Slabbert v Muji Motor Group (Pty) Ltd (D315/21) [2024] ZALCD 30; (2024) 45 ILJ 2817 (LC) (16 September 2024)

FLYNOTES: LABOUR – Discrimination – Age – No agreed retirement age between parties – Business transferred as a going concern – Offered freelance position on sales commission basis without guaranteed salary – Most proximate cause of dismissal was based on age – No sufficient basis to conclude that reason for dismissal was transfer – Dismissal was contrary to provisions – Automatically unfair – 12 months remuneration just and equitable – Labour Relations Act 66 of 1995, s 187(1)(f).

IN THE LABOUR COURT OF SOUTH AFRICA, DURBAN

Not Reportable

Case No: D 315/21

In the matter between:

HELGARDT

ANDRIES SLABBERT Applicant and

MUJI MOTOR GROUP (PTY) LTD Respondent

Heard: 18 May 2024 (Final closing argument received)

Delivered: This judgment was delivered electronically to the parties by email. The date and time for hand-down is deemed to be 16 September 2024.

JUDGMENT

WHITCHER J

Introduction

[1] In terms of the pre-trial minute concluded by the parties, this court is required to decide whether the reason for the applicant’s dismissal by the respondent was a transfer, or a reason related to a transfer, contemplated in section 197 of the Labour Relations Act, 1995 (the LRA), alternatively whether the applicant’s dismissal based on age was automatically unfair.

[2] The applicant seeks monetary relief in the following terms:

Basic (gross) salary times 24 months (R677 738.64), plus average commission earnings for 12 months (R614 633.04), plus patrimonial damages equivalent to one month’s salary of R28 239.11 in respect of the applicant’s contractual notice pay, plus costs of suit.

[3] The respondent seeks an order dismissing the applicant’s claim, with costs.

The statutory framework

[4] Section 187(1)(g) of the LRA provides that a dismissal is automatically unfair if the reason for the dismissal is a transfer, or a reason related to a transfer, contemplated in s197 or 197A of the Act.

[5] Section 187(1)(f) of the Act provides that a dismissal is automatically unfair if the reason for the dismissal is that the employer unfairly discriminated against an employee, directly or indirectly, on any arbitrary ground, including, but not limited to [inter alia] age.

[6] Section 187(2)(b) of the Act provides that despite s 187(1)(f), a dismissal based on age is fair if the employee has reached the normal or agreed retirement age for persons in that capacity.

Interpretation of s 187(2)(b)

A time frame

[7] In its most recent judgment on the subject, the Labour Appeal Court in Motor Industry Staff Association obo Landman v Great South Autobody CC t/a Great South Panel Beaters[1] (Great South Panel Beaters) held that:

“[15] Section 187(2)(b) does not prescribe a time frame within which the dismissal should take place, provided it is after the employer has reached his or her agreed or normal retirement date. Properly construed, s187(2)(b) of the LRA affords an employer the right to fairly dismiss an employee based on age, at any time after the employee has reached his or her agreed or normal retirement age. This right accrues to both the employee and the employer immediately after the employee’s retirement date and can be exercised at any time after this date. The focus is not so much on when the employee reached his or her retirement date, but rather that the employee has already reached or passed the normal or agreed retirement age.

[16] …

[17] Section 187(2)(b) of the LRA contemplates that where an employee continues to work for the employer uninterrupted after reaching retirement age, the employment relationship and employment contract continue. In other words, for purposes of a dismissal in terms of section 187(2)(b), the employment contract does not terminate by the effluxion of time when the employee reaches his or her retirement age but is deemed to continue. This effectively means that the agreed or normal retirement age of the employee remains unchanged.

[18] On this interpretation, a dismissal contemplated in section 187(2)(b) would have the same meaning as the definition of dismissal in section 186[2] of the LRA, which does not include the termination of a contract by effluxion of time as the latter is not a dismissal. Properly construed, section 187(2)(b) does not contemplate a new tacit contract coming into existence between an employer and employee (by virtue of their conduct) which governs their employment relationship when the employee continues to work for his or her employer after reaching the normal or agreed retirement age. In the same vein, section 187(2)(b) does not envisage a tacit amendment of the contract to the effect that the employee would continue to work indefinitely or that a new retirement age applies, as is contended for by the appellant in this appeal.

[19] This interpretation gives effect to the right that accrues to an employer in terms of section 187(2)(b) to fairly dismiss an employee who has passed the agreed or normal retirement age. Significantly, it is consistent with the purpose of section 187(2)(b) which is to allow the employer to dismiss employees who have passed their retirement age to create work opportunities for younger members in society.

…

[28] Where an employer expressly permits an employee to work beyond the agreed or normal retirement age, this does not constitute a waiver of the right to dismiss that employee in terms of section 187(2)(b) of the LRA, unless waiver of that right can be inferred from the clear and unequivocal conduct of the employer.[3] Equally, an employer’s failure to take steps to secure the retirement of his employee on reaching the agreed or normal age of retirement, does not constitute a waiver of its right, in terms of section 187(2)(b), to dismiss that employee any time after he or she has reached retirement age unless such waiver can be inferred from the clear and unequivocal conduct of the employer.”

[8] The Court disagreed with the proposition that if an employer is permitted to rely indefinitely on an agreed or normal retirement age, this will leave the employee in a vulnerable position by enabling the employer to abuse its position to dismiss the employee based on his age. The Court confirmed that it would be impermissible for an employer to invoke the defence in section 187(2)(b) where the employee’s age is not the real reason for the dismissal.

[9] Accordingly, where an employee continues to work for an employer uninterrupted after reaching retirement age, the employment relationship and employment contract continue, and the agreed or normal retirement age remains unchanged. The employer will then be free to dismiss the employee based on age at any stage thereafter by relying in s 187(2)(b) of the LRA. This will be the case unless it can be proven that a new retirement age has been agreed between the parties, or it is clear from the employer’s unequivocal conduct that it has waived its right to dismiss the employee after she/he has reached retirement age.[4]

Normal or agreed retirement age

[10] The Labour Appeal Court in Cash Paymaster Services (Pty) Ltd v Browne[5] held that the provision relating to the normal retirement age only applies to the case where there is no agreed retirement age between the employer and the employee, and in Rubin Sportswear v SACTWU & others[6] that an agreed retirement age will always trump a normal retirement age.

The meaning of ‘normal retirement’ age as used in s187(2)(b)

[11] In Bester v SITA[7], the Labour Court held that ‘normal’ includes the industry practice with respect to persons working in positions similar to that of the individual in question.[8] The court held that the phrase ‘for persons employed in that capacity’ introduces a comparator; the word ‘capacity’ means a specific role or position; and the category or capacity extends to outside a specific employer. It is for this reason that the legislature employed the term ‘persons’ as opposed to ‘employees’.

[12] The Court found that retiring Bester when he reached the age of 60 did not constitute an automatically unfair dismissal. This was because within the industry which SITA operates the age of 60 is a normal retirement age.

[13] The court reasoned as follows:

…the norm in the government industry, regard being had to the GEPF (Government Employees Provident Fund), is for employees to cease employment at the age of 60. SITA is an organ of state, thus it is not incongruent to compare its situation with regard to retirement with the government industry.”

[14] In Legal Aid South Africa v Theunissen[9], the Labour Appeal Court held that in the absence of any express (contractual) entitlement to the respondent to retire at the age of 65 years, the position was governed by the employer’s policy on retirement which had been amended from 65 to 60 years. The Court held that the employer had been entitled to apply the amended policy (even though it was amended long after the respondent had commenced his employment) because the amendment had followed upon good reason and a proper consultation process with the general workforce.

[15] A further important Labour Appeal Court judgment is the one in ARB Electrical Wholesalers (Pty) Ltd v Hibbert[10]. It appears the Court was prepared to accept that in certain circumstances an employer is entitled to rely on the rules of its

Provident/Pension Fund to establish a ‘normal retirement age’ in the company even if the affected employee had not been a member thereof.

[16] The court held (at paragraphs 16 to 17):

The fund is instructive to establish the retirement age applicable at the Appellant and having regard to the rules of the Fund…What the Fund’s contract does evince is that the normal retirement age at the Appellant can be up to the age of 65.

[17] Workplace Law articulated the test as follows: the norm is determined by the ‘capacity’ in which the person is employed and, presumably, by reference to the practice in the particular enterprise or sector.[11]

[18] To my mind the best guide lies in the Labour Appeal Court judgment in Rubin Sportswear v SACTWU & others[12] where Zondo JA (as he then was) articulated the position as follows:

[19] It seems to me that the word “normal” as used in sec 187 (2) (b) really means what it says. It means that which accords with the norm. However, it is important to bear in mind that that word is used in relation to persons employed in the same capacity as the person whose dismissal on the basis of having reached normal retirement age is in issue. Sec 187 (2) (b) must, therefore, not be read as if it says “(d)espite subsection 1 (f), a dismissal based on age is fair if the employee has reached the normal or agreed retirement age.” It includes the words at the end “for persons employed in that capacity.” What the section does not make clear is whether the words “persons employed in that capacity” refer to such persons who are in the same employer’s employ or whether it also refers to persons who are employed in the same capacity by other employers in the same industry or in general.

[20] It seems to me conceivable that one employer could have different normal retirement ages for different categories of employees within its workforce. There may, for example, be different normal retirement ages for professionals and artisans. In such a case the employer cannot retire an employee on the basis of a normal retirement age applicable to employees employed in a capacity different from that of his own. In other words, where an employer seeks refuge in the provisions of sec 187 (1) (b) against a claim of unfair dismissal and his defence is that the employee had reached normal retirement age, he must show not only that the employee had reached normal retirement age but that the retirement age is normal to employees employed in the same capacity as the employee concerned.

[21] In this matter it seems that the appellant sought to make 60 the normal retirement age for all its employees, irrespective of the capacity in which they were employed. Of course, there can be nothing wrong with the fixing of a normal retirement age for all the employees of an employer irrespective of their different capacities in which they may be employed. However, as I have said, the manner in which the appellant sought to achieve the objective of a normal retirement age applicable to Val’s former employees in its employ was not lawful. In law the appellant had no right to unilaterally impose such a condition to the employment of the second and further respondents because their terms and conditions of employment did not include a normal retirement age and the appellant was seeking to unilaterally introduce a new condition of employment into their conditions of employment.

[22] In my view a certain age cannot suddenly become a normal retirement age for employees or for a certain category of employees simply because the employer wakes up one morning and decides that he wants a certain age as the normal retirement age for his employees or for a certain category of his employees. He can put a proposal to his employees on what should be the retirement age and, if they agree, then there will be an agreed retirement age in that workplace applicable to all those who have agreed to the proposal. A retirement age that is not an agreed retirement age becomes a normal retirement age when employees have been retiring at that age over a certain long period - so long that it can be said that the norm for employees in that workplace or for employees in a particular category is to retire at a particular age. An example would be where, without any formal agreement, employees in a particular category have over 20 years been retiring at a particular age without fail. The period must be sufficiently long and

the number of employees in the particular category who have retired at that age must be sufficiently large to justify saying that it is a norm for employees in that category to retire at that age. If the period is not sufficiently long but the number is large, it might still be that a norm has not been established. If the period is very long but the number of employees in the particular category who have retired at that age is not large enough, it might be difficult to prove that a norm has been established.

Other related principles

[19] The onus lies on the employer to prove (on a balance of probabilities) the employee has in fact reached the normal or agreed retirement age.

[20] This Court in Solidarity obo Strydom and others v State Information Technology Agency SOC Ltd[13] (Solidarity) stated the following:

“[31]…the prerequisites in section 187(2)(b) are mutually exclusive. As stated in Cash Paymaster [supra] “…normal retirement age only applies to the case where there is no agreed retirement age between the employee and employee…” …

[33]…In light of the observation in Cash Paymaster…it is inconceivable that an employee [employer] could successfully rely on both the normal and the agreed retirement age as these scenarios are mutually exclusive.”

[21] Where there is a dispute as to the reason for the dismissal of the employee, the test is the most proximate cause of the dismissal.[14]

The material facts[15]

[22] The applicant was employed by the respondent’s predecessor in law, Ladysmith Autohaus in terms of an oral agreement entered into on 1 February 2003 as a sales consultant.

[23] The agreement made no mention of a retirement age, nor was the matter discussed and agreed upon later in the relationship. Accordingly, there was no agreed retirement age between the applicant and Autohaus.

[24] The applicant was promoted to the position of sales manager in 2013; at the time he was 65 years of age. In 2018, his role was refined as that of new car sales manager. At that stage, he was almost 70 years of age.

[25] As a senior manager, the applicant received percentages of his sales team in addition to his own commissions earned and his basic salary. His income structure was as follows: a gross salary of R28 239.11 plus 12-15% nett profit on any used vehicles sold by the applicant, plus 10% nett profit on any new vehicles sold by the applicant; and 2.5% of nett profit from total vehicles sales for that month.

[26] In July 2020, the respondent purchased Autohaus. A schedule to the sale agreement identified the applicant as “retirement age.”

[27] After purchasing the business, on or about 3 August 2020 the respondent took transfer of Autohaus as a going concern. As a consequence, the applicant’s terms and conditions of employment in place immediately preceding the transfer of the business were transferred to the respondent in terms of s197 of the LRA.

[28] At the time of the transfer of the business, the applicant was 72 years old.

[29] On 3 August 2020, the applicant attended a meeting with Mr Mngadi, the sole director of the respondent. Mr Mngadi advised the applicant that he had reached retirement age, based on what he argued is the normal retirement age of 65 in the motor industry. Mnagadi proposed an option for the applicant to continue earning an income from the respondent post-retirement on a sales commission basis, basically 50% of the profits from all vehicles sold. The applicant rejected the offer.

[30] In the words of the applicant. “the offer essentially entailed that he freelance as a salesperson” on a sales commission basis, except without a guaranteed salary and the overriding commission he had received as sales manager.

[31] The respondent avers it was an opportunity for the applicant to earn a greater income as an independent contractor.

[32] Immediately following the meeting with Mr Mngadi, the applicant was served with a notice. The notice reads as follows:

As you are aware, [the respondent] bought [Autohaus] as a going concern and as such has accordingly entered into new contracts of employment and also implemented its own internal policies.

[The respondent] also complies with the rules associated with the Motor Industry bargaining council MIBCO which prescribes age 65 as retirement age. [The respondent’s] retirement policy is 60 years.

We are aware that you have reached your retirement/pensionable age some time ago, and therefore we hereby give you notice of your retirement from [Autohaus]

[33] The nature of the respondent’s business (and thus that of its predecessor in law, Autohaus) at all material times fell within the registered scope of the Motor Industry Bargaining Council (MIBCO) which regulates by way of a Main Agreement and other collective agreements the terms and conditions of employment in the motor and auto industry.

[34] The only collective agreements which regulate and mention a retirement age are the Motor Industry Provident Fund Collective Agreement and the Auto Workers Provident Fund Collective Agreement, which stipulate a ‘retirement age” of 65 years. Membership of the Funds, however, is compulsory for only certain categories of employees employed within the registered scope of the MIBCO.[16] Employees who fall within the registered scope of MIBCO and who are not obliged to become members of the Funds may be admitted to voluntary membership at the sole discretion of the Regional Council concerned.

[35] The applicant was not a member of either Fund, and there is no averment by the respondent that he fell within the categories of employees obliged to join either Fund.

The respondent’s pleaded defence

[36] The respondent denied the reason for the termination of the applicant’s employment was the transfer of the business, or a reason related to the transfer. The respondent pleaded that “the applicant was given notice of the termination of his employment due to having reached the industry retirement age.”

[37] The respondent further pleaded that:

The MIBCO Main Agreement, amongst other things, stipulates that all employees in the motor industry are members of and are bound by the provisions of the Motor Industry Provident Fund Agreement (MIPFA).

Section 3(21) of the MIPFA specifies the retirement age as 65 years. It follows that the applicant’s retirement age during his employment with both Autohaus and the respondent was always 65 years.

The applicant like all other employees in the motor industry should reasonably have known that the agreed retirement age in the industry is 65 years.

[38] The Respondent denied that [it] implemented its own retirement policy of 60 years. It pleaded that it implemented the industry retirement age of 65 years.

[39] In argument, the respondent averred that the Main Agreement and the Provident Fund Agreements must be read together to determine the terms and conditions of employment in the motor industry. Since the applicant as a matter of law fell within the scope of MIBCO and its collective agreements, it follows that the retirement age stipulated in the Motor Industry Provident Fund Agreement applied to him, regardless of whether he was ‘registered” with MIBCO or whether he was/is a member of the Provident Fund. The

retirement age of 65 years was a condition of the applicant’s employment in the motor industry.

[40] According to the pre-trial minute, the sole fact in dispute is “whether the motor industry retirement age of 65 years” applied to the applicant.

The reason for the applicant’s dismissal

[41] On the evidence - the schedule to the sale agreement, the applicant’s discussion with Mngadi and the termination notice viewed together - I find that the most proximate cause of the dismissal was based on age as claimed by the respondent. The fact that the respondent gave the applicant “notice of [his] retirement” immediately after the transfer of the business took place is not a sufficient basis to conclude that the reason for the dismissal was the transfer, or a reason related to the transfer. More was needed from the applicant for this court to have drawn that inference. That was not provided.

Was the dismissal justified on the basis of s187(2)(b)?

[42] I found no merit in the respondent’s pleaded defence.

[43] First, the collective agreements relied on by the respondent - the Main Agreement and the Motor Industry Provident Fund Agreement - establish that the retirement age of 65 years is a term and condition of employment of only certain categories of employees employed within the registered scope of MIBCO. This is because membership of the Provident Fund Collective Agreement is compulsory for only those employees employed within the registered scope of MIBCO. Given that the applicant was not a member of the Motor Industry Provident Fund and given the absence of any averment, let alone proof that he fell into the category of employees who are obliged to join the Fund, it follows that the retirement age of 65 years was not a term and condition of the applicant’s employment.

[44] Second, no evidence was adduced that in the motor industry employees who fall outside the prescripts of the Rules of the Fund also retire at the age of 65 years; that is, that the norm and practice in the motor industry is that these employees also retire at 65 years. And, more fundamentally, that it is the norm for employees in positions similar to that of the applicant (i.e. sales managers/managers) to also retire at the age of 65 years.

[45] Was the respondent entitled to nevertheless use the retirement age of 65 years as a guideline to impose retirement on the applicant? The answer is ‘No’; because of the wording of s187(2)(b), namely “normal…for persons in that capacity”.

The provision enjoined the respondent to show that the retirement age of 65 years was normal to employees employed in the capacity as the applicant in Autohaus, which as I have found it did not.

[46] The case of the applicant is distinguishable from ARB Electrical, Bester and Legal Aid decisions in that those cases concerned internal/company retirement schemes or industry retirement schemes which did not distinguish membership and in Legal Aid the retirement age was imposed following a proper consultative process.

[47] Accordingly, in all the circumstances the dismissal of the applicant could not be justified on the basis of s 187 (2) (b) of the Act but was contrary to the provisions of s 187(1)(f) and was automatically unfair.

Compensation

[48] In terms of s 194(3) of the LRA, the compensation awarded to an employee whose dismissal is automatically unfair must be just and

equitable in all the circumstances, but not more that the equivalent of 24 months’ remuneration calculated at the employee’s

rate of remuneration on the date of dismissal.

[49] To my mind, given the applicant’s age at the time of dismissal, it is just and equitable to award the applicant compensation

equivalent to 12 months remuneration (made up of his gross salary plus average commission), which amounts to R953 496.00, plus costs of suit.

Order

1. The dismissal of the applicant was automatically unfair.

2. The respondent is ordered to pay the applicant the amount of R953 496.00 within 30 days of receipt of this judgment, plus costs of suit.

Benita Whitcher

Judge of the Labour Court of South Africa

APPEARANCES:

For the Applicant: Jacques Roos Attorneys

For the Respondent: Deale Attorneys

[1] (2022) 43 ILJ 2326 (LAC) (27 September 2022)

[2] In terms of section 186 of the LRA “dismissal” means, inter alia, termination of an employment contract with or without notice.”

[3] Road Accident Fund v Mothupi 2000 (4) SA 38 (SCA) par 15.

[4] As summarised in recent article on the judgment.

[5] (2006) 27 ILJ 281 (LAC).

[6] (2004) 25 ILJ 1671 (LAC).

[7] [2023] BLLR 303 (LC).

[8] Relying on a judgment of the Canadian Federal Court of Appeal in Air Canada Pilots Association v Kelly 2012 FCA 209 (CanLII) at para 52.

[9] (CA14/18) [2019] ZALAC 71 (25 November 2019).

[10] [2015] 11 BLLR 1081 (LAC).

[11] John Grogan, ‘Workplace Law’ (10th ed), 194.

[12] (2004) 25 ILJ 1671 (LAC).

[13] (2022) 43 ILJ 1881 (LC).

[14] See: Great South Panel Beaters (FN 1 supra) at paragraph [16].

[15] This is based on a stated case filed by the parties, the pre-trial minute and the issues for determination listed in the pre-trial

minute.

[16] It covers employees that earn below prescribed thresholds and occupy certain grade levels.