Somi v Old Mutual Africa Holdings (Pty) Ltd (Case no: J2828/14, 3 July 2015) (2015) 36 ILJ 2370; [2015] JOL 33453 (LC) per Molahlehi J.

The Labour Court ordered specific performance because the employer had summarily ended the employment contract without ‘any cause recognised by law’ as sufficient.  So not only was the employer’s action unlawful in terms of the common law but it also breached the statutory right to reasonable notice provided for in the BCEA.  In other words the employer’s action provided the employee with more than one cause of action.  Relying on the statutory right ‘not to be unfairly dismissed’ would have required a referral within 30 days, conciliation and then arbitration.  Reinstatement could have been ordered or compensation awarded, but limited to 12 months’ remuneration.  Or the employee could do what was done in this instance and apply to the Labour Court for specific performance based on the unlawful ‘dismissal’.

It is one of the beneficial quirks of our labour law that the Labour Court has the jurisdiction and power to deal with such contractual breaches, in addition to any statutory causes of action based on unfairness created by the Labour Relations Act.

The employer tried in vain to defend its action by arguing that:

  • It had subsequently paid one month’s notice pay;
  • Summary termination was lawful; and
  • There was an alternative cause of action based on unfairness.

These passages from the judgment explain why the Labour court rejected those arguments and ordered specific performance:

“that the cause of action in the present matter is based on breach of contract and accordingly [confers] the power on this Court to entertain the matter in terms of section 77(3) of the Basic Conditions of Employment Act” (para 21). 

 

“It is well-established in law that an employee whose contract of employment has been unlawfully terminated by the employer has an election to either accept the breach of contract and sue for damages or enforce the contract.  The remedy in the case where the employee enforces the contract in the face of a breach would generally be specific performance” (para 24).

With regard to the remedy of specific performance it was stated:

[24] It is well-established in law that an employee whose contract of employment has been unlawfully terminated by the employer has an election to either accept the breach of contract and sue for damages or enforce the contract.  The remedy in the case where the employee enforces the contract in the face of a breach would generally be specific performance.

 

[25] In terms of s 77A(e) of the BCEA, the Court has the power to order specific performance.[1] It has generally been accepted that exercising that power, the Court has a discretion whether to grant or refuse an order for specific performance.  In this regard, the Court in Santos Professional Football Club (Pty) Ltd v Igesund and Another,[2] found that the “practical consideration” which the Court a quo applied was not the test to apply in the exercise of the discretion of granting or refusing specific performance.

The approach to adopt according to the Court is that:

‘… courts should be slow and cautious in not enforcing contracts.  They should, in specific performance situations, only refused performance where a recognised hardship to the defaulting party is proved’.

 

[26] As indicated earlier, the respondent contends that the applicant should be denied the relief of specific performance, because she has an alternative remedy in the form of unfair dismissal and that she could obtain it through the CCMA.

I do not agree and accordingly align myself with the approach adopted by Van Niekerk J in Ngubeni v National Youth Development Agency, [3]where the Learned Judge held that:

‘[21] In so far as the remaining requirements relevant to the relief sought are concerned, there is no alternative remedy that is adequate in the circumstances.  Ngubeni has no right to pursue a contractual claim in the CCMA, and the law does not oblige him to have recourse only to any remedies that he might have under the LRA.  Equally, he is fully entitled to seek specific performance of his contract, and is not obliged to cancel the agreement and claim damages.  The balance of convenience dictates that the order sought should be granted – there is little inconvenience to the NYDA should it continue with and complete the disciplinary hearing; the result may well be the same.  For Ngubeni, the effect of the NYDA’s decision to terminate his employment at this stage is to deprive him of his employment and livelihood.  Similarly, I am satisfied that Ngubeni will suffer irreparable harm should the application not be granted.  He stands to suffer financially, and the high public profile of this matter (it is not specifically denied that much of the raising of this profile has been at the instance of the NYDA) has ensured that Ngubeni has been branded as corrupt and dishonest, with little prospect of alternative employment.’

 

[27] In Ramabulana v Pilansberg Platinum Mines, soon to be reported judgement under case number J808/13, Whitcher J, in dealing with the power of the Court to grant specific performance in terms of s 77A(e) of the BCEA held that:

‘A conspectus of case law shows that where an employee has been dismissed the employee, in a contractual dispute, is not obliged to cancel the agreement and claim damages but is entitled to claim specific performance subject to the court’s discretion to refuse to grant such an order.  Specific performance is a primary and not a supplementary remedy.  Courts in general should be slow and cautious in not enforcing contracts.  Specific performance should be refused only where it would be inequitable in all the circumstances or where, from a change of circumstances or otherwise, it would be “unconscientious” to enforce a contract specifically.  Each case must be judged in light of its own circumstances.  The right of an applicant to specific performance of a contract, where the respondent is in a position to do so, is thus beyond doubt.  The court’s discretion not to provide this relief is exercised with reference to the facts as they exist when performance is claimed and not as they were when the contract was concluded’. 

[1] Section 77A(e) of the BCEA reads as follows:

“Subject to the provisions of this Act, the Labour court may make any appropriate order, including an order –

(e) making a determination that it considers reasonable on any matter concerning a contract of employment in terms of section 77(3), which determination may include an order for specific performance, and award of damages or an award of compensation.”

[2] (2002) 23 ILJ 2001 (C) at 2014 H-I.

[3] (2014) 35 ILJ 1356 (LC).

Prof Darcy du Toit in his latest Comment Bringing a claim of specific performance instead of unfair dismissal in IR Network published by LexisNexis [subscription required] remarked as follows:

“This, of course, did not leave the employer without recourse in asserting its rights.  The order made by the court only required it to reinstate Ms Somi to her former position, subject to her contract of employment.  It did not prevent the employer from resuming the performance inquiry, or starting a new one, nor from terminating Ms Somi’s services in accordance with her contract of employment if it believes it has good reason to do so.  Equally, nothing prevents Ms Somi from challenging any action the employer may take, either on the basis of her contractual rights or her rights in terms of the LRA.

 

What, then, is the difference between seeking an order of specific performance or an order of reinstatement based on unfair dismissal in circumstances such as these?

 

The outcome is certainly the same.  The difference, however, lies in what must be proved.  “Fairness” in dismissal is a flexible concept, requiring the court to weigh up the interests of both parties.  Breach of contract involves a far more objective assessment of whether or not a party has carried out its obligations.  Where the facts are clear-cut, a contractual claim will obviously have a high likelihood of success”.