IN THE HIGH COURT OF LESOTHO
In the matter between -
TSELISO TSENOLI Plaintiff
MOHANOE MOEPI Plaintiff
LESOTHO FREIGHT SERVICES CORPORATION (PTY)LTD Defendant
Delivered by the Honourable Mr. Justice J.L. Kheola on the 10th day of March, 1988.
At a pre-trial conference held on the 12th April, 1986 the parties agreed that the trial in CIV/T/54/85 should be consolidated with the trial of the matter in CIV/T/203/85 in which Mohanoe Moepi sues Lesotho Freight Services Corporation. In addition to the above agreement the parties agreed as follows
Re Mr. T. Tsenoli
That the plaintiff (Tsenoli) was paid an amount of R274-01 by cheque dated 21 January, 1985. The cheque was drawn by the defendant and given to the plaintiff on termination of his services.
That defendant paid an amount of R987-41 to the Commissioner of Income Tax as tax deducted from Mr. Tsenoli's salary.
The distance from Maseru to Johannesburg and return is 900 kilometres.
That reasonable travelling expenses at all relevant times hereto was 35 cents per kilometre.
Re Mohanoe Moepi
That the plaintiff (Moepi) was paid an amount of R369-95 by cheque which was drawn by the defendant and given to Mr. Moepi on termination of his services.
The defendant entered into a suretyship on behalf of Mr. Moepi with Lesotho Bank for the amount of R3300.
The defendant paid Lesotho Bank the amount of R3300 in pursuance of the said suretyship, after having been deducted from Mr. Moepi's salary on termination of his services.
That the defendant paid an amount of R1297-91 to the Commissioner of Income Tax as tax deducted from Mr. Moepi's salary.
That a deposit of R400-00 was paid to Mrs. Khali by the defendant on behalf of Mr. Moepi in respect of the deposit for a house in which he was staying.
The defendant advanced Mr. Moepi the amount of R954-19 and this amount the defendant was entitled to deduct from any amount due to Mr. Moepi by it.
That the Personnel Regulations were approved by the Board of Directors of the defendant on the 9th August, 1984.
The plaintiffs are claiming damages for unlawful dismissals in breach of contracts entered into by them and the defendant.
Tseliso Tsenoli, to whom I shall refer as the first plaintiff, was employed by the defendant as a General Manager on the 22nd September, 1982 upon the terms and subject to the conditions set out in the memorandum of agreement of employment which is Annexure "A" to the summons.
One of the terms of the memorandum of agreement was that the first plaintiff would be on probation for a period of six (6) months calculated from the 12th January, 1982. It was agreed that after a period of two (2) years, depending on his satisfactory performance and proven ability to manage the defendant, the first plaintiff would take over from the then Managing Director of the defendant, Mr. R. Anersch.
The first plaintiff satisfactorily completed his probationary period and was confirmed to permanent establishment of the defendant on the 24th August, 1982. (See Document 6 of the bundle of documents compiled by the parties). He also took over the management of the defendant from Mr. Anersch.
The period of the contract was for three (3) years with effect from the 12th January, 1982 up to and including the 12th January,1985. It was a term of the agreement that the contract of employment shall be automatically renewed at the end thereof for a further period of one year on the same terms and conditions unless three (3) months' written notice of intention not to renew is given prior to the termination thereof.
On the 19th November, 1984 the defendant notified the first plaintiff of its intention not to renew the contract when it expired on the 12th January, 1985. See Annexures "B", "C" and "D" to the summons. The defendant was aware that the period of notice was less than three months and purported to make the notice retrospective to the 12th October, 1984 and offered to pay compensation in lieu of notice.
The first plaintiff alleges that the said non-renewal of his contract of employment was in breach of the provisions of clause 14 of Annexure "A" and as such was wrongful and unlawful. He is claiming payment of the sum of M27,536-63 as damages and/or compensation for the said breach of contract calculated as follows.
(i) Salary at M1,250.00 x 12 = M15,000-00
(ii) Housing subsidy at M450.00 x 12 = M 5,400-00
(iii) Car Allowance at M400,00 x 12 = M 4,800-00
(iv) Pension contributions at M62.50 x 21 at 2% = M 1,350-00
(v) Leave at M41.10 x 24 = M 986-40
TOTAL = M27,536-00
The claim of Mohanoe Moepi (second plaintiff) is for payment of the sum of M28,841 - 65 as damages for wrongful and unlawful dismissal calculated as follows
(i) Salary at M1,200 x 12 = M14,400-00
(11) Housing subsidy at M450.00 x 12 = M 5,460-00
(iii) Leave at M39.45 x 43 = M 1,775-25
(iv) Pension contributions at M60.00 x 22 at 2% = M 1,346-40
(v) Car Allowance at M450.00 x 12 = M 5,460-00 (vi) Sum unlawfully deducted = M 400-00
TOTAL = M28,841-65
The memorandum of an agreement made and entered into between the second plaintiff and the defendant is more or less the same with that of the first plaintiff. The second plaintiff was employed by
the defendant as a Workshop Manager on the 24th September, 1982 but the agreement was to take effect retrospectively to the 22nd February, 1982. He war to be on probation during the first three (3) months calculated from the 22nd February, 1982. Clause 5 and 14 of the contract were identical with those in the contract between the first plaintiff are defendant.
On the 22nd February, 198b the second plaintiff received a letter (Annexure "B"' to the summons) giving him notice that in terms of clause 5 of the memorandum of agreement between himself and the defendant, his enployment with the defendant was being terminated with effect from the end of the same working day, 22nd February, 1985. The defendant undertook to pay his salary for three (3) months in lieu of the three-month written notice as contemplated in clause 5 of the agreement.
The defendant is counterclaiming an amount of M300 from the first plaintiff. It is alleged that on the 13th January, 1985 the first plaintiff unlawfully used a vehicle belonging to the defendant to travel to Johannesburg are back, a distance of 900 kilograms. The total amount of travelling expenses at 35 cents per kilometre is M315-00 but the defendant has abondoned M15-00.
The first plaintiff denies that the use of the vehicle was unlawful and testified that Mrs Mapetla (D.W.3), who was the Acting Manager of the defendant, authorized him to use the vehicle for that trip from Maseru to Johannesburg and back. D.W.3 has denied this.
The main dispute between the plaintiffs and the defendant is the proper interpretation of clauses 5 and 14 of the memorandum of
agreement. The plaintiffs are of the opinion that clause 5 did not apply to their contracts, they contend that their contracts were governed by clause 14 and that by failing to give them a three-month written notice that their contracts were not going to be renewed on the 12th January, 1985 and on the 22nd February, 1985 respectively, the contracts were automatically renewed in accordance with clause 14. They claim that they are entitled to their salaries for twelve (12) months from the dates the contracts were supposed to expire together with all the benefits they enjoyed while they were employed by the defendant.
Clause 5 reads as follows
"The parties agree that after appointment to the permanent staff of the Corporation the Employee's service with the Corporation shall be subject to THREE (3) month's written notice and that a penalty equal to THREE (3) months of the Employee's salary, or a proportion thereof depending on how much shorter the notice is than the THREE (3) month period, shall be paid by the party who failed to give the appropriate written notice."
Clause 14 reads as follows
"This contract of employment shall be for a period of THREE (3) YEARS as from the date of commencement. Unless THREE (3) MONTH'S written notice of intention not to renew this contract is given prior to the termination thereof, it shall be automatically renewed for a further period of ONE (1) YEAR on the same terms and conditions and similarly at the end of each renewal period this agreement shall be automatically renewed for a period of ONE (1) YEAR UNLESS THREE (3) MONTH'S written notice of a contrary intention is given."
My interpretation of clause 5 is that at any time during the subsistence of the contract any party to it may terminate it by given three (3) months' written notice. This notice may be given on the last day of the contract or on any other day during the subsistence of
the contract. For instance, in the case of the second plaintiff the notice was given on the 22nd February, 1985 which happened to be the last day of the contract. In my opinion that notice was given during the subsistence of the contract and was valid unless the 2nd plaintiff is right in saying that cluse 5 did not apply to his contract inasmuch as it referred to the "permanent staff" while he was a contract employee I shall decide this aspect of the matter later in the judgment.
Clause 5 goes further to say that "a penalty equal to three (3) months of the employee's salary, or a proportion thereof depending on how much shorter the notice is than the three (3) month period, shall be paid by the party who failed to give the appropriate written notice." I must confess that I do not understand what the underlined wounds mean and as far as I am concerned they are ambiguous and superfluous. Notice can be given at any time during the subsistence of the contract and there can never be a question of it being shorter than three motions. It can be given on any day and from the next day the party giving notice must pay a sum equal to the salary of the employee for a period of three months. It seems to me that the gist of what the parties intended to convey was that payment equal to the employee's salary for three months shall be paid in lieu of notice.
Section 14 (4) (b) of the Employment Act No.22 of 1967 reads
"Either party may terminate a contract -
in any other case, by payment to the other party in lieu of notice of a sum equal to all wages and other remuneration that would have been due to the employee up to the expiration of any notice of termination which may already have been given or which might then have been given."
Clause 5 complies with the above section in that is provides for payment of cash in lieu of notice.
I shall now deal with the question whether the plaintiffs were appointed to the permanent staff of the defendant in terms of clause 5. The plaintiffs claim that they were contract employees and that they were never on permanent staff. It is true that defendant's Personnel Regulations provide for three categories of employees, namely, permanent staff, contract employees and part-time employees. The regulations were approved by the Board of Directors of the defendant on the 9th August, 1984. The contracts of employment between the plaintiffs and the defendant were signed on the 22nd September, 1982 in the case of the 1st plaintiff and on the 24th September, 1982 in the case of the 2nd plaintiff. It is clear that the regulations were made about two years after the plaintiffs hod signed their contracts and there is no indication that there were any regulations in force at the time the plaintiffs were first employed by the defendant. The words "appointment to the permanent staff" must be given their ordinary meaning.
In The Pocket Oxford Dictionary "permanent" means lasting, intended to last or function, indefinitely (opposite temporary) The plaintiffs served a probationary period of six and three months respectively and alter that they received letters of confirmation. In the case of Langenhorst v. Administrator of Transvaal, 1927 T.P D. 503 the plaintiff was employed by the Education Department, under a document headed "Permanent appointment," as a teacher. Thereafter, in pursuance of a notice dated 15th July, 1925, plaintiff's contract was terminated on 31st December, 1925. Plaintiff sued the department for damages for unlawful dismissal. It was held that the phrase "permanent appointment." was not a condition of the contract
but a representation that the employment was not of a temporary or casual nature.
In the case of Begbie & Co v. Hartman, 1925 T.P.D 446 the headnote reads as follows
"Plaintiff, in reply to an advertisement by defendant for a "blacksmith - top wages and permanent job to a satisfactory man," wrote to defendant "If I meet with your approval, I shall be glad to receive a reply stating particulars re wages and, if suitable, whether absolutely permanent." Defendant replied "Job permanent, we offer £7 for 48 hour week." Plaintiff thereupon began work with defendant, and some three months later defendant terminated plaintiff's services after one week's notice.
Held, that the words "permanent" job" were a reprentation of the nature of the employment and not a condition of the contract, and signified employment for an indefinite period terminable by either side upon giving reasonable notice, that payment by the week was a prima facie indication of an engagement by the week, and that one week's notice was, therefore, sufficient under the circumstances."
In my opinion in the present case the words "appointment to the permanent staff" simply meant that the employment was not of a temporary and casual nature. We cannot resort to the Personnel Regulations of the defendant to find out the definition of permanent staff because at the time the parties entered into the contract the regulations were not in existence. Even if we were to resort to the present Personnel Regulations we would probably find that definition of permanent employee includes a contract employee. I have come to the conclusion that the plaintiffs were on the permanent establishment of the defendant after serving their respective probationary period and that clause 5 applied to them.
I shall now deal with clause 14 of the contract It seems to me that clause 14 explains how automatic renewal of the contract is going to operate. It makes it clear to the employee that unless he
receives a three-month written notice or warning prior to the expiration of the contract, it shall automatically be renewed for a period of one year. The employer probably found it inconvenient to write letters of renewal everytime the contract expired. The employee would also rest assured that his contract would be renewed unless he received a notice to the contrary. However, clause 14 did not in any way deprive the employer of his right to dismiss the employee either on three months notice or summarily at any time during the subsistence of the contract including the period of three months prior to the expiration of the contract.
Clauses 5 and 14 are not in conflict with each other, clause 5 deals with the right of the parties to give three months' notice at any time they feel that the services have to be terminated or to pay cash in lieu of notice. Clause 14 deals with the automatic renewal of the contract and has nothing to do with dismissal. The parties would not have bound themselves that three months prior to the expiration of the contract, no party should have the right to terminate the contract even if he was no longer satisfied with its continuation.
I must repeat that under section 14 (4) (b) of the Employment Act No.22 of 1967 any party to a contract may pay cash in lieu of notice and leave at once or get rid of the employee at once. It is a right which can be exercised by the party even if the other party is unwilling to accept payment in lieu of notice.
Section 13 (4) (b) refers to a waiver and reads as follows "Nothing in this section shall prevent either party to a contract -
from waiving his right to notice on any occasion or from accepting payment in lieu of notice."
The expulsion of the 1st plaintiff who was the General Manager of the defendant, was a serious matter which had to be done after proper legal advice had been taken. The letter was so confused that it even purported to be retrospective and stated that the 1st plaintiff shall be presumed to have started serving his notice on the 12th October, 1984 while he received the notice on the 19th November, 1984. This act was unlawful but the 1st plaintiff suffered no financial loss because he had already received his salary for the period from the 12th October, 1984 to the 31st October, 1984. When the defendant decided to pay him retrospectively, that means he got double pay for that period.
I have said that the attempt to make notice retrospective was unlawful and ultra vires. Section 14 (1) of the Employment Act 1967 provides that the day on which notice is given shall not be included in the period of notice. The defendant did not only include the day on which notice was given but included a period of over thirty days retrospective to the 12th October, 1984 This was a clear violation of the law
The defendant was again in breach of the terms of the contract in that clause 14 made it clear that notice not to renew the contract had to be given three months prior to the expiration of the contract. The notice not to renew the contract was void because it was not given at the right time. I have come to the conclusion that the dismissal of the 1st plaintiff which became effective on the 12th January, 1985 was unlawful and wrongful.
The next question is the amount of damages to which he is entitled. Under normal circumstances the 1st plaintiff would have been given a three months' notice or a three months' notice not to
There was no waiver in the present case, the 2nd plaintiff accepted payment in lieu of notice. The claim of the 2nd plaintiff (Mr. Moepi) must fail. He was given a proper notice on the last day of his contract and was paid ad amount of M3600-00. equal to his salary for three months, in lieu of notice. He has no valid claim against the defendant.
The case of the 1st plaintiff (Mr. T. Tsenoli) is slightly different from that of the 2nd plaintiff in that the letter of notice seems to include both clause 5 and clause 14. The relevant parts are paragraphs 1 and 2 which read as follows
"I write to inform you that it has been decided not to renew your contract when it expires on January 12th, 1985. You shall accordingly serve your reduced period of notice from the date of receipt of this letter.
As a result of the reduced period of notice, the period from the date of receipt of this letter to the 12th of October, 1985 shall duly be paid to you in lieu of notice. The person to whom you shall be handing over to shall be communicated to you shortly,"
It is quite clear that the first sentence in paragraph 1 refers to non-renewal of contract in which case written notice ought to have been given on the 12th October, 1984 in terms of clause 14. The second sentence refers to serving a reduced period of notice and this was a reference to clause 5 because then is nothing in clause 14 concerning reduced notice. The second paragraph clearly refers to clause 5 because it is only in that clause where payment in lieu of notice is stated. It was obviously a confused letter and shows how some companies take serious decisions without referring the matter to their lawyers.
renew the contract. Mr. Pearson submitted that if the Court finds that the dismissal was wrongful and unlawful, the plaintiffs shall be entitled to damages for three months and not for twelve months. The plaintiffs' case is that they were entitled to damages equal to their salaries and other benefits for twelve months being the period the contract would have been automatically renewed.
In my view the matter must be left in the judgment of the Court to fix what is a reasonable period during which the employee who has been wrongfully dismissed may be expected to have got another comparable job. It does not mean that because the employea was wrongfully dismissed he shall be entitled to damages for an indefinite period. If he is unlucky to get another job within a reasonable time, the former employer cannot be punished for that. I am, however, convinced that in assessing what is a reasonable time, the court cannot ignore the period of notice stipulated in the contract because it indicates what the parties intended should be taken as a reasonable period.
In the instant case the parties agreed that a notice of three months should be given by either side, the defendant has failed to do so and is undoubtedly in breach of the terms of the contract and as a result of that 1st plaintiff has suffered damages. He left the employ of the defendant on the 12th January, 1985 and in my view he is entitled to damages for a period of three months commencing from the 13th January, 1985 I regard three months to have been a reasonable time within which he can be expected to have got another job. He did make several attempts to find another job but failed. It can be said that he did try to mitigate his damages and cannot be punished for having failed to get another
job comparable to that from which he was wrongfully and unlawfully dismissed. His damages shall be calculated as follows
(i) Salary at M1250.00 x 3 = M3750-00
(ii) Housing subsidy at M450-00 x 3 = M1350-00
(iii) Car allowance at M400-00 x 3 = M1200-00
(iv) Leave at M41.10 x 6 = M 246-60
TOTAL = M6546-60
Less salary 12th October to 31sr October 1984 = M 822-00
Plus interest at 11% a tempore morae.
I have excluded pension contributions because it turned out during the trial that it had been settled.
Regarding the counterclaim, Mrs Mapetla (D.W.3) denied that she gave the plaintiff the authority to use the vehicle. I find in most improbable that Mrs Mapetla could allow an employee of the defendant who was being dismissed for incompetence to use the corporation's vehicle after his dismissal. According to Mrs Mapetla the handing over was to be on the 13th January, 1985 but the plaintiff in convention did not turn up. It is not clear when Mrs. Mapetla allowed him to use the vehicle. In any case because of his hostile attitude towards her it is unlikely that she could do him such a favour.
In my view the plaintiff in reconvention has discharged the onus on a balance of probabilities and judgment must be entered in its favour.
There will be judgment for the 1st plaintiff, Mr. T. Tsenoli, in the sum of M5724-60 with costs and interest at the rate of 11% a tempore morae, less income tax.
There shall be judgment for the plaintiff in reconvention for the sum of M300-00 with costs.
The claim of the 2nd plaintiff, Mr. M. Moepi, is dismissed with costs.
10th March, 1988.
For Plaintiffs - Mr. L. Pheko
For Defendant - Mr. Pearson.
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