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Van Tonder v Lesotho Highlands Development

Case No: 
LAC/CIV/APN/6/04
LC/41/03
Media Neutral Citation: 
[2006] LSLAC 8
Judgment Date: 
26 October, 2006
Judge: 
Peete

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                                                                             LAC/CIV/APN/6/04

                                                                                      LC/41/03

 

 

IN THE LABOUR APPEAL COURT OF LESOTHO

 

 

In the matter between:-

 

 

THABO WILLIAM VAN TONDER                                 APPLICANT

 

 

and

 

 

LESOTHOHIGHLANDS DEVELOPMENT

AUTHORITY                                                                    RESPONDENT

 

 

JUDGMENT

 

 

CORAM    :         THE HON. MR JUSTICE S.N. PEETE

 

PANELLISTS:    MESSRS MAKHETHA and MOFELEHETSI

 

DATE             :           26TH OCTOBER, 2006

 

 

Summary

 

Labour Law –A fixed term contract – Several Renewals. Whether non-

renewal constitutes unfair dismissal. Section 62 of the Labour Code Act 1992.

 

Where an employer in a fixed term contract decides not to extend such

contract, such non-renewal does not amount to an unfair dismissal unless there was legitimate expectation that a fixed term contract would be renewed or extended.

Introduction

 

1.                 This is an appeal from the decision of the Labour Court delivered on the 28th day of April 2004 dismissing the applicant’s case as being without merit.

 

2.                 In his originating application before the Labour Court, the applicant (present appellant) had alleged inter alia the following –

 

(a)   That the respondent had engaged him on a three year contract

       running from the 1st October 1998 as head of Litigation and

      General Legal Services Branch.

 

(b)  Per letter dated 12th July 1999 the respondent confirmed the

       employment contract after a three month probation.

 

(c)    That after the said three year contract expired, the applicant

        received a letter from respondent extending the applicant’s

        contract for eighteen 18 months – ending 31st March 2003.

 

(d)   That another completely new contract (not annexed to the

        bundle) and “presented” to applicant and was duly and later

        signed by respondent and applicant on 5th October 2001 and

        9th October 2001 respectively.

 

(e)    That on the 1st April applicant received a letter from

        respondent for extending the contract another three (3)

        months ending 30th June 2003. The terms and conditions

        otherwise remained the same.

 

(f)     That per letter dated 13th June 2003 the applicant was

        nominated to a management team that was tasked with the

        transformation and reorganization of the LHDA and to

        consult with the affected employees in the process.

 

 

(g)     Problems for applicant began when he received the letter from

        respondent dated 1st July 2003 and at the end of this letter the

        applicant appended his signature. The letter reads:-

 

        “Lesotho Highlands Development Authority

          P.O. Box 7332

          MASERU 100

          Lesotho

 

          Ref   :   HR/390/03/CO                                    1July 2003

          File   :   LHDA/CONF/P/802

 

          Mr Thabo Van Tonder

          Section Head: Litigation and General

          Legal Services Branch

          Corporate Service Group

          LHDA

          Maseru – 100

 

        Thru:  General Manager: Corporate Service Group

 

        Dear Mr Van Tonder,

 

       NOTIFICATIN OF CONTRACT EXTENSION – THABO

       VAN TONDER

 

        In view of the Lesotho Highlands Water Commission’s query

        that the motivation for the renewal of your contract did not

        include specific tasks and time frames as well as hourly time

        sheets as required, the Project Authorities could only approve

        extension of your contract by one month i.e. to end of July

        2003 while a properly structured and adequate motivation is

        resubmitted for their consideration.

 

        The resubmission of a motivation for the renewal of your

        contract is in process and you will be advised of the outcome

        in due course.

 

 

 

        In the meantime, this letter of contract extension by one

        month with no change in other terms and conditions of your

        employment takes effect today, Tuesday 2 July 2003.

 

        Please confirm here below, your acceptance of the extension

        of your contract of employment to 31 July 2003 ad return the   

        signed copy to the Human Resources Branch.

 

                                  Yours sincerely

 

                        __________________

                                   R. TLALI

                 “ ACTING CHIEF EXECUTIVE”

 

(h)   It is clear that any purported renewal of applicant’s

        engagement beyond June 2003 had been querried by the

        Lesotho Highlands Water Commission because specific tasks

        and time frames as well as hourly time sheets had not been

        included.

 

(i)       It was quite clear that that the applicant’s engagement was to

        end on the 31st July 2003 upon the understanding that

        resubmission of a motivation of contract was in process

        and applicant would be advised of the outcome in due

        course.

 

(j)       On the 4th August 2003, applicant wrote a letter to the Chief

Executive of LHDA in which he complained that he had been     

warned by his Manager that when he reported to duty on the

1st August 2004he did so on his “own risk”. In the letter the

applicant noted that he had been reporting for work after the

1st August “upon expectation that the extension or otherwise

of his contract was being processed and that he would be

advised of the outcome in writing in due course.”

 

Applicant’s letter dated 4th August 2003 reads:-

 

 

 

 

                          “Confidential

 

                                                       P.O. BOX 13774

                                                        MASERU 100

 

 

                                                       4TH AUGUST 2003

 

 

The Chief Executive

LHDA

P.O. Box7332

MASERU100

 

ufs                               …………………………

                                   E R Mapetla

                                   GM-CSG

 

                                   …………………………

                                   K. Mophethe

                                   Legal Service Manager

 

Dear Sir,

 

                Re: EXTENSION OF MY CONTRACT

 

On the 3rd July, I received a letter Ref: HR/390/03/CO (File   

LHDA/CONF/P/812) dated 1st July 2003 from the then

Acting Chief Executive to the Effect that “The resubmission

of a motivation for the renewal of your contract is in process

and you will be advised of the outcome in due course”. Copy

of the letter is attached hereto for ease of reference.

 

Whilst waiting to be advised of the outcome as promised, my

Manager called me in this morning and advised of the

extension of my contract, I am reporting at work at my own

risk. She advised me further that I am consequently not going

to be paid for the month of August.

 

You will note, sir, that I have been reporting at work and

carried out my duties with the expectation that the extension

or otherwise of my contract is being processed, and that I

would be advised of the outcome in writing when that process

is concluded. You will agree with me that what my Manager

correctly advised, that I am here at my own risk, as I would

not be paid for the month of August, means that my contract

has not been renewed, but I have not been so advised to date

of the outcome of the process as promised.

 

I consequently still trust that my case is still being   

considered, but, in the face of the likelihood of not receiving

my salary for August, and the hardships attendant thereto, I

would humbly request that I be advised of my fate as a matter

of urgency.

 

Please also note that the contract had already been extended

for three months from April to June 2003, and that the July

extension was the second extension for one month.

 

                          Yours faithfully,

 

                __________________

                W T VAN TONDER

       “SECTION HEAD – LITIGATION & GENERAL

 

 

(k)   It was only in a letter dated 25th August 2003 (some three

   weeks later) in which the applicant was advised by the Chief

   Executive of Respondent that Applicant’s employment with

   the LHDA would come to the end at the end of August 2003

   and payment of certain monies were offered as entitlements.

 

(l)       It is also common cause that the Lesotho Highlands Water

Commission had in the meantime addressed itself to LHDA Chief Executive thus:-

 

 

 

 

 

             “The Chief Executive

               Lesotho Highlands Development Authority

               P O Box 7332

               Maseru

 

              Dear Sir,

 

              CONTRACT EXTENSIONS – LEGAL BRANCH

 

Please refer to the following documentation in respect of contract extension within the legal Branch:

 

(a)             LHWC letter, ref. SEC/LHDA/2741, dated 28 April 2003;

 

(b)             LHWC letter, ref. SEC/LHDA/2741, dated 09 June 2003;

 

(c)              LHDA letter, ref. HR/367/03/CO, dated 19 June 2003;

 

The Commission reviewed the information submitted in relation to the four individuals for whom contract extensions are requested (i.e. Mr T. van Tonder, Mr S. Mathe, Mrs T. Matshikiza and (Ms M.L. Mosakeng).

 

The Commission already, in its letter dated 9 June 2003, addressed the extension of Ms. Mosakeng. The additional information provided to the Commission in respect of the three professionals, if anything, supports the argument that the LHDA does have excess capacity that is not applied effectively. The LHDA is requested to, based on the organization’s requirements and each individual’s expertise, select two individuals from the three candidates to be extended to the end of the financial year taking congnizance of individual (s) who can give meaningful input in Mohale Tunnel Claims. The extension periods are consistent with other extensions granted and does not pre-empt the recommendations of the Organization and Manpower Study.

The LHDA is requested to select the most appropriate two candidates before the end of August 2003.

 

Yours faithfully,

 

C. Mwakalumbwa

COMMISSION SECRETARY

 

cc:     GOL Delegation

                    RSA Delegation

                    Mr R. Mapetla – GM Corporate Services”

 

      

(m)  Also attached to the papers is a twenty three paged document

titled “Staff Separation Policy and Procedure (dated 27th January 1999). It is a document that covers matters of staff policy and principles, retrenchment procedures, payment packages, and privileges.

                    

3.                 In the main, the respondent’s answer to the applicant’s claim is to the effect that the applicant was not at all unfairly dismissed but submit that his extended fixed term contract expired on the affluxion of time on the 31st July 2003 and that this was not any case of unlawful termination and further that applicant had no legitimate expectation about extension to entertain; and that there was no need to give applicant any notice that his employment with LHDA had come to an end. The respondent refutes the applicant’s contention that an offer made to him on 13.06.03 to participate in the reconstruction management team created a legitimate expectation that his fixed contracts would continue being extended (ad infinitum). One should however note at once that the tenor of this letter dated 13.06.03 is explicit that it was a mere nomination to the management team – the terms and “conditions of the basic extended contract remaining the same.

 

4.                 Indeed his 18 months contract (para 4) stipulates that the applicant may be called to do other work/duties that may reasonably expected of him. In fact the very Mrs R. Tlali Acting CEO of LHDA wrote a very clearly worded letter dated 1st July 2003 indicating that in view of the Lesotho Highlands Water Commission’s query the applicant’s engagement with the LHDA was being extended “by one month” … as from Tuesday 2nd July 2003; and on the 3rd July 2003 the applicant appended his signature accepting the one month’s extension “with no changes in other terms and other conditions of (your) employment.”

 

5.                 Understandably, when the month of July came to an end, both parties had to “cross the Rubicon”. Indeed on the 4th August 2003 the applicant wrote to the Chief Executive of the LHDA [see para 2 (j) (supra)]:

 

6.                 While the applicant’s position was thus in a limbo, certain events took place at the offices of LHDA and certain witnesses were called by this court to establish the true factual position. At issue was whether a new contractual relationship came into being when the applicant continued to report himself at LHDA offices with the expectation that the “extension or otherwise” of his contract was being processed.

7.                 The applicant’s fate was soon sealed when on the 25th August 2003 the CEO of LHDA Mr Potloane wrote thus to applicant (probably after receiving the letter from LHWC dated 4th August 2003) –

 

“August 25, 2003

 

 

Mr Thabo Van Tonder

C/O LHDA

P.O. Box7332

MASERU100

 

 

THRU  :   GM – Corporate Services Group   _____________

                                                                   E R MAPETLA

 

Dear Mr. Van Tonder

 

SUBJECT: CONFIRMATION OF TERMINATION OF EMPLOYMENT – MR THABO VAN TONDER

 

You will kindly recall that your contract of employment with the Lesotho Highlands Development Authority was extended by one month to 31 July 2003 while the Legal Services Branch re-submitted the motivation for renewal of your contract of employment to the Lesotho Highlands Water Commission, (the Project Authorities), whose response has since been received.

 

You have been personally informed by the Manager: Legal Services Branch in discussions she held with you on 13 August that the Project Authorities were unable to justify the extension of both the two persons in your section beyond this month.

 

As the Manager: Legal Services Branch explained, your contract expired on 31 July 2003 and was only extended to the end of the month whilst awaiting the Project Authorities decision. Ms Matshikiza’s current contract on the other hand is still valid to end of October 2003. Therefore, the choice of which one of you has to remain was made by this factor.

 

Accordingly, this letter serves to formally confirm that regrettably, your employment with the LHDA will come to an end at the end of this month.

 

Upon termination of your employment you will be entitled to:-

 

(i)                Cash payment in lieu of six (6) leave days, you have earned during this leave year but have not yet taken;

 

(ii)             Statutory severance for the period you have been in continuous employment with the LHDA which dates back to 1 October, 1998 less any moneys outstanding to the LHDA (if any); and

 

(iii)           Refund of your superannuation contribution as administered by Nedbank Lesotho (Pty) Ltd.

 

I wish to take this opportunity to thank you for the contribution you have made to the success of the Lesotho Highlands Development Authority and to wish you well in your future endeavours.

 

                                  Yours sincerely

 

                                  _________________

                                  E. L. POTLOANE

                                  CHIEF EXECUTIVE”

 

8.                 It should be noted that this letter was in effect terminating the applicant’s services with immediate effect and also informing him that his contract could no longer be extended and informing him also of his cash entitlements.

 

9.                 Mr Ramosehlana Mapetla – both in his affidavit and in evidence before this court confirmed that whereas he knew that the applicant’s contract would come to an end on the 31st July 2003, he however reassured the applicant that he applicant would receive the August salary because the LHTC had not as yet decided upon the applicant’s retention and further extension of his contract. “His was a contract for a fixed term ….and did not require any notice of termination,” he explained.

 

10.            In his evidence the applicant told the court that on the 1st August 2003 he nevertheless reported for duty fully knowing that his contract had expired on the previous day and that reacting to his presence, Mrs Mophethe had informed him that if he reported for duty he did so on is own risk.

 

11.            It is the applicant’s case that once his contract was not extended on the 31st July 2003 his contract automatically relocated and a new indeterminate contract “kicked into action”. He claims that Potloane’s letter dated 25th August 2003 constituted a wrongful and an unfair dismissal; moreover, so the applicant submits, the LHDA retrenchment procedure as documented in the Staff Separation Policy and Procedure had been violated and against the LHDA “last in first out” principle; he strenuously argued that he was discriminatorily axed out from the legal section and that he was otherwise denied consultation – and he was not afforded any fair hearing before the CEO decided not to extend his contract.

 

12.            Somewhat of importance is the clause 3.3 of the applicant’s second contract (dated 1st October 2001) for 18 months. Clause 3.1 for instance reads:-

 

“3.1  The Contract shall subsist for a period of eighteen (18) months and shall come into effect on 1 October 2001, and shall automatically terminate on 31 MARCH 2003 and no notice of such termination shall be required of either Party, in accordance with Section 62 (3) of the Labour Code Order 1992.

 

3.2            …………………

 

3.3            If on the other hand, the services of the Employee are still required beyond the termination date of this Contract, the Parties may agree to extend the Contract for another specified period and on such terms and conditions as may be agreed between the Parties, whereupon, the LHDA shall advise the Employee THREE month/months in advance that his/her services shall be required for the extended period. Provided, where such advance notice is not given, then the provisions of subsection 3.1 shall apply.”

 

 

13.            Salient in the facts of this case is that this 18 – month contract automatically ended on March 30th, 2003 and was later extended to June 30th and again renewed to the end of July 2003. It is not in dispute that the applicant voluntarily agreed to the shortening of the respective durations of his contract until being offered a one month’s extension in June 2003. Applicant himself agrees that the three months notice in clause 3.3 in the original contract had in fact been waived.

 

14.            He contends however that Mr. Mapetla’s pious and considerate reassurances gave rise to some legitimate expectations that another renewal would come about.

 

15.            For purposes of this judgment, I will hold in the applicant’s favour that he was at work on the 1st August 2003 (probably a Friday) and again on Monday the 4th August and until he received the letter from the CEO terminating his services on the 25th August 2003.

 

16.            It is common cause that during this period (2003) the LHDA was gradually reducing its workforce due to the successful completion of the Phase I of the Project. It was a critical period of transformation and reorganization and review of existing contractual relationships with many senior and junior personnel. The very downsizing of duration periods of the applicant’s extended contracts supports the view that fixed term contract would automatically end on the agreed dates unless renewed. Mrs Mophethe – a Senior Supervisor or Legal Officer then at LHDA had this to say:

 

“…General expectation was that once one’s fixed term contract ended if not renewed, it meant the contract had terminated…”

 

17.            She informed the court that when she met the applicant at the LHDA offices on the 4th August 2003 she asked him why he had reported for duty as his contract had terminated and also telling him that he worked at his own risk.

 

18.            She explained further that LHWC had decided to reduce the legal professionals and that since Ms Matzhikiza’s contract was still valid till October 2003 and that Mr. Mathe’s contract in the construction field was not affected and that the axe had unfortunately fallen on the month-to-month contract of the applicant.

 

19.            She stressed that applicant’s appointment to the Team was an internal and functional directive that did not affect the foundational contractual relationship between the applicant and LHDA and had no cause to raise any expectations that applicant’s contract was to be renewed once more till the Team had completed its task.

 

20.            Restructuring of staff and re-organization and/or retrenchment are basically what is often described as “operational requirements” of the organization; section 66 of the Labour Code 1992 is only relevant to those employees who are currently being contractually employed and it has no bearing to a situation where the contract comes to an end and the employer elects not to renew. Section 62 (3) of the Code reads:-

 

“62. (3)       A contract for one period of fixed duration shall

set forth its date of termination. Such contract shall subject to the provisions of section 66 concerning dismissal, automatically terminate on that date and no notice of termination shall be required of either party.

 

      (4)         ……………….”

 

21.            In this case renewal was not automatic; this fact is supported by the several renewal offers and acceptances. What was on the other hand automatic was the expiration of the extended contract in the sense that the employer did not have to do or say anything at the date of affluxion save, out of courtesy, to advise the employee that the contractual relationship was at end.

 

22.            In cases of affluxion of time in a fixed term contract, allegations of nepotism or favouritism, even if probable, do not help the employee whose fixed term contract is not renewed. Only bitterness can remain.

 

23.            One should be careful in the use of word/jargon under the Code. A contract “expires” on the fixed date – it does not terminate. A contract – whilst it is extant may be terminated lawfully or wrongfully. See Consolidated France Cotton Corporation  vs President Industrial Court 1985 ILJ 7. Non-renewal of a fixed term contract cannot amount to a termination of contract because upon affluxion of time no contract exists. An existing and current contract can be terminated for various reasons by either party. See Code, section 63. And where there exists a legitimate expectation that a contract will be renewed, non-renewal may amount to an unfair dismissal (Code 3 of Good Practice - 2003).

 

24.            In view of the fact since the last contract which the applicant had personally agreed upon and signed ended on the 31st July 2003, it was incumbent upon the applicant to show on a balance of probabilities that during the month of August 2003, a cognizable contractual relationship (ex lege) existed between himself and the LHDA – such relationship should not be confused with an ex gracia situation where the employer suffers (allows) the employee to continue to work. As already stated, I decide this point in applicant’s favour mainly because the LHDA’s attitude during August 2003 was ambivalent and reticent. Applicant did however receive his August salary.

 

25.            Mr Van Tonder, the applicant, has strongly relied upon an International Labour Organization Recommendation No.166 (3) which recommends that a contract of specific period should become a contract of indeterminate duration if it has not been renewed. This Recommendation (its generosity and benevolence aside) flies in the face of section 62 (3) of the 1992 Labour Code which speaks of automatic termination. In my view section 62 (3) is not ambiguous, and the ILO Recommendation is therefore not applicable (see Section 4(c) of the Code).

 

26.            In our view, the applicant was never dismissed – what in fact happened was that his fixed term contract of one month surely expired. In the particular circumstances of the applicant’s case, neither legitimate expectation nor audi alteram partem can be entertained because his contract under the then operational requirements of LHDA was a contract which  reduced in duration from the initial 3 years, then to 18 months, then to three months and then to one month. See Ludwick  vs  Samca 1993 (2) SA 197 where Khumalo J. who dealt with the two issues of legitimate expectation and audi alteram partem. See also Lunt  v  University of Cape Town 1989 (2) SA 438; Langeni  v  Minister of Health  -  1988 (4) SA 93 where Goldstone J. said:-

 

“The person exercising the power of dismissal is not required to have anything against the employee. He may wish to employ someone else or he way wish to reduce the size of the work-force …”

 

27.            In our view, these learned words apply with equal force in a case where an employer elects for whatever legitimate reason not to renew a fixed term contract. The fact that the fixed term contracts had been extended (renewed for several times) in no way conferred an additional right, interest or legitimate expectation upon the applicant. As Khumalo J in Ludwick’s case reasoned: “To read this into a contract would amount to introducing something into the contract which was never intended by the parties”. See also Seloadi and Others  v  Sun International Bophuthatswana – 1993 (2) SA 174.

 

28.            What the LHDA CEO did on the 25 August 2003 was to inform the applicant that that the road had ended and the contract would no longer be renewed. It was by no means a termination of applicants services without notice as vigorously contended by the applicant. The expiration of a fixed term contract requires no announcement or notice; it required no audi alteram partem; it has ex contractu and ex lege consequence.

29.            We are of the view that section 65 of the Labour Code does not come to the assistance of the applicant because section 65 refers to “termination” of contract without reference to limit to time. This section 65 (2) reads thus:-

 

“If upon any termination as provided under sections 63 and 64 the employer suffers the employee to remain, or the employee without the express dissent of the employer continues in employment after the day on which the contract is to terminate, such termination shall be deemed to be cancelled and the contract shall continue as if there had been no termination, unless the employer and employee have agreed otherwise.” (our underline)

 

30.            In the circumstances of this case, we hold that applicant had no legitimate expectation that at the end of August 2003, his contract would again be renewed or that he ought to have been afforded opportunity before LHDA decided no longer to renew.

 

31.            We hold however that a month’s notice should have sufficed. In exercise of our discretion, it is ordered therefore that Appellant be paid his monthly salary for September 2003. The application is otherwise dismissed. Each party to bear its own costs.

 

                                             ___________________________

                                                           S.N. PEETE

JUDGE OF THE LABOUR APPEAL COURT

 

 

Panellist:     __________________________      Iagree

 

Panellist:     __________________________      I agree

 

 

For Applicant      :         Mr T. Van Tonder

For Respondent   :         Mr Mathe