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[2017] ZALCD 1
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Nongoma Local Municipality v Biyela and Others (D1321-13) [2017] ZALCD 1 (25 January 2017)
IN
THE LABOUR COURT OF SOUTH AFRICA, DURBAN
JUDGMENT
Reportable
Case
no: D1321-13
In
the matter between:
Nongoma
Local
Municipality Applicant
and
S
N
Biyela First
Respondent
SALGBC Second
Respondent
Keshree
Kemi
N.O Third
Respondent
Heard:
17 August 2016
Delivered:
25 January 2017
Summary:
Municipal Systems Act, 2000 – Manager
directly accountable to the municipal manger – s 66 - the power
to conclude a
fixed term contract arises only once municipality
exercises its discretion under s 57(7) - fixed term contract could
only be effected
in terms of s 57(6) so termination one year after
elections also formed part of the terms of contract.
JUDGMENT
WHITCHER
J
[1]
First Respondent was employed as Applicant’s
Technical Services Director, a manager directly accountable to the
municipal
manger. He was employed on a fixed term five year contract,
effective from 1 September 2009 to 31 December 2014. On 1 February
2013 Applicant gave Respondent notice that his contract of employment
had terminated by operation of law. Thereafter, Respondent
consented
to and agreed to a three month’ fixed term contract effective
from 1 February 2013 to 30 April 2013.
[2]
It was
common cause that Respondent’s appointment was made in terms of
the Municipal Systems Act (‘the Systems Act’).
[1]
The issue before the arbitrator, and now on review in terms of
section 145 of the LRA, is whether Respondent was dismissed by
Applicant (whether his contract of employment was prematurely
terminated) on 31 January 2013, or whether Respondent’s
employment
contract terminated by operation of law in terms of
section
57
of the Systems Act one year after the election of the new council
following the municipal elections in May 2011. Stated differently,
the issue is whether or not section 57(6) applied to Respondent’s
contract of employment, in particular the proviso that
the employment
contract must not exceed a period ending one year after the election
of the next council of the municipality following
municipal
elections.
[3]
The arbitrator concluded that Respondent was
dismissed (that his fixed term contract was prematurely terminated by
Applicant) on
31 January 2013 and awarded him compensation equivalent
to the 20 months that had remained on the contract, which amounted to
R958
428.00.
[4]
In arriving at her decision, the arbitrator, in a
nutshell, found that section 57(7) did not apply to Respondent’s
contract
in the absence of the parties having provided for same,
either through a council resolution or a specific term in the
respondent’s
contract of employment. In other words, in the
absence of Applicant, through a council resolution or specific
contractual term,
having extended the application of section 56(6) to
Respondent’s contract of employment, Respondent’s
contract did
not automatically terminate one year after the election
of the new council following the municipal elections in May 2011.
Statutory
Framework
[5]
The relevant provisions of the Local Government: Municipal Systems
Act 32 of 2000 (the Systems Act) are as follows:
“
55 Municipal
managers
(1) As head of
administration the municipal manager of a municipality is, subject to
the policy directions of the municipal council,
responsible and
accountable for-
(e) the appointment of
staff other than those referred to in section 56 (a), subject to the
Employment Equity Act, 1998 (Act 55
of 1998);
56 Appointment of
managers directly accountable to municipal managers
(a) A municipal council,
after consultation with the municipal manager, appoints a manager
directly accountable to the municipal
manager.
57 Employment
contracts for municipal managers and managers directly accountable to
municipal managers
(1) A person to be
appointed as the municipal manager of a municipality, and a person to
be appointed as a manager directly accountable
to the municipal
manager, may be appointed to that position only-
(a) in terms of a written
employment contract with the municipality complying with the
provisions of this section; and
(b) subject to a separate
performance agreement concluded annually as provided for in
subsection (2).
(2) The performance
agreement referred to in subsection (1) (b) must-
(a) be concluded within a
reasonable time after a person has been appointed as the municipal
manager or as a manager directly accountable
to the municipal
manager, and thereafter, within one month after the beginning of the
financial year of the municipality;
(b) in the case of the
municipal manager, be entered into with the municipality as
represented by the mayor or executive mayor,
as the case may be; and
(c) in the case of a
manager directly accountable to the municipal manager, be entered
into with the municipal manager.
.....
(6) The employment
contract for a municipal manager must-
(a) be for a fixed term
of employment not exceeding a period ending two years after the
election of the next council of the municipality;
(b) include a
provision for cancellation of the contract in the case of
non-compliance with the employment contract or, where applicable,
the
performance agreement; …
(7) A municipality may
extend the application of subsection (6) to any manager directly
accountable to the municipal manager.”
[6]
According to Applicant, section 66 of the Systems Act is also
relevant to the determination of the issues in this matter. It
reads
as follows:
“
66 Staff
establishments
(1) A municipal manager,
within a policy framework determined by the municipal council and
subject to any applicable legislation,
must-
(a) approve a staff
establishment for the municipality;
(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.”
[7]
The Systems Act was amended with effect from 5 July 2011.
[2]
This amendment included amendments to sections 56 and 57. The
case before me concerns the sections as they existed prior
to the
amendments.
[8]
After 5 July 2011, the relevant part of section 57 reads as follows:
‘
(3) The employment
contract referred to in subsection 1(a) must –
(a) include the details
of duties, remuneration, benefits and other terms and conditions as
agreed to by the parties, subject to
consistency with–
(i) this Act;
(ii) any regulations as
may be prescribed that are applicable to municipal managers or
managers directly accountable to municipal
managers; and
(iii) any applicable
labour legislation ….’
(6) The employment
contract for a municipal manager must – (a) be for a fixed term
of employment up to a maximum of five years,
not exceeding a period
ending one year after the election of the next council of the
municipality; (b) include a provision for
cancellation of the
contract in case of non-compliance with the employment contract or,
where applicable, the performance agreement;
(c) stipulate the terms
of the renewal of the employment contract, but only by agreement
between the parties; (d) reflect the values
and principles referred
to in terms of section 50, the Code of Conduct set out in Schedule 2,
and the management standards and
practices contained in section 51.
[9]
In addition, subsection (7) allowing for the application of
subsection (6) to managers directly accountable to the Municipal
Manager, was deleted by way of the amendment.
[10]
Regarding retrospectivity of the new legislation, section 6(2) of the
amending legislation reads:
“
(2) the deletion
of section 57(7) of the Principal Act does not affect the
continuation of validity of a fixed term contract of
a manager
directly accountable to the municipal manager which is in force when
this Act takes effect.”
Respondent’s
submissions
[11]
It is convenient to start with the submissions made on behalf of
Respondent, which are that:
11.1 Respondent’s
contract of employment was unlawfully prematurely terminated on 31
January 2013 because the post-election
termination provisions of
section 57(6) apply to municipal managers only.
11.2 Section 57(7) does
not automatically render the provisions of section 57(6) applicable
to managers directly accountable to
municipal managers such as him.
11.3 The provisions of
section 57(7) extending the provisions of section 56(6) to managers
directly accountable to the municipal
manager must be done expressly
and deliberately either by way of including same in the manager’s
employment contract or by
passing a resolution to that effect.
11.4 No evidence was
placed before the arbitrator to indicate the council extended section
57(6) to Respondent.
[12]
In support of his submissions, Respondent relied on the following
extract from the judgment in
Uthukela
[3]
by Snyman AJ:
“
[50] The above being the case,
what was then the mutually agreed terms of employment between the
first respondent and the applicant?
It starts with the resolution of
31 May 2010, which was adopted following discussion whether the five
year fixed term contract
period applicable to municipal managers was
equally applicable to the appointment of the first respondent. It was
resolved, pursuant
to this deliberation, that the first respondent be
appointed for seven years from 1 July 2010, as this five year
limitation did
not apply, and the municipal manager was authorized to
conclude a contract with the first respondent in terms of section 57.
Again,
and contrary to what the applicant suggests, this is simply
not a resolution by the council to apply or adopt section 57(6). Far
from it, it is clear from the resolution that the council in fact
considered section 57(6) and concluded that it did not apply,
and the
council then resolved to conclude a specific agreement for seven
years with the first respondent. The reference to section
57 in the
resolution clearly contemplates the employment contract in terms of
section 57(1)(a) as read with section 57(3). I agree
with the
submission of Ms Allen that if the council intended section 57(6) to
apply, it would have specifically said so in the
resolution, and this
would have found room in the contract itself.
[51] I thus conclude sections 56 and
57 do not require, in the case of a section 56 manager, that section
57(6) must be applied
by a municipality in order to validly effect a
fixed term appointment of such a manager. Provided the council
authorizes the appointment,
the manager appointed is suitably skilled
and qualified, and a written contract is concluded in the terms of
what is required in
section 57(3) for such a manager, there can be
nothing unlawful or invalid in concluding such contract, and in
particular, any
agreed fixed term stipulated therein. In
Dihlabeng
Local Municipality v Nthute and Others
[4]
,
Musi JP, writing for the full Court on appeal, said the following:
[5]
‘
The court
a quo
erred
when it said that
section 57 appointees
needed
to have fixed-term contracts and concluded that because the second to
the fifth respondents did not have such fixed-term
contracts, they
could therefore not be managers directly accountable to the municipal
manager. The requirement of a fixed-term
contract is contained in
section 57(6) and applies only to the appointment of a
municipal manager. Of course a municipal council can act in terms of
subsection
(7) of section 57
and extend the
requirement to managers directly accountable to the municipal
manager. There has been no suggestion
in
casu
that the appellant council had
so extended the requirement.
Section 57 stipulates only two basic
requirements for the appointment of a manager directly accountable to
the municipal manager.
They are a written contract of employment and
a separate performance contract. …. In this regard it is
noteworthy that whereas
in terms of section 56(a), the municipal
council must make the appointments, the fulfilment of the provisions
of section 57 is
left to the municipal manager. ….’
[52]
In casu
, there is, as
said, a written contract and an appointment by the council. …
Thus, all the requirements for a valid employment
contract of the
first respondent as section 56 manager exists. …
[54] Therefore, considering the above,
and applying the
ratio
in
Dihlabeng Local Municipality
,
I accept that the employment contract concluded between the applicant
and the first respondent on 1 July 2010 is valid and lawful.
There is
no indication
in casu
that section 57(6) was extended to the
appointment of the first respondent, and in fact, as I have said, the
contrary is true.
The employment contract in all respects complies
with what is stipulated in sections 57(1) and (3) …
[55] I therefore conclude that the
seven year term as contained in the employment contract concluded
between the applicant and the
first respondent on 1 July 2010 is
binding on both parties. This means that the employment contract
expires on 30 June 2017, and
I thus reject the applicant’s
contention that the employment contract in fact expired on 18 May
2012 by virtue of the application
of the section 57(6) time period.”
Applicant’s
submissions
[13]
Applicant weaves a number of provisions of the Systems Act together
to construct an argument that, even in the absence of such
an express
term in Respondent’s contract, his employment was still subject
to termination one year after the May 2011 local
government election.
Applicant contends first that Respondent’s employment was
regulated by section 57(6) because he was
employed as a manager
directly accountable to the municipal manager and was given a five
year fixed term contract. The specific
contractual form of a five
year fixed term contract could not have been validly concluded with
Respondent but under section 57(6).
[14]
Following the municipal elections in May 2011, his contract, on
interpretation of section 57(6)(a), terminated one year later
in May
2012. There was thus no dismissal.
[15]
The amending Act removed the empowerment or discretion afforded under
section 57(7) of the Systems Act to make section 57(6)
applicable to
the employment of managers directly responsible to the municipal
manager. In other words, the old section 57(7) allowed
managers
directly accountable to municipal managers to be appointed for fixed
terms, but that discretion is no longer available.
The amendment
appears to foster the building of a stable local public
administration through the retention of managerial personnel.
It
fosters employment on indefinite contracts. The fact that section
57(7) was removed in order to achieve the above policy objectives
lends credence to the notion that fixed term contracts under the old
Systems Act where only authorised in terms of section 57(6).
[16]
Section 66(2), furthermore, creates an exception to the general staff
establishment norms in respect of municipal managers
and section
56 managers.
A fixed term five year contract is thus to be
understood as an exception to the rule.
[17]
Section 57 provided for written agreements in respect of these
exceptions and provided, in subsection 57(6), that the contract
of a
municipal manager must be for a fixed term up to a maximum of 5 years
not exceeding one year after the election of a new municipal
council.
[18]
The old section 57(7) provided that a municipality may extend the
application of sub-section (6) to any manager directly accountable
to
the municipal manager. It is common cause that Respondent was such a
manager. By so providing, section 57(7) empowered a municipal
council
to apply a fixed term contract to section 56 managers. In the absence
of section 57(7), which permitted the exception of
fixed-term
contract, all managers accountable to the municipal manager would, by
operation of the staff establishment, be hired
on indefinite
contracts. There was no power to conclude fixed-term contracts to
second-tier managers other than under section 57(6).
Indeed that
discretion has now been removed
in toto.
Other than with
municipal managers, a municipality is now constrained to conclude
indefinite contracts of employment with manages
directly accountable
to municipal managers.
[19]
As a principle of interpretation of contracts, if a sub-section is
invoked then all the parts of that sub-section apply. Indeed,
the
Labour Court held that, where certain of the sub-provisions of
section 57(6) of the Systems Act are made applicable, then all
the
provisions have been made applicable.
[20]
In
Sondlo,
[6]
the Labour Court held as follows:
“
That being so, I find it
implausible for the respondent to extend almost all the provisions of
sub-section (6) and leave out 1 (fixed
term). If it were so, such
will be inconsistent with the law (the enabling statute). The only
discretion left for the municipality
is whether to extend the
application of sub-section (6) or not. Once that discretion has been
exercised, which I find has been
in this matter, the entire
sub-section’s applications has to be extended.”
[21]
In other words, once the municipality exercises the discretion to
make applicable section 57(6), the entire ambit of that sub-section
becomes applicable to Respondent’s contract of employment.
[22]
In respect of the above principle, Applicant concluded a five year
fixed term contract with Respondent in terms of section
57. The
municipality at the onset exercised the discretion previously
retained under section 57(7) to extend the application of
section
57(6) to Respondent. When doing so, it had no discretion to extend
only the 5 year time period portion of the sub-section
but not the
termination after elections portion. In other words, when the
municipality exercised a discretion to conclude a five
year fixed
term contract, as is the case, it did so on the full extent of the
provisos contained in sub-section 6, namely the conditions
contained
in 57(6)(a)(b)(c) and (d). Respondent’s contract of employment
makes it clear that each of the sub-sections in
section 57(6) were
made applicable to his contract. In this regard his contract states
that Respondent is employed on a five year
fixed term contract and he
accepts employment as Technical Services Manager, subject to the
terms and conditions contained in this
contract
and
subject to
the
Local Government Municipal Systems Act, 2000
…”
Analysis
[23]
Respondent conceded that the onus was on him to prove he was
dismissed. This means that the onus rested on him to demonstrate
why
section 57(6)(a)
was expressly excluded from his contract.
[24]
Having regard to section 66 of the Systems Act, I am persuaded that
the power to conclude a fixed term contract arises only
once
Applicant exercises its discretion under section 57(7).
[25]
The
Uthukela
judgment
is distinguishable on the facts and the issues. The court in that
matter does not appear to have been referred to, nor
did it consider
the import of section 66 of the Municipal Systems Act. Indeed, the
court’s decision in
Uthukela
appears to have been based on the view that parties could validly
effect a fixed term contract (in that case it was for seven years)
entirely outside of the ambit of section 57(6).
[26]
The Labour Court authority on which the court in
Uthukela
relied also does not have a bearing on this case. The LAC in
Dihlabeng Local Municipality v Nthute and Others
was asked
whether the fact that municipal employees were not on fixed term
contracts precluded them from being considered as managers
reporting
to the municipal manager. The LAC, with respect, correctly simply
pointed out that the municipality had a discretion
whether to submit
such employees to fixed term contracts or not. The LAC did not opine
on the central issue in this case which
is, whether, once a fixed
term contract is effected, only the subsection setting a five year
time-frame applies or term providing
for termination one year after
elections too.
[27]
In
Sondlo
the court found with authority that once any of the
sub-sections of section 57(6) are incorporated, they must all apply.
This means
that the express term of a five year fixed term contract
carries with it,
ex lege
, the additional term permitting
termination one year after municipal elections.
[28]
The simple point is that in the matter before
Uthukela
, there
was no evidence before the court to demonstrate that, in fact, the
staff establishment did not allow for fixed term contracts,
except
under the legislative exception created by section 57(6).
[29]
This matter is a review. Bearing in mind that Respondent bore
the onus to prove dismissal, I can see no evidence before
the
commissioner to suggest that the staff establishment allowed
Respondent’s appointment on a fixed-term contract under
anything other than section 56(6). That being the case, a reasonable
commissioner would have considered what the contractual terms
were in
light not only of the contract but also sections 56(6) read as a
whole.
[30]
Respondent was a high ranking official, a politically-appointed
manager directly accountable to the municipal manager. In terms
of
the surrounding employment context, it was well-known that managers
at this rank were subject to replacement not only after
five years
but a year after a change in the administration of a municipality.
The absence of a contractual clause specifically
providing same does
not mean that this term did not implicitly apply.
[31]
In any event, I agree with Applicant that there was no need to reduce
such a term to writing or make a special council resolution.
It was
the law and thus formed part of the
naturalia
of the contract.
[32]
In sum, there was no authority for the municipality to have concluded
a fixed term contract other than under sub-section 57(6).
Once this
subsection was invoked to provide for Respondent’s employment,
part of the same sub-section that provided for termination
after
elections also applied.
Review
Test
[33]
It is trite that misapplication of the law or omitting a critical
piece of evidence or argument constitutes a ground for review
under
section 145 of the Labour Relations Act. In my view, if the
commissioner had proper regard to the fact that Respondent’s
fixed term contract could only be effected in terms of section 57(6),
the commissioner would also have found that termination one
year
after elections also formed part of the terms of that contract. There
is nothing on the record that suggests that, even in
the face of this
error, the outcome would likely have been the same. The misdirection
has thus had a distorting effect on the outcome
of the matter.
Consequently, the review must succeed.
[34]
Given the legal – not evidentiary - basis on which this matter
was argued and decided, I cannot see how remitting it
back to the
Bargaining Council will serve any purpose or disadvantage any party.
I am able to provide finality to the parties.
Order
[35]
In the premises, the following order is made:
(a) The review is upheld.
(b) The arbitration award
issued by the commissioner is set aside and the finding and order
replaced with the following: The case
is dismissed.
(c) There is no order as
to costs.
________________________________
Whitcher
J
Judge
of the Labour Court of South Africa
APPEARANCES:
For
Applicant: Adv I Pillay, instructed by Magigaba Inc
For
First Respondent: Adv S P Andertan, instructed by Gielink Attorneys
[1]
Act 32 of 2000.
[2]
This was done by way of the Municipal Systems Amendment Act 7 of
2011.
[3]
Uthukela
District Municipality v Khoza and Others
(D735/13
[2015] ZALCD 19 (20/3/2015)
[4]
[2009] JOL 23108 (O).
[5]
Id at paras 21 – 22.
[6]
Sondlo v
Chris Hani Municipality
(2008) ILJ
2010 (LC).