IN THE LABOUR COURT OF SOUTH AFRICA HELD IN JOHANNESBURG

Transcription

1 Page 1 of 36 IN THE LABOUR COURT OF SOUTH AFRICA HELD IN JOHANNESBURG In the matter between: CATHERINA MARGIETHA EAGLETON 1 st Applicant ANDREW PETER LEACH CLAIRE ELANE HEWSON 2 nd Applicant 3 rd Applicant And YOU ASKED SERVICES (PTY) LTD Respondent ( Exipient ) EXCEPTION AC BASSON, J 1] The Respondent ( the Excipient ) in this matter filed an exception against the Applicants statement of claim. I will for convenient sake continue to refer to the parties as the Applicants and the Respondent.

2 Page 2 of 36 2] The crux of the exception is that the statement of claim is vague and embarrassing to such an extent that the Respondent is severely prejudiced in its defense and unable to plead to the statement of claim as it currently stands. Statement of claim 3] The three Applicants in this matter have referred a complaint of an unfair dismissal on the basis of operational requirements to the CCMA. In the referral it is alleged that the Applicants were dismissed and that their dismissal was: (i) Automatically unfair as falling within the definition of section 187(1)(c) of the LRA. Alternatively (ii) A constructive dismissal within the definition of section 186(1)(e) of the LRA Further alternatively

3 Page 3 of 36 (iii) Substantively and procedurally unfair on the basis of operational requirements as set out in section 189 of the LRA. 4] The Respondent has taken exception against the statement of claim on the basis that: 1] The remedies claimed by the Applicants are mutually exclusive. The Respondent contends that mutually exclusive remedies cannot be claimed in the alternative as evidence in support of one remedy will necessary exclude the other. 2] The entire statement of claim is vague and embarrassing. More in particular the Respondent claims that there is a lack of clarity in respect of the date of the dismissal and the basis upon which the applicants claim payment of their salaries. 3] The statement of claim was filed out of time and the Applicants have not filed an application for condonation for the late filing of the statement of claim. The Applicants have indeed not yet filed an application for condonation of the late

4 Page 4 of 36 filing of their statement of claim. I am in agreement with the Applicant s submission that the mere fact that there is an application for condonation does not bring the application within the ambit of this Court s jurisdiction. It is the granting of the condonation that brings the matter within the ambit of this Court s jurisdiction. Furthermore, the exception must be determined with reference to what is set out in the pleadings. No external evidence can be resorted to by this Court in determining the exception. The application for condonation or the granting or refusal thereof is therefore not a mater which can be determined by reference to the pleadings in this matter. Background facts 5] The relevant facts appear from the Applicant s statement of claim: Prior to 1 March 2004 the Applicants were employed at a company known as Arcay Systems. The managing director was Mr. Douglas Kalkwarf. During December 2003 Kalkwarf approached the 1 st and 3 rd Applicants and offered them employment in a new entity You

5 Page 5 of 36 Asked Services (Pty) Ltd (the Respondent). In January 2004, Kalkwarf approached the 2 nd Applicant and offered him employment with the Respondent. It was agreed that each Applicant would receive remuneration in the amount of R as a nett salary. The Applicants allege that the Respondent had engendered in them a sense of confidence and security by providing them, inter alia, with a business plan. The Applicants were also assured that the Respondent was being financed and that the Respondent would be a sustainable venture. The 2 nd and 3 rd Applicants had signed written contracts of employment. Although the 1 st Applicant did not sign a written agreement, the 1 st Applicant continued to be employed as a business consultant subject to the control of the Respondent. Share option certificates were issued on 26 April 2004 allowing the Applicants the opportunity to exercise a purchase option before 28 February ] During July 2004 an informal meeting was held during which it was explained to the Applicants that the Respondent started to experience cash flow constraints. The Applicants were, however,

6 Page 6 of 36 assured that the business would remain stable. 7] On 6 September 2004 the 2 nd and 3 rd Applicants attended a meeting with Kalkwarf who explained to them that in order to continue to be employed by the Respondent, they would have to accept that the Respondent could not guarantee that they would be paid a salary. According to the Applicants it was implied by Kalkwarf that the Respondent would not be able to pay their salaries. The 1 st Applicant was also informed that her salary would not be paid in future and that in order for her to continue to be employed by the Respondent she would have to accept these terms. 8] In paragraph 6.34 the following is stated: Based on the respondent s advices that the respondent would not pay their salaries, the second and third applicants left the employ of the respondent on or about 10 September In paragraph 6.35 it is further stated that: Based on the respondent s advices that the respondent would not pay her salary, the first applicant left the employ of the respondent on or about 16 September 2004.

7 Page 7 of 36 9] The allegation is then made that the Applicants were accordingly constructively dismissed pursuant to their refusing to accede to the respondent s request that they continue to work for the respondent for no salary, alternatively the applicants were constructively dismissed, further alternatively the applicants dismissal was a procedurally and/or substantively unfair dismissal for operational requirements, as not complying with the requirements for a dismissal based on operational requirements as set out in section 189 of the LRA. 10] During October 2004, the Applicants each referred a complaint of an alleged unfair dismissal for operational requirements to the CCMA. The date of dismissal, according to the Form 7.11 referrals, is 8 September On or about 15 November 2004, an outcome report was issued and a ruling was made to consolidate the three Applicants' disputes and to issue a certificate of outcome. Over a year later, on 30 November 2005, the Applicants issued a Statement of Claim out of the Labour Court. On 12 December 2005, the Respondent filed a notice of intention to defend the application.

8 Page 8 of 36 11] On the same date a notice to remove the cause of complaint was filed. The Applicants failed to respond to the notice to remove cause of complaint. On 20 January 2006, the notice of exception was filed. On 20 March 2006, the Applicants' attorney filed a notice to oppose the exception. 12] The Respondent proceeded to place the matter on the opposed roll. On 7 September 2006, the Registrar of the Labour Court issued a notice to the parties to file heads of argument. This notice was only received by the Respondent's attorney on 26 September 2006, when it was sent by the Applicants' attorney. Exception 13] Rule 6 of the Labour Court Rules requires that a statement of claim must contain "a clear and concise statement of the material facts, in chronological order, on which the party relies, which statement must be sufficiently particular to enable any opposing party to reply to the document;... a clear and concise statement of the legal issues that arise from the material facts, which statement must be sufficiently particular to enable any opposing party to reply to the document."'

9 Page 9 of 36 14] Erasmus Superior Court Practice describes an exception (which is regulated by Rule 23 of the High Court Rules) as follows: "An exception is a legal objection to the opponent's pleading. It complains of a defect inherent in the pleading; admitting for the moment that all the allegations in a summons or plea are true, it asserts that even with such admission the pleading does not disclose either a cause of action or a defence, as the case may be. It follows that where an exception is taken, the Court must look at the pleading excepted to as it stands : no facts outside those stated in the pleading can be brought into issue and no reference may be made to any other document.... The object of an exception is to dispose of the case or a portion thereof in an expeditious manner, or to protect a party against an embarrassment which is so serious as to merit the costs even of an exception.... An exception that a pleading is vague and embarrassing is not directed at a particular paragraph within a cause of action. it goes to the whole cause of action, which must be

10 Page 10 of 36 demonstrated to be vague and embarrassing.... An exception that a pleading is vague or embarrassing will not be allowed unless the excipient will be seriously prejudiced if the offending allegations were not expunged. The effect of this is that the exception can be taken only if the vagueness relates to the cause of action. Such embarrassment may occur where the admission of one of two sets of contradictory allegations in the Plaintiff's Particulars of Claim or Declaration, destroys the Plaintiff's cause of action... The test applicable in deciding exceptions based on vagueness and embarrassment arising out of a lack of particularity can be summed up as follows: (a) In each case the Court is obliged first of all to consider whether the pleading does lack particularity to an extent amounting to vagueness. Where a statement is vague it is either meaningless of capable of more than one meaning. (b) If there is vagueness in this sense, the Court is then obliged to undertake a quantitative analysis of such embarrassment as the excipient can show is caused to him or her by the vagueness complained of. (c) In each case an ad hoc ruling must be made as to whether the embarrassment is so serious as to cause prejudice to the excipient if he or she is compelled to plead the pleading in the form to

11 Page 11 of 36 which he or she objects. A point may be of the utmost importance in one case, and the omission thereof may give rise to vagueness and embarrassment, but the same point may in another case be only a minor detail. d) The ultimate test as to whether or not the exception should be upheld is whether the excipient is prejudiced. e) The onus is on the excipient to show both vagueness amounting to embarrassment and embarrassment amounting to prejudice. (f) The excipient must make out his or her case for embarrassment by reference to the pleadings alone. (g) The Court would not decide by way of exception the validity of an agreement relied upon or whether a purported contract may be void for vagueness. The plaintiff cannot, in answering to the exception, rely on the fact that, apart from the allegations in the summons, the defendant of his or her own knowledge knows what case he/she is required to meet. In the majority of cases the defendant does know, yet this does not disentitle him/her to except successfully where the plaintiff's case is not conveyed to him/her by the summons with reasonable distinctness. It must be borne in mind that

12 Page 12 of 36 the summons is for the information of the court as well as of the plaintiff." 15] Although the Rules of the Labour Court are silent on the question of exceptions, this Court has the jurisdiction and powers to deal with exceptions to a Statement of Claim and will, in doing so, have regard to the principles in respect of exceptions as developed in the High Court. Waglay J, in Harmse v City of Cape Town (2003) 24 ILJ 1130 (LC), succinctly explains the purpose of a Statement of Claim as follows: '[6] The Statement of Claim serves a dual purpose. The one purpose is to bring a respondent before the Court to respond to the claims made of and against it and the second purpose of a statement of claim is to inform the respondent of the material facts and the legal issues arising from those facts upon which applicant will rely to succeed in its claims. [7] The material facts and the legal issues must be sufficiently detailed to enable the respondent to respond, that is, that the respondent must be informed of the nature or essence of the dispute with sufficient factual and legal particularity so that it knows what it is that the applicant is relying upon to succeed in its claim... [10] When an exception is raised against a Statement of Claim, the Court must consider... whether the matter presents a question to be decided which, at this stage, will dispose of the

13 Page 13 of 36 case in whole or in part. If not, then this Court must consider whether there is any embarrassment that is real and that cannot be met by making amendments or providing of particulars at the pre trial conference stage. (At paragraphs 6, 7 and 10). 16] In Levitan v Newhaven Holiday Enterprises CC 1991 (2) SA 297 (C) at 298H 299C the Court, in dealing with an exception on the basis of vagueness, explained the nature of the embarrassment and prejudice caused by a vague pleading: "While it could happen that the only possible response to an embarrassing declaration would be a plea which itself would be embarrassing, I venture to think that a defendant's problem would sooner be inability to foresee how the plaintiff will play his hand at the trial and what must be done to meet it. Prejudice to a litigant faced with an embarrassing pleading must ultimately lie in an ability properly to prepare to meet his opponent's case. Embarrassment may as in this case, also occur where, although the plea itself might be unobjectionable, the admission of allegations in the plaintiffs

14 Page 14 of 36 particulars of claim or declaration destroy the plaintiffs cause of action. A plaintiffs particulars of claim or declaration must be framed in such a way that an admission by the defendant of the crucial allegations in it contributes to the success of the plaintiffs claim, not to its failure. So, even though it might be possible to draft an unobjectionable plea to an objectionable declaration, this might lead nowhere because the pleadings, read together, must contain the outlines of a triable case. It is the resolution of the parties' dispute that matters. If the effect of the plea is that no intelligible dispute remains there is nothing on which a court can sensibly adjudicate. If a defendant pleads to a plaintiff s particular of claim in such a way that the remaining disputed facts no longer sustain the plaintiffs claim, there is something seriously wrong with the particulars of claim. This creates embarrassment for a defendant who is now obliged to proceed to trial on a claim which he knows to be bad in law, but to which he cannot except as disclosing no cause of action." 17] As already pointed out, in deciding the exception, the factual allegations in the statement of claim must be taken as correct and no extrinsic evidence should be taken into account except, where applicable, the documents attached to the statement of claim. [See paragraph [14] supra.] Did the Applicants resign or were they dismissed at the behest of the employer?

15 Page 15 of 36 18] It is unclear from the Applicants statement of claim whether or not they have resigned or whether they have been dismissed by their employer as no express or clear factual allegation to this effect is made. Put differently, it is not clear whether the Applicants have been dismissed by their employer in the normal or conventional sense of the word or put differently whether the contract of employment was terminated at the behest of the employer, or whether the Applicants were pushed to resign by the employer (the Respondent) because their employment relationship has become intolerable (normally referred to as a constructive dismissal). The furthest the Applicants are prepared to factually commit themselves in their statement of claim is that they have left the employ of the respondent [the employer]. 19] What is, however, clear from the statement of claim is that the Applicants plead in the alternative a conventional dismissal (at the behest of the employer) and a constructive dismissal (brought about by a resignation). Question before this Court

16 Page 16 of 36 20] The question before this Court is quintessentially whether or not the following causes of action phrased in the alternative are mutually exclusive as alleged by the Respondent. The following appears from paragraph 7 of the statement of claim under the heading LEGAL ISSUES : (i) The Respondent attempted to secure the Applicants compliance with a demand it had made in respect of an issue of mutual interest which was a request that the Applicants continue to work for the Respondent without pay. The first is a demand in respect of an issue of mutual interest. Upon failing to accede to this request they were constructively dismissed in that the Respondent indicated that it would no longer pay them. The Applicants thus allege that they have been dismissed in an attempt to compel their accession to a demand made by the Respondent in respect of a matter of mutual interest. This constitutes according to the Applicants an automatically unfair dismissal in terms of section 187(1)(c) of the LRA. Alternatively (ii) If this Court should find that the dismissal of the Applicants was not automatically unfair, then it is submitted that

17 Page 17 of 36 the Applicants were constructively dismissed by the Respondent. It is submitted that by stating that the Respondent would no longer pay their salaries, the Respondent made continued employment intolerable. Further alternatively (iii) If this Court should find that the Applicants were not constructively dismissed then it is alleged that the Applicants were retrenched by the Respondent in that the Respondent had indicated to the Applicants that it was no longer in a position to continue to employ the Applicants. 21] As I understand the Respondent s argument, the crux of the argument is that a cause of action based on a constructive dismissal is mutually destructive of a claim of a conventional dismissal.. What must an employee proof for purposes of a claim of constructive dismissal? 22] In order to prove a claim for constructive dismissal, the employee must satisfy the Court that the following three requirements are present: (i) The employee terminated the contract of employment (the employee has resigned). I will return to the contractual implication or importance of the factual allegation of a resignation in the discussion hereinbelow; (ii) (iii) Continued employment has become intolerable for the employee; The employer must have made continued employment intolerable.

18 Page 18 of 36 23] I have already pointed out that that the statement of claim does not contain an express factual allegation or statement that the Applicants have resigned (as is expected in cases where a constructive dismissal is alleged) nor does the statement of claim contain a factual statement that it was the employer (the Respondent) who dismissed them as contemplated in section 186 of the LRA (excluding the forms of dismissal contemplated by sections 186(e) and (f) of the LRA). In paragraphs 6.34 and 6.35 it is merely stated that the Applicants left the employ of the respondent which, in my view, can either mean that they have resigned or that they have left as a result of the fact that the employer had dismissed (retrenched) them (with or without notice). Is this statement sufficient clear or detailed to support, for example, a claim of constructive dismissal to such an extent that the Respondent can formulate a plea? If it does, the question which arises is whether a claim of constructive dismissal excludes a claim of dismissal at the behest of the employer? 24] I have come to the conclusion that the statement of claim is vague to such an extent that the Respondent is not in a position to formulate a plea. Secondly, I am further of the view that an Applicant (an employee) must elect whether or not he or she has resigned or whether or not the employer has terminated the contract of employment in the conventional sense of the word. My conclusion is therefore that a constructive dismissal claim is destructive of a claim of dismissal in the conventional sense. I will now briefly set out the reasons for my conclusion. Onus in terms of section 192 of the LRA

19 Page 19 of 36 25] The CCMA has jurisdiction to adjudicate disputes about alleged unfair dismissals based on conduct, capacity and in limited instances, operational requirements. The Labour Court likewise has jurisdiction to adjudicate disputes based on operational requirements and disputes where it is alleged that a dismissal was automatically unfair. Section 192 of the LRA prescribes who bears the onus in respect of dismissal disputes. In terms of section 192(1) of the LRA the onus rests on the employee to prove a dismissal (as contemplated in section 186(a) (f) of the LRA). Only once the employee has proven a dismissal will the employer bear the onus to prove the fairness thereof. In proceedings before the Labour Court an employee is required to set out in its statement of claim the material facts and the legal issues which arise from those facts to substantiate a claim of dismissal in sufficient particularity so as to enable the Respondent (the employer) to reply. Because the employee bears the onus to prove a dismissal it is thus, in my view, necessary that the essential factual allegations to substantiate this claim be set out in the statement of claim. More in particular in the context of a constructive dismissal, it is essential that the employee makes a factual allegation to the effect that he or she has resigned. I will return to this point hereinbelow. 26] It is trite that the employment contract may be terminated in different ways. An employee s contract of employment may, inter alia, be terminated by a dismissal. In the discussion hereunder brief reference will be made to the other ways in which the contract of employment may be terminated. In the employment context it is, however, dismissal as a way of terminating the employment

20 Page 20 of 36 contract that gives rise to the majority of disputes in the workplace. In terms of section 186(1)(a) (f) of the LRA a dismissal can arise in six different situations. In terms of section 186(1)(a); (b); (c) and (d) of the LRA the contract of employment is terminated through a dismissal at the behest of the employer (also referred to in the context of this judgment as a conventional dismissal). In only two situations it is the employee, and not the employer, who terminates the contract of employment (section 186(1)(e) and (f) of the LRA). In the latter two instances such a termination of the contract of employment will occur where the employee resigns either because the employment relationship has become intolerable or where the new employer (in a transfer situation) provides the employee with conditions or circumstances at work that are substantially less favourable to the employee than those provided by the old employer. Notwithstanding the fact that the employee has terminated the contract by resigning, the termination of the contract may, depending on the circumstances, be regarded as a dismissal in terms of the LRA. For purposes of deciding the present application (exception) this is an important distinction and one which has a direct bearing on the question to be decided in this matter and that is whether a claim of constructive dismissal (as contemplated in section 186(1)(e) of the LRA) and a claim of a conventional dismissal (as contemplated in section 186(1)(a); (b); (c) and (d) of the LRA) are mutually destructive alternatives. In answering this question it is necessary to briefly refer to the common law principles which underpin the termination of the contract of employment. Common law principles regarding the termination of a contract of employment

21 Page 21 of 36 27] It falls beyond the scope of this judgment to give a detailed overview of the principles in respect of the termination of a contract of employment and I will thus confine the discussion to a few cursory remarks. Although contractual principles continue to be important when interpreting the contract of employment or when considering the termination thereof, the contract of employment must be interpreted bearing in mind the all important underlying values of the constitution. In addition hereto, and of particular importance in the employment context, reference must also be had to applicable labour legislation which plays a pivotal role when considering issues such as the termination of the contract of employment. Labour legislation has, by importing principles of fairness into the contractual relationship between the employer and the employee, softened the often harsh effects brought about by the strict application of contractual principles to the employment relationship. This is especially apparent in respect of the principles applicable to the termination of the employment contract. Although contractual principles relating to a breach of contract (including those relating to the repudiation of a material contractual term) and the consequences flowing therefrom remain intact, considerations of fairness impact upon the employer s obligations prior to the termination of the contract of employment to the extent that it places a restriction on the employer s right to terminate the employment contract at will as well as the manner in which the contract may be terminated. 28] In terms of the common law, a contract of employment can be cancelled by either party to the contract and provided that the required contractual notice is given no valid reason for the lawful

22 Page 22 of 36 termination thereof is required. In the employment context it means that in terms of the common law an employee may be dismissed by the employer without a valid reason provided that the required notice period is given. As already pointed out, the LRA has infused the common law with principles of fairness which require that a dismissal must not only be lawful in the strict contractual sense, but also fair (substantively and procedurally). In order to provide a measure of certainty to both employers and employees, the LRA sets out the different ways in which an employee may be dismissed (section 186(1) (f) of the LRA) and also codifies to some extent the requirements of fairness that must be adhered to in dismissing an employee. In terms of the common law a valid reason for the termination is, however, required where the contract is terminated due to breach of contract. Where a material term of the employment contract has been breached a contracting party may summarily terminate the contract. In essence the LRA has not overtaken the basic common law principles relating to the lawfulness of a breach of contract; the repudiation and cancellation of a contract of employment with a result that these principles remain valid and applicable. As already pointed out, what the LRA has done is to soften the often devastating effects that a strict

23 Page 23 of 36 application of these common law principles may have on the employee whose contract has been terminated by the employer. Put simply, the mere fact that there is a lawful dismissal does not necessarily imply that the dismissal is also fair in terms of the LRA (see Harms JA in Council for Scientific and Industrial Research v Fijen (1996) ILJ 18 at 27A B). See also Denel v Vorster (2005) 4 BLLR 313 (SCA) at 318H I; See also Amazulu Football Club v Hellenic Football Club (2002) ILJ 2357 (ARB) at 2364G H.1 29] It is trite that it is not only the employer who can terminate the contract by 1 It is common cause that Stars repudiated its contract with the player. Mr Chaskalson argued that until an election had been made by the player to accept the repudiation and cancel the contract, the employment contract remained of force and effect. He referred, inter alia, to Miller & Miller v Dickinson 1971 (3) SA 581 (A) B at 587H 588A, where the Appellate Division stated:'in the absence of an agreement to the contrary, a party to a contract who exercises his right to cancel must convey his decision to the mind of the other party; and cancellation does not take place until this happens.'. Mr Seligson argued that the employment relationship is something distinct from and wider than the contractual relationship. He referred me to a number of authorities, including Gracie v Bull, Blythe & Co (SA) Ltd 1931 CPD 539; R v Levin 1953 (3) SA 623 (O); Myers v Abrahamson 1952 (3) SA 121 (C). Mr Seligson also referred me to s 190 of the Labour Relations Act which deals with the date of dismissal. In his reply Mr Chaskalson referred me to National Union of Textile Workers & others v Stag Packings (Pty) Ltd & Another 1982 (4) SA 151 (T); (1982) 3 ILJ 285 (T) which is a full bench decision. In this case it was held that as a general rule a party to a contract which had been wrongfully rescinded by the other party could hold the other party to the contract if he so elected. The court further held that there was no reason why this general rule should not also be applicable to contracts of employment. In my view, Mr Chaskalson is correct in his submission that there is no basis for conflating the law of contracts with the Labour Relations Act. The Act has not overtaken the common law rules relating to repudiation and cancellation. I find that on a purely contractual basis, the employment contract between the player and Stars had not been terminated as at 15 February 2002.

24 Page 24 of 36 dismissing the employee (with or without notice), the employee may also terminate the contract by reaching an agreement with the employer or by resigning either by giving the required contractual notice or without doing so. Where an employer breaches a material contractual term by, for example, not paying the employee her salary, the employee may likewise decide to repudiate the contract by resigning. For purposes of this application it is necessary to emphasise that it will only be accepted that an employee had resigned where he or she has, either by way of conduct or verbally, conveyed the unambiguous intention to withdraw from the employment contract. In Coetzee & Another v Pitni (Pty) Ltd t/a Pitani Electrification Projects & Others (2000) 21 ILJ 1324 (LC) the Labour Court pointed out that a resignation require an unequivocal election... (ad paragraph [47]). In a recent decision of the Labour Court Appeal Court in Turnbull Amazwi Power Products (Pty) Ltd v Shelly (JA 14/07) (albeit in respect of a different set of facts) the Labour Appeal Court stated the following in respect of a resignation: [16] However, this case can be decided on a different, albeit related, basis. When the departure from an organization is at the initiative of the employee by way of a voluntary resignation which is accepted, by the employer the termination of the contract it then takes place by mutual and voluntary agreement between the parties. As Mr van der Merwe, who appeared on behalf of the respondent, correctly

25 Page 25 of 36 submitted, a termination of a contract, particularly a contract of employment has important consequences for the reciprocal rights and duties of the parties. To be legally effective, a notice of intention to resign from employment and therefore to terminate the contract must be clear and unequivocal. See Kragga Kamma Estates CC and another v Flanagan 1995 (2) SA 367 (A) at 375 C. (My emphasis.) See also CEPPAWU & Another v Glass & Aluminium 2000 CC [2002] 5 BLLR 399 (LAC) where the Court stated the following: [33] Resignation brings the contract to an end if it is accepted by the employer. In Fijen v Council for Scientific & Industrial Research (1994) 15 ILJ 759 (LAC) Farlam J (as he then was) said at 772C D with regard to the test for resignation that an employee has to either by words or conduct, evince a clear and unambiguous intention not to go on with his contract of employment. He went on to say that to resign he has to act in such a way as to lead a reasonable person to the conclusion that he did not intend to fulfil his part of the contract (cf Tuckers Land & Development Corporation v Hovis 1980 (1) SA 645 (A) at 653D F). In the English case of McAlwane v Boughton Estates Ltd [1973] ICR 470 Donaldson J said that tribunals should not find an agreement to terminate

26 Page 26 of 36 employment unless it is proved that the employee really did agree with full knowledge of the implications it had for him. [34] The courts look for unambiguous, unequivocal words to amount to a resignation (Hughes v Gwynedd Area Health Authority [1978] ICR 161) and the courts did not find such to be so when the employee was a mental defective and he uttered the words in the heat of the moment after an argument (Barclay v City of Glasgow District Council [1983] IRLR 313). 30] The LRA by incorporating elements of fairness, includes in the definition of a dismissal a situation where an employee terminated a contract of employment with or without notice because the employer made continued employment intolerable for the employee. The legislature, by importing principles of fairness, therefore recognises the potential hardship an employee may suffer when he or she has no other choice but to resign as a result of the intolerable conduct of their employer. A clear distinction must therefore be drawn between a voluntary resignation which will bring the contact to an end and which will not be regarded as a dismissal in terms of section 186(e) of the LRA and circumstances in which the employee resigns not because she voluntarily wishes to bring the contract to and end, but because she has no other choice but to resign.2 What 2 See Jooste v Transnet Ltd t/a SA Airways (1995) 16 ILJ 629 (LAC) at 638A 639B Myburgh J (as he then was) where the Labour Appeal Court confirmed this point as follows: It follows from what I have said that in a matter in the Industrial Court in which the applicant resigned, but avers that he was constructively dismissed, the first factual enquiry is whether, in resigning, the applicant did not intend to terminate the employment relationship. The onus is on the applicant. If the court finds that the applicant did have that intention, the enquiry is at an end. Similarly, where the resignation forms part of an agreement between the applicant and his former employer to terminate their relationship, once the agreement is proved (by the employer) or admitted, the enquiry is at an end, unless the applicant contends and proves that that agreement is not binding. If the applicant is unable to discharge the onus on a balance of probabilities, the Industrial Court has no jurisdiction to determine the dispute concerning the alleged unfair labour practice. If the applicant does discharge the onus, the next enquiry, in a case in which the applicant

27 Page 27 of 36 the employee in the latter case is in fact saying to the Court or the arbitrator is that although I have resigned, I have been pushed in doing so by the intolerable conduct of my employer or as a result of an intolerable working environment created by my employer. See also Pretoria Society for the Care of the Retarded v Loots (1997) 18 ILJ 981 (LAC).3 31] Where an employer breaches a material term of the contract, such as not paying an employee which is a material and fundamental term of the contract, the employee has an election. In Coetzee (supra) at 1332F the Labour Court pointed out that the innocent party has a choice whether to cancel the contract or to uphold the contract and enforce it. If the employee does not elect to terminate the employment contract by resigning, he or she will not be entitled to claim a constructive dismissal as an essential element of a claim of constructive dismissal will not be present. In order to place an employer in a position to formulate a defense against a claim of contends that he was constructively dismissed, is whether the employer did constructively dismiss him. 3 When an employee resigns or terminates the contract as a result of constructive dismissal such employee is in fact indicating that the situation has become so unbearable that the employee cannot fulfill what is the employee's most important function, namely to work. The employee is in effect saying that he or she would have carried on working indefinitely had the unbearable situation not been created. She does so on the basis that she does not believe that the employer will ever reform or abandon the pattern of creating an unbearable work environment. If she is wrong in this assumption and the employer proves that her fears were unfounded then she has not been constructively dismissed and her conduct proves that she has in fact resigned.

28 Page 28 of 36 constructive dismissal it is therefore, in my view, necessary to make a factual allegation in the statement of claim to the effect that it was the employee who had terminated the contract of employment by resigning. In addition hereto the factual allegation must be made that the employee had resigned because continued employment has become intolerable and that it was the employer who had made continued employment intolerable. See Solid Doors (Pty) Ltd v Commissioner Theron & Others (2004) 25 ILJ 2337 (LAC). In the latter case the Court emhasised that all three requirements for a claim of constructive dismissal must be present. The Court found that the first requirement for a constructive dismissal, namely that the employee terminated the contract of employment, was absent. In this case the employee's case had always been that the employer had told him to 'f... off' and that he had accepted this as his dismissal by the employer. The Court pointed out that since it has never been the employee s case that he had been the one who terminated the contract of employment, there was accordingly no basis on which the CCMA Commissioner could find that there had been a constructive dismissal. 32] A statement that the Applicants had left the employ of the

29 Page 29 of 36 respondent, in my view, therefore lacks particularity to an extent that it amounts to a vagueness. More in particular, this statement is vague to such an extent that it is capable of more that one meaning: The Applicants were either dismissed by the Respondent or they had resigned as a result of the fact that the Respondent had indicated that he was no longer able to pay them their salaries. It is thus for the Applicants to commit themselves to a factual allegation which either substantiates a (conventional) dismissal (at the behest of their employer) or a resignation (which in turn could substantiate a claim of a constructive dismissal). Without such a factual commitment, a fact which falls within the singular knowledge of the Applicants, the Respondent cannot be expected to formulate a defense. Surely the Applicants must know whether or not they were dismissed (at the behest of their employer) or whether or not they have resigned. Without the factual allegation of a resignation, the employee will therefore have no cause of action in terms of section 186(1)(e) of the LRA. 33] In light of the aforegoing I am futher of the view that a claim of constructive dismissal and in the alternative a claim of a conventional dismissal is mutually destructive: A contract of

30 Page 30 of 36 employment is either terminated by the employer or by the employee (by resigning) and the employee will have to make an election. I am thus in agreement with the Respondent s submissions that once the Applicants claim a constructive dismissal, which is brought about by the fact that the Applicants had resigned, this fact automatically disentitles them from claiming that they have been dismissed by the employer in the conventional sense of the word. If the Respondent is required to plead to the statement of claim as it currently stands, it will be prejudiced in that it does not know what case it has to meet. Furthermore, I am of the view that a plea to the factual allegations will of necessity destroy at least one of the Applicants' claims: If the Respondent admits that the Applicants terminated their employment by resigning, it will destroy a claim that the Respondent had dismissed the Applicants (in the conventional sense of the word). Conversely if the Respondent pleads that it had terminated the Applicants' employment the claim for constructive dismissal must of necessity fall away. 34] In conclusion, I need to briefly deal with one remaining point raised in argument. Once a constructive dismissal has been proven by the

31 Page 31 of 36 employee does that mean that the employee is entitled to the relief provided for by the LRA? In the Applicants heads of argument the following argument is advanced from which it appears that the Applicants are of the view that once a constructive dismissal has been proven, the Applicants will be entitled to relief: Where an employer indicates to an employee that the employer will not pay the employee s salary as in this case it amount to either a repudiation of the agreement by the employer, or an indication that the employer intends to materially breach the employment agreement. In either of the above instances the employee is entitled (at contract) to cancel the agreement, or accept the repudiation, and sue for damages. The effect of the unlawful act by the employer in each instance gives rise to a cause of action by the employee. It is contended that the legislature sought to concretize a similar position to that at common law in section 186. I am not in agreement with this submission: Proving a constructive dismissal merely proves that there has been a dismissal as contemplated by section 186 of the LRA. Once a dismissal has been proven the enquiry will proceed to the second stage which is a consideration of the fairness of the dismissal. Once the employee has discharged the onus to prove that she was dismissed, it is still open to the

32 Page 32 of 36 employer to prove that the dismissal was for a fair reason and in accordance with a fair procedure (see section 192(2) read with section 188(1) of the LRA). Where the reason for the dismissal is for a reason which renders the dismissal automatically unfair in terms of section 187 of the LRA, then the employee will be entitled to the remedies provided for in section 194 and more specifically compensation as provided for in section 194(3) of the LRA. If the reason for the dismissal is not one contemplated for in terms of section 187 of the LRA but one contemplated in 188 of the LRA, the employer will have an opportunity to prove that the reason for the dismissal was for a fair reason and that such a dismissal was effected in terms of a fair procedure. 35] In light of the aforegoing I am thus not in agreement with the submission that a claim of constructive dismissal will as a matter of course entitle the Applicants to claim compensation. An Applicant is not entitled to claim compensation once he or she has established the existence of a dismissal, an employee may only be entitled to compensation once it is found that the constructive dismissal was also unfair. This conclusion is supported by the provisions of section 192(2) of the LRA which clearly sets out the onus in

33 Page 33 of 36 dismissal disputes. 36] It was also argued on behalf of the Respondent (the Exicpient) that the claim for compensation on the basis of an alleged constructive dismissal further automatically disentitles the Applicant from claiming an unfair retrenchment. Further to this it was argued that it is inherent to section 189 of the LRA that a dismissal on the basis of operational requirements are at the instance of the employer and that it would not be possible for an employee to terminate the employment relationship and then to claim that he or she was dismissed for operational requirements. I am likewise not in agreement with this argument. It would appear to me that this argument disregards the fact that section 192 of the LRA provides for two distinct and different onuses: The onus to prove a dismissal rests on the employee and the onus to prove the fairness of the dismissal (provided of course that the employee has successfully proven the existence of a dismissal) rests on the employer (section 192 of the LRA). The Labour Appeal Court decision in Ochse Webb & Pretorius (Pty) Ltd v Vermeulen (1997) 18 ILJ 361 (LAC) is a case in point. In this case the employee resigned and claimed constructive dismissal. The Court although

34 Page 34 of 36 concluding that the employee was constructively dismissed nonetheless concluded that the dismissal was fair on the basis that the employer had a valid commercial rationale for proposing an amendment to the employee s remuneration package and that the decision which preceded the proposal was the subject of consultation. This decision was decided under the previous dispensation but nonetheless is authority for the proposition that a commercial rationale may justify an amendment to an employee s remuneration packages and that a constructive dismissal is not necessary unfair. Order 37] In conclusion, I am of the view that the exception should succeed. The embarrassment complained of is, however in my view, of such a nature that it can be amended by amending the statement of claim. I can find no reason why costs should not follow the result. The following order is made: 1. The exception is upheld. 2. The Applicants are afforded leave to remove the

35 Page 35 of 36 cause of the complaint within 10 days from the date of this order. 3. The Applicants are ordered to pay the costs of the exception. AC BASSON, J FOR THE APPLICANT: INSTRUCTED BY: FOR THE RESPONDENT: INSTRUCTED BY: ADV GA FOURIE HOWES INC ADV J PARTINGTON JOHAN OOSTHUIZEN ATT DATE OF HEARING: 18 MARCH 2008 DATE OF JUDGMENT: 29 JULY 2008