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[2012] ZALCPE 10
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Maphongwana and Others v KSD Municipality and Others (P412/12) [2012] ZALCPE 10 (12 November 2012)
Reportable
REPUBLIC OF
SOUTH AFRICA
IN THE LABOUR
COURT OF SOUTH AFRICA, PORT ELIZABETH
JUDGMENT
Case no: P412/12
In the matter between:-
VUSUMZI MAPHONGWANA
..........................................................................
1
st
Applicant
BONGIWE BOYA
...........................................................................................
2
nd
Applicant
NOGOLIDE MAQHOLO
..................................................................................
3
rd
Applicant
NELISWA CONSTANCE MAHLATHI-MANKAYI
...........................................
4
th
Applicant
THEMBEKA LOUISA MLILWANA
.................................................................
5
th
Applicant
KHOLELWA SIGNORIA MBHIYOZO
.............................................................
6
th
Applicant
ZANDISILE NTELEZA
....................................................................................
7
th
Applicant
THANDEKA SIBONGILE SOGA
....................................................................
8
th
Applicant
XOLELWA PATRICIA MAGOGO
...................................................................
9
th
Applicant
NOSIMKO NKANJINI-NGQINJANA
.............................................................
10
th
Applicant
SINOVUYO PAMELA SOMHLAHLO
............................................................
11
th
Applicant
MLUNGISI ISHMAEL DLOMO
......................................................................
12
th
Applicant
LULAMA XOZWA
..........................................................................................
13
th
Applicant
NOKHONA BEATRICE MPAKA
...................................................................
14
th
Applicant
PRINCESS NOMKHITHA NTULI
..................................................................
15
th
Applicant
NTOMBIZIMBINI MAVIS QHINA
...................................................................
16
th
Applicant
THEMBEKA MQAMELO
................................................................................
17
th
Applicant
NOLUTHANDO PATIENCE BOOI
................................................................
18
th
Applicant
KHOLISWA NKALA
.....................................................................................
19
th
Applicant
THANDISWA NDAMASE
..............................................................................
20
th
Applicant
NCUMISA DIPHU
..........................................................................................
21
st
Applicant
NOMAGAMA DLOMO
.................................................................................
22
nd
Applicant
NOSIPHO SIGWILI
.......................................................................................
23
rd
Applicant
NOSICHUMISO MGXUMEKI
........................................................................
24
th
Applicant
BULELWA GHU
............................................................................................
25
th
Applicant
PHUMEAZA NXITYWA
.................................................................................
26
th
Applicant
YOLISA BLAAI
.............................................................................................
27
th
Applicant
DORAH GABUZA
.........................................................................................
28
th
Applicant
NONTLHLA JANUARY
.................................................................................
29
th
Applicant
NOVANGELI SUSAN MAJEKE
....................................................................
30
th
Applicant
LIZEKA MAGCAKINI
....................................................................................
31
st
Applicant
NOKUBONGA SINTO-GUNUZA
.................................................................
32
nd
Applicant
DUMISILE MAGWAZA
.................................................................................
33
rd
Applicant
NOMBHEDESHO MAKAULA
.......................................................................
34
th
Applicant
NOKULINA MNTUMNI
..................................................................................
35
th
Applicant
NOLWANDLE MAVIS MDEMKA
..................................................................
36
th
Applicant
ZUKISWA NAKUMBA
..................................................................................
37
th
Applicant
FEZEKA MBALEKI
.......................................................................................
38
th
Applicant
NOMTHETHO SIHEWULA
...........................................................................
39
th
Applicant
VIWE HLABAHLABA-MELAMANE
.............................................................
40
th
Applicant
VUYOKAZI MNYAMANA
..............................................................................
41
st
Applicant
PHUMZA PHYLLIS MTHONGANA
..............................................................
42
nd
Applicant
and
KSD MUNICIPALITY & OTHERS
..................................................................
Respondents
Heard:
Delivered: 12 November 2012
Summary: There is no obligation on
the employer to seek the employees’ agreement before
transferring their contracts of employment
in terms of section 197(2)
of the LRA
Transfer of contracts of employment
in terms of section 197(2) of the LRA
JUDGMENT
LALLIE J
The applicants brought an urgent
application for an order declaring unlawful the first respondent’s
failure to pay their
normal full salaries on 25 August 2012 in terms
of their contracts of employment with the first respondent (the
municipality).
They also seek this Court to order the municipality
to pay their salaries for August 2012 in full and to continue doing
so until
their contracts of employment with the municipality are
transferred to the second and third respondents, the department in
full
compliance with all the applicable law. They further seek an
order interdicting the respondents from effecting the applicants’
transfer from the employ of the municipality into the employ of the
second and third respondents’ department without full
compliance with section 197 of the Labour Relations Act
1
(the LRA) and other applicable
legislation. The application was opposed by the respondents.
As the applicants are seeking an
interim interdict, they are required to prove that they have a
prima
facie
right, although open
to some doubt, apprehension of irreparable harm if the interim
relief is not granted, a balance of convenience
in their favour and
the absence of other satisfactory relief.
The factual background of this matter
is that the Department of Health took a decision to transfer the
responsibility of primary
health care services from municipalities
to the Provincial Departments of Health. This process is referred to
as provincialisation.
The applicants were employees of the first
respondent as they are primary health care workers rendering
services in clinics around
Mthatha. In 2005, the applicants were
informed in a meeting by officials of the Eastern Cape Department of
Health (the Department)
of the provincialisation process. They were
further informed that employees of municipal clinics in the Eastern
Cape, including
themselves, would be absorbed into the Department.
The applicants were opposed to the provincialisation as they did not
wish
to be employees of the Department, which has serious problems,
unless they had been given certain assurances to safeguard their
positions. This meeting was followed by further interaction on the
issue of provincialisation between the applicants and their
trade
unions and officials of the Department. One of the meetings was held
around September or October 2010. It was attended
by officials of
the Department, the applicants and representatives of their trade
unions. The applicants again expressed their
unwillingness to be
absorbed before their concerns were addressed. After a series of
meetings, the applicants forwarded an unequivocal
communication to
the municipality in February 2012 that they were objecting to the
transfer until the sources of their dissatisfaction
were addressed
in compliance with the resolution of the Mayoral Committee of 19 May
2011, the relevant portions of which are
the following:
‘
RESOLVED
That
Council
APPROVES
the provincialisation process
should continue, as this is the unfunded mandate to the
Municipality. Provincial Government
last funded primary health
care services in December 2010;
That
the Transfer Agreement be signed by the Municipality, on
condition that the Department of Health indicates in writing,
in
a form attachment to the transfer on how the concerns raised by
the KDS Municipality regarding conditions of service
would be
resolved or would be dealt with during the transfer process;’
One of the developments which the
applicants became aware of in February 2012 was the existence of the
agreement of the transfer
of their contracts of employment to the
Eastern Cape Department of Health. On 13 July 2012, the applicants
received through their
bank accounts salaries from the Department
which were less than their usual remuneration. On 17 July 2012, the
applicants were
served with letters informing them that they had
been absorbed into the Department in terms of section 197 of the LRA
and the
Public Service Act of 1994 and its regulations. On 15 August
2012, the applicants again received from the Department remuneration
which was less than their usual salaries. When they did not receive
their usual salaries from the municipality on 25 August 2012,
they
considered bringing this application which they filed on 7 September
2012.
The applicants mainly seek an order
interdicting the respondents from effecting their transfer from the
employ of the municipality
to the employ of the department without
complying fully with section 197 of the LRA and other applicable
legislation. The prayers
for the payment of their salaries in full
until their transfer has been effected lawfully flow from the
interdict. One of the
grounds the respondents sought to rely on in
opposing the application is that the applicants do not have a right
to be protected
by the interim interdict they are seeking. The
applicants submitted that they are still in the employ of the
municipality and
an attempt is being made by the respondents to
transfer them unlawfully without complying with the provisions of
section 197
of the LRA. The applicants’ basis for their
argument of unlawfulness is that the purported agreement of transfer
of their
contracts of employment (the agreement) is invalid because
it does not comply with section 197 in that,
inter alia
, it
has not been signed by the applicants’ trade unions. The
applicants further submitted that it is after all their areas
of
concern have been properly and adequately addressed and they have
accepted the transfer that their transfer will be lawful.
From these
submissions it is clear that the applicants’ claim that they
have a right not to have their contracts of employment
transferred
without consent.
Section 197(2) provides as follows:
‘
If
a transfer of a business takes place, unless otherwise agreed in
terms of section subsection 6-
the
new employer is automatically substituted in the place of the
old employer in respect of all contracts of employment
in
existence immediately before the date of transfer;’.
Section 197(6) provides that an
agreement contemplated in subsection (2) must be in writing. The
parties to the agreement must either
be the old employer, the new
employer or the old employer and the new employer acting jointly, on
the one hand and the appropriate
person or body the employer party is
required to consult with in terms of section 189(1) of the LRA.
The relationship between section
197(2) and (6) is aptly illustrated by Van Niekerk J
in
SAMWU & IMATU v SALGA
and Others
2
as follows:
‘
In
my view, section 197(2) clearly establishes a “default”
position. In other words, provided that the nature of a transaction
is such that it falls within the ambit of section 197, the
consequences of an automatic and obligatory automatic substitution of
employer for the transferee can be avoided or varied only by an
agreement that complies with section 197(6).”
The court also relied on
NEHAWU
v University of Cape Town
3
in finding that the fact that a seller
and a purchaser of a business have not agreed on the transfer of the
workforce as part of
a transaction does not disqualify the
transaction from being a business for purposes of section 197. It was
further held that the
new employer substituted the old employer on
transfer of the contracts of employment by operation of law.
It is common cause that the
respondents attempted to reach an agreement as envisaged in section
197(6) with the applicants and
their unions. The attempts were
unsuccessful in that no agreement was ever concluded. The applicants
would have acquired the
right to consent to the transfer of their
contracts of employment had the agreement been reached. Absent the
agreement, nothing
prevented the respondents from transferring the
applicants’ contracts of employment as envisaged in section
197(2) of the
LRA which did not require the municipality to consult
with or seek the consent of the applicants before they could be
transferred.
As the applicants’ transfer on 1 July 2012 is
lawful, the applicants therefore have no right which can be
protected by
the interim order they are seeking.
In prayer 2.1 of their notice of
motion, the applicants seek an order declaring unlawful the first
respondent’s failure
to pay them their normal full monthly
salaries on 25 August 2012 in terms of their contracts of employment
with the municipality.
As the applicants’ contracts of
employment were transferred on 1 July 2012 to the Eastern Cape
Department of Health, the
applicants were no longer employees of the
municipality in August 2012. There was therefore no obligation on
the municipality
to pay them salaries on 25 August 2012 because the
obligation to pay a salary stems from the employment relationship.
Section 197(2)(a) provides that if a
transfer of business takes place other than as agreed in terms of
subsection (6), the new
employer automatically substitutes the old
employer in respect of all contracts of employment in existence
immediately before
the date of the transfer. When the applicants’
contracts of employment were transferred on 1 July 2012, the
Department
automatically became the applicants’ employer and
the obligation to pay the applicants’ salaries was
automatically
transferred. As the municipality had no obligation to
pay the applicants’ salaries, failure to pay such salaries
cannot
be declared unlawful. For these reasons there was no
obligation on the municipality to continue paying the applicants’
salaries until their employment has been terminated in full
compliance with all the applicable law, because the applicants’
contracts of employment with the municipality were lawfully
terminated on 1 July 2012 when they were transferred to the
Department.
This ground alone justifies the dismissal of this
application.
Having decided that the applicants
have no
prima facie
right to be protected by an interim
interdict, the only aspect to be dealt with is urgency. The
respondents argued that this
application is not urgent as the
applicants conceded that they have been aware for years of the plan
to transfer them in terms
of the provincialisation decision. They
should have brought this application before their transfer took
place. While there is
truth in the respondents’ submission, it
however loses sight of the reality that for years the parties had
been attempting
to effect the transfer by agreement as envisaged in
section 197(6). When the respondents took a decision to abandon the
attempts
to reach an agreement, they failed to communicate their
decision to the applicants. The applicants could not have known of
the
respondents’ change of heart as one of the Department’s
officials continued engaging the applicants on their transfer,
even
after the transfer had taken place. Although the applicants were
served on 17 July 2012 with letters advising them of their
absorption into the Department, they received the amount of
remuneration they earned from the municipality on 25 July 2012. The
payment is consistent with their version that they had not been
transferred on 25 July 2012 and that time was ripe for them to
approach this court when they did not receive their remuneration
from the municipality on 25 August 2012. For these reasons the
applicants were justified in approaching this Court on an urgent
basis.
Costs
The respondents sought a costs order
against the applicants. Section 162 of the LRA provides that an
order for the payment of
costs may be made according to requirements
of law and fairness. At the time the applicants launched this
application, they were
labouring under the incorrect impression that
their contracts of employment had not been transferred. They were
led by the respondents
to believe that the parties were still in the
process of trying to reach an agreement on their transfer. This the
respondents
did by pursuing discussions on their transfer even after
the transfer had taken place. The respondents paid them the same
salaries
they received from the municipality even after they had
been served with letters of their absorption into the Department.
Although
the respondents submitted that the payments were made in
error, the reality is that the payment evinced to the applicants the
thought that they were still employees of the municipality. The
respondents did not, before 25 August 2012, unequivocally inform
the
applicants of their transfer. In the circumstances, it would be
unfair to grant a costs order against the applicants although
their
application has been unsuccessful.
Order
In the premises, the following order
is made:
13.1 The application is dismissed,
13.2 No order is made as to costs
___________________
Lallie J
Judge of the Labour Court
APPEARANCES:
FOR THE APPLICANTS: Adv. Zilwa
Instructed by S Booi & Sons
Attorneys
FOR THE FIRST RESPONDENT: Adv. Quinn
SC and Adv Kunju
Instructed by XM Petse
FOR THE SECOND AND THIRD
RESPONDENTS: Adv. Gqamana
Instructed by State Attorney
1
Act
66 of 1995
2
[2010]
8 BLLR 882
(LC).
3
2003
(3) SA 1
(CC).