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WCLawyer, Attorney
Category: South Africa Law
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Experience:  L.LB (UOVS)
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Dear Sir/MadamIn March 2012, I was employed as a Business

Resolved Question:

Dear Sir/Madam

 

In March 2012, I was employed as a Business Development Manager by a South African owned company, Company A – a mining consultancy (herein after ‘A’), for the purpose of Business Development for this company in Mozambique. My remuneration was set at R100,000.00 per month and was in accordance with my employment contract and agreement. Besides 21 working days leave per annum, I was not given any other benefits. However, it is stated, in my contract of employment, that I will be given ‘accommodation’. Until I had been transferred to Mozambique, I had not received ‘accommodation’, or an allowance for this.

 

In April 2012, I was transferred to Mozambique, for the agreed purpose as the Business Development Manager, to a sister company, Company B – an engineering consultancy (herein after ‘B’). At that stage, the two companies belonged to the same group of companies, although, they had different names (A and B). The intention was to use the premises of B to perform my duties for A and, at the same time, to promote and develop business for B. This was all in accordance with my employment contract with A.

 

Due to the Labour Laws and other legal requirements for working in Mozambique, I was “forced” to sign a new employment contract with the registered Mozambican company, now making me an employee of B. This allowed me to apply for, and receive, a work and a residence permit to work and reside in Mozambique. The employment contract was also somewhat changed. The new contract includes a salary of USD 13,100.00 per month, housing allowance of USD 4,000.00 per month (accommodation is very expensive in Mozambique), membership to a Medical Aid Scheme (fully paid by B. I believe the value, at current exchange rates, is approximately R2,500.00 per month), and an extra flight per annum, for personal use, return to South Africa (my previous contract with A included 3 flights per annum and I now get 4).

 

During the period July to September 2012, our companies went through a merger and all of the companies in our group have since been combined into one company. They now all carry the same name (herein after ‘AB’). However, each ‘branch’, A and B inclusive, still performs its original tasks as prior to the merger.

 

Due to excessive workload in South Africa and a shortage in staff with my skills, I have recently been recalled, by the mining consultancy branch of AB (originally A), back to South Africa. I have been told that I will no longer receive the benefits that I enjoyed in Mozambique (housing allowance, medical aid, flights, etc) and I will be resuming on my ‘old salary’.

 

My queries are as follows:

  • Does my ‘new employment contract’ supersede and override my previous employment contract? Also note: no new employment contracts have been issued to employees since the name change, so technically I am still employed by B.;
  • Do I have a right to my current salary (my salary from A was converted to USD by B using an exchange rate of R7.50/USD)?;
  • Do I have rights to claim my current benefits from A when I resume work in South Africa (including medical benefits and housing allowance)?; and
  • A verbal agreement between my ex CEO, no longer with the company, was that I can have my salary paid in any currency I wish (the reason for USD in Mozambique). If I were to ask him to witness this, would it be binding on AB?

 

I would appreciate your assistance and advice in the above regard.

 

Thanking you in advance.

 

Kind regards,

 

Kevin Botes

Submitted: 1 year ago.
Category: South Africa Law
Expert:  WCLawyer replied 1 year ago.
Good day.

I trust you will find this answer beneficial. This is an info request to assist you better. Please continue on this thread.

Just to confirm: you have been paid exactly the same since the merger. They did not change back to the old contract then, but want to do so now?
Customer: replied 1 year ago.

Hi WCLawyer,


 


I certainly hope that your "name" does not have any indication to the source of your answers... lol!


 


My current salary, USD 13,100.00, is the salary that I have been getting since the 9th April 2012. Since the merger this salary, and all of my benefits, have remained unchanged.


 


Thanks,


 


Kevin

Expert:  WCLawyer replied 1 year ago.
Good one. Actually WC refers to Western Cape and not the commode.

Was there ever an agreement that the salary you have been paid in Mozambique will only be adjusted to the previous level when you return?
Customer: replied 1 year ago.

Hi


 


I apologise for the delays in my answering, I am being hampered by calls from the boss every no and then.


 


Ha! Western Cape... I feel "relieved"!


 


There was never an agreement that I would be returning to Company A from Mozambique. I was led to believe, and this was never attested, that I could settle in Mozambique, which I have.


 


There is a clause in my employment contract, with the first company, A which states "The Business Development Manager will be required to perform the services hereunder primarily in the Republic of South Africa and Mozambique. The job will be based in the offices of B, in Mozambique".


 


There is also a clause in my previous employment contract (with Company A) which states "If any of the terms of this agreement, such as rate of remuneration payable to the Business Development Manager, are varied, the other terms shall, unless otherwise agreed in writing, remain in full force and effect"... I am not sure if this clause is relevant to our discussion or not?


 


I hope I have answered your question correctly.


 


Kevin

Expert:  WCLawyer replied 1 year ago.
It is not a problem.

Would you want to return to South Africa? Is the company closing its operation in Mozambique?
Customer: replied 1 year ago.

No. Currently the Mozambique company is not doing too bad, we are actually making reasonable profits and we are meeting targets. I am not aware of any intention to close the company or even to downsize.


 


As I have explained to the CEO, of the South African company, I am not returning of my own accord but because I am compelled by his recalling me. I would not want to return of my own accord.

Expert:  WCLawyer replied 1 year ago.
Finally: The company that is now the merged company; are they only registered in South Africa?
Customer: replied 1 year ago.

No. The company Head Office is in the Netherlands. It is formed from a merger of many companies internationally, in South Africa and in Mozambique. Each branch, Company A (RSA) and Company B (Mozambique) are registered in their respective countries where they are located. For example, Company A is a (PTY) Ltd and Company B is a Limitada.

Expert:  WCLawyer replied 1 year ago.
Then I have to ask you one more question: In your contract, does it say which legal system will be followed if there is a dispute?
Customer: replied 1 year ago.

Yes. Clause 9 in my current contract explains "For any dispute arising from interpretation of the clauses of this contract, the parties now agree, to be mediated by the labour department of the Maputo City. Omissions in this contract will be solved by laws in force in Mozambique". Please note that the wording I have used has been translated from Portuguese (the original language of the contract is Portuguese).

Expert:  WCLawyer replied 1 year ago.
I am afraid that I would then not be able to assist you, as I have no idea of the laws of Mozambique. I am also doubtful on whether an attorney here does have knowledge of these laws, but I will put it back on the message board, just in case.

Apologies.
Customer: replied 1 year ago.

Hi

 

Back.

 

It is accepted by both companies, A and B, I would think it is perhaps an instruction from HO, that I am to return to SA. My questions were concerning my current salary and benefits and if I would have any rights to claim the benefits that I am currently getting... especially concerning the fact that to return is not my choice. The fact that I will have to return, I have come to accept (mostly to ensure that I am still employed) although, I haven't signed any change in employment contract, or an agreement, as I was compelled to do when I started working in Mozambique.

Customer: replied 1 year ago.

Thank you for assistance.


 


Kind regards,


 


Kevin

Expert:  WCLawyer replied 1 year ago.
You see, in terms of South African Law, the company would not be able to vary your contract, since that would be a unilateral change of the terms of the agreement. For them to terminate the Mozambique contract, they would have to use retrenchment procedure based on operational requirements (i.e that they are going to close your department or something to that effect).

I have no idea under what circumstances they can terminate the agreement in terms of the laws of Mozambique, which this in effect is. They are terminating the employment agreement with the one company and negotiating a new contract for the South African company.

See, if South African Law was applicable, you would have a choice to say no to the (let us call it) repatriation agreement (to South Africa), unless they were to make it worth your while.

They still cannot force you to sign the South African agreement. For the repatriation agreement to be legal, you would have to agree to those terms as would the company.

The problem is that, if they can terminate your agreement in terms of Mozambique law, this puts you in a bit of a weaker position, pertaining to negotiating the new agreement. If they are not allowed to, as the case would be, was the SA laws applicable to the Mozambique contract, the obviously you would be able to tell them to meet your terms, or you will remain in Mozambique.

So, I think your next step would be to find out exactly under which circumstances the Mozambique contract may be terminated. If this can easily be done, in my opinion, like I said, your negotiation position is somewhat weakened.

So, what I want you to understand is that we are dealing here with the potential termination of an agreement on the Mozambique side and the negotiation of a whole new agreement on the South African side.
Customer: replied 1 year ago.

Hi


 


The request to "terminate" the Mozambican contract has not come from my Mozambican employer but from my previous employer in South Africa. This person visited Mozambique, a few days back, and informed my Mozambican employer (both persons are CEO's) that he is recalling me to South Africa. My Moz employer was not even aware of this intention prior to this visit.


 


I did not add, in my correspondence between you and I, that my salary is currently being paid by each of the two companies (50% each).


 


My Moz employer did tell me that if the Moz company could afford to pay my full salary, he would not agree to abide by the demands of company A's CEO.

Expert:  WCLawyer replied 1 year ago.
But the employer on your contract is listed as the Mozambique company?
Customer: replied 1 year ago.

Hi


 


Yes. That is correct. My current contract is the contract that I got from the Mozambican company.

Expert:  WCLawyer replied 1 year ago.
Regardless of where they funding comes from for your Mozambique contract, it is with the Mozambique company and the laws of Mozambique is applicable to that contract.

From what I can tell, you don't have an employment contract with the South African company anymore. So, whatever contract you are going to enter into, will be a new contract and for you to move, you must terminate the contract with the Mozambique company.

The decision to terminate from the Mozambique company may be because of pressure or internal policies between the holding company and the subsidiaries, but the entity that needs to terminate is still the Mozambique company in accordance with Mozambique law.

Am I making sense at all?
Customer: replied 1 year ago.

Hi


 


Thank you. Yes, you are making sense and I do understand. It is obvious now that the Moz company will need to terminate my current contract (hopefully with valid reasons) as I am currently employed by them.


 


 


Also, if I understand correctly. Once Moz has terminated my contract, I am actually "jobless" unless I accept the SA contract (possibly on their terms only and without opportunity to negotiate/demand)??

Expert:  WCLawyer replied 1 year ago.
Precisely. Which is why I am saying that it is of cardinal importance to know how easily your contract can be terminated in terms of Moz law. If it can be done easily, then you basically need to jump before they push you. If not, you can dig your heels in a little bit more.
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Experience: L.LB (UOVS)
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