Barrier v Paramount Advanced Technologies (Pty) Ltd

• Jurisdiction: http://justis.com/jurisdiction/166,South Africa
• Judge: Davis JA and P Coppin JA and Molefe AJA
• Judgment Date: 18 February 2021
• Docket Number: JA35/2020
• Hearing Date: 18 February 2021
• Court: Labour Appeal Court
• Citation: 2021 JDR 0478 (LAC)

Coppin JA:

[1]

This is an appeal against an order of the Labour Court (Prinsloo J), with the leave of that court, setting aside, in terms of s145 of the Labour Relations Act [1] ("LRA"), an arbitration award of a commissioner ("the arbitrator") of the Commission for Conciliation Mediation and Arbitration (" the CCMA"), that was made in favour of the appellant.

[2]

The dispute that was the subject of the award concerns the severance amount that had to be paid to the appellant when he was retrenched by the respondent after working for it long before and beyond the date of retirement at the age of 65.

[3]

In particular, since the relevant provision, namely, s 41(2) of the Basic Conditions of Employment Act [2] ("BCEA"), required the respondent to pay the appellant upon retrenchment an amount 'equal to at least one week's remuneration for each completed year of continuous service' with it, the (ultimate) question is whether, and to what extent, the payment(s) he was entitled to upon his retirement at 65 impacted on the amount he was entitled to as severance pay.

[4]

In determining the amount of severance pay, the respondent only took into account the period after the appellant had reached the age of 65. The arbitrator essentially held that the period before that also had to be taken into account as the appellant's employment with the respondent continued uninterrupted after he turned 65 and continued until it was terminated upon his retrenchment.

[5]

The Labour Court, essentially, held that the arbitrator's conclusion was not correct, having found, in essence, that the (contractual) period that ended when the appellant turned 65 cannot be taken into account in determining the amount of severance pay that was due to him. The correctness of that decision is to be evaluated and adjudicated in this appeal.

[6]

The succeeding paragraphs deal with the essential common cause facts, the award of the arbitrator, the Labour Court' decision, an evaluation of that

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Coppin JA

decision, the issue of costs and, ultimately, the relief. For convenience and practicality, where necessary, the designation of the parties as 'applicant' or 'respondent' in quotations from documents or process preceding this appeal has been adapted to reflect their designations as on appeal.

Common Cause Facts:

[7]

The respondent employed the appellant as an engineer with effect from 8 May 1985. In terms of a written contract of employment subsequently concluded between them on 19 May 1994, it was agreed, inter alia, that the appellant's employment with the respondent would terminate at the end of the month when he reached the age of 65 unless the parties agreed otherwise in writing. The contract also contained a so-called "no-variation-except-in-writing" clause.

[8]

The appellant reached the age of 65 on 13 June 2013 but continued to work for the respondent, as he used to, uninterruptedly, beyond this date until he was voluntarily retrenched by the respondent with effect from 31 May 2017.

[9]

On 21 February 2017, the respondent offered the appellant a fixed-term contract that was to commence from 1 February 2017 and terminated on 28 February 2019 and provided, inter alia, that the appellant would not be entitled to "any discharge or severance benefits" upon its termination. The appellant was not satisfied with its terms and did not accept the offer but continued to be employed by the respondent.

[10]

In March 2017, the respondent indicated an intention to embark on a restructuring of its business operations due to its unfavourable financial position. On 4 April 2017, the respondent invited all its employees, including the appellant, to apply for a voluntary retrenchment package (VSP) on certain terms. One week's compensation was offered for every completed year of service. The terms of the VSP were the same as upon forced retrenchment, save that the respondent offered to even pay a week's salary for incomplete years of service and freed employees from the obligation to work during their notice period.

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[11]

The appellant applied for the VSP, and his application was accepted by the respondent on 10 April 2017. The agreement entered into in that regard did not specify the actual amount of the severance pay that the respondent would pay the appellant, but he was informed of that (specific) amount subsequently.

[12]

The appellant queried the amount as it was calculated only taking into account the appellant's employment with the respondent from 1 July 2013, and not the period up to the date of his 'retirement', i.e. 30 June 2013 (he reached the age of 65 on 20 June 2013), despite his payslip always having reflected 1 May 1985 as the starting date of his employment with the respondent.

[13]

In response, the appellant was informed by the human resources (HR) manager of the respondent, Ms Mmolotsi, in essence, that the appellant had officially retired on 30 June 2013 in terms of his employment contract and therefore, the first period ending on that date was not taken into account in calculating his severance pay. The HR manager also informed him that his payslip had only indicated his starting date as May 1985 for UIF and tax purposes, but not for the purposes of calculating his severance pay.

[14]

The appellant proceeded to accept the severance package subject to the reservation that the severance pay was not correct, in that it had to be for 32 weeks (and not for 4 weeks). The appellant was paid for 4 weeks at the rate of R 34 849,14 per week (totalling R 139 396,55) in respect of severance pay.

[15]

On 15 June 2017, the respondent referred a dispute to the CCMA regarding the calculation of his severance pay. He contended that it should have been for 32 weeks and not for 4 weeks. He sought payment from the respondent of severance pay for 29 weeks, made up of the difference, and of the additional period he had remained in the employ of the respondent. Even though his termination date in the retrenchment agreement had been stipulated as 31 May 2017, he only, eventually, and finally left his employment with the respondent on 30 June 2017.

The arbitration in the CCMA:

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[16]

At the arbitration, there was an issue about whether the eventual termination of the appellant's employment with the respondent was a retrenchment and, accordingly, a dismissal as contemplated in section 41(2) of the BCEA. The respondent contended, essentially, that the appellant had retired and that after his retirement, "the termination was as a consequence of the VSP granted" to the appellant and that he was therefore not entitled to the severance pay which he claimed.

[17]

The arbitrator found that even though the written employment contract that the parties had entered into in 1985 had provided for the appellant's retirement at age 65, the appellant did not in fact, retire upon reaching that age but continued to be employed by the respondent until his eventual retrenchment by the respondent. According to the arbitrator, on the respondent's own version, it neglected to compel the appellant to retire when he reached the age of 65, "even though it had the right to do so."

[18]

The arbitrator reasoned that even if it were to be accepted that the written contract came to an end on 30 June 2013 (i.e. after the appellant turned 65), because it was not extended by the parties in writing, as contemplated in that contract, "it is apparent that the (appellant's] employment nevertheless continued uninterrupted the next day on similar or materially identical conditions of service."

[19]

With reference to section 84(1) of the BCEA, which provides the formula for determining the length of an employee's employment with the same employer, and provides, essentially, as shall be fully discussed below, that a break in the employment of less than one year is inconsequential, the arbitrator held that "there was absolutely no break in the [appellant's] employment with the respondent when he continued his employment after 30 June 2013."

[20]

The arbitrator referred to aspects of the decision in Rogers v Exactocraft (Pty) Ltd (2015) 36 ILJ 277 (LC) (Rogers), but distinguished the facts there from the present on the basis that the accepted evidence indicated that the appellant "had in fact not retired; nor did the respondent compel him to do so in June 2013", and further, that neither the appellant nor the respondent, had

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processed the appellant's retirement and the appellant had not been paid any of his retirement benefits.

[21]

The arbitrator found that the respondent had initiated a retrenchment process in March 2017, and during the consultation phase, which it had also initiated, had offered its employees (including the appellant) the VSP, which formed part of the respondent's efforts to comply with section 189(2)(b) and (c) of the LRA. The section provides that the employer must, during the consultation process, attempt to reach a consensus on the method for selecting the employees to be dismissed as well as on the severance that is to be paid to them. In a memorandum dated April 2017, the respondent had stressed that those who were granted the VSP would be treated as if they had been forcibly entrenched.

[22]

In light of that, the arbitrator concluded, essentially, that the matter before him was about the amount of the appellant's severance pay, as the parties had already agreed that the appellant would be paid severance pay and that his employment had been terminated for operational requirements, which was by definition, a dismissal.

[23]

Regarding the calculation of severance pay, the arbitrator concluded as follows: "[66] I made the finding, above, that the duration of the [appellant's] employment with the respondent, for the purposes of section 41(2)...