Khati V Minister of Justice and Constitutional Development 2013 JOL 30859 (FB)

Khati v Minister of Justice and Constitutional Development [2013] JOL 30859 (FB)

Reported in: Judgments Online, a LexisNexis Electronic Law Report Series Case No: 775 / 2011 Judgment Date(s): 29 / 11 / 2012 Hearing Date(s): 23–24 / 10 / 2012 Marked as: Unmarked Country: South Africa Jurisdiction: High Court Division: Free State, Bloemfontein Judge: Thamage AJ Bench: SJ Thamage AJ Parties: TD Khati (P); Minister of Justice and Constitutional Development (D) Appearance: Adv S Grobler, Kramer, Weihmann and Joubert (P); Adv IP Gough, State Attorney (D) Categories: Action – Civil – Substantive – Private Function: Confirms Legal Principle Relevant Legislation: Public Service Act 103 of 1994; Magistrates Act 90 of 1993

Key Words

Employment – Retirement – Leave payment – Calculation of leave credit

Mini Summary

The plaintiff was a retired magistrate. He averred that he had a leave credit of 637 days at the date of his retirement, and sued the defendant for payment in that regard.

The issues in dispute were the calculation of the total leave days to the plaintiff’s credit at the time of retirement, and the tariff used to calculate the leave days towards payment of leave gratuity. The plaintiff’s contention was that the leave days for purposes of leave gratuity should be calculated based on 100% of his remuneration package at the time of his retirement whilst the defendant stated that it should be calculated at 60% of the total remuneration package at the time of plaintiff’s retirement. Based on those disputed issues, the two questions to be decided by the Court were whether the correct number of leave days was 637 as contended by the plaintiff or 517 as contended by the defendant, and what constituted basic salary.

Held that the evidence established that the plaintiff’s remuneration package had two components namely 60% which was basic salary and 40% being non pensionable allowance. Accepting that the plaintiff’s basic salary was 60% of his total remuneration package, the Court concluded that his leave gratuity was correctly calculated based on 60% of his total remuneration package.

It was clear from the plaintiff’s case that he had expected his leave gratuity to be paid based on gross annual remuneration and not 60% of the gross annual remuneration. The Court considered whether he had a legitimate expectation in that regard. It was not satisfied that plaintiff had discharged the onus of proving that his expectation was legally sustainable and enforceable. He had therefore failed to prove that his leave gratuity should be based on 100% of his gross remuneration.

While the plaintiff failed on the issue of the tariff used as far as remuneration was concerned, he succeeded in his claim that his leave credit was 637 days. The defendant therefore was required to pay him the balance due for those days.

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THAMAGE AJ:

[1] Plaintiff is a retired magistrate and the defendant is the Minister of Justice and Constitutional Development, cited herein in his official capacity. [2] Plaintiff instituted an action against the defendant in respect of payment of his leave gratuity and claimed the following:

2.1 Payment of R756 264,28;

2.2 Interest of the aforementioned amount at 15.5% per annum a tempore morae;

2.3 Further and alternative relief.

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[3] At the beginning of trial, I was informed that most of the issues are common cause and that points that are in dispute are the following:

3.1 The calculation of the total leave days to the plaintiff's credit at the time of retirement;

3.2 The tariff used to calculate the leave days towards payment of leave gratuity.

[4] Plaintiff's contention is that the leave days for purposes of leave gratuity should be calculated based on 100% of his remuneration package at the time of his retirement whilst defendant states that it should be calculated at 60% of the total remuneration package at the time of plaintiff's retirement.

[5] Plaintiff further contends that as at the time of his retirement, his leave credit was 637 days, whereas the defendant submits that the leave credit was 517 days.

[6] The parties agreed that the defendant will be the first to give evidence.

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[7] Defendant's witness is Theresa Harrison, an assistant director in Human Resources Section, Department of Justice, who, inter alia, stated that her job is to do administration functions in respect of employees' conditions of service.

[8] Her evidence in brief is as follows:

8.1 That she is the one who dealt with payment of plaintiff's leave gratuity and that payment was done already. That payment was calculated on 517 days at 60% of plaintiff's total remuneration package.

8.2 There are two calculations, namely, 637 days and 517 days, that the 637 days is incorrect and that both calculations were reduced in writing and form part of plaintiff's and defendant's discovery bundles.

8.3 She further testified that during the period 1 January 1978 to 31 December 1985 there were no proper leave records, hence this made the calculation of leave days cumbersome. That the leave audit is done by considering all available evidence, for example leave forms, Persal record, leave cards and any other available information. She further

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testified that in May 1998, Persal reflected 364 days and manual calculations reflected 436 that is the reason why she says the 637 figure is incorrect. Furthermore, the balance carried forward for calculation by Persal is 404 and she worked on that balance to come to the figure of 517. The critical point in respect of plaintiff's leave record is from date of 1 January 1978 till 31 December 1985 as during this period, it appears that plaintiff never took leave. 8.4 In respect of the tariff to be used in calculation of the amount payable as leave gratuity, she testified that the calculation is based on 60% of the total remuneration package.

8.5 That plaintiff was paid leave gratuity based on 60% of his total remuneration package multiplied by 517 days and divided by 365. She referred to Government Notice R361 "Regulations for Judicial Officers in the Lower Courts" dated 11 March 1994; Chapter DVIII of the Public Service code and Proclamation 75 dated 19 November 2009.

8.6 That plaintiff on the date of his retirement was a senior magistrate and therefore in terms of the proclamation his

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total remuneration was R669 625 per annum. His leave gratuity was 60% of his total remuneration package. That Resolution 2000 of the Public Servants Central Bargaining Council is for employees appointed in terms of the Public Service Act and it is not applicable to magistrates.

8.7 She testified that for people appointed in terms of the Public Service Act, their gratuity prior to 30 June 2000 was based on basic salary but from 1 July 2000 it is based on total remuneration package. All the leave days prior to 30 June 2000 were capped and from that period employees should then take their annual leave hence could not have accumulated leave, if they don't take leave, they will forfeit the leave days.

[9] Under cross-examination, she repeated most of her evidence-in-chief and the following evidence emanated from her cross-examination:

9.1 She testified that the final decision on payment of plaintiff's leave gratuity was made by the Regional Head and she only made recommendations. That she was not personally

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involved in the leave days audit, she took information as it appears from Persal, and the opening balance on Persal was 404 days, and then she continued from the said figure. She conceded that during the period 1979–1985 there are no leave records in respect of the plaintiff and that if the plaintiff took leave during that period, then there could have been records indicating same.

9.2 She further testified that if the determination in terms of Resolution 7 of 2000 was not only for people employed under Public Service Act, plaintiff would have qualified. People appointed in terms of Public Service Act, their leave days are calculated on the basis of working days whilst magistrate leave days are calculated based on calendar days. That after July 2000, public servants leave days could not be accumulated and they are given 18 months to take their annual leave otherwise they forfeit the leave days, on the contrary magistrates can still accumulate leave days.

9.3 That an amount of R569 089 was already paid to the plaintiff as leave gratuity based on 60% of his total annual

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remuneration. The witness testified that during the year 2009, there was a complete change on magistrate's remuneration, they were upgraded from Grade 11 or 12 to the SMS Level, and their salaries differed from the salaries prior to 2009.

[10] This concluded the evidence of defendant's witness and defendant closed his case. [11] Plaintiff testified as witness and his evidence is basically as follows:

11.1 He is a retired magistrate and at the time of his retirement he was a senior magistrate with a salary of R669 625 per annum. He started working for the defendant on 1 May 1968 as a clerk and ultimately as a magistrate. He worked at various stations and his last office was in Bloemfontein in the inspectorate section. He got a rank translation in 1983 from a clerk to a magistrate after he studied at the University of Zululand. He was attending at the University of Zululand for alternate six months in a year.

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11.2 During the time he was at the University, he was still employed by the defendant and received his salary every month, if he had to take leave, he still had to complete a leave form and cause it to be authorised.

11.3 During 1978 to 1985, he did not take leave and that there was no stage where he was absent from work without having his leave approved.

11.4 Before he could retire, a certain Mr Hatting informed him that there are no leave records, he then went to all the stations that he worked before, collected the files and that is how a figure of 637 was calculated.

11.5 That prior to 2008, his salary was based on a salary notch and there was no restructuring of salary. After 2008 the salary package was based on 60% and 40% flexible portion which one can restructure.

11.6 He further testified that pensionable allowances are allowances which pension can be deducted and these allowances were taken into consideration for purposes of leave gratuity.

11.7 This concluded evidence-in-chief of the plaintiff.

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[12] During his cross-examination, he repeated most of his evidence-in-chief and further testified as follows:

12.1 That the calculation of 517 days is incorrect as it does not show all leave days calculated from the date he assumed duty whereas the 637 days indicates all the leave credits and debits from the day he started working for the defendant. The 517 days entries only start from 404 days and there is no analysis of how the 404 days were reached.

12.2 That there is no difference between basic annual salary and annual salary and he does not know why on the "Regulations for Judicial Officials in the Lower Courts", they did not use only the phrase annual salary. He also admitted that the phrase basic salary was again used in Proclamation 75 of 2009 "Remuneration of Magistrates".

[13] On questions by the Court, plaintiff admitted that at the time of his retirement he was employed in terms of the Magistrates Act.

[14] This concluded the evidence of the plaintiff and he consequently closed his case.

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[15] Mr Grobler, on behalf of the plaintiff, submitted that plaintiff's claim should succeed for the following reasons: 15.1 That plaintiff followed correct channels when applying for leave and in all probabilities, all the leave days taken by plaintiff, there will be an approved leave forms, hence the leave credit at the time of plaintiff's retirement was 637 days.

15.2 That in case of doubt, the employee must be given the benefit of doubt.

15.3 That paragraph 3(a) of the "Regulations for Judicial Officers in the Lower Courts" was applicable at the time of plaintiff's retirement.

15.4 As regards basic salary, he submitted that basic salary means gross annual remuneration and that the proclamation speaks of "basic salary component".

[16] Mr Gough, for the defendant, made the following submission:

16.1 The leave days credit were audited and the most reliable figure is the 517 days.

16.2 That for purposes of calculation of leave gratuity, the tariffs cannot be based on gross remuneration, which includes allowances.

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16.3 That there is a difference between basic salary and gross salary. That the position regarding what is basic salary is clear from Proclamation 75 of 2009, hence there is no need to mention the Public Service Code.

[17] From the evidence it is clear that there are two questions to be decided by this Court: firstly, whether the correct number of leave days is 637 or 517; and secondly, what constitutes basic salary.

[18] At the beginning of the trial I was informed that both plaintiff and defendant had agreed that defendant is the one who will first adduce evidence, which scenario was allowed. This, however, did not mean that the defendant bears the onus of proof; the onus of proof is still with the plaintiff. I am of the view that such arrangement was done in consideration of fairness and convenience. See dicta in Mobil Oil Southern Africa (Pty) Ltd v Mechin 1963 (2) SA 706 (A) more so that the facts of this matter are peculiarly within the knowledge of the defendant.

[19] There are two documents which were discovered by both the plaintiff and the defendant in respect of calculation of leave days, one document total leave credits is 517 and the other is 637.

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[20] Both documents were created and compiled by the employees of the defendant, the 517 days were calculated by taking the brought forward days from Persal, viz 404 being the number of days as at August 2001 and then from 1 September 2001 until 31 October 2009 (retirement date) were added. Of importance is that this document was compiled on 26 October 2009.

[21] The 637 days credit was compiled by taking all the leave records from 1 May 1968 until 31 October 2009. Of importance is that the document was compiled on 3 November 2009, almost seven days after the first compilation.

[22] On 26 October 2009 a memo was written by the Director: Human Resources Management to the effect that the number of leave days to the credit of the plaintiff is 517 and that payment thereof should be made and that as soon as leave records are retrieved, certain adjustments will be made.

[23] It is clear from the evidence of the plaintiff that he went to all his previous work stations to obtain the files which he gave to Mr Hatting. After the records were made available to Mr Hatting, Page 13 of [2013] JOL 30859 (FB) the Director: Human Resources Management wrote a letter dated 3 November 2009 indicating that an audit has been done and the total leave days is 637.

[24] Despite the audit, the Regional Head decided to maintain the status quo of 517 days and no reasons were advanced as to why he did not follow the audited calculations, except for the concern that it is unlikely that plaintiff could not have stayed without taking leave between the period 1 January 1978 till 31 December 1985. Plaintiff, however, did explain that during this period he never took leave and he was on six monthly basis studies at the University of Zululand [sic].

[25] Having said so, I am satisfied that plaintiff has proved his case on the balance of probabilities in so far as his claim on the number of days that were to his credit at the time he retired.

[26] Coming now to the second issue, namely, what constitutes basic salary for purposes of payment of leave gratuity.

[27] . . .

27.1 Chapter DVIII of the public service code under paragraph 4.1 states as follows:

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"A leave gratuity may be paid to an officer or employee whose services terminate for one of the following reasons:

(a) Retirement of an officer on attaining the pensionable age in terms of section 16(1) or (2) of the Public Service Act, 1994."

27.2 Clause 5.1 of the said public service code states as follows:

"5.1 The amount of leave gratuity is calculated as follows:

(a) In all cases except those referred to in (b)

Amount of leave gratuity = 365,

where A represents the sum of the officer's or employee's basic annual salary and the annual equivalent of all pensionable allowances which are payable to him or her on the last day of his or her service, and (my emphasis)

where B represents the officer's or employee's accumulated vacation leave credit (excluding a part of a day) standing to his or her credit on the last day of his or her service."

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27.3 Proclamation 75 dated 19 November 2009 is a proclamation in respect of magistrates and has been made in terms of section 12 of the Magistrates Act 90 of 1993.

27.4 Paragraph 2 of the above-mentioned proclamation reads as follows:

"2. The total remuneration shall include the following elements:– 2.1 A basic salary component equal to 60% of the package; which constitutes the pensionable salary.

2.2 . . .

2.3 A flexible portion to the remaining amount of the total package."

[28] From the evidence of defendant's witness it is clear that there are fundamental differences in respect of people appointed as magistrate vis-à-vis people appointed in terms of the Public Service Act 103 of 1994 which repealed the previous Act, namely, Act 111 of 1984. Magistrates were public servants until in 1994 when the Magistrates Act 90 of 1993 came into operation and from that time onwards the staff code for public servants was no longer applicable to them.

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[29] Salient differences between the magistrates and public servants in respect of leave are as follows:

29.1 Magistrates' leave days are calculated based on calendar days whilst public servants' days are calculated on working days.

29.2 Magistrates can accumulate leave days that were not utilised during the year whilst on the other hand public servants cannot accumulate leave days that were not utilised in a year; they are given 18 months to utilise the days otherwise they forfeit the days.

[30] The crux of plaintiff's case is based on Government Notice R361 dated 11 March 1994 issued in terms of the Magistrates Act wherein paragraph 3(a) states as follows:

"The provisions contained in Chapter DVIII of the Public Service Code shall mutandis mutandis apply to magistrates."

In terms of the said Code, calculation of leave gratuity was paid based on basic annual salary and the annual equivalent of all pensionable allowance.

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[31] Amongst the documents, which were jointly discovered, is the monthly salary advice of the plaintiff dated 15 October 2009, which reflects a gross salary of R43 466,10 and the basic salary of R31 290. The difference is allowances, namely, motorcar, housing and NP cash. From the records as well as evidence which is not disputed, is that plaintiff's pension was only deducted from his basic salary. On the contrary, using the criteria of Chapter DVIII of the Public Service Code mention is made of basic salary and all pensionable allowances (my emphasis).

[32] It is clear that plaintiff's remuneration package had two components, namely, 60% which is basic salary and 40% being non pensionable allowance (my emphasis). Whereas for purposes of Chapter DVIII it is basic salary and all pensionable allowance (my emphasis).

[33] I find it difficult to understand the argument raised by Mr Grobler that basic salary means gross annual remuneration. The phrase "basic salary" is clear and unambiguous, there is however no need to have evidence to alter its meaning (see Rand Rietfontein Estates Ltd v Cohn 1937 AD 317).

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[34] It is common cause that at the time of his retirement, plaintiff was employed in terms of the Magistrates Act. It therefore follows that the essential terms of contract of employment between plaintiff and defendant is in the Magistrates Act and all proclamations and/or regulations made in terms of the said Act, paragraph 2 of Proclamation 75 dated 19 November 2009 operates retrospectively from 1 April 2009. [35] It is evident that Resolution 7 of 2000 of the Public Servants Bargaining Council is not applicable to the plaintiff since it is applicable to public servants only. Having said that, I come to the conclusion that plaintiff's basic salary is 60% of his total remuneration package and that his leave gratuity was correctly calculated based on 60% of his total remuneration package.

[36] The other point to be considered is whether based on 60% of the annual remuneration, the plaintiff is prejudiced.

[37] Defendant's witness testified that during 2009 there was a complete change in magistrates' remuneration, wherein they were upgraded to SMS level hence there cannot be any financial prejudice to the plaintiff.

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[38] It is clear from the plaintiff's case that he had expected his leave gratuity to be paid based on gross annual remuneration and not 60% of the gross annual remuneration. One can have a legitimate expectation in relation to a right that is legally sustainable and enforceable (see Gibbs v Minister of Justice (234/08) [2000] ZASCA 73 (1/6/2009)).

[39] I am not satisfied that plaintiff discharged the onus of proving that his expectation is legally sustainable and enforceable. In the circumstances I am of the view that plaintiff had failed to prove that his leave gratuity should be based on 100% of his gross remuneration.

[40] The evidence of the defendant is to the effect that if the outstanding leave days (meaning the difference between 517 and 637 days) are paid, using the scale of 100% remuneration (taking into account that an amount of R569 089,52 has been paid already) then plaintiff's claim would be R599 543,70, on the contrary if his claim is based on the amount of 60% of the annual remuneration package then his claim would be R130 737,87. This scenario of calculation was admitted by the plaintiff.

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[41] Plaintiff's claim succeeds in so far as the total number of leave credits as at the time of his retirement, namely, 637 and fails to succeed on the tariff to be used for calculation thereof, namely, 100% of the gross remuneration package. The tariff should thus be based on 60% of his gross remuneration package.

[42] I therefore make the following order:

42.1 Defendant to pay plaintiff an amount of R130 737,87.

42.2 Interest on the aforementioned amount calculated at 15.5% from date of service of summons till date of final payment.

42.3 Costs of suit.