Study on Employment Case Law

Description
Labour Relations Act, No 66 of 1995 (LRA) regulates the granting of organisational rights to registered trade unions according to the extent of trade union representivity in a workplace. The origin of this right is to be found in the provisions of s23 of the Constitution, where employees are afforded the right to form and join a trade union of their choice, participate in the lawful activities of a trade union, organise and engage in collective bargaining, and to strike.

EMPLOYMENT CASE LAW
UPDATE 2013
© 2013
This information is published for general information purposes and is not intended
to constitute legal advice. Specialist legal advice should always be sought in relation
to any particular situation. Cliffe Dekker Hofmeyr will accept no responsibility for
any actions taken or not taken on the basis of this publication.
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ORGANISATIONAL RIGHTS FIONA LEPPAN
BENEFITS DISPUTE GAVIN STANSFIELD
SUSPENSION AND UNFAIR DISMISSAL GILLIAN LUMB
DECRIMINALISATION OF DISCIPLINARY ENQUIRIES AADIL PATEL
RETRENCHMENT JOHAN BOTES
DISCRIMINATION MOHSINA CHENIA
COLLECTIVE LABOUR LAW HUGO PIENAAR
BUSINESS TRANSFERS FAAN COETZEE
LABOUR BROKERS MICHAEL YEATES
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ORGANISATIONAL RIGHTS FIONA LEPPAN
1 | EMPLOYMENT CASE LAW UPDATE 2013
INTRODUCTION
Chapter III Part A of the Labour Relations Act, No 66 of 1995 (LRA) regulates the granting
of organisational rights to registered trade unions according to the extent of trade union
representivity in a workplace. The origin of this right is to be found in the provisions of s23 of
the Constitution, where employees are afforded the right to form and join a trade union of their
choice, participate in the lawful activities of a trade union, organise and engage in collective
bargaining, and to strike.
Part A gives effect to the right to organise and participate in the activities of a trade union, but
within certain limits. Part A provides a platform for the enforcement of organisational rights
conferred on representative unions in Part A, but has no application to organisational rights
sought outside Part A.
We shall examine the present requirements of the LRA on this topic. We shall then examine
relevant and recent case law dealing with organisational rights and then conclude with an
overview of the pending amendments in terms of the LRA Amendment Bill.
What statutory organisational rights can a trade union (or two unions acting
jointly) exercise in the workplace where it enjoys suffcient representivity?
There are currently three such rights, namely:
? access to the workplace (s12 of the LRA)
? deductions of subscriptions (s13 of the LRA)
? leave for trade union activities (s15 of the LRA)
What additional statutory rights can a majority trade union exercise
in the workplace (or two or more acting jointly)?
There are two such rights, as follows:
? The right to appoint trade union representatives/shop stewards (s14 of the LRA)
? The right to disclosure of information (s16 of the LRA).
ORGANISATIONAL RIGHTS UNDER
THE LRA AND THE BILL FIONA LEPPAN
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What does 'suffciently representative' mean?
This concept is not defned in the LRA.
In an early arbitration award of SACTWU vs Sheraton Textiles (Pty) Ltd (1997) 7 SALLR 48 (CCMA),
the Commissioner noted that a union is probably suffciently representative if it can infuence
negotiations, the fnancial interests of those engaged in the industry or infuence peace and stability
within an industry or any segment of that industry. The Commissioner made reference to the 30%
numerical threshold which applies where a union(s) seek(s) to establish a statutory council
at sectoral level on the basis of it being suffciently representative.
How does the CCMA decide which organisational rights to grant?
In assessing how the CCMA should award organisational rights, it must seek:
? To minimise a proliferation of trade union representation in a single workplace
and, where possible, encourage "a system of a representative trade union
in a workplace".
? To minimise the social and administrative burden of requiring an employer to grant
organisational rights to more than one registered trade union.
? To consider the nature of the workplace, the nature of the rights sought to be exercised;
the nature of the sector in which the workplace is situated and the organisational history
of the workplace.
What constitutes a 'workplace'?
This is not to be confused with a bargaining unit.
Section 213 of the LRA defnes a 'workplace' as:
“…the place or places where employees of an employer work. If an employer carries
on or conducts two or more operations that are independent of one another by reason
of their size, function or organisation, the place or places where employees work in
connection with each independent operation, constitutes the workplace
for that operation… .”
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3 | EMPLOYMENT CASE LAW UPDATE 2013
What constitutes a 'bargaining unit'?
There is no statutory defnition, but the term refers to a specifc group of employees with a clear
and identifable community of interests by a trade union for the purposes of collective bargaining.
How are organisational rights acquired?
? By way of a collective agreement: A union and employer can conclude such an agreement
that will determine which organisational rights will be afforded to the union and the manner
in which those rights are to be exercised, together with any limitations that may apply.
? By way of an employer and union being party to a statutory council or bargaining council.
? By way of a process in terms of s21 of the LRA, which establishes the steps that should be
taken to exercise rights conferred by Part A of Chapter III, namely:
? The union must notify the employer of the rights it seeks to exercise.
? The parties must endeavour to reach agreement thereon.
? If that engagement process fails, the employer or the union can declare a dispute
and refer same to the CCMA for conciliation.
? If conciliation fails, either party can refer same to arbitration.
? There is an alternative option to arbitration. Either party can seek to impose industrial action
(in the form of a strike or lockout) if the issue in dispute is about any matter dealt with in
s12 to 15 of the LRA. If the industrial action option is pursued, then the party calling for that
industrial action may not refer the dispute to arbitration (in terms of s21) until a period of 12
months has elapsed from the date when such notice of industrial action was given by the one
party to the other.
? Importantly, if an arbitration award is issued, then neither party can embark upon industrial
action as the award fnalises the dispute and brings it to an end.
? We shall deal with the important case of NUMSA and others vs Bader Bop (Pty) Ltd and
another (2003) 2 BLLR 103 (CC) separately.
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Can a majority trade union establish thresholds of representativeness
binding upon other minority trade unions at the same workplace?
In order to address this question, regard must be had to s18 of the LRA, which permits an
employer and registered trade union, that has the majority of employees as its members in a
workplace, to conclude a collective agreement establishing a threshold of representativeness
required in terms of one or more of the organisational rights stipulated in s12, 13 and 15
of the LRA.
One must be mindful that s18(2) of the LRA provides that such a collective agreement will not be
binding unless the thresholds of representativeness in the collective agreement are applied equally
to any trade union seeking organisational rights.
Can there be two different thresholds established in terms of different
agreements with competing unions that operate within the same
bargaining unit? Is this legally permissible?
The existence of two different thresholds that apply within the same bargaining unit does not
necessarily infringe s18(2) of the LRA, because s18 of the LRA only applies to unions seeking
organisational rights, and not to unions which already enjoy such rights or whose organisational
rights are already enshrined in a collective agreement.
See: Solidarity vs Assmang Ltd: Private Arbitration Award: (30 May 2012).
Does s18(2) of the LRA have a bearing on existing bargaining entitlements?
Section 18(2) does not have application to agreements conferring a bargaining entitlement.
Nothing in the current LRA prevents an employer having different thresholds for collective
bargaining purposes.
ORGANISATIONAL RIGHTS FIONA LEPPAN
5 | EMPLOYMENT CASE LAW UPDATE 2013
Is there a right to strike to secure organisational rights? An analysis
of the Bader Bop constitutional court decision.
The issue before the Constitutional Court pertained to the relationship between s20
1
and s21
2
of
the LRA and the implications these sections had on one of Bader Bop's minority unions, NUMSA
that argued that because s20 of the LRA allows for the attainment of organisational rights via
a collective agreement, it would follow that organisational rights can be obtained through
collective bargaining, including industrial action.
3

The Constitutional Court found that when interpreting s20 and s21 of the LRA, regard must be
had to, among others, s18 and s23 of the Constitution, which pertain to freedom of association
and fair labour practices respectively, and s1 of the LRA, which outlines the purpose of the LRA.
The Constitutional Court concluded that s20 of the LRA should be interpreted as an "express
confrmation of the internationally recognised rights of minority unions to seek to gain access to
the workplace and to obtain organisational facilities through a process of collective bargaining."
4

In terms of s21, it held that:
"Section 21 on its own terms, however, is not available to a union that admits that it is
not suffciently representative as contemplated by the Act. On the other hand, however,
Section 21 should not be read to deny such unions the right to pursue organisational
rights through the ordinary mechanisms of collective bargaining."
5

The question arises whether such a recognition agreement once concluded means that other
minority unions who do not reach the requisite thresholds in terms thereof are to obtain
organisational rights or collective bargaining rights, are entitled to embark on industrial action?
1. Organisational Rights in collective agreements.
2. The manner in which unions are able to exercise rights conferred by Part A, Chapter III of the LRA.
3. J Grogan, Collective Labour Law, (2010), p 55.
4. Bader Bop, para 41.
5. Ibid, para 42.
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It is submitted that O'Regan J, addresses this issue, albeit indirectly. At paragraphs 38 to 39,
O'Regan J held that:
"Du Plessis AJA also referred to Section 18 of the Act to support the conclusion of
the majority. This provision permits employers and unions to conclude a collective
agreement to establish the specifc thresholds necessary to exercise the rights in
Sections 12, 13 and 15 defned in the Act as ‘suffciently representative’. Du Plessis
AJA reasoned that this provision, too, suggested that minority unions could not use
strike action to obtain rights in confict with such an agreement.
The interpretation of the majority of the LAC is one which the text may plausibly bear.
However it fails to take into account suffciently the considerations that arise from the
discussion of the ILO Conventions outlined above and, in particular, does not avoid the
limitation of Constitutional rights."
O'Regan J found that on an interpretation of Part A of Chapter lll of the LRA which promotes,
rather than inhibits the right to freedom of association and fair labour relations in terms of s18 and
23 of the Constitution respectively, fnds its direction from the ILO. She goes further, at paragraph
40, to hold that:
"There is nothing in Part A of Chapter lll, however, which expressly states that unions
which admit that they do not meet the requisite threshold membership levels are
prevented from using the ordinary process of collective bargaining and industrial
action to persuade employers to grant them organisational facilities, such as access to
the workplace, stop-order facilities and recognition of shop stewards."
The majority of the J udges in the Bader Bop case was of the view that matters pertaining to
organisational rights are clearly of mutual interest vis-á-vis the employer and trade unions, and
are matters capable of forming the subject matter of a referral to the CCMA for conciliation – the
condition precedent to protected strike action.
6

6. See: Bader Bop (Supra) note 1 above, para 40.
ORGANISATIONAL RIGHTS FIONA LEPPAN
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The limitation on the right to strike, contained in s65 of the LRA, will not be applicable to a
minority union that admits it does not have organisational rights, and is seeking to embark on
industrial action in order to obtain certain organisational rights. Sections 65(1)(c) and 65(2) are
only applicable to disputes which parties may refer to arbitration. Due to the fact that a minority
union does not have the representative status
7
as contemplated by Part A, Chapter III of the
LRA, arbitration procedures are not open to a minority union, and as a result the strike-related
limitations contained in s65(1)(c) read with 65(2) do not pose a bar to a strike by minority unions.
An important principle that can be drawn from the Bader Bop decision is that the relevant
provisions contained in Part A, Chapter lll of the LRA must be interpreted in a manner which
avoids the limitation of fundamental rights enshrined in the Constitution. John Grogan confrms
this view, when he states that minority trade unions can acquire organisational rights through the
procedures set out in s134 of the LRA (disputes about mutual interest issues), which requires
and permits unions to extract such rights from unwilling employers via collective bargaining
supplemented by protected strike action.
8

However, due consideration must be taken regarding the 'majoritarianism principle'. This was
highlighted in the LAC decision of Kem-Lin Fashions CC v Brunton & Another,
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where it was
held that:
"The legislature has also made certain policy choices in the Act which are relevant
to this matter. One policy choice is that the will of the majority should prevail over
that of the minority. This is good for orderly collective bargaining as well as for the
democratisation of the workplace and sectors. A situation where the minority dictates
to the majority is, quite obviously, untenable. But also a proliferation of trade unions
in one workplace should be discouraged. There are various provisions in the Act which
support the legislative policy choice of majoritarianism. Some of them are Sections
14(1); 16(1); 18(1); 25(1) and (2); 26(1) and (2); 32(1)(a) and (b); 32(3)(a), (b), (c)
and (d) and 32(5); 78(b)." (Our emphasis) (Kem-Lin Principle)."
7. Section 11 of the LRA.
8. Supra, note 8 above, p 71.
9. (2001) 1 BLLR 25 (LAC) para 19.
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However, such a view should be juxtaposed with the reasoning found in the Bader Bop judgment
which emphasises the constitutional provisions of the right to freedom of association and the right
to fair labour relations. Furthermore, O'Regan J emphasises the teleology contained in s1 of the
LRA,
10
and makes specifc reference to two important ILO Conventions to which effect must be
given when interpreting s18 and 23 of the Constitution.
11
The aforementioned conventions are the
Freedom of Association and Protection of the Right to Organise Convention, No 87 of 1948 and
the Right to Organise and Collective Bargaining Convention, No 98 of 1949. The fundamental
principle which can be drawn from the Constitutional Court's reasoning is that prohibiting the right
to strike based on an issue of mutual interest which affects a fundamental right of a trade union,
would essentially amount to a limitation on the right to strike.
This view is supported by a purposive methodology of interpretation of the LRA
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adopted by
the Constitutional Court, which, permits minority unions to resort to industrial action in order to
obtain organisational rights specifed by s12 to 15 of the LRA.
10. This Section outlined the purpose of the LRA.
The purpose of this Act is to advance economic development, social justice, labour peace and the democratisation of the
workplace by fulflling the primary objects of this Act, which are –
a) to give effect to and regulate the fundamental rights conferred by Section 23 of the Constitution;
b) to give effect to obligations incurred by the Republic as a member state of the International Labour Organisation;
c) to provide a framework within which employees and their trade unions, employers and employers’ organisations can –
i) collectively bargain to determine wages, terms and conditions of employment and other matters of mutual interest; and
ii) formulate industrial policy; and
d) to promote -
i) orderly collective bargaining;
ii) collective bargaining at sectoral level;
iii) employee participation in decision-making in the workplace; and
iv) the effective resolution of labour disputes.
11. This is due to Section 39(1)(b) of the Constitution which mandates that when interpreting the Bill of Rights
regard must be had to international law.
12. A purposive interpretation of the LRA is mandated by virtue of Section 1 of the LRA.
ORGANISATIONAL RIGHTS FIONA LEPPAN
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BRIEF OVERVIEW OF RELEVANT RECENT CASE LAW ON THE ISSUE
OF ORGANISATIONAL RIGHTS
Platinum Mile Investments (Pty) Ltd t/a Transition Transport v South African Transport
and Allied Workers Union and others (2010) 31 ILJ 2037(LAC)
The Labour Appeal Court (LAC), in this case, was faced with the contention by the employer,
Platinum Mile Investments, that the strike imposed by the South African Transport and Allied
Workers Union (SATAWU) was not protected as it pertained to a recognition dispute. Further
it was contended by the employer that the ensuing dismissals as a result of the strike were not
automatically unfair because the strike should have been deemed to be an unprotected one.
The facts and legal principles as follows:
? There was no recognition agreement between SATAWU and the employer. On
9 J une 2005, SATAWU referred a refusal to bargain/organisational rights dispute to
the CCMA for conciliation. The employer had refused to conclude such a recognition
agreement. The second dispute concerned the employment of labour brokers.
? SATAWU threatened to strike over the recognition dispute as early as 29 J une 2005.
On 2 September 2005, SATAWU notifed the employer that its members would
commence with a strike over the recognition dispute.
? SATAWU gave 48 hours' notice to strike before it had received an advisory
arbitration award which recommended that the parties enter into a recognition
agreement within a 30 day period before any strike could take place. However,
despite the advisory arbitration award, a strike started on 5 September 2005.
? The LAC held that the strike contravened s64(1)(b)
13
read with s64 (2) of the LRA,
and once it was accepted that the strike was about a recognition dispute it followed
that the strike was unprotected.
13. Section 64(1)(b) requires a union to give 48 hours' notice of its intention to strike before that strike could commence.
This notice may not be given before the receipt of an advisory award.
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? Ultimately the LAC set aside the Labour Court's decision where the Labour Court
found that the strike by SATAWU was protected and that the resultant dismissals
automatically unfair. The LAC found that the strike which pertained to the
recognition dispute was unprotected and that the ensuing dismissals were not unfair.
? This decision is important because a refusal to recognise a trade union as a collective
bargaining agent constitutes a refusal to bargain for which an advisory award must be
obtained before any protected strike can commence.
UASA & AMCU v BHP Billiton Energy Coal South Africa Ltd and another (JS354/13)
[2013] (5 March 2013)
This case resulted from an urgent application to the Court regarding organisational rights of
minority unions. United Association of South Africa (UASA) and Association of Mineworkers
and Construction Union (AMCU) applied to have the Court interdict the majority union, NUM,
from changing the existing thresholds for organisational rights by means of a collective agreement
with the employer.
UASA and AMCU formed a coalition for the purposes of establishing organisational rights at the
employer. In December 2009, the coalition referred a dispute concerning organisational rights
to the CCMA. A settlement agreement was reached between the coalition and the employer on
5 March 2010. However, despite this National Union of Mineworkers (NUM) and the employer
concluded a new threshold agreement for organisational rights on 31 J anuary 2013.
The employer's industrial relations policy provided that, in accordance with s18 of the LRA, the
employer and the majority union (which was NUM) will agree on threshold levels applicable to
recognition and participation in organisational rights in accordance with s12, 13 and 15 of the LRA.
The coalition maintained that the settlement agreement, which was made an award of the
CCMA, and certifed as such, remained binding and enforceable on the parties to the settlement
agreement. However the employer argued that it was entitled to conclude a new threshold
agreement in terms of s18 of the LRA. The effect of the new thresholds was due to come into
force and effect a day after the urgent application was heard, hence the urgency of the matter.
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The coalition's case was based on a two-pronged contention:
? The settlement agreement remained valid and binding (the settlement agreement point).
? The 2013 agreement was ultra vires (beyond the powers of the law) of s18 of the
LRA, because the agreement purports to defne the 'workplace' as the employer's
operations holistically, and not, as before, its individual operations (s18 and the
workplace point).
The Settlement Agreement Point
Steenkamp J held that because the settlement agreement had been certifed in terms of s143(3) of the
LRA, it was of greater legal value than a collective agreement. The effect of an award of the CCMA
being certifed is that the award may be enforced 'as if it were an Order of the Labour Court'.
14
The Court held that there was no real impediment to prevent NUM and the employer from
entering into new agreements between each other. However, Steenkamp J noted that in the face of
the existing arbitration award (that was certifed), the employer could not enforce new thresholds
contrary to those stipulated in the CCMA award.
Section 18 and the workplace point
NUM placed emphasis on the principle of majoritarianism that underlies the collective bargaining
regime of the LRA. In light of this, Steenkamp J referred to the Kem-Lin Principle stated on page 7.
An important objective of s18 of the LRA is, according to Prof Martin Brassey (Brassey),
to enable parties to the agreement to attach a numerical fgure to the somewhat indeterminate
concept of 'suffciently representative' which is required in terms of s12, 13 and 15 of the LRA.
Moreover, Brassey states that the primary purpose of s18 of the LRA is to promote workplace
majoritarianism, which is the system under which a single union or group of unions enjoy
exclusive rights by virtue of its/their representivity in a workplace.
14. However it must be noted that in the case of Tony Gois t/a Shakespeare's Pub v Van Zyl & Others, (2003) 11 BLLR 1176
(LC), it was held that the certifcation of a CCMA award does not convert the award into an order of the Labour Court.
Section 11 of the LRA.
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With regard to the concept of the workplace, Brassey provides some important insight:
"The workplace is the organising moment for various rights under the Act.
It determines the constituency within which organisational rights are asserted and
a workplace forum can be established.
…In the private sector the nature of a workplace is a question of fact. If the employees
all work in one place, it is the workplace: if they are divided into separate branches
or depots, the separate locations can each be a workplace. Deciding whether two
locations are separate workplaces entails an examination of the extent to which they
operate independently of each other, which in turn entails a consideration of the size,
function and organisation of each. Geographical separation will be important, but will
not always be decisive. A single workplace might embrace depots in adjoining towns."
Ultimately Steenkamp J , given the factors considered above, made the following observations:
"As I have remarked above, though, these are not ordinary circumstances. NUM and
BECSA can enter into and amend agreements in terms of Section 18. What BECSA
cannot do, given the binding arbitration award of 5 March and 30 June 2010, is to
enforce new thresholds as against AMCU and UASA without their consent as long
as that award stands. But I say so only in the context of fnding that the coalition has
established a prima facie right, though open to some doubt, for the interim relief they
seek; it is for a CCMA arbitrator to delve into and make a fnding on the merits in
terms of s24 of the LRA."
This case provides unique insight into the validity of s18 agreements, the fact that under the
current LRA regime, the majoritarian principle prevails, and the effect of a settlement agreement
that establishes thresholds can have on the validity of subsequent threshold agreements.
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The SA Post Offce Ltd v Commissioner Nowosenetz NO and others (2013) 2 BLLR 216 (LC)
In this recent case the Applicant concluded four successive collective agreements with
Communication Workers Union (CWU) in which a threshold of 30% +1 was set for any union
seeking to acquire organisational rights in the Applicant's workplace. In 2009, another union,
South African Postal Workers Union (SAPWU) made a request for organisational rights but this
was refused even though it met the stated threshold. The Applicant continued with its refusal
because it had, in the interim, concluded an agency shop agreement with the CWU setting a new
threshold of 40%. This new agreement stated that all earlier agreements were superseded.
The CWU and SAPWU declared disputes against the Applicant which were consolidated for
the purpose of the arbitration hearing. The Commissioner found that SAPWU was entitled to
organisational rights before the new agency shop agreement was concluded. The Applicant
successfully took the award on review. It argued that organisational rights could not apply
retrospectively. The court found that:
? Novation applies when parties replace a valid contract with a fresh valid contract.
? The wording of the fnal contract indicated a clear intention to replace the earlier
threshold with a new one.
? It is settled law that novation abolishes not only the obligations between contracting
parties, but also all obligations arising from the novated contract, including
obligations owed to third parties.
? SAPWU would have to meet the new 40% threshold to gain organisational rights.
ORGANISATIONAL RIGHTS UNDER THE LRA BILL
The amendments to the LRA will have a major impact on the ability of minority unions, which do
not reach certain thresholds required to enjoy organisational rights, to obtain such rights through
the CCMA. These amendments will focus on s21 of the LRA, as follows:
"S21(8A) subject to the provisions of subsection (8), a Commissioner may in an arbitration
conducted in terms of Section 22(4) grant a registered trade union that does not have as
members the majority of employees employed by an employer in a workplace -
(a) The rights referred to in Section 14, despite any provision to the contrary in that
Section, if -
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i. the trade union is entitled to all of the rights referred to in Sections 12 , 13 and
15 in that workplace, and
ii. no other trade union has been granted the rights referred to in Section 14 in that
workplace.
(b) The rights referred to in Section 16, despite any provision to the contrary in that
Section, if -
i. the trade union is entitled to all of the rights referred to in Sections 12, 13 and
15 in that workplace, and
ii. no other trade union has been granted the rights referred to in Section 16 in that
workplace.
(8C) Subject to the provisions of subsection (8), a Commissioner may in an
arbitration conducted in terms of Section 22(4) grant the rights referred to in
Sections 12, 13 or 15 to a registered trade union, or two or more registered
trade unions acting jointly, that does not meet thresholds of representativeness
established by a collective agreement in terms of Section 18, if –
(a) all parties to the collective agreement have been given an opportunity to
participate in the arbitration proceedings; and
(b) the trade union, or trade unions acting jointly, represent a signifcant interest,
or a substantial number of employees, in the workplace."
The purpose of the Labour Relations Amendment Bill is to amend the LRA, "so as to facilitate the
granting of organisational rights to trade unions that are suffciently representative," or to ensure
that those unions that represent a signifcant interest can validly exercise key organisational rights.
A minority trade union may potentially make use of s21(8A) and/or s21(8C) in order to obtain
organisational rights contained under Part A, Chapter III of the LRA, which it may have otherwise
struggled to do. However, a minority union could opt to exercise its right to strike for the grant
of organisational rights, in line with the Bader Bop decision.
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IMPACT OF PENDING EMPLOYMENT LEGISLATION
The amendments to the LRA has brought about some signifcant changes to the manner in which
the CCMA must make this determination, and the number of trade unions that may in future be
entitled to exercise organisational rights.
While the CCMA commissioner tasked with making the determination of 'suffciently
representative' must still (as before) seek to minimise the proliferation of trade unions, and
minimise the fnancial and administrative burden of requiring the employer to grant organisational
rights to multiple trade unions, the commissioner is now enjoined to take into account (in addition
to the factors previously considered) "the composition of the work-force in the workplace taking
into account the extent to which there are employees assigned to work by temporary employment
services, employees employed on fxed term contracts, part-time employees or employees in
other categories of non-standard employment". This must be read with the further addition that
trade unions may seek to exercise organisational rights in respect of employees of a temporary
employment service (TES) either at a workplace of the TES, or one or more of the clients of the
TES. Moreover, if the trade union elects to exercise rights at the TES's workplace, any reference
to the 'employer's workplace' must be read as including the client's workplace.
Before dealing with some of the other expansions of benefciaries of organisational rights, we
want to pause to consider the effect of the additional organisational rights granted to trade unions
in respect of TES employees. The past prejudice suffered by these employees has certainly been
foremost in the minds of the drafters of the amendments to the LRA, and will feature several times
in this explanation of the effects of the amendments. It has been said that TES employees were
often subject to abusive practices, amongst other reasons, because they have no effective access to
any collective bargaining or organisational rights. Even if a trade union has majority representation
amongst the TES employees, it would have had no right to gain access to the workplace of the client
(that is the place where the employees actually render their services), it could not appoint shop
stewards at the client's premises, and no industrial action could be embarked upon at the client's
premises. In fact, any industrial action at all is extremely risky - even if such was embarked upon
against (and at the workplace of) the TES - because the client may well be able to terminate the
commercial agreement with the TES, pursuant to a failure of the TES to abide by its terms. Even
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a protected strike may therefore have resulted in a right for the client (some would argue, the real
benefciary of the employees' service) to summarily terminate the contract in terms whereof the
employees render services to it.
The amendments now make it possible for TES employees to be effectively represented by
trade unions, with access to all of the organisational rights normally enjoyed by representative
trade unions. Indeed, these trade unions may have greater rights than others, because it has
an election as to which workplace it should seek organisational rights for. If it does not have
suffcient representation in the client's workplace (and now TES employees will be included in
the count of members, not only the client's staff, unlike before), it may be able to prove suffcient
representation in the TES's workplace, and through that avenue, also acquire the right to have
access to the client's workplace, have its elected shop stewards be active at the client's workplace,
etc. Even industrial action may in future have an impact on the client, because picketing may
now take place at a site other than the employer's workplace, provided that the person whose
workplace it is, must have been given an opportunity to make representations to the CCMA about
picketing rules before such rules are established (s69(6)(a)).
ORGANISATIONAL RIGHTS FIONA LEPPAN
17 | EMPLOYMENT CASE LAW UPDATE 2013
NOTES
BENEFITS DISPUTE GAVIN STANSFIELD
22
BENEFITS DISPUTE | 18
May an employee pursue an unfair labour practice claim in terms
of s186(2)(a) if the right to such claim does not vest in a contract
of employment or statute?
Facts
Yes. In the case of Apollo Tyres SA (Pty) Ltd v Commission for Conciliation, Mediation and
Arbitration and others (2013) 34 ILJ 1120 (LAC), Apollo Tyres had initiated an early retirement
scheme for monthly paid staff between the ages of 46 and 59 years. After being told that she did
not qualify for the scheme because she was below the age of 55, Ms Hoosen resigned and referred
a dispute to the CCMA claiming that the company's refusal to pay her the amount specifed in
the voluntary retrenchment scheme constituted an unfair labour practice relating to the provision
of benefts. Apollo Tyres argued that the CCMA lacked jurisdiction to arbitrate the matter as the
voluntary retrenchment scheme is not a 'beneft' as contemplated by the Labour Relations Act,
No 66 of 1995 (LRA). The Commissioner rejected the argument and ruled that the company had
committed an unfair labour practice by not admitting Hoosen to the scheme and ordered Apollo
Tyres to pay her the specifed severance package. The company's review application to the Labour
Court was dismissed. Apollo accordingly appealed the Court's decision.
Findings
In coming to its conclusion, the Labour Appeal Court (LAC) said the following in relation to the
unfair labour practice remedy in terms of s186(2)(a):
? The unfair labour practice jurisdiction cannot be used to assert an entitlement to new
benefts, to new forms of remuneration or to new policies not previously provided for by
the employer. This does not mean however that an employee's only recourse to the CCMA's
unfair labour practice jurisdiction is in circumstances where he/she has a cause of action
arising in contract law.
? There are at least two instances of employer conduct relating to the provision of benefts that
may be subjected to scrutiny by the CCMA in terms of s186(2)(a) viz. where the employer
fails to comply with a contractual obligation that it has towards an employee and where
the employer exercises a discretion that it enjoys under the contractual terms of the scheme
conferring the beneft.
BENEFITS DISPUTE GAVIN STANSFIELD
19 | EMPLOYMENT CASE LAW UPDATE 2013
? Many employee benefts schemes confer rights and create obligations and confer discretion
on employers. One of the objects of s186(2)(a) is to provide a remedy when such discretion
is exercised unfairly.
? Previous decisions of the Court, which held that the beneft must be an entitlement that
is rooted in contract or legislation, are untenable. If this were the case, it would entitle
employers to act with impunity. Employees complaining of an employer's unfair exercise
of a discretion emanating from a policy or practice would not have recourse to the civil
courts because no contract came into being, nor would they have a remedy in terms of
s186(2)(a) by reason of there being no underlying contractual right to the beneft in question.
Single employees can furthermore not engage in strike action. The s186(2)(a) remedy would
accordingly be rendered sterile.
? The correct approach is therefore to interpret the term 'beneft' to include a beneft to which
the employee is not only entitled ex contractu or ex lege (including rights judicially created),
but also those where an advantage or privilege which the employee has been offered or
granted exists in terms of a policy or practice that is subject to the exercise of discretion on
the part of the employer.
? Applying these legal principles to the facts, the retirement beneft in Apollo Tyres had been
offered to all monthly paid employees between the ages of 46 and 59. Hoosen was 49 and
paid a monthly wage. The appellant had a discretion as to whether or not to grant the beneft.
The issue was whether that discretion had been exercised unfairly, that is whether the
employer had acted arbitrarily, capriciously or for no justifable reason.
? Apollo Tyres had continuously shifted the goal posts and provided no credible reason for
not granting Hoosen an early retirement package. The Court accordingly held that Apollo
Tyres had perpetrated an unfair labour practice by excluding the employee from the early
retirement scheme and dismissed the appeal with costs.
22
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NOTES
SUSPENSION AND UNFAIR
DISMISSAL GILLIAN LUMB
21 | EMPLOYMENT CASE LAW UPDATE 2013
SUSPENSION
What reasons can an employee advance in support of a contention that
he/she is being unfairly suspended, and can all employees seek a remedy
for an alleged unfair suspension, or only public sector employees?
Facts
In MEC for Education, North West Provincial Government v Gradwell (2012) 33 ILJ 2033
(LAC), the reason that was advanced, was that the employer violated the audi alteram partem
rule by failing to afford the employee an opportunity to be heard before the decision was
taken to suspend him. This case dealt with a precautionary suspension, commonly used in the
public sector. Gradwell, acting head of the Department of Education, North West Provincial
Government, was suspended after allegations were made that he was guilty of serious fnancial
misconduct. His employer communicated with him in writing, prior to his suspension, informing
him of the allegations and allowing him 24 hours to show cause why he should not be suspended.
Gradwell requested further information and an extension of time to enable him to meaningfully
respond to the allegations. After a brief extension of time, Gradwell was placed on precautionary
suspension on full pay. The Labour Court (on urgent application in terms of s158(1)(a) of the
Labour Relations Act, No 66 of 1995 (LRA) held that the suspension was unlawful, relying on the
absence of a objectively justifable reason to deny the employee access to the workplace, and the
lack of suffcient time to be heard prior to his suspension.
Findings
The Gradwell judgment confrmed that an unfair suspension of an employee can constitute
an unfair labour practice in terms of s186(2)(a) of the LRA. The requirement that a suspension
must be fair was held to apply to both precautionary and punitive suspensions. What would be
considered fair in any given circumstances will depend "upon the weighing and balancing
of a range of factors, including the nature of the decision, the rights, interest and expectations
affected by it, the circumstances in which it is made, and the consequences resulting from it".
In the context of a precautionary suspension (as opposed to a suspension as a disciplinary
sanction) "the standard of procedural fairness, may legitimately be attenuated for three principal
reasons: First, precautionary suspensions tend to be on full pay with the consequence that the
prejudice fowing from the action is signifcantly contained and minimized. Secondly, the period
of suspension is often of limited duration. Thirdly, the purpose of the suspension - the protection
33
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SUSPENSION AND UNFAIR DISMISSAL | 22
of the integrity of the investigation into the alleged misconduct - risks being undermined by
a requirement of an in-depth preliminary investigation. Provided the safeguards of no loss of
remuneration and a limited period of operation are in place, the balance of convenience in most
instances will favour the employer". Murphy AJA further held that it is suffcient if "any (current
or future) investigation" may be compromised by the employee’s presence at the workplace. The
suspension may therefore be justifed as long as an investigation is within contemplation, it need
not have actually commenced. He further noted that "the nature, likelihood and the seriousness
of the alleged misconduct will always be relevant considerations in deciding whether the denial
of access to the workplace was justifable". The period granted to Gradwell to respond was not an
unreasonable period in the circumstances.
A further notable aspect of the Gradwell judgment, particularly for employers who are not in
the public sector, is that the Labour Appeal Court (LAC) held that the right to fair process in
suspensions is founded on the statutory right to fair labour practices in terms of s186(2) read with
s185 of the LRA. These sections of course apply to all employees, not just public sector employees.
The LAC was not willing, however, to read in a contractual term as a naturalia in all contracts of
employment, to the effect that employees have an implied right to be heard prior to suspension.
Facts
Another reason successfully advanced by an employee to challenge his suspension, (in Lebu v
Maquassi Hills Local Municipality (2) (2012) 33 ILJ 653 (LC)), was that the employer did not
comply with a statutory provision or internal policy governing suspension. The municipality had
failed to justify the employee's suspension and to afford him seven days in which to make his
representations on the reasons for the proposed suspension, as required by the Local Government:
Disciplinary Regulations for Senior Managers 2010.
Findings
The Court held in Lebu that suspended employees must be provided with the details of the alleged
misconduct and the reasons for the suspension. It is not enough to simply allege that the employee
has committed an act of misconduct – that by itself does not justify a suspension. The court noted
that the "purpose of removing an employee from the workplace, even temporarily and on full pay,
must be rational and reasonable, and must be conveyed to the employee concerned in suffcient
detail to enable the employee to compile the representations that he or she is invited to make
in a meaningful way".
SUSPENSION AND UNFAIR
DISMISSAL GILLIAN LUMB
23 | EMPLOYMENT CASE LAW UPDATE 2013
The court further determined that the reasons ought to have been provided before the decision to
suspend was taken, and could not be subsequently provided in answering affdavits, to rectify the
earlier failure.
Judge van Niekerk in the Lebu judgment, summarised the procedural steps to ensure a fair suspension:
? The employer (in casu a municipality) reasonably believes that the employee has
committed an act of serious misconduct.
? The purpose of any suspension must be rational, and the employer must be in a
position to establish the reasonableness of its belief, for instance if the employer
reasonably believes that the continued presence of the employee would jeopardise
an investigation, or that the employee might commit further acts of misconduct, or
may interfere with potential witnesses.
? Both the nature of the misconduct alleged and the purpose of the proposed suspension
must be set out in terms that are suffciently particular so as to enable the employee to
make meaningful representations in response to the proposed suspension.
? The employee must be permitted time to prepare a response to the suspicions,
and should be given an opportunity to make representations to the employer.
? The employer must seriously consider the representations and make a decision in the
light of those representations and its own interests on whether the employee should
be suspended, and it must then provide the reasons for rejecting the employee's
representations, should that happen.
Facts
Employees can further rely on an allegation that the period of suspension was too long, as was
the case in Nyathi v Special Investigative Unit (2011) 32 ILJ 2991 (LC), where the employee was
suspended for breach of her fduciary duties, disclosure of privileged information and irregular
claims for allowances.
Findings
In Nyathi, where the employer suspended the employee beyond the period allowed for in the
applicable disciplinary code, J udge Basson found that the employer had acted unfairly the
employer was ordered to permit the employee to resume her duties.
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SUSPENSION AND UNFAIR DISMISSAL | 24
Facts
In Taung Local Municipality v Mofokeng (2011) 32 ILJ 2259 (LC), the employee's contention was
that the employer committed an irregular act of suspension. The municipality had suspended the
municipal manager (due to allegations of irregular spending and procurement transgressions) at a
council meeting which was not quorate.
Findings
In the Taung case, Molahlehi J held "…the fact that the defect is limited to procedure is
immaterial in the assessment of its validity and force in law because it offends one of the basic
principles of our law, namely the rule of law". The suspension was accordingly held to be invalid.
SUSPENSION/GARDEN LEAVE AND THE RIGHT TO WORK
Can an employee insist on being allowed to render work, even if the employer
prefers to pay the employee out for the remainder of the employee's (fxed
term) contract of employment?
Facts
The applicant in Abdullah v Kouga Municipality (2012) 33 ILJ 1850 (LC) was the chief fnancial
offcer of Kouga Municipality. He had been suspended for approximately 10 months by his
employer, before he approached the court for an order uplifting his suspension. J udge Lallie
ordered on an interim basis that the applicant's continued suspension was unlawful and was
to be uplifted. About two days after the interim order was issued, the municipality notifed the
applicant that it had decided to terminate his fxed term contract and to pay out the remainder of
this contract, on the basis that the council had lost all trust in the past senior management of the
Kouga Municipality.
Findings
Judge La Grange held that the respondent decided to summarily terminate the applicant's contract
of employment, relying not on allegations of misconduct, but cited a 'loss of trust' as justifcation
for the termination. While a relationship of trust is fundamental to the employment relationship
if the trust relationship has broken down without assigning the blame for that breakdown to
the employee, an employer is not entitled to terminate the employment relationship summarily.
SUSPENSION AND UNFAIR
DISMISSAL GILLIAN LUMB
25 | EMPLOYMENT CASE LAW UPDATE 2013
The termination of employment was therefore unlawful. It was further held that, in summarily
terminating the applicant's employment, the respondent did not act in contempt of the interim
order uplifting the applicant's suspension, and the Court therefore refused an application by the
applicant to hold the respondent in contempt of court.
As a remedy, the Court declined to order reinstatement due to the breakdown of trust, and instead
awarded contractual damages. The respondent was ordered to pay the applicant's remuneration up
until the expiry of his temporary contract of employment (which had in any event been tendered
by the employer).
Section 198B of the Labour Relations Amendment Bill will restrict an employer's right to
enter into fxed term contracts of employment for periods longer than three months with certain
categories of employees. This amendment may have an impact on decisions such as that
outlined above.
LEGAL REPRESENTATION AT CCMA PROCEEDINGS FOR UNFAIR
DISMISSAL
Can a party to proceedings at the CCMA or a bargaining council insist
on having legal representation at the arbitration hearing?
Facts
Rule 25(1)(c) of the rules of the CCMA restricts the right of appearance by lawyers in disputes
arising from dismissals for misconduct or incapacity. Lawyers from the Northern Province
challenged the constitutionality of the provision. The High Court obliged them by declaring rule
25(1)(c) unconstitutional and invalid but the court suspended the declaration of invalidity for
36 months to give the CCMA time to promulgate a new rule. In CCMA v Law Society, Northern
Provinces SCA (005/13) [2013] ZASCA 118 (20 September 2013), the Supreme Court of Appeal
(SCA) overturned this decision.
Findings
The SCA upheld the constitutionality of the CCMA rules limiting the right of legal representation
in some CCMA proceedings. It held that the CCMA plays a central role in resolving labour
disputes and is required to deal with matters 'fairly and quickly', with the minimum of legal
33
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SUSPENSION AND UNFAIR DISMISSAL | 26
formalities. For this reason, the LRA empowers the CCMA to formulate rules regulating
representation in proceedings before it. The justifcation for excluding legal representation in
certain circumstances lie in the fact that labour dispute resolution in South Africa had become
lengthy and expensive, and exclusion of legal representation would alleviate this (as agreed by the
parties to NEDLAC).
In addition, the right to legal representation may be necessary in some cases to ensure
procedurally fair administrative action, but this is not always true, and it is always open to the
parties to ask the commissioners to exercise their discretion to allow legal representation.
The fact that the exclusion only applies to some types of disputes was further not held to be
irrational, because these disputes form the bulk of cases heard by statutory arbitrators, and could
therefore be singled out for different treatment.
The applicants also contended that the exclusion of legal practitioners from these proceedings was
discriminatory against legal practitioners and limited their freedom to exercise their profession.
The SCA was not persuaded, and found that their qualifed exclusion from some cases heard
by the CCMA does not affect their dignity, and did not restrict anybody from entering the legal
profession, or the right of litigants to legal representation in courts of law.
The Labour Relations Amendment Bill encompasses amendments in relation to the functions
of the CCMA. These amendments include the requirement that the CCMA make rules regulating
the right of any party to be represented by any person or category of persons in any conciliation
or arbitration proceedings, including the regulation or limitation of the right to be represented in
those proceedings. Depending on the content of the rules, this provision may have an impact on
the position pursuant to the above judgment.
SUSPENSION AND UNFAIR
DISMISSAL GILLIAN LUMB
27 | EMPLOYMENT CASE LAW UPDATE 2013
MANAGEMENT'S DISCIPLINARY AUTHORITY
Can an employer discipline an employee for misconduct committed outside
of, or prior to employment with the employer?
Facts
Yes, as demonstrated in City of Cape Town v SA Local Government Bargaining Council & others
(2) (2011) 32 ILJ 1333 (LC). During the course of investigations into licensing fraud in the
public service, the Scorpions discovered that a senior management employee of the applicant
city council, had presented a false Namibian driver's licence to the Kuils River authority for
conversion into a South African driver's licence in contravention of the National Road Traffc
Act, No 93 of 1996. The employee was dismissed for gross dishonesty on the basis that her
position was one that demanded 'impeccable trust credentials'. At bargaining council arbitration,
the arbitrator found that the employee had been a party to the fraudulent issuing of the driver's
licence, but that the sanction of dismissal was too extreme because, among other things, the fraud
had not been committed in relation to her duties and the City had not suffered any loss or direct
prejudice as a result of the employee's misconduct, and nine years had passed since the fraud was
committed. The employer took the outcome on review.
Findings
Where an employee employed in a position of trust abuses that trust and states a dishonest version
(even if relating to events outside of employment), this may justify dismissal. It is irrelevant that
the misconduct was not work related, that the employer suffered no loss and that the offence is
eventually uncovered (in casu after nine years). The trust relationship had irretrievably broken
down; the employee never admitted her misconduct and persisted during the disciplinary hearing
and arbitration with a version of events which was untrue, and the arbitrator had found that
the City had proved the charge of gross dishonesty and that the employee was employed in a
position which demanded trust. Dismissal was found to be the appropriate sanction. The court
found further that the dishonest conduct of the employee went to the heart of the employment
relationship and was destructive of it. The fact that the dishonest conduct was not relevant to the
employee's duties was not necessarily decisive.
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SUSPENSION AND UNFAIR DISMISSAL | 28
Many employers and employees challenge decisions of the CCMA in relation to unfair dismissals
by way of review to the Labour Court. The Labour Relations Amendment Bill seeks inter alia
to limit the launching of applications to review and set aside arbitration awards for purposes of
better positioning the employer in negotiations to settle matters. The amendment also requires the
lodging of security to suspend the enforcement of an arbitration award and seeks to expedite the
fnalisation of applications to review and set aside arbitration awards.
CONSISTENCY IN APPLICATION OF DISCIPLINE
Must all employees who made themselves guilty of serious misconduct
be treated alike (ie face the same disciplinary penalty) even though some
of the offenders showed remorse while others did not?
Facts
In National Union of Public Service & Allied Workers on behalf of Mani & others v National
Lotteries Board (2013) 34 ILJ 1931 (SCA), the trade union complained about the employer's
management style and the fact that the trade union had not been consulted with regard to the
appointment of the new COO. The trade union petitioned for the removal of the newly appointed
COO. The employees stated in correspondence to the employer that among other things, "they
were no longer prepared to spend a day with Professor Ram in the same building… and that the
board is urged to ensure that 30th June 2008 is the last day of his employment."
At the disciplinary hearing the chairperson afforded the employees an opportunity to apologise
for their conduct and sign an undertaking disassociating themselves from the misconduct. Ten
employees who refused to sign the undertaking were dismissed.
SUSPENSION AND UNFAIR
DISMISSAL GILLIAN LUMB
29 | EMPLOYMENT CASE LAW UPDATE 2013
Findings
The LAC held that trade union activities that constitute acts of insubordination are not protected.
The Court further held that the dismissal of ten employees and the sanction of fnal written
warnings for the remaining employees involved was not an inconsistent application of discipline.
The Court found that all of the employees had been given the opportunity to apologise and that
the ten employees who were dismissed had refused to do so which rendered the continued work
relationship intolerable.
Facts
In SACCAWU and others v Check One (Pty) Ltd (2012) 33 ILJ 1922 (LC) the trade union referred
a dispute alleging, among other things, that the employer had been inconsistent in applying its
disciplinary policies. Thirty eight members of the trade union embarked on an unprotected strike,
twenty nine of the striking employees were charged with participating in an unprotected strike
and causing the employer to suffer fnancial loss, nine of the striking employees were charged
with participating in an unprotected strike and causing the employer to suffer fnancial loss, and in
addition intimidating, threatening and preventing other employees from working.
Findings
The court held that the differentiating factor between the two groups of employees was that the
nine employees were dismissed on grounds of the second charge and not for participating in an
unprotected strike. Accordingly the employees had failed to show inconsistency.
33
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DISMISSAL GILLIAN LUMB
SUSPENSION AND UNFAIR DISMISSAL | 30
NOTES
DECRIMINALISATION OF DISCIPLINARY
ENQUIRIES AADIL PATEL
31 | EMPLOYMENT CASE LAW UPDATE 2013
Is an employer obliged to adopt a stringent approach for procedural
fairness when conducting disciplinary enquiries?
Facts
In the case of Avril Elizabeth Home for the Mentally Handicapped v CCMA & others [2006] 9
BLLR 833 (LC) an employee had been dismissed for being an accomplice to theft. This came
about due to a video recording which revealed the employee (a supervisor) watching another
employee stealing the employer's property. The CCMA Commissioner found her dismissal to
have been both procedurally and substantively unfair. The procedural unfairness resided, in the
Commissioner's view, in the fact that the chairperson of the disciplinary enquiry was subordinate
to the initiator, leading to a reasonable apprehension of bias, whereas substantive unfairness was
found because the video evidence was, in his view, not conclusive of the employee's guilt.
Findings
On review, the Labour Court held (in respect of the alleged procedural unfairness) that it is not
required that an employer conduct a disciplinary enquiry as though it was a criminal trial and
that workplace effciencies should not be unduly impeded by onerous procedural requirements.
A less formal approach is envisaged by the Labour Relations Act, No 66 of 1995 (LRA). The
Court held that "On this approach there is clearly no place for formal disciplinary procedures
that incorporate all of the accoutrements of a criminal trial, including the leading of witnesses,
technical and complex "charge sheets", requests for particulars, the application of rules of
evidence, legal arguments, and the like."
The Court further confrmed that the appropriate test to establish whether suffcient evidence
was led to confrm guilt, is the balance of probabilities test, and not whether the only reasonable
inference that could be drawn from the evidence is guilt.
SENIOR EMPLOYEES AND LESS FORMAL DISCIPLINARY ENQUIRIES
When can an employer dispense with the formal requirements in conducting
a disciplinary enquiry when disciplining employees for misconduct?
Facts
In Ngutshane v Ariviakom (Pty) Ltd t/a Arivia.kom & Others [2009] 6 BLLR 541 (LC) the
employee's dismissal was based on her inability to work with the Respondent's CEO. This was
44
DECRIMINALISATION OF DISCIPLINARY ENQUIRIES | 32
evident through the grievances which the employee had lodged against the CEO for racist,
humiliating, undermining, harassing and victimising behaviour. The employee was eventually
dismissed as her conduct had resulted in the employment relationship breaking down beyond
repair. The employee had also put herself in direct confict with her employer. The employer
afforded the employee the opportunity to make representations regarding whether or not she
should be dismissed. It was the employer's view that in so doing, it had fulflled its obligations
under the audi alteram partem rule. The employee rejected this opportunity and refused to make
representations. She was subsequently dismissed.
Findings
The Court held that "where an employee's misconduct is manifest, common cause or not in
dispute, a less formal process will suffce." The Court held that in terms of the LRA, an elaborate
disciplinary enquiry is not required for every dismissal. The Court went on to hold that it is
not open for an employee to dispute the procedural fairness of a dismissal where the employee
was the cause of the procedural unfairness upon which he or she relies. By refusing to make
representations the employee had caused the very procedural unfairness of which she had
complained. Accordingly, the employee's claim was dismissed. The Court held that in affording
the employee an opportunity to make representations, the employer had complied with its
obligation to observe the audi alteram partem principle.
Facts
In Buckle and Stoop v Rand Water (unreported Labour Court case, case number:JS 69/09)
employees challenged their unfair dismissal. They were dismissed pursuant to a disciplinary
hearing where legal representation was excluded from the process, after it was initially allowed.
Findings
The Court held that "Two issues arose in respect of procedural fairness. The frst is that employees
who frustrate their rights to due process cannot be allowed to be heard to complain about
procedural unfairness. The second is that the code of Good Practise does not require an employer
to hold a disciplinary hearing that is modelled on a criminal or even civil trial. Where an
employer does a full investigation (as was done in this case) and obtains a forensic report there
is nothing unfair, in my view, if the hearing takes the form of a neutral Chairperson interrogating
the report and the employees responses thereto in an interventionist manner
DECRIMINALISATION OF DISCIPLINARY
ENQUIRIES AADIL PATEL
33 | EMPLOYMENT CASE LAW UPDATE 2013
and by granting the parties a fair opportunity to question each other on disputed issues.
Unfortunately many disciplinary enquiries are allowed to run for months while employees are on
suspension with pay because of the fear that employees may claim procedural unfairness if the
enquiry was not conducted in a manner as one would conduct a trial."
SENIOR EMPLOYEES - TWO DISTINCT OCCASIONS WHEN THE
NORMAL REQUIREMENT TO APPRAISE, WARN, AND ALLOW AN
OPPORTUNITY TO IMPROVE PERFORMANCE MAY NOT APPLY.
When may the employer dispense with the normal requirements
to appraise, warn and allow an employee an opportunity to improve
his/her performance if the employee is found to have performed poorly?
Facts
The case of Somyo v Ross Poultry Breeders (Pty) Ltd [1997] 7 BLLR 862 (LAC) deals with
the obligations of an employer in relation to the poor performance of a senior employee. The
employee in this instance was a manager of one of the employer's chicken farms. The employee's
dismissal in this instance was primarily due to the poor work ethic which the employee had
adopted in the operation of the chicken farm. In this case the dismissed employee had a great deal
of experience as he had managed the chicken farm since 1990.
Findings
This Labour Appeal Court (LAC) decision is an illustration of the exemption which applies when
an employer is dealing with either an individual who is a senior or managerial employee or an
employee who possesses specialist knowledge or skills in order to undertake his/her work. The
LAC stated that normally when an employer is confronted with the poor work performance of an
employee the employer is obliged to, 'warn the employee the pending dismissal due to work poor
work performance if they do not improve and granting the employee a reasonable opportunity
to remedy the complaint'. However, in this instance the employer was not dealing with a normal
employee but an employee who occupied a managerial position, who had the requisite skills
and knowledge to appreciate the consequences of his failure to follow proper procedures in the
running of the employer's farm. As such the employer was not required to provide the employee
with an opportunity to improve.
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DECRIMINALISATION OF DISCIPLINARY ENQUIRIES | 34
Facts
In the New Forest Farming CC v Cachalia & Others [2003] 10 BLLR 1051 (LC) case the
employee, a farm manager, referred an unfair dismissal dispute to the CCMA following his
dismissal by the farm owner for poor work performance. The employee had failed to keep the
farm self-suffcient for nine of the ten years in which he had been employed as manager of the
farm. The commissioner found that the employee had not been warned or given the opportunity to
remedy his poor performance and ordered that the employee be compensated. The employer took
the decision on review to the Court.
Finding
The Court relied on the two exceptions to the employer's obligation to afford employees an
opportunity to remedy their poor work performance, as set out in the Somyo v Ross Poultry Breeders
(Pty) Ltd (supra) case. The employer is not obliged to appraise, warn or afford the employee the
opportunity to improve in the case of senior employees or managers who are in a position, due to
their knowledge and experience, to judge for themselves whether they are meeting the standards set
by the employer; and secondly where the degree of professional skill required from the employee is
so high that the slightest departure from that high standard is so serious that one failure to perform
in accordance with high standard is enough to justify dismissal. The Court held that decision of
the commissioner to compensate the employee was irrational. The Court set the decision aside and
referred the matter to the CCMA to be afresh before a new commissioner.
DECRIMINALISATION OF DISCIPLINARY
ENQUIRIES AADIL PATEL
35 | EMPLOYMENT CASE LAW UPDATE 2013
DISMISSAL OF SENIOR EMPLOYEES FOR INCOMPATIBILITY
Is the test for substantive fairness more fexible in the case of the dismissal
of senior managerial employees?
Facts
Yes. Our courts have recognised that the test for the substantive fairness of dismissals of senior
managerial employees may be more fexible. In Brereton v Bateman Industrial Corporation Ltd
& Others (2000) 21 ILJ 442 (IC) a senior managerial employee launched proceedings in the
Industrial Court for reinstatement and/or compensation following his dismissal by the employer.
The court reviewed the case law relating to the substantive and procedural fairness of the
dismissal of senior executives.
Finding
The Court held that an employer is entitled to set its own performance standards. The Court will
only intervene where the performance assessment is grossly unreasonable. It was further held
that such employees "occupy a completely different position to that of ordinary employees" and
that "aspects such as personality conficts, management style, and simple lack of confdence in
the ability or willingness of the manager to do the job in the way the owner or senior colleagues
desire could justify dismissal. The use of formal procedures prior to dismissal also seems to be
less relevant in these circumstances".
The Court held the employee to the yardstick set in the Somyo v Ross Poultry Breeders (Pty) Ltd
(supra) case and held that the employee (who held the positions of joint Managing Director (MD)
of the ELB Group and Executive Chairman occupying the position of MD and Chief Executive
Offcer of Batecor) should possess the skills and knowledge to judge for himself whether he was
meeting the standards set by his employer – that to a large extent were indirectly set by himself.
The application was therefore dismissed with costs.
44
DECRIMINALISATION OF DISCIPLINARY ENQUIRIES | 36
When can an employee be dismissed for incompatibility?
Facts
In the case of Jabari v Telkom SA (Pty) Ltd [2006] BLLR 924 (LC) the employee had been
dismissed for incompatibility in that he had lodged a number of grievances against the employer,
failed to prosecute the grievances and regularly challenged senior management. The employee
referred an automatically unfair dismissal to the CCMA that referred the matter to the Court due
to its lack of jurisdiction.
Findings
The Court defned incompatibility as "a species of incapacity" relating to "the subjective
relationship of an employee and other co-workers, within the employment environment, regarding
the employee's inability to maintain cordial and harmonious relationships with his peers".
It was held that an employer "has the prerogative to set reasonable standards pertaining to the
harmonious interpersonal relationships at the workplace" and, where the conduct of an employee
creates disharmony, is therefore entitled to address the problem by taking remedial action. The
onus is on the employer not only to prove incompatibility, but also to show that the employee is
partly substantially responsible for the disharmony and that the proven incompatibility constitutes
a fair reason for dismissal. In this case however, the dismissal was found to be for illegitimate and
unlawful reasons in that the employer was attempting to deprive the employee of his right to not
be subjected to unfair labour practices.

DECRIMINALISATION OF DISCIPLINARY
ENQUIRIES AADIL PATEL
37 | EMPLOYMENT CASE LAW UPDATE 2013
IMPACT OF PENDING EMPLOYMENT LEGISLATION
Many contracts of employment contain provisions detailing how future disputes between
the parties should be resolved. This has largely taken the form of an agreement to refer any
post-dismissal dispute to private arbitration, however, consideration should in future be given
to whether it may not be advisable to agree to certain pre-dismissal referrals to statutory dispute
resolution bodies in the contract of employment.
Currently, s188A of the LRA provides for the possibility of having the initial decision on
disciplinary action referred to the CCMA or a Bargaining Council with jurisdiction, by agreement
with the employee. This of course avoids any adverse fndings against employer decisions,
and limits exposure to compensation orders. It can also have a positive effect on time sensitive
disciplinary disputes.
The pending amendments to s188A allow for a much greater use of the services of the CCMA or
Bargaining Councils in internal disciplinary enquiries.
Once the amendments become effective, it will become possible to reach an agreement with
employees earning in excess of the earnings threshold published in terms of the BCEA, in their
contracts of employment, that internal disciplinary enquiries may be referred to the CCMA or a
Bargaining Council, and no further agreement at the time of the actual dispute would be required.
For all employees, irrespective of earnings levels, the employer may acquire the right to use this
process by agreeing to it in a collective agreement, in which case permission from the individual
employee will not be required at the time of the dispute.
The amendments to s188A do not expressly speak to the use of post dismissal private dispute
resolution mechanisms, and it will therefore remain possible to include these provisions in
contracts of employment, however, these should be approached with caution, especially when
attempts are made to compel the employee to share the cost of private dispute resolution.
Please also remember that the initial proposals that were included in the Labour Relations
Amendment Bill, to the effect that high earning employees would forego some unfair dismissal
protections under the LRA have been abandoned in the Parliamentary process.
44
DECRIMINALISATION OF DISCIPLINARY ENQUIRIES | 38
NOTES
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39 | EMPLOYMENT CASE LAW UPDATE 2013
Can an employer place the onus on employees to ensure that consultation
takes place?
Super Group Supply Chain Partners v Dlamini & another (2013) 34 ILJ 108 (LAC)
Facts
The Super Group Supply Chain Partners had been compelled to retrench a large portion of
its workforce when two of its clients cancelled the contracts for warehousing and distribution
services. The two respondent employees were among those selected for retrenchment.
They alleged that the company had not consulted adequately with them. They alleged further that
the company had expected the employees to approach it to ensure that consultations took place
and had not used fair and objective selection criteria when selecting them for retrenchment.
Findings
The Court emphasised that it was not fair for an employer 'to shirk its statutory duty' to consult
and create an onus on an employee to chase the employer to ensure that consultation takes place.
The Labour Appeal Court (LAC) found that the company had only tendered evidence of a
general and, at times, hearsay nature of consultations that had taken place. Further, the company
had provided no documentary proof of minutes of meetings held with the employees or their
representatives or that meetings had indeed taken place.
There was, therefore, no evidence before the Court to prove that there had been consultation
on the selection criteria; that the employees knew and understood the selection criteria; that
the selection criteria were fair and objective; that the employees were fairly identifed for
retrenchment; that the employees did not apply for positions; and that the workers who had been
retained instead of the employees had more appropriate skills than the employees. In addition, the
company had unfairly placed the onus on the employees to ensure that consultation took place.
The LAC upheld the order by the Labour Court that the employees' dismissal was substantively
unfair and that they should be reinstated.
55
RETRENCHMENT JOHAN BOTES
RETRENCHMENT | 40
When are parties engaged in a meaningful joint consensus-seeking process?
National Union of Metal Workers of South Africa (NUMSA) and Others v Feltex
Automotive Trim (Pty) Ltd (JS413/09) [2013] ZALCJHB 107 (5 June 2013)
Facts
The employer manufactures boot trimmers for supply to motor companies. In 2008, the motor
industry suffered heavy losses as a result of the global economic recession, resulting in the
company's main customers reducing their motor vehicle production. As a result, the company also
reduced production.
The company initiated retrenchment consultations with the union. National Union of Metal
Workers of South Africa (NUMSA) submitted that the posts in question were not redundant.
It demanded that the employees be retained and, in the event that the company proceeds to
retrench the employees, it should pay each employee an ex-gratia amount of R350 000 over
and above their severance package.
The company submitted that its fnancial woes meant that retaining the retrenched employees' rates
of pay and the R350 000 ex-gratia payment were unaffordable. The company counter-proposed to
employ the dismissed employees in the positions occupied by the labour broker employees, at the
rates paid to those employees. The union rejected this offer and the employer rejected the union's
suggestions. After three meetings and an impasse having been reached, the employer retrenched the
employees. They were paid severance pay of two weeks' pay for each year of service.
Finding
The Court reaffrmed that the test for whether there has been genuine consultation prior
to retrenchment is whether the employees and the union have been given a fair opportunity to
suggest ways in which job losses might be avoided or the effects of retrenchment ameliorated.
The employer is not bound to accept suggestions; these must merely be seriously considered.
Consultation is not necessarily a pretence if the employer approaches the matter with a pre-disposition
to a particular solution: the test is whether management retained a suffciently open mind to be
persuaded by practical and rational alternatives.
RETRENCHMENT JOHAN BOTES
41 | EMPLOYMENT CASE LAW UPDATE 2013
May an employer retrench employees in order to re-employ them through
a labour broker?
National Union of Mineworkers & others v DB Contracting North CC (2013) 34 ILJ 971 (LC)
Facts
DB Contracting North CC's subcontracted a portion of its business to an electrical contractor
employed by Eskom. The contractor lost the Eskom contract and this allegedly affected the
employer fnancially. National Union of Mineworkers (NUM) demanded that its members be paid
at the bargaining council hourly rate of R16.98. The employer refused to pay them more than the
R11.55 it already paid the employees.
The following year, the employer issued a notice to consult in terms of s189(1) of the Labour
Relations Act, No 66 of 1995 (LRA). During consultations with NUM, the employer informed the
union that it proposed to employ the employees through a labour broker after their retrenchment.
As an alternative to the retrenchments, it was agreed NUM would fnd out whether the employees
would be prepared to accept R11.55 per hour, in which case the employer would be able to afford
to retain them. However, before the union could communicate the employees' response, the
employees were notifed of their retrenchment.
In unfair dismissal proceedings before the Court, the employer contended that it had dismissed
the employees for operational requirements.
Findings
In this case, the Court held that the evidence indicated that the real reason for dismissal was not,
as alleged by the employer, its fnancial diffculties arising out of the cancellation of the Eskom
contract, but rather it was the demand for an increase in hourly rates and the employer's ability
to afford that rate and the employer's desire to get rid of its workforce and use employees of
labour brokers.
The Court emphasised that the dismissal of employees solely to use those same employees as
employees of a labour broker fell outside the realm of operational requirements.
Accordingly, the employer had failed to prove on a balance of probabilities that it had dismissed
its workforce for operational reasons. The dismissal was therefore substantively unfair.
55
RETRENCHMENT JOHAN BOTES
RETRENCHMENT | 42
Does the timing of the dismissal letter indicate whether the employer
has engaged in a meaningful joint consensus-seeking process?
National Union of Mineworkers & others v DB Contracting North CC (2013) 34 ILJ 971 (LC)
Finding
It is a factor that a Court will look at in determining whether the employer has engaged in a
meaningful joint consensus-seeking process. In this case, regarding procedural unfairness, the
Court held that the employer had reneged on its agreement with NUM that it would not issue
retrenchment letters until the offcial had communicated the employees' response to being
remunerated at the rate of R11.55 per hour. It had prematurely issued the dismissal letters.
It was, therefore, clear to the Court that the employer had failed to engage in a meaningful joint
consensus-seeking process with the union and this rendered the dismissal procedurally unfair.
Association of Mineworkers & Construction Union & others v Shanduka Coal (Pty) Ltd
(2013) 34 ILJ 1519 (LC)
Facts
Shanduka Coal was suffering signifcant operating losses at two of its collieries. It had
several preliminary meetings with the representative unions at those collieries, Association of
Mineworkers and Construction Union (AMCU) and United Association of South Africa (UASA)
at which the reasons for closing the collieries were discussed. Thereafter, a notice in terms of
s189(3) of the LRA was issued and facilitation under the auspices of the CCMA commenced.
Five facilitation meetings were held in total.
Shanduka Coal declined to allow AMCU to inspect its audited statements until compelled to do so
by the facilitator in terms of a disclosure of information ruling (in terms of s16 of the LRA). During
the course of the facilitation process, AMCU refused to deal with substantive issues; failed to attend
meetings and generally delayed the process by raising technical objections. By the third facilitation
meeting, Shanduka Coal and UASA concluded a retrenchment agreement. AMCU, however, only
submitted its own proposals for the frst time at the fourth facilitation meeting.
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43 | EMPLOYMENT CASE LAW UPDATE 2013
Thereafter, Shanduka Coal issued notices of retrenchment to the individual employees. The last
facilitation meeting was held after the notices were issued. Shortly thereafter AMCU launched an
application in the Court in terms of s189A(13) in order to compel the company to comply with a
fair retrenchment process.
It contended, among other things, that the termination notices had been issued prematurely before
consultations with the union had been completed and before the 60 days required in terms of
s189A(7) had expired.
Findings
The Court will consider the timing of the dismissal letter in determining whether the employer
has engaged in a meaningful joint consensus-seeking process.
In this case, the Court held that, even though Shanduka Coal could have been more constructive
in its approach to the disclosure of information and even if it had issued the notices of termination
prematurely, for the most part it approached the consultations in a constructive spirit, inviting
proposals and discussion on the problem it faced. Such criticisms that might be made of its
engagement did not compare with the consistently dilatory and evasive strategy pursued by
AMCU. The Court was therefore not satisfed that AMCU had established that the retrenchment
was procedurally unfair.
55
RETRENCHMENT JOHAN BOTES
RETRENCHMENT | 44
Do discussions in the consultation process have to follow the sequence set
out in s189(2)?
Findings
The Court emphasised that ideally, the logical progression of discussions in the consultation
process will follow the sequence of issues set out in s189(2). However, discussion on these issues
often proceed in tandem, so that selection criteria might be discussed even though the parties have
not yet agreed on the need or extent of any retrenchments, and there is nothing to prevent this from
happening. Because it is supposed to be a problem-solving process, the process is not advanced if
it consists of mechanically running through a checklist of items without any engagement between
the parties. Likewise, the process is not advanced if obstacles are constantly placed in the way of
consultation on the substantive issues taking place.
RETRENCHMENT JOHAN BOTES
45 | EMPLOYMENT CASE LAW UPDATE 2013
If a retrenchment is found to be unfair and the employee is reinstated
and awarded back pay, should the employee have to repay the severance
paid to him?
Coca Cola South Africa (Pty) Ltd v Ndlovu and others (case no D813/11 delivered
on 7 May 2013)
Facts
The employer retrenched an employee, who was paid a severance package. The employee
subsequently referred an unfair dismissal dispute to the CCMA. The arbitrator found that the
employee's retrenchment was unfair and ordered the employer to reinstate the employee, with
seven months' back pay. The employer took the arbitration award on review because, among
other things, the arbitrator did not order the employee to repay his severance package despite the
employee having been retrospectively reinstated.
The employer's contention was that the employee had sustained no loss that justifed him retaining
the severance package. The result of the award was that the employee was reinstated and allowed
to keep his severance payment of approximately R1.3 million.
Findings
The Court found that the employee was no longer entitled to the severance package, which
was intended to soften the blow of the retrenchment. Chetty AJ concluded that there can be
no justifcation for a result where the employee is reinstated with full back pay and retains
a severance package which far exceeds the amount of his back pay. The Court ordered the
employee to repay the severance pay.
55
RETRENCHMENT JOHAN BOTES
RETRENCHMENT | 46
IMPACT OF PENDING EMPLOYMENT LEGISLATION
Amendments to s187(1)(c) of the LRA
The legislature intends amending the wording of this section "... to remove an anomaly arising
from the interpretation of s187(1)(c) in National Union of Metalworkers of SA v Fry's Metals (Pty)
Ltd (2005) 26 ILJ 689 (SCA) that held that the clause had been intended to remedy the so-called
"lock-out" dismissal which was a feature of pre-1995 labour relations practice. The effect of this
decision when read with decisions such as Chemical Workers Industrial Union & others v Algorax
(Pty) Ltd (2003) 24 ILJ 1917 (LAC) is to discourage employers from offering re-employment to
employees who have been retrenched after refusing to accept changes in working conditions."
The amended provision seeks to preclude the dismissal of employees where the reason for the
dismissal is their refusal to accept a demand by the employer over a matter of mutual interest.
This is intended to protect the integrity of the process of collective bargaining.
The intention is to do away with the fnding that a lock-out dismissal can be fair if the dismissal is
indeed fnal and not one merely aimed to compel the employees to accept a demand to amend terms
and conditions of employment. Where employees refuse to accept a demand on a matter of mutual
interest and are then dismissed, such a dismissal will be automatically unfair - even if the dismissal
is fnal (and not reversible if the employees accede to the demand). It thus removes the latitude of
employers to amend terms and conditions by retrenching employees through a 'fnal' dismissal.
The section is amended to preclude a party from unreasonably refusing to agree to extend the
period for consultation over a proposed retrenchment. Subsection (19) is also deleted - this used
to set out the test for determining the substantive fairness of a dismissal under s189A. With no
corresponding section applicable to retrenchments under s189, this subsection created uncertainty
about its applicability to cases of s189 retrenchments. The legislature is of the view that the courts
should retain discretion to develop the jurisprudence in this area in the light of the circumstances
and facts of each case and to articulate general principles applicable to all retrenchment cases.
RETRENCHMENT JOHAN BOTES
47 | EMPLOYMENT CASE LAW UPDATE 2013
NOTES
RETRENCHMENT JOHAN BOTES
66
DISCRIMINATION MOHSINA CHENIA
DISCRIMINATION | 48
Can a collective agreement entered into permit discrimination on any
of the restricted grounds?
Facts
No, in the case of Jansen Van Vuuren v South African Airways (Pty) Ltd & Another (2013) 34 ILJ
1749 (LC), the Labour Court was faced with a situation where an airline pilot had reached his
retirement age of 60, but prior to his contract automatically terminating at the end of such month,
he was informed that a collective agreement was being entered into in relation to the retirement
age and that he should merely stay at home and await to be recalled. Prior to being recalled, the
employee became aware that his accrued leave pay was being used to pay his salary whilst he
had been told to wait at home. Furthermore, certain provisions of the collective agreement were
alleged to be discriminatory on the grounds of age. The discrimination related to a reduction in
remuneration, the fact that employees who were younger than 57 would not have any penalisation
for having turned 60, that his dignity, his sense of self-worth and morale was negatively affected
as for reasons simply related to age, he was treated as a subordinate.
Findings
Shaik AJ , held that the terms of the agreement were discriminatory and manifestly unfair. The
employee was made to suffer unfair discrimination on a prescribed ground and the employer was
ordered to pay damages in respect of remuneration that the employee would have earned which
amounted to approximately R820 000 plus interest, as well as compensation equivalent to one
years' remuneration, as well as costs, including the cost of two Counsel.
Is an employment equity plan subject to an individual's right to equality
and dignity?
Facts
No, in SA Police Service v Solidarity on behalf of Barnard (Police and Prisons Civil Rights
Unions as Amicus Curiae) (2013) 34 ILJ 590 (LAC), a white female captain at level 8 had applied
on two occasions for an appointment to a newly created post at level 9. She was shortlisted,
interviewed and recommended and was the preferred candidate on both occasions but was not
promoted. The employee thereafter referred a dispute to the Court for unfair discrimination.
The Court concluded that the failure to appoint the employee was based on her race and
constituted discrimination that was unfair and not in compliance with the EEA. The SAPS
thereafter appealed to the Labour Appeal Court (LAC).
DISCRIMINATION MOHSINA CHENIA
49 | EMPLOYMENT CASE LAW UPDATE 2013
Findings
The LAC, per Mlambo J P et al, stated that the SAPS's employment equity plan was binding on all
employees and had certain numerical goals for level 9 which had to be met within a set time frame.
In terms of the Employment Equity Plan, no posts were available for the promotion of white
candidates. The Court stated that had the employee being promoted it would have aggravated the
over representatively of white employees at level 9, and would have represented a step backwards
and in direct violation of a clear constitutional objective. The Court held that the employment
equity measures were not subject to an individual's right to equality and dignity. The appeal was
upheld with an order that the referral to the Court was dismissed with no order as to costs. There
was no order as to costs on appeal.
Does an Employment Equity Plan have to be approved in order to be
utilised as a defence against discrimination on grounds of race?
Facts
No, in Stone v SA Police Service (2013) 34 ILJ 1619 (LC), a white male captain had been
shortlisted but not appointed to the post of Superintendent. A black male candidate was appointed.
At the time the Employment Equity Plan had not yet been approved.
Findings
On the facts of this case, La Grange J , found that although the SAPS had failed to establish that
it acted fairly in terms of its Employment Equity Plan, it did not follow that the employee would
have been appointed, because another candidate, a white female was originally the preferred
candidate. The employee had failed to demonstrate the causal link between the SAPS's failure
to prove that it acted fairly under its Employment Equity Plan at the fnal selection stage and
his non-promotion to the post. The failure to promote the employee was held not to be unfair
discrimination on the basis of race. The application was dismissed with no order as to costs.
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DISCRIMINATION | 50
Can an employee claim unfair discrimination on the grounds of prejudice
on account of her diligence and consciousness?
Facts
Yes, in Motaung v Department of Education & Others (2013) 3 SA 44 (LC), the employee claimed
that she was unfairly discriminated against by her employer for obeying the dictates of her
conscience. She claimed that she had refused to bow to pressure from her superiors to ignore aspects
of a statutory framework governing the performance of her duties. She complained that she was
unlawfully prevented from doing her normal work by being stripped off her functions, was given
unsatisfactory performance evaluations, and consequently denied certain notch increases.
Findings
La Grange J, found that the employee was discriminated against on account of her acting in
accordance with her conscience and that if she had processed the problematic applications,
she would be complicit and fouting the regulations governing the registration of private higher
education institutions and possibly guilty of misconduct. The employee was ordered to be restored
to her normal functions and paid the relevant notch increases, which amounted to approximately
R1.3 million, with no order as to costs.
Can an employee who is not a member of the provident fund be forced
to retire at the age limit determined in such provident fund?
Facts
No, in Hibbert v ARB Electrical Wholesalers (Pty) Ltd (2013) 34 ILJ 1190 (LC), an employee's
employment was terminated when he turned 64. The employee claimed that his dismissal was
automatically unfair on the basis of age discrimination. The employer's defence was that he had
reached the agreed retirement age which was 60 in terms of the provident fund.
DISCRIMINATION MOHSINA CHENIA
51 | EMPLOYMENT CASE LAW UPDATE 2013
Findings
La Grange J, held that because the employee was not a member of the provident fund, and in the
absence of evidence of a retirement age of persons performing in the same capacity at the employee,
the company had failed to establish a normal retirement age that applied to the employee. On the
basis that the employee had conceded that he would have retired at age 65 and that the discrimination
was not of the most egregious type, the dismissal of the employee was found to be automatically
unfair and compensation was awarded for one year's remuneration with costs.
Must an employer have a rational, coherent employment equity plan in
order to prefer one group of designated employees over another group
of designated employees, who are supposedly over represented?
Facts
Yes, in Munsamy v Minister of Safety and Security & Another [2013] 7 BLLR 695 (LC), an
Indian employee claimed that he had not been promoted on the basis of unfair discrimination.
The employer relied on its employment equity plan to justify its decision on the basis that Indian
people are already over represented at that level while Africans were underrepresented.
Findings
Whitcher AJ , found that the employer had failed to prove that the discrimination against the
employee was in line with an employment equity plan that had been a subject to a proper
consultation. Furthermore, even if there had been proper consultations, there was nothing in the
plan that authorised the employer to use mechanisms such as a points quota system based on
national graphics to decide on promotions. The failure to promote the employee, was found to be
unfairly discriminatory, and the employee was awarded compensation in the amount of just over
R333 000, as well as costs.
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DISCRIMINATION | 52
IMPACT OF PENDING EMPLOYMENT LEGISLATION
The main piece of legislation that regulates equality in the workplace is the Employment
Equity Act, No 55 of 1998 (EEA). The proposed amendments to the EEA are contained in the
Employment Equity Amendment Bill (EEAB).
The EEAB seeks to amend the EEA in the following manner:
? Section 6 (which lists the prohibited grounds of discrimination) now includes "any other
arbitrary ground" therefore expanding the scope of potential claims for unfair discrimination
outside just the specifc listed grounds already contained in the section.
? In addition, s6 has two new clauses inserted in subsection (4) and (5). Subsection 4 states
that "a difference in terms and conditions of employment between employees of the same
employer performing the same or substantially the same work or work of equal value that is
directly or indirectly based on any one or more of the grounds listed in subsection (1) or on
any other arbitrary grounds is unfair discrimination".
? Subsection (5) allows the Minister to issue regulations regarding criteria and methodology
of the assessing of equal value (the Equal Pay Clauses).
? The Equal Pay Clauses will place more of a burden on employers when a temporary
or part-time employee is employed into a position where there is a comparator employee
already employed.
? Section 20 which governs the employment equity plan has only been amended to include
a fne that the Labour Court may impose on an employer if the employer fails to prepare an
employment equity plan or implement it in accordance with the Act.
DISCRIMINATION MOHSINA CHENIA
53 | EMPLOYMENT CASE LAW UPDATE 2013
? Section 21 has been amended to delete the distinction between employers with fewer than
150 employees and those with more. All designated employers will now be required to
submit an employment equity report once a year on the required date (being the frst working
day of October or as prescribed). If an employer cannot comply with the time periods, it
is required to provide written reasons to the Director-General one month before the frst
working day in October. If the employer does not submit such written reasons, or there if the
Court fnd that’s the employer did not have good cause for not submitting its report, then the
Court can impose a fne on application by the Director-General.
? Section 11 has been amended to include that where income differentials are disproportionate
or unfair discrimination as contemplated in s6(4), steps must be taken to progressively reduce
such differentials subject to guidance by the Minister as contemplated in subsection (4).
66
DISCRIMINATION | 54
NOTES
COLLECTIVE LABOUR LAW HUGO PIENAAR
55 | EMPLOYMENT CASE LAW UPDATE 2013
COLLECTIVE AGREEMENTS
Does a trade union require the authority of either the majority or minority
of its members to reach an agreement with an employer?
Facts
No, in Fakude & Others v Kwikot (Pty) Ltd (2013) 34 ILJ 2024 (LC), disciplinary action was taken
against a large number of employees who participated in an unprotected strike. National Union of
Metal Workers of South Africa (NUMSA) agreed with the company that the majority of employees
who participated in the industrial action would not dismissed but would instead receive fnal written
warnings. The agreement further allowed for 26 employees' contracts of employment to be terminated.
These employees signed individual settlement agreements and received severance packages. The
dismissed employees thereafter claimed that they had not given the union consent to conclude the
agreement on their behalf and that they had signed under duress.
Findings
Molahlehli J , found that it is a general principle that a trade union has the power and authority
to take decisions to settle disputes in the interests of its members, in particular in the interest
of majority of the members at times to the detriment of the minority. J udicial authority clearly
indicates that a trade union is entitled to take any decision on behalf of either the majority or
minority of its members without necessarily having to obtained members' consent, even if such
decision will adverse the effects of those members. NUMSA had acted in the interest of the
majority at the expense of the minority but that was immaterial because those affected by the
decision had joined the union voluntarily and in the exercise of their freedom of association.
The application was dismissed with costs.
STRIKES / LOCK-OUT
Must there be a protected strike in existence, or notice of a strike given to
an employer, in order for the CCMA to conclude a picketing agreement
under s69(4) of the Labour Relations Act, No 66 of 1995 (LRA)?
Facts
Yes, in the case of SA Airways v SA Transport and Allied Workers Union & Others (2013) 34 ILJ
2064 (LC), a CCMA Commissioner ruled that she did not have jurisdiction to determine
picketing rules as there was no actual strike pending or threat of a strike at the time.
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COLLECTIVE LABOUR LAW | 56
Although several disputes were pending between the parties, no strike notice had yet been issued in
the particular matter.
Findings
Snyman AJ found that the following jurisdictional facts have to exist before the CCMA can
determine picketing rules in terms of s69(4) & (5):
? Actual authorisation of the picket by the trade union.
? Actual protected strike in existence or notice must have been given to the employer
of a protected strike as contemplated in s64(1)(b).
? There must be no prior agreement, collective or otherwise, between the trade union and the
employer which determines picketing rules.
? A picketing agreement concluded at the CCMA does not bind parties indefnitely and in
perpetuity and automatically comes to an end once a dispute is resolved or abandoned.
In this matter, on the basis that no strike was pending and no strike notice had been given,
the review was dismissed with no order as to costs.
Note: Use Collective Agreements to insert picketing arrangements.
Can a CCMA Commissioner provide in the picketing agreement that
employees of a labour broker strike outside such premises instead
of at the client's premises?
Facts
Yes, in the matter of Consolidation Unions of SA obo Individual Applicants v CCMA & Others
(2012) 34 ILJ 2010 (LC), the Labour Court was requested to urgently review a picketing agreement
which had been established by the Commissioner in terms of s69(5) of the LRA that allowed for
picketing at the employer's premises (the temporary employment service (TES) that employed
them) instead of at the mine where the employees, which was 30 kilometres away. The union
alleged that the proper place for picketing should be at the mine and not at the TES premises.
Findings
Steenkamp J , held that as no record was before him in relation to what evidence the Commissioner
had analysed, the picketing rules were reviewed and set aside and the matter remitted back to the
CCMA with no order as to costs.
COLLECTIVE LABOUR LAW HUGO PIENAAR
57 | EMPLOYMENT CASE LAW UPDATE 2013
Does a union have to comply with both collective agreement,
and statutory requirements when embarking on a secondary strike?
Facts
Yes, in the case of Transnet SOC Ltd v SA Transport & Allied Workers Union (2013) 34 ILJ 1281
(LC) during the nationwide road freight industry strike, SATAWU served notice of a secondary
strike which would involve approximately 42 000 members who worked at Transnet Freight
& Rail and Transnet Port Terminals. The notice was given in terms of s66(2)(b) of the LRA.
However, Transnet argued that the notice did not comply with the collective agreement which
required the strike notice for a secondary strike to include reasons for believing the secondary
strike would be protected.
Findings
Steenkamp J held that a union is bound by the provisions of a collective agreement and
accordingly it was required to comply with the additional requirements regarding the notice.
However, it was on this basis as well as the basis that the secondary strike would have a major
impact on the country and Transnet that it was determined that the secondary strike would
be unreasonable. The union was directed to withdraw the notice and a rule nisi was granted
interdicting the secondary strike with costs reserved for the return date.
CHANGE IN SHIFT SYSTEMS/UNILATERAL CHANGES
Can an employer unilaterally alter a shift system when such system
is incorporated in a collective agreement?
Facts
No, in SAMWU v City of Tshwane & Another (case number:J877/13), the Court was faced with a
situation where the previous shift systems had been concluded in terms of a collective agreement.
Once the collective agreement had lapsed and during negotiations, the employer sought to introduce
the new shift systems unilaterally on the basis that it was not a term and condition of employment
and managerial prerogative, as well as on the basis that the change in the shift system did not have
the fundamental impact to alter the nature of the work performed by the affected members. The union
sought a declaratory order on an urgent basis that s64(4) and s64(5) of the LRA were applicable.

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Findings
Molahlehi J , found that it is trite that terms of a collective agreement are not only binding on
individual employees but as a matter of law are incorporated into the employees' contracts of
employment. Accordingly, the provisions of the shift system were incorporated in the contracts
of employment beyond the life span of the collective agreement and until such time as another
collective agreement was concluded changing those provisions remained in force and in effect.
On the basis that there were alternative remedies available to the applicant, the application was
struck from the roll with no order as to costs.
Does a cancellation of transport and half day off on a Friday constitute
a unilateral change to terms and conditions of employment?
Facts
No, in Pikitup Johannesburg (SOC) Ltd v The South African Municipal Workers Union & Others (case
number:J920/2013), employees of Pikitup had been allowed for an excess of 12 years, a half day on
a Friday pay day to go bank their salary cheques and were provided transport to do so. During March
2013, a meeting was set up to discuss the withdrawal of the half day, which had become irrelevant
as employees were paid by EFT, and that transport would be withdrawn as the employer no longer
had a transport feet that could provide such transport. A referral was made to the CCMA and prior to
conciliation occurring a notice to strike was issued in terms of s64(4) of the LRA. The employer sought
an urgent interdict from the Court on the basis that the change was not a unilateral change to terms and
conditions of employment and that any strike action would be unprotected.
Findings
Prinsloo AJ , found that there was no provision in the employment contracts which made mention
of the half day off, as well as the free transport, nor was such alleged term contained in the
collective agreement. The cancellation of the half day off would not result in employees working
more than the agreed 40 hour work week and the functions of the employees would remain
unaffected. The strike notice was found to be valid but that no such application was present in the
instance and that the strike action was in fact unprotected and interdicted on this basis with no
order as to costs.
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Can employees lawfully strike in terms of s64(4) after a certifcate of
outcome has been issued?
Facts
No, in the case of Unitrans Supply Chain Solutions (Pty) Ltd v SATAWU & Others (case
number:J1174/2013), Unitrans sought to amend a briefng and debriefng system in relation to its
driver operations so as to ensure strict compliance with stoppages of trucks during work hours.
This is also a requirement of its client. The union opposed such amendment on the basis that it
was a unilateral change to terms and conditions of employment. After a certifcate of outcome was
issued by the National Bargaining Council for the Road Freight and Logistics Industry, the union
issued a strike notice in terms of s64(1). An urgent application was sought from the Labour Court
on the basis that any strike action would be unprotected as the change related to a work practice and
managerial prerogative, and not that of a unilateral change to terms and conditions of employment.
Findings
Snyman AJ , found that Unitrans had a proper operational reason as to why it sought to change its
briefng and debriefng system (being the operational needs of its service contract with its client).
The true nature of the job was not changed nor any material employment condition, and Unitrans
was entitled to unilaterally change same. It was further held that s64(4) is intended to constitute
status quo relief as an interim measure pending conciliation of the matter. Once the conciliation
period prescribed in s64(1) expires, the issue of entitlement to the status quo relief expires with it.
Accordingly, the strike was interdicted with no order as to costs.
Is a strike protected if employees refuse to comply with new systems
for time keeping and alcohol abuse?
Facts
Yes, in the case of Pikitup (SOC) Ltd v SAMWU obo members and Others [2013] ZALCJHB 192,
the employer wanted to introduce mandatory breathalyser testing and an updated control/time
keeping system. An interim order was granted interdicting the strike on the basis that the strike
would be unprotected as the dispute was not one of mutual interest, and which instead fell within the
realm of operational issues of the employers business. The union thereafter anticipated the order.
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Findings
Hulley, AJ held that the dispute concerned a matter of mutual interest and that the law did not force
the employer to use a breathalyser system. Furthermore, as a tender had been provided in terms of
the biometric access control system, the employees could not continue to refuse to work on that
demand. The rule nisi was discharged and the applicants were ordered to pay the costs.
DISMISSALS IN RELATION TO STRIKES
Is dismissal for participation in an unprotected strike always fair?
Facts
No, in the case of Fawu & Others v Supreme Poultry (Pty) Ltd (case number:C371/06), the
Court was tasked with determining whether dismissals of some 30 employees for participation
in unprotected strike was fair. The strike was related to various grievances of the employees
that they had tried to have heard for a period of over two months. They were ordered to return
to work within 15 minutes and when they did not do so, a bus was arranged to transport them
off the premises. The employees did not have a further opportunity to return to work but were
immediately suspended pending the disciplinary hearing.
Findings
Steenkamp J , found that the dismissal was procedurally fair but substantively unfair given the fact
that the strike was for a short duration, was of a peaceful nature, where the employees had been
provoked by management, the employees had legitimate grievances and no adequate ultimatums
were issued. On the basis that there was no evidence if the trust relationship had broken down the
employees were reinstated retrospectively. However, not for the full period of the pending trial but
only for a period of 12 months, there was no order as to costs.
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Facts
Yes, in Transport and Allied Workers Union of SA & Others v Unitrans Fuel and Chemical
(Pty) Ltd (2013) 34 ILJ 1785 (LC), a Labour Appeal Court (LAC) decision had previously held
that employees were entitled to strike over demands for wage cuts and wage discrepancies but
prohibited from striking in respect of any other demands as these were matters that had to be
negotiated at the Bargaining Council. The union thereafter issued a fresh strike notice which
included a demand that all employees be paid at the highest rate. Unitrans once again approached
the Court for an interdict on the grounds that the substantive demand for wage increases had to be
negotiated at central level and that the strike was therefore prohibited.
The Court ruled that the strike would only proceed on the demands identifed in the decision
and not on the new demand for an increase. Transport and Allied Workers Union of South
Africa (TAWUSA) was however steadfast in its belief that its demand was legitimate and the
strike commenced the day after the interdict was granted. Unitrans issued several ultimatums,
there were incidents of intimidation and disruption to the company's operations. The company
thereafter acceded to the demand relating to seven shell drivers and insisted that all employees
had to return to work as the only demand in which they were entitled to strike had been resolved.
The employees refused and were dismissed.
Findings
Bhoola J , found that a demand for a wage increase was a substantive issue which was reserved
for sectoral bargaining through the Bargaining Council and that the demand was actually for an
increase for all employees despite the company's capitulation to the demand in respect of the
seven shell drivers the union persisted with its demand. The strike was therefore unprotected and
the dismissals were not automatically unfair.
It was further held that the dismissals were substantively and procedurally fair on the basis
that the union remained intransigent in its demand and an impasse had been reached with no
reasonable prospects of resolution, the strike lasted at least six days with the company issuing
four ultimatums and sustaining loss of over R3 million. The dismissals were accordingly justifed
and the claim was dismissed with costs.
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Facts
No, in Chemical, Energy, Paper, Printing, Wood and Allied Workers Unions & Others v CTP
Limited (case number:JS215/10), the Court was faced with a partially unprotected strike where
employees at various divisions of a company had embarked on a strike in support of the primary
strike. After many of the employees had been dismissed for reasons relating to misconduct during
the strike, a referral was made on the basis that their dismissal was automatically unfair, and in the
alternative substantively and procedurally unfair.
Findings
Myburgh AJ, found that the strike was protected in so far as the individual applicants engaged
therein in support of the primary strike. On the basis that the individual applicants were not guilty of
particularly serious misconduct, their dismissal was inconsistent with the one division of strikers (who
committed more serious misconduct), and no material factors in aggravation warranting sanction of
dismissal for frst offence, the dismissal was found to be substantively unfair and procedurally fair.
Deceased employees were awarded twelve months remunerations, the remainder of the employees
were reinstated with effect from 1 June 2010 without any loss of benefts, and the amounts earned by
the balance of individual applicants that were re-employed would be deducted from back pay due to
them, the frst respondent was ordered to pay the costs of the application.
Facts
Yes, in the case of National Union of Mineworkers obo Members v Wanli Stone Belfast (Pty)
Ltd [2013] ZALCJHB 99, NUM had referred a dispute to the CCMA alleging that the company
refused to bargain with it. On the day conciliation was to take place NUM issued a strike notice.
The company warned NUM that the strike would be unprotected as conciliation hadn't occurred
and there was no advisory award. The strike continued and the company sought an interdict, which
declared the strike unprotected. The participants were subsequently dismissed.
Findings
Basson J found that the strike was unprotected and that the Applicants had failed to lead evidence
to show they were not acting in bad faith when they disregarded the court order. NUM and the
Applicants were fully aware the strike was unlawful and the dismissals were upheld.
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Is the protection of a protected strike only for the members
of the referring union?
Facts
No, In the case of South African Transport & Allied Workers' Union & Others vs Lebogang
Michael Moloto N.O. & Others (2012) ZACC 19 the matter was initially referred to the Labour
Court in which dismissed employees contended that their dismissals were automatically unfair
in terms of s187(1)(a) of the LRA. However, they were not members of the Union by which the
strike notice was issued. The Labour Court held that their participation was lawful and reinstated
them with back pay. The matter thereafter went to the LAC, where it was held that notice
employees who were not members of the Union were not required to refer a separate dispute to
conciliation. The matter was thereafter referred to the Supreme Court of Appeal (SCA) where it
was held that employees who were not members needed to submit their own notice to strike.
The matter then went to the Constitutional Court.
Findings
The majority judgment, per Maya AJ , et al, overturned the SCA order and concluded by saying
that to hold otherwise would place a greater restriction on the right to strike on non-unionised
employees and minority union employees. The appeal was successful and costs were granted.
The dismissal of the individual employees was declared automatically unfair.
Facts
No, in the case of South African Transport and Allied Workers Union & another v Three Flames
Investments CC [2012] ZALCHB 166, a single employee was dismissed for being absent from work
during a protected strike. The employee claimed he was dismissed for participating in a protected
strike and this was automatically unfair. There was a dispute surrounding who the employee's true
employer was, either the landlord (in which case the employee had no reason to strike), or the
courier company (in which case the employee had a reason to participate in the protected strike).
Findings
Boqwana AJ held that the employee was not a union member, but was an employee of the
Respondent. Whether he was a union member was irrelevant as he would receive protection
for participating in the protected strike in support of the union's demands. It was held that the
dismissal was automatically unfair and the employee was awarded 24 months compensation.
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Can ultimatums allow for a short period of time to return to work when
the harm to the business is substantial?
Facts
Yes, in the case of Motor Transport Workers Union obo Sehularo & Others v G4 Cash Services
(Pty) Ltd [2012] ZALCJHB 112, employees embarked on an unprotected strike despite an order
interdicting the strike. The frst ultimatum was issued at 08h30, then a second one issued at 09h00
directly to the union offcials. The employees did not comply with the ultimatums and they were
subsequently dismissed. An unfair dismissal dispute was referred to the Court.
Findings
Bhoola J held that the employees were aware that the strike action was harmful to the business.
It was further held that the company had complied with the Code of Good Practice: Dismissals and
the ultimata informed the employees of the consequences of not returning to work. The dismissals
were held to be substantively and procedurally fair and the application was dismissed with costs.
GENERAL
Can a lockout still apply to unions and its members whose members tender
their services during such lockout?
Facts
Yes, in UTATU SARWHU & Others v Autopax Passenger Services & Others (case
number:J1931/2013), two separate strikes arose. The frst strike was in relation to wage
agreements and conditions of employment. In response to the strike, the employer locked out all
union members inclusive of United Transport and Allied Trade Union (UTATU), despite UTATU
not wanting to participate in the strike, and its members tendering their services. The second strike
related to one issue that was regulated by the Bargaining Council Agreement and one which was
not, namely, Sunday pay as well as a meal allowance. Again UTATU did not voluntarily participate
in the strike but was subject to the lockout, even though its members tendered their services.
In both circumstances UTATU clearly benefted from the original wage agreement as well as the
later settlement agreement in respect of the second demands.
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Findings
Snyman AJ, found that the lockout was protected and that UTATU was part and parcel of the very
same specifcally defned bargaining unit to which the very issue in dispute directly applied. The
applicants were accordingly not entitled to the relief sought, and not entitled to the remuneration for
their salaries which was not paid during the lockout. The frst respondent was still ordered to pay the
salaries of the second to further applicants up to 19 August 2012 but save for the remainder of the
order, the applicant’s application was dismissed with no order as to costs.
IMPACT OF PENDING EMPLOYMENT LEGISLATION
Section 69
The proposed amendments to s69 (picketing), provides for the owner or the controller of the
property to be involved in the setting of picketing agreements and rules.
Note the meaning of ‘picketing agreement’ and ‘picketing rule’.
Most importantly, the new s69(12) provides for the Labour Court:
? To order compliance with a picketing agreement or rule;
? To vary a picketing agreement or rule;
? To suspend a picket or a strike; or
? To suspend engagement of replacement labour.
Specifc time periods are set for the above.
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NOTES
BUSINESS TRANSFERS FAAN COETZEE
67 | EMPLOYMENT CASE LAW UPDATE 2013
Is a 'transfer' that is in compliance with Bargaining Council Rules but that
fails to comply with s197 permissible in law?
Facts
No, in Chemical Energy, Paper, Printing and Allied Workers Union and Another v Sambane
Powder Coating CC and Lavender Moon Trading [2013] JOL 30737 (LC), the Labour Court was
faced with the question relating to an outsourcing of labour.
The confict in the matter arose from the outsourcing of the employees by the First Respondent
to the Second Respondent who in turn assigned the employees to the First Respondent. It was
common cause that the transfer had not taken place in terms of s197 of the Labour Relations Act,
No 66 of 1995 (LRA).
The First Respondent contended that the transfer took place in terms of the Bargaining Councils
Main Agreement.
Finding
The Court held that outsourcing in South African labour law is governed by the provisions of
s197 of the LRA.
The purpose of s197, in addition to facilitating business transactions, provides for transfer of
employment contracts from one employer to another. It also provides protection against unfair
loss of employment arising from a sale of business as a going concern or the outsourcing of part
of a business.
The Court further held that it follows that in law, the transfer of employees from one employer to
another can only take place as a consequence of an employer outsourcing "part of the enterprises
activities". The Court reiterated that there is no provision in legislation or common law that
provides for outsourcing of employees from one employer to another unless it is done as a result
of the outsourcing part of the business.
The Court accordingly held that as a result of the transfer is not taking place in terms of
s197 - the employment contracts of the employees with the First Respondent remained intact.
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Is the effect of s197 of the LRA to automatically effect a joinder
or substitution of the new employer as a judgment debtor in relief obtained
against the old employer?
Facts
No, as was held in Jafta Ngema and 24 Others v Screenex Wire Waring Manufactures (Pty) Ltd
and Screenex Manufacturing t/a Johnson Screenex (2013) 34 ILJ 1470 LAC.
During 2005, the First Respondent embarked on a retrenchment process with the Appellants. The
Appellants were dismissed in December 2005 for operational requirements. During 2006, the First
Respondent's business was sold as a going concern to the Second Respondent. During 2007, the
Labour Court ordered the First Respondent to reinstate the Appellants.
During 2 September 2007, the shareholding of the Second Respondent was sold to the current
owner. In September 2007, the Labour Appeal Court dismissed an appeal by the First Respondent
against the reinstatement order.
During May 2000, the Appellant brought an application in which they sought to substitute the
Second Respondent as the judgment debtor in the reinstatement order.
Findings
The Court was faced with the question that if the new employer is automatically substituted in
any litigation in place of the old employer, so that the employees acquire a claim against the new
employer, does it follow that the claim is enforced merely by operation of law or do the employees
need to proceed against the new employer in order to enforce the claim.
The Court found that although the Appellants manifestly enjoyed the same rights against the new
employer as they held against the old employer by operation of law, namely s197 of the LRA,
it did not mean that there was no requirement that employees as holders of these rights should not
be required to pursue them against the new employer.
The Court held further that the Second Respondent should be afforded an opportunity to be heard
in a matter where it has a direct and substantial interest. The Court held that at the very least, the
Second Respondent would be entitled to be heard on the specifc question relief.
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Does s197 of LRA apply in case of franchise agreements?
Facts
No. In PE Pack 4100CC v Adam Sanders and Cell C Provider Company and two Others
(2013) 34 ILJ 1477 (LAC) the Court was faced with the question of the applicability of s197
to franchise agreements.
The Second Respondent is a cell phone service provider and has a business model in terms of
which it develops its business on a franchise basis. The Second Respondent cancelled franchise
agreements it had with the Third and Fourth Respondents and entered into a franchise agreement
with the Appellant. As a consequence of the cancellation of the franchise agreements, the First
Respondent was advised that the Third and Fourth Respondents wished to enter into consultations
with him regarding retrenchment.
Findings
The question as determined by the Court was whether s197 applies in cases of franchise agreements.
The Court looked at two questions in making its determination:
? Does the transaction concerned create rights and obligations that require one entity to
transfer something in favour of or for the beneft of another or to another?
? If the answer is in the affrmative, does the obligation imposed within the transaction
contemplate a transferor who has the obligation to effect a transfer or allow a transfer to
happen and a transferee who received the transfer? If the answer to this question is in the
affrmative, then the transaction constitutes a transfer for the purposes of s197.
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The Court distinguished the nature of franchise agreements from a transfer of a business as a going
concern. The Court held that:
'the licence to operate a business on behalf of second respondent [Cell C, the franchisor]
had been terminated by the latter [Cell C], insofar as third and fourth respondents were
concerned. This was not the equivalent situation to that of an outsourcing agreement.
The franchisor continued to hold the core assets. They remained those of the franchisor,
being second respondent, both before and after the agreement had been concluded. There
was thus no transfer of infrastructural assets which would sustain an argument that there
was a transfer of a going concern. Once the core assets remained intact, that is in the
ownership of the second respondent as the franchisor, it becomes diffcult to see how a
transfer of a business pursuant to s 197(1) has taken place'.
The Court held that there was no transfer of a business which falls within the scope of s197
of the LRA.
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Do employment contracts of temporary employment service's (TES)
employees transfer in terms of s197 at the termination of the agreement
between the client and the TES?
Facts
No, in terms of Franman Services (Pty) Ltd v Simba (Pty) Ltd and Capital Outsourcing (Pty) Ltd
(2013) 34 ILJ 97 (LC), the Court was faced with an application relating to the termination of an
agreement to provide labour, between the Applicant and the First Respondent.
The Applicant, a labour broker, sought an order that upon the termination of the agreement with
the First Respondent, the contracts of employment of the Applicant's employees would transfer to
the First Respondent or a new service provider appointed by the First Respondent. The Applicant
thereafter sought to join the Second Respondent to the proceedings, at the time of hearing, the
First and Second Respondents had not concluded an agreement relating to the provision of TES's.
Findings
The Court held that in order to determine whether a transfer has taken place in terms of s197,
it entails an enquiry into:
? The existence of a transfer by one employer to another.
? Whether there was a transfer of a business (is there an economic entity capable of being
transferred?).
? Whether the business is transferred as a going concern (does the economic entity that
is transferred retain its identity after the transfer?).
The Court held that if the transfer meets the above criteria, the transferee is substituted automatically
and by operation of law for the transferor as the employer of those of the transferor's employees
engaged in the business on the date of the transfer. The transfer occurs by operation of law and
irrespective of the wishes or intentions of the parties.
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The Court differentiated the current case to other cases dealing with outsourcing arrangements.
The Court noted that in the present case, there is not agreement between the First and Second
Respondents.
The Court held that generally speaking, the termination of a contract between a client and service
provider is not in itself a transfer of a business as a going concern. In the present case, the Court
took into account that the business of the Applicant was going to discontinue and that was the
main reason for the cancellation of the agreement. The fact that the service provided to the frst
respondent would be provided by the second applicant was to the Court of no consequence.
Relating to the functions of the employees, the Court held that the fact that any of the second
respondent’s employees may be engaged on the same production line performing the same tasks
does not in itself trigger s197. There were no assets, tangible or intangible, goodwill that was to be
transferred and the Court accordingly held that there was not transfer in terms of s197.
The Court however emphasised that the judgment was based on the facts at hand, and that any
subsequent event such as an agreement between the frst and second respondent or offer of
employment to the Applicants employees may have the consequence of a different result.
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NOTES
LABOUR BROKERS MICHAEL YEATES
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Can a labour broker dismiss it's employee when the client no longer
requires the services of the Labour Broker's employee for any reason?
Facts
In National Union of Metalworkers of South Africa and A Ketlohoilwe and Others v Abancedisi
Labour Services (as yet unreported Supreme Court of Appeal; Case No 857/12 30 September
2013), the Court was faced with determining whether the second and further appellants were
unfairly dismissed by the respondent, a labour broker.
The employees were employed by the respondent and placed with a client of the respondent.
During 2001, the employees engaged in a two hour work stoppage – they complained about
management work practices and demanded the dismissal of a supervisor. As a consequence of the
work stoppage, the employees were required to sign a code of conduct by the client, to regulate
industrial action. Each employee was required to sign the code of conduct - those who agreed
were allowed onto the client's premises and those who refused to sign were not allowed access
onto the clients premises.
It was thereafter confrmed that those employees who refused to sign the code of conduct would
not be permitted back on the premises or paid any wages.
The employees thereafter referred an unfair dismissal claim to the Labour Court which was opposed
by the respondent. The respondent contended that the employees had not been dismissed as they
remained on the respondent's payroll, the employees argued that taking into account the cumulative
effect of the respondent's conduct was to evidence that the employees had been dismissed.
Findings
In considering whether the employees were unfairly dismissed, the Court per Maya JA, frstly
considered the employees' contracts of employment. The essence of the contract of employment is
that the assignment of the employees to the client is dependent on the longevity of the agreement
the respondent has with the client and it would endure until the client no longer required the
service of the employee for whatever reason.
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The Court held that a refusal to allow an employee to do work he was engaged to do may constitute
wrongful repudiation and a fundamental breach of the employment contract which vests the employee
with an election to stand by the contract or to terminate it. The Court found that the respondent's
conduct in not paying the employees resulted in the termination of the employment relationship.
The Court further held that whether or not the respondent intended to repudiate the employment
contract, the effect of its conduct constituted a material breach of the employment contract that
entitled the employees to cancel it. That the conduct of the respondent fell within the bounds of
a termination in terms of the LRA – that is the employer has engaged in an act which brings the
contract of employment to an end in a manner recognised as valid by law.
The Court, albeit obiter, reiterated that labour brokers should bear in mind the intention of the
Labour Relations Act, No 66 of 1995 (LRA) which is to give effect to s23 of the Constitution.
Employment may only be terminated as a result of the employee's conduct, capacity or the
employers operational requirements, these reasons must further meet the requirements of
substantive and procedural fairness set out in the LRA.
Does the CCMA in South Africa have jurisdiction when a temporary
employment service (TES) places an employee with a foreign client?
Facts
Yes, in MECS Africa (Pty) Ltd v Commission Mediation and Arbitration, Marleze Swanepoel N.O
and Theo Pauw (as yet unreported Labour Court, JR 455/12, 16 August 2013) the Court was faced
with a review application of a jurisdictional ruling issued by the CCMA.
The Applicant is a TES, a South African company with its registered offce in Johannesburg, it is a
subsidiary of Micro-Mega Holdings Limited. On 6 J uly 2011, the employee (the third respondent)
signed a fxed term contract of employment with the Applicant and undertook to provide services
as a civil construction manager to the Applicants clients. It was agreed that the employee would
provide services to the Applicants client, a mining company which operates in the Democratic
Republic of Congo.
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At the insistence of the Applicant, the employee on 8 July 2011 signed a further fxed term
contract of employment with Micro Mega Services and Support SPRL - this company is
registered in the Democratic Republic of Congo and is a subsidiary of Micro-Mega Holdings
Limited. The contract provided that the employee would provide services to the clients of Micro
Mega Services and Support SPRL.
The South African fxed term contract of employment states that the employee may only be
employed by the Applicant. The Congolese contract of employment states that the employee may
not be engaged in any business that would in any way interfere with his employment with the
Congolese labour broker.
The employee's salary was paid by the Applicant. On 2 September 2011, the Applicant delivered
a letter to the employee advising him that his employment with the Applicant and its subsidiaries
would terminate on 1 September 2011 as per the clients instructions. No similar letter was
received by the employee from the Congolese Labour Broker.
The Applicant referred a dispute to the CCMA where the Applicant raised a point in limine that
the CCMA lacked jurisdiction to hear the dispute. The CCMA commissioner found that the
CCMA did have jurisdiction.
Findings
Leppan AJ held that the Commissioner in the CCMA was correct in fnding that the principles
of private international law and choice of law were not applicable in the present matter - the
agreement between the parties cannot confer jurisdiction on the CCMA, only the LRA can do
so. The Court agreed that the correct test, as followed by the Commissioner was the "locality of
undertaking test".
The Court held that based on the Labour Appeal Court judgment in Astral Operations Ltd v Parry
(2008) 29 ILJ 2668, the CCMA had jurisdiction to hear disputes referred to it by employees of a South
African TES, even if those employees were placed with clients outside of South Africa's borders.
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Leppan AJ held that as a TES, the Applicants business is to provide is clients with individuals who
will provide services to those clients - s198 indicates that the employee is employed by the TES
and not the client.
In considering the locality in which the employee works, the Court considered where a TES
conducts its labour broking business. The Court stated that it is the place where it recruits and
procures labour and not the place where its clients have operations. If the TES is in South Africa,
then the CCMA will have jurisdiction.
IMPACT OF PENDING EMPLOYMENT LEGISLATION
Section 198 and 198a
The most important impact of the amendments to s198 relates to employees of labour brokers
employed for longer than three months and earning below the earnings threshold published
annually, currently set at R193 805 per annum.
The proposed amendments will essentially have the following implications, for such category
of employees:
? The client and the labour broker will be jointly and severally liable for non-compliance,
unfair dismissals and the like, and proceedings may be instituted and enforced against either
of them.
? Employees of the labour broker will be deemed to be employees of the client and the client
will be deemed to be their employer.
? The employment of the employees will be for an indefnite basis by the client, unless a fxed
term contract can be justifed in terms of s198B.
? The employees of the labour broker must be treated on the whole not less favourable than
employees of the client, performing similar work, unless there is a justifable reason for
different treatment in terms of s198D.
Note: The employee may therefore have two employers, namely the labour broker and the client.
99
LABOUR BROKERS | 78
NOTES
JOHANNESBURG
1 Protea Place Sandton Johannesburg 2196, Private Bag X40 Benmore 2010 South Africa
Dx 154 Randburg and Dx 42 Johannesburg
T +27 (0)11 562 1000 F +27 (0)11 562 1111 E [email protected]
CAPE TOWN
11 Buitengracht Street Cape Town 8001, PO Box 695 Cape Town 8000 South Africa
Dx 5 Cape Town
T +27 (0)21 481 6300 F +27 (0)21 481 6388 E [email protected]
www.cliffedekkerhofmeyr.com
©2013
Cliffe Dekker Hofmeyr is a member of DLA Piper Group,
an alliance of legal practices
BBBEE STATUS: LEVEL THREE CONTRIBUTOR
This information is published for general information purposes and is not intended to constitute legal advice. Specialist legal advice should always be sought in relation to
any particular situation. Cliffe Dekker Hofmeyr will accept no responsibility for any actions taken or not taken on the basis of this publication.

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