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CASE NO:450/99
In the matter between:
FEDLIFE ASSURANCE LIMITED APPELLANT
and
WOLFAARDT H J RESPONDENT
CORAM : HOWIE, MARAIS, MPATI, JJA,
NUGENT and FRONEMAN AJJA
DATE OF HEARING : 16 AUGUST 2001
DATE OF
JUDGMENT : 18 SEPTEMBER 2001
Damages for repudiation of fixed-term
employment contract – whether such claim excluded by Labour Relations Act
No 66 of 1995
– whether Labour Court has exclusive jurisdiction in respect
of such claim.
JUDGMENT
FRONEMAN AJA
[1] I have read the judgment of Nugent
AJA. To my regret I am unable to agree with some of the reasoning and its
eventual result. I shall
attempt to set out my reasons for coming to that
conclusion as succinctly as I am able to.
[2] One of the
primary objects of the Labour Relations Act 66 of 1995 (the Act) is to give
effect to and regulate the fundamental labour
rights conferred by the
Constitution (section 1(a)). Another is to promote the effective resolution of
labour disputes (section 1(d)(iv)).
The Act’s provisions must be
interpreted to give effect to its primary objects and in compliance with the
Constitution (sections
3(a) and 3(b)). The Constitution is thus a good place to
start any enquiry on the interpretation and application of the Act. The
Constitution is also a good place to start when one looks at the common law
contract of employment. The general reason for this is
that we have only one
system of law and, in the final analysis, the Constitution always determines the
nature and ambit of that law
(Pharmaceutical Manufacturers Association of SA:
In re Ex parte President of the RSA 2000(2) SA 674 (CC) para [44] at
696B-C). This remains the case even when it is found that the common law is not
affected by our new
constitutional dispensation: such a conclusion derives its
validity from the very fact that the Constitution allows that kind of
autonomy.
Perhaps that is stating the obvious, but it is still relatively early on in our
attempt at a constitutional democracy and
lest we too easily assume that kind of
autonomy without constitutional sanction, I think it may help to reiterate the
central importance
of the Constitution in that regard. Once it becomes the
common understanding of our law it may no longer be necessary to do so.
[3] Prior to the acceptance and enactment of the Constitution,
our law maintained a rigid distinction between a common law contract of
employment, which was said to have nothing to do with fairness, and a statutory
labour dispensation, which had much to do with fairness.
In commenting on the
inquiry under the unfair labour practice jurisdiction of the old industrial
court under the provisions of the
previous Labour Relations Act 28 of 1956 (the
old Act), Nienaber JA stated the following in National Union of Metalworkers
of SA v Vetsak Co-operative Ltd 1996(4) SA 577 (AD) at 592F-H
:
“The most one can do is to reiterate that there are two sides to
the inquiry whether the dismissal of a striking employee is
an unfair labour
practice, the one legal, the other equitable. The first aspect is whether the
employer was entitled, as a matter
of common law, to terminate the contractual
relationship between them – and that would depend, in the first place, on
the seriousness
of its breach by the employee. The second aspect is whether the
dismissal was fair – and that would depend on the facts of
the case. There
is no sure correspondence between unlawfulness and fairness. While an unlawful
dismissal would probably always be
regarded as unfair (it is difficult to
conceive of circumstances in which it would not), a lawful dismissal will not
for that reason
alone be fair....”
[4] In my view the Constitution has a material impact on that
particular conceptual distinction between the proper domain of contract
and that
of the statute, namely that the former has little to do with fairness, whilst
only the latter has (I must emphasize that
I am dealing only with the contract
of employment and labour legislation – what effect the Constitution may
have on the law
of contract generally, or other legislation, is not relevant for
present purposes). Section 23(1) of the
Constitution[1] provides that everyone
has the right to fair labour practices. It seems to me almost uncontestable that
one of the most important
manifestations of the right to fair labour practices
that developed in labour relations in this country was the right not to be
unfairly
dismissed. Had the Act not been enacted with the express object to give
effect to the constitutional right to fair labour practices
(amongst others),
the courts would have been obliged, in my view, to develop the common law to
give expression to this constitutional
right in terms of section 39(2) of the
Constitution. To the extent that the Act might not fully give effect to and
regulate that
right, that obligation on ordinary civil courts remains (compare
Grogan, Workplace Law, 6th ed, at 13-15; Key Delta v
Mariner [1998] 6 BLLR 647 (E) at 651G-J; Naptosa v Minister of Education,
Western Cape Government 2001(4) BCLR 388 (C) at 396B-C). It is my view of
the effect of the Constitution on our common law of employment that compels me
to a different conclusion than that of Nugent AJA in this
matter.
[5] The facts that one has to accept for the purposes of
determining the exception to the special plea are these:
The respondent
entered into a contract of employment with the appellant for a fixed period of
five years. Prior to the expiry of the
five-year period the appellant purported
to terminate the contract on the basis that the respondent’s position had
become redundant.
The respondent construed this as a fundamental breach of
contract, in the form of an unlawful anticipatory repudiation, and purported
to
accept the repudiation, thereby bringing the contract to an end. He contends
that his claim, as formulated in the particulars
of claim, has nothing to do
with, and does not rely on, any unfair dismissal, and that therefore the
provisions of the Act relating
to dismissals in general and unfair dismissals in
particular are inapplicable. In this I think he errs.
[6] At
this stage it may be appropriate to refer to the provisions of the Act that are
material and relevant, apart from those general
provisions concerning the
Act’s primary objects and how it should be interpreted that I have already
referred to.
[7] Section 185 provides that every employee has
the right not to be unfairly dismissed. Section 186(a) of the Act defines a
dismissal
for the purposes of the Act’s application. Dismissal includes
the fact that “an employer has terminated a contract of
employment with or
without notice”(section 186(a)), as well as when “an employee
terminated a contract of employment
with or without notice because the employer
made continued employment intolerable for the employee” (section 186(e)).
An employee
is defined in section 213 as “any person, excluding an
independent contractor, who works for another person or for the State
and who
receives, or who is entitled to receive, any remuneration”. Sections 187
to 189 make provision for, respectively, automatically
unfair dismissals, other
unfair dismissals, and dismissals based on operational requirements. Section 190
makes specific provision
for the date when a dismissal is considered to come
into effect. Of particular importance is section 191(1) which prescribes the
procedure “[i]f there is a dispute about the unfairness of a
dismissal...” . Section 192 deals with the onus in such procedures
whilst sections 193 and 194 prescribe the remedies for unfair dismissals and
the
limits on the compensation that may be awarded in regard thereto. Finally,
section 195 provides that “[a]n order or award of compensation made in
terms of this Chapter is in addition to, and not a substitute for, any other
amount
to which an employee is entitled in terms of any law, collective
agreement or contract of employment”.
[8] In
my view there can be little doubt that the facts set out in para. 5 above
clearly bring the respondent within the definition
of “employee” in
section 213 of the Act, and the termination of his employment within the
definition of “dismissal”
in section 186. The crucial initial
question is thus whether the dispute about the termination of his contract is a
dispute “about
the fairness of a dismissal” under section 191(1) or
not. If it is not, the appeal must fail. If it is, further issues need
to be
considered, namely whether the fact of his fixed-term contract entitles him to
“any other amount” under section
195, besides the statutory
compensation he may be entitled to, and, if so, which is the correct forum to
determine that issue.
[9] It is important, at this stage, to
emphasize that what is in issue here is narrow and very particular: namely
whether the dispute
resulting in the dismissal of an employee, following upon an
unlawful repudiation of the employment contract by his employer, is
a
“dispute about the fairness of a dismissal” under section 191 of the
Act. The Act does not purport to confer jurisdiction
on the dispute resolution
agencies created by it in general terms. Its structure “is rather to
identify particular disputes,
or issues, which may arise, and to provide for
those particular disputes or issues...” (per Nugent J in Eskom Ltd v
NUM (2000) 22 ILJ 618 (W) at 621 C-D. Both the Labour Court and the
High Courts have grappled with the jurisdictional problems relating to these
issues and the result
is not harmonious (an exhaustive reference to the cases is
to be found in Langeveldt v Vryburg Transitional Local Council &
Others [2001] 5 BLLR 501 (LAC) at 510-522)).
[10] Is the
present dispute a dispute about an unfair dismissal? It certainly appears to me
to be the case. In ordinary terms, untrammelled
by legal interpretation, it
seems unfair that one party to a bargain should be allowed to go back on his
word by dismissing someone
before the promised time for the termination of his
contract of employment arrives. Nienaber JA gave expression to that underlying
sentiment when, in NUMSA v Vetsak Co-operative Ltd, above [3], he noted
that it is difficult to conceive of circumstances where an unlawful dismissal
would not also be unfair. I have
already indicated that in my view the right not
to be unfairly dismissed is a particular concretized form of the constitutional
right
to fair labour practices. If that premise is correct then one can only
argue that the present dispute is not one about an unfair
dismissal if the
provisions of the Act do not comprehensively deal with this constitutional right
and if the right not to be unfairly dismissed does not form part, in any
way, of the common law contract of employment. In my view that
is not the case
in either instance.
[11] The express provisions of the Act
relating to dismissals are wide-ranging and comprehensive in nature. The scheme
of the Act in
relation thereto starts with the primary objects already referred
to, namely to give effect to and regulate the constitutional labour
rights and
to promote the effective resolution of labour disputes. The first section of
chapter 8 of the Act gives expression to
one of these fundamental rights by
providing that every employee has the right not to be unfairly dismissed
(section 185). The definition
of “dismissal” of an employee goes
beyond the mere termination of employment to include those instances where a
reasonable
expectation of further employment exists (section 186(b)) and
instances of constructive dismissal(section 186(e)), of which the acceptance
by
an employee of an unlawful repudiation of the contract by the employer is but an
example (Jooste v Transnet Ltd (1995) 16 ILJ 629 (LAC) at 636-638).
The further sections then regulate how dismissal disputes are to be resolved
and set out the remedies available in those disputes.
Included amongst them is
the right to enforce a bargain which entitles an employee to any amount greater
than the statutory compensation
allowed for under the Act (section 195).
[12] It is true that the Act does not define what an
“unfair” dismissal is, but that is understandable given the many
forms
that unfairness can take and the jurisprudence that has already
crystallized on this issue under the unfair labour practice provisions
of the
old Act. It is also true that the Act has drastically interfered with a number
of aspects of the common law contract of employment
– a fact readily
acknowledged by Mr. Gauntlett, who, together with Mr. Halgryn, appeared for the
appellant. The result, he
argued, is that in some instances the position of
employees is enhanced and in others the position of employers. There may be a
debate
about who, on balance, is better off in the end, but if there is
complaint in that regard the constitutionality of the restrictions
must be
tested under section 36 of the Constitution ( compare Naptosa v Minister of
Education, above, [4], at 395 E-F ). Generally speaking, however, employees
have gained much that they did not previously have. Their primary
remedy now is
reinstatement, which must be ordered unless specified conditions exist (sections
193(1)(c) and 193(2)). It is in this
context, so Mr. Gauntlett submitted, that
the statutory remedies, including the limits set to the amount of compensation
in section
194 of the Act, must be viewed.
[13] Neither side,
however, referred to the provisions of section 195 in their written heads of
argument. Its terms offer further support,
in my view, of the Act’s
purpose to deal comprehensively in Chapter 8 with all dismissals from employment
of employees under
the Act (but it does not help the appellant’s
contention that compensation under section 194 is all that the respondent is
entitled to). It may be an objectionable feature of the statute if it deprives
employees, on dismissal, of the right to enforce bargained
terms in their
contracts of employment that would put them in a better financial position than
that which the statute itself provides
for. Section 195 ensures that this may
not occur (compare the similar approach in section 4 of the Basic Conditions of
Employment
Act 75 of 1997 (the BCE Act) ).
[14] The
judge in the court below characterized the issue to be decided in broad and
general terms as “whether or not the ordinary
civil courts, having regard
to the LRA, retained their jurisdiction to adjudicate common law contractual
breaches of agreements of
employment”. From what I have already stated it
should be clear that I consider the issue to be much narrower and more specific.
He also set store by the fact that there was no express exclusion in the Act of
the common law claim to damages and that the presumption
against taking away
existing rights operated against an interpretation that the Act impliedly did
so. In my view these considerations
are misplaced. The Act does not purport to
change the pre-constitutional common law by expressly mentioning each and every
aspect
of it that it wishes to change. It deals with specific issues and states
expressly what the law now is in regard to those issues.
To determine to what
extent the common law was changed by that one has to compare these express
provisions with what the common law
was and determine the extent of the changes
wrought by the Act. The presumption against taking away existing rights also
presupposes
a common law contract of employment free of the spirit and values
underlying constitutionalised labour rights (The use of common
law presumptions
in such a context may prove problematical – compare J R de Ville,
Constitutional & Statutory Interpretation, Cape Town, 2000, at
62-69). . I would imagine that our law of employment, infused with these values,
would make provision both for
a system that guarantees that employees may be
entitled to claim as their financial due that which they bargained for, over and
above
basic statutory entitlements, as well as for a right not to be unfairly
dismissed. I happen to think that this is what the Act
(and the BCE Act in a
different context) achieves, albeit perhaps not to the fullest extent possible.
However, even if I am wrong
in viewing the Act as dealing comprehensively with
these issues, I am of the view that the common law contract of employment must
then give some form of expression to that fundamental right not to be unfairly
dismissed. As soon as the common law does give some
expression to that right, I
have the same kind of difficulty as Nienaber JA had in National Union of
Metalworkers of SA v Vetsak Co-operative Ltd, above [3], namely to conceive
how an unlawful dismissal would not also be an unfair dismissal. And if such a
dismissal is unfair
any dispute about it falls squarely within the opening words
of section 191(1) of the Act. In short, one of the demands of the
Constitution
on our common law of employment is that it includes a right to a fair dismissal.
Dismissal upon an unlawful breach of
contract by an employer is an unfair
dismissal. And the Act deals fully with the consequences of an unfair
dismissal.
[15] The respondent’s claim is capable
of being seen as a claim for a monetary benefit that he bargained for and is
entitled to under
section 195 of the Act in addition to the compensation that
may be awarded under section 194, namely as damages in lieu of specific
performance (compare De Wet and Van Wyk, Kontraktereg en Handelsreg,
5th ed, 208-212). For present purposes it is not necessary to decide
whether his claim comfortably fits within the traditional formulation
of that
kind of claim under the common law of contract, or whether some adaptation will
be necessary to enable it to be so accommodated,
but only to determine which
forum is competent to determine that issue.
[16] Once it is
accepted that this particular dispute is one about the fairness of a dismissal
it follows that it must be dealt with
in accordance with the procedure set out
in section 191 of the Act, a procedure which in one way or another ends up with
the Labour
Court (and on appeal, the Labour Appeal Court) having the final say.
The Labour Court has the competence to award damages (section
158(1)(a)(vi) ),
if that is what is called for under section 195 of the Act. The present case
thus becomes a matter to be determined
by the Labour Court in terms of the Act
and also, by virtue of the provisions of section 157(1) of the Act, a matter to
be determined
exclusively by that court.
[17] Mr. Pretorius, who
appeared for the respondent with Mr. Antonie sought to avoid this conclusion by
relying on section 77(3) of
the BCE Act . That section provides that the Labour
Court has concurrent jurisdiction with the civil courts to hear and determine
any matter concerning a contract of employment, irrespective of whether any
basic condition of employment constitutes a term of an
agreement. This, he
submitted, gives the High Court concurrent jurisdiction with the Labour Court to
determine this matter. In my
view the submission is unsound. The High Court does
not need the BCE Act to give it jurisdiction in a matter concerning a contract
of employment. It has that residual competence in any event, although it may be
attenuated by statutory provisions such as section
157(1) of the Act. What
section 77(3) does is to give the same residual concurrent competence to the
Labour Court, something that
court does not enjoy without specific statutory
authority.
[18] In my view, therefore, the exception to the
special plea should have been dismissed. I would allow the appeal with costs,
including
the costs of two counsel, and substitute the order in the court below
with the following:
“The exception is dismissed. The defendant’s
special plea is upheld, and the plaintiff’s claim dismissed, with
costs”.
___________________
FRONEMAN AJA
[1] Section 27(1) of the interim Constitution Act 200 of 1993 had similar provisions.
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