CARMEL RICKARD: A case of unusual initiative
The owner of a company who did not scrutinise an employment agreement carefully later had to pay the price for his negligence
Employers are usually in the driving seat when it comes to employment contracts, tweaking clauses at will and offering staff a take-it-or-leave-it deal. But then along comes an employee who gets the better of the boss — using a contract. The case of Marinique de Wet against World Luxury Hotel Awards concerns a contract with a unique clause, one that took the labour court completely by surprise.
And the manager who signed the document hadn’t spotted it was there.
In 2006 De Wet was appointed manager of the company, an international hotel marketing scheme, during its embryonic stage. She and owner Brandon Lourens signed an initial contract in September 2006, with a monthly incentive based on the scheme’s turnover.
Seven years later, in March 2013, De Wet and Lourens signed a new contract, drafted by De Wet’s brother.
Both De Wet and Lourens would later give evidence that Lourens "paged through it" before initialling every page and then signing in full.
When the relationship had deteriorated and the resulting dispute ended in court, Lourens commented ruefully that he signed "to his detriment".
As part of her package De Wet was paid a commission of 10% of the firm’s monthly turnover, an amount that soared with the exponential growth of the business.
According to De Wet, by 2015 it was worth R13m-R14m, though Lourens put it at R8m.
In 2014 relations soured and on January 1 2015 De Wet resigned. That was when Lourens realised his mistake in not reading the 2013 contract properly: it stated that should De Wet’s job at the firm be terminated for any reason other than "gross dishonesty" she would be entitled to severance pay based on her last month’s salary and the length of time she had worked. When De Wet asked for her severance pay following her resignation, Lourens was shocked to find the clause.
"At the time I signed your contract of employment I did not read it," he wrote to her. "It was drafted by an attorney representing you and I trusted that you not include any out-of-the-ordinary terms therein."
And out of the ordinary this clause certainly is. Judge Anton Steenkamp, who heard the matter in the labour court, commented: "It hardly needs to be stated that a claim for severance pay for an employee who resigned of her own accord is highly unusual. But then, so is the clause in the contract: it even provides for severance payment where the employer dismisses the employee for misconduct, other than gross dishonesty." Later he repeated that the clause was unusual, and in another place stressed, "That is a highly unusual scenario."
The court had to decide whether, under the contract, De Wet was entitled to severance pay if she were to resign, or only following dismissal. Steenkamp found she had to be paid: resignation was termination of a contract at the instance of the employee, and the contract did not limit payment to termination "by the employer".
In her evidence, De Wet explained why she wanted the clause: Lourens refused to give her shares in the company and she did not have a provident fund. She therefore researched the industry norm for provident fund payments and built that percentage into the contract together with the clause providing she would always be eligible for severance pay.
In the end the court ordered that De Wet be paid leave pay of R519 000 and severance pay of R243 000.
And her legal costs, of course.
You have to admire De Wet’s spunk and foresight in arranging the contract to suit her needs.
But there’s more: Lourens also did not ensure the inclusion of a restraint-of-trade clause, and De Wet has since set up what looks very much like a copycat outfit, called "Haute Grandeur Global Hotel Awards".