South African Post Office Ltd v Mampuele (JA29/09) [2010] ZALAC 15; (2010) 31 ILJ 2051 (LAC) ; [2010] 10 BLLR 1052 (LAC) (4 June 2010)

Principle:

Parties to an employment contract cannot contract out of the protection against unfair dismissal afforded to an employee whether through the device of 'automatic termination' provisions or otherwise, because the Act had been promulgated not only to cater for an individual's interest but the public's interest.

Facts:

Mampeule was appointed as the SAPO's Chief Executive Officer on 30 October 2005 on a 5 year fixed term contract. The contract also provided for simultaneous appointment as Executive Director on the SAPO's Board of Directors. SAPO's Articles of Association (in particular, Article 8.3) provide that if an executive director ceases to be a director of the company for any reason whatsoever, his contract of employment shall terminate automatically and simultaneously with the cessation of his office as an executive director of the company.

On 21 May 2007 the Minister, on behalf of SAPO's sole shareholder, removed Mampeule from the office of director. On 22 May 2007 SAPO then sent a letter to Mampeule informing him of the shareholder resolution, stating that his contract of employment terminated automatically and simultaneously with the cessation of office as executive director of the company. Mampeule challenged his dismissal.

The court was required to deal with the validity of an automatic termination clause in a contract of employment. The court a quo had held that automatic termination provisions are impermissible in their truncation of the provisions of chapter 8 of the LRA, and possibly even, the concomitant constitutional right to fair labour practices. The court further held that these provisions are contrary to public policy as statutory rights conferred on employees for benefit of all employees and are incapable of consensual validation. On appeal the court a quo's decision was upheld.

Extract from the judgment:

(Patel JA)

[22]   Mampeule, in my view, has correctly premised his defence to SAPO's point in limine that section 5 of the Act which affords him protection taken together with clause 9.1 of his contract, the relevant portion of which has been quoted above, must trump the "automatic termination" provision of the contract. Section 5(2)(b) provides:

". . . no person may do, or threaten to do, any of the following . . . prevent an employee . . . from exercising any right conferred by this Act."

Section 5(4) further provides:

"A provision in any contract, whether entered into before or after the commencement of this Act, that directly or indirectly contradicts or limits any provision of section 4, or this section, is invalid, unless the contractual provision is permitted by this Act."

[23]   The onus rested on SAPO to establish that the "automatic termination" clause prevails over the relevant provisions in the Act and clause 9.1 of the contract. A heavier onus rests on a party which contends that it is permissible to contract out of the right not to be unfairly dismissed in terms of the Act. I am in agreement with the submission made by Mampeule's counsel, supported by authorities, that parties to an employment contract cannot contract out of the protection against unfair dismissal afforded to an employee whether through the device of "automatic termination" provisions or otherwise because the Act has been promulgated not only to cater for an individual's interest but the public's interest (see Brassey Commentary on the Labour Relations Act at A2-9 and A2-11; SA Eagle Insurance Co Ltd v Bavuma1985 (3) SA 42 (A) at 49G-H [also reported at [1985] 2 All SA 190 (A) - Ed]; Bafana Finance Mabopane v Makwakwa& another 2006 (4) SA 581 (SCA) at paragraph [10] [also reported at [2006] 4 All SA 1 (SCA) - Ed] and Denel (Pty) Ltd v Gerber [2005] 9 BLLR 849 (LAC) at 24). The court a quo was thus correct when it held at paragraph [46] that:

"Provisions of this sort, militating as they do against public policy by which statutory rights conferred on employees are for the benefit of all employees and not just an individual, are incapable of consensual validation between parties to a contract by way of waiver of the rights so conferred."

[24]   In the absence of a clear explanation by the SAPO as to why Mampeule was suspended and why it belatedly used the 'Automatic termination' provision in its articles of association and considering its response as advertised to above, the inference is overwhelming that SAPO's conduct was designed to avoid its obligations under the act. I am satisfied that the court a quo through a process of purposive interpretation came to a correct decision and in no way misdirected itself. In light of this conclusion it is in my view, unnecessary to consider the constitutionality vel non of the 'automatic termination' clause.