Mhlontlo Local Municipality & 2 others v Ngcangula and Another

The first and second respondents were employees of Mhlontlo Local Municipality. On 25 March 2019, the municipality passed Resolution No. 01-18/19 granting all employees a 2.5% notch increment on basic salaries, retrospective to 2015. Both respondents received the increment. In November 2020, the municipality informed both respondents that the 2.5% increment was an irregular expense identified by the Auditor-General and demanded repayment. The municipality then ceased paying the increment and made deductions from their salaries without their consent. The respondents contended that they had never been placed on salary scales as required for the increment, and only employees who qualified under specific criteria were entitled to it. The respondents launched applications in the high court claiming the deductions were unlawful under s 34(1) of the Basic Conditions of Employment Act 75 of 1997, as they had not consented to the deductions. The municipality argued that the payments were made erroneously as the respondents did not qualify for the notch increment because they had not been placed on salary scales as required by the ongoing job evaluation process.

• Whether the high court had jurisdiction to adjudicate the matter under s 77(3) of the Basic Conditions of Employment Act
• Whether the withdrawal of the salary increment constituted a breach of the contract of employment
• Whether the 2.5% notch increment was a term of the respondents' employment contracts
• Whether the appeal was perempted by subsequent payment to the respondents
• Whether the matter had become moot
• Whether the analysis of pleadings determines jurisdiction in employment matters
• Whether costs on an attorney-client scale were appropriately awarded

1. The appeal is reinstated with no order as to costs. 2. The appeal is upheld with costs, save that no costs are to be paid by the respondents for the preparation of the appeal record. 3. The order of the high court is set aside and substituted with: 'The applications in case numbers 1343/2021 and 1466/2021 are dismissed with costs.'

1. Jurisdiction under s 77(3) of the Basic Conditions of Employment Act is determined by the applicant's pleadings. Where a dispute relates to, is linked to, or is connected with an employment contract, civil courts have concurrent jurisdiction with the Labour Court, irrespective of whether basic conditions of employment constitute a term of the contract. 2. For an employee to establish a breach of contract entitling them to specific payments, they must plead and prove that the payment in question was a term of their employment contract. Erroneous payments made by an employer do not create contractual entitlements. 3. Employees seeking to enforce continued payment of amounts must establish both that they were contractually entitled to such payments and that they met any qualifying criteria for such entitlements. 4. Peremption requires clear and unequivocal conduct demonstrating that a party has abandoned its right to appeal. The onus rests on the party alleging peremption. Payment of disputed amounts after obtaining leave to appeal does not necessarily constitute peremption where there is no evidence of unequivocal acquiescence to the judgment. 5. Where a municipal resolution granting benefits to employees is subsequently set aside as illegal and irrational, courts cannot enforce continued payment under such resolution as this would entrench an illegality.

The Court observed that punitive costs orders (attorney-client scale) should not be awarded merely because employees elect to litigate against their employer and incur costs in the process. Such orders require justification such as dishonest or fraudulent conduct. The Court noted with implicit criticism that the municipality's attorneys were responsible for delays in filing the notice of appeal and complying with time periods, though it considered this could be appropriately sanctioned through costs orders rather than dismissal of the appeal. The Court's consideration of the Labour Court and Labour Appeal Court judgments, though not strictly part of the record at the time of the high court hearing, was noted as relevant to assessing whether the appeal had become moot or academic. The Court suggested these subsequent judgments confirmed that the underlying basis for the high court's decision was fundamentally flawed.

This case clarifies important principles regarding concurrent jurisdiction between civil courts and the Labour Court under s 77(3) of the Basic Conditions of Employment Act. It confirms that jurisdiction must be determined from the applicant's pleadings, and that where a dispute relates to or is connected with an employment contract, civil courts have concurrent jurisdiction with the Labour Court regardless of whether the matter also involves basic conditions of employment. The judgment is significant for establishing that erroneous payments by an employer do not create contractual entitlements, and that employees cannot enforce continued payment of amounts to which they were never lawfully entitled, as this would entrench illegality. It reinforces the principle that municipal decisions must comply with legality and rationality requirements, and that irregular expenditure must be recovered in accordance with constitutional obligations. The case also provides guidance on the doctrines of peremption and mootness in the context of appeals, clarifying the standard of proof required to establish that an appeal has been abandoned or rendered academic.