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IN THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Reportable
Case No: 450/99
In the matter between:
FEDLIFE
ASSURANCE LIMITED Appellant
and
HENDRIK JOHANNES
WOLFAARDT Respondent
Coram: Howie, Marais, Mpati, JJA, Nugent
and Froneman, AJJA
Heard: 16 August 2001
Delivered: 18 September 2001
Damages for repudiation of fixed-term employment contract – if not whether such claim excluded by Labour Relations Act No 66 of 1995 – if not, whether Labour Court has exclusive jurisdiction in respect of such a claim.
J U D G M E N T
NUGENT, A J A:
[1] The Labour
Relations Act No. 66 of 1995 has created an elaborate and in many respects
innovative legal framework for the regulation
of the relationship between
employers and employees. In some respects, however, the Act retains and builds
upon concepts and principles
that were developed by the courts when interpreting
the Labour Relations Act 28 of 1956 which it repealed.
[2] The
1956 Act (after its amendment in 1979) created a statutory remedy for the
commission of what was referred to as an “unfair
labour practice”
which was soon interpreted by the courts to include the unfair dismissal of an
employee (Brassey: Employment Law Vol. 1 A1:47). The effect of that
interpretation was to recognise the existence of a right not to be unfairly
dismissed and such
a right is now expressly provided for in s 185 of the 1995
Act.
[3] The 1995 Act also establishes a Labour Court as a superior
court with “authority, inherent powers and standing, in relation
to
matters under its jurisdiction, equal to that which a court of a provincial
division of the (High) Court has in relation to the
matters under its
jurisdiction” (s 151(2)). In some matters the jurisdiction of the Labour
Court is exclusive while in others
its jurisdiction is concurrent with that of
the High Court. We are concerned only with the Labour Court’s exclusive
jurisdiction
which is conferred upon it by s 157(1) in the following terms:
“Subject to the Constitution and section 173, and except where this Act provides otherwise, the Labour Court 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.”
[4] The
issue in the present case purports to be whether the respondent’s action
against the appellant is a matter that falls
within the exclusive jurisdiction
of the Labour Court and is thus excluded from the jurisdiction of the High
Court. On closer examination,
however, the question goes further and calls upon
us to decide whether the respondent’s claim is legally cognisable at all.
[5] The appeal arises from an action that was instituted by the
respondent against the appellant in the Witwatersrand Local Division
of the High
Court in which he claimed damages for breach of contract. The claim is singular
only in that the contract is one of
employment. In his particulars of claim the
respondent alleged that the contract was for a fixed term of five years
commencing on
1 December 1996 and that the appellant repudiated the contract by
purporting to terminate it with effect from 31 December 1998 on
the grounds that
the respondent’s position had become redundant. The respondent alleged
that he had elected to accept the
appellant’s repudiation (with the result
that the contract came to an end) and he claimed damages in consequence of the
breach.
[6] The appellant filed a special plea the material portions
of which read as follows:
“2. In terms of Section 157(1) of the Labour Relations Act No 66 of 1995, the Labour Court has exclusive jurisdiction in respect of all matters that must be determined by the Labour Court and all matters that in terms of any other law are to be determined by the Labour Court.
3. The Labour Court in the premises has exclusive jurisdiction to adjudicate dismissals occasioned by operational requirements in terms of Section 191(5) and Section 189 of the Labour Relations Act.
4. In the premises the above Honourable Court does not have jurisdiction to adjudicate the dispute between the parties by virtue of the fact that the Labour Court has exclusive jurisdiction to adjudicate same.”
[7] The respondent
excepted to the special plea on the grounds that it failed to disclose a
defence. The exception was upheld and the
special plea was set aside by
Odendaal AJ who considered himself bound by the decision in Jacot-Guillarmod
v Provincial Government, Gauteng, and Another 1999(3) SA 594 (T) which was
on all fours with the present case. The appellant now appeals to this court with
leave granted by the
court a quo.
[8] The only question
that was considered in Jacot-Guillarmod’s case , and by the court
a quo, was whether an action for contractual damages arising from the
repudiation of a contract of employment was a matter that fell within
the
exclusive jurisdiction of the Labour Court as provided for in s 157(1) of the
1995 Act. However, the principal argument that
was advanced before us went
considerably further and was rather in the nature of an exception to the
particulars of claim. The
main submission on behalf of the appellant was that
an action of that nature is no longer cognisable in our law and that the
employee
concerned (in this case the respondent) has no remedies other than
those provided for in Chapter VIII of the 1995 Act. If that is
indeed so then
clearly those remedies are not enforceable in the High Court.
[9] Before turning to that argument it is helpful to briefly
summarise the rights and remedies that are provided for in Chapter VIII
of the
1995 Act. The foundation of the chapter, which deals with “Unfair
Dismissals”, is s 185, which provides that
“every employee has the
right not to be unfairly dismissed”. The remaining sections expand upon
the content of that
right and prescribe the procedures and remedies for its
enforcement.
[10] An employee who claims to have been unfairly
dismissed may refer the dispute to a statutory council or to the Commission for
Conciliation
Mediation and Arbitration (whichever is appropriate in the
particular case) which must attempt to resolve the dispute through conciliation
(s 191(1) and (4)). If the dispute is not resolved through conciliation it
must be resolved by arbitration in some cases or it
may be referred to the
Labour Court for adjudication in other cases depending upon the nature of the
dismissal (s 191(5)). If the
Labour Court or the arbitrator finds that the
dismissal was unfair the employer may be ordered to reinstate or to re-employ
the employee
(such an order must be made in certain cases) or to pay
compensation (s 193(1)). Section 194 places limits on the amount of
compensation
that may be awarded. Where the dismissal was automatically unfair,
as that term is used in the 1995 Act, or it was based upon the
employer’s
operational requirements and is found to be unfair, the Labour Court may in
addition make any other order that it
considers appropriate in the circumstances
(s 193).
[11] The principal argument advanced on behalf of the
appellant was that Chapter VIII of the 1995 Act codifies the rights and remedies
that are available to all employees in our law arising from the termination of
their employment. In other words, so it was submitted,
the effect of the 1995
Act has been on the one hand to confer on employees the rights and remedies
provided for in Chapter VIII in
the event of dismissal and on the other hand to
deprive them of their common law remedies. The chapter is thus said to be not
only
comprehensive but also exhaustive insofar as it provides for remedies upon
dismissal. Support for that construction of the Act was
sought in what was
referred to as its broad scheme rather than in any of its particular provisions.
It was submitted that the material
inroads made by the legislature upon the
right of employers to terminate contracts of employment in accordance with their
terms must
necessarily have been intended to be balanced by the abrogation of
employees’ rights to enforce such contracts at common law
either by way of
claiming specific performance or by way of claiming
damages.
[12] In effect, according to that submission, the common
law right to enforce a fixed-term contract of employment has been abolished by
the 1995 Act. Such a contract must then take its place alongside any other
employment contract that may be terminated at the employer’s
will provided
the termination does not constitute an unfair dismissal as contemplated by
Chapter VII of the 1995 Act.
[13] The clear purpose of the
legislature when it introduced a remedy against unfair dismissal in 1979 was to
supplement the common law
rights of an employee whose employment might be
lawfully terminated at the will of the employer (whether upon notice or
summarily
for breach). It was to provide an additional right to an employee
whose employment might be terminated lawfully but in circumstances
that were
nevertheless unfair.
[14] That position was perhaps ameliorated
with the adoption of the Interim Constitution in 1994 which guaranteed to every
person the
right to fair labour practices in s 27(1) and rendered invalid any
law inconsistent with its terms (which has been repeated in the
present
Constitution). Thus it might be that an implied right not to be unfairly
dismissed was imported into the common law employment
relationship by s 27(1) of
the Interim Constitution (and now by s 23(1) of the present Constitution) even
before the 1995 Act was
enacted.
[15] However there can be no
suggestion that the constitutional dispensation deprived employees of the common
law right to enforce the
terms of a fixed-term contract of employment. Thus
irrespective of whether the 1995 Act was declaratory of rights that had their
source in the Interim Constitution or whether it created substantive rights
itself, the question is whether it simultaneously deprived
employees of their
pre-existing common law right to enforce such contracts, thereby confining them
to the remedies for “unlawful
dismissal” as provided for in the 1995
Act.
[16] In considering whether the 1995 Act should be
construed to that effect it must be borne in mind that it is presumed that the
legislature
did not intend to interfere with existing law and a fortiori,
not to deprive parties of existing remedies for wrongs done to them. A statute
will be construed as doing so only if that appears
expressly or by necessary
implication (Stadsraad van Pretoria v Van Wyk 1973 (2) SA 779 (A) at 784
D-H). While the advent of the Constitution, and s 39(2) in particular, has
not had the effect of prohibiting
entirely the use of the presumption against
legislative alteration of the existing law (whether common law or statute) when
interpreting
a statute which is less than clear, it nevertheless limits its
field of application. The same is true of the presumption against
the
deprivation of existing rights. To illustrate: where a statute is ambiguous as
to whether or not an existing law or right has
been repealed, abolished or
altered and the existing law or right is not in harmony with “the spirit,
purport and objects of
the Bill of Rights” there would appear to be no
justification for invoking any such presumption. But where the existing law
or
right is not unharmonious the presumption will still find application. The
continued existence of the common law right of employees
to be fully compensated
for the damages they can prove they have suffered by reason of an unlawful
premature termination by their
employers of fixed-term contracts of employment
is not in conflict with the spirit, purport and objects of the Bill of Rights
and
it is appropriate to invoke the presumption in the present case.
[17] The 1995 Act does not expressly abrogate an employee’s
common law entitlement to enforce contractual rights and nor do I think
that it
does so by necessary implication. On the contrary there are clear indications
in the 1995 Act that the legislature had
no intention of doing
so.
[18] The clearest indication that it had no such intention is
s 186(b) which extends the meaning of “dismissal” to include
the
following circumstances:
“(A)n employee reasonably expected the employer to renew a fixed term contract of employment on the same or similar terms but the employer offered to renew it on less favourable terms, or did not renew it.”
It is significant that although the
legislature dealt specifically with fixed-term contracts in this definition it
did not include
the premature termination of such a contract notwithstanding
that such a termination would be manifestly unfair. The reason for
that is
plain: The common law right to enforce such a term remained intact and it was
thus not necessary to declare a premature
termination to be an unfair dismissal.
The very reference to fixed-term contracts makes it clear that the legislature
recognized
their continued enforceability and any other construction would
render the definition absurd. By enacting s 186(b) the legislature
intended to
bestow upon an employee whose fixed-term contract has run its course a new
remedy designed to provide, in addition to
the full performance of the
employer’s contractual obligations, compensation (albeit of an arbitrary
amount) if the employer
refuses to agree to renew the contract where there was a
reasonable expectation that such would occur. That being so, it would be
strange indeed, and bereft of any rationality, for the legislature to deny to
the employee whose fixed term contract of five years
has been unlawfully
terminated within days of appointment the benefit of either specific performance
of the contract or damages for
its premature termination and to confine the
employee to the limited and entirely arbitrary compensation yielded by the
application
of the formula in s 194 of the 1995 Act. It is manifest that the
result would be that the former employee, although in far less
need than the
latter of a remedy, will have received more than is due at common law, but that
the latter may not recover as of right
even that which was payable at common law
and instead must rest content with “compensation” which may be
ludicrously
small in comparison with the true loss. The absurdity does not end
there. If it were so that a plaintiff such as this is confined
to a claim for
“compensation” in terms of s 194, where the employer proves that
“the reason for dismissal is a
fair reason related to the employee’s
conduct or capacity or based on the employer’s operational
requirements”
and “that the dismissal was effected in accordance
with a fair procedure” the plaintiff would not be entitled to any
compensation. That would be the combined effect of s 188(1)(a) and (b); s 192;
s 193 and s 194. Such a result could never have
been the intention of the
legislature.
[19] Moreover, s 195 makes it clear that an order or
award of compensation in consequence of an unfair dismissal is “in
addition
to and not a substitute for any other amount to which the employee is
entitled in terms of any law, collective agreement or contract
of
employment”. It was submitted on behalf of the appellant that the
“other amounts” referred to in that section
are those amounts that
might have accrued to an employee at the time of the dismissal, such as accrued
wages, leave pay and the like,
and do not include damages for breach. I can see
no reason to restrict the plain words of the section in that
manner.
[20] I can see no reason why the legislature should have
sought to produce that result. A right not to be unfairly dismissed finds its
application pre-eminently in circumstances in which the employee has no
contractual security of employment. While it is understandable
that the
legislature wished to enhance the security of that class of employees I can see
no reason why it should have exacted a prejudicial
quid pro quo from
another class of employees entirely in order to do so. In my view there is
simply no logical or conceptual connection between
the rights that have been
afforded on the one hand and those that are said to have been abolished on the
other.
[21] We were much pressed with the contention that,
although the respondent plainly intended to plead a common law claim for damages
arising
from the unlawful premature repudiation of the fixed term contract and
studiously abstained from reliance upon an “unfair labour
practice”
and making a claim for “compensation” within the meaning of the 1995
Act, but also pleaded the employer’s
professed reason for the repudiation
as being its operational requirements, he was confined to the remedies set forth
in s 194 of
the Act. Counsel for appellant submitted that whether or not
respondent intended that was irrelevant; he could not escape being
confined to
s 194 by the manner in which he chose to plead his claim. Khumalo v
Potgieter 2001 (3) SA 63 (SCA) was said to be authority for the submission.
In my view it is not. It appears plainly from the judgment in
that case that it
was common cause that “the appellant’s claimed entitlement to
continued occupation of a portion of
the farm in question is based solely
[my emphasis] on the Act”. (At 66 B.) There was no other basis in law
for the claim. As the Court said at 67E:
“In order to succeed with prayer 1, the appellant had to found her case on the provisions of the Act. This is what she in fact did, even though she did not expressly refer to the terms of the Act.”
In the
present case a clearly identifiable and recognisable common law claim for
damages has been pleaded. The disclosure of the
employer’s professed
reason for repudiating the contract was mere surplusage and did not signal a
resort to a claim under Chapter
VIII.
[22] In my view Chapter VIII
of the 1995 Act is not exhaustive of the rights and remedies that accrue to an
employee upon the termination
of a contract of employment. Whether approached
from the perspective of the constitutional dispensation and the common law or
merely
from a construction of the 1995 Act itself I do not think the respondent
has been deprived of the common law right that he now seeks
to enforce. A
contract of employment for a fixed term is enforceable in accordance with its
terms and an employer is liable for
damages if it is breached on ordinary
principles of the common law.
[23] There remains the question
whether the respondent’s action for contractual damages is nevertheless a
matter that falls within
the exclusive jurisdiction of the Labour Court in terms
of s 157(1). The appellant’s counsel submitted in the alternative
that it
does.
[24] If an employee, as here, accepts repudiation and
cancels, the Labour Court would not order reinstatement or re-employment (see s
193 (2)). That would leave compensation under s 194. S 194(1) allows punitive
compensation only and s 194 (2) is limited to a year’s
remuneration.
Having deliberately set those restrictions, it seems difficult, if not
impossible, to infer that the legislation intended
(notwithstanding the
apparently limitless scope of s 158 (1)(a)(vi) and s 193 (3)) that the 1995 Act
itself should nevertheless provide
the employee with the full balance of the
common law damages as well. Absent such intention, s 195 must surely
contemplate that
for such balance (recovery of which it, in terms, allows) an
employee is free to sue in the civil courts. No doubt s 77 (3) of the
Basic
Conditions of Employment Act 75 of 1997 subsequently conferred concurrent
jurisdiction on the Labour Court but that is not
what is in issue in the present
case.
[25] Furthermore s 157(1) does not purport to confer
exclusive jurisdiction upon the Labour Court generally in relation to matters
concerning
the relationship between employer and employee. Some of the
implications were recently discussed by Zondo, JP in Langeveldt v Vryburg
Transitional Local Council and Others [2001] 5 BLLR 501 (LAC). Its
exclusive jurisdiction arises only in respect of “matters that elsewhere
in terms of this Act
or in terms of any law are to be determined by the Labour
Court”. Various provisions of the 1995 Act identify particular
disputes
or issues that may arise between employers and employees and provide for such
disputes and issues to be referred to the
Labour Court for resolution, usually
after attempts at conciliation have failed (see for example sections 9, 24(7),
26, 59, 63(4),
66(3), 68(1), 69 etc). In my view those are the
“matters” that are contemplated by s 157(1) and to which the Labour
Court’s exclusive jurisdiction is confined (though there may be some
debate in particular cases as to their ambit: See for
example Mondi Paper
(A Division of Mondi Ltd) v Paper Printing Wood & Allied Workers’
Union & Others (1997) 11 ILJ 84 (D); Coin Security Group (Pty) Ltd v
SA National Union for Security Officers and Other Workers & Others 1998
(1) SA 685 (C)).
[26] The only provisions relied upon in the present
case in support of the submission that the respondent’s action is such a
“matter”
were the provisions of Chapter VIII. Section 191 provides
that “a dispute about the fairness of a dismissal” may be
referred
to the appropriate body for conciliation. If it is not resolved it may
thereafter be referred to the Labour Court for adjudication
if the dismissal was
based on the employer’s operational requirements.
[27] Whether a particular dispute falls within the terms of s 191
depends upon what is in dispute, and the fact that an unlawful dismissal
might
also be unfair (at least as a matter of ordinary language) is irrelevant to that
enquiry. A dispute falls within the terms
of the section only if the
“fairness” of the dismissal is the subject of the employee’s
complaint. Where it is
not, and the subject in dispute is the lawfulness of the
dismissal, then the fact that it might also be, and probably is, unfair,
is
quite coincidental for that is not what the employee’s complaint is about.
The dispute in the present case is not about
the fairness of the termination of
the respondent’s contract but about its unlawfulness and for that reason
alone it does not
fall within the terms of the section (even assuming that the
termination constituted a “dismissal” as defined in Chapter
VIII).
In those circumstances the respondent’s action is not a
“matter” that is required to be adjudicated by
the Labour Court as
contemplated by s 167 (1) and the special plea was correctly set
aside.
[28] The appeal is dismissed with costs which are to
include the costs occasioned by the employment of two counsel.
_______________
R W Nugent,
AJA
Howie JA)
Marais JA)
Mpati JA) concur
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