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[2003] ZALCJHB 14
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Avbob Mutual Assurance Society v CCMA Bloemfontein and Others (JR562/02) [2003] ZALCJHB 14 (31 January 2003)
REPORTABLE
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT JOHANNESBURG
CASE
NO. JR 562/02
In
the matter between :
AVBOB
MUTUAL ASSURANCE
SOCIETY
Applicant
and
CCMA
BLOEMFONTEIN
First
Respondent
J
MTHEMBU
N.O.
Second
Respondent
M
A
PIENAAR
Third
Respondent
JUDGMENT
PILLEMER,
AJ:
Respondent
conducts business in the insurance industry and sells its insurance
policies and its other funeral related products through
the use of
agents. In 1976 the Appellate Division had occasion to examine the
standard form contract between the Respondent and
such an agent
appointed by it under the usual terms and conditions then applicable
for the purpose of deciding whether the contract
was one of service
or not. The court painstakingly analysed the document highlighting
those aspects that tended to support an employment
contract and
contrasting such terms with those that went the other way. The issue
before the court was whether or not the “agent”
was
covered by the Workmen’s Compensation Act, 1941, which the
court held meant upon a proper interpretation of the legislation
before it that it had to determine whether or not there was a
contract of service under the common law. It held that the
appropriate
approach in a context where there were indications going
both ways, was to determine what sort of relationship most strongly
appears
from all the facts or what the “dominant impression”
is which the contract makes upon a person. In the result the court
found that the contract was not an employment contract and the
“agent” was in fact an agent or independent contractor.
Factors that weighed heavily with the court were the provisions that
the agent could employ others to do the work, even employ
a temporary
substitute, was paid commission and not a salary, had to bind himself
as surety, was not obliged to work fixed hours
and could take leave
whenever he wanted.
See:
Ongevallekommisaris v Onderlinge
Versekeringsgenootskap A.V.B.O.B.
1976(4)
SA 446 (AD) (“ the AVBOB case”)
This
case is a leading authority on the test and the topic. It has been
criticised by academics but nonetheless cited with approval
by the
Labour Appeal Court in the leading case of
SABC
v McKenzie
(1999) 20 ILJ 585 (LAC) at
590E-F. While it is clearly not binding on other agents who have
agreed to bind themselves to similar
contractual terms at the level
of
res judicata
it is of such strong persuasive authority and constitutes the proper
interpretation of the standard form contract in question,
that in my
view it must have the effect of rendering it practically impossible
to argue that the contract constitutes an employment
contract.
Factors which are weighty and point strongly against the relationship
being one of employment because they would not
generally be found in
an employment contract are set out in the judgment and they would
apply whatever test was used. It is also
worth noting that the agent
does not pay UIF and PAYE and is obliged to register as a provisional
taxpayer. The conditions of appointment
also use terminology that is
indicative of a relationship other than one of employment and there
is no suggestion that this is
a sham. The contract reveals that it is
the fruits of the labour rather than the labour itself that is
remunerated. These are all
classic pointers to the conclusion that
the relationship is that of principal and agent/independent
contractor and not one of employment.
Against
that background rather surprisingly the Applicant decided that with
the passage of time and in the context of the Labour
Relations Act,
1995 (“the LRA”) and the definition of employee in that
Act, the same reasoning would not apply to his
contract, even though
it was in substance identical to that considered in the AVBOB case.
It contained all the indicators
that militated against an employment
relationship. Even more surprisingly Applicant managed to persuade
the Second Respondent that
it was an employment contract and that he
was therefore entitled to process an unfair dismissal dispute before
the CCMA in terms
of S 191 of the Labour Relations Act, 1995 (“the
LRA”). It is that decision which the applicant seeks to
review
and set aside in these proceedings.
The
applicant relied upon what was referred to as the “Green
Bible”, which is a voluminous set of rules and directions
that
are binding upon agents. These regulations find their source in the
written conditions of appointment which has a clause authorising
the
issuing of regulations that do not conflict with the conditions of
appointment. In my view the features of control that are
embodied in
the “Green Bible” add very little to the fact that there
is a large measure of control in the conditions
of appointment, but
notwithstanding these features they do not detract from the
interpretation of the contract as not being one
of employment.
Control is not decisive and is of little value in determining the
relationship where the contract contains provisions
inimical to an
employment contract and, what is more, has actually been interpreted
by the Appellate Division as not constituting
a contract of service.
I
am in respectful agreement with the interpretation in the AVBOB case
and it follows therefore that I hold that the contract is
not an
employment contract and the applicant was not an employee of the
respondent. The existence of an employment relationship
is a
jurisdictional fact that must be present for s191 of the LRA, under
which the Third Respondent sought relief, to be applicable.
If, as I
find, that jurisdictional fact is absent then it follows that the
CCMA did not have jurisdiction to arbitrate the dispute
and its
finding that it did is wrong in law and must be reviewed and set
aside for want of jurisdiction.
In
Pinetown Town
Council v President, Industrial Court
1984(3) SA 173 (N) Leon J
explained the concept when he pointed out at 179B-D that
“
where
the jurisdiction of a tribunal is dependant on the existence of a
particular state of affairs, it cannot give itself jurisdiction
by
incorrectly finding that the conditions for the exercise of
jurisdiction are satisfied….[A] determination on the
jurisdictional
facts is always reviewable by the courts because in
principle it is not part of the exercise of the jurisdiction but
logically
prior to it.”
I
respectfully agree with the above approach, which was advanced in
argument by Mr Franklin, SC for the Applicant, and on that approach
I
have to make the factual finding on whether or not the conditions for
the exercise of jurisdiction were present and, if they
were not, the
review must succeed for want of jurisdiction by the Arbitrator.
In
this case it was common cause that I had to have regard to the terms
of the contract, which was embodied in the conditions of
appointment
or the so-called “Akte van Aanstelling”, a letter of
appointment and the “Green Bible” and
that this was what
had been presented to the Second Respondent when he heard the
arbitration. It seems to me that in a case like
this where no factual
findings on evidence have to be made and it is just a matter of
interpretation that the review simply turns
upon the proper
interpretation of the contract. In the circumstance the
interpretation of the contract by the Second Respondent
is no bar to
the review succeeding if he was wrong. To the extent that Second
Respondent’s reasoning and finding is relevant,
it seems to me
that he failed to apply his mind to the AVBOB case, which was drawn
to his attention because he referred to the
test set out in that case
in his award, or to apply his mind properly to the contract as his
finding that “the contract
is not only a subterfuge but a
bizarre one designed to strip the agents of the protection to which
they are entitled according
to law and fair labour practice and to
place them at the mercy of the Respondent” flies in the face of
the provisions in
the contract which the Appellate Division stressed
created the dominant impression that it was not one of service. There
was no
evidence of subterfuge. The Second Respondent records in his
award that he is simply being asked to interpret the contract and I
am respectfully unable to appreciate how it is possible for him to
have come to the conclusion he did, bearing in mind that the
contract
has obviously been in its present form since at least the mid 1970’s.
In my assessment he misdirected himself to
such an extent that he
cannot be said to have applied his mind properly to the matter, and
if it was necessary to find that he
committed a reviewable
irregularity rather than simply came to the wrong conclusion then in
my assessment he committed such an
irregularity. His finding was not
justifiable on the evidence that he had to consider.
The
review therefore must inevitably succeed.
The
Applicant argued that I was precluded from dealing with the
substantive issue, i.e. whether the CCMA had jurisdiction, because
a
certificate of outcome had been issued following the conciliation
process. It was contended that on the strength of the judgment
in
Fidelity Guards Holdings v Epstein &
Others
(2000) 21 ILJ 2382 (LAC) I
could not interfere until the certificate had been set aside. Since
there was no application before
me to review the issuing of that
certificate, it was argued that I could not interfere and the review
had to be dismissed. That
argument is without merit. If the CCMA had
no jurisdiction to arbitrate because the Applicant was not an
employee it also had no
jurisdiction to conciliate and its purported
action is on no relevance once the jurisdictional point is taken
before a forum that
has power to decide the issue and is found to be
good. In any event the
Epstein
decision has no bearing on the issue in this case. It dealt only with
the other jurisdictional fact that has to be present before
a matter
may be arbitrated or adjudicated namely the certificate that the
dispute remains unresolved. It did not deal in any way
with the point
in issue in this case. The general statement in paragraph [21] of the
Eptein judgment at 2389I that “as long
as the certificate of
outcome stands, the CCMA has jurisdiction to arbitrate the dispute”
has to be understood in the context
of that judgment and cannot apply
to cases like the present. The Commissioner who conciliates the
dispute ought not to make any
finding on the factual matters that
bear upon jurisdiction as that is something that is dealt with at
arbitration and not conciliation.
(See
Dempster
v Kahn NO & others
(1998) 19 ILJ
1475 (LC),
BHT Water Treatment( a
division of Afchem (Pty) Ltd v CCMA and others
(2002) 23 ILJ 141 (LC) at 145-6). The issuing of a certificate of
outcome is therefore no bar to a challenge of the kind made in
these
proceedings.
It
was also argued that the AVBOB case was of no moment because it was
decided before the LRA was promulgated and related to a different
statute. I have dealt with these submissions above and for the
reasons there set out they are rejected. I have to decide whether
or
not the Applicant was an employee and to do so have to look
principally at the conditions of service. These reveal that the
contract is not an employment contract for the reasons set out above.
He is therefore not an employee, but rather an independent
contractor. He has no remedies under the LRA because by definition he
is excluded from its ambit.
I
accordingly make an order in the following terms:
1.
The review succeeds and the finding by the
Second Respondent that the Applicant was the employer of the Third
Respondent is set
aside.
2.
It is declared that the First Respondent
has no jurisdiction to arbitrate the dispute that has been referred
to it by the Third
Respondent.
3.
The Third Respondent is ordered to pay the
Applicant’s costs.
_________________________________
PILLEMER,
AJ
Date
of hearing:
24 January 2003.
Date
of judgment:
31 January
2003.
For
Applicant:
A Franklin SC
instructed
by Deneys Reitz
For Third
Respondent: J P
Breytenbach
instructed
by HV Jordaan care of Symington and De Kock (Welkom)