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[2012] ZALCD 13
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Hibbert v ARB Electrical Wholesalers (Pty) Ltd (D775/10) [2012] ZALCD 13; [2013] 2 BLLR 189 (LC); (2013) 34 ILJ 1190 (LC) (27 September 2012)
REPUBLIC
OF SOUTH AFRICA
THE
LABOUR COURT OF SOUTH AFRICA, DURBAN
JUDGMENT
Reportable
Case: D775/10
In the matter between:
HIBBERT N.D.
..................................................................................................
Applicant
and
ARB ELECTRICAL
WHOLESALERS (PTY) LTD
.......................................
Respondent
Heard: 19-22 September
2011
Final judgment: 27
September 2012
Summary:
(Automatically unfair dismissal- age – unilateral retirement -
normal retirement age not proven- no damages under
EEA)
JUDGMENT
LAGRANGE, J:
This case concerns an
alleged automatically unfair dismissal based on age discrimination.
The employer alleged that there was
no dismissal but that the
applicant agreed to retire at age 64.
The applicant is also
claiming damages for the alleged unfair discrimination in terms of
the
Employment Equity Act 55 of 1998
. The essence of this claim is
that the applicant alleges that once the act of unfair
discrimination based on his age was brought
to the respondent’s
attention it failed to act to remedy his selection for retirement
based on age. As a result of being
forced to retire at 64 he claimed
he was unable to maintain payments on various policies and incurred
medical aid membership
fees.
By agreement between the
parties the first issue to be determined in this case was whether or
not the applicant was dismissed.
The parties further agreed that any
evidence led in relation to this issue would not be repeated if the
case advanced to the
next stage, in the event I found that the
applicant was indeed dismissed.
I handed down judgment
on the first question on 21 September 2011. I decided that the
applicant had not agreed to retire in April
2010 when he turned 64.
Rather, the respondent had unilaterally decided to retire him then.
The respondent then proceeded to
lead additional evidence on the
question of whether or not the applicant’s dismissal was
automatically unfair.
Evidence
Only Mr B Neasham, the
Financial Director, was recalled to give further evidence in the
second half of the trial. The evidence
given previously by himself,
the applicant Mr B Sloley (a Director) and Mr C Robertson (the CEO),
is set out in the decision
on whether or not the termination of the
applicant’s services was consensual and will not be repeated
in this judgment.
In
Rubin
Sportswear v SA
Clothing & Textile Workers Union and others
(2004) 25
ILJ
1671 (LAC)
,
the LAC held,
“
Section
187(1)(b)
creates two bases upon which an employer can justify the
dismissal of an employee on grounds of retirement age. The one is an
agreed retirement age, the other is normal retirement age. Those are
the only two bases.”
1
In
Cash
Paymaster Services (Pty) Ltd v Browne
(2006)
27
ILJ
281
(LAC)
,
the LAC held that “
(t)he
provision relating to the normal retirement age only applies to the
case where there is no agreed retirement age between
the employer
and the employee.
”
2
The thrust of Neasham’s
additional evidence was to try to lay a foundation for an argument
that there was a retirement age
norm in the respondent’s
business and that the applicant’s compulsory retirement had
been effected in line with that
norm.
As a background, he
explained how the business had grown significantly as it expanded
geographically, so that by 2007 it had approximately
350 employees
and at the time the matter was heard there were about 450 employees
and 70 trainees on learnerships. Neasham also
provided a list of
eleven persons, inclusive of the applicant, who had retired or were
due to retire from the company. On that
list, of the eight persons
who had been retired the three youngest were 61 and were retired in
2009. Of the remaining five, two
had been retired at the age of 62
also in 2009. Apart from the applicant, the oldest two retirees were
63 and 67 years old, who
had also retired in 2009. At the time the
list was compiled, three other employees were due for retirement at
the end of December
2010, two of whom were 60 and the other 61 years
of age when the list was drawn up.
He pointed out that the
persons on the list were not external sales persons like the
applicant, who was expected to be on the
road soliciting business
from new clients and new business from existing clients. Neasham
testified that there were now 38 external
sales personnel employed
by the firm with an average age of 33.8 years. He sought to
emphasise in his evidence the relatively
demanding role of an
external salesperson who had to create demand rather than just
satisfying existing demand as an internal
sales person does.
The employee who had
been retired at age 71, had been employed as an internal
administration clerk and was office based. Another
employee, Mr P M
Naidoo had been retired around 2005. He was also office based and
returned to work on a contract basis for the
firm. He too was around
71 years old when he retired. When asked who was the oldest existing
employee after the applicant, Neasham
identified a Mrs S Winter who
was not yet 60 but was taking early retirement because the demands
of the work were proving too
onerous. As far as external sales
representatives of competitors were concerned, Neasham said he was
not aware of any who were
older than 60 years of age. Under
cross-examination, he conceded that the firm had transferred Hibbert
to Nelspruit when he was
62 and agreed that it was possible for a
strong person of that age to do the work of an external salesperson.
He also pointed
out under cross-examination that because the company
was relatively new the need to retire people had only recently
arisen.
He also confirmed
evidence which was led in the first portion of the trial that the
applicant one of three employees who had not
joined the firm’s
Provident Fund. There were no persons currently employed who did not
belong to the fund. The Provident
fund rules specified a normal
retirement age of 64 of all employees with the possibility of early
retirement from the age of
55 onwards with the employer's consent
and retirement between 60 and 65 at the employer’s election.
Evaluation of
automatically unfair dismissal claim
In argument, the
respondent sought to rely on
s 187(2)(a)
and (b) as alternative
defences to the claim of a discriminatory dismissal based on age.
The provisions read:
“
(2)
Despite subsection
(1)( f )—
(a)
a dismissal may be
fair if the reason for dismissal is based on an inherent
requirement of the particular job;
(b)
a dismissal based
on age is fair if the employee has reached the normal or agreed
retirement age for persons employed in that
capacity.”
Applicant’s
counsel argued strenuously that the respondent’s attempt to
rely on
s187(2)(a)
was not previously canvassed in the pleadings and
could not be raised only belatedly in argument. Ms Poseman pointed
out that
had the applicant been apprised of the respondent’s
intentions in regard to relying on
s 187(2)(a)
she would also have
tailored her cross-examination accordingly. I agree that the
respondent was not entitled to disclose this
defence in closing
argument on the fourth day of trial: it should have been addressed
by an agreed amendment to the pre-trial
minute or, failing that, by
applying for leave to amend its answering statement.
Mr Moosa gamely argued
that a defence based on operational requirements was revealed in the
respondent’s answering statement
in paragraph 31 where it
addressed the legal issues raised by the applicant. That paragraph
reads:
“
The
Respondent denies that what occurred constituted a dismissal, [or] an
automatically unfair dismissal and that the termination
of employment
gives rise to a claim for compensation either under the Labour
Relations Act or the
Employment Equity Act.”
Such
a broad denial
conceals rather than reveals a defence based on operational
requirements. Moreover, when the respondent pleaded
to the alleged
facts of the applicant’s claim, it is clear that it was
relying on establishing an agreed or normal retirement
date as the
sole basis of its defence. The question of an alternative defence
based on operational requirements was not disclosed,
nor is it
discernible from the answering statement.
In relation to
s 187(2)
(b), the respondent persisted with an argument that the applicant’s
retirement date was both the normal age for retirement
and an agreed
retirement age. As I have already determined that the decision to
retire the applicant was the respondent’s
and not the result
of an agreement, it follows that the second alternative is a decided
matter for the purposes of this judgment
and only the remaining leg
of the respondent’s defence falls to be considered.
Nonetheless, I will make mention of the
further argument advanced in
favour of the existence of a general agreement on the normal
retirement age, advanced by respondent’s
counsel, in so far as
it might have a bearing on the existence of a normal retirement age.
The respondent relied on
the authority of the Labour Appeal Court decision in
SA
Metal & Machinery Co (Pty) Ltd v Gamaroff
[2010] 2 BLLR 136
(LAC)
as
support for its argument that since the provident fund rules
determined that the normal retirement age was 60 years of age,
that
applied equally to the applicant. Applicant’s counsel, Ms
Poseman, correctly pointed out that the facts in
Gamaroff
are not on all fours
with this matter. In that case,
the
company policy and procedure booklet, which formed part of the
respondent’s contract, referred to the provident fund
rules.
3
Also, the former
employee in that case withdrew his claim that the retirement age was
70, and led no evidence to prove that he
was not bound by the
provident fund rules, even though he was a member of the fund. By
contrast, in this instance, it was common
cause the applicant was
not a member of the provident fund. There were also no comparable
contractual ligaments tying him to
a specific retirement regime as
part of his terms and conditions of employment.
Did the respondent
establish that it had a normal retirement age, which applied to the
applicant? Mr Moosa argued that even though
the court had found that
there was no agreement between the applicant and respondent on a
normal retirement age, at a more general
level there was consensus
on the issue. He sought to rely, in part, on the evidence of the
Provident fund retirement provisions
as support for inferring that
60 was the normal retirement age. He pointed out that Hibbert had
been granted a special dispensation
by being exempted from the fund
and could not rely on his exemption from membership of the fund to
argue for a retirement age
that was more generous than what the fund
rules stipulated. It was also suggested that the Provident fund
rules of the respondent’s
funds referred to the normal
retirement age of ‘employees’ whereas in
Gamaroff
the scheme rules only referred to the retirement age of ‘members’.
However, the only document referred to in evidence,
which dealt with
the respondent’s Provident fund rules was in the form of a
memorandum addressed to members. It makes no
mention of whether the
retirement age is applicable to members or employees generally.
The difficulty with this
argument is the fact that the applicant was clearly exempted from
membership of the fund. Secondly, the
respondent’s efforts to
obtain the applicant’s acceptance of the retirement ages
stipulated in the fund, indicates
it saw the need to try and obtain
his consent in order to apply those standards to him. Moreover, it
was conceded by Neasham
that the company had not really addressed
the issue of its retirement policy until it encountered the
difficulties with the applicant.
This is supported also by the
evidence that at least two employees had retired at 71, which shows
that notwithstanding the provident
fund rules, there was not a
consistently applied retirement policy that was applied to all.
Turning to the argument
that a normal retirement age of 60 years had been established by the
respondent on the basis of other
evidence, it was argued that the
only staff members whose retirement had taken place at the more
advanced age of 71 years were
not external salespersons.
Consequently, they were not staff employed in the same capacity as
the applicant. For the provisions
of
section 187(2)(b)
to apply, the
employer must establish the normal retirement age in respect of a
person employed in the same capacity as the applicant,
thereby
making allowance for the possibility that an employer might have
different normal retirement ages for different categories
of staff.
4
The difficulty the
respondent faces in establishing a retirement age norm for someone
in the applicant’s position is the
lack of other retired
external sales persons with whom it could compare the applicant. In
Rubin Sportswear
the LAC made this observation about
s
187(2)(b)
in passing:
“
What
the section does not make clear is whether the words 'persons
employed in that capacity' refer to such persons who are in the
same
employer's employ or whether it also refers to persons who are
employed in the same capacity by other employers in the same
industry
or in general.”
5
There was no history of
retiring external sales persons at the firm, so the respondent
sought to rely on Neasham’s evidence
that he was ‘not
aware’ of any external sales personnel employed by the
respondent’s competitors that were
over 60 years old. It must
be said that this evidence was extremely sketchy and lacking in
detail. Moreover, vague as it was,
Neasham provided no evidence of
whether any of the persons employed in that capacity by competitors
had
reached
the age of 60 yet. They might just as well be in
the same position as the respondent’s external sales staff who
are mostly
in their early thirties. In
Rubin Sportswear
the LAC was alive to the difficulty an employer may encounter in
proving the existence of a retirement norm:
“
A
retirement age that is not an agreed retirement age becomes a normal
retirement age when employees have been retiring at that
age over a
certain long period - so long that it can be said that the norm for
employees in that workplace or for employees in
a particular category
is to retire at a particular age. An example would be where,
without any formal agreement, employees
in a particular category have
over 20 years been retiring at a particular age without fail. The
period must be sufficiently long
and the number of employees in the
particular category who have retired at that age must be sufficiently
large to justify saying
that it is a norm for employees in that
category to retire at that age. If the period is not sufficiently
long but the number is
large, it might still be that a norm has not
been established. If the period is very long but the number of
employees in the particular
category who have retired at that age is
not large enough, it might be difficult to prove that a norm has been
established.”
6
In relation to the other
information of retirees presented by Neasham, it is apparent that
most of the persons in question were
retired between April and
August 2009, which follows the period in which the cost reduction
procedures were implemented. As there
were only three staff who
never became members of the Provident Fund, all of these persons
would have been subject to the provisions
of the fund’s rules,
and the provisions of the rules would have been directly relevant to
determining their normal retirement
dates. However, in the absence
of being a member of the fund, and in the absence of cogent evidence
of retirement ages of person
performing in the same capacity as the
applicant either in the employment of the respondent or its
competitors, I am not persuaded
the respondent has established a
normal retirement age that would have applied to the applicant.
As the respondent has
not succeeded in proving a defence under
s 187(2)(b)
, I must
conclude that the applicant’s dismissal on grounds of age was
automatically unfair in terms of
s 187(1)(f)
of the LRA.
Claim under
Employment Equity Act
The
applicant also
claimed that he was entitled to further compensation and damages for
the employer failing to take action against
the person who was
responsible for forcing him to retire simply on account of his age,
alternatively that the forced retirement
constituted unfair
discrimination entitling him to further compensation and damages
resulting from his premature retirement.
In advancing this claim,
the applicant placed reliance on the judgments in
Evans v
Japanese School of Johannesburg
(2006)
27
ILJ
2607 (LC), Bedderson v Sparrow Schools
Education Trust (2010) 31
ILJ
1325 (LC)
and
Ehlers v Bohler Uddeholm Africa (PTY) Ltd
(2010) 31
ILJ
2383 (LC).
In all these judgments, an
automatically unfair dismissal in terms of
s 187
of the LRA was also
held to amount to unfair discrimination in an employment policy or
practice which contravened
s 6(1)
of the EEA. If this court finds an
employer has unfairly discriminated against an employee under
the EEA, it may make an award of compensation and, or alternatively,
damages under
section 50(1)(d)
and (e) read with
s 50(2)(a)
and (b).
In
Evans
’s
case the employee who had been retired was retired 4 years prior to
the retirement age previously agreed with her. The
court ordered not
only compensation for unfair dismissal of 24 months’ salary,
but also damages amounting to approximately
two-thirds of what she
claimed. In
Bedderson
’
s
case the court
accepted that the applicant was entitled to bring distinct claims
for compensation under both the LRA and EEA,
but it determined the
issue of compensation jointly. No damages were awarded because no
evidence was led to support such a claim.
In
Ehlers’
case, the court declined to make an award of damages or compensation
for unfair discrimination under the EEA in a case involving
automatically unfair on account of gender discrimination. The court
acknowledged that a distinct claim of unfair discrimination
based on
the employer’s conduct prior to the employee’s dismissal
might have been made out which would have warranted
an award of
damages or compensation, but it had not been proven.
In
Wallace v Du
Toit
[2006] 8 BLLR 757
(LC)
, the court was alive to
the problems of duplicating compensation where the act of unfair
discrimination under the EEA is essentialy
the same act of
discrimination on which the claim of automatically unfair dismissal
under the LRA is based. Pillemer, AJ, made
the following
observations in relation to the matter before him in that case:
“
It
seems to me that where a solatium is claimed or awarded under the
ambit of compensation to compensate for the automatic unfairness
of
the dismissal, which in this situation embodied the unfair
discrimination, and such claim is made in addition to a claim for
damages for unfair discrimination arising out of the same facts then
there is a duplication that works unfairly against a respondent
which
a court must be careful to avoid
“
7
My difficulty with the
applicant’s claim under the EEA in this matter raises
analogous problems. As in
Wallace
,
the essence
of the discriminatory conduct lies in the dismissal of the applicant
on account of his age in the absence of a normal
retirement age
being established. To award compensation simply because the
employer’s conduct amounts to discrimination
warranting
compensation under either Act, does not in my mind mean that the
employee is entitled to compensation for the same
wrong under both.
That leaves the question
of damages. It can still be argued that even if an employee cannot
expect compensation under both the
LRA and the EEA, he or she might
still be entitled to claim damages for the unfair discrimination
under the EEA, which unlike
the LRA, recognises such a claim.
Accepting that proposition is correct, the employee must still prove
his damages. As I understood
the applicant this was a matter that
could be dealt with in further proceedings as to quantum in the
event the court was minded
to find the respondent liable to pay
damages.
In this case, a
fundamental difficulty presents itself which was not an issue in
Evans
’s case. In that matter the employer varied an
agreed retirement age, so the resulting loss to the applicant
clearly would
arise from the reasonably foreseeable losses she
suffered in consequence of not being employed for the remainder of
the period
between her actual retirement and the due date of
retirement. In this instance, just as the respondent could not
establish a
normal retirement date applicable to the applicant, the
applicant could also not establish what his due retirement date
should
be, other than by reference to his own financial planning
which was premised on a retirement date at age 65.
In the absence of a due
retirement date, I do not see how it will be possible to determine
with any certainty actual damages arising
from the applicant’s
unilateral retirement by the respondent. Accordingly, I cannot hold
the respondent liable for damages
in this matter. This does not
detract from the finding that his retirement in the absence of a
normal retirement age being determined
for him was unfairly
discriminatory.
Relief
Having found the
applicant had been automatically unfairly dismissed on account of
his age and that such dismissal was also unfairly
discriminatory
under
s 6
of the EEA, the remaining issue is to determine an
appropriate level of compensation, since reinstatement is not being
sought.
This is not the most
egregious type of automatically unfair dismissal on account of age,
particularly given the absence of a previously
understood due date
of retirement which the employer then unilaterally altered to an
earlier date. An award of twenty four months’
remuneration
under these circumstances would be excessive in my view. Taking into
account also the applicant’s own expectation
that he would
retire at age 65 and was not intending to work beyond then it seems
to me that it would be inappropriate to award
him more than one
year’s remuneration as compensation.
There is no reason why
the applicant should not be awarded costs as he has been
substantially successful in his claim.
Order
The respondent’s
dismissal of the applicant on account of his age in the absence of
the existence of a normal retirement
date, was automatically unfair
in terms of
s 187
of the LRA and was an act of unfair discrimination
in terms of
s 6
of the EEA.
The applicant’s
claim for an award of damages under the EEA is dismissed.
The respondent must pay
the applicant an amount of compensation equivalent to twelve months’
remuneration in the amount
of R 420, 0000-00 within 15 days of this
judgment.
The respondent must pay
the applicant’s costs.
_____________________
R LAGRANGE, J
JUDGE OF THE LABOUR
COURT
Appearance:
For the Applicant: M M
Poseman instructed by Riaan Kruger
For the Respondent: O
A Moosa, SC instructed by C Haralambous.
1
At
1680,[24]
2
At
288,[25].
3
At
135-136,[27]-[28]
4
In
Rubin Sportswear
, the LAC acknowledged this possibility: “
Of
course, there can be nothing wrong with the fixing of a normal
retirement age for all the employees of an employer irrespective
of
their different capacities in which they may be employed.”
(At 1679,[21]).
5
At
1679,[19].
6
At
1679-80,[20]
7
At
764,[20]