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The University Of The North v Franks & others

The University Of The North v Franks & others

CAN AN EMPLOYER WITHDRAW AN OFFER OF VOLUNTARY RETRENCHMENT?

On the 15th August 2000, the University of the North, as part of its restructuring brought about by a drastic reduction in government subsidy, issued a memorandum offering voluntary retrenchment to all the permanent members of the university staff. The offer expired on the 15th September 2000. On the 4th September 2000, another communique was issued to the university community purporting to withdraw and rescind the previous memorandum. By this time, some 140 staff members had accepted the offer. Three of those employees sought relief in the Labour Court and argued that the university was not entitled to withdraw the offer and that they were entitled to claim the benefits contained in the offer.

Was the offer of 15 August 2000 valid? Was the employer prevented from alleging that it is not valid? Could the offer be accepted by the employees after its purported withdrawal by the notice issued on 4 September 2000?

In respect of the first two questions, the Labour Appeal Court held that the University council had mandated the Executive Committee to restructure and implement voluntary retrenchment. The Executive Committee had left the voluntary retrenchment in the discretion of management. Management had decided upon the terms of the offer set out in the memorandum of 15 August and therefore the offer was properly authorised and was valid. The University was further held to be bound by its offer.

In respect of the third question, the first issue to decide was whether the statement that the offer "shall expire on 15 September 2000" amounted to an undertaking to keep the offer open for the given period, or whether it merely determined the reasonable time within which the offer was to be accepted, without any implied undertaking not to exercise the employer’s normal right of withdrawal before acceptance. The court was of the view that it amounted to the former on the basis that the offer was not a simple statement in a one-on-one contractual situation but one made by the principal of a university to a large staff. The offer, if accepted, would have had vast personal repercussions for each of them and would entail deep thought, investigation of alternative positions and family discussions. Seen in this light, the court held that it was inconceivable that either the principal or any of the staff would have contemplated that this offer could be withdrawn before the set date. As such, the court held that the statement implied an undertaking by the employer to keep the offer open until the 15th of September 2000. Consequently, because it was held that the offer could not be revoked before its expiration date, the acceptance of the offer by the employees after the 5th of September 2000 and before the 15th of September 2000 was therefore held to be valid.

The court held that the employees were entitled to accept the offer when they did and were accordingly entitled to the retrenchment benefits provided for therein.

Gary Watkins

Gary Watkins

Managing Director

BA LLB

C: +27 (0)82 416 7712

T: +27 (0)10 035 4185 (Office)

F: +27 (0)86 689 7862

Website: www.workinfo.com
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