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[2009] ZALCD 33
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Niewoudt v All-Pak (D749/06) [2009] ZALCD 33 (14 January 2009)
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT DURBAN
D749/06
In
the matter between:
ANGELIQUE
NIEWOUDT
APPLICANT
And
ALL
- PAK
RESPONDENT
JUDGMENT
Cele
J
Introduction
1.
The applicant has contended that she was an employee of the
respondent and that she was subjected to an automatically unfair
dismissal by the respondent on account of her pregnancy. Both
contentions of the applicant were opposed by the respondent with
a
version that the applicant was an independent contractor who, in that
capacity, decided to terminate the services she had rendered
to the
respondent.
Background
Facts
2.
The applicant, Ms Niewoudt commenced an employment relationship with
the respondent in November 2005 in the position of an administration
clerk, in charge of book keeping. She was employed through a labour
broker called Zibandlela which provided labour services to
the
respondent. Her contract with Zibandlela was for four months and
ended in February 2006. She then left to go and work for another
company for a period of one week. She discovered during that period
that she was pregnant.
3.
Ms Niewoudt met the sole proprietor of the respondent Mr Dean
Sumpton. She disclosed to him that she was pregnant. It was agreed
between the two that she would come back to the respondent to render
her services there. Some terms under which she was to render
the
services were reduced into writing by her and were subsequently
confirmed by Mr Sumpton. Both appended their signatures to
that
document with its contents reading:
“
First I would like
to thank you for giving me the opportunity to come work for you well
knowing that I am pregnant.
As you asked me to put on
paper what I want and we have come to the agreement that I will get:
·
3 months maternity leave: R3330 per month which adds up to R10 000.
·
To be paid out my annual leave, which is R5000.
·
And annual Bonus, which is R5000.
All of the above adds up
to R20 000 (sic)
Keeping my salary
constant at R5000 a month for the 4 months that I will be
off-October-November-December-January respectively will
add up to the
above of R20 000. I do prefer to have R20 000 over a period of 4
months.
Also making shore that
yourself and Caryn are capable to work on pastel, if any further
information is required from myself while
I am on maternity leave
please do not hesitate to call. (sic)
I would also like to know
that my position will still be available when I return from my
maternity leave.
I do promise that I will
come and visit while being on leave.
I hope that you find this
letter to your satisfaction and agree with all the remarks that are
stated.”
4.
The core business of the respondent was the manufacture of boxes and
wrapping papers for packaging. Apart from Caryn, a sales
lady Ms
Niewoudt was the only office bound staff of the respondent and had to
answer incoming telephone calls. She started with
a salary of R3500
per month but in April 2006 she was earning R5 000 per month. She
received her monthly payments through ABSA
after the respondent would
have deposited her salary payment cheques with them. The respondent
provided her with the office where
she worked from 07:30 to 17h00.
5.
During or about August 2006, at which time Ms Niewoudt was
approximately 30 weeks pregnant, she was instructed by Mr Sumpton
to
refile some invoices which Mr Sumpton had been looking for from
various filing boxes that he had brought to her office. Mr Sumpton
complained that she had not done the invoice filing properly as he
had great difficulty in retrieving those invoices. He then instructed
her to file the invoices in the boxes properly. She told him she
would do so when she came back from maternity leave. He insisted
on
his instruction and said if she did not comply she had to go home and
to look for a place to pay her in doing whatever she wanted.
She
immediately telephoned her fiancée who came and took her away.
Before she left, she had asked for the UIF form and Mr
Sumpton told
her that she had not registered herself. She then referred an unfair
dismissal dispute to the Commission for Conciliation,
Mediation and
Arbitration (“CCMA”) for conciliation. On the next day
she attended to a Dr F.W. Hart who then issued
a letter dated 2
August 2006 in which he stated that Ms Niewoudt had a threatened
miscarriage that she and her baby survived. He
said that he felt she
was still to be regarded as a high – risk case until delivery
of her baby. On 28 August 2006 a certificate
of outcome was issued
stating that the dispute remained unresolved and Ms Niewoudt referred
the dispute to this court on 14 November
2006 by means of a statement
of claim.
The
trial issues
Whether
Ms Niewoudt was an employee
Applicant’s
version
6.
The issue to be resolved is whether Ms Niewoudt was an employee
of the respondent or that she was an independent contractor
who
offered her services. She conceded that during her first employment
with the respondent, from October 2005 to February 2006,
all
employees, including herself, of the respondent were engaged through
Zibandlela and thereafter Zibandlela would pay salaries
of staff
tendering their services with the respondent.
7.
When she came back to the respondent to render her services for the
period February to the end of July 2006, she was no longer
engaged
through Zibandlela. She said that Mr Sumpton undertook to register
her and Caryn under the company. Caryn was to investigate
how such
registration had to be done. She denied that she had undertaken to
facilitate getting her own independent contractor to
serve the
respondent under. She agreed that she did the same type of work as
she would do in her first engagement with the respondent.
She
conceded that she had a debate with Mr Sumpton on the unemployment
insurance fund (UIF) and she said it tool place when she
went to him
to enquire the nature of deductions which were made on her salary.
She said that he had said to her that she had not
made an effort to
register herself for the UIF. She had responded by saying that it was
Caryn who had to register them. From April
to July she was being paid
by the respondent an amount of R5000 as gross earnings which after
some deductions came to R4575.00
per month. Mr Sumpton would deposit
a cheque for her monthly earnings and he would identify such payment
in the deposit slips as
salary. She conceded that she had telephoned
Mr Sumpton in respect of the first cheque which took about seven days
to clear. She
said that she did not know that cheques were thereafter
marked salary to help facilitate them being cleared within 2 days by
the
bank, so as to help her.
8.
It is common cause between the parties that Ms Niewoudt drafted and
typed out an undated letter addressed “To whom it my
concern”
(sic) and that it was signed by Mr Sumpton. The latter was to help
her to buy a cellular telephone. She stated in
it that Mr Sumpton was
confirming that she worked for All-PAK/SOLUTIONS, the respondent.
9.
She testified that she had no other employment when she worked
for the respondent and that she worked under the control
of Mr
Sumpton. She said that her only income was from the respondent.
Respondent’s
version
10.
Mr Sumpton testifies that he never had an employee in his company. He
preferred to concentrate on the operational needs of his
company and
to leave staff administration to a labour broker as that would take
from him all the trouble of staff management away.
11.
When he engaged Ms Niewoudt for the second time, she had said that
she did not want to be under Zibandlela as it meant losing
some money
which was paid to Zibandlela. She wanted to be an independent
contractor or to form a close corporation. They had not
reduced that
arrangement into writing as it had nothing to do with him.
12.
She had seen how much she earned under Zibandlela and she knew that
Zibandlela took off an amount of R5 000. She asked if the
respondent
could pay her an equivalent of R5 000, in which event, she would then
invoice the respondent for that amount. The respondent
would also
give a bonus of R5 000 at the end of the year to Zibandlela. The
respondent had to pay for the maternity leave as well.
It would close
down the business for the December recess. He agreed with her
suggestion as he never wanted to employ her. She was
to be a sole
agency employer and she had to invoice herself as well. He had never
promised to register her with the UIF nor did
he promise to ask Caryn
to do it for him. The R5 000 payment to her was to take effect from
April 2006. She however never invoiced
the respondent thereafter,
even though he had asked her several times about it. She would say
that she was experiencing a difficulty
in getting information she
needed. He agreed that he paid her R5 000 up to July 2006 minus R50
for UIF and R375 for income tax.
When paying her, he issued cash
cheques which cleared immediately, instead of the 7 days waiting
period.
13.
A period of three months went by without Ms Niewoudt invoice the
respondent. Mr Sumpton had become concerned. He then approached
Zibandlela to enrol her. He was concerned that she was getting what
she wanted, but without getting invoices, he ran the risk of
getting
penalties.
14.
Mr Sumpton agreed that he provided Ms Niewoudt with a place to work
at, everything she needed to work with and that he told
her what to
do as well as how to do it. He admitted that he controlled her hours
of working. He conceded that she was financially
dependent on the
respondent. He agreed that he would keep her position at work for the
period that she was away to deliver her
baby and that he had paid her
for a week when she had been hospitalised sometime in April or May
2006.
Submissions
15.
Mr Forster appearing for the applicant argued for a finding
that the relationship in which Ms Niewoudt tendered her services
to
the respondent were those of an employee because:
Ø The
respondent determined the work that was to be done, the place where
it was to be carried out and the manner of
doing it;
Ø The
working hours were determined by the respondent to be 07h00 –
17h00 for 4/5 days in a week;
Ø Ms
Niewoudt would be granted a maternity leave.
Ø Ms
Niewoudt financially depended on the respondent and no one else.
Ø In her
salary payment, deductions for UIF and income tax were made by the
respondent.
Ø The letter
which she had drafted and typed had working conditions pointing to
her being an employee.
16.
The submission made by Mr Alberts in this regard was fairly brief. He
submitted that the respondent had never employed its own
staff but
relied on labour supplied by various labour brokers such as
Zibandlela. He said that no reason was shown to be existing
why the
applicant would be treated differently from other staff such as
Caryn.
Analysis
17.
Section 213 (a) of the Act defined an employee to mean:
“
any person,
excluding an independent contractor, who works for another person or
for the State and who receives, or is entitled
to receive, any
remuneration.”
18.
Section 213 (a) of the Act clearly therefore excludes an independent
contractor from the definition of an employee. Section
200 A of the
Act also provides a guide in the process of determining whether the
person is an employee where services are rendered
to another. Section
200 A creates a presumption and provides:
“
(1) Until the
contrary is proved, a person who works for or renders services to,
any other person is presumed, regardless of the
form of the contract,
to be an employee, if any one or more of the following factors are
present:
(a) the
manner in which the person works is subject to the control or
direction of another person;
(b) the
person’s hours of work are subject to the control or directions
of another person;
(c) in the
case of a person who works for an organisation, the person forms part
of that organisation;
(d) the
person has worked for that other person for an average of an least 40
hours per month over the last three months;
(e) the
person is economically dependent on the other person for whom he or
she works or renders services;
(f) the
person is provided with tools of trade or work equipment or renders
services to one person.”
19.
The Code of Good Practice as published in Gen N1774 in GG29445 of 1
December 2006 also provides guidelines for the determination
whether
a person is or is not an employee. Paragraph 18 of the Code provides
a detailed elaboration on each of the presumptions
which section 200
A provides. I have considered the provisions of the Code and need not
restate their provisions here for present
purposes.
20.
This court, per Van Niekerk AJ, as he then was, dealt with the
complex and indeed, a controversial question, “is a foreign
national who works for another person without a work permit issued
under the Immigrations Act 13 of 2002, an “employee”
as
defined by the Act. The question was answered in the affirmative, see
Discovery Health Ltd v Commission for Conciliation, Mediation
&
Arbitration & Others (2008) 29 ILJ 1480 (LC). The enquiry before
me is however a different one then that which confronted
this court
in the Discovery Health Ltd case and such difference was identified
in paragraph 53 of that judgment. The line to draw
in the present
matter is between employment and genuine self employment.
21.
Courts in South Africa have evolved various tests to distinguish
between the employment contract proper and other various forms
through which work or services are rendered. These tests such as the
control test and the organisation test had their own inherent
problems-see in this regard S v AMCA Services & another
1962 (4)
SA 537
(A). In that case, a company had been convicted of a
contravention of regulation 2 read with regulation 6 (1) (a) of the
regulations
set forth in the Annexure to War Measure 43 of 1942, for
failing to pay cost of living allowance to certain persons engaged as
collectors and alleged to have been “employees” of the
company within the definitions of the regulations. They were
engaged
in the collection, on behalf of the company, of regular payments in
respect of policies of insurance or saving accounts.
Court had to
decide whether the collectors were “employees” within the
definition of the regulations. The court drew
a distinction between
“working for” a person and “having work done”
for him. It held that the latter expression
clearly did not imply the
rendering of personal services, as does the former, but merely the
production of a certain result by
the labour of others. The court
further held at page 543:
“
It follows that in
my view the expression “working for any other person” in
the definition of “employee”
should be construed as
implying the rendering of personal services. A person who is not
bound to render his personal services to
another, cannot therefore,
be said to be “working for” that other person within the
meaning of the definition. I should
add that it does not, however,
follow that every person bound to render his personal services,
necessarily falls within the intention
of the regulation.
It
is, I think quite clear from the features mentioned above that the
collectors in the present case are not obliged to render their
personal services to the company. By their agreement with the company
they are bound merely to produce a certain result either
by their own
labour or the labour of others. Nor is the commission they receive on
collections made on behalf of the company, paid
for their personal
labour, but is the contract price from which they may derive a profit
by the assistance or labour of others
and after allowing for
transport expenses.”
22.
With all of this in mind, I return to the facts before me. In my
view, it is necessary to determine that which the parties agreed
to
at the commencement of the rendering of services, whether it
translated to reality and the consequences thereof, if any.
The
parties’ agreement
23.
According to Ms Niewoudt she was to be an employee of the respondent.
Mr Sumpton was to get Caryn to register both Ms Niewoudt
and herself
(Caryn) with the UIF as both were to be employees of the respondent.
The services she rendered to the respondent were
of the same nature
as those she had tendered while she worked for the respondent through
Zibandlela. Her earnings were to be R3500
per month which was to
increase to R5 000 per month during her maternity leave. Her position
would be kept by the respondent until
she returned from the maternity
leave, she could not dispute that her monthly earnings were described
as salary in the bank deposit
slip to facilitate the early clearance
of the cheque deposited by the respondent. She fell under the direct
control and supervision
of Mr Sumpton who told her what to do, when
to do it and how to do it.
24.
I find the version of the respondent to have been more plausible and
consistent with the probabilities of this matter. There
are aspects
of it which when put to Ms Niewoudt, remain undisputed. Firstly, Ms
Niewoudt testified that Caryn and herself were
employees of the
respondent and that Caryn was to attend to their registration for the
UIF. Caryn testified and disputed that version.
She said that she was
not an employee of the respondent. She denied that she had to attend
to the UIF registration. Secondly, Mr
Sumpton said that the earnings
initially agreed upon between the parties were to be R3200 and that
Ms Niewoudt would soon attend
to the registration of herself under a
sole employment agency in which case she would then be paid R5 000
monthly as was the case
with Zibandlela and she would invoice the
respondent and pay herself the salary. For the period April-July
2006, she was paid R5
000. Her version could not explain why she was
given that increase. In the version of the respondent, she was to
invoice the respondent
and to pay the statutory deductions through
the agency. Thirdly, it became common cause between them that Mr
Sumpton had confronted
her about the UIF registration issue. If the
respondent wanted to have her as an employee, it could not shift to
her such registration.
Fourthly, it remained undisputed that the rest
of the people who rendered their services with the respondent, did so
through a
labour broker and that the respondent did not have any
administrative functions that were to take care of any person as its
employee.
Fifthly, the version of the respondent was that Mr Sumpton
wanted to re-register Ms Niewoudt with Zibandlela when she failed to
register herself and to invoice the respondent for the payment of R5
000. That version was not seriously challenged except to the
extent
that it would have amounted to a unilateral change of working
conditions.
25.
Accordingly, I find that on total probabilities of this matter, both
parties agreed that Ms Niewoudt was to render her services
to the
respondent through a labour agency akin to Zibandlela and that Ms
Niewoudt was to have secured the necessary documentation.
Did
the agreement translate to reality?
26.
Ms Niewoudt failed to bring into being a labour broker which she was
to serve the respondent under. There existed a direct relationship
between the respondent and Ms Niewoudt. Ms Niewoudt never became an
independent contractor. What she tendered to the respondent
were her
personal services. If she had gone away for a confinement, her place
with the respondent would have been kept for her,
in terms of their
agreement. That arrangement suggested that she would have been on
maternity leave. That leave would be consistent
with her being an
employee of the respondent. While Caryn would be assisting the
respondent in the absence of Ms Niewoudt, there
was no agreement that
the monthly payments which the respondent agreed to pay to Ms
Niewoudt would be passed on to Caryn. When
Ms Niewoudt took ill and
was hospitalised for a week in April or May 2006, she received her
monthly remuneration. That indicated
that the payment of such money
was not linked to the deliverance of services to the respondent. When
Mr Sumpton had deducted the
UIF and income tax money from the R5 000
paid monthly to Ms Niewoudt, it appears that he took charge of it and
handled it himself
in the manner he deemed appropriate. All of that
contradicted Ms Niewoudt being in the position of an independent
contractor.
The
consequence
27.
In Ongevallekom v Onderlinge Versekeringsgenootskap A.V.B.O.B 1976
(4) SA (AD) the court had to deal with the determination
of whether a
person was a workman in terms of section 3 of the Workman’s
Compensation Act 30 of 1941. The court adopted an
approach of
determining what sort of relationship most strongly appeared from all
the facts or what the “dominant impression”
was which the
contract made on a person. In Midway Two Engineering &
Construction Services v Transnet Bpk (1998) 19 ILJ 738
(SCA) the
appellant, a labour broker had supplied 40 drivers to the respondent
because of a prolonged strike by the respondent’s
workforce.
One of the supplied drivers caused serious damage to a building
belonging to another company. The respondent settled
the claim of
damage and obtained cession of the companies claim and it sought
redress from the appellant. Court had to deal with
the issues whether
the driver had acted within the course of his employment with the
appellant when the damage was caused. The
appeal court held that the
control test, traditionally used to distinguish between an employee
(employer liable) and an independent
contractor (principal not
liable) was obsolete and simplistic. It held that what was required
was a multifaceted test that took
into account all the relevant
factors in order to determine who as a matter of policy and fairness
had been more closely associated
with the risk creating act.
28.
The application of a multifaceted test in the facts of the present
case has the consequence that the failure of the intention
of the
parties to come to fruition resulted in Ms Niewoudt being an employee
of the respondent. Mr Sumpton realised the consequence
and that is
why he said he wanted to re-register her as an employee under
Zibandlela to obviate being fined by the Department of
Labour.
29.
The next enquiry is whether as an employee of the respondent, Ms
Niewoudt was dismissed. Dismissal is defined in section 186
(a) of
the Act to mean that an employer has terminated a contract of
employment with or without notice. From the given facts, it
is common
cause that the termination of employment was consequent upon an
alternative instruction given by Mr Sumpton to Ms Niewoudt.
I find
therefore that as a result of Ms Niewoudt not complying with the
instruction to do the refiling, she was dismissed by Mr
Sumpton.
Was
the dismissal automatically unfair?
30.
Section 187 (1) (e) of the Act provides that a dismissal is
automatically unfair if the employer in dismissing the employee
has
the reason for such dismissal being the employee’s pregnancy,
intended pregnancy or any reason related to her pregnancy.
On the
date of her dismissal, Ms Niewoudt was about 9 weeks from the date
the baby was due to be delivered. Her undisputed evidence
was that
she was visibly pregnant. She had a threatened miscarriage for which
she had to be hospitalized for a week in April or
May 2006 and had
reported that to the respondent. More importantly, when the
instruction was given to her to refile the invoices,
her answer was
that she would do it upon her return from her maternity leave. She
therefore unequivocally indicated to Mr Sumpton
that there was a link
between her inability to render her services, at the time, with her
pregnancy and that once pregnancy was
over, she would be able to
execute her duties normally. Mr Sumpton was therefore alerted by Ms
Niewoudt that her inability to carry
out the instruction given to her
was related to her pregnancy. Notwithstanding that explanation, Mr
Sumpton dismissed her. I agree
with Ms Niewoudt that her dismissal
was indeed associated with or related to her pregnancy and was
therefore automatically unfair,
see also Mnguni v Gumbi (2004) 25 ILJ
715 (LC) at 721.
Relief
31.
Ms Niewoudt made it clear that she did not wish to be reinstated. On
the contrary she asked for a compensatory order. She testified
that
she was studying and had decided against working for the time being.
Compensation awarded to an employee whose dismissal is
automatically
unfair must be just and equitable in all the circumstances, but must
not be more than the equivalent of 24 months’
remuneration on
the date of dismissal-section 194 (3) of the Act.
32.
Mr Sumpton was very considerate when he took Ms Niewoudt back to his
employment soon after becoming aware that she was pregnant.
He even
offered to pay her an increased salary of R5 000 per month during her
maternity leave and to keep her position until she
would have
delivered her baby. He tried to accommodate her in a plan to have her
employed under a labour brokerage of her own.
He came across as not
knowledgeable about staff management.
33.
He took the trouble of carrying the invoice boxes to Ms Niewoudt’s
office so that she could trace the invoices he needed.
The facts of
this case suggest that Mr Sumpton recapitulated to frustration when
he discovered a misfiling of invoices and he reacted
with anger
towards her.
34.
Ms Niewoudt did not come to court with clean hands. She lied about
the agreement pertaining to her status with the respondent.
On the
facts of this case, she very well knew the plan they had mooted to
disguise her as the single employee of a labour brokerage.
She and
her fiancée decided against her continued employment so that
she could focus on her studies.
35.
All these considerations tend to mitigate in favour of the respondent
when a just and equitable compensation is considered.
36.
The following order will consequently issue:
1. The
respondent is ordered to compensate Ms Niewoudt in an amount of money
equivalent to ten months of the remuneration
she earned on the date
of her dismissal, being R5 000 x 10 = R50 000.
2. The
respondent is ordered to pay the costs of this claim.
_________
Cele
J
Date
of Hearing: 8-9 September 2008
Date
of Judgment: 14 January 2009
Appearances
For
the Applicant: Mr Justin Forster-Forster Attorneys
For
the Respondent: Adv S Alberts instructed by J Sellick Attorneys