South African Broadcasting Corporation v McKenzie (CA8/98) [1998] ZALAC 13 (15 October 1998)

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[1998] ZALAC 13
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South African Broadcasting Corporation v McKenzie (CA8/98) [1998] ZALAC 13; [1999] 1 BLLR 1 (LAC); (1999) 20 ILJ 585 (LAC) (15 October 1998)

IN THE LABOUR APPEAL COURT OF SOUTH
AFRICA
25 Sept 1998
HELD AT JOHANNESBURG
Case No: CA8/98
In the matter between
SOUTH AFRICAN BROADCASTING
CORPORATION
Appellant
and
L E McKENZIE
Respondent
JUDGMENT
Introductory
[1] The respondent, Mr L E McKenzie,
instituted action in the industrial court in terms of s 46(9) of the
Labour Relations Act, 28
of 1956 (“the Act”). In the statement
of claim he averred that he had been employed by the appellant, the
South African Broadcasting
Corporation (“SABC”), and that his
services had been unfairly terminated. In its reply to McKenzie’s
statement of case, the
SABC placed in issue that McKenzie had been
its employee, averred that he had produced and presented two radio
programmes, “Talkabout”
and “Traveller’s Check”, as an
independent contractor, and denied that his services had been
unfairly terminated.
[2] Mr P P de Klerk, a senior member
of the industrial court, adjudicated upon the first issue, namely,
whether or not McKenzie
was an employee in terms of the Act. Having
heard the evidence of McKenzie and Messrs N C Vermaas and J D Orr of
the SABC, the
industrial court made a determination in favour of
McKenzie.
[3] The matter thereafter proceeded
before Mr W F Maritz, an additional member of the industrial court.
He made a determination
in the following terms:
‘
1. The circumstances of the
termination of [McKenzie’s] contract with the [SABC] constituted
an unfair labour practice.
2. The [SABC] is ordered to pay
compensation to [McKenzie] in an amount of R 45 000.
3. The aforesaid shall be paid to
the attorneys of record of the applicant for his account within 21
days of the date of the handing
down of this determination.
4. Costs are awarded to [McKenzie]
on the Supreme Court scale such costs to include the costs related
to the initial hearing in
respect of the determination of the
jurisdiction of the Court.’
[4] The SABC appeals against the
ruling that McKenzie was its employee, the finding that it committed
an unfair labour practice,
the award of compensation and the order
for costs.
Was McKenzie an employee of the
SABC?
The law
[5] Unless McKenzie was an employee
as defined in the Act, the industrial court had no jurisdiction to
make a determination in terms
of s 46(9). The onus was on McKenzie
to prove that the industrial court had jurisdiction to determine the
dispute, which meant
that he bore the onus of proving on a balance
of probabilities that he was an employee, as defined, of the SABC:
c.f.
Kloof Gold Mining Co Ltd v National Union of Mineworkers a o
(1986) 7 ILJ 665 (T) at 674H-J;
Dempsey v Home and Property
[1995] 3 BLLR 10
(LAC) at 17F-G.
[6] The definitions of ‘employee‘
and ‘employer’ in s 1 of the Act were:
“
employee” means any person who
is employed by or working for any employer and receiving or entitled
to receive any remuneration,
and subject to subsection (3), any
other person whomsoever who in any manner assists in the carrying on
or conducting of the business
of an employer; and “employed” and
“employment” have corresponding meanings;...
“
Employer” means any person
whomsoever who employs or provides work for any person and
remunerates or expressly or tacitly undertakes
to remunerate him or
who subject to subsection (3) permits any person whomsoever in any
manner to assist him in the carrying on
or conducting of his
business; and “employ” and “employment” have corresponding
meanings;’. (Subsection (3) is irrelevant
to this judgment.)
[7] The first part of the definition
of ‘employee’, which refers to a person who is employed by or
working for an employer and
who receives or is entitled to receive
remuneration, has been interpreted to mean a person who works for
another in terms of the
common law contract of service: P A K Le
Roux and A Van Niekerk,
The South African Law of Dismissal
,
57. The second part, which refers to a person who in any manner
assists in the carrying on or conducting of the business of the
employer, has received a mixed reception from the courts. In one
case it was said that there was ‘no reason why the ordinary
meaning of the words ought not to be given effect to in the present
circumstances’ (
Boumat v Vaughan
(1992) 13 ILJ 934 (LAC) at
939H-I) whereas in another it was held that ‘[to] adopt a literal
interpretation...would clearly result
in absurdity’ (
Liberty
Life Association of Africa Ltd v Niselow
(1996) 17 ILJ 673 (LAC)
at 683A). The purpose of the second part is stated to be ‘to limit
the possibility of parties structuring
their relationship in such a
way as to exclude the application of the Act...’: Le Roux and Van
Niekerk above at 59. What has
been accepted by the courts and the
commentators is that an independent contractor is not an employee as
defined by the Act:
South African Master Dental Technicians
Association v Dental Association of South Africa a o
1970 (3) SA
733
(A) at 741B;
Borcherds v C W Pearce and J Sheward t/a Lubrite
Distributors
(1993) 14 ILJ 1262 (LAC) at 1276D-E;
Liberty
Life Association of Africa Ltd v Niselow
at 683A-D; Brassey et
al,
The New Labour Law
, 381; Wallis,
Labour and Employment
Law
, para 58;
Mureinik
,
‘The Contract of Service: An
Easy Test for Hard Cases’
,
1980 (97)
SALJ
246
fn 2.
The distinction between an employee and an independent contractor
has been formulated over the years in different ways:
one must
ascertain ‘whether he renders the service in the course of an
independent occupation representing the will of his employer
only as
to the result of the work and not as to the means by which it is
accomplished’ (
Colonial Mutual Life Assurance v Macdonald
1931 AD 412
at 426); ‘[a] test of service is sometimes said to be
whether B is about A’s business or about his own. In a sense B is
always
working both for A and for himself, and the distinction may
be easier to state than to apply; but in substance it seems to have
the root of the matter in it’(
R v AMCA Services Ltd a o
1959 (4) SA 207
(A) at 213H); ‘[the] object of the contract of
service is the rendering of personal services by the employee...to
the employer...The
services or the labour as such is the object of
the contract. The object of the contract of work is the performance
of a certified,
specified work or the production of a certain
specified result. It is the product or the result of the labour
which is the object
of the contract’ (
Smit v Workmen’s
Compensation Commissioner
1979 (1) SA 51
(A) at 61A-B); ‘the
independent contractor “sells the job” whereas the employee
“sells his hands”, ...[e]mployment is
a relationship in which
one person is obliged, by contract or otherwise, to place his or her
capacity to work at the disposal of
another....an employee is to be
distinguished from an independent contractor, who undertakes to
deliver, not his or her capacity
to produce, but the product of that
capacity, the completed work’ (Brassey, ‘The Nature of
Employment’, (1990) 11
ILJ
889 at 899, 935-6;
Liberty
Life Association of Africa Ltd v Niselow
at 681D-E).
[8] Various tests have been
formulated for identifying the contract of employment (or service).
The first is the supervision and
control test: ‘...one thing
appears to me to be beyond dispute and that is that the relation of
master and servant cannot exist
where there is a total absence of
the right of supervising and controlling the workman under the
contract; in other words, unless
the master not only has the right
to prescribe to the workman what work has to be done, but also the
manner in which such work
has to be done’ (
Colonial Mutual Life
Association v Macdonald
at 434-5,
R V AMCA Services
at
212H). The second is the organisation test: a person is an employee
of he is ‘part and parcel of the organisation’ (
Bank voor
Handel en Scheepvaart NV v Slatford
[1953] 1 QB 248
(CA) at 295)
whereas the work of an independent contractor ‘although done for
the business, is not integrated into it but is
only accessory to it’
(
Stevenson Jordan and Harrison Ltd v Macdonald and Evans
[1952] 1 TLR 101
(CA) at 111). The third test is the dominant
impression test: ‘Dit was ook gemene saak dat waar ‘n verhouding
elemente van
sowel ‘n diensverhouding as van ‘n ander soort
verhouding het, ‘n mens moet probeer vasstel welke soort
verhouding die sterkste
uit al die feite spreek, of, soos dit in the
uitspraak van die Hof
a quo
gestel word, wat die “dominante
indruk” is wat die kontrak op ‘n mens maak. Ek meen dat hierdie
siening van die saak noodwendig
juis moet wees, want as ‘n
verhouding nie oorwegend dié van heer en dienaar is nie, sou ‘n
mens dit beswaarlik met reg so
kon noem’ (
Ongevallekommissaris
v Onderlinge Versekeringsgenootskap A.V.B.O.B.
1976 (4) SA 446
(A) at 457A,
Smit v Workmen’s Compensation Commissioner
at
62H). The dominant impression test has been severely criticised.
Mureinik, 258, states: ‘...the “dominant impression”
test
offers no guidance in answering the (legal) question whether the
facts are of such a nature that the propositus may be held
to be a
servant within the meaning of the common law in difficult
(penumbral) cases. Indeed, it is no test at all. To say that
an
employment contract is a contract which looks like one of employment
sheds no light whatsoever on the ‘legal nature’ of
the
relationship between a master and his servant.’ Brassey, “The
Nature of Employment”, 920, while accepting that the judgment
in
the
AVBOB
case may be valuable for its rejection of the
notion that any one factor can be decisive in determining the nature
of the relationship,
states: ‘but beyond that the test is
unhelpful; indeed it is no test at all, but merely a shorthand way
of saying that the decision
must not be taken without considering
all the relevant factors’. In
Smit v Workmen’s Compensation
Commissioner
the right of supervision and control was downgraded
as a factor. The Court held that the existence of such a right
‘...is indeed
one of the most important indicia that a particular
contract is in all probability a contract of service. The greater
the degree
of supervision and control to be exercised by the
employer over the employee the stronger the probability will be that
it is a
contract of service. On the other hand, the greater the
degree of independence from such supervision and control the
stronger
the probability will be that it is a contract of
work....notwithstanding its importance the fact remains that the
presence of such
a right of supervision and control is not the sole
indicium but merely one of the indicia, albeit an important one...’
at 62D-G.
See, too,
Liberty Life Association of Africa Ltd v
Niselow
at 682G-I. Despite the criticisms of the dominant
impression test it has been consistently followed by the High Court,
the industrial
court, the Labour Court and the Labour Appeal Court:
See Le Roux and Van Niekerk at 59 fn 22;
Medical Association of
South Africa a o v Minister of Health a o
(1997) 18 ILJ 528 (LC)
at 536C-E.
[9] Some of the important
characteristics of the contract of employment and the contract of
work, respectively, are:
1. The object of the contract of
service is the rendering of personal services by the employee to the
employer. The services are
the object of the contract.
The object of the contract of work is
the performance of a certain specified work or the production of a
certain specified result.
2. According to a contract of
service the employee will typically be at the beck and call of the
employer to render his personal
services at the behest of the
employer.
The independent contractor, by way of
contrast, is not obliged to perform the work himself or to produce
the result himself, unless
otherwise agreed upon. He may avail
himself of the labour of others as assistants or employees to
perform the work or to assist
him in the performance of the work.
3. Services to be rendered in terms
of a contract of service are at the disposal of the employer who may
in his own discretion
subject of course to questions of repudiation
decide whether or not he wants to have them rendered.
The independent contractor is bound
to perform a certain specified work or produce a certain specified
result within a time fixed
by the contract of work or within a
reasonable time where no time has been specified.
4. The employee is subordinate to
the will of the employer. He is obliged to obey the lawful
commands, orders or instructions
of the employer who has the right
of supervising and controlling him by prescribing to him what work
he has to do as well as the
manner in which it has to be done.
The independent contractor, however,
is notionally on a footing of equality with the employer. He is
bound to produce in terms
of his contract of work, not by the orders
of the employer. He is not under the supervision or control of the
employer. Nor is
he under any obligation to obey any orders of the
employer in regard to the manner in which the work is to be
performed. The independent
contractor is his own master.
5. A contract of service is
terminated by the death of the employee whereas the death of the
parties to a contract of work does
not necessarily terminate it.
6. A contract of service terminates
on expiration of the period of service entered into while a contract
of work terminates on
completion of the specified work or on
production of the specified result. See
Smit v Workmen’s
Compensation Commissioner
at 61A-H.
[10] The legal relationship between
the parties must be gathered primarily from a construction of the
contract which they concluded
(
Smit v Workmen’s Compensation
Commissioner
at 64B;
Liberty Life Association of Africa Ltd v
Niselow
at 683D-E), ‘although the parties’ own perception of
their relationship and the manner in which the contract is carried
out
in practice may, in areas not covered by the strict terms of the
contract, assist in determining the relationship’ (
Borcherds v
C W Pearce and J Sheward t/a Lubrite Distributors
at 1277H-I).
In seeking to discover the true relationship between the parties,
the Court must have regard to the realities of
the relationship and
not regard itself as bound by what they have chosen to call it
(
Goldberg v Durban City Council
1970 (3) SA 325
(N) at
331B-C). As Brassey, “The Nature of Employment”, at 921, points
out, the label is of no assistance if it was chosen
to disguise the
real relationship between the parties, ‘but when they are bona
fide it surely sheds light on what they intended.’
The reasoning of the industrial
court
[11] The industrial court (de Klerk
SM) accepted that an independent contractor was not an employee in
terms of the Act, applied
the dominant impression test, had regard
to the ‘wider meaning of a statutory employee as defined in the
Act’, and formed ‘the
overall impression’ that McKenzie was an
employee as defined in the Act. Factors which the court held
indicated that McKenzie
was an independent contractor were that he
was engaged for fixed periods of twelve months and less at a time as
a freelance contributor
to produce and present two programmes at
specific times of the day on fixed days of the week; he was paid a
fixed sum of money
per programme as remuneration not only for those
services, but also for certain rights, such as copyrights which the
SABC acquired
in terms of the agreements; McKenzie made a conscious
decision to engage himself as a freelance contributor rather than a
permanent
member of staff as it gave him more freedom and
independence and he thereby forfeited any entitlement to a pension,
medical aid
and other benefits; and McKenzie held out to the
Receiver of Revenue that he conducted his own business and described
his remuneration
as ‘fees’. The industrial court, however,
found that those factors were ‘less compelling’ than the
following: the SABC
provided McKenzie with an office, a desk, a
telephone, stationery, a typewriter, typing and fax facilities; he
was invited to attend
staff meetings; he was paid monthly and
received an annual increase in his remuneration; he was given paid
leave or time off and
he devoted all his productive capacity over a
period of six years to his task; he kept office hours on a similar
basis to other
broadcasters who were permanent staff members;
McKenzie performed his functions under the direction and supervision
of the programmes
manager in Johannesburg and the station manager in
Cape Town; and he was regarded ‘as a co-employee (part of the
furniture) which
was not the case with ordinary freelance
contributors.’
The facts
[12] The SABC draws a distinction
between its employees, of whom there are about 5 000, and its
freelance contributors (‘freelancers’),
of whom there are about
30 000. There are two classes of freelancers: writers, for whom one
kind of standard contract is used,
and other artists, such as
actors, directors, producers, presenters, and continuity announcers,
for whom another standard contract
is used. McKenzie, as will be
seen later, was bound by the latter type of standard contract. The
contracts of employment of the
SABC’s employees, in general,
differ widely from the standard contracts concluded with
freelancers:
- an employee is paid a salary
whereas a freelancer is paid a fee for performing a specific task;
- an employee is obliged to
contribute to a group life insurance scheme, a pension fund, and a
medical aid, whereas a freelancer
is not - it follows that a
freelancer does not receive a pension, life insurance, medical aid,
or a housing subsidy from the SABC;
- an employee is entitled to annual
leave whereas a freelancer is not;
- an employee usually receives an
annual bonus in the form of a thirteenth cheque, whereas a
freelancer does not;
- an employee receives an annual
increase in salary which is negotiated between the SABC and the
union representing the employee,
whereas a freelancer receives an
increase in fees, fixed by the SABC, which is usually an increase of
about ten percent;
- an employee is entitled to sick
leave, whereas a freelancer is not;
- an employee is subject to the
discipline of the SABC, whereas a freelancer is not;
- unlike an employee, a freelancer is
entitled to take other work, without obtaining the permission of the
SABC, unless there is
a potential for conflict;
- an employee has tax deducted from
his salary each month, depending on the applicable tax rate, whereas
a freelancer, by arrangement
with the Receiver of Revenue, has a
flat rate of 25% per month deducted from his fees.
[13] McKenzie was employed by the
SABC from about 1959 until 1968 and from 1983 to 1986, when he
resigned. For most of those periods
he was employed as a radio
broadcaster. For about two years after 1986 he worked for a video
company in Cape Town. In about September
1988 Mr B Jones asked
McKenzie whether he would be interested in taking over an afternoon
talk show called ‘Second House’ on
Radio South Africa, the
SABC’s English language broadcast channel. McKenzie expressed
interest. It was agreed that there would
be a trial period of three
months. He was engaged in terms of an oral contract as a
freelancer. McKenzie testified that he ‘preferred
the option’
of being a freelancer:
‘
One had to weigh up what you
perceived as benefits of being one form of employee or the other
form of employee. In one case you
received benefits in the form of
additional car loans, housing loans at senior-levels of seniority,
leave, medical aid and various
other staff benefits. On the other
hand that cost you an awful lot of your own freedom. You had to
apply for all sorts of things.
You couldn’t do anything without a
letter of authority, you had to discuss everything, so one had to
make up one’s own mind
which was more beneficial, which was more
suitable for one’s own requirements.’
[14] The name of the programme was
later changed to ‘Talkabout’. McKenzie produced and presented
it. It was broadcast live
every weekday lunchtime from the Cape
Town studios. Guests participated on the programme and listeners
were invited to telephone
McKenzie and ask the guest questions on
non-controversial topics such as pets and gardening. Music was
played. Subsequently a
second contract was concluded in terms of
which McKenzie produced and presented a radio programme on Saturday
mornings called ‘Traveller’s
Check’. It was a fifteen minute
pre-recorded programme which contained travel news and interviews.
[15] From about 1991 each year the
parties signed the standard form contract for freelancers
(‘freelance contract’); one for
the Talkabout programme and one
for the Traveller’s Check programme. At all times separate and
parallel contracts existed for
the two programmes. Each contract
was for a fixed period. McKenzie was paid a fixed fee per
programme. As an illustration reference
is made to the contracts
concluded on 31 January 1991. McKenzie is referred to as ‘ the
Performer’ in the contracts:
‘
1. THE PERFORMER undertakes to
take part in the programme at the times set out hereunder:
Programme Date and Time
TALKABOUT MONDAY TO FRIDAY 13:30 -
14:15
01/01/91 TO 30/09/91
2. THE SABC undertakes to pay the
performer the amount of R 200,00 per programme as remuneration for
his services and the rights
acquired in terms of this agreement.
This amount shall be payable as soon as the programme has been
approved and/or broadcast
by the SABC.’
The Traveller’s Check contract was
for the same period at remuneration of R 175,00 per programme.
[16] From 1991 the practice developed
that new freelance contracts for both programmes were signed at
about the time that the existing
contracts expired. On occasions
the new contracts were concluded after the expiry of the existing
contracts, while the programmes
continued to be broadcast. The last
written freelance contract for the Talkabout programme was for the
period 1 October 1992 to
31 March 1993. McKenzie testified that he
‘assumed that the agreement regarding time off or leave [as to
which see paragraph
22 below] was the only further additional clause
to the standard agreement.’
[17] Prior to March 1995 Radio South
Africa’s audience was mainly white and over 50 years of age.
Management wished to appeal
to a more inclusive English audience,
which was younger. Impetus to change the radio station was provided
by the appointment of
Mr G Reddy as chief executive of radio at the
beginning of 1994. He gave management a mandate to change. Two
reviews were done,
one by Mr R Wurth, of the Australian Broadcasting
Corporation, and another by Miss A Tonks. Miss Tonks found: ‘Radio
South Africa
is an old fashioned radio station with a predominantly
older English speaking white audience. The presentation of the
station
has an overwhelmingly English rather than English-speaking
South African sound.’ She recommended turning Radio South Africa

‘into a lively modern information based network, providing access
to all English speaking South Africans, whatever their colour
or
home language’. Management accepted that the new target audience
‘would be people who wished to be entertained, informed,
educated
in English, who were 35 and upwards, and who were by
definition...primarily urban or metropolitan listeners.’ One of
the consequences of changing the target audience was the possibility
that McKenzie’s two programmes would be discontinued.
In March
1994 Vermaas and Mr J Mullen, Radio South Africa station manager,
visited Cape Town. Mullen informed McKenzie that there
was ‘a
very real possibility’ that McKenzie’s contracts would not be
renewed. During the course of the year the SABC established
a
transitional committee consisting of members of management of Radio
South Africa, the staff of Radio South Africa and some trade
union
representatives. Five meetings of the transitional committee took
place in August 1994. One of the members of the committee
was Mr J
Richards, the representative of the Cape Town region of the SABC.
Richards, after each meeting of the transitional committee,
reported
back to persons working from the Cape Town studio. McKenzie
attended one of the meetings. The message which Richards
conveyed
to the Cape Town studio was that considerable changes were to take
place and that the new radio station ‘would be driven
by
perception of a new...audience that was being sought by ...the SABC
broadcaster...’. On 16 August Vermaas informed all freelancers
that Radio South Africa had delayed its usual programme changes,
that it would continue to broadcast according to its present

schedule for the month of October, and requested freelancers to
regard the memorandum ‘as a one month extension of your present
contract’. On 9 September Vermaas, in a letter to McKenzie,
referred to ‘our new schedule’ and stated: ‘...we would be
looking at a new kind of phone-in. We have someone in mind whom I
hope will still be available after all this faffing about!
And the
whole thing might well bomb and we’ll be saying ‘where is Leslie
now we need him’ and Leslie will be in the Bahamas...’.
On 22
September Vermaas informed McKenzie that Radio South Africa would
continue with its present programme schedule until 1 March
1995. He
expressed the hope that McKenzie would be willing to be part of the
schedule until then. A copy of a Traveller’s Check
freelance
contract was enclosed. On 28 September Vermaas requested McKenzie
to continue with the Talkabout programme until the
end of February
1995. McKenzie’s response on 4 October to the letter of 28
September was:’Your proposal is quite acceptable,
and in fact
gives me a bit more breathing space!’. On 23 January 1995, in a
letter of that date, Vermaas told McKenzie that
the two programmes
would not continue beyond 28 February.
[18] The fee that McKenzie was paid
compensated him for preparation, pre- and post- production work and
for the actual broadcast.
The fee remained constant no matter how
much work he put into a particular programme. The preparation
varied ‘tremendously’
from programme to programme.
[19] McKenzie was paid only if he
presented the programme himself. Save for a period of about six
months (during which a contrary
request by him was accommodated) out
of the six and a half years of the relationship, he was not paid if
he did not present the
programme, even if he had done all the
preparatory work.
[20] McKenzie represented to the
Receiver of Revenue each year that he was an independent contractor.
He said he conducted business
under the name of ‘Leslie McKenzie’
- he did not describe himself as an employee of the SABC. His income
was stated to be ‘fees’
and expenses were deducted from his
income. An analysis of McKenzie’s income tax returns reveals that
he benefited to the extent
of the following deductions:
YEAR FEES EXPENDITURE NET INCOME
1989 12185 5353 6832
1990 48887 7086 41799
1991 104635 9884 94751
1992 108563 11583 96980
1993 71000 11651 59349
[21] At a time when he was producing
and presenting the two programmes for the SABC, McKenzie used a
letterhead in which he described
his business as ‘programme and
advertising productions for television and radio.’
[22] In keeping with the relationship
between the SABC and other freelancers, McKenzie did not contribute
to the pension fund, the
medical aid and the life insurance policy:
accordingly, he was not entitled to a pension, medical aid, life
cover or the annual
bonus. He was not subject to the SABC’s
disciplinary code and personnel regulations.
[23] In terms of the freelance
contract, McKenzie was not entitled to leave and in fact he took no
leave for the period 1988-1993.
In October 1993 he raised his need
to take leave with Mullen. The SABC’s response was to agree to
give him three weeks ‘time
off’. The contract the SABC drafted,
which is dated 19 October 1993, but which was never signed by the
parties, recorded the
SABC’s understanding of the agreement in
regard to leave in these terms:
‘
8. During the period of your
engagement you shall be exempted from your duties for a period of 3
(three) weeks. This period of
exemption shall not be regarded as
paid leave, but merely a concession to attend to your personal
affairs. The SABC will maintain
the remuneration stipulated above
during such period or periods of exemption provided that the
programme manager shall be given
sufficient prior notice thereof.’
The ‘time off’ agreement applied
to the Talkabout programme only and did not apply to the Traveller’s
Check programme (which
was recorded in advance).
[24] McKenzie was not entitled to
sick leave in terms of the freelance contracts. The draft agreement
of 19 October 1993 contained
the following term: ’In the event of
your inability to perform by reason of illness or physical
incapacity, a certificate of
a fully qualified medical practitioner
certifying such inability shall be submitted to the SABC and the
SABC shall, in its own
discretion, decide whether any payment should
be made for such period or periods of absence.’ That term was
never discussed with
McKenzie, let alone agreed with him, and was
never implemented.
[25] McKenzie was entitled to take on
other work as long as he did not present a similar programme for a
rival radio station. In
fact, he contributed to other radio
programmes on the basis, to use his words, of ‘freelance
assignments’ and for about two
years he broadcast a breakfast
programme and later a midnight programme for Radio Algoa in Port
Elizabeth. He signed a separate
freelance contract, also with the
SABC, for that work.
[26] McKenzie was paid a separate fee
per programme for all additional work. He was paid only for work
done in terms of the freelance
contracts.
[27] The factors which the industrial
court held to be in favour of a finding that McKenzie was an
employee of the SABC were that
in the period of over six years that
McKenzie broadcast the two programmes from Cape Town, he was
indistinguishable from an employee
of the SABC; he went to work at
the Cape Town studio every day; he spent almost a working day at the
office; he had the use of
an office and facilities such as a
telephone, fax machine and stationery; he attended staff meetings;
he dealt with telephonic
queries from the public; he performed day
to day administrative functions such as distributing faxes and mail;
he resolved problems
such as those which arose between staff
members, with the studio booking staff and in the canteen; his
advice and counsel was sought
and given; he accepted awards in
respect of his programmes on behalf of the SABC. The industrial
court suggested at one stage
during the evidence that McKenzie was
‘part of the furniture’. Orr adopted that phrase and also
referred to McKenzie as ‘part
of the family’. Orr’s
explanation for giving McKenzie the use of the SABC’s facilities
was ‘[b]ecause he did six programmes
a week for us and it would
have been quite difficult for him to have done that without the
benefit of office accommodation and
the use of a telephone and a
desk and access to the fax machine and access to studio bookings and
so on, typewriter.’ Orr’s
evidence was that McKenzie was
invited to attend staff meetings - it was not obligatory for him to
do so and he could not be compelled
to do so. Orr admitted that
McKenzie had resolved problems at his request - he had not
instructed McKenzie to do so, and he could
not instruct McKenzie to
do so.
The application of the law to the
facts
[28] The question is whether McKenzie
was an independent contractor as at 28 February 1995 when the
contractual relationship between
the parties terminated. Mr
Reynecke, who appeared for the SABC, conceded that if McKenzie was
not
an independent contractor, he was an employee in terms of
the Act.
[29] In advancing his argument that
McKenzie was an employee, Mr Stelzner, who appeared for McKenzie,
laid emphasis on the second
part of the definition of employee in
the Act. He submitted that McKenzie, by producing and presenting
the programmes in terms
of the freelance contracts and by performing
the additional work described in paragraph 29 above, assisted the
SABC in carrying
on or conducting its business. However, the fact
that McKenzie assisted the SABC in carrying on or conducting its
business does
not in itself justify the finding that McKenzie was an
employee of the SABC. The question remains whether he did so as an
independent
contractor or an employee.
[30] For the reasons that follow, on
a balance of probabilities, McKenzie was an independent contractor
and not an employee of the
SABC.
[31] Prior to concluding the
freelance contracts McKenzie had been an employee of the SABC. He
knew that the SABC drew a clear
distinction between its employees
and freelancers. At the time he agreed to produce and present the
predecessor to the Talkabout
programme he made an informed and
deliberate decision to do so as a freelancer. The advantages to him
outweighed the disadvantages.
For example, he preferred to make his
own arrangements for a pension and medical aid rather than to make
the compulsory contributions
to a pension fund and a medical aid
fund. He elected to contract with the SABC on the terms contained
in the freelance contract.
There is no doubt that had anyone asked
McKenzie in September 1988 whether he was an employee of the SABC
his answer would have
been an unequivocal ‘no’.
[32] At all times from 9 December
1991, when the first freelance contract was signed, until 28
February 1995, when the contractual
relationship between the parties
ended, McKenzie was bound by the terms of the freelance contract.
In terms of that contract McKenzie
was an independent contractor:
- he undertook to produce and present
two radio programmes for a fixed period; the object of the contract
was the product of McKenzie’s
capacity to work, not his capacity
to produce;
- he earned a fee for each programme
paid to him monthly - he was not paid a salary;
- a separate and distinct freelance
contract was concluded for each piece of extra work such as
presenting the programmes for Radio
Algoa;
- he was paid a separate fee per
programme for all additional work;
- he was not at the beck and call of
the SABC;
- each contract with the SABC
terminated on the expiry of the period for which it was agreed he
would produce and present a particular
programme;
- save for a period of about six
months he was not paid if he did not present the programme, even if
he had done all the preparatory
work;
- he did not contribute to the
pension fund, the medical aid and the life insurance policy, and he
was not subject to the SABC’s
disciplinary code and personnel
regulations;
- save for the ‘time off’
arrangement concluded by concession for 1993, McKenzie was not
entitled to leave;
- he was not entitled to sick leave;
- he was entitled without permission
or consultation to take on other paid work for the SABC or other
bodies as long as he did not
present a similar programme for a rival
radio station.
These are clear indications that
McKenzie did not, in the description of Brassey, “make over his
capacity to produce”, but much
rather committed himself to the
“production of a given result by his labour”, he did not
transact his “capacity to work”
but rather “the product
thereof”.
[33] Mr Stelzner submitted that the
SABC exercised a large degree of supervision and control over
McKenzie: McKenzie devised the
format of the Talkabout programme
under a predecessor to Vermaas, who was the programme manager;
McKenzie was initially required
to produce and present the programme
for a probationary period; there was close supervision during the
initial period; McKenzie
reported to different programme managers
over the years; there was a constant flow of information between
McKenzie and Vermaas;
Vermaas gave feedback to McKenzie as to
whether the programme worked or not and McKenzie had to get approval
from Vermaas for topics
aired; Vermaas could and would provide
criticism; Vermaas gave McKenzie instructions on which topics he
should introduce and which
topics he should avoid; Vermaas could
effectively veto a decision of McKenzie’s, for example on a topic
for the programme, and
McKenzie was obliged to obey the instruction;
the budget for the programme was set by Vermaas and the expenditure
controlled by
Orr, the Western Cape regional manager; temporary
staff for McKenzie’s programmes was hired by McKenzie for and on
behalf of
the SABC, subject to Orr’s approval; some of the guests
on the programmes were paid for by McKenzie on behalf of the SABC,
subject
to Orr’s approval; Vermaas had the right to approve
McKenzie’s replacement when he went on leave. Reference was made
to the
draft contract of 19 October 1993 which reflected the SABC’s
view on supervision and control in the following clauses:
‘
2. You undertake to perform your
duties in accordance with the SABC’s Standing Instructions that
will be placed at your disposal
on your request as well as strictly
according to the job description of the SABC in similar capacity.
3. You undertake to perform your
duties:
3.1. in accordance with the
instructions which may be given to you from time to time by the
PROGRAMME MANAGER or his nominee: and
3.2. in accordance with the
standards expected of a person in similar capacity in the television
and broadcasting industry.
4. You undertake that:
4.1. the performance of your
services shall comply with the terms and conditions with which the
SABC must comply as the holder
of a broadcasting licence, the
provisions of which you declare yourself to be conversant with:
4.2. you shall at all times adhere to
the security rules and other applicable regulations of the SABC.’
[34] McKenzie did testify that during
the probationary period he was closely supervised, but it was put to
Vermaas, under cross
examination, that McKenzie would testify that
that supervision was ‘diluted to some extent because...there was a
good trust relationship
between him and his superiors’. It is
correct, for example, that McKenzie and Vermaas communicated with
each other regularly,
that Vermaas gave McKenzie feedback, and that
Vermaas could veto a decision of McKenzie. Nevertheless, the
impression one nevertheless
gets from the evidence is that McKenzie
was left very much to his own devices. The programmes were
uncontroversial and had a particular
audience, hence their prolonged
life, until the review which took place in 1994, about which more
later. Vermaas described his
contribution to McKenzie’s
programmes in this way:
‘
Q: Would Mr McKenzie be required
to submit to you before a programme was to be broadcast on a weekly
or daily or whatever basis,
information relating to the specific
topic that would be discussed on that day, who the guest was going
to be, whether they are
going to talk about roses or whatever, what
music he is going to play, in other words was the programme content
checked? Given
to you first?
A: The short answer is no. But what
we did try and encourage programme makers to do was to give us some
idea what topics they were
going to do for a week, so that we can
just check that there weren’t any clashes in programming. That
somebody else was possibly
not doing that. But it wasn’t a
question of submitting the programme material for me to say yes or
no that is a good or bad
topic.
Q: Could Mr McKenzie in that respect
determine who the guests were going to be, what music was going to
be played, what the topic
was?
A: Yes.’
That evidence of Vermaas was not
disputed by McKenzie.
[35] It does not follow from the fact
that Vermaas had the right to give McKenzie instructions as to the
content of the programmes
and that McKenzie had to perform his
duties in accordance with certain editorial standards that the SABC
exercised the control
over him of an employer. The SABC, as a
public broadcaster, has the right to exercise editorial control over
the programmes it
broadcasts.
[36] The factors set out in paragraph
[26] prevailed from the time McKenzie commenced broadcasting the
Talkabout programme in September
1988 until he stopped broadcasting
at the end of February 1995. It is true that to an outsider he
would have been indistinguishable
from employees of the SABC in the
Cape Town studio: he kept office hours; he used the facilities of
the SABC, such as an office
and telephone; he attended staff
meetings; and he helped to deal with problems as they arose. What
militates against a finding
that those factors are indicative of an
employment relationship are the following:-
- It was convenient for the SABC and
McKenzie to accommodate McKenzie in the SABC studio as he was
producing and broadcasting a
programme five days a week. It was
perhaps inevitable, given McKenzie’s enthusiasm, that once he was
accommodated in the Cape
Town studio he would integrate himself with
the organisation.
- Throughout the six and a half year
period the parties periodically re-affirmed that their contractual
relationship was one between
the SABC and a freelancer. Neither the
SABC nor McKenzie, and his conduct in this regard is the more
significant, at any time took
any steps to change the nature of the
contractual relationship. Each new programme or contribution to a
programme was broadcast
in terms of a freelance contract. Payment
was only made per programme.
- McKenzie represented to the outside
world that he carried on a business, which he described as
‘programme and advertising productions
for television and radio’.
He represented to the Receiver of Revenue each year that he was an
independent contractor. Income
tax was deducted on the basis that
he was a freelancer and he benefited, substantially, to the extent
of the expenditure which
the Receiver of Revenue allowed each year
on the assumption that McKenzie’s representation - that he was an
independent contractor
- was true. The remarks of Bulbulia D P in
Callanan v Tee-Kee Borehole Castings (Pty) Ltd and another
(1992) 13 ILJ 1544 (IC) at 1550D-E are apposite: ‘...I must also
point out that the applicant cannot have his proverbial cake
and eat
it. He cannot say that he was not the respondent’s employee as a
machinist for purposes of taxation (or for wishing
to avoid the
pension scheme of the industrial council), but simultaneously be
regarded as an employee for the purpose of the Labour
Relations
Act.’ See, too,
CMS Support Services (Pty) Ltd v Briggs
[1997] 5 BLLR 533
(LAC).
- Just as there was no obligation on
the SABC to provide its facilities to McKenzie, there was no
obligation on him to attend staff
meetings and he was not obliged to
take any instructions from the station manager or anyone else as to
solving problems, and so
on. The only control which the SABC was
entitled to exercise over McKenzie, and which it did exercise,
related to the content
of the programmes he broadcast.
- The conduct of the parties in the
twelve month period preceding the termination of their relationship
described in paragraph 17
was inconsistent with an employer/employee
relationship and consistent with the relationship between principal
and independent
contractor.
[37] In any event, if McKenzie was an
employee of the SABC, the studio did not act unfairly. By renewing
the freelance contracts
each year, usually after the expiry of the
existing contracts, for a period of six years, the SABC assumed an
obligation in fairness
to give McKenzie reasonable notice of its
intention not to renew the contracts. And, as the industrial court
correctly found,
reasonable notice was given (in September 1994) of
the intention to discontinue the programmes and not to use McKenzie
as a broadcaster
(after March 1995). There was no further
obligation to consult McKenzie before taking that decision. The
format of the programme
schedule was entirely the prerogative of the
SABC. Each year the SABC exercised that prerogative in holding its
annual programme
review. In August 1994, with the establishment of
the transitional committee, a more dramatic review took place. At
no time in
the six and a half years of his relationship with the
SABC did McKenzie ever contend that he had a right to be consulted
about
the programme schedule. And in March 1994 at the meeting with
Vermaas and Mullen, and during the course of the next year, McKenzie
never claimed that right. As McKenzie testified, the SABC had the
right to decide what programmes it wished to broadcast and whether
it wished to continue with a particular programme.
[38] The appeal is upheld, with
costs.
[39] The orders of Messrs De Klerk
and Maritz in the industrial court are set aside. The order of Mr
De Klerk is substituted with
the following:
“
The preliminary point, namely,
whether the applicant was an employee of the respondent, is decided
in favour of the respondent.”
It is in accordance with the
requirements of the law and fairness that no order as to costs
should be made in respect of the industrial
court proceedings:
National Union of Mineworkers v East Rand Gold and Uranium Co Ltd
[1991] ZASCA 168
;
1992 (1) SA 700
(A).
Myburgh J P
I agree
Froneman D J P
I agree
Cameron J A
Date of Hearing: 30 September 1998
Date of Judgment:
Counsel for Appellant: J J Reyneke
SC instructed by Smit & Lowndes
Counsel for Respondent: R G L
Stelzner instructed by Sonnenberg, Hoffmann & Galombik
This judgment is available on the
internet at: http://www.law.wits.ac.za/labourcrt