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[2012] ZALCJHB 72
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Wienand v Pharma Natura (Pty) Ltd (JR561/2011) [2012] ZALCJHB 72; (2013) 34 ILJ 1012 (LC) (12 July 2012)
9
REPUBLIC OF SOUTH AFRICA
THE LABOUR COURT OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: JR561/2011
In the matter between
KENNETH WIENAND
…..................................................................................
Applicant
and
PHARMA
NATURA (Pty) Limited
…...........................................................
Respondent
Heard: 2012-07-12
Delivered: 2012-07-12
Summary:
Review of a jurisdictional ruling. The test applicable to
jurisdictional ruling review. Where a Commissioner has found
that
there was no employer and employee relationship-a jurisdictional
fact, the Court of review is guided by the facts objectively
viewed.
The fact that a Commissioner found that he has no jurisdiction is of
no consequence. Where an employee receives a salary
through a Close
Corporation such does not suggest that the remuneration aspect was
not agreed upon. The test applicable to determine
the legal question
of an employer and an employee restated. The ruling was reviewed and
set aside.
__________________________________________________________
JUDGMENT
__________________________________________________________
MOSHOANA AJ
[1] This is an application brought in terms of Section 158(1)(g) of
the Labour Relations Act, in terms of which the applicant one
Kenneth
Douglas Wienand, seeks a review against a jurisdictional ruling made
by the second respondent.
[2] In terms of the aforesaid ruling, the second respondent concluded
that since there was no employer and employee relationship,
the third
respondent being the National Bargaining Council for the Chemical
Industry, did not have jurisdiction to entertain a
dispute between
the applicant and the first respondent.
[3] In brief, the facts of this matter are that the applicant was
appointed as the financial manager of the first respondent. It
seems
common cause between the parties that at the time of his appointment,
the first respondent was facing some financial difficulties.
To that
extent, the applicant himself testified at the arbitration
proceedings, that he would have negotiated a package of R75 000,
00, but because of the financial crisis that were presented to him,
he negotiated or he settled for R65 000, 00 per month.
[4] It is also common cause that after a period of a year or so, of a
relationship I must call at this stage of the judgment, the
applicant
sought to have his salary increased, given the undertakings that were
apparently given to him that after a survey his
salary might be
increased.
[5] Now, it is apparent to the court, that given the discussions
around the increment, the first respondent deemed it appropriate
at
that time to then terminate the relationship. The applicant being
aggrieved by the termination of the relationship approached
the third
respondent for assistance.
[6] As I have pointed out earlier in this judgment, what became an
issue before the second respondent was whether there was an
employer
and employee relationship. It is correct as submitted by Mr Levine
for the first respondent that the second respondent
acted in the most
prudent way by asking the parties to still lead evidence in order to
determine this issue.
[7] The parties deemed it necessary to lead evidence in order to
assist the second respondent in a sense, to come to a conclusion
on
this jurisdiction fact.
[8] Mr Malan appearing for the applicant, impressed on me that if one
has regard to certain conclusions that he pointed to in the
award, it
is very clear that the commissioner was wrong in some of the
conclusions that he had arrived at, which led him to the
finding that
there was never an employer and employee relationship.
[9] Of course, as I have pointed out, the
applicant was aggrieved by the ruling and approached this court to
exercise its powers
of review. The test for review has been dealt
with in a number of judgments in this court, but then it came to a
focal point by
the much celebrated judgment of
Sidumo
where the issue is one of reasonableness.
[10] However, there are authorities of this court
and the Labour Appeal Court, that correctly so, held that when it
comes to a jurisdictional
ruling, the test in
Sidumo
does not apply. What is required is for a court
like this one to assess the facts objectively in order to determine
whether a jurisdictional
fact has been established, in this instance,
the fact is whether there was an employer and employee relationship?
[11] Mr Levine appearing for the first respondent agreed that that is
the test as it was highlighted by Mr Malan in his supplementary
heads. Now the only question before this court is, whether on the
facts objectively viewed an employment relationship existed between
the applicant and the first respondent.
[12] The only way in which this court can determine that issue, is
obviously to have regard to the facts that are placed before
it. The
applicant approached this matter by way of a review, and in that
regard, the court would have to have regard to the evidence
that was
presented at the arbitration proceedings, together with any
documentary evidence that supports any contention either way.
[13] What became very clear during the submissions and also from the
review papers was that the applicant was placed at the disposal
of
the first respondent through an employment agency. There is evidence
to the effect that the employment agency required to be
paid for its
services.
[14] In the course of the submissions I raised an issue with Mr
Levine that the court understands that such entities would place
only
employees and or staff at a disposal of a company. The court has
never come across a situation where employment agencies will
place at
a disposal of a company, another company. But I will return to the
issue of the Close Corporation later in this judgment.
[15] The applicant having been placed in that position by the
employment agency, as a financial manager, was paid a fixed amount
which of R65 000, 00 per month until to a point when he was
terminated. It is common cause that the remuneration that the
applicant
was paid, was not paid directly to him, but was paid
through a close corporation.
[16] This issue of being paid through a close
corporation, somewhat arrested the attention of the commissioner, to
come to the conclusion
that there was no employer and employee
relationship. In my view, the issue of remuneration as an
essentialia
of a contract of employment becomes important at
the point of agreement, not at the point where how it is being paid.
[17] By way of example, an employee can direct the
employer to pay his salary, the entire salary to an entity like a
trust. That
does not suggest that the issue of remuneration was never
agreed. It is not always the case that an employee would be paid
directly,
but what is important as an
essentialia
of a contract of employment, is that there must be
an agreement on the remuneration payable.
[18] From the facts Mr Levine conceded that there was a fixed amount
that was payable over a period of time, so the only conclusion
that
one can arrive at is that the issue of remuneration was agreed upon.
The fact that it was paid through a Close Corporation,
in the court’s
view, is of no consequence in terms of determining whether the issue
of the salary or remuneration had been
agreed.
[19] Mr Levine in his submission agreed to the proposition by this
court, that the issue of whether there was an employer and employee
relationship has since become somewhat a legal question. Although it
needs to be bolstered by facts it has become a legal question
in the
sense that the courts over the years have developed tests that they
use for the purposes of determining that very difficult
question.
[20] Often times, employers faced with a possibility of the
application of the Labour Relations Act, the Basic Conditions of
Employment
Act or the Employment Equity Act, it becomes easy for them
to simply say that there was never an employer and employee
relationship.
[21] It was for this reason that the courts have developed tests over
the years and it was for this reason that one saw the provisions
of
Section 200A of the Labour Relations Act arising from the test that
has been applied for one to be presumed to be an employee.
[22] In the judgment of my brother Molahlehi J, in
the
National Education Health and Allied
Workers Union v Ramodise and Others
,
1
this court was confronted with a similar question.
Although in the contrary the court there was dealing with an
application where
Nehawu was seeking to reverse a conclusion by a
commissioner to the effect that there was an employer and employee
relationship.
[23] The court relied upon what the LAC had to say
in the matter of
State Information
Technology Agency (Pty) Limited v The Commission for Conciliation,
Mediation and Arbitration and Others
.
2
The judgment the Labour Court said the following:
‘
The
Labour Appeal Court in
State
Information Technology Agency (Pty) Limited v The Commission for
Conciliation, Mediation and Arbitration and Others
2008 (29) ILJ 2234 (LAC) confirmed the approach it had adopted in
Denel,
Davis JA in that case after upholding the views expressed by
Benjamin
in 2004 (25) ILJ
held that the decision in
Denel
is congruent with the provisions of Section 213 of the Labour
Relations Act and that when determining the issue of employment
relationship the court must work with three primary criteria. The
three criteria are set out at paragraph 12 of the judgment as
follows:
“
1. An
employer’s right to supervision and control
2. Whether the employee forms an
integral part of the organisation with the employer.
3. The extent
to which the employee was economically dependent upon the
employer.”’
3
In this matter, I intend to be guided by these primary criteria.
Turning to the facts of this case and considering the first criteria
of supervision and control.
[24] My reading of the papers and I did not understand Mr Levine to
submit otherwise, is that since the relationship started up
to the
point of its termination, the applicant was performing the assigned
functions under the control, it seems to me, of the
CEO. One of the
issues that he was to deal with was the turnaround strategy.
[25] I do not see how an employee or the applicant in this instance,
would have been able to finalise or deal with the issue of
the
turnaround strategy, without being supervised amongst others, by the
CEO or even, for that matter, the board of the company.
[26] The other aspect is that of control. It is very clear from the
evidence that was presented, that there were certain number
of hours
that the applicant had to dedicate. But the most telling aspect for
this court is that when the applicant had to take
leave, he had to
seek permission and it became clear that until it was approved the
applicant could not just up and leave. Therefore
there was a measure
of control in terms of the applicant’s employment.
[27] The argument by Mr Levine that the issue of leave was simply
just to indicate that the applicant was absent and there are
no
consequences to be attached to that should be rejected. If one has
regard to the block appearing on the leave forms, which I
invited Mr
Levine to address me on, requires authorisation by somebody who is
above the applicant. The CEO had to approve that
over a period when
the applicant took leave. There is not dispute about that.
[28] Now as far as this court is concerned, there was supervision and
control from the facts that are presented in this case. The
second
criterion is whether the applicant formed an integral part of the
organisation with the employer. I heard from the submissions
and also
had regard to the structures of the company that the applicant was
sitting amongst others in the executive committee meetings.
[29] The applicant somehow took part in some of the decisions that
one could say had to do with the running of the employer as
an
organisation. In that regard, I find it very difficult to conclude
that the applicant did not form an integral part of the organisation.
[30] The third criterion is the extent to which the employee was
economically dependent on the employer. I suppose that what broke
the
camel’s back in this matter, a salary increment, is evidence
enough to demonstrate that the applicant was depending economically
on the employer.
[31] He sought to be given an increase, given the fact that when he
negotiated at the time, he somehow sold himself short with
R10 000,
00 but at the time he understood the situation.
[32] Now his continued economic survival was dependent on him further
negotiating an increase and because the first respondent
was unhappy
with the fact that the applicant was forging ahead with his
contention that he has to be given an increase, his services
were
terminated.
[33] The issue of whether there was dismissal does not arise in these
proceedings. But in passing, I can state that the termination
letter
that I have seen in these papers, although carefully crafted to
suggest that it was terminating his services, is nothing
else but
termination in terms of Section 186(1) (a) of the Labour Relations
Act, which is a dismissal. But as I have pointed out,
that issue does
not arise in these proceedings at this stage.
[34] In conclusion, it is my view that the jurisdictional fact
existed and it was incumbent upon the second respondent with those
facts, to have come to no other conclusion but that there was an
employer and employee relationship and that the third respondent
had
jurisdiction.
[35] On the issue of costs, both parties submitted that costs should
follow the result and I do not see any reason why I should
be averse
to such submissions.
Order
[36] In the result I come to this conclusion and order the following:
The ruling issued by the second respondent is hereby reviewed and
set aside.
There was an employer and employee relationship between the
applicant and the first respondent, thereby the third respondent
does have jurisdiction to arbitrate the alleged unfair dismissal
dispute, referred to it by the applicant.
The first respondent is to pay the costs of this application.
______________
G N MOSHOANA AJ
Acting Judge of the Labour Court.
APPEARANCES
For the Applicant: Mr F Malan of Edward Nathan Sonnenberg, Sandton.
For the Third Respondent: Mr C Levin of Clifford Levin Attorneys,
Cheltondale.
1
2010
(31) ILJ 695 (LC).
2
2008
(29) ILJ 2234 (LAC).
3
Id
at para 20.