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[2016] ZALCD 18
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Burnett v Nampak Cartons and Labels KZN (D998/10) [2016] ZALCD 18 (10 June 2016)
REPUBLIC
OF SOUTH AFRICA
THE LABOUR COURT OF
SOUTH AFRICA, DURBAN
Not
Reportable
Case no: D998/10
In the matter between:
ROGER
BURNETT
Applicant
And
NAMPAK CARTONS AND
LABELS KZN
A
division of NAMPAK PRODUCTS
LTD
Respondent
Heard:
29 February and 1 March 2016
Delivered:
10 June 2016
Summary: Contractual
claim for payment of agreed voluntary retrenchment package.
JUDGMENT
GUSH J
1.
The applicant in this
matter, an erstwhile employee of the respondent, applied by way of
notice of motion for an order that the
respondent pay him the amount
of R466,796.55. The amount claimed is the balance of a voluntary
retrenchment package the applicants
avers the respondent agreed to
pay him.
2.
The application is
opposed by the respondent. After the respondent had filed its
opposing affidavit the parties agreed that the
matter should be
referred to trial.
3.
In due course the
bodies conducted a pre-trial conference and filed a pre-trial minute
which minute records the background to the
matter and in particular
the following common cause facts:
a.
the respondent during
December and January 2009/10 embarked on consultations regarding the
contemplated retrenchment of a number
of employees;
b.
that a total of 43
employees had applied for voluntary retrenchment and that the
criteria to be applied to employees who had applied
for voluntary
retrenchment was that the value of their severance package would be
“cost neutral”. This meant that any
employee who
volunteered to be retrenched would receive severance package the
value of which would not exceed the remuneration
due to such
volunteer for the balance of the financial year.
c.
On 28 January 2010 the
applicant applied for voluntary retrenchment and on the 29 January
2010 met with the respondents Aaron Ganesh
(the applicant’s
general manager Pinetown) and Leon Selzer the then managing director
of the applicant. At the conclusion
of the meeting the applicant was
advised that he would be notified of the outcome of his application
on Monday, 1 February 2010.
d.
On Saturday, 30 January
2010 in response to a telephonic query from the applicant, Ganesh
left a message on the applicants phone
advising the applicant
“basically da deal is dat da retrenchment must be cost neutral
in dis Fin Year, you me and Sinazo
will resolved on Monday @ 8.00”
(sic).
e.
On Monday 1 February
2010 the applicant and Ganesh met and agreed the applicant’s
retrenchment package which was produced
by and signed by both the
applicant and Ganesh on 3 February 2010.
f.
On 2 February 2010 the
applicant was handed a certificate of service by the respondent’s
human resource manager in which the
reason for the termination of the
applicant services was recorded as “retrenchment”.
g.
On 4 February 2010 the
applicants then human resources director Mr Ntshangase met with the
applicant and handed him a restraint
of trade agreement for him to
sign. The applicant refused to sign the restraint of trade and
advised Ntshangase that he had accepted
an offer employment with
Golden Era Packaging a competitor of the respondent.
4.
The pre-trial minute
records that the court was required to decide:
a.
whether on 1 February
2010 or at all the respondent agreed to retrench the applicant;
b.
if the respondent did
agreed to retrench applicant on 1 February 2010 or at all was it
entitled in law to resile from such agreement
to retrench because
applicant had failed to disclose the possibility of employment with
Golden Era Packaging to the respondent,
alternatively insist that
such retrenchment be subject to the applicant signing a restraint of
trade agreement in favour of the
respondent;
c.
if the respondent was
entitled, in law, to resile from the retrenchment agreement (if any)
whether it did in fact do so;
d.
the circumstances under
which the applicant left the employ of the respondent on 4 February
2010.
5.
During the course of
cross-examination of the applicant the respondent placed on record
that it’s defence to the applicants
claim was:
“
The
conclusion of the retrenchment or termination of the applicant would
be subject to the parties entering into a mutual separation
agreement
which would include a restraint of trade provision”; and
“
There
was no retrenchment agreement”
6.
The applicant gave
evidence in support of his application and the respondent led the
evidence of Ntshangase and Selzer.
7.
In his evidence the
applicant was adamant that in response to his request for voluntary
retrenchment he had met with the respondents
Ganesh and Selzer. No
mention had been made of any restraint of trade at this meeting or at
any time prior to the agreement being
concluded. After the meeting it
had been agreed that he would be retrenched and a document setting
out the retrenchment package
had been prepared by the respondent. The
applicant had been given a certificate of service and the quantum of
his retrenchment
package had been agreed as had the date on which his
employment would cease.
8.
It is no coincidence
that this evidence accords with the statement of agreed fact as set
out in the pre-trial minute (see above).
9.
It is common cause that
the applicant’s contract of employment did not include a
restraint of trade.
10.
The applicant was
adamant that at no stage during the discussions with the respondent’s
representatives was the issue of a
restraint raised with him until he
was presented with the restraint by Ntshangase.
11.
It was also his
evidence that he had been considering joining a family business
not connected with the respondent at the time
of the discussions and
agreement. He also gave evidence that he had not been offered a
position with Golden Era Packaging until
after the conclusion of his
retrenchment.
12.
The applicant gave his
evidence clearly and was patently an honest witness. His confusion
regarding the respondent’s conduct
and his position subsequent
to the respondent’s disingenuous efforts to have him sign a
restraint of trade agreement, which
became apparent during cross
examination, was understandable given the respondents conduct.
13.
An example of his
credibility as opposed to that of the respondent’s witnesses
was the respondent’s and in particular
Ntshangase’s
denial that he Ntshangase had spoken to the applicant during the week
after his meeting with the applicant regarding
the restraint.
14.
The applicant was
adamant that he had telephoned Ntshangase to discuss with him issues
relating to his insurance and medical aid.
It transpired from the
pleadings and the documents attached thereto that Ntshangase despite
his denial of such telephone conversation
had instructed the
respondent’s legal adviser that such telephone conversations
had taken place.
15.
Whilst the issue of the
subsequent telephone conversations have little relevance to the
overall merits of the matter it served to
graphically to demonstrate
the somewhat selective recall of the events by the respondent’s
witnesses and illustrate the veracity
of the applicant’s
evidence.
16.
Further evidence of the
respondent’s witness’s selective recall of is to be found
in the copies of the exchange of correspondence
between the
applicant’s attorney and Ntshangase and the legal adviser
included in the pleadings.
17.
It is clear that
Ntshangase was instructed to draft the restraint of trade by either
Ganesh or Selzer that the respondent was uncertain
as to who in fact
had given the instruction. What is abundantly clear from the nature
of the restraint drafted by Ntshangase was
that it had little to do
the respondents averment that it was connected to the
applicant’s application for voluntary
retrenchment and the
respondent’s agreement to accede to his request. The so called
restraint simply recorded that the payment,
described by the
respondent itself as a retrenchment package, was paid to the
applicant as a consideration for agreeing to the
restraint.
18.
Seltzers evidence was
equally unsatisfactory. It became apparent that having forgotten to
raise the issue of a restraint Selzer
endeavoured variously, despite
evidence and documentation to the contrary to suggest that it was
common practice to require retrenched
employees to sign restraints
and that the applicant was never a candidate for retrenchment.
19.
Selzer in his evidence
dealt with what transpired at the meeting. He conceded that the
applicant’s contract of employment
did not contain a restraint
of any nature and at no stage during his meeting with the applicant
was the issue of a restraint of
trade discussed. Specifically Selzer
agreed that it was never put to the applicant that his application
for voluntary retrenchment
would only be approved if he signed a
restraint of trade.
20.
For reasons best known
to him, Selzer insisted, during his evidence, that the applicant had
never been nor was he ever considered
a candidate for retrenchment.
This was despite the bundles of documents and pleading demonstrating
otherwise. The minutes of the
first retrenchment meeting between
organised labour and the respondents records a summary of the
positions the respondent contemplated
retrenching including 13 non
production employees. The applicant’s bundle contained a
schedule of in which 13 non production
employees are identified and
includes the applicant.
21.
This document
highlights the applicant as appearing the list but highlighting him
due to his retrenchment package exceeding the
amount related to the
so-called cost neutral criteria. Selzer insisted that this document
had nothing to do with the ongoing retrenchment
process and was one
of many cost exercises undertaken by the respondent at regular
intervals. This was clearly and simply a fabrication.
22.
It became apparent that
Selzer believed that the respondent’s case was best served by
denying that the applicant had ever
been considered for possible
retrenchment.
23.
What is abundantly
clear from the evidence is that the applicant during the course of a
retrenchment exercise initiated by the respondent
made application to
be considered for voluntary retrenchment.
24.
The applicant aware of
the criteria applied by the respondent namely that the amount of the
package should not exceed the balance
of the applicant’s salary
to the end of the financial year agreed to limit the value of his
severance package so as to fall
within this criteria.
25.
The respondent elected
to entertain the applicant’s application and at the conclusion
of a meeting with the applicant decided
to accept the applicant’s
application for voluntary retrenchment.
26.
The amount payable to
the respondent was calculated by the respondent and agreed as was the
date of his departure and the reason
for the termination of his
services.
27.
The respondent conceded
that at no stage during negotiations or prior to the agreement being
reached was the acceptance of his application
for voluntary
retrenchment made subject to him signing a restraint of trade nor was
the issue of a restraint of trade ever discussed.
28.
The applicant’s
contract of employment did not include a restraint clause and as the
issue of a restraint did form part of
the discussions and subsequent
agreement I am not persuaded that the applicant was in any way
obliged to disclose where he was
to be employed after leaving the
respondents employ. There is no evidence to suggest that the
respondent only accepted the voluntary
retrenchment as a result of
any representation made to the respondent.
29.
I am satisfied that the
evidence of the applicant that at the time the negotiations took
place the applicant had not agreed to take
up employment with Golden
Era Packaging. In any event I am not persuaded that the applicant was
under any contractual obligation
whatsoever to disclose where he was
intending to be employed after his dismissal. He was not subject to a
restraint of trade and
had no reason to believe that an agreed
voluntary severance package payable in response to the responded
acceptance of his request
for voluntary retrenchment would be made
subject to restraint.
30.
What is abundantly
clear is that the issue of the restraint was an afterthought by the
respondent after the retrenchment agreement
had been concluded and
the circumstances surrounding the retraint agreement was simply an
attempt to claso the stable door after
the horse had bolted.
31.
This is evidenced by
the respondents obfuscation of the circumstances surrounding the
production and contents of the restraint.
Selzer was unsure of the
nature of the so called agreement presented to the applicant and
equally unsure as to who had instructed
Ntshangase to draft it.
Ntshangase said Selzer instructed him and Selzer denied he had given
the instruction.
32.
The respondents had
simply attempted to impose a restraint on the applicant after the
agreement had been reached that the applicant
would be voluntarily
retrenched. The specific nature of the restraint presented to
the applicant namely that the amount of
the retrenchment package to
be paid to the applicant was a consideration for the restraint was no
more than a thinly disguised
attempt by the respondent to introduce
into the agreement a clause that had never been discussed and was not
part thereof.
33.
As set out above the
court was asked to decide:
a.
whether on 1 February
2010 or at all the respondent agreed to retrench the applicant;
b.
if the respondent did
agreed to retrench applicant on 1 February 2010 or at all was it
entitled in law to resile from such agreement
to retrench because
applicant had failed to disclose the possibility of employment with
Golden Era Packaging to the respondent,
alternatively insist that
such retrenchment be subject to the applicant signing a restraint of
trade agreement in favour of the
respondent;
c.
if the respondent was
entitled, in law, to resile from the retrenchment agreement (if any)
whether it did in fact do so;
d.
the circumstances under
which the applicant left the employ of the respondent on 4 February
2010.
34.
I am satisfied that the
answers to the above question are:
a.
Yes the respondent did
agree to retrench the applicant.
b.
The respondent was not
entitled to resile from the agreement or insist on the applicant
signing the restraint agreement and its
failure to abide by the
retrenchment agreement is a breach thereof.
c.
That the applicant’s
employment was terminated in accordance with the agreement reached
with the respondent.
35.
There is no reason why
costs should not follow the result.
36.
Accordingly and for the
reasons set out above I make the following order:
a.
The respondent is
ordered to pay the applicant the sum of R466,796.55 together with
interest thereon from 5 February 2010;
b.
The respondent is
ordered to pay the applicant’s costs
D H Gush
Judge
of the Labour Court of South Africa Durban
APPEARANCES:
FOR THE
APPLICANT: Adv P
Schumann
Instructed
by Hamilton Attorneys
FOR THE RESPONDENT:
Adv Van As
Instructed
by Cliffe Dekker Hofmeyr Inc