IN THE
INDUSTRIAL COURT OF SWAZILAND
HELD AT
MBABANE
In the matter
between:
CASE NO.
358/03
SAMUEL M.
DLAMINI…………………….APPLICANT
And
VILAKATI AND
PARTNERS
MEDICAL SERVICES
(PTY) LTD ……….RESPONDENT
CORAM
NKOSINATHINKONYANE:
ACTING JUDGE
GILBERT
NDZINISA: MEMBER
DAN MANGO:
MEMBER
FOR THE
APPLICANT: MR. DAVID MSIBI
FOR THE
RESPONDENT: MISS LORRAINE ZWANE
JUDGEMENT -
23.11.2005
This is an
application for determination of an unresolved dispute in terms of
Section 85(2) of the Industrial Relations Act No. 1 of 2000 (as
amended).
The applicant is
a former employee of the respondent, a medical practice based in
Manzini.
The applicant
claims that he was constructively dismissed by the respondent. He now
seeks an order that the respondent pays him terminal benefits and
compensation for the dismissal which he says was unfair and unlawful.
The applicant in
his statement of claim stated that he was employed by the respondent
as a Chief Radiographer on 15 July 1992. He said he was earning
E4,820:00 per month. He said he was in continuous employment by the
respondent until 22 May 2003. He stated that on or about 30 October
2002 he got a letter of dismissal on grounds of dishonesty. He said
he appealed and was successful. On appeal it was ordered that the
hearing be re-opened to allow him to cross-examine the main witness.
He said he was never notified about the results of the second
hearing. He stated that the respondent terminated the lease agreement
of the house that he was occupying. He further said his post was
advertised and that all these acts by the respondent showed that he
was no longer wanted there and thus he resigned.
The respondent
in its replies denied that the applicant was constructively
dismissed. The respondent stated that the applicant was dismissed
after sufficient evidence of dishonesty was led against him.
It is not in
dispute that the applicant was the employee of the respondent. The
applicant therefore was an employee to whom Section 35 of the
Employment Act No.5 of 1980 applied. Consequently, the service of the
applicant could only be terminated for reasons permitted by Section
36 of the Employment Act or on any other acceptable common law
ground.
The burden of
proof is on the respondent to show that the reason for the
termination was one permitted by Section 36, and that, taking into
account all the circumstances of the case, it was reasonable to
terminate the service of the applicant.
The evidence led
before the court revealed that the applicant was employed as a
radiographer on 13 July 1992. He resumed his duties on 15 July 1992.
He was promoted to be the Chief Radiographer during that same year.
In terms of his
job description, (annexture "VP 2") he was the head of the
radiology department of the respondent. During 1996 and 1997, the
practice was taken over from Dr. Vilakati by RW1 Dr. Joseph Zama Gama
and Dr. B.L. Shabangu. The practice was transferred to the two
doctors as a going concern.
The workers
continued to work as normal under the new management. The workers
were not involved in the take over process. They were just told later
that new management had taken over. There were told to seek their
terminal benefits from Dr. Vilakati. When they approached him, he
referred them back to the new management.
The court will
deal with this issue of the take over later in this judgement.
The evidence
before the court also revealed that the applicant was dismissed by
letter, dated 30th October 2002. It is important to note
that in that letter of dismissal, the respondent advised the
applicant that if he wished to appeal he could do so within three
working days. The applicant indeed lodged an appeal.
The respondent
therefore was not entitled to treat the applicant as dismissed at
that stage before the outcome of the appeal hearing. On appeal, the
chairman made an order that the disciplinary hearing be reconvened to
enable the applicant to cross-examine the key witness. The effect of
the ruling of the appeal chairman, though the decision was clearly
not elegantly drafted, was that the disciplinary hearing chairman's
decision was set aside.
At the
reconvened hearing the key witness failed to appear. No further
evidence against the applicant was led. The applicant was never
notified of the outcome of the reconvened hearing. Up to the date
that he appeared before the court, the verdict of the reconvened
hearing was not available.
After the
decision of the appeal, the respondent did not allow the applicant to
continue with his work. The respondent however paid the applicant's
salary for November, December 2002 and January 2003.
The applicant
was however not paid his salary for February, March, April and May
2003.
The applicant
said during that period the relationship between him and the
respondent turned sour. The applicant said during that period the
respondent terminated the lease agreement with the landlord at the
place where the applicant was staying. No alternative place of
residence was offered. The applicant was not paid his 13th
cheque. Furthermore, the position of the applicant was advertised,
obviously to replace him. The applicant said that because of this
conduct by the respondent,, it became clear to him that he was no
longer wanted, and he resigned on 22 May 2003.
On behalf of the
respondent RW1 denied that the applicant was forced to resign. RW1
said the applicant was dismissed because of the misconduct of which
he was found guilty by the disciplinary hearing chairman. RW1 said
the lease agreement was cancelled after a verbal agreement between
the parties. RW1 further said that the applicant's post was
advertised because it was agreed between the parties, as it seemed
that they were going to reach an agreement on the exit package of the
applicant.
It is not clear
to the court why the respondent was negotiating a settlement with the
applicant in this matter. If, as the respondent defence was, the
applicant was dismissed for misconduct, why was there any need to
negotiate an exit package of the applicant? Secondly, it is not clear
why did the respondent pay the applicant's salary for November,
December 2002 and January 2003, if according to it, the applicant was
dismissed on 30th October 2002.
The above
conduct of the respondent points at one direction, and one direction
only, namely, that the respondent knew that pending the outcome of
the appeal, the applicant was still its employee and entitled to his
salary.
The court will
reject RWl's story that the termination of the lease agreement and
the advertising of the applicant's post was done by mutual agreement.
The evidence before the court showed that the relationship between
the parties was at its lowest ebb. The respondent was just keen on
getting rid of the applicant in any other way it could after it
failed to locate its key witness. It is highly unlikely therefore
that he could have consented that his post be advertised or that the
lease agreement be terminated as he still considered himself to be
the respondent's employee.
From the manner
the negotiations were going on, it is clear to the court that the
respondent was not fully committed. The only conclusion that the
court can come to is that the respondent only wanted to frustrate the
applicant. The court comes to this conclusion because of the letter
dated 11 December 2002 (annexure "RW1" B) which was written
to the respondent requesting that a meeting be held to find an
amicable solution. The respondent did not respond to that letter.
On 04/02/2003
the respondent wrote a letter to the applicant's representative
wherein it reaffirmed its position that the applicant was dismissed
on 30 October 2002, and also made an offer.
On 7 May 2003 a
letter (exhibit "RW1"C) was again written to the respondent
by the applicant's representative. That letter reads in part as
follows verbatim:-
"We have
made several attempts to meet you by coming to your surgery and by
telephone as we write the unpaid salaries for our client had
accumulated to May 2003.We are instructed by our client that the only
way to cut the issue of salary and rent is when we sign the
memorandum of agreement, which was drawn by the two parties. May we
once again request to meet yourself on Thursday 8 May 2003 at a time
convenient to you. The purpose of the proposed meeting is to go
through the draft of the settlement and sign same."
The contents of
this letter clearly support the applicant's evidence that the conduct
of the respondent towards him was non-committal.
RW2 and RW3's
evidence did not help to advance the respondent's case. These were
junior staff members, that is, a receptionist and a cleaner
respectively. They told the court evidence relating to the accused's
conduct at work. They said that he would leave his office with his
friends sometimes without reporting. RW2 said sometimes he would come
back to work after lunch smelling of liquor and exhibited conduct
that suggested that he was drunk. The applicant was however never
called to a disciplinary hearing for the said conduct.
There were other
misdemeanors alleged to have been committed by the applicant. Again
that evidence was not relevant to the present enquiry. The applicant
was never disciplined for those alleged acts of misconduct.
Furthermore,
even at the pleadings stage the respondent failed to dispute material
allegations by the applicant. In paragraph 4 of the applicant's
statement of claim the applicant said "the applicant was in
continuous employment of the respondent until 22 May 2003." In
response thereto the respondent said,
"Save to
state that the applicant decided to resign as appears on annexture
"SM3" of his application, the allegations contained herein
are admitted."
If the
respondent did not dispute that the applicant was in continuous
employment until 22nd May 2003, it is not clear why then
did it say in court that he was terminated for misconduct on 30
October 2002.
Again, in
paragraph 8 the applicant said, "The respondent refused to allow
applicant to return to work although he was paid November, December,
2002 and January 2003 salaries." In response the respondent
stated that-
"During
that period of time, that is, November 2002 to Januarys 2003 the
respondent tried to offer a consensual termination package, which
however was rejected by the applicant. It is worthy of mention at
this point in time, that the respondent had all the reasons to
terminate the services of the applicant but due to failure to locate
the key witness in the matter, it was considered appropriate to offer
him a package, so that he would leave the company amicable (sic)."
This response
showed, as the evidence in court also revealed, that the applicant's
reason to leave the company was not as a result of the letter of
termination dated 30th October 2002. After the applicant
succeeded on appeal, and the appeal chairman having ordered a
re-hearing, the respondent failed to locate the key witness. The
respondent then had to find another way to get rid of the applicant
as its efforts to get rid of him through lawful means had failed.
The chairman of
the reconvened hearing having failed to bring those proceedings to
finality, that is, hand down his judgement, the respondent was not
entitled to debar the applicant from carrying on with his duties. The
respondent was also not entitled to withhold his salary and advertise
his post as the hearing had not been finalized.
The court will
therefore accept the applicant's evidence that it was the
respondent's conduct of refusing him to resume his duties after the
disciplinary hearing, the cancellation of the lease agreement and the
advertising of his post that forced him to resign. This treatment of
the applicant by the respondent was such that the applicant could no
longer reasonably be expected to continue in his employment. The
court will accordingly come to the conclusion that the applicant has
proved on a preponderance of probabilities that he resigned as the
result of the employer's unlawful conduct. He was therefore unfairly
dismissed.
REMEDY:-
It was argued on
behalf of the respondent that even if it were to be found that
respondent was liable, the liability could only cover the period from
1996 when the new directors took over the practice. The evidence
revealed that between 1996 and 1997 the medical practice was sold to
the new directors as a going concern. The respondent's attorney
relied for her argument on section 33 bis of the Employment Act. That
section provides that:-
"(1) An
employer shall not
(a) Sell his
business to another person; or
(b) Allow a take
over of the business by another person,
Unless he first
pays all the benefits accruing and or due for payment to
the employees at the time
of such sale or take over. " The evidence showed that there was
no written guarantee approved by the Commissioner of Labour, that the
new partners were going to pay all the terminal benefits of the
employees, as required by section 33 bis subsection (2). That
subsection reads as follows:
"Notwithstanding
subsection (1) if the person who is buying the business or taking it
over makes a written guarantee which is understood by and acceptable
to each employee that all benefits accruing at the termination of his
previous employment shall be paid by him within 30 days and by mutual
agreement agreed in writing and approved by the Commissioner of
Labour, subsection (1) shall not apply. "
Subsection (3)
states that -
''An employer
who fails to comply with subsection (1) shall upon conviction, be
liable to a fine not exceeding six thousand Emalangeni or to
imprisonment not exceeding two years or both. "
The evidence in
this case revealed that the business was transferred to the new
management as a going concern. By "going concern" is meant
that the business is not closed down on sale but remains active and
operating before, during and after the transfer to new ownership (See
NEHAWU V. UNIVERSITY OF CAPE TOWN & OTHERS (2000) 4 BLLR 311
(LAC) at pages 325 - 327 and the cases referred to therein.).
The employees
continued to work as normal and in terms of the employment contracts
that they had entered into with the previous management. There was no
break in the operations of the business. The transfer of the
contracts of employment in this case was never an issue. The new
management is therefore estopped from now saying it is not bound by
the contracts of employment that the workers entered into with the
company prior to its taking over as it never entered into new
contracts with the employees.
The respondent
cannot therefore in the circumstances of this case invoke the
provisions of section 33 bis (1) against the applicant. This is
moreso because the workers were never involved or consulted during
the take over negotiations. The workers are not parties to the
contract of sale. The terms and conditions of the contract are not
binding on them.
Dr. Gama in his
evidence in chief said there was a written undertaking to pay the
terminal benefits by the seller as from the date that each of the
employees were engaged by the company. Such document was never
presented to the court. The respondent's attorney during submission
relied on clause five of the memorandum of sale of shares (exhibit
RW1 "A"), for her argument that the respondent was not
liable to pay any terminal benefits to the applicant arising prior to
the take over by the new management.
Clause five of
the agreement of sale states:-
"The seller
undertake to pay any amount due by the company in respect of income
tax, rates and any other known liabilities or claims arising to the
date of the payment of the aforesaid E696,288:00 (six hundred and
ninety six thousand two hundred and eighty eight Emalangeni) and form
that date onwards ...."
The precise
meaning of this clause is not clear to the court. The rest of the
contents were not legible. However, even if this clause was meant to
absolve the respondent from any liability from the payment of
terminal benefits, this was a contract between the new management and
the erstwhile management. How can it be held against the employees
who were not parties to it and were not involved in the transfer
process?
The contract of
sale of the shares is valid only as between Dr. Gama and his partner
(the buyers) and Dr. A.M. Vilakati and his wife (the sellers).
Nowhere in this agreement are the workers mentioned.
The evidence
showed that when the new management told the workers that they had
taken over the business, the workers wanted to know about their fate.
They were assured that they were not going to lose their employment.
The evidence
also showed that Dr. A.M. Vilakati failed to pay the terminal
benefits and the matter was taken to court. It is presently pending
at the High Court. The new management also told the workers to go and
claim their terminal benefits from Dr. A.M. Vilakati. Dr. Vilakati
refused to pay and referred them to the new management. That was the
chance for the new management to take action and set the record
straight about the status of the employment contracts of the
employees.
The new
management cannot approbate and reprobate. On the one hand they were
telling the workers to go and claim their terminal benefits from Dr.
Vilakati, whilst on the other hand they continued to benefit from the
services of the employees on the basis of the employment contracts
that the employees entered into with the previous management.
Furthermore the
applicant was hauled to a disciplinary hearing and was charged with
misconduct. He was found guilty and a letter of dismissal was written
to him. Dr. Gama said such was in line with clause 16 of the
applicant's contract of employment. This contract of employment was
entered into between the applicant and the respondent when the
respondent company was being run by the previous management.
The new
management cannot now say it is not bound to pay the terminal
benefits as from 1992 when the applicant was first employed by the
company as it never entered into a new contract of employment with
the applicant when it took over the company in 1996. It relied on the
terms of that contract of employment when it dismissed the applicant
for misconduct. It cannot in the same breath say it is not bound by
that contract of employment when it comes to the payment of the
applicant's terminal benefits.
It seems to the
court therefore, that section 33 bis can be invoked by the respondent
only if the workers were consulted during the process of the
transfer. In the present case that was not done and the workers did
not have a chance to resign if they did not want to work under the
new management.
Secondly, the
section can be relied upon by the respondent if after the take over
it entered into new contracts of employment with the workers.
The new
management having acquiesced to the taking over of the business with
the existing staff, it is estopped from denying that it is bound by
the contracts of employment of the staff that were in place when they
took over.
Furthermore, the
business retained its identity. It was taken over by the new
management to carry out the same or similar activities on the same
premises.
From the
aforementioned observations the court will come to the conclusion
that the respondent is liable to pay the terminal benefits
(additional notice and severance allowance) calculated as at the date
of the contract of employment between the applicant and the
respondent company.
In considering
the appropriate compensation the court will take into account that
the applicant is presently self-employed. He is 42 years old and is
married with four children. He did not however tell the court how old
these children are. He had worked for the respondent for ten years.
In terms of the
certificate of unresolved dispute, eight issues were in dispute.
These were; arrear wage, 13th cheque, notice, severance,
annual leave, compensation, medical aid re-imbursement and pension
fund re-imbursement. The court will therefore not consider the
additional claims that now appear in the applicants particulars of
claim namely, additional notice and rent/accommodation compensation
as they do not appear in the certificate of unresolved dispute. The
amounts claimed by the applicant were not in dispute. Taking all
these factors into account the court will make an order that the that
the respondent pays to the applicant the following terminal
benefits:-
1. AREAR
SALARIES FOR FEBRUARY
MARCH, APRIL AND
MAY 2003(E4,820:00 x 4) E19,280:00
2. 13th
CHEQUE ……………………………………..E
4,820:00
3. NOTICE PAY00
…………………………………..E
4,820:00
4. SEVERANCE
ALLOWANCE
(90 DAYS X
E158:47 PER DAY) …………………...E14,262:00
5. ANNUAL LEAVE
E12,050:00
6. MEDICAL AID
RE-IMBURSEMENT ………......E
750:00
7. PENSION FUND
RE-IMBURSEMENT ………...E
750:00
The court will also order
the respondent to pay an amount equal to six months salary as
compensation for the unfair dismissal amounting to (E4,820:00 x 6)
=E28,920:00.
The total amount payable to
the applicant therefore will be E85,522:30.
There will be
no order as to costs.
The members agree.
NKOSINATHI
NKONYANE A-J
INDUSTRIAL COURT
