REPORTABLE
Case Number  : 126 / 98
IN THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
In the matter between  :
TREVOR BAUDACH
Appellant
and
UNITED TOBACCO COMPANY LTD
Respondent
Composition of the Court
:
Grosskopf,
Olivier,
Scott,
Streicher JJA and Melunsky AJA
Date of hearing
:
22 May 2000
Date of delivery
:
30 May 2000
S U M M A R Y
Unfair labour practice - employer misrepresenting to employee that his position had
become redundant - agreement to accept package in full and final settlement not
binding.
J U D G M E N T

PJJ OLIVIER
[1] This is an appeal against the judgment of Froneman J in the Labour
Appeal Court (“the LAC”), upholding an appeal by the present respondent,
the United Tobacco Company (“UTC”), against a judgment by the Industrial
Court in favour of the appellant, Trevor Baudach.   The appeal is with leave
of the court a quo.   It is properly before us by virtue of item 22 (4) of
Schedule 7 to the Labour Relations Act 66 of 1995 (“the LRA of 1995"),
which provides that any pending appeal from the decision of the LAC to this
Court in terms of ss 17 C and 64 of the previous Labour Relations Act 28 of
1956 (“the LRA of 1956") must be dealt with as if the last-mentioned Act had
not been repealed.
[2] Baudach was employed by UTC for a period of 26 years, from 1969
until 1995.   Immediately prior to his dismissal, which gave rise to the present
litigation, he held a senior position in UTC as the regional manager of Kwazulu

Natal.   On 23 November 1994 he was summoned by letter from the head
office of UCT in Johannesburg to attend a meeting there on 28 November
1994.   He had no inkling of the reason for the request.   At the meeting he was
informed that his services were no longer needed by UTC because, due to the
restructuring of its trade marketing department, his position, as regional
manager had become redundant.   He was offered a settlement package and
told that if he did not accept this package the usual retrenchment procedures
would apply.   It is common cause that the said package would leave him in
a much better financial position than would normal retrenchment.
[3] On the same day a UTC letter was handed to him, confirming the
“consultation” on that day between himself and Mr John Greenleese (the
National Trade Marketing Manager), Mr P Fourie (the Human Resources
Director) and Mr J Vos (the Divisional Manager).
The relevant part of the letter reads as follows :

“The Company, over the past year has experienced a marked and
dramatic decrease in its performance due to depressed and decreasing
sales volumes.   The Company, from an economic point of view and out
of necessity has been forced as a result to restructure its trade
marketing department.   After much deliberation and consideration it
is with regret that the Company must advise that your services have
become incompatible with the Company’s future needs in Trade
Marketing.
The Company, without prejudice to its rights and in full and final
settlement of the termination of your services is prepared to offer to
yourself a retrenchment package of R292 943,95 being in respect of
the following :
Three months notice pay effective 1 January 1995;
Full annual bonus in respect of 1994 and 1995;
All outstanding leave pay due to yourself;
All employment benefits up and until 31 March 1995.”
(My emphasis)
[4] Baudach requested time to consider the matter and returned to his
home in Durban.   In December he received a further letter from UTC dated
14 December 1994, confirming that

“ ... your position within the Company has become incompatible with
the Company’s future needs in Trade Marketing and that your position
within the said department has become redundant.
Pursuant to the said consultations [i.e. those in November 1994], we
hereby confirm that your contract of employment will terminate on 31
December 1994.   The Company in full and final settlement of the
termination of your services, shall pay yourself the following
redundancy package : ...” (My emphasis)
Details of the package were then given.
[5] At the foot of the page there appears the following stipulation :
“I, T. Baudach, confirm receipt and acceptance of the redundancy
package offered to myself by United Tobacco Company Limited and
confirm that the same is in full and final settlement of all claims
arising out of the termination of my employment with United Tobacco
Company Limited.   I am signing this agreement on a free and voluntary
basis.”  (My emphasis)
Baudach signed this note on 18 December 1994.
[6] As a result of further calculations and tax implications, it was agreed

that the second letter should be withdrawn and it was replaced with one from
UTC head office (signed by Fourie) dated 31 January 1995.    It provided that
Baudach’s employment would terminate on 31 March 1995;  set out amended
package figures;  and requested Baudach, “should the above arrangement be
acceptable to you”, to sign an acceptance provided for at the end of the letter
which reads :
“I, Trevor Baudach hereby confirm my acceptance of the above
termination payments in full and final settlement of monies owing to
me by United Tobacco.”
Baudach signed the acceptance on 7 February 1995 and returned the letter, so
countersigned, to UTC headquarters.
[7] Baudach left the employment of UTC on 31 March 1995 and the
termination payments as set out in the third letter were paid to him.
Notwithstanding these facts, Baudach brought an application in September
1995, in terms of s 45 (a) of the LRA of 1956, in the Industrial Court at

Durban against UTC, alleging that the termination of his employment was both
substantively and procedurally unfair.   He prayed for orders :
declaring his dismissal by UTC with effect from 31 March 1995
be an unfair labour practice;
that he be reinstated in his former position; and
that compensation in an amount to be determined by the
Industrial Court for the “loss of any benefits, damages and
sentimental damages” be paid to him by UTC.
[8] In reply to the application UTC pleaded on the merits and also filed a
special plea to the effect that the matter had been settled by the acceptance of
UTC’s offer when Baudach signed the “full and final settlement” stipulations
as set out above.
[9] At a pre-trial conference Baudach’s legal representatives delivered a
reply to the special plea, averring that the circumstances under which the

respondent signed the acceptance was unfair “in particular because [UTC]
misrepresented to the applicant that his post had become redundant when in
truth it had not.”   The alleged misrepresentation was also relied on in support
of Baudach’s claim that his dismissal was substantively unfair.
[10] At the pre-trial conference a further important step was taken, when
Baudach made it clear that he no longer sought reinstatement, but only
compensation for his unfair dismissal.   And in the course of his opening
address, the legal representative of Baudach indicated that it was not the
latter’s intention to claim the setting aside of his acceptance of the benefits
paid out to him, but to set them off against the larger amount to which he was
entitled as compensation for his unfair dismissal.
[11] The trial proceeded before the Industrial Court, presided over by Dr H
Grobler assisted by two assessors, on the basis set out above.   Baudach as
well as Fourie testified,  the latter on behalf of UTC.

[12] It soon transpired that the cause of Baudach’s complaint was that he
had accepted the termination of his employment and the package offered him
because he believed the representations made by UTC that his retrenchment
was a fait accompli as the position held by him had become redundant,
whereas he learned, towards the end of February 1995 or early in March 1995,
that in fact his job had not become redundant.  A young woman, Mrs Zita
Hanson, had been appointed in his place as acting regional manager in
Kwazulu Natal and she was later replaced by another young woman who was
appointed as regional manager.   He obtained the last-mentioned information
towards the middle of March 1995.  His evidence was that he was never
informed that his position (which was represented to him as being redundant)
would in fact continue to exist.
[13] Baudach also testified that he would have reached the pensionable age
with UTC a mere 28 months after the termination of his services and that, had

an alternative position been offered to him with UTC, he would seriously have
considered accepting it to safeguard his pension.   Although UTC was a very
big organisation, he was never given the choice of another position.  Under
these circumstances he accepted the package and signed the acceptance.
[14] In the course of Fourie’s evidence it transpired that the real reason for
terminating Baudach’s employment was that UTC had decided that there was
a need for change in the marketing division in Kwazulu Natal.   They needed
someone who was “far more aggressive, dynamic, has more leadership than
he had, at that time.   And it was appropriate to change the person in that
position.”   Fourie later admitted that UTC was not dealing here with a case
of retrenchment or redundancy but with Baudach’s “incompatibility” or
“unsuitability” and his “leadership style”;  he was not “dynamic” and had a
low “energy level”.   It was also stated by Fourie that Baudach was in fact
informed during the meeting in Johannesburg, mentioned above, that he was

unsuitable for the position he held.   This evidence is in conflict with that of
Baudach and is inconsistent with the reasons advanced in the three UTC
letters.
[15] The misrepresentation as to the reason for Baudach’s dismissal
apparent from the said letters  -  that Baudach’s position had become
redundant  -  was fully exposed when it was admitted by UTC in the pre-trial
minutes that his position had never become redundant and that it was filled by
other persons after his employment terminated.
[16] The Industrial Court found in favour of Baudach on the basis that
his services were terminated in pursuance of a purported retrenchment and
that he had been misled into believing that his services were being terminated
on the basis that his position would disappear in the course of a restructuring
exercise.
It is also implicit in the judgment of the Industrial Court that the

misrepresentation was committed intentionally.   It was said by the President:
“In view of the fact that there were no grounds on which to terminate
[Baudach’s] services, and because [UTC] had ostensibly acted over
hastily, it would appear that it was decided to style his dismissal as a
retrenchment - which it clearly was not.”
This, coupled with the lack of proper consultation, led the court to find
that Baudach’s dismissal was substantively and procedurally unfair, and to
grant him compensation in the amount of R276 625,00 with costs.
[17] UTC successfully appealed to the LAC.   In the course of his judgment
Froneman J held that the factual findings of the Industrial Court were justified.
But, he said, the Court had not dealt in express terms with the issues raised
in the special plea;  they had been rejected by implication, for reasons that are
not apparent.   The learned judge then stated that the first question that arises
from the special plea is whether Baudach’s claim in the Industrial Court was
not, in essence, a claim for damages based on misrepresentation, and, if so,

whether that court had jurisdiction to entertain the claim.
[18] The learned judge then dealt with the argument of Baudach’s legal
representative that the misrepresentation in the present case constituted an
unfair labour practice as envisaged by s 1 of the L R A of 1956, viz any act
or omission which has or may have the effect of unfairly affecting any
employee or prejudicing  his employment opportunities or work security.   He
also referred to the argument that the legal effect of Baudach’s acceptance of
the termination payments must be overridden by the equitable jurisdiction of
the Industrial Court and should therefore effectively be ignored.
[19] Firstly Froneman J relied on a dictum by Van den Heever JA in
National Automobile and Allied Workers Union (now known as National
Union of Metal Workers of SA) v Borg-Warner SA (Pty) Ltd (1994) 15
ILJ 509 (A) at 518 B - C, F - H).   Van den Heever JA, after saying that the
termination of an employer-employee relationship did not terminate the

relationship envisaged by the LRA of 1956 merely because the relationship
had ended in common law, concluded however by saying : “ ... when both
parties so agree, or when equity permits, the relationship does come to an
end”.   These concluding words, in Froneman J’s opinion, applied to the
present case.
Froneman J then said that the question is whether the consensual
termination of the contractual relationship also amounted to a termination of
the employment relationship itself.   In the present case, he said, the express
terms of Baudach’s acceptance of the termination benefits admits of no
reasonable construction other than that his employment relationship would
come to an end; that the payments were in respect of the termination of the
employment relationship; and that these payments constituted a full and final
settlement of monies owing to him by UTC arising from the termination of his
employment relationship with UTC.

[20] It follows, so the learned judge reasoned, that when Baudach instituted
his claim in the Industrial Court, he was no longer an employee in terms of the
LRA of 1956, unless he proved that his acceptance of the termination benefits
was not binding.   The learned judge held that he expressly chose to do
exactly the opposite, namely to abide by his acceptance of these benefits.  In
so doing, the learned judge said, he had placed himself beyond the jurisdiction
of the Industrial Court’s unfair labour practice jurisdiction.   “He cannot,”
observed the learned judge, “have his cake and eat it.”
[21] For the reasons that follow I am in respectful disagreement with the
learned judge a quo.
From the very beginning of the litigation Baudach based his claim on the
concept of unfair labour practice.   He relied this on two grounds, firstly the
misrepresentation (discussed above), and, secondly, the lack of consultation.
As regards the misrepresentation, his case was, at least impliedly, that

the misrepresentation had a dual effect:  it amounted to an unfair labour
practice and entitled him to resile from the agreement of settlement  (according
to both well-known common law principles and principles of unfair labour
practice).   In bringing the action for reinstatement alternatively for
compensation and by tendering to have the amount already received taken into
consideration in calculating the quantum of the compensation, he at least
impliedly resiled from or lawfully rescinded the settlement agreement, whether
by virtue of the common law or as an incidence of the unfair labour practice.
In the light of the finding of the Industrial Court that the misrepresentation
was committed intentionally, he was entitled so to do, and his claim was
rightly upheld in the Industrial Court  (see also for analogous cases Unilong
Freight Distributors (Pty) Ltd v Muller 1998 (1) SA 581 (SCA) especially
at 591 I - 592 B, (a case of duress); Mediterranean Woollen Mills v South
African Clothing and Textile Workers’ Union 1998 (2) SA 1099 (SCA)

especially at 1103 D-J, (a case of misrepresentation)).
[22] It follows that the alleged settlement agreement could not validly be
raised by UTC as a defence.   For the purposes of the LRA of 1956 he was
entitled to be treated as an ex-employee and, by fiction law, as if the labour
relationship between UTC and himself were still in esse.   The Industrial Court
had jurisdiction to deal with his claim, which was for compensation by virtue
of the LRA of 1956, and not a common law claim for damages, as the learned
judge a quo thought.
[23] The Industrial Court was correct in finding that UTC had committed
an unfair labour practice against Baudach.   The misrepresentation was clearly
the cause that induced Baudach to accept the settlement.   It was, per se, an
unfair labour practice.   Furthermore, there was no proper and honest
consultation with Baudach, explaining to him in what respect his services were
unsatisfactory and affording him an opportunity to counter the allegations.

Nor was he given an opportunity to improve on his past performance;  nor
was he offered an alternative position in the company.   What in truth was an
unfair dismissal was clothed as a retrenchment.
[24] The Industrial Court as trial court awarded Baudach a sum in
compensation after hearing all the evidence.   The amount claimed was not
seriously contested, except for an amount of R5 600,00, which was deducted
from the claim.   In this Court no convincing argument was advanced as to
why the award should be interfered with.
[25] Three applications for condonation were presented to this Court, two
by the appellant and one by the respondent.   The only application that was
contested was one by the appellant.   His attorneys were late in lodging the
Notice of Appeal in this Court, in delivering the record of appeal and in
providing security for costs.   It transpired that the appeal was timeously
prepared and a notice of appeal was forwarded to the correspondents of the

appellant’s attorneys in Bloemfontein.   Before the notice could be lodged
with the Registrar of this Court, the appellant’s attorney was informed by
various members of the staff of the Registrar of the new LAC that  the appeal
had to be prosecuted in that Court and not in the Supreme Court of Appeal.
All this occurred shortly after the LRA of 1995 had come into effect.
Apparently there was confusion in the office of the Registrar of the new LAC
about the effect of that Act and the transitional provisions.   The attorney
erroneously followed the advice given him by the said members of staff of the
new LAC.
[26] In my view, the attorney’s explanation is bona fide and acceptable.
Having regard also to his strong case on the merits, the appellant’s failure to
comply with the prescribed time limits should be condoned.    All three
applications should therefore be granted.   As to the costs of the applications,
the appellant ought to pay the costs of the first-mentioned application, but on

an unopposed basis only.   The opposition to it was not warranted.   In the
other two applications, each party should pay its own costs.
[27] The following order is made  :
The appeal succeeds with costs.
The judgment and order of the court a quo are set aside and
replaced with the following order :
“1
The appeal is dismissed with costs, and
The order made by the Industrial Court in this
matter is reinstated.”
The appellant’s application for condonation of his failure to
lodge his Notice of Appeal within the prescribed time limits and
his failure to deliver the record of the appeal and to provide
security timeously is granted.   The costs of the application on
an unopposed basis are to paid by the appellant.

The appellant’s application for condonation of his failure to
attach the order granting leave to appeal to the Notice of Appeal
and of the incorrect citation of this Court in the heading on the
record of appeal is granted; each party to pay its own costs.
The respondent’s application for condonation of the late filing of
its opposing affidavit in the application mentioned in par 3
hereof, is granted;  each party to pay its own costs.
P J J  OLIVIER  JA
CONCURRING :
GROSSKOPF JA
SCOTT JA
STREICHER JA
MELUNSKY AJA