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[2012] ZALCJHB 165
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Lombard v ABC Resources (Pty) Ltd (JS 75/10) [2012] ZALCJHB 165 (20 December 2012)
REPUBLIC
OF SOUTH AFRICA
THE LABOUR COURT OF
SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Reportable
Case no: JS 75/10
In the matter between:
JANINE LOMBARD
..................................................................................................
Applicant
and
ABC RESOURCES (PTY)
LTD
.............................................................................
Respondent
Heard: 20, 22 and 23
August 2012
Delivered: 20 December
2012
Summary: Dismissal for
operational reasons – failure to comply with section 189 of the
LRA – dismissal substantively
fair but procedurally unfair –
applicant tacitly agreeing to new contract – not entitled to
difference in salary but
entitled to payment for accrued leave and
notice pay.
___________________________________________________________________
JUDGMENT
BOQWANA, AJ
Introduction
There are two issues
before this Court. One is about fairness of the dismissal for
operational reasons and the other relates to
contractual claims for
outstanding salary, leave and notice pay.
In
regard to the unfair dismissal claim, the applicant alleges that the
respondent’s failure to follow the procedure laid
down in
section 189 of the Labour Relations Act
1
(‘the
LRA’) in the retrenchment process was so gross so as to
indicate that there could be no reason for the retrenchment
and
accordingly this failure by the respondent rendered the applicant’s
dismissal substantively unfair.
Contractual
claims are brought under the provisions of section 77(3) of the
Basic Conditions of Employment Act
2
(‘the
BCEA’) and they are outstanding remuneration for the months of
August, September and October 2009,
notice
pay and payment of accrued leave.
In respect of the first
claim, the applicant seeks maximum compensation or such compensation
as is reasonable in the circumstances
whilst various payments are
sought in respect of the contractual claims together with interest
at 15.5% temporae
morae
until date of final payment.
Parties led extensive
evidence that lasted for a period of three days. I will only focus
on the salient facts as detailed evidence
is on record.
The respondent called
only one witness, Jorge Basilio (‘Basilio’), whilst the
applicant was the only one who testified
in her case.
Facts
The applicant was
employed by the respondent until her dismissal in November 2009. The
respondent is a recruitment company that
provided recruitment
services in the information technology industry.
It was affiliated to ABC
IT Solutions (Pty) Ltd (‘ABC IT Solutions’), a sister
company to the respondent, with both
companies managed and owned by
Basilio.
During 2007, ABC IT
Solutions identified an opportunity where corporate banks required
personnel on an ongoing basis. ABC IT Solutions
approached a number
of recruitment companies who had a labour broking profile and
experience so as to take advantage of this
opportunity. Professional
Empowerment Solutions CC (‘Empowerment Solutions’),
which was owned by the applicant, was
one of the entities doing
business in the recruitment industry and it provided ABC IT
Solutions with placement services.
On
10 December 2008 ABC IT Solutions and Empowerment Solutions,
represented by Basilio and the applicant respectively, entered
into
a joint venture agreement to form ABC Resources (Pty) Ltd, the
respondent.
The respondent would
source personnel for ABC IT Solutions and its clients mainly within
the banking industry. It was envisaged
that Empowerment Solutions
would bring along its own and existing client base. The respondent
would then invoice ABC IT Solutions
and its other clients.
The
applicant was tasked with the formalities such as registration of
the company and directors with CIPRO. It was decided that
both
Basilio and the applicant would be registered as directors. The
applicant, however, would not get shareholding from the
beginning
since the joint venture would initially be funded by Basilio and/or
ABC IT Solutions at the beginning stages. It was
envisaged that with
time she would become a shareholder on merit as the business grew.
Basilio
and the applicant drew up a business plan, which they sought to
present to the big corporate banks in order to secure
placement
business with those banks.
Basilio alleges that the applicant
was a signatory on all their bank accounts, and that the objective
was that the respondent
would look to particularly the Standard Bank
and the ABSA Bank as clients (i.e. would source employment
particularly for these
clients).
They also tried to
secure funding from various institutions which proved to be a
challenge. The respondent managed to secure a
contract with ABSA.
Shortly thereafter an economic downturn hit the industry with banks
deciding to freeze placement contracts.
This made things difficult
for the respondent..
At the same time the
applicant was employed by the respondent as a general manager as per
letter of appointment dated 19 May 2009.
The effective date of this
contract of employment although not in the letter was to be 1 June
2009.
What is key from this
letter of appointment, amongst others, is the following paragraph:
‘
We have
pleasure in offering you a position as General Manager, for ABC
resourcing with the intention of an appointment as Director
within
the 1
st
three months; June, July and August 2009.’
What is also important
to note is that the applicant’s total remuneration was
R26 650, with the basic salary being
R15 250.00 and the
balance was allocated for laptop, internet card, accommodation
rental, vehicle rental, petrol allowance.
Other important clauses
for the present purposes are leave and termination of employment
clauses. The provision dealing with leave
states as follows:
‘
Employee
will be entitled to
15
working days
per annum paid leave.’ (own underline)
The termination of
employment clause states as follows:
‘
The
Employee’s employment with the company may be terminated by him
or by company..., after the first month no less than
1
calendar month’s notice
will be accepted’ (own underline)
This agreement was
signed by both parties. The letter of employment and the
interpretation of its content are quite crucial as
it shall become
clear during the course of this judgment. It is this agreement that
the applicant basis her contractual claim
on. She claims that this
agreement was in force until her dismissal whilst the respondent
alleges that the contract of employment,
and in particular clauses
dealing with her position and the remuneration were changed by
agreement between the parties.
Due to the loss of the
placement contracts with ABSA and Standard Bank by the respondent,
resources that were placed with those
banks were retrenched. These
retrenchments occurred roughly between June and August 2009. The
only income that the respondent
derived came from ABC IT Solutions
and that was unsustainable. The only other engagement that the
respondent managed to get came
from ABSA in October 2009 but that
did not cover operational costs in full.
In September 2009,
Basilio approached the applicant with a new contract of employment.
This contract would change the position
of the applicant from that
of a general manager to a sales manager. According to Basilio, this
was done in order for the applicant
to focus more on sales and the
sales model and to make sure that it was affordable for the company.
This contract restructured
the applicant’s remuneration in
that her total remuneration would now be R20 200 with her basic
salary being R10 000.
Everything else remained the same except
the introduction of a telephone allowance and an exclusion of rental
accommodation which
previously was paid at R4950. Another change was
the removal of the 10% profit share payable to the manager on
declared profits
and an introduction of a 20% of net sale commission
paid to the sales manager monthly based on sales achieved. Apart
from those
changes everything else remained the same.
This agreement was not
signed by any of the parties.
According to Basilio,
the applicant was not worse off instead she stood to earn more if
sales were achieved. According to him
this deal was for both the
benefit of the respondent and that of the applicant as there was no
business coming. Further, the
applicant needed to be out there to
sell and close deals so as to alleviate overheads of the company and
in turn she was to be
compensated with double commission.
What is crucial though
is Basilio’s allegation that this new arrangement was agreed
to between the parties. The applicant
disputes this. Basilio alleges
that the applicant tacitly agreed to this restructured agreement
based on her conduct.
First, the applicant
wrote various emails to Basilio which he took to mean that the
applicant understood the new arrangement and
was in agreement with
it. Reference is made to an email that read as follows:
‘
Hi Jorge
And the car R3500 as I still don’t
have a hire car but will be getting one this week/next week, then the
first deduction for
the car will come off my salary at the end of
October.
Total therefore to be added to my
basic of R10 000 is R7700 (petrol, cell, data bundles, medical,
car),
Thank you
Kind regards.’
Basilio contends that no
dissatisfaction was raised on any email by the applicant instead
emails from the applicant gave an impression
that all was well and
accepted. He also states that the applicant invoiced ABC IT
Solutions based on the new remuneration structure.
Something
else occurred during the period of September 2009. The applicant was
requested to assist with the Human Resources function
(‘HR’)
together with three other people due to the absence of the HR
Manager, one David Zannella (‘Zannella’),
being given
the responsibility of handling another project elsewhere. The
applicant claims that, that work took most of
her time and
she could not go out and sell so as to get business for the
respondent. She however admits that no business was forthcoming.
It
seems that this HR work gave her something to do.
The applicant alleges
that Basilio was a verbally abusive and a dismissive person who
would not listen to her. She claims that
she raised her
dissatisfaction with Basilio hence the new contract was not signed.
She asserts that she only invoiced ABC IT
Solutions using the new
remuneration structure because she was told what her new salary
would be and she obliged. She claims
that she had no choice but to
invoice using the new amount as she needed the money. She referred
to an email sent by Basilio
to her two days before she was advised
of her retrenchment with Basilio apologising for unprofessional and
bad behaviour. This
according to her served as an example of how
Basilio treated her.
The applicant alleges
that her salary was continuously being paid late and when she
enquired of when it would be paid Basilio
would be abusive and shout
at her.
According to Basilio the
applicant had always known that things were not going well with the
respondent’s business. She
knew that there was no significant
business coming, she was also exposed to the finances of the
respondent as a general manager
and she conducted and assisted with
the retrenchments that had taken place because of lack of business
from the banks.
On 29 October 2009
Basilio claims that he advised the applicant that the respondent
could not continue as no business was forthcoming
and that there was
no funding. The applicant disputes this version. She alleges that
she had no idea before this date that Basilio
was going to retrench
with her.
According to the
applicant, when she had not heard anything about payment of her
salary on the afternoon of Friday 30 October
2009, she approached
Basilio, although it was difficult to do so, to ask him whether she
could expect payment on Friday or Saturday.
Basilio flew into a
blinding rage and began to scream at the top of his lungs telling
her that she was not performing her duties
well as an HR Manager and
that he was retrenching her and would pay her one week’s pay.
The applicant was so shocked as
did not know from where that came
from. At no point before this time was she ever told that she was
being retrenched. Basilio
denies that he shouted at the applicant.
He also alleges that on this day he advised the applicant about the
respondent having
to close down for lack of funding, which was not
sustainable.
Later on that day, the
applicant alleges that she received a telephone call from Basilio
asking them to meet the following day,
Saturday 31 October 2009 to
discuss this retrenchment.
On 31 October 2009 a
meeting took place at a coffee shop. Basilio alleges that he
discussed details of how the operations would
close down with the
applicant and as the last person standing she would be retrenched.
He claims that an option of the applicant
going back to Empowerment
Solutions was also discussed, and if possible, Empowerment Solutions
would invoice ABC IT Solutions
as it used to. According to Basilio,
this was all done amicably and a settlement was reached. He also
relies on an email dated
1 November 2009, where the applicant
requested details of the meeting held on Saturday, 31 October 2009,
to be put in writing
as a basis for this agreement.
The applicant’s
version is that, Basilio advised her that he needed to retrench her
based on operational restructuring and
that he was going to shelve
the company. He told her that she would get a month’s notice
and would be paid all leave due
to her, that she would receive
formal notification about the retrenchment over the weekend and that
on Monday, 02 November 2009,
she coulddo the handover to other staff
members.
On 03 November 2009, the
applicant received a letter of termination of her services from
Basilio but the letter was dated 01 November
2009. The letter
advised, inter alia, that her services would be terminated. These
two paragraphs from that letter are worth
noting:
‘
Due to the
economic situation we are faced with, a collective business decision
was made to make your position as Sales Manager
redundant. ABC
resourcing is left with no choice but to restructure the current
company structure whereby current MD will head
sales further continue
with the outsource of service (HR, Finance, Sales) to ABC IT
Solutions.
As per your contract, ABC Resourcing
gives you one month’s notice. You will be paid out your full
salary, further should any
leave be due, you will be given an
opportunity to take it during your notice period. Should there be
severance due, all payouts
will take place on or before the 30
November 2009.’
Analysis
Claim 1
A dismissal for
operational requirements must both be substantively and procedurally
fair.
In
BDM
Knitting Mills (Pty) Ltd v SACTWU
,
3
Davis AJA held that the
starting point is whether there is a commercial rationale for the
decision to retrench. The court is not
to take the employer’s
justification at face value, and is entitled to examine whether the
particular decision has been
taken in a manner that is fair to the
employee who stands to be retrenched. To this extent the court is
entitled to enquire as
to whether a reasonable basis exists on which
the decision is predicated. Viewed accordingly, the test becomes
less deferential
and the court is entitled to examine the content of
the reasons given by the employer, albeit that the inquiry is not
directed
to whether the reasons offered is the one which would have
been chosen by the court. Fairness, not correctness is the mandated
test.
In the
NEHAWU
v The Agricultural Research Council
,
4
the court went further
to say that the purpose is ‘not merely to determine whether
the requirements for a proper consultation
process have been
followed and whether the decision to retrench was commercially
justifiable’ (but) ‘whether the
retrenchment is properly
and genuinely justified by operational requirements in the sense
that it was a reasonable option in
the circumstances’. In
Keil
v Foodgro (A division of Leisurenet)
5
and many other decisions
of this court,
it
has been held that there is an integral connection that exists
between procedural and substantive fairness.
The applicant contends
that her dismissal was substantively and procedurally unfair. She
submits that in as much as the respondent
has conceded that section
189 of the LRA was not followed to the letter of the law, its
conduct amounts to substantive unfairness
in many respects, one
being, that it was fully aware at least in May 2009 that the
business had hit a slump but yet went ahead
to appoint the applicant
as a general manager on the same month at a salary of R26 500. This
was accordingly inconsistent with
its submission that there was a
need to retrench the applicant. Secondly, the applicant had offered
to help the business by resuscitating
clients from her old business
in the legal and secretarial industries but Basilio referred to
those as small fish and did not
seem to be interested in them.
Thirdly, the applicant did not have time to perform a sales
function, as she was busy with HR
related functions. Fourthly, the
manner in which the retrenchment happened shows that there was no
contemplation at all. The
real reason was unhappiness with her
‘performance in not generating sales and the fact that she
raised queries about her
reduced salary or non payment of her
salary.
The applicant submits
further that because of Basilio’s dismissive nature it was
very difficult for her to offer any suggestions
nor have any
meaningful discussions with him about the business. Even during her
retrenchment period, she only had two days with
Basilio where she
was told that she was being retrenched as the business was being
shelved and she would be paid a month’s
notice. It is common
cause that no letter inviting her to consult on a contemplated
retrenchment was issued to her. She submits
that had she been given
an opportunity to make representations she would have offered to
sell her database from her previous
placements in legal and
secretarial and secondly, she would have suggested that she takes on
more HR functions as an avoidance
measure.
The respondent contends
that the rationale for the retrenchment is simple. There was no
business generated in the joint venture
and that is mainly due to
the banks freezing projects requiring staff. It submits that this
was well known to the applicant as
she was in charge of the
invoicing and had knowledge of the financial situation and was
involved in previous retrenchments.
The respondent conceded,
at the outset,
that the procedure as
required by section 189 of the LRA was not followed to the letter of
the law and it would have been a farce
to have gone through a
mechanistic procedure to retrench somebody when they were the last
person standing after having been involved
in other retrenchments
beforehand. Everybody had left and she knew that there was only one
outcome, and that was that the respondent
was going to have to
retrench her too. Secondly, the applicant had actually met with
Basilio on 29 October 2009, and they reached
settlement on 30
October 2009.
Both parties referred to
the Labour Appeal Court’s judgment of
SACTWU
and Another v Discreto
6
w
here
the court held as follows:
‘
Every person
has the constitutional right to fair labour practices (s. 27(1) of
the Interim Constitution; s. 23(1) of the Final
Constitution). As far
as retrenchment is concerned, fairness to the employer is expressed
by the recognition of the employer’s
ultimate competence to
make a final decision on whether to retrench or not (cf. the
Atlantis
Diesel
case at 1252H (ILJ); 28I (SA)). For the employee fairness is found in
the requirement of consultation prior to a final decision
on
retrenchment. This requirement is essentially a formal or procedural
one, but, as is the case in most requirements of this nature,
it has
a substantive purpose. That purpose is to ensure that the ultimate
decision on retrenchment is properly and genuinely justifiable
by
operational requirements or, put another way, by a commercial or
business rationale. The function of a court in scrutinising
the
consultation process is not to second guess the commercial or
business efficacy of the employer’s ultimate decision (an
issue
on which it is, generally, not qualified to pronounce upon), but to
pass judgment on whether the ultimate decision arrived
at was genuine
and not merely a sham (the kind of issue which courts are called upon
to do, in different settings, every day).
The manner in which the
court adjudges the latter issue is to enquire whether the legal
requirements for a proper consultation
process has been followed and,
if so, whether the ultimate decision arrived at by the employer is
operationally and commercially
justifiable on rational grounds,
having regard to what emerged from the consultation process. It is
important to note that when
determining the rationality of the
employer’s ultimate decision on retrenchment, it is not the
court’s function to
decide whether it was the best decision
under the circumstances, but only whether it was a rational
commercial or operational decision,
properly taking into account what
emerged during the consultation process.’
This judgment seems to
suggest that whilst the court is not there to second guess the
commercial or business efficacy of the employer’s
ultimate
decision, the court will scrutinise the commercial justifiability of
the ultimate decision based on what transpires
at the consultation
process.
Further,
consultation must be a
meaningful joint consensus seeking consultation process and not
merely a mechanical checklist approach.
In
Chetty
v Scotts Select A Shoe
7
Landman J observed that:
‘
the legislature
intended that the procedure regarding dismissal for operational
requirements should be governed by law rather
than by guidelines’
which means that the
duty to follow the procedure for operational reasons is higher than
in other reasons (misconduct and incapacity).
I align myself with the
learned Judge’s reasoning. It did not matter, in my view, that
the applicant was involved in previous
retrenchments and was aware
of the financial situation of the respondent, consultation process
had value, as Grogan AJ puts it
‘even if the fate of the
employee is apparently sealed.
’
8
It was imperative for
the respondent to meaningfully engage with the applicant and not
simply advise her of the decision that
he had made. It is common
cause that at those two meetings no financials were looked at, nor
were there any meaningful discussions
on avoidance measures and not
just measures to avoid retrenchment but to save the business. Even
if the outcome was known in
Basilio’s mind, the applicant
should have been invited to consult and make whatever
representations she might have had,
even if those would have been
rejected by the respondent at the end. Further,
she
would be entitled to be furnished with the reasons why those had
been rejected. None of that happened here. It must be borne
in mind
that this was a start up business that was formed a few months
earlier, with the applicant being hired by the respondent
in the
midst of an economic downturn.
The applicant conceded
that she knew that there was no business was being generated by the
respondent, after business from the
banks fell through and she ended
up doing some HR work. Whilst that is so, she was entitled to a fair
consultation process, where
all issues would be canvassed and a
joint outcome including termination of service could be reached.
It is common cause that
the applicant was an employee, and although there was a joint
venture agreement she was not a shareholder
nor did the ultimate
decision making in the respondent rest with her. She may have had
some knowledge of the financial situation
but she took instructions
clearly from Basilio and depended on Basilio’s leadership. She
therefore was entitled to a fair
process. I must say, even if she
was a director, she would still be protected by section 189 of the
LRA, by virtue of her employment
relationship with the respondent.
Whilst she may have been the last person standing, it cannot be
suggested that a meeting at
a coffee shop advising her of the
retrenchment is enough to satisfy the requirements of section 189 of
the LRA for employees
at that level.
It was suggested by
Basilio that at the meeting of 30 October 2009 an alternative of the
applicant going back to Employment Solutions
and invoicing the
respondent was discussed as the viable option. Apart from this being
disputed by the applicant, she was advised
of this option after
having been informed that she was being retrenched. In any event, it
does not make sense that the applicant
would be receiving work from
ABC IT Solutions at her Employment Solutions business whilst it was
alleged that no work existed
whilst she was within the respondent.
Ms Lancaster, argued further that this alternative was not raised
anywhere in the papers
of the respondent and only cropped up for the
first time in Basilio’s evidence. The events of the two
alleged ‘consultation’
meetings clearly show that
Basilio made a decision to retrench the applicant before discussing
with her.
Although both parties
knew that the business was undergoing financial constraints, Basilio
testified that the respondent was initially
funded by him but that
arrangement was unsustainable. Both Basilio and the applicant were
hopeful that business would be forthcoming.
Basilio was also hopeful
that the respondent would obtain funding from other financial
institutions. There was also a loan account
from ABC IT Solutions
towards the funding of the respondent. The idea was that the
applicant would be made an owner overtime.
It seems to me the
applicant never anticipated before 29 October 2009 that she would be
retrenched on 30 October 2009 with effect
to 30 November 2009. She
was caught by surprise. Even when she was finally told about the
retrenchment, there is no evidence
to suggest that the process was
meaningful as contemplated in section 189 of the LRA.
The respondent relies on
an email dated 01 November 2009, from the applicant, requesting
discussions held ‘on Saturday’
to suggest that there was
an agreement that the applicant would be retrenched. This email
clearly does not record any agreement
between the parties that the
applicant should be retrenched.
It is also worth
reflecting on the termination of service letter. This letter talks
about the sales manager position being made
redundant and the MD to
head sales and further continue with outsource of services. This is
not consistent with shelving of the
company that the applicant was
advised about. The letter also advises that any leave can be taken
during the notice period. This
is not consistent with the provisions
of the BCEA as no leave could be taken during the notice period.
Further this letter does
not see severance pay as a statutory
payment that the employer is obliged to pay. All this paints a
picture of an employer who
was clearly avoiding its legal
obligations.
Having said that I am
satisfied that there was a need to retrench. It is common cause that
in the five to six months that the
applicant was employed no
business or very little of it came. The funding of the business by
ABC IT Solutions was not sustainable.
Although the applicant’s
appointment was confirmed during the time that the banks froze
placement contracts, both Basilio
and the applicant were hopeful of
a turn around, although it did not happen. ABC IT Solutions or
Basilio could not be excepted
to fund the business endlessly. The
fact that the applicant ended up assisting in HR just before her
retrenchment points to genuine
operational reasons. It must be
remembered that the applicant was employed by the respondent and not
by ABC IT Solutions.
Although there was a
commercial rationale that could indicate that at some point the
respondent may need to retrench, Basilio
did not demonstrate that he
had planned to retrench the applicant at the time the respondent
did. There was no need to be abrupt
to the point of totally
disregarding the requirements of the law. The applicant deserved to
be treated with respect and was entitled
to a fair process.
I therefore have no
alternative but to find that the dismissal of the applicant was
substantively fair but procedurally unfair.
Turning to the
appropriate relief, the applicant has asked for compensation. In the
judgment of
Alpha
Plant and Services (Pty) Ltd
,
9
the court held that,
in exercising
discretion,
regard
must be had on factors such as the employer’s departure from
the requirements of a fair procedure, the employee’s
conduct
and the employee’s length of service. The discretion on
whether to award compensation is a narrow one, to be exercised
judicially after proper consideration of the relevant circumstances.
Having taken into
account that there was no compliance with the provisions of section
189 at all and the applicant’s length
of service which was six
months, I am of the view that four months compensation would be fair
in the circumstances.
Claim 2
Remuneration claim
The applicant contends
that the unsigned contract dated 6 September 2009 is unenforceable.
It was unilaterally imposed as she
never agreed to it. Accordingly,
the remuneration contained in the signed contract of 19 May 2009
stands. She alleges that she
was short paid for the months of
August, September and October 2009.
The opening paragraph of
the May 2009 contract stated the applicant was appointed as general
manager with effect with the intention
to appoint her as a director
within the first three months of June, July and August 2009.
Whatever adjustments that would be
made in that contract would have
to be by agreement between the parties. The respondent does not seem
to dispute that but what
Basilio says is that the applicant’s
conduct pointed towards an agreement.
I agree with the
respondent’s contention. The applicant’s conduct pointed
to a tacit agreement that she was in agreement
with the restructured
contract based on the fact that she invoiced the respondent using
the new remuneration structure. She also
did not raise her
unhappiness in any correspondence nor take the issue following any
legal process. Instead her emails confirmed
the new arrangement and
she seemed to be going along with it.
The fact that the
contract is not signed is irrelevant as a contract does not need to
be signed to be binding. Further, there
was nothing in the old
contract that stipulated that any amendment to the contract had to
be signed.
I therefore find that
the respondent did not breach the contract by failing to pay in
terms of the old contract.
Notice pay
With
regard to the notice pay. I find that the applicant was entitled to
one calendar month’s notice as per her contract
of employment.
The allegation is that since the applicant was given notice only on
03 November 2009, calendar month’s notice
expires on 31
December 2009. Accordingly,
the
applicant was contractually entitled to payment
in
lieu
of
notice until 31 December 2009.
The respondent concedes
that one calendar month’s notice had to be given, but it
submits the applicant was notified of her
termination verbally
before 01 November 2009 but that termination was confirmed in
writing on 03 November 2009. The letter of
appointment stipulates
that notice must be given in writing. The respondent’s
argument must therefore fail.
In
the case of
South
African Music Rights Organisation v Mphatsoe,
10
Van
Niekerk J
held
that:
‘
a
calendar month does not necessarily begin on the first day of the
month any more than a calendar year necessarily begins on
1 January.
What is necessary is to ascertain the intention of the parties by
way of interpretation, an exercise in which the
language and nature
of the contract is relevant. This approach avoid the mechanical and
possibly arbitrary rules to the variety
of circumstances that
inevitably manifest themselves when employment is terminated, and
enjoins a court to focus primarily on
the terms of the contract
between the parties.’
The word ‘
month
’
is used a number of times in the contract of employment. For
instance clause 2.1 refers to ‘
basic monthly amount’
,
clause 2.2 refers to remuneration being paid on ‘
25
th
of each month’
, and clause 2.3.1 refers to sales
manager ‘
paid monthly’
sales achieved and also
refers to 20% of net sale being ‘
calculated monthly’
and added to salary. It is only clause 7.1 that deals with the
notice period that mentions
one calendar months
notice. From
this, it could be said that the parties attached some significance
to the use of the word ‘
calendar
’ in respect of
the notice. Accordingly, there should be a distinction between
‘
month
’ and
calendar month’
. Those
instances where month is used will be consistent with the
interpretation that parties did not intend the month to be run
from
the beginning of the month, but where calendar month is used then it
meant that the intention was for a month to begin running
from the
first day of the month. It follows therefore that notice should have
been given in writing from the first day of the
month, therefore,
the applicant is entitled to be paid in lieu of notice until 31
December 2009 at the restructured remuneration.
The applicant conceded
that she had already been paid for November 2009 and therefore
amount owing is remuneration only for December
2009.
Leave pay
With regards to
calculation of her leave pay the applicant alleges that she is
entitled to 15 working days leave per cycle (or
period of 12 months)
which equates to 21 consecutive days as per the BCEA. She alleges
that leave, accrued to her is 1.75 days
per month and not 1.25 as
per the respondent’s calculation. As she was employed for 6.5
months, at least 10.5 accrued leave
days were due to her.
Mr Graham did not seem
to take issue with the applicant’s contention that the
calculation should be at 1.75 days but contended
that the leave days
should be calculated at 15 days x salary and not at 21 days x
salary. The respondent in its letter of termination
directed the
applicant to take leave whilst serving her notice period. That
cannot be done as it is contrary to the provisions
of the BCEA. I
find no basis for the respondent’s refusal to pay accrued
leave due to the applicant.
The applicant is,
therefore, entitled to payment of accrued leave from 1 June 2009 to
30 November 2009 (6 months) at the restructured
remuneration (new
contract) being 15 working days accrued at 1.75 days per month; 6
months x 1.75 days equalling 10.5 days.
In the circumstances, I
make the following order:
The dismissal of the
applicant was substantively fair but procedurally unfair;
The respondent must pay
to the applicant compensation equivalent to
four months
remuneration calculated in terms of the new contract of employment
dated 6 September 2009;
The contractual claim
for salary for the period of August 2009, September 2009 and October
2009 is dismissed;
The respondent must make
payment
in lieu
of notice to the applicant equivalent to
one
month’s
remuneration calculated in terms of the new
contract of employment dated 6 September 2009;
The respondent must pay
to the applicant outstanding leave days being 10.6 days accrued over
a period of 6 months calculated at
15 working days at the rate of
1.75 days per month;
The orders in paragraphs
2,4 and 5 must be effected within 21 days of this judgement;
There is no order as to
costs.
__________________
BOQWANA AJ
Acting Judge of the
Labour Court
APPEARANCES:
For the Applicant: Ms S
Lancaster of MacRobert Inc.
For the Respondent: Mr DG
Graham of Donald Graham Attorneys
1
Act
No.66 of 1995
2
Act
No. 75 of 1997
3
(2001)
22 ILJ 2264 (LAC) at para 19.
4
(2000)
9 BLLR 1081
(LC).
5
(1999)
4 BLLR 345
(LC) at para 10.
6
1998
(12) BLLR 1228
(LAC)
at para 8
7
(1998)
19 ILJ 1465 (LC) at para 24.
8
See
Whall v BrandAdd Marketing (Pty) Ltd
(1999) 6 BLLR 626
(LC)
at para 24.
9
(2001)
3 BLLR 261
(LAC) at paras 124-128.
10
[2009]
7 BLLR 696
(LC); (2009) 30 ILJ 2482 (LC) at para 13
.