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[2014] ZALCJHB 100
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South African Tourism v Monare and Others (JR2298/11) [2014] ZALCJHB 100; (2014) 35 ILJ 2280 (LC (31 March 2014)
REPUBLIC
OF SOUTH AFRICA
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Reportable
CASE
NO JR 2298/11
In
the matter between:
SOUTH
AFRICAN TOURISM
APPLICANT
and
TEBOGO
BRIAN MONARE
1
ST
RESPONDENT
THE
COMMISSION FOR CONCILIATION
MEDIATION
AND ARBITRATION
2
ND
RESPONDENT
COMMISSIONER
MOOI NO
3
RD
RESPONDENT
Date
heard: 7 March 2014
Supplementary
heads filed: 28 March 2014
Judgment
delivered: 31 March 2014
JUDGMENT
VAN
NIEKERK J
[1]
This is an application to review and set aside an arbitration award
issued by the third respondent (the commissioner). In her
award, the
commissioner found that the first respondent had been unfairly
dismissed. The essence of the commissioner’s finding
is that at
most, the first respondent had been guilty of a failure to follow
proper procedures, but that he was not guilty of any
dishonesty or
fraud, certainly not to the extent that they continued employment
relationship would be intolerable. To the extent
that the first
respondent had been guilty only of breaching company procedures, the
commissioner ordered that the first respondent
be reinstated, but
without retrospective effect.
[2]
The grounds for review reflected in the founding and supplementary
affidavits largely reflect process-related conduct on the
part of the
commissioner. The primary ground for review articulated at the
hearing of the application is that by concluding that
the first
respondent had not been guilty of any dishonest conduct and that at
most, he had failed to comply with applicable policies
and
procedures, the commissioner made a decision to which no reasonable
decision-maker could come on the available material. The
applicant
also attacks the commissioner’s decision to reinstate the first
respondent, on the basis that the breakdown of
trust and confidence
in the first respondent rendered that decision unreasonable.
[3]
At the hearing, the court directed that the parties submit
supplementary heads of argument, addressing the issue of the
territorial
application of the LRA, given the undisputed facts
relating to first respondent’s employment. It is common cause
that on
10 November 2009, the applicant and the first respondent
entered into a contract of employment for a fixed term, to commence
on
1 February 2010. That contract was concluded outside of the
Republic of South Africa. In terms of the contract, the first
respondent
was appointed as the applicant’s finance and
administration manager in the United Kingdom, with effect from 1
February 2010.
The first respondent had previously been employed in
the applicant’s Amsterdam office. It is not disputed that the
first
respondent commenced work at the applicant’s office in
Wimbledon, London, and that he rendered services there until his
dismissal
on 30 September 2010. The first respondent’s
dismissal was preceded by a disciplinary hearing conducted in London
on 27 and
28 September 2010. The chair of the enquiry found the first
respondent guilty of various offences with which he had been charged.
These charges related to subsistence and travel claims made by the
first respondent during March 2010, and the unauthorised use
of an
access code on the applicant’s IT system. Prior to his
dismissal, the first respondent had been suspended on full pay
on 26
August 2010 by his direct superior, Ms Lebo Mokhesi, the country
manager: UK. It is not disputed that in the capacity of
country
manager, Mokhesi had overall managerial control of the applicant’s
London operation, where first respondent performed
his work.
[4]
The starting point in the determination of any extra-territorial
application of the LRA in relation to the CCMA must be s 114(1)
of
the Labour Relations Act. That section provides that the CCMA has
jurisdiction in all the provinces of the Republic. Section
213
defines Republic to mean, when used in a territorial sense, the
national territory of the Republic.
[5]
Since the CCMA is a statutory body with a statutorily defined
jurisdiction, it is not open to parties to agree to confer
jurisdiction
on the CCMA merely because they wish the CCMA to
arbitrate their dispute. Further, contrary to what the third
respondent submits
in the present proceedings, it is of no
consequence that the issue of extra-territorial application has not
previously been raised
in these proceedings – the issue of
jurisdiction can be raised at any time.
[6]
In
Serfontein v Balmoral Central Contracts SA (Pty) Ltd
(2000)
21
ILJ
1019 (CCMA), the commissioner Lagrange (as he then was)
held that in a dispute such as the present, the CCMA was required to
determine,
as far as possible, if the substance of the employment
relationship in question is reflected in obligations which are due
and enforceable
within the boundaries of the Republic of South
Africa. The commissioner considered that the substance of that
relationship might
ordinarily be determined by having regard to the
place where the employee must render his or her services, the place
where payment
is made, the location of the parties, the method of
calculating remuneration and the currency remuneration, and the place
at which
the relationship was entered into. None of these factors is
individually decisive (at p1025).
[7]
In In
Kleinhans v Parmalat SA (Pty) Ltd
[2002] 9 BLLR 879
(LC), this court held that it had jurisdiction in a claim for
breach of contract in circumstances where the claimant employee
of an
employer based on South Africa had been seconded to a foreign country
on a fixed term contract. In that case, the court approached
the
issue of jurisdiction from the perspective of private international
law and after weighing up as features of the contract which
fell
outside the jurisdiction as against those which link the contractual
relationship to South African territory, the court concluded
that it
had jurisdiction.
[8]
In
Astral Operations Ltd v Parry
(2008) 29
ILJ
2668
(LAC), the Labour Appeal Court held that in this court did not have
jurisdiction to entertain a claim for contractual damages,
unfair
retrenchment and the non-payment of various statutory amounts in
circumstances where the respondent employee’s workplace
was in
Malawi. In coming to that conclusion, the LAC had regard to a number
of prior decisions that concerned the territorial application
of the
1956 LRA, in particular,
CWIU v Sopelog CC
(1993) 14 ILJ 144
(LAC) and
Genrec Mei (Pty) Ltd v Industrial Council for the Iron,
Steel, Engineering & Metallurgical Industry & others
(1995) 16
ILJ
51 (A). The court came to the conclusion that
the territorial application of the LRA is to be determined ultimately
by the locality
of the undertaking carried on by the employer. At
paragraph 19 of the judgment, the court said the following:
‘
It seems to me
that in a case involving the CCMA the court could also ask whether
the employer’s undertaking in which the
employees work is
carried on inside or outside the Republic. If it was carried on
inside, the CCMA would then have jurisdiction
and, when it was
carried on outside, the CCMA would not have jurisdiction.’
[8]
The court had regard to the facts of the case and those of
Genrec,
and said the following (at 2678H):
‘
In both cases the
employer had a business operated from the Republic. In both cases the
employer had an operation outside South
Africa. In both cases the
employee or employees had entered into specific contract of
employment requiring them to work outside
South Africa. In the light
of all of this it was decided in
Genrec
that of the Act did
not apply prior to its amendment. In the light of all of this I am of
the view that the Act did not apply to
the appellant’s
operation in Malawi and that the Labour Court had no jurisdiction to
entertain the respondent’s claims.
[9]
In a recent judgment,
MECS Africa (Pty) Ltd v CCMA 7 others
(unreported JR 455/12, 16 August 2013) this court had to consider
whether the CCMA had jurisdiction to entertain a dispute lodged
by an
employee who was employed by a temporary employment service in South
Africa and whose services were made available to one
of his
employer’s clients operating in the Democratic Republic of
Congo. In that case, the employee had returned to South
Africa from
the DRC when the notice of termination of employment was issued. In
the CCMA it had been argued, on the basis of
Astral Operations
,
that the location of the employer’s undertaking was the DRC. On
the facts, the court found that that the primary purpose
of the
employer’s business was to assign persons to provide services
to its clients, a business that was located in South
Africa. The
court was clearly swayed by the nature of the employer’s
business, i.e. the recruitment and procurement of labour.
That
function was performed within the boundaries of the Republic of South
Africa and not in the geographic locations at which
the employer’s
clients conducted their operations. Of some further significance was
the fact that the employer, as a distinct
legal entity, had no
presence in the DRC – the employee did not work at the
employer’s operations in the DRC; rather,
he worked at the
operation of one of his employer’s clients. On this basis, the
court concluded that the locality of the
employer’s undertaking
in which the employee performed in terms of his contract was in South
Africa and that the CCMA the
consequently had jurisdiction to
entertain the dispute.
[10]
The choice of law principles referred to and applied in the
Parmalat
should be approached with a degree of caution – the claim in
that instance was one brought in contract - it was not a dispute,
such as the present, in which an employee relied on a statutory right
not to be unfairly dismissed and sought to enforce that right
in an
arbitration conducted under the auspices of a statutory body. In any
case, as the LAC observed in
Astral Operations
, to the extent
that a contractual claim may only be brought in this court under the
provisions of s 77(3) of the Basic Conditions
of Employment Act, the
extraterritorial application of that statute is a relevant
consideration, one that does not appear to have
enjoyed the attention
of the court in
Kleinhans
.
[11]
The authority binding upon me is to the effect that the primary but
not sole consideration in determining the territorial application
of
the LRA is the location of the undertaking carried on by the
employer. Of course, this begs the question of the meaning of an
‘undertaking.’ In my view, the presumption against
extraterritorial application assumes some significance here –
the court ought to exercise a degree of conservatism and caution in
the determination of an undertaking in these circumstances.
Given the
amorphous meaning of the word ‘undertaking’ there will
always be practical difficulties in determining the
location of an
employer’s undertaking, especially in the case of an employer
that conducts operations on a global basis.
Ultimately, this is a
question of fact, to be determined by reference to all of the
available evidence.
[12]
In the present instance, it is common cause that the applicant is a
juristic person, established in terms of
s 2
of the
Tourism Act, 72
of 1993
, registered in terms of South African law, with its head
office situated in Sandton, South Africa. That is largely the basis
on
which the applicant contends that its London office does not
constitute a separate entity or undertaking, but is merely an
extension
of its undertaking in South Africa, presumably in terms of
s13
of the
Tourism Act, which
empowers the board to open and conduct
offices in the Republic and elsewhere.
[13]
On the other hand, it is not disputed, as I have indicated, that the
first respondent was appointed to work as finance and
administration
manager in the United Kingdom. It does not appear from the papers
that the first respondent ever worked for the
applicant in South
Africa. The offer of employment relevant for present purposes was
made to him when he worked in Amsterdam. On
his version, it was an
appointment in the applicant’s London office, for a fixed term
of five years. To use the language
of
Astral Operations,
this
is a case in which the employer operates a business from within the
Republic of South Africa and in which it has entered into
a specific
contract of employment requiring the employee to work outside of
South Africa. The location in which the first respondent
was
appointed to work, the applicant’s office in London, had its
own information technology systems, its own controls, time
management, its own staff, and its own premises and was subject to a
separate audit. In my view, all of these facts point to an
undertaking carried on outside of the Republic of South Africa.
[14]
I do not understand the
Astral Operations
decision to exclude
the consideration of any other relevant factors and in particular,
those that were the subject of specific
mention in the
Serfontein
award mentioned above. In this regard, it is not in dispute that the
first respondent was paid in pounds sterling in the United
Kingdom in
terms of a contract concluded outside of the Republic of South
Africa. All of these factors militate against a conclusion
that the
LRA has territorial application in the present instance.
[15]
To the extent that the first respondent has relied on the recent
judgment in
MECS Africa
, this is not a case in which the first
respondent was employed by a labour broker and then assigned to
render services to client
on an operation outside of the borders of
the Republic of South Africa. Nor is this a case in which the first
respondent was recruited
in South Africa and thereafter seconded to
the applicant’s London office. Secondment arrangements envisage
the continuity
of employment at a home ‘base’ during a
temporary deployment on agreed terms to a different location.
Ordinarily, a
secondment agreement would contemplate a return to the
home base on termination of the assignment. Conceptually, such
arrangements
are not dissimilar to those that existed in
MECS
Africa
, and I venture to suggest that most would result in a
similar outcome. But in the present instance, there is no such
residual nexus
with the applicant’s South African office. The
first respondent may be South African and he may have worked for an
entity
whose head office is located in South Africa but he was
recruited overseas, his employment contract was concluded overseas,
he
was obliged to work overseas for an agreed fixed term with no
right to return to South Africa and continue employment there on
conclusion of that fixed term, and he performed services only in the
United Kingdom. He committed the acts of misconduct that resulted
in
his dismissal in the United Kingdom, his disciplinary hearing was
held there, and he was given notice of dismissal there. In
my view,
in these circumstances, the LRA has no territorial application. It
follows that the first respondent had no right to refer
his dispute
to the CCMA, and the CCMA had no right to entertain it.
[16]
Finally, in relation to costs, given the broad discretion conferred
on the court by
s 162
of the Act, it seems to me that the
requirements of the law and fairness are best served by making no
order as to costs. The issue
of territorial application ought to have
been raised at a much earlier stage and it would not be fair to
prejudice the first respondent
with a costs order given the
circumstances in which the point was raised and decided.
For
the above reasons, make the following order:
1.
The arbitration award issued by the third respondent on 1 September
2011 under case number GATW 13517/10 is reviewed and set aside
ANDRE
VAN NIEKERK
JUDGE
OF THE LABOUR COURT
REPRESENTATION
For
the applicant: Adv. A Snider, instructed by DLA Cliffe Dekker Hofmeyr
Inc
For
the respondent: Bester & Rhoodie Attorneys