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[2015] ZALCJHB 271
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National Union of Metalworkers of South Africa and Others v Eskom Holdings SOC Limited (JS1086/12) [2015] ZALCJHB 271 (19 August 2015)
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Not Reportable
Case no: JS 1086/12
THE
NATIONAL UNION OF METALWORKERS
First
Applicant
OF
SOUTH AFRICA
M
CELE & 3
OTHERS
Second
to Further Applicants
and
ESKOM
HOLDINGS SOC
LIMITED Respondent
Stated
Case:
24 November 2015
Delivered:
19
August 2015
JUDGMENT
TLHOTLHALEMAJE,
AJ
Introduction:
[1]
The
applicants brought this claim before the court in terms of section 77
(3) of the Basic Conditions of Employment Act
[1]
(The BCEA). The dispute pertains to an alleged unilateral change to
their terms and conditions of employment. In the alternative,
it is
alleged that the respondent’s conduct amounted to a breach of
contract. The dispute followed upon the withdrawal of
monthly fixed
payments which the applicants alleged they were entitled to. No oral
evidence was led as the parties had agreed that
the matter should be
dealt with as a stated case.
Background:
[2]
The individual applicants are Messrs MT
Cele; MH Cele; RJ Matona and OS Oliphant. They are currently employed
by the respondents
as Principal Clerk Billing Support in its Billing
Department, except for Oliphant, who has since retired. In 1999, the
respondent
introduced a two cycle shift system in its Processing
Centre. The first shift started 06h00 to 14h00 and the second at
14h00 to
22h00. The individual applicants were paid a shift allowance
for working on those shifts.
[3]
In 2002 the respondent discontinued the
shift system. Payment of the shift allowance was however not stopped,
and was at some point
changed in the employees’ salary advice
to reflect it as ‘fixed monthly payment’. The respondent
had continued
to pay the fixed monthly payments from 2002 until
August 2012.
[4]
An audit done during 2011 by the
respondent’s Hennie Doman indicated that employees were
receiving a shift allowance which
they were not entitled to as they
were no longer doing any shift work. On 6 February 2012, the
respondent advised the individual
applicants at a shift allowance
meeting that the shift allowance that was being paid to them was to
be phased out.
[5]
On 1 March 2012, the individual applicants
were issued with letters by the respondent advising them that the
‘shift allowance’
would be discontinued in the next six
months. On 29 March 2012 NUMSA referred a dispute to the CCMA for
conciliation. The dispute
was however withdrawn. On 25 July 2012,
NUMSA wrote a letter to the respondent requesting it to cancel the
withdrawal of the employees’
fixed monthly payments as the
employees had tailored their lifestyles around the payments and
further since some had long term
financial commitments. The
respondent failed to respond to the request. A similar letter sent by
NUMSA’s attorneys of record
was not responded to. By the end of
August 2012, the payment of the shift allowance was phased out.
[6]
On 2 October 2012, NUMSA referred a dispute
pertaining to unilateral changes to terms and conditions of
employment. The dispute
could not be resolved by the CCMA on 29
October 2012. A certificate of outcome entitling NUMSA to embark on
strike action was issued.
NUMSA nevertheless referred the dispute to
the Court in terms of the provisions of the BCEA.
The
dispute and submissions:
[7]
The issues which the parties placed before
the court to determine were whether the withdrawal of the monthly
fixed payments by the
respondent which was paid to the individual
applicants was justifiable; whether those payments were part of the
individual applicants’
terms and conditions of employment; and
whether or not the erroneous payments created a legal duty to
continue paying even though
the employees were no longer performing
shift duties. The applicants’ main contentions in regard to
these issues are as follows:
7.1
The respondent failed to consult meaningfully with them prior to the
decision to discontinue
the payment of fixed monthly payments, and
the meeting held with them on 6 February 2012 was just a formality to
inform them of
the withdrawal;
7.2
Since the respondent had conducted audits on salary payments annually
it should have picked
up the error as early as 2002 when the shift
system was stopped, and there was no excuse as to the reason it had
failed to detect
the alleged errors;
7.3
The payments could not have been an error because of the lengthy
period it took, and they
were in fact part of their salary package.
The respondent had no excuse for having failed to detect the payments
which it now alleged
to have been made in error;
7.4
The respondent did not have a unilateral right to tamper with the
individual applicants’
terms and conditions of employment
without a proper and meaningful consultation to show good reason why
the payments which had
been made for ten years were discontinued;
7.5
The fixed monthly payment formed part of their terms and conditions
of the t service by
virtue of the long period they had been receiving
it, and such payments were legitimate as they were part of their
salary.
7.6
The payments were continued subsequent to the shift system having
been terminated, as a
quid pro quo
for their being prepared to
work shifts when their position did not as a rule require it.
[8]
The respondent’s contentions were as follows:
8.1
Although it was not obliged to consult with the applicants, it had
done so individually
and collectively, and the termination of the
payments was not unilateral.
8.2
The consultations held with the applicants were meaningful and they
were afforded an opportunity
to adjust their lifestyle.
8.3
Despite audits being conducted annually, the error was not detected.
This however did not
in law create a legal obligation to continue
paying where none existed. The individual applicants were unjustly
enriched as a consequence
of the error.
8.4
The obligation to pay ceased when the shift system was terminated.
The fact that the respondent
continued to make payments did not and
does not in law give rise to an obligation to continue paying.
8.5
An error in law cannot give rise to a legal obligation, and an
erroneous payment did not
give rise to a legal obligation.
Evaluation:
[9]
The issue in this case is whether an
erroneous payment over a period of ten years made to the individual
applicants can lead to
such payments being considered as part of the
terms and conditions of their service. Central to the applicants’
case is that
once the payments were labelled differently, they were
legitimately due to them.
[10]
The
respondent contends that its case and the error pleaded should not be
confused with
Justus
error
in the context of a
condictio
indebeti
[2]
.
Amongst the requirements of a successful plea of
condictio
indebeti
is that the payment must have been
indebite
in the widest sense, that is, there must have been no legal or
natural obligation to pay or perform. Furthermore, the payment must
have been made in the mistaken belief that the debt was due. Such a
mistake must be one that is excusable
[3]
.
[11]
The respondent’s contention is that
it never harboured a
bona fide
and reasonable belief that it was contractually bound to pay the
individual applicants after the termination of the shift system.
It
contends that it simply failed to terminate the payments once the
shift system was terminated, and this was as a result of a
mistake
attributable to pure tardiness.
[12]
Whether the continued payment constituted a
term and condition of employment needs to be looked at in context.
Most terms and conditions
of employment are usually established in a
written contract of employment setting out the express terms that are
applicable. The
written terms and conditions of employment may be
supplemented by implied terms and conditions, which are understood to
exist because
of the conduct and behaviour of the parties or because
there is an expectation or assumption by both parties. In some
instances,
parties may rely on the concept of custom and practice,
which is essentially a practice that has developed over a period of
time
or by arrangement, that has never been specifically agreed
between the employer and the employee, but can be argued to have
formed
part of the terms and conditions of employment. In other
instances, the terms and conditions of employment may be governed by
collective
agreements
.
[13]
In
Pikitup
Johannesburg (Soc) Ltd v South African Municipal Workers Union and
Others
[4]
,
Prinsloo AJ had regard to the distinction between terms and
conditions of service, and mere work practices by stating the
following;
“
John
Grogan, writing in Collective Labour Law (Juta 2007) notes that the
precise limits of s 64(1)(a) have not yet been determined,
but
expresses the view that it must concern the terms under which
employees work, or their benefits, rather than a mere 'working
practice' (at 145). He continues:
‘
The
difference between ''terms and conditions of employment' and working
practices is generally determined by whether the employees
are able
to demonstrate that the changes affect their contractual rights,
whether emanating from their individual contracts of
employment or
from a collective agreement.’
Determining whether a
particular aspect of an employment relationship constitutes a
condition of service or a work practice requires
an examination of:
1.
the employees' contracts of employment;
2.
any other document regulating the
relationship such as collective agreements;
3.
any
additional terms that can be implied from the parties' conduct or
from custom and practice in the workplace.”
[5]
[14]
In
A
Mauchle (Pty) Ltd t/a Precision Tools v NUMSA
[6]
the court distinguished between ‘terms of employment’ on
the one hand and ‘work practices’ on the other,
the
latter being subject to the employer’s prerogative and its
introduction not constituting a unilateral change. Thus a
change to
shift systems is not in itself a unilateral change to an employee’s
terms and conditions of employment but merely
a change to the
employer’s work practice. In the absence of a contractual right
to work the previously agreed shift pattern,
the regulation of shift
times constitutes a work practice and falls within management’s
prerogative to change
[7]
.
[15]
In this case, it was common cause that the
two shift system was established for a particular purpose, and I did
not understand the
applicants’ case to be that as a result of
the introduction of the shift system, their contracts of employment
were accordingly
altered. With the termination of the two shift
system in 2002, and with the changes shift allowance to ‘fixed
monthly payments’,
I further did not understand the applicants’
case to be that the payments were made as a result of their working
shifts for
the purposes of an entitlement to any payment, or whether
there was a common understanding that this had now become part of
conditions
of employment. To this end, without any express, implied
or tacit contractual rights of the applicants to work shifts, there
is
therefore no basis for any conclusion to be reached that they had
a vested right to continued payment of the shift allowance. What
was
put in place with the two shift system amounted to a new work
practice which was accordingly compensated and subject to the
prerogative of the respondent to change. In essence therefore, there
was no unilateral change to terms and conditions of employment.
[16]
A further argument advanced on behalf of
the applicants was that when the name of the payments changed they
had assumed that the
payments continued as a gratuity in
consideration of assisting the respondent in working shifts in order
to rid it of its backlog.
As it was correctly pointed out, once it
was assumed that payments were meant as gratuities, the implication
is that there was
no obligation on the respondent to continue making
those payments. The payments in this case were made in
acknowledgement and consideration
for the inconvenience caused by
shift work, which was specifically meant to deal with the backlog.
[17]
It is my view that the essence of the
applicants’ case is to be found in NUMSA’s letter of 25
July 2012 to the respondent
requesting it to cancel the withdrawal of
the employees’ fixed monthly payments as the employees had
tailored their lifestyles
around the payments and further since some
had long term financial commitments. It is accepted that once
employees were used to
working shifts for which they were
compensated, this invariably came with changes to their lifestyles as
more income was generated.
Decent human resources practice would have
dictated that if an extra income earning practice was to be stopped,
the employees would
at the most be properly and timeously so advised,
to enable them to adjust their lifestyles accordingly. This however
cannot be
a sustainable legal argument where it is alleged that a
term and condition of employment was unilaterally changed.
Furthermore,
despite the applicant’s contentions, they were
consulted on the issue at the very least from 6 February 2012. In
March 2012
they were given a further six months’ warning that
the payments were to be stopped. In my view, to the extent that the
applicants
at some point considered the payments to be a gratuity,
and further in the light of their primary concern being the effect of
the
withdrawal of the payments on their lifestyles, they were not
entitled to consultation in the true sense, and accordingly, it is
accepted that they had at least between February 2012 and August 2012
to adjust their lifestyles accordingly.
[18]
In conclusion, the introduction of the two
shift system in 1999 was mere a new work practice. The applicants’
contracts of
service were not altered by these changes to have
resulted in these being part of their terms and conditions of
employment. The
applicants’ rights were not affected by these
changes, and the respondent was entitled as a matter of law to
introduce what
amounted to a new work practice and cancel it. There
was therefore no unilateral change to terms and conditions of
employment to
entitle the applicants to continued payments when the
shift system was stopped. Those payments were made as
quid
pro qou
in consideration of the
applicants having availed themselves for the shift system.
[19]
The fact that it took the respondent over
ten years to rectify the error did not as it was correctly pointed
out on its behalf,
create a legal obligation on it to continue to
make those payments. The error was purely as a result of tardiness on
its part and
there is no basis to make any determination as to
whether the error was excusable or not as this was not the
respondent’s
case. The respondent was further entitled to stop
the payments as they were not legally due to the individual
applicants. Furthermore,
I am satisfied that the applicants were
timeously and properly consulted prior to the payments being stopped,
and there is no basis
for any finding to be made that the
respondent’s conduct amounted to a unilateral change to the
applicants’ terms and
conditions of service, or that it had
acted in breach of their contract.
[20]
I have further had regard to considerations
of law and fairness, and I am satisfied that there is no basis for
any cost order to
be made. Accordingly, the following order is made;
Order:
i.
The applicants’ claim of an alleged
unilateral change to their terms and conditions of employment is
dismissed.
ii.
There is no order as to costs.
__________________
Tlhotlhalemaje, AJ
Acting
Judge of the Labour Court of South Africa
APPEARANCES:
On
behalf of the Applicants:
Adv K Lapham
Instructed
by:
Finger Phukubje INC Attorneys
On
behalf of the Respondent:
Adv. B Makola
Instructed
by:
Madhlopa INC
[1]
Act
75 of 1997
[2]
The
condictio
indebiti
is the enrichment remedy by means of which the solvens recovers from
the
accipiens
money paid or property transferred in intended payment or
performance of a debt that is not due. (See
Frame
v Palmer
1950 (3) SA 340
(C) at 346D-G)
[3]
Nelson
Mandela Metropolitan Municipality v Ngonyama Okpanum
Hewitt-Coleman
(Case No:765/2010)
[4]
(2014)
35 ILJ 188 (LC)
[5]
At
paras [38] to [39]
[6]
[1995]
4 BLLR 11
(LAC)
[7]
See
Johannesburg
Metropolitan Bus Services (Pty) Ltd v SA Municipal Workers Union and
Others
(2011) 32 ILJ 1107 (LC);
Ram
Transport SA (Pty) Ltd v SA Transport and Allied Workers Union and
Others
(2011) 32 ILJ 1722 (LC) and
Apollo
Tyres South Africa (Pty) Ltd v NUMSA & others
[2012] 6 BLLR 544
(LC)