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[2014] ZALCPE 37
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Schroeder and Another v Pharmacare Ltd t/a Aspen Pharmacare (P341/11) [2014] ZALCPE 37; [2015] 2 BLLR 168 (LC); (2015) 36 ILJ 1349 (LC) (26 November 2014)
REPUBLIC OF SOUTH
AFRICA
IN THE LABOUR COURT OF
SOUTH AFRICA, PORT ELIZABETH
JUDGMENT
Case no: P 341/11
DATE: 26 NOVEMBER 2014
Not Reportable
In the matter between:
BRIAN
SCHROEDER
..........................................................................
First
Applicant
GRAHAM
SUTHERLAND
..............................................................
Second
Applicant
And
PHARMACARE LTD T/A ASPEN
PHARMACARE
...............................
Respondent
Date of trial: 19 November 2014
Date of judgment: 26 November 2014
JUDGMENT
VAN NIEKERK J
Introduction
[1] The applicants were employed by the
respondent until February 2011, when the respondent contends that it
was agreed that their
employment would terminate by mutual consent.
On 16 February 2011, each of the applicants signed what is termed a
‘mutual
termination settlement agreement’ with the
respondent, in terms of which they agreed that their employment
would terminate
with effect from 16 February 2011. The signature of
the agreements was the culmination of a process initiated by the
respondent
and conducted by what would appear to be its labour
consultant. The less said about that process and the terms of the
agreements
the better, but be that as it may, both applicants later
referred unfair dismissal disputes to the bargaining council.
[2] In the case of the second
applicant, on 13 July 2011, the presiding arbitrator held that the
bargaining council lacked jurisdiction
to entertain the referral
since the parties had concluded a settlement agreement, the effect of
which was that the second applicant
had not been dismissed. In the
case of the first applicant, a similar ruling appears to have been
made; the council had no jurisdiction
since the first applicant’s
employment had been terminated by mutual consent.
[3] On 30 January 2012, the applicants
referred a statement of case to this court in terms of Rule 6. They
seek an order setting
aside the settlement agreements, and of
reinstatement into the respondent’s employ with retrospective
effect. In its statement
of defence, the respondent raised two
special pleas. The first is that the referral falls to be dismissed
because the applicants
unduly delayed exercising any right they may
have had to challenge the validity of the settlement agreement. The
second is that
this court lacked jurisdiction to grant relief in the
form of ‘an order of reinstatement or compensation.’
[4] When the matter was called, I
raised with the parties’ representatives the issue of
jurisdiction, not specifically in
the terms of the respondent’s
special pleas but more narrowly, whether this court has the
jurisdiction to set aside an agreement
(on the grounds of duress,
misrepresentation and the like) entered into between an employer and
employee in terms of which a termination
of employment is mutually
agreed.
[5] Adv. Grogan, who appeared for the
respondent, submitted that any averments of misrepresentation and
duress ought properly to
have been raised before the commissioner in
the course of an enquiry into the existence of a dismissal. He
referred to Cook4Life
CC v Commission for Conciliation, Mediation and
Arbitration & others (2013) 34 ILJ 2018 (LC), where the court
stated, at paragraph
14 of the judgment, that s 191 of the LRA
contemplates that the CCMA must make a ruling when the existence of a
dismissal is placed
in issue. The court held further that where it is
contended that an agreement is voidable on account of its having been
induced
by duress (and that the employee had therefore been dismissed
for the purposes of the Act), the arbitrator ought properly to
determine
that issue, even if requires ultimately that the agreement
be set aside.
[6] From the papers before me, it would
appear that in the case of the second applicant, the commissioner
took the view, incorrectly,
that a dispute about the validity of the
settlement agreement precluded him from arbitrating the dispute.
However, that finding
is not relevant for present purposes –
the issue under consideration goes directly to the jurisdiction of
this court to enquire
into the validity of an agreement concluded
between an employer and an employee, by way of a referral in terms of
Rule 6, where
the employee claims to have entered into an agreement,
under duress, in terms of which his or her employment is terminated.
[7] Adv. le Roux, who appeared for the
applicants, conceded that there was no provision in the LRA (or any
other statute for that
matter) which conferred jurisdiction on this
court to entertain the applicants’ dispute in the terms in
which it has been
referred. He conceded too that in the case of the
second applicant at least, the arbitrator, as part of the enquiry
into the existence
of a dismissal, ought properly to have determined
whether the settlement agreement had been entered into under duress.
(It would
appear that in the case of the first applicant, the
arbitrator did make such an enquiry and on being advised that the
agreement
had been concluded free of duress, held that its terms
precluded the first applicant from claiming unfair dismissal.)
Argument
in the present proceedings was therefore confined primarily
to the consequences of that concession. Adv. le Roux submitted that
the court is empowered to remit the matter to the bargaining council
for a continuation of the arbitration proceedings, and that
in the
present circumstances; an order to that effect was warranted. In
support of this submission, Adv. le Roux relied on the
provisions of
s 158 (2). That section reads as follows:
(2) If at any stage after a dispute has
been referred to the Labour Court, it becomes apparent that the
dispute ought to have been
referred to arbitration, the court may –
(a) stay the proceedings and refer the
dispute to arbitration; or
(b) with the consent of the parties and
if it is expedient to do so, continue the proceedings with the court
sitting as an arbitrator,
in which case the court may only make an
order that a commissioner or arbitrator would have been entitled to
make.
[8] Adv. Grogan submitted that the
application of s158 (2) was limited to the circumstances in which a
party genuinely but mistakenly
refers a dispute to this court for
adjudication and where it becomes apparent during the course of the
proceedings that the issue
in dispute is one that ought properly to
be arbitrated by the CCMA or a bargaining council. A court is not
empowered, he submitted,
to remit a matter in circumstances where the
referral was misconceived in the first instance and where no
arbitrable dispute is
before this court, and where the proper remedy
in any event, is to review and set aside the jurisdictional ruling
made by the arbitrators
in each case.
[9] It is well-established that the
court’s jurisdiction is to be determined on the basis of the
applicant’s pleadings.
In the referral made by the applicants,
I find no reference to any provision of the LRA that confers
jurisdiction on this court
to determine the validity of a settlement
agreement, in the context of a termination of employment. To the
extent that the relief
sought by the applicants is the setting aside
of the agreement, this court has jurisdiction to make a settlement
agreement an order
of court in defined circumstances. (See s 158(1)
(c).) The court is not empowered, without more, to enquire into
their validity.
The court may determine whether an agreement induced
by duress or misrepresentation ought to be set aside in the context,
for example,
of an alleged dismissal for a reason related to the
employer’s operational requirements. But the court exercises
jurisdiction
in that instance by virtue of the employee asserting a
reason for dismissal that falls within the court’s
jurisdictional
ambit. Further, the court has jurisdiction in terms of
s 77 (3) of the BCEA in respect of matters that arise from employment
contracts.
This is not the basis on which the present claim has been
referred. Whether a dispute about the validity of an agreement that
has
the effect of terminating employment is a matter that arises from
an employment contract is therefore an issue that I need decide.
[10] As far as the future conduct of
this matter is concerned, the wording of s 158 (2) and in particular
the use of the word ‘may’
in the preamble to the section,
makes it clear that the court has a discretion to refer a matter to
arbitration if it becomes apparent
that the nature of the dispute is
such that it ought to have been so referred. The exercise of a
discretion to remit is common
in those cases where applicants contend
that they were dismissed for a reason that is automatically unfair (a
dispute over which
this court has jurisdiction) and where it becomes
apparent during the course of the proceedings that the true reason
for dismissal
is not automatically unfair and which the LRA requires
is one that requires to be arbitrated. I do not understand s 158 (2)
to
mean that this court is empowered to remit a matter to arbitration
in circumstances where the court has no jurisdiction in respect
of
the subject of the original referral. In other words, there must at
least be some preliminary basis for the court to assume
jurisdiction.
In the present case, there is none.
[11] In any event, the arbitrator has
already issued a ruling to the effect that he or she has no
jurisdiction to arbitrate the
dispute. To remit a matter to
arbitration in the circumstances and to direct that the arbitration
proceedings continue on the basis
that the arbitrator has
jurisdiction to determine the dispute, would amount to a review of
the arbitrator’s ruling. What
the applicants are asking the
court to do is to remit their dispute to arbitration in circumstances
where in both their cases,
there remains a valid and binding ruling
to the effect that the settlement agreement constituted a mutually
agreed termination
of employment and thus not a ‘dismissal’
for the purposes of s 186 (1) of the LRA. While those rulings stand
(put another
way, until they are reviewed and set aside), s 158 (2)
does not empower this court to make any order to the effect that the
arbitration
proceedings should continue.
[12] For these reasons, the applicants’
referral stands to be dismissed for want of jurisdiction, without any
further order
as to the further prosecution of the applicants’
unfair dismissal dispute.
[13] Insofar as costs are concerned,
the court has a broad discretion in terms of s 162 of the LRA to make
orders for costs according
to the requirements of the law and
fairness. While the respondents would ordinarily be entitled to its
costs on the basis that
costs follow the result, there are at least
two considerations that require that the parties bear their own
costs. The first is
that the applicants are individuals. The Labour
Appeal Court has recently highlighted the potential of adverse orders
for costs
to discourage employees who feel genuinely aggrieved from
pursuing their grievances against their employers, however misguided
that pursuit might be. I accept to that the arbitrator’s view
on his powers in relation to the settlement agreement significantly
influenced the course of this dispute, and in particular, the
referral to this court. Secondly, although the respondent raised
a
jurisdictional point of sorts in its special plea that referred only
to the remedy of reinstatement and\or compensation sought
by the
applicants. The jurisdictional point which the parties at the stage
of trial concede disposes of the referral to this court
is more
deeply grounded and one that ought properly to have been anticipated
and clearly articulated at the time that the statement
of defence was
filed. Had the respondent done so, it is possible that this matter
would never have reached the stage of trial.
For these reasons, I do
not intend to make a costs order.
I make the following order:
1. The applicant’s referral is
dismissed.
ANDRÉ VAN NIEKERK
JUDGE OF THE LABOUR COURT
REPRESENTATION
For the applicants: Adv. F le Roux,
instructed by Bakker Attorneys
For the respondent: Adv. J Grogan,
instructed by Joubert Galpin Searle Attorneys