In Perumal v Clover SA (Pty) Ltd [2021] 11 BLLR 1143 (LC), the employee, employed by Clover SA (the Company), was invited to participate in retrenchment consultations.
During the consultation process, the employee requested a breakdown of his severance package.
Thereafter, a manager of the Company issued the employee with a letter, alleged to be an ‘agreement’, in terms of which it was stated that the employee was to be retrenched and setting out the severance package that the employee would receive.
The Company subsequently withdrew the letter, claiming that it had been erroneously issued to the employee.
The Company reiterated to the employee that his employment had not been terminated and that the consultation process was continuing with a view to establish whether there were alternatives to avoid retrenchment.
Thereafter, the Company decided that there was no need to retrench the employee and advised the employee that his position would no longer be affected by the proposed restructuring.
The employee sent correspondence to the Company indicating that he did not accept the withdrawal of the ‘agreement’ and that the Company was required to pay him the severance package.
The employee thereafter refused to report for duty. As a result, the Company instituted disciplinary action against the employee, and he was subsequently dismissed.
Six months later, the employee instituted an application in the Labour Court (LC) to have the ‘agreement’ made an order of court in terms of section 158(1)(c) of the Labour Relations Act 66 of 1995 (the LRA).
The court noted that s 158(1)(c) of the LRA empowers the LC to make an arbitration award or settlement agreement an order of court. This section must be read with s 158(1A) of the LRA, which defines a settlement agreement as a written agreement in settlement of a dispute that a party may refer for arbitration or for adjudication to the LC. Section 158(1)(c) accordingly does not oblige the LC to make a settlement agreement an order of court. The court has a discretion to do so but may not do so if the agreement does not comply with the criteria set out in s 158(1A).
The question was thus whether the ‘agreement’ satisfied the criteria set out in section 158(1A) of the LRA and should be made an order of court. In this regard, the employee submitted that the agreement should be made an order of court as it concerned a matter that is capable of being arbitrated as it involved a retrenchment. In turn, the Company submitted that the employee was not retrenched and that the agreement accordingly did not seek to settle any dispute.
Applying the criteria set out in section 158(1A), the court found it highly improbable that the Company would have continued with the consultation process if it had agreed to retrench the employee. Furthermore, the facts indicated that the Company had made it clear to the employee that he had not been retrenched and that there was no agreement to justify the termination of his employment. Thereafter, the employee returned to work and was paid his salary. The court struggled to understand how the employee could have interpreted the factual position as one where he had been retrenched.
In the circumstances, the employee had failed to demonstrate that there was a dispute that was settled relating to a retrenchment. The court found that absent a retrenchment, there could be no dispute, let alone one that the employee was entitled to refer to arbitration or adjudication by the court. As the ‘agreement’ did not satisfy the criteria set out in s 158(1A) of the LRA, the court held that it did not have the discretion to make the agreement an order of court.
The application was dismissed.
Nadine Mather
