About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Johannesburg Labour Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: Johannesburg Labour Court, Johannesburg
>>
2014
>>
[2014] ZALCJHB 129
|
|
Silver Falcon Trading 176 (Pty) Ltd v Mahlawule NO and Others (JR1296/12) [2014] ZALCJHB 129 (22 April 2014)
REPUBLIC
OF SOUTH AFRICA
THE LABOUR COURT OF
SOUTH AFRICA, JOHANNESBURG
JUDGMENT
NOT
REPORTABLE
OF
INTEREST TO OTHER JUDGES
CASE
NO: JR 1296/12
In
the matter between:
SILVER FALCON
TRADING 176 (PTY) LTD
Applicant
And
M D MAHLAWULE N.O.
First Respondent
CCMA
Second Respondent
P G COETZEE
Third Respondent
Heard
:
20 March 2014
Delivered
:
22 April 2014
Summary:
Review – whether employee or shareholder – finding that
employment relationship existed not supported by evidence –
reviewed and set aside.
JUDGMENT
STEENKAMP
J
Introduction
[1]
This
case is another reminder of the wisdom to reduce agreements to
writing. Too often, what begins as a “gentlemen’s
agreement”
[1]
ends up in
a court spat such as this one where the gloves come off and the
gentlemanly behaviour of the past is a distant memory.
[2]
The dispute in this case is whether the
third respondent, Mr P G Coetzee, was an employee of the applicant or
whether he entered
into a partnership agreement. Whatever agreement
there was, was terminated by the applicant. Mr Coetzee says he was an
employee;
he was dismissed; and it was unfair. The applicant says it
merely terminated the partnership agreement. The matter was referred
to arbitration at the CCMA (the second respondent). The arbitrator
(the first respondent) found in Coetzee’s favour. The
applicant
asks this Court to review that decision and to set it aside.
Background
facts
[3]
The
applicant conducts a general trading business. It employed Mrs
Coetzee (the third respondent’s wife). Mr Coetzee
[2]
had his own business, Delkor Electrical Contractors. He became
interested in the applicant’s business. In January 2010 he
went
to China with the applicant’s MD, Duncan Mackie. They went to
China again in May 2010. They decided to import solar
geysers from
China for distribution in South Africa. In October 2010 they entered
into an agreement. The applicant says it was
a profit sharing
arrangement; Coetzee says he was employed. No agreement was put in
writing.
[4]
Coetzee distributed and sold geysers on
behalf of the applicant in October and November 2011. The applicant
paid him R25 000
for each of those months. He says he considered
it a salary; the applicant says it was his profit share for sales
made in those
months. Those were the only payments the applicant ever
made to Coetzee.
[5]
In December 2011 Coetzee went on holiday.
He did not apply for leave. He was not paid. In January 2012 he
returned from holiday
and demanded to be paid. Mackie told him that
he had not made enough sales to generate a profit and was not
entitled to any payment.
Mackie told him that the “partnership”
was no longer beneficial to the applicant and terminated it.
[6]
Coetzee referred an unfair dismissal
dispute to the CCMA. Conciliation was unsuccessful. The first
respondent (the arbitrator) conducted
the arbitration. He found that
Coetzee was an employee; that he had been dismissed; and that the
dismissal was unfair. He ordered
the applicant to pay Coetzee
R150 000, being the equivalent of six months’ remuneration
calculated at R25 000 per
month.
The
arbitration award
[7]
The
arbitrator based his decision on the definition of “employee”
in s 213 and the presumption in s 200A of the Labour
Relations
Act.
[3]
That section reads as
follows:
“
200A.
Presumption as to who is employee
(1) Until the contrary is
proved, a person, who works for or renders services to any other
person, is presumed, regardless of the
form of the contract, to be an
employee, if any one or more of the following factors are present:
(a) the manner in which
the person works is subject to the control or direction of another
person;
(b) the person’s
hours of work are subject to the control or direction of another
person;
(c) in the case of a
person who works for an organisation, the person forms part of that
organisation;
(d) the person has worked
for that other person for an average of at least 40 hours per month
over the last three months;
(e) the person is
economically dependent on the other person for whom he or she works
or renders services;
(f) the person is
provided with tools of trade or work equipment by the other person;
or
(g) the person only works
for or renders services to one person.
(2) Subsection (1) does
not apply to any person who earns in excess of the amount determined
by the Minister in terms of section
6(3) of the
Basic Conditions
of Employment Act
.”
[8]
It is common cause that, based on the
claimed “salary” of R25 000 per month, Coetzee
earned more than the amount
referred to in s 200A(2). Yet the
arbitrator based his award on the presumption contained in s 200A(1).
[9]
The arbitrator took the following factors
into account:
9.1
“
It was never disputed that a
suggestion was made to [Coetzee] to stop his electrical construction
work and focus on their business.
This is a request which he complied
with. Therefore, I find it hard to believe that a person can devote
one’s full time to
the promotion of a business, without a
promise of a reliable income. It is my finding that he is well
covered by both subsections
(a) and (b) of the definition [in s
213].”
9.2
Though his hours of work were not
controlled, it was never disputed that they exceeded the average of
forty per month.
9.3
Andrew Mackie admitted during
cross-examination that Coetzee was provided with “tools of
work” by the applicant. He
referred to “cards, pamphlets,
tanks, geysers and pumps”.
9.4
He assisted customers with their technical
problems.
9.5
“
Despite the fact that he drew
something from his maintenance work, the fact that he had to stop his
electrical operations and focused
on the [applicant], meant that he
was economically also dependant on the business. Therefore, he was an
integral part of the business.”
9.6
“
I agree with the [applicant’s]
version that he was not controlled. However, it is not sufficient
enough to declare him not
an employee, considering other factors.”
Review
grounds and the applicable test
[10]
The
question whether Coetzee was an employee goes to jurisdiction. The
Sidumo
[4]
test does not apply. The question is whether the arbitrator was right
or wrong.
[5]
[11]
The applicant raises the following review
grounds:
11.1
The arbitrator did not consider the
evidence before him and the probabilities when he found that an
employment relationship existed.
11.2
The arbitrator incorrectly applied the
provisions of the LRA and committed a material error of law.
Evaluation
/ Analysis
[12]
In
State
Information Technology Agency (Pty) Ltd v CCMA
[6]
Davis JA set out the following criteria to determine whether someone
is an employee:
12.1
The employer’s right to supervision
and control;
12.2
whether the employee forms an integral part
of the organisation; and
12.3
the extent to which the ‘employee’
is economically dependent upon the employer.
[13]
Coetzee testified that, following is visit
to China with Duncan Mackie, he was offered a 30% profit sharing
arrangement in the applicant’s
business. That much is common
cause. And in August 2011 the Mackie brothers – the partners in
the applicant – asked
him to stop the construction side of his
electrical business, but the maintenance side of his business carried
on and he continued
to derive an income from it. He was not paid a
salary in September 2011 and the parties did not agree on a salary
amount. The only
payments he received were in October and November
2011. No terms of employment, such as leave or working hours, were
agreed upon
or even discussed.
[14]
It is difficult to see how the pamphlets
and geysers could be seen as “tools of the trade”. The
applicant gave Coetzee
pamphlets to hand out at a trade show. The
geysers were the stock in trade.
[15]
Coetzee testified that the applicant did
not control him. The arbitrator accepted that. Coetzee was not given
instructions on what
to do when, he could come and go as he pleased,
for example when he went on holiday in December 2011.
[16]
Given these factors, it is hard to fathom
how the arbitrator could have found that Coetzee formed an integral
part of the applicant’s
business. The finding that he “had
to stop his electrical operations and focused on” the
applicant, and “
therefore
,
he was an integral part of the business” is a
non
sequitur
. Even if it were correct; it
would not follow; but the premise is also wrong. The applicant only
asked Coetzee to stop the construction
side of his business. The
maintenance side carried on to generate an income for him. The
evidence did not establish that Coetzee
formed an integral part of
the applicant’s business. At best, he marketed and supplied
solar geysers on the applicant’s
behalf. That is consistent
with the initial profit sharing arrangement rather than an employment
relationship. So is the fact that
he only got paid twice. On the
probabilities, those payments were made in accordance with the profit
share arrangement flowing
from sales, and not as a salary. And under
cross-examination Coetzee conceded that he was “not part of
Silver Falcon in any
way”.
[17]
The arbitrator’s findings are not
supported by the evidence and the probabilities. It appears that the
arbitrator was persuaded
by the presumption contained in s 200A(1);
but, as the legislature stipulates in s 200A(2), the presumption did
not apply to Coetzee,
given his earnings. In this regard, the
arbitrator committed an error of law.
[18]
On the probabilities and on the evidence at
arbitration, Coetzee did not show that he was subject to the
applicant’s control.
In that regard the arbitrator was correct.
On the finding that Coetzee was economically dependent on the
applicant, I cannot agree.
He only ever received two payments from
the applicant. His own business continued to generate an income. That
does not go far enough
to show economic dependency to the extent that
an employment relationship can be said to have come into being, given
the absence
of any clear agreement and the absence of the other
factors outlined above. And, as I have discussed above, the finding
that Coetzee
formed an integral part of the applicant’s
business does not follow on the arbitrator’s earlier findings
or on the
evidence before him.
Conclusion
[19]
On a conspectus of all the facts and having
regard to the probabilities, it has not been shown that the parties
entered into an
employment relationship. It is more probable than not
that the parties continued with a profit sharing arrangement as
initially
discussed. Coetzee was not an employee. Therefore, he was
not dismissed and the question of a fair dismissal does not arise.
[20]
With regard to costs, I take into account
that Coetzee is an individual who had to defend an arbitration award
in his favour. I
do not consider a costs award to be appropriate in
law and fairness.
Order
The
arbitration award of the first respondent under case number LP 859-12
is reviewed and set aside. It is replaced with an award
that the
third respondent, Mr P G Coetzee, was not an employee of the
applicant.
______
_________________
Steenkamp
J
APPEARANCES
APPLICANT:
Cobus
Prinsloo
Instructed
by Pratt, Luyt & De Lange (Polokwane).
THIRD
RESPONDENT:
M
H Schnehage
Instructed
by Stemmett & Osman Inc. (Polokwane).
[1]
No sexism intended – only men were involved.
[2]
I shall refer to the third respondent, Mr Coetzee, as “Coetzee”.
Where it is necessary to refer to his wife, I will
refer to her as
“Mrs Coetzee”.
[3]
Act 66 of 1995 (the LRA).
[4]
Sidumo
& another v Rustenburg Platinum Mines Ltd & others
(2007)
28
ILJ
2405 (CC).
[5]
Workforce
Group (Pty) Ltd v CCMA
(2012) 33
ILJ
738 (LC);
Asara
Wine Estate & Hotel (Pty) Ltd v Van Rooyen
(2012) 33
ILJ
363 (LC);
Sanlam
Life Assurance Ltd v CCMA
(2009) 30
ILJ
2903 (LAC).
[6]
(2008) 29
ILJ
2234 (LAC) para [12].