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[2010] ZALCD 9
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Jenkin v Khumbula Media Connexion (Pty) Ltd (D914/08) [2010] ZALCD 9 (2 June 2010)
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT DURBAN
REPORTABLE
CASE NO. D 914/08
In
the matter between:-
RICHARD
JENKIN
Applicant
And
KHUMBULA
MEDIA CONNEXION (PTY)
LTD
Respondent
JUDGMENT
GUSH,
J
1.
On
the 17
th
August 1981 the Applicant commenced employment
with a division of Transnet which was referred to as the Transnet
Production House.
The applicant in his evidence explained that he was
employed as a printer and that his duties involved making copies of
documents
and manuals for customers which he would then bind.
2.
Whilst
so employed, in January 1991, the business operated by his then
employer, the Transnet Production House, was acquired by
a company,
Linkallash (Pty) Ltd trading as Skotaville Press. In 2002 Skotaville
Press became African Impression Media (Pty) Ltd.
The Applicants
evidence was that when these changes occurred his employment had
continued as before and that he continued performing
his duties as if
nothing had changed. His duties, salary and terms and conditions of
employment remained the same as did the nature
of the work he
performed.
3.
During
2006 the name of the company changed again, this time from African
Impression Media to Khumbula Media Connexion. The Applicant’s
evidence was that at the end of September 2006 he received his usual
salary and pay slip. From the beginning of October 2006 everything
remained the same and he continued working as before save that at the
end of the month the name of his employer as it appeared
on his pay
slip was now that of the Respondent. As had happened with the name
changes before, all remained the same. The applicant
continued to
perform the same duties from the same office for the same customers.
The Applicant explained that his manager was
the same person who had
managed him and that Mr Khumbula Siphiwe Christopher Ngcobo was still
the CEO as far as he was aware. At
the end of October 2006 he
received his pay slip as usual which now reflected his employer as
being the Respondent.
4.
The
Applicant did not apply for any position with the new company nor was
he approached to sign any contract. His employment simply
continued
uninterrupted, he sat in the same office and he believed that it was
simply a change of name.
5.
The
applicant explained that his problems had started in March 2007 when
people had arrived at the office and commenced removing
the
furniture. He was concerned and on the advice of his attorneys wrote
to the Respondent on the 12
th
March advising that he would
continue to report for work until told otherwise. On the 13
th
April he received a reply telling him that as the lease on the
premises had expired and as the company was looking “elsewhere”
that he should “stay at home with full pay and benefits”
until further notice.
6.
During
the latter part of 2007 the Applicant was advised by his medical aid
that his membership had lapsed due to the non payment
of his premiums
by the Respondent. He had queried this with the Respondent and on the
4
th
December 2007 he had met with Mr Khumbula Ngcobo.
During this meeting he had asked for the pay slips that he had not
received and
asked that the premiums for the medical aid be paid. His
evidence was that Mr Ngcobo had told him that he would look into the
matter
and revert to him. Mr Ngcobo had in addition said to him that
he would “come back” to him with a retrenchment proposal
and that they would meet again in January 2008.
7.
No
meeting took place in January. The Applicant said that he had tried
to contact Mr Ngcobo but he had been unavailable. He continued
to
receive his usual salary for December and January. It appears from
the Applicant’s bank statements which formed part of
the bundle
that he received a payment from the Respondent in the amount of
R16,224 in February 2008, which was later explained
as having been
the payment of the arrear medical aid contributions. In April 2008
the Applicant, having not received a salary for
March, telephoned the
Respondent to ascertain why, and was told that his contract had come
to an end.
8.
He
was asked about the unsigned contract of employment the Respondents
had included in the bundle of documents which purported to
have
placed him on a one year fixed term contract of employment commencing
the 18
th
October 2006 and ending on the 30
th
September 2007. His evidence was that he had not entered into such a
contract and that the first time he had seen the contract
was when it
was submitted by the Respondent Attorneys in preparation for the
case. The Applicant’s evidence concerning the
unsigned
“Severance/Retrenchment Package” document which the
Respondent had also included in the bundle was that he
had, as with
the unsigned contract of employment, never seen the document prior to
this matter commencing. He was adamant that
not only had he not
agreed to accept a package but that the amounts and detail had not
been discussed. He concluded his evidence
by explaining that he
remains unemployed having been unsuccessful in obtaining employment.
He also denied that he had been offered
a position in Johannesburg.
He said that had such an offer been made he would have accepted it.
9.
Mr
Khumbula Siphiwe Christopher Ngcobo gave evidence for the respondent.
He was the owner and Chief Executive Officer of African
Impression
Media (Pty) Ltd. In May 2006 African Impression Media (Pty)
Ltd, was placed in provisional liquidation. At this
time Mr Ngcobo
became a consultant to the respondent in this matter, Khumbula Media
Connexion (Pty) Ltd, a company owned by his
wife.
10.
It
is clear from the evidence that after the liquidation of African
Impression Media (Pty) Ltd, the business conducted in the Durban
office where the Applicant had worked since 1981, continued its
operations until the furniture was removed in March 2007. The only
change appears to have been that with effect from the 1
st
October 206 the office was run and operated by the Respondent. This
is evidenced by the pay slips issued to the Applicant. Mr Ngcobo
confirmed that at the end of September 2006 the Applicant received
from African Impression Media (Pty) Ltd his usual pay slip reflecting
the details of his employment by African Impression Media (Pty) Ltd.
At the end of October 2006, however, the Applicant was issued
with a
pay slip reflecting his employer as being “Khumbula Media
Connexion”. The format of the pay slip, the address
of the
employer, and the salary details were all identical. The date
of his engagement however was reflected as 1
st
October
2006 as opposed to the previous months pay slip which recorded his
date of employment as the 17
th
August 1981.
11.
Mr
Ngcobo was at pains to explain that the contracts African Impression
Media (Pty) Ltd had had with Transnet had come to an end
and that it
was simply a convenience for the Respondent to move into the same
premises continue the printing business and use the,
albeit outdated,
equipment. He confirmed that the Durban office in addition to the
contracts also provided a service to walk in
customers and that this
service continued. Save for the above, Mr Ngcobo was unable to
gainsay the Applicant’s evidence that
the work that the
Applicant had been doing and the customers he was doing it for
remained the same over the period of the change
in proprietorship of
the Durban office. Mr Ngcobo offered no explanation or documentation
to establish:
1.
what had transpired with the liquidation;
2.
any agreement if any with the liquidators; and
3.
any detail regarding the contracts and the customers that he
suggested
were different from those his company African Impression
Media (Pty) Ltd had dealt with
Neither
did the owner of the Respondent give evidence.
12.
Ngcobo’s
evidence was to the effect that he did not consider the continuation
of the printing centre in Durban to be a transfer
of the business or
a part thereof as a going concern. Accordingly the length of service
applicable to the Applicant’s retrenchment
package should not
take into account the Applicant’s previous employment.
13.
As
far as the fairness of the retrenchment procedure was concerned,
Ngcobo maintained that he had not only discussed the retrenchment
in
some detail with the applicant at the meeting in December but that at
the conclusion of the meeting the Applicant had agreed
to the
retrenchment package although he had asked for time to take it home
and consider it (sic). Ngcobo relied on the unsigned
“Severance/Retrenchment Package” letter as evidence of
the agreement he had reached with the Applicant, but was unable
to
explain why the Respondent had not complied with the terms of the
purported agreement.
14.
In
addition in his evidence Ngcobo suggested that not only had the
Applicant applied for employment with the respondent after the
liquidation of African Impression Media (Pty) Ltd, but that he had
entered into a fixed term contract with the Applicant, also
unsigned,
that was to run from the 18
th
October 2006. He suggested
that during his meeting with he Applicant in December 2006 he had
offered the Applicant employment in
Johannesburg but that the
Applicant had turned it down.
15.
The
Applicant gave his evidence is a simple and clear manner. He is
clearly not a sophisticated man and one gained the distinct
impression that he was being entirely honest. His explanation that he
had not seen either of the unsigned documents was entirely
plausible
given the Respondents evidence surrounding them. Whilst it is so that
the Applicant during cross examination made certain
concessions it
was abundantly clear that he did not understand the questions. His
evidence in chief was clear and credible and
the cross examination
did not negate it. Somewhat opportunistically it was put to the
Applicant in cross examination, regarding
the validity of the fixed
term contract, that the job description in the contract differed from
the Applicants previous job description
which confused the Applicant
but this submission was abandoned when it was pointed out that the
job title was in fact the same.
His denial that he had been offered a
position in Johannesburg was plausible. Had this offer been made one
would have expected
the matter to have been dealt with in the
documentation. In the absence of any documentary record of the offer,
taking into account
the fact that the meeting took place in a Steers
restaurant in the absence of offices, either the so called agreement
was pre-prepared
in which case the it is improbable that the offer of
alternative employment in Johannesburg was made, or the so called
severance
agreement was prepared after the meeting. Neither of these
possibilities accord with the evidence of the Respondent.
16.
On
the other hand the Respondent’s Ngcobo in his evidence was
vague as to the details of the sequence of events after the
liquidation of the company African Impression Media (Pty) Ltd, and he
was unable to substantiate his evidence with any documentation
either
from the liquidators or the Respondent company. The only two
documents which the Respondent put up were both unsigned agreements
and when dealing with the documents Ngcobo failed to explain why:
if the Applicant had
agreed to a fixed term contract the Respondent did not invoke the
terms thereof when at its purported expiry
the Applicant was being
paid to stay at home;
if the Applicant had
agreed to the terms of the retrenchment it was necessary to take the
document home to think about it;
if the severance package
had been agreed, the Respondent did not pay the Applicant the agreed
amount when it was supposedly due.
(the amount which appeared in the
Applicants bank statement for February was explained to have been
the medical aid contribution
payment)
17.
At
the commencement of the trial the parties filed a supplementary
pretrial minute, which succinctly set out what the parties required
the court to decide. It was agreed that the court was to
decide:
1.
firstly, “if the applicant’s dismissal was procedurally
fair”;
2.
secondly, if the dismissal “was procedurally unfair”,
what
compensation should be paid to the applicant; and
3.
whether the business of African Impression Media was transferred to
the Respondent
as a going concern as contemplated by
section 197A
of
the
Labour Relations Act 66 of 1995
. If the transfer was a
section
197
transfer then the quantum of the severance pay was agreed in the
amount of R35,153.82.
18.
Dealing
firstly with the procedural fairness of the dismissal it is pertinent
to record that it was common cause that the applicant
had been
dismissed for operational reasons and that only one meeting had taken
place, namely the meeting in Durban on the 4
th
December
2007. Despite Ngcobo’s insistence that there had been
communication with the staff regarding the pending retrenchment
he
was unable to produce any documentation to support this contention.
This was despite his acknowledgement that he was aware of
the
requirements of the
Labour Relations Act when
dealing with
retrenchments and his insistence that he had followed the Act to the
best of his ability.
19.
I
have no hesitation in accepting the evidence of the Applicant that
whilst the issue of retrenchment was mentioned during the fateful
meeting, Ngcobo had in fact not made an offer but had undertaken to
revert to the Applicant regarding the offer that was to be
made. As
mentioned above the Respondent if it had concluded the agreement as
was suggested there would be no reason for the Respondent
having
failed themselves to comply with it.
20.
In
JOHNSON & JOHNSON (PTY) LTD v CHEMICAL WORKERS INDUSTRIAL
UNION (1999) 20 ILJ 89 (LAC)
the Labour Appeal Court set out
clearly the requirements for compliance with the procedural aspects
of
section 189
of the
Labour Relations Act. The
court held:
“
The important
implication of this is that a mechanical, 'checklist' kind of
approach to determine whether
s 189
has been complied with is
inappropriate. The proper approach is to ascertain whether the
purpose of the section (the occurrence
of a joint consensus seeking
process) has been achieved (cf Maharaj & others v Rampersad
1964 (4) SA 638
(A) at 464; Ceramic Industries Ltd t/a Betta
Sanitaryware & another at 701G-702H (BLLR), 676B-677C ( ILJ ); Ex
parte Mohuloe
(Law Society Transvaal intervening)
1996 (4) SA
1131
(T) at 1137H-1138D).”
“
Mention has
already been made that
s 189
is inextricably linked to the issue
whether a dismissal based on operational requirements is fair or not.
In testing compliance
with its provisions by determining whether the
purpose of the occurrence of a joint consensus seeking process has
been achieved
or frustrated, a finding of non-compliance by the
employer will almost invariably result also in the dismissal being
unfair for
failure to follow proper procedure. It is difficult to
envisage a situation where the result could be different.”
(at
page 96/7 paras 29 and 31)
21.
Given
the overall circumstances of the matter the meeting held with the
applicant was not sufficient to constitute consultations
as required
by
section 189
, specifically if the objects of the consultation
process are taken into account. The Respondent did not even attempt
“
a mechanical, 'checklist' kind of approach”
but
merely convened a single meeting without even setting out in writing
its intentions or bothering to properly consult with the
Applicant as
is required by the
Labour Relations Act (LRA
). I am satisfied that
the respondents did not comply with the procedural requirements of
the LRA, particularly
section 189
and that their failure to do so was
unfair.
22.
The
second issue to be decide is whether or not the Respondent took over
the business of the previous company as a going concern
as envisaged
in
Section 197A
of the Labour Relations Ac. The Labour relations act
defines a
business
as:
“
including the
whole the part of any business trade undertaking or service”
;
and
transfer
as:
meaning the transfer
of the business by one employer to another employer as a going
concern.
Section 197A
applies in
cases of insolvency. The section specifically provides that if the
old employer is insolvent the contract of employment
does not
automatically terminate as provided for in the Insolvency Act where a
transfer of a business takes place. In such circumstances
the “
new
employer”,
is automatically substituted in the place of the
“
old employer”.
23.
It
is necessary to consider exactly what constitutes a transfer of a
business or part thereof in the circumstances of this matter.
There is no doubt that the operation performed by African Impression
Media (Pty) Ltd simply continued under the control and direction
of
the Respondent. The enquiry is a factual one. It matters not
that the proprietor or “former employer” that
went
insolvent was a company owned by the husband of the owner of the
respondent and is not necessary in this matter to consider
“piercing
the corporate veil”. The enquiry must be limited to
whether or not there was a transfer of the part
of the business or
service that operated in Durban as a going concern from the insolvent
company to the respondent. In this matter
the issue in question is
the consequence of the take over of the part of the business or
service for the purposes of calculating
severance pay. In other words
whether the Applicants length of service commenced with the take over
or whether his previous service
should be taken into account.
24.
The
facts are as follows. The Applicants evidence was that during 2006
the entity that employed him changed from African Impression
Media to
Khumbula Media Connexion. He was not aware of the insolvency of
African Impression Media. He continued to perform his
duties in
exactly the same manner and for the same customers through the
transition. This evidence was not challenged. Prima facie
the
Applicants evidence established that the Respondent continued the
business of the “old employer”. The Applicant
cannot be
required to prove the underlying causa or contract underpinning the
“transfer”. It must be sufficient to
establish a factual
situation which gives rise to a prima facie conclusion that a
transfer of the business or part thereof has
taken place. In the
circumstances where the Applicant’s evidence has clearly
demonstrates that the “business or part
thereof” has
continued uninterrupted it is incumbent upon the Respondent to
establish that the situation was not one envisaged
by S197A of the
LRA.
25.
What
the Respondent offered in rebuttal of the Applicants evidence was a
vague explanation that ranged from the assertion that the
Respondent
had existed prior to 2006 to the suggestion that contracts dealt with
by African Impression Media, which had been placed
in liquidation,
had come to an end. Neither averment, in the absence of any
further evidence or documentation, or comment
from the liquidators,
satisfactorily answered the evidence of the Applicant. What is clear
is that the Applicant was employed continuously
doing the same work
from his original employment by Transnet to his retrenchment by the
Respondent. The question is whether the
facts as described by the
Applicant established:
“…
a
transfer of a business-
(a) if the old
employer is insolvent…”
26.
The
decision in
AVIATION UNION OF SA on behalf of BARNES & OTHERS
v SA AIRWAYS (PTY) LTD & OTHERS (2009) 30 ILJ 2849 (LAC)
deals
extensively with the provisions of section 197. Applying a purposive
interpretation the court considered firstly the constitutional
right
to fair labour practices contained in section 23(1) of the
Constitution. Referring to the matter of
National Education Health
& Allied Workers Union v University of Cape Town & others
2003 (3) SA 1
(CC); (2003) 24 ILJ 95 (CC)
the court held
:
“
In terms of the
jurisprudence of the European Court of Justice it seems that the
principle underlying Directive 77/187 is that if
the business moves,
the workers move with it.”
27.
In
the
“
MEMORANDUM ON ACQUIRED RIGHTS
OF WORKERS IN CASES OF TRANSFERS OF UNDERTAKINGS;
GUIDELINES
ON THE APPLICATION OF COUNCIL DIRECTIVE 77/187/EEC OF 14 FEBRUARY
1977; BASED ON THE CASE LAW OF THE COURT OF JUSTICE
OF THE EUROPEAN
COMMUNITIES”
(published by
the ILO) it is said:
“
First of all,
it should be noted that the Court of Justice of the European
Communities has ruled that the Directive applies to all
transfers
resulting from a contract, an administrative or legislative act, or a
court decision.
The Court has also
held that the essential criterion for the recognition of a transfer
is whether the transferee has received an
existing undertaking so as
to be able to continue its activities or, at least, activities of the
same type. It follows that the
decisive criterion for establishing
whether there is a transfer for the purposes of the Directive is
whether the economic unit
retains its identity. The assessments
necessary in order to establish whether or not there is a transfer in
the sense indicated
are a matter for the national courts, in view of
the specific interpretation factors involved:
·
type of undertaking or business,
·
whether or not tangible assets such as buildings and movable
property are transferred,
·
the value of intangible assets at the time of transfer,
·
whether or not the majority of employees are taken over by the new
employer,
·
whether or not the customers are transferred,
·
the degree of similarity between the activities carried on before
and after the transfer,
·
the period, if any, for which those activities were suspended.”
;
and
“
The Court has
ruled that the Directive applies to all situations in which there is
a change in the legal or natural person responsible
for carrying on
the business. As soon as the economic unit continues its activity,
the mere fact of the change in the natural or
legal person who is
responsible for carrying on the business is sufficient to make the
Directive applicable, regardless of whether
or not ownership of the
undertaking is transferred.”
28.
The
issue as to whether or not there has been a transfer should not only
depend on the existence of an agreement but on the facts.
In National
Education Health & Allied Workers Union v University of Cape Town
& others (supra) at
2003 (3) SA 1
(CC); (2003) 24 ILJ 95 (CC)
where the test is set out as follows:
“
'Going
concern'
The phrase 'going
concern' is not defined in the LRA. It must therefore be given its
ordinary meaning unless the context indicates
otherwise. What is
transferred must be a business in operation 'so that the business
remains the same but in different hands'.
Whether that has occurred
is a matter of fact which must be determined objectively in the light
of the circumstances of each transaction.
In deciding whether a
business has been transferred as a going concern regard must be had
to the substance and not the form of
the transaction. A number of
factors will be relevant to the question whether a transfer of a
business as a going concern has occurred,
such as the transfer or
otherwise of assets both tangible and intangible, whether or not the
workers are taken over by the new
employer, whether customers are
transferred and whether or not the same business is being carried on
by the new employer. What
must be stressed is that this list of
factors is not exhaustive and none of them is decisive individually.
They must be considered
in the overall assessment and therefore
should not be considered in isolation.”
Insofar as the court was
referring specifically to the term “going concern” the
same logic must apply to the question
of whether or not there has
been a “transfer”.
29.
In
FOOD & ALLIED WORKERS UNION v COLD CHAIN (PTY) LTD &
ANOTHER (2009) 30 ILJ 2919 (LC)
Francis J held
that
“
The next
question that is to be decided is whether there will be a transfer as
a going concern. In NEHAWU, the Constitutional Court,
referring to
the jurisprudence of the European Court of Justice, said that this
leg of the test is best summarized by asking whether
there has been a
transfer of an economic entity that retains its identity after the
transfer has taken place. This would be indicated
inter alia by the
fact that the operation was actually continued or resumed by the new
employer, with the same or similar activity…
whether or not
the majority of its employees are taken over by the new employer;
whether or not its customers are transferred;
the degree of
similarity between the activities carried on before and after the
transfer;…”
(at page 2929 para 26)
29.
I
am satisfied, having taken into account the evidence of the parties,
that the assumption of the business operated African Impression
Media
(Pty) Ltd by the Respondent constituted a “transfer” as
envisaged by section 197A of the LRA and that accordingly
section
197A(2)(d) is of application to the Applicants employment for the
purposes of calculating the Applicant’s completed
years of
service as provided for in
section 41
of the
Basic Conditions of
Employment Act No. 75 of 1997
. The applicable commencement date of
Applicants employment is therefore the 17
th
August 1981.
The parties agreed that if
section 197A
applied the Applicant would
be entitled to payment of the sum of R35,153.82.
30.
In
the circumstances I make the following order:
30.1
The Respondent’s dismissal of the applicant was procedurally
unfair;
30.2
The Respondent is ordered to pay the Applicant compensation in an
amount
equivalent to 8 months salary;
30.3
The assumption of the business operated African Impression Media
(Pty)
Ltd by the Respondent constituted a transfer as envisaged by
section 197A
of the LRA and the respondent is ordered to pay the
Applicant the amount of R35,153.82;
30.4
The Respondent is ordered to pay the Applicants costs.
GUSH,
J
Date
of Hearing: 6
th
and 7
th
May 2010
Date
of Judgment: 02
nd
June 2010.
Appearances:
For
the Applicant: Advocate A Boulle, instructed by J. H. Nicolson
Stiller and Geshen;
For
the Respondent: Advocate S Madlala instructed by Makaula Zilwa Inc.