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[2017] ZALCJHB 364
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National Union of Metalworkers of South Africa and Another v Transalloys (Pty) Ltd (JS237/15) [2017] ZALCJHB 364 (21 September 2017)
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not
reportable
Case
no: JS 237/15
NATIONAL
UNION OF METALWORKERS
OF
SOUTH AFRICA
MAMABOLO
AND TWO OTHERS
First
Applicant
Second
Applicant
and
TRANSALLOYS
(PTY) LTD
Respondent
Heard:
14 and 15
September 2017
Delivered:
21 September 2017
Summary:
Contractual claim for breach of contract. No breach of contract but
error.
JUDGMENT
PRINSLOO,
J
Introduction
[1]
The
Applicants approached this Court in terms of the provisions of
section 77(3) of the Basic Conditions of Employment Act
[1]
(BCEA) and the nature of the claim is a breach of contract.
[2]
The
Respondent opposed the matter and both parties adduced evidence
during the trial.
The
evidence
[3]
The
material facts presented to this Court and as they are relevant to
the breach of contract claim appear undisputed and uncontested.
The
main issue in dispute is whether there was indeed a breach of
contract or whether the Respondent made a
bona
fide
mistake.
[4]
The
relevant facts, as presented during evidence, are as follows:
[5]
The
Respondent placed an internal advertisement for three positions of
lab analysts. In the advertisement the minimum requirements
were
recorded as well as the grade or level of the position as level 5C
and the closing date was 31 January 2014. The Second Applicants
(the
employees) applied for the advertised positions, they were
shortlisted and interviewed and they were successful.
[6]
It
is common cause that the level of the position and the salary
attached to it were discussed with the employees during the interview
and they were informed that the successful candidates would be
employed and paid at salary level 5C.
[7]
On
17 February 2014 an offer of employment was made to the employees.
The offer of employment made to the employees was signed by
the
Respondent’s general manager, Mr Theo Morkel and it was signed
by the employees who confirmed their acceptance of the
position
offered to them on the conditions contained in the offer. The
commencement date was 1 March 2014.
[8]
In
the offer of employment the terms and conditions of employment were
set out and it was recorded that the employees would be appointed
as
lab analysts, level 5A of the 5 grade pay structure. The employees
commenced employment as lab analysts on 1 March 2014 and
they were
remunerated on the salary scale attached to level 5A.
[9]
It
is common cause that all the other lab analysts in the employ of the
Respondent are remunerated at salary level 5C and the evidence
was
that there is no difference between the duties and responsibilities
of the lab analysts employed and remunerated on level 5C
and the
employees who were remunerated on level 5A. On 12 May 2014 NUMSA
filed a grievance due to the discrepancy in the salaries
of the lab
analysts. NUMSA demanded that the lab analysts paid on level 5C also
be paid on level 5A and that the human resources
manager responsible
for the contracts be reprimanded.
[10]
The
Respondent’s case is that they became aware of the error in the
salary levels on 12 May 2014 when the grievance was filed
by NUMSA.
[11]
On
16 May 2014 the human resources manager, Mr Sekgobela, was issued
with a written warning for negligence in that the newly appointed
lab
analysts were appointed on level 5A instead of level 5C and the
corrective measure recorded was that the mistake should be
corrected
with immediate effect.
[12]
On
16 May 2014 Mr Sekgobela met with the employees and he explained to
them that there was a payment error in that they should be
paid on
level 5C and not level 5A, that the error would be corrected and that
they would not be expected to pay back the money
that was already
paid to them in error.
[13]
On
16 May 2014 the Respondent also issued letters to the employees
titled ‘pay correction’. The employees were informed
that
they were given an incorrect salary when they were employed on level
5A instead of level 5C and that the mistake would be
rectified with
effect from May 2014.
[14]
The
salary paid at level 5A was R 27 719 per month and the salary at
level 5C was R 24 228 per month. With effect from May 2014
the
employees’ salary was reduced to level 5C. The Respondent did
not recover the difference paid between level 5A and 5C
for March and
April 2014.
[15]
On 3 July
2014 NUMSA on behalf of the employees filed a grievance and the
nature of the grievance was recorded as a violation of
the
contractual agreement between the employer and the lab analysts in
that their salaries were reduced and NUMSA demanded that
the employer
should adhere to the contractual agreement.
[16]
The parties
were unable to resolve the issue internally or at the bargaining
council and the Applicants approached this Court for
relief.
[17]
The
Applicants’ case is that the Respondent issued contracts for
the employees, which were signed by the general manager and
that
those contracts were clear on
inter
alia
the
commencement date, remuneration and the level of the position. The
Respondent acted in breach of the contracts when the employees’
salaries were changed from level 5A to level 5C. The employees do not
regard the inclusion of level 5A in their contracts as an
error and
this is so because the contract was signed by the general manager,
who should have picked up the error, but did not.
[18]
The relief
sought by the Applicants is an order to declare that the Respondent
has breached the employees’ contracts of employment
and for the
Respondent to be ordered to pay the employees the difference between
what they earned on salary level 5A and 5C as
from May 2014 to date.
[19]
The
Respondent’s case is that it uses a five grade pay structure
and the purpose of the grading system is to ensure that employees
on
certain grade levels would earn the same and lab analysts have been
graded at level 5C. The employees applied for the position
of lab
analyst that was advertised at level 5C and when the contracts were
issued to the employees, a typing error was made and
their salaries
were stated at level 5A. It was an administrative error that caused
the employees to be placed on level 5A instead
of level 5C and after
the error was picked up, the Respondent merely corrected the error in
May 2014 to level 5C and this does
not constitute a breach of
contract.
The
issue: Was there a breach of contract
[20]
The
parties agreed that the issue this Court has to decide is whether
there was a breach of contract.
[21]
The
starting point should be the contract of employment.
[22]
It is
common cause that t
he
employees were
appointed
to the position of lab analyst with effect from 1 March 2014 and that
their contracts show that they were appointed on
salary level 5A and
they were so paid until the Respondent became aware of this in May
2014, when their salary levels were adjusted
to level 5C.
[23]
The
Respondent’s case is that this was a
bona
fide
error
as lab analysts are employed on salary level 5C and not on level 5A.
[24]
In
Sonap
Petroleum (SA)(Pty) Ltd v Pappadogianis
[2]
it was
held that:
‘
In my view therefore, the
decisive question in a case like the present is this: did the party
whose actual intention did not conform
to the common intention
expressed, lead the other party, as a reasonable man, to believe that
his declared intention represented
his actual intention?
…
.To answer this question, a
three-fold enquiry is usually necessary, namely, firstly, was there a
misrepresentation as to one party’s
intention, secondly, who
made that representation and thirdly, was the other party misled
thereby. The last question postulates
two possibilities: was he
actually misled and would a reasonable man have been misled’?
[25]
If the
mistaken party has conducted himself as to give the other party
reasonable believe that he was contracting with him on certain
terms,
he is bound on the basis of quasi-mutual assent unless there is some
special reason for classifying the mistake as a
iustus
error.
One
such reason obviously exists when the other party knew of the mistake
and such knowledge enables the mistaken party to rescind
the contract
if the mistake was material.
[3]
[26]
A mistake
will be treated as a
iustus
error
if
the other party ought, as a reasonable person, to have known of it
and where the offer made is snapped up when the person purporting
to
accept the offer knows or ought to know that there was no intention
to make the offer as it appears from the wording of the
contract.
This was also accepted in
Sonap
Petroleum
where
the court held that:
‘
If he realised (or should have
realised as a reasonable man) that there was a real possibility of a
mistake in the offer, he would
have had the duty to speak and to
enquire whether the expressed offer was the intended offer’.
[27]
A
unilateral mistake of motive has no effect on the validity of the
contract but it does not follow that a party is entitled to
enforce a
contract when that party knew or ought reasonably to know that the
contract was entered into where the other party was
mistaken on some
matter in the contract
[4]
.
[28]
In
casu
the
advertisement for the positions of lab analyst clearly indicated that
the positions are on level 5C and during the interview
process the
employees were also informed that the lab analysts would be appointed
and remunerated on level 5C. The offer of employment
subsequently
made to them, reflected the post as lab analyst at level 5A, which is
inconsistent with the advertisement and information
given to the
employees in the interview. It is also inconsistent with the fact
that all other lab analysts are employed an remunerated
at level 5C
and the fact that the position of lab analyst was graded at level 5C.
[29]
The
Applicants’ witness, Mr Nyaze, conceded in cross-examination
that the error in respect of the salary level for lab analysts
was
not made in the advertisement, but was made in the contract issued to
the employees.
[30]
Ms
Maumela, one of the applicant employees, testified that the contract
they signed should remain intact and that it is not an error
because
the contract was drafted by the human resources manager and was
signed by the general manager. She testified that when
she saw that
the contract was on a higher salary level than what was advertised
and communicated to her during the interview, she
thought that she
was upgraded to a higher level and she did not bring this to the
Respondent’s attention as she believes
that she has no
responsibility to do so. Ms Maumela conceded that the error was made
by the person responsible for the drafting
of the contract.
[31]
The
employees knew that they applied for a position of lab analyst on
level 5C and they were told that they would be appointed on
level 5C
and in my view they could not have expected anything but an offer of
employment on level 5C. On the employees’ own
version they
noticed that the contract offered to them was on a higher salary
level. This should have raised a question in the
employees’
mind
and
should have sparked a thought that there was a real possibility of a
mistake in the offer and they had the duty to speak and
to enquire
whether the expressed offer was the intended offer. Ms Maumela’s
version that she had no responsibility to raise
the issue with the
employer is unreasonable, opportunistic and indicative of the
employees’ attempt to snatch the bargain.
The employees knew or
ought to have known that there was a real possibility of a mistake in
the offer on level 5A.
[32]
The fact
that the contract was signed by the general manager does not
automatically mean that a contract that contains an error
should
remain intact and be enforceable, even where the contract indeed
contains an error, simply because it was signed by the
general
manager. This Court has to consider the
context
within which the contract came into existence. The position of lab
analyst was advertised on level 5C, it was confirmed
during the
interview that the post was on level 5C, all other lab analysts are
employed on level 5C and the post of lab analyst
was graded on level
5C. It is within this context that I accept that the intention was to
appoint the employees on level 5C and
a contract within this context
that reflected level 5A, contained an obvious error in respect of the
salary level.
[33]
I
am persuaded that the inclusion of level 5A in the offer made to the
employees was a
bona
fide
error
as the employees were to be appointed on level 5C. I am further
satisfied that the Respondent in adjusting the employees’
salary levels to level 5C corrected the error that was made and that
this does not constitute a breach of contract but rather a
rectification.
[34]
In
respect of the issue of costs Mr Masutha for the Applicants argued
that no cost order should be made as there is an ongoing relationship
between the parties. Mr Berry for the Respondent argued that the
Applicants should pay the Respondent’s costs. I am disinclined
to make a cost order for two reasons. Firstly, there is an ongoing
relationship not only between the Respondent and the employees
but
also between NUMSA and the Respondent. Secondly, the Respondent was
not represented by lawyers but was represented by an employer’s
organization that is not entitled to charge legal fees for services
rendered to its members and in those circumstances there would
be no
purpose to grant a cost order where there are no costs that could be
taxed as is the case with lawyers.
[35]
In the
premises I make the following order:
Order:
1.
The
Applicants’ case is dismissed;
2.
There
is no order as to costs.
__________________
Connie Prinsloo
Judge
of the Labour Court of South Africa
Appearances:
For
the Applicants:
Mr Masutha of NUMSA
For
the Respondent:
Mr D Berry of the Guardian Employers Organisation
[1]
Act 75 of 1997.
[2]
1992 (3) SA 234
(A)
[3]
R H Christie
The
Law of contract in South Africa
5
th
edition p 318
[4]
R H Christie
The
Law of contract in South Africa
5
th
edition p 319