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[2011] ZALCJHB 61
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J & J Freeze Trust v Statutory Council for the Squid and Related Fisheries of SA and Others (P530/09) [2011] ZALCJHB 61; [2011] 11 BLLR 1068 (LC); (2011) 32 ILJ 2966 (LC) (20 July 2011)
J&J
Freeze Trust v Statutory Council for the Squid and Related
Fisheries & others case no P530/09. Review of jurisdictional
ruling. Review dismissed. Council had jurisdiction as there
existed employment relationship between the parties.
2011
IN THE LABOUR COURT OF
SOUTH AFRICA
HELD IN JOHANNESBURG
Reportable
Case No P530/09
In the matter between:
J & J NFREEZE TRUST
….................................................................................
Applicant
and
THE STATUTORY COUNCIL FOR THE
SQUID AND RELATED FISHERIES OF SA
…........................................
1
st
Respondent
JONATHAN GRUSS N.O
…....................................................................
2
nd
Respondent
NEVILLE MICHAEL OLKERS
…..............................................................
3
rd
Respondent
Date of reasons: 20 July 2011
REASONS FOR THE ORDER
Molahlehi J
Introduction
On 26 November 2010, this Court made
an order in the following terms:
“
The
applicant’s application to review and set aside the second
respondent’s ruling issued under case number SCS113/08
is
dismissed with costs
.”
The order was made following the
application in terms of which the applicant sought to review and set
aside the ruling issued
by the second respondent (the arbitrator)
under case number SCS 113/08 dated 27 September 2009. In terms of
that ruling, the
arbitrator found that the first respondent had
jurisdiction to entertain the alleged unfair dismissal dispute
referred to it
by the third respondent. The applicant contended that
the first respondent did not have jurisdiction because the third
respondent
was not an employee but an independent contractor.
The third respondent has also applied
for condonation for the late filing of his response to the
applicant’s review application.
In my view, based on the
explanation given by the third respondent and the circumstances
surrounding the delay, I see no reason
why condonation for the late
filing should not be granted.
Background facts
It is common cause that prior to his
dismissal, the third respondent provided the applicant with services
of a skipper in vessel
Langusta II. The relationship between the
applicant and the third respondent lasted for a year. After his
dismissal by the applicant,
the third respondent referred an alleged
unfair dismissal dispute to the first respondent for determination.
At the hearing before
the arbitrator, acting under the auspices of
the first respondent the applicant raised a point
in limine
concerning the jurisdiction of the first respondent to entertain
the dispute. As indicated, the applicant contended that the first
respondent did not have the jurisdiction to entertain the matter
because the third respondent was not an employee but an independent
contractor.
In support of its contention that the
third respondent was not an employee but an independent contractor,
the applicant presented
before the arbitrator two witnesses. The two
witnesses are Mr Shaw and Mr Nel.
The first witness of the applicant
was Mr Nel, a trustee of the applicant, testified that the third
respondent was paid on a commission
basis which was calculated on
the squid caught. According to him, Mr Shaw, the shore skipper was
responsible for the vessel and
when the vessel was at sea the
skipper was in charge.
Mr Nel further testified that once
the vessel was at sea, the third respondent made his own decision
and that the shore skipper
or himself did not have control over him.
This according to Mr Nel included both the working hours and the
crew to assist him.
However, the third respondent required his (Mr
Nel) approval if he was to come back in to the harbor.
As concerning a document titled
“Skipper’s contract” which the third respondent
relied upon in asserting that
he was an employee, Mr Nel testified
that that document was nothing but “just couple of rules . . .
So it is just guidelines.”
And during cross examination, when
put to him that the third respondent was appointed on a probationary
period of three months
and thereafter to be appointed permanently,
Mr Nel stated that: “Not permanently. I said we are going to
see how it is
going for three months, if he can produce, that is the
main . . .” And later during cross examination, when
questioned
about the contract, he said that he was not referring to
the written contract but to the verbal contract concluded with the
third
respondent. This was after he had earlier stated that he was
the author of the written contract.
Mr Nel conceded during cross
examination that during the period of the relationship, the third
respondent had worked only for
the applicant and econonmically
depended on the applicant. In addition, the third respondent was
entitled to receive an additional
R10,00 per kilogram choka caught.
Mr Shaw, the second witness of the
applicant testified that the third respondent was an independent
contractor who received payment
from the applicant based on whatever
fish was caught. In other words, he was paid a commission and not a
salary.
In relation to the nature of the
relationship between the applicant and the third respondent, Mr Shaw
testified that he typed
the document on which the third respondent
relied on as his contract of employment. He testified that it was
never intended to
be a contract of employment but rather served as a
document containing “instructions so that he knows what to do
and also
to give percentages and the stuff.”
Mr Shaw further testified that the
crew of the boat was recruited by the third respondent and that he
(the third respondent) was
responsible for managing them on his own
behalf but however the applicant paid the crew on behalf of the
third respondent.
As concerning the payment of tax, Mr
Shaw testified that they deducted it on the basis of a tax directive
from SARS. And in relation
to the “Salary Advice” which
the third respondent received, he testified that the words “salary”
and
“employee” as used in the document was never
intended to convey that the third respondent was an employee.
The third respondent on the other
hand testifying on his own behalf, stated that he was phoned by Mr
Shaw and informed that his
employment contract was terminated. As an
employee, he was amongst others entitled to family and sick leave,
both of which he
took during the course of his employment by the
applicant. He took sick leave during 2007 and during that period,
the boat slipped,
meaning that the boat did not go to the sea.
During 2008, he took family responsibility leave because of the
death of his grandfather.
In relation to the nature of the
relationship he had with the applicant, the third respondent
understood it to be permanent, of
course after the initial
probationary period of three months. In terms of the contract of
employment, the third respondent says
that he was required to take a
21 days trip and needed permission if he was to return earlier than
that.
Grounds for review
The applicant contended that the
jurisdictional ruling was reviewable because the arbitrator
unreasonably and unjustifiably failed
to have proper regard to the
evidence of the applicant pertaining to:
“
20.1
The fact that Mr Shaw is not regarded as a shore skipper since he is
only doing maintenance on the boat. He is also not an
employee of the
Applicant, but an independent contractor.
20.2
the fact that Mr Shaw concluded and employment agreement with the
Third Respondent without having had the necessary authority
from the
Applicant to do so;
20.3
the fact that the crew are employees of the Applicant and that the
skipper does not form part of the crew and is therefore
not an
employee of the Applicant;
20.4
the fact that Mr Shaw issued a letter to the Third Respondent
certifying that the Third Respondent is a permanent employee
of the
applicant, without hearing he had the necessary authority from the
Applicant to do so;
20.5
the fact that the third respondent only and commission on total catch
of squid caught;
20.6
the fact that the Third Respondent's duties were project based and
that there were no specific working hours, either done that
troops to
see approximately twenty one (21) days at a time;
20.7
the fact that three (3) month period related to the notice period
that the Third Respondent had to give the Applicant when
he wished to
terminate the Independent Contractor Agreement with the Applicant.”
The applicant
further contended that the arbitrator failed to have proper regard
to the legal authorities, the nature of the contract/relationship
between the skipper and the owner of the boat including the general
practice in the fishing industry. The applicant further
criticised
the finding of the arbitrator that Mr Shaw had
the authority to conclude an employment contract on behalf of the
applicant. The
contract which the arbitrator relied on in concluding
that there was an employment relationship was according to the
applicant
not
authorised
.
The arbitration award
The arbitrator in
his analysis of the evidence which was presented before him starts
by indicating that the evidence which was
tendered by both Mr Nel
and Mr Shaw was not helpful in determining the jurisdictional point
which the applicant had raised. In
making the finding that the
relationship that existed between the parties was an employment
relationship the arbitrator relied
on a number of court decisions.
The first authority he had regard to is that of
Atlantic
Fishing Enterprise v CCMA and Others,
1
and Shaw
Geswindt and Evervest 32 (Pty) Ltd.
2
The two cases
dealt with the same issue as the present, which related to skippers
in the quid fishing industry.
In
Atlantic Fishing Enterprise,
the court held that the starting point in determining whether
someone is an employee or independent contractor is the very
contract
that the parties have concluded. The label given to the
relationship is not determinative of the nature of the relationship
but
rather according to the court, the objective facts of what the
true nature of the relationship is.
In considering factors that assist in
determining the true nature of the relationship between the parties
the arbitrator had the
following to say:
“
25.
As it related to the first criteria relating to supervision and
control, a degree of supervision and control in my view considering
operational requirements of the Respondent’s business does not
necessary imply that an employment relationship existed or
exists.
However, based on the contract, the applicant was not only
responsible for the production of a result (quality and quantity
of
fish caught). h also lend us personal services by managing the
Respondent’s employees whiles out at sea. This Mr Nel conceded
under cross examination. He (Applicant) had the power to hire and
fire crew on behalf of the Respondent. He was further responsible
to
control the food and to calculate the wages of the Respondent’s
employees. He in my view was also a manager for the Respondent.
The
Applicant, in my view, formed an integral part of the organisation of
the employer; he was responsible as the skipper to find
fish (squid).
In order for the crew to catch, therefore, without his involvement,
the respondent would not be able to successfully
engage in the
commercial fishing undertaking.
26
the undisputed evidence of tendered by the Applicant that it was
corroborated by the agreement is that the Applicant was required
to
give three months notice before resigning. He testified that during
2007, he approached the shore skipper concerning the offer
to skipper
another vessel, the terms thereof was far better than the terms
offered by the Respondent. He was told that he had to
give three
months notice, and as a consequence thereof, he could not accept the
other offer. The implication of the three months
notice period is
that the Applicant could not terminate his involvement with the
Respondent without giving three months notice.
The Applicant could
not from one trip to another change vessels (clients), and therefore
considering the three-month notice period,
and considering that a tip
was for 21 days he was economically dependent upon the Respondent.
27
The three month trial period clause in the contract and thereafter
being permanent instated, implies that a probation period
applied to
the Applicant engagement with the Respondent. Having regard to such
terms and considering the nature of an independent
contractor's
relationship in general with Clients and that no reciprocal notice
period was required on the part of the Respondent,
the only logical
deduction, one can conclude is that the three months period amounted
to a probation for purposes as contemplated
in terms of Item 8 of
Schedule 8 of the Code of Good Practice.”
Evaluation
The approach to be
adopted in dealing with review of jurisdictional ruling has been set
out in
SA Rugby
Players’ Association (SARPA) and Others v SA Rugby (Pty) Ltd
and Others; SA Rugby (Pty) Ltd and Another,
3
where the court held that the CCMA
being a creature of statute did not have the power to determine its
jurisdiction but may do
so for convenience. In other words, the CCMA
or the bargaining council cannot grant itself jurisdiction which it
does not have.
This means the question of whether the CCMA or a
bargaining council has jurisdiction is a matter to be determined by
the Labour
Court. The Labour Court determines the existence or
otherwise of the jurisdiction of the CCMA or the bargaining on the
basis
of the existence of objective facts.
In
Salam
Insurance Life Insurance Limited v CCMA and Others,
4
the court held
that in determining jurisdictional reviews, the Labour Court was
called upon to decide
de
novo
whether
there was an employer/employee relationship between the parties. In
other words, as stated by this Court in the recently
unreported case
of
Pick
It Up v Marwashe,
5
the test in reviews concerning the
jurisdiction of the CCMA or the bargaining council is not that of a
reasonable decision maker
as is the case in the general review cases
but whether the objective facts as they existed formed the basis
upon which the CCMA
or the bargaining council could assume
jurisdiction. It would seem even the issue of the correctness or
otherwise of the decision
of the commissioner is in this respect
irrelevant. In other words the court in the jurisdictional review
may well find that the
decision of the commissioner or the
arbitrator was correct, but it is critical that the court has to
apply its own mind and determine
whether the objective facts as
presented gave the commissioner or the arbitrator the jurisdiction
upon which the dispute could
be entertained by the CCMA or the
council.
It therefore follows from the above
discussion that, I am called upon to determine whether the objective
facts provided the first
respondent with the necessary jurisdiction
to entertain the alleged unfair dismissal dispute of the third
respondent.
Determining the nature of the
relationship between the parties.
In terms of
section 213 of the Labour Relations Act
6
an employee is
defined as
“
(
a)
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; and
any
other person who in any manner assists in carrying on or
conducting the business of an employer, and "employed"
and "employment" have meanings corresponding to that of
" employee".
Historically,
various tests have been used in determining whether the relationship
between the parties is that of an employer/employee
or otherwise. At
some stage in the development of labour jurisprudence, the control
test was favoured by the courts in the determination
of the true
nature of the relationship between the parties. In terms of this
test, the extent of the control which the alleged
employer had over
the employee was determinative as to the true nature of the
relationship. It would seem the use of this test
lost favour because
of its failure to take into account the technological changes that
had over the years taken place in the
field of work. The control
test was
criticised
in
Smit
v Workman’s Compensation Commissioner,
7
for being too wide
a concept. After evaluating the usefulness of the control test and
accepting that whilst it served as an indicator
of the nature of the
relationship, the Court then
summarised
some of the
important legal characteristics of both the employment relationship
and independent contractor relationship. In this
respect the court
had the following to say:
“
1.
The object of the contract of service is the rendering of personal
services by the employee (locator operarum) to the employer
(conductor operarum). The services or the labour as such is the
object of the contract. The object of the contract of work is the
performance of a certain specified work or the production of a
certain specified result. It is the product or the result of the
labour which is the object of the contract.
2.
According to a contract of service the employee (locator operarum) is
at the beck and call of the employer (conductor operarum)
to render
his personal services at the behest of the latter.
By
way of contrast the conductor operis stands in a more independent
position vis-à-vis the locator operis. The former is
not
obliged to perform the work himself or produce the result himself
(unless otherwise agreed upon). He may accordingly avail
himself of
the labour or services of other workmen as assistants or employees to
perform the work or to assist him in the performance
thereof.
3.
Services to be rendered in terms of a contract of service are at the
disposal of the employer who may in his own discretion decide
whether
or not he wants to have them rendered.
The
conductor operis is bound to perform a certain specified work or E
produce a certain specified result within the time fixed
by the
contract of work or within reasonable time where no time has been
specified.
4.
The employee is in terms of the contract of service subordinate to
the will of the employer. He is obliged to obey the lawful
commands,
orders or instructions of the employer who has the right of F
supervising and controlling him by prescribing to him what
work he
has to do as well as the manner in which it has to be done.
The
conductor operis, however, is on a footing of equality with the
locator operis. The former is bound by his contract of work,
not by
the orders of the latter. He is not under the supervision or control
of the locator operis. Nor is he under any obligation
to obey any
orders of the locator operis in regard to the manner in which the G
work is to be performed. The conductor operis is
his own master being
in a position of independence vis-à-vis the locator operis.
The work has normally to be completed subject
to the approval of a
third party or the locator operis.
5.
A contract of service is terminated by the death of the employee
whereas the death of the parties to a contract of work does
not
necessarily terminate it.
6.
A contract of service also terminates on expiration of the period of
service entered into while a contract of work terminates
on
completion of the specified work or on production of the specified
result.”
In responding to the shortcoming of
the control test, the organizational test was developed. The enquiry
in the use of the organization
test entails enquiring into whether
the person who contends to be an employee forms an integral part of
the business.
The other test
that has been used by the courts is the dominant impression test
which received attention and approval in Ongevalle
Kommisaris v
Ondelinge Versekkringemaatskap AVBOB.
8
The essence of
this test is to determine whether on the facts and the circumstances
of a given case the dominant impression presents
the existence of an
employment contract or an independent contractor.
9
In
State
Information Technology Agency (SITA) (Pty) Ltd v CCMA and Others,
10
the court held
that:
“
[10]
I
turn therefore to deal with the question, as to who the employer was
pursuant to the facts as set out in this case. The major
obstacle
facing appellant concerned the judgment of this court in Denel (Pty)
Limited v Gerber, 2005 (26) ILJ 1256 (LAC), in which
this court
adopted a “reality test” to a situation of where a
company or a closed corporation is interposed between
an employer and
an employee. The court took the view that, even where there was an
agreement where one legal entity such as a company
or close
corporation and the alleged employer for the provision of services,
it was open to the court to find that the person who
effectively was
the owner of the company or a close corporation was an employee of
the other company, with which his or her company
or close
corporation
had such an agreement. The mere fact that use is made of a legal
entity such as a company or close corporation to provide
services,
was no bar to the conclusion by the court that a particular
individual who was contracted to a company or close corporation,
or
who owned the company or close corporation in terms of which he was
obligated to provide services to the alleged employer, was
an
employee of the company, which was contractually entitled to receive
such services.
In
short, the court in Denel supra, approached the vexed question of the
employment relationship on the basis of the substance of
the
arrangements between the parties as opposed to the legal form so
adopted. That particular judgment has been the subject of
legal
analysis. See in particular André van Niekerk, 2005 (26) ILJ
1094, who in turn refers to a most comprehensive and
thoughtful
analysis by Paul Benjamin in the 2004 (25) ILJ 787.
Benjamin’s
contention is that the Denel judgment is congruent with Section 213
of the Labour Relations Act which inter alia
defines an employee as
any other person who in any manner assists in carrying on or
conducting the business of an employer. Benjamin,
(whose article was
written before the decision in Denel), notes that the issue of the
employment relationship has become crucial
to labour law partly
because of the concept of outsourcing and because, in many cases, a
traditional employer/employee relationship
no longer operates in the
labour market. He refers in this connection to international
standards developed by the ILO and, in particular,
to recent
conventions which “show a conscious policy to extend their
application to workers not employed in convention employment
relationships” at 801.
[11]
Benjamin then makes a further useful point in relation to the
determination of this question:
“
A
starting point is the distinguished personal dependence from economic
dependence. A genuinely self employed person is not economically
dependent on their employer because he or her retains the capacity to
contract with others. Economic dependence therefore relates
to the
entrepreneurial position of the person in the marketplace. An
important indicator that the person is not dependent economically
is
that he or she is entitled to offer skills or services to persons
other than his or her employer. The fact that a person required
by
contract, who only provide services for a single client, is a very
strong indication of economic dependence. Likewise, depending
upon an
employer for the supply of work is a significant indicator of
economic dependence”
The Court per Davis JA went further
to say:
“
For
this reason, when a court determines the question of an
employment
relationship, it must work with three primary criteria:
1.
An employer’s right to supervision and control;
2.
Whether the employee forms an integral part of the organisation with
the employer; and
3.
The extent to which the employee was economically dependent upon the
employer.”
The applicant in
contending that the third respondent was not an employee relied on
the above authorities, including those of
the Labour court dealing
specifically with squid fishing vessels. The applicant submitted
that with no exception the Labour court
has held that skippers of
such vessels were independent contractors. The other case which the
applicant relied on in contending
that the third respondent was not
an employee was that of
Shaun
Geswindt v Everest 32 (Pty) Ltd
in
which the court found that the skipper in the squid fishing vessel
was an independent contractor.
11
In support of its
point that it is common practice in the squid fishing industry that
skippers are independent contractors, the
applicant relied on a
number of arbitration awards where the commissioners dealing with
the same issue found that the skippers
were independent contractors.
As concerning the facts of this case,
the applicant says that it had a verbal agreement with the third
respondent in terms of
which he (third respondent) was engaged as
the skipper on the squid vessel for 12 months and earning an amount
of R618,000 based
on commission. Furthermore, the applicant
contended that:
it did not deduct UIF from the salary
of the third respondent.
It had no control over the third
respondent whilst he was at sea.
The third respondent employed his own
crew.
The third respondent was not entitled
to leave pay.
Third respondent determined his own
pay in terms of how much squid he caught.
The third respondent was at liberty
to work on any other vessel of his choice.
The third respondent's tax liability
was determined in terms of the tax directive.
The third respondent did not require
permission of the applicant. If you wish to attend to the above.
The transcript of the hearing before
the arbitrator reveals that there were two conflicting versions
between the parties. These
conflicting versions can in my view be
resolved through evaluating the credibility of the witnesses of the
respective parties.
There is no doubt in my mind that the two
witnesses of the applicant were in a number of material respects
unreliable. Their
credibility, with respect, is in serious doubt.
The version of the employee is more probable than that of the
applicant’s
witnesses.
In my view, substantively the
objective facts of this case reveal that the relationship that
existed between the parties was that
of an employer/employee. The
finding made by the commissioner in determining the jurisdiction of
the statutory council for convenience
is undoubtedly correct and I
align myself with it. The contract of employment categorizes the
third respondent as an employee.
His duties as defined therein, as
follows:
cleaning the vessel before entering
the harbour.
Quality control of fish;
controlling food, stock and
tackle-provided by the applicant;
Managing fellow employee use employed
by the applicant;
The contract also provides for the
probationary period of three months and thereafter, if the third
respondent performed satisfactorily,
he would be appointed
permanently. He would be instated and that is what happened. The
contract also makes provision for three
months notice period, should
the third respondent wish to terminate the contract earlier.
The fact that no UIF deduction was
made from the third respondent's salary and that the tax deducted
was by way of the tax directive,
is in my view not decisive in the
determination of the true nature of the relationship between the
parties. It should also be
noted that the fact that there is a
general practice in the industry, as the applicant contended that
skippers are independent
contractors, is not law and therefore each
case has to be evaluated on its own merits.
The facts in this
matter weigh significantly in favour of the finding that the
relationship between the parties was that of employer/employee.
Although the applicant sought to water down the value of the written
agreement between it and the third respondent as concerning
the true
nature of their relationship, that fact is significant in a number
of respect. The written agreement, whilst not determinative
of the
true nature of the relationship between the parties, on its own, is
significant if regard is had to other facts associated
with its
provisions. It is this agreement that made the third respondent an
integral part of the applicant including making him
economically
dependent on the applicant. The income the third respondent received
was effected through a salary advice which
categorized the third
respondent as an employee. Another significant fact to be taken into
account in this respect is the concession
made by Mr Nel that the
third respondent rendered his personal services to the applicant.
The fact that the third respondent
had to give a three months notice
if he was to resign, means that he could not skipper any other
vessel as and when he so decided.
The applicant could not dock the
vessel as and when he so wished. In addition, the applicant
confirmed the status of the third
respondent as an employee with
the estate agent when the third respondent was looking for a house.
The third respondent was responsible for managing the crew
on behalf
of the applicant and not for catching the fish. The crew was
responsible for catching the fish.
In as far as the number of decisions
that had been made concerning other skippers who had been found to
be independent contractors,
it is my view that the assessment of the
true nature of the relationship is not based on statistical
imperatives but rather each
case has to be considered on its own
merits.
It was accordingly for the above
reasons that the order quoted above was made.
__________________
Molahlehi J
Judge of the Labour Court of South
Africa.
Appearances
For the Applicant : Applicant’s
Manager :
For the Third Respondent: TD
Portgieter Attorneys
1
Unreported
C
ase number P809/02.
2
Unreported
Case number P410/03.
3
[2008] ZALAC 3
;
[2008]
9 BLLR 845
(LAC).
4
Unreported
Case JA38/08,
5
Unreported
C
ase number,
JR1613/09.
6
66
of 1995.
7
1979
(1) SA 51
(A).
8
1976
(4) SA 446
(A).
9
See
also
Bezer v Cruises International CC
(
2003) 24 ILJ 1372 (LC)
10
2008)
29 ILJ 2234(LAC) at para 10-11..
11
See
note 2. above
19