Heunis v Letsweleputswa District Municipality (2635/2015) [2015] ZAFSHC 200 (2016) 37 ILJ 895 (HC) (29 October 2015) per Mocumie J.
The High Court granted the retired employee’s application and ordered the Municipality to contribute a lump sum to the pension fund as there was not, and could not have been, any agreement to waive the right to the retirement benefits.
Excerpts without footnotes
[17] A settlement agreement is subject to the common law principles of contract. The onus is on the party that alleges a compromise has been reached. A compromise (transactio) is a contract which has as its object the prevention, avoidance or termination of a dispute or litigation. The municipality could not nail its colours to the mast as to what dispute or litigation the parties intended to settle because there was never any dispute. The municipality made an offer to retrench the applicant before his retirement age for operational reasons and he accepted. . . . . .
[18] The fact that the municipality did not append the written agreement on which it relied initially is untenable for the simple reason that the agreement referred to is not appended to the papers. The municipality has provided no reason why such agreement was not appended to the papers. Instead it attempted to side step this by alleging reference to an audio recording of the outline of the discussion which took place between the applicant and the municipality’s management including the Municipal Manager on 22 September 2014. As Mr Steenkamp correctly conceded, that audio recording made no reference to s38A and the rights flowing from it or that the applicant waived his rights in terms of the section in lieu of some payment. What the audio recording specifically referred to at page 22 was (i) severance package as per SALGBC Collective Agreement, (ii) one month notice pay (iii) accumulated leave pay and (iv) pro rata bonus.
[19] The municipality instead attempted to sneak in a proposition that the applicant was paid R400 000 more than what he was entitled to. Yet as is clear from all the communication between the parties, at no stage did it state that the R400 000 was in lieu of the applicant’s pension benefits. There is no basis upon which the applicant could have waived such important rights. Rights which are enshrined in a statute and cannot in any way be contracted out of. This proposition is simply untenable in law. What is seriously disturbing is that such proposition is made under oath by people who hold the most senior positions in the municipality, a municipal manager and a Chief Financial Officer. Two officers who are directly responsible for the management of the finances of the municipality. It is totally unacceptable.
[20] Section 38(A) binds the municipality, as it correctly admitted in its opposing affidavit. This statutory provision that binds the municipality to the extent that it is not open to the parties to contract out of it. Secondly, although this was not raised as a separate issue, s38A creates a tripartite obligation i.e. vis-a-vis the applicant and his employer; the employer vis-à-vis the pension fund and the pension fund vis-a-vis applicant. The Fund was not even consulted or engaged on this provision and the implication of contracting out of it.
[21] Apart from the fact that the municipality blew hot and cold on whether there was a written agreement between it and the applicant and whether there was an oral agreement reduced into writing, it is clear that there was never a written agreement between the parties settling the pension benefits as claimed by the municipality. There was never a settlement agreement concluded between the applicant and the municipality nor did such purported agreement amount to a compromise of the applicant’s rights to his pension benefits. On the simple reading of s38A, it could not be. If, for unknown reasons, it could be interpreted that way, such interpretation would be contrary to s4 of the Basic Conditions of Employment Act 75 of 1997 which expressly incorporates this basic condition of employment in the contracts of employees. On the other hand such interpretation would be contrary to public policy, because an employee cannot waive statutory rights.