Given the prevalence of workplace disput

Valenti Law

Given the prevalence of workplace disputes, I think a “Bring Your Lawyer to Work Day” may be more popular! 😉 http://ow.ly/UldUV

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DAMAGES DUE TO UNPROTECTED STRIKE – SA LABOUR COURT: TU & MEMBERS LIABLE FOR DAMAGES – R 1,4 MILLION ORDERED IN DAMAGES UNLAWFUL CONDUCT?” – UPDATE

NEWTON PUBLICATION

DR ISAAC NEWTON ACTION EQUALS REACTION

“Lex III: Actioni contrariam semper et æqualem esse reactionem: sive corporum duorum actiones in se mutuo semper esse æquales et in partes contrarias dirigi.”

Translated to English, this reads:

“To every action there is always opposed an equal reaction: or the mutual actions of two bodies upon each other are always equal, and directed to contrary parts.”

CASE LAW UPDATE – [Courtesy LexisNexis]

Algoa Bus Company (Pty) Ltd v Transport Action Retail and General Workers Union (Thor Targwu) and another [2015] 9 BLLR 952 (LC)

Strike – Damages – Union ignoring interdict and failing to take measures to persuade members to resume work – Union and members jointly liable for loss occasioned by strike.

Trade union – Liability for unlawful strike – Union ignoring interdict and failing to take measures to persuade members to resume work – Union and members jointly liable for loss occasioned by strike.

Editor’s Summary
The applicant instituted action for financial loss occasioned by a two-week strike engaged in by the respondent employees, all members of the first respondent. It claimed that the strike had occasioned irrecoverable loss of revenue, not including physical damage to buses which had been recovered from its insurer.

Although the first respondent trade union had filed a notice of opposition and answering affidavit, none of the respondents entered appearance to oppose the application except for a union official who made representations from the bar about the union’ parlous financial situation. The matter was heard on a default basis.

The Court noted that the respondents were not in a position to challenge the losses in passenger fairs and transport subsidies detailed by the applicant which was accepted. The evidence also showed that the union had done nothing to discourage its members from striking or that it had even distanced itself from the strike.

Claims that the union was unaware for some time that the strike had commenced were rejected, and allegations that union officials had tried to encourage members to resume work were lacking in specificity. The strike was not a spontaneous event, but was the result of discontent that had been brewing for some time, and was finally triggered by disciplinary action against two shop stewards. The strike could, accordingly, not be said to have been a response to unjustified conduct by the applicant.

It was common cause that the strikers had not complied with the LRA, and the court had issued an interdict halting the strike, which was also unopposed. The order left no doubt that the strike was unlawful and went unheeded for several days l and went unheeded for several days. That the union might be in a parlous financial situation was not in itself a basis for not granting the applicant relief.

Though the order might add to the union’s financial woes, there was no evidence that it could not raise additional funds if it wished to continue to exercise its functions as a union.

Since the individual respondents were liable on a joint and several basis, the money could be recovered from them over the period suggested by the applicant. Payments would amount to less than 3% of their remuneration over that period.

The Court ordered the respondents to pay R1,4m in damages, being the amount lost by the applicant during the five days the strike after was interdicted.

INTRODUCTORY COMMENTS

In terms of Section 23(2) of the Constitution of the Republic of South Africa, 1996 –“(2) Every worker has the right to – …strike”.

In an authoritative publication by Professor John Grogan “Collective Labour Law”, Juta (2010), at 12 to 13, the learned author observes that the extent to which labor rights have been entrenched in the South African Constitution is probably unique in that it reflects the drafter’s determination to avoid a repetition of the abuse to which trade unions were subjected to in the apartheid era.

It can be submitted that the SA Constitutional “right to strike” is one, if not the most important right, from a trade union perspective, chiseled in the SA Constitution and it is jealously protected by the SA trade union federations and its constituent members. After all, it took much effort and resolve by the SA trade union movement to secure a fundamental “right to strike” as an entrenched right in the SA Constitution.

However, and according to Grogan supra, Section 23 of the Constitution is even-handed: “it confers on ‘everyone’ (including employers) ‘a right to fair labour practices’ and, leaving aside the right to strike, confers identical rights on trade unions and employers’ organizations. [Emphasis added].

Therefore, the right to strike should not be perceived as sacrosanct and necessarily as if of more significance or value, when compared or weighed with any of the other fundamental rights entrenched in the South African Constitution.

At this juncture it was deemed apposite to record the words of Samuel Taylor Coleridge (1772-1834), “There are no rights whatever…without corresponding duties.” [Samuel Taylor Coleridge, English poet and man of letters; Ottery St. Mary, Devonshire; one of the most brilliant, versatile, and influential figures in the English romantic movement].

Recent concerns around labour relations in South Africa have to a large extent focused attention on a significant increase in lengthy strike action; and especially the escalation in levels of unlawful conduct by strikers in the form of violence, intimidation, riotous behaviour that led to damage of property and all sorts of direct and indirect financial prejudice suffered by those affected as a consequence thereof.

Section 69(1) of the Labour Relations Act 66 of 1995 (the LRA) gives registered trade unions the right to authorise their members and supporters to picket “for the purposes of peacefully demonstrating” in support of protected strikes and against any lockout. Such demonstrations are invariably part and parcel of South African strikes, as they are in many other countries.

However and unfortunately so, in South Africa in particular, demonstrations by strikers often go far beyond conduct normally associated with picketing. Regrettably, industrial action frequently deteriorates into mass mayhem bordering on anarchy, sometimes accompanied by murder, assault, intimidation, arson, industrial sabotage, disruption of public services, littering and other criminal acts.

In most cases, the public generally bears these antics, if not with a grin, then at least with the hope that they need endure them only until the strikers eventually lose their steam and the situation returns to normal, at least until the next labour flare-up. [See John Grogan “Tone it down! Curbing union exuberance” Employment Law Journal, LexisNexis (December 2011)]

In the article by Grogan supra the learned author analysed and commented upon a judgment, that attracted much attention in the press, namely by the South African Supreme Court of Appeal (SCA) – South African Transport and Allied Workers Union v Garvis & others [2011] 12 BLLR 1151 (SCA).

The following passage[s] in Garvis was referred to in articles pertaining to a legal battle between a trade union SATAWU and a few Cape Town street vendors who claimed damages for losses suffered in 2006 during a riot by union members that worked itself up through the High Court, the SCA and, finally, the South African Constitutional Court:

“[46] During the pre-constitutional era, public protests and demonstrations against a denial of fundamental human rights were often met by brute force with resultant loss of life. The Sharpeville massacre and the 1976 Soweto student uprising are stark examples that are etched into the national psyche. In any event, the legislature, after an extensive consultative process, and following on the brutal experiences of the apartheid era, promulgated the Regulation of Gatherings Act 205 of 1993.

[47] Our Constitution saw South Africa making a clean break with the past. The Constitution is focused on ensuring human dignity, the achievement of equality and the advancement of human rights and freedoms. It is calculated to ensure accountability, responsiveness and openness. Public demonstrations and marches are a regular feature of present day South Africa…The Constitutional Court has recognised that the rights presently enjoyed by employees were hard-won and followed years of intense and often grim struggle by workers and their organisations…Trade unions should ensure that a noble struggle remains unsullied. The Act was designed to ensure that public protests and demonstrations are confined within legally recognised limits with due regard for the rights of others.

[50]…The chilling effect that the provisions of the [Regulation of Gatherings Act] (RGA) should rightly have is on unlawful behaviour that threatens the fabric of civilised society and which undermines the rule of law. In the past the majority of the population was subjected to the tyranny of the state. We cannot now be subjected to the tyranny of the mob”. [Emphasis added].

In South African Transport and Allied Workers Union and another v Garvas and others (City of Cape Town as Intervening Party and Freedom of Expression Institute as amicus curiae) [2012] 10 BLLR 959 (CC) the Court determined that Section 11(2) of the RGA did limit the right to assemble in terms of Section 17 of the Constitution, however, the limitation was reasonable and justifiable.

The victims of the violence that erupted after the SA Transport & Allied Workers Union convened a gathering in Cape Town, as part of the union’s effort to mobilise members during a strike in the transport industry could institute damages claims in the High Court against the union in terms of Section 11(2) of the RGA.

The Court held that Section 11(2) of the RGA was not unconstitutional. Section 17 of the Constitution protects the right to assemble and demonstrate only insofar as the conduct of the protestors was peaceful and the participants unarmed.

Somewhat ironically, shortly after the Constitutional Court handed down theGarvis judgment, during August 2012, the Marikana Tragedy occurred, an event which has been described as a watershed event for the South African labour relations system.

The nature of the events that occurred at Marikana had been widely published in the media in SA and abroad. In short: pursuant to strike action by a trade union active at the Lonmin platinum mine scores of Lonmin workers were gunned down by police during unprotected strike action. The issues that precipitated the tragedy were incredibly complex and go way beyond the field of labour relations.

Suffice it to record the observations by some commentators as to the root causes of strike action in SA, not only with reference to lengthy strike in the mining sector, also the strike action that followed thereafter in the metal and engineering industry.

In an article by a senior journalist of a leading SA newspaper, Jan de Lange ‘The resolution of the strike in the hands of Government’ Rapport 2014/07/20, the observation was made ‘we really need to look beyond production losses and even violence at the drivers of these strikes’. http://t.co/QhM018jr3N

In the article referred to above De Lange expressed an opinion that the underlying factors that caused the strike in the metal & engineering industry are in substance the same or similar factors or ‘drivers’ that caused a lengthy strike [5 months] in the mining sector. The strike was correctly labeled as a ‘political strike’.

Notwithstanding the labeling of the strike and according to Professor Karl von Holdt, a professor in Sociology at the University of the Witwatersrand (WITS) the root cause of the wave of strikes in SA is not primarily due to political aspirations of trade union leaders.

According to Professor Von Holdt the real reasons are socio-political and other concerns or issues such as the lack of access to basic amenities and housing. The increase in violence and other forms of unlawful conduct during strikes are symptomatic of increasing levels of frustration and anger in that a large sector of the SA population live in what is known as ‘informal settlements’ with no service delivery and without access to basic amenities.

Therefore, the socio-economic needs of a substantial number of SA citizens remained unfulfilled despite political reform.

It follows that South African employers are not in a position to remedy the situation and find them in the unenviable position of being in the midst of socio-economic cum political conflict that culminated in industrial strife.

Having regard to a number of orders handed down by the South African Labour Courts, it is very much apparent that the protest action resorted to, and favored by some strikers ever so often takes the form of mass mayhem bordering on anarchy, sometimes accompanied by murder, assault, intimidation, arson, industrial sabotage, disruption of public services, littering and other criminal Acts. [See: article by Grogan supra].

The court orders referred to above were obtained out of necessity and on an urgent basis by employers in an attempt to curb strike violence, damage to property as well as other criminal acts committed by strikers in contravention of the Regulation of Gatherings Act 205 of 1993 and agreed picketing rules with the unions involved.

An alarming trend that developed is the non-compliance and contempt of court orders by strikers. Unfortunately the incidence of non-compliance and contempt of court orders emanate from the ‘Apartheid-Era’ where workers paid scant regard to interdicts or any other order of court based on political reasons as a form of protest and civil disobedience.

This notwithstanding, the ‘Apartheid-Era’ is long gone and buried – twenty or more years ago. The resurgence of contempt of court, the propensity to disregard the rule law and the reasons therefore could not by means of regression be labelled as a “problem inherited from apartheid – a ‘spawn’ of the ‘wicked’ regime in power at the time”. As a Law Professor once said to a student who arrived late for class and presented a flimsy excuse for being late, “Dear sir…that kite won’t fly”.

The tendency by strikers to disregard the rule of law and heedlessly act in contempt of court orders are a matter of great concern to the courts, the legislator and the South African public. At the fifteenth annual general meeting held by the South African Society for Labour Law (SASLAW), where Mr Justice Andre van Niekerk delivered the key note address the Judge observed, ‘The value and effectiveness of legal institutions is dependent entirely on an acknowledgment and commitment to the rule of law.

When citizens or a group of citizens decide that their interests are better advanced by flouting the law, then there is very little to say about the role and perspectives of courts… the basic foundation of law is present when citizens are concerned about maintaining the integrity of the legal system, while recognising the inevitability of conflict… When this is not present, and when citizens reject the law as a means of settling normative conflict, then the social good of the law, which includes its capacity to provide a framework of cooperation despite disagreement, disintegrates.’

Judge van Niekerk also referred to the role of the court in unprotected strikes and specifically commented on urgent applications to interdict acts of strike-related violence.

In this regard, he said: ‘The first and most fundamental concern is one that acknowledges that what may be at issue is a breakdown of the rule of law; especially where orders are issued and then blatantly disregarded. It is not uncommon on return dates to be told that when the order granted by the court was served, the recipients of copies of the order refused to accept them or threw them to the ground and trampled on them.

At its most basic level, this is demonstrative of a rejection of the rule of law, andcontempt for its institutions. … Ironically, not infrequently it is the same people who show their contempt for the court in graphic terms who approach the court with claims for reinstatement when the inevitable dismissal for misconduct follows.’ [Emphasis added].

At a seminar held at the University of Pretoria, on 28 October 2014, presented by SASLAW the key note speaker was Advocate Anton Myburgh SC with the seminar topic, “Ensure compliance and contempt of court orders: a viable means to control strike violence?”

[Advocate Myburgh SC also authored a comprehensive article on the subject matter addressed at the SASLAW seminar, published in the authoritative publication Contemporary Labour Law – Anton Myburgh SC, “Contempt of court in the context of strikes and violence” Contemporary Labour Law(July 2014) Volume 23 No. 12].

In the comments that follow hereunder referral would interchangeably be made to the published article supra by Myburgh SC, as well as some of the issues raised and observations made at the SASLAW seminar.

CONTEMPT OF COURT IN THE CONTEXT OF STRIKES AND VIOLENCE – RECENT JUDGMENTS BY THE LABOR COURTS

At the outset it should be noted that one could not submit a quasi academic article or posting as to the subject matter under discussion, in the first instance due to the legal complexity thereof, and in the second instance postings on the LinkedIn network should preferably be brief and not drafted as a law review.

Four notable judgments by the Labour Courts were dissected by Myburgh SC and the importance of the judgments; especially the ‘message therein recorded’, if not an admonition by the courts as to what could be expected by maverick parties who fail to comply with orders of court, in the context of violent or riotous behaviour, who persist with unlawful conduct under the guise of strike action, albeit unprotected or protected strike action.

Also noteworthy in the judgments are the real possibility that those who blatantly disregard court orders would be ‘corrected’ by means of a quasi-criminal sanction, to wit to be found in contempt of court. One well known example is a judgment by the Labour Court where the court imposed a fine of R 500.000 against a union for contempt, namely In2Food (Pty) Ltd v Food & Allied Workers Union & Others (2013) 34 ILJ 2589 (LC). On appeal to the Labour Appeal Court (LAC) the union succeeded, on a technical point, as to the wording of the order wherein the union was interdicted and restrained from“continuing” with the strike and access prevented to the company premises by persons not involved in the strike, referred to by some commentators as ‘strike sympathisers’ or ‘self-appointed moral supporters’ or even ‘concerned community members’ (CCM’s).

Of importance is a key passage by the court a quo in the In2Food judgment, which the LAC amplified, endorsed and adapted – quoted hereunder where Steenkamp J (at 2591H-2592B) pronounced:

“The time has come in our labour relations history that trade unions should be held accountable for the actions of their members. For too long trade unions have glibly washed their hands of the violent actions of their members…[The LRA] makes it extremely easy to go on a protected strike, as it should be in a context where the right to strike is a constitutionally protected right. However, that right is not without limitations.

Firstly, the proper procedures set out in s 64 of the LRA should be followed. And secondly, it must be in line with the constitutional right to assemble and to picket peacefully and unarmed, as entrenched in s 17 of the Bill of Rights… Very simply, there is no justification for the type of violent action that the respondents have engaged in, in this instance. And alarmingly, on the evidence before me, the union and its officials have not taken sufficient steps to dissuade and prevent their members from continuing with their violent and unlawful actions… These actions undermine the very essence of disciplined collective bargaining and the very substructure of our labour relations regime.” [See detailed discussion, Myburgh SC – Contemporary Labour Law, 110 to 113 supra].

Of significance is that the LAC in In2food referred to FAWU v Ngcobo NO & Another (2013) 34 ILJ 3061 (CC), where FAWU was held liable to its own members for failure to prosecute the members’ interests properly in litigation (at paras 18-19):

The respondent’s thesis that a trade union, as a matter of principle, has a duty to curb unlawful behaviour by its members indeed enjoys merit. Indeed, the principle of union accountability for its actions or omissions are beginning to gain recognition… The sentiments expressed by the court a quo which are cited above [see Steenkamp J, above] have been rightly described by Alan Rycroft as a ‘…’significant moment of judicial resolve’. Indeed, the sentiments deserve endorsement and are adopted by this Court.”

[See: Rycroft, A “Being held in Contempt for Non-compliance with a Court Interdict: In2food (Pty) Ltd v FAWU & Others” (2013) 34 ILJ 2589 (LC)” 2013 34 ILJ 2499].

Referral was made to three other important judgments handed down by the courts where the courts had to pronounce on the question whether the Respondent was in contempt of court pursuant to an interim order obtained against unruly strikers ad factum praestandum and upon non-compliance with the order, an ensuing application declaring the non-compliant party[s] in contempt of court and imposing of a sanction.

For the sake of brevity the three judgments would not be addressed in this posting, however, they would be cited for those who wish to peruse them. They are Xstrata SA (Pty) Ltd v AMCU & Others (case no. J1239/13, 25/2/2014, per Tlhotlhalemaje AJ, Ciro Beverage Solutions (Pty) Ltd v SATAWU & Others (case no. J2630/13, per Shaik AJ) and Anglo American Platinum Ltd & Another v AMCU & Others (case no. J158/14, 6/3/2014, per Van Niekerk J).

It is important to mention that facts and circumstances which led to applications made for urgent relief were almost identical in that it involved strike violence as well as a disregard of interim orders obtained. Therefore, the applications made were based on contempt of court. In each of the judgments, the unions and their members escaped sanction based on being found in contempt of court on technical grounds.

It was deemed apposite to quote from the article by Myburgh SC supra, “But unions would be well advised to take heed of these judgments, as the judicial net is clearly tightening around those of them who are prepared to run the risk of disobeying court orders”.

Of concern was that Myburgh SC at the SASLAW seminar referred to study conducted during 2012 by the Congress of South African Trade Unions (COSATU), in the form of a poll amongst its members [2.2 million – 2012], wherein it was found that “60% of members polled believe that strike demands will not be achieved without violence.”

Myburgh SC identified two flash points of violence during strikes namely:

” – Early on in the strike > directed against the employer;

When support wanes > directed against employees.”

Violence during strike action could be classified as a form of economic duress and has the following effect:

“> It skews collective bargaining power;

> It disturbs the forces of demand and supply;

> It places undue pressure on employers to settle; and

> It frightens employers into settlement.”

It could be taken as a given that employers and their legal representatives would take due notice of the technicalities that prevented a successful order of contempt against a union and its members and ensure that the drafting of applications for interdicts, and ensuing contempt applications would address the technical shortcomings identified in the judgments cited above.

Of critical importance from a trade union perspective would be an awakening that the courts have had enough of strike violence and contemptuous conduct upon being served with interdicts. As was stated at the SASLAW seminar, “The courts are looking for ways to hold unions accountable.”

CONCLUSION

The words by Van Niekerk J, at the 15th SASLAW annual general meeting held by the South African Society for Labour Law (SASLAW) have been deemed to be important and are repeated hereunder for edification – especially to strikers who after being dismissed for violence or any other unlawful conduct during a strike, where the dismissal was preceded by an application for an interdict, an ensuing successful application for contempt of court and followed by a quasi-criminal sanction against the perpetrators:

“The first and most fundamental concern is one that acknowledges that what may be at issue is a breakdown of the rule of law; especially where orders are issued and then blatantly disregarded. It is not uncommon on return dates to be told that when the order granted by the court was served, the recipients of copies of the order refused to accept them or threw them to the ground and trampled on them.

At its most basic level, this is demonstrative of a rejection of the rule of law, and contempt for its institutions. … Ironically, not infrequently it is the same people who show their contempt for the court in graphic terms who approach the court with claims for reinstatement when the inevitable dismissal for misconduct follows.’ [Emphasis added].

Johann Scheepers

16/12/2014

HAVE YOU CONSIDERED ALTERNATIVES TO RETRENCHMENT?

RETRENCHED

“The socio-political impact of retrenchments has been most damaging, and concern has been expressed that realistic and viable options to retrenchment are often overlooked as companies hasten to improve the bottom line by simply cutting back on staff compliment.”

[Andrew Levy et al, ‘Alternatives to Retrenchment: How to Reduce Labour Overhead without Retrenching Employees”, Technisem, Andrew Levy & Associates (1992)].

 

“All parties concerned should seek to avert or minimize as far as possible termination of employment for reasons of an economic, technological, structural or similar nature without prejudice to the efficient operation of the undertaking, establishment or service, and to mitigate the adverse effects of any termination of employment for these reasons . . .’ (ILO Recommendation 166).”

[Martin Brassey et al “Steps to Avoid or Minimize Retrenchment – The New Labour Law” (1987) Juta, 287].

INTRODUCTORY REMARKS:

In an article published in Business Day Live by Natasha Marrian & Skonathi Mantshantsha entitled, Zuma acknowledges economy is sick’, August 31, 2015 the President of the RSA, President Jacob Zuma appealed to “business and labour to prioritise saving jobs over profit margins and wage hikes”.

The mining industry, unions and the government signed a broad plan on Monday to stem a wave of job losses.

Three weeks of emergency talks aimed at stemming job losses in the mining sector had resulted in a series of joint programmes including a commitment from government to establish a fund that would financially assist in retraining retrenched mineworkers, Mineral Resources Minister Ngoako Ramatlhodi said on Monday.

The parties on Monday formally signed off on 10 joint interventions, ranging from joint promotional initiatives to promote South African minerals, to agreements to enhance productivity and an agreement that when mines were intended to be mothballed or sold saving jobs would be prioritised, Mr Ramatlhodi said at a briefing in Pretoria.

There was no moratorium on retrenchments nor did parties believe all the jobs could be saved, Mr Ramatlhodi said, hence government’s commitment to financially assist in retraining. About 19,000 jobs were currently at risk of being lost in the sector, Mr Ramatlhodi said.

Weak commodity prices, low economic growth, continued demands from labour for above-inflation wage increases and the announcement by companies that they would shed tens of thousands of jobs in coming months had prompted emergency talks between the parties earlier on (August 5, 2015).

It is evident that from reported articles and statistics that SA is in the midst of what some opposition political parties labelled a ‘Job Crises’ or rather that unemployment levels have reached a critical stage.

In a posting in LegalBrief Workplace August 26, 2015 referral has been made to an article by Wiseman KhuzwayoRetrenchments: CCMA springs into action” Business Report (August 19, 2015) wherein it is reported that the Commission for Conciliation, Mediation & Arbitration (CCMA)  responded to the ‘jobs crises’  by establishing a job insecurity crisis committee and task team to ensure that there was sufficient capacity to implement an action plan designed in order to alleviate the imminent terminations due to operational requirements ‘retrenchment’.

The director of the CCMA Nerine Kahn is quoted as having said: “This action plan is part of the CCMA’s job security strategy, which is underpinned by three principles: leave no stone unturned in the quest to find alternatives to retrenchment; where retrenchments are unavoidable, do not allow any worker to walk into the sunset without access to support mechanisms; and where business enterprises are in distress, in partnership, facilitate lifeboat rescue to prevent business closures.” [Emphasis added].

The recent increase in mass retrenchments referrals had given rise to the CCMA embarking on the recorded urgent action plan to support businesses in distress, with 23 231 jobs at stake in the first quarter.

The number is from large-scale referrals received so far. It equals 40 percent of the referrals received last year being in a single quarter.

It said a comprehensive assessment of the national job insecurity situation would be conducted with a focus on identifying high risk sectors.

Social partners would be engaged, focusing on establishing the technical aspects of businesses in distress and job insecurity, the CCMA said.

This included joint collaboration regarding early warning and intervention systems, preventing business closure and job loss, post retrenchment support, facilitation of sector sustainability initiatives and assisting businesses in distress to access enterprise support, promotion of sectoral employability and employment security, training and awareness raising.

PURPOSE OF THE ARTICLE:

Against the above background this article has been written with the emphasis on the duty or legal obligations to consider alternatives to avoid termination of service on the ground of operational requirements, or as it is commonly referred to as ‘retrenchment’.

Referral will be made to possible alternatives to retrenchment that should be considered prior to terminating service.

At the outset it should not be recorded that postings on the LinkedIn network should preferably be brief and not created; nor should it be perceived by the reader as if a comprehensive or an authoritative work of reference on the subject matter. The objective is to edify, within the confines of the medium and to generate interest and possible debate on the subject matter.

This article would differ in substance and nature if compared with previous articles by the writer insofar as it would not be legalistic in nature. Although reference will be made to the law where deemed necessary the focus would be on the submission of practical and possible workable alternatives to termination on the ground of operational requirements or as it is commonly known ‘retrenchment’.

It follows from the above newspaper articles that potential for termination based on operational requirements, [economic reasons] is a matter of great concern in SA. Although one is alive to the unenviable financial position that SA employers face, writer is of the considered opinion that the during the consultation process that should precede retrenchment, some employers do not commence with the consultation process as soon as a reduction of the work force is contemplated.

It ever so often emerges at the arbitration of a retrenchment dispute at the CCMA or as is recorded in many reported judgements by the Courts that upon realisation of economic distress the employer respond forthwith by for example a resolution by its board of directors, or CEO to retrench a predetermined number of employees as a measure “to improve the bottom line by simply cutting back on staff compliment”. [See: quotation by Andrew Levy above].

DIRECTORS IN MEETING BOARDROOM

What follows thereafter is an attempt at compliance by the employer with statutory obligations, to wit to engage the parties in consultation by means of a meaningful joint consensus-seeking process with the purpose to reach consensus [agreement] on various issues as stipulated in section 189(2) & (3) of the Labour Relations Act, 66 of 1995 (as amended) (the LRA).

The ‘consultation process’ that some employers follow is one in name only and not remotely as stipulated in the LRA as referred to supra.

In short: the decision to retrench has already been made and is for all intents and purposes a fait accompli. The consultation process that follows is cosmetic in substance and nature. The process followed constitutes subterfuge. Any proposed alternatives by the union or legal representatives to avoid retrenchment would de facto not be considered in good faith. The process therefore is meaningless and merely a ‘going through the motions’ exercise in order to minimise the risk of litigation based on unfair retrenchment.

There is no real or bona fide willingness and positive participation by the employer and at times the employees in a joint consensus-seeking process; and with the purpose to attempt to reach consensus [agreement].

Writer has on many occasions dealt with disputes where the employer did not bother to engage the employees in consultation and simply issued contractual notice of termination without any compliance whatsoever with statutory obligations. The picture hereunder depicts and succinctly captures the sate of non-compliance by some employers.

RETRENCHED 2

However, ever so often the trade union acting on behalf of members leave no stone unturned to prolong or the consultation process by various means some of which will be referred to in this article.

In the authoritative publication by J Grogan ‘Workplace Law’ (2009) Juta, 10ed at 275, the learned author observes that Section 189 requires that all consultation parties [should] attempt to reach consensus on the various matters specified. [Section 189(1) to (3) of the LRA. Consultation is not simply one-sided; an employer cannot be expected to consult with a union that unreasonably evades consultation or seeks to delay it. [Emphasis added].

Therefore, it is submitted that there is in law a reciprocal duty on the employee party to participate in the consultation process ‘in good faith’. [My interpretation]. Also see: SASBO – Finance Union v ABSA Bank Ltd [2011] 12 BLLR 1232 (LC). [Courtesy – LexisNexis BLLR].

In SASBO – Finance Union v ABSA Bank Ltd supra, after consulting for several months, the employer decided to close down one of its divisions. Affected employees were issued with reassignment or relocation letters. The union launched an urgent application in terms of section 189A(13) of the LRA. The union contended that the respondent had simply handed letters to the employees concerned without completing the consultation process, and had effectively presented them with a fait accompli without the restructuring plan and its commercial rationale having been adequately discussed.

The Court held that the union negotiator must have been aware of the details of the new business plan for at least two months before the letters were issued. It was also common cause that the union had been provided with detailed information at subsequent meetings. The union had failed to disclose the meeting which had started the consultation process, during which the respondent had provided a detailed plan of the proposed restructuring and the envisaged consultation process.

Although this was not a case in which restructuring was a “life or death” measure to rescue the employer’s business, the union had not given any compelling reason for why consultation should have continued beyond the point where the employer finally took the decision to issue the reassignment and relocation letters.

The Court noted further that the process had not yet led to a decision to retrench any of the affected employees. The Court held that the employer would be irredeemably prejudiced if the process were to be reversed or extended at this stage.

The union would have adequate remedies if the employer breached its undertaking to apply the relocation and reassignment criteria fairly. Rather than having been unfairly terminated, the process was ongoing. The union had, accordingly, failed to make out a case for the relief sought.

The application was dismissed.

WHAT IS CONSULTATION & WHEN SHOULD IT COMMENCE?

Section 189 (1) requires that consultation must take place when the “employer contemplates dismissal”. The word “contemplate” indicates that the employer must consult at the stage when a final decision to dismiss had not yet been reached, but the possibility of dismissal has only been foreseen. At most, therefore, the employer must have an intention to retrench at the stage when consultation commences.

Item 3 of the Code of Good Practice on dismissals based on operational requirements (Appendix 2) states that “the consultation process must commence as soon as a reduction of the work force, through retrenchments or redundancies, is contemplated by the employer.”

This requirement ensures that the employees are afforded the opportunity to influence the employer in its final decision to dismiss or not. The actual timing of consultation will depend on the circumstances of each case. When considering this question, the interests of both the employer and the employees should be taken into consideration and balanced.

If an employer has already decided to proceed with the dismissal for operational requirements, it may mean that the consultation process is not worth its name or cosmetic – if employees or a trade union are confronted with an already-made, fait accompli decision, they have no opportunity to influence the final decision. In such cases the operational requirements dismissal may be procedurally flawed before it has even begun.

Therefore, in order for a fair dismissal on the ground of operational requirements a condictio sine qua non would be the willingness and positive participation by the employer and the employees in a joint consensus-seeking process; and with the purpose to attempt to reach consensus [agreement].

It can be deduced that in order to satisfy the test stipulated by the legislature in Section 189 and pronounced upon by the Courts, the parties’ conduct during the consultation process would in all probability be analyzed, assessed and measured by tribunals using as a yardstick the concept of ‘good faith’.

The question that may follow is, ‘What is ‘good faith’?’

Within the process of collective bargaining and within the legislative framework of the ‘old’ LRA, 1956 the pronouncements made by the Courts were informative, ‘the very stuff of collective bargaining is the duty to bargain in good faith’.

[See: National Union of Mineworkers v East Rand Gold and Uranium Co Ltd (1991) 12 ILJ 1221 (A) at 1237; Standard Bank of Bophuthatswana Ltd v Reynolds NO & Others 1995 (3) SA 74G].

In short: the Courts held that a fundamental tenet of ‘bargaining in good faith’ was that parties were required to approach the negotiations with an open mind and a genuine desire to reach agreement.

This purpose was encapsulated in the expression ‘good faith bargaining’. Practices which undermined the bargaining process were deemed to be unfair namely:

  • unreasonable preconditions for bargaining;
  • premature unilateral action;
  • illegitimate pressure tactics;
  • denial of union access;
  • sham bargaining, inadequate substantiation of proposals and dilatory tactics;
  • by-passing a recognised union and negotiating directly with employees when the union was not acting in bad faith; and
  • unilaterally implementation of proposals.

It is submitted that the same or similar interpretation of the underlying principles of ‘bargaining in good faith’ supra would be applied by the Courts and Commissioners of the CCMA in determining compliance with the legislative requirement as stipulated in Section 189(2) of the LRA, ‘engaging in a meaningful joint consensus-seeking process [in order to] attempt to reach consensus’.

Item 5 of the Code of Good Practice on dismissals based on operational requirements – deals with the substance of the consultation process and stipulates as is set out hereunder:

“(5) The period over which consultation should extend is not defined in this Act [the LRA]. The circumstances surrounding the consultation process are relevant to a determination of a reasonable period. Proper consultation will include:

(a) the opportunity to meet and report back to employees;

(b) the opportunity to meet with the employer; and

(c) the request, receipt and consideration of information.

(6) The more urgent the need by the business to respond to the factors giving rise to any contemplated termination of employment, the more truncated the consultation process might be. Urgency may not, however, be induced by the failure to commence the consultation process as soon as a reduction of the workforce was likely. On the other hand the parties who are entitled to be consulted must meet, as soon, and as frequently as, may be reasonably practicable during the consultation process.”

 

ALTERNATIVES TO RETRENCHMENT

INTRODUCTORY REMARKS:

Employers seldom give consideration to the question, “What are the hidden costs if terminations are effected on the ground of retrenchment?”

They are significant, and often overlooked, which is why retrenchment exercises ought to be a measure of last resort, and not a first response. [See: Andrew Levy supra].

Cost factors could be divided to direct and indirect costs, of which some are procedural in nature.

As to indirect costs the time spent by senior management in lengthy consultation processes should be projected and quantified. Upon commencement with consultation, much of the pace or duration thereof may be determined by the employee side, the issues and the questions they raise. If a union is involved, the usual difficulties of delay and dates for meetings become an issue. The more the employer attempts to expedite the finalisation of consultation, the greater the weight of evidence against the employer that the employer failed to consult properly; alternatively in good faith.

Over and above the time management spend in consultation, there would be preparatory meetings, strategic planning and often the need to seek legal advice. Senior management members are involved and as a consequence they cannot focus on other core duties and obligations. The ‘involved process’ deflects senior management from their other duties; as a consequence the costs are perpetually increasing.

Other problems that may arise include –

  • Negatively affecting the company’s Employment Equity plans, goals and demographic profile.
  • Disturbing established work teams and thus resulting in productivity losses.
  • Losing skilled staff that is difficult to replace in the event of an upturn.
  • Affecting the representative status of a union[s] at the workplace and the possibility of ‘de-recognition’ as well as an increase in labour conflict potential due to inter union rivalry may follow.

As to direct costs the first is the payment of severance pay which often have to funded from current cash flow, notice provisions, accumulated leave pay due and payable, possible contractual payments such as pro-rata bonuses, long-service payments. Employers seldom made provision for these contingent liabilities.

Employers also often do not take into account that although the statutory minimum severance pay in terms of section 41(2) of the Basic Conditions of Employment Act, 75 of 1997 (as amended) (BCEA), to wit ‘severance pay equal to at least one week’s remuneration for each completed year of continuous service with that employer…’ constitutes a minimum amount. Trade unions often wish to negotiate a much more favourable severance package than the ‘bare minimum’ as prescribed in the BCEA!

Further lengthy negotiations may follow not confined only on the quantum of the severance package. All sorts of ancillary issues may be tabled for example a contractual obligation to re-hire retrenched staff in the event of vacancies arising in the post-retrenchment period.

Therefore, the costs albeit direct or indirect should be analysed and assessed prior to issuing a notice to the employee parties as stipulated in terms of the provisions of section 198 of the LRA.

 

WHAT ARE VIABLE ALTERNATIVES TO A RETRENCMENT?

Some that may be considered have been listed below:

  • Moratorium on appointments;
  • Cessation of overtime;
  • Lay-offs;
  • Short time;
  • Plant shutdowns;
  • Early retirements;
  • Voluntary separation;
  • General cost cutting actions;
  • Negotiated ‘wage freeze’ as an alternative to retrenchment;
  • Moratorium on wage/salary increases or ‘wage sacrifice’ for a defined period.

It follows that some of the proposed alternatives may be a matter of operational impossibility depending on the nature of the employers business; however, some may upon scrutinisation be a viable option especially after a proper cost-benefit analysis (CBA) has been done.

WHAT IS A COST-BENEFIT ANALYSIS? (CBA)

Employers may find it of considerable value to conduct a cost benefit analysis (CBA) prior to embarking on a retrenchment exercise. A CBA involves comparing the total expected direct and indirect cost/risk of retrenching employees against the commercial viability and practicality of implementing alternative measures to termination of employment, in order to establish whether the benefits of implementation of said alternative measures outweigh the direct and indirect costs/risks of retrenchment, and by how much.

Following hereunder writer deemed it appropriate to discuss some of the alternatives and to provide the reader with hopefully useful information as to the meaning of the various measures and legalities as well as potential difficulties in the implementation of the alternative under discussion.

LAY-OFFS

A lay-off can be defined or rather explained as the temporary suspension of a contract of employment because of an employer deciding to reduce his or her operations as a result of a shortage of orders, a temporary decline in the market, or other factors over which the employees have no control. Employees are re-employed when the demand for labour improves and they do not lose their seniority or other benefits, except remuneration, for the period during which they were laid off.

The contract of employment is therefore not terminated but is rather suspended. Employees receive no payment for the period and nor do their benefits such as pension or medical aid usually continue to accrue. However they do have the reassurance that either after a specific time or when matters improve, they will be able to take up their jobs again.

It follows that lay-offs cannot be unilaterally implemented by employers. The implementation of this measure should form the subject matter of agreement, except if there is provision for lay-off contained in a collective agreement struck at bargaining council or a plant-level agreement.

However, not all employers are aware of the legal consequences that may follow pursuant to the unilateral implementation of what the employer deemed to be a lay-off and a fair one for that matter.In an arbitration that served before writer the background an material facts were as follows: pursuant to the normal closure of business during the 2012 festive season Applicant, in accordance with contractual obligation tendered service on 14 January 2013.

Upon arrival at Respondent’s premises Applicant; as well as all employees in the employ of the Respondent were served with a letter/notice. The contents of the letter/notice were to the effect that Respondent would only commence with business on 01 March 2013, ostensibly for reasons based on “unforeseen financial and unresolved issues” (sic). Following thereon, Applicant made various attempts to contact the wife of Respondent’s only director, Mrs. N who was responsible for Respondent’s financial administration.

For the purpose of this article it was deemed appropriate to quote the contents of the letter/notice dated 14 January 2013 which was handed to the Applicant; as well as to all the Respondent’s employees:

“To all employees of SM (Pty) Ltd: Due to unforeseen financial circumstances and unresolved issues the company will not re-open on the 14 of January 2013 but only on 1 March 2013.

The company also in unambiguous terms wants to make it clear that this letter will by no means be seen as a dismissal letter (sic).

Regards

Management”

Following thereon, Applicant eventually managed to make contact with N and made enquiry as regards the status of the employment relationship whereupon N replied “I can do nothing”, or words to that effect.

On or about 12 February 2013 Applicant received an sms-message from the Respondent in which she was requested to furnish Respondent with address particulars which Respondent intended to use to forward form UI19 in terms of the provisions of the Unemployment Insurance Act 63 of 2001. [Normally used in SA by employees in order to claim unemployment benefits upon termination].

Legal considerations:

According to the authoritative publication by Grogan J: Dismissal (2010) JUTA 383, to avoid retrenchment, employees may be willing to agree to take unpaid leave or accept “lay-offs”. In such cases, the consent of employees or representatives must be obtained, unless the conditions of employment provide for such eventualities. In the matter before me the Applicant did not agree to a “lay-off”.

Therefore, by simply informing the Applicant of the “lay-off”; Respondent acted unilaterally and without consent of the Applicant. Notwithstanding the wording of the letter referred to above, that it should not be perceived as constituting a dismissal letter; in law the Respondent unilaterally amended terms and conditions of employment which amounted to a repudiation of the contract and in turn entitled the Applicant to accept and thereby cancel, or to hold the Respondent to the contract.

Suffice it to mention that it was found that by serving Form UI19 the Respondent without lawful grounds indicated to the Applicant a deliberate and unequivocal intention no longer to be bound by the contract. Therefore, Respondent was said to “repudiate” the contract.

In the light of the aforegoing it was found that the Applicant’s contract was terminated in terms of the provisions of Section 186(a) of the LRA. The Applicant was entitled to relief in terms of the provisions of Section 41(2) of the Basic Conditions of Employment Act – “Severance Pay”.

In another interesting and rather technical matter that served before Senior CCMA Commissioner GS Jansen van Vuuren, Galane / Green Stone Civils CC [2015] 1 BALR 60 (CCMA) the following events unfolded that led to a dispute referral to the CCMA.

After being placed on short time and then told to stay at home until further notice, the Applicant referred a dispute to the CCMA, claiming that he had been dismissed but not stating the reason for his alleged dismissal. The Respondent contended that the applicant lacked jurisdiction to entertain the matter because the applicant had not been dismissed, but rather had been instructed to remain at home until the respondent obtained building contracts.

The Applicant agreed that he had not been dismissed.

The Commissioner noted that the debate over whether section 191(5) of the LRA is “employee driven” in the sense that dismissed employees may choose between the Labour Court and statutory arbitration has now been settled by the Labour Appeal Court, which has held that jurisdiction is determined by the actual reason for the dismissal. Although the matter had been referred for arbitration, it was the arbitrator’s duty to establish jurisdiction.

Short time is not mentioned in the LRA, but is a method used to avoid retrenchment. This case was not about the interpretation of a collective agreement. However, the applicant was a permanent employee who had been left without income indefinitely.

This did not amount to short time, but was for all practical purposes a dismissal. The Commissioner held that refusing the applicant relief would in these circumstances license unscrupulous employers to evade their obligations to employees. While not specifically catering for situations in which the applicant found himself, the statutory definition of “unfair labour practice” was wide enough to embrace situations such as the present, if the applicant’s entitlement to his wages constituted a “benefit”.

There was no reason why the term “benefit” should not cover remuneration. The arbitrator, accordingly, found that the dispute concerned an alleged unfair labour practice, and that the matter was to be arbitrated as such.

The Commissioner ruled accordingly.

Of interest is that the arbitrator found that, “It is debatable whether the respondent’s action in casu could really be equated to or described as “short time”. The applicant’s working hours (and remuneration) had not merely been reduced as a temporary measure. It had, in fact, been cancelled indefinitely. Short time cannot be tantamount to “no time”.

So the long and the short of a lay-off scheme is that it should be negotiated with the employees as an alternative to retrenchment. Short time is a completely different concept than lay-off.

What Is A Rolling Lay-off? [See: Andrew Levy supra, 16].

A rolling lay-off is the name given to an arrangement whereby one twelfth of the labour force takes a month unpaid leave at a time; in other words, in any one particular month one twelfth of the labour force on unpaid leave which over the year allows for significant saving in labour costs but also spreads the cost of the saving equally amongst the employees.

It is possible that rolling lay-offs could be used not only on a monthly basis but say daily or weekly, so that the period of rotation and the period of absence is shorter and therefore has less of a cash flow implication insofar as the employees’ wages are concerned.

There are a number of examples of such arrangements being used in the textile industry but otherwise it has not been a very common practice in South Africa.

‘SHORT TIME’ / REDUCTION OF WORKING HOURS:

Short time or rather the reduction of working hours means that ordinary hours of work that have been temporarily reduced to avoid retrenchments, pending a return to full time work. It normally results from a slackness of trade, shortages of raw materials, breakdown of plant or machinery, the vagaries of the weather or other unforeseen circumstances.

In the authoritative publication by, Professor John Grogan ’Dismissal’ 2nd ed (2014) 453, ‘Short-time’, or a reduction of normal working hours, is a recognized and generally accepted practice in the industrial sector. Short-time is usually regulated in bargaining council agreements, which define the circumstances in which it can be implemented, the periods for which it can be worked, and the manner in which wages are calculated for the period concerned, The implementation of short-time wages are calculated for the period concerned. The implementation of short-time is an acceptable alternative to retrenchment even if there is no agreement to that effect.

MORATORIUM ON HIRING NEW EMPLOYEES:

According to Grogan supra 452, a moratorium on recruitment, coupled with the reduction of the number of existing employees by natural attrition (through death, retirement, disability, resignation or dismissal) is probably the least painful method of avoiding large-scale retrenchment. This alternative is obviously slow, and the employer has no control over the levels of employees who are lost in the process.

ELIMINATION OF OVERTIME:

The elimination or reduction of overtime is an obvious alternative to reducing the number of employees. The viability of this alternative depends on the nature of the business; it does not follow that an employer that regularly resorts to overtime work has no need to retrench – paying fewer workers to perform overtime may be less costly than retaining a large number of workers and abolishing overtime. [See: Grogan, supra 452].

VOLUNTARY RETRENCMENT:

Employees who wish to be ‘retrenched’ voluntarily may be permitted to leave with severance to leave with severance benefits. This alternative may require the employer to offer inducements to employees, such as relatively high severance pay. Such offers are normally made however, if compulsory retrenchment is seen as a possibility, the employer should consult the unions before offering voluntary retrenchment, as the terms on which voluntary retrenchment is offered may affect its success.

In order to avoid the depletion of personnel with special skills or experience employers usually reserve the right to accept or reject applications for voluntary retrenchment. Employers should ensure that they do not reject applications for voluntary retrenchment on an indefensible or discriminatory basis. [See: Grogan supra 452].

EARLY RETIREMENT:

Employees who have attained, or who will have attained normal retirement age at the date of the proposed retrenchment may be retired in terms of the rules of the employer’s retirement fund. If employees have already reached compulsory retirement age, they can be forced to take retirement. Those who are still younger than that age cannot be compelled to do so, as this could amount to a dismissal based on age discrimination. [See: Grogan supra 453].

TEMPORARY PLANT SHUT DOWNS:

Consideration could be given to the temporary closing of a plant as a result of economic and financial difficulties. Also termed as down time, to wit periods of inactivity, especially of a machine or plant while equipment is being repaired, set up or adjusted.

The above constitutes some alternatives to be considered before embarking on retrenchment.

Andrew Levy supra poses the question, “What strategies can save costs without actually terminating employees?”

Part of the process of consultation, is to see whether or not ways can be found to save jobs. In this regard, it is important to realize that employees must have the opportunity to put their suggestions forward, and that if the employer refuse them, then it is obliged to provide a reasoned response. This goes to the heart or raison d’être of the consultation process, or what consultation is all about.

The corollary is also important, and this is that if the employer has no good reason to refuse the employee’s suggestion, if commercially viable then a obligating follows to accept it – for the only reason for refusal then can be simply that it is the employees’ (or worse, the union’s idea!).

There is case law that an employer who refused the employees’ offer of each of them taking wage cut, (in order to save the shop steward’s job), acted unfairly. Interestingly enough, it does not seem as if the employer can cut wages to save jobs, but the employees can suggest it.

The LRA requires that ‘proper’ or ‘meaningful consensus seeking’ consultation take place, and hence this will; be the focus of attention when alternatives are examined. Included in this, is the need to examine ways in which the numbers of jobs affected might be reduced, or the timing might be affected.

Other than the measures listed above, the employer might consider:

  • A hiring freeze
  • Job sharing arrangements
  • Granting unpaid leave
  • No Sunday work
  • Transfer of employees to other departments
  • Transfer to other units in the organization
  • Retraining of individuals
  • Spreading retrenchments over time, in the hope that natural attrition will help resolve the problem.

CONCLUDING REMARKS:

STRESS RELATED BONUS

Employers can rest assured that unions may focus the attack on visible signs of opulence or income disparity, and suggest that the management car scheme should be changed, executive bonuses be withheld and the like. Ever so often, this is simply a way of getting under management’s skin; so to speak however, a rejection of such proposal out of hand will be done at the employer’s peril.

It was deemed appropriate to amplify the words of CCMA Director Nerine Kahn as having said: “This action plan is part of the CCMA’s job security strategy, which is underpinned by three principles: leave no stone unturned in the quest to find alternatives to retrenchment; where retrenchments are unavoidable, do not allow any worker to walk into the sunset without access to support mechanisms; and where business enterprises are in distress, in partnership, facilitate lifeboat rescue to prevent business closures.” [Emphasis added].

Johann Scheepers

September 26, 2015

Copyright:

Copyright reserved by the writer hereof. No part of this article/ guide may be reproduced, without prior written permission by the author.

The content of this article is intended to be general in substance and nature; to provide commentary on contemporary issues and where appropriate constitutes a general guide to the subject matter. Specialist advice should be sought about the reader’s specific circumstances.

The commentary expressed herein is that of the writer and not that of any professional organisation or entity with which the writer may be associated with.

4 Tips for Effectively Presenting Your Expert

Another insightful article by Julie Brook,Esq. It is submitted that the article is applicable and of general application to litigious processes in most countries. SA litigators will find it of practical use insofar as the need to lead expert witnesses in proving a claim of discrimination in remuneration practice is the cause of action.

CEBblog™

ThinkstockPhotos-537972277You have an expert witness set to testify on your client’s behalf. Never undermine the impact your expert’s testimony can have on your case. Don’t let him or her bore the jury—present your expert in the most positive and effective light possible.

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‘SEASONAL WORK’ v ‘FIXED-TERM CONTRACTS’ v ‘TEMPORARY CONTRACTS’?

SEASONAL WORK

“The first thing we do, let’s kill all the lawyers” Henry The Sixth, Part 2 Act 4, scene 2, 71–78 William Shakespeare.

At the outset the quotation should not be interpreted by the reader literally, it’s a lawyer joke“The first thing we do,” said the character in Shakespeare’s Henry VI, is “kill all the lawyers.” Contrary to popular belief, the proposal was not designed to restore sanity to commercial life. “Rather, it was intended to eliminate those who might stand in the way of a contemplated revolution — thus underscoring the important role that lawyers can play in society.” Dickstein Shapiro Morin & Oshinsky LLP Firm Profile.

INTRODUCTORY REMARKS

The lawmaker and the legal profession in South Africa have recently been under scrutiny and the subject matter of severe criticism by the public, politicians [‘the lawmakers’] and by all and sundry for various reasons.

However and as was reiterated above, the quotation cited calls for a contextual interpretation. The words uttered should be read and interpreted within the context of the work by the play write. A literal interpretation of the said uttering would lead to a manifest absurdity, repugnance, undue hardship or a result contrary to good order, the fundamental tenets of morality and popular religious belief.

Having clarified the quotation recorded above, the South African Labour Relations Amendment Act, 6 of 2014 (the LRA) came into effect on January 1, 2015. The amendments to SA labour legislation and especially those contained in Section 198 of the LRA have been the subject matter of much-heated debate and criticism.

The debate was between employment law and human resources practitioners since the amendments to the LRA came into effect on January 1, 2015 and after a transitional period April 1, 2015. The debate centred on what the legislature intended when saying that a labour broker employee is ‘deemed the employee of a client’.

[See: articles published LinkedIn: “Regulation of Non-Standard or A-Typical Employment – South Africa” July 05, 2015 and Interpretation ‘Deeming Provision’ S198A of the Labour Relations Act – South Africa” July 12, 2015 ]. 

The subject matter discussed in the articles referred to pertained to an arbitration award, Assign Services (Pty) Ltd // Krost Shelving & Racking (Pty) Ltd  & National Union of Metal Workers of South Africa (NUMSA)  CCMA Case Number ECEL1652-15  and a ruling, Refilwe Esau Mphirime // Value Logistics Ltd / BDM Staffing (Pty) Ltd BC Case Reference Number FSRBFBC34922.

Following the delivery of the Assign Services Award and the Value Logistics ruling legal representatives of the Respondent parties and employer organisations acting on behalf of Temporary Employment Services [TES] or as they are commonly known as labour brokers gave notice in the media that the cited award and ruling would be taken on review in the SA Labour Court.

According to a posting in LinkedIn as to the status of the pending two review applications the following has been reported, “CAPES NEWS –

The way forward:

The legal team has already been briefed to draft urgent review papers. Review papers will be filed by Friday 3 July 2015.

Arrangements are being made for this matter to be heard on an urgent basis. We plan on having it heard before the end of July 2015.

In the interim, it is intended to approach the CCMA and bargaining councils with a view to putting similar cases on hold pending the Labour Court ruling. [Emphasis added].

It has always been known that this issue will not end at the CCMA. Accordingly, CAPES urges all to recognise that there is every chance of the Labour Court setting aside this ruling, and therefore planning and strategy should take this into account.”

Writer deemed it appropriate to reply in good faith to the posting as quoted, “Thank you J…and especially to ‘CAPES NEWS’…for the news! Let us pray that all interested parties would abide by the Court’s judgment in compliance with the legal maxim ‘id certum est quod certum reddi potest’, or ‘whatever can be made certain, is certain’, if only by an independent third party deciding the issue’ :-).

Suffice it to record that all interested parties are awaiting the SA Labour Court’s judgment[s]. However, in the interim dispute referrals in all probability are lodged. The referrals would in all probability be entertained by the Commission for Conciliation, Mediation & Arbitration (CCMA).

PURPOSE OF THE ARTICLE

At the outset it should not be recorded that postings on the LinkedIn network should preferably be brief and not created; nor should it be perceived by the reader as if a comprehensive or an authoritative work of reference on the subject matter. The objective is to edify, within the confines of the medium and to generate interest and possible debate on the subject matter.

The purpose of the article is to briefly address the substance and nature of the legislative amendments, if any as they may have a bearing on employment relationships commonly referred to, or termed in agreements or contracts as, ‘Seasonal Work’, ‘Fixed-Term Contracts’ and ‘Temporary Contracts’.

At first glance and upon interpretation of the wording of the three contractual relationships, ‘Seasonal’, “Fixed-Term’ and “Temporary’ it is very much apparent that the relationship is bound to come to an end in some way or another.

Therefore, there could be no talk or rather expectation of security of tenure for example as in the event of a contract referred to as ‘permanent’ or an ‘indefinite contract’.

The celebrated author Professor John Grogan in the authoritative publication, J Grogan “Workplace Law” 10th ed (2009) 42, edifies that the label ‘indefinite-period’ employment contract is something of a misnomer, because an employment contract expires automatically when the employee dies or reaches the agreed or normal retirement age.

A contract of employment is indefinite in this sense only—where the parties do not specify a date of termination, the contract then endures until it is terminated by agreement, by the giving of the contractually stipulated or reasonable notice of termination, or until either party elects to terminate on fundamental breach by the other, or on retirement at the agreed age, or on one of the other grounds accepted in law.

The words of Benjamin Franklin, one of the founding fathers of the United States, as recorded in a letter to Jean-Baptiste Leroy, 1789 came to mind wherein he wrote, ”Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.”

The same could be said about the ‘permanency’ of employment relationships albeit of relevance in South Africa or anywhere else for that matter.

Pursuant to the posting of the first article, South African readers may find of interest the comments made as to the subject matter of the article, by Professor George J. Gliaudys Jr, Dean at Irvine  University College of Law, Los Angeles, USA:

“Dear Colleague in Law,

The broader context of temporary employees is that there is an over-supply of labor in many of the developed countries including your own SA these days. The need for agile management of human resources and fiscal expenditures make temporary employee resourcing and utilization almost a mandatory best business judgement principle for corporate leadership in keeping with their fiduciary responsibilities to the shareholders to increase share values.

It might be a good thing to simply admit to this business reality and not try to make a temporary worker obtained to fill a work need of a short duration into a “quasi” permanent employee through adding benefits by the company that gets them from an employment service company specializing in temporary labor provision to a corporation needing such tabor resourcing flexibility

It’s an issue that resonates throughout the world these days. I’m pleased that you are in a position to shape its contours as a Commissioner

George”

Against this background the article was conceptualised and drafted.

SECTION 198B OF THE LRA : FIXED-TERM CONTRACTS

Clause 36 of the Explanatory Memorandum on the Objects of the Labour Relations Amendment Bill No. 16B of 2012 – Regulation of Non-Standard Employment and General Provisions (Chapter IX) that led to the amendments to the LRA ‘Non-standard’ employment in the Labour Relations Amendment Act of 2013 (LRAA) refers to;

Part-time work;

Fixed-term contract work; and

– Employment through labour brokers or rather Temporary Employment Services (TES).  

In an article published in the authoritative publication by Professor J Grogan, “The New Dispensation – The Amendments to the Labour Relations Act, Part 1 – ‘Fixed Term Contracts” Employment Law Journal, (June 2014) the learned author observes that prior to the amendments, the only protection afforded employees on fixed-term contracts has been that provided by section 186(1)(b) of the LRA,  the right to sue for unfair dismissal if the employee acquired a reasonable expectation that the fixed term contract would be renewed “on the same or similar terms”.

Reasonable expectation of permanent employment?

In an article published in an authoritative publication by Professor PAK Le Roux, “Amendments to the Labour Relations Act – Part 1: Proposed changes on unfair dismissal, on-standard employment. Strikes and lockouts” Contemporary Labour Law (May 2012) Vol 21, 90 the learned author observes that the most important amendment to the definition of dismissal is that relating to the expiry of fixed term contracts. In terms of s 186(1)(b) a dismissal takes place if an employee employed in terms of a fixed term contract reasonably expected that the employer would renew the contract on the same or similar terms but the employer did not renew the contract, or offered to renew it on less favourable terms.

Employees have tried to argue that this section also covers the situation where an employee alleges that she reasonably expected “permanent employment” – the term permanent employment referring to the situation where the employee would not be employed in terms of another fixed term contract, but would be employed in terms of contract for an indefinite period of time.

After several years of controversy and conflicting decisions, the Labour Appeal Court held, in University of Pretoria v Commission for Conciliation, Mediation & Arbitration & others (2012) 23 ILJ 183 (LAC) that a reasonable expectation of permanent employment does not fall within the definition for dismissal. The LRAA in effect changed the LAC’s decision in University of Pretoria.

The controversy over whether this right extends to situations where the employee expected permanent employment has been resolved.

Now, the period for which employers may keep employees on fixed term contracts is limited, because these employees are also performing “temporary service”. For this purpose, “fixed-term contract bears its standard meaning a contract that terminates on the occurrence of a specified event or completion of a specified task or project or on a fixed date other than an employee’s normal or agreed retirement age.” [See: section 198B(1) of the LRA].

Section 198B(1) Definition of a fixed-term contract:

 Fixed-term contract is one which expires upon:

(a) The occurrence of a specified event;

(b) The completion of a specified task or project;

(c) A fixed date, other than an employee’s  normal or agreed retirement Age. (The Social Security legislation has fixed the retirement age, however policies of companies may provide otherwise).

In terms of s 198B (2) (a) the protection provided for In section 198B only applies to employees employed on fixed-term contracts who earn below the BCEA-threshold. [Currently R205 433.30 per annum].

It must however, be home In mind that the amendments to Section 186, which allows for a new category of dismissal in that fixed-term employees may prove a legitimate expectation to be Indefinitely employed applies to all employees, irrespective of earnings.

Successive Fixed-Term Contracts:

Section 198B (3) provides for employers to employ employees on fixed-term contracts or successive fixed term contracts for longer than 3 months only if:

(a) The nature of the work is of a limited or definite duration or;

(b) The employer can demonstrate any other justifiable reason for fixing the term of the contract.

Section 198B(4) contains a non-exhaustive list of justifiable reasons.

What could be ‘justifiable reasons’ in terms of Section 198B(4)?

(a) the replacement of an employee who Is temporarily absent;

(b) a temporary increase in work which is not expected to endure beyond 12 months;

(c) a student or graduate;

(d) a project that has limited or defined duration;

(e) a non-citizen who has been granted a work permit;

(f) seasonal work;

(g) public works or job creation scheme;

(h) a project funded by an external source;

(i) the employee has reached the normal or agreed retirement age.

According to Grogan referred to supra among reasons that may be considered ‘justifiable’ in this regard are such factors as seniority, experience, length of service, merit, and “other criteria of a similar nature”.

Here again there is ‘boundless scope for controversy.’ Employees on 24 months on fixed term contracts are entitled to severance pay on termination, unless the employer arranges alternative employment [See: sections 198B( 10) and (11) of the LRA].

The effect of contravention of Section 198B?

Where employment occurs in contravention of Section 198B (3) ‘Successive Fixed-Term Contracts’  such employment is deemed to be of an indefinite duration and the employees are then accordingly considered permanent.

Employees employed in terms of fixed-term contracts for longer than three months should not be treated less favourably than those employees employed on a permanent basis performing same or similar work unless there are justifiable reasons for different treatment. The Employer must prove the existence of any justifiable reasons. [See: section 198D (2) of the LRA infra ].

Employers must provide an employee employed in terms of a fixed-term contract with equal access to opportunities to apply for vacancies.

Provisions of Section 198D(2) of the LRA – controversial?

“(2) For the purposes of sections 198A(5), 198B(8) and 198C(3)(a) ,a justifiable reason includes that the different treatment is a result of the application of a system that takes into account—

(a) seniority, experience or length of service;

(b) merit;

(c) the quality or quantity of work performed; or

(d) any other criteria of a similar nature,

And such reason is not prohibited by section 6(1) of the Employment Equity Act, 1998 (Act No. 55 of 1998, as amended).” 

BAD FAITH BARGAINING 2

*Commentary:

It is important to draw a clear distinction between what are considered as ‘justifiable reasons’  for fixing a ‘Fixed-Term Contract’ in  terms of section 198B(4)  – see the grounds as listed supra (a) to (i); with the ‘justifiable reasons for different treatment’ in terms of section 198D of the LRA.

Section 198D “General Dispute Resolution Provisions”  provides that any disputes arising from the interpretation and application of sections 198A to 198C may be referred to CCMA or Bargaining Council (with jurisdiction).

It is submitted that Commissioners and BC panellists by virtue of s 198D have the power to interpret the provisions of section 198A to section 198C, but also have the power to apply the amendments. It is trite that interpretation and application also include enforcement and compliance. 

Section 198D(2) stipulates as is set out hereunder:

[T]he justifiable reasons for differentiation as previously referred to is set out namely:

It refers to the application of a system that takes into account: 

– Seniority, experience or length of service; 

– Merit; 

– The quality or quantity of work; 

– Any other criteria of a similar nature, and such reason is not prohibited by the EEAA.”

*[The above commentary as to the importance of the distinction, between justification in fixing a term as provided for in section 198B(4) and justification to treat employees differently (section 198D) has been inserted for the purpose of clarification and courtesy of Senior CCMA Commissioner Eleanor Hambidge].

Commissioners of the CCMA in the analysis of cases involving fixed-term contracts would in all probability firstly, determine whether there Is indeed a valid fixed-term contract. If there is not a valid fixed-term contract in place, then the employee Is employed indefinitely.

Indefinite employment may terminate should a fair reason therefore exists, whereas a fixed-term contract terminates on the occurrence of a specified event, task or date.

What would be regarded as a ‘valid fixed-term contract’?

There are 3 basic requirements for a valid fixed-term contract:

  1. Must be in writing;
  2. Must state the term when It expires, which must be:

– Upon the occurrence of a specified event, or

– Upon the completion of a specified task or project; or

– On a fixed date, other than retirement age ; and

If the contract is longer than 3 months or if the employee has previously been employed for not less than 3 months, the fixed-term contract must state the reason –

If any of these are not met:

– Then it is not a fixed-term contract;

– Employment is of indefinite duration;

– The employee must be regarded as being employed on an indefinite basis; and

The provisions of section 189 of the LRA apply to any dismissal for operational requirements.

Finally, fixed-term contracts and the terms agreed upon should be in accordance with and subject to the test commonly used in assessment the validity of contractual arrangements namely that there should be consensus between the contacting parties, or in other words that there was a meeting of the minds. [See: RH Christie et al “The law of contract in South Africa” 6th ed (2010) 1, where referral is made to Saambou-Nasionale Bouvereniging v Friedman 1979 3 SA 978 (A) 993F Jansen JA, with whom the other four judges concurred, expressed the view that:

“In die algemeen word geleer dat die grondslag van ‘n ooreenkoms consensus ad idem, wilsooreenstemming tussen die partye, is. Ons bronne, literatuur en regspraak is deurspek met ‘n terminologie en stellings wat daarop dui dat met consensus bedoel word die saamval van wat elke party werklik (psigologies) wil. As dit inderdaad die grondslag van ooreenkoms en kontraktuele aanspreeklikheid is (die ‘wilsteorie’) dan volg die antwoord op die onderhawige geval byna vanselfsprekend” ].

For any fixed-term contract longer than 3 months, including the period of any previous contracts: that the reasons for fixing the term was objectively justified.

CONCLUSION

It was deemed appropriate to under this heading refer to the Explanatory Memorandum on the Objects of the Labour Relations Amendment Bill No. 16B of 2012 – Regulation of Non-Standard Employment and General Provisions (Chapter IX) that led to the amendments to the LRA – ‘Non-standard’ employment in the Labour Relations Amendment Act of 2013 (LRAA).

Specific reference has been made to “Insertion of section 198B of Act 66 of 1995 – fixed-term contracts for employees earning below earnings threshold” by virtue of its importance in interpreting the purpose and objects of the amendments insofar as the subject matter of this article is concerned.

An amendment to section 186 – explained earlier – provides additional protection against dismissal for all employees employed on fixed-term contracts. Like section 198A, the new section 198B introduces additional protection for more vulnerable workers and applies only to employees who earn on or below the threshold prescribed in terms of section 6(3) of the BCEA.

The section does not apply to employees who are employed in terms of a statute, sectoral determination or collective agreement that permits the conclusion of a fixed-term contract.

In addition, and in order to accommodate new and small businesses, the section does not apply to:

 an employer that employs less than 10 employees;

 an employer that employs less than 50 employees and whose business has been in operation for less than two years.

These exclusions do not apply if the employer conducts more than one business or the business was formed by the division or dissolution for any reason of an existing business.

An employer is permitted to employ an employee to whom the new section applies on a fixed-term contract or successive fixed term contracts for up to three months. An employee may be employed on a fixed term contract for a longer period if the nature of the work for which the employee is engaged is of a limited or definite duration or the employer can demonstrate any other justifiable reason for fixing the term of the contract.

The period of three months may be varied by a sectoral determination or a collective agreement concluded at a bargaining council.

The section sets out a non-exhaustive list of ten justifiable reasons for fixing the term of a contract.

An employee to whom the section applies who is employed for a period longer than three months is deemed to be employed for an indefinite period unless the nature of the work is of a limited or definite duration or the employer can demonstrate any other justifiable reason for fixing the term of the contract.

An employer who employs an employee to whom the section applies on a fixed-term contract or who renews or extends a fixed term contract must do so in writing and must state the reason that justifies the fixed-term nature of the employment contract.

An employer bears an onus to prove in any relevant proceedings that there is a justifiable reason for fixing the term of the contract and that the term was agreed.

The new section contains additional protections for employees to whom it applies:

 An employee employed on a fixed-term contract for more than three months (or whatever period is determined by a sectoral determination or collective agreement concluded at a bargaining council) must be treated on the whole not less favourably than an employee on an indefinite contract performing the same or similar work, unless there is a justifiable reason for treating the employee differently. What may constitute a justifiable reason for this purpose is dealt with in section 198D.

 An employer must provide an employee employed on a fixed-term contract with the same access to opportunities to apply for vacancies as it provides to an employee employed on an indefinite contract of employment.

 If a fixed term of longer than 24 months can be justified under the section, the employer must, on expiry of the contract and subject to the terms of any collective agreement regulating the issue, pay the employee one week’s remuneration for each completed year of the contract.

The employer is not obliged to make this payment if, prior to the expiry of the fixed-term contract, it offers the employee employment or procures employment for the employee with a different employer which commences no later than 30 days after expiry of the contract and on the same or similar terms.

The commentary in the article referred to supra by PAL le Roux was also deemed of substantial interest and should be recorded herein.

According to the learned author it is difficult to predict how these provisions relating to non-standard employment will affect employer hiring and employment practices and the consequences of their application are difficult to predict.

Much will depend on the how arbitrators interpret concepts such as “comparable employees”, “similar work”, “justifiable reasons” and what they will regard as “on the whole not less favourable” terms and conditions of employment.

“What is clear is that arbitrators will face a difficult task in this regard and it is hoped that they will be given sufficient training to be able to handle these issues. It seems likely that these provisions will lead to a drop in the use of these types of employees – if only because employers will want to avoid the uncertainties of litigation on these issues.”

 

Johann Scheepers

July 24, 2015

Copyright:

Copyright reserved by the writer hereof. No part of this article / guide may be reproduced, without prior written permission by the author.

The content of this article is intended to be general in substance and nature; to provide commentary on contemporary issues and where appropriate constitutes a general guide to the subject matter. Specialist advice should be sought about the reader’s specific circumstances.

The commentary or opinions expressed herein is that of the writer and not that of any professional organisation or entity with which the writer may be associated with.

INTERPRETATION ‘DEEMING PROVISION’: THE LABOUR RELATIONS ACT – SOUTH AFRICA

TIME TO TEMP

“Certainly no less important than the often repeated statement that the words and expressions used in a statute must be interpreted according to their ordinary meaning is the statement that they must be interpreted in the light of their context. But it may be useful to stress two points in relation to the application of this principle.

The first is that ‘the context’ as here used, is not limited to the language of the rest of the statute regarded as throwing light of a dictionary kind on the part to be interpreted. Often of more importance is the matter of the statute, its apparent scope and purpose, and, within limit, its background. [Emphasis added].

[ Ngobo J, Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs & Tourism & others 2004 (4) SA 490 (CC); [also reported at 2004 (7) BCLR 687 (CC) – Ed] at para [89] citing Jaga v Dönges 1950 (4) SA 653 (A)].

SECOND CCMA RULING – INTERPRETATION SECTION 198A OF THE SA LABOUR RELATIONS ACT

[Refilwe Esau Mphirime // Value Logistics Ltd / BDM Staffing (Pty) Ltd BC Case Reference Number FSRBFBC34922 – Suria van Wyk, Commissioner].

INTRODUCTORY REMARKS

This constitutes a follow up article to the one-posted July 05, 2015, “Regulation of Non-Standard or A-Typical Employment – South Africa” wherein the award in the matter Assign Services (Pty) Ltd (Applicant) // Krost Shelving & Racking (Pty) Ltd (First Respondent) & National Union of Metal Workers of South Africa (NUMSA) (Second Respondent) CCMA Case Number ECEL1652-15.

In the first article the award referred to above was considered and brief commentary made as to the amendments to the South African Labour Relations Amendment Act 6 of 2014 (LRA) especially provisions that afforded protection to employees of labour brokers or rather Temporary Employment Services (TES) and those performing Part-time work as well as Fixed-term contract work.

Writer indicated that a follow up article would be published wherein an analysis of Value Logistics award/ruling supra, handed down by South African Commission for Conciliation, Mediation & Arbitration (CCMA) would be made with referral to the respective submissions and arguments raised by the legal representatives of the parties and the findings and determinations made by the presiding Commissioner.

Pursuant to the posting of the first article, South African readers may find of interest the comments, as to the subject matter of the article, made by Professor George J. Gliaudys Jr, Dean at Irvine University College of Law, Los Angeles, USA:

Dear Colleague in Law,

The broader context of temporary employees is that there is an over-supply of labor in many of the developed countries including your own SA these days. The need for agile management of human resources and fiscal expenditures make temporary employee resourcing and utilization almost a mandatory best business judgement principle for corporate leadership in keeping with their fiduciary responsibilities to the shareholders to increase share values.

It might be a good thing to simply admit to this business reality and not try to make a temporary worker obtained to fill a work need of a short duration into a “quasi” permanent employee through adding benefits by the company that gets them from an employment service company specializing in temporary labor provision to a corporation needing such labor resourcing flexibility.

It’s an issue that resonates throughout the world these days. I’m pleased that you are in a position to shape its contours as a Commissioner. 

George”

In an article by Hugo Pienaar et al, ”Ruling on the Deeming Provision – CCMA Ruling on the Interpretation of the Deeming Provision in Section 198A of the Labour Relations Act” Employment Alert (July 1, 2015) DLA Cliffe Dekker Hofmeyer, 1-2, the learned authors submit that the various interpretations afforded to the deeming provision have been hotly debated.

The debate was between employment law and human resources practitioners since the amendments to the LRA came into effect on 1 January 2015 and 1 April 2015. The debate centred on what the legislature intended when saying that a labour broker employee is deemed the employee of a client.

Does the employee transfer from the labour broker to the client, with the client becoming the sole employer of the person, or does the provision create a dual employment relationship – with both the client and labour broker being the employers?

The Assign Service award is summarised by the authors supra as set out hereunder:

The reasons for the interpretation advanced by the CCMA are, amongst others, the following:

■ Section 198A(3)(b) is to be interpreted in a manner akin to how the law deals with adoption. A legal fiction is created in that the adoptive parent becomes the parent of the adopted child. The biological parent and the adoptive parent are not dual parents.

■ A greater amount of confusion and uncertainty is created by the “dual employment position”, for example;

Which employer is responsible for the discipline of the deemed employees?

– Which employer’s disciplinary code applies?

– How does one deal with the issue of reinstatement?

■ Section 198A does not apply in circumstances where the work performed by the TES employees for the client is of a genuinely temporary nature.

■ The joint and several liability provision contained in s198(4A) does not refer to joint and several liability in terms of s198A(3)(b) but rather, only refers to joint and several liability in terms of s198(4).

The mere fact that proceedings may be instituted, or awards enforced, against both the client and the TES does not axiomatically mean that the parties are dual employers. It is simply an issue relating to the parties’ liability.

■ Section 198A(3)(b)(ii) provides that TES employees not performing temporary services are, “subject to the provisions of s198B, employed on an indefinite basis by the client.

■ The memorandum of objects to the LRA amendments provides that, if TES employees “are not employed to perform temporary services, they are deemed for the purposes of the LRA to be the employees of the client and not the TES“. [Emphasis added].

According to one of the authors, Kirsten Caddy, the impact of the CCMA’s interpretation is that:

– once a client of a TES is deemed to be the sole employer of TES employees, those deemed employees must, for example, be included in any retrenchment procedure that the client may embark upon;

– employees must be provided with terms and conditions of employment, by the client, that is no less favourable to those enjoyed by comparable indefinite employees of the client;

– said employees will remain the employees of the client after the termination of the commercial agreement between the TES and the client and can institute any employment-related disputes against the client without having to join the TES to those proceedings.

The author then comments further that the Assign Service award is likely to be taken on review to the Labour Court. Accordingly, this is probably not the end of the “sole” versus “dual” employer debate.

“However, employers should be cognisant of the preliminary stance taken by the CCMA in dealing with the interpretation of the deeming provision.”

“Whilst CCMA awards do not create legal precedent that must be followed by other commissioners, the ruling provides a glimpse in what may be the view on this issue at the statutory body”.

CONFUSED MAN

Binding effect of precedents:

At this juncture, it was deemed important to record that insofar as the amendments to Section 198 of the LRA are concerned no legal precedent exists that Commissioners should follow when making findings and determinations/rulings insofar as the interpretation and application of the amendments are concerned.

This notwithstanding, the absence of legal precedent does not absolve the presiding Commissioner from his/her statutory duty to follow, apply and adhere to the letter and spirit of the Constitution of the RSA, 1996.

Therefore, a purposive approach to the interpretation of the LRA is required, having regard to Section 1 “Purpose of this Act”; in compliance with and to give effect to the provisions of Section 23 of the Constitution – “Labour relations – (1) Everyone has the right to fair labour practices…(2)…”

Contextual or purposive approach to interpretation?

– Where the literal approach leads to absurdity, a contextual approach would be applied. [Application of the Interpretation Act 33 of 1957];

– This includes the reading or identification of ‘interpretive material’ contained within the script or wording of the LRA and other authoritative material which could be of ‘interpretive assistance’ such as background information, explanatory memorandum, punctuation and etcetera; and

– Entrenchment or prioritisation of the purpose of the Act versus the intention of the legislature.

As to the ‘precedential value’ or binding status of the award of one Commissioner vis-à-vis that of another, in Mustek Ltd v Tsabadi NO and others [2013] 8 BLLR 798 (LC) the Labour Court held that Commissioners are not bound by earlier arbitration awards.

The Court held at [13] “It is fatuous to suggest that one Commissioner should complaisantly endorse the findings of another Commissioner where the two matters have their origins in the same incident. The rationale for the first Commissioner’s decision has to be analysed. There can be any number of reasons why that Commissioner arrived at the conclusion he did. To argue that a Commissioner is bound by the findings of another Commissioner is repugnant to the rules of precedent”. [Emphasis added].

However, in Gcaba v Minister of Safety & Security & others (2010) 31 ILJ 296 (CC); [2009] 12 BLLR 680 (CC) the Constitutional Court held that CCMA commissioners are bound to follow the judgments of the Labour Court, the Labour Appeal Court, the Supreme Court of Appeal and the Constitutional Court irrespective of their views as to the correctness of such judgments.

Subject to certain exceptions, Commissioners are also bound to follow awards and rulings of their colleagues. Such judgments, awards and rulings are to be followed because it is in the interests of:

 Legal certainty;

 Equality before the law; and

 The satisfaction of legitimate expectations.

In Le Roux v CCMA & others [2000] 6 BLLR 680 (LC) at 687-668, the Court held that if divergent views were expressed in judgments of a Court and there is no binding decision of a higher Court, then Commissioners may properly select that view which they regard to be more in accordance with the proper interpretation of the LRA.

On a debatable point of law where the Labour Court has expressed its views with diffidence there may be room in some cases for a commissioner, after a careful consideration of the problem in accordance with proper legal principles, to arrive at a different conclusion. [Le Roux v CCMA & others (supra)].

Where a Court whose decisions are binding made remarks in passing which remarks had no bearing on the outcome of the case i.e. was not the reason for the decision, Commissioners are not bound to follow such views although it should be regarded as persuasive. They should only deviate from such views if satisfied that it is wrong and in such event, reasons for deviating should be given.

Only in exceptional cases may a previous award be deviated from i.e. only

 If the commissioner is satisfied that the previous award was wrong; or

 Where the point was not argued; or

 Where the issue is in some legitimate manner distinguishable.

[Gcaba v Minister of Safety & Security & others (supra) at par 59; see also Daniels v Campbell NO & others 2004 (5) SA 331 (CC)]

Writer is of the considered opinion that if there is no binding authority on an issue, Commissioners must interpret the LRA themselves.

[See: CCMA Guidelines: Misconduct Arbitrations (the Guidelines), 3 – 4 ‘Interpretation of the law’[at 5] [A]n arbitrator who adopts a different approach must set out the reasons for doing so in the relevant award…

[At 10]… [A]n arbitrator must make decisions that are fair and reasonable in the light of the specific circumstances of the case. Section 33(1) of the Constitution states that everyone has the right to administrative action that is lawful, reasonable and procedurally fair. Every decision by an arbitrator must comply with these three elements].  

It is submitted that although the Guidelines referred to above apply to arbitrations, where the termination was based on the ground of ‘misconduct’ the legal principle as it pertains to the rules of precedent, as referred to and cited above would also be applicable insofar as the interpretation and application of  Section 198, or any other provision of the LRA is concerned.

This notwithstanding, an award or ruling by a Senior Commissioner of the CCMA has persuasive value especially in the event that an arbitration award/ruling is reported in a recognised authoritative law journal.

Having attempted to clarify the binding effect of precedents insofar as awards and rulings of Commissioners are concerned writer deemed it appropriate to make use of the opportunity to clarify a misconception prevalent amongst some users of the CCMA, and in all probability amongst some legal representatives appearing before the Commission.

From postings in blogs on LinkedIn and according to hearsay some persons are of the firm belief that Commissioners of the CCMA from time to time ‘act upon instruction or directive’, one would guess by a person[s] in authority to interpret and apply the law in accordance with the dictates of said ‘instruction’ or ‘directive’.

Furthermore and so it is believed that Commissioners, ‘so strictly charged, upon pain of punishment’ to desist from any deviation in an award/ruling in accordance with the prescripts of said ‘instruction’ or ‘directive’ and if not would do so at his/her peril. [Writer’s interpretation].

Most readers would find such notion as peculiar and highly improbable, however the same or similar argument was raised by one of the parties in an application for the recusal of the presiding Commissioner in the matter Refilwe Esau Mphirime // Value Logistics Ltd / BDM Staffing (Pty) Ltd which ruling forms the subject matter of this article.

Suffice it to place on record that writer has not come across any such directive or instruction. It simply constitutes a fallacy and may have been designed by a party as a stratagem to create a possible ground for review in the event of a potentially unsuccessful claim or defence.

In the article by Pienaar referred to above the learned author succinctly captured the interpretation of the amendments to the LRA, in particular section198A(3)(b)(i) (“Deeming Provision“). The author observes that two main approaches in the interpretation of the deeming provisions emerged namely; the Sole Employer Approach and the Dual Employment Approach in respect of employees who earn below the threshold stipulated in the Basic Conditions of Employment Act, No 75 of 1997, and who perform work for a period exceeding three months. [Emphasis added].

Referral was made to the matter Refilwe Esau Mphirime // Value Logistics Ltd / BDM Staffing (Pty) Ltd (Value Logistics) wherein the two approaches referred to supra were placed at the forefront of the National Bargaining Council for the Road Freight and Logistics Industry (“NBCRFLI“) to establish the identity of ‘the true employer’ of the TES employees.

The presiding Commissioner acting under the auspices of the NBCRFLI ruled that employees, who are not performing temporary services for the client of the TES, become the employees of the client only and any claim brought by the employees in terms of the LRA must be brought against the client. The Commissioner in Value Logistics therefore favoured the Sole Employer Approach.

Of importance is that the Commissioner in the matter Assign Services (Pty) Ltd // Krost Shelving & Racking (Pty) Ltd & National Union of Metal Workers of South Africa (NUMSA) found that Section 198A (3)(b) should be interpreted to mean that “deemed” means that the client becomes the sole employer of the placed workers for the purposes of the LRA, provided that they earn below the threshold and that the three months period referred to supra elapsed.

Therefore, the Commissioner in Value Logistics and the one in Assign Services interpreted Section198A (3)(b)(i) of the LRA in accordance with the term coined by Pienaar supra as the Sole Employer Approach.

The two approaches have been well defined by Pienaar and it was deemed appropriate to record them hereunder:

The Sole Employer Approach:

– In terms of the Sole Employer Approach, TES employees who are not performing temporary services for the client of the TES, become the employees of the client and the client becomes the only employer of the TES employees.

This approach suggests that the employees are transferred to the client and that the TES is removed from the employment relationship. [See: J Grogan, “The New Dispensation – The Amendments to the Labour Relations Act, Part 1 – ‘Non Standard Employment” Employment Law Journal, (June 2014) the learned author observes, “that the employees are deemed by law to be employees of the client…they become the client’s employees de facto and de jure..the labour broker simply drops out of the picture after three months…the employee’s contract transfers (a la section 197) to the client”.

The Dual Employer Approach:

– In terms of the Dual Employment Approach, the Deeming Provision, read together with Section 198(4) and 198(4A) of the LRA, creates a dual employment relationship (for the purposes of instituting legal proceedings and executing same in certain instances only) and the employees therefore have two employers in this regard, the TES and the client.

[See: J Grogan, “The New Dispensation – The Amendments to the Labour Relations Act, Part 1 – ‘Non Standard Employment” Employment Law Journal, (June 2014), “the word ‘deemed’ carries a different meaning;…while the broker remains the actual employer, the client is simply assumed to be the employer in the sense that the client now assumes the obligations and acquires the rights of an employer vis-à-vis the TES employee…the TES remains the employer in a kind of suspended sense”.

This would mean that the TES could lawfully continue to pay the employee, and perform other administrative functions for the client in respect of the employee.

In the article by Pienaar the author argues that the Ruling in Value Logistics is subject to scrutiny due to the fact that it suggests that the TES is removed from the employment relationship, which inter alia infringes the TES’s constitutional right to choose their profession freely.

Nothing in the amendments to the LRA suggest a ban on TES. Other impractical implications arising from such an approach includes the fact that the joint and several liability, as well as the equality provisions in the LRA will become superfluous. This goes against the proximate reason for the amendments to the LRA.

“In the premises, the said attorneys firm intends to approach the Labour Court to have the Value Logistics Ruling reviewed”. [Hugo Pienaar and Joloudi BadenhorstCliffe Dekker Hofmeyr Attorneys at Law].

JUDGE WONT BUDGE

DISCUSSION AND BRIEF ANALYSIS OF THE RECENT CCMA AWARD / RULING

[Refilwe Esau Mphirime // Value Logistics Ltd / BDM Staffing (Pty) Ltd BC Case Reference Number FSRBFBC34922 – Suria van Wyk, Commissioner].

In the Value Logistics matter and prior to the commencement of the proceedings the presiding Commissioner had to deal with all sorts of preliminary applications in the form of firstly, a condonation application on for the late filing of an application for recusal (sic).

The ‘Application for Condonation for the late filing of an application for Recusal’, or so it was termed for the sake of clarity by the Commissioner was brought by BDM Staffing (Pty) Ltd, (BDM Staffing), initially cited as the Respondent party to the dispute that served before the National Bargaining Council for the Road Freight and Logistics Industry (NBCRFLI).

BDM Staffing participated in conciliation proceedings and upon non-resolution of the matter it was referred for arbitration.

Despite the fact that parties at conciliation indicated that they would not object to the Commissioner being the arbitrating commissioner, no proof of service of a notice of objection, in terms of section 136(3)-(4) of the LRA was ever filed with the CCMA, or the Bargaining Council.

An objection filed in terms of section 136(3) of the LRA has to be directed to the forum, i.e. the CCMA or the relevant Bargaining Council and is not an application that is brought before a presiding commissioner.

The application for recusal filed by BDM Staffing, was not an objection as stipulated in terms of section 136(3) of the LRA, but was an application for recusal and condonation ostensibly in terms of the NBCRFLI Dispute Resolution Rules.

An application for recusal does not fall within the ambit of rule 33 of the Bargaining Council rules. There are no time limits set on when an application for recusal must be filed and therefore no condonation was required.

Therefore, BDM Staffing as the saying goes ‘got its wires crossed’ in that it from the outset brought an application for condonation in error and in a dual format of byzantine complexity, to wit ‘application for condonation of late filing of application for recusal’.

In the Ruling it was confirmed that BDM Staffing (Pty) Ltd indicated during the arbitration held on 25 May 2015 that an application for recusal would be filed in conjunction with its Heads of Argument on the interpretation of section 198A(3)(b)(i) of the LRA.

Ruling on the Application for Recusal: 

BDM Staffing in short: would have it that the Commissioner should recuse herself and that the matter should be arbitrated based on perceived bias by the Commissioner in favour of the Applicant party.

At this juncture it was deemed appropriate to record that the test for determining recusal involves the question whether a reasonable, objective and informed person would on the correct facts reasonably apprehend that the presiding officer will not bring an impartial mind to bear on the adjudication of the case. [President of the Republic of South Africa and others v South African Rugby Football Union and others 1999 (7) BCLR 725 (CC); SACCAWU and another v Irvin & Johnson Ltd Seafoods Division Fish Processing [2000] JOL 7073 CC; NEHAWU v Department of Health (Free State) 2014 JDR 1541 (LC)].

BDM Staffing argued that the Commissioner harboured a preconceived notion as to the interpretation of  section 198A(3)(b)(i) of the LRA based on the under mentioned arguments:

(i) That by joining Value Logistics Ltd as a Respondent party to the matter the Commissioner acted in a manner that showed bias; and

(ii) That the Commissioner showed or harboured a preconceived notion of the interpretation of section 198A(3)(b)(i) of the LRA based on the argument that as a consequence of the CCMA Road Shows and training provided to Commissioners a fixed interpretation of the LRA was a fait accompli;

(iii) That Commissioners accredited to hear section 198 matters have been ‘coached’ to interpreted the amendments ‘in a certain way’.

One could only infer that the argument by the Respondent, BDM Staffing and as referred to by the writer above was based on perceptions of the same of a similar nature as referred to in this article supra.

Writer made mention of the existence of a notion, or the firm belief that Commissioners of the CCMA from time to time ‘act upon instruction’ or ‘directive’, one would guess by a person[s] in authority to interpret and apply the law in accordance with the dictates of said ‘instruction’ or ‘directive’.

Writer by mere coincidence also attended CCMA training and therefore is in the position to record that no ‘directive’ or ‘instruction’ as to a favoured interpretation of section 198A was given by the course presenter, or any other person for that matter.

Suffice it to reiterate that writer has not come across any such directive or instruction.

It simply constitutes a fallacy and in all probability has been raised by the Respondent party as a stratagem designed to create a possible ground for review in the event of a potentially unsuccessful claim or defence.

Furthermore, the argument raised by the Respondent reminded writer of the matter, Betha & others v BTR Sarmcol (A division of BTR Dunlop Ltd) [1998] 8 BLLR 793 (A), pertaining to the dismissal of strikers. At the time of their dismissal most of the appellants were members of the Metal and Allied Workers’ Union (“MAWU”).

In July 1986 MAWU, on behalf of the dismissed workers, brought an application for their reinstatement in terms of section 46(9) of the Labour Relations Act 28 of 1956 (“the Act”). The matter came before the Industrial Court (“the IC”) in 1987. After a protracted hearing which lasted 39 days the IC, in September 1987, dismissed MAWU’s application. The judgment of the IC has been reported: Metal and Allied Workers Union v BTR Sarmcol (1987) 8 ILJ 815 (IC).

MAWU took the IC’s decision on review to the Natal Provincial Division of the then Supreme Court. During the IC hearing an unsuccessful application was made for the recusal of the presiding officer because of his attendance, while the matter was in progress, at a conference organised and hosted by BTR’s industrial relations adviser [labour consultants].

Of interest was that the basis for the review application was that the presiding officer had by his conduct exhibited a degree of bias sufficient to vitiate the IC’s decision. The Natal Provincial Division (Didcott J) granted the application and set aside the IC’s decision. Its judgment is also reported: Metal and Allied Workers’ Union and another v BTR Industries SA (Pty) Ltd and others (1989) 10 ILJ 615 (N).

The ensuing appeal to this Court was dismissed – see BTR Industries South Africa (Pty) Ltd and others v Metal and Allied Workers’ Union and another 1992 (3) SA 673 (A) – and the matter was consequently remitted for hearing de novo before a newly constituted Industrial Court.

However, the Commissioner in her Ruling as to the second submission in support of recusal, namely based on the notion of a ‘fixed predetermined interpretation” of Section 198A(3)(b)(i) of the LRA due to training and exposure to ‘CCMA Road shows’ made short thrift of the argument, in a decisive and fearless manner as is quoted hereunder:

“It is a condition of accreditation of all Councils that only Commissioners and panellists who have been trained on section 198 may hear these matters. If the above was regarded to be a valid ground for recusal the resultant effect would be that all Commissioners accredited to hear section 198 matters would have to recuse themselves. The legislator have given the CCMA and the accredited Bargaining Councils the power to preside over these matters and therefore I will execute my duties as Commissioner accredited to hear the section 198 matters, independently and fairly.”

As to the first submission in support of recusal, namely that by joining Value Logistics Ltd the presiding Commissioner in a similar manner swiftly and decisively disposed of the nonsensical argument as is quoted hereunder:

“I had a duty to join Value Logistics Ltd as a second respondent to the dispute as they have an interest in the outcome of the dispute. Joining a party to a dispute creates no liability; it only ensures that the party joined will have an opportunity to state their case at the proceedings. The CCMA Rules, rule 26(2) and 26(3) give the power to a Commissioner to make an order, on own accord, to join any person as a party in the proceedings if the party to be joined had a substantial interest in the subject matter of the proceedings. It can therefore not be argued that by joining Value Logistics Ltd I acted in a manner that showed bias.”

So much then for the preliminary points where after the Commissioner proceeded by handing down a Ruling as to the interpretation of Section 198 and Section 198A of the LRA.

RULING ON THE INTERPRETATION OF SECTION 198 AND SECTION 198A OF THE LABOUR RELATIONS ACT, 66 OF 1995 (AS AMENDED)

The Commissioner opined by addressing the rules of interpretation as pronounced upon by the Courts and thereafter by reference to contemporary judgments as to the positive law pertaining to the interpretation of statute.

In the Ruling reference was made to the judgment Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] 2 BPLR 135 (SCA) wherein the Court held that interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument, or contract, having regard to the context provided by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence.

Whatever the nature of the document, consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production.

Referral was found that Section 3 of the LRA states that any person applying the LRA must interpret the provisions-

(a) to give effect to its primary objects;

(b) in compliance with the Constitution; and

(c) in compliance with the public international law obligations of the Republic.

Section 198 of the Labour Relations Act, 66 of 1995 (as amended)

Section 198 of the LRA applies to all employees irrespective of their income. Section 198(1) of the LRA defines a TES to mean any person who for reward, procures for or provides to a client other persons who performs work for the client and is remunerated by the temporary employment service.

In terms of section 198(4) the TES and the client are jointly and severally liable if the TES, in respect of any of its employees, contravenes-

(a) a collective agreement concluded in a bargaining council that regulates terms and conditions of employment;

(b) a binding arbitration award that regulates terms and conditions of employment;

(c) the Basic Conditions of Employment Act 75 of 1997 (hereinafter referred to as the BCEA);

(d) a Sectoral determination made in terms of BCEA.

Section 198(4) speaks to the duties and obligations of the TES for purposes of the BCEA and non compliance with sectoral determinations, collective agreements and awards that relate to terms and conditions of employment.

The legislator set very specific boundaries to the joint and several liability, it is not universal but it is limited to the issues stipulated in section 198(4)(a) – (d) listed supra..

The Labour Relations Amendment Act, 6 of 2014 introduced section 198(4A) – (4E) into to the legislation. It should be reiterated that one section cannot be interpreted in isolation.

Section 198(4A) stipulates that if the client of a temporary employment service is jointly and severally liable in terms of section 198(4) or is deemed to be the employer of an employee in terms of section 198A(3)(b)

(a) the employee may institute proceedings against either the temporary employment service or the client or both the temporary employment service and the client;

(b) a labour inspector acting in terms of the Basic Conditions of Employment Act may secure and enforce compliance against the temporary employment service or the client as if it were the employer, or both; and

(c) any order or award made against a temporary employment service or client in terms of this subsection may be enforced against either.

The Commissioner’s interpreted the client’s liability in terms of section 198(4) and section 198A(3)(b)   as two fold  and applicable within two eventualities or factual situations:

The liability of the client created in section 198(4) which amounts to the joint and several liability:

The interpretation of this section is clear in that section 198(4A)(a) – (c) unpacks the consequences and recourse of joint and several liability in the instance where there is:

–  a contravention by the TES of the BCEA;

– a contravention by the TES of sectoral determinations, collective agreements and awards that regulate terms and conditions of employment.

The liability created in section 198A(3)(b) where the client is deemed to be the employer of the employee for purposes of the LRA:

The provisions of this section may be lead to confusion because:

– one automatically wants to assume that the employee can now institute a claim jointly and severally for his/her dismissal;

however the joint and several liability in section 198(4) is not extended to a claim for unfair dismissal under the LRA.

In the Ruling the Commissioner and correctly so sought ‘interpretive’ guidance from the Memorandum of Objects, Labour Relations Bill 2012 [the Memorandum].

The Memorandum states that: “Section 198 continues to apply to all employees. It retains the general provisions that a TES is the employer of persons whom it employs and pays to work for a client, and that a TES and its client are jointly and severally liable for specified contraventions of employment laws.” [See: p22 of the Memorandum].

The Commissioner found that the joint and several liability of the TES and the client is limited to the specified grounds in section 198(4) only.

This joint and several liability is also mirrored in section 82(3) of the BCEA which states that the client and the TES is jointly and severally liable in the event that the TES contravenes any provisions of the the BCEA or a sectoral determination.

The Memorandum makes no provision for enforcing all kinds of awards against either the TES or the client. It is limited to claims for joint and several liability. This is confirmed in the wording of section 198(4A)(c) which states: “any order or award made against a temporary employment service or client in terms of this subsection may be enforced against either”.

Therefore and so it was found that when considered holistically the entire subsection 4 deals with issues related to the BCEA and terms and conditions of service.

The Commissioner found that the interpretation of section 198(4A)(a) should be that despite the fact that the client at some point may become the deemed employer for purposes of the LRA, that the triggering of the deeming provision would not exempt the TES or the client from the joint and several liability created in terms of section 198(4).

Therefore, the joint and several liability created in terms of section 198(4) stays intact.

Writer respectfully agrees with the learned Commissioner that  joint and several liability in itself is not indicative of dual employment, for example in terms of the provisions of section 197(8)-(9) of the LRA  that deals with ‘Transfer of contract of employment’.

In terms of section 197(8)-(9) the old employer and the new employer is held jointly and severally liable where the old employer is clearly not the employer anymore. [Emphasis added].

Section 198A of the Labour Relations Act, 66 of 1995 (as amended)

Insofar as the interpretation of section 198A is concerned the Commissioner in her Ruling referred to the Memorandum of Objects, Labour Relations Bill 2012 [the Memorandum] and found that in section 198A the legislator still acknowledges the unique triangular relationship between the TES, the client and the employee.

The focus however shifted to provide additional protection for vulnerable workers. To edify the reader especially as to the problems and abusive practices associated with TES’s and how vulnerable employees’ Constitutional rights have been infringed as a result of the misuse of the triangular relationship, a number of reported judgments were cited and analysed as examples of infringements of the Constitutional rights of vulnerable employees.

Some of the case law was cited and discussed by the writer in the article posted July 05, 2015, “Regulation of Non-Standard or A-Typical Employment – South Africa” wherein the following judgments were referred to and briefly discussed, SA Post Office Ltd v Mampeule [2010] 10 BLLR 1052 (LAC); Mahlamu v CCMA & others [2011] 4 BLLR 381 (LC); Dyokhwe v De Kock NO and others [2012] 10 BLLR 1012 (LC); National Union of Metal Workers of South Africa and others v Abancedisi Labour Services CC [2012] 11 BLLR 1123 (LAC); Kelly Industrial Ltd v Commission for Conciliation, Mediation and Arbitration and others [2015] 6 BLLR 606 (LC)].

The Commissioner found that upon proper reading of the Memorandum the purpose of the amendments which was to address more effectively certain problems and abusive practices associated with a TES, the interpretation of the Act in the manner as recorded hereunder effectively stops the  said abusive practices identified and pronounced upon by the Courts in the judgments cited above. When considered objectively the abusive practices emanated from the triangular relationship in which the client is exempted from all the responsibility in terms of the LRA.

The Memorandum of Objectives clearly stipulate that: “Employees in this category are employees of the TES for the purposes of the LRA only if they are employed to perform genuinely temporary work, defined in the new section as “temporary services”.

The above is effectively mirrored in section 198A(3)(a) which states: “For the purposes of this Act, an employee performing a temporary service as contemplated in subsection (1) for the client is the employee of the temporary employment services in terms of section 198(2)”.

Therefore as long as the employee is performing genuinely temporary work the duties and obligations as described in section 198(2) and (4) will apply i.e. the TES is the employer for the purposes of the LRA.

The issue of joint and several liability for the TES and client would arise in the event of any contravention by the TES of the BCEA, sectoral determinations, collective agreements and awards that regulate terms and conditions of employment.

The Memorandum of Objectives further stipulate that: “If they are not employed to perform temporary services, they are deemed for the purposes of the LRA to be employees of the client and not the TES.”

The footnote in the Memorandum of Objectives indicate that for ‘purposes of the LRA’ includes for purposes of freedom of association, organisational rights, collective bargaining, strikes and lock-outs, workplace forums, trade unions and employers’ organisations, dispute resolution, unfair dismissals and unfair labour practices.

Section 198A(3)(b) states that for the purposes of the LRA an employee-

(b) not performing such temporary service for the client is-

(i) deemed to be the employee of that client and the client is deemed to be the employer; and

(ii) subject to the provisions of section 198B, employed on an indefinite basis by the client.

Therefore and in accordance with an interpretation of section 198B of the LRA when words are given their normal grammatical meaning, this means that even in the absence of evidence thereto that an employer-employee relationship between the client and the employee exists (i.e. no evidence exists of a transfer of the employee), the client is now regarded as the employer for purposes of the LRA.

The wording of the Act does however not imply that the employee has been transferred to the client, nor does it indicate that the triangular relationship now automatically dissolved.

The key question that was posed by the Commissioner to be answered had little to do with the status of the triangular relationship and whether or not there was a transfer of an employee as stipulated in section 197 of the LRA.

The crux of the interpretation of section 198A lies in the question as to who is responsible for the duties and obligations in terms of the LRA. The wording in the LRA in this regard is clear and unambiguous.

Once the TES employee was not performing a bona fide temporary service, the client would then be deemed to be the employer in terms of the LRA. The client therefore bears the responsibility to ensure that duties and obligations towards the employee in terms of the LRA are met.

It therefore follows that should the amendments be interpreted to mean joint and several liability for the purposes of the LRA, the abusive practices referred to in the cited case law and discussed by the Commissioner in the Ruling, would not be addressed.

The Commissioner found that by awarding the client the duties and obligations as employer for purposes of the LRA also ensures that the Constitutional rights of the employees as well as their rights in terms of the LRA are protected and enforced.

An interesting and elucidative exercise followed wherein the Commissioner applied her finding as to the interpretation of the section 198A of the LRA by applying it to the cited case law as if the amendments were in effect at the time of conception of the disputes that eventually found their way to the Labour Courts.

The said exercise made for interesting reading and showed that it could not be said that the interpretation of the law would have absurd consequences.

Writer respectfully agrees with the Commissioner’s comparative analysis as recorded in the Ruling and dare to say that he would be loathe to submit that the interpretation would have led to absurdities and all sorts of ghastly consequences or ‘Babylonian confusion’.

In conclusion it was found that the correct interpretation of section 198A(3)(b)(i) is therefore that the client is awarded the duties and obligations for the purposes of the LRA when the employee is not performing a temporary service and therefore any claim brought in terms of the LRA must be brought against the duty-bearer, which is the client.

CONCLUSION

In the concluding remarks writer shamelessly borrowed from the Commissioner’s Ruling and the conclusions reached.

However, as was said by Alexander Pope, ‘To err is human and to forgive is divine’.

Nothing in the wording of the amendments to the LRA suggests that a transfer akin to section 197 of the LRA occurs. The wording in the LRA cannot be interpreted as if  the deeming provision has the effect that the triangular relationship between the TES and the client dissolves and that the commercial relationship comes to an end.

In the absence of wording that would suggest that the triangular relationship comes to an end or that a transfer takes place, such a consequence cannot be assumed.

The legislator created neither joint and several liability nor dual employment for purposes of the LRA. The issue of dual employment was argued around joint and several liability, however joint and several liability in itself is not indicative of a dual employment relationship.

It is however clear from the case law that the legislator would no further  tolerate attempts of a client to circumvent its legal duties and obligations by making use of employees provided by a TES. In the amendments there is a definite shift when it comes to the duties and obligations in terms of the LRA and this is driven by the legislator through the legislation.

What happens to the commercial relationship between the TES and the client after the shift in liability will ultimately have to be negotiated between the relevant parties in terms of their business agreement. What is however clear from the recent case law and the amended LRA is that if the terms of the new agreement infringes upon the rights of employees, it will not be binding and the Courts will reject such agreements.

Johann Scheepers

July 12, 2015

Copyright:

Copyright reserved by the writer hereof. No part of this article / guide may be reproduced, without prior written permission by the author.

The content of this article is intended to be general in substance and nature; to provide commentary on contemporary issues and where appropriate constitutes a general guide to the subject matter. Specialist advice should be sought about the reader’s specific circumstances.

The commentary or opinions expressed herein is that of the writer and not that of any professional organisation or entity with which the writer may be associated with.

REGULATION OF ‘NON- STANDARD’ OR ‘A -TYPICAL EMPLOYMENT’ – SOUTH AFRICA

HELLO TEMP

‘It can no longer be debatable that, following this legislative directive, labour brokers may no longer hide behind the shield of commercial contracts to circumvent legislative protections against unfair dismissal. A contractual provision that provides for the automatic termination of the employment contract and undermines the employee’s rights to fair labour practices, or that clad slavery with a mink coat, is now prohibited and statutorily invalid.’

[Mosime AJ in SA Transport & Allied Workers Union on behalf of Dube & others v Fidelity Supercare Cleaning Services Group (Pty) Ltd (2015) 36 ILJ 1923 (LC), commenting on the protection afforded to employees of labour brokers by the SA Labour Relations Amendment Act 6 of 2014].

INTRODUCTORY REMARKS

On January 01, 2015 the introduction of stricter regulation was introduced amongst other as to the regulation of a-typical forms of employment in accordance with the provisions of the South African Labour Relations Act, 66 of 1995 (as amended – Labour Relations Amendment Act, no 6 of 2014) – (LRA) aimed at providing labour broking employees, employees employed on fixed term contracts, and part-time employees greater protection.

The Labour Relations Act came into effect on January 01, 2015 but many of the provisions in the LRA governing Temporary Employment Services (TES’) only came into effect on April 01, 2015 after the expiration of a three-month grace period. The amendments to Section 198 of the LRA provide increased protection to those employed in what was defined as non-standard work.

A-typical forms of employment / non-standard work – Why do these employees need particular protection?

With the passage of time, both employers and employees opted for atypical or new forms of employment. These new forms of employment departed from the standard model of full-time permanent (indefinite) employment, and included fixed-term employment contracts, seasonal employment, working from home and sub-contracting relationships or independent-contractor relationships.

Upon closer scrutiny of the substance and nature of the contractual relationship it in form appeared to be that of an independent contractor relationship, however the employee party de facto became economically dependent on one ‘employer’ or the principal party to the contract.

The employee party may therefore be called ‘dependent contractors’ and they were often vulnerable to the whims of the employer/principal as they were not afforded the minimum statutory employee benefits or fair labour practice protection in terms of Section 23 of the Constitution of the RSA in that contracts could be terminated at will by the ‘employer’ simply by exercising notice provisions, if any contained in the contract.

Clause 36 of the Explanatory Memorandum on the Objects of the Labour Relations Amendment Bill No. 16B of 2012Regulation of Non-Standard Employment and General Provisions (Chapter IX) that led to the amendments to the LRA ‘Non-standard’ employment in the Labour Relations Amendment Act of 2013 (LRAA) refers to:

Part-time work;

Fixed-term contract work; and

– Employment through labour brokers or rather Temporary Employment Services (TES).

The legislature recognised that permanent employment or employment for an indefinite period remain a major form of employment, however that the South African labour market over the past decade[s] experienced an increase in non-standard employment practices.

As these new forms of work emerged, it became more apparent that the protection afforded to traditional full-time employment does not adequately provide protection for non-standard employees. In theory, said non-standard employees enjoyed protection under the pre-amended statutory regime, but in practice the prevailing circumstances of employment made the enforcement of employment rights extremely difficult if not impossible.

The LRAA under Sections 198A, 198B and 198C extended significant protection to employees earning under the threshold as provided for in Section 6(3) of the SA Basic Conditions of Employment Act, 75 of 1997 (as amended – BCEAA, no 20 of 2013) (BCEA).

Sections 198A, 198B, and 198C protect labour broker employees, fixed-term contract employees and part- time employees (respectively), who earn below the threshold.

The said threshold is currently R205 433.30 per annum, but it is anticipated that it would increase with effect from July 01, 2015.

In an article published in the authoritative publication by Professor J Grogan, “The New Dispensation – The Amendments to the Labour Relations Act, Part 1 – ‘Non Standard Employment” Employment Law Journal, (June 2014) the learned author observes, “But a close examination of the amendments discloses a distinct bias towards extending the rights of employees, or some of them, mostly at the expense (literal and figurative) of employers.”

Nowhere is this more apparent than in the new concept of “temporary employment”.

This effectively proscribes using employees provided by labour brokers or employing staff on fixed term contracts for longer than three months, provided they earn below R205 433.30 a year, unless such employment falls within specific exceptions allowed by the Act.

After the said three months period, all such employees must be treated in substantially the same manner as full time employees.

According to the article authored by Grogan supra this legislative innovation was a response to calls from labour to eradicate labour broking and to prevent cunning employers from evading the provisions of the LRA, in particular by using fixed term contacts and employing “temporary” employees.

The notion of “temporary service”, and the new statutory protection of these vulnerable employees, also reflects judicial distaste expressed in a number of judgments for arrangements by which employers could use and dispense with employees without being called to account for actions that would otherwise constitute unfair labour practices or unfair dismissals. [See, for example, SA Post Office Ltd v Mampeule [2010] 10 BLLR 1052 (LAC); Mahlamu v CCMA & others [2011] 4 BLLR 381 (LC); Dyokhwe v De Kock NO and others [2012] 10 BLLR 1012 (LC); National Union of Metal Workers of South Africa and others v Abancedisi Labour Services CC [2012] 11 BLLR 1123 (LAC); Kelly Industrial Ltd v Commission for Conciliation, Mediation and Arbitration and others [2015] 6 BLLR 606 (LC)].

In matters that recently served before the SA Labour Court one of the issues in contention was ‘automatic termination clauses’ in fixed term and more specifically incorporated in contracts commonly utilised by temporary employment services. In Kelly Industrial Ltd v Commission for Conciliation, Mediation & Arbitration & others (at 1877), where the employment contracts provided for automatic termination on completion of a particular project and the employees’ contracts were terminated before the completion of the project, the court found that the employees had been dismissed.

In SA Transport & Allied Workers Union on behalf of Dube & others v Fidelity Supercare Cleaning Services Group (Pty) Ltd (at 1923), where the employment contracts provided for automatic termination should the client terminate its contract with the employer, the court found that the clause was invalid in terms of s 5 of the LRA 1995 as it was impermissible for employees to waive the protections against unfair dismissal afforded by the LRA.

In Mahlamu v CCMA & others [2011] 4 BLLR 381 (LC) Van Niekerk J, held that an employment contract which stipulated that it would expire automatically on termination of the contract between the employer and its client, or if the client no longer required the applicant’s service “for whatsoever reason” had the effect that the applicant’s security of employment was entirely dependent on the will or whim of the client. The client could at any time, and for any reason, simply state that the applicant’s services were no longer required and, that done, the contract would terminate automatically ex contractu, leaving the applicant with no remedy.

The Court held that employers and employees cannot contract out of the protection against unfair dismissal afforded to the employees whether through the device of “automatic termination” provisions or otherwise: a contractual device that purports to render the termination of a contract of employment as something other than a dismissal, with the result that the employee is denied the right to challenge the fairness thereof in terms of section 188 of the LRA, ‘is the very mischief that section 5 of the Act prohibits’.

The Court noted that, in terms of the recent amendments to the LRA, such clauses are now prohibited and statutorily invalid.

According to the article by Grogan supra while the amendments to the LRA would certainly discourage abuse of “labour broking” and “temporary” employment, it will also drastically reduce the flexibility which employers in many sectors require to meet the needs of cyclical markets or unforeseen contingencies. [Emphasis added].

The amendments insofar as they pertained to Temporary Employment Services (TES) or as they are commonly known as labour brokers were not well received, and caused a flurry of activity amongst labour brokers, their clients and lawyers acting on behalf of labour brokers for reasons set out hereunder.

Following thereon the South African Commission for Conciliation, Mediation & Arbitration (CCMA) published the first edition of a publication entitled, “Non – Standard Employment Newsletter – CCMA” under the editorship of Senior Commissioner Eleanor Hambidge an internationally recognised authority in employment law and amongst other developments in comparative jurisprudence as it pertains to a-typical employment within the South African employment environment and elsewhere.

The said publication is bound to become an authoritative work of reference as to important developments in South Africa especially within the field of the developments of employment law not only insofar as it pertains to how the positive law is interpreted and applied by Commissioners of the CCMA and Judges of the Labour Courts.

The purpose of the first edition of the said Newsletter on the Regulation of Non – Standard Work was to provide an update on current developments, in particular test cases to be heard where conflicting interpretations were attached to the “deeming provision”, as well as all the training interventions undertaken before and after the enactment of the Labour Relations Amendment Act, Act 6 of 2014, (the LRAA) which came into operation on January 01, 2015.

The publication Non – Standard Employment Newsletter – CCMA  also contains a statistical comparative analysis of trends in the number of cases submitted to the CCMA for resolution as well as information as to the cause of action, outcome, albeit conciliated/mediated or arbitrated ‘adjudicated’.

In an article published in an authoritative publication by Professor PAK Le Roux, Amendments to the Labour Relations Act – Part 1: Proposed changes on unfair dismissal, on-standard employment, strikes and lockouts” Contemporary Labour Law (May 2012) Vol 21, 95 – 99, the learned author summarised the statutory provisions as to a TES pre-LRAA and post-LRAA:

“Temporary employment services:

The amendments relating to TES’ envisage that

  • Additional obligations will be placed on the TES as employer.
  • The provisions relating to joint and several liability will be strengthened.
  • The client of a TES will, in certain circumstances, become the employer of a person assigned by a TES to that client. [Emphasis added].

The current legal position is that

  • In terms of section 198(2) the TES is the employer of the employee assigned to a client.

This means that when a person assigned to a client by a TES is claiming that an unfair labour practice has been inflicted on him, or that he was unfairly dismissed, his/her remedy is against the TES.

  • There are circumstances prescribed in both the LRA and the Basic Conditions of Employment Act, 75 of 1997 (BCEA) where the client and the TES are jointly and severally liable for contraventions of a bargaining council agreement, an arbitration award regulating terms and conditions of employment, the BCEA and a sectoral determination

The LRAA amended the above position in three ways:

Additional obligations imposed on a TES:

The first amendment imposed additional obligations on a TES as employer.

These are –

  • A TES will have to provide an employee it assigns to a client with written details of the terms and conditions of employment he/she would be entitled to whilst assigned to the client. The details to be provided are those prescribed in s 29 of the BCEA.
  • The terms and conditions of employment provided to an employee of a TES would have to comply with any employment law, sectoral determination or bargaining council agreement applicable to a client that the TES employee has been assigned to.

The implication would be that a TES is not necessarily required to grant its employees the same terms and conditions of employment as those provided by a client to its employees, provided that it complies with the above.

In addition, the issue of whether an employee of a TES is covered by a bargaining council agreement or a sectoral determination must be determined by reference to the sector and area in which the client is engaged”.

“The client as employer:

The new s198A stipulates that, in certain circumstances, the client will be regarded as the employer of the person supplied to it by a TES. [Emphasis added].

The underlying principle seems to be that if a client is making use of a TES in what is regarded as an “acceptable” [bona fide/justifiable] manner, the person assigned to the client would be regarded as the employee of the TES.

However, where there is “unacceptable use” the client will be regarded as the employer.

This notwithstanding, the TES may still be held joint and severally liable in certain circumstances even though the client is now the employer.

Acceptable use, which is defined as a “temporary service”, takes place if the person assigned to the client performs work for the client –

  • for a period of less than three months;
  • as a substitute for an employee of the client who is temporarily absent from work;
  • in a category of work and for any period of time which is determined to be a temporary service by a collective agreement entered into by a bargaining council, a sectoral determination, or a notice published by the Minister of Labour in terms of s 189A.

If the use of the services of a TES does not fall within one of the above circumstances, the person assigned to the client by the TES will be regarded as being employed by the client. This means that the client can be held liable for any unfair labour practices committed as well as for an unfair dismissal.

As far as terms and conditions of employment are concerned, the employee “deemed to be the employee of the client” must be treated “on the whole not less favourably” than an employee of the client performing the same or similar work, unless there is a justifiable reason for differential treatment.

Section 198D states that a justifiable reason includes the application of a system that takes into account seniority, experience or length of service, merit, the quality or quantity of work performed or any other criteria of a similar nature that is not a discriminatory ground prohibited by the Employment Equity Act, 55 of 1998 (as amended).

There is one important limitation to the principle that the client would be regarded as the employer in certain circumstances; it would not apply in respect of employees who earn more than the amount specified in a notice published in terms of s 6(3) of the BCEA, namely R205 433.30 per annum.

Finally, section 198(4F) stipulates that the registration of a TES as a precondition for conducting the business of a TES.

Sent off

JURISDICTION TO ENFORCE STATUTORY PROVISIONS?

Section 198D of the LRA provides for Commissioners of the Commission for Conciliation, Mediation and Arbitration (CCMA) jurisdiction to interpret and apply sections 198A-C and is also applicable to bargaining council panellists when hearing matters under the auspices of councils.

These empowering provisions imply a number of new issues that may form the subject matter of disputes:

– The power of Commissioners to enquire into contracts and conditions of employment;

– The power of Commissioners to override certain contractual provisions to inter alia allow for fixed-term contract employees to be considered indefinite employees in their workplaces;

– The power of Commissioners to evaluate the reasons for fixing the term of fixed-term contracts;

– The power of Commissioners to identify comparable full–time time or standard employees and ensure that non-standard employees receive the same treatment and benefits.

New powers and duties for Commissioners arising from Section 198A:

– S 198A(3)(b) Treat the client as the true employer if the worker is not engaged in a Temporary Service;

– S 198A(4) Determine whether the purpose of a termination was to avoid deeming;

– S 198A(5) Identify a comparable employee of the client and award conditions that are on the whole not less favourable (unless there are justifiable reasons for different treatment under s 198D(2).

The statutory amendments insofar as TES’s and their clients were concerned had not been well received by some. In an article published in Business Day Life, by Karl Gernetzky,”Labour brokers to tackle amended act in court” (April 20, 2015) it was reported that, “Umbrella bodies representing labour brokers…The African Professional Staffing Organisation (Apso) and industry body the Confederation of Associations in the Private Employment Sector (Capes) may go to court within a month to seek a declaratory order on how to interpret aspects of the act they say is unclear. [See explanatory notes hereunder].

The problem was the act’s [LRA] stipulation that temporary employees automatically become permanent employers after being employed for just three months…

This created uncertainty and was open to misinterpretation…However, Apso and Capes maintain that an employment relationship is a legal relationship under the purposes of the LRA, and that the provisions in the LRA cannot simply mean that an employee should be transferred into the books of the client”.

In the authoritative publication by Professor John Grogan, “Labour Litigation and Dispute Resolution” 2nd ed (2014) 307-308, the learned author observes “A declaratory order is an order in which a court settles a dispute over the existence or otherwise of some legal right or entitlement”.

Since the ‘Courts do not act as legal advisors’, applicants for declaratory orders must prove that they have an, ‘existing, future or contingent right or obligation’ that needs to be determined, that there is another interested party on which the order would be binding, and that the issue is not abstract or merely intellectual. [Emphasis added]. [See also: NAPTOSA & Another v Minister of Education, Western Cape & Others (2002) 22 ILJ 889)].

If importance to those intending to seek declaratory orders is that such orders will not be made if they permit the applicant to bypass the procedures laid down by the LRA. [See: Grogan p308].

At the time of drafting the article writer was unaware of whether the parties referred to above launched an application for a declaratory order in terms of Section 158(1)(iv) of the LRA.

Of importance is that the CCMA handed down two important arbitration awards/rulings  concerning the interpretation of the ‘deeming provision’ provided for in Section 198 A (3) (b) of the LRA.

A summary of the provisions of Section 198 A (3) (b) of the LRA is recorded hereunder:

Section 198A (3) (a) and (b) provide:

“For the purposes of this Act, an employee:

 (a) performing a temporary service for the client, is the employee of the TES terms of s 198(2); or

 (b) not performing such temporary service for the client is-

  (i) deemed to be the employee of that client and the client is deemed to be the employer; and

  (ii) subject to the provisions of s198B, employed on an indefinite basis by the client”. [Emphasis   added].

If the client has been deemed to be the employer, additional protections are applicable:

– The employee is employed indefinitely (unless a valid Fixed-term contract exists-see S198B);

– The employee must be treated like the client’s other comparable workers (unless justifiable reasons for the different treatment exist (s198D (2))

If the employee has become an employee of the client as a result of the deeming provision, alleged unfair dismissal proceedings must be instituted against the client.

PURPOSE OF THE ARTICLE

As was referred to above the CCMA and a CCMA Commissioner acting under the auspices of a bargaining council handed down two important arbitration awards/rulings concerning the interpretation and application of the ‘deeming provision’ provided for in Section 198 A (3) (b) of the LRA.

The first: Assign Services (Pty) Ltd (Applicant) // Krost Shelving & Racking (Pty) Ltd (First Respondent) & National Union of Metal Workers of South Africa (NUMSA) (Second Respondent) CCMA Case Number ECEL1652-15.

The second: Refilwe Esau Mphirime // Value Logistics Ltd / BDM Staffing (Pty) Ltd BC Case Reference Number FSRBFBC34922.

In the first instance a brief analysis of the conflicting views as to the interpretation of the controversial deeming provisions would be recorded and assessed.

For the sake of brevity and convenience a follow up article would be published, Regulation of ‘Non-Standard’ or ‘A-Typical Employment’ in South – Africa [Part Two] wherein an analysis of the Value Logistics award/ruling handed down by the CCMA would be made with referral to the respective submissions and arguments raised by the legal representatives of the parties and the findings and determinations made by the presiding Commissioner.

At the outset it should not be recorded that postings on the LinkedIn network should preferably be brief and not created; nor should it be perceived by the reader as if a comprehensive or an authoritative work of reference on the subject matter. The objective is to edify, within the confines of the medium and to generate interest and possible debate on the subject matter.

DEEMED EMPLOYMENT – ‘A LEGAL FICTION’

LABOR BROKER

In the article referred to supra by Professor J Grogan, “The New Dispensation – The Amendments to the Labour Relations Act, Part 1 – ‘Non Standard Employment” Employment Law Journal, the new section 198A (3)(b) provides that, after three months, employees who had been rendering “temporary service” for broker’s clients are “deemed to be the employee of the client and the client is deemed to be the employer”. Furthermore, the employee is also “deemed” to be employed on a permanent basis by the client.

The key problem would be what the lawmakers meant by the word “deemed”.

According to Grogan one view held, is to the effect that the employees are deemed by law to be employees of the client, which means that they become the client’s employees de facto and de jure. On the strength of that view, the labour broker simply drops out of the picture after three months and the employee’s contract transfers (a la Section 197 of the LRA) to the client.

However based on another possible view, the word “deemed” carries a different meaning; It means that, while the broker remains the actual employer, the client is simply assumed to be the employer in the sense that the client now assumes the obligations and acquires the rights of an employer vis-à-vis the TES employee, but that the TES remains the employer in a suspended sense.

This would mean that the TES could lawfully continue to pay the employee, and perform other administrative functions for the client in respect of the employee.

‘Deeming’ a legal fiction?

In Black’s Law Dictionary ‘deem’‘Deem: to hold, consider, adjudge, condemn …’ When by statute certain acts are deemed to be a crime, they are such a crime, and not a semblance of it, nor a mere fanciful approximation to or designation of the offence. [See: Com v Pratt 132 Mass 247].

A legal fiction is a status in law based on hypothetical or non-existent facts for example, in the event of adoption and corporate legal persona. A legal fiction has real, valid legal effect and should not be confused with the concept of a ‘rebuttable presumption’ which is valid only until disproven.

According to Du Toit et al “Labour Relations Law – A Comprehensive Guide” (2015) 6th ed, concerns have been raised about the term ‘deemed’ employer, which may be interpreted to mean that the TES remains the actual employer and the client becomes the ‘nominal’ employer in respect of statutory obligations: Grogan ‘The New Dispensation’Van Eck ‘Regulated flexibility and the Labour Relations Amendment Bill of 2012’ (2013) 46 De Jure 600 606. ‘Whether this will be the case remains to be seen’.

Questions arising from the ‘deeming provision’

When the TES employee is deemed to be the employee of the client:

  1. Does the contract of employment transfer to the client? Does this terminate the employment relationship with the TES?
  2. Is the client the employer only for the purposes of the LRA, but not for other employment laws?
  3. Are there two employers? AND IF SO:

– Is there a dual employer for LRA organisational rights, strikes, dismissals and etcetera?

– Who must pay UIF; tax, skills development levies, etcetera?

– Who must administer leave?

– Must the client consult the TES employee (or the TES) under s189?

– Who must pay severance pay?

– How is section 197 to apply?

DISCUSSION AND BRIEF ANALYSIS OF THE RECENT CCMA AWARD / RULING

Assign Services (Pty) Ltd (Applicant) // Krost Shelving & Racking (Pty) Ltd (First Respondent) & National Union of Metal Workers of South Africa (NUMSA) (Second Respondent) CCMA Case Number ECEL1652-15.

The arbitration in this matter concerned the interpretation of the deeming provision provided for in Section 198A (3) (b) (LRA). The Applicant, Assign Services (PTY) Ltd, (Assign), a Temporary Employment Service as defined in section 213 of the LRA was present and represented by Senior Counsel.

The First Respondent, Krost Shelving and Racking (PTY) Ltd, (Krost), was not present at the hearing, however prior to the hearing signed a formal notice in terms of which it waived its right to participate in the proceedings and committed to abide by the CCMA ruling/award.

The Second Respondent, NUMSA, a registered union was represented by Senior Counsel as well.

Issues to be determined:

  1. To determine the correct interpretation of Section 198 A (3) (b) of the LRA (“the deeming provision”).
  2. The Applicant was of the view that the consequences of the deeming provision were that the placed workers remained employees of the Applicant, for all purposes and are deemed to also be employees of the First Respondent for purposes of the LRA. This position was referred to as the “dual employment position”.
  3. The Second Respondent was of the view that, the placed workers with effect from April 01 2015, were deemed to be employees of the First Respondent only, for purposes of the LRA. This was referred to in the award as the “sole employment” position.

The Applicant’s (Assign) arguments:

The Applicant (Assign) argued in favour of the ‘dual employment’. Counsel for the Applicant referred to S v Rosenthall (1) SA 65 A, and argued that the word “deemed” does not have a uniform meaning, It’s meaning and especially it’s effect depends on the context in which It is used In a statute and the purpose of the statutory provision, for purposes of the matter, it being Sections t98 and 198 A of the LRA.

Counsel further referred to the case of R v Haffeejee and another 1945 AD 345, where the court held that in determining the meaning of “deemed”, the court must examine “the aim, scope and object of the legislative enactment In order to determine the sense of its provisions.”

It was argued that the deeming provision did not serve to terminate the contractual relationship between the TES and the client, nor did it serve to terminate the contractual relationship between the TES and the placed workers, it in fact created greater protection for the placed workers by making both the TES and the client dual employers. 

The Second Respondent (NUMSA) arguments:

Counsel also referred to Rosenthall and to R v County Council of Norfolk 65 (1891) QB division, and submitted that the Court indicated that the word “deem” is often used in legislation in a “very loose sense”, and thus could easily be equated or replaced with the word ‘is’.

Thus he argued that, the use of the word deemed In Section 198 (3) (b) (i) creates a legal fiction, in other words a legal rule that in the circumstances specified In Section 198 (3) (b) (i) the client [is] the employer of the placed workers, irrespective of what the situation would have been If the legal rule had not been enacted by the legislative provisions.

Section 198 (4A) did not create any new liabilities for the parties concerned, in that the section merely provided for an opportunity for an employee to institute proceedings against a party that is liable. The said section applied to all employees placed by a TES and not only ‘deemed employees’.

It was argued that Section 198 A (3) (b) (i) does not expressly mention that the client becomes the employer, the wording of Section 198 A (3) (b) (ii), supports the sole employment argument, when it reads “subject to the provision of Section 198 B, employed on an indefinite basis by the client”.

In terms of Section 198 A (5), the legislature actually intended to create better employment conditions for the placed workers than those enjoyed by them under the TES. Therefore a simple transfer of employment In terms of Section 197 of the LRA would not suffice.

THE CCMA AWARD – A BRIEF ANALYSIS AND COMMENTARY

At the outset the Commissioner recorded that in terms of Section 3 (a) of the LRA as amended: “Any person applying the Act must interpret its provisions to give effect to its primary objects”.  

In order to correctly interpret the effect and application of the deeming provision in terms of Section 198 A (3) (b) (i) of the LRA as amended, ‘one needs to consider the explanatory memorandum (memorandum of objects) of the 2014 LRA Amendments.

The Commissioner therefore adopted what is commonly known as a purposive approach to the interpretation of the LRA and having due regard to Section 23 of the Constitution of the RSA.

In terms of the explanatory memorandum of objects Section 198 has been amended in order to address more effectively certain problems and abusive practices associated with temporary employment services (TES) or what are more commonly referred to as “labour brokers”. The main thrust of the amendments is to restrict the employment of more vulnerable, lower paid workers by a TES to situations of genuine and relevant temporary work and to introduce various further measures to protect workers employed in this way. [At 5.8].

The Memorandum of objects further goes on to explain the additional protections afforded to vulnerable employees by Section 198 A in relation to “termination to avoid deeming” and “pay parity” of deemed employees to comparable employees of the client. [At 5.7].

“Having considered the Memorandum of Objects it is clear to me that while I accept that determining the correct Interpretation of the deeming clause is not an easy task…I am convinced that the correct interpretation is the one that will provide greater protection for the vulnerable class of employees identified by Section 198A of the LRA.

The Second Responded on the other hand argues that a “dual employer” interpretation will create confusion, uncertainty and prejudice for the vulnerable employees envisioned by Section 198A of the LRA. In this regard Professor Paul Benjamin in his article “to regulate or to ban” indicates that there is evidence from studies of arbitration awards and sociological research, that employees are often not aware whether they are employed by an agency or by the business where they work.

According to Professor Benjamin the triangular relationship, namely between the client, the TES and the employee becomes somewhat convoluted where it in substance is no longer temporary and the employee has ‘a closer relationship with the client than the agency’.

This artificial construction and (one that gives rise to immense scope for abuse), to make the agency the employer of an employee working on an ongoing indefinite basis for a client merely because the employee’s pay is routed through the agency.

The Commissioner found that the deeming provision in Section 198A (3)(b) should be Interpreted akin to how the law deals with the concept of “adoption”. In the case of “adoption” a legal fiction is also created, in that, for purposes of the law, the adoptive parent is regarded as the parent of the adopted child.

In this regard the best interest of the chid is considered to be in the scenario where the adoptive parent is afforded full rights in terms of guardianship and/all obligations in terms of parenting and upbringing of the adopted child. The law does not regard a biological parent and the adoptive parent as dual parents, as doing so would lead to uncertainty and confusion. [At 5.12].

Equally in the case at hand there are a number of problems that could arise in the “dual employment” interpretation, for example, who would be responsible for the disciplining of the placed workers and who’s disciplinary code would be applicable, that of the TES or that of the client?

The following questions and propositions were posed in the award:

– How would “re-instatement” occur if there is dual employment?

– Clearly this would lead to greater uncertainly and confusion for the vulnerable employees the Act is seeking to afford greater protection too.

Having dealt with and interpreted the wording of Sections 198A (3) (b) (i) and 198A (3) (b) (ii) of the LRA; as well as the relevant clause in the memorandum of understanding, it was found ‘that the correct interpretation of Section 198A (3) (b) of the LRA Is that after the three months have elapsed, the client becomes the sole employer of the placed workers who are earning below the BCEA threshold’.

Therefore, and so it was found, Section 198A (3)(b) should be interpreted to mean that “deemed” means that the client becomes the sole employer of the placed workers for the purposes of the LRA, provided that they earn below the threshold and that the three months period referred to supra elapsed.

CONCLUSION

Having been privy to reports published in various South African news papers shortly after delivery of the award and the opinions expressed therein by spokespersons of various organisations that represent agencies that provide temporary employment services, it became very much apparent that an application for the review of the award in the South African Labour Court may be forthcoming.

In the light of the aforementioned possibility writer deemed it appropriate and possibly in his best interest to give notice of reservation of the right to comment at an appropriate time and on a date to be determined.

However and shortly after the posting of this article the opportunity presented itself to read commentary and observations made by all and sundry in the form of fierce criticism directed against the CCMA as well as the presiding Commissioner based on the grounds of disagreement and discontent with the interpretation of the LRA insofar as the amendments to Section 198A are concerned.

To those a comment was deemed necessary by referral to and for edification to the authors thereof, to wit the legal maxim “iudicis est ius dicere non dare”, which means “it is the province of a judge [including the odd CCMA Commissioner] to expound (interpret) the law not to make it”.

Johann Scheepers

July 05, 2015

Copyright:

Copyright reserved by the writer hereof. No part of this article / guide may be reproduced, without prior written permission by the author.

The content of this article is intended to be general in substance and nature; to provide commentary on contemporary issues and where appropriate constitutes a general guide to the subject matter. Specialist advice should be sought about the reader’s specific circumstances.

The commentary expressed herein is that of the writer and not that of any professional organisation or entity with which the writer may be associated with.

PREGNANCY – DUTY TO PROVIDE ‘REASONABLE ACCOMMODATION’ RECENT DEVELOPMENTS IN SA

pregnantcouple-in-worker-s-jumpsuit-isolated-in-white

The use of the comparative method requires a knowledge not only of  the foreign law, but also of its social, and above all its political context. The use of comparative law for practical purposes becomes an abuse only if it is informed by a legislative spirit which ignores the context of the law.’

[O Kahn –Freund, “On Uses and Misuses of Comparative law”, The modern Law Review, (1974) 27]

PREGNANCY – DUTY TO PROVIDE ‘REASONABLE ACCOMMODATION’ RECENT DEVELOPMENTS IN SA

INTRODUCTORY REMARKS

In an article by the writer posted on LinkedIn entitled “THE EMPLOYMENT EQUITY ACT, 47 OF 2013 & EMPLOYMENT EQUITY REGULATIONS, 2014 – IMPORTANT ISSUES AND QUESTIONS?” September 13 2014*, it was mentioned that SA employers would be wise to revisit their Human Resources policies, procedures, guidelines and any document that may be relevant thereto with the purpose of ensuring compliance with the amendments to Employment Equity, 55 of 1998 [EEA] was concerned.

*[Also published in: “Employment Equity Newsletter – CCMA” (April/May 2015) 2nd ed, 6-8; “Legal Brief Today – Workplace”, (September 17, 2014) Juta & Co Ltd].

The gratuitous advice referred to in the article supra was given in good faith especially if seen in the light of the promulgation of the amendments to South African Employment Equity legislation, namely Employment Equity Amendment Act, 47 of 2013 [EEAA] and the Employment Equity Regulations, 2014 [EER] which came into effect on 01 August 2014 [EEA].

Following thereon and as recent as on June 1, 2015 the SA Minister of Labour in accordance with the provisions of section 54(1) of the ‘new’ EEA, and on advice of the Commission for Employment Equity signed “The Code of Good Practice On Equal Pay/Remuneration For Work Of Equal Value” where after the Code was duly published in the Government Gazette, on June 1, 2015 – and so be it as the saying goes.

In the article referred to above a friendly comment was made in passing by the writer as to the statutory need to revisit and if necessary add or amend HR policies. It was stated that, “One hopes that employers are not adopting a ‘wait and see’ approach as to compliance with the legislation, for example to await a ‘test case’ or legal precedent to be set by the Courts or even the CCMA”.

Following thereon the South African Commission for Conciliation, Mediation & Arbitration (CCMA) published the first edition of a publication entitled, “Employment Equity Newsletter – CCMA” under the editorship of Senior Commissioner Winnie Everett, an internationally recognised authority in employment law and amongst other the subject matter of employment discrimination.

The said publication is bound to become an authoritative work of reference as to important developments in South Africa especially within the field of employment discrimination law not only insofar as it pertains to how the positive law is interpreted and applied by Commissioners of the CCMA and Judges of the Labour Courts.

The publication Employment Equity Newsletter – CCMA also contains a statistical comparative analysis of trends in the number of cases submitted to the CCMA for resolution as well as information as to the cause of action, outcome, albeit conciliated/mediated or arbitrated ‘adjudicated’.

Of interest to readers may be the editorial note by Commissioner Everett in “Employment Equity Newsletter” (April/May 2015) 2nd ed, “The CCMA commissioners have seized the opportunity to provide clarity on the meaning of arbitrary grounds of unfair discrimination since the amendments to the Employment Equity Act (EEA) came into effect on 1 August 2014.

The amendments conferred jurisdiction on the CCMA to arbitrate unfair discrimination cases where the dispute involves sexual harassment, and all other unfair discrimination cases where the applicant earns below the Basic Conditions of Employment Act threshold [currently R205, 433.30 per year] or the parties consent to arbitration…In this issue we provide summaries of interesting and important cases dealing with unfair discrimination on both listed and arbitrary grounds. These include cases where the applicant claimed unfair discrimination on grounds of pregnancy…”

Discrimination on the ground of pregnancy is referred to as one of the listed grounds in terms of section 6(1) of the EEA that deals with the Prohibition of ‘Unfair’ Discrimination:

‘‘(1) No person may unfairly discriminate, directly or indirectly, against an employee, in any employment policy or practice, on one or more grounds [listed grounds], including race, gender, sex, pregnancy, marital status, family responsibility, ethnic or social origin, colour, sexual orientation, age, disability, religion, HIV status, conscience, belief, political opinion, culture, language, birth or on any other arbitrary ground.’’; and

(2) It is not unfair discrimination to –

(a)…

(b) distinguish, exclude or prefer any person on the basis of an inherent requirement of a job;

(3)…;

‘‘(4) 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), is unfair discrimination.” [Emphasis added].

In “Employment Equity Newsletter” 2nd Ed, 2 – Everett, C under the heading “Pregnancy” [listed ground] provides an interesting summary of two matters where the CCMA dealt with unfair discrimination on the ground of pregnancy.

The first matter pertained to a case where woman alleged unfair discrimination on the basis of her pregnancy. It involved a mine in Limpopo [a province in SA], where the underground worker was put on five months’ unpaid leave after a reported pregnancy.

To protect pregnant women, the employer normally takes steps to find alternative surface work, but in this case, the Commissioner found that applicant was placed on unpaid leave simply because she fell pregnant twice in three years. “She was the only person who fell pregnant twice in three years; that is why she was the only person subjected to this type of treatment out of a total of eighteen pregnant employees. She was clearly unfairly discriminated against on the basis of her pregnancy.” (LP5753-14)

The second matter involving pregnancy, the Managing Director of a company stated in an email that, “Clearly this pregnancy is becoming a problem. I can see it is becoming a disability and a liability”. The Commissioner found that the comment was unwarranted and discriminatory even if it was in response to a perceived drop in performance. (GATW 11893-15) [Emphasis added].

Upon perusal of the summaries of the two matters supra the following could be deduced:

  1. That the inconsistent and [unfair] discriminatory treatment of an Applicant vis-à-vis a comparator, regardless of the fact that both are pregnant, could not be a determinative factor used in justification of, or as a defence for differential treatment;
  2. That an Applicant could not be penalised or treated less favourably in the form of the unilateral imposition of ‘unpaid leave’ for falling pregnant twice within a three year period, ostensibly on the ground of what could be termed ‘a predisposition to conceive or repetitive conception’; and
  3. That employers should desist from making unwarranted and potentially discriminatory remarks which may be offensive to the dignitas of the recipients thereof.

Upon perusal of articles posted on LinkedIn the aforesaid unwarranted and discriminatory comments made are not confined to the SA labour [mining] or other economic sectors. Discrimination based on pregnancy is an international phenomenon as is borne out by the cited matter as discussed below.

In an article by C Stoneburner Esq, “Hey pregnant lady, why don’t you stay home, enjoy some of our doughnuts, and put up your feet? – Employment Discrimination Report” (March 10, 2015) Fox Rothschild LLP, New York, “Although the facts alleged in a recent lawsuit entitled EEOC v. D&S Shipley Donuts are not quite as patronizing as the title of this post suggests; they are close”.  

The EEOC brought suit against a franchisee of Shipley’s Do-Nuts claiming that the franchisee violated Title VII of the Civil Rights Act of 1964 and the Pregnancy Discrimination Act.

The Complaint alleged that Brooke Foley was employed by D&S Shipley Donuts until she became pregnant.  However, this was not a simple case of an employee being terminated because she was pregnant.  “The complaint alleged that employees who were pregnant were required to provide “a written medical release” assuring the company that they did not have a “high-risk pregnancy” and that it was safe for the employee to perform normal job duties. [Emphasis added].

The EEOC also alleged that this medical release was required even in situations where employees did not request “any type of accommodations or disclose that there were any medical issues related to the pregnancy”.

When rumours spread that Ms. Foley was pregnant, the owner of the Company confronted her and allegedly demanded to know if she was pregnant.  She refused to confirm that she was in fact pregnant.  Nevertheless, during this confrontation, the owner told her that she was required to provide medical clearance.  Ms. Foley was also allegedly immediately removed from the work schedule until she could provide the note.  Ms. Foley objected to the requirement that she obtain medical clearance and was then terminated the following day.

According to the author, “This case has a rather simple lesson that is one of the basic premises behind the Pregnancy Discrimination Act  — that employers cannot assume that pregnant employees will be unable to work or will not be dedicated to their jobs once they become pregnant or have children.  Even in an environment where the physical demands are much greater than being a cashier in a doughnut shop, employers cannot simply assume that pregnant employees cannot perform the job functions.”

Having set the scene, so to speak for the purpose of this article it should not be recorded that postings on the LinkedIn network should preferably be brief and not created; nor should it be perceived by the reader as if a comprehensive or an authoritative work of reference on the subject matter. The objective is to edify, within the confines of the medium and to generate interest and possible debate on the subject matter.

Writer would also refer to the same or similar international jurisprudence on the subject matter that may prove of relevance and edification to the reader.

PREGNANCY – DUTY TO PROVIDE ‘REASONABLE ACCOMODATION’ – A SA CASE STUDY

The matter was referred to the Commission for arbitration in terms of Section 10 of the Employment Equity Act, No 55 of 1998 as amended (EEA). The dispute was couched in the form of ‘unfair discrimination on the grounds of pregnancy’. [See: NWRB 2464-14 – 25 May 2015].

SUMMARY OF BACKGROUND & MATERIAL FACTS:

Four Applicants referred a dispute against their employer, a mining conglomerate in SA, in that they alleged unfair discrimination by the Respondent and more specifically on the grounds as set out hereunder:

  1. That they have been discriminated against based on their pregnancy as all other pregnant Employees who were employed in risk positions were placed in alternative positions, as opposed to being placed on maternity leave;
  2. That the Respondent failed to comply with the provisions of its Pregnancy Policy; alternatively applied the said policy in an inconsistent manner and as a consequence they were unilaterally placed on maternity leave long before their actual expectant dates which led to the Applicants having to take unpaid maternity leave in order to recover from childbirth and to fulfill their caregiving duties.

As a remedy the Applicants prayed for compensation in the form of non – patrimonial loss, to wit the loss of dignity in the form of a solatuim as well as compensation for patrimonial loss suffered for the period having been on unpaid maternity leave caused by the Respondent’s failure to comply with its maternity policy and the unjustifiable inconsistent application of the said policy.

At the commencement of the proceedings the Respondent brought all sorts of preliminary points [application for postponement – denied by the Arbitrator], a point in limine to the effect that the Applicants’ case was bad in law and not capable of succeeding – point in limine dismissed by the Arbitrator] and following thereon an application for recusal of the Arbitrator which application was unsuccessful.

Of some interest was the point in limine raised by the legal representative for the Respondent. She referred to the Constitutional Court judgment in Yonela Mbana v Shepstone & Wylie (not yet reported Case No CCT 85/14, handed down on 7 May 2015) where a black female claimed discrimination on the grounds of race and social origin and cited as comparators a black male and two white females.

The Court held that it was unlikely that the differential treatment was attributable to the grounds raised as the comparator is also a black person and in this regard held that her claim that she was discriminated against on the basis of race loses traction. [See par [38] of award].

The Arbitrator found at [39] “According to the issues in dispute a determination is required on whether or not the Respondent’s conduct constitutes discrimination on the grounds of pregnancy, and if it did, whether or not such discrimination was rational and not unfair or otherwise justifiable. The Applicants in comparing themselves with the five (5) other pregnant Employees, who were given alternative employment (comparators), is according to my understanding but one facet of their claim. 

I would agree with the Respondent that it is unlikely that the differential treatment was attributable to their pregnancy insofar the comparison is made with the five (5) other pregnant Employees.  However the Applicants’ claim is wider than a mere comparison with the five (5) Employees mentioned.  According to the Applicants’ claim of discrimination, it was argued that they have suffered unfavorable treatment as no alternative employment was given to them, they were not consulted prior to being placed on maternity leave and that the maternity leave was unilaterally imposed on them”.  [Emphasis added].

SUMMARY OF THE ARBITRATOR’S FINDING AND AWARD:

For the sake of brevity the Arbitrator’s finding and award would be recorded in truncated form hereunder:

  1. In matters of discrimination and more particularly pregnancy it is not always necessary to cite a comparator in order to prove differential treatment. In Wallace v Du Toit [2006] 8 BLLR 757 (LC) the Labour Court held that the dismissal of Ms Wallace based on the assumption that she would be unable to continue to fulfill her duties as child minder merely because she was pregnant, amounted to unfair discrimination. There was no comparator in the cited case.
  2. In the United Kingdom, the Equity Act of 2000 removed the need to point to a comparator when alleging discrimination on the basis of pregnancy.

The Respondent argued that the Applicants restricted their claim by agreeing that the reasonableness of the Pregnancy Policy was not in dispute and that no consideration could accordingly be given to any subsequent argument that was raised.

The Labour Court in Harmse v City of Cape Town [2003] 6 BLLR 557 (LC) held that a failure by an Applicant to specify whether discrimination is direct or indirect does not render a claim expiable.  The Applicants were laypersons and unable to distinguish between direct and indirect discrimination. The Arbitrator found that the Respondent was fully aware of the particulars of the Applicant’s claim from the very onset of these proceedings and was afforded a fair opportunity to defend the claim.

By referring to Section 26 of the Basic Conditions of Employment Act, 20 of 2013 read with the Code of Good Practice on the Protection of Employees during Pregnancy and after Childbirth (the Code), item 5.3 of the Code requires, where appropriate, that the Employer should also maintain a list of employment positions not involving risk to which pregnant or breastfeeding employees could be transferred to. Likewise item 5.8.2 requires the Employer, the Employee and her representative to determine what steps to take to prevent the exposure to the risk by adjusting the employee’s working conditions.

The Arbitrator found that having regard to the above and read with Section 15(2) of the Employment Equity Act, a duty to reasonable accommodation is established. A failure to reasonably accommodate and recognize pregnancy and maternity, and in general the reproductive role, can constitute discrimination.

Having found that the Respondent failed to adhere to the spirit and letter of its Maternity Policy, by imposing maternity leave on the Applicants, without following a meaningful consultative process in order to seek alternative positions in accordance with the principle of ‘reasonable accommodation’ the Respondent acted irrationally, without justification and thereby committed an act of unfair discrimination.

The Applicants were awarded compensation for non-patrimonial loss in the form of solatuim as well as compensation for patrimonial loss suffered for the periods of unpaid maternity leave taken.

DUTY TO PROVIDE ‘REASONABLE ACCOMMODATION’ – PROBLEMS & PUZZLES

Finding solutoin

[Picture: Courtesy Julie Brook, Esq., “Disability Accommodation” (October 21, 2013) CEB blog posts]

In the arbitration award referred to above in paragraphs (iv) & (v) the Arbitrator found that by reference to Section 26 of the Basic Conditions of Employment Act, 20 of 2013 read with the Code of Good Practice on the Protection of Employees during Pregnancy and after Childbirth (the Code) read with Section 15(2) of the Employment Equity Act, a duty to reasonable accommodation is established.  A failure to reasonably accommodate and recognize pregnancy and maternity, and in general the reproductive role, can constitute discrimination.

The duty to accommodate goes beyond avoiding a specific discriminatory act.  Sound workplace policies must be implemented that afford accommodation.  Employers must therefore make bona fide attempts to adapt the workplace and or duties of Employees in order for pregnant Employees to retain their positions and or investigate possible alternative positions wherein these Employees can be temporarily transferred to.  These policies should be flexible enough to accommodate the different needs that may accompany different positions and differences in pregnancies. [At 47].

The fact that accommodation may ultimately prove impossible, cannot be ignored, but all options must be seriously considered and weighed before determination is made on the impossibility of accommodation. [At 48].

It is trite that the awards by Commissioners could not be regarded as legal precedent or binding authority. In Mustek Ltd v Tsabadi NO and others [2013] 8 BLLR 798 (LC) the Court held at [13] “That to argue that a Commissioner is bound by the findings of another Commissioner is repugnant to the rules of precedent.”

This notwithstanding, the award by a Senior Commissioner of the CCMA has persuasive value especially in the event that an arbitration award is reported in the relevant law journal.

Be that as it may, it was deemed apposite to restate the relevant statutory provisions in terms of SA law.

THE RELEVANT PROVISIONS OF SOUTH AFRICAN LEGISLATION

For the purpose of this article it was deemed apposite to refer section 9 and 10 of the Constitution of the Republic of South Africa, 1996 – “CHAPTER 2 ‘BILL OF RIGHTS’” in that it enshrines the rights of all people in SA and “affirms the democratic values of human dignity, equality and freedom.” [See: section 7 ‘Rights’ – Constitution].

Section 9 and 10 of the Constitution stipulate as set out hereunder: 

“9. Equality

(1) Everyone is equal before the law and has the right to equal protection and benefit of the law.

(2) Equality includes the full and equal enjoyment of all rights and freedoms. To promote the achievement of equality, legislative and other measures designed to protect or advance persons or categories of persons, disadvantaged by unfair discrimination may be taken.

(3) The state may not unfairly discriminate directly or indirectly against anyone on one or more grounds, including race, gender, sex, pregnancy, marital status, ethnic or social origin, colour, sexual orientation, age, disability, religion, conscience, belief, culture, language and birth.

(4) No person may unfairly discriminate directly or indirectly against anyone on one or more grounds in terms of subsection. 

(5) Discrimination on one or more of the grounds listed in subsection (3) is unfair unless it is established that the discrimination is fair.

10. Human dignity

Everyone has inherent dignity and the right to have their dignity respected and protected.”

The list of prohibited grounds of discrimination contained in section 6(1) of the EEA is open-ended, thus making it necessary to distinguish between ‘listed’ and ‘unlisted’ grounds. The listed grounds are identical to those formerly contained in item 2(1)(a) of Schedule 7 to the LRA, with the addition of ‘pregnancy’, ‘HIV status’ and ‘birth’, and include all the grounds listed in section 9(3) of the Constitution with the addition of ‘family responsibility’, ‘HIV status’ and ‘political opinion’.

‘Pregnancy’ is defined as including ‘intended pregnancy, termination of pregnancy and any medical circumstances related to pregnancy’ [s 1]. While the definition does not allude to ‘potential’ pregnancy – that is, the fact that a woman capable of bearing children may be perceived as likely to become pregnant – discrimination against an employee or job applicant on this ground will undoubtedly be treated as sex discrimination. [See: D du Toit et al “Labour Relations – A Comprehensive Guide” 6th Ed (2015) 676].

In the authoritative publication JL Pretoruis et al “Employment Equity Law – Reasonable Accommodation” (2012) LexisNexis 7-44 to 7-59, the learned authors at [7-18] address the interface between reasonable accommodation and affirmative action under the EEA and makes specific reference to international jurisprudence.

Referral is made to ‘European Community, Council Directive 86/613 of December 1986 and wherein the interface between reasonable accommodation and the protection of women during pregnancy and motherhood was confirmed.

The learned authors at 7-45 to 7-46, paragraph 7.8.2 “Examples of reasonable accommodation of pregnancy and maternity” analysed international jurisprudence and in effect advise the reader as to measures to be introduced in order to give effect to the principle of ‘reasonable accommodation’.

Referral is also made by Pretoruis supra, Employers will have to state the specific barrier and the subsequent measures instituted in their reports to the Department of Labour  in terms of Section 21 of the Promotion of Equality and Prevention of Unfair Discrimination Act of 2000” [See: 7-44, footnote 205].

Section 8(f) prohibits any person from discriminating against any person on the ground of pregnancy. It will, therefore, cover instances where, for example, a medical aid fund discriminates against pregnant women on unfounded assumptions or excludes certain categories of women from cover.

Therefore, it is submitted that the finding by the Commissioner referred to supra insofar as the duty to provide reasonable accommodation in the event of pregnancy forms part of SA employment law could not be faulted.

Furthermore, in an article by DC Saxe et al “Vacations, Family and Medical Leave, and Other Time Off – Pregnancy Disability Leave” (2015) Continuing Education of the Bar – California (CEB), pregnancy leave falls under the provision of ‘Disability Leave’.

A woman is disabled by pregnancy, childbirth, or related medical conditions if, in the opinion of her health care provider, she is unable to work at all because of pregnancy, childbirth, or related medical conditions, is unable to perform any one or more of the essential functions of her job, or is unable to perform those functions without undue risk to herself, to the successful completion of her pregnancy, or to other persons. [2 Cal Code Regs §11035(f)].

A woman also is considered to be “disabled by pregnancy” if she is suffering from severe morning sickness or needs to take time off for prenatal or postnatal care; bed rest; gestational diabetes; pregnancy-induced hypertension; preeclampsia; postpartum depression.

For the sake of brevity of this article further reference to the relevance of international jurisprudence was deemed inappropriate with the exception of an article by C Tanzola, Esq. “Accommodating Employee Disability – Not All That Painful” (2014) Sherrard Kuzz LLP, Ontario, Canada, where the learned author provides the reader with some practical tips as to measures to accommodate an employee, albeit due to disability however of general application insofar as pregnancy accommodation is relevant.

Kuzz observes that the Ontario Human Rights Code (“Code”) requires an employer to accommodate an employee with a disability “to the point of undue hardship.” This means considering the employee’s restrictions and limitations and either modifying the employee’s current job or finding other work as close as possible to the  employee’s pre-disability job, within the scope of the employee’s abilities.

There are four fundamental steps to accommodation:

  1. Consider whether a disability exists.

“Disability” is defined broadly under the Code to include any degree of:

  • physical disability, infirmity, malformation or disfigurement caused by an injury or birth defect or illness;
  • mental impairment or developmental disability;
  • learning disability or mental disorder, or
  • injury or disability for which benefits are claimed or received under the Workplace Safety and insurance Act (“Act”) [Canadian statute].

The definition of “disability” does not consider where the injury or illness occurred; only that it exists. A common cold or stress (which does not otherwise trigger a disability, such as depression or anxiety) is not a “disability” under the Code.

  1. Complete a procedural analysis.

In most cases, an employer becomes aware an employee has a disability when the employee asks for accommodation. However, in some cases it may be incumbent on the employer to make a proactive inquiry. For example, where the employer observes a dramatic change in the employee’s behaviour causing a disruption in the workplace, the employer may need to inquire whether the employee requires accommodation.

Once it has been established that an employee has a disability, the employer must consider what can be done to facilitate the employee’s continued participation in the workplace.

This procedural analysis typically begins with an inquiry into the nature of the disability (e.g. physical or mental), the employee’s limitations (e.g. no lifting of more than 10lbs) and for how long the limitations – and thus the need for accommodation – may last.

Where the information from the employee’s doctor is insufficient, an employer might consider retaining the services of its own doctor or asking the employee to attend an independent medical examination paid for by the employer. When all else fails, an on-going failure to cooperate can lead to discipline or the denial of the accommodation request.

If it is not possible to modify the employee’s regular job, other similar jobs at the same wage rate must be considered. The employer must also explore if the tasks of multiple positions can be combined or bundled. In essence, the duty to accommodate requires the employer to offer work that is as similar as possible to the employee’s pre-disability job.

  1. Complete a substantive analysis.

Although closely related to the procedural analysis, the substantive analysis considers the specific modifications that may be required so the employee can fully participate in the workplace.

This may include decreased productivity standards, reduced hours, increased breaks and the ability to sit and stand as needed.

To this end, while an employee’s input into the accommodation process is important, the employee does not have the right to insist on a more favourable position, and any absence resulting from an employee’s refusal to work in an otherwise suitable position is culpable.

Finally, unless the cost of a modification will significantly impact the viability of a business, the cost of accommodation will not be accepted as “undue hardship”.

  1. Follow-up regularly.

Once an accommodation plan has been established, the employer should remain in regular contact with the employee and request updated medical information and reports to ensure that as the employee’s disability changes (if at all) the accommodation plan is amended accordingly. Ideally, the employee should be working his way back to his pre-disability position.

Practical Tips

The duty to accommodate, while at times daunting, can be managed to the benefit of both the employer and employee. To simplify the process remember the following tips:

  1. Each case must be evaluated and analyzed on its own merits.
  2. Accommodate to the point of undue hardship for all cases of disability.
  3. Consider every suitable or potentially suitable workplace position, including bundled tasks.
  4. Continue to seek out updated, meaningful medical information.
  5. Work with the employee (and union), to explore and implement appropriate accommodation.
  6. When in doubt, reach out to experienced employment counsel who will help you navigate through the process.

CONCLUSION

According to Du Toit supra an employer need not accommodate applicants or employees with disabilities if doing so would impose an ‘unjustifiable hardship’ on the business of the employer.

“Unjustifiable hardship” is defined as ‘action that requires significant or considerable difficulty or expense’ and involves considering, among other things, the effectiveness of the accommodation and the extent to which it would seriously disrupt the operation of the business.

It should be reiterated that referral to the SA law as it pertains to disability should not be seen as equating pregnancy with a form of disability. The referral to the law as it pertains to disability was done with the purpose to provide the SA reader with guidelines as to the manner in which the Courts may approach the employer’s duty to provide reasonable accommodation in the event of pregnancy.

In Standard Bank of SA v CCMA [2008] 4 BLLR 356 (LC) par 98; [ see also MEC: Education, KZN v Pillay 2008 (2) BCLR 99 (CC) par 76], the SA Labour Court held, unjustifiable hardship means ‘(m)ore than mere negligible effort’, and, as in the case of reasonable accommodation, it imports a proportionality test.

The Duty to Provide Reasonable Accommodation – An Imposition of a ‘Disproportionate Burden on the SA Employer’?

In the authoritative publication by Pretoruis et al “Employment Equity Law – Reasonable Accommodation” at 7-42 to 7-43 supra it is suggested that making ‘reasonable accommodation’ should not impose a disproportionate burden on the employer.

It was also noted that comparative law supports the duty to provide reasonable accommodation and that such duty is implied in the Constitution as well as the EEA.

The determination of whether the employer would be disproportionately burdened upon imposition of reasonable accommodation calls for an objective individualised assessment of the nature and cost of accommodation in the light of the employer’s financial resources, workplace structures, workplace environment and extend of business operations.

It calls for, and should be determined on a case-by-case basis having regard to factors such as:

– the nature and cost of accommodation required;

– an objective assessment of the employer’s overall financial resources;

– the number of persons employed;

– the effect on expenses and resources;

– the impact of the accommodation on the operation and continued commercial viability of the entity;

– geographical separateness, administrative or fiscal relationship of the facility in question to the covered entity.

Whether hardship is justifiable will differ according to the circumstances of each case. In Standard Bank of SA v CCMA it was held that the expected modification or adjustment in the workplace should be based on a ‘pragmatic common sense approach’.

The fact remains that the employer is in a better position to formulate accommodation and is duty bound to initiate the process.

The employee has a reciprocal duty to participate in the process and to assist in securing appropriate accommodation.

Any reasonable proposal which is offered to the employee may not be turned down by him/her without just cause or compelling reason; failing whereto the offer may be withdrawn and punitive action may follow as a consequence of unreasonable refusal or rejection of a bona fide offer of accommodation by the employer

Johann Scheepers

June 25, 2015 [updated]

Copyright:

Copyright reserved by the writer hereof. No part of this article/ guide may be reproduced, without prior written permission by the author.

The content of this article is intended to be general in substance and nature; to provide commentary on contemporary issues and where appropriate constitutes a general guide to the subject matter. Specialist advice should be sought about the reader’s specific circumstances.

The commentary expressed herein is that of the writer and not that of any professional organisation or entity with which the writer may be associated with.

 

 

[O Kahn–Freund, “On Uses and Misuses of Comparative law”, The Modern Law Review, (1974) 27]

When a group becomes a scary Mob

A thought provoking article by Professor Spoelstra and an unfortunate reality and manifestation of destructive conflict prevalent within SA.

The subject matter is of great interest and I certainly intend to liaise with Prof Spoelstra as to the allocation of further reading material as to the issue. J Scheepers – SA.

Prof Manie Spoelstra

We all find ourselves in crowds or groups of people at times. At sport events, work or social events. That is normal, but could the same group become a mob?

Mobs get crazy. They destroy property, throw stones at police, run over others (old or small) or dance naked in the street.

Don’t think you are immune! For example:

  • Recently we were inundated with news about mobs attacking foreigners in South Africa in what they call ‘xenophobic’ violence. Horrific pictures and footage could be seen in social media, television and the press. These acts were never executed by individuals but always by smaller or bigger groups. These mobs killed several and caused immense damage to shops and properties
  • A few years ago we witnessed the same behaviour when students became a mob as they rushed to get admitted to a Johannesburg University, leaving a number of people…

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