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[2010] ZALCJHB 53
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Nape v Intcs Incorporate Solutions (Pty) Ltd (JR617/07) [2010] ZALCJHB 53 (10 March 2010)
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD AT JOHANNESBURG
CASE NO : JR617/07
In the
matter between:
SIMON
NAPE
Applicant
and
INTCS
CORPORATE SOLUTIONS (PTY) LTD
Respondent
JUDGMENT
BODA
AJ
INTRODUCTION
1.
The facts of this case are indicative of
what commonly happens to employees employed by labour brokers.
2.
After the Applicant committed an act of
misconduct (he sent an email containing offensive material at the
client’s premises
to one individual), the client, Nissan
(Pty) Ltd, invoking its contractual rights, demanded that the
Respondent, its
Labour Broker, remove the Applicant from Nissan’s
premises.
3.
The Respondent, as the Applicant’s
employer, suspended the Applicant and after a disciplinary hearing,
determined that a final
written warning instead of dismissal was an
appropriate sanction. The Applicant agreed to the written warning but
Nissan was not
satisfied and refused to allow the Applicant access to
its premises.
4.
The Respondent was obliged, in terms of its
contractual relationship with Nissan to accede to Nissan’s
demands and accordingly
invoked the provisions of
section 189(a)
of
the
Labour Relations Act, 66 of 1995
(“
the
Act
”) and after a consultation
meeting with the Applicant, found no alternative position and
retrenched him.
5.
It is common cause that the Applicant found
work immediately thereafter at a higher salary and suffered no
financial loss at all.
6.
Nevertheless, the Applicant persists with
his claim for compensation that is just and equitable. Mr Levin,
acting on his behalf,
contended that the dismissal was both
substantively and procedurally unfair and submitted that the
Applicant should be granted
just and equitable compensation.
7.
Mr Beaton, acting on the Respondent’s
behalf, countered, contending that the dismissal was in all respects
fair and that in
any event even if it was not , the Applicant would
not be entitled to any compensation at all or at best, only one
month’s
compensation.
8.
The issues to be determined are accordingly
whether or not the retrenchment of the Applicant from the employ of
the Respondent,
who is a Labour Broker, was substantively and
procedurally unfair and if so, what compensation, if any, should be
awarded.
9.
I am grateful to both representatives for
their helpful and able arguments.
10.
Neither of the parties raised the issue of
joinder of Nissan to these proceedings. In my view it was not
necessary to join
Nissan to these proceedings for at least three
reasons. Firstly, the Applicant did not claim Nissan to be his
employer. In terms
of
section 198
of the Act the applicant has no
claim against Nissan for unfair dismissal (compare for example
State
Information Technology Agency (SITA) (Pty) Ltd v CCMA &
others
[2008] ZALAC 1
;
[2008] 7 BLLR 611
(LAC)).
Secondly, the Applicant did not claim reinstatement but only
compensation.
(
Gordon
v Department of Health: KwaZulu-Natal
[2008]
11 BLLR 1023
(SCA). Thirdly, the Applicant did not claim that the
labour broker arrangement was a sham (compare
State
Information Technology Agency (Pty) Ltd (
"SITA"
)
v Swanevelder & others
[2009] JOL
23479
(LC)).
11.
I propose to set out the facts in greater
detail. I thereafter deal with the complaint that the dismissal was
substantively unfair
followed by the procedural challenges and
finally with the issue of compensation.
The
Facts
12.
Two witnesses testified at the hearing :
Mrs Samantha Jane Boyce (“
Boyce
”),
a Director of the Respondent, and the Applicant.
13.
The facts were, save in one minor
respect, largely common cause. For reasons that will follow, where
there were factual disputes,
I have preferred the version of the
Respondent over the Applicant’s.
14.
The Respondent had a labour broking
contract with Nissan and other clients in terms of which it agreed to
supply mainly specialised
computer programming consultants and
engineers to clients on the basis that the Respondent would be the
employer of the employee.
The Respondent was not in the business of
supplying sales persons as labour.
15.
The Respondent procured Nissan as a client
in 2000. It supplied brand managers and computer project managers to
Nissan. These managers
earned above R35 000 per month.
16.
In terms of the standard arrangement,
Nissan had the right to require the employee to be replaced for any
reason whatsoever, with
someone else or, as the evidence shows, to
request that the employee be removed from its premises.
17.
At the special instance and request of
Nissan, the Respondent agreed during or about 2005 to employ Sales
Trainees for Nissan on
the same basis because Nissan had placed a
moratorium on the hiring of employees. The Trainees would be employed
by the Respondent,
receive training from Nissan for a limited
duration and would thereafter either continue to work at Nissan or be
deployed to find
their own jobs.
18.
The Applicant was one of many Trainees to
be so employed by the Respondent during 2005.
19.
From all the Trainees, the Applicant was
the only one to remain at Nissan but on the same basis, namely that
he would continue to
be employed by the Respondent and not Nissan in
the capacity of sales consultant.
20.
The Applicant was first placed on a
probationary contract for a few months, and then placed on a fixed
term contract for a few months
which was again renewed in August
2006.
21.
This last contract was again with the
Respondent and was due to expire on 31 August 2007.
22.
Pursuant to the employment contract between
the Applicant and Respondent, the Respondent was allowed to terminate
the Applicant’s
contract, before 31 August 2007, inter
alia
,
“
on grounds proven by the client
to be reasonable and/or substantively and procedurally fair.
”
23.
The latter clause, however, is not to be
found in the contract between the Respondent and Nissan which, as I
have stated, allows
Nissan to request the removal of the Applicant on
any grounds whatsoever.
24.
During September 2006 the Applicant, while
at Nissan, received an offensive email and distributed it to another
individual at Nissan
using Nissan’s computer. Nissan took
offence to this and demanded that the Applicant be removed.
25.
As mentioned in the introduction, the
Respondent suspended the Applicant and thereafter determined at a
disciplinary hearing that
a final written warning should be imposed
and not dismissal. The Applicant pleaded guilty, demonstrated remorse
and agreed with
the sanction.
26.
The Respondent duly communicated the
findings of the hearing to Nissan but in an email dated 14 September
2006 Nissan said “
we view the
incident committed by Simon as very serious. As discussed our
policies are very clear in this regard and as a result,
we do not
want Simon back on our premises in any capacity
.”
27.
On 20 September 2006, the Respondent wrote
to the Applicant in terms of
section 189(a)
of the Act, informing him
that as a result of economic reasons, it was contemplating
retrenching him because Nissan had informed
it that it no longer
needed the Applicant’s services.
28.
The notice contained the usual information
one finds in any
section 189(a)
notice and recorded the Respondent’s
proposals about alternatives considered, the selection criteria,
proposals on severance
pay and so on. I agree with Mr Levin when he
says that the notice is at places vague because it transpired that
the Respondent
simply copied large portions from a precedent. But I
am overall satisfied that the notice was sufficiently clear enough
for the
Applicant to understand the issues and proposals. As I have
stated earlier, the facts, all along, were mostly common cause.
29.
The Respondent had one consultation meeting
with the Applicant on 16 October 2006. The minute of the consultation
was introduced
in evidence. The Applicant alleged that during this
meeting, he had made a proposal to be swapped, but in response he was
told
to shut up. I reject his version that he was told to shut up,
because it was neither pleaded nor put to Boyce, who testified that
she was present during the meeting.
30.
I also accept Boyce’s evidence that
the meeting lasted about an hour.
31.
She, however, conceded that although
the minute did not record this, either during this meeting or perhaps
at some time, the Applicant
did make a proposal to be swapped.
However, he was told that there was no place he could be swapped in
because his position was
an exception in that all the Respondent’s
other clients required specialised skills which he did not possess.
32.
Save in this one respect, the minute
recorded what was discussed at the meeting and I accept the record as
being accurate.
33.
The minute shows that the Respondent
discussed and consulted on proposals on:
“
appropriate
measures to avoid the dismissal, change
the timing of the dismissal, appropriate measures to mitigate the
adverse effects of dismissal,
selection criteria, severance pay and
alternatives considered.”
The
Applicant was the only person to be retrenched. The
consultation process concluded that there was no alternative position
he could be placed in.
34.
The minute recorded that at several points,
the Applicant did not make any proposals but placed in dispute the
substantive rationale
for dismissing him.
35.
It is common cause that the Applicant at no
point, either during the meeting or even at the trial, identified a
specific position
he could be placed in or in which he could be
swapped.
36.
On 23 October 2006, the Applicant was
informed that he was retrenched and he was paid one week per year of
service as severance
pay, notice pay and other statutory payments.
37.
The Applicant earned R16 571.98 per
month. His final payment came to R30 044.78.
38.
In effect he was paid up to 15 November
2006. On the same date he commenced employment at a higher salary
with another employer.
39.
It is also common cause or at least not
disputed that the Respondent stopped receiving any reimbursement or
fee from Nissan in respect
of the Applicant’s salary since
September 2006 and that it carried the cost of the package and
salary, without having received
any value in return from its client.
40.
I also accept that Nissan was a large
client of the Respondent and that Nissan had superior bargaining
power. This much is demonstrated
by the very fact of the Applicant’s
employment. The Respondent agreed to employ the Applicant as a favour
to Nissan even
though its main business was focussed on computer and
engineering specialists. This much is also apparent from Nissan’s
refusal
to accept the agreement between the Applicant and Respondent
that a final written warning was appropriate.
Substantive
fairness
41.
Genuine labour broking relationships are
given legal force by the provisions of
section 198
of the Act. It
provides,
inter alia
,
as follows:
“
198.
Temporary
Employment Services.
—
(1) In
this section, “temporary employment services” means any
person who, for reward, procures for or provides
to a client other
persons—
(
a
)
who render services to,
or perform work for, the client; and
(
b
)
who are remunerated by
the temporary employment service.
(2) For the
purposes of
this Act
, a person whose services have been
procured for or provided to a client by a temporary employment
service is the
employee
of that temporary employment service,
and the temporary employment service is that person’s employer.
(3) Despite
subsections
(1)
and
(2)
,
a person who is an independent contractor is not an
employee
of
a temporary employment service, nor is the temporary employment
service the employer of that person.
(4) The
temporary employment service and the client are jointly and severally
liable if the temporary employment service,
in respect of any of its
employees
, contravenes—
(
a
)
a
collective agreement
concluded in a
bargaining council
that regulates terms and
conditions of employment;
(
b
)
a binding arbitration
award that regulates terms and conditions of employment;
(
c
)
the
Basic Conditions
of Employment Act
; or
(
d
)
a
determination made in terms of the W
age
Act”
42.
But for the provisions of this
section, the person who renders service could have been regarded as
being employed by both the client
and the Labour Broker. In some
cases, mentioned in subsection 4, the Act makes the client and Labour
Broker jointly and severally
liable to the employee but not in cases
of dismissal. Where the employee is dismissed, the employee’s
cause of action is
only against the Labour Broker and not against the
client. These provisions represent a compromise between labour and
management
and the legitimacy of such arrangements has accordingly
been retained in the section.
43.
In this case, the Applicant did not attack
the labour broking arrangement on the basis that it was a sham and
that the client was
in fact the true employer. Indeed, there is no
evidence at all to support this finding. I accordingly accept, in
this judgment,
that the relationship between the Respondent and
Nissan was genuine.
See:
LAD
Brokers
(Pty) Ltd v Mandla
[2001] 9 BLLR 993
(LAC)
Dick
v Cozens Recruitment Services
[2001] 22
ILJ 276 (CCMA)
44.
So as things stand, the employee has no
recourse against the client for unfair dismissal claims.
NUM
& others v Billard Contractors CC & another
[2006]
12 BLLR 91
(LC) at par 79:
“
Section
198
of the
Labour Relations Act applies
to arrangements of this
kind. Parties are entitled to choose to structure their relationships
in this way, and they may do so even
if the principal purpose is to
make the labour broker (and not its client) the person who is
responsible for managing employees
and ensuring compliance with the
various statutes that regulate employment rights. The provisions of
section
198(4)
make the client jointly and severally liable in respect of
contraventions of specifically identified employment rights. Unfair
dismissal rights are not among these. Whether or not this is
desirable as a matter of policy is not for me to decide in these
proceedings, and I express no view on that question here.”
45.
The facts reveal that both the Applicant
and the Respondent were
ad idem
that the misconduct for which the Applicant was accused, justified a
final written warning and not dismissal, but that Nissan did
not.
46.
Mr Beaton stressed the fact that the
legislature has given its stamp of approval to the relationship and
submitted that there was
nothing more the Respondent could do in this
case after the client, Nissan, took the stance that it did not want
the Applicant
on its premises. He submitted further that the Labour
Broker in these circumstances was legitimately entitled to invoke
section 189
of the Act given the fact that it now had to pay the
employee’s salary without being able to receive any value for
it from
the client as the client had acted within its contractual
rights to terminate the payment. He relied upon the decision in
Lebowa Platinum Mines Ltd v Hill
[1998] 7 BLLR 666
(LAC) which deals with
dismissal/s at the behest of third parties and submitted that the
principles set out therein, found application.
He submitted that the
Respondent had met the requirements of this judgment. He highlighted
the fact that the Respondent had very
little bargaining power to
negotiate with Nissan, who was its biggest client.
47.
The premise of the argument really rests
upon two pillars: Firstly, that the client was acting lawfully under
the terms of the contract
when it no longer wished to tolerate the
employee’s presence on its premises. Secondly, that the
Respondent, the Labour Broker,
was powerless and could do nothing in
response.
48.
It seems to me that if these two pillars of
the argument are correct, the rest of the argument submitted by Mr
Beaton would undoubtedly
be right. Moreover, it seems to me that if
these submissions are correct, an employee may find that it may
be impossible
to claim reinstatement. Although the Applicant in this
case only sought compensation, this would in my view be the logical
consequence
if I uphold Mr Beaton’s arguments.
See
NUMSA obo Ngayi & 6 others v Lapace
Construction
, an unreported decision of
Commissioner M Marcus MEGA 21381. The decision is distinguishable in
one important respect. In that
case the client terminated the entire
contract with the Labour Broker and not just the contract in relation
to one employee. In
that case, the learned Commissioner, having
to deal with the former scenario, says:
“
At
the outset of proceedings Mr Xilongo indicated he would seek the
reinstatement of the Applicants. I indicated to him that in
my view
such an order would not be feasible since it was not capable of
implementation, in that the labour broker/employee contract
is a
special category of employment which requires the continued existence
of three parties, the employer (broker), the employee
assigned by the
broker to work for the latter‘s client, and the client. In my
analysis of this legally complex relationship
in
Dick v
Cozen’s Recruitment Services
[2001]
22ILJ 276 CCMA, I categorized the broker as the
de jure
employer and its client as the
de
facto
employer, expressing the view
that the employment relationship cannot exist without the continued
existence of both broker and client
inasmuch as the intention of all
the parties is that the employee is assigned by the broker to perform
work for the broker’s
client, not the broker. The arrangement
does not contemplate the employee offering his labour to the broker
in the latter’s
business, but only in the business of the
client to whom he is assigned by the broker. The sequitur is: Remove
the client from
the equation and the employee’s employment with
the broker in terms of
section 198
(1) and (2) of the Act falls away,
since you have removed the
de facto
employment
which is the source of the employee’s work and remuneration. In
short, the employee’s employment with the
broker cannot
continue (or exist, in my view) without a client to whom the employee
is assigned by the broker to work. This intention
is reflected in the
definition of employer and employee found in
section 198
(2) of the
Act which reads as follows: “For the purposes of this Act, a
person
whose services have been procured for or provided to a
client
(my emphasis) by a temporary
employment service (that is, Labour Broker) is the employee of that
temporary employment service, and
the temporary employment service is
that person’s employer “. Inasmuch as Applicants`
services have at this time or
subsequent to their dismissals not been
provided to the client (Babcock) by Respondent, it is not physically
or legally possible
to reinstate them in the employment of the
Respondent. It was never contemplated in the employment contract
between Applicants
and Respondent that Applicants would perform work
for the Respondent in its labour broking undertaking. Hence my
conclusion as
conveyed to Mr Xilongo at the outset of this matter
that it is not feasible to order Applicants` reinstatement in the
employment
of the broker (Respondent). In the alternative, Mr Xilongo
asks that Applicants be awarded substantial compensation for the
period
of their unemployment following their unfair dismissal by
Respondent.”
49.
I propose to examine these two pillars of
Mr Beaton’s argument more fully.
50.
In so doing, I am mindful of the fact that
the relationship between the Respondent and Nissan was a lawful one.
I am also mindful
of the fact that I am not dealing with the
situation where the client cancels the entire contract with the
labour broker on grounds
which are lawful.
51.
I make a distinction, however, between the
legality of the relationship on the one hand, compared to the terms
of the contract on
the other. While the relationship may be a lawful
one, not all of its terms may be.
The
contractual argument
52.
In
Barkhuizen
v Napier
2007 [7] BCLR 691 (CC) the
Court stated:
“
What
then is the proper approach of constitutional challenges to
contractual terms where both parties are private parties? Different
considerations may apply to certain contracts where the State is a
party. This does not arise in this case.
[28]
Ordinarily,
constitutional challenges to contractual terms will give rise to the
question of whether the disputed provision is contrary
to public
policy. Public policy represents the legal convictions of the
community; it represents those values that are held most
dear by the
society. Determining the content of public policy was once fraught
with difficulties. That is no longer the case. Since
the advent of
our constitutional democracy, public policy is now deeply rooted in
our Constitution and the values which underlie
it.
11
Indeed, the founding
provisions of our Constitution make it plain: our constitutional
democracy is founded on, among other values,
the values of human
dignity, the achievement of equality and the advancement of human
rights and freedoms,
12
and the rule of
law.
13
And the Bill of
Rights, as the Constitution proclaims, “is a cornerstone”
of that democracy; “it enshrines the
rights of all people in
our country and affirms the democratic [founding] values of human
dignity, equality and freedom.”
14
[29]
What
public policy is and whether a term in a contract is contrary to
public policy must now be determined by reference to the values
that
underlie our constitutional democracy as given expression by the
provisions of the Bill of Rights. Thus a term in a contract
that is
inimical to the values enshrined in our Constitution is contrary to
public policy and is, therefore, unenforceable.
[30]
In
my view, the proper approach to the constitutional challenges to
contractual terms is to determine whether the term challenged
is
contrary to public policy as evidenced by the constitutional values,
in particular, those found in the Bill of Rights. This
approach
leaves space for the doctrine of
pacta
sunt servanda
to
operate, but at the same time allows courts to decline to enforce
contractual terms that are in conflict with the constitutional
values
even though the parties may have consented to them. It follows
therefore, that the approach that was followed by the High
Court is
not the proper approach to adjudicating the constitutionality of
contractual terms.”
53.
Public policy imports the notions of
fairness, justice and reasonableness. Public policy would preclude
the enforcement of a contractual
term if its enforcement would be
unjust or unfair. Public policy, it should be recalled “
is
the general sense of justice of the community, the boni mores,
manifested in public opinion.”
54.
As has been observed further, in the
judgment, “
while public policy
endorses the freedom of contract, it nevertheless recognises the need
to do simple justice between the contracting
parties. To hold that a
Court would be powerless in these circumstances would be to suggest
that the hands of justice can be tied;
in my view, the hands of
justice can never be tied under our Constitutional Orde
r.”
55.
At p.351 Moseneke DCJ said:
“
Public
policy cannot be determined at the behest of the idiosyncrasies of
individual contracting parties. If it were so, the determination
of
public policy would be held ransom by the infinite variations to be
found in any set of contracting parties. In effect, on the
subjective
approach that the majority judgment favours, identical stipulations
could be good or bad in a manner that renders whimsical
the
reasonableness standard of public policy”
56.
In
Mozart Ice
Cream Classic Franchises (Pty) Ltd v Davidoff & another
[2009]
3 SA 78
(C) the Court stressed the importance of being vigilant when
private power is abused. The Court said:
“
In
our country, there should be no need to remind the legal community of
the importance of power and its abuse, even when sourced
in private
hands. By contrast, see the mischaracterisation of the law fashioned
by private power at paragraph [30] of
Den
Braven
.
Private
power in South Africa is also accountable to the principles of the
Constitution. Madala J reminds us of this important
point of our
history when he wrote in
Du
Plessis v De Klerk
1996 (3) SA 850
(CC) [also reported at
[1996] ZACC 10
;
1996
(5) BCLR 658
(CC)
–Ed]
at paragraph [163]:
"Ours
is a multiracial, multi-cultural, multi-legal society in which the
ravages of apartheid disadvantage and inequality are
just
immeasurable. The extent of the oppressive measures in South Africa
was not confined to government/individual relations, but
equally to
individual/individual relations. In its effort to create a new order,
our Constitution must have been intended to address
these oppressive
and undemocratic practices at all levels. In my view our Constitution
starts at the lowest level and attempts
to reach the furthest in its
endeavours to restructure the dynamics in a previously racist
society."
57.
In
SA Post
Office v Mampeule
[2009] 30 ILJ
664(LC), the Court in a similar manner considered that contractual
rights cannot be structured in a way which would
undermine the
fundamental protections guaranteed to employees by the Act. The Court
said:
“
The
respondent’s counsel says if it were permissible, then the
entire provisions of chapter 8 of the LRA, and the constitutional
right to fair labour practices, could be easily circumvented. This
could be achieved, so the argument goes, by including a clause
in
every employee’s contract that his employment will terminate
automatically on the occurrence of some or other event, for
example,
a prescribed act of misconduct or incapacity. There is much to be
said for this submission. Such clauses are eminently
undesirable in
the labour relations context. The progressive disciplinary measures
for which
schedule
8
to the LRA makes provision would be rendered otiose and the labour
relations clock in this country would have been turned back
some
three decades.”
58.
Labour broking arrangements affect three
parties: the client, the broker and the employee. As this case shows,
it is almost inevitable
in the way the relationship is structured
that the client will wield the most bargaining power and gets the
best end of the deal.
The Labour Broker is in the middle. The Labour
Broker gets paid for procuring the labour and earns a profit but, as
this case shows,
the Labour Broker is the one liable in the case of
an unfairly retrenched employee. The employee, however, may claim
statutory
severance pay from both.
59.
In this tripartite arrangement, employees
are the weakest and most vulnerable.
60.
Although I have found and accepted that the
arrangement itself has been given the stamp of approval by organised
labour, management
and the legislature, this does not mean that the
Labour Broker and the client are at liberty to structure their
contractual relationships
in a way that would effectively treat
employees as commodities to be passed on and traded at the whims and
fancies of the client.
61.
Nor does it mean that Labour Brokers and
clients may structure their contractual relationship in a way that
would undermine the
employee’s constitutionally guaranteed
right to fair labour practices.
62.
The judgment of the Namibian Supreme Court
in
Africa Personnel Services (Pty) Ltd v
Government of The Republic of Namibia
SA
51/2008, unreported is instructive and recognises the need to monitor
potential abuses in the labour broking arrangement without
altogether
prohibiting it. The Court in that case was concerned with the
constitutionality of prohibiting labour broking arrangements.
The
Court held that an absolute prohibition is unjustified because of the
right to free trade, the needs for flexibility which
Labour Brokers
cater for in a dynamic market and the importance of freedom of
contract. The Court, however, recognised the need
to strike a balance
between the interests of employers to have labour broking
arrangements protected on the one hand, compared
to the interest of
workers not to be treated as commodities because of the way the
relationship is carried out. The Court said
after referring to the
ILO
Private
Employment Agencies Convention,
C181,
1997
, as follows:
“
We
have discussed the principle that “labour is not a commodity”
earlier in this judgment and pointed out that, unlike
a commodity, it
may not be bought or sold on the market without regard to the
inseparable connection it has to the rights and human
character of
the individual who produces it. We emphasised the importance of
labour legislation in bringing about social justice
at the workplace;
to redress bargaining imbalances between employers and employees and
to protect employees, especially those who
are most vulnerable,
against exploitation. The numerous regulative requirements proposed
in the Convention are intended to ensure
that the labour of agency
workers is not treated as a commodity and that their human and social
rights as workers are respected
and protected in the same respects as
the protection accorded in labour legislation to employees in
standard employment relationships.
It is self-evident from a reading
of the text as captured in the summary above that the purpose of the
Convention is to create
a framework within which private employment
agencies may operate and, at the same time, to ensure that workers
using their services
are protected. If the proposed regulative
framework for the protection of the workers and their rights is put
in place by member
States and it is supervised and enforced, it would
not allow for the labour of agency workers rendered within its
protective social
structure to be treated like a commodity. This is
so, not only because their engagement by agency service providers and
placement
with agency clients are subject to their consent, but also
because the social protection provided for in those regulative
measures,
which is inseparably attached to their person and labour,
is by legal implication part of the terms and conditions of the
triadic
employment relationships which arise as a consequence. Had
that not been so, then the adoption of the Convention by the ILO
would
be in conflict with one of the most basic principles upon which
it was founded. The terms of the Convention do not give us reason
to
suggest such a conflict. It follows that we do not accept the
respondents’ contention that agency work cannot be regulated
because it is per se inimical to the first principle of the
Philadelphia Declaration and therefore, albeit indirectly, also at
odds with Article 95(d) of the Constitution.”
63.
The Constitution provides that everyone and
not just employees have a right to fair labour practices.
Consequently, even though
a person may not be regarded by the law as
an employee of the client but of the Labour Broker, the client still
has a legal duty
to do nothing to undermine an employee’s right
to fair labour practices unless the limitation is justified by
national legislation.
64.
There is nothing in the text of section 198
of the Act that indicates to me that a Labour Broker and a client may
limit the right
of an employee not to be unfairly dismissed.
65.
It must be recalled that this right exists
primarily to guarantee security of employment. (See
Sidumo
& another v Rustenburg Platinum Mines Ltd & others
[2007] 12 BLLR 1097
(CC)). If Labour Brokers and clients are given
the licence to contract for standards that are less than the
fundamentals guaranteed,
the right to security of employment of
employees involved in this tripartite relationship will be severely
undermined.
66.
In applying the right not to be unfairly
dismissed, a Court is not bound by contractual limitations created by
parties through an
agreement when the agreement conflicts with the
fundamental rights of workers.
67.
The Courts especially have a duty not to
perpetuate wrongs exercised by private parties who wield great
bargaining power.
68.
In
Volvo
(Southern Africa) (Pty) Ltd v Yssel
[2010] 2 BLLR 128
(SCA), the client sued the employee on the basis
that the employee owed to the client a fiduciary duty,
notwithstanding the fact
that the employee was employed by the Labour
Broker:
“
Yssel
occupied the most senior position in Volvo’s information
technology division. That there was no contractual privity
between
him and Volvo seems to me to be of little consequence. It was the
position to which he was appointed, rather than the nature
of the
contractual relationship, that defined what Volvo could expect of
him. He had not been brought in to its offices so as to
provide him
with an opportunity to hawk his own wares but had been brought there
in the interests of Volvo.
That
his functions might not have included recruiting, employing and
acquiring staff does not seem to me to be material. No doubt
he could
not be compelled to accept instructions to engage himself in matters
of that nature. But the fact is that he did engage
himself in
arranging matters between Volvo and its staff. And in doing so, he
did not purport to be doing so as a stranger who
was conducting his
own affairs. He did so as an incident of his function as manager of
the division. Indeed, there can be no doubt
that Yssel was well aware
that it was precisely because he was the manager of the division that
Volvo could be induced to “relax
the care and vigilance it
would and should have ordinarily exercised in dealing with a
stranger.”
8
[20]
Yssel
was well aware that Van Eeden had made no independent enquiries
relating to the arrangement with Highveld and was acting entirely
upon what she was told by him. That he found it necessary to secure
an agreement of secrecy from Pieterse makes it abundantly clear
that
he was well aware that Van Eeden believed that he was arranging
matters pursuant to his ordinary managerial duties and not
for his
own account. In short, he was well aware that Van Eeden did not
consider herself to be dealing at arm’s length with
an
independent broker who was arranging matters on his own account, but
was dealing with the manager of the division concerned.
It was only
because Yssel was the manager that the transaction came about at all.
I have no doubt that Yssel was in a position
of trust when he engaged
himself in the matter and was not entitled to allow his own interests
to prevail over those of Volvo.
He is obliged in those circumstances
to disgorge his secret commissions and the appeal must succeed.”
69.
It seems to me that by a parity of
reasoning, if the Courts could recognise that the employee owed a
fiduciary duty to the
client of a Labour Broker, the Court should
also recognise that the client must structure its affairs with due
regard to the employee’s
rights to fair labour practices.
70.
Accordingly, any clause in a contract
between a Labour Broker and a client which allows a client to
undermine the right not to be
unfairly dismissed, would in my view be
against public policy.
71.
It is axiomatic that an employer should not
be allowed to invoke such a clause to justify a dismissal for
operational requirements.
72.
An illegal demand can never found the basis
to justify a dismissal based on operational requirements just as it
cannot form the
basis of a lawful strike.
(
TSI
Holdings (Pty) Ltd & others v NUMSA & others
[2006] 7 BLLR 631
(LAC)). By the same token
section 189 of the Act cannot be used to disguise the true reason for
dismissal.
See:
CWIU & others v Latex
Surgical Products (Pty) Ltd
[2006] 2
BLLR 14
(LAC)
Perumal
& another v Tiger Brands
[2007] ZALC 41
;
[2008] 1
BLLR 58
(LC)
Oosthuizen
v Telkom SA Ltd
[2007] 11 BLLR 1013
(LAC)
73.
It is axiomatic, however, that where the
demand of the client for the removal of the employee is lawful and
fair the employer Labour
Broker may properly rely upon the provisions
of section 189 of the Act.
The
Brokers right of recourse against the client
74.
It is clear from section 198 of the Act
that an employee has no right of recourse against a client of a
Labour Broker for unfair
dismissal claims.
75.
The legislature has, however, placed the
burden of satisfying unfair dismissal claims in cases like this, on
the Labour Broker.
That is part of the compromise inherent in the
section. As the constitutional validity of this compromise has not
been challenged,
I do not express any opinion about it. I have dealt
with this aspect earlier.
76.
But the Act is silent about the rights of
the Labour Broker against the client.
77.
It follows from what I have stated above,
especially in the
Barkhuisen
and
Mozart Ice Cream Parlour
cases that I have referred to earlier, that the Labour Broker is in
fact not powerless to resist its client’s attempt to
wield its
bargaining power in a way which undermines the fundamental rights of
employees. The Labour Broker is entitled to approach
a Court of law
to compel the client not to insist upon the removal of an employee
where no fair grounds exist for that employee
to be removed. The
Labour Broker is also entitled to resist any attempt by the client to
enforce a contractual provision which
is against public policy.
78.
Similarly, if a Court were to reinstate an
employee into the employ of the Labour Broker, the Labour Broker may
enforce such an
Order against the client to give effect to the
employee’s rights to fair labour practices.
79.
In my view, the Labour Broker could in such
a case approach either the High Court or the Labour Court for
appropriate relief. The
fact that the dispute in such an event would
be between two parties to a contractual relationship, which is not an
employment relationship,
would not mean that the Labour Court could
not grant appropriate relief to a Labour Broker if the issue in
dispute concerns the
employee’s rights not to be unfairly
dismissed.
80.
In terms of the judgment in
Gcaba
v Minister for Safety and Security & others
[2009] 12 BLLR 1145
(CC) this Court is entitled under section 157 to
develop its jurisdiction to give effect to the Act. The court held as
follows:
“
Section
157(2)
confirms that the Labour Court has concurrent jurisdiction with the
High Court in relation to alleged or threatened violations
of
fundamental rights entrenched in
Chapter
2
of the Constitution and arising from employment and labour relations,
any dispute over the constitutionality of any executive or
administrative act or conduct by the state in its capacity as
employer and the application of any law for the administration of
which the minister is responsible.
111
The purpose of this provision is to extend the jurisdiction of the
Labour Court to disputes concerning the alleged violation
of any
right entrenched in the Bill of Rights which arise from employment
and labour relations, rather than to restrict or extend
the
jurisdiction of the High Court. In doing so,
section
157(2)
has brought employment and labour relations disputes that arise from
the violation of any right in the Bill of Rights within the
reach of
the Labour Court. This power of the Labour Court is essential to its
role as a specialist court that is charged with the
responsibility to
develop a coherent and evolving employment and labour relations
jurisprudence.
Section
157(2)
enhances the ability of the Labour Court to perform such a role.
112
Therefore,
section
157(2)
should not be understood to extend the jurisdiction of the High Court
to determine issues which (as contemplated by
section
157(1)
)
have been expressly conferred upon the Labour Court by the LRA.
Rather, it should be interpreted to mean that the Labour Court
will
be able to determine constitutional issues which arise before it, in
the specific jurisdictional areas which have been created
for it by
the LRA, and which are covered by
section
157(2) (a)
,
(b) and (c)."
81.
The failure to recognise such a right of
recourse will render the primary remedy for a dismissed worker,
namely reinstatement, altogether
illusory.
In
order to fulfil the Acts stated objective to promote social justice
it is necessary to recognise a right of recourse.
82.
If the Courts do not recognise the Labour
Broker’s right of recourse, the consequences would be that an
employee may find
himself without a job for reasons which otherwise
would be unfair.
83.
It would also mean that the entire purpose
of section 189 of the Act whose primary purpose is not to find
alternatives or even to
hand out severance packages, but to save jobs
would be left unfulfilled , in the context of labour broking
arrangements,
without giving effect to the need to protect security
of employment within the tripartite arrangement. To read the Act in
the way
the Respondent argues would, in my view, mean that the
employee, in the situation of the Applicant, receives only secondary
protections
such as the payment of severance benefits, under
section 189. The primary protection of saving jobs is nullified.
84.
Accordingly, on the facts of this case, I
find that the client’s insistence that the Applicant be removed
was unlawful and
a breach of the Applicant’s right to fair
labour practises. The Applicant did not commit an offence for which
dismissal was
justified. The client had no right to insist upon
the application of its own internal policies concerning offensive
emails
because if it wanted that to apply, it should have employed
the employee. It seems to me that the client’s insistence that
its policies apply contradicted the very structure of the
relationship. The client had no right to impose its employment
policies
on the Labour Broker, where the application of those
policies conflicted with the right not to be unfairly dismissed.
85.
Furthermore, insofar as the contract
between the Respondent and its client allowed the client to
arbitrarily require the removal
of an employee from its premises,
such provision was unlawful and against public policy as it took no
account of the right of the
employee not to be unfairly dismissed.
86.
The Respondent Labour Broker could have
accordingly resisted the client’s attempts to invoke clauses in
its contract with
the client which undermined the Applicant’s
rights. It was unfair of it not to do so before invoking its right to
terminate
the contract of employment for operational requirements and
also because the demand of the client was unlawful and unfair.
87.
Mr Beaton relied upon the
Lebowa
Platinum judgement
. In
Lebowa’s
case, the Court dealt with a dismissal of an employee after the Union
threatened to go out on strike if the employer did not dismiss
the
employee for making a racist comment. The employer had no role
whatsoever to play in the making of the racist comment.
The
facts are not entirely the same because in the present case, the
Labour Broker voluntarily entered into a contractual relationship
with the client without ensuring that its employee’s security
of employment is guaranteed in a way which is consistent with
the
right to fair labour practices. Moreover, in this case Nissan did not
demand the Applicant’s dismissal, but rather that
the
Respondent ensure that he be removed from Nissan’s premises.
The effect of the demand in this case was probably the same
as a
demand that the employee be dismissed, as no alternatives were
available. The findings that I have reached are nevertheless
consistent with the
Lebowa decision
.
In this case, the Court said:
“
The
mere fact that a third party demands the dismissal of an employee
would not render such dismissal fair. Such an approach would
indeed
open a veritable Pandora’s Box of injustices.
The
demand for the employee’s dismissal must usually enjoy a good
and sufficient foundation. Where it impinges upon the fundamental
rights of the employee in terms of the Constitution special
considerations need to be taken into account in determining whether
it enjoys such a foundation.”
88.
The case of
Mnguni
v Imperial Truck Systems(Pty)Ltd t/a Imperial
Distribution
[2002] 23 ILJ 492
(LC) is instructive. The facts in that case were very similar to the
present one. The employer rendered
distribution services to various
clients at the client’s premises. One of the client’s
alleged that the employee had
stolen its goods. The employee was
however innocent. The client demanded the employee’s removal
from its premises. The employer
obliged and after finding no
alternatives retrenched the employee. The Court held this to be
unfair. It held that the employer
had to take all reasonable steps to
persuade its client to drop the request. The Court also found that
there was no proof that
the client would have cancelled the contract
had the employer insisted that it allow the employee to continue
working. These criticisms
apply with equal force to the respondent
(
See too
:
Buthelezi & others v Labour for
Africa (Pty)Ltd
[1991] 12 ILJ 588
(IC)). Furthermore, the right of the Labour Broker to request
the client to drop its demand extends further
to any demand which
infringes the employee’s right to fair labour practices and
which cannot be justified. As indicated above,
the Labour Broker has
the right to approach a competent Court for appropriate relief in
such a case.
89.
The concerns expressed by Commissioner
Marcus in the
Lapace Construction
judgment
supra
are
valid concerns especially in cases where the client cancels the
entire contract with the Labour Broker. But it seems to me that
once
it is recognised that the Labour Broker has a right of recourse
against the client, the in principle difficulties with reinstatement,
may in appropriate circumstances, fall away. There may be civil
procedure inconveniences to give effect to this right of recourse,
but the law caters for those issues by allowing a respondent
Labour Broker for example to issue a third party notice if the
facts
and issues are the same. Or even the Applicant, employee to join an
interested party, the client, where reinstatement is
claimed.
As I have mentioned, a Labour Broker may avoid a
dismissal altogether if it acts expeditiously and refuses to comply
with the client’s
requests. A Court of law may grant a
mandamus
against the client in order to enable the employee to continue
working.
90.
In the
LAD
Labour Broker’s case
supra,
the Labour Appeal Court simply gave effect to section 198 by holding
that the Labour Broker was liable to the employee in respect
of the
employee’s unfair dismissal claim. The Court did not have to
examine the validity of the demand by the client.
91.
Similarly, the decision
in
State Information Technology Agency (SITA) (Pty)Ltd v CCMA &
others
[2008] ZALAC 1
;
[2008] 7 BLLR 611
(LAC))is
distinguishable because on the facts of that case the court found
that section 198 did not apply as the SITA was the true
employer.
92.
In
Sindane v
Prestige Cleaning Services
[2009] 12
BLLR 1249
(LC) the Court adopted a different approach to the one
adopted in this judgment. The Court dealt with the situation where
one of
the respondent’s clients scaled down its cleaning
requirements, and the services of the applicant and a colleague were
terminated.
Here, there was perhaps a genuine economic reason, as the
court ultimately found, and section 189 could have been suitably
applied.
The employee claimed that he had been unfairly dismissed for
the respondent’s operational requirements. The respondent
claimed
that his services had terminated according to the terms of
his fixed-term contract, which provided that it would last only while
the client required his services, and denied that the applicant had
been dismissed. The Court agreed with this submission. Although
the
facts of this case are distinguishable from the present case, because
dismissal is not what is in issue, it seems to me that
this approach
gives far too much emphasis to the rights of parties to contract out
of the Act. It seems to me that this approach
violates section 5(2)
of the Act because it prevented the employee from exercising the
rights under section 189 of the Act.
Procedural
Fairness
93.
Mr Levin submitted that the consultation
process was too short, that it was not
bona
fide
and that the section 189(a) notice
was vague and led to unfairness. He emphasised that the Respondent
did not seriously make any
effort to accommodate the employee in
another position and did not disclose sufficient information
regarding alternative available
posts. He submitted that the
Respondent did not seriously make any effort to change the timing of
the dismissal, to assist the
Applicant or to discuss the issue of
severance.
94.
In assessing the procedural fairness of the
dismissal, it must be borne in mind that there were no genuine
factual disputes between
the parties. The facts leading up to the
Applicant’s retrenchment were mostly common cause.
See
too
:
Ngutshane v Ariviakom (Pty) Ltd t/a
Arivia.kom & others
[2009] 6 BLLR
541
(LC) at para 30
95.
For this reason, I cannot find any
unfairness to have occurred in consequence of the fact that the
section 189(a) notice was at
places unclear because parts of it were
cut and pasted from a precedent. On the whole, the notice identified
clearly the reason
for the proposed retrenchment and the other issues
were sufficiently clear for the Applicant to understand them. The
purpose of
the section 189(a) notice was fulfilled and there was
substantial compliance with the section
(
Visser
v Sanlam
[2001] 3 BLLR 313
(LAC)).
96.
Furthermore, because the facts were mostly
common cause, there was no point in prolonging a consultation process
for the sake of
it as nothing constructive could be achieved by doing
that. One meeting to discuss all the required issues with an open
mind and
with a view to reaching consensus, is sufficient. Only one
employee was affected.
97.
The Applicant made no proposal about
changing the timing of the dismissal. Given the fact that the
Respondent was not being reimbursed
any funds by the client after
September 2006, it was not unfair for it to change the timing of the
dismissal any further. As mentioned,
the Applicant suffered no harm
as a result of the timing of the dismissal because he immediately
found a job at a higher salary.
98.
For the same reasons, the failure on the
Respondent’s part to make a more generous severance package
proposal was not unfair.
Again, the Applicant made no proposals
whatsoever on this issue.
99.
The one proposal that the Applicant did
make, namely to be swapped, was seriously considered but as I have
found, it was not feasible.
Even at the trial, the Applicant could
not identify the position he was talking about. Nor did the evidence
show that the Respondent
withheld relevant information regarding
alternative posts.
100.
I am satisfied that the Respondent
approached all the issues with an open mind and accordingly I find
that the meeting satisfied
the requirement of section 189.
101.
The dismissal was accordingly procedurally
fair.
Compensation
102.
I have found that the dismissal was
substantively unfair.
103.
There are two stages to the enquiry. The
first is to decide if compensation must be granted. If so, the next
is to decide the quantum
thereof.
104.
The principles have now been clearly set
out in
Dr D.C Kemp t/a Centralmed v
Rawlins
[2009] 11 BLLR 1027
(LAC):
“
There
are many factors that are relevant to the question whether the court
should or should not order the employer to pay compensation.
It would
be both impractical as well as undesirable to attempt an exhaustive
list of such factors. However, some of the relevant
factors may be
given. They are:
(a)
the nature of the reason
for dismissal; where the reason for the dismissal is one that renders
the dismissal automatically unfair
such as race, colour, union
membership, that reason would count more in favour of compensation
being awarded than would be the
case with a reason for dismissal that
does not render the dismissal automatically unfair; accordingly, it
would be more difficult
to interfere with the decision to award
compensation in such case than otherwise would be the case;
(b)
whether the unfairness of
the dismissal is on substantive or procedural grounds or both
substantive and procedural grounds; obviously
it counts more in
favour of awarding compensation as against not awarding compensation
at all that the dismissal is both substantively
and procedurally
unfair than is the case if it is only substantively unfair, or, even
lesser, if it is only procedurally unfair;
(c)
in so far as the
dismissal is procedurally unfair, the nature and extent of the
deviation from the procedural requirements; the
minor the employer’s
deviation from what was procedurally required, the greater the
chances are that the court or arbitrator
may justifiably refuse to
award compensation; obviously, the more serious the employer's
deviation from what was procedurally required,
the stronger the case
is for the awarding of compensation;
(d)
in so far as the reason
for dismissal is misconduct, whether or not the employee was guilty
or innocent of the misconduct; if he
was guilty, whether such
misconduct was in the circumstances of the case not sufficient to
constitute a fair reason for the dismissal;
(e)
the consequences to the
parties if compensation is awarded and the consequences to the
parties if compensation is not awarded;
(f)
the need for the courts,
generally speaking, to provide a remedy where a wrong has been
committed against a party to litigation
but also the need to
acknowledge that there are cases where no remedy should be provided
despite a wrong having been committed
even though these should not be
frequent;
(g)
in so far as the employee
may have done something wrong which gave rise to his dismissal but
which has been found not to have been
sufficient to warrant
dismissal, the impact of such conduct of the employee upon the
employer or its operations or business; and
(h)
any conduct by either
party that promotes or undermines any of the objects of the Act, for
example, effective resolution of disputes.
[21]
From the above it is
clear that in the case of a narrow discretion – that is, a
situation where the tribunal or court has
available to it a number of
courses from which to choose – its decision can only be
interfered with by a court of appeal
on very limited grounds such as
where the tribunal or court:
(a)
did not exercise a
judicial discretion; or
(b)
exercised its discretion
capriciously; or
(c)
exercised its discretion
upon a wrong principle; or
(d)
has not brought its
unbiased judgment to bear on the question; or
(e)
has not acted for
substantial reasons (see
Ex parte Neethling & others
1951 (4) SA 331 (A) at 335); or
(f)
has misconducted itself
on the facts (Constitutional Court judgment in the
National
Coalition for Gay & Lesbian Equality
case at paragraph 11);
or
(g)
reached a decision in
which the result could not reasonably have been made by a court
properly directing itself to all the relevant
facts and principles
(Constitutional Court judgment in
National Coalition for Gay &
Lesbian Equality
at paragraph 11).
Although the principle is
that the exercise of a true discretion by a court of first instance
or by a tribunal can only be interfered
with by an appeal court on
limited grounds, the list of those grounds on which interference is
permissible is not so short any
more as can be seen above.
[22]
I do
not think that the provisions of
section
193(1)(c)
of the Act give the Labour Court or an arbitrator the kind of power
which would enable it or him to grant or refuse an order of
compensation on identical facts as it or he sees fit. In my view, the
ultimate question that the Labour Court or an arbitrator
has to
answer in order to determine whether compensation should or should
not be granted is: which one of the two options would
better meet the
requirements of fairness having regard to all the circumstances of
this case? If however the court or arbitrator
answers that the
requirements of fairness, when regard is had to all of the
circumstances, will be better met by denying the employee
compensation, no order of payment of compensation should be made. If
the court or arbitrator answers that the requirements of fairness
will be better met by awarding the employee compensation, then
compensation should be awarded.”
105.
In
Lakomski v
TTS Tool Tecnic Systems (Pty) Ltd
[2007] (28 ILJ 2775 (LC), the Court recognised the principle that the
fact that an employee suffered no financial harm is not a
bar to the
granting of compensation. The test is not whether the employee
suffered patrimonial loss but whether it is just an equitable
to
grant compensation in these circumstances. Patrimonial loss is a
factor to be considered though it is not absolute. In that
case five
months compensation was awarded for a dismissal that was both
substantively and procedurally unfair.
106.
I have decided to exercise my discretion to
grant compensation. I have decided to award compensation because a
retrenchment is a
no fault dismissal. I am of the view that the
Applicant should not be left remediless because his dismissal was
unfair. As I have
stated, the Respondent did not make any tender to
him at any time. As such the case of
Rawlins
is distinguishable from the present matter. I am also of the view
that it is necessary to send a clear message to Labour Brokers
not to simply accede to the demands of their clients when such
demands conflict with their employees’ rights to job security
because such demands are unfair.
107.
In consequence of the fact that the
Applicant suffered no financial loss, I can only award nominal
compensation. I have decided
to award a sum of R16 571.98 (one
month) to the Applicant as just and equitable compensation for the
substantively unfair
dismissal. The employer acted unlawfully and
unfairly but it was in my view
bona
fide
. The employee would be unfairly
enriched by a higher amount. The Respondent conceded that in the
event that the dismissal was found
to be substantively unfair this
amount would be just and equitable as compensation to the employee.
Costs
108.
The Respondent did not make any tender of
compensation to the Applicant. He was entitled accordingly to pursue
his claim.
109.
Not to award costs in this matter would be
unfair because it would nullify the order of Compensation.
110.
In my view, justice requires that costs
should follow the result.
Order
111.
The dismissal of the Applicant is
substantively unfair but procedurally fair.
112.
The Respondent is ordered to pay the
Applicant a sum of R16 571.98 (sixteen thousand five hundred and
seventy one rands and
ninety eight cents) as compensation.
113.
The Respondent is ordered to pay the
Applicant’s costs.
F.A BODA
ACTING JUDGE LABOUR
COURT
10 March 2010
For Applicant
: Mr
Clifford Levin (Attorney)
Instructed
by:
Clifford
Levin Attorneys
For Respondent
Adv R Beaton
Instructed
by:
Vogel
Malan Attorneys