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[2016] ZALCJHB 53
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Vodacom (Pty) Ltd v Motsa and Another (J 74/16) [2016] ZALCJHB 53; 2016 (3) SA 116 (LC); [2016] 5 BLLR 523 (LC); (2016) 37 ILJ 1241 (LC) (9 February 2016)
THE LABOUR COURT OF
SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Case no: J 74/16
DATE: 09 FEBRUARY 2016
REPORTABLE
In the matter between:
VODACOM (PTY)
LTD
....................................................................................................
APPLICANT
And
GODFREY
MOTSA
..........................................................................................
FIRST
RESPONDENT
MTN GROUP
LTD
.......................................................................................
SECOND
RESPONDENT
Heard: 4 February 2016 Judgment
delivered: 9 February 2016
Summary:
Urgent application to
enforce ‘garden leave’ clause and restraint undertakings
in contract of employment. Discussion
on nature of garden leave and
relationship to restraint undertakings. On facts, employer found to
have elected to enforce both
garden leave and restraint undertakings;
six month period of garden leave considered together with six month
post-termination restraint
when reasonableness of restraint assessed.
Period of restraint so considered not unreasonable; application
granted.
VAN NIEKERK J
Introduction
[1] The first respondent, Mr. Godfrey
Motsa, was employed by the applicant (Vodacom) in January 2007. On 23
December 2015, Motsa
resigned. In these proceedings, brought on an
urgent basis, Vodacom seeks a final order to enforce the terms of
Motsa’s employment
contract. In particular, Vodacom seeks to
hold Motsa to a notice period of six months (in the form of what is
known as ‘garden
leave’) and a restraint undertaking for
a further period of six months after the expiry of the notice period.
[2] The parties agree that the matter
is urgent. They disagree on the circumstances surrounding Motsa’s
resignation and whether
or not he is subject to both the period of
contractual notice and the six month restraint. Vodacom contends that
Motsa is required
to serve his notice period (without him being
required to work) and after the expiry of that period, the restraint
becomes operative.
Motsa contends that he was released from the
obligation to serve the notice period because after he had submitted
his resignation,
Vodacom elected not to hold him to his notice
period. He maintains that as a consequence, his employment terminated
immediately.
Although Motsa maintains that he is entitled to take up
employment elsewhere from 1 January 2016, he acknowledges that he is
bound
by the restraint and confidentiality undertakings.
[3] In so far as those undertakings are
concerned, the parties agree on the terms of a draft order attached
to the answering affidavit
in which Motsa makes certain undertakings
in favour of Vodacom, valid until 30 June 2016. This is consistent
with Motsa’s
contention that he is bound by the six month
restraint but the notice period, and with the relief sought in
prayers 4.1, 4.2 and
5 of the notice of motion. The only real dispute
in relation to the restraint, obviously related to the dispute about
the notice
period, concerns the date from which the restraint
undertakings should operate. Vodacom, consistent with its view that
Motsa is
obliged to serve out the six month notice period before the
restraint is triggered, contends that the restraint undertakings come
into force only after the notice period expires and the contract
terminates. Motsa maintains that the restraint undertakings became
operative on 23 December 2015, the date on which he says that Vodacom
made the election that he was not required to work out a
notice
period. In the alternative, Motsa contends that Vodacom is not
entitled to restrain him for a six month period beyond the
expiry of
his notice because it is clear from the terms of the restraint that
the useful life of any confidential information to
which he had
access is six months. In these circumstances, he submits that the
enforcement of the restraint beyond the six month
period would be
unreasonable.
Material facts
[4] Motsa is a senior executive
employee. He commenced employment with Vodacom on 8 January 2007. On
1 April 2015, he was appointed
to the post of chief officer: consumer
business unit (CBU). Motsa was also appointed a director of Vodacom
and a member of its
exco. During October 2015, Motsa advised
Vodacom’s CEO, Mr. Shameel Joosub, that he had received an
offer of employment from
the second respondent (MTN) and tendered his
resignation from Vodacom’s employ. After a number of
discussions, Motsa was
persuaded to withdraw his resignation, no
doubt in part on account of an improved remuneration package (R4.3
million, plus additional
shares).
[5] Clause 16 of Motsa’s contract
of employment regulates the termination of employment. The relevant
clauses read as follows:
16.1 Either party shall be entitled to
terminate this Agreement by furnishing the other Party with not less
than 6 (six) months’
prior written notice...
16.6 The Company may, in its sole and
absolute discretion, for any reason whatsoever, not require the
Executive to work or to attend
to his ordinary employment related
duties and responsibilities during his notice
period but require the Executive to be
available during this period to assist the Company and provide a
seamless transition of his
responsibilities at the request of the
Company. The Executive may not in such circumstances have any contact
with customers and/or
clients of the Company during the Executive’s
notice period without the prior written consent of the Company.
16.7 The Executive will be required to
work his notice period in terms of clause 16.1, however, the Company
may elect to pay the
Executive in lieu of notice, in which event the
Executive will not be required to work his notice period.
Clause 18 of the contract contains a
series of restraint of trade obligations that apply post termination
of employment. Given the
parties agreement on the terms of draft
order dealing with the restraint component of the present dispute, I
do not intend to burden
this judgment with a repetition of the entire
clause. It is sufficient to say for present purposes that for six
months after the
date on which Motsa’s employment terminates,
for any reason, he is restrained from being employed or otherwise
engaged in
the business of any competitor within a defined geographic
area, which by and large comprises Southern and parts of East and
West
Africa.
On 22 December 2015, Vodacom became
aware that MTN had communicated to its senior employees that Motsa
had been appointed as its
vice-president for the SEA region, which
includes Southern Africa, with effect from 1 January 2016. Joosub and
Vodacom’s
chief HR officer, Mr. Mbungela, attempted to contact
Motsa on several occasions to determine the accuracy of the MTN
communication.
On 23 December 2015 Joosub spoke to Motsa, who said
that he was considering an offer of employment from MTN but that had
not accepted
the offer. Later on the same day, Motsa told Joosub that
he would be resigning.
On 23 December 2015, Motsa sent an
email to Joosub and Mbungela. The email reads as follows:
Hello Shameel, Hello Matimba,
I hereby officially inform you of my
decision to resign from Vodacom effective January 1. 2016.
This is an extremely difficult decision
to make but I confirm to have made it. I really thank you for
everything you have done for
me and Vodacom.
Monsieur Joosub, Monsieur Mbungela,
please accept my deepest regret.
Regards
Godfrey Motsa.
It is not clear from the terms of
Motsa’s resignation whether he intended that his six-month
contractual notice period commence
running on 1 January 2016, or
whether he was of the view that he would be released from any further
obligation to Vodacom with
effect from that date. In the answering
affidavit, he says that he intended to work his notice period if that
was what Vodacom
required him to do. That is hard to square with the
communication from MTN that Motsa had been appointed with effect from
1 January
2016 but given what transpired later, nothing turns on
this.
On 24 December 2015, Joosub circulated
an internal email communication. It reads as follows:
Godfrey Motsa, Chief Officer Consumer
Business Unit in Vodacom will be leaving the company with immediate
effect to pursue other
opportunities.
Godfrey joined Vodacom in 2005 and was
appointed to his current role in April 2015.
We would like to thank Godfrey for his
contribution during his time at Vodacom and we wish him well in his
future endeavours.
We will announce his successor in due
course.
Mbugela (who was responsible for an
initial draft of the communication) says that the words ‘leaving
the company with immediate
effect’ meant no more than that
Motsa would not be required to come to work during the notice period,
that it was never Vodacom’s
intention to waive the notice
period by making this statement, nor did Vodacom waive the notice
period or any part of it.
[12] Later on 24 December 2015,
Mbungela says that he attempted unsuccessfully to contact Motsa. He
sent a WhatsApp message stating
GM... we r still colleagues for the
next 6 months isn’t it? [4 ‘smiley’ emojis
inserted]. Please call me when
u have a moment.
Motsa replied:
Ok. I will call. Why did you dismiss me
with immediate effect. Did you really have to say that. People think
I have been fired and
I must have committed a serious transgression.
[13] More than two weeks later, on 11
January 2016, Motsa spoke to a Ms. Julie Arndt, Vodacom’s
executive head for human resources
support, and informed her that in
his view, he was no longer employed by Vodacom because Vodacom had
dismissed him. Motsa undertook
not to breach any of his restraint
obligations and said that he would only commence work on the South
African portfolio of his
position at MTN after the expiry of his
restraint.
[14] On the same day, 11 January 2016,
Mbungela addressed a letter to Motsa. Amongst other things, he
recorded that Motsa had in
his email dated 23 December 2015 resigned
to take up a position with MTN as vice-president of its Southern and
East Africa region.
The letter records Motsa’s obligation to
give six months’ notice and that by virtue of his resignation
and intention
to join a competitor, ‘it would be inappropriate
for you to continue in your current position ... until the end of
your 6
(six) months notice period’. The letter continues:
6. Although you will not be required to
work or attend to your ordinary employment related duties and
responsibilities during this
period, it will be necessary for you to
hold yourself available during this period to assist the company and
to provide a seamless
transition of your responsibilities at the
request of the Company.
7. Your Guaranteed Cost of Employment
remuneration will remain unchanged and will be paid to you until the
termination of your employment
on 30 June 2016.
8. Since you will remain employed by
the company until the end of your 6 month notice period on 30 June
2016, you will remain bound
by all of your obligations to the Company
in terms of your Executive Contract of Employment and, in particular,
your obligation
to maintain the confidentiality of the Company’s
proprietary information.
9. Accordingly and subject to such
obligations above, you may not commence employment with, or in any
other manner advise, assist
or be associated with, any other entity
prior to the end of your 6 month notice period on 30 June 2016.
Furthermore, you may not
commence employment with MTN or any other
competitor of the Company prior to 31 December 2016 as this would be
a breach of the
Restraint of Trade undertaking you have given in
favour of the Company.
Motsa did not respond to the letter but
it is clear from the papers that at that stage, Motsa was concluding
an agreement in terms
of which he would provide consultancy services
to MTN Dubai. . On 14 January 2016, Vodacom’s attorneys
addressed a letter
to Motsa in terms not dissimilar to Mbungela’s
letter but in addition demanding formal undertakings from Motsa,
amongst others,
that he would remain employed by Vodacom until the
expiry of the notice period, that he would comply with his restraint
of trade
obligations.
After a number of further exchanges
between the parties and their representatives, on 22 January 2016,
Motsa’s attorneys addressed
a letter to Vodacom’s
attorneys. In this letter, Motsa confirmed that he had tendered his
resignation on 23 December 2015,
and that his six month notice period
would ordinarily have terminated on 30 June 2016. The letter
continues:
3.1 Our client tendered his resignation
in writing on 23 December 2015, to take effect from 1 January 2016.
His six month notice
period would have accordingly terminated on 30
June 2016.
3.2 On 24 December 2015 at 14h32, your
client’s CEO, Mr. Shameel Joosub, issued an internal communique
to all employees of
your client, including our client, in which he
announced as follows:
“Godfrey Motsa, Chief Officer
Consumer Business Unit in Vodacom will be leaving the company with
immediate effect to pursue
other opportunities... We would like to
thank Godfrey for his contribution during his time at Vodacom and we
wish him well in his
future endeavours...”.
This is followed by references to the
same communique, which had been picked up in a number of industry
publications. Paragraph
3.7 of the letter continues:
3.7 Your client’s communiques and
conduct on 24 December 2015, which communiques have been confirmed as
recently as this week
in the industry press, make it evident that
after our client tendered his resignation on 23 December 2015, to
take effect on 1
January 2016 followed by a six month notice period,
your client elected , on 24 December 2015, in terms of clause 16.7 of
our client’s
executive contract of employment with you, to pay
him in lieu of notice, in which event our client is not required to
work his
notice period. Our client has acted on such representation
of your client and has entered into an agreement for the provision of
consulting services with MTN (Dubai) Limited (“MTN Dubai”)
with effect from 1 January 2016 for a period of six months.
Your
client is estopped from contending that our client remains in its
employ in light of the representations your client made
on 24
December 2015 as set out above, and which representations have been
repeated by your client in the publications mentioned
above.
[17] The letter goes on to record,
amongst other things, that Motsa’s engagement as a consultant
by MTN Dubai did not constitute
a breach of his restraint
undertakings, and that Vodacom was indebted to Motsa in a sum
equivalent to six months’ remuneration
in consequence of its
election to pay Motsa in lieu of notice.
[18] These proceedings were initiated
soon afterward, on 26 January 2016.
The applicable legal principles
[19] The principles that regulate a
resignation are well-established. Resignation is a unilateral act;
see Sihlali v South African
Broadcasting Corporation (J799/08; 14
January 2009)). When an employee gives the required notice, the
contract terminates at the
end of the notice period. When an employee
leaves his or her employment without giving the required period of
notice, the employee
breaches
the contract. Ordinary contractual
rules dictate that the employer may hold the employee to the contract
and seek an order of specific
performance requiring the employee to
serve the period of notice. Alternatively, the employer may elect to
accept the employee’s
repudiation, cancel the contract and
claim damages. Of course, it is always open to the parties to
terminate an employment contract
on agreed terms and for either of
them to waive whatever rights they might otherwise have enjoyed.
The principles applicable to restraint
agreements are equally well-established. In Massmart Holdings v
Vieira & another (unreported,
J1945-15) the court recently
summarised them as follows:
[4] Restraint agreements are
enforceable unless they are unreasonable (see Magna Alloys and
Research (SA) (Pty) Ltd v Ellis
[1984] ZASCA 116
;
1984 (4) SA 874
(A)). In general
terms, a restraint will be unreasonable if it does not protect some
proprietary interest of the party seeking
to enforce a restraint. In
other words, a restraint cannot operate only to eliminate
competition. The party seeking to enforce
a restraint need only
invoke the restraint agreement and prove a breach of the agreement,
nothing more. The party seeking to avoid
the restraint bears the onus
to establish, on a balance of probabilities, that the restraint
agreement is unenforceable because
it is unreasonable (see
2013 (1)
SA 135
; Magna Alloys and Research (SA) (Pty) Ltd supra; Den Braven SA
(Pty) Ltd v Pillay and another
2008 (6) SA 229
(D)).
[5] One of the most influential
statements of the law in regard to the determination of the
reasonableness or otherwise of a restraint
of trade agreement is that
in Basson v Chilwan and others
1993 SA 742
(A). In that judgment, the
court established the following test:
1. Is there an interest of the one
party, which is deserving of protection at the termination of the
agreement?
2. Is such interest being prejudiced by
the other party?
3. If so, does such interest weighs up
qualitatively and quantitatively against the interests of the latter
party that the latter
should not be economically inactive and
unproductive?
Is there another facet of public policy
having nothing to do with the relationship between the parties but
which requires that the
restraint should either be maintained or
rejected?
Precisely what constitutes a
proprietary interest and a trade secret worthy of protection is not a
matter that arises in the present
instance, and I need say no more
about it. The primary submission advanced on behalf of Motsa, as I
have indicated above, is that
the conflation of the garden leave and
restraint provisions renders the restraint unenforceable or put
another way, Vodacom bargained
for a six month restraint period, and
that is what the period of enforced garden leave effectively affords
it. Mr. Redding SC,
who appeared for Vodacom, submitted that both the
period of garden leave and the post-termination restraint should be
enforced
- the period of garden leave as a term of the contract
(Vodacom having elected to enforce that term), and the restraint
agreement
after the expiry of the notice period. Mr. Pretorius SC,
who with Ms. Bosman appeared for Motsa, submitted that to enforce a
six
month restraint after the expiry of a six month period of garden
leave would bind Motsa to a restraint longer than had been bargained
for, and that any restraint that extended beyond six months was in
any event unnecessary to protect Vodacom’s legitimate
interests.
To the best of my knowledge, the
concept of garden leave and its relationship, if any, with a
restraint of trade agreement has not
been the subject of
consideration by the South African labour courts. I was not referred
to any authority, but a garden leave clause
is understood to
typically provide that if an employee gives notice, the employer may
require the employee to spend a whole or
part of the notice period at
home, thus allowing confidential information to which the employee
had access to become stale and
keeping the employee out of the
clutches of a competitor. (See Harvey on Industrial Relations and
Employment Law A11 -90 paragraph
[251], Whether the employee elects
to do any gardening, it would seem, is a matter of personal
inclination). The advantage for
the employer, of course, is that the
employee is rendered commercially inactive because he or she remains
in employment, in circumstances
where there is no risk to a
reasonableness challenge that a restraint undertaking might otherwise
attract. Of course, the disadvantage
for the employer is that the
employee remains entitled to remuneration for the notice period. In
the case of a restraint, of course,
the employee is not rendered
entirely inactive, at least not outside of the bounds of the
restraint. Here, public policy and other
considerations play a role
and the court must necessarily take into account the employee’s
right to exercise his or her skills.
There are a number of English and other
authorities that deal with the relationship, if any, between garden
leave and a restraint
agreement. In William Hill Organisation v
Tucker
[1998] IRLR 313
(CA) Morritt LJ said the following, in the
context of a case where there was no express garden leave clause in
the contract:
... there appears to be a trend to
increasing reliance on garden leave provisions in preference to
conventional restrictive covenants,
no doubt because hitherto the
courts have treated the former with greater flexibility than the
latter as explained by Neill LJ
in Credit Suisse v Armstrong
[1996]
ICR 882
, 892. But the reported cases dealing with the court’s
approach to the grant of injunctions in this field show that if
injunctive
relief is sought, then it has to be justified on similar
grounds to those necessary to the validity of an employee’s
covenant
in restraint of trade. It seems to me that the court should
be careful not to any greater extent than would be covered by a
justifiable
covenant in restraint of trade previously entered into by
an employee.
In the Credit Suisse case to which
Morritt LJ referred, the Court of Appeal held that there was
ordinarily no relationship between
a garden leave clause and a
restrictive covenant, and that if the covenant was valid, the
employer was entitled to have it enforced.
The court acknowledged the
prospect of an exceptional case, where the period of garden leave was
long ‘perhaps substantially
in excess of a year’ in which
the court might decline any further protection based on a restrictive
covenant. In that case,
the court upheld a post-termination restraint
in circumstances where the employee had already served a period of
six months on
garden leave. Credit Suisse has been applied in a
number of subsequent decisions. Later judgments indicate a different
trend. In
the more recent decision in Tullett Prebon pic v BGC
Brokers LP
[2010] EWHC 484
(QB), the court stated:
[224] Where the court considers that
the period for which the employer is entitled to protection ends
during the time for which
the employee may be on garden leave, it
will enforce the garden leave provision for that period, and will
decline to enforce any
post termination restriction. It will decline
the latter because the employer will already have got all the
protection he is entitled
to, and the Court has the discretion not to
enforce an enforceable post termination restriction or covenant where
the circumstances
are such that it should not.
[225] The court may consider that the
period for which the employer is entitled to protection extends
beyond the period which is
available for garden leave and into the
period covered by an enforceable post termination restriction or
covenant. The court will
then exercise its discretion as to the
enforcement of the restriction and will enforce the restriction for
the whole or such part
of the period provided by the terms of the
restriction as is appropriate...
[25] In Air New Zealand v Grant Kerr
([2013] NZEmpC
153 ARC 38/13)
, the New Zealand Employment Court
recently held, after a consideration of the above and other
authorities, that the correct approach
to be adopted is that a garden
leave provision should be taken into account by the court when
considering the reasonableness of
the duration of any
post-termination restraint covenant (se paragraph [71] of the
judgment).
[26] I see no reason to adopt a
different approach. While I appreciate that in South Africa the onus
is on the party resisting a
restraint to establish that it is
unreasonable in one or more respects, it seems to me that any
consideration of reasonableness,
especially in relation to the
duration of a restraint, ought necessarily to take account of the
full period that an employee is
out of the market. Put another way,
any period of enforced commercial inactivity prior to the termination
of employment is relevant
to the assessment of the reasonableness of
any restraint that applies post termination. This position would be
consistent with
the broader public interest, which militates against
having experienced and competent employees inactive and their skills
atrophy
during any unreasonably long exclusion from commercial
activity. Not that these considerations are definitive, of course -
the
courts must also take into account the fact that highly- paid
executive employees command the eye-watering remuneration packages
they do at least partly on account of restraint and other ‘golden
handcuff clauses in their contracts. But ultimately, the
question
that remains to be answered is whether any period of enforced
commercial inactivity, whether by way of a garden leave
clause or a
more conventional restraint or both, is unreasonable having regard to
the proprietary interests that the employer seeks
to protect.
Analysis
[27] It makes sense first to deal with
Motsa’s obligation, if any, to serve a notice period. Here, the
central issue is whether
or not Vodacom waived its right to have
Motsa work out his notice period or, put another way, it elected to
terminate Motsa’s
employment with immediate effect and pay him
lieu of notice. As I have indicated above, Motsa contends that
Vodacom elected to
pay him in lieu of notice and that his contract of
employment terminated immediately. Vodacom denies any agreement to
this option
and contends that by failing to give the required notice,
Motsa breached the contract of employment. Vodacom seeks to hold
Motsa
to both the ‘garden leave’ option and the
post-termination restraint period.
[28] The rule ordinary applicable is
that motion proceedings are not designed to resolve factual disputes
and that where factual
disputes are fully explored in the evidence,
they must be resolved in favour of the respondent (see Plascon Evans
Paints Ltd v
Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A)). In other
words, the court is bound by the facts in Vodacom’s affidavits
that Mots admits and the facts deposed to by
Motsa, unless they are
so far-fetched or clearly untenable that the court is justified in
rejecting them on the papers (see Plascon
Evans (supra) at 634-5).
[29] In my view, any dispute of fact is
more apparent than real and as will appear below, the court is in a
position to make a decision
on Motsa’s version. The Plascon
Evans rule does not bind a court to a respondent’s expressions
of opinion or say- so.
The court must have regard to the facts as
they are presented. In the present instance, what Motsa thought that
the communique
meant is neither here nor there - the court must
assess the wording of the communique objectively and determine
it can be said that the communique
discloses an election by Vodacom not to hold Motsa to his notice
period and to pay him in lieu
of notice.
Clause 16 of Motsa’s contract of
employment afforded Vodacom three options in respect of the notice
period. Motsa could be
required to work a notice period, during which
he would continue to work normally and be paid; the ‘garden
leave’ option,
during which Motsa would be paid to remain at
home but remain available to ‘assist’ Vodacom and provide
‘a seamless
transition of his responsibilities’; and
thirdly, payment in lieu of notice, in which event the contract would
terminate
with immediate effect and Vodacom would pay Motsa the
remuneration he would have earned during the notice period.
In support of his contention that
Vodacom elected to terminate his employment and pay him in lieu of
notice, Motsa relies only on
the email communication to the effect
that he was leaving Vodacom ‘with immediate effect’. The
email does not refer
to Vodacom having elected to pay Motsa in lieu
of notice.
Motsa does not dispute that in his
telephone conversation with Joosub on 23 December 2015, Joosub
referred to the options that Vodacom
had available to it in relation
to his contract of employment. He states only that Joosub did not
state which option Vodacom would
be pursuing. Nyoka provides a
detailed exposition on the telephone conversation between him and
Motsa on the same date, and specifically
avers that he informed Motsa
that if he were to resign and take up employment with a competitor,
Vodacom would enforce both the
notice and restraint undertakings
contained in his contract. Motsa denies Nyoka’s averments,
except to the extent to which
they conflict with the version that he
proceeds to set out. He admits the telephone conversation, and a
discussion on the various
options open to Vodacom. Similarly, in
relation to the averment that Mbungela advised Motsa on 23 December
2015 that he would not
be required to work during his notice period
and that he would be bound by a post-termination restraint, Motsa
denies that he was
advised that he would be subject to a notice
period during which he would not be required to come to work.
[33] What Motsa does not say at this
point is that Vodacom had elected to waive any right to elect that he
serve his notice period.
That is a version that emerged only much
later. Motsa’s resignation and his response to the communique
must be assessed against
the uncontested facts that he was reminded,
before he submitted his letter of resignation, by no less than
Joosub, Nyoka and Mbungela,
that the termination of his employment
was subject to a six month notice clause and a six month restraint,
and that it was for
Vodacom to elect whether or not to enforce these
provisions. Despite this, Motsa resigned, intending at that stage to
join MTN,
Vodacom’s largest competitor.
[34] On Motsa’s own version, at
the time when the communique was issued on 24 December 2105, he did
not understand this as
any form of election or waiver - his only
concern was for his reputation and in particular, that the wording
might be construed
to the effect that he had been dismissed for
misconduct. This is simply inconsistent with a belief that he had
been the beneficiary
of a waiver entitling him to leave Vodacom’s
employ immediately with six months’ remuneration.
[35] Further, until the much later
exchange of correspondence by the parties’ legal
representatives, there is no evidence
to indicate that Motsa ever
expressly entertained the thought that the communique constituted a
waiver of his notice period and
an election to pay him in lieu of
notice. What is particularly significant is that Motsa is not able to
point to a single meeting,
telephone conversation or item of
correspondence, after he had received advice on the options open to
the Vodacom should he resign,
that indicates even remotely that
Vodacom had decided to release him from his notice period, even less
to pay him in lieu of notice.
The communique issued to Vodacom’s
employees on 24 December 2015 and the general notice that Motsa would
be leaving Vodacom
‘with immediate effect to pursue other
opportunities’ does not unequivocally state that Motsa would be
leaving Vodacom’s
employ with immediate effect, nor does it say
that he is released from his notice period, or that he would be paid
in lieu of notice.
The communique is nothing more than the
standard mealy-mouthed public relations response by any corporation
to the resignation of
a senior executive; it is quite capable of
sustaining the conclusion that Motsa would no longer be physically
present at work,
with immediate effect, for the duration of the
employment relationship.
In so far as Mr. Pretorius contended
that what Vodacom seeks is an order for specific performance and that
the court ought to be
disinclined to grant such an order, the
traditional reason for refusing specific performance is the personal
nature of the employment
relationship. That is not a relevant
consideration in the present instance. In any event, the court has a
discretion to make an
order for specific performance. The six month
notice clause was clearly intended to render Motsa commercially
inactive for that
period; the wording of the clause says as much. I
do not understand him to contend that such a provision is against
public policy
or unenforceable on some or other basis. Motsa knew
what he was signing when he entered into his employment contract and
I see
no reason why he should not be held to it.
In short: On his own version, Motsa has
failed to establish that Vodacom waived its rights to enforce the
notice period. There is
no reason why Motsa should not be held to the
terms of his contract. Motsa’s contract expressly affords
Vodacom the discretion
to enforce the agreed period of garden leave.
Motsa is therefore bound by Vodacom’s election to enforce
clause 16.6 of his
contract, which terminates on 30 June 2016.
I turn next to Motsa’s restraint
undertakings. As I have concluded, these stand to be scrutinised in
accordance with the ordinarily
applicable principles, subject to a
reading of the restraint so as to include the period of garden leave.
Although a garden leave clause might
make no express reference to any intention to ‘sterilise’
an employee, that is
the effect. So while clause 16 of Motsa’s
contract refers to obligations to ‘assist’ Vodacom and
‘provide
a seamless transition of his responsibilities’
(whatever that means), the fact of the matter is that for the period
of garden
leave Motsa will not have access to any of Vodacom’s
trade secrets, whether in the form of confidential information or
otherwise,
and any trade connections which may have some value to
MTN. Indeed, that is what the wording of clause 16.6 contemplates, to
the
extent that it expressly prohibits Motsa, during the period of
garden leave, from having contact with Vodacom’s customers
and
clients.
[40] It is not disputed that Motsa was
a senior executive, a director of Vodacom and a member of its exco.
It is also not disputed
that Motsa is responsible for significant
aspects of Vodacom’s commercial business, including sales,
marketing, data collection
and the management of consumer sales,
product strategy, wholesale products and services, community
services, customer relationship
management, and dealer relationship
and supply chain management.
[41] In this capacity, Motsa is privy
to strategic business decisions on a micro-level. He is also privy to
strategic decisions
taken and instructions issued by the exco of
Vodaphone Pic, at least in respect Vodacom’s South African
business. Motsa does
not dispute that he attended a strategy planning
meeting for the Vodacom group held in Cape Town in December 2015,
where matters
of macro-strategic importance were discussed. He does
not deny that at the meeting, the group presented its strategic plan
for
the forthcoming three years, a plan that covered every aspect of
Vodacom’s business. It would not be an understatement to
say
that Motsa has intimate knowledge of Vodacom’s short and longer
term strategic plans, and it is obvious that this information
would
be of benefit to a direct competitor. On this basis alone, and given
the useful life of the information to which Motsa has
been exposed,
in my view, a period of restraint that spans effectively the 12 month
period following Motsa’s resignation,
is not unreasonable.
[42] In summary: I am satisfied that
Vodacom is entitled to the enforcement of the post termination
restraint agreement, on the
terms reflected in the draft order.
Costs
[43] The court has a broad discretion
to make orders for costs according to the requirements of the law and
fairness. None of the
conventional factors which militate against a
costs order are present in this case. There is no reason why costs
ought not to follow
the result.
I make the following order:
1. It is declared that the first
respondent’s contract of employment terminates on 30 June 2016.
2. The first respondent is interdicted
and restrained from 1 July 2016 until 31 December 2016:
2.1. from being interested in, engaged
in, concerned or associated with or employed by the second respondent
or any of its subsidiaries
or affiliate companies, where such
engagement, association or employment constitutes a breach of the
restraint agreement contained
in his contract of employment with the
applicant.
2.2. from becoming involved in any
capacity of whatsoever nature with the second respondent and its
subsidiaries or affiliate companies,
where such involvement would
constitute a breach of the restraint provisions in the contract of
employment, which include, but
are not limited to, the first
respondent being a member of and/or participating in, in any manner
whatsoever, whether as a consultant
or otherwise, any committee or
other forum having purview of and/or directly or indirectly
exercising influence and control over
the second respondent or the
businesses conducted by the second respondent in South Africa,
Tanzania, DRC, Mozambique, or Lesotho.
3. The first respondent is interdicted
and restrained from disclosing any confidential information of the
applicant, such information
being any information to which the first
respondent became privy by virtue of his employment with the
applicant, and which would
be of assistance to a competitor to enable
such competitor to compete against the applicant and would ordinarily
be known to such
competitor.
4. The first respondent is to pay the
applicant’s costs, such costs to include the costs of senior
counsel.
ANDRE VAN NIEKERK JUDGE OF THE
LABOUR COURT
APPEARANCES
For the applicant: Adv AIS Redding
SC,
Instructed by ENS Africa
For the first respondent: Adv P
Pretorius SC, with him Adv P Bosman,
Instructed by Webber Wentzel