IN THE LABOUR COURT OF SOUTH AFRICA

HELD AT JOHANNESBURG

CASE NO J463/97

In the matter between :

B SCHWEITZER							Applicant

and

WACO DISTRIBUTORS					Respondent

JUDGEMENT

ZONDO J :

Introduction

	[1]	The applicant, a man aged 68 this year, was employed by the respondent for many years as a product manager. He was dismissed from the respondents employment with effect from the 30th April 1997. Pursuant to his dissatisfaction with that dismissal, the applicant has brought an unfair dismissal claim in this Court against the respondent. He seeks compensation. From the beginning the respondent has maintained that the dismissal was fair and justified. The broad issue for this court to decide in this matter is therefore whether or not the applicant’s dismissal was fair. If the Court found that the dismissal was unfair, it would also have to decide what relief, if any, should be afforded the applicant.

	[2]	The matter came before me as a trial. Both parties led oral evidence. The applicant testified on his own behalf. He did not call any witness. The respondent’s first witness was its managing director, Mr Lipson. Its other witness was one Mr Thomas Lemkhe who took the applicant’s position after the latter’s dismissal.

	[3]	In 1995 the applicant and the respondent’s Mr Lipson interviewed one Mr Thomas Lemkhe. The applicant testified that the vacancy which needed to be filled was for someone who would have to work out in the field visiting customers and marketing the respondent’s product. He also testified that his job was an office-bound one. Subsequent to two interviews Mr Lemkhe was appointed. While on the one hand Mr Lemkhe’s functions took him out of the office most of the time to visit customers and market the respondent’s product, the applicant performed his functions in his office. Mr Lipson testified that it was agreed between himself and the applicant that Mr Lemkhe would, once he was ready, take over from the applicant and the applicant would retire. The applicant denied this evidence and said that what Mr Lipson had told him was that Mr Lemkhe would take over from him if he (i.e. the applicant) became incapacitated and could no longer perform his duties. Because of the view I take of this matter and the basis of the conclusion I have reached, it is not necessary to resolve this conflict. I will assume in the applicants favour that there was no agreement such as was suggested by Mr Lipson.

	[4]	Sometime in January or February 1997 Mr Lipson had called the applicant into his office saying  that he needed to discuss something with him. The respondent’s version was that after some discussion on that occasion an agreement had been reached that the applicant would retire with effect from the 1st May 1997. The applicant denied any such agreement. Mr Bleazard indicated to the Court during argument that, for the purpose of argument, he would not rely on the alleged agreement to justify the dismissal. At any rate it was clear when Mr Lipson gave his evidence that there was no such agreement. Mr Lipson testified that the respondent’s case that there was an agreement with the applicant in this regard was based on the fact that the applicant had not objected at that meeting to the idea of retiring when the idea was raised with him by Mr Lipson.

On the applicant’s version on this occasion he was called to Mr Lipson’s office where Mr Lipson told him that Mr Lemkhe was getting impatient. The applicant had enquired why to which Mr Lipson had replied by saying it was time Mr Lemkhe took over. The applicant then asked Mr Lipson whether he meant that he was kicking him (the applicant) out. Mr Lipson had agreed that this was the case. The applicant had felt very unhappy. This was referred to as retirement. At some stage during that meeting the applicant was told that his retirement would take effect from the 1st May 1997. Mr Lipson’s evidence was that an earlier date had been contemplated or discussed but finally the 1st May was agreed. The applicant testified that he asked what package he was going to get but Mr Lipson had told him none. It would appear that the applicant did not raise this issue of his retirement with Mr Lipson or any one from the respondent until on the 21st April 1997 he addressed a letter to Mr Lipson in which he expressed his dissatisfaction about his “forced retirement”. In particular he complained that there had been no discussions with him on alternatives.

	[5]	The respondent did not hold any discussions with the applicant on alternatives available after his letter. On the evidence that was led it was clear that the applicant was not afforded a fair hearing before the decision was made to dismiss him nor was he consulted in any way on that occasion or thereafter. In so far as the respondent may have contended otherwise, I find that such contention was not supported by evidence at all. Although there was evidence led on the other aspects of the case other than that which I have referred to above, it is not necessary to refer to such aspects because of  the conclusion to which I have arrived and the basis thereof.

	[6]	The reason advanced by the respondent for the dismissal of the applicant was that he had gone past the agreed or normal retirement age of the respondent which is 65. The applicant had turned 65 in 1994 but continued to perform his duties without any change until he was dismissed in 1997. When the applicant was dismissed, he was 67 years old. It was common cause between the parties that the dismissal of the applicant was not based on any complaint on the respondent’s about his work performance. Indeed, it was common cause that the applicant’s dismissal was not in any way based on any conduct on his part. The ground on which the applicant challenged his dismissal in terms of his statement of claim was that it was a dismissal for operational requirements and that the respondent had failed to comply with its obligation in terms of sec 189 of the Labour Relations Act, 1995 (Act No 66 of 1995) (“the Act”). Sec 189 is the section that sets out the procedure to be followed by an employer when it contemplates dismissal for operational requirements. During argument Mr Greenstein, who appeared for the applicant, abandoned this ground of challenge. For that reason I will leave it out of consideration in this judgement.

	[7]	The applicant had an alternative ground of challenge in its statement of claim. The alternative ground was that the dismissal constituted an unfair discrimination based on age and was therefore automatically unfair in terms of sec 187(1) of the Act. This is the ground of challenge which was pursued on behalf of the applicant. The applicant challenges both the substantive as well as the procedural fairness of his dismissal. Although the respondent’s defence to the applicant’s claim included an allegation that the applicant had agreed to his dismissal which was a retirement, Mr Bleazard, who appeared for the respondent, informed the Court during argument that, for the purpose of his argument in this matter, he was not relying on the existence of such agreement. The Court will therefore not consider this alleged agreement.

	[8]	I have alluded above to the fact that oral evidence was adduced by both sides in this matter. Because of the nature of the defence pursued by the respondent and the conclusion that I have reached, I do not propose dealing much with the oral evidence that was led. What I have said above will, in my view, together with what I say below, suffice.

	[9]	Apart from challenging his dismissal on the grounds of age as being unfair per se, in his statement of claim the applicant advanced two other grounds on which he challenged his dismissal. The one was that there was another employee employed by the respondent who had not been dismissed and yet had gone past the age of 65. The respondent admitted that there was such an employee but alleged that the only reason such employee had not been dismissed was that a suitably qualified replacement had not as yet been found and, as soon as such replacement was found, the employee concerned would also be dismissed. This evidence by Mr Lipson was not challenged. Accordingly it disposed of the one ground on which the applicant complained that he had been unfairly discriminated against on the basis of age.

	[10]	The applicant stated his other ground of complaint about his dismissal on grounds of having gone past the agreed or normal retirement age as being that the respondent “had never established what the agreed or normal age of retirement for persons in the [applicant’s] position or capacity happened to be”.  The statement of claim continued thus in this regard : “The applicant, despite his request, was not shown the respondent’s accepted retirement policy and denies that the respondent has ever indicated that it wished to retire him at a particular age or time”. Among the bundle of documents in the agreed bundle which was admitted was documentation relating to the respondents provident fund. That documentation, inter alia, indicated quite clearly that the employees to whom it applied (and this included the applicant) would normally retire at the age of 65 unless the respondent gave consent in a particular case for an employee to retire earlier or later than that age. In that event the earliest would be 60 and the latest would be 70. It became common cause during the trial that at some stage while in the respondents employment, the applicant signed a document which had as one of its pages the  page stating what I have just said above as the retirement policy of the respondent.  In the light of this both parties presented their argument  on the basis of an acceptance that the respondent’s agreed or normal retirement age which was applicable to the applicant was 65.

The applicant’s main contentions
	[11]	Against the above factual background, the applicant contended that his dismissal was substantively and procedurally unfair. Substantively unfair, he contended, because the dismissal of an employee because of his age is an automatically unfair reason to dismiss (and therefore such dismissal is automatically unfair in terms of sec 187 (1)(f) of the Act). Procedurally unfair, he contended, because the respondent failed to follow a fair procedure before it dismissed him.

The respondent’s defence
	[12]	The respondent’s defence was that it was entitled to dismiss the applicant simply on the ground that he had gone past the age of 65 years which was the agreed or normal retirement age applicable to him. In support of its defence the respondent relied on the provisions of sec 187 (2)(b) of the Act. It was also argued on the respondent’s behalf that there was no obligation on the respondent in the circumstances of this case to follow any procedure other than to give the contractual notice of the termination of the applicant’s contract of employment which it did. I turn now to consider these arguments.

Substantive Fairness
	[13]	The enquiry on whether or not the dismissal was substantively unfair, the point of departure is, in my view, the reason for dismissal. Was the reason for dismissal a fair reason? In this case the reason for the dismissal of the applicant was that he had gone past the agreed or normal retirement age. The question therefore is : Is that by itself a fair reason to dismiss irrespective of the fact that neither the performance of the employee or the employer’s operational requirements are affected adversely by his age? In order to properly appreciate the matter is it necessary to refer not only to sec 187(2)(b) but also to sections 185, 186 and 187 of the Act. Sec 185 says every employee “has the right not to be unfairly dismissed”. Sec 187(1)(f) and 187(2) read :-
“187 Automatically unfair dismissals
(1)	A dismissal is automatically unfair if the employer, in dismissing the employee, acts contrary to section 5 or if the reason for the dismissal is :-
(a) ..............
(b) .............
(c) ..............
(d) .............
(e) .............
(f)	that the employer unfairly discriminated against an 				employee, directly or indirectly, on any arbitrary 				grounds including but not limited to race, gender, sex, 			ethnic or social origin, colour, sexual orientation, age, 			disability, religion, conscience, belief, political 				opinion, culture, language, marital status or family 				responsibility.
(2)	Despite subsection 1(f) -
(a)	a dismissal may be fair if the reason for dismissal is 			based on an inherent requirement of the particular 				job;
(b)	a dismissal based on age is fair if the employee has 			reached the normal or agreed retirement age for 				persons employed in that capacity”.

	[14]	I will refer to the provisions of sec 186  later. The provisions of sec 187(1)(f) render a dismissal based on age automatically unfair. Sec 187(2)(b) provides an exception to sec 187(1)(f). Accordingly, where sec 187(2)(b) is applicable, a dismissal purely on grounds of age is not automatically unfair. The question which arises at this stage is whether or not sec 187(2)(b) is applicable to this matter. In order to determine whether sec 187(2)(b) is applicable in a particular case, the questions that need to be asked are :-
(a)	Was the employee’s dismissal based on age?
(b)	If the answer to question (a) is in the affirmative, did the employer have a normal or agreed retirement age for persons employed in the 	capacity in which the employee was employed? If yes, what was it?
(c)	If the answer to the first question in (b) above is in the affirmative, 	had the employee reached such retirement age at the time of his 		dismissal?
 
If the answer to question (c) above is also in the affirmative, then sec 187(2)(b) is applicable in the case. If the answer to anyone of the above questions is in the negative, then sec 187(2)(b) does not apply. In this case the answers to all the three questions are in the affirmative. In the premises I find that sec 187(2)(b) is applicable to this case.

	[15]	The conclusion that sec 187(2)(b) applies in this case necessarily means that the dismissal of the applicant on grounds of age is not automatically unfair and, therefore, sec 187(1)(f) finds no application in the matter. That, however, is not necessarily the end of the matter as the next question is whether the dismissal falls into the category of simply unfair dismissals. If the dismissal is not an automatically unfair one, it may be that it is unfair on grounds other than the grounds referred to in sec 187(1). Whether or not the fact that an employee has gone past the agreed or normal retirement age is a fair reason to dismiss depends, in my view, on the meaning of the provisions of sec 187(2)(b). I turn to consider those provisions.

	[16]	Initially I thought the provisions of sec 187(2)(b) could not apply to a matter such as this one where the employee has not only reached but has gone beyond the agreed or normal retirement age. The basis for this thought was that to apply sec 187(2)(b) when the employee has gone past the agreed or normal retirement age would be extremely unfair and inequitable because the employer would be dismissing the employee purely on grounds of age and would be doing so in circumstances where there is no complaint that the age of the applicant is affecting his job performance or competence adversely nor would it be in circumstances where there is a complaint that the operational requirements of the employer are adversely affected by the employee’s age. It seemed to me that that would mean that, prior to reaching the agreed or normal retirement age, the employee has the right not to be dismissed unless there is a fair reason and the employer has followed a fair procedure and yet the moment the employee has gone past the normal or agreed retirement age, he/she is suddenly without such a right. I thought that the legislature could never have intended to enact provisions with such far- reaching implications without making that intention clear. Not believing that such a serious inroad into the employee’s right  not to be unfairly dismissed could have been intended by the legislature in enacting sec 187(2)(b), it appeared to me that sec 187(2)(b) applied to a situation where the employee was dismissed on reaching the agreed or normal retirement age and not where he has gone beyond that.

However, I subsequently became convinced that sec 187(2)(b) could not apply  where a contract of employment came to an end on the employee reaching the normal or agreed retirement age because, if one considers the definition of the word “dismissal” in sec 186 carefully, it cannot be said that, in such a situation the employee is being dismissed. This is so because in that situation the contract of employment comes to an end by the effluxion of time on the employee reaching  that age without the employer having to do anything. 
	[17]	In sec 186 dismissal is defined as meaning :-
“186 “dismissal” means that -
(a)	an employer has terminated a contract of employment 			without notice;
(b)	an employee reasonably expected an employer to renew a 			fixed term contract of employment on the same or similar 	terms but the employer offered to renew it on less 				favourable terms, or did not renew it;
(c)	an employer refused to allow an employee to resume work 			after she -
(i)	took maternity leave in terms of any law, collective 			      	agreement or her contract of employment; or
(ii)	was absent from work for up to four weeks before the 			     expected date, and up to eight weeks after the actual 			    date, of the birth of her child;
	(d)	an employer who dismissed employees for the same or 				similar reasons has offered to re-employ one or more of them but has refused to re-employ another; or
(e)	an employee terminated a contract of employment with or 		     without notice because the employer made continued 		                	employment  intolerable for the employee”.

	[18]	Bearing in mind, therefore, that sec 187(2)(b) refers to a dismissal, the position would be that the dismissal referred to in sec 187(2)(b) which is said to be fair is a dismissal as defined in sec 186. Dismissal in sec 187(2)(b) cannot carry a meaning which is different from the meaning of dismissal in sec 186. The fact that the coming to an end of the contract of employment by effluxion of time is not contemplated in the definition of dismissal in sec 186 meant that the dismissal in sec 187(2)(b) must include a dismissal after the employee has gone past the agreed or normal retirement age. That is the situation in this matter.

	[19]	The one part of the thrust of Mr Greenstein’s argument was that sec 187(2)(b) only applies to the “dismissal” of an employee on reaching the agreed or normal retirement age and not where, as in this case, the employee has gone past that age. When he was confronted with the proposition from the Bench that on such occasion what happens is not a dismissal as defined in sec 186 but the coming to an end of the contract of employment by the effluxion of time, Mr Greenstein conceded this but persisted in the argument that that is the situation to which sec 187(2)(b) applies. As I have said already that is, in my view, not the correct interpretation of sec 187(2)(b).

	[20]	The next part of Mr Greenstein’s argument was that the dismissal was unfair because the respondent had not followed a fair procedure before it dismissed the applicant. This submission raised the question as to where the duty , if any, on the employer’s part to follow a fair procedure before dismissing an employee in circumstances where sec 187(2)(b) applies is derived from. That question must be considered together with the question of what role, if any, the duty to follow a fair procedure plays in such a dismissal. On the respondent’s behalf it was argued that in a case where sec 187(2)(b) applies, there is no duty on the employer to follow any procedure other than the giving of the contractual notice of termination.

	[21]	Asked where the duty to follow a fair procedure in a case such as this was derived from, Mr Greenstein submitted that it was derived from the provisions of sec 188(1)(b) of the Act. Sec 188 says :-
“188 other unfair dismissals
(1)	A dismissal that is not automatically unfair is unfair if the 	employer fails to prove -
(a) 	that the reason for dismissal is a fair reason -
(i)	related to the employee’s conduct or capacity; 				or
(ii)	based on the employer’s operational 						requirements; and
 (b)	that the dismissal was effected in accordance with a 				fair procedure”. (underlining supplied).

	[22]	At first glance I gained the impression that the duty to follow a fair procedure contained in sec 188(1)(b) applies to those cases where the reason for dismissal relates to conduct, capacity or the operational requirements of the employer. This impression could only hold if the “and” coming after par 1(a)(ii) were conjunctive. However, I think it is disjunctive. The result of this may be that, even if a dismissal does not fall within the categories in par (a)(i) or (a)(ii), it may still be governed by the duty to follow a fair procedure referred to in sec 188(1)(b).

The categories of dismissals appearing in sec 188(1)(a)(i) and (ii), namely, dismissals for conduct, dismissals based on capacity (or incapacity to be accurate) and dismissals based on operational requirements are not the only categories of dismissals in our law. There are dismissals which have nothing to do with either conduct, capacity or the operational requirements of the employer. Sec 187(1)(f) provides a good example of the latter category of dismissals.

	[23]	Seeking support for his submission that even in a case where sec 187(2)(b) applied, the employer had a duty to follow a fair procedure, Mr Greenstein referred to the provisions of sec 194. He argued that sec 194 was worded in a manner which is inconsistent with the submission that there is a category of dismissals to which the duty to follow a fair procedure does not apply and that such a duty applies only in respect of dismissals based on conduct, capacity or operational requirements. Mr Bleazard sought to counter this argument by submitting that sec 194 deals with the capping of compensation and nothing else and is of no assistance in the inquiry at hand. Here are the provisions of sec 194:-
“194 Limits on compensation
	(1)	If the dismissal is unfair only because the employer did not 			follow a fair procedure, compensation must be equal to the 	remuneration that the employee would have been paid between 	the date of dismissal and the last day of the hearing of the arbitration or adjudication, as the case may be, calculated at the rate of the employee’s rate of remuneration on the date of dismissal. Compensation may however not be awarded in respect of any unreasonable period of delay that was caused by the employee in initiating or prosecuting a claim.
	(2)	The compensation awarded to an employee whose dismissal 			is found to be unfair because the employer did not prove 			that the reason for dismissal was a fair reason related to the employee’s conduct, capacity or based on the employer’s 		operational requirements, must be just and equitable in all 	circumstance, but not less than the amount specified in 		subsection (1), and not more than the equivalent of 12 	months’ remuneration calculated at the employee’s rate of remuneration on the date of dismissal.
	(3)	The compensation awarded to an employee whose dismissal 			is automatically unfair must be just and equitable in all 				circumstances, but not more than the equivalent of 24 	months’ remuneration calculated at the employee’s rate of remuneration on the date of dismissal”.

	[24]	I am inclined to agree with Mr Greenstein that sec 194 is worded in a manner which is inconsistent with the notion that there are dismissals in respect of which the Act contemplates that the duty to follow a fair procedure will not apply to as a matter of principle or policy as opposed to circumstances where such a duty cannot be applied in a particular case due to particular circumstances. Had it been otherwise one would have expected sec 194 (1) to say for example in part: “If a dismissal [based on a reason relating to conduct, capacity or operational requirements] is unfair only because .....”. The words in the brackets are the words that one can imagine could have been inserted for example if it was intended that the requirement of following a fair procedure would apply only to the categories of dismissals referred to in sec 188(1)(a)(i) and (ii). Instead sec 194(1) is framed in a neutral manner.

	[25]	It will be seen that, whereas sec 194(1) does refer to a dismissal, it does so without referring to any categories of dismissals. In the light of this it is significant that sec 194(2) refers specifically to specified categories of dismissals, namely, those based on conduct, capacity and operational requirements. The specific reference to those categories of dismissals would mean that a dismissal contemplated in sec 189(1)(f), such as in this case, would not be governed by sec 194(2). It is also significant that sec 194(3) makes a specific reference to a particular category of dismissals, namely, automatically unfair dismissals - which means that those dismissals which are not automatically unfair would not be affected by sec 194(3).

	[26]	Having said all that I have said above with regard to sec 194(1), (2) and (3) with reference to the duty to follow a fair procedure, I am, however, unable to hold that, in this case, there was a duty on the respondent to follow any procedure other than giving the contractual notice of termination. The wording of sec 187(2)(b) needs to be looked at very carefully. Because of the significance of that wording I consider it warranted to quote sec 187(2)(b) again. Sec 187(2)(b) says despite sec 187(1)(f) “a dismissal based on age is fair if the employee has reached the normal or agreed retirement age for persons employed in that capacity”.

What this Court has jurisdiction to adjudicate with regard to dismissal disputes is  the fairness or otherwise of such dismissals. That this is the case can be traced to sec 191(1). Sec 191(1) says if “there is a dispute about the fairness of a dismissal”, that dispute may be referred to conciliation and, thereafter, either to arbitration or to this Court for adjudication.
	[27]	The above therefore means that, when a dismissal dispute comes before this Court for adjudication, as this particular matter has, the inquiry is whether or not the dismissal was fair and the Court has to pronounce on that issue. The particular language which the legislature has chosen to use in sec 187(2)(b) means that, when a dispute about the fairness of a dismissal based on age comes before this Court, all things being equal, the enquiry in relation to the fairness of the dismissal can only relate to whether the conditions necessary for sec 187(2)(b) to apply exist. Once it is established that they do exist, and it has been established that the dismissal is one based on age, the statute itself pronounces on the fairness of the dismissal; it states that such dismissal “is fair”. Once those conditions are found to exist, there is nothing left for the Court to pronounce on. The conditions which must exist in order for a dismissal to be fair in terms of sec 187(2)(b) are the following :-
(a)	the dismissal must be based on age;
(b)	the employer must have a normal or agreed retirement age for persons 	employed in the capacity of the employee concerned;
(c)	the employee must have reached the age referred to in (b) above.

Once all these three conditions are present, as is the case in this matter, sec 187(2)(b) says the “dismissal is fair”.  The Court has no competence to enquire into the fairness of the dismissal save, maybe, to declare what the statute says anyway. In this context I am of the opinion that such fair procedure as the employer may be obliged to follow in a case such as this one can only be aimed at giving the employee a hearing on whether or not those conditions exist. I have been driven to the conclusion that I have reached by the specific language used by the legislature in sec 187(2)(b). It is, in my view, significant that in sec 187(2)(b) the legislature has said “is fair” and not “may be fair”. In my view it is this choice of words that has the effect of placing a limitation on the enquiry which the court may embark upon in a case such as this one. In sec 187(2)(a) the legislature says despite sec 187(1)(f) “a dismissal may be fair if the reason for dismissal is based on an inherent requirement of the particular job”. (my underlining). Of significance in subsection (1)(a) is the choice of the words “a dismissal may still be fair” when in par (b) the words chosen are “a dismissal is fair”. Later on in sec 188 (1) and (2) “a dismissal is fair” is used again but in those instances it is directed at only the reason for dismissal as opposed to the entire dismissal. The same is true of the use of “is automatically unfair” in sec 187(1). Sec 26 (6) has a similar wording albeit in the double negative (which produces a positive). It says: “it is not unfair to dismiss an employee -
(a)	for refusing to join a trade union party to a closed shop 	agreement;
(b)	who is refused membership of a trade union party to a closed shop agreement if the refusal is in accordance with the provisions of subsection (5); or
(c)	who is expelled from a trade union party to a closed shop 			agreement if the expulsion is in accordance with the 			provisions of subsection (5)”.

In my view there would be no justification for not giving effect to sec 187(2)(b) as it is. To give effect to it means in this case the respondent was under no obligation to follow any particular procedure once the conditions contemplated in sec 187(2)(b) were present. I assume that it was obliged to give contractual notice of  termination. It must have been so obliged. However, I do not have to decide this because there is no dispute about it in this case. Accordingly the dismissal of the applicant is said by sec 187(2)(b) to be fair. I am alive to the far reaching implications of this construction of sec 187(2)(b) but I consider that that is the construction which is called for by the particular language employed by the legislature in sec 187(2)(b) and effect must be given to it. There may well be social policy reasons for the provisions of sec 187(2)(b) which may include the opening of job opportunities in the labour market for younger members of our society in an environment of an ever increasing rate of unemployment. It is possible that the legislature took the view that the loss of experience which goes with advanced age is a fair price to pay in  order to achieve the accommodation of younger members of society in the job market.

Lastly I consider that no order for costs is warranted in this case because this case is a novel one under the new Act. Accordingly the applicant’s claim is dismissed with no order as to costs.

R. M. M. ZONDO
Judge : Labour Court of  South Africa 

Date of trial			:	14 and 15 May 1998
Date of argument		:	11 July 1998
Date of Judgement	:		28 July 1998
For the Applicants	:		Mr Greenstein
Instructed by		:	Swartz Sutcliffe Attorneys
For the Respondent	:	Mr B. Bleazard
Instructed by		:	Attorneys Brian Bleazard