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[2012] ZALCCT 25
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Dyokhwe v De Kock NO and Others (C 418/11) [2012] ZALCCT 25; [2012] 10 BLLR 1012 (LC); (2012) 33 ILJ 2401 (LC) (21 June 2012)
Reportable
REPUBLIC OF SOUTH AFRICA
THE LABOUR COURT OF SOUTH AFRICA, CAPE TOWN
JUDGMENT
case
no: C 418/11
In the matter between:
KHULULEKILE DYOKWE
Applicant
and
COEN DE KOCK N.O.
First respondent
CCMA
Second respondent
MONDI PACKAGING
SOUTH AFRICA (PTY) LTD
STRATOSTAFF (PTY) LTD
t/a ADECCO RECRUITMENT SERVICES
Third respondent
Fourth respondent
Heard
:
5 June 2012
Delivered
:
21 June 2012
Summary:
Review – true nature of employer –
whether employed by Temporary Employment Service or its client at
time of dismissal.
LRA s 198.
JUDGMENT
STEENKAMP J:
Introduction
This application for review concerns the true nature of the employer
in the contentious labour broking environment.
The applicant was initially employed by the third respondent, Mondi
Packaging South Africa (Pty) Ltd (“Mondi”) for
more than
two years. He was then informed that he would have to sign a new
contract of employment with the fourth respondent,
Stratostaff (Pty)
Ltd trading as Adecco Recruitment Services (“Adecco”).
Adecco is a temporary employment service
as defined in section 198
of the LRA
1
or, in common parlance, a labour broker. The applicant did so but
continued working in the same position at Mondi. He was dismissed
5
½ years later, in January 2009. The question arises who his
true employer was at the time of his dismissal.
The first respondent (“the arbitrator”) ruled that
Adecco was the employer. The applicant wishes to have that ruling
reviewed and set aside in terms of s 145 of the LRA.
Background facts
The applicant was initially employed by Mondi on a three-month
contract in 2000. He continued to be employed and a series of
fixed
term contracts.
2
On 9 December 2002 Mondi’s human resources manager sent the
applicant a letter in these terms:
“
Dear
Mr Dyokhwe
RE: NOTICE OF TERMINATION OF
CONTRACT
We regret to advise that due to
a drop-off in our workload your contract of employment will only be
extended to 20th December 2002
and will therefore terminate on that
date. We will advise of the final arrangements with regard to your
payment in due course."
Despite this notice, the applicant continued to be employed by Mondi
into 2003 without signing a further contract of employment.
It
appears, therefore, that he continued to be employed on a permanent
basis. For example, he received a payslip from Mondi on
23 February
2003, as before, clearly indicating Mondi as the employer. The
arbitrator accepted on the evidence before him that
the applicant
“continued to work for [Mondi] until 30 June 2003”.
On 7 July 2003 the applicant’s manager at Mondi, Len Williams,
told him to go to Tyger Valley to "sign a form."
According
to the applicant's uncontested evidence, Williams told him:
"The reason why you must go
to Tyger Valley, whenever we are recruiting, we want to recruit
people who have experience, people
who know what kind of job we are
doing here."
Williams also told the applicant that, if he didn't want to go to
Tyger Valley, he should go home – and that is what the
applicant did. The next morning, Williams phoned him and told him
again to go to Tyger Valley. After that, a woman who was not
known
to him phoned him and told him to take the train to Bellville
station. She would meet him there. He did so and telephoned
her when
he got there. She then gave him directions to what turned out to be
the offices of Adecco.
At Adecco, two women present showed the applicant two forms. The one
was his employment contract with Mondi. The other turned
out to be a
new employment contract with Adecco; but the applicant explained
that he cannot read English and he did not read
or understand the
document. He was able to sign his name. The woman present –
apparently a representative of Adecco –
asked him to sign the
new (Adecco) contract and told him:
“
We
want you to be with us for the time being and nothing is going to
change. Whenever they are looking for permanent staff they
will know
where to find you."
The Adecco contract is headed, “Contract of employment defined
by time”. It purports to be a fixed term contract
“defined
by time”. It is no such thing. It contains no fixed term. The
introduction reads as follows (handwritten
portions indicated by
italics):
“
Adecco
South Africa,
herein
after [
sic
]
referred to as the Employer, hereby agrees to employ
K
Dyokhwe
(Name),
530916546086
(ID
No.)
hereinafter referred to as the Assignee on a
Fixed
Term Contract Defined by Time
as
Asst
(Job
Title)
with
effect from
07.07.03
(Date)
to
–
(Date),
based
on the following terms and conditions:
You
will be employed primarily in the capacity of
Asst
Reporting
to
L WILLIAMS
Employed at
MONDIPAK.”
The contract further stipulates an hourly rate of R10. It also
states, contrary to the terms of the contract itself:
“
As
this contract is for a fixed period, you will not be entitled to any
discharge or severance benefits on termination of such contract.
It
is specifically recorded that there will be no expectation that your
contract of employment will be renewed or prolonged beyond
the date
of completion as aforesaid. The termination of this contract as
provided for in this agreement shall not be construed
as being a
retrenchment but shall be completion of the contract."
After signing the Adecco contract, the applicant returned to work at
Mondi and continued working at the same place in the same
position
and reporting to the same supervisor and manager as before. However,
he now received a payslip from Adecco and his hourly
rate was
reduced from R12, 56 to R10, 00 per hour. When he complained,
Williams told him to go to Adecco. He went to the CCMA
instead,
where an official told him that he should just “continue
working”.
The applicant continued to work at Mondi for another 5 ½
years until 5 January 2009, when Mondi summarily informed him
that
his employment had been terminated, without any notice or other
procedure. His supervisor, Gert Manuel, showed him a list
of
employees – including his name – and said:
“
If
your name is on the list your contract of employment is terminated,
the work is finished.”
Manuel told the applicant to go to Adecco. He did so, and the woman
to whom he spoke at Adecco told him they did not have work
for him
as he was too old. He then referred an unfair dismissal dispute to
the CCMA.
The arbitration proceedings
The arbitration took place on 4 April 2011. Mondi and Adecco were
both cited as respondents.
3
The applicant and Mondi were legally represented by their current
attorneys. Adecco was represented by Mr G Howard, a representative
of an employers’ organisation.
The Commissioner directed that the parties lead evidence to
determine the identity of the applicant’s employer at the time
of his dismissal. He led evidence in the form of his own testimony
and a bundle of documents. Adecco’s representative (Howard)
cross-examined the applicant, but did not lead any evidence. So did
Mondi's representative, Mr Witten.
The commissioner’s ruling
The Commissioner found that Adecco was the applicant’s
employer at the time of his dismissal; that Mondi "is excused
from attending any further arbitration proceedings regarding this
matter."; and that the matter should be rescheduled for
arbitration between the applicant and Adecco in order for a decision
to be made as to the existence of the dismissal and, if
so, the
fairness thereof.
In coming to the finding that Adecco was the employer, the
Commissioner took the following factors into account:
The applicant signed a new contract with Adecco on 7 July 2003. It
is clear from the contract that he was to be regarded as
being
employed by Adecco, and no longer by Mondi, from that date onwards.
Despite the fact that the applicant was illiterate and could not
understand the written terms of the new contract, he was advised
that he was needed at Mondi; that, "whenever they wanted to
find him, they would know where to find him"; and that
he
signed the document "for the time being until [Mondi] started
recruiting.”
The applicant realised that this rate of pay had been reduced and
that he received a payslip from Adecco at the end of July
2003.
The Commissioner was not convinced that the applicant had been
misled all the facts were misrepresented him when he signed the
contract with Adecco. He held that:
"it is simply unacceptable
for an employee, who at worst case scenario knew that he signed a
contract of employment with a
new employer (in this case a temporary
employment service) in July 2003 and that he would henceforth be
employed by this new employer,
to continue to work until 2009/2010
and then only to challenge the validity of the contract of employment
when he was allegedly
dismissed."
The Commissioner took the provisions of section 198 of the LRA into
account and found that Adecco was the applicant’s employer.
He
noted that Adecco "at no stage has tried to run away from the
fact that they are applicant’s employer and they
conceded as
much during the arbitration proceedings."
Grounds of review
The applicant relies on four grounds of review, being conclusions
that, in his view, are so unreasonable that no other commissioner
could have come to the same conclusion
4
:
The Commissioner's finding that the applicant was "no longer
employed by [Mondi]" after signing the Adecco contract;
the Commissioner's finding that the applicant was not induced to
sign the Adecco contract by misrepresentations;
the Commissioner's reliance on incorrect legal advice provided to
him by a CCMA official in finding that the applicant had
lost or
abandoned rights that he would otherwise have had; and
the Commissioner's failure to consider the contention that it would
be contrary to public policy to enforce the applicant contract
against the applicant in the circumstances of this case.
The legal context: Labour brokers under the LRA, the Constitution
and international law
The overarching basis of this review application is the
Commissioner's approach to a temporary employment service ("TES")
in terms of section 198 of the LRA. The relevant part of that
section reads:
‘
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.’
Section 3 of the LRA requires courts to adopt a construction of
section 198 that complies with the Constitution and public
international law, while at the same time giving effect to the LRA’s
primary objects. This principle is reinforced by section
39(2) of
the Constitution, which requires courts interpreting legislation to
seek to promote the spirit, purport and objects
of the Bill of
Rights.
The applicant argues that the Commissioner failed to adopt an
approach to section 198 consistent with the requirements of the
provision itself and the purposes of the LRA, interpreted in the
light of the spirit, purport and objects of the Bill of Rights
in
terms of section 39 of the Constitution and having regard to
relevant international law.
Section 198 in the context of the purposes of the LRA and the
Constitutional right to fair labour practices
Section 1 of the LRA provides that --
“
The
purpose of this Act is to advance economic development, social
justice, labour peace and the democratisation of the work-place
by
fulfilling the primary objects of this Act, which are—
(a) to give effect to and
regulate the fundamental rights conferred by section 27 of the
Constitution;
(b) to give effect to
obligations incurred by the Republic as a member state of the
International Labour Organisation;
(c) to provide a framework
within which employees and their trade unions, employers and
employers’ organisations can—
(i) collectively bargain to
determine wages, terms and conditions of employment and other matters
of mutual interest; and
(ii) formulate industrial
policy; and
(d) to promote—
(i) orderly collective
bargaining;
(ii) collective bargaining at
sectoral level;
(iii) employee participation in
decision-making in the work-place; and
(iv) the effective resolution of
labour disputes.”
The Constitutional Court recognised in
NEHAWU v UCT
5
that one of the core purposes of the LRA and of s 23 of the
Constitution is to safeguard workers’ employment security,
especially the right not to be unfairly dismissed. Although that
case concerned the application of s 197 in the context of transfers
and outsourcing, a similar concern arises in the context of labour
broking. To the extent that employment through a TES as opposed
to a
former employer – while the employee carries on doing the same
job, but at a lower rate – may threaten employment
security
and other aspects of the constitutional right to fair labour
practices, section 198 must be interpreted strictly in
order to
protect workers governed by s 198.
This judgment is being prepared at a time when amendments to the LRA
contemplating extensive amendments to s 198 and taking account
of
the pitfalls of labour broking generally have been tabled before
Parliament. The court does not make policy – that is
the
province of the legislature. I must consider the facts of this case
in the context of a review application and in an effort
to interpret
the provisions of section 198 as they stand at present. At the same
time, I must consider the constitutional prerogatives
outlined
above.
The Namibian Supreme Court has had occasion to consider the
constitutionality of an absolute ban on labour broking. The relevant
section of the Namibian Labour Act
6
read as follows:
“
No
person may, for reward, employ any person with a view to making that
person available to a third party to perform work for the
third
party.”
In
Africa Personnel Services (Pty) Ltd v Government of the
Republic of Namibia & others
7
the court, while striking down that section as unconstitutional,
nevertheless recognised a need to strike a balance between the
interests of employers to be flexible and the interests of employees
not to be treated as ‘mere commodities’ on the
basis of
the contractual arrangements between the TES and the client:
“
[L]abour
is not a tradable innate object but an activity of human beings.
Unlike a commodity, it cannot be bought or sold on the
market without
regard to the inseparable connection it has to the individual who
produces it: it is integral to the person of a
human being and
intimately related to the skills, experience, qualifications,
personality and life of that person. It is the means
through which
human beings provide for themselves, their dependants and their
communities; a way through which they interact with
others and assert
themselves as contributing members of society; an activity through
which to foster spiritual wellbeing, to enhance
their abilities and
to fulfil their potential. All these elements must be brought into
the equation of labour relationships if
social justice and fairness
are to be achieved at the workplace; if social security, stability
and peace are to be maintained.
Employees may be subordinate to their
employers in employment relationships but that does not mean that
they are lesser beings
or that they do not have equal rights and
freedoms as such.”
This court, too, has recognised the vulnerability of workers in TES
arrangements, as the weakest and most vulnerable party in
the
triangular relationship, and held that they may not be treated “in
a way that would effectively treat employees as
commodities to be
passed on and traded at the whims and fancies of the client.”
8
I must agree with Mr
Ngcukatoibi
and with Mr
Brickhill
9
when they argue that, against this background, arbitrators and
courts must ensure that alleged TES arrangements meet all the
requirements of s 198 and not to regard labour broking arrangements
as presumptively valid on face value as soon as a signed
contract is
put up by an employer.
Our courts have recognised that an employee employed by a TES cannot
be dismissed at will in terms of a contractual clause that
specifies
that a contract is terminated ‘automatically’ simply
because the client of the TES no longer requires the
employee’s
services. In
Mahlamu v CCMA & others
10
Van Niekerk J held:
“
In the
present instance, the upshot of the commissioner’s award is
that the applicant’s security of employment was entirely
dependent on the will (and the whim) of the client. The client could
at any time, for any reason, simply state that the applicant’s
services were no longer required and having done so, that resulted in
a termination of the contract, automatically and by the operation
of
law, leaving the applicant with no right of recourse. For the reasons
that follow, and to the extent that the commissioner regarded
this
proposition to be the applicable law, he committed a material error
of law that must necessarily have the result that his
ruling is
reviewed and set aside.”
‘
Disguised employment relationships’ and international
law
The International Labour Organisation (ILO), of which South Africa
is a member, has addressed ‘disguised employment
relationships’
– mainly in the context of employment
relationships being dressed up as independent contractor
arrangements – but
its concerns are equally apposite where the
nature of the true employer is obfuscated by TES arrangements.
The Private Employment Agencies Convention, 1997 (C181)
11
seeks to ensure that workers placed by employment agencies receive
adequate protection under labour law. For the purpose of this
Convention the term
private employment agency
means
any natural or legal person which provides one or more of the
following labour market services:
12
“
(a)
services for matching offers of and applications for employment,
without the private employment agency becoming a party to the
employment relationships which may arise therefrom;
(b) services consisting of
employing workers with a view to making them available to a third
party, who may be a natural or legal
person (referred to as a ‘user
enterprise’) which assigns their tasks and supervises the
execution of these tasks;
(c) other services relating to
jobseeking, determined by the competent authority after consulting
the most representative employers
and workers organizations, such as
the provision of information, that do not set out to match specific
offers of and applications
for employment.”
The Convention requires that ratifying countries have adequate
machinery for lodging complaints concerning agencies.
13
National legislation should stipulate the responsibilities of
employees and ‘user enterprises’ for collective
bargaining,
wages and conditions of employment, social security
benefits, and health and safety.
14
However, the Convention does not deal specifically with the security
of employment of workers engaged through private employment
services.
ILO Recommendation 198
15
,
albeit not of the binding force of a Convention, enjoins member
states to:
“
combat
disguised employment relationships in the context of, for example,
other relationships that may include the use of other
forms of
contractual arrangements that hide the true legal status, noting that
a disguised employment relationship occurs when
the employer treats
an individual as other than an employee in a manner that hides his or
her true legal status as an employee,
and that situations can arise
where contractual arrangements have the effect of depriving workers
of the protection they are due.”
ILO R198 recommends that an employment relationship should be
determined –
“
primarily
by the facts relating to the performance of work and the remuneration
of the worker, notwithstanding how the relationship
is characterised
in any contrary arrangement, contractual or otherwise, that may have
been agreed between the parties.”
16
In the instant case it is common cause that the employee was being
paid by the TES, Adecco, from July 2003; yet I must approach
the
true nature of the relationship, in circumstances where the
workplace and the nature of the employee’s remained the
same
for almost nine years, conscious of the obligation to combat
disguised employment relationships and to examine the substance
rather than the form of the relationship.
Prof Paul Benjamin provides, as is his wont, a thought-provoking,
insightful and thorough discussion of this topic in a recent
publication.
17
He points out that, while s 198 was enacted to regulate the
temporary employment sector, it has become a vehicle for permanent
triangular employment:
18
“
Despite
the use of the term ‘temporary employment service’ (TES),
its application is not limited to agencies supplying
temporary
employees. This coupled with the fact that joint and several
liability does not extend to unfair dismissal protection
and the
contract of employment has led to widespread permanent triangular
employment of employees who generally earn less than
those workers
hired directly by the employer.”
This is exactly the situation that prevails at Mondi. From one day
to the next, the applicant found himself ostensibly employed
by a
new employer; but the only difference was that he was being paid
more than 20% less.
As Benjamin points out with regard to the TES being deemed the
employer in terms of section 198:
19
“
The
‘deeming’ approach seeks to clarify the issue of who the
employer is in triangular employment relationships. However,
its
rationale breaks down once the employee’s placement with a firm
is no longer temporary and the employee has a closer
relationship
with the client than the agency. It is an entirely superficial
construction (and one that gives rise to immense scope
for abuse) to
make an agency the employer of an employee working on an on-going or
indefinite basis for a ‘client’
merely because the
employee’s pay is routed through the agency.”
Once again, the learned author could have been describing the
relationship in the case before this court; except that, in this
case, the TES did not even ‘place’ the applicant; on the
contrary, Mondi simply purported to transfer him to the
TES.
Benjamin
20
expresses the opinion that s 198 in its current form offends the
constitutional entrenchment of labour rights guaranteed in terms
of
section 23 of the Constitution. He goes on to say that is remarkable
that no serious legal attack has been mounted on the
section’s
constitutionality. And so it is; but this is not that case either.
At most, the applicant has asked this court
to interpret the section
purposively in terms of the Constitution and to assess the
arbitration ruling accordingly.
In this regard, the two main hurdles the applicant has to overcome
is the deeming provision in s 198; and the fact that this
is a
review, not an appeal. Was it unreasonable for the arbitrator to
have found that, applying s 198, Adecco was the employer?
This question must also be considered in the light of the fact that
our labour laws provide for joint and several liability by
the TES
and the client in certain circumstances, but perhaps tellingly, this
does not include protection against unfair dismissal.
In terms of s
198(4), the TES and the client are jointly and severally liable if
the TES contravenes a collective agreement concluded
in a bargaining
council; a binding arbitration award; the BCEA
21
;
or a determination in terms of the Wage Act. And the Employment
Equity Act
22
holds
a TES and a client jointly and severally liable for unfair
discrimination. As Benjamin
23
points out, there are two exceptions to the ruling that the TES is
the employer: For the purposes of affirmative action, a person
supplied by a TES placed with the client for more than three months
is considered to be the client’s employee; and the
client is
the employer for purposes of compliance with health and safety
legislation, but not compensation for occupational injuries
and
diseases.
First ground of review: No longer employed by Mondi?
The commissioner accepted that, from the time he signed an
employment contract with Adecco on 7 July 2003, the applicant was
no
longer employed by Mondi. The problem is that Mondi never terminated
the employment relationship.
The applicant puts up two legs to his first ground of review:
The first leg is factual: there is no evidence that Mondi
terminated the employment relationship before his dismissal in
January 2009.
The second leg is conceptual: that is whether the contractual
arrangements between the applicant, Mondi and Adecco was one
contemplated by s 198 or whether it was a ‘sham’
arrangement or
in fraudem legis.
Evidence of termination by Mondi?
In order to terminate its employment of the applicant, Mondi had to
take a positive step.
24
It is common cause that the applicant did not resign – there
was no termination at the behest of the employee.
Mondi argued that it did terminate the applicant’s employment.
However, it presented the commissioner and this court with
a number
of different and contradictory versions.
In its founding affidavit in its
in limine
application
before the CCMA – disputing that Mondi was the employer –
its human resources manager, Mr Spurgeon
Lange, stated that:
“
The
applicant thus had no further employment relationship with [Mondi]
since the end of
December
2002
.
25
The applicant was one of approximately
25
ad hoc workers whose services were terminated by [Mondi] at the end
of 2002.”
This version was repeatedly advanced by Mondi during the
arbitration proceedings and its representative, Mr
Witten
,
repeatedly put it to the applicant in cross-examination.
When the applicant pointed out that he remained employed by Mondi
in 2003, Mr Witten persisted with the same version, putting
it to
the applicant that, even from January to June 2003, he didn’t
work for Mondi any more.
After the applicant had referred to a payslip from Mondi issued in
February 2003, Mr Witten put a new version to him. This
was that,
when Williams told the applicant to go to Tyger Valley in July
2003, he (Williams) had told the applicant that he
no longer worked
for Mondi. The applicant denied it and Mondi led no evidence in
support of either version.
In its answering affidavit in this application Mondi advanced a
third version. That is that Mondi “advised the applicant
in
December 2002 it would no longer be requiring his services”
and that the effect of entering into the Adecco contract
on 7 July
2003 “terminated the employment relationship between the
applicant and [Mondi] at the end of June 2003.”
This version
is not supported by any evidence led at the arbitration.
Although the contention that, by entering into a contract with
Adecco, the applicant (or Mondi) terminated the contract between
them, appears superficially attractive, it begs the question.
There was no evidence before the arbitrator that Mondi terminated
the applicant’s employment prior to his dismissal in
2009.
The commissioner’s mere acceptance, without any evidence,
that the employment relationship had been terminated
in July 2003
is not sustainable in the absence of any evidence.
Arrangement in fraudem legis?
The arbitrator also failed to have regard to the true relationship
between the parties. On the evidence before him, the only
reasonable
conclusion was that the new agreement between Adecco, Mondi and the
applicant was
in fraudem legis.
In considering who is an employee, our courts have consistently had
regard to the true nature of the employment relationship.
For
example, in
Denel (Pty) Ltd v Gerber
26
Zondo JP held, after considering the authorities:
“
On the
above authorities it seems to me that the parol evidence rule does
not preclude the leading of oral evidence where the purpose
of
leading such oral evidence is to show what the true relationship was
between parties to a dispute or where the evidence tends
to show or
may tend to show what the true relationship was between the parties
or where it may tend to show that the relationship
between the two
parties falls or fell within the ambit of the definition of the word
“employee” in section 213 of the
Act.”
I can see no reason why the well-known principles relating to sham
independent contractor relationships should not also apply
to TES
relationships. The question remains who the true employer is; and
although no presumption akin to that in s 200A addresses
this
question in a TES relationship, the court should not shy away from
examining that relationship.
It may, at face value, appear obvious that Adecco is a TES as
contemplated in s 198; and, indeed, it accepts that it was the
applicant’s employer. But this glib assertion needs closer
examination.
Section 198 defines a TES as an entity that “procures for or
provides” to a client other persons who render services
to, or
perform work for, the client; and who are remunerated by the
temporary employment service.
In the present case, Adecco paid the applicant from July 2003 and he
continued to perform work for Mondi (the “client”).
But
did Adecco procure or provide the applicant to Mondi? The answer
must be in the negative. The applicant had been working
for Mondi
since 2000. Three years later, he was told to sign a new employment
contract (that he could not read and that was not
properly explained
to him) with Adecco. For the next five years, he continued doing the
same work at the same place as he had
done for the previous three
years. Mondi sent the applicant to Adecco; the latter neither
procured his services nor provided
him to Mondi. (As an aside, it
should be noted that neither party argued that s 197 of the LRA
applied to the arrangement between
them. I need not consider that
possible aspect).
It is so that s 198 creates a fiction or presumption that the TES
is, in most instances, the employer; but, as Jan Theron has
pointed
out, that presumption is rebuttable.
27
The actual nature of the relationship between the parties did not
support the finding that Mondi had terminated the applicant’s
employment.
The factual situation is akin to that described by Landman J in
Building Bargaining Council (Southern & Eastern Cape) v
Melmons Cabinet CC & another
28
,
albeit in the context of a so-called independent contractor
relationship:
“
Mr
Mawa was a humble employee prior to entering into the independent
contract agreement with Melmons. Since entering into the contract
his
position has not changed insofar as he does the same work, is subject
to a new form of regulation of his working hours and
his methods of
work and a slightly improved pay. He may theoretically be his own
boss but he still has to clock in and out at Melmons
factory. He is
entitled, according to Mr Louw of Melmons, to go fishing if he
chooses to do so rather than work. Of course, if
he wet his line
while Melmons required him to clean newly installed cupboards he
would soon find that Melmons would not be placing
any further orders
with him and that he would possibly be held liable for damages.
Mr Mawa’s activities form
an integral part of Melmons’ organisation. He would not be able
to enter into contracts with
other manufacturers to clean their
cupboards, no matter how well he may do it. The dominant and
overwhelming impression that the
agreement and the evidence gives is
that Mr Mawa is still a mere employee, albeit one encumbered by sets
of rights and duties which
operate to his detriment. One’s
impression on reading the record is that one has to deal with the
surreal. Melmons, with
the assistance of its employers’
organisation, COFESA, has perpetrated a cruel hoax on Mr Mawa. He
believes that he is a
self-employed entrepreneur, earning more than
he did as an employee. He is blissfully ignorant of his newly
acquired obligations
and the loss of rights and privileges which
Melmons has persuaded him to forego.... The agreement which purports
to be an independent
contractor/principal relationship is a sham and
it remains a sham even though Mr Mawa has consented to it. In truth
Mr Mawa is
an employee and Melmons is his employer.”
Having regard to the true nature of the employment relationship in
this case, Mondi remained the applicant’s employer.
The
commissioner’s finding to the contrary is not sustainable,
having regard to the uncontested evidence led at arbitration.
And
even if the arbitrator’s interpretation of section 198 could
be sustained on the basis that the section creates a legal
fiction
that the TES is the employer, it cannot be sustained for the further
grounds of review discussed below; because, in this
case, Adecco
neither procured nor provided the employee to the client; and the
arrangement on the facts of this case was not
that of a temporary
employment relationship.
Second ground of review: misrepresentation
Our law recognises that it would be unconscionable for one party to
seek to enforce the terms of an agreement where he misled
the other
party, even where it was not intentional. Where the
misrepresentation results in a fundamental mistake (
iustus
error
), there is no agreement and the ‘contract’ is
void
ab initio
. The purpose of this principle is to protect a
person if he is under a justifiable misapprehension, caused by the
other party
who requires his signature, as to the effect of the
document he is signing.
29
It has also been held that the
caveat subscriptor
principle
will not be enforced if the terms of the contract have been
inadequately or inaccurately explained to an ignorant signatory.
30
The commissioner’s conclusion must be assessed against this
principle, and bearing in mind that the applicant’s evidence
was uncontested.
The commissioner nevertheless rejected the applicant’s
evidence that he did not understand that he was entering into a
new
contract of employment with Adecco. The commissioner did so on the
basis of two factors:
The fact the applicant did not challenge the validity of the new
contract after 2003; and
The applicant’s testimony under cross-examination summarised
by the commissioner as a ‘concession’ that the
applicant “knew that he was signing the contract for the time
being until [Mondi] recruited again”.
As Mr
Ngcukatoibi
argued on contractual principles,
misrepresentation renders a contract void
ab initio
. Events
subsequent to its alleged conclusion cannot be taken into account in
determining whether or not such misrepresentations
vitiated the
agreement. Accordingly, in relying on subsequent events, the
commissioner took irrelevant considerations into account.
Furthermore, the commissioner’s reliance on a ‘concession’
by the applicant cannot support his conclusion that
the applicant
knew that he was entering into an employment contract with Adecco.
This is so for the following reasons on the
record of the
arbitration proceedings:
The uncontested evidence – which the commissioner purported
to accept elsewhere in his ruling – was that the applicant
is
illiterate and that the terms of the Adecco contract were neither
read nor explained to him. (In argument, I pointed out
to Mr
Ngcukatoibi
that the applicant could sign his name; on the
other hand, he testified that he identified the Adecco offices only
by the “red
lettering” and not because he could read
the name. The fact remains that his own evidence that he was
illiterate was
not challenged).
The women at the Adecco office presented the applicant with his
current employment contract with Mondi and the Adecco contract
and
told him that “nothing is going to change”; and indeed,
in his mind and in fact, nothing did – he went
straight back
to doing the same job at the same place. It was only later that he
realised he was now being paid less.
In the face of the applicant’s evidence, no reasonable
decision-maker could conclude that the applicant understood
at
the time
that he was entering into a new employment
relationship. On the evidence, the contract was void for the reason
of material misrepresentation.
A finding to the contrary is not in
accordance with established legal principles and cannot be said to
be reasonable.
Third ground of review: The commissioner’s reliance on
advice provided to the applicant by a CCMA official
The commissioner relied on the fact that the applicant had received
advice from the CCMA, on the basis of which he acted to his
detriment, to reject the contention that the Adecco contract was
vitiated by misrepresentation, even though the applicant received
that advice only after he had signed the contract.
The fact that the applicant accepted the advice from an unknown CCMA
official to continue working as he was, cannot breathe life
into a
contract that was void. By relying on this basis to hold that the
contract was valid, the commissioner reached a conclusion
that was
unreasonable.
Fourth ground of review: public policy
This review ground is based, not on public policy as a principle (as
this a review, not an appeal), but on the contention that
the
commissioner failed to even consider the argument that was
represented to him that it would be against public policy to enforce
the Adecco contract and to hold that Adecco, and not Mondi, was the
employer, given the particular circumstances of the case.
The commissioner disregarded this argument altogether. This in
itself is a reviewable irregularity. Had he considered it, he
could
not reasonably have rejected it, given post-constitutional legal
precedent.
In
Barkhuizen v Napier
31
the Constitutional Court held that courts must not enforce a
contractual clause if “implementation would result in
unfairness
or would be unreasonable for being contrary to public
policy”. And in
Nape v INTCS
32
this court expressed the view that:
“
...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.”
The applicant submitted that it would be contrary to public policy
to enforce the agreement signed by Adecco and the applicant.
There
was extreme inequality of bargaining power between the applicant and
Adecco. This was exacerbated by his illiteracy and
inability to read
and understand the document. Neither was it explained to him. In
Barkhuizen v Napier
33
Cameron JA held that inequality of bargaining power may be a factor
in declining to enforce a contract on the basis of public
policy.
And in this case, Adecco and Mondi exploited the applicant’s
illiteracy and vulnerability to induce him to sign
the contract.
As Craig Bosch
34
has pointed out, whether contracts such as this one are contrary to
public policy must be decided on a case-by-case basis in
the light
of the evidence presented in each case.
On the clear evidence of the circumstances in which the contract in
this case was signed, it would be contrary to public policy
to
enforce the Adecco contract. But is a contrary conclusion so
unreasonable that no other reasonable decision-maker could have
come
to that conclusion?
I am of the view that it is, given the specific circumstances of
this case. I am reinforced in that view when I have regard to
the
wording of section 198 itself, and bearing in mind that I need to
interpret it in the light of the constitutional right to
fair labour
practices and the public international law obligations of the
Republic.
Section 198 describes the TES as employer as the entity that –
“
procures
for or provides to a client other persons—
who
render services to, or perform work for, the client;”.
The New Shorter Oxford English Dictionary
35
describes the verb “to procure” as:
“
Obtain,
esp. by care or with effort; gain, acquire, get.”
In the case before the arbitrator and before this court, Adecco
neither “procured” nor provided the applicant to
perform
work for Mondi. The applicant had been working for Mondi for more
than two years before he signed a contract with Adecco.
If anything,
Mondi
“provided” the applicant to Adecco; and then,
in a swift sleight of hand, the applicant returned to Mondi to
continue
his work as before, yet Adecco and Mondi wish to perpetuate
the fiction that he had now been “procured” or
“provided”
by Adecco.
Conclusion
The applicant’s employment with Mondi was anything but
temporary. Mondi never terminated his employment. Adecco neither
procured nor provided his services. In these circumstances, it would
do violence to both the language and the purpose of section
189 to
hold that Adecco was his true employer.
I am of the view that the arbitrator’s contrary conclusion was
so unreasonable that no reasonable arbitrator could have
come to the
same conclusion. The ruling should therefore be reviewed and set
aside. The arbitration on the merits of the applicant‘s
dismissal should proceed with Mondi as the employer party.
With regard to costs, I take into account that Mondi (the only
respondent opposing this application) already had a ruling in
its
favour; and that the issues raised in this application may have
wider public interest ramifications. It would not be appropriate
in
law or fairness to order Mondi to pay the applicant’s costs.
Order
I therefore issue the following order:
The ruling of the first respondent under case number WECT 4323-09
dated 21 April 2011 is reviewed and set aside.
The ruling is replaced with a ruling declaring that Mondi (the
third respondent) was the applicant’s true employer at
the
time of his dismissal.
The CCMA (the second respondent) is directed to set the unfair
dismissal dispute down for arbitration before a commissioner
other
than the first respondent.
There is no order as to costs.
_______________________
Steenkamp J
APPEARANCES
APPLICANT:
T Ngcukaitobi
Instructed by the Legal
Resources Centre (A Andrews).
THIRD RESPONDENT:
L Witten of Norton
Rose.
1
Labour
Relations Act 66 of 1995
.
2
These
contracts appear to have been "rolled over" for a number
of years. There is little doubt that the applicant would
have formed
a reasonable expectation of renewal as contemplated in
s 186(1)(b)
of the LRA. But that is not the dispute before this court.
3
This
was subsequent to a previous joinder ruling; an arbitration award
against Mondi; and a prior review in this court. The previous
arbitration award was reviewed and set aside because one respondent
had only been joined after the other had given evidence.
The dispute
was remitted to the CCMA and a fresh arbitration took place before
commissioner De Kock.
4
i.e.
the test set out in
Sidumo & another v Rustenburg Platinum
Mines Ltd & others
2008 (2) SA 24
(CC).
5
2003
(3) SA 1
(CC) para [42].
6
Act
11 of 2007 s 128.
7
[2011]
1 BLLR 15
(NmS) para [70].
8
Nape
v INTCS Corporate Solutions (Pty) Ltd
[2010] 8 BLLR 852
(LC)
para [60].
9
who
drafted the applicant’s heads of argument.
10
[2011]
4 BLLR 381
(LC) para [10].
11
Convention
concerning Private Employment Agencies, C181 of 1997 (Adopted 1997,
came into force 10 May 2000).
12
C181
article 1.
13
Article
10.
14
Article
12.
15
Recommendation
concerning the employment relationship, 2006 (adopted 15 June 2006).
[The commensurate numbering of the section
in the LRA is purely
coincidental].
16
R
198 para 9.
17
Benjamin,
‘To regulate or to ban? Controversies over temporary
employment agencies in South Africa and Namibia’, in
Malherbe
and Sloth-Nielsen (eds),
Labour Law into the Future: Essays in
Honour of D’Arcy du Toit
(Juta 2012) pp 189-209.
18
Ibid
p 196.
19
Ibid
p 197.
20
Ibid
p 199.
21
Basic
Conditions of Employment Act, Act 75 of
1997.
22
Act
55
of 1998 s 57(1).
23
Op
cit
p 200
24
Cf
SA Post Office Ltd v Mampeule
(2010) 31
ILJ
2051 (LAC)
para [12].
25
My
emphasis.
26
[2005]
9 BLLR 849
(LAC) para [17].
27
Jan
Theron, “The Shift to Services and Triangular Employment:
Implications for Labour Market Reform” (2008) 29
ILJ
1
at 18.
28
[2001]
3 BLLR 329
(LC) paras [20] – [21].
29
Brink
v Humphries & Jewel (Pty) Ltd
2005 (2) SA 419
(SCA);
[2005]
2 All SA 343
(SCA).
30
Katzen
v Mguno
[1954] 1 All SA 280
(T).
31
[2007] ZACC 5
;
2007
(5) SA 323
(CC).
32
Supra
para [70].
33
Supra
para [29].
34
Craig
Bosch, “Contract as a barrier to ‘dismissal’: The
plight of the labour broker’s employee’
(2008) 29
ILJ
813 at 819.
35
Oxford
University Press, 1993.