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[2012] ZALCPE 4
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Abdullah v Kouga Municipality and Another (P01/12) [2012] ZALCPE 4; [2012] 5 BLLR 425 (LC); (2012) 33 ILJ 1850 (LC) (2 February 2012)
REPUBLIC OF SOUTH AFRICA
Reportable
Of interest to other judges
THE LABOUR COURT OF SOUTH AFRICA
PORT ELIZABETH
JUDGMENT
case
no: p01/12
In the matter between:
R ABDULLAH
Applicant
and
KOUGA MUNICIPALITY
First Respondent
SIDNEY FADI
Second Respondent
Heard
:
30 January 2012
Delivered
:
02 February 2012
Summary:
Contempt application dismissed – dismissal
following upliftment of suspension – fixed term contract –
unlawful
termination – specific performance declined
JUDGMENT
LAGRANGE, J
Introduction
This is an urgent application anticipating the return day of an
interim order issued by my colleague Lallie J, on 12 January
2012,
seeking confirmation of the rule. The applicant also applies for an
order declaring the respondents in contempt of the
interim order,
with a prayer for ancillary relief should a finding of contempt be
made, which the interim order anticipated as
a possibility. In
addition, the applicant seeks to set aside the alleged unlawful
termination of his services on 16 January 2012.
Background
When the interim order was handed down the applicant was still
employed as the chief financial officer of Kouga Municipality,
the
first respondent. However, by that time he had been suspended for
approximately 10 months and he approached the court for
an order
uplifting his suspension. Judge Lallie issued the following order on
an interim basis and set down for final determination
on the return
day being 2 February 2012:
"2.1. declaring the
Applicant's continued suspension unlawful for want of compliance with
the law in general and Local Government
Disciplinary Regulations for
Senior Managers, 2010 in particular;
2.2. directing that the
suspension be uplifted on the ground that the Respondents are
prohibited in the circumstances from suspending
the applicant for
longer than three months;
2.3. directing the
Respondents to permit the Applicant to resume work with immediate
effect and to allow him to exercise his contractual
duties without
hindrance, unless there is some lawful reason for doing otherwise;
2.4. restraining the
Respondents from suspending the Applicant again for any reason
related to the purported reasons for which he
has been suspended;
2.5. granting the Applicant
leave to approach the above Honourable Court on the same papers, as
supplemented to the extent necessary,
for an order convicting the
Respondents of contempt of court should they fail to comply with
orders contemplated in 2.3 and 2.4
above..."
Neither party mentions whether or not the applicant did return to
work consequent to obtaining this relief. In any event, on
16
January 2012, two working days after the interim order was issued,
the municipality gave the applicant a letter, the material
portion
of which reads:
"Termination of Fixed
Term Contract
Kouga municipality has
decided to terminate your fixed term contract that expires on 30 June
2012 and to pay the remainder of this
contract, together with all
leave due to you.
Kouga municipality withdraws
all allegations of misconduct and uplifts your suspension with
immediate effect. The records of Kouga
municipality shall be purged
of all allegations of misconduct (and poor work performance or
incapacity if applicable.
The motivation for this
decision is the fact that Kouga municipality Council has lost all
trust in the past senior management of
Kouga municipality, as it
managed the municipality from receiving a clear audit report to the
brink of insolvency.
Given your position of CFO,
council cannot continue with this relationship.
Should you believe that there
are any other monies due to you, you are invited to bring it to our
attention and we shall consider
the same.
The termination shall be with
immediate effect and you are not required to report for duty..."
The applicant's claim of unlawful termination
The applicant alleges that his dismissal was in breach of his
contract of employment and he is entitled to have the termination
nullified and resume his duties. He claims that the contract must
endure unless there is lawful cause for its earlier termination
and
that by expunging all references in the councils records to the
applicant's misconduct or poor work performance the respondents
implicitly acknowledge there is no lawful cause for terminating his
employment. Because the termination itself amounts to a repudiation
of his contract because it is in breach of the employers fundamental
obligation not to terminate the contract without lawful
cause, the
applicant in effect claims that he is entitled to insist on specific
performance of his contract in the form of a
revocation of the
unlawful dismissal. The applicant also claims that the failure to
follow a proper procedure before terminating
his services is also in
breach of his contract.
The municipality retorts that in tendering to pay the applicant the
balance of his remuneration for the unexpired portion of
his
contract it was not acting in breach of the contract that was
fulfilling all its obligations as an employer towards him.
It
contended that the applicant had no contractual right to perform his
duties in the sense of a so-called "right to work".
The
employer explains that on the applicant's return to work it faced
the prospect of pursuing costly and time-consuming disciplinary
procedures, while potentially exposing itself to another potential
bout of financial mismanagement of the kind it had experienced
prior
to the applicant's suspension. It decided that it would make more
practical sense to relieve the applicant of his duties
and pay him
out the balance of his contract without making any finding of
culpability or incompetence on his part and without
alleging the
same.
In explaining the reasons for its decision the respondent
municipality relies on a simple statement that it had lost any
confidence
in the previous management team members, one of whom was
the applicant, given the deterioration of the municipal finances
during
their tenure. In undertaking to wipe out the record of any
misconduct or poor performance on the part of the applicant, the
respondent
was effectively eschewing any reliance on misconduct or
poor performance as reasons for his dismissal and sought to rely on
a
loss of confidence
per se
as the reason for terminating the
contract. The respondent sought in argument to persuade the court
that the mere existence of
such a lack of confidence, detached from
any claim that the applicant’s conduct or performance was the
cause thereof, constituted
sufficient grounds for the lawful
termination of the contract.
The relevant passages of the applicants contract of employment read:
"11. Termination
11.1 this agreement will
terminate –
11.1.1 automatically on
expiry of the term referred to in 3.2, subject to any extension or
renewal in terms of 3.3.
11.1.2 and the director
finances instance, if the director finance gives the municipality
ones month's notice of termination in
writing.
11.1.3 at the municipality's
instance, if the municipality terminates the director finances
employment for reasons relating to the
director finances conduct,
capacity, performance, or the operational requirements of the
municipality
or for any other reason recognised by law as
sufficient
, on one calendar month's notice of termination in
writing.
11.2 the municipality will be
entitled to
summarily terminate the director finances employment
contract for any sufficient reason recognised by law
which, in
the alia, may include the following:..."
(emphasis added)
The remainder of paragraph 11.2 lists an assortment of different
types of misconduct. Further, clause 13.1 of the contract reads:
"13.1 This agreement,
together with the disciplinary, grievance and retrenchment
procedures, as adopted by the municipality
from time to time, shall
at all times be subject to the provisions of the Structures Act,
Systems Act, the Labour Relations Act,
as amended and the Basic
Conditions of Employment Act, as amended, their successors and any
other laws may be applicable from time
to time."
The applicant does not specifically allege that the municipality had
adopted the disciplinary regulations contained in the Local
Government: Disciplinary Regulations for Senior Managers, 2010, but
claims that those regulations do apply to him. He specifically
refers to provisions in those regulations stipulating the procedures
to be followed in the case of misconduct and poor performance.
In
its answering affidavit the respondent specifically disputed the
incorporation of this code into the applicant’s contract
of
employment and the applicant does not take this matter further in
his reply. It may well be that the regulations are applicable
to
him, but he did not plead that his termination was unlawful in the
sense that the respondent acted
ultra vires
the regulations
in dismissing him without following any of the procedures.
The municipality terminated the applicant services summarily. It
studiously avoided any reliance on allegations of misconduct,
but
plumped for a "loss of trust" as justification for the
termination. It is of course trite law that a relationship
of trust
is fundamental to the employment relationship. But if the trust
relationship has broken down, without assigning the
blame for that
breakdown to the employee, is an employer entitled to terminate the
employment relationship summarily?
Counsel for the respondent placed much reliance on the case of
Masetlha v President of the Republic of South Africa and
another
[2007] ZACC 20
;
2008 (1) SA 566
(CC)
, which dealt with the
suspension and subsequent termination of the employment of the head
and director-general of the National
Intelligence Agency. The
dismissal arose from the President’s unilateral amendment of
the appellant’s term of office
so that it expired nearly two
years earlier than it should have. The premature termination of the
appellant’s employment
was also accompanied by an offer to
place the applicant in the same financial position he would have
been in had his contract
of service run its full course.
1
On the facts of that matter, the Constitutional Court held that the
ordinary principles of contract would apply to termination.
Therefore, the majority of the court reasoned, the employment
relationship “... may not be terminated as a matter of
contract before the expiry of the period unless there is
material
breach of the contract by the employee
.”
2
(emphasis added). It must also be mentioned that the court also held
in
Masetlha
that the dispute was “....not merely about
a breach or wrongful termination of an employment contract. It is
rather about
whether public authority has been exercised in a
constitutionally valid manner.”
The Constitutional Court dealt with the review application in
Masethla
as a review of executive action. In that context
Moseneke DCJ, for the majority of the court, said :
“
[82]
Reverting to the present case, I agree with the High Court that
ordinarily
a
dismissal of a head of an intelligence service on the basis of
irretrievable loss of trust
on the part of his principal, in this case the President,
would
not be arbitrary or irrational
.
Of course, the facts in a particular case may demonstrate
irrationality, arbitrariness or bad faith on the part of the person
who makes the dismissal decision. In this case, nothing suggests that
the President acted arbitrarily or without sufficient reason.
....
[88] Although it is clear
that there has been a breakdown in trust,
that alone is not a
sufficient ground to justify a unilateral termination of a contract
of employment
. It must however be said that the irretrievable
breach of trust will be relevant for purposes of remedy. The ordinary
remedies
for breach of contract are either reinstatement or full
payment of benefits for the remaining period of the contract. 46 In
my
view, even if the contract of employment were terminated
unlawfully, Mr Masetlha would not be entitled to reinstatement as a
matter
of contract. Reinstatement is a discretionary remedy in
employment law which should not be awarded here because of the
special
relationship of trust that should exist between the head of
the Agency and the President.
...
[91] As we have observed
earlier, when a fixed-term contract of employment is terminated the
applicant may claim reinstatement or
full payment of benefits for the
remaining period of the contract. It is however plain that, in the
context of this case, the reinstatement
of Mr Masetlha would be
inappropriate. To the extent that the mainstay of his claim is to be
reinstated as director-general of
the Agency, his claim must fail.
From that must follow that Mr Masetlha's residual or alternative
remedy is full payment of salary,
allowances and benefits of his post
for the remaining period of his contract.”
3
(emphasis added and footnotes
omitted)
Thus, although the President’s dismissal of Masethla was not
reviewable as executive action, it did not detract from the
fact
that from a contractual perspective the mere existence of a
breakdown of trust, which I accept
in casu
was common cause,
was not sufficient to warrant the unilateral termination of the
contract. However, what the decision in
Masethla
also
highlights is that where such a breakdown exists, the discretionary
remedy of specific performance in the form of reinstatement
is
unlikely to be granted, and the employee’s remedy will be
confined to payment of the balance of his contractual remuneration.
4
I am satisfied that a right to work has not been established as a
feature of the applicant’s employment relationship with
the
respondent, so this is not a consideration in determining an
appropriate remedy in this case.
Contempt of the interim order
The applicant argues that his dismissal was merely a ruse to avoid
the interim order uplifting his suspension and that the purported
termination of his contract was nothing more than a continuation of
his unlawful suspension in another guise, both actions having
the
same consequence namely to deprive the applicant of his "right
to render service in terms of his contract" until
the date of
its expiry.
It might well be the case, as counsel for the applicant contended,
that the strategy of dismissal was a cynical response to the
order
uplifting his suspension. However, even though both the suspension
and the termination have the effect of keeping the applicant
away
from the workplace, it is wrong in law to conclude that the
respondent’s act of dismissal might have been in contempt
of
the interim order. Stripped of the regulatory procedures governing
suspension of senior municipal officials like the applicant,
suspension on pay is a measure an employer is entitled to impose if
it does not want to make use of the employees services, unless
the
employee is engaged in the type of occupation which might entail a
right to perform work. In any event, suspension can only
take place
in the context of an ongoing employment relationship. Conversely,
upliftment of a suspension can only be enforced
in a continuing
employment relationship. If the relationship is terminated for
whatever reason no suspension can continue, nor
can an upliftment of
a suspension persist. Suspension and the remedies for unlawful
suspension are logically contingent on the
continuity of the
employment relationship.
When Lallie J, handed down the interim order, she did so in the
context of an employment relationship which still existed. The
fact
that the applicant was subsequently dismissed would constitute a
lawful reason for not permitting him to exercise his contractual
duties as contemplated in the second part of the order.
Accordingly, although the respondent has achieved a similar
practical effect of removing the applicant from the workplace by
terminating his services instead of suspending him, the act of
termination was not an act in breach of the interim order, but
one
that had the effect of rendering it legally inoperative. Contempt of
the court’s interim order does not arise as an
issue.
Urgency
The respondent had from late on 17 January until 23 January to
prepare its answering affidavit. Although the applicant may be
criticised for not setting up timetable for responses with reference
to the return date on 2 February 2012, which was close enough
to 30
January 2012, when it set the matter down, I think sufficient time
was given to the respondent to prepare its response
as its
comprehensive affidavit and heads of argument demonstrate. In a
matter where a party is seeking specific performance of
a contract
of employment in a context where he had just been reinstated after a
long absence from work, I believe it was sufficiently
important for
him to approach the court as a matter of urgency in an effort to
assert his primary remedy of setting aside the
unlawful termination.
Conclusion
In summary, I conclude that:
the respondent did not act in contempt of the interim order
uplifting the applicant’s suspension, when it summarily
terminated his employment on 16 January 2012, and
the summary termination of the applicant’s services was an
unlawful, but given the breakdown of trust an order of
reinstatement would not be appropriate and his remedy should be
confined to his contractual damages.
Costs
The applicant was partially successful, even though the primary
remedy he sought was declined. In the circumstances, it seems
appropriate that each party should pay its own costs.
Order
In the circumstances, the following order is made:
The contempt application is dismissed.
The Applicant’s dismissal is declared unlawful and the first
respondent is ordered to pay the applicant’s remuneration
up
and until the expiry of his temporary contract of employment,
within 10 days of the date of this order;
Each party is to pay its own costs.
__
_____________________
R LAGRANGE
Judge of the Labour Court of South
Africa
APPEARANCES
APPLICANT: J G Grogan
instructed by Wikus Van Rensburg Attorneys
FIRST AND SECOND
RESPONDENTS: R G Buchanan SC assisted by P N Kroon
Instructed by Joubert Galpin Searle
1
At
585, [50]
2
At
588,[62]
3
At
595-7
4
See
also the unreported decision of Revelas J in
F P Dennis v
Kouga Municipality
(Eastern Cape High Court, case no
644/2011 dated 30/09/11)
in which the court reviewed the
contractual remedies available to an employee and reaffirmed an
employee’s entitlement
to claim specific performance for a
breach of contract in the form of reinstatement for an unlawful
dismissal.