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[2016] ZALCD 27
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Perumal and Others v Endumeni Municipality (D790/2013) [2016] ZALCD 27 (29 November 2016)
IN
THE LABOUR COURT OF SOUTH AFRICA, DURBAN
JUDGMENT
Reportable
case
no: D790/2013
In
the matter between:
SHARMALAN
PERUMAL
First Applicant
IAN
GRISDALE
Second Applicant
JAMES
BARTMAN
MALTMAN
Third Applicant
and
ENDUMENI
MUNICIPALITY
Respondent
Heard
:
19 March 2014 (first application)
29 April 2016
(third application)
16 November 2016
(second application)
Delivered:
29 November 2016
Summary:
First Application: by applicants for declarator that their contracts
did not terminate by effluxion of
time and that they are still
employees of the respondent. Counter application by respondent to
declare fixed period contract null
and void. Both applications
dismissed.
Second
Application: Interlocutory application to declare that R Brijraj
(deponent to the respondents opposing affidavit) did not
have
authority to oppose the applicants’ application. Application
dismissed.
Third
Application: Interlocutory application to declare that judgment in
the first application had not been delivered by 6 August
2014.
Application granted
JUDGMENT
GUSH
J
[1]
In 2013, the applicants launched the first
application seeking a declarator that their contracts of employment
with the respondent
had not terminated by effluxion time. The details
of this application appear below in this judgment.
[2]
This matter was heard on 19 March 2014 and
the judgment was completed during the July 2014 recess to be handed
down on 5 August
2014 in the Durban Labour Court at the beginning of
the third term. I was not able to hand the judgment down as I was on
long leave
for that term.
[3]
Despite all indications to the contrary, it
appears as if the judgment was not handed down in an open court on 5
August 2014 as
is reflected on the file cover and the applicants
launched the second application (co-incidentally on 6 August 2014).
The uncertainty
regarding the handing down of the judgment on 5
August led to the applicants’ filing the third application.
[4]
Given the nature of and the relief sought
by the applicants’ in the second and third applications, it was
necessary to consider
them in reverse order.
[5]
The third application, for a declarator
declaring that the judgment had not been handed down was heard on 29
April 2016 and I gave
judgment in this application that day ordering
that as there was no evidence to establish that the judgment was in
fact handed
down in open court on 5 August 2014 or at all, the
parties were given leave to argue the second application viz. the
declarator
regarding Brijraj’s authority to oppose the first
application.
[6]
By this time, the first applicant had
passed away and his executor did not intend pursuing the matter.
[7]
This second application by the applicants
was to declare that Brijraj did not have the necessary authority to
oppose the applicants’
application and for his affidavit to be
struck out.
[8]
When the applicants’ first
application was argued and although Brijraj’s authority was
questioned in the applicants’
replying and answering
affidavits, this point was not argued.
[9]
Apart from the fact that Brijraj’s
averment that he was duly authorised is verified by the respondent’s
mayor and deputy
mayor, subsequent to the issue of authority being
raised, the respondent filed an affidavit in the second application
by the acting
senior manager legal and estates, Bezuidenhout,
confirming Brijraj’s authority. Needless to say that the
applicants also
challenge Bezuidenhout’s authority.
[10]
The applicants’ challenge to the
verification of Brijraj’s authority by the mayor and deputy
mayor is based on the averment
that in that their affidavits they
both include the qualification “in so far as they relate to
me”. What appears to
have escaped the attention of the
applicants is that in asserting his authority to oppose the
application Brijraj bases it on his
authority as “acting
municipal manager…appointed as such by
the
council of the respondent
.” My
emphasis). It cannot be gainsaid that this averment clearly “relates”
to them. There is nothing in the papers
to suggest that the mayor
and/or deputy mayor were not members of the respondent’s
council and the applicants take no issue
with either verifying
affidavit.
[11]
I am accordingly satisfied that Brijraj had
the necessary authority to oppose the applicants’ application.
In any event, given
my judgment in the first application, the
applicants did not succeed in proving that they were entitled to the
relief they sought
based on their own papers.
[12]
Given the specific nature of the two
interlocutory applications, the merits of the first application were
not argued during the
hearing of the second and third applications.
For this reason, I can find no justification for changing the
judgment I originally
prepared in July 2014. Having decided that it
was not handed down in open court, in the absence of any evidence to
establish it
was, of necessity it must now form part of this
judgment.
[13]
The applicants in the first appliocation
apply for an order declaring:
a.
that their fixed-term contracts of
employment with the respondent have not terminated by effluxion of
time;
b.
that the purported non-renewal of their
contracts of employment by the respondent's council be declared to be
a breach thereof and
that such non-renewal be held to be of no force
and effect and that the non-renewal be set aside;
c.
alternatively to (b) above, that the
purported non-renewal of the contracts of employment be declared to
be a breach of the contract
of employment and that the applicants are
therefore entitled to payment of the agreed notice period contained
in the fixed term
contract; and in the case of the first and third
respondents; that they are therefore entitled to exercise an election
within 15
days of the date of court so ordering to terminate the
fixed term contract by taking voluntary retirement;
d.
in the event that the relief in (b) is
granted that the applicants be declared still to be employees of the
respondent, entitled
to the benefits of such employment with effect
from 30 June 2013; and that the respondent be accordingly directed to
accept the
applicants’ tender of their services and to perform
its reciprocal obligations in terms of the applicants’
contracts
of employment.
[14]
The respondent opposed the application and
filed a counter-application seeking the following relief:
a.
that the applicants’ fixed-term
contracts of employment be declared unlawful invalid and that they be
set aside;
b.
that the continued employment of the
applicants by the respondent after 17 May 2013 be declared to be
unlawful;
c.
alternatively to (b) above that the
applicants’ employment with the respondent be declared to have
terminated on 12 June 2013
alternatively 30 June 2013.
[15]
The facts and circumstances concerning this
matter are largely common cause. As is recorded by the respondent in
its opposing affidavit:
"the parties are in general agreement as
to the sequence of material events which form the background to this
application”.
[16]
The background facts regarding the
applicants’ contracts of employment are:
a.
Respondent is a duly established
municipality.
b.
The
first applicant entered into a written contract of employment with
the respondent on 13 December 2001 in terms of which contract,
the
first applicant was appointed to the position of Manager: Corporate
Services (with effect from one November 2001). The post
to which the
first applicant was appointed was a managerial position reporting
directly to the Municipal Manager as envisaged by
section 57 of the
Local Government: Municipal Systems Act.
[1]
c.
As was required by section 57 (at the
time), the contract of employment was for a fixed period not
exceeding 24 months after the
election of the next council of the
respondent.
d.
The
next election took place in March 2006 and the first applicant’s
contract was renewed for a further “fixed term”,
once
again for a period “not exceeding 24 calendar months after the
next general election for councillors in the Endumeni
Municipality
[respondent)]”
[2]
in accordance with section 57 as it provided at that time.
e.
The next election took place on 18 May 2011
and taking into account the 24 month period, the fixed term of the
contract came to
an end on 17 May 2013.
f.
The second and third applicants were
likewise employed by the respondent in 2001 as Manager: Financial
Services and Manager: Technical
Services respectively. Both these
posts are also "section 57 posts" and their contracts were
renewed in 2006 for the
same fixed-term as that of the first
applicant. The fixed term of their contracts, as with the first
applicant came to an end on
17 May 2013.
[17]
The renewed fixed-term contracts were all
renewed on the same terms and conditions as "stipulated" in
the original contract
save to the extent that such terms and
conditions were inconsistent with the recordal of the renewed
contract.
[18]
The relevant clauses of the fixed-term
contracts of employment of the applicants (pertaining to their
duration, renewal and consequences
if not renewed) are as follows:
a.
The
applicants’ initial and renewed contracts of employment both
provided that the contract was to continue for a fixed-term
not
exceeding 24 calendar months after the next general election for
councillors in the respondent municipality.
[3]
b.
The
initial contracts stipulated that at the expiry of this period, the
applicants would retire voluntarily "in terms of the
applicable
statutes" or conclude a new contract with the municipality. The
second applicant’s initial contract differed
from the first and
third applicants’ initial contracts only in that this clause
contained an additional provision namely
“... or continue to
work for the municipality or its successor in title”.
[4]
c.
further to this, the applicants’
initial contracts stated:
‘
The
municipality shall not be bound to renew the contract but, if the
contract is not renewed for any reason, Municipality ... shall
continue to employ the manager [Corporate Services, Financial
Services and Technical Services] in a position of a similar nature,
involving similar duties at a similar level of seniority and
remuneration subject to all applicable Labour Legislation.’
[5]
d.
The
renewed contracts all repeat this clause but add the proviso that
such continued employment shall be “outside the ambit
of
section 57 of the Municipal Systems Act”.
[6]
e.
In each renewed contract, that clause
providing for the continued employment of the applicants is
immediately followed by a clause
providing that:
‘
At
the expiry of that fixed term the manager [Corporate Services,
Financial Services and Technical Services] may either retire
voluntarily or conclude a new contract of employment with the
municipality, or continue to work for the municipality...’
[7]
[19]
In addition to the above, the renewed
contracts contain a clause recording the applicants’
entitlement to remain members of
the medical aid scheme should the
applicants qualify and that the respondent is in such circumstances
obliged to continue payment
of its contributions to the medical aid
scheme of the applicants’ “choice”.(sic)
[20]
The
first and third applicants’ contracts contain a provision under
the heading “Termination” requiring the respondent
to
give the applicants “12 months’ notice of termination in
writing” should the respondent, at its instance,
terminate the
contract for any reason relating to conduct capacity performance or
any reason “recognised by the law as sufficient”.
In such
event, the contract provides that the applicant in question would be
entitled to "go on voluntary pension in terms
of the applicable
statutes or as otherwise determined by the Labour Relations Act”.
[8]
The second applicant’s contract contains a similar provision
save that the notice period is for one months’ notice
should
his contract be terminated by the respondent in the same
circumstances.
[9]
[21]
The 24-month period provided for in the
applicants’ contracts of employment expired on 17 May 2013.
[22]
The applicants record in their founding
affidavit that they requested the respondent’s speaker to
convene a special executive
committee and council meeting for 16 May
2013 in order to discuss their contracts of employment. In response
to this request, the
applicants were advised that the matter would be
considered at the respondent’s council meeting of 31 May 2013.
At this meeting,
the question of the renewal of their contracts was
referred to a special council meeting to be held on 5 June 2013 and
that "the
contracts of the managers directly accountable to the
municipal manager be renewed on a month-to-month basis on the same
terms
and conditions of employment contract entered into in September
2006”.
[23]
On 5 June 2013, the special council did not
take place but a meeting of the executive committee of the respondent
was convened.
This meeting, despite apparently not quorate, purported
to resolve that the contracts of employment for the applicants would
not
be renewed. Pursuant to this meeting, the chairperson of the
respondent’s executive committee addressed a letter to each of
the applicants advising them that the executive committee had
resolved to terminate their services pending the resolution of the
respondent's council and reminding them that their contracts have
expired on 18 May 2013.
[24]
On 10 May 2013, the applicants were, on the
instructions of the respondent’s Mayor, escorted from the
respondent’s premises.
The Mayor in addition issued an internal
memorandum to senior officials of the respondent informing them that
the applicants were
no longer employed by the respondent.
[25]
The respondent’s council met on 12
June 2013 and the recommendation by the executive committee of 5 June
2013 was approved
and adopted as a resolution of the council. On 25
June 2013, the respondent’s Municipal Manager addressed a
letter to the
applicants advising them that the respondent’s
council had, on 12 June 2013, resolved not to renew their employment
contracts.
On 19 July 2013, the Municipal Manager again wrote to the
applicants this time informing them that the respondent would no
longer
make any contribution to their medical aid scheme after 30
July 2013.
[26]
It is common cause that the respondent did
not address the expiry of the applicants’ contract of
employment prior to 17 May
2013, and specifically the respondent did
not address the renewal of the contracts prior to this date. It is
common cause that
the applicants’ fixed period contracts were
not renewed before 17 may 2013.
[27]
Based on the above the applicants aver:
a.
That their contracts of employment had not
terminated by effluxion of time;
b.
That the purported non-renewal of the
contracts by the respondent's council on 12 June 2013 constitutes a
breach of the contract
of employment and the notice provision
contained in the contracts; and the termination is therefore of no
force or effect. Accordingly,
the applicants argue that they remained
employees of the respondent and therefore are entitled essentially to
retrospective reinstatement;
c.
alternatively to the prayer that the
non-renewal be deemed to be of no force and effect: that insofar as
the purported non-renewal
is in breach of the contracts of employment
and the notice provision that the applicants accordingly are entitled
to payment for
the notice period provided for in the fixed period
contract and that they should be entitled to exercise their election
to take
voluntary retirement from the employ of the respondent.
[28]
The respondent in turn opposes the relief
sought by the applicants and argued that:
a.
the fixed period contracts that were
renewed in 2006, annexed to the applicants’ application were
unlawful and invalid and
that they should be set aside;
b.
that the applicants continued employment
after 17 of May 2013 was unlawful;
c.
alternatively to (b) above that the
applicants’ employment was terminated on 12 June 2013
alternatively 30 June 2013.
[29]
It is unclear why the respondent finds it
necessary to seek an order declaring the applicants’ fixed term
contracts of employment
entered into in 2006 to be unlawful, invalid
and that they be set aside. The respondent’s argument appears
to be based essentially
on an averment that it was not competent for
the respondent to have renewed the applicants’ fixed period
contracts in 2006
by virtue of the provisions of sections 56 and 66
of the Municipal Systems Act and amendments thereto prior to the date
on which
they terminated by effluxion of time. I am not persuaded
that the amendments to the Act had retrospective effect and
accordingly
I am satisfied that the continued employment of the
applicants up to 17 May 2013 by virtue of the renewed contract was
lawful.
[30]
The question to be decided in this matter
is whether the applicants were and could be lawfully employed after
their fixed period
contracts terminated on 17 May 2013 and if so to
what relief the applicants are entitled.
[31]
Having regard to both the arguments of the
applicants and the respondent, it appears that the issue is this:
a.
The applicants’ contracts of
employment expressly record that the duration of the contract was for
a fixed-term and it is
common cause that the fixed term expired on 17
May 2013.
b.
The respondent did not renew the fixed term
contract prior to 17 May 2013 and that it expired on 17 May 2013.
c.
It is trite that where a fixed term
contract expires and the employer continues to employ the employee,
in the absence of any provisions
to the contrary, the employee is
deemed to be employed on an indefinite contract of employment.
d.
In this matter, however, the applicants’
fixed period contracts specifically provided for what would happen in
the event that
the respondent elected not to renew the contracts. The
continued employment of the applicants’ was also subject to the
provisions
of the Municipal Systems Act.
e.
The applicants’ contracts
specifically stipulated that, in the event that the fixed period
contract of employment was not
renewed, the applicants would continue
in the employ of the respondent but "outside the ambit of
section 57 of the Municipal
Systems Act". The applicants’
fixed period contract specifically records that it is a contract
entered into in compliance
with Municipal Systems Act.
f.
The circumstances governing the applicants’
continued employment is further qualified in the contract by the
provision that
at the expiry of a fixed term contract, the
applicants’ had the option to “retire voluntarily or
conclude a new contract
of employment with the municipality or
continued to work for the municipality”.(sic)
g.
Given that the contract specifically
records the consequences should the contract not be renewed and in
addition provides for an
election to be exercised by the applicants
to either retire or continue in employment, there is nothing in the
papers to support
a suggestion that the applicants could have
entertained any reasonable expectation of the contract being renewed.
To the contrary,
the applicants must have specifically contemplated
that the contracts may in all likelihood not be renewed and for this
reason
addressed this possibility by including in the fixed term
contract a provision for their continued employment "outside the
ambit of section 57 of the Municipal Systems Act".
h.
It is clear from the papers that the
applicants neither elected to retire voluntarily nor conclude a new
contract of employment
with the respondent.
i.
The only conclusion therefore that can be
drawn therefor is that the applicants relied upon the clause
providing for their continued
employment by the respondent "outside
the ambit of section 57 of the Municipal Systems Act…"
j.
Apart from stating that this continued
employment would be at a "similar level of remuneration",
it is not spelt out what
duties and functions the applicants would
perform or what post they would occupy. In the original contract
however, it is suggested
that the continued employment would be in "a
position of similar nature involving similar duties at a similar
level of seniority
in remuneration..."
[32]
Taking the above into account and that the
stated intention of the parties was to specifically circumvent the
provisions of section
57 of the Municipal Systems Act, the applicants
continued employment was clearly intended not to be in the capacity
of section
57 employees despite it being envisaged that the
applicants would to all intents and purposes be section 57 employees.
[33]
That being so, it is necessary to consider
whether the applicants’ continued employment satisfied the
requirements of the
Municipal Systems Act and in particular section
66 thereof and whether such continued employment was lawful.
[34]
Section 66 of the Act provides:
‘
Staff
establishments
(1)
A municipal manager, within a policy framework determined by the
municipal council and subject to any applicable legislation,
must-
(a)
develop a staff establishment for the municipality, and submit the
staff establishment
to the municipal council for approval;
(b)
provide a job description for each post on the staff establishment;
(c)
attach to those posts the remuneration and other conditions of
service as may be determined
in accordance with any applicable labour
legislation; and
(d)
establish a process or mechanism to regularly evaluate the staff
establishment and,
if necessary, review the staff establishment and
the remuneration and conditions of service.
(2)
Subsection (1) (c) and (d) do not apply to remuneration and
conditions of service regulated by employment contracts referred
to
in section 57.
(3)
No person may be employed in a municipality unless the post to which
he or she is appointed, is provided for in the staff establishment
of
that municipality.
(4)
A decision to employ a person in a municipality, and any contract
concluded between the municipality and that person in consequence
of
the decision, is null and void if the appointment was made in
contravention of subsection (3).’
[35]
There is nothing in the applicants’
papers to suggest that their continued employment as provided for in
the fixed period
contract formed part of the approved staff
establishment or was subject to a specific job description
specifically as the parties
had agreed that the applicants continued
employment was not as section 57 employees..
[36]
In response to the averment by the
respondent that their employment was contrary to the provisions of
section 66, the applicants
simply averred that the posts that they
occupied at the expiry of their fixed term contract did in fact form
part of the staff
establishment approved by the respondent. There is
nothing in the applicants’ papers over to justify this
conclusion other
than the averment that by "approving [their]
continued employment respondent approved their "post-section 57
appointments
on the staff establishment". This however does not
take into account the requirements of the Act regarding section 57
employees.
I am not persuaded that this averment by the applicants is
justified given the facts. Their continued employment was therefore
neither compliant with section 57 nor section 66 of the Act.
[37]
That being so, I am satisfied that the
applicants at the termination of their fixed term contracts became
employees of the respondent
as provided for in the contract, but
subject to such employment being lawful. The circumstances of the
applicants prospective continued
employment was specifically
regulated by their fixed period contract. The applicants had the
option of retiring voluntarily, concluding
a new contract of
employment or continuing to work for the respondent but “outside
the ambit of section 57 of the Municipal
Systems Act”.
[38]
The applicants did not elect to retire nor
did they conclude a new contract of employment. Their continued
employment is therefore
subject to the provisions of section 66 of
the Municipal Systems Act. Consequently their continued employment
was to a post that
was not a section 57 post, not identified in the
staff establishment nor the subject of a job description and their
employment
was in contravention of section 66 (3) and as a
consequence null and void as provided for in section 66(4).
[39]
In the alternative to the applicants’
main prayer that the fixed period contracts had not terminated by
effluxion of time
and that the non-renewal was a breach of the
contract, the applicants sought an order that they be found to be
entitled to be paid
the agreed notice pay recorded in their contracts
and/or to exercise their election to take voluntary retirement.
[40]
In this regard, the applicants relied on a
clause in their fixed period contract relating to a notice period. It
is clear however
that this clause applied only to the termination of
the fixed period contract prior to its termination by effluxion of
time. It
is untenable to suggest that where their fixed period
contract terminated by effluxion of time that the applicants would be
entitled
to the notice period stipulated therein.
[41]
As far as the entitlement to take voluntary
retirement is concerned although the fixed period contract did not
stipulate by when
this election should be exercised, it was as an
alternative to continued employment. It is clear from the papers that
the applicants
all chose and now rely on their continued employment.
[42]
Turning then to the relief sought by the
applicants. The applicants have not established:
a.
that their contracts of employment did not
terminate by effluxion of time;
b.
that the purported non-renewal of the
contracts constituted a breach of the fixed period contracts of
employment; or
c.
that they are entitled to an order
declaring that they remain employees of the respondent and that they
be reinstated.
[43]
Regarding the respondent’s
counter-application, it is abundantly clear that the respondent has
not established that the applicants
fixed period contracts were
unlawful invalid or that they should be set aside. As far as the
additional relief is concerned, namely
that their continued
employment be declared unlawful alternatively that it be declared
that the applicants’ employment was
terminated during June
2013, this relief does not take into account the provisions of
section 66(4) of the Municipal Systems Act.
In terms of this section,
the employment of the applicants immediately following the
termination of a fixed period contract is
simply null and void and
the issue of the termination of their services is irrelevant.
[44]
In the particular circumstances of this
matter, I am not satisfied that that a costs order against either
party is justified in
any of the applications.
[45]
For the reasons set out above ,I make the
following order:
First Application
a.
Both the applicants’ application and
the respondent’s counter-application are dismissed;
b.
There is no order as to costs.
Second Application.
c.
The applicants’ application is
dismissed.
________________________
D H Gush
Judge
of the labour Court of South Africa
APPEARANCES:
FOR
THE APPLICANTS:
Adv. C Nel
Instructed by Livingston Leandy Inc
(First Application)
McGregor Erasmus Attorneys (Second and
Third Applications)
FOR
THE RESPONDENT:
Adv. P Wallis (First Application)
Adv. A J Dickson SC (Second and third
applications)
Instructed
by PKX Attorneys
[1]
32 of 2000.
[2]
Contract of
employment: Page 56 of the indexed pleadings.
[3]
Applicants’
contracts of employment Pages 38, 56, 63, 97, 79 and 103
respectively of the indexed Pleadings.
[4]
Page 79 of
the indexed pleadings.
[5]
Pages 38,
63 and 97 respectively of the indexed Pleadings.
[6]
Pages 56,
97 and 102 of the indexed pleadings.
[7]
Pages 56,
97 and 103 of the indexed Pleadings.
[8]
Pages 48
and 89 of the indexed pleadings.
[9]
Page 70 of
the indexed pleadings.