Sibanye Gold Limited v Commission for Conciliation, Mediation and Arbitration and Others

Israel Hlophe (Third Respondent) was employed by Rand Uranium (Pty) Ltd, a subsidiary of Sibanye Gold Limited, since 2013. On 28 June 2017, he was appointed to act as a Shift Boss on a temporary basis and was paid an acting allowance of R15,562.67, in addition to his basic salary of R17,553.33. He acted in this position for approximately four months. On 30 October 2017, Sibanye retrenched Mr Hlophe following a section 189A consultation process. The agreed retrenchment package included severance pay calculated at two weeks' pay per completed year of service, based on the employee's basic salary. Mr Hlophe had eight years of completed service. Sibanye calculated his severance pay and notice pay based on his basic salary only, excluding the acting allowance. Mr Hlophe was dissatisfied with this calculation and referred a dispute to the CCMA. The Commissioner (Second Respondent) found in Mr Hlophe's favor, holding that the acting allowance should have been included in the calculation of severance and notice pay, and awarded him notice pay of R15,562.67 and severance pay of R63,266.40. Sibanye applied to review and set aside the arbitration award.

• Whether section 41(2) of the Basic Conditions of Employment Act (BCEA) applies to severance pay packages that exceed the statutory minimum
• Whether an acting allowance must be included in the calculation of severance pay and notice pay when parties have agreed to a severance package based on basic salary
• Whether the Commissioner misconceived the nature of the enquiry by applying section 41 of the BCEA to an agreed severance package above the statutory minimum
• Whether the review application was properly before the court (procedural issues regarding time limits)

1. The arbitration award issued by the Commissioner under case number GAJB25639-17 dated 14 June 2019 is reviewed and set aside, only to the extent that the Commissioner incorrectly found the acting allowance should be included when calculating Mr Hlophe's severance pay and notice pay in terms of section 41 BCEA, and replaced with the following order: (i) The method of calculating severance pay prescribed in the BCEA applies only to the calculation of severance pay payable in terms of the BCEA; (ii) Mr Hlophe's claim is dismissed. 2. There is no order as to costs.

Section 41(2) of the BCEA prescribes the calculation method for severance pay only in respect of the statutory minimum ('at least one week's remuneration for each completed year of continuous service'). Where parties agree to severance pay that exceeds this statutory minimum through a consultation process (such as section 189A of the LRA), the calculation method prescribed in section 41 of the BCEA does not apply. The parties are free to agree on their own calculation method. The words 'at least' in section 41(2) mean 'not less than' and create a safety net or floor, not a mandatory calculation method for all severance pay. When an agreed retrenchment package specifies that severance pay will be calculated on the basis of basic salary and exceeds the statutory minimum, the employer is not obliged to include temporary allowances (such as acting allowances) in the calculation absent express agreement to do so.

The Court noted that it deemed it superfluous to remit the matter back to the CCMA given the conclusion arrived at, indicating that where the legal position is clear on review, the court may substitute its own decision rather than remitting. The Court made an observation regarding costs, stating it was 'disinclined to award costs against Mr Hlophe as the circumstances of this case dictate that each party pays its own costs,' without elaborating on what those specific circumstances were. This suggests a general approach in labour matters of not penalizing employees who pursue disputes in good faith even if unsuccessful.

This judgment clarifies the application of section 41 of the BCEA regarding the calculation of severance pay. It establishes that the statutory calculation method applies only to the minimum severance pay required by the Act. Where parties agree through collective bargaining or consultation processes to severance packages that exceed the statutory minimum, they are free to determine their own calculation method. This reinforces the principle of freedom of contract in the employment context and the limited scope of minimum wage/benefit legislation. The case is significant for labour law practitioners, employers, and employees in understanding the interplay between statutory minimums and negotiated retrenchment packages. It affirms that the BCEA provides a floor, not a ceiling, for severance benefits and that parties' agreements will prevail where they exceed statutory minimums. The judgment also provides guidance on procedural matters related to review applications and time limits under the Labour Court Practice Manual.