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[2014] ZALCJHB 203
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Nijs v Fleet Africa (Pty) Ltd and Another (J2115/12) [2014] ZALCJHB 203 (30 May 2014)
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Note:
Certain
personal/private details of parties or witnesses have been
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REPUBLIC OF SOUTH
AFRICA
IN THE LABOUR COURT OF
SOUTH AFRICA, JOHANNESBURG
JUDGMENT
REPORTABLE
CASE NO: J2115/12
In the matter between:
ERICA
NIJS Applicant
and
FLEET AFRICA (PTY)
LTD First
Respondent
CITY OF
JOHANNESBURG Second
Respondent
Heard:
17 January 2014
Delivered:
30 May 2014
Summary:
JUDGMENT
RAWAT
AJ
[1]
This is an application for a declaratory order in terms of which it
be found that a valid and binding settlement agreement was
concluded
between the Applicant and the First Respondent, Fleet Africa Pty
Limited (Fleet Africa) in May 2012.
[2]
At the outset of the application, the Second Respondent withdrew as a
party to the proceedings with the agreement of the Applicant
and
Fleet Africa.
Background
[3]
The Applicant was employed by the Second Respondent for the period
six September 1993 until 31 March 2001, in the Public Safety
Department, more particularly in the Logistics Division.
[4]
On 1 April 2001, the Applicant was transferred in accordance with the
provisions of section 197 of the Labour Relations Act
66 of 1995
(“LRA”) to an entity known as Super Fleet Power Plus
Performance. This entity was later taken over by Fleet
Africa at
which the Applicant remained employed until May 2012.
[5]
Fleet Africa is in the business of managing transport fleets. Until
February 2012, there existed a contractual relationship
between the
First and Second Respondents in terms of which Fleet Africa rendered
Fleet Management Services for the Second Respondent
on an agreed fee
structure which entailed full maintenance leasing and which included
a sale and lease back provision of the vehicles
which belonged to the
Second Respondent.
[6]
Upon the termination of the contractual relationship between the
First and Second Respondents, a dispute arose between them
as to
whether the employees of Fleet Africa who mainly performed their
duties in relation to the contract between the First and
Second
Respondents, were to be transferred to the Second Respondent in
accordance with the provisions of section 197 of the LRA.
The dispute
was eventually resolved on 29 May 2012 by way of an arbitration
appeal award in terms of which it was held that upon
the termination
of the contractual relationship between the First and Second
Respondents, certain employees of the Fleet Africa
had to be
transferred to the Second Respondent with retrospective effect from 1
March 2012.
[7]
Pending the outcome of the above dispute, the Applicant and the Fleet
Africa began the process of entering into a voluntary
retrenchment
package. The CEO of the Fleet Africa, Mr. Kamagilo Mmutlaka
(Mmutlaka) addressed a communication to “Valued
Fleet Africa
Employee”, dated 1 March 2012 and headed “Change in
Operational Processes and Structures”.
[8]
Thereafter, there is a regular communication from Mmutlaka to staff.
On 10 April 2012, at page 45 of Volume 1 under the heading
"alternatives to retrenchment considered" at paragraph 13,
a letter from him reads:
‘
Amongst
the alternatives, the company will also consider early retirement as
an alternative to retrenchment for those employees
qualifying for
such early retirement in terms of the Super Groups Pension and
Provident Fund Rules.’
[9]
In a letter dated 18 April 2012,. Mmutlaka, further indicates the
pressure that the litigation and uncertainty of the situation
is
having on Fleet Africa at page 53 of volume 1, it reads:
‘
The
company has continued to fund the employees’ salaries for March
2012 and to date, but cannot afford to fund the salaries
for much
longer. Should no clear resolution be obtained from the Labour
Court on 18 April 2012 and what employees need to
be fully aware of
is that the company prima facie view is that it cannot afford paying
employees’ salaries indefinitely and
an urgent resolution of
these issues is required.’
[10]
Other correspondence of significance included in the bundle of volume
1 of the documents are copies of several electronic mail
transmissions between the Applicant and Madelene Harrington
(Harrington) Fleet Africa's Human Resources Manageress regarding
details
pertaining to voluntary retrenchment (page 65 of volume 1).
[11]
In one such communication sent on 10 May 2012 at 01:36pm, the
Applicant states:
‘
Hi
Madelene,
Thanks for the details.
Sorry, my error, 18 years completed is correct.
Please advise:
1.
What is the taxable percentage after the first R30 000.00?
2.
Can you obtain the 2012 pension / provident figures on my behalf?
3.
For how long is this?
[12] To which Harrington
responded:
’
Hi
Erica
Herewith package details
as requested:
·
Retrenchment benefit is 2 weeks for every
completed year of service.
·
You mentioned 19 years, please check our
date of engagement as I only get 18 completed years of service.
·
Leave days are calculated until end of June
2012.
·
Notice pay – May and June Salary.
UIF – you can claim
after June 2012, as your official termination date will be
30/06/2012.
Pension/provident –
withdrawal date will be April 2012, to speed up the processing the
claim.
Tax – package the
first R30 000.00 is tax free. Pension/Provident – first R315
000.00 tax free, thereafter you get taxed
18% up to R630 000.00, R56
700.00 + 26% of taxable income up to R945 000: R141 750.00 +
36% above R945 000.00.
Please
let me know if you have any other questions
.
[13] The following
electronic mail exchange was made between the Applicant and
Harrington.
‘
Hi
Madelene,
Thanks for the details.
Sorry, my error, 18 years completed is correrct. Please advise:
1.
What is the taxable percentage after the
first R30, 000.00? not quite sure, will have to look into this
for you.
2.
Can you obtain the 2012/provident figures
on my behalf? Will request for you today
3.
For how long is this offer valid? Until the
11
th
May 2012,
Kind
regards.’
[14]
The last communication from Harrington, was a letter regarding
the applicant and which reads as follows:
‘
Dear
Sir/Madam
RE: E NIJS –
[........]
Please take of the
following:
·
The above employee worked for the City of
Johannesburg Ref no. 0958226 from 6
th
September 1993 until 31
st
March 2001.
·
He/she was then transferred to Super Fleet
Power Plus Performance Ref no. 1028923 from 1
st
April 2001. We don’t have any records of Black Ginger, as
the company’s name was Super Fleet Power Plus Performance.
·
Super Fleet Power Plus Performance became
part of Fleet Africa and therefore the Ref no. 06374012. Super
Fleet Power Plus
Performance doesn’t exist anymore.
·
That is the reason as to why we can only
use his/her engagement date with our company as from 1
st
April 2001, as City of Johannesburg is a complete separate entity on
its own. Although we recognised their original date
of
employment for all other reasons, we cant complete the U119 form
using this date as his UIF contributions were paid over the
City of
Johannesburg.
Please feel free to
contact me should you have any more queries.
Yours sincerely
Madelene Harrington
HR Officer.’
[15]
On 16 May 2012 at the meeting chaired by Mr. William Berry, of
William Berry Attorney’s, who represents Fleet Africa
and a
recording and admission of which transcript was objected to and is
dealt with hereinunder. The significance of the transcript
is
suitably best included at this stage of the background. The relevant
verbatim words of Mr. Berry are:
‘
They
have to take you, its part of their transfer; part of their process…
the only time that you won’t be… and
that was what I was
trying to explain to you pertaining to that settlement agreement is
that it does not include the City saying
that they have not been
party to this at all. This is our exercise. So when you see the
settlement agreement you will see that
it says in full and final
settlement of all claims against Fleet Africa, bah bah bah and the
City, okay, but the City isn’t
a party to this agreement so we
have to put it in because of our relationship with the City, because
we don’t want them coming
back and saying that you settled with
these guys and you didn’t tell us and you’re hammering
us. We want to be able
to at a later stage to say that we in fact had
no obligations to include you in this agreement, but what I’m
saying to you
is that if it’s a legal right for you to
transfer, is what this arbitration is going to do then even if you
agreed not to
go, you are entitled to go. You are actually
getting a double benefit. Fleet Africa didn’t’ have to do
this,
they could simply say we are going to wait for the 197….
We could wait for the 197 one way or the other an simply say we
are
not giving you anything, but because they want certainty, they have
agreed to put money into a pot for that, because we don’t…
we foresee that this is going to be an on-going dispute with the City
because the City doesn’t want (inaudible). We are saying
we
want a closure
cut off and were prepared to
pay you some money.
Whether they want you or
not, if the decision is made by the arbitrator that the business
transfers the same as it did in 2001 you
will go across to the City,
whether they like it or not, okay. So that is the first answer. The
second answer is Fleet Africa is
giving a retrenchment but it is
doing it as a voluntary retrenchment at this point in time, okay. So
at this point in time, we
are giving more than we would have to do if
we have to retrench, okay, mainly because we want the settlement
agreement signed up
so that you don’t sue Fleet Africa, so you
get the extra because you are foregoing the right to sue Fleet
Africa, but you
are not necessarily foregoing the right to transfer
to the City. So you could get two, you can get your job with the City
of Johannesburg
with all your length of service and terms of service
and terms of conditions and if you signed up the voluntary
retrenchment with
Fleet Africa, you get your severance as well, so
you’re getting a double benefit. If we don’t succeed on
the 197, and
they say that there wasn’t this transfer to the
City, then we will have to retrenchment then if you haven’t
signed
the voluntary retrenchment your package is going to be
smaller, but then you can sue, then you can go to court and say that
it
was unfair and the dismissal was unfair retrenchment because you
wouldn’t have signed the settlement agreement. You see that
is
the difference. Fleet Africa is prepared to pay extra to get a
settlement from you.’
[16]
The settlement agreement which forms the crux of this application was
signed by Fleet Africa on 18
May 2012 and on 21 May 2012.
It was signed by the Applicant. It reads:
Settlement Agreement
Between
Fleet Africa (Pty) Ltd
(collectively hereinafter
referred as “Fleet Africa”)
And
Erica Nijs
(hereinafter referred to
as the “Employee”)
1.
The Employee has been granted voluntary
retrenchment in terms of the voluntary retrenchment policy applicable
at Fleet Africa in
respect of the restructure of the businesses.
Accordingly, the parties to this agreement have agreed to the
termination of
the Employee’s employment by way of voluntary
retrenchment.
2.
The parties agree that in full and final
settlement of any claims of whatsoever nature arising from(including
but not limited to
any outstanding salary obligations, any
accumulated leave pay, any severance benefit and any notice
obligations any entitlement
to transfer in terms of section 197 of
the Act (to the City of Johannesburg or elsewhere) and any claims for
unfair dismissal whether
automatic or not) that the Employee may have
against Fleet Africa to the following:
2.1.
the Employee’s last working day will
be (fill in details);
2.2.
the Employee will be paid the gross sum of
R215, 145.49 as set out in the breakdown of amounts due attached
hereto, less all income
tax deductions, and other deductions in terms
of a directive obtained for this purpose;
2.3.
the Employee will be entitled to be paid
the credit due to the Employee from any retirement funds maintained
by Fleet Africa on
the Employee’s behalf, which payment shall
be made in accordance with the rules of any such fund.
2.4.
the Employee shall keep in strict
confidence any informant or knowledge that the Employee has acquired
while in the employ of Fleet
Africa about the business of Fleet
Africa, or any related entity, person, director, employee or the
like, and shall not disclose
any such information to any third party.
2.5.
the Employee will continue to be bound by
any restraint, confidentiality or other like agreement contained in
his current employment
contract.
2.6.
the Employee specifically waives his/her
right to be ring – fenced and considered as included as an
employee of the business
that provided the fleet service to the City
of Johannesburg in terms of the outsource agreement A114 at any time
but more specifically
at 29 February 2012.
2.7.
the Employee agrees that to the extent that
it is permissible and required that this agreement is made in
compliance with sections
197 (2) and 197 (6) of the Act and the
circumstances of such agreement has been explained to the employee
and the employee has
been given the opportunity to take independent
legal advice in respect of the consequences of this agreement.
2.8.
the Employee shall keep the concluding of
this agreement and the terms of this agreement confidential.
3.
The Employee agrees to return all and any
of the property of Fleet Africa (including but not limited to
documentation, whether recorded
in electronic format or otherwise,
credit cards, access cards, petrol card and the like on the
Employee’s last working day
as recorded herein, or as directed
by Fleet Africa.
4.
The Employee acknowledges that he/she knows
and understands the content of this agreement and the effect of this
agreement to expunge
any claims that he/she may have against Fleet
Africa are defined herein and that she voluntarily binds
himself/herself to the agreement
in exchange for the benefits
provided by this agreement.
5.
Subject to clause 2.5 this agreement
supersedes, overrides and replaces any other agreements and/or any
other terms and conditions
of employment, whether written, implied or
oral, that may exist between the Employee and Fleet Africa, and the
current employment
relationship is replaced in its entirety by this
agreement. The Employee confirms specifically and without
limiting the foregoing
that he/she has no claims from whatsoever
nature arising against Super Group Ltd.
6.
This agreement constitutes all the terms of
the agreement between the
parties in regard
to the subject matter thereof.
7.
Neither party shall be bound by any express
or implied term representation, warranty, promise or the like not
recorded herein.
8.
No addition to, variation, or agreed
cancellation of this agreement shall be of any force or effect unless
in writing and signed
by or on behalf of the parties.
9.
No indulgence which either party
(“grantor”) may grant to the other (“grantee”)
shall constitute a waiver
of any of the rights of the grantor, who
shall not thereby be precluded from exercising any rights against the
grantee which may
have arisen in the past or which may arise in the
future.’
[17]
On the same day, the arbitration award of A.E. Franklin S.C. was
signed and released. It reads:
‘
(a)
It is declared that the transfer of assets and other rights and
obligations (which constitute
a fleet service business operated by
the First Applicant until 1 March 2012) from the First Applicant to
the First Respondent on
the expiry of the second outsourcing service
agreement between the First Applicant and the First Respondent, which
expiry occurred
on 1 March 2012, is a transfer of a business as a
going concern in terms of Section 197 of the Labour Relations Act 66
of 1995;
(b)
It is declared that the date of such transfer of the business as a
going concern is
1 March 2012l
(c)
The First Respondent is ordered to comply
with its obligations in terms of
Section 197
of the
Labour Relations
Act (in
respect of the employees of the transferred business)
(d)
The First Respondent is ordered to pay:
(i)
The Applicants’ costs, including the
costs of the Arbitrator and of the Labour Court proceedings; and
(ii)
NUMSA’s costs in the arbitration
proceedings;
Such costs to be taxed on
the High Court scale on a party and party basis.’
[18]
This award was challenged by way of an appeal which confirmed the
award of Franklin S.C. and that award is dated the 29 May
2012.
[19]
The need for this application for a declaratory order arose when
Fleet Africa refuted the validity of the settlement agreement
signed
on 18 May 2012 by the Fleet Africa and 21 May 2012, when it was
signed by the Applicant.
[20]
In order to create a quick and effective reference to the events as
outlined in the background, the Court considers it beneficial
and
necessary to include the tabulation of the timeline of events in this
matter. The timeline, as prepared by Advocate Cowley
and agreed to by
Advocate Buirski, appears hereunder.
No.
Date
Event
1
6 September 1993 to 31
March 2001
Applicant employed by
Second Respondent
2
1 April 2001
Section 197
transfer
of employment of Applicant from Second Respondent to Fleet Africa
3
29 February 2012
Contractual
relationship between First and Second Respondents terminated
4
1 March 2012
Transfer of business
would take place from First to Second Respondent
5
1 March 2012
Fleet
Africa informs its employees (including Applicant) that
retrenchment process would commence
6
10 April 2012
First staff
communication of Fleet Africa to inform the Applicant about the
retrenchment process
7
10 May 2012
Fleet Africa informs
Applicant about the details of her retrenchment package
8
16 May 2012
Meeting between Fleet
Africa and its employees
9
18 May 2012
Applicant accepts the
correct retrenchment package
10
18 May 2012
Retrenchment contract
(aka as “SETTLEMENT AGREEMENT”) of Applicant signed by
Fleet Africa
11
21 May 2012
Applicant signs
retrenchment contract
12
21 May 2012
Fleet Africa informed
Applicant about result of arbitration between the First and Second
Respondents and that it was subjected
to appeal
13
29 May 2012
Arbitration appeal’s
outcome
12
11 June 2012
Fleet Africa
repudiates the Applicant’s retrenchment contract
13
25 June 2012
Applicant demands
specific performance
14
28 June 2012
Fleet Africa states
reasons for repudiation
[21]
It is to be specifically mentioned that there are no material
disputes of fact on the papers. Rather, the parties differ in
their
approach to the legal consequences which results from the
circumstances of the background to the matter. Fleet Africa contends
that the termination of the second outsourcing agreement (and the
events which followed) gave rise to the transfer of a business
as a
going concern as contemplated under section 197 of the Labour
Relations Act 66 of 1995 (LRA), whilst the Applicant contends
that
her employment with Fleet Africa terminated on the conclusion of the
settlement agreement.
Fleet
Africa’s Objection
[22]
Advocate Buirski raised the point that a transcript of a meeting held
on 16 May 2012 and which was filed under the heading
“Index
Additional Documents” was inadmissible as it had been filed
without a supporting affidavit and therefore has
no status. Advocate
Cowley responded and drew the Court’s attention to Volume 2 of
the record, page 173 to 176, which is
an affidavit of one Alexander
Nathaniël Van Zyl (Van Zyl) and which affidavit reads:
‘
2
I am an adult male diesel mechanic and at all times materially
relevant to the
application an employee of the First Respondent,
whose employment has been transferred to the Second Respondent as is
the case
with the Applicant.
3.
I confirm that I have read the Replying Affidavit of the Applicant
and confirm
the correctness thereof insofar as same relates to me.
4.
I confirm that on or about 16 May 2012,
myself together with other unionised staff members of the Fleet
Africa attended a consultation
in terms of Section 189 with the First
Respondent.
5.
The First Respondent was represented by its
HR Executive, Nontuthuko Masuku and its legal representative Mr
William Berry.
6.
During the said consultation, whilst
voluntary retrenchment packages were being discussed, Mr Berry
informed all present verbatim
of the following:
“
They
have to take you, its part of their transfer, part of their process…
The only time that you won’t be… and
that was what I was
trying to explain to you pertaining to that settlement agreement is
that it does not include the City saying
that they have not been
party to this at all. This is our exercise. So when you see the
settlement agreement you will see that
it says in full in full and
final settlement of all claims against Fleet Africa, bah bah bah and
City, okay, but the City isn’t
a party to this agreement so we
have to put it in because of our relationship with the City, because
we don’t want them coming
back and saying you settled with
these guys and you didn’t tell us and you’re hammering
us. We want to be able to at
a later stage say that we in fact had no
obligations to include you on this agreement, but what I’m
saying to you is that
it’s a legal right for you to transfer,
is what this arbitration Whether they want you or not, if the
decision is made by
the arbitrator that the business transfers the
same as it did in 2001 you will go across to the City, whether they
like it or not,
okay. So that is the first answer. The second answer
is Fleet Africa is giving a retrenchment but it is doing it as
a
voluntary retrenchment at this point in time, okay, so at this point
in time we are giving more than we would have to do if we
have to
retrench, okay, mainly because we want the settlement agreement
signed up so that you don’t sue Fleet Africa, so
you get the
extra because you are foregoing the right to sue Fleet Africa, but
you are not necessarily foregoing the right to transfer
to the City.
So you could get two… you can get your job with the City of
Johannesburg with all your length of service and
terms of conditions
and you signed up the voluntary retrenchment with Fleet Africa, you
get your severance as well, so you’re
getting a double benefit.
if we don’t succeed on the 197, and they say that there wasn’t
this transfer to the City,
then we will have to retrench and then if
you haven’t signed the voluntary retrenchment your package is
going to be smaller,
but then you can sue, then you can go to court
and say that it was unfair and the dismissal was unfair retrenchment
because you
wouldn’t have signed the settlement agreement. You
see that is the difference. Fleet Africa is prepared to pay extra to
get
a settlement from you.”’
[23]
In the rebuttal affidavit, sworn to by Harrington, at page 199
paragraph 20, says the following:
‘
[I]n
respect of the Applicant’s submissions in paragraph 24 and the
affidavit of Van Zyl the consultation was likewise recorded
by the
First Respondent and I submit that the Applicant is required to
submit a sworn translation of the recording for it to be
properly
taken into account in the present application. I submit in this
regard that the consultation took place with the non-unionized
employees who attended the meeting in their individual capacities.
The Applicant was not present at the meeting, nor was she
represented.’
[24]
This affidavit of Van Zyl was attested to by a Commissioner of Oaths
at Parkview Police Station on 18 September 2012 and was
filed by the
attorneys of record on the same day being 18 September 2012.
[25]
In response, the Applicant filed a copy of the transcript, to which a
certificate of veracity is attached from transcribers
Lubbe and
Meintjies CC and which is dated 22 October 2012 and was faxed to
William Berry Attorneys on 2 December 2013.
[26]
It, therefore, appears evident to this Court that the Applicant had
remedied the flaw identified
by Harrington in her rebuttal affidavit
and in fact complied with the suggestion to submit a sworn
translation of the recording.
From this point, Fleet Africa did not
raise any further objections on this issue.
[27]
The objection raised by Advocate Buirski was also not raised at the
outset of the application as a point
in limine
, not only when
Advocate Cowley referred to it in his address to the Court, where it
became apparent that Advocate Buirski had not
seen the document.
[28]
Advocate Buirski, upon the Court’s questioning as to why he had
not seen the transcript before,
inter alia,
responded that he
himself may have been at fault. Advocate Buirski also admitted from
the Bar that the meeting did take place and
did not dispute the
contents of the transcript.
[29]
The Court, therefore, finds that the transcript of the meeting held
on 16 May 2012 and attended by Mr. William Berry for the
purpose of
consulting with non-unionised affected employees is admissible. The
Court has already referred to this transcript in
its summary of the
background for the purposes of proper chronology of events.
The Issues
[30] The legal issues to
be decided are:
1.
Whether this Honourable Court has
jurisdiction to entertain this Application;
2.
Whether Fleet Africa was entitled to enter
into the settlement agreement;
3.
The validity of the settlement agreement;
[31]
Fleet Africa contended that this Honourable Court does not have
jurisdiction to entertain this application on the basis that
settlement agreements that are within the contemplation of section
158(1)( c) are settlement agreements that arise as a compromise
or
resolution to any litigation brought in terms of the Act.
[32]
Section 158(1)(c) of the Act provides as follows
‘
The
Labour Court may:
“
Make
any arbitration award or any settlement agreement an order of the
Court.”’
[33]
Fleet Africa relies on the decision of
Molaba
and Others v Emfuleni Local Municipality
,
[1]
where it was recognised that the requirement in the definition in
section 142A are relevant for the purposes of interpreting section
158(1)(c). In this regard, section 142A of the Act may make any
settlement agreement in respect of any dispute that has been referred
to the Commission an arbitration award and that a settlement
agreement is a written agreement in settlement of a dispute that a
party has a right to refer to arbitration or to the Labour Court.
[34]
Fleet Africa argued that the
Molaba
decision held that
although a broader interpretation of the Court’s power in terms
of the section 158(1)(c) of the Act may
be defensible, such an
interpretation would entirely undermine the limitations established
by section 142A and blur the lines between
contractual claims and
claims that could be resolved by orders under section 158(1)(c).
[35]
Further, it was held that a narrow interpretation of the section was
preferred to limit the application of section 158(1)(c)
of the Act to
those instances where a party has validly referred a dispute to the
court for adjudication and where a dispute at
any time after the
referral has been settled.
[36]
Fleet Africa argued that in the present case no matter of mutual
interest had been validly referred to the court for adjudication
prior to the conclusion of the settlement agreement that the
Applicant seeks to enforce by way of this application.
[37]
However in
Greef
v Consol Glass (Pty) Ltd
,
[2]
the Learned Court in overturning the decision of the Court
a
quo
,
found that in following
Molaba
,
its interpretation of section 158(1)(c), without taking into account
section 158(1)(A), but with reference to, in particular section
142(A)(1), the equivalent of which was desirably excluded from
Section 158, was wrong
.
[38] Section 158(1)(c)
must be read with section 142(1)(A) which reads:
‘
For
the purposes of subsection (1)(c) a settlement agreement is a written
settlement agreement of a dispute that a party has the
right to refer
to arbitration or to the Labour Court
...’
[39] The Learned Court,
in the
Greef
decision said:
‘
So
properly interpreted, in terms of s 158(1)(c), read with s 158(1A),
the Labour Court may make any arbitration award an order
of court and
may only make settlement agreements, which comply with the criteria
stated in s158(1A), orders of court. A settlement
agreement that may
be made an order of court by the Labour Court in terms of s 158(1) C
(c), must (i) be in writing, (ii) be in
settlement of a dispute (ie
it must have as its genesis a dispute); (iii) the dispute must be one
that the party has a right to
refer to arbitration, or to the Labour
Court for adjudication, in terms of the LRA; and (iv) the dispute
must not be of the kind
that a party is only entitled to refer to
arbitration in terms of s 22(4), or s 74(4) or s 75(7).’
[3]
[40]
At the time of the settlement agreement that the Applicant and the
Fleet Africa had entered into, Fleet Africa was one of the
Applicants
in a dispute with the City of Johannesburg. The Motor Industry Staff
Association was the Second Applicant and the National
Union of Metal
Workers of South Africa, the Third Applicant.
[41]
The essence of the dispute here was that Fleet Africa concluded two
successive “Outsource Service Agreements” in
2001 and
2006 respectively. Fleet Africa, in terms of these two agreements
operated and managed the City’s vehicle fleet.
The second
outsourcing agreement terminated on 29 February 2012. According to
Fleet Africa, termination of the second outsourcing
agreement and the
re-purchase of vehicles which followed triggered the operation of
section 197 of the Act. The City disagreed
with this contention. It
took the stance that no business was transferred to it upon
termination of the second outsourcing agreement.
All that happened,
the City maintained, was that the services provided by Fleet Africa
were put out to tender and would in due
course be rendered by a new
service provider. The City, therefore, contended that section 197
does not apply.
[42]
In order to resolve this dispute (and in an effort to obtain clarity
in regard to the position of the employees who had been
engaged in
providing the fleet management business for the City), Fleet Africa
approached the Labour Court by way of an urgent
application launched
on 13 March 2012. It sought the following relief:
‘
Declaring
that the transfer of assets and other rights and obligations (which
constitute a fleet service business operated by the
Applicant until 1
March 2012 from the Applicant to the Respondent, on expiry of the
second outsource service agreement between
the Applicant and the
Respondent, which expiry occurred on 1 March 2012, is a transfer of a
business as a going concern in terms
of Section 197 of the Labour
Relations Act 66 of 1995 (“the Act”);
Declaring that the date
of such transfer of the business as a going concern is 1 March 2012;
Ordering the Respondent
to comply with its obligation in terms of Section 197 of the Act (in
respect of the employees of the transferred
business).’
[43]
The parties later referred the application to be decided before A.E.
Franklin S.C. at
an arbitration process.
The parties agreed to,
inter alia,
the following term of
reference to the Arbitrator:
‘
2.3.
The Arbitrator will have the powers to make a decision or order,
including as to procedural matters
and costs that a Judge of the
Labour Court would have had in dealing with this matter. The costs of
the Labour Court proceedings
will be costs in the arbitration.’
[44]
In addition, the primary purpose of the settlement agreement on the
part of Fleet Africa was specifically to, in writing, obtain
the
Applicants consent to a voluntary retrenchment package and in return
to waive her right to lodge a dispute in whatever forum.
This is best
captured by reference to the relevant clause in the settlement
agreement:
‘
2.
The parties agree that in full and final settlement of any claims of
whatsoever nature
arising from (including but not limited to any
outstanding salary obligations, any accumulated leave pay, any
severance benefit
and any notice obligations any entitlement to
transfer in terms of section 197 of the Act (to the City of
Johannesburg or elsewhere)
and any claims for unfair dismissal
whether automatic or not)
that the Employee
may have against Fleet Africa to the following:
2.1.
the Employee’s last working day will be (fill in details);
2.2.
the Employee will be paid the gross sum of R215, 145.49 as set out in
the breakdown of amounts
due attached hereto, less all income tax
deductions, and other deductions in terms of a directive obtained for
this purpose;
2.3.
the Employee will be entitled to be paid the credit due to the
Employee from any retirement funds
maintained by Fleet Africa on the
Employee’s behalf, which payment shall be made in accordance
with the rules of any such
fund.
2.4.
the Employee shall keep in strict confidence any information or
knowledge that the Employee has
acquired while in the employ of Fleet
Africa about the business of Fleet Africa, or any related entity,
person, director, employee
or the like, and shall not disclose any
such information to any third party.
2.5.
the Employee will continue to be bound by any restraint,
confidentiality or other like agreement
contained in his current
employment contract.
2.6.
the Employee specifically waives his/her right to be ring –
fenced and considered as included
as an employee of the business that
provided the fleet service to the City of Johannesburg in terms of
the outsource agreement
A114 at any time but more specifically at 29
February 2012.
2.7.
the Employee agrees that to the extent that it is permissible and
required that this agreement
is made in compliance with sections 197
(2) and 197 (6) of the Act and the circumstances of such agreement
has been explained to
the employee and the employee has been given
the opportunity to take independent legal advice in respect of the
consequences of
this agreement.
2.8.
the Employee shall keep the concluding of this agreement and the
terms of this agreement confidential.’
[45]
This Court is satisfied that this matter is consistent with the
preferred broader interpretation of section 158 (1)(c),158
(1A) and
158(1)(a), as held in
Greef
which in turn followed the case of
Bramley
v John Wilde t/a Ellis Alan Engineering and Another
.
[4]
[46]
In the interim, pending the outcome of, first, the referral to the
Labour Court and thereafter, the referral of one and the
same matter
to Arbitration, Fleet Africa embarked on an extensive process of
consultation in terms of section 189 of the Act. The
background and
the timeline sketch a clear and uncontested chronology of these
consultations and related events.
[47]
On the contention of Fleet Africa that the arbitration award
effectively takes over the settlement agreement, the Court would
have
to,
inter alia,
find:
1.
That the employment relationship between
Fleet Africa and the Applicant became non-existent at the time of the
retrenchment consultations
because of the appeal award of 29 May 2012
which made a retrospective order that an effective section 197
takeover occurred on
1 March 2012.
2.
That the settlement agreement is null and
void as it was signed on 18
May
2012 by the Fleet Africa and 21 May 2012 by the Applicant.
3.
That this Court has no jurisdiction to hear
this application as the effect of the retrospective order was that
the Applicant was
transferred to the Second Respondent.
4.
That the rights under section 197 of the
Act exonerate Fleet Africa from its obligations from the date of the
transfer.
[48]
In consideration of these consequences which Fleet Africa contends
ought to be found, the court deems it appropriate to examine
section
197 and its correlation to section 189 of the Act.
[49]
The extensive and diligent process of consultation in terms of
section 189 embarked on from March to May 2012 and which has
been
referred to in sufficient detail herein, is clearly that of an astute
employer who in its own words is acting as:
‘
A
company (which) acknowledges its obligations and employee rights in
this regard lawfully and in good faith and in accordance with
the
Labour Relations Act" and
"the company is well aware of the
impact on morale that this
communication
and the ensuing discussions is likely to have and assures you that
the process mentioned above will be dealt with
as fairly, sensitively
and as speedily as possible.’
[50]
Section 197(2) of the Act reads:
‘
If
a transfer of a business takes place, unless otherwise agreed in
terms of subsection (6)-
(a)
the new employer is automatically substituted in the place of the old
employer in
respect of all contracts of employment in existence
immediately before the date of transfer;
(b)
all the rights and obligations between the old employer and an
employee at the time
of the transfer continue in force as if they had
been rights and obligations between the new employer and the
employee;
(c)
anything done before the transfer by or in relation to the old
employer, including
the dismissal of an employee or the commission of
an unfair labour practice or act of unfair discrimination, is
considered to have
been done by or in relation to the new employer;
and
(d)
the transfer does not interrupt an employee's continuity of
employment, and an employee's
contract of employment continues with
the new employer as if with the old employer.’
[51]
On a broad interpretation of section 197(2), the automatic
consequences of a transfer of business taking place are as stipulated
in paragraphs (a) to (d). What is of immense importance is the
intention encapsulated by the exclusion contained in "Unless
otherwise agreed in Subsection 6".
[52] Section 197(6)(a)
reads:
‘
An
agreement contemplated in subsection (2) must be in writing and
concluded between-
(i)
either the old employer, the new employer, or the old and new
employers acting
jointly, on the one hand; and
(ii)
the appropriate person or body referred to in section 189 (1), on the
other.’
[53]
In this instance, a transposing of the parties in this matter would
be, in terms of section 6(a)(i), the old employer and in
terms of
section 6(a)(ii), the employee. This is in terms of section 189(1)
which establishes the hierarchy of parties in a consultative
process.
Section 189 (1) reads:
‘
When
an employer contemplates dismissing one or more employees for reasons
based on the employer's operational requirements, the
employer must
consult-
(a)
any person whom the employer is required to consult in terms of a
collective agreement;
(b)
if there is no collective agreement that requires consultation-
(i)
a workplace forum, if the employees likely to be affected by the
proposed dismissals
are employed in a workplace in respect of which
there is a workplace forum; and
(ii)
any registered trade union whose members are likely to be affected by
the proposed
dismissals;
(c)
if there is no workplace forum in the workplace in which the
employees likely to be
affected by the proposed dismissals are
employed, any registered trade union whose members are likely to be
affected by the proposed
dismissals; or
(d)
if there is no such trade union, the employees likely to be affected
by the proposed
dismissals or their representatives nominated for
that purpose.’
[53]
This criteria of consulting parties essential to the process of
consultation in terms of section 189 is crucial and if not
allowed
will result in the agreement being invalid.
[5]
[56]
This is indicative of the flexibility of section 197 in that it
specifically caters for alternative possibilities to its
consequences,
whilst at the same time ensuring a standard of
compliance that the agreement is required to be in writing and has to
meet the criteria
of section 189(1).
[57]
Section 197(2) starts with the word “if”:
“
If”
in this context, according to Websters New World Dictionary means “on
condition”, “in case that”
and could also mean “in
anticipation of”. This meaning and the explicit use of the word
“If”, in the Court’s
view, extends the notion of
flexibility even further, creating the perfect space for the
situation as arose in this matter where
there was a lacuna between
the referral of the matter, first in the Labour Court and then, to
arbitration and the delivery of the
appeal award on 29 May 2012.
During this time, Fleet Africa was faced with responsibility of
retaining and maintaining its staff
complement which rendered
services to the Second Respondent. On the facts before this Court, it
was appropriate for Fleet Africa
to mitigate its losses and to
commence the consultation process that it undertook in terms of
section 189.
[58]
Section 189, in parallel with section 197, involves communication
between the employer and employee directly or via the accepted
representation channels. In a world as technologically connected as
ours at present is, the old English concept of the employment
relationship being one of “master and servant”, has long
gone been outgrown.
[59]
In the global village of economy, transnational and multi-national
corporations with tentacles extending far and wide have
impacted or
rather redefined the traditional and neat employment relationship. At
national level, the picture is no different in
a country as South
Africa, with its impeccable Constitution, the arena of Labour Law has
become firmly defined and statutory intensive.
This has to some
extent, led to the development of “core business emphasis”.
[60]
Businesses today prefer to contain their business activities to what
their “core business” is and to outsource
other necessary
activities in their scope and employment, to other “core-business”
companies. This is what the relationship
was in respect to the First
and Second Respondents. The foundation of a relationship of such a
kind, is the tender award which
defines all the terms and conditions
of the two parties. Fundamental to this, is the inevitable period of
existence which has a
definite start and a definite termination.
[61]
The harsh reality is that whilst the contracting parties, in this
instance the First and Second Respondents, obviously ensure
a
profitable and constructive consequence of the contractual
relationship for each other, it does have a double–edged sword
effect on the employees who serve in such a relationship.
[62]
On the one hand, employees enjoy security for a defined period. But
there is the knowledge that at the end of the period of
the contract,
it could mean that they could well join the ranks of the unemployed.
Even where the possibility of a section 197
takeover existed as in
this case, it was subject to the determination of, at first, the
Labour Court, and then, the Arbitrator.
[63]
It is, and one does not require a psychologist to pronounce on this,
a most frightening time for both the company as well as
the affected
employees. The prospect of having a regular income with benefits
possibly, of having a place which creates a format
of life to a
person, who more often than not, has others who likewise, depend on
the stability, comfort and provision that such
a position of
employment inevitably provides.
[64]
In this instance, the Applicant, Erica Nijs, was employed by the
Second Respondent, the City of Johannesburg, from 6 September
1993 to
31 March 2001. She was part of a Section 197 takeover which took
effect on 1 April 2001. The final contractual relationship
between
the First and Second Respondents terminated on 29 February 2012. On 1
March 2012 and only finally pronounced on 29 May
2012, would be the
transfer of business from the Fleet Africa to the Second Respondent.
On 1 March 2012, Fleet Africa informed
its employees (of which the
Applicant was one) that the retrenchment process would commence. This
process has been referred to
hereinabove in the background and
timeline.
[65]
This timeline and the explicit and obviously
bona fide
communication of Harrington and the Applicant regarding her
retrenchment package against the background of this situation between
the First and Second Respondents lends itself to a complete mosaic of
“corporate events” as it unfolded in this scenario.
[66]
On 29 May 2012, the Applicant commenced her contract of employment
with the Second Respondent, as it was in the circumstances,
the
natural thing to do.
[67]
Has she, as argued by Fleet Africa, waived her rights in terms of the
settlement agreement by assuming her employment with
the Second
Respondent?
[68]
This court thinks not and this is where the words of Mr. William
Berry, as the Fleet Africa’s labour specialist, tasked
with the
addressing of and advising of the affected employees as part of the
consultation process of section 189, is of utmost
relevance.
[69]
He stated,
inter alia
, and it is repeated, yet again here:
‘
We
want to be able to at a later stage say that we in fact had no
obligation to include you in this agreement, but what I’m
saying to you is that its a legal right for you to transfer, is what
this arbitration is going to do, then even if you agreed not
to go,
you are entitled to do so”. You are actually getting a double
benefit.’
[70] And this is
precisely what the Applicant did.
[71]
This Court does not consider it even necessary but for the sake of
exploring all aspects on the issue of jurisdiction refers
to the case
of
Franks
v University of the North
,
[6]
where the learned Court found that the provisions of section 77 of
the Basic Conditions of Employment Act 75 of 1997, confers concurrent
jurisdiction on the Labour Court with a Civil Court to hear and
determine any matter concerning a contract of employment,
irrespective
of whether any basic conditions of employment
constitutes a term
of
the contract.
[72]
This Court has deliberately elected not to proceed with each issue
that it has been tasked with adjudicating on, under separate
headings. The facts here are convoluted and as such are best referred
to from a holistic perspective as opposed to a compartmentalised
approach. The court will proceed to make findings on all issues
pertaining to this matter.
The issue of
jurisdiction
[73]
Section 158(1)(c)(iv) read with section 158(1A) is met in every
respect. The dispute between the First and the Second Respondents
was
referred to both the Labour Court as well as to private arbitration
and there is a written agreement of settlement, which the
Applicant
had the right, in her own capacity as employee, to refer to
mediation/arbitration and the Labour Court. In this case,
no term of
the agreement of settlement was disputed. What was contended was that
the agreement of settlement was made conditional
to the arbitration
award. No such clause is contained in the agreement of settlement
which appears in its totality in this judgment.
[74]
Whilst Fleet Africa would like to convince this court that it did not
have the relevant juristic capacity to enter into such
an agreement
of settlement, its long, thorough and direct communications with its
employees as a whole and with the Applicant,
herself, speak
otherwise.
[75]
The Labour Appeal Court in
South
African Post Office Limited v CWU obo Permanent Part – Time
Employees
,
[7]
held that there was a dispute between the parties about the
interpretation of the said agreement and it was ordered that the
dispute
between the parties about the interpretation of the agreement
be referred to the CCMA.
[76] No such dispute
exists in this matter.
[77]
The agreement of settlement and having satisfied all the requirements
in relevant sections of the Act and the cases above,
which has been
extensively canvased. This being so, this Court is in a position to
exercise its discretion to determine whether,
on all the further
facts and circumstances, the agreement of settlement be made an order
of court.
[78]
The second issue is whether Fleet Africa was entitled to enter into
the settlement agreement with the Applicant. Much has been
traversed
on the consideration of all the facts in the context and background
of the dispute between the First and Second Respondents.
In fact, the
in-depth and incisive interpretation of section 197(2) read with
section 197(6) and its particularly language in the
use of the word
“if” and the opening sentence of the section, lead to
this Court’s finding that the flexibility
afforded in this
section read together with section 189 in so far as it is of
relevance here, that the agreement of settlement
made against the
background of this matter and in contemplation of and anticipation of
a transfer of a contract of employment.
In which event, the
consequences of section 197(2)(a) and (b) and (c) come into effect.
Section 189 is to be seen as running parallel
to section 197 in this
context.
[79]
This Court holds the view that agreements of settlement concluded
between parties in terms of section 189 and against the backdrop
of
an anticipated section 197 transfer, are agreements concluded with
the purpose of the Labour Relation Act in the foreground,
namely, to
advance economic development, social justice, labour peace and the
democratisation of the workplace.
[80]
The Court finds that Fleet Africa was not only entitled to conclude
the agreement of settlement but that it did so, most diligently,
conscientiously and in good faith, for all the reasons already
traversed.
[81]
The Court makes the following order:
1.
The Agreement of Settlement entered into by
Fleet Africa and the Applicant and which has the dates of 18
May 2012 on which Fleet Africa signed
and 21 May 2012 on which the Applicant signed is made an Order of
Court;
2.
Fleet Africa to pay the costs of the
application.
__________________
Rawat, AJ
Acting Judge of the
Labour Court
APPEARANCES:
For
the Applicant:
Adv. HH Cowley
Instructed
by:
Martin Hennig Attorneys
For
the First Respondent:
Adv. P Buirsky
Instructed
by:
William Berry Attorneys
For
the Second Respondent:
Mr. C Todd
Instructed
by:
Bowman Gilfillan
[1]
(2009)
30
ILJ
2760 (LC).
[2]
(2013)
34
ILJ
2821 (LAC) at para 17.
[3]
Ibid
at para 19.
[4]
(2003)
24 ILJ 157 (LC).
[5]
See
Douglas
and Others v Gauteng MEC for Health
[2008] ZALC 8
;
[2008] 5 BLLR 401
(LC) and
SAMWU
and Another v SALGA and Others
[2010] 8 BLLR 882 (LC).
[6]
(2001)
22 ILJ 1158 (LC) at 15.
[7]
(2014)
35 ILJ 455 (LAC) at para 24.