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[2013] ZALCJHB 110
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Trans-Caledon Tunnel Authority v Commission for Conciliation Mediation and Arbitration and Others (JR 3009/11) [2013] ZALCJHB 110; [2013] 9 BLLR 934 (LC); (2013) 34 ILJ 2643 (LC) (1 March 2013)
REPUBLIC
OF SOUTH AFRICA
THE LABOUR COURT OF
SOUTH AFRICA, JOHANNESBURG JUDGMENT
Reportable
Case no: JR 3009/11
In the matter between:
TRANS-CALEDON TUNNEL AUTHORITY
...............................................................
Applicant
and
COMMISSION FOR CONCILIATION,
MEDIATION AND ARBITRATION
...............................................................
First
Respondent
L NOWOSENETZ N.O.
............................................................................
Second
Respondent
CHRISTOPHER MAGEDA
..........................................................................
Third
Respondent
Heard: 08 January 2013
Delivered: 01 March 2012
Summary: Review – CCMA has
jurisdiction to determine employee’s unfair labour practice
claim relating to benefits –
jurisdiction not dependent on
employee having enforceable right
ex contractu
–
jurisdiction not affected by benefit forming part of employee’s
remuneration – jurisdiction not affected by employee
alleging
contractual right to benefit – if employer failed to implement
contractual right, such failure not necessarily unfair
–
arbitrator’s failure to consider unfairness independently of
contractual liability a reviewable irregularity –
arbitrator’s
finding that employee contractually entitled to full bonus a
reviewable irregularity – award set aside
on review and
substituted with award dismissing employee’s unfair labour
practice claim
______________________________________________________________
JUDGMENT
______________________________________________________________
MARCUS, AJ
Introduction
This is an application in terms of
section 145 of the Labour Relations Act 1995 (“the Act”)
to review and set aside
the award dated 20 October 2011 issued by
the Second Respondent (“the Commissioner”) under the
auspices of First
Respondent under case reference GATW 9787/11, in
which Second Respondent ruled that First Respondent had jurisdiction
to arbitrate
Third Respondent’s (the employee’s) claim
that the Applicant’s failure to pay him the full incentive
bonus
package for 2011 of 50% of cost to company, for which he
qualified as incumbent of the post of Projects Communication Manager
in terms of his employment contract, was an unfair labour practice
relating to the provision of benefits to employees as contemplated
in section 186(2)(a) of the Act.
Having found that he had jurisdiction
to arbitrate in terms of section 186(2)(a) and that Applicant’s
failure to pay Third
Respondent the full amount of the bonus
provision was in breach of Applicant’ obligations in terms of
the employment contract
and as such an unfair labour practice in
terms of section 186(2)(a), the Applicant was ordered to make up in
compensation the
difference between the bonus paid to Third
Respondent for 2011 and the full bonus incentive of 50% of cost to
company provided
for in the employment contract.
The Applicant on review attacks First
and Second Respondent’s jurisdiction to arbitrate the dispute
in terms of section
186(2)(a), which jurisdiction was unsuccessfully
challenged by the Applicant at Arbitration. Should such jurisdiction
exist,
Applicant attacks Second Respondent’s finding that the
terms of the employment contract entitled the employee to payment
of
the full bonus provision of 50% of cost to company without reference
to his performance assessment, and the further finding
that if such
entitlement exists, Applicant’s failure to pay Third
Respondent the full bonus provision was unfair and an
unfair labour
practice in terms of section 186(2)(a).
Background
Clause 1 (first bullet) of his
employment contract entitles the employee to a “guaranteed
remuneration package of R500,000
per year” which is stated to
include “all benefits such as a 13th cheque, medical aid,
retirement and group life”.
Under bullet 2 of clause 1, the
employee also receives a “variable package” in the form
of “an incentive related
to the performance of individuals and
based on an agreed incentive contract. This amount is not included
in the above guaranteed
remuneration package. This position
qualifies for an annual incentive payout of 50% on the actual cost
to company, on a split
of (30:20).” Clause 11 provides for
evaluation of the employee’s performance against his job
description in terms
of TCTA’s performance management system.
The employee’s performance was
reviewed in each of the three years of his employment with the
Applicant. In the initial
two years, when he also received a bonus
which fell short of the full bonus provision of 50%, the employee
did not object to
or dispute the short payment ‘because no
dispute existed at the time and I was not aware of any
differentiation by the
employer in its treatment of myself and other
employees’. In August 2011, he first lodged a grievance over
his annual bonus
payment on the grounds that the Applicant, in
amending its Remuneration Policy in regard to new employees
following the introduction
of the Imvuselelo (“New Dawn”)
project, was unfairly discriminating against existing employees like
himself who allegedly
received smaller bonuses than those paid to
new employees under the new system.
The nature of the dispute referred
by Third Respondent to Arbitration
The employee then referred an unfair
labour practice (“ulp”) dispute to First Respondent
alleging unfair conduct by
the employer in relation to the provision
of benefits in the form of the annual performance bonus paid to him
for 2011, alleging
that in the calculation of his 2011 bonus,
Applicant failed to comply with the terms of his employment
contract. In his referral
of dispute, the employee sought to be
compensated for the alleged ulp on the basis that his performance
bonus for 2011 be calculated
on the same basis as that applicable to
new employees under the newly amended remuneration policy. In his
answering affidavit,
Third Respondent points out that the basis of
his complaint in the referral was “unfair discrimination where
I request
for the result of the conciliation to refer to the removal
of the differentiation. The incentive should be paid according to
the current policy like the new employees”.
Issues for determination at
Arbitration
In view of a degree of confusion
arising from the manner in which the employee’s dispute was
articulated in his referral,
and
following Applicant’s attorney’s request at the
inception of the arbitration for clarification as to the issues
for
determination, in particular, whether employee was complaining about
unfair treatment compared to the new employees; the
employee’s
representative advised the arbitrator that the unfair labour
practice claim submitted to arbitration was founded
solely on the
employer’s failure to pay the employee the full bonus
provision of 50% of cost to company allegedly due to
him under the
terms of his employment contract, and did not derive from the
alleged unfavourable or unfair treatment as compared
to the new
employees, accorded him in the payment of his 2011 bonus.
This was subsequently re-affirmed by
employee’s representative.
1
Whilst the discussions confirming
that the employee’s claim at arbitration derived purely from
Applicant’s failure
to implement the bonus clause allegedly
entitling the employee to the full 50% bonus regardless of his
performance,
do not appear
from the arbitration transcript, they are attested by the deponent
to Applicant’s founding and replying affidavits
and are not
disputed by Third Respondent on this point. The issue as stated by
employee’s representative was also the issue
determined by
Second Respondent in his award, in terms of which Second Respondent
awarded to the employee the amount of R172,640
claimed by his
representative as representing the difference between the full bonus
provision of 50% and the sum paid to the
employee in respect of his
2011 bonus. This represents an entirely different basis of
quantification of the employee’s
claim; from that based on the
alleged differentiation between the calculation of the employee’s
bonus and that paid to
the new employees with the amendments to the
remuneration policy introduced following Imvuselelo, which formed
the basis of his
unfair discrimination claim in the referral of
dispute, in which the employee sought to be compensated on the basis
that his
performance bonus for 2011 be calculated on the same basis
as that applicable to new employees under the newly amended
remuneration
policy. Presumably as a result of the amendment of his
claim at commencement of the arbitration to one based on his averred
right,
founded in law and fairness, to the full implementation of
the bonus provision in his contract, no evidence was led at
Arbitration
to support the original discrimination based claim or
its quantification in terms of the referral, nor was it dealt with
by Second
Respondent in his award.
In the circumstances, the employee’s
(and his counsel in the heads of argument) attempts to persist in
the answering affidavit
with a claim based on unfair discrimination
between him and the new employees in regard to calculation of bonus
are nothing short
of extraordinary. The record (arbitration
transcript) and the award itself serve to fully endorse Applicant’s
averments
as to the nature of the issues placed before the
arbitrator and determined by him at the arbitration, which averments
were in
any event not disputed by the employee in the answering
papers. How in these circumstances, employee’s counsel can
submit
in his heads that “it is clear his client’s
complaint is not about a contractual right to remuneration but about
the unequal and thus unfair treatment of him vis-à-vis the
new employees”, and that his client “has conclusively
shown that his case at CCMA was based on his perception of unfair
treatment of himself versus another group of employees regarding
the
provision of a benefit” is utterly beyond me. It is quite
clear that the unfair discrimination allegation in the referral
was
not proceeded with and did not form part of his claim at
arbitration, which was confined to the factual issue as to whether
the terms of the employee’s contract entitled him
ipso
facto
to the full 50% bonus provided for and, if so, whether the
failure to award him the full 50% was an unfair labour practice in
terms of section 186(2)(a).
As mentioned, in accordance with the
basis of his claim as stated by his representative, the employee
sought to be compensated
for the alleged ulp relating to his bonus
payment, in an amount representing the difference between the full
bonus provision
of 50% of his guaranteed package, and the bonus paid
to him for 2011.
2
In response to the Arbitrator’s
query as to the amount he was claiming at Arbitration, the
employee’s attorney indicated
he would be seeking compensation
of R172,640, representing “the shortfall in respect of the 50%
of cost to company”.
In response to the Commissioner’s
further query as to how precisely this amount was made up,
employee’s attorney
explained that the claim represented the
difference between R300,000 (being 50% of employee’s alleged
cost to company)
and the bonus of R127,360 paid to him for 2011
(Record, p18).
Amount awarded by Arbitrator
Employee testified at the arbitration
in line with the basis of claim as stated by his attorney, that he
was contractually entitled
to the full 50% bonus irrespective of his
performance.
3
Having found in favour of the
employee that his contract entitled him to the full 50%
independently and regardless of his performance
assessment, the
arbitrator duly awarded the employee the amount of R172,640 claimed
by his representative. This Ruling forms
the main ground of
Applicant’s attack on the merits of the award in terms of the
standard of reasonableness
applied
in
Sidumo and Another v
Rustenburg Platinum Mines Ltd and Others
4
,
and on the process related grounds that the Second Respondent, in
interpreting the bonus clause as entitling the employee to
the full
bonus regardless of his performance, failed to apply his mind to the
issues and to the plain wording of the clause upon
which Second
Respondent purports to base his interpretation, which according to
the Applicant are gross irregularities in terms
of section 145(2)
warranting the review of the award on its merits.
CCMA’s jurisdiction to
arbitrate over an employer’s alleged unfair conduct relating to
the provision of benefits to
an employee in terms of section
186(2)(a)
Third Respondent’s
characterisation of his claim that Applicant’s failure to pay
him the full 50% bonus for 2011 was
in breach of the terms of his
employment contract, as constituting an unfair labour practice in
terms of section 186(2)(a).
Applicant argues that Second
Respondent lacks jurisdiction to arbitrate employee’s claim as
an unfair labour practice relating
to the provision of benefits in
terms of section 186(2)(a),
inasmuch
as it is essentially a claim for payment of remuneration allegedly
due to employee in terms of clause 1 of the contract,
bullet 2, in
the form of the employee’s alleged entitlement to the full 50%
bonus independent of his performance, and as
such is not a claim
relating to a benefit as contemplated in section 186(2)(a).
Applicant cites,
in this
regard,
cases like
Schoeman
and Another v Samsung Electronics SA (Pty) Ltd
5
where the Court held that a “benefit”
under the section (or its predecessor contained in item 2(1)(b) of
Schedule
7 to the LRA) is something extra, apart from remuneration.
Applicant further argues that section
186(2)(a) is not intended to confer jurisdiction on the CCMA to
arbitrate over ordinary
contractual claims arising from alleged
breach of contract, which it says is confirmed by the provisions of
section 77(3) of
the BCEA which confers on the Labour Court
concurrent jurisdiction with the civil courts “to determine
any matter concerning
a contract of employment”. Applicant
says section 185and 186 were enacted to create a set of equitable
remedies designed
to give content to the constitutional right to
fair labour practices, over and above the long standing ordinary
civil remedies
that arise at common law or in terms of a statute,
which already exist to address unlawful conduct by the employer like
a breach
of the employment contract. Applicant submits the intention
in enacting sections 185 and 186 was to empower the CCMA to
adjudicate
disputes about the fairness (not lawfulness) of the
employer’s conduct, the purpose being to create a remedy to
address
unilateral action by the employer which, although lawful, is
deemed by the arbitrator to be unfair to the employee, as in the
lawful though unfair termination of an employment contract.
Applicant submits that the protection conferred by section 186(2)(a)
in relation to the provision of benefits is not aimed at protecting
contractually enforceable benefits for the enforcement of
which no
special equitable remedy would be required, but that the section is
rather intended to provide a remedy in the case
of benefits to which
the employee does not have a right enforceable in law, but which are
conferred at the employer’s discretion,
in support of which
Applicant cites the recent judgment of Lagrange J in
IMATU
obo Verster v Umhlathuze Municipality and Others,
6
in which the Learned Judge set aside
the commissioner’s finding that he lacked jurisdiction to
order payment of an acting
allowance as, per the Commissioner, this
was not a benefit in terms of the section.
Whilst in general I find myself in
agreement with Lagrange J’s analysis of section 186(2)(a) and
with the above submissions
made by the Applicant insofar as they
reflect the views on the interpretation and application of that
section expressed by the
Learned Judge in the IMATU decision,
Applicant’s counsel, in his argument that benefits are
something extra and apart from
remuneration, appears to have
overlooked Lagrange J’s support for the view expressed in
Protekon (Pty) Ltd v CCMA
and Others
7
that this narrow definition of
“benefit” went too far, the Court there holding that ‘in
my view, there is little
doubt that remuneration in its statutory
sense, is broad enough to encompass many forms of payment to
employees that may, in
the ordinary use of language, properly be
described as “benefits”’.
8
In
IMATU
,
Lagrange J points out that
Protekon
usefully makes the point that
“concerns about blurring the line between those issues which
are justiciable and those which
are the subject of collective
bargaining are not best resolved by trying to draw a bright line
between remuneration and other
benefits. Rather, the question can be
decided by a proper conceptualisation of the true nature of the
dispute between the parties
and not how they have characterised or
packaged it”.
9
I agree with the views here
expressed.
I can find no persuasive argument
based on the purposive interpretation of the section rightfully
supported by Applicant’s
counsel,
for
excluding as a benefit within the meaning of section 186(2)(a), the
employee’s claim to entitlement to the full bonus
ex
contractu
, merely because
the benefit claimed falls within the definition of remuneration in
the LRA. Whilst I agree with the Applicant
that a straight claim for
enforcement of a term of an employment contract would, as a right
enforceable at law, be better and
more appropriately dealt with as
an enforcement claim by the civil courts or the Labour Court in
terms of section 77(3) of the
BCEA than by the CCMA as a ulp,
one must bear in mind that the clause
sought to be enforced by the employee in the present case is one
that, in terms of the jurisdictional
criteria argued for by the
Applicant,
confers a
discretion on the employer as to the amount of bonus to award, based
on the employee’s performance and other factors,
with which
interpretation of the clause (as conferring a discretion on the
employer in awarding a performance related bonus)
I fully concur,
as I shall come to presently. On the
Applicant’s own argument then, this consideration would.
on the face of it, seem to bring the
employee’s claim within Applicant’s jurisdictional
criteria in terms of its argument
that the section is intended to
address the unfair unilateral though lawful exercise of a discretion
by the employer not to confer
the benefit claimed by the employee,
where the employer’s failure to
do so, though lawful and within the employer’s legal rights,
is deemed unfair to the
employee. In terms of the
Protekon
decision, an employer’s failure
to comply with a contractual obligation towards an employee in
relation to the provision
of an employment benefit, as well as its
exercise of a discretion in relation to a benefit, may be subjected
to scrutiny by the
CCMA under its ulp jurisdiction.
10
In the first of these scenarios, the
Court pointed out there is an overlap between the CCMA’s ulp
jurisdiction and that
of the civil courts to deal with contractual
disputes, whilst in the second instance where the employer has no
obligation in
law to award the benefit, the employee may be confined
to an unfair labour practice claim.
Analysis of the scope and ambit of
the unfair labour practice jurisdiction relating to the provision of
benefits, conferred by section
186(2)(a)
In
IMATU
,
Lagrange J points out that the Labour Courts and arbitrators have
long wrestled with the precise ambit of what constitutes a
benefit
in terms of the section, and that the view that initially prevailed
is that contained in
Hospersa
and Another v Northern Cape Provincial Administration
,
11
which confirmed the finding of the
Court
a quo
that
a claim for an acting allowance based purely on the fact that the
employee had been acting for some two years in a more senior
position than her incumbent post, was in the nature of an interest
dispute over a remuneration demand, and that item 2(1)(b)
of
Schedule 7 [now section 186(2)(a)],was not intended to enable an
employee to invoke the CCMA’s ulp jurisdiction to arbitrate
over unfair employer conduct in relation to the provision of
benefits, to create a new benefit to which the employee was not
otherwise entitled
ex
contractu
or
ex
lege
(that is, in terms of
his contract of employment or an applicable collective agreement or
statute regulating his conditions).
Whilst
this dictum has been regularly applied in its literal or narrow
sense in a number of arbitrations and Labour Court decisions
over
the years to exclude the CCMA’s jurisdiction to determine
unfair labour practice claims in terms of the present section
186(2)(a) in the absence of the claimant employee being able to
establish a right to the benefit
ex
contractu
or
ex
lege
(in other words, a
legally enforceable right thereto); in some more recent decisions of
the Labour Court, this narrow interpretation
of the
Hospersa
decision has (in my view rightly)
been placed into question. In
Protekon,
Todd AJ rejected counsel
for the employer’s submission that the effect of
Hospersa
was to restrict the ulp jurisdiction
in relation to benefits to the enforcement of contractual rights. In
terms of counsel’s
argument, “scrutiny of employer
conduct was to be limited to an examination of whether the employee
is contractually entitled
to the remedy sought. I do not agree that
this was the intention of the LAC or the effect of the decision in
Hospersa
”
.
12
The Learned Judge, in my view,
rightly points out that the true principle of
Hospersa
(and the proper limits of that
decision) is that the CCMA’s ulp jurisdiction “cannot be
used to assert an entitlement
to new benefits, to new forms of
remuneration or to new policies not previously provided by the
employer. To permit that would
allow an employee to use the ulp
jurisdiction to establish new contractual terms; something the LRA
clearly contemplates should
be left to a process of bargaining
between the parties.”
13
What, then, is the true ambit of
employer conduct intended to be addressed in the section?
In my view, the wording of section
186(2)(a) bears out Todd AJ’s analysis. The section cannot,
in my view, have been intended to be
confined to addressing unlawful employer conduct in breach of a
legal or contractual obligation
on the employer to provide a
benefit, the construction that would follow from the narrow
interpretation of
Hospersa
requiring the employee to establish a
right to the benefit
ex
contractu
or
ex
lege
(i.e a right
enforceable at law), in order to vest the CCMA with jurisdiction to
arbitrate the employee’s claim. Such right
would only arise if
the employer was acting unlawfully in refusing the benefit. This
narrow interpretation of the section in
the application of
Hospersa
has been applied by the Labour Court
in a number of decisions excluding CCMA’s jurisdiction to
arbitrate ulp claims under
the section.
14
As pointed out in the
Protekon
and
IMATU
judgments, there would be no need to create a
special equitable jurisdiction to determine the unfair labour
practices specified
in section 186(2) in order to protect employees
from unlawful employer conduct in breach of a legal or contractual
obligation.
This could not reasonably have been the intent of the
section. A legally enforceable benefit can be enforced by the
employee
in the usual way in the civil courts or Labour Court in
terms of section 77(3) of the BCEA. The protection afforded by the
section
is also not couched in the form of enforcement of benefits
to which the employee is contractually entitled. The nature of the
protection afforded by the section is against “unfair employer
conduct relating to the provision of benefits”, a quite
different concept from unlawful employer conduct in respect of which
ample civil remedies already exist in our law. In creating
an
equitable jurisdiction based on fairness, the legislature could only
have had in mind the redressing of employer conduct which,
although
lawful in that it does not involve a breach of any agreement or law,
is found to be substantively or procedurally unfair
to the employee.
As pointed out in
Protekon
and
IMATU
, the obvious
situation that comes to mind here, is one involving the lawful
exercise of a discretion by the employer against
awarding the
benefit or promotion sought, lawful inasmuch as the employee does
not enjoy a legally enforceable right
ex contractu
or
ex
lege
to the benefit or promotion. The conclusion is that the ulp
jurisdiction created by the section, being a special one founded in
equity or fairness and not legal enforceability, is aimed precisely
at addressing the situation where the employee does not necessarily
enjoy a legally enforceable right to the benefit, but where the
employer’s refusal to confer it is found by the arbitrator
to
be unfair.
Whilst many would argue that such
interpretation is in conflict with the principles of
Hospersa
(although this does not reflect the view of
Hospersa
taken by
Todd AJ in
Protekon
), it appears to me to be the only
interpretation which accords with the language and intent of the
section, which is surely aimed
at providing employees with a remedy
against lawful but unfair employer conduct in the areas covered by
the section. For instance,
it would be highly unusual for an
employer to be contractually obligated to promote an employee.
However, when the CCMA finds
in arbitration proceedings under the
section, that the employer acted unfairly (albeit lawfully) in
declining to promote an employee,
the employee is given a remedy
under the section. Likewise when the employer is not legally obliged
to provide a benefit but
acts unfairly in withholding same from the
employee. Inasmuch as the employer’s withholding of the
benefit would not be
unlawful, the employee would not have a right
ex
contractu
or
ex lege
to enforce the benefit.
However, despite the absence of a right enforceable at law, the
employee is given an equitable right
under the section to approach
the CCMA in arbitration to seek delivery of the benefit where the
employer’s refusal to award
same is found to be unfair. The
unfair dismissal jurisdiction of CCMA is likewise founded in
principles of equity denoted by
fairness, rather than legally
enforceable rights, the CCMA having jurisdiction to reinstate or
compensate employees found at
arbitration to have been unfairly
although lawfully dismissed, lawfully inasmuch as the common law
principles governing contracts
for services (
locatio conductio
operarum
) entitle either party to terminate the contract
lawfully at common law by giving reasonable notice of termination.
However, when
the giving of such notice is deemed unfair, the
employee is given an equitable remedy under the CCMA’s unfair
dismissal
jurisdiction. In like vein, the rights conferred on
employees against the unfair labour practices specified in section
186(2)(a)
are triggered by unfair conduct by the employer in
relation to the provision of benefits, even though the employer may
be acting
within his lawful rights in refusing the benefit ( which
implies the employee does not have an enforceable right to the
benefit
in law).
The true nature of the ulp rights
conferred by the section was highlighted by Zondo JP (as he then
was) in
Department of
Justice v CCMA and Others
,
15
where the Learned Judge President
rejected counsel for the employer’s submission (presumably
derived from the narrow interpretation
of
Hospersa
)
that unfair labour practice claims under 186(2)(a) are confined to
disputes of right arising
ex
contractu
or
ex lege,
stating
that ‘the answer to this argument is simply that item 2 of
Schedule 7 [now section 186(2)(a)], is one of the statutory
provisions that seek to give content to the constitutional right to
fair labour practices entrenched in the Constitution. The
section
creates a statutory right not to be subjected to an unfair labour
practice that takes the form of conduct spelt out therein.’
16
The Learned Judge President pointed
out that the ulp’s specified in the section, give rise to
employee rights created
ex
lege
in terms of the
section
.
“
For
that reason, a dispute as to whether the conduct of an employer
relating to promotion is an unfair labour practice, is a dispute
of
right and not a dispute of interest”
17
the reference here being to rights
founded in fairness (equity) rather than in law or contract.
In my view, the Learned Judge
president could not have made it clearer that an employee `s claim
under section 186(2)(a) is not
one founded on a dispute of right
arising
ex
contractu
or
ex lege
(that
is, one flowing from a law or contract regulating his or her
conditions of employment)
.
It is a claim arising
ex lege
founded
in the special ulp jurisdiction created by the LRA in section
186(2)(a) to give content to the constitutional right against
unfair
labour practices. This interpretation of the rights conferred by the
section was concurred in,
in
the minority judgment of Goldstein JA who states that “the
view that item 2(1)(b) provided only for rights that arose
ex
contractu
or
ex
lege
is clearly wrong. If
that were so, the provision would have been redundant since such
rights would have been enforceable in the
absence of 2(1)(b)….
Just as the LRA provides for disputes arising from unfair dismissals
in respect of which there are
no contractual remedies to be resolved
by arbitration, so was item 2(1)(b) designed for situations where
neither the contract
of employment nor the common law provide the
employee with a remedy”.
18
This is not to say that CCMA would
not have jurisdiction to address unlawful employer conduct under
section 186(2)(a), provided
such is at the same time deemed to be
unfair, support for which can be found in the
Protekon
decision.
19
In
Protekon
,
the Labour Court reached a similar conclusion to the LAC in
Dept
of Justice
that there
would have been little purpose in introducing the ulp jurisdiction
in section 186 if an employee’s recourse to
the ulp
jurisdiction was to be confined to circumstances where he or she has
a cause of action in contract law. Thus,
where
an employer is left with a discretion in the awarding of a benefit
(which implies the benefit is not enforceable at law
in terms of the
narrow interpretation of
Hospersa
),
this would not deprive the CCMA of jurisdiction to scrutinise
employer conduct alleged to be unfair in terms of the section.
20
This principle also finds support in
the
IMATU
decision where Legrange J held that
“the more plausible interpretation was that the term
‘benefits’ was intended
to refer to advantages conferred
on employees which did not originate from contractual or statutory
entitlements, but which have
been granted at the employer’s
discretion.”
21
In
Protekon
,
Todd AJ points out that the true principle of
Hospersa
(and the proper limits of that
decision) is that the CCMA’s ulp jurisdiction “cannot be
used to assert an entitlement
to new benefits, to new forms of
remuneration or to new policies not previously provided by the
employer. To permit that would
allow an employee to use the ulp
jurisdiction to establish new contractual terms; something the LRA
clearly contemplates should
be left to a process of bargaining
between the parties.”
22
It seems to me the need for
preserving the distinction between “rights” and
“interests” disputes, highlighted
in
Hospersa
,
in the CCMA’s assumption of jurisdiction to arbitrate ulp
disputes relating to benefits, which distinction underlies the
scheme of dispute resolution established by the LRA, would be
adequately addressed by limiting the scope and application of the
unfair labour practice jurisdiction relating to the provision of
benefits, to those benefits for which the employee is entitled
to
apply to the employer in terms of his employment or under the
existing employment structure or conditions, in the sense that
the
basis or potential for conferring the benefit already exists in the
employment structure, whether in terms of his conditions
of
employment, existing policies or simply past practice of the
employer in awarding the benefit in question as occurred in
IMATU,
where the basis of the employee’s
claim for an acting allowance was that he had received the benefit
on another occasion.
In
Hospersa
on the other hand, where no present
basis for granting an acting allowance was found to exist in terms
of the employee’s
conditions of service or the employer’s
policy, procedure or practice, apart from the employee’s
perception that
a failure to pay such allowance was unfair, the
court was justified in rejecting jurisdiction to arbitrate, in as
much as the
dispute was concerned with a matter of mutual interest
which, as noted by Todd AJ, “the LRA clearly contemplates
should
be left to a process of bargaining between the parties…”.
23
Although the judgment in
IMATU
does not expressly go this far, my
sense of Legrange J’s thinking on this issue is that there may
not even be a need for
CCMA to enquire into the question as to
whether it is being asked to determine an interest dispute which
ought not to be subject
to arbitral scrutiny under its ulp
jurisdiction, inasmuch as an employee claiming an acting allowance
on the grounds that it
was previously granted to him or others by
the employer, is claiming the employer’s refusal to grant the
allowance
on the occasion
in question
(my emphasis)
was unfair. In terms of Legrange J’s
analysis, a ruling by the arbitrator in favour of such a claim,
would not serve to
create an enforceable right to such benefit in
the future (either for the claimant or for others). “The
latter claim (that
is, to establish an enforceable right to such
benefit in the future), would properly be the subject of collective
bargaining”.
24
Such a ruling in favour of the
employee’s claim to the benefit, would nonetheless serve to
create a presently enforceable
right to the benefit awarded, so that
it may still be necessary for the arbitrator to consider whether the
CCMA’s assumption
of jurisdiction to arbitrate the dispute,
would infringe against the principle highlighted in
Hospersa,
of not allowing an
employee to use the ulp jurisdiction “to assert an entitlement
to new benefits, to new forms of remuneration
or to new policies not
previously provided by the employer”.
25
In the present dispute, even on the
narrow application of
Hospersa
which I believe represents an
incorrect and unintended application of section 186(2)(a) which has
been overtaken by the LAC’s
judgment in
Department
of Justice
, the CCMA would
have had jurisdiction to arbitrate over the Third Respondents claim
inasmuch as it is founded on an alleged contractual
entitlement to
the full bonus and, were such entitlement to be established as was
found by the Arbitrator to be the case, to
arbitrate over the
further issue as to whether the failure to pay the full bonus was
unfair. If, on the other hand, the narrow
application of
Hospersa
is rejected in favour of
the interpretation of the section contended for herein as I believe
it should be; in my view the employee’s
claim could still be
referred to arbitration under the section as one founded in the
employer’s alleged failure to comply
with a contractual
obligation towards the employee in relation to the provision of an
employment benefit, which failure is averred
by the employee to be
unfair (that is, on the employee’s interpretation of the
contract) or, (on the employer’s interpretation
of the
contract), as one involving the alleged unfair exercise by the
employer of its discretion in the awarding of a discretionary
bonus
under the contract.
26
I respectfully associate myself with
the views expressed by my brother judges in
Protekon
and
IMATU
differing from the Court’s
approach in
Samsung
Electronics
(
supra
)
that remuneration as defined in the LRA does not include benefits
contemplated in section 186(2)(a) which were held in that
case to be
“something extra”, apart from remuneration. Thus, whilst
I accept that employee’s claim to entitlement
to the full
bonus falls under the head of remuneration in the employment
contract and in terms of the LRA definition, this does
not in my
view, serve to bar him from referring a ulp claim relating to
benefits to arbitration in terms of the section. I am,
however, in
agreement with Applicant’s submission that its failure to pay
the employee the full bonus provision of 50%
of cost to company
allegedly due to him under the terms of his contract, and Second
Respondent’s ruling in favour of the
employee that the terms
of his contract entitled the employee to the full bonus without
reference to his performance assessment,
implied that the Second
Respondent, before issuing an award in favour of the employee, was
required to consider and determine
independently of the employer’s
alleged failure to comply with the bonus clause, whether such
failure was also unfair conduct
relating to the payment of a bonus.
Whilst Second Respondent concluded that it was, he furnished no
reasons for arriving at this
conclusion independently of his finding
that the Applicant was contractually obliged to pay the full bonus.
Whilst unlawful employer
conduct may well also be deemed to be
unfair in the circumstances and most probably often is, this is not
a conclusion that follows
automatically from every breach of
contract. As pointed out by Applicant’s attorney, had Second
Respondent given proper
consideration to the evidence proffered by
Applicant in explanation of its actions in not paying the full bonus
provision, he
might well have concluded that Applicant’s
failure to do so, whilst found by him to have been in breach of
Applicant’s
obligations under the contract, was nonetheless
not unfair conduct in terms of the section.
The inevitable inference is that
Second Respondent did not consider or apply himself to the issue of
unfairness independently
of the issue of contractual entitlement,
nor did he consider the evidence adduced by Applicant in regard to
this issue (none
was adduced by the employee whose claim derived
solely from his alleged contractual entitlement to the full bonus).
Second Respondent’s
failure to determine this issue as one
separate from the finding that the employer had failed to comply
with its contractual
obligation to pay the full bonus, means that he
failed to apply his mind to what was a critical finding in his
award, namely,
whether Applicant acted unfairly (and not merely
unlawfully) in its failure to pay the full bonus. I would agree with
the Applicant
that this amounts to a gross irregularity in terms of
section 145 (2) which alone justifies the setting aside of the award
on
review.
27
[].
Arbitrator’s finding that the
plain language of the contract entitles Third Respondent to payment
of the full 50% bonus, without
reference to his performance
assessment
Earlier I concluded that the
arbitrator was empowered to make such a finding in regard to the
employee’s claim, but that
his unmotivated assumption that the
finding that Applicant had failed to comply with its contractual
obligation to pay the full
bonus,
ipso facto
rendered such
failure unfair in terms of the section, in the absence of an
independent determination as to whether the employer
had acted
unfairly in not conferring the alleged contractual benefit,
following a proper consideration of the relevant evidence
and
arguments adduced by the Applicant on this issue, amounted to a
reviewable irregularity in terms of section 145 (2).
Is the Second Respondent’s
conclusion that the terms and plain language of the employee’s
contract entitled him to the
full bonus payment regardless and
independently of his performance assessment, justifiable?
I fail to see how this conclusion
could have been reached by Second Respondent on the plain wording of
the remuneration clause.
As pointed out at length by the Applicant
in its founding papers, the second part (bullet 2) of the
remuneration clause headed
“Variable package”, is just
that. Whilst the first part of the remuneration clause is headed
“Guaranteed package”
and provides therein for payment of
a “guaranteed remuneration package of R500,000 per annum”,
the second part of
the clause, which Second Respondent interprets in
his award as entitling Third Respondent to payment of the full 50%
bonus independent
of his performance, provides for payment of a
variable annual incentive bonus based on the employee’s
performance. The
amount of the bonus is expressly stated “not
to be included in the above guaranteed remuneration package”.
I agree
with the Applicant’s submission that Second
Respondent, in interpreting the last sentence of the “Variable
package”
part of the clause (which provides that the
employee’s post qualifies for an annual incentive payout of
50% of cost to
company), as entitling the employee to the full 50%
bonus independent of his performance assessment, inexplicably
appears to
have chosen to ignore the remainder of the “Variable
package” portion of the remuneration clause, the plain wording
of which makes it plain beyond doubt or dispute in my view, that the
incentive bonus payment provided for therein does not form
part of
the guaranteed fixed remuneration package provided in the first part
of the remuneration clause, and that it is not intended
to provide
therein for payment of a fixed annual bonus but rather for the
payment of a “variable package” in the
form of a
discretionary incentive bonus based on the employee’s
performance, having a ceiling of “50% of cost to
company”.
I have no doubt that the apparent
failure by Second Respondent to consider or apply himself to the
plain wording of the remuneration
clause in concluding as he did
that the clause conferred on the employee a contractual entitlement
to payment of the full 50%
bonus independent of his performance
assessment, amounts to a reviewable gross irregularity in terms of
section 145(2). Such
interpretation by Second Respondent has also
given rise to his issuing an award based on the Third Respondent’s
contractual
entitlement to the full bonus as found by Second
Respondent, a finding which I agree with the Applicant, no
reasonable commissioner
could have arrived at, which renders the
award liable to be set aside both as a gross irregularity in terms
of section 145(2),
and on the application of the
Sidumo
test.
I agree that, had Second Respondent properly applied himself to
interpreting the plain wording of the clause, the only
interpretation he could reasonably have arrived at, is that the
second part of the clause provides for payment of a variable
annual
incentive bonus based on the employee’s performance. Clause 11
makes provision for the assessment of his performance
in awarding
such a bonus.
In light of my conclusion that
Second Respondent was empowered to consider Third Respondent’s
claim under the section, should
the claim be remitted to First
Respondent for reconsideration by another arbitrator
?
In my view, there is no basis for
remitting the claim for fresh arbitration, nor would any purpose be
served in doing so. Inasmuch
as the employee’s ulp claim
submitted at arbitration rested solely on the employer’s
alleged failure to comply with
its averred contractual obligation to
pay him the full 50% bonus independent of his performance, and in
light of my conclusion
that the only reasonable outcome that could
have been reached by the Second Respondent on this issue, would have
been to dismiss
employee’s claim of contractual entitlement to
payment of the full bonus as unfounded, there would seem to be no
grounds
for referring the matter back for a re-hearing by another
arbitrator as to whether Applicant acted unfairly in its award of
the
2011 bonus. The sole ground of unfair employer conduct relied on
by the employee at arbitration, was the employer’s failure
to
comply with its alleged contractual obligation to pay him the full
50% bonus independent of his performance. I have pointed
to the
absence of any such obligation being found in the plain wording of
the provisions of the employee’s contract dealing
with
remuneration. No other ground of unfairness relating to the payment
of the 2011 bonus was raised by the employee at the
arbitration.
Employee did not, for example, suggest that the employer’s
assessment of his bonus payment for 2011 was made
on an arbitrary or
irrational basis not related to his performance assessment. Had this
been employee’s case, Applicant
would have been required to
lead detailed evidence as to precisely how the bonus payment in
question was arrived at.
On this premise, why should the
matter be remitted to CCMA for a fresh hearing on an issue which did
not form part of the employee’s
complaint at arbitration or in
his answering papers filed in the review? Presumably, because no
issues of this nature were raised
by the employee at the
arbitration, no evidence of this sort was tendered by him. His
evidence in support of his claim at arbitration
was confined to a
confirmation of his view that the terms of his contract entitled him
to the full 50% bonus independent of his
performance. Even in his
answering affidavit filed in the review, Third Respondent does not
complain of an unfair exercise by
the employer of its discretion in
awarding him the bonus that it did, possibly because such a
complaint would not accord with
employee’s claim that he was
contractually entitled to the full 50% unconditionally and
irrespective of his performance
assessment.
The Applicant dealt with this matter
to a limited extent in its evidence adduced at the arbitration and
in its founding papers
in the review, in which Applicant avers that
Third Respondent received a different amount in respect of his
variable package
in each year of his employment, and that this
amount was never the full 50% provided for, which would only be paid
in the remote
circumstance that the employee, the division in which
he worked and the company as a whole, all achieved the maximum
scores on
their respective performance evaluations. Applicant`s
uncontested evidence in its founding papers is that at the
arbitration,
Third Respondent conceded during cross examination that
he received a variable bonus each year which was always short of the
full amount of 50%, that he had not disputed his bonus payment in
previous years, and that he had undergone a performance review
at
the end of each year of his employment in which he had never
achieved the maximum score.
In these circumstances, there is no
justification for remitting the matter to First Respondent for
arbitration before another
commissioner, nor would any purpose be
served in doing so.
[39] I make the following order:
1. The award dated 20 October 2011
issued by the Second Respondent in favour of the Third Respondent is
reviewed and set aside and
replaced with a finding that:
(a) Second Respondent had jurisdiction
to determine Third Respondent’s unfair labour practice dispute
relating to the provision
of benefits in terms of section 186(2)(a).
(b) Third Respondent’s claim
that Applicant’s failure to pay him the full 50% bonus
provision for 2011 was in breach
of his employment contract or was an
unfair labour practice as envisaged in section 186(2)(a) of the LRA,
is dismissed.
(c) There is no order as to costs in
the arbitration.
2. I make no order as to costs in the
review.
_____________
MARCUS AJ
Acting Judge of the Labour Court
Appearances:
For the Applicant: Adv E. Tolmay
Instructed by Brink Cohen Le Roux INC
For the Third Respondent: Adv A.
Campbell
Instructed by De Haan Denton Attorneys
1
Record
at 126-127.
2
Record
at 17.
3
Record
at 32-34.
4
(2007)
28 ILJ 2405 (CC).
5
(1997)
18 ILJ 1098(LC) at 1102-3.
6
(2011)
9 BLLR 882
(LC).
7
[2005]
7 BLLR 703(LC).
8
Ibid
at para 19,
per Todd AJ.
9
IMATU
(supra) at para 18.
10
Protekon
(supra) at para 36.
11
(2000)
21 ILJ 1066 (LAC) at paras 8-9.
12
Protekon
(supra) at para 31.
13
Ibid
at para 32.
14
See
for instance,
Eskom v Marshall and Others
[2003] 1 BLLR 12
(LC) and
SA Post Office Ltd v CCMA and Others
[2012]
11 BLLR 1183
(LC)
.
15
(2004)
25 ILJ 248 (LAC) at para 53,
16
Ibid
at
para 53.
17
Department
of Justice
at para 54,
18
Department
of Justice
at para 14.
19
Protekon
decision at para 36.
20
Protekon
at para 35.
21
IMATU
at para 21.
22
Protekon
at para 32.
23
Protekon
at para 32.
24
IMATU
at para 23.
25
Protekon
at para 32.
26
Protekon
at 711, para 36.
27
See
Herholdt v Nedbank Ltd
(2012) 33 ILJ 1789 (LAC) at paras 36
and 39.