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[2015] ZALCJHB 78
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Public Servants Association and Another v Director General: Office of the Presidency of South Africa and Another (JR2219/11) [2015] ZALCJHB 78; [2015] 7 BLLR 700 (LC) (5 March 2015)
REPUBLIC
OF SOUTH AFRICA
THE LABOUR COURT
OF SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Case no:
JR2219/11
DATE: 05 MARCH
2015
Reportable
In the matter
between:
PUBLIC
SERVANTS
ASSOCIATION
.................................................................
First
Applicant
LINAH
MATLAKALA
....................................................................................
Second
Applicant
And
DIRECTOR
GENERAL: OFFICE OF THE
PRESIDENCEY
OF SOUTH AFRICA
OFFICE
..............................................
First
Respondent
THE
PRESIDENCY OF SOUTH
AFRICA
.................................................
Second
Respondent
Heard:
19 November 2014
Delivered:
05 March 2015
Summary: Review
application i
n terms of S 158(1) (h) of the LRA. Review of the
decision of State as employer. Refusal/failure to pay bonus to
employees. Review
administration acting/legality of the decision.
JUDGMENT
MOLAHLEHI, J
Introduction
[1]
In
this review application which is brought in terms of section
158(1)(h) of the Labour Relations Act (the LRA),
[1]
the
applicants seek an order reviewing and setting aside the
decision made by the first respondent in his capacity as the
Director
General (the DG) of the second respondent. The decision relates to
the refusal to pay performance bonuses to those employees
who
qualified during the financial year 2009 and 2010.
Background
[2]
It
is common cause that during May 2007, the second respondent
established and implemented a Performance Management Development
System Policy ("PMDS") for levels 1-12 in line with the
provisions of section 3(5) (c) of the Public Service Act (the
Act),
[2]
which
provides the executing authority with powers amongst others to
establish performance management system.
[3]
The Public Service Regulation (“the
regulations”), of 2001 also gives the executing authority the
power to develop a
system of performance management and development
for employees in the department.
[4]
The Minister of Public Service
Administration (“the Minister") issued the Incentive
Policy Framework (the policy frame
work) which provides in terms of
Clause 18 that the department may not spend more than 1.5% of their
annual remuneration budget
on departmental financial performance
incentive scheme as contemplated in Chapter 1 Part 8F of the
regulations
[5]
The policy framework provides further under
Clause 29 that should a situation occur where a budgeted amount (that
is 1.5% of the
annual remuneration budget for performance bonuses) is
insufficient to award the maximum of 18% to deserving staff members,
the
department will have to manage the situation by scaling down the
applicable percentage to be granted or setting tighter standards
for
granting of the performance awards.
[6]
The second respondent has in line with the
above legal frame work developed the PMDS system for level 1-12.
Clause 10.6 of the PMDS
provides that the performance cycle is a one
year period running from 1 April to 31 March of the following year.
In order to comply
with the incentive policy frame work issued by the
Minister, the second respondent “must budget" as
follows:
a.
1% of the wage bill for effecting pay
progression for salary levels 1-12; and
b.
1.5% of the remuneration budget for the
allocation of performance bonuses for salary levels1-12.
[7]
During the month of May 2010, the officials
of the second respondent conducted performance assessment in respect
of the employees
employed within the second respondent in levels 1 to
12. The outcome of that assessment was that employees who qualified
received
salary notch progression but did not receive performance
bonuses.
[8]
The officials of the first applicant
engaged with various management officials of the second respondent
regarding the non-payment
of performance bonuses to those employees
who qualified.
[9]
On 1 March 2011, the second respondent’s
office informed members of the first applicant that the second
respondent would not
be paying performance bonuses because of lack of
funds. Thereafter several discussions were held between the parties
seeking a
solution to the problem to no avail.
Grounds for
Review
[10]
The applicants seek to have the decision of
the respondents reviewed (the decision not pay the bonuses) on the
grounds that such
a decision was arbitrary, unfair and irrational in
that:
“
24.1
The Second Respondent's officials failed to adhere to the provisions
of the PMDS and the Incentive Policy Framework and as
such, are in
transgression of the PMDS in that they failed to budget for
performance bonuses as required by the PMDS;
24.2
Furthermore, the Second Respondent's official’s failure to
consider other alternatives other than the monetary payment
for
performance bonuses as stated in the PMDS;
24.3
No reasons and/or insufficient reason were provided by the officials
of the Second Respondent on why they failed to budget
for performance
bonuses as required by the PMDS and the Incentive Policy Framework.
24.4
The officials of the Second Respondent
failed to apply their minds to the provisions of the Incentive Policy
Framework issued by
the Minister of Public Service which provides
that in the event where the budget proves to be insufficient to award
the maximum
of 18%, as it is this case, the Department will have to
manage the situation by scaling down the applicable percentages to be
granted;
24.5
The reason given by the Second Respondent's
officials not to pay performance bonuses to deserving employees is
not justifiable in
terms of the reason given for such decision in
that it demonstrates that the officials of the Second Respondent
ignored and/or
failed to take into consideration the provisions of
the Second Respondent’s policies.”
It was further
contended that the decision made was irrational, capricious
unjustifiable and unfair to the members of the First
Applicant and
other employees within the department.
Points raised
by the respondents
[11]
In contending that the decision not to
award bonuses is not reviewable the respondents have in their
answering affidavit raised
the following points:
a.
The decision which the applicants are
seeking impugned does not constitute an administrative action.
b.
The decision in question is discretionary
and therefore the applicants have no right to claim payment of the
bonuses.
c.
The applicants’ claim is in the form
of an interest rather than rights dispute.
The issues for
determination
[12]
The issues for determination in this matter
are the following:
a.
Does the decision not pay performance the
bonuses for those who qualified constitute an administrative action?
b.
Is payment of the performance bonuses
discretionary?
c.
Are the applicants entitled to the payment
of bonuses as matter of right or their demand to be paid bonuses is a
matter of interest?
[13]
The
difficult question of whether the decision by the state as employer,
which give rise to a labour dispute, constituting an administrative
action received a detailed consideration in
De
Villiers v Western Cape Department of Education
.
[3]
In
that case the court answered the question in the affirmative. The
question in that case arose in the context of a review concerning
a
refusal by the state to reinstate the employee whose contract of
employment had been terminated in terms of section 14 (1) of
the
Educators Employment Act (“the EEA”).
[14]
It
is generally accepted that the conduct of the state in its capacity
as an employer does not constitute an administrative action.
Accordingly the employment disputes between the state and its
employees must be dealt with in terms of the LRA or other labour
related legislation. The authorities are in agreement that in this
regard the remedies for labour disputes between the state in
its
capacity as an employer and its employees are found in the relevant
labour legislation.
[4]
[15]
The
Court may however in appropriate cases as stated in De Villiers
depart from the general rule. In determining whether to depart
from
the general rule the court will consider the source and nature of the
power exercised by the state in its capacity as an employer.
The
inquiry in this regard involves determining whether the power
exercised was in terms of a contract or a statute. The existence
of
alternative remedies is also a consideration to take into account
when weighing the need to intervene in a review application
involving
the conduct of the state in the labour related dispute.
[5]
[16]
It
was on the basis of the above that the court in De Villiers found
that the conduct of the state as the employer in refusing to
reinstate the employee in terms of section 14 (2) of the EEA
constituted an administrative action and it was also for that reason
that the court found that it was entitled to exercise its review
jurisdiction.
[6]
[17]
The court further found that even if it was
to be found that the decision did not amount to an
administrative action it could
still be reviewed in terms of section
158 (1) (h) of the LRA. In terms of section 158 (1) (h) of the LRA
the conduct of the state
in its capacity as an employer can be
reviewed on grounds permissible in law. In other words the court has
the power to review
the decisions made by the state in its capacity
as an employer on the grounds of legality.
[18]
In
Public
Servants Association of SA v Premier of the Free State and Others,
[7]
the
court in dealing with the review under section 158(1) (h) of the LRA
and confirming the approach that had been adopted in De
Villiers held
that:
“
This
Court recognised that in exceptional circumstances, action by the
state as employer might constitute administrative action
[thus
rendering the decision susceptible to review] and that the action on
the review does not constitute administrative action,
s 157 [1] [h]
empowers this Court to review the decision taken by the state in its
capacity as employer, on such grounds as permissible
in law. In the
decision taken by the respondent in relation to the implementation of
the PDMS were administrative action.... (and
I will presume for the
purposes of this judgment that they were not), this Court retains the
review jurisdiction on the ground
of legality, which incorporates
most, if not all, of the grounds of review relied upon by the
applicant in its founding affidavit.
In applying the facts to the law
the Court found that the decisions taken by the state as an employer,
of not paying levels 9 to
12 the bonuses were inconsistent with the
provisions of the PDMS, and thus was irrational, arbitrary and
capricious. It was for
this reason that the court found that the
decisions were reviewable.”
[19]
The
same approach was adopted in
MEC
Department of Education KwaZulu Natal v Khumalo
and another,
[8]
where
in dealing with the extent of the remedy under section 157 (1) (h) of
the LRA the court had held that:
“
26.
Section 158(1)(h) is available when no other process is available or
special circumstances exist to review an act of the State
as
employer. It is not a safety net to process disputes in public
employment that should have been channelled through some other
prescribed provision. Nor is it a licence to bypass the prescribed
conciliation, arbitration and review procedures when an applicant
has
missed the time limits.”
[20]
In the
Public
Servants Association v Premier of the Free State
,
the case whose circumstances are not different to those of the
present case, the MEC for Health, who was the third respondent,
had
decided to award bonuses to employees in salary levels 1 to 8 and not
to those at levels 9 to 12. Similar to the present case
the reason
for not awarding levels 9 to 12 performance bonuses was stated as "a
lack of funds."
[21]
I align myself with the above decisions
and accordingly find that in the present instance the DG had the duty
to ensure that 1.5%
of the salary budget was allocated for the
performance bonus. It is also clear that in terms of the PMDS, which
as indicated earlier
is based on the provisions of the Act, the DG
has a duty to pay the bonuses to those who after the performance
assessment qualified.
It has to be noted that the duty to pay the
bonuses to those who qualified has its in source in legislation,
regulations and the
policy of the second respondent.
[22]
In my view the excuse of non-payment of
bonuses due to lack of funds is unsustainable. It is evident in this
regard that the policy
maker did anticipate the situation where there
could be shortage of funds. The policy frame work provides a clear
approach to be
adopted by the DG, should such a situation arise. The
approach does not include a refusal to pay the bonuses to those who
qualified
on the basis of lack of funds. The powers given to the DG
in the event of lack of funds is limited to having to scale down
whatever
the amount was to be paid to those who qualified or
tightening the criteria for qualifying to receiving the bonus.
[23]
It accordingly follows that in refusing
to pay the bonuses to those applicants who qualified the DG exercised
the power he did not
have. It also follows that the excuse of lack of
funds is also not sustainable and can also not be a valid reason for
not paying
the bonuses. The decision is therefore illegal and thus
susceptible to review.
[24]
The other point raised by the respondents
is that the issue of payment of bonuses has to do with an attempt to
create a right and
thus it is interest based. In this regard they
contend that the applicants’ claim can be resolved though
collective bargaining
and not adjudication.
[25]
The
question of what constitutes a dispute of right or interest is
answered by Rycroft and Jordan,
[9]
in
the following terms:
“
Broadly
speaking, disputes of right concern the infringement, application or
interpretation of existing rights embodied in a contract
of
employment, collective agreement or statute, while disputes of
interest (economic disputes) concern the creation of fresh rights,
such as higher wages, modification of existing Collective agreements
etc. Collective bargaining, mediation and, as a last resort,
peaceful
industrial action, are generally regarded as the most appropriate
avenues for the settlement of conflicts of interests
while
adjudication is normally regarded as an appropriate method of
reserving disputes of rights.”
[26]
It is clear in the present instance that
the applicants are not seeking to create a right to receive bonuses
but that right has
its source as indicated earlier in the
legislation, the regulations and the policy of the second respondent.
[27]
In light of the above analysis I am of the
view that the applicants have made out a case whose facts and
circumstances dictates
that the Court should intervene and review the
decision made by the respondents. I do not however belief that I
should allow cost
to follow the results in circumstances where there
is on-going relationship between the parties.
Order
[28]
The following order is made:
1.
The decision of the first respondent not to
pay bonuses to the Second to Further Applicants, taken during March
2011, is reviewed
and set aside.
2.
The matter is referred back to the Second
Respondent to consider the payment of the bonuses of those who
qualified.
3.
There is no order as to costs.
E, MOLAHLEHI
Judge
of the Labour Court, Johannesburg
Appearances:
For the
Applicant: Advocate L. Malan
Instructed by:
Thabang Ntshebe Attorneys
For the
Respondent: Advocate R Beaton SC
Instructed
by: The State Attorne
[1]
Act 66 of 1995.
[2]
Act
103 of 1994.
[3]
(2010) 31
ILJ
1377 (LC).
[4]
See
Chirwa v Transnet Limited and Others
[2007] ZACC 23
;
2008 (4) SA 367
and Gcaba v
Minister of Safety and Security and Others
(2010) 31 ILJ 296 at para 67 and 68.
[5]
See paragraph 19 of De Villiers.
[6]
The
same approach was adopted in
Wede
v MEC for Department of Health, Western Cape
[2013] 34
ILJ
1315 (LC), where the court after accepting that the dismissal of a
public servant is not an administrative action, held
that it
however decided to review the decision in terms of section 157
[1] [h] of the LRA. On the merits of the case the
court found that
the decision by the MEC not to reinstate the employee was
reviewable.
[7]
Unreported
judgement – case number J123/09 dated 15 March 2010.
[8]
[2010]
31
ILJ
2657 (LC).
[9]
See
A Guide to SA Labour Law (1992) at page 169.