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[2013] ZALCD 4
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Ntambanana Municipality v Mzobe and Others (D801/10) [2013] ZALCD 4 (27 February 2013)
REPUBLIC OF
SOUTH AFRICA
THE
LABOUR COURT OF SOUTH AFRICA, AT DURBAN
JUDGMENT
Reportable
Case No: D801/10
In
the matter between:
NTAMBANANA
MUNICIPALITY
..............................................................................
Applicant
and
XOLANI
CAESAR MZOBE
..........................................................................
First
Respondent
HUMPHREY
NDABA N.O.
.....................................................................
Second
Respondent
SOUTH
AFRICAN LOCAL GOVERNMENT
BARGAINING
COUNCIL
............................................................................
Third
Respondent
Date
heard:
28 August 2012
Date
delivered:
27 February 2013
Summary:
Review application – renewal of contract of municipal manager –
reasonable expectation – whether employee dismissed
or contract
ran its life time.
judgment
CELE
J
Introduction
[1]
In terms of s 158(1)(g) of the Act
1
the applicant seeks
to review and set aside,
or
correct,
the
arbitration award handed down by the second respondent, acting under
the auspices of the third respondent, in this matter on
21 July 2010,
in terms of which the second respondent found that there was a
dismissal of the first respondent by the applicant
and that such
dismissal was substantively and procedurally unfair. The first
respondent opposed the application.
Factual background
[2]
The first respondent, Mr Mzobe, was employed by the applicant in
terms of a fixed term contract commencing on or about 31 October
2005, terminating on 31 October 2008, in the position of Director:
Corporate and Community Services. The Executive council of the
applicant considered the extension of the fixed term contracts of its
managers appointed in terms
section 57
of the
Local Government
Municipal Systems Act 32 of 2000
. During March 2008, it resolved to
recommend the renewal of the managers’ fixed term contracts,
including that of Mr Mzobe.
The matter came before Council for
deliberation and decision. On or about 30 May 2008, the applicant
Council took a resolution
not to renew Mr Mzobe’s contract
while the other senior managers had theirs renewed. The decision of
Council was not preceded
by any discussion or voting. There was a
proposal which was supported and a unanimous decision was taken not
to renew his contract
and to advertise the post when his contract
expired. The Municipal Manager told him verbally what Council had
decided. The decision
was communicated to Mr Mzobe in writing only on
or about 6 August 2008, wherein he was notified that his
contract would be
terminating by the effluxion of time with effect
from 31 October 2008.
[3]
In terms of the provisions of Government Municipal Systems Act,
managers could only be appointed after consultation with the
Municipal Manager. The managers’ contracts and the legislative
provisions of Government Municipal Systems Act and Regulations
precluded a legitimate expectation except in limited circumstances.
No such consultation took place with the Municipal Manager.
Clause 3
of the contract of Mr Mzobe’s employment provided that his
contract could be renewed at the discretion of the Council.
[4]
In March 2008, a strategic meeting attended,
inter alia,
by
the Municipal Manager and Mr Mzobe, became a recipe for mistrust
between them, as a result of a plan to increase the salary
of the
Municipal Manager’s secretary, which Mr Mzobe was supposed to
take a lead in but did not.
[5]
Both in March 2008, after the strategic meeting, and in August 2008,
after notification of the expiry of his contract in October
2008, Mr
Mzobe elected to negotiate the early termination of his contract of
employment, which provisions were based on a consensual
termination
of the contract of employment. He in fact, left his employment early
and was paid out in lieu of performing the remainder
of his contract
of employment. His letter dated 17 March 2008, proposing the
shortening of his contract, had five paragraphs, the
second and third
of which read:
‘
2.
I cannot work at an environment where I receive such comments from my
manager, especially since this is not the first message.
3.
I have decided to make things easy for you. I propose that, by
agreement, my employment be terminated with immediate effect and
that
I be paid my remuneration for the remaining three months. Surely if
you get rid of me, your council will function properly
in my absence
as before. If you buy me out I will leave immediately. ‘
[6]
Thereafter Mr Mzobe referred an alleged unfair dismissal dispute in
terms of s 186(1)(b) of the Act to the third respondent
for
conciliation and arbitration. In terms of his letter dated 7 August
2008, addressed to the Municipal Manager, the conduct of
his employer
had created a legitimate expectation on him that his employment
contract would be renewed, at least for a further
3 year period
because:
a) According to him, EXCO of the
applicant, without consultation with the Municipal Manager, resolved
to renew his contract / resolved
to recommend to the applicant’s
council that his contract should be renewed;
b) He heard nothing further from the
applicant until he was informed that his contract would not be
renewed.
c) He was not informed of the reasons
for the non-renewal. He then contended that if no reasons were
advanced in the general meeting,
they could not be considered as
reasons of the Council.
[7]
The second respondent was appointed to arbitrate the dismissal
dispute which had arisen. He made various findings which included:
a) The non-renewal of the contract by
the Council was in line with clause 3 of the contract of employment
of Mr Mzobe which stated
that the contract may, at the discretion of
the Council, be renewed at the termination thereof;
b) Despite the fact that Mr Mzobe was
a section 57 Manager, he was an employee subject to the provisions of
chapter 8 of the Labour
Relations Act, and the concomitant
constitutional right to fair labour practice;
c) Taking into consideration that the
definition of Council in the definition section of the contract of
employment of Mr Mzobe
included an executive committee, even though
the committee made a recommendation in line with the standing
practice alluded to
by Raymond, the fact that Council did not give
reasons to Mr Mzobe why his contract was not renewed, the
inconsistency in that
the other section 57 managers’ contracts
were renewed and the continued availability of the particular job, he
concluded
that Mr Mzobe had a legitimate expectation that Council
would renew his contract or provide reasons why it did not renew the
contract;
d) Once Mr Mzobe successfully showed
that he was dismissed in terms of s 186(1)(b) of the Act, the onus
shifted to the employer
to show that the reason for the non-renewal
of the contract was a fair reason related to the employee’s
conduct or capacity
or to the employer’s operational
requirements; and the decision not to renew the contract was taken
following a fair procedure;
e) There was evidence that Mr Mzobe’s
conduct at the strategic organisational meeting resulted in a tense
relationship with
the Municipal Manager which led to their work
relationship being incompatible;
f) Incompatibility was a species of
incapacity and if the Municipality was of the view that the
relationship between Mr Mzobe and
his supervisor was incompatible, an
incapacity route should have been followed to deal with the matter,
which would have been in
line with schedule 8 of the Act;
g) The dismissal of Mr Mzobe was
therefore substantively and procedurally unfair;
h) The conduct by Mr Mzobe about the
Municipality’s secretary contributed to a deterioration of
relations between him and
his supervisor. Consequently, an order of
reinstatement would be inappropriate in the circumstances. 5 months
salary compensation
was just and equitable.
[8]
The applicant has outlined a number of grounds for review with
supporting submissions, including that:
a) The second respondent failed to
determine whether EXCO had the delegated powers which the first
respondent alleged they had,
despite the fact, and legal submissions
advanced by the applicant to the effect that EXCO was devoid of such
powers. While impliedly
accepting that EXCO did not have such powers,
the second respondent pursued the alternative argument that EXCO’s
decision
to recommend the renewal created a legitimate expectation of
such renewal. The second respondent did not consider the issue
whether
the first respondent knew that EXCO would not have such
authority to bind the applicant and accordingly that he could not
place
any reasonable reliance on that issue. The second respondent
thus failed to apply his mind to a material aspect of the law in that
regard and to the relevant material before him, namely the actual
authority of EXCO, and the first respondent’s knowledge
of it.
b) The second respondent failed to
resolve a material dispute of fact concerning EXCO’s authority
and the first respondent’s
knowledge, so as to adjudicate the
actual case before him, and whether it was one of renewal and not
just a legitimate expectation
thereof.
c) The second respondent found that a
failure by the applicant to give reasons to the first respondent for
the non-renewal of his
contract and the fact that the other section
57 managers’ contracts had been renewed constituted sufficient
grounds for an
expectation of renewal on behalf of the first
respondent. In doing so, the second respondent failed to take into
account material
aspects of the evidence which a reasonable decision
maker would have and which would have precluded the second respondent
(and
a reasonable decision maker) from reaching the conclusion that
he did;
d) He failed to apply his mind to the
relevant statutory provisions in terms of which the contracts of the
section 57 managers employed
by a municipality can be renewed and
when a legitimate expectation can be said to exist. He said nothing
of why the three factors
on which he relied, militated against the
aforesaid contractual and statutory provisions, and notwithstanding
them, created a legitimate
expectation on behalf of the first
respondent;
e) The second respondent failed to
apply his mind to the issue of when the material time for determining
a reasonable expectation
for renewal should have been investigated.
Evaluation
[9]
Parties are in dispute as to whether the termination of the contract
of employment of Mr Mzobe was a dismissal. In terms of
s 192(1) of
the Act,
Mr Mzobe had the onus
to prove the existence of such dismissal. Such onus entails him
having to prove that the termination of employment
falls within the
purview of s 186(1)(b) of the Act, and also to prove that the
subjective expectation was in relation to the renewal
of the
contract.
2
The expectation has to be reasonable
and is therefore objectively determined.
3
[10]
One of the essential terms of the contract of employment in this case
is that the contract was to have run its life time by
31 October
2008. For Mr Mzobe to place reliance on s 186(1)(b) of the Act,
he had to prove the existence of
certain facts on the basis of which a contract that was to end on 31
October 2008,
was reasonably
expected to be renewed or extended. The second respondent’s
finding in this regard in favour of Mr Mzobe that
‘
.
. . taking into consideration that the definition of Council in the
definition section of the contract of employment of Mr Mzobe
included
an executive committee, even though the committee made a
recommendation in line with the standing practice alluded to
by
Raymond, the fact that Council did not give reasons to Mr Mzobe why
his contract was not renewed, the inconsistency in that
the other
section 57 managers contracts were renewed and the continued
availability of the particular job. . . ‘
meant that Mr Mzobe had a legitimate
expectation that Council would renew his contract or provide reasons
why it did not renew the
contract and that Mr Mzobe had successfully
proved that he had been dismissed by the applicant.
[10]
By and large, the facts of this matter remained common cause between
the parties. The circumstances prevailing at the time
it was decided
not to renew the employment contract, do not appear to support the
finding made by the second respondent. Mr Mzobe’s
letter of 17
March 2008, proposing the shortening of his contract and the reasons
he outlined, negate any prospects of him having
to reasonably expect
his contract to be renewed or extended. He admitted that he could no
longer work with his immediate supervisor.
He was a senior official
who took part in the meetings of Council. He knew that the executive
committee could never take final
decisions on the employment of
managers and that the powers of the committee were limited to making
recommendations for consideration
by the Council. At his level of a
Manager, he could never have been confused about the powers of the
executive committee. For him
to suggest that he had an expectation
that his contract would be extended, well knowing how council
business was run, was rather
self-serving and disingenuous. The
applicant’s contention that the second respondent failed to
apply his mind appropriately
to important facts of this matter is
accordingly well grounded and is upheld.
[11]
The second respondent further held that incompatibility was a species
of incapacity and if the municipality was of the view
that the
relationship between Mr Mzobe and his supervisor was incompatible, an
incapacity route should have been followed to deal
with the matter,
which would have been in line with schedule 8 of the Act. When the
undisputed facts of this matter are considered,
it becomes difficult
to appreciate the reasonableness of this finding. It was not the
evidence of the parties that Mr Mzobe was
incapable of executing his
tasks to the level required of the manager in his position. The issue
turned on the human relationship
having a negative effect on his job,
as opposed to the ability to perform his tasks within required
levels. It follows that an
incapacity hearing could never have a
bearing on the poor human relations between Mr Mzobe and his
Municipal Manager. The second
respondent went out of his way to
consider irrelevant issues and thus committed a gross irregularity.
[12]
A proper conspectus of relevant evidential material shows that Mr
Mzobe failed to prove the existence of facts on the basis
of which he
could reasonably expect his employment contract to be renewed.
[13] A proper order is accordingly
issued in the following terms:
The review application is granted in
this matter;
The arbitration award issued by the
second respondent in this matter is reviewed and set aside;
The applicant did not dismiss Mr
Mzobe, whose contract of employment was terminated by effluxion of
time;
No costs order is made.
_______________________
Cele J
Judge of the Labour Court
Appearances:
For
the Applicant: Adv. C Nel.
Instructed
by Kloppers Incorporated
For
the First Respondent: Mr P Shangase.
Instructed
by Messrs A P Shangase & Associates, Durban.
1
The
Labour Relations Act No 66 of 1995
.
2
See
in this respect
Fedlife Assurance Ltd v Wolfaardt
2002 (1) SA
49
(SCA) and (2001) 22 ILJ 2407 (SCA) and
Dierks v University of
South Africa
(1999) 20 ILJ 1227 (LC).
3
See
Foster v Stewart Scott Inc
(1997) 18 ILJ 367 (LAC).