IN THE LABOUR COURT OF SOUTH AFRICA
BRAAMFONTEIN NOT REPORTABLE
CASE NO: J1107/02
20030530
In the matter between
BAREND KAYNIE Applicant
and
Credit Guarantee Insurance Respondent
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J U D G M E N T
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PILLAY J : The applicant's claim is for payment of a bonus for the period 1
July 2000 to 30 June 2001.
Both parties are ad idem that the dispute turns on the interpretation of
the contract which provided for the bonus. However they each place different
interpretations on the contract.
The material terms of the contract provides as follows:
"3.2. Participating employees who are under notice or have been
dismissed at the time of the above mentioned Board meeting will
not be entitled to any incentive payment that may be ratified by
that board meeting. Participating employees that leave or have
left the employment of Credit Guarantee for any reason other
than dismissal or in order to join another employer will be entitled
to their pro rata temporis share. Participating employees on
extended (any leave other than normal annual or sick leave),
sick, maternity or other leave will participate in the Incentive on a
pro rata temporis basis."
It is common cause that the applicant gave a month's notice to
terminate his employment with effect from 30 June 2001. He was therefore
not "under notice", nor had he been dismissed by the time of the board
meeting in August 2001. Accordingly, he was not disqualified from
participating in the scheme in terms of the first sentence of clause 3.2.
The applicant relies on the plain and ordinary meaning of the second
sentence of clause 3.2. He concedes that participating employees who left
during the bonus cycle to join another employer would not be entitled to their
bonuses. It could not have been the intention to exclude those employees
who complete the cycle and meet all the performance criteria. His resignation
only took effect after the bonus cycle. There is a dispute of fact as to whether
he resigned to take up employment elsewhere.
The respondent alleges that the agreement is badly constructed. The crux of
its argument is that the bonus was not payable to any employee who left the
respondent to work for another employer at the time when the board decided
on the payment of bonuses. It made no sense to pay a bonus to an employee
who was no longer in the respondent's service, so it was contended.
Furthermore the right to the bonus accrued only after the bonuses were
calculated, audited and ratified by the board at its meeting in August following
the particular bonus cycle. If the bonus is ratified, the board would pay the
the particular bonus cycle. If the bonus is ratified, the board would pay the
employees provided they are eligible. So it was submitted for the respondent.
In my view clause 3.2. determines the eligibility of employees for
participating in the scheme. The plain meaning of the second sentence of
clause 3.2. entitles participating employees who leave the respondent in the
midst of a bonus year to a pro rata share of the bonus. It follows that if
employees serve the full period of the bonus cycle then they should be
entitled to 100% of the bonus. If this were not so, then those leave in the
midst of the bonus cycle would be advantaged over those who wait until the
end of the bonus cycle. There is no rational basis for such a differentiation.
The right to the bonus arises from the contract as evidenced at
document 11 to 12 of the record. It is subject to contingencies, namely, the
performance of the respondent over the period of the bonus cycle, the
calculation, auditing and ratification of the bonus. Ratification cannot be
withheld if employees are eligible in terms of clause 3.2.
The respondent's scheme operates to reward employees for past
performance and to incentivise them for the future. By refusing to pay the
applicant for his past performance, after having incentivised him to remain in
its employ for the duration of the bonus cycle, the respondent is unlawfully
depriving him of his just and agreed reward. If he indeed resigned to take up
employment elsewhere, then he did so after he became eligible for the bonus
on 30 June 2001.
I accordingly find that the applicant has a contractual right to be paid a bonus
for the period 1 July 2000 to 30 June 2001.
However there is a dispute as to the quantum of the bonus. The court
accordingly directs that this issue be referred for further evidence. The
parties are given leave to supplement the evidence on the same papers to
deal with the quantification of the claim which may be heard by any judge of
this court.
The respondent is ordered to pay the costs.
COURT ADJOURNS
PILLAY D, J
10 September 2003