Can Years Of Erroneous Payments Form Part Of Employment Terms And Conditions?

This dispute pertains to an alleged unilateral change to the Applicants terms and conditions of employment and in the alternative, they alleged that the withdrawal of erroneous payments amounted to a breach of contract.

BACKGROUND

Mr Cele and 3 others were employed by Eskom as principal clerks in the Billing Department. In 1999, Eskom introduced a two-shift system in its processing centre arranged from 6am – 2pm and another from 2pm – 10 pm. Employees were paid a shift allowance which was later reflected in their payslips as “fixed monthly payments”. Eskom had continued to pay the fixed monthly payments from 2002 until August 2012 despite shifts having been stopped in 2002. This anomaly was pick up during an audit that was done during 2011. On the 6th of February 2012, Eskom held a shift allowance meeting with the employees and advised them that the shift allowance will be phased out over time. On the 1st of March 2012, Eskom followed up by issuing letters to the employees advising them that the shift allowance will be discontinued in the next six months. On the 29th March 2012 NUMSA referred the dispute to CCMA for conciliation but later withdrew the application. On 25 July 2012 NUMSA wrote a letter to Eskom requesting it to cancel the withdrawal of the employees’ fixed monthly payments as the employees had tailored their lifestyles around the payments and further that they had long term financial commitments. Eskom did not respond to the letter and also to NUMSA’s attorneys’ letter. The allowance was discontinued by end of August 2012. On the 2nd of October 2012 NUMSA referred the dispute to the CCMA. At a conciliation held on the 29th October 2012, the dispute could not be resolved. The union referred the matter to the Labour Court under Section 77 of the Basic Conditions of Employment.

UNION SUBMISSIONS

  • No meaningful consultation but they were just informed;
  • Eskom could have picked up the error as early as the 2002 audit;
  • Payments could not have been an error as it was paid over a lengthy period;
  • Eskom did not have unilateral rights to tamper with the individual employee’s terms and conditions of employment without a proper and meaningful consultation;
  • The fixed monthly payment form part of their terms and conditions of services;
  • Payment was seen as a “quid pro quo” for their being willing to work shifts.

RESPONDENT’S SUBMISIONS

  • Eskom was not obliged to consult but had done so individually and collectively and that the termination of the payments was not unilateral;
  • Consultations were meaningful in that, the employees were afforded an opportunity to adjust their lifestyles;
  • The error did not create a legal obligation to continue paying when none existed and were the employees unjustly enriched as a result of the error;
  • Continued payment did not in law gave rise to an obligation to continue paying;
  • Erroneous payment did not give rise to a legal obligation.

ISSUES FOR DETERMINATION

The Labour Court had to determine whether the withdrawal of monthly fixed payment by Eskom to the employees was justifiable; whether these payments had become part of their terms and conditions and whether or not erroneous payments created a legal duty to continue paying even in the absence of shifts.

LEGAL PRINCIPLES

Courts have determined that there is a distinction between terms and conditions of service and mere work practices. In Pick it up Johannesburg (SOC) v South Africa Municipal Workers Union and others and Precision Tools V NUMSA the court held that:

A term or condition of employment emanates from an employment contract or collective agreement’

‘Work practices’ are the employer’s prerogative.

The ‘test’ to determine whether a particular aspect constitute a condition of service or work practice thus requires an examination of:

  • the employees contracts of employment;
  • any other document regulating the relationship such a collective agreements.
  • any additional terms that can be implied from the parties’ conduct or from custom and practice.

APPLYING LEGAL PRINCIPLES

The court, after citing several cases, determined that what was put in place with the two shift system amounted to a new work practice which was accordingly compensated. A charge to the shift system is not in itself a unilateral charge to an employee’s terms and conditions of employment but merely a change to the employer’s work practice.

CONCLUSION

The Court accordingly concluded that there was no unilateral change to the terms and conditions of employment and was satisfied that the applicants were timeously and properly consulted and given a further six months warning that the payments would be stopped. This time afforded the employees enough time to adjust their lifestyles accordingly.

By Abi Matjila
abious@dyason.co.za