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[2013] ZALCD 8
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Coca-Cola (Pty) Ltd v Ngwane NO and Others (D813/11) [2013] ZALCD 8; [2013] 9 BLLR 891 (LC) (7 May 2013)
17
Reportable
REPUBLIC OF SOUTH
AFRICA
IN THE LABOUR COURT OF
SOUTH AFRICA, AT DURBAN
JUDGMENT
Case no: D813/11
In the matter between:-
COCA-COLA
(PROPRIETARY) LIMITED
......................................................
Applicant
and
JABULANI NGWANE N.O
.
..............................................................
First
Respondent
COMMISSION FOR
CONCILIATION
MEDIATION AND
ARBITRATION
................................................
Second
Respondent
ENOCK M NDLOVU
.........................................................................
Third
Respondent
Heard :
19
February 2013
Delivered:
07 May
2013
Summary:
Review of
award of reinstatement where position no longer in existence –
whether reinstatement was competent. Whether failure
of commissioner
to consider whether severance pay should be tendered on reinstatement
and back pay being award. Whether omission
to make such order
constitutes a reviewable irregularity.
judgment
CHETTY AJ
[1] The applicant seeks
to review an award of the first respondent (‘the commissioner’)
in which the latter ruled in
favour of the third respondent, Mr
Ndlovu, finding that his dismissal was unfair and reinstated him to
the position that he had
held prior to his dismissal. In the
alternative, the commissioner ruled that the employee be reinstated
to any other position which
is equivalent in status and grade to the
one he held prior to his dismissal on 31 December 2010. The
commissioner further ordered
the applicant to pay the third
respondent his salary for a period of seven (7) months, totalling
R530 060,72. The applicant
contends that the award is reviewable
and should be set aside on essentially two grounds - that the
retrenchment of the third respondent
was substantively and
procedurally fair, alternatively that the remedy of reinstatement be
substituted with that of compensation.
It was further contended that
in the event of this Court finding that the award of the commissioner
is not reviewable for those
reasons, that the third respondent be
ordered to repay to the applicant the amount of R1 300 920,00
paid to him as a
severance package upon his retrenchment.
[2] At the commencement
of the proceedings, Mr Boda, who appeared for the applicant,
indicated that he would not be pursuing the
ground of review which
attacked the retrenchment of Ndlovu as being substantively and
procedurally unfair. Instead, the applicant
confined its grounds of
review to whether the remedy of reinstatement granted by the
commissioner was proper in law. One of the
grounds relied on was that
the position which the third respondent had previously occupied, no
longer existed as at the time when
the award was handed down. As
such, it was contended that he could not be reinstated to a position
which no longer existed as he
had been employed on a fixed term
contract which had since expired. Secondly, the applicant contended
that the failure of the commissioner
to order Ndlovu to repay the
severance package upon assuming reinstatement constituted a
reviewable irregularity in that the reinstatement
order includes an
order for back pay to the date of his dismissal. The contention of
the applicant in essence is that the third
respondent has sustained
no loss which justifies him retaining his severance package.
[3] A brief factual
background to the matter is that the third respondent was employed by
the applicant in June 1997, and by February
2008 he rose to become
Shopper Marketing Manager earning a salary of R75 722 per month.
In July 2009 he accepted a secondment
as the regional sales manager
at Lionshare Holdings (Pty) Ltd in KwaZulu-Natal whose mandate it was
to distribute and market the
Mazoe beverage, a product falling under
the Schweppes trademark, which ultimately falls under the ownership
of Coca Cola, the parent
company. The distribution agreement entered
into between the applicant and Lionshare was terminated in June 2010.
In September
2010 the third respondent was advised of his
retrenchment. It is common cause that after the termination of the
Lionshare agreement,
the applicant secured another partner in
Smollans Sales and Marketing (Pty) Ltd, to market and distribute the
Mazoe beverage, as
well as other products. The applicant employed
another employee, Paul Mahau, to manage this particular contract.
Mahua, according
to the applicant, was selected for this position
because of his length of service as well as his experience in the
franchise department.
At the time when the third respondent was
seconded to Lionshare, his position at the applicant was taken over
by another employee,
Mrs Ngcezulu. On this basis, the applicant
contends that the reinstatement of the third respondent was not
competent.
[4] The applicant further
contends that the commissioner failed to apply his mind to the
evidence and the facts of the matter when
he concluded that the
applicant had a duty to “bump up” the third respondent
into the position of Mahau, and that no
reasonable arbitrator would
have interfered with the applicant’s decision in the exercising
of its prerogative to choose
suitable persons for managerial and
supervisory positions. The applicant’s stance is that when the
third respondent decided
to accept the secondment to Lionshare, this
secondment came “at risk”, in that, once he accepted the
appointment, he
should have appreciated that his previous position at
the company would have been taken over by someone else, and that in
the event
of his retrenchment, he could have had no expectation that
his previous position would be available to him. Upon the termination
of the Lionshare agreement, the applicant contends that due to
operational requirements, it was necessary to retrench the third
respondent as there were no suitable alternative positions where he
could be employed. At the arbitration, the applicant contended
that
the retrenchment of the third respondent was fair, and that he, in
any event, was paid a generous severance package, meaning
that there
was no loss that he had suffered. The argument advanced by the
applicant is that, in accepting the severance package,
the third
respondent lost the right to challenge his retrenchment.
[5] As a starting point,
Mr Boda referred me to the commissioner’s award and
particularly the order that the third respondent
be reinstated
‘
. . . to
the position he held before his secondment to Lionshare or any other
position which is equivalent in status and grade to
the one that he
held before his dismissal on 31 December 2010
.
’
1
It was submitted that in
making the order that he did, the commissioner failed to apply his
mind to the evidence before him, notably
that of Ms Gule, the
applicant’s employee relations manager. She testified that the
third respondent was paid a “statutory
payment” in terms
of severance, calculated in terms of guideline of one week for each
completed year of service. In addition,
the third respondent received
a “Coke payment”, being a reference to the Eurasia Africa
Group Severance Pay Plan in
terms of which he received an additional
payment calculated at 1 month’s salary for each year of
service, subject to a maximum
of 18 months. The third respondent
accordingly received a total of R1 292 790.00 which the
applicant contends was never
taken into account by the commissioner
when ordering that the third respondent be reinstated with back pay
totalling R530 060,72.
The result of the commissioner’s
award is that the applicant is reinstated with back pay and is
allowed to keep his severance
package of approximately R1,3m.
[6] The first ground of
attack against the decision of the commissioner is whether it was
competent for him to reinstate the third
respondent in light of the
above circumstances. The commissioner ordered that the third
respondent be ‘reinstated to the
position he held before his
secondment’. Mr Boda contended that as Mr Mahau was appointed
by the applicant to manage the
Smollans agreement, the decision of
the commissioner to order reinstatement was unreasonable, as no such
position existed. It must
be borne in mind that one of the main
grounds advanced by the third respondent as to why his dismissal was
unfair was his contention
that the Smollans agreement should have
been awarded to him to manage rather than Mahau. The applicant’s
witness, Mr Neves,
testified that he knew of no reason why the third
respondent would not have been suitable for the position. Neves
further stated
that the applicant required a “resource”,
and that the franchise department ultimately selected the candidate.
The
second aspect of the reinstatement order is that if the applicant
was unable to accommodate the third respondent within the Lionshare
agreement, they were required to reinstate him to ‘
any other
position which is equivalent in status and grade to the one he held
before his dismissal on 31 December 2010
.’ It is common
cause that upon the third respondent taking up his position in July
2009 on secondment under the Lionshare
agreement, his position as a
shopper marketing manager was subsequently filled Ms Ngecezulu in
October 2009.
[7] The third respondent
was hard pressed during the arbitration to concede that if he was
offered the position of shopper marketing
manager, he would have
declined it. The responses of the third respondent on this aspect do
not reflect an unequivocal rejection
of that position. It is also
relevant that the order for reinstatement is fairly broad, permitting
the applicant to install the
third respondent to ‘
any other
position’
of similar status. I agree with Mr Mgaga, who
appeared for the third respondent, that the commissioner was probably
persuaded in
coming to this conclusion by the evidence of Ms Gule,
who testified on behalf of the applicant at the arbitration that
‘
there are always positions available
’. (My
emphasis.) Under cross examination, Ms Gule was also asked about the
shopper marketing manager position, which the
third respondent
occupied prior to the Lionshare agreement. Upon reviewing the
profiles of the shopper marketing manager position
before and after
the Lionshare agreement, Ms Gule conceded that the profiles in both
positions looked the same. She further conceded
that an argument that
the third respondent would not have been able to function in the
shopper marketing manager position, after
the collapse of the
Lionshare agreement, ‘
would not hold much water’
.
On this basis alone, the commissioner’s award relating to
reinstatement would appear to be rationally connected to the evidence
presented at the arbitration.
[8]
Counsel
for the applicant placed much emphasis on the change in the job
descriptions and the nature of the functions in the shopper
marketing
manager’s post,
which
the third respondent previously occupied. On that basis it was
contended that there could have been no expectation that the
third
respondent could have had to return to the same position. In this
regard, Mr Boda relied heavily on the decision of Van Niekerk
J in
Tshongweni
v Ekurhuleni Metropolitan Municipality
2
where the Court
considered whether an employee could be reinstated in employment
where the post he had previously held was under
a fixed term
contract, the period of which had expired due to effluxion of time.
Under those circumstances, the Court held that
an employee could not
be reinstated into a new contract. Similarly, it was contended by
counsel for the applicant that reinstatement
is not competent if the
substratum
of the job previously
performed is no longer available.
[10]
The
crucial distinction between
Tshongweni
and the current matter is
that the former had already obtained alternative employment as the
head of department in the Gauteng government
at the time when the
matter came before the Court, and he did not want to leave his
present employment. The Court noted the nature
of the order that the
applicant sought was
‘
. . . not
one that would reinstate him in the respondent’s employ in any
physical sense – he seeks reinstatement into
a new contract on
the basis of a reasonable expectation that after the contract ein
force at the time of his dismissal terminated
on 31 March 2007, he
would have been offered a new five year contract . . .’
3
The Court further noted
that the applicant conceded that despite his claim to
be reinstated, he had no
intention of continuing an employment relationship
with the applicant and in
effect his claim for reinstatement was for
remuneration that he
would have earned for the unexpired portion of the fixed
term contract, in
addition to what he claimed he would have earned under the
contract, but for his
dismissal. In light of these factors Van Niekerk J concluded that
‘
All of
the authorities referred to suggest that the remedy of reinstatement
is confined to reinstatement into the contract of employment
in
existence on the date of dismissal. In my view, if the duration of
that contract was limited, and the expiry of the contract
precedes
the date on which a finding of unfair dismissal is made,
reinstatement is not a competent remedy. Even less can an employee
claim reinstatement into a contract that he or she asks the court to
create, and nor can the employee claim that the court should
recognise that the contract would have been prematurely terminated.
The applicant plainly does not seek the restoration of his
employment
relationship with the respondent – his claim is nothing less
than a claim for compensation. That being so, the
applicant’s
claim is subject to the limits on compensation prescribed by s 194 of
the LRA.
Even if this is too narrow a view
of the applicable legislation, it seems to me that in circumstances
such as the present it cannot
be said that reinstatement is a
reasonably practicable remedy, and that the exception in s193(2)(c)
is thus applicable. All of
the circumstances described above (and in
particular, the applicant having concluded a five year fixed term
contract with his new
employer, which he has no wish to terminate)
render reinstatement impracticable.’
4
[11]
On
appeal
5
,
Murphy AJA agreed largely with the views of the court
a
quo
,
also noting that the question as to whether reinstatement was
competent in the circumstances of the case was not a question that
needed to be answered in light of the applicant indicating he did not
want to be reinstated
6
.
The observations made by Murphy AJA are relevant to the outcome of
this application.
‘
. . . In
argument before us, counsel for the appellant submitted that
notwithstanding such concession it would be permissible for
the court
to order reinstatement for the period between 5 July 2006 (the date
of dismissal) and 31 January 2010 (the day before
the appellant
commenced employment with the Gauteng Provincial Government). He
argued that reinstatement is “a multifaceted
remedy” and
that nothing in the LRA prevented the Labour Court from making a
qualified order of reinstatement, which did
not oblige the appellant
to tender his services for the future. The effect of such an order,
were it to be granted, would be that
the appellant would be paid his
remuneration for the stipulated period, but he would be excused from
tendering his services
.
Counsel’s submission is
founded upon a fundamental misconception regarding the nature of the
statutory remedies available
for unfair dismissal in terms of the
LRA. Reinstatement, re-employment and compensation, as the exclusive
remedies for unfair dismissal,
(now provided for in s 193(1) of the
LRA), were introduced into labour legislation to remedy the absence
of satisfactory relief
for the unfair termination of the contract of
employment by employers. At common law the only remedy available to a
dismissed employee
was an action for wrongful breach of contract. As
in all cases of breach of contract, the injured party could elect to
sue for
specific performance or for damages. A claim for specific
performance in terms of a reciprocal obligation will succeed only
where
the party claiming performance has performed or at least
tenders performance. In the context of an employment contract, a
claim
for specific performance is a claim for reinstatement on the
same terms and conditions of employment that existed at the date of
dismissal and must be accompanied by a tender by the employee to
resume services or at least to fulfil the principal obligation
under
the contract to make his or her services available. The employee’s
entitlements under a contract of employment are
dependent on the
availability of his or her services to the employer and not the
actual rendering of services. (Johannesburg Municipality
v O’Sullivan
1923 AD 201.)
’
[12]
Mr.
Boda sought further to rely on the decision of the Constitutional
Court in
Equity
Aviation Services (Pty) Ltd v CCMA and Others
7
(which referred to
Tshongweni
)
for the contention that as the third respondent’s previous
position of a shopper marketing manager had transformed from
the time
that he had held the post, it was not competent for the commissioner
to have considered him being reinstated to that position.
In
Equity
Aviation
the
Constitutional Court explained the meaning of the word ‘reinstate’
as follows
‘
The
ordinary meaning of the word “reinstate” is to put the
employee back into the job or position he or she occupied
before the
dismissal, on the same terms and conditions. Reinstatement is the
primary statutory remedy in unfair dismissal disputes.
It is aimed at
placing an employee in the position he or she would have been but for
the unfair dismissal. It safeguards worker’s
employment by
restoring the employment contract. Differently put, if employees are
reinstated they
resume
employment
on
the same terms and conditions that prevailed at the time of their
dismissal
.
’
8
(My
underlining)
[13]
For
the reasons which are set out above, counsel submitted that
reinstatement was not competent in law and the decision of the
commissioner falls to be reviewed and set aside. He submitted that
the commissioner had no power to order reinstatement,
and to the extent that
this Court finds that the dismissal was nonetheless substantively and
procedurally unfair, no compensation
should be ordered as the third
respondent had been paid a severance in excess of the statutory
requirements. Alternatively, it
was submitted if I were to find that
reinstatement was competent, then I should order the third respondent
to repay the amount
of severance paid to him as a condition of his
reinstatement. I deal with each of these aspects below.
[14]
Mr
Mgaga on the other hand submitted that if I were to find that the
commissioner’s decision that the third respondent was
unfairly
dismissed survives the threshold for review set out in
Sidumo
& another v Rustenburg Platinum Mines Ltd & others,
9
then the commissioner was
enjoined by s 193(1) of the Act to consider reinstatement as a
primary remedy unless any of the conditions
set out in s
193(2)(a)-(d) were raised,
and
are sustained as defences to reinstatement. There is nothing on
record where the applicant raised the criteria set out in s
193(2) as
a basis for the commissioner not to award reinstatement. In his
replying affidavit in this Court, the third respondent
states that
the applicant did not lead any evidence at the arbitration to
indicate that it was not reasonably practicable to reinstate
him, or
that the fact that the shopper marketing manager position was
occupied by Ms Ngcezula was a bar to his reinstatement to
that
position. Counsel for the applicant conceded in his heads of argument
that the issue of reinstatement not being a competent
remedy was not
argued before the first respondent,
but
that it was permissible to be raised as a point of law on review
.
10
[15]
Support for the argument
of the applicant is also to be found in
Cash
Paymaster Services Northwest (Pty) Ltd v Commission for Conciliation,
Mediation and Arbitration & others
11
where the Court dealt
with a case of a fixed term contract that was to terminate within a
month of the arbitration hearing. The
Court held that the
commissioner had a duty to establish the nature of the contract when
fashioning a remedy, and that by making
an order of reinstatement,
and effectively extending the contract beyond its fixed term, the
commissioner had exceeded her powers.
The award was accordingly set
aside and substituted with an award of compensation for the unexpired
portion of the fixed term contract.
The LAC in
Tshongweni
however
affirmed that re-instatement or re-employment should be ordered,
unless the employee does
not wish to be re-instated or re-employed. The Court further held
that
‘
The
appellant’s claim for reinstatement, in the guise he wants it,
cannot be maintained because he is not prepared to make
his services
available to the employer and he does not want to be put back in the
job.
What
the appellant really wants is not reinstatement (the resumption of
his employment) but his salary for the period he was unemployed
between July 2006 and February 2010, that is 43 months’ salary
which would be an amount in excess of R2 million. …The
foremost problem with granting such a remedy is that, as already
said, the LRA does not provide for damages for unfair dismissal.
Where reinstatement is not granted, the court is limited to granting
compensation in a maximum amount of 12 months.’
12
The views expressed in
Tshongweni
in the
Labour Court and in the Labour Appeal Court were cited with approval
SA Post
Office v CCMA & others
13
.
[16] The crucial
distinction between the authorities relied on by the applicant and
the facts of the matter before me, is that the
third respondent has
never given any indication of not wanting to pursue a claim for
reinstatement, nor was this the case before
the arbitrator. Moreover,
I do not regard the decision of the commissioner as being
inconsistent with the decision of the Constitutional
Court in
Equity
Aviation
. The evidence presented by Ms Gule clearly states that
the applicant is a large employer, and ‘there are always
positions
available’. She further conceded that there was no
impediment to the third respondent being re-employed in the shopper
marketing
manager post, even though the position had transformed in
its outlook. I am accordingly persuaded by the argument on behalf of
the third respondent that the finding of the commissioner to award
reinstatement in the circumstances of the matter was not
unreasonable.
I am further of the view that the applicant had not
managed to establish the existence of any of the factors set out
under s 193(2)
of the Act which would militate against reinstate. I
am equally satisfied that the arbitrator’s decision of
reinstatement
to an alternate position was reasonable, particularly
in light of the evidence of Ms Gule.
[17] I now turn to the
applicant’s attack with regard to the third respondent being
permitted to retain his severance package,
while at the same time
benefitting from the award of reinstatement with back pay. Mr Boda
submitted that the basis of review is
to be found in the award where
the commissioner states the following
‘
I am
aware that the applicant was paid a generous severance and that is
not in dispute.
Though the severance package, by
operation of law, flows from the employer’s operational
requirement but since that is not
the case before me I elect not to
make any determination in this regard.’
14
[18] Mr Magaga submitted
that the commissioner’s decision not to pronounce on the issue
of the return of the severance package
was not an unreasonable
decision and not one open to review. In substantiation of this
argument, I was referred to the parties
opening statements at the
arbitration and the pre-arbitration minute. In the pre-trial minute
the following is recorded
‘
Objection
to relief sought
The respondent has raised an
objection to the relief sought by the Applicant in that he was paid a
more favourable severance than
his statutory entitlement. As a
result, if compensation is ordered, the presiding commissioner must
have due regard to the amount
of severance already paid to the
Applicant by the Respondent.
The Applicant records that the
amount of severance pay already paid is not in issue. The amount of
compensation to be awarded to
the Applicant in the event of a finding
that the dismissal was procedural[ly] and/or substantively unfair is
independent of the
severance pay already paid.’
15
[19] When the matter came
before the commissioner, the applicant’s counsel stated the
following
‘
Mr
Ngcukaitobi:
Thank
you Mr Arbitrator. Whilst we are on the subject of preliminary
points, I see that in the pre-arbitration minute there is an
objection raised at paragraph 3 in relation to the nature of the
relief that is sought in this matter. That is not an objection
that
we take in limine as such but it is something that will be argued as
part of the merits of the dispute. So although it’s
styled as
an in limine objection, the fact is this, we will argue the point at
the end of the arbitration. I just need to get that
out of t[h]e
way
.
’
16
The applicant’s
representative elaborated on the issue of severance pay
during his opening
address where he stated
‘
Now you
will see of course at page 84 there is a letter written to the
employee which sets out the termination date of 30 November
2010 and
it sets out the proposals for payment of severance package. . . One
thing will strike you there, Mr Arbitrator. Those
payments
considerably exceed what the employee would have been entitled to
under the Basic Conditions of Employment Act. They are
generous. That
is because policy of Coca-Cola is to pay employees more than they
would be statutorily entitled to. I say this because
I see that if
the employee doesn’t get his job back, he says that he wants
compensation, buy you and I know that one of the
factors which the
Labour Appeal Court says we must take into consideration is assessing
the amount of compensation is the amount
of severance. If you get
more money from the company when you are retrenched, that is
effectively set off against what you would
have been entitled to in
compensation. It’s a factor and an important factor that must
be taken into account.
’
17
[20] Mr Mgaga, who also
appeared for Mr Ndlovu at the arbitration, confined his response on
the issues raised by the applicant,
to what was set out in the
pre-arbitration agreement. In response to the contentions of the
applicant in this Court, Mr Mgaga appears
to base his argument that
the issue of severance is “independent” to that of any
compensation awarded by the commissioner
in terms of s 193 of the
Act, on the provisions of the applicant’s Severance Pay Plan
which records the following
‘
Situations
Affecting Severance Benefit
If an employee who is entitled to a
severance benefit under this Plan is re-employed by the Company or a
Related Company, the employee
will be required to refund a pro-rated
portion of the separation payment equal to the remaining amount of
the benefit that would
have been payable as of the date of
reemployment, if the employee had received severance benefits on a
monthly basis.
For example:
If an employee has received 18
months of severance under this Plan and rehired 12 months after
separating from the Company then
the employee will be required to
return 6 months of severance pay as of the date of re-employment.’
18
[21] While the applicant
argued that the first respondent had to take into account the amount
of severance awarded to the third
respondent in determining any
compensation to be awarded if he found that the dismissal was unfair,
third respondent submitted
that in the event of reinstatement, the
Commissioner had to defer to the applicant’s Severance Pay Plan
which regulates the
situation where an employee is “re-employed”.
The difference, in my view, lies in that the Severance Pay Plan
contemplates
a situation of a retrenched employee being re-hired by
the company after an up-turn in economy or in its business in
general. The
plan does not contemplate the situation of a retrenched
employee being reinstated pursuant to an order of Court. Given the
example
cited above from the policy, as the third respondent was
dismissed on 31 December 2010 and the arbitrator’s award was
handed
down in August 2011, it would mean that if the agreement were
strictly applied (to the exclusion of any Order pertaining to the
return of the severance package), consequent upon the Order of
reinstatement with back pay, all that the third respondent would
have
to refund was 10 (ten) month’s severance pay.
19
That would entail that
the award of reinstatement,
together
with back pay of R530 060.72,
would
remain intact,
as
well as severance of 7 (seven) month’s salary (equivalent to
approximately R530 060,72). The third respondent will
then have
been reinstated with back pay, as well as benefitting from a
severance package for the period he was out of work. If
the argument
of the third respondent were to prevail, he would be reinstated with
back pay to a date earlier than that of his dismissal.
This would be
contrary to the provisions of s 193(1)(a) of the Act. If one were to
consider the combined amount as compensation
under s 194 of the Act,
it would also exceed 12 months remuneration.
[22] It was further
submitted on behalf of the third respondent, that the decision of the
arbitrator not to interfere with the issue
of severance should not be
regarded as an irregularity nor should any inference be drawn that he
had failed to apply his mind to
the facts before him. It was
contended that the commissioner correctly decided to have the issue
of the third respondent’s
severance payment resolved in terms
of the applicant’s Severance Pay Plan. This argument finds
expression in the written
submissions by the third respondent on the
issue of the repayment of the severance package at the arbitration
proceedings
‘
It is
submitted that in so far as retrospective reinstatement is concerned
the Commission does not have jurisdiction to pronounce
on the
severance pay that has already been paid to CCSA to Ndlovu. CCSA’s
policy on Severance Pay Plan does regulate what
should happen if an
employee was retrenched returns to to CCSA. It is also to be noted
that CCSA did not even consult Ndlovu on
severance pay as prescribed
by Section 189(3)(f).
As I have alluded to
earlier, if the matter were to be resolved on the basis of the
provisions of the Severance Pay Plan alone,
the applicant would have
been entitled to retain seven (7) month’s salary from the
severance package, calculated from the
date of dismissal to the date
of his reinstatement. It is perhaps equally important to note that in
terms of the Severance Pay
Plan, the right to recover severance
payments already paid to an employee only arises in the instance of
re-employment. It is therefore
no answer to the complaint of the
applicant when the third respondent says in his answering affidavit
that ‘
I
am expecting that when I am eventually reinstated the Applicant’s
policy on severance pay plan will be applied to me’.
(My emphasis.) It is also
no answer in my view to the contention that the commissioner’s
failure to deal with this issue is
not a reviewable act or omission.
I do not accept the argument that the issue of the return of the
severance monies paid to the
third respondent was not before the
commissioner. As set out earlier, the issue of the severance was
raised pertinently at the
commencement of the arbitration
proceedings.
[23] Mr Mgaga submitted
that the pre-arbitration minute must be interpreted narrowly in that
the issue of the severance payment
made to the third respondent would
only arise if the commissioner found that compensation (as distinct
from reinstatement) should
be ordered. As I understood the third
respondent’s line of argument, as no compensation was awarded
by the commissioner,
the amount of the severance awarded become a
non-issue, and therefore no reviewable irregularity was committed by
the commissioner.
What then is the essence of the order made by the
commissioner? The commissioner granted an award of reinstatement with
back pay
to the date of the dismissal. It is trite that under such
circumstances, the dismissed employee is reinstated to his previous
position,
and placed in the position as if no dismissal had taken
place. If this was the import of the order made by the commissioner,
then
it must follow that the positions of the respective parties are
restored to that which existed prior to the dismissal. Under such
circumstances, the third respondent would have suffered no loss which
was not addressed by an order of reinstatement with full
back pay. In
light of the relief granted by the commissioner, the third respondent
is no longer entitled to the severance package,
which was intended to
soften the blow from his retrenchment. I also am not persuaded that
there is anything on record before me
which points to the third
respondent having ‘effectively tendered to refund the severance
pay’ as contended for by
the applicant in his heads of
argument. The applicant denied that there has been any tender of the
return of the severance. It
was contended by Mr Boda that once the
third respondent had elected to accept the severance package offered
by the applicant in
respect of his retrenchment, he then lost his
right to pursue an action for reinstatement and must be regarded as
having waived
his right to pursue a claim for unfair dismissal.
Although the facts of the matter were distinguishable from the
present case,
Ngcobo JA in
Decision
Surveys International (Pty) Ltd v Dlamini & others
20
held that the fact that
an employee had accepted the conditions of the termination of his
employment was no bar to him seeking relief
of compensation arising
from the unfairness of a retrenchment.
[24] In dealing with the
issue of the severance payment which the commissioner elected not to
deal with, I was urged by the applicant
to follow the path adopted in
Unilver
S.A. (Pty) Ltd v Salence
21
where the Court took into
account the fact that the employee who had challenged the fairness of
his retrenchment, although successful,
had to repay the amount of the
severance award. In this regard the Court held that
‘
W
hilst
it might be sufficient merely to delete paragraph 2 of the order of
the Court
a
quo
it
seems to me that it would be advisable, in the interests of
certainty, to supplement the order of the Court
a
quo
to
make it clear that reinstatement is to be effective from 31 December
1993, the effective date of the termination of the respondent’s
employment, and that the appellant is obliged to remunerate the
respondent for the whole of the period since the termination of
his
employment, subject to the respondent refunding his retrenchment
package.’
22
[25] Mr Mgaga submitted
that the return of severance pay was not an item contemplated under
the Act and therefore it was open to
the commissioner to be persuaded
by the parties regarding the relief sought. With reference to
Unilever,
he submitted that if this Court were reluctant to
allow the issue of the repayment of the severance to be regulated
alone by the
provisions of the Severance Pay Plan, rather than the
decision of the commissioner being reviewed and set aside, I should
opt to
issue an order clarifying the award of the first respondent.
Mr Boda on the other hand contended that the commissioner’s
decision to remain silent on the issue of the return of the severance
package was an irregularity which had to be reviewed, as opposed
to a
mere clarification being issued by this Court. I agree with the
submissions of the applicant in this regard. A reading of
the award
of the commissioner makes it clear that he had no intention of
pronouncing on the issue of the return of the severance
payment by
the third respondent, and was content to have this resolved by the
parties, despite this issue being raised pertinently
before him at
the outset of the arbitration proceedings. In my view, in light of
his decision to reinstate the third respondent
with back pay, the
commissioner was obliged to deal with the repayment of the severance
as this payment occurred only as a result
of the retrenchment of the
third respondent. Once the basis for that dismissal had been
addressed by a remedy of reinstatement
with full back pay, it was
incumbent on the first respondent to deal with the severance aspect.
The decision of the commissioner
not to make any order with regard to
the severance package, in my view, was not a decision which another
reasonable decision maker
could reach in the circumstances. Moreover,
the only justification apparent from the award, for the commissioner
electing not to
deal with the issue of the severance payment, is that
‘this [was] not the case before’ him. This is not a
situation
where a commissioner has failed to identify good reasons
for his decision. In regard to his failure to pronounce on the
severance
pay, I am of the view that the applicant has succeeded in
establishing that both the reasons (such as they are) and the result
of the award are unreasonable. There can be no justification for a
result where the third respondent is reinstated with full back
pay
and retains a severance package which far exceeds the amount of his
back pay. It is a decision that a reasonable decision maker
would not
reach.
[26] Mr Boda submitted
that the applicant should be awarded costs of the review application,
whilst Mr Mgaga submitted that as the
applicant has effectively
abandoned its challenge to the merits of the commissioner’s
award and focused almost exclusively
on the remedy, it should be
liable for the costs of the application. Mr Mgaga contended that if
the third respondent had known
earlier of the applicant’s
intention to abandon much of the challenges foreshadowed in its
Notice of Motion and founding
affidavit, this matter could have been
resolved between the parties. I may have been persuaded by the third
respondent to award
costs his favour, except that I found no evidence
of an intention to refund the severance package to the applicant. On
that aspect
alone, the applicant was justified in persisting with the
review. In light of the order that I make below, and the fact that
the
third respondent will be reinstated in employment, it seems to me
to be just and equitable that each party bear their own costs.
[27] I accordingly make
the following order:
1. The review application
to set aside the decision of the first respondent dated 11 August
2011 under CCMA case number KNDB1107/11,
is upheld to the extent as
set out below :
1.1 The order of the
first respondent is amended as follows:
1.1.1 The third
respondent is to be reinstated to the position he held before his
secondment to Lionshare, or any other position
which is equivalent in
status and grade to the one he held before his dismissal on 31
December 2010;
1.1.2 The Applicant is
ordered to pay arrear salary to the third respondent for the period
from 31 December 2010 to the date of
his reinstatement;
1.1.3 The reinstatement
of the third respondent as set out in para 1.1.1 above is
against
repayment to the applicant by the third respondent of the severance
package paid to the latter in the amount of R1 300 920.00
(one million three hundred thousand nine hundred and twenty rand);
1.1.4 The reinstatement
and the payment of the arrear salary shall be effected within 14 days
of the date of this order;
1.1.5 The repayment of
the severance package by the third respondent to the Applicant is to
be effected within 14 days of the date
of this order;
2. Each party to pay its
own costs.
___________________________
Chetty AJ
Acting Judge of the
Labour Court
Appearances
:
For the Applicant: Adv FA
Boda.
Instructed by Cliffe
Dekker Hofmeyr.
For the Third Respondent:
Mr B Mgaga.
Garlicke & Bousfield
Attorneys Inc.
1
Arbitration
award: Index to Pleadings, p 22.
2
[2010]
10 BLLR 1105
(LC).
3
Above
1113C-D.
4
Above
2, p 1114E-I.
5
Tshongweni
v Ekurhuleni Metropolitan Municipality
(2012) 33 ILJ 2847 (LAC).
6
Above
para 34-35.
7
[2008]
12 BLLR 1129
(CC).
8
Above
at para 36.
9
(2007)
28 ILJ 2405 (CC).
10
See
CUSA v TAU Ying Metal Industries & others
[2009] 1 BLLR 1
(CC) where Ngcobo J stated at para 67-68 ‘Subject to what is
stated in the following paragraph, the role of the reviewing
court
is limited to deciding issues that are raised in the review
proceedings. It may not on its own raise issues which were
not
raised by the party who seeks to review an arbitral award. There is
much to be said for the submission by the workers that
it is not for
the reviewing court to tell a litigant what it should complain
about. In particular, the LRA specifies the grounds
upon which
arbitral awards may be reviewed. A party who seeks to review an
arbitral award is bound by the grounds contained in
the review
application. A litigant may not on appeal raise a new ground of
review. To permit a party to do so may very well undermine
the
objective of the LRA to have labour disputes resolved as speedily as
possible.
These principles are,
however, subject to one qualification. Where a point of law is
apparent on the papers, but the common approach
of the parties
proceeds on a wrong perception of what the law is, a court is not
only entitled, but is in fact also obliged,
mero motu
, to
raise the point of law and require the parties to deal therewith.
Otherwise, the result would be a decision premised on an
incorrect
application of the law. That would infringe the principle of
legality. Accordingly, the Supreme Court of Appeal was
entitled
mero
motu
to raise the issue of the Commissioner’s jurisdiction
and to require argument thereon. However, as will be shown below, on
a proper analysis of the record, the arbitration proceedings in fact
did not reach the stage where the question of jurisdiction
came into
play.’
11
(2009)
30 ILJ 1587 (LC)
12
Above
5, para 39-40.
13
Unreported
judgment of Steenkamp J, C1147/10, 25 July 2012 citing
Director-General: Office of the Premier of the Western Cape &
ano v SAMSA obo Broens & others
Unreported, case no CA
5/2011 (26 April 2012) [coram Davis JA, Molemela AJA and Murphy AJA
concurring] paras 13-15.
14
Arbitration
award: Index to Pleadings, p 21.
15
Record
p 649-50.
16
Record
p 227.
17
Record
p 238.
18
Index
to CCMA Record – Vol 1, p 37.
19
The
third respondent’s severance package comprised a total of 17
months salary.
20
[2002] ZACC 27
;
[1999]
5 BLLR 413
(LAC).
21
[1996]
5 BLLR 547
(LAC).
22
Above
at 564D-E.