IN THE LABOUR COURT OF SOUTH AFRICA
SITTING IN CAPE TOWN
REPORTABLE
CASE NO: C190/2004
HEARD: 2005/05/27
ORDER GRANTED:
10/06/05
REASONS
DELIVERED: 21/06/05
In the matter between
ROGER PARRY APPLICANT
and
ASTRAL OPERATIONS LTD RESPONDENT
JUDGMENT
Pillay D, J
Introduction
1. This is a claim for contractual damages, unfair retrenchment and non
or underpayment of various agreed or statutory amounts. It arises
from an international employment contract. 1[1] As such, it requires the
application of the rules of conflict of laws. Predictably, the
preliminary points for determination are jurisdiction of the court and
the proper law of the contract. 2[2]
Background
2. About 1977, the applicant commenced employment with Tiger
Brands, then a division of the respondent. Over twentythree years his
career advanced steadily until he was appointed managing director of
Meadow Feeds (National), a division of the respondent, and in 2001 to
the position of director, Astral Foods Ltd, the holding company of the
respondent.
3. His position became redundant. By agreement dated 31 July 2001 the
respondent retrenched the applicant and paid him severance pay for
twentythree years service, which amounted to about R600 000. He
agreed to be reemployed by the respondent in the new position of
general manager of Africa Operations from 1 June 2001.
4. The applicant relocated to Malawi. Although he spent most of his time
there, he was also responsible for operations in Zimbabwe and Zambia.
He accounted to the respondent’s board of directors for these
operations.
5. In 2002, the applicant initiated the sale of most of the assets of the
Malawi operations to Capital Poultry (2000) Ltd with effect from 30
July 2002. The sale was in the interests and with the approval of the
respondent. That resulted in his position becoming gradually
redundant.
6. About the same time, the applicant was mandated to start a similar
operation in Blantyre and have it ready for resale in about six months.
The Blantyre operations were sold in November 2002.
The Blantyre operations were sold in November 2002.
7. By memorandum dated 23 July 2002, Mr. J.C. Groenewald, the
applicant’s immediate superior, advised him that Meadow Feed Mills
1[1] Spiro, E :The General principles of the conflict of laws Juta (1982) 7.
2[2] Schmitthoff, Clive M : The English Conflict of Laws at 6 7.
(Bryanston) was considering positions for him within the Meadow
Group in South Africa, but that this would take some time to finalise.
Groenewald also undertook that once Meadow Feeds had withdrawn
from Malawi, the applicant would be repatriated to South Africa at the
respondent’s costs.
8. On 31 October 2002 Groenewald wrote to the applicant to advise that
as the Malawi operations were coming to an end, the respondent had
no option but to offer him a retrenchment package, based on the
respondent’s policy. The respondent now contends firstly, that
Groenewald had no authority to make such an offer, alternatively, that
he was mistaken about the respondent having any obligation to pay the
applicant a retrenchment package. Secondly, its retrenchment policy
did not apply to employees engaged outside South Africa.
9. The respondent repatriated the applicant to South Africa on 15
November 2002 but the applicant continued to wind up what remained
of the Malawi operations.
10. Between 512 December 2002 the applicant, at the request of Gustav
De Wet, the financial manager, travelled to Malawi to complete certain
tasks, mainly in relation to debt collection.
11. The applicant reported back to De Wet on 13 December 2002. There is
a dispute about the contents of this discussion. The respondent
contends that it was the common understanding of the parties that the
applicant’s employment with the respondent would terminate once the
Malawi operations closed down. The applicant allegedly
acknowledged this during the discussion with De Wet.
12. The applicant denies that there was any discussion or understanding
about termination of his employment. He believed that he remained in
the respondent’s employ, despite the redundancy of his position in
Africa Operations. De Wet had indicated to him that he might have to
Africa Operations. De Wet had indicated to him that he might have to
return to Malawi in January 2003. It was only on 14 January 2003,
after his dismissal, that he advised the applicant that this was no longer
required of him.
13. Although the respondent does not deny having discussed the
applicant’s return to Malawi, it contends that the applicant would have
returned to Malawi on a specific contractual basis.
14. It is common cause that during this discussion with De Wet, the
applicant raised the possibility of his employment in the position of
managing director of Meadow Feeds Northern Region, a position that
had been held by Groenewald, who was in the process of being
dismissed. He also offered himself for the position of financial
manager of the Northern Region. It was not disputed that the applicant
had the experience and skills for both positions. There is a dispute
about what De Wet’s response was.
15. The applicant contends that De Wet indicated that his appointment to
this position or that of financial manager of the Northern Region would
not be well received as he had “crossed swords” with someone. De
Wet denied saying this. It was the respondent’s case that the applicant
had not offered himself for the financial manager position and that De
Wet himself filled the position. It is not necessary to resolve this
conflict of fact for, as it turns out, the respondent did not consider
placing the applicant in any alternative position.
16. According to the applicant, the first he knew about his dismissal, which
had purportedly been effected on 31 December 2002, was when he
opened his email at home and read a letter dated 7 January 2003 from
Len Hansen, the human resources and organisation development
manager.
Claims
17. Under claim A, the applicant alleges that the respondent is in breach of
the contract of employment in that it retrenched him without
complying with its retrenchment procedures. He claims R530 131,31
in terms of section 77(3) of the Basic Conditions of Employment Act
No. 75 of 1997 (BCEA) for loss of earnings as damages for breach of
contract and certain share options and accrued profits.
18. Under claim B, the applicant alleges that the respondent was
contractually obliged to:
i. pay him his monthly salary in
the amount of $6680 and R4133;
ii. give him one calendar month’s
notice of termination prior to termination of
employment; and
notice of termination prior to termination of
employment; and
iii. pay him two weeks per year of
service as severance pay.
19. The respondent failed to pay him:
i. notice pay and to give him
notice of his dismissal;
ii. his full salary for November
2002, other than to make a contribution of $540;
iii. his salary for December 2002,
January and February 2003;
iv. two weeks severance pay for
his employment since 1 June 2001;
v. the balance of his salary for
June / July 2002 amounting to $2000;
vi. the balance of his relocation
allowances amounting to $680 for June 2001 and $4684
for November 2002;
vii. accrued leave pay for
November 2002 to February 2003 in the amount of
$2177 and R1272.
The applicant claims payment of these amounts under section 77(3) of
the BCEA.
20. Under claim C, the applicant alleges that the respondent failed to
comply with section 188(1) and 189 of the Labour Relations Act No.
66 of 1995 (LRA) in almost every respect. For his unfair dismissal, the
applicant claims twelve months compensation.
21. Under claim D, the applicant claims as an alternative to his claim under
C, a breach of the constitutional right to fair labour practices in terms
of section 23(1) of the Constitution of the Republic of South Africa
Act No. 108 of 1996.
Issues
22. The issues to be decided are:
i. Jurisdiction;
ii. The proper law governing the
contract;
iii. Whether the applicant has a
right to loss of earnings as damages for breach of
contract;
iv. Whether the applicant is
entitled to the various amounts claimed under the
BCEA.
v. Whether the respondent
complied with section 188 and 189 of the LRA; and
vi. Whether the applicant has an
independent claim under the constitutional right to fair
labour practices.
Submissions on the points in limine
23. The respondent resists all four claims on the basis firstly, that the court
lacks jurisdiction and secondly, that South African law does not apply
to the contract.
24. Mr Oosthuizen, for the respondent, submitted that the place where the
dispute arose is the workplace, which has jurisdiction. In this case the
workplace is Malawi. It was a tacit, alternatively, an implied term of
the contract that its retrenchment procedure would apply only to
employees to whom the LRA and the BCEA were applicable. As the
applicant was employed outside South Africa and beyond the territorial
application of South African legislation, the respondent was not bound
to apply its retrenchment procedures. He relied on Chemical &
Industrial Workers Union v Sopelog CC, 3[3]Bolhuis v Natyre (Pty)
Ltd,4[4]Genrec Mei (Pty) Ltd v Industrial Council for the Iron, Steel,
Engineering, Metallurgical Industry and Others, 5[5] Lamani &
Another v CTC Bus Co Ltd & Another, 6[6] Transport and Allied
Workers Union of SA v Bahwaduba Bus Service (Pty) Ltd, 7[7]NH
Lunderstedt v Metalix (Pty) Ltd, 8[8] Wilson v Maynard Ship Building
Consultants AB, 9[9] Todd v British Midlands Airways Ltd, 10[10]
Janata Bank v Ahmed, 11[11] and Weston v Vega Space Systems
Engineering Ltd. 12[12]
25. Kleynhans v Parmalat SA (Pty) Ltd, 13[13] Mr Oosthuizen submitted,
was distinguishable from these cases because Kleynhans was seconded
to work in Mozambique for a fixed term. Before the secondment he
was employed in South Africa. After the secondment expired he was to
return to that employment.
26. He further contended that reliance on the law of the place of work ( lex
loci solutionis ) to determine jurisdiction is logical and sensible because
of the prohibition on the extraterritorial application of statutes 14[14]
and the doctrine of effectiveness. 15[15] He proceeded thereafter to list
the following factors connecting the contract to Malawi and
disconnecting it from South Africa:
i. The applicant’s initial
employment with the respondent had been terminated
by retrenchment.
employment with the respondent had been terminated
by retrenchment.
ii. The new contract of
employment did not envisage a temporary sojourn in
3[3] (1993) 14 ILJ 144 (LAC).
4[4] (1995) 3 BLLR 37 (IC)
5[5] (1995) 4 BLLR 1
6[6] (1988) 9 ILJ 583 E.
7[7] 1989 (10) ILJ 1169 (IC).
8[8] Industrial Court Case NHN 12/3/188 (unreported).
9[9] (1978) ICR 377 at 387.
10[10] (1978) ICR 959.
11[11] (1981) IRLR 457.
12[12] (1989) IRLR 429.
13[13] (2002) 9 BLLR 879 (LC).
14[14] Bishop and Others v Conrath and Another 1947 (2) SA 800 (T) at 804;
Viljoen v Venter 1981 (2) SA 152 (W) at 154 H.
15[15]Steytler NO v Fitzgerald 1911 AD 295 at 346; Thermo Radiant Oven Sales Ltd v Nelspruit
Bakeries 1969 (2)SA 295 (A) at 307; South Atlantic Islands Development Corporation v Buchan 1971
(1) SA 234 (C) at 240; Veneta Mineraria Spa v Carolina Collieries (Pty) Ltd 1987 (4)SA 883 (A) at
893; Ewing McDonald & Co Ltd v M&M Products Co 1991 (1) SA 252 (A) at 259260;
Malawi. He was based there. His wife was to join him
there and she had considered opening a guest house
there.
iii. He performed no duties for the
respondent or any of its South African operations.
Neither the fact that he reported monthly to the
respondent’s head office in Pretoria, nor the fact that he
bought some products and machinery in South Africa
changed his place of employment.
iv. His salary was paid in Malawi
and in the Isle of Mann.
v. He paid PAYE taxes and
unemployment insurance in Malawi.
27. Malawi, Mr Oosthuizen said, has its own labour legislation, which sets
certain standards and provides remedies for unfair dismissal. He
concluded by handing a copy of the legislation to the court
downloaded from the Internet as proof of the contents of Malawian
labour law.
28. The applicant did not take issue with the respondent on extra
territoriality and the doctrine of effectiveness. 16[16] Principally, the
applicant’s stance was that it was evident from the contract that the
parties had tacitly, alternatively impliedly, chosen South African law
as the proper law of the contract. From this, the presumption arises that
the parties chose South African courts as the forum to adjudicate their
dispute. Alternatively, the parties and the contract had a real
connection to South Africa. 17[17] The parties could not contract out of
the LRA 18[18] and there is nothing in the contract that suggests that
the LRA 18[18] and there is nothing in the contract that suggests that
they did. 19[19] Mr Kahanowitz then proceeded to identify the factors
connecting the dispute to South Africa.
29. These submissions preempt an outline of the conflict of laws
approach, a definition of certain technical terminology, a discussion
about of the nature of labour law and the characterisation or
categorisation of rights in this dispute before deciding in limine the
issues of jurisdiction and the applicable law.
Conflict of Laws Approach
16[16] Lamani, above.
17[17] Kleynhans, above.
18[18] Building Bargaining Council (Southern and Eastern Cape) v Melmons
Cabinets CC and Another (2001) 22 ILJ 120 (LC).
19[19] Wilson v Maynard Shipbuilding Consultants AB (1978) ICR 377 (CA) at
385 EG.
30. Access to academic material on conflict of laws in South Africa has
been difficult. Firstly, such material is scarce. Secondly, few libraries
stock the material that is available. Reliance on the old authorities has
become obsolete. 20[20] Although case law is an important source of
law, in the field of labour law it remains underdeveloped. Most texts
deal with specific categories such as contract, delict, property and
marriage, but not with labour law. Recourse has therefore had to be
had to foreign sources, 21[21] cases on contract generally and other
categories of law.
31. Another difficulty is that the terminology is technical. It is further
complicated by some writers using the same expression to mean
different things. For instance, “ lex causa ” is used by Dicey and Morris
to mean the appropriate foreign law. 22[22] Spiro uses it to mean the
law that governs the issue. 23[23] Hence the definition of technical
terms in the judgment.
32. The parties interlinked their submissions on jurisdiction and the choice
of law and cited case law that overlaps both issues. There is a tendency
to conflate the two, mainly because both involve a process of
identifying connecting factors. 24[24] However, the connecting factors
relevant to each are quite different.
33. The fact that foreign law is involved is irrelevant to the issue of
jurisdiction.25[25] Logically, jurisdiction is determined before the law
applicable to the issue in dispute. 26[26]
34. The first step in the process of selecting the proper law is
characterisation.27[27] What is characterised depends on the way a
court approaches a problem. It could be an issue, a set of facts or a rule
of law. 28[28] Booysen J was emphatic that it is rules of law which are
of law. 28[28] Booysen J was emphatic that it is rules of law which are
characterised. Characterisation, he added, is but a tool in the process
of reasoning in terms of which those rules are interpreted. 29[29]
20[20] LAWSA Vol 2 Part 2 (2003) 283; Laconian Maritime Enterprises v
Agromar Lineas Ltd 1986 (3) SA 509 D at 518.
21[21] LAWSA Vol 2 Part 2 (2003) 283.
22[22] Dicey and Morris : The conflict of laws Vol 1 (1993) 3137.
23[23] Spiro 41.
24[24] See the critique of Kleynhans by Christa Roodt : Jurisdiction of the
South African Labour Court: Employer Indentity and Party Autonomy (2003)
15 SA Merc LJ.
25[25] Schmitthoff 8.
26[26] Schmitthoff 8.
27[27] Laconian at 517, Dicey and Morris 36.
28[28] Dicey and Morris 3536.
29[29] Laconian 519.
35. Characterisation is important because the same facts may invoke
different rights or rules of law. The facts may give rise to a common
law breach of the contract of employment or delict in one jurisdiction
and a statutory or mandatory 30[30] breach in another. 31[31] If the
statute is an expression of public policy and directs that it be applicable
to the facts, that could be decisive of the applicable law. 32[32] A
statutory violation is a matter actionable by the state whose laws have
been violated.33[33] This is so despite the wishes or any choice of
forum by the parties to the employment contract. Party autonomy can
be restricted by public policy considerations 34[34] or by the doctrine of
forum nonconveniens , if that doctrine forms part of the South African
conflict of laws. 35[35] In that situation, the characterisation of the issue
as public law or policy settles the question of the forum having
jurisdiction36[36] and the choice of law.
36. Schmitthoff helpfully clarifies that the choice of law may arise at
various stages: at the formative stage when the legal right has to be
characterised or classified; at the secondary stage when the right has to
be connected to one or other legal unit (state) or jurisdiction; and
several times thereafter within the same case. 37[37] For instance, in a
divorce the South African courts usually determine the personal
consequences of the marriage according to the domicile of the spouses,
that is, the domicile of the husband at the time of marriage. However,
division of the matrimonial property is governed by the domicile of the
marriage.38[38]
37. Schmitthoff continues that once the conflict of laws sets the rules for
the choice of law for every right that is in issue, it withdraws 39[39] and
the choice of law for every right that is in issue, it withdraws 39[39] and
the legal issue is determined by application of the chosen or
appropriate law. 40[40]
38. Some authorities explain the process as the determination of
30[30] Defined below.
31[31] Gamillsheg in Blanpain and Engels Comparative Labour Law and Industrial Relations
in Industrialised Market economies (1993) 21; 195
32[32] Forsyth, CF : Private International Law; 3 rd edition; Juta & Co, Ltd
1996.13.
33[33] Gamillsheg 2; 183.
34[34] Gamillscheg 196.
35[35] Christa Roodt 141.
36[36] Gamillsheg 15/190.
37[37] Schmitthoff 9.
38[38] Frankel’s Estate v The Master 1950 (1) SA 220 (AD); Brown v Brown
1921 AD 478.
39[39] But it can revive if there is a reference back, or if the applicable law is
against public policy (Forthsyth 10).
40[40] Schmitthoff 9.
jurisdiction, the characterisation of the right or rule of law, 41[41]
followed by the identification of connecting factors according to the
lex fori 42[42] to determine the appropriate law 43[43] and finally, the
ascertainment of the content of the lex causa , here meaning the foreign
law,44[44] by adducing expert evidence. The process is not as
mechanical as my summary outline suggests. For, as discussed above,
the content of the foreign law 45[45] can influence the process of
characterisation.46[46]
39. Like Forsyth, Dicey and Morris also seem to take the view that
characterisation should be done in accordance with the domestic law of
the forum. 47[47]
40. In employment, the lex causa , i.e. the law that governs the legal issue, 48
[48] could be for example the lex loci solutionis or the lex loci
contractus. Which of these two laws should apply depends on the place
having the closest and most real connection to the issues. 49[49] It is
now fairly settled that the private law of the lex fori , i.e. the law of the
court seized with the matter, applies to characterise the dispute and
determine the connecting factors. 50[50] But this is not an immutable
rule.51[51]
41. Reliance on the lex causa for the purposes of characterisation is
problematic and has been rejected by Dicey and Morris. 52[52] The lex
causa depends on rather than determines the connecting factors. 53[53]
Some authorities prefer a via media or enlightened approach to
characterisation.54[54] According to this approach, while the lex fori
predominates, the lex causa is allowed to influence the
characterisation.55[55]
41[41] Laconian 517518.
42[42] Forsyth 10; Laconian 520.
43[43] Forsyth 910.
44[44] Forsyth 910.
45[45] E.g. if it is mandatory.
46[46] Forsyth 9.
47[47] Dicey and Morris 36.
48[48] Spiro 41,
45[45] E.g. if it is mandatory.
46[46] Forsyth 9.
47[47] Dicey and Morris 36.
48[48] Spiro 41,
49[49] Ex parte Spinazze and Another NNO 1985 (3) SA 650 (A).
50[50] Dicey and Morris 31; LAWSA Vol 2 Part 2 2003 para 284; Laconian
520..
51[51] Forsyth 10.
52[52] Dicey and Morris 37; Forsyth takes the view that the lex causa should
be used instead of the lex fori if nationality is the connecting factor.
53[53] Dicey and Morris 3031.
54[54] Laconian 518519 and the authorities cited there.
55[55] Laconian 518.
42. Proof of foreign law, if it is the applicable law, does not invoke the
rules of conflict of laws. Foreign law must be proved by evidence. 56
[56] It is a question of fact not of law. 57[57]The court may take judicial
notice of the foreign law if the sources are unimpeachably accurate and
authoritative.58[58]A printout from a website on the Internet is not,
without more, such a reliable source. Besides, a labour statute is not
proof of the content of the law, in the absence of an agreement between
the litigants or evidence of an expert, such as a lawyer. 59[59]
Moreover, the court cannot place its own interpretation on the foreign
law.60[60]
The principle of territoriality
43. Sovereignty is the exercise of legislative, judicial or executive
jurisdiction by a supreme power over its territory. 61[61] Jurisdiction is
intended to have effect only in the territory of the sovereign. 62[62]
International comity, in the sense of courtesy amongst sovereigns, 63
[63] encourages adherence to the principle of territoriality and respect
for sovereignty. 64[64]
44. Conflicts rules are usually territorial in that they apply only to
transactions governed by the lex fori .65[65] They apply extra
territorially when the lex fori does not govern the transaction. 66[66]
When courts apply foreign law, the principle of sovereignty is not
affronted, if it means giving effect to the orders of the sovereign of the
forum.67[67] The primary purpose of conflicts rules is to ensure that
justice is done between private litigants. 68[68] However, if the orders
emanate from another sovereign, extraterritorial application would be
a violation of sovereignty. 69[69]
56[56] Schmitthoff, 9.
57[57] LAWSA Vol 2 Part 2 (2003) para 288; Laurens v Hohne (1993) 2 SA
104 (W) 116B.
57[57] LAWSA Vol 2 Part 2 (2003) para 288; Laurens v Hohne (1993) 2 SA
104 (W) 116B.
58[58] LAWSA Vol 2 Part 2 (2003) para 288; Law of Evidence Amendment
Act No 45 of 1988 s 1(1).
59[59] LAWSA Vol 2 Part 2 (2003) para 289.
60[60] LAWSA Vol 2 Part 2 (2003) para 289.
61[61] Schmitthoff 10.
62[62] Schmitthoff 11.
63[63] Forsyth 59
64[64] Schmitthoff 1011.
65[65] Spiro 9.
66[66] Spiro 9.
67[67] Forsyth 58; Laconian 520.
68[68] Forsyth 59.
69[69] Schmitthoff 1112.
The doctrine of effectiveness
45. Courts should exercise jurisdiction if they can give effect to their
judgments. Thus if a court has no control over the person or property
of the defendant, any judgment it issues would amount to no more than
a theoretical proposition. 70[70]
Mandatory or peremptory and directory rules
46. Mandatory or peremptory rules are based on social policy or are of a
public policy nature, otherwise they are merely directory. A mandatory
rule must be applied by the lex fori . Parties can choose the law to apply
to a directory rule. 71[71]
Characterising labour law
47. Most legal systems classify labour law into mandatory norms
enforced by courts or through grievance procedures and other
protective provisions of such social and political significance that
special government agencies and inspectorates are entrusted
with their enforcement. 72[72]
48. Labour law 73[73] is a hybrid of private and public laws. It is
private law because the employment relationship is established
by contract. Party autonomy and selfregulation are permitted.
49. Labour law has a public law component for which a state
machinery is assigned the responsibility of monitoring and
enforcing employment conditions such as safety, working hours,
protection of vulnerable people such as children, pregnant
women, disabled and discriminated employees.
50. The private and public law aspects of labour law are also
70[70] Forsyth 150.
71[71] Spiro 9.
72[72] Gamillscheg 193.
73[73] I use the term “labour law” to include employment law.
reflected in international labour law. For instance, ILO standards
encourage collective bargaining, consultation and cooperation
between employers and workers, on the one hand, and, on the
other hand, urge the state to enable that by providing
appropriate legislation and dispute resolution machinery.
51. Each country applies only its own public law norms. 74[74] The
law of one nation does not have extraterritorial reach because
the principle of sovereignty applies. 75[75] The inspectors of the
Department of Labour cannot cross the borders into a
neighbouring state and enforce South Africa’s safety
regulations, child labour protections or minimum wage
determinations. Moreover, judges are usually disinclined to
apply the public law of a foreign nation, mainly because of their
unfamiliarity with it. Thus, classification of labour norms as
private or public law may be an issue.
52. However, the distinction between private and public law
characterization of labour law is not always clear or universally
accepted.76[76] For instance, public law norms, which regulate
the relationship between the state and the employer for the
benefit of the employee, may be incorporated into private
contracts of employment. 77[77] Conceivably, such terms can be
enforced as part of the duty of care or as an implied term of the
contract.78[78]
53. In South Africa, an added consideration is the elevation of
labour rights to a constitutional right. In my opinion the
74[74] Gamillsheg 3; 184
75[75] Gamillsheg 19; 194
76[76] Gamillscheg 19/1934
77[77] Gamillscheg 194.
78[78] Gamillscheg 194.
constitutionalisation of labour rights strengthens the public policy
and protective components of labour law, 79[79] without
annihilating the private law features. Thus party autonomy and
self regulation persist, as that is what the Constitution and LRA
encourage through collective bargaining, but within the limits
allowed by the Constitution and the legislation.
54. The Labour Court has territorial jurisdiction only in South
Africa.80[80] It also has “exclusive jurisdiction in respect of all
matters that elsewhere in terms of this Act or in terms of any other law
are to be determined by the Labour Court,” including constitutional
issues arising from labour matters. 81[81]
55. Given the wide powers of the court, “any other law” would
include a common law conflicts rule arising in labour matters.
However, if the court concludes that a foreign law applies, as a
creature of statute, it would not have jurisdiction to apply the
foreign law. The court acquires jurisdiction only from the LRA,
the BCEA and the EEA.
56. “Any law” in conflict with the LRA 82[82] or the EEA, 83[83] other
than the Constitution or an amending statute, must yield in
favour of these statutes. The term “any law” must also refer to
foreign law. Thus institutions exercising jurisdiction 84[84] under
LRA or EEA are barred from applying any law, foreign or
municipal, which conflict with these statutes.
79[79] See for example the purpose of the legislation : section 1 of LRA,
section 2 BCEA section 2 of EEA.
80[80] Section 157 o f the LRA.
81[81] Section 157 o f the LRA.
82[82] Section 210.
83[83] Section 63.
84[84] Discussed further below.
57. Basic conditions of employment in South Africa expressly
constitute terms of the employment contract, unless another law
or an agreement between the parties contain conditions more
favourable to the employee. 85[85] The BCEA prevails over any
agreement.86[86]
58. Public policy norms governing an employment relationship,
which cannot be excluded by contract, include provisions that
prescribe minimum terms and conditions of employment 87[87]
and the protection against unfair discrimination, 88[88] dismissal
and labour practices. 89[89] Chapter 10 of the BCEA and chapter
5 of the EEA establish inspectorates within the Department of
Labour to monitor, supervise and enforce compliance with the
BCEA and EEA respectively by instituting proceedings, if
necessary.
59. So comprehensive is the codification that most rights or rules of law
are mandatory, protective and of a public policy nature, although they
are not always enforced at the instance of the state. This does not
render such rights or rules any less mandatory or protective. The state
machinery is available for enforcement. 90[90] However, enforcement is
usually left to employees to pursue their rights through the courts and
grievance procedures. Those who benefit from the enforcement
initiatives of the inspectorate are mainly indigent employees who have
had their basic conditions of employment violated, such as the non
payment of their remuneration or leave pay.
60. Any employee can enforce such rights without the intervention
of the inspectorate. The inspectorate is not a prerequisite for
85[85] BCEA section 4.
86[86] BCEA section 5.
87[87] See for example sectoral determinations in chapter 8, especially
sections 55(4) and 57 of the BCEA.
88[88] Employment Equity Act No. 55 of 1998.
89[89] See Chapter 8 of the LRA.
90[90] Chapter 10 of the BCEA and chapter 5 of the EEA.
individual employees exercising their rights. That is my view in
so far as it involves the inspectorate as part of the state
machinery.
61. However, there are other institutions established with some
participation by the state, whose intervention cannot be
dispensed with. Here I refer to the Commission for Conciliation,
Mediation and Arbitration (CCMA) and councils. Almost all
disputes between employers and employees under the LRA and
discrimination disputes under the EEA must be referred to
conciliation before the CCMA or a council having jurisdiction.
The referral for conciliation is not dependent on whether the
right is characterised as mandatory, public law, directory or
private law. It is a procedural step that is jurisdiction conferring
either on the CCMA, council or court that ultimately adjudicates
the dispute. 91[91]
62. The above analysis leads me to conclude that labour legislation
in South Africa is directly applicable to all employment in South
Africa.92[92] South African employers cannot contract out of the
legislation, unless the statute allows it. What the position might
be if the parties choose foreign law to apply to the contract is
discussed below.
63. As the lex fori the court has identified the issues in dispute above. The
applicant pleaded various breaches of a contract of employment. His
claims are founded in common law, South African labour legislation
and the Constitution. Against these facts and the above analysis of
labour legislation in South Africa, the question of which law should
apply when characterising the issues is academic because of the
identity of classification and content. 93[93]
91[91] Discussed further below.
92[92] Forsyth 13.
93[93] Laconian 518.
64. However, the applicant was employed in Malawi. The applicability of
the lex loci solutionis should be investigated.
Lex loci solutionis
65. Until Kleyhans, the weight of judicial 94[94] and academic opinion in
South Africa was that a contract of employment must be determined by
the law of the place where work is done. 95[95] For instance, in
Chemical & Industrial Workers Union v Sopelog CC 96[96] the LAC
had to determine the jurisdiction of the Industrial Court based on its
interpretation of the LRA of 1956. Scott J concluded that it could not
have been the intention of the legislature to attribute a locus different
from that of the workplace.
66. Mr Oosthuizen, while distinguishing Kleynhans, did not reject it as
being wrongly decided.
67. The explanation for the preference generally of the lex loci solutionis is
that notionally, employees are too weak to resist a choice of law
imposed by the employer. The law of the place of work then becomes
normally applicable. 97[97] Another reason for preferring the law of the
place of work is that, as discussed above, protective labour laws are so
closely connected to the social order of the state of the forum, that their
application is mandatory and independent of the proper law of the
contract.98[98] The territoriality of labour laws reinforces preference
for the law of the place of work. 99[99]
68. However, the law of the place of work can disadvantage workers if it
offers less protection than the law of the place chosen by the parties. 100
[100] The trade off of party autonomy in favour of the place of work
does not always serve to protect workers. For instance, parties may
choose the law of Canada because, apart from having some connection
to the contract, it provides as much as twentyfive months notice for
dismissal.101[101] But if South African law has to apply because the
dismissal.101[101] But if South African law has to apply because the
employee works here, she would be entitled to no more than the
statutory notice of a maximum of four weeks, 102[102] unless the parties
94[94] See Kleynhans at 16, the cases cited there and the reasons for
distinguishing them.
95[95] Gamillscheg 15/189.
96[96] (1993) 14 ILJ 144 (LAC).
97[97] Gamillscheg 15/189.
98[98] Gamillscheg 15/190.
99[99] Gamillscheg 15/190.
100[100] Gamillscheg 16/190191.
101[101] Levitt, Howard, A : The Law of Dismissal in Canada Chapter 8.
102[102] Section 37 of BCEA; Gamillscheg 16/190.
agree on longer notice.
69. Gamillscheg103[103] warns that while the legal system of the place
where the work is carried out is of paramount importance, the issue
still remains one of the employment relationship. He adds:
“A legal relationship has its roots not in a place but in a legal
system. The law does have a place of territorial validity where
it is the lex fori, however, this territorial factor is but one of
several potentially relevant determining aspects, the place of
work is an important point of consideration but far from being
the only one.” 104[104]
70. The special features of international employment contracts are
recognised in international law. For instance, Article 6 of the
Convention on the Law Applicable to Contractual Obligations, 105[105]
(the Rome Co nvention) firstly recognises party autonomy by
permitting a contract of employment to stand, provided a choice of law
made by the parties does not have the result of depriving the employee
of the protection afforded to her by the mandatory rules of the law
which would be applicable in the absence of choice. Secondly, in the
absence of choice, a contract of employment is be governed:
(a) by the law of the country in which the employee habitually works;
or
(b) if the employee does not habitually carry out his work in any one
country, by the law of the country in which the place of business
through which he was engaged is situated; unless it appears from the
circumstances as a whole that the contract is more closely connected
with another country, in which case the contract shall be governed by
the law of that country.
71. South Africa is not bound by the Convention. Perhaps the time is ripe
to consider it. In the meantime, having considered international law as
it must, 106[106] the court is guided by the Convention. It protects
it must, 106[106] the court is guided by the Convention. It protects
workers. Contracting parties retain their autonomy. Nothing in the
Convention conflicts with the Constitution or our labour laws.
72. The Convention will be especially helpful in cases where the parties
choose foreign law to apply to a contract concluded in South Africa, or
if the employer is South African. Guided by the Convention, the first
enquiry would be to establish that the employee has not been deprived
103[103] Gamillscheg 12/187.
104[104] Gamillscheg 12/187.
105[105] opened for signature in Rome on 19 June 1980 (80/934/EEC)
106[106] Section 39(1) of the Constitution.
of the protection of the mandatory rules. Given the breadth of the
mandatory provisions of South African labour legislation, discharging
this onus is a hard row to hoe. Added to this is the onus on the party
relying on the foreign law to prove its contents. A convention will not
only facilitate adjudication of international employment contracts in
South Africa but also discourage foreign law being chosen to avoid the
protection provided by South African law. Effectively, a convention
similar to the Rome Convention will complete the circle of protection
afforded by the regulatory framework.
Jurisdiction
73. I return to the facts of this case.
74. The parties to this dispute are South African. The contract was
concluded and allegedly breached in South Africa. Accordingly, the
cause of action arose in South Africa.
75. The respondent repatriated the applicant when the operations in
Malawi were closed. He continues to live in South Africa. The
respondent is a company registered in terms of the company laws of
South Africa and trades on the Johannesburg Stock Exchange. The
doctrine of effectiveness applies.
76. Clause 15 of the contract of employment subjects the applicant to the
respondent’s policies. Its human resources policies incorporate
references to the LRA and the BCEA. As the policies are those of a
South African company operating in South Africa, they must be
consistent with South African law. Therefore, not only is the BCEA
incorporated automatically by law, 107[107] the parties impliedly also
chose South African law to apply to the contract.
77. The causes of action are common law breaches of the contract of
employment, statutory breaches of the LRA, alternatively the
Constitution, and the BCEA. All the claims are founded on mandatory
Constitution, and the BCEA. All the claims are founded on mandatory
laws of South Africa. They all fall within the jurisdiction of the Labour
Court which, as the lex fori governs the transaction.
78. As indicated above, the respondent has not proved the contents of
Malawian law. In any event a Malawian court could refuse jurisdiction.
On the basis of the principle of sovereignty it cannot be expected to
apply mandatory laws of another state.
79. The Labour Court of South Africa accordingly has jurisdiction over the
parties and the causes of action.
107[107] Kleynhans at para 25.
The Proper Law of the Contract
80. The proper law of a contract may be an express choice, a tacit choice
or, in the absence of any choice, be assigned by the court. 108[108] In
this case, the parties did not include an express choice of law clause in
the contract.
81. The court has found above that the parties tacitly, alternatively
impliedly, chose South African law. A choice of jurisdiction is an
indication of a choice of law, 109[109] although the converse is not
necessarily true. 110[110] Here follows further evidence in support of the
conclusion that the parties chose South African law:
i. The contract is a standard
template used by the respondent for employees engaged
in South Africa and abroad.
ii. The contract is for employment.
It was prepared in South Africa for South Africans.
iii. Despite denying initially in
proceedings before the CCMA that it was the employer,
the respondent admitted in these proceedings that it was
the employer.
iv. The applicant remained under
the control and supervision of the Board of the
respondent. He represented “the employer” in Malawi.
There was no one more senior to him there.
v. The applicant was on the
payroll of the respondent’s South African head office.
payroll of the respondent’s South African head office.
The respondent paid his salary and reviewed his
performance for annual salary adjustments. Such review
was linked to the respondent’s performance and
effected in accordance with the latter’s policy.
vi. The applicant continued to
contribute to the Tiger Brands Provident Fund and was
subject to its rules and regulations. Deductions were
made from his salary for this purpose.
vii. He also remained a member of
108[108] Forsyth, 283.
109[109] Christa Roodt 137 and the cases cited there.
110[110] Gamillscheg 196; Christa Roodt 137; 139140.
the Tiger Brands Medical Society and was obliged to
join any other Society with which the respondent
contracted.
viii. Although the applicant was
conditionally released from his restraint of trade
agreement, which he had concluded before his 2001
retrenchment, payment made by the respondent in
respect of that agreement would have been forfeited if
the applicant breached the condition in the Africa
Operations contract of employment.
ix. As a term of his employment,
the applicant retained his shareholding in Tiger Brands,
a company listed on the Johannesburg Stock Exchange.
x. The respondent acknowledged
some of its obligations, namely :
a. paying the applicant’s relocation costs
on repatriation, although it now claims a
refund of a pro rata share.
b. giving an undertaking in the contract of
employment to pay future severance pay,
although it now disputes any obligation
to do so.
c. Groenewald indicating to the applicant
that the respondent would consider
employing him and Daan Storm, the
production manager in Malawi, in South
Africa. Daan Storm was employed in
South Africa. The applicant was not for
reasons which are discussed below.
82. Normal hours of work was to be determined “by relevant legislation”.
Likewise, sick leave was subject to the conditions prescribed “by
relevant legislation”. The reference to “relevant legislation is
relevant legislation”. The reference to “relevant legislation is
ambiguous. It could be a reference to South Africa legislation i.e. the
BCEA or it could be a reference to the legislation of Malawi,
Zimbabwe or Zambia where he rendered services for the respondent.
The claim in this case is not based on hours of work or sick leave.
Therefore it matters not whether the reference is to foreign or South
African legislation.
83. Applying the “officious bystander” test 111[111] there can be no doubt
that the only law applicable to the employment relationship in the
minds of the parties at the time of contracting was South African. In
fact, it was not until the respondent obtained legal advice that it alleged
Malawian law applied to the contract. Neither party was familiar with
Malawian law. It was not until closing arguments were presented that
the respondent was able to produce a copy of it.
84. If I am wrong in finding that the parties tacitly or impliedly exercised a
choice of law, then the same factors that I have identified as indicators
of an implied choice of law are also strong factors connecting the
contract, the disputes, the parties and their rights to South Africa.
85. The applicant rendered services in four countries: South Africa where
he attended board meetings as part of his job, Malawi where he was
based most of the time, Zimbabwe and Zambia where he supervised
the operations for the respondent. The conflicts rule of the law of the
place where work is done is clearly inappropriate in the circumstances.
86. The redundancy of his position did not terminate the relationship. The
agreement continued, albeit on varied terms.
87. The fact that the applicant paid taxes to the Malawian Government, that
he was based mainly in Malawi, or that his wife had considered
establishing a guest house there, are not sufficiently strong connecting
factors to dislodge South African law as the proper law of the contract.
88. I conclude therefore that the applicable law is South African.
Claim A: Damages for breach of contract
89. Mr Kahanowitz for the applicant relied on Fedlife v Wolfaard, 112[112]
Denel (Pty) Ltd v Vosloo 113[113] and Buthelezi v Municipal
Demarcation Board 114[114] in support of this claim. He submitted that
Demarcation Board 114[114] in support of this claim. He submitted that
it was an explicit, alternatively implied, further alternatively, a tacit
term of the contract that the respondent would terminate the contract
fairly, that is, for good cause and by applying fair procedure. He
111[111] Rail Commuter Action Group and Others v Transnet Ltd T/A
Metrorail and Others (No 1) 2003 (5) SA 518 (C) at 568570; Smith NO and
Another v Van Reenen Steel (Pty) Ltd and Another 2002 (2) SA 613 (D) at
623; Botha v Coopers & Lybrand 2002 (5) SA 347 (SCA); Maritime Motors
(Pty) Ltd v Von Steiger and Another 2001 (2) SA 584 (SE) at 595596; Alfred
McAlpine & Son (Pty) Ltd v Transvaal Provincial Administration 1974 (3) SA
506 (A) at 531H 532C;
112[112] (2001) 12 BLLR 1301 (A).
113[113] (2005) 4 BLLR 313 (SCA) at para 16.
114[114] (2004) 25 ILJ 2317 (LAC) at paras 1214.
referred to clause 15 of the contract and to the fact that at the time of
contracting, the parties were mindful that the LRA 115[115] and the
Constitution prohibit unfair dismissal. The respondent breached its
obligation to act fairly. The applicant accepted the repudiation,
cancelled the contract and claimed contractual damages. 116[116] Such
damages is not the equivalent of notice pay, as suggested by the
respondent. It is the equivalent of the applicant’s loss of earnings up to
the date of the trial because he would still have been employed if the
applicant had not dismissed him unfairly. So it was submitted for the
applicant.
90. The respondent denied firstly, that the applicant suffered any damages
and contended that the applicant failed to establish a causal link
between the alleged breach and the damages allegedly suffered.
Moreover, it was a duplication of claim C. To allow a common law
claim additionally to compensation in terms of section 194 of the LRA
would revive the spectre of compensation for dismissal being limitless
and having to be proved by actuarial evidence. 117[117] That was the
direction which jurisprudence under the old LRA had taken, which the
new LRA seeks to avoid by capping compensation claims. 118[118]
91. Secondly, compensation under section 194 is not patrimonial but in the
nature of a solatium.119[119]
92. The third submission for the respondent was that Fedlife permits
employees to sue for the balance of their common law damages, which
is limited to the remuneration payable to the employee as if the
employment had been terminated lawfully with proper notice. At most
therefore, the applicant was not entitled to more than one month’s pay
as contractual damages. However, as the applicant already claims
as contractual damages. However, as the applicant already claims
notice pay under claim B, he is not entitled to any amount as
contractual damages. 120[120] So the argument went.
115[115] Key Delta v Marriner (1998) 6 BLLR 647 (E).
116[116] Mafihla v Govan Mbeki Municipality (2005) 4 BLLR 334 (LC) at
paras 4445.
117[117] Jonker v Amalgamated Beverage Industries , (1993) 14 ILJ 199 (IC);
Ferodo (Pty) Ltd v De Ruiter , (1993) 14 ILJ 1008 (LAC); Camdons Realty
(Pty) Ltd v De Ruiter (1993) 14 ILJ 1008 (LAC).
118[118] Jonathan Goldberg, “Money Matters: Compensation under the New Act”
(Employment Law, Vol 12, No 3, p 54):
119[119] Johnson & Johnson (Pty) Ltd v Chemical Workers Industrial Union (1999) 20 ILJ 89
(LAC)
120[120]Cotler v Variety Travel Goods (Pty) Ltd, 1974 (3) SA 631 (A);
Tiopaizi v Bulawayo Municipality 1923 AD 317; Grundling v Beyer 1967 (2)
SA 131 (W); Farring v Arkin 1921 CPD 286; Beeton v Peninsula Transport Co
(Pty) Ltd 1934 CPD 53 at 59; Myers v Abrahamson 1952 (3) SA (C) at 127 D
93. In Fedlife, the Supreme Court of Appeal considered whether the LRA
interfered with existing common law rights and concluded that it did
not, based on the presumption of the validity of existing law. 121[121] It
found that the LRA does not expressly abrogate an employee’s
common law entitlement to enforce contractual rights. 122[122] Section
195, it said, does not exclude a claim for contractual damages 123[123]
as it could not have been the intention of the legislature to enhance the
security of the class of employees who have no contractual security of
employment by simultaneously exacting a prejudicial quid pro quo
from another class of employees. Effectively, employees who secure
by agreement better conditions of employment than those offered in
the legislation should not be disadvantaged by having to yield any of
their superior conditions of employment, irrespective of whether their
claims are framed as unlawful dismissal under the common law or
unfair dismissal under the LRA and the Constitution. The
interim124[124] and final Constitutions which guaranteed fair labour
practices did not deprive employees of their common law right to
enforce a fixed term contract. 125[125]
94. What then are the common law rights on dismissal of an employee
engaged in terms of a contract for an indefinite period?
95. Historically, the legislature introduced in 1979 the unfair labour
practice jurisdiction of the industrial courts in order to supplement the
inadequate common law rights of employees, whose services might
otherwise be terminated lawfully at will, even if the termination was
unfair.126[126] Termination at will was lawful if proper notice was
given.
96. By the 1990’s compensation awards under unfair labour practice
claims became substantial as employees strove to prove patrimonial
claims became substantial as employees strove to prove patrimonial
losses by leading expert actuarial evidence. To end the uncertainty and
difficulties created by the breadth of the unfair labour practice
jurisdiction, the LRA of 1995 defined unfair labour practices 127[127]
and capped compensation claims. 128[128]
97. The common law entitlement of an employee for contractual damages
G; Santos Professional Football Club Limited v Igesund 2003 (5) SA 73 (C)
121[121] Fedlife para 16
122[122] Fedlife para 17
123[123]Fedlife para 19 & 20.
124[124] Act 200 of 1993.
125[125] Fedlife Para 15.
126[126] Para 13.
127[127] Section 186 of LRA.
128[128] E.g. section 194 of LRA.
for breach of an indefinite contract is what s/he would have earned
from the date of the dismissal to the earliest date after that upon which
the employment could lawfully have been terminated. 129[129]
Effectively, this is the notice period. Loss of benefits such as pension
rights and other benefits payable during the notice period must be
included in the claim. Amounts earned by the employee during this
period must be deducted from the claim.
98. Although the respondent’s human resources policies provided for four
weeks notice on termination of employment, the respondent conceded
that the applicant was entitled to one calendar months notice. His
damages would be the equivalent of his salary for one calendar month,
plus his car allowance, pension and medical aid benefits for that
period. However, any award of notice pay must be deducted from these
damages.
99. In addition, the applicant would have acquired certain share options
and accrued profits if he had not been dismissed unlawfully. It is not
clear when the share options matured. However, the applicant
attempted to exercise his options in October 2003. The respondent
allegedly resisted the claim on the basis that he was no longer an
employee. In the absence of any better evidence as to when his share
options accrued, and whether it was conditional upon him being an
employee, I direct that the applicant be paid his share options and
accrued profits that matured as at 28 February 2003.
100. The need for certainty and limitation of compensation claims
in labour disputes is a matter of socioeconomic policy. 130[130]
Furthermore, the elevation of labour rights as a socioeconomic
constitutional right reenforces the need to balance the various
constitutional right reenforces the need to balance the various
competing interests in labour disputes. Consequently, an award of
damages under the common law should be factored into the assessment
of compensation under section 194 of the LRA.
Claim B: claims under the BCEA
Notice Pay
101. The evidence for the respondent was that the applicant was
notified orally of his retrenchment at the meeting with De Wet on 13
December 2002. De Wet testified that it was not up to him but
someone senior to him, such as Hansen, to notify the applicant of his
dismissal. Hansen confirmed that until his email of 7 January 2003, he
had not notified the applicant of his dismissal, which was purportedly
effected on 31 December 2002. Precisely who took the decision to
129[129] Wallis MJD Labour & Employment Law ; 40.
130[130] See Explanatory Memorandum to the LRA 1995 ILJ p316 and 320.
dismiss the applicant, when it was taken, and when, before 7 January
2003, it was communicated to the applicant, was not proved.
102. The respondent admitted that the applicant was entitled to one
calendar month’s notice, which ought to have been served during
February 2003. Despite this admission the respondent also admitted
that it backdated the termination notice on 7 January to 31 December
2002. Notwithstanding these contradictions, the respondent persisted
that the applicant’s employment was lawfully terminated with one
calendar month’s notice. The applicant, it claimed, was aware in
October that his employment would be terminated on 31 December
2002.
103. Groenewald had informed the applicant on 31 October 2002
that he would be retrenched without giving him a date. On 16
November 2002 he received a copy of a letter sent by Groenewald to
De Wet about giving the applicant a certificate of employment and
details of his retrenchment package. Still, no date was set for the
retrenchment; no discussion had occurred about alternatives to
retrenchment. The applicant would have expected to be consulted
about alternatives before he was dismissed. After his relocation to
South Africa on 15 November 2002, he was despatched back to
Malawi between 5 and 12 December 2003. He was also expecting to
return there again in January 2003. In all these circumstances the
applicant’s evidence that he was not aware of his dismissal until 7
January 2003, after it was effected, must be accepted.
104. On the respondent’s own version the applicant was not given
any notice of his dismissal. Notice given after his dismissal is no notice
any notice of his dismissal. Notice given after his dismissal is no notice
at all. The applicant is therefore entitled to one calendar month’s notice
pay.
Salary for November, December, January and February
105. De Wet had undertaken in writing on 14 January 2003 to
transfer the applicant’s salary for November and December 2002 into
his account. This was not done. The respondent admitted that the
applicant is entitled to his salary for November and December 2002
but alleged that its payment of R15 685,28 for medical aid and pension
for those months, its overpayment of the relocation allowance $4000
and its pro rata claim to a refund of the relocation allowance of R 52
568,00 had to be deducted from monies due to the applicant.
106. The respondent claims the amounts in respect of the relocation
allowance in terms of clause 3.5 of the Group Human Resource Policy.
Recalling that it contended in limine that the policy did not apply to the
applicant, the basis of the claim is disingenuous. Moreover, on a
proper construction of the clause the respondent may claim such a
deduction if the relocation was at the instance of the applicant. His
relocation was occasioned by his position becoming redundant, that is,
by circumstances beyond his control.
107. Groenewald had undertaken on behalf of the respondent to pay
the applicant’s relocation costs. The respondent did not inform the
applicant that he had no authority to do so or that he was mistaken,
until litigation commenced.
108. The respondent has led no evidence to support its claim to any
of the other deductions. Significantly, the deductions were not included
in the counterclaim. If the respondent seriously believed that it was
entitled to these deductions it would have made a better effort at
pleading and proving them. The respondent is not entitled to any of the
deductions.
109. Based on the respondent’s admissions, the applicant is entitled
to his salary for November (balance) and December 2002. He is also
entitled to his salary for January 2003 as he only received notice of his
dismissal in that month. He is not entitled to a salary for February 2003
as he is awarded notice pay.
Severance pay
110. The respondent undertook in the contract of employment to
pay “ future …severance pay … .from the date ….. when the employee takes
up the new position ”. Its explanation for not abiding by this
undertaking, namely that it was advised by its attorney that it had no
obligation to pay this and other amounts owing to the applicant
because he was employed in Malawi, cannot relieve it of its contractual
commitment. It committed itself in June 2001 but received the advice
only about December 2002. The respondent gave the undertaking in
the full knowledge that the applicant would be employed in Malawi.
the full knowledge that the applicant would be employed in Malawi.
Such a breach is manifestly dishonourable.
111. The applicant is accordingly entitled to two weeks severance
pay.
Underpayment of salary for June and July 2002
112. No case was made out that the applicant was paid for this
period. Nor has the respondent advanced any reason for not paying the
applicant for this period.
113. The applicant is entitled to these underpayments.
Relocation allowances
114. Based on the findings above, the applicant is entitled to the
balance of his relocation costs.
Accrued leave
115. It follows from the above findings that the applicant is also
entitled to his accrued leave for November 2002 to February 2003.
Claim C: Unfair retrenchment
116. The respondent pleaded in the alternative to its points in
limine that, in so far as it was obliged to comply with the provisions of
the LRA, it did so by consulting adequately with the applicant. During
discussions between the applicant, Groenewald and De Wet it was
commonly understood that his employment would terminate when the
Malawian operations closed down. Moreover, the applicant was fully
aware of all the material facts pertaining to his dismissal, he having
initiated and negotiated the sale of the Malawi operations himself. He
had every opportunity to raise and discuss any issues about the
termination of his employment with Groenewald and De Wet. He was
aware that there were no alternative positions for him in the
respondent’s Africa Operations division. The purpose of consultations
was effectively achieved. So it was submitted.
117. Regarding alternative employment, Hansen testified that the
respondent did not consider employing the applicant in South Africa,
firstly, because he knew what positions were available and there were
none suitable for the applicant. Secondly, the respondent had no
obligation to employ him after the Malawi operations were closed as
no such undertaking was given by the respondent when it contracted
with him. In addition, he was employed by Meadow Feeds Malawi as
his appointment was made on the letterhead of that entity. Thirdly, the
his appointment was made on the letterhead of that entity. Thirdly, the
applicant’s performance was under par. Hansen alleged that the
applicant did not manage debtors successfully and he failed to
implement effective internal controls.
118. The respondent conceded that it did not comply will all the
requirements of section 189 of the LRA. Mr Oosthuizen urged the
court not to take a mechanical checklist approach to section 189, and to
find that there was adequate notice and consultation with the
applicant.131[131]
119. Further alternatively, the respondent contended that the
applicant should not be awarded any compensation given the short
131[131] Atlantis Diesel Engines (Pty) Ltd v National Union of Mineworkers of SA 1995(3) SA
22 (A); Imperial Transport Services (Pty) Ltd v Sterling (1999) 3 BLLR 201 (LAC); CWIU v
Lennon Ltd (1994) 10 BLLR 278 (LC); SACTWU & Others v Discreto (A Division of Trump
and Springbok Holdings) , (1998) 12 BLLR (LAC).
duration of his employment, the fact that he started a new job on 1
March 2003 and that his patrimonial loss was limited. Moreover, he
failed to make any suggestions about alternative employment other
than the position of managing director of Meadow Feeds Northern
Region, which Groenewald was about to vacate as a result of his own
dismissal for misconduct. The respondent conceded that it did not
consult properly with the applicant about this alternative position but
contended that it was raised at a very late stage. 132[132]
120. By no stretch of any argument can it be said that the
retrenchment of the applicant was procedurally and substantively fair.
To begin with, the respondent could not say who took the decision to
dismiss the applicant.
121. On the respondent’s own version it did not notifying the
applicant clearly and in advance of the date of his dismissal on 31
December 2002.
122. The respondent undertook to consider him for other positions
but did not actually do so. It hardly lies in its mouth to complain that
the applicant presented only one alternative and that he did so very late
in the process. The respondent would have had a bird’s eye view of its
organisation and the available positions. The LRA places an onus on
the respondent, not the applicant, to ensure that the dismissal was fair.
To this end, the respondent was obliged to explore alternatives to
retrenchment. The applicant’s suggestion could not have been made
any earlier as Groenewald still filled the position and was only in the
process of being disciplined at the time.
123. To suggest for the first time during the trial that the reason for
not finding the applicant an alternative position was because of his
alleged poor performance, is manifestly contrived. As the applicant
was not confronted with this allegation while he was still employed, he
had no way of knowing what was wrong with his performance or how
he might remedy it, assuming that it needed remedying.
124. The applicant’s alleged poor performance was not pleaded.
Nevertheless, the respondent led evidence and crossexamined the
applicant on the issue. In rebuttal, the applicant explained that the
business was very vulnerable to currency fluctuations. When the rand
weakened, the respondent sustained losses. Predictably, this evidence
goes unchallenged as the respondent had closed its case by then.
125. The respondent did not consult the applicant at all about fair
132[132] Riveiro & Another v JSN Motors (1995) 18 BLLR 93 (IC); Numsa & Others v Dorbyl
Ltd & Another (2004) 9 BLLR 914 (LC)
selection criteria. Poor performance is not a fair selection criterion if
no prior corrective measures were implemented.
126. The respondent reneged on its written undertakings to pay
severance pay, the relocation allowance and the applicant’s salary for
November and December 2002.
127. Groenewald informed the applicant on 31 October 2002 that
he would be retrenched without giving him notice of the date of his
dismissal and without consulting with him about alternative
employment. Despite the respondent’s shortcomings, the applicant
continued to engage the respondent constructively with a view to
finding alternative positions for himself.
128. The respondent’s contention that the applicant knew that he
would be without a job once the Malawi operations closed, is
improbable. If that were so the applicant would not have initiated and
concluded the sale of the assets of that business, at least, not without
first attempting to secure his own position. It is hardly likely that the
applicant would have deliberately worked himself out of employment
altogether.
129. The applicant was aware that his position would become
gradually redundant after he had concluded the sale of the assets of the
Malawian division. He did not realise that he would be without a job
until after he was in fact dismissed.
130. Initially, the respondent seems to have had good intentions of
acting fairly towards the applicant. Groenewald’s letter to the applicant
on 23 July 2002 conveys this. For reasons that have not emerged
clearly from the evidence, the good intentions dissipated over the next
five months. The first and only indication that the applicant had that
five months. The first and only indication that the applicant had that
someone within the respondent was unhappy with him was when De
Wet told him that he had “crossed swords” with someone. Although
De Wet denied saying this, the probabilities are that someone within
the respondent’s hierarchy was antagonistic towards the applicant.
131. The respondent became vindictive towards the applicant when
it withheld payments that it admitted were due to him on the basis that
it had a counterclaim based on his alleged breach of contract for failing
to collect outstanding debts due to the respondent.
132. The counterclaim was entirely spurious for it emerged from
De Wet’s evidence that he had instructed the applicant not to return to
Malawi to recover debts as the respondent wanted to “cut (its) losses
and close”. Despite De Wet communicating this to the applicant as far
back as 17 January 2003, the respondent persisted with its
counterclaim in May 2004.
133. Predictably, the applicant raised several objections in limine to
the counterclaim. Eventually, the respondent decided three weeks
before the trial to withdraw the counterclaim. It only did so four days
before trial.
134. In my opinion the counterclaim was not genuine. It was a
frivolous litigation strategem which must attract a punitive order for
costs.
135. In all the circumstances, the retrenchment was procedurally
and substantively unfair.
136. My award of compensation takes into account all the relevant
circumstances including :
i. The respondent was devious in
its dealings with the applicant by reneging on written
undertakings to the applicant.
ii. The respondent’s opposition
was disingenuous, relying on the written contract of
employment when it suited it, and distancing itself
when the contract favoured the applicant.
iii. The applicant had twentyfive
years service with the respondent.
iv. The applicant was loyal to the
respondent having put the latter’s interests above his
own by selling the assets of the Malawi operations. He
could not have held such senior supervisory positions if
he had not consistently proven his commitment.
he had not consistently proven his commitment.
v. Hansen, who had been
employed for about a year before the applicant’s first
retrenchment, was insensitive in what he did as much as
in what he did not do in ensuring a procedurally fair
dismissal. Informing any employee, let alone one who
has given 25 years of service to his employer, by email
of his dismissal is hardly the caring conduct expected of
human resources personnel.
vi. The respondent is a big
company. It is listed on the stock exchange and has
several subsidiaries and divisions. The probabilities are
that if the respondent had considered employing him, a
position could have been found for him somewhere
within the organisation. Alternatively, the respondent
could have assisted in placing him elsewhere.
vii. The applicant found
employment in March 2003, although at a lower rate of
pay.
viii. The applicant was over fifty
years old when he was subjected to the anxiety of being
jobless.
137. So reprehensible has the respondent’s conduct been, so gross
the violation of the applicant’s dignity that, despite the applicant being
awarded contractual damages under section 195 of the LRA, he should
be also be awarded the maximum compensation allowed under section
194 of the LRA.
Claim D alternative to claim C: Constitutional right to fair labour
practice
138. This claim falls away as it is in the alternative.
Respondent’s amendment
139. The respondent applied to amend the pleadings. At the
conclusion of the proceedings such objection as there was fell away.
However, the amendment did require consideration and additional
work for the applicant, especially as it resulted in certain contradictions
that I identified above. In allowing the amendment therefore, I
nevertheless intend to order the respondent to pay the applicant’s costs
of it.
Computation
140. The parties undertook to resolve the calculation of the amounts
payable to the applicant on the basis of the order that I grant. Any
dispute arising in this regard should be referred to the court on the
same papers, supplemented in so far as may be necessary, so as to
enable the court to determine the issues in chambers, if possible.
enable the court to determine the issues in chambers, if possible.
Order
141. Hence the order I granted on 6 June 2005, varied below at (i)
by the elimination of the duplication of notice pay at (iii), the inclusion
of the car allowance, medical aid and pension benefits payable for one
month and a reference to the BCEA. The respondent must pay the
applicant :
i. the car allowance, medical aid
and pension benefits for one month, as damages for
breach of contract under section 77(3) of the BCEA
read with section 195 of the LRA.;
ii. the value of his share options
and accrued profits that matured as at 28 February
2003;
iii. one month’s pay as notice pay;
iv. the balance of his salary for
June, July and November 2002;
v. his salary for December 2002
and January 2003;
vi. two weeks pay as severance
pay;
vii. the balance of his relocation
allowances;
viii. his accrued leave for
November, December 2002, January and February 2003
;
ix. twelve months compensation
for unfair retrenchment under section 194 of the LRA;
x. Interest on the aforesaid
amounts at the prescribed rate;
amounts at the prescribed rate;
xi. his costs of the counterclaim on
an attorney and client scale;
xii. his costs of the application for
amendment on a party and party scale; and
xiii. his costs of the action on a
party and party scale.
Pillay D, J
21 June 2005