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[2016] ZALCD 2
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Maphumo Local Municipality v Mhlongo and Others (D1198/13) [2016] ZALCD 2 (20 January 2016)
IN
THE LABOUR COURT OF SOUTH AFRICA, DURBAN
Reportable/Not
Reportable
Case
no: D1198/13
MAPHUMULO
LOCAL MUNICIPALITY
Applicant
and
VUSUMUZI
WELCOME
MHLONGO
1
ST
Respondent
Cm
RICHARD LYSTER
N.O.
2
nd
Respondent
CCMA
3
RD
Respondent
IMATU
4
TH
Respondent
Heard:
6 August 2015
Delivered:
20 January 2016
Summary:
renewal of municipal manager’s contract of employment
JUDGMENT
WHITCHER
J
Introduction
[1] This
is an opposed application in which the applicant, (‘Maphumulo
Municipality’) seeks to review and set aside
the award of the
second respondent, (‘the arbitrator’) issued under the
auspices of the CCMA under case number D1198
/ 2013. In this
award, the arbitrator found the dismissal of the first respondent
(‘Mhlongo’) unfair and ordered
his reinstatement as
relief.
Background
[2]
Mhlongo was appointed as municipal manager at Maphumulo Municipality
on 1 September 2001 in terms of a fixed term contract of
employment.
The contract was renewed in August 2006. The second contractual
term would terminate two years after the
“next local government
election”.
[3]
Despite some confusion in the award about the date of the relevant
local government election, this was 18 May 2011, making the
date of
Mhlongo’s termination 18 May 2013.
[4] In
2012 Mhlongo was dismissed for misconduct. He successfully
challenged the fairness thereof and was reinstated retrospectively
in
terms of a CCMA award dated 4 March 2013.
[5] On 25
April 2013, as the expected end date drew near, Mhlongo met with the
mayor and deputy mayor at the Richard’s Bay
Protea hotel.
He made out a case for the further renewal of his contract.
According to Mhlongo, his presentation was
well received. The
mayor did inform him that the final decision did not lie with her,
however. She would have to take
instruction from the Regional
Working Committee (RWC) of the ANC, the majority party in the
municipality.
[6] On 13
May 2013, Mhlongo asked the mayor for feedback on the advice she
received from the RWC. She told him that the RWC’s
advice
was still pending and undertook to get back to him.
[7] On 20
May 2013, the mayor met with Mhlongo and advised him that his fixed
term contract had expired two days earlier on 18 May
2013. She
asked why he was still present at work. He advised her that he
expected notice to the effect that his contract
was not being
renewed. He carried on performing his duties.
[8] On 23
May 2013, he attended an Exco Council meeting where he was informed
that a decision was formally taken by this body not
to renew his
fixed term contract. He, however, remained at work until a full
council meeting on 29 May 2013 convened, which
he attended. The
full council had the power to overrule the decision of the Exco but
they did not do so. Instead, Mhlongo
was placed on a notice
period to expire at the end on June 2013.
[9] The
CCMA award records a number of reasons why Mhlongo said he developed
an expectation that his contract would be renewed past
18 May 2013.
First, he had been permitted to work beyond the stipulated end date.
The former mayor, Mr. Ngidi, had
also informed him that as long as he
continued to achieve unqualified audits, a welcome and apparently
unusual occurrence for municipalities,
his contract would be
renewed. Mhlongo had indeed, performed well and took away the
impression from the Richards Bay Protea
Hotel meeting on 25 April
2013 that the mayor acknowledged this. Mhlongo also stated that
it was practice that fixed term
contracts were renewed.
[10]
Mhlongo stated that he had used the 25 April 2013 meeting at the
Protea Hotel explicitly to discuss and motivate for the renewal
of
his fixed term contract. Such an opportunity was provided for
in terms of clause 3.2 and 3.3 of his contract with the
municipality. Mhlongo testified that part of the reason he
expected a renewal of his fixed term contract was that, at the
Protea
Hotel meeting, the Mayor expressed no dissatisfaction with his work.
Mhlongo accepted that, in terms of section 56A(6)(a)
of the
Municipal Systems Act of 2000, a renewed contract would be for five
years but not longer than one year beyond the next local
government
elections.
[11] In
his evidence, the deputy-mayor, Mr Mbonambi stated that Mhlongo was
not dismissed, his fixed term contract had come to an
end. The
additional time he had worked after 18 May 2013 was a notice period.
Mbonambi denied that Mhlongo had motivated
for the renewal of his
contract at the 25 April 2013 meeting at the Protea hotel.
The
award
[12] In
his award the arbitrator pointed out that both parties’
representatives had, in litigating the case, missed the fact
that
Mhlongo’s contract itself defined under what circumstances a
renewal could reasonably be expected. In terms of
clause 3.3,
this was that the municipal manager:
“
shall
have to prove that he has performed his duties under this agreement
to the satisfaction of the Mayor, and the Mayor will have
to be
satisfied of the Municipal Manager’s work performance. In
determining such work performance, the Mayor must be
guided by the
Municipal Manager’s performance in terms of the Performance
Management System, as well as his compatibility
with the Mayor and
the Executive Authority, and provided that:
3.3.1
All performance agreements concluded and required to be
concluded between the Mayor and the municipal manager
have been
fulfilled,
3.3.2
Any other terms must be a basis for renewal (e.g. same remuneration),
3.3.3
the failure to renew or extend the period referred to in 3.2, which
renewal or extension shall not be unreasonably
withheld, could be a
matter for arbitration.
[13] The
arbitrator accepted that the meeting on 25 April at the Protea Hotel
constituted an opportunity for Mhlongo to motivate
for the renewal of
his contract before any advertisements were sent out, an opportunity
provided for in Mhlongo’s contract.
The arbitrator
rejected Mbonambi’s evidence that this meeting did not discuss
the possible renewal of Mhlongo’s fixed
term contract. In
doing so, the arbitrator made an adverse finding on the deputy-mayor
Mbonambi’s credibility.
[14] On
the arbitrator’s analysis of clause 3.3 of Mhlongo’s
fixed term contract, his renewal was not to be unreasonably
withheld. Having received no negative feedback from the Mayor,
Mhlongo knew of no reason why a renewal would be withheld.
Indeed, contractually, after Mhlongo made representations in favour
of a renewal, it was incumbent on the municipality to advance
reasons
against such an event. Not any reasons would do. If it
wished to avoid a renewal, the municipality was confined
by the terms
of the contract to rely only on Mhlongo’s poor performance or
incompatibility as identified by the Mayor. The
arbitrator found that
once Mhlongo testified that his performance was of such a nature that
a renewal was reasonably expected “it
was incumbent on the
Respondent to show, by evidence, that it was reasonable not to renew
the contract”.
[15] In
this regard, the arbitrator found that since Mhlongo’s fixed
term contract repeatedly made reference to the Mayor
being satisfied
with Mhlongo’s performance, it was essentially the Mayor had to
disprove that her municipal manager had performed
satisfactorily. The
Mayor elected not to testify and thus there was no evidence before
the CCMA to rebut Mhlongo’s version
that his performance was
not only satisfactory, but exemplary. No evidence was led that
he was incompatible with the Mayor
either. There was no
testimony from deputy-mayor Mbonambi to this effect, nor the acting
municipal manager, neither was there
any trace of performance or
compatibility problems in any of the council minutes handed up as
evidence.
[16] The
arbitrator went on to find that the probable cause of the non-renewal
of Mhlongo’s fixed term contract was the decision
of the ANC’s
RWC. However, this body’s attitude towards Mhlongo had no
statutory or contractual standing.
It was the terms of
Mhlongo’s contract, paired with the absence of any criticism
from the Mayor that properly and reasonably
conditioned his
expectation of a renewal. Clause 3.3 of this contract gave him
an opportunity for renewal which, the arbitrator
found, Mhlongo
invoked in the 25 April 2013 Protea Hotel meeting. Absent
any performance or compatibility problems
from the Mayor’s
side, Mhlongo could thus have expected a renewal of his fixed term
contract as a matter, more or less, of
contractual compliance.
[17] As
Mhlongo was unfairly denied a renewal of contract, which would have
been for five years, or not later than one year after
the next local
government elections, the arbitrator coupled his finding that an
unfair dismissal in terms of section 186 (1)(b)
of the LRA had
occurred with an order reinstating Mhlongo as Municipal Manager for
the term mentioned above.
Grounds
of review
[18] The
municipality’s main ground of review is that while the
arbitrator relied on clauses 3.2 and 3.3 of the fixed term
contract
to find that Mhlongo’s expectation of renewal of his fixed term
contract was reasonable, he ignored the implications
of clause 4.1 of
the same contract which, on the facts of the case, pointed in the
opposite direction. Clause 4.1 required
the municipal
manager to conclude a performance agreement with the Mayor within 60
days of signing the agreement and thereafter
a separate performance
agreement had to be concluded every year within 30 days of June of
the year. If no performance agreement
was concluded, none would
come into effect, alternatively, the contract would automatically
terminate upon the expiry of the 30
days period from June of the
year.
[19] The
municipality pointed out that, in terms of section 57(1), (2) and (4)
of the Municipal Systems Act, the Municipal Manager
may be appointed
to that position only subject to a separate performance agreement
concluded annually and to be concluded within
a reasonable time after
a person has been appointed as the municipal manger and thereafter
within one month after the beginning
of each financial year of the
municipality.
[20] It
was these statutory provisions that were expressly included in clause
4.1 of the written contract of employment concluded
between the
municipality and Mhlongo on 3 August 2006.
[21] The
municipality led evidence that, during the period of Mhlongo’s
employment, Mhlongo had not concluded any performance
agreement with
the municipality despite the express provisions requiring same and
despite the fact that the onus was on him to
conclude such agreement.
[22] The
municipality argued further that Clause 3.2 and 3.3 of the written
contract of employment expressly provided that the appointment
of
Mhlongo shall commence on 1 July 2006 and shall endure for a period
which terminated automatically two years after the next
ordinary
Local Government Elections but at the end of such period Mhlongo
shall be offered an opportunity to renew the agreement
before any
advertisements for applications are done provided, inter alia, that
all performance agreements concluded and required
to be concluded
have been fulfilled.
[23]
Accordingly, the non-existence of any performance agreement between
the municipality and Mhlongo was a bar for the renewal
of the
contract of employment to which the arbitrator did not have proper
regard in coming to his finding.
[24]
Thus, Mhlongo ought to have harboured no expectation of renewal.
[25] In
its heads, the municipality further argued that Mhlongo is an IFP
member whereas the mayor is an ANC member, thus creating
policy
incompatibility, which entitled it not to renew Mhlongo’s
contract and militating against reinstatement as relief.
[26]
Mhlongo, in opposing the review application, noted that the
municipality elected not to launch any serious attack upon the
conclusions reached by the arbitrator on the objective basis for his
expectation of renewal outlined in the award and the absence
of any
evidence led by the municipality in the arbitration contradicting
such conclusions.
[27]
Mhlongo argued that the municipality chose to rather focus on the
contention that because no separate performance agreement
was entered
into between the municipality and Mhlongo (which agreement is
typically concluded after the conclusion of the primary
contract of
employment in any event), the fixed term contract was not renewed.
[28] The
basis for the review of the award was thus that the arbitrator had
regard to the provisions of clause 3.2 of the fixed
term contract
(which set out the obligations of the municipality and, in
particular, the obligations of the Mayor in respect of
the renewal of
the fixed term contract), whereas the arbitrator should have
considered the provisions of clause 4 of the fixed
term contract,
relating to the obligations of the parties to conclude a Performance
Agreement which is ancillary to the fixed term
contract.
[29]
Mhlongo argued that this criticism of the award was unsustainable, as
neither the provisions of the fixed term contract upon
which this
criticism was premised (i.e. clause 4.1), nor the relevant provisions
of the Municipal Systems Act of 2000 support the
idea that the
arbitrator committed any error at all.
[30]
Mhlongo pointed out that the obligation to conclude a separate
performance agreement was contained in clause 4.1 of the FCT
and read
as follows:
“
Notwithstanding
anything to the contrary contained in this agreement, the Municipal
Manager shall be required to conclude a performance
agreement with
the Mayor within 60 days of signing this agreement,
and
thereafter a separate performance agreement must be concluded every
year within 30 days of June of such year,
failing which no agreement shall come into force or effect,
alternatively this agreement shall automatically terminate
immediately
upon the expiry of the period referred to in this clause
for which such performance agreement ought to have been concluded, or
upon the expiry of such reasonable extension of the period as may be
agreed to.by the Mayor, for such purposes.” (Emphasis
added).
[31] From
this clause, Mhlongo argues, the following points emerge:
1.
The renewal of the fixed term contract precedes the conclusion of the
separate
performance agreement, so the absence of such agreement at
the time of renewal cannot be said to prevent the fixed term contract
from being renewed;
2.
Such performance agreement need only be concluded within 30 days of
June (i.e.
the end of July) of the year in which the fixed term
contract expires; and
3.
In the event of such performance agreement not being concluded within
such time
frame, the Mayor may extend the time period for the
conclusion of such performance agreement.
[32] For
Mhlongo, the due date for the conclusion of the performance agreement
had not yet arrived at the time that his services
were terminated on
23 June 2013.
[33]
Mholongo similarly points out that section 57(2) of the Municipal
Systems Act provides that the performance agreement must
be concluded
within 60 days after a person has been appointed as the municipal
manager, failing which the appointment lapses: provided
that, upon
good cause shown by such person to the satisfaction of the
municipality, the appointment shall not lapse; and be concluded
annually, thereafter, within one month after the beginning of each
financial year of the municipality. The section further provides
that
the performance agreement shall be entered into with the municipality
as represented by the mayor.
[34]
Mhlongo’s argument was that the 60 day period must be
calculated from the date of renewal (i.e. 18 May 2013) or, in terms
of the fixed term contract, the 30 day period after June (the end of
July) referred to in clause 4.1 of the contract. It could
not mean
any period shorter than that. On this basis, the due date for the
conclusion of the performance agreement had again not
yet arrived at
the time a decision was taken not to renew.
Analysis
[35] The
review test is trite. The applicant must first show that a
material irregularity exists in the arbitration award.
Second,
the applicant must show that such an irregularity could reasonably
lead to a different outcome. For reasons that
follow below, I
am satisfied that the conclusions the arbitrator reached on both the
law and facts are not those that no reasonable
decision-maker would
have made.
[36] I
agree with Mhlongo’s submissions that the arbitrator committed
no reviewable irregularity in concluding that a performance
contract
is not a prerequisite for the renewal of the fixed term contract, on
the facts outlined above. The time for the conclusion
of the last,
required performance contract had not yet lapsed at the time the
municipality decided not to renew Mhlongo’s
contract.
[37] It
is not accurate that the arbitrator failed to properly take into
account the historical non-existence of performance agreements
between the municipality and Mhlongo and failed to appreciate that
this constituted a bar to the renewal of Mhlongo’s contract
since the Mayor had no way of assessing his performance in terms of
the Performance Management System. Albeit in general
terms, in
his award, the arbitrator finds that there is no basis for the
argument that Mhlongo should be held responsible for omissions
or
failings in terms of his own contract. Mhlongo and the
municipality were equal contracting parties and both were expected
to
be aware of what was required of them.
[38]
While the failure to agree to the terms of a performance agreement
may, contractually and proactively, be invoked as grounds
for
termination of a contract in terms of the contract itself, I am
loathe to have this count against the employee in circumstances
where
his employer has tolerated the absence of a performance agreement, it
seems, for many years. I note that clause 15
of Mhlongo’s
contract specifically provides for the municipality to call upon him
to remedy any breach of the contract that
they are moved to enforce.
I do not find any mention that Mhlongo was placed on terms to
conclude a performance agreement
in the record. It strikes me,
as it apparently did the arbitrator too, to be an
ex
post facto
rationalisation for an otherwise unfair action that labour tribunals
should, for policy reasons, not countenance.
[1]
[39]
Indeed, the arbitrator specifically found that the absence of a
performance agreement was not the true cause for the non-renewal
of
Mhlongo’s contract. The true cause instead appeared to be
the decision of a non-statutory body, the RWC of the ANC,
to replace
him. This was not a proper legal basis for a non-renewal,
especially in light of the terms of the contract the
municipality had
signed with him.
[40] I
mention in passing that clause 3.3 strikes me as considerably
limiting an employer’s options should it not wish to
renew a
fixed term employee’s contract. Be that as it may, there was no
suggestion this contract was not valid.
[41] It
is not necessary to assess whether Mhlongo’s expectation of a
renewal fell within the ambit of the factors in existing
case law
which have been held to sustain a reasonable expectation of renewal
of a fixed term contract. The arbitrator did
not base his
decision on whether Mhlongo was permitted to work beyond the end
date, that he received repeated prior renewals, or
that there was
on-going work for him to do. The reason given by the arbitrator
was that Mhlongo had formed a reasonable expectation
of continued
employment because of a term in his contract of employment which
specifically regulated renewal. This was clause
3.3. It
provided that, absent poor performance or incompatibility as
determined by the Mayor, a municipal manager at the
Maphumulo
Municipality could expect a renewal of his fixed term contract.
I do not find the arbitrator’s factual or
legal conclusions on
this score to be beyond the pale of what a reasonable decision-maker
would have found.
[42]
Indeed, in my view, the arbitrator correctly determined that
Mhlongo’s expectation that his contract would be renewed
flowed
quite naturally from the provisions of the contract itself. Indeed,
this is a rare case where a non-renewal of a fixed term
contract
could just as well have been litigated as the enforcement of a
contract.
[43] The
same applies to the municipality’s argument set out in
supplementary heads of argument, (served a day before the
matter was
heard), that the fact that Mhlongo motivated for a renewal on 25
April at the Protea Hotel showed he had no positive
expectation of
renewal. The arbitrator convincingly dealt with this in his
award by finding that the absence of any criticism
from the Mayor at
the Protea Hotel meeting reasonably informed Mhlongo’s
expectation of renewal. I point out that this
finding was made
in the context of clause 3.3 of Mhlongo’s fixed term contract.
Given what Mhlongo’s contract
said about his achieving renewal,
the arbitrator found his expectation of renewal perfectly
reasonable. I, in turn, make
the same finding with regards to
the arbitrator’s decision.
[44] The
municipality’s attempt to introduce new evidence relating to
Mhlongo’s political party membership is both unfortunate
and
impermissible. Having said that, I do note that it was,
notionally, possible for the municipality to have relied on a
difference of political party between mayor and municipal manager as
a reason against renewal. This is quite possibly the
ground of
incompatibility invoked in clause 3.3 itself. However, for this
reason to be invoked, would require evidence to
this effect. In
the manner they litigated the case at the CCMA, the municipality put
all their eggs in the basket of termination
by effluxion of time,
instead of termination for incompatibility. To introduce new
material into their basket at this stage
is impermissible.
[45] The
suggestion that Mhlongo’s successful overturning of his earlier
unfair dismissal at the CCMA somehow constitutes
incompatibility with
the Mayor comes dangerously close to an admission of an automatically
unfair dismissal for exercising his
rights in terms of the Labour
Relations Act.
Order
[46] In
the circumstances, the following order is made:
46.1.
The application is dismissed with costs.
________________________________
Benita
Whitcher
Judge
of the Labour Court of South Africa
APPEARANCES:
On behalf
of the applicant: Adv T Kadungure (instructed by Ngidi & Company
Inc.)
On behalf
of the first respondent: R Meneses from Garlicke & Bousfield Inc.
[1]
National
Lotteries Board v South African Education and Environment
2012
(4) 504 (SCA) at para 27.