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[2014] ZALCPE 35
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Mushaike and Others v Independent Communications Authority of South Africa (P 137/12) [2014] ZALCPE 35 (12 December 2014)
REPUBLIC
OF SOUTH AFRICA
IN
THE LABOUR COURT OF SOUTH AFRICA, PORT ELIZABETH
JUDGMENT
CASE
NO: P 137/12
DATE:
12 DECEMBER 2014
Not
Reportable
In the matter
between:
PASCAL MUSHAIKE
AND 8 OTHERS
..............................................
Applicants
And
INDEPENDENT
COMMUNICATIONS AUTHORTIY
OF SOUTH
AFRICA
........................................................................
Respondent
Heard: 5 and 6
September 2013
Delivered: 12
December 2014
Summary: The
applicants are required to establish their entitlement to the
Performance bonus for their claim to the bonus to succeed.
JUDGMENT
LALLIE J
Introduction
[1] The applicants
are employed by the respondent in Port Elizabeth and occupy different
positions. Their claim is that pursuant
to concluding verbal
performance management contracts with the respondent, the respondent
refused to pay them their performance
bonuses. The respondent’s
defence was that the performance management contracts (“contracts”)
were invalid as
the respondent is a public entity and not competent
to enter into verbal contracts, alternatively, if the contracts
(“contracts”)
were valid, the applicants did not qualify
for the performance bonus (“the bonus”). In addition it
was submitted that
the contracts were not binding as the individual
who purported to enter into those contracts with the applicants
lacked the necessary
authority to act on behalf of the respondent.
[2] Mr Moletsane
(“Moletsane”) testified on behalf of the applicants that
during the 2010-2011 financial year which
coincided with the
2010-2011 performance cycle and ran from 1 April 2010 to 31 March
2011, they reported to Mr Goliath (“Goliath”)
who was
their Regional Manager. The respondent paid the performance bonus to
its employees since 2006 in terms of a performance
management policy.
The practice was that employees would fill their key performance
areas (KPAs) in their contracts. At the end
of the year the regional
manager would appraise their performance and forward the appraisals
to the human resources department
which would pay their bonuses at
the end of March. In 2008 and 2009 bonuses were not paid at the end
of the financial (at the end
of March) but two months later. In 2010
to 2011 there were labour problems which led to some employees
signing their contracts
late. The appraisals made by Goliath were
changed at head office, conduct which the applicants appealed
against. The result was
that their original appraisals were
reinstated.
[3] The applicants’
key performance areas consist of targets they are required to meet.
As there are different units at the
Port Elizabeth regional office,
each unit has its own targets. During appraisal, the applicants
presented a portfolio of evidence
to Goliath as proof that they had
reached their targets. Owing to labour disputes a number of contracts
were signed in June 2011
long after the 31 October 2010 deadline. In
the past signing performance management contracts late was of no
consequence. Employees
would be paid their bonuses if they met their
targets. Although there was a prescribed manner of conducting
appraisals for the
2010-2011 performance cycle, it was not followed
in Port Elizabeth because the senior managers, Dr Ramsey (“Ramsey”)
and Goliath did not see eye to eye as a result no employee received a
performance bonus at the Port Elizabeth office for that financial-
year and the explanation the respondent proffered was that the
employees signed their contracts late. Both Moletsane and Goliath
testified that the applicants’ counterparts in other provinces
who signed theirs even later received their bonuses. An assertion
which did not stand the test of cross-examination as the documents
they sought to rely on did not reflect the dates on which their
counter parts signed their contracts.
[4] Goliath conceded
that there were problems at the respondent which resulted in the late
signing of the contracts by employees
in 2011. Some problems were
caused by the manner in which the respondent dealt with the issue of
performance management as in some
instances they were instructed, as
Regional Managers, to deal with the issue in terms of other documents
over and above the performance
management policy. He encountered
problems of inconsistency in evaluating performance as standards
differed from province to province.
He sought guidance from Ramsey
and when the problems were not resolved he escalated his concerns to
the Human Resources Department
and the CEO who made an insignificant
attempt to assist. He reached a decision with his staff to sign the
contracts for the sake
of progress. The only flaw was that the
performance management contracts, save Walmarans’s were
submitted late. He denied
failure to comply with the policy when
conducting appraisals as it was not an issue. Goliath submitted that
there was a year when
the appraisals were disregarded and each
employee received a Christmas bonus.
[5] Ramsey, the
respondent’s only witness denied that the applicants could be
entitled to the bonus without signing their
contracts timeously and
in terms of the respondent’s policy. Verbal contracts were
invalid and in breach of the respondent’s
policy. The process
of paying performance bonuses started with the signing of the
performance management contract by an employee
and his or her
supervisor and Regional Manager. In March of the year preceding the
payment of the bonus, the mid-year review was
used to motivate the
business plan. The end of the year assessment ended with a moderation
and payment of the performance bonus.
[6] Ramsey testified
that he notified all the Regional Managers including Goliath to
motivate employees to sign their contracts
for the 2010-2011
performance cycle but he was ignored. He explained that the policy
that governed payment of the bonus required
the periods prescribed
for reviews to be adhered to in order to facilitate payment to
deserving employees before the end of the
financial year. The
respondent has to comply with the Public Finance Management Act which
requires the respondent to make payments
it has budgeted for. As the
applicants’ contracts were not submitted on time, they were not
budgeted for.
[7] Ramsey testified
that the issue of the payment of the bonus was done according to the
book in the 2009-2010 financial year and
employees including the
applicants were paid their bonus. He denied that the amounts the
applicants are claiming are due to them
as no contracts were sent to
him, the human resources department or the finance department. He
signed no assessments in October
2010 and at the end of March 2011.
There was no agreement as to what the applicants were doing. The
applicants were informed of
the consequences of not signing their
contracts on time. He found their self assessments unreasonable. He
denied ever being informed
that Goliath had problems with the
performance management contracts as he was even involved in setting
targets for employees.
[8] The applicants
had to establish their entitlement to the performance bonus for the
2010-2011 performance cycle. The fourth
and fifth applicants withdrew
their claims. Goliath and Wolmarans conceded that they were not
entitled to the bonus. It was argued
on behalf of the applicants that
there was a dispute with regard to the contents of the contracts. The
applicants and the respondent
presented by Goliath should have agreed
on the contents of the contract for the 2010-2011 performance cycle.
The applicants attributed
the delay in signing their contracts to
problems which were escalated to Ramsey, the HR Department and the
CEO. Ramsey denied the
existence of problems and testified that the
applicants revolted. The applicants relied on a letter in which their
trade union,
CWU, raised problems pertaining to the payment of the
bonus and advised the applicants against signing the 2010/2011
performance
contracts as CWU had not been consulted. The applicants
argued that Ramsey was untruthful in denying knowledge of the
problems
as he promptly reported their refusal to sign the contracts
and attached the letter from the CWU. He further referred to the
union’s
approach of refusing to sign the contracts as
ill-founded. It was also argued on behalf of the applicants that
despite the respondent’s
failure to solve their problems they
signed their contracts. They were evaluated by Goliath who decided
that they qualified for
the bonus in the amounts they are claiming.
[9] It was argued on
behalf of the respondent that the applicants’ contracts were
invalid. Firstly, because there was no meeting
of the minds between
the parties. The applicants were required to sign the contracts by
September failing which they would forfeit
their eligibility for the
bonus. When they missed the deadline the offer expired. Goliath had
no authority to enter into the contracts
on behalf of the respondent.
[10] A conclusion
that the applicants disqualified themselves from receiving the bonus
by their failure to sign the contracts on
time can properly be taken
after all the circumstances surrounding the delay have been
considered. It is common cause that at
the commencement of the
2010-2011 performance cycle the respondent had a performance
management policy in place which, inter alia,
governed the payment of
the performance bonus. The respondent denied that the late signing of
the contracts was due to conflict
between the applicants’ trade
union and itself. A letter dated 16 September 2010, written by Ms
Mopeli (“Mopeli”)
who was the acting CEO supports the
applicants’ version. Its salient provisions are that although
it was towards the end
of the second quarter of the financial year,
45% of the employees had not met the requirements of the performance
management process.
She acknowledged the challenges experienced with
the effective implementation of the management system including the
inability
to start implementing new performance contracts. The
process had to be managed on the basis of the 2003 policy until the
revised
policy had been approved save for deviating from four formal
evaluations per cycle as it was not practical. Employees had to be
made aware that performance management is a condition of employment.
Both divisions had to submit their staff performance contracts
by
midday 20 September 2010 with signed IDPs. All employees who chose
not to co-operate with the process were required to give
their
reasons in writing. All employees were required to participate in the
half yearly review process during October 2010 and
divisions had to
submit their evaluation reports to HR by 31 October 2010 to qualify
for compliance with the process. Paragraph
seven of the letter is
instructive and reads:
‘Due to
challenges of attempting to resolve the disputes on the PMS process
from staff and management in the regions, the
process has to be
undertaken on a direct interactive basis. The regions should be
isolated from the measures proposed and contracting
deadline for the
regions be extended to 31 October 2010 and be taken simultaneously
with the half yearly review. However, all the
different phases of the
process must be effected to the compliant. HR must support and
monitor the activities.’
Most applicants
signed their contracts in June 2011.
[11] In addition to
proving the existence of problems between management and employees
with regard to the signing of the contracts
for the 2010-2011
performance cycle, the letter also serves to clarify to the
respondent’s employees, including the applicants,
the
importance of having the contract signed and the consequences of
failure to sign them. The letter therefore, amended the requirement
that the contracts had to be signed before 31 March 2010. Having been
fore-warned, the applicants could not seek to rely on the
past
practice that late signing of contracts was of no consequence.
Similarly, the respondent could not rely on strict compliance
with
the policy with regard to the date on which the contracts should have
been signed.
[12] It was
submitted on behalf of the applicants that Goliath and Ramsey did not
see eye to eye, a situation which contributed
to their inability to
fulfil the requirements which would have made them eligible to the
bonus. On 28 March 2011, the CEO addressed
the following letter to
senior managers:
‘PERFORMANCE
APPRAISAL PROCESS FOR 2010/2011
The performance
management cycle for 2010/2011 is coming to an end; it is therefore
imperative to outline a process that will enable
adequate preparation
and timeouts finalisation of the performance appraisal process.
The divisional heads
with the assistance of human resources shall convene performance
appraisal meetings to ensure objective and
consistent application of
performance ratings and also to resolve disputes that might arise in
the respective divisions. All employees
shall be assessed on a five
point performance rating scale; employees appointed in the last
quarter of the financial cycle shall
be assessed in the following
financial year.
Unresolved disputes
shall be referred to the CEO for consideration and final decision.
The CEO shall sign off all divisional performance
ratings schedules
for presentation to the remuneration committee (REMCO). REMCO shall
recommend to Council the appropriate performance
rewards.’
Attached to the
letter is a schedule stating the dates on which steps in the
evaluation system should be taken as well as the persons
responsible
for taking the steps. Goliath testified that the respondent failed to
comply with its own policies.
[13] The letter of
28 March required Ramsey and Goliath as the divisional heads to
convene performance appraisal meetings and refer
unresolved disputes
to the CEO. They did not, instead they were entrenched in their
differences. In the process they missed the
opportunity of dealing
with the problems surrounding the applicants’ contracts.
Goliath entered into performance management
contracts with the
applicants between May and July 2011, appraised their performance and
decided that performance bonuses were
due to them. Ramsey attempted
to moderate the appraisals. It is common cause that the respondent’s
policy has delegated that
function to the moderation committee. As
the general manager, his function was to make submissions to the CEO
who in turn was charged
with the responsibility of dealing with
unresolved disputes and taking the final decision. Ramsey alleged
that the CEO had delegated
his power of final decision making to him.
He could not produce the delegation and the policy is silent on the
delegation of the
CEO’s function of taking the final decision.
By usurping the CEO’s power contrary to the policy, Ramsey
abdicated his
performance management responsibilities to the
detriment of the applicants.
[14] Goliath’s
evidence that the respondent’s efforts to solve the applicants'
problem was minimal was proved correct
by Ramsey’s attitude and
lack of understanding of the extent of his authority in the
performance management process. His
evidence that he signed the
contracts late was not refuted. He was the regional manager and had
the authority to enter into performance
management contracts on
behalf of the respondent. The fact that he exercised his authority
late does not diminish his authority
which was linked to his position
at the respondent. The only evidence led on behalf of the applicants
pertaining to the signing
of their contracts was that they were
signed late. The allegation that they had entered into verbal
contracts was not substantiated.
[15] It is common
cause that in terms of the respondent’s policy payment of the
performance bonus forms part of the performance
management system
which begins with the signing of the performance contract between an
employee and the respondent, represented,
for purposes of the present
matter, by Goliath in his capacity as the regional manager. The
contracts should have been endorsed
by Ramsey in his capacity as
general manager. The applicants conceded that their contracts were
signed late. In the contracts the
applicants and Goliath were
required to have agreed on outputs and development plan objectives,
measurements and assessment of
outputs, interpretation of assessment
criteria and approaches to two review sessions. Assessments had to be
based on facts and
not conceptions and had to be recorded. The
applicants failed to establish that they entered into contracts which
complied with
the policy. The decision to pay the applicants the
performance bonus had to be based on two assessments. It is common
cause that
Goliath assessed the applicants once. Management
contributed to the applicants’ inability to fulfil the
requirements of being
eligible for the performance bonus. The
applicants have to take responsibility for their contribution to
their problem. When there
were problems between the CWU and the
respondent about the performance contracts, the acting CEO made the
respondent’s position
to all its employees very clear. She
invited all employees who chose not to co-operate with the process to
state their reasons
in writing. The applicants did not seize the
opportunity and lost the advantage of bringing their problems to the
CEO’s attention.
All the pre-requisites for the payment of the
bonus were clarified in the letter but the applicants did not comply.
They were left
with no basis for their claim to the performance
bonus. As the applicants have not established their entitlement to
the bonus their
claim cannot succeed.
[16] I have
considered the arguments on costs. It will not be fair to make a
costs order against the applicants in view of the respondent’s
contribution to the applicant’s inability to fulfil the
requirements for the performance bonus.
[17] In the premises
the following order is made:
17.1 applicants’
claim is dismissed.
Lallie J
Judge of the
Labour Court of South Africa
APPEARANCE
For the
Applicant: Advocate Grobler
Instructed by:
Van De Walt Attorneys
For the
Respondents: Mr Motsoeneng In person