Contract: Sign-on bonus enforced

3 Comments

1. 

   GilesFiles on January 8, 2016 at 6:09 pm

   Sanlam Life Insurance Ltd v Sibanda (08/13667) [2008] ZAGPHC 484 (20 August 2008) per PA Meyer J.

   Excerpts

   [1] The applicant claims the repayment of a ‘retention bonus’ paid to the respondent, who was previously employed by the applicant in the position of Marketing Manager of its Employee Benefits Institutional Channel (“SEB”).

   [2] The retention bonus was paid in terms of a written retention bonus agreement in order to retain the respondent’s services for the period 1 April 2006 to 31 March 2009 [clause 2.2].
   The respondent was obliged, in terms of clause 2.3 thereof, to repay the retention bonus to the applicant should he leave the applicant’s employment within the stipulated period ‘…either due to resignation from Sanlam or due to any dismissal from employment with Sanlam for any reason…’

   Clause 2.7 thereof further stipulates ‘[f]or the sake of clarity’ that there shall be no obligation to repay the retention bonus should the respondent’s employment with the applicant ‘…terminate because of death, disability or retrenchment.’

   [3] The respondent’s employment with the applicant terminated on 31 December 2007. The issue is whether his employment terminated ‘because of … retrenchment.’ It is common cause that the intention of the parties was that the reference to ‘retrenchment’ in the retention bonus agreement was a reference to a termination of an employee’s services pursuant to section 189 of the Labour Relations Act 66 of 1995, which is a dismissal by an employer ‘based on the employer’s operational requirements.’
   . . . . .
   [12] By letter dated 8 January 2007, the respondent’s attorney advised the applicant that its unilateral action was of no legal consequence, that the applicant’s services terminated because he was retrenched, and that the respondent ‘…will therefore not adhere to a purported instruction to report for duty – he has been retrenched.’

   By letter dated 9 January 2008, the applicant inter alia advised the respondent that if he does not return to work by not later than 14 January 2008, the applicant ‘… will reluctantly have to take appropriate disciplinary steps.’ The applicant held ‘a disciplinary enquiry’ on 24 January 2008 in the absence of the respondent, and the applicant ‘dismissed’ him on the 25th January 2008. Adv Wagener, who acted for the applicant, informed me at the commencement of the proceedings that the applicant was not relying on such ‘dismissal’.

   [13] Adv Wagener relied on SA Transport and Allied Workers Union v Old Mutual Life Assurance Co (SA) Ltd (2005) 26 ILJ 293 LC in support of his submission that an election on the part of an employee to ‘retire’ or to be ‘retrenched’ is akin to a resignation on his part. I disagree with such general proposition or that the case referred to supports such proposition, but its facts are in any event distinguishable from the facts of the present matter.

   [14] In support of the applicant’s contention that the respondent left its employment due to resignation, Adv Wagener submitted that no formal notice of retrenchment or dismissal was given to the respondent prior to his departure on 31 December 2007. This submission is factually incorrect. The applicant, in its notice dated 31 July 2007, announced a decision to close SEB and to retrench the seven affected employees. In terms of that notice, their employment was to terminate on the 31st October 2007. Early retirement and redeployment were mere possibilities to avoid their retrenchments. The respondent was not redeployed, because he did not wish to accept the alternative offer of employment. The applicant’s own correspondence to which I have referred made it clear that the applicant accordingly retrenched the respondent.

   [15] In paragraph 47 of the founding affidavit it is stated that ‘[i]nsofar as it is found that the applicant was not entitled to withdraw its consent to the termination of the respondent’s services, the termination of his services remains to be categorized as a termination by mutual consent.’

   The only agreement reached between the applicant and the respondent was for his termination date to be extended from 31 October 2007 until 31 October [sic – December] 2007. The respondent’s employment was therefore not, in my view, terminated ‘by mutual consent’. But even if I am wrong in this view, then the applicant is still not entitled to repayment of the retention bonus since clause 2.3 of the retention bonus agreement does not require repayment in the event of a termination ‘by mutual consent’.

   [16] In the result the applicant’s application is dismissed with costs.

2. 

   GilesFiles on January 8, 2016 at 6:17 pm

   [2016] 2 BLLR 135 (LAC)
   Headnote:

   Contract of employment – Retention and recruitment clauses – Employer undertaking to pay employee equivalent of amount he had lost in consequence of leaving former employer, and contract of employment terminated soon thereafter – Undertaking binding after termination of contract because not conditional on continued employment – Employee entitled to full amount promised.

3. 

   GilesFiles on March 16, 2016 at 5:58 pm

   Also reported (2016) 37 ILJ 646 (LAC)