Independent Municipal and Allied Trade Union (IMATU) v Mase and Others (P116/21) [2022] ZALCPE 38; [2022] 12 BLLR 1110 (LC) (16 August 2022)

IN THE LABOUR COURT OF SOUTH AFRICA, PORT ELIZABETH

Not Reportable

CASE NO: P116/21

In the matter between:

INDEPENDENT MUNICIPAL AND ALLIED

TRADE UNION ("IMATU")

Applicant

And

THANDO MASE

(cited herein in his capacity as the

Municipal Manager for the Second

Respondent and in his personal capacity)

First Respondent

MHLONTLO LOCAL MUNICIPALITY

Second Respondent

THE SOUTH AFRICAN LOCAL

GOVERNMENT BARGAINING COUNCIL

Third Respondent

SOUTH AFRICAN LOCAL

GOVERNMENT ASSOCIATION

Fourth respondent

SOUTH AFRICAN MUNICIPAL WORKERS UNION

Fifth Respondent

Heard: 11 March 2022

Delivered: This judgment was handed down electronically by circulation to the Applicant's and Respondents' Legal Representative by email, publication on the Labour Court website and release to SAFLII. The date and time for handing - down is deemed to be 15h00 on 16 August 2022.

JUDGEMENT

LALLIE J

[1] The applicant approached this court in an effort to enforce an arbitration award which had been certified in terms of section 143 of the Labour Relations Act[1] (the LRA). It sought an order to have the first respondent, who was the second respondent's municipal manager, found guilty of contempt of court. The first and second respondent decided to terminate their employment relationship by mutual agreement with effect from 25 February 2022. When the contempt application was argued in April 2022, the first respondent was no longer an employee of the second. The applicant and the second respondent which opposed the application agreed that the first respondent was out of the picture. It was argued on behalf of the second respondent that as the applicant had not amended the notice of motion and sought the relief of contempt of court against it, the relief could not be granted against the third respondent. The applicant tracie union's counter argument was that its understanding was that it was proceeding with the contempt proceedings, against the second respondent.

[2] It is common cause that the applicant sought the relief of contempt of court against the first respondent only. The applicant's understanding referred to above is not enough. Absent the amendment of its notice of motion to reflect that the relief of contempt of court was sought against the second respondent, the foundation on which the relief could be based was not laid. Furthur, in the rule nisi issued out of this court on 26 November 2021 only the first respondent was required to show cause why an order of contempt against him should be made final. As the rule nisi excludes the second respondent in respect of contempt of court, a final order of contempt of court may not be granted against the second respondent.

[3] The purpose IMATU sought to achieve by bringing the contempt application which will also be referred to as part A of this application, is the enforcement of the arbitration award issued on 30 January 2021 against the second respondent. In the award the second respondent is directed to comply with clause 6.6 and 6.8 of the SALGBC salary & wage collective agreement (the collective agreement) and pay its employees on behalf of whom IMATU had referred the dispute a salary increment of 6,25% for the 2020/2021 financial year. The increment will also be referred to as the third leg of the 2018 collective agreement which require the second respondent to increase the salaries of the affected employees by 6,25% over 3 financial years, namely, 2018/2019,2019/2020 and 2020/2021. The second respondent paid the increment for the first 2 financial years.

[4] The test for contempt of court laid down in Fakie NO v CCII Systems (Pty) Ltd[2] still stands and is cited with approval and relied upon by the Constitutional Court. It requires the applicant to prove the existence of the order as well as its knowledge and non-compliance by the respondent. When that has been proved the burden of proving that

the non-compliance is not unlawful and mala fide has to be discharged by the respondent. The existed of the recertified award which has the effect of an order of this court and

its knowledge by the second respondent is common cause. The second respondent denies non-compliance with the certified award. It further denied acting unlawfully and mala fide.

[5] In the answering affidavit it is submitted that the second respondent paid the 6.25% salary increase since Febuary 2021. It is clear from the reading of the answering affidavit that reference to the period February 2021 to February 2022 in the explanation is an obvious error. In substantiating the averment that the second respondent did not deliberately disobey the certified award wilfully and mala fide, it was submitted, that the municipality made the 6.25 salary increases. What it had not paid was the 2.5% increments. The second

respondent conceded having withheld implementing the 2020/2021 wage increases until the legality of the notch increase could be

conclusively established and reiterated having made the 6.25% salary increase payments on 25 February 2021 and attached a schedule setting out the inclusion of the payment.

[6] The above averment is not denied in clear terms in the replying affidavit. The attack on the attachment the second respondent relies on is not directed at the allegation that the second respondent paid the 6.25% increment. It is mainly directed at the non-payment of the 2.5% incremental notch which forms the basis of Part B of this application. Absent an unequivocal denial that the third 6.25% salary increment was made and in terms of the rule in Plascon Evans Paints Ltd v Van Riobeeck Paints (Pty) Ltd[3] I must accept the second respondent's version that it paid the third leg of the increment due in terms of the 2018 collective agreement.

The second respondent has proved that it paid the salary increment for the third leg referred to in the 2018 collective agreement. The second respondent therefore compiled with the award on 25 February 2021.

[7] The applicant failed to prove that the second respondent did not pay the third leg of the increments due in terms of the 2018 collective agreement. Non-compliance with the certified award was, in the circumstances, not proved. There is therefore no basis to enforce the certified award against the second respondent. The application for contempt of court cannot succeed.

[8] The second respondent submitted that part B of the application should not be heard. The same argument was raised against the counter application. Both arguments were mainly based on form which may not be elevated above substance. Both applications are linked to the main application and the parties relied in a certain way on the same facts in all the applications. Section 1(d)(iv) of the LRA provides that one of its purposes is the promotion of effective resolution of labour disputes. The effective resolution of the main application required that part B and the counter application be heard.

[9] In part B of this application the applicant sought the following relief:

'(b) Declaring that the South African Local Government Bargaining Council ("SALGBC") resolution taken at a Plenary meeting on 4 June 2004 to the effect that all municipalities are to implement a 2.5% incremental notch increase in accordance with industrial council's scales to all qualifying employees, is a term and condition of all qualifying employee's contract of employment;

(c) Declaring that the First Respondent's unilateral act of reversing the implementation of the 2.5% notch increase to all qualifying employees is in breach of the individual employees' contracts of employment, unlawful and void ab initio.''

[10] Part B of the application is also opposed by the second respondent which filed a counter application. It is the applicant's case that on 4 June 2004 the applicant and the first to fifth respondents took a resolution that municipalities were instructed to implement the 2.5% incremental notch in accordance with the industrial council scales. The first and second respondent failed to implement the resolution. In an effort to enforce the implementation of the resolution of 4 June 2004, the third respondent addressed a letter dated 19 February 2019 to municipalities including the second respondent directing them to implement the 2.5% increment notch increases annually. The second respondent's council resolved, on 25 March 2019, to adopt the circular on payment of the 2.5% notch increases. The second respondent implemented the 2.5% notch increase across the board in respect of its employees shortly thereafter. It was the applicant's case that the implementation became a term of the contract of employment between the second respondent and its employees.

[11] On 23 November 2020 the first and second respondent addressed a letter to the latter's employees. In the letter the employees were, informed that the 2.5% increment on their salary notches and the back pay they received March 2019 in terms of council resolution of 25 March 2019 had to be repaid. The reason was that the payment had been picked up by the office of the Auditor General as an irregular over payment. The employees were given up to 30 June 2021 to repay the money. During February 2021 the first and second respondent unilaterally proceeded to make deductions from the salaries of some members of the applicant. The applicant submitted that the first and second respondent failed to prove that its members benefitted unduly form the implementation of the notch increase resolution. They insisted that the first and second respondent had no right to unilaterally reserve the implementation of the 2.5% notch increase because the agreement to implement the increase had become a term of the employees' contracts of employment. The applicant sought to have the conduct of the first and second respondent declared unlawful and void ab anitio.

[12] The second respondent's grounds for opposing part B of this application are that the first and second respondent's conduct is lawful. It is justified by the second respondent's failure to implement the notch increase in terms of all the relevant instruments including circulars the applicant attached to its application. The circulars specifically state that the 2.5 % increase applied "only to employees who have been placed on salary scales (i.t.o the erstwhile industrial Council) and who have not yet reached the top of the said salary scales". The circulars further provide that the appropriate task grade to be determined in the Eastern Cape division should be task grade 11. It was the second respondent's case that the applicant failed to disclose facts which demonstrate that the employees it represents met the criterion which entitled them to the 2.5% increment. The second respondent's conduct of applying the 2.5% increase to all its employees without applying the criterion was said to be incorrect and unlawful. The implementation, in the second respondent's view, did not form part of its employees' contracts. It was argued that the reversal of the implementation did not, in the circumstances, constitute a breach of the employees' contracts of employment.

[13] The applicant did not disprove the second respondent's version. It insisted with the argument that its members' contracts were breached. I must accept the second respondent's unrefuted factual averments that the second respondent's purported implementation of the notch increment resolution was inconsistent with the enabling resolutions and circulars. It is common cause that the second respondent implemented the 2.5% notch increase across the board. In the notice of motion the applicant seeks an order that relief be granted to all qualifying employees. The qualifying employees were not identified so is the manner in which they qualified, in the absence of proof that the employees represented by the applicant fall in the category of employees who were entitled to receive the 2.5% notch increment in terms of the set criteria, the applicants have no basis for alleging that the implementation of the notch increase formed part of their members' contracts, The entitlement to the notch increase was not proved. The relief the applicant seeks in part B of the application can, in the circumstances, not be granted.

[14] In opposing part B of this application the second respondent brought a counter application, part C of this application, in terms of section 158(i)(h) of the LRA and sought an order reviewing and setting aside the resolutions its council took on 25 March 2019 in its capacity as an employer. The counter application is opposed by the applicant. The facts which form the basis of the second respondent's counter application are that in November 2003 the second respondent and the fourth and fifth respondents concluded a Task Job Evaluation Collective Salary and Wage agreement which will be referred to as the evaluation agreement in this judgment. The purpose of the agreement was, inter alia, to regulate jobs and remuneration in local government. On 29 November 2006 the third respondent issued a circular directing all municipalities to implement a 2.5 % salary notch increment. The circular sets out the posts and criteria to be met by employees in order to qualify for the notch increments. On 20 February 2019, the third respondent issued a further circular reminding municipalities to implement the 2.5% salary notch increment. On 25 March 2019, the second respondent's council took resolution 01-18/19 to adopt the circular on payment of the 2.5% notch increase. It further resolved that the increase be paid form 2015 until February 2019.

[15] The second respondent seeks to have resolution 01-18/19 reviewed and set aside on the grounds that it was taken in breach of the principle of legality. It was the second respondent's case that in taking the resolution the second respondent exercised public power unlawfully in that it did not comply with the conditions for the lawful exercise of the power. It was submitted that the conduct of the second respondent's council was irrational because the resolution has no rational connection to the purpose for which the power was conferred.

[16] The applicant's grounds for opposing the counter application are that the impugned resolution is neither irrational nor unlawful. The applicant submitted that the resolution which the council took in the process of exercising its prerogative merely records how the second respondent's council decided to allocate funds. The prejudice that the applicant's members will suffer should the counter application succeed was relied upon. So was the delay in bringing the review application. The applicant submitted that the second respondent's conduct of unilaterally withdrawing the 2.5% increment constituted unacceptable self help.

[17] It is common cause that this court has the necessary jurisdiction to adjudicate the counter application. The applicant relied on some averments which had been made in respect of the contempt and part B of this application. As a sphere of government, the second respondent and its council has a constitutional obligation to exercise its powers within the confines of the law. As part of local government, the second respondent exercises public power. When that power is exercised in terms of enabling legislation or any other instrument, the second respondent had an obligation to exercise it in terms of the enabling instrument. The principle is aptly expressed in Public Protector and Others v President of the Republic of South Africa and Others[4], authority the second respondent relied on, where the following view was expressed:

'In our law, where the exercise pf public power depends on the existence of certain conditions, such power cannot be validly exercised in the absence of those conditions,'

[18] It is common cause that the second respondent's council obtained the power to implement the 2.5% salary notch increment from a circular of the third respondent. It is not in dispute that certain categories of employees were eligible to receive the increment after, certain criteria had been met. The applicant conceded that the second respondent's council, purporting to implement the circular took the impugned resolution that the 2.5% salary notch increment be given across the board without requiring the fulfilment of the criteria. On the applicant's own version the second respondent's council acted outside the scope of the enabling instrument in passing the impugned resolution.

[19] I have taken into account the arguments advanced on behalf of the applicant on the prejudice including the financial hardship that its members stand to suffer in the event of this counter application being granted. The applicant did not\ disprove the second

respondent's case that the council violated the principle of legality in that the applicant's averment that the impugned resolution was taken lawfully was not substantiated. The second respondent has an obligation to correct itself when it: has acted irregularly. The obligation was confirmed in Khumalo and Another v MEC for Education, KwaZulu Natal[5] where the Constitutional Court reminded state organs of their obligation to rectify their own unlawful decisions.

[20] The office of the Auditor General was established in terms of chapter 9 of the Constitution of the Republic of South Africa, 1996 (the Costitution). Amongst is responsibilities is auditing and reporting on, inter alia, the financial management of all municipalities. It identified the impugned resolution and the payments made in terms thereof as irregular. The second respondent therefore had an obligation to correct its irregularity. Section 181(3) of the Constitution requires the second respondent as an organ of state to ensure the effectiveness of chapter 9 institutions. The applicant did not challenge the Auditor General's findings.

[21] In light of the concession that the council acted outside the bounds of the enabling instrument and the Auditor General's finding, the prejudice the applicant's members stand to suffer becomes less significant. The applicant's members are employees of the second respondent. They are entitled to agreed remuneration in terms of their contracts of employment. A decision to have income increments that were not lawfully due to them is permissible. This court cannot allow the second respondent to continue using public funds to pay it as employees remuneration that is not lawfully due to them. The second respondent as a sphere of government, may not be prevented form complying with the Auditor General's directions.

[22] I have considered the arguments on behalf of the applicant to the effect that an order that is prejudicial to its members cannot have retrospective effect. The argument cannot stand because it overlooks the reality that the impugned resolution was at no stage lawful. The applicant did not establish how its members acquired the right to the notch increments. The applicant provided no reason in law why they should be allowed to retain salary increments that were not due to them. The second respondent has an obligation to expend the public funds it pays the salaries of the applicant's members form lawfully.

[23] The second respondent has proved that its council violated the principle of legality in passing the impugned resolution. Resolution 01-18/19 of 25 March 2019 is therefore reviewed and set aside.

[24] I could find no reason in fairness to grant a costs order against the applicant.

[25] In the premises, the following order is made:

Order:

1. The rule nisi issued out of this court on 26 November 2021 is discharged.

2. Part B of the application is dismissed.

3. Resolution 01-18/19 passed by the second respondent's council on 25 March 2019 is reviewed and set aside.

4. There is no order as to costs.

Z. Lallie

Judge of the Labour Court of South Africa

Appearances:

For the Applicant:

Advocate JG Grogan

Instructed by

Wheeldon Rushmere & Cole Inc

For the First and Second Respondents:

Advocate Katz SC

Instructed by

Mvuzo Notyesi Incorporated

[1] Act 66 of1995, as amended.

[2] 2006 (4) SA 326 (SCA).

[3] 1984 (3) 5A 623 (A).

[4] 2021 (6) SA 37 (CC) at para 18.

[5] 2014 (5) SA 579 (CC) at para 54.