Ukweza Holdings (Pty) Ltd v Nyondo and Others (PA2/19) [2020] ZALAC 7; [2020] 6 BLLR 544 (LAC); (2020) 41 ILJ 1354 (LAC) (4 March 2020)

80 Reportability

Labour Law

Brief Summary

Labour Law — Dismissal — Fixed-term contract — Appellant's project manager employed on fixed-term contract which expired — Employee continued to work after contract expiration — Appellant issued notice of termination post-expiration — Commissioner ruled employee was dismissed and awarded compensation — Appellant appealed, contending no dismissal occurred as contract ended by effluxion of time — Court held CCMA erred in finding dismissal; fixed-term contract ended as per its terms, and no legitimate expectation of permanent employment existed.

Comprehensive Summary

Summary of Judgment

1. Introduction

This matter concerned an appeal in the Labour Appeal Court against a judgment of the Labour Court dismissing a review application. The underlying dispute arose from a CCMA arbitration award in which the commissioner held that the termination of the third respondent’s engagement constituted a dismissal and awarded compensation.

The appellant was Ukweza Holdings (Pty) Ltd, an employer operating a catering business. The first respondent was the commissioner (Nyondo A NO) who issued the arbitration award. The second respondent was the Commission for Conciliation, Mediation and Arbitration (CCMA). The third respondent was the employee (Oliver Michael David), who represented himself in the appeal.

Procedurally, after the employee referred a dispute to the CCMA, the commissioner issued an award finding a dismissal and unfairness, with compensation. The employer then brought a review application in the Labour Court to set the award aside, which was dismissed by Lallie J. With leave of the Labour Court, the employer appealed to the Labour Appeal Court. The appeal also involved an application for condonation for the late filing of the notice of appeal.

The general subject-matter of the dispute was whether the CCMA had jurisdiction to arbitrate because the employee had been dismissed, or whether the employment relationship ended by effluxion of time upon expiry of a fixed-term contract, in which event the CCMA would lack jurisdiction to determine an unfair dismissal dispute.

2. Material Facts

Ukweza Holdings provided catering services to various customers, including Life St George Hospital. It required a project manager on site at that hospital. When its project manager resigned, Ukweza appointed the employee to replace the resigned manager on a fixed-term contract for the period 11 December 2014 to 31 December 2014.

It was common cause that despite the initial fixed-term contract ending on 31 December 2014, the employee continued to render services thereafter. Only in the middle of January 2015 did the employer approach the employee to extend the fixed-term contract, and the employee agreed to an extension until 31 January 2015.

The employee learned that the position he occupied had been advertised, and he raised this with his superior, Mr Bam. While the content of their discussion was disputed, it was not disputed that Mr Bam informed the employee that he would be considered for the post along with other candidates.

On 2 February 2015, the employer emailed the employee advising that he had been unsuccessful in his application for the project manager post, that his contract would not be extended, and that it would end on 13 February 2015. On 3 February 2015, the employee received a notice of termination stating unequivocally that his “fixed term contract will end on the 13th February 2015”. The selected end date of 13 February 2015 was linked to the employer’s mistaken belief that it was obliged to give two weeks’ notice in terms of the Basic Conditions of Employment Act 75 of 1997.

The employee treated the termination as a dismissal and referred a dispute to the CCMA. At the outset of arbitration, the employer raised that there was no dismissal because the contract had terminated by effluxion of time. The commissioner ruled that the employee had been dismissed and that the employer bore the onus to prove fairness. The commissioner reasoned that because the fixed-term contract had expired on 31 January 2015, the subsequent termination letter could not terminate an expired contract and thus constituted termination of employment in terms of section 186(1)(a) of the Labour Relations Act 66 of 1995, leading to a finding of unfair dismissal and an award of compensation.

On review, the Labour Court upheld the commissioner’s approach on jurisdiction, finding that the commissioner was correct that the CCMA had jurisdiction and that the fixed-term contract had already expired when the termination notice was issued.

3. Legal Issues

The central legal question was whether the CCMA had jurisdiction to arbitrate the dispute, which depended on whether there had been a dismissal as contemplated by the Labour Relations Act, or whether the employment ended by effluxion of time upon expiry of a fixed-term contract.

A further legal issue (arising from the employer’s grounds of appeal) concerned the proper standard of review applicable to a commissioner’s jurisdictional ruling, namely whether the Labour Court was required to determine the jurisdictional issue de novo on a correctness standard, as opposed to deferring to the commissioner on a reasonableness approach.

Although additional issues were raised by the employer—whether the commissioner decided the “wrong dispute” (by focusing on section 186(1)(a) rather than an alleged expectation of renewal) and whether compensation was excessive—the Labour Appeal Court treated these as subsidiary and ultimately unnecessary to decide once jurisdiction was resolved.

The dispute therefore primarily concerned a question of law (jurisdiction and the correct test), applied to a largely common-cause factual matrix about the contractual periods, the employee’s continued service, and the employer’s communications.

4. Court’s Reasoning

The Labour Appeal Court held that where jurisdiction is in issue, the commissioner’s decision is reviewable on an objective basis: the applicable standard is correctness, not reasonableness. In this case, the employer had challenged jurisdiction on the basis that there was no dismissal because the contract ended by effluxion of time. The Labour Appeal Court accepted that the Labour Court ought to have approached the jurisdictional issue on the basis of whether the commissioner was right or wrong.

Turning to the commissioner’s reasoning, the Labour Appeal Court criticised the approach as too technical, because it did not sufficiently account for the practical manner in which the parties conducted themselves. The commissioner had reasoned that, since the fixed-term contract ended on 31 January 2015 and the notice of termination was issued thereafter, the notice could not relate to a contract that had expired, leading to the conclusion that the employee must have been on an indefinite contract from 1 February 2015.

The Labour Appeal Court reasoned that, on that logic, the employee would have had to be treated as a permanent employee already from 1 January 2015, because he continued working after the initial contract ended on 31 December 2014. However, the evidence showed that the parties only discussed and agreed the January fixed-term extension mid-January, and there was no contemporaneous suggestion that the relationship had converted to permanent employment simply because the employee continued working after the earlier expiry. The Court treated this as demonstrating that the commissioner’s inference of an automatic “morphing” into indefinite employment was not supported by how the relationship was managed.

The Labour Appeal Court further addressed the employee’s reliance on an alleged expectation of being permanently appointed. It held that the argument of a legitimate expectation was misconceived on the facts, because the employee knew (or became aware) that the employer had advertised the post and he made himself available to be considered in competition with other candidates. In those circumstances, the Court held that there could be no legitimate expectation to the very post for which he competed and was unsuccessful.

The Court also rejected the proposition that continued service after the end of January meant the fixed-term contract became permanent. It treated the employer’s mistaken belief about paying two weeks’ notice (during which the employee did not render, and was not required to render, services) as insufficient to alter the character of the fixed-term relationship.

On the facts as found relevant, the Labour Appeal Court concluded that the fixed-term contract ended on 31 January 2015. It emphasised that the mere fact that the employer did not inform the employee before expiry that the contract would not be renewed did not mean the contract was automatically extended or that employment became permanent, absent a legal provision producing that consequence.

Having found that the fixed-term contract ended by effluxion of time and that there was no dismissal, the Court held that the CCMA had no jurisdiction to arbitrate an unfair dismissal dispute. In light of that conclusion, the Court considered it unnecessary to determine the remaining issues regarding the characterisation of the dispute and the quantum of compensation.

As to costs, the Court held that it was not a matter where costs should follow the result. The Court also granted condonation for the late filing of the notice of appeal, being satisfied that it should be granted on the information before it.

5. Outcome and Relief

The Labour Appeal Court granted condonation for the late filing of the notice of appeal.

The appeal was upheld, and the order of the Labour Court was substituted. The CCMA award was reviewed and set aside and replaced with an order that the CCMA lacked jurisdiction to arbitrate the dispute in the absence of a dismissal.

No order as to costs was made.

Cases Cited

Ukweza Holdings (Pty) Ltd v Nyondo and Others (PA2/19) [2020] ZALAC 7; [2020] 6 BLLR 544 (LAC); (2020) 41 ILJ 1354 (LAC)

Legislation Cited

Basic Conditions of Employment Act 75 of 1997

Labour Relations Act 66 of 1995 (section 186(1)(a))

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The Labour Appeal Court held that the fixed-term contract ended by effluxion of time on 31 January 2015 and that the subsequent notice of termination did not convert the relationship into indefinite employment or establish a dismissal. Because there was no dismissal, the CCMA had no jurisdiction to arbitrate the dispute as an unfair dismissal matter. The Court substituted the Labour Court’s order with an order reviewing and setting aside the CCMA award and replacing it with a jurisdictional finding in the employer’s favour, granted condonation for late filing of the notice of appeal, and made no costs order.

LEGAL PRINCIPLES

A commissioner’s ruling on jurisdiction is subject to review on the standard of correctness; the reviewing court must determine objectively whether the CCMA had jurisdiction, rather than whether the commissioner’s conclusion was merely reasonable.

A fixed-term contract ordinarily terminates by effluxion of time on its expiry date. The employer’s failure to give advance notice that the contract will not be renewed does not, without more and absent a legal provision to that effect, automatically extend the contract or convert the relationship into permanent employment.

An employee cannot establish a legitimate expectation to continued or permanent appointment to a post where the employee knew the post was being advertised and participated in a competitive process for it, but was unsuccessful; the factual context may negate the asserted expectation.

An employer’s mistaken belief about giving notice pay under the BCEA, and the issuing of a notice referencing a later date, does not on its own establish that the fixed-term relationship has become indefinite where the underlying fixed-term arrangement has already expired and the relevant context does not support a conversion to permanent employment.