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[2015] ZALCPE 22
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Lamont v Eden District Municipality (P182/2012) [2015] ZALCPE 22 (25 March 2015)
REPUBLIC OF SOUTH
AFRICA
THE LABOUR COURT OF
SOUTH AFRICA, PORT ELIZABETH
JUDGMENT
Case no: P182/2012
DATE: 25 MARCH 2015
Not Reportable
In the matter between:
AJ
LAMONT
.............................................................................................................................
Applicant
And
EDEN DISTRICT
MUNICIPALITY
...................................................................................
Respondent
Heard: 18-19 March 2015
Delivered: 25 March 2015
Summary:
Termination of fixed
term contract. Offer to reinstate fixed term contract
unconditionally, four months after it was unlawfully
or unfairly
terminated by the respondent, limits the applicant’s claim,
whether as contractual damages or statutory compensation,
to four
months’ salary.
JUDGMENT
EUIJEN, AJ
Introduction
[1] This is an application founded both
in contract and on an alleged breach of section 189 of the Labour
Relations Act, no 66 of
1995 (the LRA), which seeks the applicant’s
reinstatement, alternatively payment of all amounts due to him for
the remainder
of a fixed term contract, including two performance
bonuses and, in addition, compensation for the unfair termination of
his employment
in terms of section 195 of the LRA in an unspecified
amount. At the hearing, Mr Lamont abandoned his claim for
reinstatement and
limited the relief he sought to the damages and
compensation set out in the alternative prayer. The fixed term
contract upon which
his claim is based had, in any event, expired by
the date of this hearing.
[2] The respondent for its part, denies
that it dismissed the applicant Mr Lamont; it contends that he
deserted. In the alternative
and, if it be found that Mr Lamont was
dismissed, i.e. that his contract was unlawfully or unfairly
terminated, then the respondent
pleads that it tendered to reinstate
him unconditionally in writing on 25 September 2012, which tender was
repeated as a formal
tender in terms of Rule 22A of the Rules of this
Court on 8 October 2012, which has not been accepted by the
applicant. This consequently
limits the amount of the applicant’s
claim to four month’s salary whether viewed as contractual
damages or compensation
for an unfair dismissal.
[3] Mr Engela, who appeared on behalf
of the respondent advised me at the commencement of his case that
although the respondent
viewed the fixed term contract entered into
with Mr Lamont as unlawful, he would not rely on such unlawfulness in
these proceedings,
since this was not pleaded as a defence. It is
only referred to insofar as it informs the respondent’s offer
to reinstate
Mr Lamont from 1 October 2012.
Evidence
[4] Mr Lamont testified in support of
his case. He has extensive experience in local government, and was
previously the mayor of
the respondent municipality between 2000 and
2005, as well as the previous Pacaltsdorp Municipality.
[5] Approximately 18 months prior to
the start the World Cup held in this country during 2010, Mr Lamont
entered into a fixed term
contract of employment with the respondent
to promote George as a venue to host participating national teams.
The period of that
agreement ran from 1 November 2008 until 31
December 2010. No provision was made for the termination of that
agreement prior to
its expiry. In terms of that agreement, Mr Lamont
was entitled to an annual salary of R460 000,00, “(all
inclusive)”,
part of which (14%) was payable as a performance
bonus.
[6] Prior to the expiry of the
agreement and with effect from 1 November 2009, Mr Lamont entered
into another fixed term contract
of employment with the respondent
municipality, to endure until 31 December 2013. The second contract
expanded his duties from
that of co-ordinator for the 2010 soccer
World Cup to include ‘various other projects’. The annual
salary payable to
Mr Lamont was increased to R598 620,56, this time
exclusive of a performance bonus of 14%. The performance bonus is
dependent on
a performance assessment. The second contract also
contained a provision (clause 11) entitling the employee to terminate
the agreement
on notice. There is no similar provision entitling the
respondent employer prematurely to terminate the agreement on notice.
[7] On 2 May 2012, Mr Lamont was called
to a meeting with the municipal manager Mr GW Louw and the human
resources manager Ms A
de Beer. He was advised that the council had
restructured the municipality’s staff complement which had
rendered his position
redundant. He was also told that he had reached
retirement age, although his 65th birthday was only on 6 May that
year. He was
offered payment of three times his monthly salary as an
“exit package”. He was told to consider accepting the
exit
package and communicate his response later.
[8] This advice was subsequently
confirmed to Mr Lamont in a letter from the municipal manager dated 7
May 2012. The letter also
confirmed the offer of payment of the
three-month salary as an “exit package”. The letter
concluded on the following
terms:
“In terms of paragraph 11 (1), of
the employment contract you are hereby given notice, of my council’s
attention, to
terminate the said employment contract on 31 May 2012.
Should you fail to accept this offer within 7 days of this letter,
such
offer will become obsolete and your contract of employment will
terminate on 31 May 2012 due to you reaching retirement age, but
without any exit package.”
[9] Mr Lamont testified that he was
shocked at the content of the municipal manager’s letter. He
decided not to accept the
three-month exit package as there was no
need to declare his position redundant. After the conclusion of the
World Cup at the end
of 2010, he had busied himself with agricultural
projects in the district on the instructions of the mayor. Not having
accepted
the three-month exit package, he regarded himself as
dismissed with effect from 31 May 2012.
[10] He accordingly instructed his
attorneys of record to address a letter of demand to the respondent,
demanding payment of the
full amount for the remainder of the
duration of his fixed term contract, until the end of December 2013.
Such a letter was addressed
to the municipality on 9 May 2012. From
the outset, Mr Lamont has been adamant that the did not wish to
continue working at the
municipality after the 2 May 2012 meeting,
because he felt that he could not trust the municipal manager, Mr
Louw or the mayor
and the council anymore.
[11] Further correspondence was
addressed to Mr Lamont by the municipal manager, denying that he had
been dismissed and instructing
him to return to work, which Mr Lamont
ignored, despite being accused of desertion. The matter was then
handed over to the respondent’s
attorney of record who
addressed two letters to the applicant’s attorneys. The first
dated 15 June 2012, contained a repetition
of the three month “exit
package” offer, which was again rejected. The second dated 25
June 2012, contained the following
offer:
“As far as the last-mentioned
referral to the Labour Court is concerned, or (sic) instructions are
to make the following tender
of reinstatement to your client, which
we hereby do:
1 Your client may return to work and
resume his duties on 1 October 2012.
2 Your client’s salary for the
four months from 1 June 2012 until the end of September 2012 will be
paid to him and that all
benefits in terms of the contract will be
restored.
The tender is open and unconditional,
and it will also be formally filed in the court file with the Labour
Court.”
[12] The second offer quoted above was
subsequently repeated in terms of Rule 22A of the Rules of the Labour
Court, on 8 October
2012. Both were not accepted by Mr Lamont. Again,
the reason that he gave, was that given the manner of his dismissal,
he felt
that he could not trust the municipal officials and
councillors with whom he had to work, ever again in the future. It
was put
to him that the real reason why he had refused to accept the
respondent’s unconditional offer to reinstate him was that it
had come at an awkward time when he was involved in co-ordinating the
bicentennial celebrations at Pacaltsdorp. Mr Lamont admitted
that he
was the coordinator of the Pacaltsdorp bicentennial celebrations, but
said this was a voluntary position for which he was
not paid. It did
not prevent him from accepting the respondent’s offer of
reinstatement.
[13] Mr Lamont also testified that he
had been assessed on his performance in coordinating the soccer World
Cup during 2010 and
paid a performance bonus thereafter. He had not
been assessed for the duration of his second fixed term contract with
the municipality.
On this basis, Mr Lamont claimed that he was
entitled to be paid two performance bonuses for the remainder of the
duration of this
contract of employment, as if he had been assessed.
[14] Mr Louw, the current municipal
manager of the respondent municipality gave evidence on its behalf.
He was also the municipal
manager at the time of Mr Lamont’s
appointment in terms of his first fixed term contract of employment,
as the coordinator
of the 2010 soccer World Cup. He had thereafter
been suspended by the municipality on 12 October 2009 and
subsequently dismissed.
He referred the matter to the SA Local
Government Bargaining Council and was reinstated with effect from 1
July 2011.
[15] After his return to the
municipality, Mr Louw was surprised to find Mr Lamont still there, as
the soccer world cup had ended
the previous year. It was then that he
discovered Mr Lamont’s second fixed term contract of
employment, which had been entered
into while he was dismissed by the
municipality. He discovered a number of other irregular appointments
made during the same period.
This led the mayoral committee to
instruct him to conduct an audit of all employment contracts entered
into during this period.
This was done by a firm of attorneys who
produced a report which, inter alia identified Mr Lamont’s
contract as an irregular
appointment. It was this report which led
the mayoral committee to the consideration of a restructuring of the
municipality’s
staff complement.
[16] Mr Louw testified that at the time
he met Mr Lamont, together with the human resources manager on 2 May
2012, the mayoral committee
was merely considering restructuring the
staff complement; consequently he did not tell Mr Lamont that his
position was redundant
as no decision had yet been made about it. He
also denied mentioning Mr Lamont’s age. He did confirm offering
Mr Lamont payment
of three month’s salary as an exit package.
The same offer was made to all other identified irregular
appointments as a pragmatic
solution to the problem.
[17] Mr Louw testified that the reason
he had stated in his letter dated 7 May 2012 both that Mr Lamont’s
position was redundant
and that, in any event, he would be retired
because he had reached 65 years of age, was that he had received this
advice from the
human resources manager after the meeting. He had
subsequently discovered this advice to be wrong on both counts when
the matter
was handed over to the respondent’s attorneys. That
is why the offers to reinstate Mr Lamont had been made, which were
bona
fide attempts to rectify this mistake.
[18] He stated that he and the rest of
the management team were perfectly prepared to continue working with
Mr Lamont. He pointed
out that no allegations of impropriety had been
levelled against Mr Lamont and his dismissal was a “no fault”
termination.
He contrasted Mr Lamont’s position with his own
where he faced multiple allegations of unfounded misconduct and was
still
able to resume his employment with the municipality after his
reinstatement, which endures to this day.
[19] Mr Louw attempted to suggest that
his letter of 7 May 2012, was not a dismissal letter, when read
together with his subsequent
letters, particularly those instructing
Mr Lamont to return to work, which were ignored. He confirmed
however, that the respondent’s
attorneys were subsequently
given instructions to convey an unconditional offer of reinstatement
to Mr Lamont, precisely because
the respondent had been advised that
its termination of the employment contract was unlawful.
Was there a Dismissal?
[20] The applicant bears the onus of
proving that he has been dismissed, since this has been placed in
issue in these proceedings.
(Ouwehand v Hout Bay Fishing Industries
[2004] 8 BLLR 815
(LC) at 818 paras [14-15]) This issue largely
depends on the interpretation to be given to the municipal manager’s
letter
of 7 May 2012. That letter is unquestionably a termination
letter. In the first instance, it is headed “termination of
employment
contract due to reaching pensionable age\operation
requirements”. Secondly, it states in terms that “should
you fail
to accept this offer within 7 days of this letter, such
offer will become obsolete and your contract of employment will
terminate
on 31 May 2012...” There is nothing uncertain or
ambiguous about this letter. It states unequivocally that in the
event that
Mr Lamont did not accept the exit package within 7 days,
which he did not, his employment terminated on 31 May 2012.
[21] None of the subsequent letters
addressed to Mr Lamont by the municipal manager, alters this
position. At no stage did the municipal
manager unconditionally
withdraw the termination letter, until such time as the respondent’s
attorneys made such an offer,
which is dealt with later in this
judgement. His first letter just says that the applicant’s
letter of demand is premature.
The instructions to return to work are
confusing and certainly do not convey in any clear terms that the
applicant’s dismissal
has been revoked.
[22] In the light of these proved
circumstances, I find that Mr Lamont has proved that he was dismissed
with effect from 31 May
2012.
Lawfulness and Fairness of the
Dismissal
[23] As I have already observed, the
clause in the employment contract on which the municipal manager
relied in his letter of 7
May 212, terminating the employment
contract, (clause 11(1)), only gives the employee the right to
terminate the agreement, not
the employer. The respondent did not
rely on any breach of the employment contract by the applicant to
justify its termination.
I accordingly conclude that the employment
contract was unlawfully terminated by the respondent. (SA Football
Association v Mangope
(2013) 34 ILJ 311 (LAC))
[24] Insofar as it remains competent to
consider also the fairness of the applicant’s dismissal, since
it arises from the
same factual matrix supporting the contractual
claim, which question I consider more fully below, I conclude that Mr
Lamont’s
dismissal for alleged operational requirements is also
unfair. The Labour Appeal Court has held that it is impermissible to
terminate
a fixed term contract of employment prematurely for
operational requirements (Buthelezi v Municipal Demarcation Board
(2004) 25
ILJ 2317 (LAC))
Damages and/or Compensation
[25] As stated at the outset of this
judgment, the applicant claims payment of his salary for the
remainder of his fixed term contract,
together with two performance
bonuses and compensation for his unfair dismissal. The entitlement to
both is said to arise from
the wording of section 195 of the LRA,
which permits the award of compensation in addition to contractual
damages. In support of
this submission, Mr van Rensburg for the
applicant, also relied on the matter of Abdullah v Kouga Municipality
[2013] 5 BALR 437
(SALGBC), read with an application under the same
name in the Labour Court where the applicant was awarded payment of
the remainder
of the duration of his fixed term contract of
employment as contractual damages ([2012]
5 BLLR 425
(LC)).
[26] In the Kouga Municipality case,
the Bargaining Council Commissioner found that payment of contractual
damages amounting to
the remainder of the fixed term contract of
employment was insufficient to compensate the applicant fully for the
unfairness of
the dismissal, since the respondent’s conduct had
destroyed the trust relationship, thereby rendering reinstatement
impossible.
It was this loss that the applicant was compensated for
at the bargaining council. Nevertheless, even though the
circumstances
in that matter were far more egregious than the
present, the Commissioner awarded only one month’s salary as
compensation.
[27] As far as the applicant’s
entitlement to contractual damages is concerned, it is of course
trite that he is not merely
entitled to payment of the balance of his
fixed term contract of employment; he is under a duty to mitigate his
damages. Put differently,
the amount claimed stands to be reduced by
an amount the applicant could reasonably have been expected to earn
during the period
of his claim. (SA Football Association v Mangope
(2013) 34 ILJ 311 (LAC) at 332A-333E)
[28] In the present matter, Mr Lamont
testified that he had applied for two positions at municipalities he
did not name, but both
of his applications were unsuccessful because
of his age. As far as the offer of reinstatement from the respondent
municipality
was concerned, it was argued on his behalf that the
offer was conditional and ought not to be considered as a genuine
offer that
would have effectively mitigated Mr Lamont’s loss.
Mr Lamont himself did not rely on this in his evidence in chief; he,
as
already noted, conceded that he viewed the offer as unconditional,
unlike his attorney. Mr Lamont’s reasons for refusing the
tender, as I understood his evidence, was that he could not return to
the respondent after the 2 May 2012 meeting, because the
respondent
had shattered his trust in it. I will accordingly consider both
reasons.
[29] As far as the respondent’s
attorney’s letter dated 25 May 2012 is concerned, it is clear
from the terms of that
offer quoted above, that it is expressly
unconditional. The fact that the letter goes on to express the view
that the contract
remains unlawful and that an application will be
made to the High Court in due course to set it aside, does not change
this. It
is merely an expression of intent for the future. There is
no link between the threatened review application and the offer of
reinstatement.
The applicant is not asked to waive or compromise any
of his rights in connection with the threatened review application or
indeed
do anything at all in return for his reinstatement. This ought
to be more than clear in terms of the formal offer filed in terms
of
Rule 22A. I accordingly conclude that the offer of reinstatement made
to the applicant by the respondent’s attorneys was
not
conditional at all.
[30] Mr van Rensburg submitted that the
formal tender made in terms of Rule 22A does not comply with the
requirements of the Rule
in that it is not said whether it includes
costs or not. The offer obviously does not include costs, since these
are not mentioned
in the terms of the offer. The part of the Rule
which has not been complied with by the applicant is Rule 22A(1)(d),
which states
that if a party disclaims liability for costs, the
reasons must be given. The reason(s) why there is no tender of costs,
is not
stated in the applicant’s notice filed in terms of Rule
22A.
[31] While it is correct that the
formal tender does not comply with the Rule in the respect which I
have indicated, I do not consider
that this in any way renders it
invalid, or ineffective, or prevented the applicant from accepting
the tender. Indeed, his remedy
is provided in Rule 22A(5) which
provides that on acceptance of a tender without costs, costs may be
applied for upon acceptance.
The fact that the respondent has not
given a reason for the withholding of costs, at least until the
making of the tender, is thus
more likely to count against it in such
a situation. Moreover, it was not the withholding of costs, but the
fact that the applicant
wishes to claim more than the four months’
salary tendered, that is the reason for this trial proceeding. For
these reasons,
I find that the fact that the tender was not strictly
in accordance with the Rules of this Court, is not a good reason why
it was
not accepted, or capable of acceptance by the applicant.
[32] That leaves Mr Lamont’s
reason advanced in evidence why he did not accept the respondent’s
formal tender of reinstatement
for consideration. That, it will be
recalled, is that his trust in key municipal officials and office
bearers was shattered after
the 2 May 2012 meeting. In my judgment,
if that is indeed the reason, then Mr Lamont’s sensibilities
are far more precious
than reasonable. No allegations of misconduct
or indeed any impropriety were levelled against Mr Lamont in that
meeting and, if
anything, the person whose reputation took a knock as
a result of it, is the municipal manager, who accepted responsibility
for
the ensuing letter of 7 May 2012, despite being poorly advised by
the human resources manager. The municipal manager’s shoulders
are, however, broader than those of Mr Lamont and I find the former’s
evidence regarding the contrasting situations faced
by himself after
his reinstatement and Mr Lamont, telling on this issue. The
observations of Nugent JA in Rawlins v Kemp t/a Centralmed
(2010) 31
ILJ 2325 (SCA) decision, to which I was referred by Mr Engela, are
also instructive in this regard:
“No doubt Dr Rawlins genuinely
felt that there had been a breach of trust. But these are two
professional people who might
be expected to resolve any acrimony
that might earlier have existed. No objective grounds were advanced
why any perceived breach
of trust between them was not capable of
being restored. Dr Rawlins chose not even to explore that possibility
but rejected it
out of hand. That is not how labour relations should
be conducted and I agree that the rejection of the repeated offers of
reinstatement
was unreasonable and she has only herself to blame for
her financial loss.” (at 2330, para [18])
[33] In the present matter too, I find
that Mr Lamont’s conduct in rejecting the offer of
reinstatement to be unreasonable
and unwarranted. Had he accepted
that offer, his damages would have been limited to payment of four
month’s salary and he
would have been in gainful employment
thereafter. Whether the respondent thereafter sought to set that
contract aside on grounds
of alleged unlawfulness is neither here nor
there; the respondent would always have had that right and the
applicant still had
all the defences he always had to defend that
application, notwithstanding an acceptance of an offer of
reinstatement.
[34] Finally, I do not consider that
reliance on the unfair dismissal portion of Mr Lamont’s claim
takes this issue any further.
It is equally well established in the
realm of unfair dismissal law, as it is in contract, that an offer of
unconditional reinstatement,
limits the claimant, at best, to the
relief he could have secured at the stage the tender was made. In
Johnson & Johnson (Pty)
Ltd v CWIU
[1998] 12 BLLR 1209
(LAC), the
Labour Appeal Court held that:
“The nature of an employee’s
right to compensation under section 194(1) also implies that the
discretion not to award
that compensation may be exercised in
circumstances where the employer has already provided the employee
with substantially the
same kind of redress (always taking into
account the provisions of section 194(1)), or where the employer’s
ability and willingness
to make that redress is frustrated by the
conduct of the employee.” (at 1220, para [41])
[35] Mr Engela referred me to a number
of cases in this Court where this approach has been followed. (See:
Burger v Alert Engine
Parts (Pty) Ltd
[1999] 1 BLLR 18
(LC) at 25C-H;
Fletcher v Elna Sewing Machines Centre (Pty) Ltd
[2007] ZALC 72
;
[2000] 3 BLLR 280
(LC) at 290 B-I; Mkhonto v Ford NO & Others
[2000] 7 BLLR 768
(LAC) at 771F- 772B; Maloba v Minaco Stone Germiston (Pty) Ltd &
Another
[2000] 10 BLLR 1191
(LC) at 1201 C-I; Scribante v Avgold Ltd
(Hartebeesfontein Division) (2000) 21 ILJ 1864 (LC) at 1874 I-J)
[36] For all of the above reasons, I
hold that whether viewed as damages for breach of contract, or as
compensation for unfair dismissal,
Mr Lamont is entitled to the same
measure of damages. In this case I hold those to be equal to payment
of four months’ salary,
since Mr Lamont could have resumed his
employment on the same terms and with the same job security as
prevailed previously. I find
that no further damages have been proved
and in particular, that Mr Lamont has not demonstrated that he is
entitled to any additional
solatium for injury to his dignity as a
result of his unfair dismissal.
Costs
[37] Both parties were agreed that
costs should follow the result in this matter. It follows from the
conclusions which I have reached
in this judgment that Mr Lamont is
entitled to his costs up and until 1 October 2012 and the respondent
is entitled to its costs
thereafter.
[38] There is also the issue of the
reserved costs relating to the condonation of the later filing of the
respondent’s answering
statement of defence. That application
was granted and it appears that the respondent has achieved a fair
degree of success in
advancing that defence in these proceedings.
Nevertheless, it still sought an indulgence from this Court in doing
so. In my judgment,
it seems to me that the interests of justice and
fairness require that I make no order as to costs on that
application.
Order
[39] I make the following order:
a. The dismissal of the applicant by
the respondent with effect from 31 May 2012, is declared to be
unlawful and unfair.
b. The respondent is ordered to pay the
applicant four months’ salary in the amount of R199 540,19,
within ten (10) days of
the date of this order.
c. Interest on the aforesaid amount is
payable at 9% per annum from the date of this order to date of
payment.
d. The respondent is to pay the
applicant’s costs up to and including 1 October 2012 and the
applicant is to pay the respondent’s
costs thereafter,
including the costs of the hearing in this Court.
e. As far as the reserved costs of the
condonation application for the late filing of the respondent’s
statement of defence
are concerned, there is no order as to costs.
Euijen AJ
Acting Judge of the Labour Court of
South Africa
APPEARANCES:
For the Applicant: Mr W van Rensburg
Instructed by: Wikus van Rensburg
Attorneys
Port Elizabeth
For the Respondent: Adv RB Engela
Instructed by:Schroter Attorneys
George