G4S SECURITY (PTY) LTD V MOTA AND ANOTHER

Case No: 
LC/REV/37/13
Media Neutral Citation: 
[2017] LSLC 1
Judgment Date: 
9 February, 2017
Judge: 
F.M. Khabo

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IN THE LABOUR COURT OF LESOTHO                                                                                                                                                                                                  LC/REV/37/13

HELD AT MASERU

In the matter between:

G4S SECURITY (PTY) LTD                                                                   APPLICANT

and

THABANG JONAS `MOTA                                                                  1st RESPONDENT

DIRECTORATE OF DISPUTE PREVENTION AND RESOLUTION   2nd RESPONDENT

______________________________________________________________________

JUDGMENT

______________________________________________________________________

DATE : 09/02/17

Severance pay - Review of an arbitral award - Where the Arbitrator had ordered that the employer pay severance pay over and above the provident fund that the employee had already received - In circumstances where the employer possessed an exemption certificate at the material time, the validity of which was never challenged by the employee - The Court finding the Arbitrator to have failed to apply her mind to the fact that an exemption certificate existed and the employer could not pay both proceeds from the provident fund and severance pay -  The award is reviewed and set aside.

FACTUAL BACKGROUND

1. Facts in this matter are substantially common cause. The 1st respondent was engaged as a Bank Marshall by Fidelity Services Group Lesotho (Pty) Ltd (hereinafter referred to as Fidelity Services) on 13th May, 2003, a company which was eventually bought over in 2007 by G4S Security (Pty) Ltd (hereinafter referred to as G4S), the present applicant. The latter absorbed the employees of the former Company. Of particular relevance to this case is that Fidelity Services administered a provident fund scheme on behalf of its employees which included the 1st respondent and possessed an exemption certificate obtained under Section 79 (7) of the Labour Code (Amendment) Act, 1997 which provides that:-

Where an employer operates some other separation benefit scheme which provides more advantageous benefits for an employee than those that are contained in subsection (1) he may submit a written application to the Labour Commissioner for exemption from the effect of that subsection.

2. The Section provides further in Subsection (9) that:-

If upon considering an application under subsection (7) the Labour Commissioner is satisfied that the scheme operated by the employer offers better advantages to the employee, the Labour Commissioner shall exempt the employer from the effect of subsection (1).

Subsection (1) of Section 79 of the Labour Code Order, 1992 relates to the payment of severance pay and reads:-

An employee who has completed more than one year of continuous service with the same employer shall be entitled to receive, upon termination of his or her services, a severance payment equivalent to two weeks’ wages for each completed year of continuous service with the employer.

3. In 2009, the applicant opted out of the provident fund scheme it had inherited from Fidelity Services and paid to the 1st respondent, among others, proceeds amounting to Twenty - Seven Thousand, Three Hundred and Seventy - Two Maloti, and Twenty - Seven Cents (M27 372.27). In October, 2012, the 2nd respondent resigned from the applicant’s employ and claimed his severance pay from the inception of his employment with Fidelity Services in 2003 to 2009 when the applicant ceased to operate the provident fund scheme. On relinquishing the scheme, the applicant had paid its employees benefits from the provident fund but had withheld severance pay by virtue of possession of the exemption certificate.

4. There appears to have been no problem with the payment of severance pay from 2010 when the applicant abandoned the provident fund scheme to 1st respondent’s resignation in 2012. What was in issue was 1st respondent’s claim of severance pay from 2003 when he started working to 2009 when the scheme was stopped. The applicant’s defence was its possession of an exemption certificate during the period in question. When parties could not come to an agreement, the 1st respondent lodged his claim with the Directorate of Dispute Prevention and Resolution (DDPR) and was granted a ruling in his favour.[1]The import of the learned Arbitrator’s decision was essentially that the 1st respondent was entitled to both the proceeds from the provident fund plus severance pay from 2003 to 2009. Dissatisfied with this ruling, the applicant sought to review this decision.

APPLICANT’S CASE

5. The applicant contended that the 1st respondent was not entitled to the amount of severance pay claimed on the ground that they had inherited the exemption certificate from the payment of severance pay from Fidelity Services when they took over in 2007, and that they had paid the applicant his proceeds from the provident fund as it offered more advantageous benefits than severance pay. They argued that the learned Arbitrator’s award was unreasonable and failed to take cognisance of the exemption certificate which was never challenged at any stage by the 1st respondent. They contended that the learned Arbitrator committed the following irregularities:-

  1. That she failed to take into consideration that a payment amounting to Twenty- Seven Thousand, Three Hundred and Seventy- Two Maloti Twenty- Seven Cents (M27 372.27) had already been paid to the 1st respondent when his employment was terminated with Fidelity Services; and

     

  2. That she failed to take into account the prejudice that the applicant was likely to suffer in that it would pay twice.

They prayed that the award of the (DDPR) in A1154/12 be reviewed and set aside. In reaction, 1st respondent’s Counsel argued that what the applicant had instituted was not a review as they are contending that the learned Arbitrator came to a wrong conclusion and are not complaining about the procedure. He insisted that the 1st respondent was entitled to both the proceeds of the provident fund and severance pay. He therefore prayed that the review application be dismissed with costs.

EVALUATION OF THE CASE

6. Dates are very critical in this case. There is no dispute that when the applicant took over Fidelity Services in 2007, it inherited both its assets and liabilities including its staff. Clearly, this included the exemption certificate acquired by Fidelity Services.  Ms. Winnie Adoro, applicant’s Human Resource Manager had this to say in her evidence before the DDPR (quoted verbatim) :-[2]

It is true Mr `Mota worked for G4S after Fidelity was bought by G4S the whole company of Fidelity Cash Services was bought by G4S they bought their major shares so G4S took over in their selling agreement, it was agreed that G4S buys Fidelity which includes assets, clients, employees and their entire service period. Among that the new company (G4S) bought was the Provident Fund which already continued at Fidelity when the fund was born in 2003. Fidelity applied for exemption from payment of severance pay in this agreement the workers thought it best that Fidelity terminates the contract with the old company, but this was not part of the agreement between the two companies just their time of work and what they accumulated for their leave days...

7. This evidence was unrefuted. There was no dispute that the provident fund scheme was done away with by the applicant in 2009. The provident fund scheme having ceased to exist in 2009, and by extension the exemption certificate, the 1st respondent was clearly only entitled to severance pay from when the scheme ceased to operate up to his retirement in 2012. The learned Arbitrator appeared to have dwelled on whether 1st respondent’s employment was terminated in 2009 when the applicant ceased to operate the provident fund and paid over its proceeds to its employees or not.[3]This in our opinion was neither here nor there in the determination of the issue that was before her. Normally, proceeds from provident fund schemes or pension schemes are payable on termination of employment but in the circumstances of this case payment was made simply because the applicant had ceased to operate the provident fund scheme and the administrator of the scheme had to pay over whatever proceeds had accumulated to its rightful beneficiaries.

8. The legal framework regarding severance pay is clear as enunciated in paragraph 1 above. Facts are not in dispute. What is at stake is the application of the law to the facts.  The 1st respondent argued that it is not unheard of for a person to be paid both severance pay and provident fund even were an exemption certificate existed, He relied for this proposition on the decision of this Court in Ben Heqoa v Browns Cash & Carry and Another,[4] among others. This case is distinguishable from the current one. In the Heqoa case, the applicant had challenged the validity of the exemption certificate on the basis that it had been retrospectively applied to him. The exemption certificate had been issued when the applicant had already resigned. The Court held that retrospectivity undermined the principle of legality. In casu, the 1st respondent never challenged the validity of the exemption certificate before the DDPR such that the learned Arbitrator would have pronounced herself on the issue.

9.  Also in Telecom Lesotho (Pty) Ltd v Leche[5] the Court of Appeal upheld the Labour Appeal Court’s decision declaring the exemption in question invalid on the basis that the respondent had not been given a hearing before it was granted. The Court based its decision on the audi alterum partem rule of natural justice. The Court of Appeal underscored that whether a hearing is necessary or not will depend on the facts of each particular case[6]. As aforesaid, the validity of the exemption certificate was never an issue in the present case. Since the applicant was in possession of an exemption certificate when he stopped the provident fund scheme he could only pay what provided more advantageous benefits as envisaged by Section 79 (7) of the Labour Code (Amendment) Act, 1997 between the provident fund scheme and severance pay due to the 1st respondent. It is apparent that the former provided more benefits hence the employer opted for it.

WHETHER THE MATTER IS REVIEWABLE

10. It is worth mentioning that 1st respondent’s Counsel had raised a number of points in limine in his answering papers, but only pursued one in which he contended that the applicant had lodged an appeal disguised as a review. As it is, this Court has no appeal powers over decisions of the DDPR. The applicant has challenged the learned Arbitrator’s decision on the grounds of unreasonableness in ordering the payment of severance pay in circumstances where there was an exemption certificate and the employee had already been paid his dues under the provident fund scheme. Section 228 F (3) of the Labour Code (Amendment) Act, 2000 as amended by the Labour Code (Amendment) Act, 2006 gives this Court power “to set aside an award on any grounds permissible in law and any mistake of law that materially affects the decision.This includes common law grounds of review, as they form part of “grounds permissible in law.

 

UNREASONABLENESS AS A GROUND FOR REVIEW

11. It was held in Theron v Ring Van Wellington Die NG Sendingkerk[7] that unreasonableness of a decision per se was not a sufficient of review. The unreasonable had to be so gross and disturbing so as to indicate something approaching arbitrariness, mala fides, or the like. The decision in Theron’s case opened the way for a less stringent test. Decisions were subsequently set aside on review where, although the decision could be not be categorised as grossly unreasonable, it appeared that the decision - maker had taken into account irrelevant considerations or had ignored relevant ones. In such circumstances, the decision could be set aside under the Court’s common law power of review on the basis that the decision - maker had failed to properly apply his or her mind to the matter. The ambit of the grounds of judicial review have therefore been widened to include the concept of “failure to apply one’s mind” on the part of the decision - maker. This concept has been developed extensively over the years.

12. Thus the Court held in Johannesburg Stock Exchange and Another v Witwatersrand Nigel Ltd and Another[8]  that in order to establish review grounds it may have to be shown that the tribunal failed to apply its mind to the relevant issues in accordance with the “behests of the statute and the tenets of natural justice. Such failure may be shown by proof, inter alia, that the decision was arrived at arbitrarily or capriciously or mala fide or as a result of unwarranted adherence to a fixed principle or in order to further an ulterior or improper purpose; or that the tribunal misconceived the nature of the discretion conferred upon it and took into account irrelevant considerations or ignored relevant ones, or that the decision was so grossly unreasonable as to warrant the inference that the  presiding officer had failed to apply his or her mind to the matter in the manner aforestated. This case has been cited with approval in a number of authorities including the Labour Appeal Court case of Lesotho Electricity Corporation v Liteboho Samuel Ramoqopo and Another[9] and JD Trading (PTY) LTD t/a Supreme Furnishers v M. Monoko and Two Others.[10] Theron’s case was quoted with approval in Standard Bank of Bophuthatswana Ltd v Reynolds NO and Others.[11] 

13. In evaluating this case, we find the learned Arbitrator has failed to properly apply her mind to the case that was before her in ordering that the 1st respondent be paid severance payment despite the existence of an exemption certificate whose validity was never challenged.

ORDER

  1. That the 1st respondent is only entitled to the payment of severance pay from 2010 when the provident fund scheme ceased to operate up to 2012 when he resigned and not from his assumption of duty in 2003 as he claims, because he had already received his proceeds under the provident fund scheme that ended in 2009. This is if it has already not been paid;

     

  2. The DDPR award in A1154/12 is therefore reviewed and set aside; and

     

  3. There is no order as to costs.

 

THUS DONE AND DATED AT MASERU THIS 09TH DAY OF FEBRUARY, 2017.

 

 

    F.M. KHABO

PRESIDENT OF THE LABOUR COURT OF LESOTHO

 

 

S. KAO                                                                                                                          I CONCUR

ASSESSOR

 

M. MOSEHLE                                                                                                                I CONCUR

ASSESSOR

 

 

FOR THE APPLICANT           :  ADV., M. RAFONEKE - ASSOCIATION OF LESOTHO EMPLOYERS

                                                   AND BUSINESS   

FOR THE 1st RESPONDENT :  ADV., M.J. RAMPAI - PHOOFOLO CHAMBERS

 

ANNOTATIONS

STATUTES REFERRED TO

Labour Code (Amendment) Act, 2006

Labour Code (Amendment) Act, 2000

Labour Code (Amendment) Act, 1997

Labour Code Order, 1992

 

CITED CASES

Ben Heqoa v Browns Cash & Carry and Another LC/REV/331/06

Telecom Lesotho (Pty) Ltd v Leche C of A (CIV) No. 20/2010

Lesotho Electricity Corporation v Liteboho Samuel Ramoqopo and Another LAC/REV/121/05

JD Trading (PTY) LTD t/a Supreme Furnishers v M. Monoko and Two Others LAC/REV/39/04

Johannesburg Stock Exchange and Another v Witwatersrand Nigel Ltd and Another 1988 (3) SA 132 (A)

Theron en Andere v Ring Van Wellington van Die NG Sendingkerk in Suid - Africa en Andere  1976 (2) SA 1 (A)

Standard Bank of Bophuthatswana Ltd v Reynolds NO and Others 1995 (3) BCLR 305 (B)

 

 

 

 

 

 

 

 

[1] Paragraph 12 of the award.

[2] P. 25 of the DDPR record

[3] Paragraph 9 and 10 of the award

[4] LC/REV/331/06

[5] C of A (CIV) No. 20/2010

[6] Paragraph 11 of the judgment

[7] 1976 (2) SA 1 (A)

[8] 1988 (3) SA 132 (A) at 152 A-E

[9] LAC/REV/121/05

[10] LAC/REV/39/04

[11] 1995 (3) BCLR 305 (B)