Case Number: ELRC88-20/21EC
Province: Eastern Cape
Applicant: SAOU obo Zeelie, Christo
Respondent: THE HEAD OF THE DEPARTMENT OF EDUCATION
Issue: Unfair Labour Practice - Provision of Benefits
Award Date: 10 September 2020
Arbitrator: J KIRBY
IN THE ELRC ARBITRATION
SAOU obo Zeelie, Christo “the Applicant”
THE HEAD OF THE DEPARTMENT OF EDUCATION –
Eastern Cape “the Respondent”
Case Number: ELRC88-20/21EC
Date of arbitration: 10 September 2020
Date of award: 04 October 2020
Education Labour Relations Council
261 West Avenue
Tel: 012 663 0452
Fax: 012 643 1601
DETAILS OF HEARING AND REPRESENTATION
The arbitration heard on 10 September 2020, was a virtual hearing.
Ms C Stander, an official and representative of the SAOU, was present together with its member, Christo Zeelie (the Applicant.) Ms Stander handed in bundle of documents pre-numbered pages 1-29. As the documents had to be emailed, this was done under cover of two separate emails; the first bundle comprising of pages 1-14 and the second bundle consisting of pages 15-29. A written submission was also submitted after the Respondent had made a written statement of fact as indicated below.
The Respondent, Department of Education: Eastern Cape was represented by its employee, Mr E Hector. He submitted a written statement of fact once he had heard the Applicant’s opening address.
The proceedings were digitally recorded.
TERMS OF REFERENCE AND ISSUES TO BE DECIDED
The principal issue I am required to determine is whether the Respondent applied the provisions of ELRC Resolution 7 of 2001 (read with chapter H of the Personnel Administrative Measures (PAM) correctly insofar as it relates to the payout of accumulated leave credits due to the Applicant on his retirement. The dispute was referred to arbitration by the General Secretary of the ELRC in terms of clause 69(5) of the ELRC Constitution-Dispute Resolution.
As will become evident from this award, the Respondent did not dispute the merits of the Applicant’s claim. It did, however, require rulings in respect of the following three preliminary issues before the merits of the dispute referred on behalf of the Applicant could be considered:
Whether the Applicant was late in his referral and hence is required to apply for condonation;
Whether the Applicant has correctly described his dispute as being one framed as being in respect of the enforcement of a collective agreement or whether it should have been referred to the ELRC as a dispute involving the failure to provide benefits in terms of section 186(2) of the Labour Relations Act 66 of 1995 (LRA;) and
Whether the ELRC has jurisdiction to hear this dispute in that the Applicant retired on 31 December 2018 and as such was no longer an employee of the Respondent when the dispute was referred to the ELRC in July 2020.
THE PRELIMINARY ISSUES
The Respondent’s submissions
The Respondent did not make any submissions in respect of the issues dealt with in paragraphs 6.2 and 6.3 above, save for requesting that rulings be made in respect of the issues raised by it.
With regards to its submission that the Applicant’s referral was late and condonation of the late referral is required, it was submitted that the Applicant’s referral ought to have been made within a reasonable period of his retirement on 31 December 2018. In this regard, it was submitted that a “reasonable period” would have been three months yet it had only been referred in July 2020, about twenty months after his retirement.
The Applicant’s submissions
It was submitted that the Applicant’s trade union was entitled to refer this dispute to the Council for resolution and that the dispute had been correctly described as being involving compliance with the provisions of a collective agreement read with the Basic Conditions of Employment Act 75 of 1997 (BCEA.)
With regards to the alleged need for the Applicant to have applied for condonation of his referral, it was submitted that the referral was not late. Prior to the referral, the Applicant had been in communication with the Respondent.
Analysis of submissions in respect of the preliminary issues
Paragraph 5 of annexure A to ELRC Resolution 7 of 2001 provides, inter alia, that educators shall retain all audited leave credits accrued prior to July 2000 and that payouts of such leave credits shall be made in the event of retirement. As will become evident below, the Respondent does not dispute that it has failed to pay the Applicant the amount due to him for his audited leave credits.
Clause 69.5 of the ELRC Constitution-Dispute Resolution states that:
“The General Secretary may on own discretion … refer any unresolved dispute concerning compliance with any provision of a Collective Agreement to arbitration.”
Section 40(b) of the BCEA states that on termination of employment, an employer must pay an employee remuneration for any period of annual leave due that the employee has not taken.
It is evident from the referral form that the summary of facts describes the dispute as follows:
“Mr C Zeelie retired on 31/12/2018 and has still not received his capped leave money that is due to him.”
In light of the above, I am satisfied that the dispute concerns the compliance with a provision of a collective agreement and that the General Secretary correctly referred the dispute as such for arbitration in terms of clause 69(5) of the ELRC Constitution-Dispute Resolution.
With regards to the claim that the ELRC lacks jurisdiction as the Applicant is now retired and is no longer an employee of the Respondent, the Applicant’s trade union, SAOU, is a party to the relevant collective agreement and is entitled to make use of its enforcement provisions to ensure that the Respondent complies with its obligations towards the Applicant. This objection raised by the Respondent has no merit.
The third objection raised by the Respondent is that the Council lacks jurisdiction to arbitrate the dispute as it had been referred late and the late referral has not yet been condoned. The Applicant’s claim to be paid out his leave credits arose on 31 December 2018, the date of his retirement. The dispute was referred to the ELRC on 8 July 2020. It is the submission of the Respondent that the referral ought to have been done within a “reasonable period” of the claim having arisen and that such a reasonable period would have been three months from the date of retirement.
Neither ELRC Resolution 7 of 2001, the LRA, the Labour Relations Act 66 of 1995 (LRA) nor the BCEA stipulate the period within which a referral of a dispute concerning the enforcement of payment due in terms of the collective agreement for accrued leave must be made. It is not in dispute that the Applicant’s dispute concerns the failure by the Respondent to pay to him remuneration equivalent to his audited leave credits. The amount owing by the Respondent would constitute a debt as defined by the Prescription Act 68 of 1969. The Prescription Act stipulates that a debt prescribes after three years except where this is inconsistent with any other Act. As already indicated the LRA and BCEA do not stipulate a period in this regard.
It was held in the reportable judgement in the combined Labour Court cases of SACCAWU on behalf of Makhubela and Development Bank of South Africa (Case No JS443/12) and SACCAWU on behalf of Radebe and Development Bank of South Africa (Case No JS437/12) that claims brought in terms of section 77(3) of the BCEA were required to be instituted within three years as provided by the Prescription Act. No reason has been advanced for why I should follow a different approach to the Applicant’s claim in respect the debt arising from ELRC Resolution 7 of 2001.
As the referral of the Applicant’s claim was made within the period of three years, I find that there is no need for the Applicant to apply for condonation of his referral and that the Secretary General was accordingly entitled to refer the dispute to arbitration.
Ruling in respect of the preliminary issues
The ELRC has jurisdiction to arbitrate the dispute.
SUMMARY OF EVIDENCE AND ARGUMENTS
The submissions of the parties
It is common cause that:
The Applicant retired on 31 December 2018, prior to which he had been employed by the Respondent in terms of the Employment of Educators Act 36 of 1998;
On retirement, he became entitled to be paid leave pay equivalent to his audited leave credits; and
He has not received this payment.
The documentary evidence of the Applicant, which is not disputed by the Respondent, indicates that:
The Respondent had sent a letter, dated 13 June 2019, to the Applicant requesting him to submit certain documentation such as his identity document and bank statements “to effect payments in respect of leave gratuity.” A copy of the letter is at page 15, which is in bundle 2, of the Applicant’s documents;
The Applicant responded to the request on or about 25 September 2019. These documents are at pages 16-20 of bundle 2 of the Applicant’s documents; and
The Applicant’s salary advice for July 2018 records that he had 101,28 days of capped leave and that his annual basic remuneration was R473 187.00-page 21 of bundle 2 of the Applicant’s documents.
It was on submission of the salary advice for July 2018 that the representative of the Respondent interjected and stated that the Respondent did not dispute that the Applicant was due his leave payout and that the Respondent’s audit of the leave due to him had found that he had accumulated 115, 42 days leave credit. The Respondent was then asked to submit a written “statement of fact” to this effect. The written “statement of fact” includes the following:
“This serves to confirm that Mr. C Zeelie (Persal number: 51461251) retired from service on 31 December 2018.
It also confirms that Mr. C. Zeelie has not received his leave gratuity ( capped leave) of 115.42 days, as audited, which was submitted by the Sarah Baartman Education District Office (Finance Directorate) to the Provincial Education Office in Zwelitsha in October 2019. No reason for the non-payment has been given by the responsible offices regarding this matter.”
The Applicant accepted that his audited leave credits amounted to 115,42 days and it was submitted that by applying the formula contained in PAM for the calculation of leave gratuity, the Applicant was entitled to the payment of R209 483.35. The Applicant requested that interest be paid on this amount with effect from 1 January 2019.
Included at pages 28-29 of bundle 2 of the Applicant’s documents is circular 13 of 2019 from the Head of the Department of Education. It is titled “Payment of interest on late payment of salaries and benefits.” The circular bemoans the fact that orders to pay interest on late payments are being frequently granted against the Respondent. As the payment of interest is regarded as fruitless and wasteful expenditure in terms of the Public Finance Management Act the circular proceeds to instruct that any interest payments incurred by the Respondent must be recovered from the responsible official.
The Respondent did not make any submissions challenging the Applicant’s case.
ANALYSIS OF EVIDENCE AND ARGUMENT
ELRC Resolution 7 of 2001 details at chapter F paragraph 5 of annexure A thereto as does the Personnel Administrative Measure (PAM) at chapter H paragraph 4.5 that audited annual leave accrued prior to 1 July 2000 and during the period 1 July 2000-31 December 2001 should be paid out on retirement. The parties agree that these provisions apply to the Applicant who retired on 31 December 2018.
The Respondent submits and the Applicant accepts that his audited leave amounts to 115.42 days.
It is evident from the Applicant’s salary advice (at page 21 of bundle 2 of the Applicant’s documents) that the Applicant’s basic annual salary prior to his retirement was R473 187.
PAM chapter 4 at paragraph 4.5.4 details the formula to be applied in calculating the leave payout on retirement. This formula may be summarized as follows:
(audited annual leave x annual basic salary)/(260,714)
In applying the said formula to the audited leave credit (115,42 days) and annual basic salary (R473 187) of the Applicant, I find that the Applicant’s submission that he is entitled to the payment of R209 483.35 in respect of his audited leave, to be correct. It is not in dispute that the Respondent has not paid him this amount (or any other) in respect of his audited leave credit.
I find that the Applicant is entitled to the payment of R209 483.35.
Section 33A(9) of the LRA provides that:
“Interest on any amount that a person is obliged to pay in terms of a collective agreement accrues from the date on which the amount was due and is payable at the rate prescribed in terms of section 1 of the Prescribed Rate of Interest Act, 55 of 1975, unless the arbitration award provides otherwise.”
No reasons have been placed before me why interest should not accrue on the amount owed to the Applicant. I trust that this amount will be recovered from the responsible official/s and will not be borne by the taxpayers.
The Respondent, the Head of the Department of Education-Eastern Cape, owes Christo Zeelie R209 483.35 in respect of audited leave.
The Respondent is ordered to pay the said amount by no later than 30 November 2020.
Interest shall accrue on the said amount at the prescribed rate of interest from 1 January 2019 until the full amount has been paid.
04 October 2020