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[2018] ZALAC 18
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Piet Wes Civils CC and Another v Association of Mineworkers and Construction Union (AMCU) and Others (JA37/2017) [2018] ZALAC 18; [2018] 12 BLLR 1164 (LAC); (2019) 40 ILJ 130 (LAC) (10 March 2018)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Not
reportable
Case
no: JA37/2017
In
the matter between:
PIET
WES CIVILS
CC
First
Appellant
WATERKLOOF
SKOONMAAKDIENSTE CC
Second
Appellant
and
Association
of Mineworkers and
Construction
Union
(AMCU)
First
Respondent
MEMBERS
OF AMCU
Second
to Further Respondents
Heard:
28 March 2018
Delivered:
10 March 2018
Summary
:
Urgent
application in terms of s 189A(13) of the LRA granted by the
Labour
Court.
Respondent
employees reinstated pending proper consultation by appellant on
their dismissals for operational requirements. On appeal,
appellants
contended that employees not dismissed for operational requirements
but employed on limited duration employment contracts.
Having regard
to s198B, contracts found unlimited in duration. Order of Labour
Court upheld. Appeal dismissed with costs.
Coram:
Phatshoane ADJP, Musi JA and Savage AJA
JUDGMENT
SAVAGE
AJA:
Introduction
[1]
This appeal, with the leave of the Court
a
quo
, is against the judgment and order
of the Labour Court (Steenkamp J)
in
which
the appellants, Piet Wes
Civils CC (Piet Wes) and Waterkloof Skoonmaakdienste CC (Waterkloof),
were ordered in terms of s 189A(13)
to reinstate the respondent
employees until
a
fair procedure had been complied with
as
contemplated by s 189 of the
Labour Relations Act, 66 of 1995 (LRA). The dispute involving
eighteen respondents, all employees of Piet Wes, was referred for
the
hearing of oral evidence.
[2]
The first
respondent, the Association of Mineworkers and Construction Union
(AMCU), on behalf of the respondent employees, sought
urgent relief
in the Labour Court on 2 December 2016, in two applications brought
in terms of s 189A(13), against the two appellant
close corporations,
Piet Wes and Waterkloof, respectively. The applications were
subsequently consolidated for hearing before the
Labour Court. The
respondents sought that the appellants be directed in terms of s
189A(13)(c) to reinstate the employees pending
compliance by the
appellants with s189A; and that the appellants be interdicted from
retrenching the employees until a fair procedure
has been complied
with. In the alternative, payment of twelve months’
compensation in terms of s189A(13)(d) was sought.
Background
Piet
Wes
[3]
Piet Wes
entered into four agreements with Exxaro Coal (Pty) Ltd, trading as
Grootegeluk Mine (Exxaro), on 10 November 2003, 2 September
2013, 17
June 2014 and 30 September 2014 for the provision of certain services
to Exxaro, including the management and distribution
of magnetite,
the movement of coal, an internal delivery service and the cleaning
of plants. In order to provide these services,
Piet Wes employed a
number of employees, including the second to further respondents.
[4]
In
dispute between the parties is whether the contracts of employment
entered into by Piet Wes with the respondents were to subsist
for a
limited duration, or for a fixed term, or whether the contracts were
of an unlimited duration. Only certain employees signed
the written
contract. The remaining employees were employed by way of verbal
agreement, the terms of which, according to Piet Wes,
were the same
as those of the written employment contract.
[5]
The
written employment contract contained the following clause:
‘…
2.
DURATION OF AGREEMENT:
The
duration of the agreement is subject to the following terms and
conditions:-
-
As long as the EMPLOYER is supplied with
work contracts by his clients. The EMPLOYER has no alternative
employment at his disposal
for the EMPLOYEE should the work contract
with his client expire;
-
NO EMPLOYEE OF PIET WES MAY CROSS OVER TO
ANOTHER CONTRACTOR WITHIN EXXARO OR BE INVITED FOR AN INTERVIEW
UNLESS OUTSIDE THE SCOPE
OF WORK. SHOULD AN EMPLOYEE OF PIET WES BE
FOUND GUILTY THEREOF, A PLACEMENT FEE WILL BE CHARGED;
-
In the event of the employee resigning from
Piet Wes Civils or are dismissed for valid reasons within 24 months
from first date
of employment, the cost of medical competency
certificate will be deducted from the employee’s last
remuneration;
-
…
In the event that the EMPLOYER’S
operational needs change…
’
.
[6]
During
August 2016, Exxaro gave one month’s notice of cancellation of
one agreement to Piet Wes. Piet Wes gave one month’s
notice of
the termination of the contracts to 43 of its employees. In dispute
between the parties was whether the contracts of
employment of 18 of
these employees were terminated at the end of August 2016 or the
beginning of September 2016, as was contended
by Piet Wes, or on 11
November 2016 with the remainder of the 43 employees. While AMCU
stated that employees dismissed in August
2016 were recalled to work,
this was denied by Piet Wes.
[7]
Following
notice of termination of their employment contracts, an unfair
dismissal dispute was lodged by the respondents with the
Commission
for Conciliation Mediation and Arbitration (CCMA), the determination
of which remained pending at the time that the
urgent application was
heard by the Labour Court. On 6 December 2016, a tender of payment of
one week’s salary to each employee
who had been employed for a
period in excess of 24 months as contemplated by s198B(10)(a) was
made by Piet Wes.
[8]
The respondents took the view that the
termination of the respondents’ contracts of employment was in
breach of s198B in that
the contracts were entered into for an
unlimited duration; and that their dismissals for reason of
operational requirements had
not complied with a fair procedure. This
led the respondents to approach the Labour Court for urgent relief in
terms of s189A(13).
Waterkloof
[9]
Waterkloof
entered into an agreement with Exxaro for cleaning services, as a
result of which it employed 104 respondent employees.
As was the case
with Piet Wes, not all employees signed a written contract of
employment, with some employees employed in terms
of an oral
agreement. For those who did sign a contract, its duration was
recorded as follows:
‘…
2.
DURATION OF AGREEMENT:
The
duration of the agreement is subject to the following terms and
conditions:-
-
As long as the EMPLOYER is supplied with
the same work contracts by his clients. The EMPLOYER has no
alternative employment at his
disposal for the EMPLOYEE should the
work contract with his client expire;
-
NO EMPLOYEE OF WATERKLOOF MAY CROSS OVER TO
ANOTHER CONTRACTOR WITHIN EXXARO OR BE INVITED FOR AN INTERVIEW
UNLESS OUTSIDE THE SCOPE
OF WORK. SHOULD AN EMPLOYEE OF WATERKLOOF
SERVICES BE FOUND GUILTY THEREOF, A PLACEMENT FEE WILL BE CHARGED;
-
In the event of the employee resigning from
Waterkloof Dienste or are dismissed for valid reasons within 24
months from first date
of employment, the cost of medical competency
certificate will be deducted from the employee’s last
remuneration;
-
In the event that the EMPLOYER’S
operational needs change’.
[10]
O
n
11 November 2016, Exxaro notified Waterkloof in writing of the
termination of the employment contract on one month’s notice.
Waterkloof employees were on strike at the time and, at a meeting,
non-striking employees were informed of the termination of their
employment contracts. On 28 November 2016, AMCU’s attorneys
were informed that the employment contracts of 104 employees
had been
terminated and that no s189A process would be embarked upon given
that the employees “
were
all employed on limited duration contracts which were linked to the
supply of work
”
by the clients of Waterkloof. Payment of one week’s salary for
each completed year of service was tendered to those
employees who
had been employed for more than 24 months.
[11]
Aggrieved
with the dismissals,
the respondents
sought urgent relief in the Labour Court, contending that the
contracts of employment did not accord with s198B,
that they were
indefinite in duration and that the provisions of s189A had not been
complied with.
Relevant
statutory provisions
[12]
Section 189A applies to dismissals based on
operational requirements by employers with more than 50 employees.
S189A(13) provides
that:
‘
If
an employer does not comply with a fair procedure, a consulting party
may approach the Labour Court by way of an application
for an order—
(a)
compelling the employer to comply with a
fair procedure;
(b)
interdicting or restraining the employer
from dismissing an employee prior to complying with a fair
procedure;
(c)
directing the employer to reinstate
an employee until it has complied with a fair procedure;
(d)
make
an award of compensation, if an order in terms of
paragraphs
(
a
)
to
(
c
)
is
not appropriate.
’
[13]
Section
198B
[1]
applies
to fixed-term contracts in which employees earn below a prescribed
earnings threshold.
[2]
It
applies neither to employees earning above the threshold, nor to
employers who employ less than 10 employees (or less than 50
employees subject to certain conditions).
[3]
Section
198B(1)
states that for purposes of s198B –
‘
a
“fixed term contract” means a contract of employment that
terminates on –
(
a
)
the occurrence of a specified event;
(
b
)
the completion of a specified task or project; or
(
c
)
a fixed date, other than an employee’s normal or
agreed retirement age, subject to
subsection
(3)
.’
[14]
In terms of s198B(3):
‘
(3)
An employer may employ an employee on a fixed term contract
or successive fixed term contracts for longer than three
months
of employment only if—
(a)
the nature of the work for which the employee is employed
is of a limited or definite duration; or
(b)
the employer can demonstrate any other justifiable reason for fixing
the term of the contract’.
[15]
Section 198B(4) provides that:
‘
(4)
Without limiting the generality of
subsection
(3)
,
the conclusion of a fixed term contract will be justified if
the employee - …
(
d
)
is employed to work exclusively on a specific project that has a
limited or defined duration…’
[16]
In
terms of s 198B(5), a fixed term contract which has been “
concluded
or renewed in contravention of
subsection
(3)
is
deemed to be of indefinite duration
”
.
S198B (6) requires that "(a)
n
offer to employ an employee on a fixed-term contract or to renew or
extend a fixed-term contract, must - (a) be in
writing;
and (b) state the reasons contemplated in
subsection
(3) (a)
or
(b)
”
.
[17]
Section
198B(7) provides that “(i)
f
it is relevant in any proceedings, an employer must prove that there
was a justifiable reason for fixing the term of the contract
as
contemplated in
subsection
(3)
and
that the term was agreed
”
.
[18]
In terms of s 198B(10)(a) –
‘
(
a
)
An employer who employs an employee in terms of a fixed
term contract for a reason contemplated in subsection 4(d) for
a
period exceeding 24 months must, subject to the terms of any
applicable collective agreement, pay the employee on
expiry of the contract one week’s remuneration for each
completed year of the contract calculated in accordance with section
35 of the Basic Conditions of Employment Act.
(b)
An employee employed in terms of a fixed-term contract, as
contemplated in
paragraph
(a)
, before
the commencement of the Labour Relations Amendment Act, 2014, is
entitled to the remuneration contemplated in
paragraph
(a)
in
respect of any period worked after the commencement of the said Act.’
[19]
Section 198B(11) provides that an employee
is not entitled to payment in terms of ss 198B(10) if the employer
offered or procured
employment for the employee with a different
employer, which commences on expiry of the contract and is on the
same of similar
terms.
Submissions
on appeal
[20]
It was submitted for the appellants on
appeal that the employment contracts entered into with the employees
were for a limited duration
linked to the completion of the tasks for
which the appellants had been contracted by Exxaro to undertake and
were therefore subject
to, and determined by, the subsistence of
agreements with Exxaro. The employment contracts, it was argued, were
neither unlawful
or invalid and it was a clear term that they would
end on the termination of the agreement with Exxaro. This was so even
though
they were clumsily drafted. Since proof was provided to the
respondents that Exxaro terminated the contracts entered into between
it and the appellants, and the employment contracts were not
constructed so as to circumvent the provisions of the LRA, it was
argued that the Labour Court had erred in concluding that the
contracts with the respondents were not intended to endure for a
limited duration or terminate on completion of a specified event,
task or project, as contemplated in s 198B(1). A legitimate reason
existed to fix the term of the contracts as contemplated in s
198B(3)(b), and the appellants were not the proximate cause for the
legitimate termination of the contracts. It followed therefore that
the respondents were not dismissed and that they were therefore
not
entitled to reinstatement or to the relief envisaged in s189A(13).
The appellants accordingly seek that the appeal be upheld
with costs
and that the order of the Labour Court be set aside and replaced with
an order dismissing the consolidated applications
in terms of
s189A(13).
[21]
The respondents opposed the appeal on the
basis that the employment contracts were not valid and enforceable
limited duration contracts
but indefinite duration contracts in terms
of s198B(5). The appellants were therefore not entitled to terminate
such contracts
in terms of an automatic termination clause, when such
a clause was intended to circumvent the fair dismissal obligations
imposed
on the appellants by the LRA and Constitution of the Republic
of South Africa, 1996. Since no justifiable reason was shown to exist
for fixing the term of the contracts, it was submitted that the
Labour Court properly ordered the reinstatement of the employees.
Consequently, it was submitted that the appeal should be dismissed
with costs.
Discussion
[22]
In
Enforce
Security Group v Fikile and Others (Enforce),
[4]
this
Court had regard to fixed term employment contracts which had been
entered into prior to s 198B having been brought into operation
on 1
January 2015. In t
he
current matter, s 198B finds application.
[23]
An offer to employ an employee on a fixed
term contract, or to renew or extent that contract must, in terms of
s198B(6) be in writing;
with a
fixed term
contract, in terms of s198B(1), required to state expressly that it
is to terminate on the occurrence of a specified
event, on the
completion of a specified task or project or a fixed date, subject to
s198B(3). The requirement that a written offer
of employment is made
to an employee is for compelling reason in that it seeks to prevent
any later dispute arising as to the terms,
scope or duration of the
fixed term or limited duration contract entered into. On the
appellants’ own version, no written
employment contract was
entered into with a number of employees employed by both Piet Wes and
Waterkloof, with the basis of employment
apparently having been
agreed verbally with those employees. No evidence was put up that
employees were provided with a written
offer of employment, as
required by s198B(6). It follows that the appellants failed to show,
in respect of those employees with
whom no written contract had been
concluded, that the provisions of s198B had been complied with.
Consequently, those employees
were not employed on the basis of a
limited duration contract but rather for an unlimited duration.
[24]
Turning to the employees with whom the
appellants state that a written employment contract was entered into,
the duration of that
contract was made subject to the “supply
of work contracts” by Piet Wes’ clients, and the supply
of the “same
work contracts” by Waterkloof’s
clients.
[25]
A contract duration linked to the supply of
work contracts by clients cannot be construed to equate to the
occurrence of a “specified
event”, “the completion
of a specified task or project” or “a fixed date”,
as contemplated by s198B(1).
This is so in that a “specified
event”, “the completion of a specified task or project”
or a “fixed
date” does not constitute a possibility that
future contracts may not be supplied in future by an employer’s
clients.
This remains a possibility and nothing more than that. It is
by no means a specified event which in future will arise, nor is it
related to the completion of a task or project or a fixed date, but
is an operational risk which may occur, one under which the
business
operates.
[26]
The purpose of s 198B is to provide
security of employment, except in circumstances where a fixed term or
limited duration contract
is clearly justified. The Labour Court was
correct in finding that to place a construction of the words
“
specified event
”
on the cancellation of the Exxaro contract went beyond the intention
of the legislature. From a plain reading of the contract
that was
concluded between the appellants and certain of the employees, no
limited duration or fixed term can be read into what
was is clearly,
from its terms, an unlimited duration employment contract entered
into between the parties.
[27]
Since
all of the employment contracts entered into were of an indefinite
duration, as contemplated by s 198B(5), such contracts
could not be
terminated on notice by the appellants without adherence to the fair
dismissal procedures set out in the LRA. The
respondents were
consequently entitled to approach the Labour Court to seek relief as
provided in s189A(13), which, as was stated
by the Constitutional
Court, in
Steenkamp
v Edcon Ltd,
[5]
grants
“
special
protection for the rights of employees…to protect the
integrity of the procedural requirements of dismissals governed
by
section 189A
”.
[6]
[28]
The Labour Court correctly stated that,
after Exxaro terminated its contracts with the appellants, there may
exist “
justifiable and fair reason
for dismissing the employees for operational requirements
”
but that that issue would only be capable of being ascertained
through a proper consultation process as contemplated in
s 189 and s
189A. I agree. It follows for these reasons, that the Labour Correct
was correct in granting the relief sought by the
respondents in terms
of s189A(13) and in reinstating the respondent employees to enable
the appellants to follow a fair pre-dismissal
procedure in accordance
with s189A.
[29]
Given the
dispute of fact which arose on the papers as to whether the contracts
of employment of 18 of 43 affected Piet Wes employees
had been
terminated at the end of August 2016 or the beginning of September
2016, as was contended by the appellants, or on 11
November 2016, as
is contended by the respondents, the Labour Court properly referred
that dispute to the hearing of oral evidence.
[30]
It
follows for these reasons that there is no merit in the appeal, which
cannot succeed. Having regard to considerations of law
and fairness,
there is no reason as to why the costs of this appeal should not
follow the result. Costs were not granted in the
Labour Court and
there is no reason to interfere with that order.
Order
[31]
For these reasons, the following order is
made:
1.
The appeal is dismissed with costs.
_____________________
Savage
AJA
Phatshoane
ADJP and Musi JA agree.
APPEARANCES:
FOR
THE APPELLANTS: E J Steenkamp
Instructed
by Cavanagh & Richards Attorneys
FOR
THE RESPONDENTS: A L Cook
Instructed
by Larry Dave Attorneys
[1]
Inserted
into the LRA by
s
38 of
Labour
Relations Amendment Act 6 of 2014.
The provision became operative on 1 January 2015 in terms of GG 38317
(19 December 2014).
[2]
Currently
R205
433 per annum as
prescribed
by the
Minister
in
terms of
section
6
(3)
of
the Basic Conditions of Employment Act 105 of 1997 (as
amended).
[3]
Subject
to s198B(2), when the business has been in operation for less than
two years, unless—(i) the employer conducts more
than one
business; or (ii) the business was formed by the division or
dissolution for any reason of an existing business; and
(
c
)
an
employee
employed
in terms of a fixed term contract which is permitted by any statute,
sectoral determination or
collective
agreement.
[4]
(2017)
38 ILJ 1041 (LAC);
[2017] 8 BLLR 745
(LAC) (25 January 2017).
[5]
(2016)
37
ILJ
564
(CC);
2016
(3) BCLR 311
(CC);
[2016]
4 BLLR 335
(CC);
2016
(3) SA 251
(CC)
paras 161-164.
[6]
At
para 163.