IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT JOHANNESBURG
CASE NO. JR1658/01
In the matter between:
STEVEN RAYMOND VAN WYK Applicant
and
ALBANY BAKERIES LIMITED First
Respondent
COMMISSION FOR CONCILIATION,
MEDIATION AND ARBITRATION Second
Respondent
TSHEPO MASHIGO N.O. Third
Respondent
_____________________________________________________________
______
JUDGMENT
_______________________________________________________________________
_______
NDLOVU AJ
[1] The Applicant, a former employee of the First Respondent (the
Employer) launched this review application in terms of section 145 of
the Labour Relations Act 66 of 1995 (“the Act”), whereby he sought
to have the arbitration award issued by the Third Respondent (the
Commissioner) on 4 September 2001 under case number GA3101
reviewed and set aside. (The notice of motion erroneously reflected
the case number as GA29285). He further sought that the
2
Court determines the matter in terms of section 145(4) of the Act, or
alternatively, remit it for a rehearing by a different commissioner.
[2] The evidence before the Commissioner revealed that the employment
of the Applicant with the Employer commenced on 13 July 1999. The
Employer operated the business of a bakery from a number of branches
(bakeries) in certain parts of the country. The branches were grouped and
demarcated into regions. The Applicant was appointed as the regional
manager for the Gauteng region, which consisted, among others, Menlyn,
Pretoria and West Rand branches.
[3] In or about September 1990 the Applicant was transferred to the
Pretoria Branch which, according to the Applicant, it had been agreed
between him and the management that it was only a temporary
transfer. He submitted that whilst in Pretoria acting as branch
manager, he still retained his position as, and performed the functions
of, the Gauteng regional manager. He stated that a certain Mr Colin
McCabe had been interviewed for the Pretoria branch manager’s
position and indeed started work there in December 2000.
[4] On 6 February 2001 the Applicant was informed by Mr Noel Doyle,
described as the Employer’s Category Director (Managing) that there
was a restructuring process of the Employer’s business which was
underway, and that the position of regional manager would be
disbanded. Doyle further told the Applicant that, as a result, the
Employer had decided to appoint the Applicant as manager of
3
the Pretoria branch, but without change in his salary. This, the
Applicant found unacceptable as he regarded the change in his position or
rank as a demotion. Hence, on 19 February 2001 the Applicant tendered his
resignation, which was to take effect on 31 March 2001.
[5] The Applicant contended that his resignation was occasioned by the
Employer which had made his continued employment intolerable,
thus rendering his resignation a constructive dismissal. Consequently,
he referred the dispute to the Second Respondent (“the CCMA”) for
conciliation. However, the conciliation process failed to resolve the
dispute and a certificate to that effect was issued on 4 May 2001 in
terms of section 135(5)(a) of the Act. The employer refuted the
allegation that it made the Applican’ts continued employment
intolerable.
[6] The dispute was then referred to arbitration. The arbitration hearing
was subsequently conducted by the Commissioner who, in his award
concluded as follows:
“I therefore conclude on evidence before me that the
Applicant has failed to make a case of constructive
dismissal”.
It is this award which the Applicant now seeks to be reviewed and set
aside.
[7] The Applicant submitted in his founding affidavit that the Employer
had repudiated the employment contract between the parties, which
repudiation the
4
Applicant had accepted. He submitted that under such circumstances
he had a choice of either demanding specific performance from the
Employer or cancelling the contract and claim compensation. He had opted
for the latter.
[8] It was argued by Mr Snyman (for the Applicant) that the
lowering of the Applicant’s position from regional manager to branch
manager was a material breach of the Applicant’s employment
contract with the Employer, irrespective of whether or not the salary
was reduced. Therefore, Mr Snyman submitted, the fact that the
Applicant had then requested to be offered a retrenchment package
had to be understood in that context. He contended that the finding
that there had been no demotion was a misdirection on the
Commissioner’s part.
[9] Mr Wesley (for the Employer) submitted that the Applicant had no
grounds for review. He argued that the Applicant was not dismissed
by the Employer, constructively or otherwise. The Applicant’s
redeployment was no demotion. However, even if the Court found
that the Applicant was demoted he should not have resigned. In other
words, a finding that there was indeed a demotion, would not be
sufficient. He further argued that not every repudiation of an
employment contract would amount to intolerability, which was a
prerequisite of constructive dismissal. He submitted that if the Court
found that indeed not every cancellation of an employment contract
(based on repudiation) amounted to constructive dismissal, then this
review should fail. He further pointed out that the issue of
intolerability was not pleaded in the Applicant’s founding affidavit.
5
[10] A constructive dismissal occurs when
“an employee terminates a contract of employment with
or without notice because the employer made continued
employment intolerable for the employee”.
(Section 186(1)(e) of the Act).
[11] Like in every contractual relationship it is implied in an employment
contract that neither the employer nor the employee would do, or omit
to do, anything that would cause either of them to find it impossible or
difficult to continue as a party in the employment relationship. Such
conduct would amount to repudiation of the contract. Therefore, by
making the employee’s continued employment intolerable, the
employer thereby repudiates the employment contract.
[12] In Pretoria Society for the Care of the Retarded v Loots [1997] 18
ILJ 981 (LAC) at 983J984A, the Labour Appeal Court cited with
approval from the decision in Woods v W M Car Services
(Peterborough) (1981) IRLR 347 at 350, where the Employment
Appeal Tribunal stated as follows:
“It is clearly established that there is implied in a contract of employment a term
that employers will not, without reasonable and proper cause, conduct
themselves in a manner calculated or likely to destroy or seriously damage the
relationship of confidence and trust between employer and employee:
Courtaulds Northern Textiles Ltd v Andrew [1979]
IRLR 84. To constitute a breach of this implied term, it
is not necessary to show that the employer intended any
repudiation of the contract: the Tribunal’s function is to
look at the employer’s conduct as a whole and determine
6
whether it is such that its effect, judged reasonably and sensibly, is such that
the employee cannot be expected to put up with it ......
the conduct of the parties has to be looked at as a whole and its cumulative
impact assessed”.
(See also: Jooste v Transnet Ltd t/a S A Airways [1995] 16 ILJ 629
(LAC) at 638 HJ.
[13] Again, as in every contractual relationship, where the employer
repudiates the contract, the employee (being the innocent party) has
the right either to reject the repudiation and demand specific
performance in terms of the contract from the Employer (being the
guilty party) or to accept the repudiation and cancel the contract, in
which latter event the employee would be entitled to claim damages
or compensation, as the case may be, from the employer.
[14] In Monyela & Others v Bruce Jacobs t/a L V Construction [1998] 19
ILJ 75 (LC) at 82 EG (per Zondo J as he then was) the Court stated
as follows:
“If the employer changes the terms and conditions
of employment of the workers without their
consent, its conduct may constitute a repudiation
of the workers’ contracts of employment. In
that event the workers will have an election
whether to accept the repudiation and claim
whatever damages they may suffer as a result of
such repudiation or they may reject the repudiation
and hold their employer to their contracts of
employment”.
[15] It was argued, on behalf of the Employer, that the Applicant’s
redeployment to the branch manager’s position did not amount to a
demotion because, among others, his salary was not reduced. The
Commissioner agreed with the Employer. He made himself clear:
“Of significance is that the Applicant’s
7
salary was never tampered with, it remained the same. I do not agree
with the Applicant when he says that he viewed this action (the
redeployment) as a demotion” (at page 27 of the Bundle).
[16] The dictionary meaning of the word “demote” is: “Reduce to a lower
rank or class” . (The New Shorter Oxford English Dictionary, 1993
edition, at page 631).
[17] A demotion has therefore less to do with the demoted employee’s
salary. It would seem the reduction of salary is only a secondary factor, the
primary and decisive factor being the reduction in rank, position or status of
the employee concerned. However, it further appears to me, the reduction of
salary but without change in the name of rank or position has the effect of
reducing the employee’s status in the workplace, if it is done without his/her
consent.
Therefore, such an instance could still in my view, constitute a demotion.
In any event, that scenario is not part of the enquiry before the Court.
[18] In Taylor v Edgars Retail Trading [1992] 13 ILJ 1239 (IC) at
1242J1243A the Industrial Court referred to the concept of demotion,
as formulated by Scoble in The Law of Master and Servant at page
176, as follows:
“Where a servant is employed to perform a
particular class of work and contracts to perform
work of a particular character, is thereafter
instructed to perform work of a more menial
nature, he may be said to have been degraded in
his status, and .... such act by his employer may in
certain circumstances be regarded as tantamount to
a dismissal”.
(Cited with approval in Matheyse v Acting Provincial Commissioner,
8
Correctional Services & Others [2001] 22 ILJ 1653 (LC) at 1658J1659A).
[19] In Matheyse’s supra the Court further elaborated on the issue of
demotion and stated:
“In a series of decisions (which predated the LRA)
the civil courts have gone further and applied a
wider definition to the concept of demotion in the
labour relations context,
holding that it applies even where employees retain their salaries, attendant
benefits, and rank, but have suffered a reduction or demotion in their
‘dignity’, ‘importance’ and ‘responsibility’ or in their ‘power’ or ‘status’”.
[20] It is common cause that on 6 February 2001 Noel Doyle, the
Employer’s Category Director (Managing) informed the Applicant
that he (the Applicant) would be redeployed to the position of Pretoria
branch manager as a result of the restructuring of the Employer’s
business. I agree with Mr. Snyman that this decision to redeploy the
Applicant in the manner aforesaid amounted to a unilateral alteration
of the Applicant’s working conditions in terms of his employment
contract with the Employer. It was unilateral in that the Applicant had
not been consulted about it at all. It was merely presented to him as a
fait accompli . The decision was officially implemented through the
Employer’s document headed “Announcement”, which was issued
and circulated by the Employer within the workplace on 12 February
2001.
[21] The Announcement aforesaid read, among others, as follows:
“In order to meet the challenges facing the business, the
following changes have been implemented with
immediate effect. A revised organogram is attached.
9
1 ..............2 ..............
3 Steven van Wyk takes up a position as Bakery Manager
Pretoria.
4 ..............
5 ..............
6 All Bakery Managers will report directly to myself.
I am sure you will join me in wishing all of the best to
the above gentlemen in their roles.
(Signed) Noel Doyle
CATEGORY DIRECTOR (MANAGING)”
[22] Evidently, the document does not attempt to reflect any bilateral co
operation between the Employer’s management and the affected
employees.
[23] The labour force is an integral part of the industrial dynamics and
development in every country and, therefore, essentially one of the
major attributes to the creation and maintenance of the sound
economic growth in the country. It is accordingly not unreasonable to
expect of an employer that whenever a management decision is
contemplated which would impact adversely on the working
conditions of a particular employee or group of employees, a sincere
and meaningful discussion on the issue be conducted with the affected
employees. Indeed his position is consistent with the consultation
process envisaged in section 189, which is supposed to precede any
retrenchment exercise by an employer. The Labour Appeal Court in
Van der Riet v Leisurenet t/a Health and Racquet Club [1998] 5
BLLR 471 (LAC) (per
10
Kroon JA) stated:“Despite the existence of a commercial
rationale of the introduction of the new structure,
including the demotion of the Appellant, the important
fact is that it was effected without any consultation with
the Appellant. That conduct on the part of the
Respondent was unfair visavis the Appellant” (at
paragraph 39)”.
[24] The position of regional manager involved being in charge of all
branches (and their managers) which fell within a particular region.
All such branch managers reported to the regional manager. The
position of branch manager was therefore inferior to that of regional
manager. It followed, accordingly, that the redeployment of the
Applicant, without his consent, from the position of regional manager
to that of branch manager (with or without change in his salary
structure) constituted a demotion.
[25] A demotion is characterised as an unfair labour practice in terms of
section 186(2)(a) of the Act. A remedy available to an employee who
has been unfairly demoted is, in terms of the Act, to refer the dispute
to the CCMA or the relevant accredited council, as the case may be,
and allow the dispute resolution mechanism to take its course, in
terms of sections 135 and 191(5)(a)(iv) of the Act, being the
conciliation and the arbitration processes, respectively. However, this
route is only but one option available to the demoted employee. The
demotion as such is a repudiation by the employer of the employment
contract with the demoted employee. As alluded to earlier, where an
employer has repudiated the employment contract in this way, the
employee has two options, namely, either to reject the repudiation and
demand specific performance by the employer. That is, the removal
by the employer of the act or omission on the
11
employer’s part which constituted the repudiation. The other option is
for the employee to accept the repudiation, thereby cancelling the
employment contract and then claim compensation from the employer. Such
compensation is equivalent to damages for breach of contract.
[26] Therefore, in my view, the referral of a demotion complaint to the
dispute resolution mechanism provided for in the Act, as alluded to
above, is only the instance where a demoted employee exercises the
right to reject the employer’s repudiation and demand specific
performance, in the form of reversal of the employer’s conduct
complained of. This position, however, does not detract from the
employee’s right to prefer the other option, namely, to accept the
repudiation and cancel the contract, whereafter claim compensation
from the employer. In practical terms the latter option would, almost
invariably, involve the employee concerned resigning from
employment and claiming compensation from the employer. The
resignation could, in such circumstances constitute constructive
dismissal, which is ipso facto unfair. This is what happened with the
Applicant in the present instance. In W L Ochse Webb & Pretorius
(Pty) Ltd v Vermeulen [1997] 18 ILJ 361 (LAC) at 367BD (per
Froneman J) the Court stated :
“If one deals with the case in the more conventional manner outlined in the
Transnet case, the following would result: The
Respondent’s resignation was, in commonlaw
contractual terms, an acceptance of the Appellant’s
repudiation of a material term of the commonlaw
contract of employment. The resignation itself was
consistent with an intention on the part of the Respondent
to
12
pursue his remedy, as he saw it, of compensation due to
him as an employee in terms of the Act ( see National
Automobile & Allied Workers Union (now known as
National Union of Metalworks of SA v BorgWarner
SA (Pty) Ltd [1994] 15 ILJ 509 (A) (at 518). The matter
was thus justifiable under the Act. The Appellant’s
repudiation caused the respondent’s dismissal. His
dismissal was therefore, in a practical sense, at the behest
of his employer. It thus qualities as a “constructive
dismissal…..”
[27] The fact that the Applicant asked for a retrenchment package on 6
February 2001 did not, in my view, render his resignation a voluntary
one, in the true sense of the word. He asked for the retrenchment
package only after he was told about his permanent redeployment
(which was, his demotion) and not before. Indeed, he seemed to
consider a retrenchment package a better option than the demotion. I
cannot say he was wrong in this assessment, in the light of the
circumstances he found himself in. Of course, it would also probably
have depended on what retrenchment package was put on the table as
an offer to him.
[28] The language used in his letter of resignation dated 19 February 2001
manifested no voluntariness to resign on the part of the Applicant, but
rather only a deep frustration. The letter read thus:
“Noel Doyle,
“Category Director, (Managing), Baking
SUBJECT: RESIGNATION S R VAN WYK
AS AT 28th FEBRUARY 2001
13
Sir,
It is with regret that I wish to advise you of my
resignation.
* This is due to the fact that I believe you have been
procedurally unfair in offering me the position of
Bakery Manager at Pretoria Bakery whilst it is a
known fact that you have offered this position to
Colin McCabe, who has already relocated his
family to Pretoria.
* You furthermore failed to consult with me before changing my
conditions of service and refused to offer me a retrenchment package after
demoting me from Regional Manager to Bakery Manager without any
consultation. By your own admission, this was neither a performance nor a
capability issue.
* Furthermore you requested me not to go to a Labour Lawyer for
advice.
* You informed me that Colin McCabe was coming to Pretoria Bakery
as my assistant, yet after you met with me on Tuesday 6th February, 2001,
you met with Colin McCabe on Saturday, 10th February, 2001 and
confirmed his transfer to Pretoria as the Bakery Manager. This makes
the working relationship with Albany Bakery
unbearable.
* You were also substantively unfair in giving
George Slabbert the option of a demotion from a
Bakery Manager to an Assistant Manager and then
you offered him a 4 month retrenchment package
yet you refused to offer me the same.
My last working day will be 31 March 2001.
Yours sincerely
Mr S R van Wyk ”
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[29] In Pretoria Society for the Care of the Retarded, supra, the Court
noted:
“Perhaps the best example of a constructive dismissal is the repudiation of
the contract of employment by the employer who compels the employee to
resign”. (at 984A).
[30] The evidence and the material presented before the Commissioner
was, in my opinion, overwhelming that the Applicant resigned as a
result only of the
Employer having demoted him. In this way, the Employer repudiated
the employment contract between the parties.
[31] Mr Wesley’s submission that the Applicant did not, in the founding
affidavit, plead intolerability, does not, with respect, hold any substance.
The context from the entire reading of the founding affidavit reflects that
intolerability was indeed part of the Applicant’s pleadings. For example, he
alleged, among others, as follows:
“21. On 12 February 2001, a new company structure was
announced, reflecting inter alia the change in my
position i.e that of branch manager instead of regional
manager.
22. On 13 Ferbruary 2001 I contacted Doyle and informed him that I
would not accept the demotion.
23. On 18 February 2001 I settled an email to the First Respondent
(dated for the following day), stipulating that that ( sic) I was
demoted without consultation and that I was in lieu ( sic)
therefore not in a position to work for the First
Respondent any longer”.
(paragraphs 21 23 of the Applicant’s founding affidavit ).
15
[32] The demotion of the Applicant aforesaid was, I venture to imagine,
both a frustrating and humiliating experience. It was objectively both
intolerable and unbearable. His choice to resign was, in my view, a
reasonable and justifiable response to the Employer’s apparently
arrogant and wrongful repudiation of the parties’ employment
contract. The Applicant is therefore entitled to compensation in terms
of section 194 of the Act. I consider, in the circumstances of this case,
that compensation in the amount equivalent to the Applicant’s six
months salary, calculated at the rate of his salary on the date of
dismissal, would be just and equitable. It was not disputed that at the
time of his constructive dismissal aforesaid his salary was R36
236,99 per month. The Court determines, in terms of section 145(4),
that an order giving effect thereto would be appropriate.
[33] The Court accordingly makes the following order:
(1) The arbitration award issued by Commissioner Tshepo Mashigo
(Third Respondent) on 4 September 2001 under Case No.
GA3101 is hereby reviewed and set aside, and substituted
therefore with the following order:
“1 The Applicant’s resignation from the Respondent’s
employ on 31 March 2001 constituted a
constructive dismissal, which was an unfair
dismissal.
“2 The Respondent is to pay compensation to the Applicant in the
amount equivalent to the Applicant’s 6 months’ salary, calculated at the rate
of the Applicant’s rate of remuneration on the date of his dismissal, namely
(R36 236,99 x 6) =
16
R217 421,94"
(2) The compensation aforesaid is payable within 30 (thirty) days of the
date this Order.
(3) There is no order as to costs.
_______________
___
NDLOVU AJ
Appearances:
For the Applicant : Mr S Snyman
c/o
Snyman van der Heever Heyns
For the Respondent : Adv M Wesley
Instructed by : Brink Cohen LeRoux & Roodt Inc
Date of Judgment : 26 September 2003