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[2017] ZALCCT 34
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City of Cape Town v SALGBC and Others (C494/2016) [2017] ZALCCT 34 (2 August 2017)
REPUBLIC
OF SOUTH AFRICA
Not
reportable
Of
interest to other judges
THE
LABOUR COURT OF SOUTH AFRICA, CAPE TOWN
JUDGMENT
C
ase
no: C 494/2016
In
the matter between:
CITY
OF CAPE TOWN
Applicant
and
SALGBC
First
respondent
Retief
OLIVIER N.O.
IMATU
obo Lucille SEARLE
Second
respondent
Third
respondent
Heard:
31 May 2017
Delivered:
2 August 2017
SUMMARY:
Review – fixed term contract of
employment -- arbitrator found that employee had a reasonable
expectation of permanent employment.
Award reviewed and set aside.
LRA ss 145, 186(1)(b).
JUDGMENT
STEENKAMP
J
Introduction
[1]
This is an application for review following an unusual set of
circumstances resulting from two separate arbitration awards.
It
concerns the question whether an employee had the expectation of the
permanent renewal of her fixed term contract of employment
after the
employer had twice refused to renew it.
Background
facts
[2]
Ms Lucille Searle
[1]
was employed by the City of Cape Town on a fixed term contract for
three years from 1 April 2012. It was extended twice. The second
extension expired on 30 September 2015 and the City did not renew it.
In contrast, the City extended the contracts of her similarly
situated colleagues until 31 January 2016.
[3]
The employee referred a dispute
to the South African Local Government Bargaining Council
[2]
in terms of s 186(1)(b) of the Labour Relations Act.
[3]
That subsection used to read as follows:
“ ‘
Dismissal’ means
that –
…
(b) an employee reasonably expected
the employer to renew a fixed term contract of employment on the same
or similar terms but the
employer offered to renew it on less
favourable terms, or did not renew it…”
[4]
Following some uncertainty as
to its interpretation
[4]
,
the subsection was amended in 2015. The legislature added the
following subsection as s 186(2)(b)(ii):
“
or
(ii) to retain the employee in
employment on an indefinite basis but otherwise on the same or
similar terms as the fixed term contract,
but the employer offered to
retain the employee on less favourable terms, or did not offer to
retain the employee.”
[5]
The dispute came before Commissioner Anne Erwin. She found that the
employee did reasonably expect the City to renew her contract
on the
same or similar terms. She ordered the City to reinstate the employee
retrospectively for the same period as her similarly
situated
colleagues, i.e. from 1 October 2015 to 31 January 2016.
[6]
The City accepted the Erwin award and did not take it on review. But
it asked the employee not to physically return to work.
Instead, it
paid her out the balance of her contract until 31 January 2016.
According to the City, her functions and duties as
an administrative
officer had been absorbed into other functions.
[7]
Come 31 January 2016, the City permanently appointed other employees
whose contracts had expired from 1 February 2016, arguing
that they
are specialists in their field.
[8]
Ms Searle referred a fresh dispute to the Bargaining Council in terms
of s 186(1)(b) of the LRA on 10 March 2016. She now claimed
that she
expected to be permanently appointed, together with her colleagues,
from 1 February 2016.
[9]
The new dispute came before
Commissioner Retief Olivier
[5]
.
He found that the employee was dismissed – and that the
dismissal was unfair – because she reasonably expected to
be
employed on an indefinite (permanent) basis. It is that award that
the City seeks to have reviewed and set aside.
Arbitration
award
[10]
The Commissioner found that the employee had “more than a
reasonable expectation” that her fixed term contract
(pursuant
to the Erwin award) would be converted to a permanent contract of
employment. He ordered the City to:
10.1 employ Ms Searle on
an indefinite contract from 4 July 2016;
10.2 pay her
retrospectively to 1 February 2016; and
10.3 pay the wasted costs
for a postponement on 5 May 2016.
Grounds
of review
[11]
The City has applied to have the Olivier award reviewed and set aside
in terms of s 145 of the LRA. It argues that the arbitrator:
11.1 committed misconduct
in relation to his duties to an arbitrator;
11.2 committed errors of
law; and/or
11.3 committed gross
irregularities in the conduct of the arbitration proceedings.
Misconduct and gross irregularities?
[12]
The City’s argument is
that the Commissioner committed misconduct in relation to his duties
as an arbitrator by failing to
apply his mind to the evidence before
him and, as a result, coming to a conclusion that no reasonable
arbitrator could have arrived
at.
[6]
Mr
Conradie
argued
that, quite simply, there was no evidence before Commissioner Olivier
to support the conclusion that the employee had a reasonable
expectation of further or permanent employment.
[13]
In order to decide whether a
reasonable expectation of employment existed, an arbitrator must take
into account all the surrounding
circumstances. For example, in
Dierks v University of South
Africa
[7]
the Court listed the following factors, pointing out that it is not a
closed list:
“
These include an approach
involving the evaluation of all the surrounding circumstances, the
significance or otherwise of the contractual
stipulation, agreements,
undertakings by the employer, or practice or custom in regard to
renewal or re-employment, the availability
of the post, the purpose
of or reason for concluding the fixed term contract, inconsistent
conduct, failure to give reasonable
notice, and nature of the
employer's business.
These factors are not a
numerus
clausus
.”
[14]
In this case, the surrounding circumstances could not have created a
reasonable expectation of permanent employment. The arbitrator
appears not to have taken the following circumstances into account:
14.1 In terms of the Erwin
award, there was no obligation on the City to take the employee into
account for permanent
employment. Her temporary contract was only
extended to the end of January 2016.
14.2 The City never
offered the employee a permanent position or made any promises in
this regard. On the contrary,
it made it clear to her that she would
not be expected to return to work and that it would pay out the
balance of her contract
until the end of January 2016.
[15]
The facts of this matter are
diametrically opposite to those, for example, in the recent case of
Nowalaza and Others v Office
of the Chief Justice
[8]
where the factual position was this:
“
The applicants expressed their
expectation. They expressed their understanding that the new
contracts constituted a holding position
for the OCJ. They at all
times wished to pursue their rights to employment. They harboured
such an expectation.”
[16]
In this case, the employee did not return to work after the Erwin
award. She accepted the payment of the balance of her contract
in
terms of that award. The City made it abundantly clear that she
should not expect any permanent employment – in fact,
she
should not even return to work for the balance of her contract.
[17]
Commissioner Erwin recorded in her award that “[i]t had been
explained to the employees that job descriptions were being
developed
and there were no guarantees that non-permanent staff would be placed
on the new structure”. She found that Ms
Searle’s
contract had to be extended to 31 January 2016, thus “giving
her an opportunity to be considered for the permanent
post”;
there was no indication that the City was under any obligation to
appoint her permanently or that she had an expectation
of permanent
employment.
[18]
There is also no indication that Commissioner Olivier took into
account the City’s evidence at arbitration that the other
employees’ circumstances were different to those of Ms Searle.
Her line manager, Mr Alistair Graham, testified that she was
a
generalist fulfilling administrative functions, whereas those
employees who were appointed permanently fulfilled specialist
functions:
“
The specialist staff were made
permanent.
I think it is important to note with
respect to these specialised posts that they’re unique posts
primarily within the organisation
and they were functions which even
the planning department couldn’t give coverage over. There was
no coverage within the
planning department for [these] functions.
They were specialist functions which were developed through the
development of violence
prevention through urban upgrading
methodology. So they were unique … posts with unique job
descriptions.”
[19]
The other obvious difference was that Ms Searle never returned to
work, whereas those employees who were offered permanent
employment
continued with their (specialised) work throughout, as the City’s
representative (Ms du Preez) pointed out to
her in cross-examination:
“
You see the comparison
[9]
that you’re drawing is that your circumstances are exactly the
same to other permanent employees. We’re saying no,
that’s
not the case. They were continuously working, whereas you were at
home.”
…
“
Apart from one email there’s
nothing to indicate that you seriously want to return to work.”
…
“…
I haven’t heard
any evidence presented stating that the City created an expectation
that you would become permanent. In fact
the City told you we don’t
want you back.”
[20]
Graham also confirmed that Ms Searle could be differentiated form the
other employees as they were at work uninterrupted. She
could not
have had a reasonable expectation of permanency as the City simply
did not want her to return to work for the balance
of her contract
period, let alone permanently. And Leonie Kroese had already informed
her in August 2015 that a contract would
not be renewed and that her
functions would be done from the director’s office. Graham
testified that, if the post doesn’t
exist anymore, it would be
difficult to have an expectation to fill it because it doesn’t
exist anymore. The arbitrator does
not appear to have taken this
testimony into account.
[21]
When the employee referred her first unfair labour practice dispute,
she did not claim that she had a reasonable expectation
of
permanency. In her answering affidavit in these proceedings, she says
as much: “When I referred my first dispute to the
[Bargaining
Council], my expectation was only to receive a four-month contract as
all other fixed term employees that worked with
me did.” Any
claim of an expectation of permanent employment could only have
arisen after the Erwin award had been issued
on 15 December 2015. And
following on that award, the City made it clear that she did not have
any expectation of further employment
after the expiry of her
contract: it paid out until 31 January 2016, asked to stay at home,
and she did so.
[22]
The further evidence before Commissioner Olivier was that the City
was still in the process of finalising its new organisational
structure at the time. The changes to the structure were continuously
communicated to staff and the two administrative officer
posts were
no longer on the new structure. Ms Searle could not have had an
expectation to fill a position which did not exist any
longer. This
evidence, too, was not taken into account by Commissioner Olivier.
[23]
To make it abundantly clear
that she should not have any expectation of permanent employment, the
City’s head of dispute resolution
management, Mr Riedewaan
Momberg, wrote to her trade union, IMATU
[10]
,
on 27 January 2016 and stated:
“
With regards to your request
that the employer should consider offering Ms Searle permanent
status. The applicable arbitration award
does not address that area
and more Importantly permanent employment within the City are govern
by well-established policies, procedures
and procedures, as you are
familiar with. Until such time it has been followed and/or adhered to
we cannot entertain any proposal
for permanency.”
[24]
Commissioner Olivier also failed to consider the evidence before him
that the employee had applied for four alternative positions
in the
City and a number of positions at the University of Cape Town since
February 2016. Contrary to an expectation for permanent
employment in
her previous position at the City, that created the impression that
she did not have an expectation to be permanently
employed.
[25]
By failing to evaluate
significant common cause facts and by disregarding the evidence set
out above, the Commissioner committed
a number of irregularities. But
for these irregularities, he would have arrived at a different
conclusion. Having regard to the
two-stage enquiry set out in
Gold
Fields
[11]
,
that renders the award reviewable. As the Labour Appeal Court
recently pointed out in
SAB
v Hansen:
[12]
“
In short, this requires the
Labour Court to consider two issues: The first is whether the
applicant has established an irregularity.
This irregularity could be
a material error of fact or law, the failure to apply one’s
mind to relevant evidence, or misconceiving
of the enquiry or
assessing factual disputes in an arbitrary fashion. The second is
whether the applicant has established that
the irregularity is
material to the outcome by demonstrating that the outcome would have
been different having regard to the evidence
before the arbitrator.
An arbitration award will, therefore, be considered to be reasonable
when there is a material connection
between the evidence and the
result.”
[26]
In this case, there was no material connection between the evidence
and the result. And, as discussed below, he further committed
an
error of law that was material to the outcome.
Error
of law
[27]
Despite the amendment of s 186(1)(b) by the addition of subsection
(ii), the employee could not have had a reasonable expectation
of
renewal of the fixed term contract as well as a reasonable
expectation of permanency. The two are mutually exclusive. Yet the
arbitrator refers to her alleged reasonable expectation of renewal on
the same terms and conditions as before (i.e. a fixed term
contract)
to include a reasonable expectation of permanency. He says that the
employee was “reinstated to the same terms
and conditions that
she employed before her dismissal, which was also the same terms and
conditions that apply to the other non-permanent
employees”. He
says that there is no reason for him to disagree with the findings of
Commissioner Erwin. Yet he then jumps
to a conclusion that the
employee would be made permanent, contrary to the Erwin award. In so
doing, he ignored the disjunctive
“or” in subsections (i)
and (ii) in the amended s 186(1)(b), thus committing an error of law.
And in turn, this led
to an unreasonable result.
Conclusion
[28]
The award must be reviewed and set aside. This Court is in a position
to substitute it, having all the evidence before it.
It need not be
remitted.
[29]
With regard to costs, I take into account that there is an ongoing
relationship between the City and IMATU; and that the employee
had an
arbitration award in her favour. Taking into account the requirements
of the law as well as fairness, I do not consider
a costs award to be
appropriate.
Order
[30]
I therefore make the following order:
30.1 The arbitration award
of Commissioner Retief Olivier under case number WCM 021612 dated 20
June 2016 is reviewed
and set aside.
30.2 It is replaced with
an award that the employee, Ms Lucille Searle, was not dismissed.
_______________________
Anton
Steenkamp
Judge
of the Labour Court of South Africa
APPEARANCES:
APPLICANT:
Bradley Conradie of BCHC attorneys.
THIRD
RESPONDENT: Elco Geldenhuys of
MacGregor Erasmus.
[1]
The third
respondent, represented by the Independent Municipal and Allied
Trade Union (IMATU).
[2]
The first
respondent.
[3]
Act 66 of
1995 (the LRA).
[4]
Discussed
later in the judgment.
[5]
The second
respondent.
[6]
Thus
rendering the award reviewable in light of the test in
Sidumo
v Rustenburg Platinum Mines Ltd
[2007]
12 BLLR 1097 (CC).
[7]
[1999] 4
BLLR 304
(LC) par 133.
[8]
[2017] ZALCJHB 234 (15 June 2017) par 91.
[9]
Transcribed
as “comparative”.
[10]
The third
respondent. (Momberg’s grammar as in original).
[11]
Gold
Fields Mining South Africa (Pty) Ltd (Kloof Gold Mine) v CCMA
[2014]
1 BLLR 20 (LAC).
[12]
South African Breweries
(Pty) Ltd v Hansen
[2017]
ZALAC 33
(25 May 2017) par 11.