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[2015] ZALCJHB 129
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SATAWU obo Dube and Others v Fidelity Supercare Cleaning Services Group (Pty) Ltd (JS879/10) [2015] ZALCJHB 129; [2015] 8 BLLR 837 (LC); (2015) 36 ILJ 1923 (LC) (17 April 2015)
REPUBLIC
OF SOUTH AFRICA
IN THE LABOUR
COURT OF SOUTH AFRICA, JOHANNESBURG)
JUDGMENT
Case no: JS 879 /
10
DATE: 17 APRIL
2015
Reportable
In
the matter between:
SATAWU
obo DUBE AND 2
OTHERS
...................................................................................
Applicant
And
FIDELITY
SUPERCARE CLEANING SERVICES
GROUP (PTY)
LTD
...............................................................................................................
Respondent
Heard: 5 February
2015
Delivered: 17
April 2015
Summary:
Labour Brokers – Automatic Dismissal Clauses – validity
thereof – unfair, unlawful and invalid in certain
circumstances
Amendments
to LRA – section 198(4) (c) considered.
JUDGEMENT
MOSIME AJ
Introduction and
facts that are common cause
[1]
The respondent is a cleaning contractor
and, at the time of this dispute, was in a cleaning Service Level
Agreement (SLA) with the
University of the Witwatersrand (Wits
University), the respondent’s customer. The three applicants
were all employed by the
respondent and placed at Wits University.
The applicants were all members of the South African Transport and
Allied Workers Union
(“SATAWU”), which appeared in this
matter on their behalf.
[2]
Two of the applicants, namely Ms Patricia
Duduzile Golele and Ms Amina De Lange, did not appear at court during
the hearing of this
matter, and after hearing submissions from both
representatives on the application for dismissal of their cases, I
made a ruling
to that affect. Consequently, this judgement is only in
respect of Ms Agnes Dube (“Dube”).
[3]
The Applicants were represented by Mr Vusi
Shongwe, a trade union official from SATAWU, and the Respondent by Mr
Sean Snyman, from
SNYMAN Attorneys, Johannesburg. I am indebted to Mr
Snyman for his detailed heads of arguments, from which I have relied
for some
valuable authorities. I had not received Mr Shongwe’s
written heads at this stage.
[4]
The respondent’s business is based on
cleaning contracts the respondent concludes with its clients. The
respondent then employs
cleaners who are then placed to render
cleaning service at the premises of the customers. Dube was employed
by the respondent as
a supervisor on the Wits SLA referred to above,
and concluded a written Contract of Employment (“COE”) on
15 January
2009. The salient terms of this contract were:
‘
2.
Period of Employment
2.1
The employee’s employment will commence on the date appearing
on the schedule (“the schedule”) to which this
agreement
is attached and terminate on the date appearing on the schedule
or
the date upon which the contract which exists between the company and
the customer terminated
or on the retirement date, whichever date occurs first’
[1]
.
(Emphasis supplied)
[5]
And also:
‘
2.2.
The employee specifically acknowledges
that:
2.2.1
he/she
fully understands that the company’s contract with the customer
might be terminated by the customer
and for any cause or might terminate through the effluxion of time
and that in consequence thereof the nature of the employee’s
employment with the company and its duration is totally dependent
upon the duration of the company’s contract with the customer
and
that the employee’s contract will terminate when any of the
events predicated in 2.1 occur and the employee fully understands
that there will be no entitlement of severance pay’
.
[2]
(Emphasis
supplied)
[6]
On
the 27 November 2009, Wits University gave notice to the respondent
of the termination of the service level agreement with effect
from 31
December 2009. On 01 December 2009, the respondent issued all
employees with letters
[3]
of
that date advising them that the respondent’s SLA with Wits
University was to come to an end on the 31 December 2009
[4]
.
This letter also recorded that the employment of the employees would
consequently terminate (in terms of provisions of
Clause
2.1
in their employment contract) on the 31 December 2009. It is common
cause that none of the employees was consulted by the respondent
in
terms of
section 189
of the
Labour Relations Act 66 of 1995
, as
amended (the LRA).
[7]
Before
the termination of the service level agreement, the respondent
entered into a new one-year extended SLA with Wits University
[5]
,
which envisaged a vastly reduced staff complement and service, for a
period of one year ending 31 December 2010. Thus, on the
03 December
2009, the respondent issued notices
[6]
to the employees advising that the respondent had positions available
at Wits University from 01 January 2009, and invited its
employees to
make applications for those vacant positions available at Wits by
Friday 04 December 2009. There were 7 (seven) vacant
positions at the
level of supervisors, and 162 (one hundred and sixty two) cleaner
positions.
[8]
Neither
Dube nor any of the other applicants applied for placement in the
vacancies they were notified of on the 03 December 2009.
As a result,
their contracts were terminated on the 31 December 2009. SATAWU
contends
[7]
that in terminating
the employment of the applicants as it did, the respondent dismissed
them on a reason based on operational
requirements. In terms of
section 189
(1) and (3) (a) to (j
)
of
the LRA, the respondent was required to issue a written notice when
it anticipated to retrench the employees and invite the union,
especially since the respondent was aware that the employees were its
members. This is the crux of the applicants’ case.
[9]
SATAWU
submitted further that the dismissal of the applicants was for no
reason
[8]
as, despite the
respondent indicating that its contract with the university had
terminated, the respondent nevertheless continued
to employ other
supervisors and placed them at Wits after it had dismissed the
applicants. In their view, the union
contended
that the applicants were dismissed and their dismissal was unfair for
the simple reason that the Wits contract did not
terminate. The
applicants were dismissed for other reasons than those known to
them
[9]
.
[10]
The respondent did not pay severance pay to
any of the applicants upon the termination of their employment
contracts. It is also
common cause that neither SATAWU nor any of the
applicants were consulted as contemplated in
section 189
of the
Labour Relations Act 66 of 1995
. The respondent contends that it did
not dismiss the applicants (or any of the employees) at the end of
December 2009. According
to the respondent, the services of the
employees automatically terminated at the end of December 2009 in
terms of specific provisions
of their contracts of employment.
[11]
The
parties concluded a Pre-Trial Minute records
[10]
and recorded succinctly the issues as that which the court needed to
determine. Given my ruling on who the applicants are in this
matter,
the court will consider these questions as they apply only to Dube
alone.
Oral Evidence for
Applicant
[12]
SATAWU called Dube to testify and she
confirmed most of the facts that are listed above as of common cause.
Dube started working
in the cleaning service since 1990 with
Pritchard Cleaning. In 1993 she was promoted to a position of Team
Leader, and in 1995,
Supervisor. She was based at OK retailer at the
Sandton City and in 2000, where she was retrenched, and later
rehired. She was
based at Wits University since 2005 until her
dismissal in 2009. Dube had the view that the respondent had
continued providing
services to Wits University beyond the 31
December 2009, and that the contract between the respondent and Wits
University did not
terminate in December but terminated only during
June 2013. About one hundred (100) employees, except her and the
other two supervisors
were employed by the respondent and placed at
Wits until that time.
[13]
Dube testified that she applied for a
disability grant, instead of taking a new contract offered to her
with Wits.
Application for
Absolution from the Instance
[14]
The basis to the application was the
admissions and concessions made in her testimony by the applicant,
and other material facts
that are common cause. Firstly, the
respondent contends that the applicant had admitted to have signed a
contract of employment
with the terms that provided that that
contract would terminate automatically with the termination of the
contract between the
respondent and its client, Wits University. The
witness admitted that she understood that when the contract with Wits
terminates,
so would be her employment contract.
[15]
It
is the court’s view that the enquiry that is most likely to
follow the finding in regard to the questions in the Pre-Trial
minute
[11]
, namely whether or
not there was a dismissal, would be whether or not the employer
followed the prescribed procedures in terminating
the employment of
the applicant for reasons based on what appears to be operational
requirements.
[16]
In the premises, the court found and ruled
that the granting of absolution from the instance would be
inappropriate under the circumstances.
Oral Evidence by
the respondent’s witnesses
[17]
Marion Croukamp (‘Croukamp’),
is the Regional Manager of the respondent specifically in charge of
the SLA with Wits,
and had provided about 200 (two hundred) cleaners
employed by the respondent to Wits, under the contract. On site, the
respondent’s
management compliment consists of a Project
Manager and Supervisors; and there are about 7 or 8 shop stewards
representing all
the cleaners. She confirmed that Wits had then,
during 2009, presented the respondent and the other contract cleaning
service providers
on site with a new contract “spec” and
invited them to tender. Croukamp specifically testified that the
respondent
was never assured of being awarded the tender, and if it
did not get the tender, it was certain that the employment of all the
employees on the Wits contract would terminate in terms of the notice
given on 1 December 2009.
[18]
But,
and fortunately, the respondent was successful in the awarding of the
tender by Wits although based on a different and reduced
“job
spec”. The new contract required the re-engaged service
providers to reduce the costs of cleaning contracts by
R500 000.00.
It was common cause that the respondent and Wits then concluded a new
service level agreement, although with a reduced
staff compliment and
service, for the period from 1 January 2010 to 31 December 2010.
[12]
[19]
Croukamp
testified further that, because the respondent managed to secure a
new cleaning contract with Wits, the respondent had
then a number of
vacancies that could be filled by those employees that received
notice of termination on 1 December 2009, on new
contracts of
employment. On 3 December 2009, the respondent issued notices to all
the employees that the respondent had positions
available at Wits
effective from 01 January 2010 until December 2010. These positions
were 7 supervisor positions and 162 cleaner
positions. Employees had
to indicate whether they were interested in any of these vacancies by
completing and submitting the indication
of interest section
reflected at the foot of the same notice, to the office of a certain
Raymond Khoza on site, by 4 December 2009,
and thereafter submitting
a proper written application for employment by 11 December 2009. It
is no longer an issue that Dube did
in fact receive this notice
[13]
.
It is common cause also that Dube never applied for any of these
vacancies.
[14]
Croukamp in
fact testified that Dube was considered by her to be a good employee,
and that if Dube had applied for a supervisor
position, Croukamp
would most certainly have favourably considered accommodating her and
placed her. This evidence by Croukamp
is unchallenged.
[20]
What had however, happened prior to all the
events in this matter in December 2009, is that Dube was experiencing
difficulties in
attending work because of an earlier motor vehicle
accident she was involved in during 2007 (unrelated to her work).
Dube
had continued to suffer health
problems that caused her to be
frequently
absent from work
as she had to regularly
attend sessions for physiotherapy.
She also
needed medical treatment.
[21]
Croukamp
testified that Dube came to her in October / November 2009 and asked
to be assisted with an application for a disability
grant. Croukamp
said that as a result of this request, incapacity consultations were
held with Dube, and a decision was actually
implemented to reduce her
work load and to assist her in discharging her duties. Dube confirmed
this. Croukamp stated that she
noticed that Dube had not applied for
a position. She then met with Dube to discuss this with her. Dube was
adamant that she did
not want a position and wanted to rather pursue
the application for a disability benefit. Croukamp undertook that the
respondent
would assist her in this regard, and referred Dube to the
proper persons in HR. The facts do show that Dube did not apply for a
position on the new Wits contract, despite there being supervisor
positions available, but actually persisted with the pursuit
for a
disability benefit
[15]
.
[22]
According
to Croukamp there was no general notification sent to all employees,
but management ensured that each received a unique
notification
relating to and addressing his or her particular circumstances
[16]
.
With regard to Dube, her notice
[17]
of 18 December 2009 specifically recorded that she had requested to
apply for a disability pension grant and that all the paperwork
in
this regard had been completed. She was informed who she could deal
with concerning the processing of this application, and
she was
thanked for her service and wished well for the future
[18]
.
Dube confirmed in her evidence that she received this notice and
never took issue with it in any way.
[23]
On
21 December 2009, the respondent sent notice to all employees that
did not receive the 18 December 2009 notification (as referred
to
above) to collect new employment contract by 22 December 2009 and
sign and submit them by 4 January 2010.
[19]
Croukamp testified that these were completely new employment
contracts signed by the employees, which were also directly linked
to
the new Wits contract. Dube’s last working day was then indeed
on 31 December 2009, in terms of the notice of 1 December
2009.
The Issue to be
determined
[24]
This
court has to determine the nature
and
terms of the employees’ contracts of employment with the
respondent
[20]
and establish whether these can validly terminate employment
automatically
following the termination of the service level agreement between
their employer and the employer’s client. This question
entails, in essence, whether or not there was a dismissal.
[25]
Should
it be found that the employees’ contracts did not terminate
automatically but that they were indeed dismissed by the
Respondent,
the Court will be required to determine whether their dismissal was
substantively and procedurally fair or not, taking
into account the
facts of this case
[21]
.
[26]
In
the event the Court should find that the dismissal of the employees
was substantively and/or procedurally unfair, the Court will
be
required to determine the relief to be afforded to the employees
[22]
.
[27]
It
was submitted by the respondent in the heads
[23]
that the ‘only issue the Court has to determine is whether the
Wits contract indeed terminated’. If it did, the term
of the
fixed term contract of Dube had been “fulfilled”, and her
employment terminated in terms of the agreed terms
in such contract.
In my view, this question cannot be determined without also asking
whether or not that “fulfilment”
– herein meaning
termination - of Dube’s contract of employment follows
naturally, or “automatically”
,
after
the termination of the SLA between the respondent and client, (as
appears in paragraph 42 above). I do not therefore agree
with Mr
Snyman, for the respondent, that this matter can simply be disposed
by means of his proposition.
[28]
In his opening statement, Shongwe contended
that there were only 3 issues to be determined by this court, namely
(i) whether the
dismissal of the applicants for operational
requirements was fair; (ii) whether contracting out of the right not
to be unfairly
dismissed [automatic dismissal] is permissible in our
law; and (iii) whether the reasons advanced by the respondent for
dismissal
were true reasons. From my view, these questions are
answered when those in [24], [25] and [26] above, are.
When is automatic
termination of a contract of employment permissible?
[29]
A
view has already been posited, approved and upheld in the labour
courts holding effectively that a current contract of employment
can
terminate by operation of its terms
(de
jure)
,
as a natural consequence of the termination of another contract, to
which the current contract intensively relies for its own
subsistence. This is possible in all instances where there is a
contractual arrangement in terms of which
a
person, the employee, agrees that his or her services have been
procured for and will be provided to a client, a third party,
by a
temporary employment service (“the employer”). When in
such circumstances, there is a clause in the current contract
to the
effect that when a certain “event” occurs, such as the
client terminating the SLA contract with the employer,
the current
contract will also terminate. There can be no question, save where
there is an attack on the lawfulness or validity
of the contract
itself, that when such an event comes to pass, the current contract
will also validly and/or lawfully terminate
[24]
.
[30]
To
the extent that this termination is triggered by the “
occurrence
of an event”
and is not based on an employer’s own decision, there is no
dismissal and the employee is not entitled to a hearing nor,
as it
would be the case with the public sector employees, is the
termination subject to judicial review (
Nkopo
v Public Health and Welfare Bargaining Council and Others
[25]
and
MEC,
Public Works, Northern Province v CCMA and Others
[26]
).
The conundrum arises when a school of events occur and it is
incumbent to decide which of those are capable of terminating a
contract of employment validly without it being said that there was a
dismissal.
[31]
Thus,
Basson J, in
Sindane
v Prestige Cleaning Services
[27]
,
holding that:
‘
It
is accepted that apart from a resignation by an employee (unless
constructive dismissal is claimed consequent to resignation),
an
employment contract can be terminated in a number of ways which do
not constitute a dismissal as defined in
section 186(1)
of the LRA,
and more particularly, in terms of
section 186(1)(a).
These
circumstances include the following: (i) The death of the employee;
(ii) The natural expiry of a fixed term employment contract
entered
into for a specific period, or upon
the happening of a particular event
,
e.g. the conclusion of a project or contract between an employer and
a third party...’
[28]
(Emphasis
supplied)
[32]
In the
Sindane
case, the employee’s contract had been terminated as a result
of the client scaling down its own contract with the employer,
a
labour broker, by cancelling an agreement in terms of which an extra
cleaner had been provided to them. The contract stipulated
that, upon
termination of the broker’s contract with the client to whom
the employee rendered services, the employee’s
employment
contract with the employer broker would automatically terminate. The
court held, in this regard:
‘…
In
the first instance, if the fixed term employment contract is, for
example, entered into for a period of six months with a contractual
stipulation that the contract will automatically terminate on the
expiry date, the fixed term employment contract will naturally
terminate on such expiry date, and the termination thereof will not
(necessarily) … constitute a “dismissal”,
as the
termination thereof has not been occasioned by an act of the
employer. In other words, the proximate cause of the termination
of
employment is not an act by the employer. The same holds true for a
fixed
term employment contract linked to the completion of a project or
building contract
.
These fixed term employment contracts are typical in circumstances
where it is not possible to agree on a fixed time period of
employment,
i.e.
a definitive start and end date, as it is not certain on what exact
date the project or building contract will be completed
,
and hence, the termination date is stipulated to be the completion
date of the project or building contract. Similarly as in a
fixed
term employment contract with a stipulated time period, when a fixed
term employment contract linked to
the
completion of a project or building contract terminates
,
such termination will not (necessarily) be construed to be a
dismissal as contemplated in
section 186(1)(a).
Thus, the contract
terminates automatically when the termination date arrives,
otherwise, it is no longer a fixed term contract
(
SA
Rugby (Pty) Ltd v CCMA & Others (2006) 27 ILJ 1041 (LC) at 1044
par 6)…
’
[29]
.
[33]
The
court thus posits that, in circumstances where
an
act
of the employer is not the proximate cause of the termination of the
employment contract, it does not constitute a dismissal. This
proximate cause theory, as I understand, holds that the act that
directly or indirectly actuates termination, is the one determining
whether or not there was a dismissal. An act by a third party, as for
instance a decision by the Vice Principal of Wits, terminating
a
service level contract with the labour broker, cannot be a
proximate
cause
,
and therefore cannot result in a dismissal of the employee of the
labour broker. Also, where the client of the labour broker demands
that an employee be dismissed by the labour broker, such cannot be
regarded as proximate cause, whether in time or distance, of
the
actual termination; nor would it be where there is a galvanisation of
a clause in the contract of employment in terms of which
the employee
binds him/herself to an arrangement that entails an automatic
termination thereof. The reason these are not dismissals
is simply
that they are not envisaged in the provisions of
section 186
(1) of
the
Labour Relations Act. According
to this section, a “dismissal”
can only be legally present where it is triggered by the act of the
employer
[30]
or the
employee
[31]
.
[34]
This
question arose in
South
African Post Offices (Pty) Ltd v Mampeule
[32]
.
In this case, the court said the following about the proximate cause
test
[33]
:
‘
[43]
The proximate cause test … is sometimes referred to as the
effective cause test or the actual cause test. It has been
held by
the Courts that the cause that latest in time may not necessarily be
the effective cause of the result. Conversely, an
act that may on the
face of it seem remote to the result may in fact be the effective
cause. When a fishing trawler is lost after
being arrested when the
owners failed to pay the fine to release it, the proximate or
effective cause of the loss is not confiscation
of the trawler but a
failure to pay the fine even though confiscation is nearer in time to
the loss than failure to pay a fine
(Incorporated
General Insurances Ltd v Shooter t/a Shooter’s Fisheries
1987
(1) SA 842
(A) at 862C-863B)’.
‘
[44]
So, too, in this case the fact that operation of the contractual term
may seem closer in time to the termination of the employment
contract
does not make the term of the employment contract the proximate or
effective cause of termination of employment...In
Commercial
Union Assurance Co of South Africa Ltd v Kwazulu Finance and
Investment Corporation and Another
[1995] ZASCA 63
;
1995
(3) SA 751
(A) the Court said:
‘
The
proximate cause is not merely the one which was latest in time, but
the one which is proximate in efficiency.. ‘.
[35]
In the
Mampeule
case, this court had to deal with an the interlocutory application
for
a declaratory order that the
termination of the respondent’s employment, as a direct result
of his removal from the applicant’s
board of directors, does
not constitute dismissal for purposes of section 186(1) (a) of the
Labour Relations Act, 66 of 1995 (“the
LRA”). This
proposition, the court noted, was founded on a term of the
respondent’s contract of employment with the
applicant, read
together with the applicant’s Articles of Association, to the
effect that his removal from the applicant’s
board gives rise
unavoidably to the automatic and simultaneous termination of his
employment contract with the applicant.
[36]
The court held that the purposive interpretation of “dismissal”
will include any act by an employer that directly
or indirectly
results in the termination of a contract of employment. As the
employer had actually ‘terminated the respondent’s
contract of employment by severing the umbilical cord that ties the
respondent’s employment contract to his membership of
the
applicant’s board of trustees’ (
SA Post Office Ltd v
Mampeule supra
793
)
the act of severance constituted a
dismissal. In considering the legitimacy of automatic termination
clauses, the court held that
such clauses are:
‘…
impermissible
in their truncation of the provisions of chapter 8 of the LRA and,
possibly even, the concomitant constitutional right
to fair labour
practices ... Provisions of this sort, militating as they do against
public policy by which statutory rights conferred
on employees are
for the benefit of all employees and not just an individual, are
incapable of consensual validation between parties
to a contract by
way of waiver of the rights so conferred”
[34]
.
[37]
Section 37 of the
Basic
Conditions of Employment Act
[35]
(“the BCEA”), provides that a contract of employment (for
an employee working more than 24 hours for an employer) can
only be
terminable at the instance of a party to that contract, and only on
notice. The LRA requires that, whether or not there
was a notice, the
employer must follow a fair procedure and provide the employee with
valid reasons. This requirement for procedural
and substantive
fairness is a fundamental right in terms of section 185 of the LRA,
and the employee cannot contract it out through
automatic termination
clauses.
[38]
The Labour Appeal Court subsequently reconsidered on appeal the
finding of the court in
SA
Post Office Ltd v Mampeule
[36]
and upheld the finding of the court
a
quo
albeit
on a different basis. In reaching its decision the court relied upon
section 5(2) (b) and 5(4) of the LRA
[37]
.
The court also posited that parties to an employment contract cannot
contract out of the protection against unfair dismissal,
whether or
not they do so by means of an automatic termination clause, as the
LRA is promulgated in the public interest and not
only to cater for
the interests of the individuals concerned
[38]
.
The court was satisfied that the employer had failed to offer a clear
explanation as to why the automatic termination clause had
been
independently triggered. On this score, the court concluded that
there was an overwhelming inference that SAPO’s conduct
was
designed to avoid its obligations under the LRA and that the only
explicable motive appeared to be to circumvent the unfair
dismissal
provisions of the LRA. Section 5 of the LRA therefore trumped the
‘automatic termination’ provision of the
contract.
[39]
There followed after this, a Labour Court decision in
Mahlamu
v CCMA
[39]
in which this court noted the trite statutory injunction ‘that
the LRA must be purposively construed in order to give effect
to the
Constitution (see section 3(b) of the LRA). Accordingly, section 5
(and the other sections of the LRA …) must be
interpreted in
favour of protecting employees against unfair dismissal, as this is
one of the objects of the Constitution’
[40]
.
This injunctive statutory protection against unfair dismissal is a
fundamental component of the constitutional right to fair labour
practices that serves to protect the vulnerable by infusing fairness
into the contractual relationship, and that the LRA must be
purposively construed to give effect to this.
[40]
The court noted as well that, as the automatic termination provisions
in the contract clearly falls within the section 5(2)(b)
injunction,
the key consideration is whether such provisions are permitted by the
LRA and whether it is permissible in certain
circumstances to
contract out of the right not to be unfairly dismissed
[41]
.
[41] The facts in
Mahlamu
in summary are that
Gubevu Security Group
(“the
employer”) had employed the applicant as a security officer
during June 2008. Clause 2.1 of the contract reads:
‘
Employment
period
This employment
contract will commence on 2008/10/23, and will automatically
terminate on:
·
expiry of the contract between the Employer
and the Client alternatively
·
In the event where the Client does not
require the services of the Employee for whatsoever reason’.
[42] During January
and February 2009, the employer’s client (“Bombela”)
advised
Gubevu
that the armed escort services at the Park,
Marlboro Portal and Benrose sites would end, with immediate effect.
On 6 March 2009,
the third respondent wrote the applicant a letter
stating that the Bombela contract had been cancelled and that in the
absence
of alternative positions, the applicant’s services were
no longer required. The letter refers specifically to clause 2.1 (B)
of the contract, intimating that the contract had terminated
automatically on account of the fact that Bombela no longer required
the applicant’s services.
[43]
The arbitrator held that the applicant’s employment contract
specified that the applicant’s employment would terminate
automatically if for any reason the client no longer required the
services of the employee. Since the client had stated that the
applicant’s services were no longer required, the applicant’s
employment had terminated automatically and there was
therefore no
‘dismissal’ for the purposes of s 192 of the LRA. On that
basis, the arbitrator dismissed the applicant’s
claim.
[44]
In my view, it was very commendable that, in ruling on this matter,
the court (per Van Niekerk J) had also spotted that mischievous
contraption according to which, as ‘a rule of thumb employers
can make an agreement varying or waiving their rights under
the Act
but employees cannot do so by means of individual consent’
[42]
,
as the right serves both the interests of other employees and the
public interest. The court concluded that, at 389:
‘
A
contractual device that renders a termination of a contract of
employment to be something other than a dismissal, with the result
that the employee is denied the right to challenge the fairness
thereof in terms of section 188 of the LRA, is precisely the mischief
that section 5 of the Act prohibits. Secondly, a contractual term to
this effect does not fall within the exclusion in section
5(4),
because contracting out of the right not to be unfairly dismissed is
not permitted by the Act’.
[45]
In that regard, the court echoed the position adopted in the
Mampeule
case (
supra)
,
where it was held
[43]
:
‘
[46]
In the result, the automatic termination provisions of article 8.3,
which regulates the termination of the contract of employment
and is
thus incorporated by reference therein, are impermissible in their
truncation of provisions of chapter 8 of the LRA and,
possibly even,
the concomitant constitutional right to fair labour practices
(
cf
Igbo v
Johnson Matthey Chemicals Ltd
[1986] IRLR 215
(CA)
)
.
Provisions of this sort, militating as they do against public policy
by which statutory rights conferred on employees are for
the benefit
of all employees and not just an individual, are incapable of
consensual validation between parties to a contract by
way of waiver
of the rights so conferred’.
[46] Then the court
hastily took this position, lest misunderstood: that this is not to
say that there is a ‘dismissal’
for the purposes of s
186(1) of the LRA in those cases where the end of an agreed fixed
term is defined by the occurrence of a
particular event (see below).
In that regard, the court understood, as universally should be, the
ratio of
Sindane
(
supra
) to be that:
‘…
ordinarily,
there is no dismissal when the agreed and anticipated event
materialises (to use the example in
Sindane
,
the completion of a project or building
project)
, subject to the employee’s
right in terms of s186 (1) (b) to contend that a dismissal has
occurred where the employer fails
or refuses to renew a fixed term
contract and an employee reasonably expected the employer to renew
the contract. In other words,
if parties to an employment contract
agree that the employee will be engaged for a fixed term, the end of
the term being defined
by the happening of a specified event, there
is no conversion of a right not to be unfairly dismissed into a
conditional right’.
[47] And:
‘
Without
wishing to identify all of the events the occurrence of which might
have the effect of unacceptably converting a substantive
right into a
conditional one, it seems to me that these might include, for
example, a defined act of misconduct or incapacity,
or, as in the
present instance,
a decision by a third
party that has the consequence of a termination of employment’
.
(Emphasis supplied)
[48] The particular
event or events that obviate the dismissal in circumstances where
there is a fixed term contract are now succinct
and doubtless, as
provided for in the following provision of the new amendments to the
LRA, with regard to employees earning below
the regulated earnings
threshold:
‘
Section
198B (1) for the purposes of this section, a ‘fixed-term’
contract of employment means a contract of employment
that terminates
on-
(a)
the occurrence of a specified event;
(b)
the completion of a specific task or
project; or
(c)
a fixed date, other than an employee’s
normal or agreed retirement age, subject to sub-section (3)’
[49] So
Sindane
should be understood, in my view. The position should thus still be,
with regard to higher earners, that they cannot commit in
a contract
of employment to an arrangement that defines an ‘
event’
in sub-section
198B (1) (a)
as including the fact that a where
a client terminates its contract with the employee’s employer,
or demands the removal
of the employee from the client’s
workplace, that that should result in the automatic termination of
the employee’s
contract of employment. The reasons for
disallowing such terminations are that the arrangements, in addition
to those already mentioned,
are that they are against public policy
(
Nape
), they seek to truncate the provisions of section 5 of
the LRA and the fundamental right of the employee embodied in s185 of
that
Act (
Mampeule (LC
)
). Also, they are not a
direct act of the employer (or employee) but one galvanised by an
external third party to the contract (
Mahlamu, Mapeule
). Of
necessity, the interpretation of ‘
event’
must be
taken on a narrow, than a wider, approach purposefully to maximise
the protection of job security and other constitutionally
recognised
labour rights and practices.
[50]
I was referred by Mr Snyman to a decision by this court in
Twoline
Trading 413 (Pty) Ltd t/a Skosana Contract Labour v Abram Mongatane
and Others
[44]
,
(per Snyman AJ), where the Court said the following, with specific
reference to such automatic termination provisions in contracts
of
employment:
‘
63.3
…and in the case where the whole service agreement between the
client and the temporary employment service is terminated
or is
completed or otherwise comes to an end, then it is not an issue of
individual employees being dealt with whilst the underlying
service
agreement still continues to exist. In such a case,
the
exercise by a client of a contractual right to terminate the whole
service agreement is an event that could legitimately constitute
an
event substantiating automatic termination of a fixed-term contract
.
It is in my view exactly the same situation as the completion of a
project or contract. In such a case, the termination of the
entire
underlying service agreement between the client and the temporary
employment service would automatically terminate the contract
of
employment of the employees of the temporary employment service along
with it, provided the employment contracts of the employees
make
specific provision for this and properly define this’.(Emphasis
added)
[51] Given the
expressions about the decisions by this court in
Mampeule, Nape
and
Mahlamu
, supra, the view expressed in the
Twoline
Trading
above cannot be correct. A contractual provision that
provides for the automatic termination of the employment contract at
the
behest of a third party or external circumstances beyond the
rights conferred to the employee in our labour laws undermines an
employee’s rights to fair labour practices, is disallowed by
labour market policies. It is contrary to public policy,
unconstitutional
and unenforceable
(Grogan “The Brokers
Dilemma” 2010 Employment Law 6)
. This view is clear from
all the decisions referred to above, and it is apparent from these
that labour-brokers may no longer hide
behind the shield of
commercial contracts to circumvent legislative protections against
unfair dismissal. The freedom to contract
cannot extend itself beyond
the rights conferred in the constitution, as for instance, against
slavery.
[52]
Mr Snyman also referred this court to the decisions in
Union
Government v Vianini Ferro-Concrete Pipes (Pty) Ltd
[45]
;
LAD
Brokers (Pty) Ltd v Mandla
[46]
and
Malandoh
v SA Broadcasting Corporation,
[47]
for the proposition that it is a fundamental principle of our law of
contract that Dube was voluntarily bound by the contract that
she
signed, and that the resulting document (in a contract) will be
accepted as the sole evidence of the terms of the contract.
It has
already been decided by the Labour Appeal Court that a contract of
employment, voluntarily and freely entered, cannot truncate
the
provisions of the LRA
[48]
and
the regulatory framework that supports it execution.
[53]
In the case of
Nape
v INTCS Corporate Solutions (Pty) Ltd
[49]
the employee’s contract was terminated because the employer’s
client no longer required his services. The employer
argued that the
employment contract allowed for automatic termination on these very
grounds and that the termination did not constitute
a dismissal. The
Court disagreed and struck down the employment contract’s
provision as it clashed with and was overruled
by the provisions of
section 189 of the LRA that requires a retrenchment process in
circumstances where employers are unable to
provide work for the
employee.
[54]
The decision in this case was far-reaching and offered a long view to
the direction in law and policy regulation in the labour
market. It
criticised the finding of the court in
Sindane
as
placing ‘far too much emphasis on the rights of parties to
contract out of the Act’
[50]
.
In the
Nape
matter, the employee of a labour-broker, while placed at a client,
was found guilty of sending an offensive e-mail to another employee
using the client’s computer. The court noted that, although the
relationship between the broker and its client was lawful,
it did not
follow that all the terms of the contract which governed that
relationship were also lawful. A contractual provision
that enables a
labour-broker to withdraw an employee placed with a client, the court
held, is contrary to public policy and in
breach of the employee’s
constitutional right to fair labour practices. The court noted that,
in spite of legislative approval
of labour broking services,
labour-brokers and their clients are ‘not at liberty to
structure their contractual relationships
in a way that would
effectively treat employees as commodities to be passed on and traded
at the whim and fancies of the client’
(
Nape
supra
862).
The client of a labour-broker has a legal duty to do nothing to
undermine an employee’s rights to fair labour practices,
unless
the limitation is justified by national legislation
[51]
.
[55]
The court added that, in applying the right not to be unfairly
dismissed, it is not bound by contractual limitations created
by the
parties and may not ‘perpetuate wrongs exercised by private
parties who wield great bargaining power’ (
Nape
supra
864).
The court noted that it is not bound by contractual limitations
created by parties through an agreement that conflicts with
the
fundamental rights of workers. It concluded 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 is against public
policy and unenforceable. The willingness of the
court in Nape to
move beyond its legislative mandate, by implying public-policy
considerations into the contract so as to temper
unfair contractual
and legislative provisions, is to be applauded
[52]
.
[56] It is noted, in
passing, that those policy changes propounded in judicial decisions
referred to above, have now come to pass,
and the contractions by
which unscrupulous labour brokers and their clients could use
contracts to shield themselves from obligations
to protect the
security of employment have been jettisoned. The New
Labour
Relations Amendment Act (Act No 6 of 2014)
stipulates new
provisions for the regulation of non-standard employment, and
effectively protects employees who would find themselves
in the same
situation as the applicant in this matter, henceforth.
[57] The new
sub-section 198 (4C)
of the LRA, as amended,
provides as follows:
‘
An
employee may not be employed by a temporary employment service on
terms and conditions of employment which are not permitted
by this
Act, any employment law, sectoral determination or collective
agreement concluded in a bargaining council applicable to
a client to
whom the employee renders services’.
[58]
The Act also provides
[53]
that
in any proceedings brought by an employee, the Labour Court or an
arbitrator may determine whether a provision in an employment
contract or a contract between the temporary employment service and a
client complies with subsection 4C and make an appropriate
order or
award.
[59] It can no
longer be debatable that, following this legislative directive,
labour-brokers may no longer hide behind the shield
of commercial
contracts to circumvent legislative protections against unfair
dismissal. A contractual provision that provides for
the automatic
termination of the employment contract and undermines the employee’s
rights to fair labour practices, or that
clads slavery with a mink
coat, is now prohibited and statutorily invalid.
[60] In the light of
the view above, I find that Dube was indeed dismissed by the
respondent and that her dismissal would be based
on the respondent’s
operational requirements. Based on the evidence, the operational
conditions were created by the cancellation
of the Wits contract.
When the respondent considered the alternatives, and an opportunity
offered to her, Dube never applied for
a position under the new Wits
contract and instead sought and pursued a disability benefit. I find
that Dube could have avoided
her own dismissal by applying for a
position as supervisor on the new Wits contract. In this regard, the
undisputed evidence of
Croukamp was that if Dube had applied for a
position, Croukamp would have given her a position. In fact, Croukamp
pursued Dube
to enquire why Dube had not applied for a position, and
it was then that Dube expressed her wish to seek a disability
benefit.
Because of these critical considerations, the issue of
procedural fairness is actually of no consequence, as the respondent
did
not want to dismiss Dube and it was within her own power to avoid
her dismissal.
[61]
In
Fidelity
Springbok Security Services (Pty) Ltd v SATAWU obo Chabalala and 7
Others
[54]
the Court said the following, specifically referring to an offer of
alternative employment in the context of an allegation of unfair
retrenchment:
‘
....
the dismissed employees did not accept this offer. If they had
accepted it, the dismissed employees would not have been dismissed
and there would have been no claim for unfair dismissal… Even
if there may have been unfairness in the way in which the
appellant
handled the consultation process or any aspect of the matter prior to
that offer, such unfairness would not have been
in issue if they
accepted the job offer’.
[62]
The factors in determination of the entitlement to severance pay were
dealt with in
Freshmark
(Pty) Ltd v Commission for Conciliation, Mediation and Arbitration
and Others
[55]
.
The Court said the following, which ratio can also be applied in this
matter:
‘…
.
an employee who unreasonably refuses an offer of alternative
employment is not without fault. He has himself to blame if he
subsequently
finds himself without employment and, therefore, does
not deserve to be treated on the same basis as the employee who finds
himself
without employment due to no fault on his part ….
Where the employer offers to continue to employ the employee -
whether
in the same position but on different terms or on the same
terms but in a different position or in the same position and on the
same terms but in a different place, that is still alternative
employment. It is an offer of an alternative contract of employment’.
[63]
The decisions in
Entertainment
Catering Commercial and Allied Workers Union of SA and Others v
Shoprite Checkers t/a OK Krugersdorp
[56]
;
Chemical
Workers Industrial Union and Others v Latex Surgical Products (Pty)
Ltd
[57]
;
and
Schatz
v Elliott International (Pty) Ltd and Anothe
r
[58]
all supports a view that an employee offered a viable alternative to
a dismissal, but refuses to take it, cannot complain that
the
termination of his/her employment for operational reasons was unfair.
Dube could have applied for a position on the new Wits
contract; she
was specifically asked to, and should not have sought a disability
benefit, in order for any claim of unfair dismissal
by her to have
any substance. Without having done so, it is not without effort to
find any reason to believe that her dismissal
was unfair.
[64] There is ample
evidence showing that the respondent bent backwardly in this case to
ensure that as many employees as possible
would get taken on the new
contract. Dube was consulted on numerous occasions, and when she
indicated that she would rather pursue
the disability route, the
respondent still assisted her in that regard. I am satisfied that the
respondent acted prudently and
fairly in the circumstances.
[65]
In considering the facts already set out above, as well as the
absence of any evidence as to mitigation of damages and the
past and
current employment status of the applicant, it is my view that Dube
is not entitled to any compensation for the reason
that she declined
what I considered reasonable alternative employment
[59]
.
[66] I accordingly
make the following order:
1.
There was a dismissal.
2.
The dismissal was for operational
requirements.
3.
The dismissal of the applicant is not
procedurally unfair.
4.
There is no order as to costs.
Mosime AJ
Acting
Judge of the Labour Court of South Africa
APPEARANCES:
For
the Applicant: Mr Vusi Shongwe, Trade Union Official of SATAWU
For
the Third Respondent: Mr Sean Snyman
Instructed
by: Snyman Attorneys
[1]
Clause
2.1 of Dube’s Contract of Employment (COE)
[2]
Clause
2.2 of Dube’s COE
[3]
See
pages 18, 19 and 20 of the court bundle.
[4]
See
the Pre-trial minute (clause 3.7) in the Pleadings Bundle, page 29.
[5]
See
Clause 6.2, page 21 of the Pleadings Bundle.
[6]
See
page 21 of the Pleadings Bundle.
[7]
See
page 6 of the Pleadings Bundle, Para 15 and 16 of the Statement of
Case.
[8]
See
page 6 of the Pleadings Bundle.
[9]
At
paragraph 8 of the Statement of Case, under the heading
Legal
Issues
,
SATAWU
submits: ‘
The
Respondent’s dismissal of the employees had no reason as the
Respondent indicated that its contract with Wits had been
terminated, but this is not the case, as it employed other
supervisors at Wits’.
[10]
Clause
5 of the Pre-Trial Minute in the Pleadings Bundle, page 32.
[11]
Clause
4.6 and 4.7 of the Pre-Trial Minute in the Pleadings Bundle, page
31; and Clause 5.3, page 32.
[12]
Pleadings
Bundle (Pre-trial minute) page 29 para 3.7
[13]
Court’s
Bundle page 21; Pleadings Bundle (Pre-trial minute) page 30 para
3.10; page 4 (statement of case) paras 11 –
12
[14]
Pleadings
Bundle (Pre-trial minute) page 30 para 3.11
[15]
See
Court’s Bundle page 29 – 36
[16]
See
Pleadings Bundle, page 23 – 24
for
examples of the notices of 18 December 2009 sent to De Lange and
Golele.
[17]
See
page 25 of the Pleadings Bundle.
[18]
Court’s
Bundle page 25.
[19]
Court’s
Bundle page 37.
[20]
Pleadings
Bundle (pre-trial minute) page 32 para 5.2.
[21]
Pleadings
Bundle (pre-trial minute) page 32 para 5.3.
[22]
Pleadings
Bundle (pre-trial minute) page 32 para 5.4.
[23]
At
paragraph 2.14, page 11 of the Respondent’s Heads.
[24]
A
useful insight into this topic will be found in an article by Tamara
Cohen,
in
the
ELRC
Labour Bulletin
,
July 2013.
(Published
through Obiter, Faculty of Law,
Nelson Mandela Metropolitan University .
[25]
(2002)
23
ILJ
520 (LC
[26]
[2003]
10 BLLR 1027 (LC)
[27]
(2010)
31
ILJ
733 (LC)
[28]
Ibid
,
at para16.
[29]
The
court pointed out, however, ‘that the LRA does provide a
remedy to an employee who have entered into fixed term employment
contracts as referred to in section 186(1) (b) of the LRA in terms
whereof an employee, who reasonably expected the employer
to renew a
fixed term contract of employment on the same or similar terms, but
the employer offered to renew it on less favourable
terms, or did
not renew it, can claim a dismissal occasioned thereby. In such a
case the act of the employer which is the failure
or refusal to
renew the fixed term employment contract on the same or similar
terms, or to renew it at all is the proximate cause
of the
dismissal. Furthermore, an employee who has entered into a fixed
term employment contract is not without remedy in terms
of the LRA
or the common law, if the employer unfairly or unlawfully terminates
the employment contract of the employee for reasons
related to
misconduct, incapacity or operational reasons, prior to the natural
expiry of the fixed term employment contract’
at paragraph
[16].
[30]
Subsection
(1) (a), (c) and (d).
[31]
Subsection
(1) (b), (e) and (f).
[32]
(2009
8 BLLR 792
(LC)
[33]
At
paragraph [43] and [44].
[34]
At
page 803.
[35]
Act
75 of 1997.
[36]
(2010)
10 BLLR 1052 (LAC)
[37]
Section
5(2) provides that ‘no person may prevent an employee from
exercising any right conferred by this Act’. Section
5(4)
provides further that “[a] provision in any contract, whether
entered into before or after the commencement of this
Act, that
directly or indirectly contradicts or limits any provision of
section 4, or this section, is invalid, unless the contractual
provision is permitted by this Act’
.
The court noted that the
onus
rested
on the employer in such circumstances to establish that the
automatic termination clause prevailed over the relevant provisions
in the LRA.
[38]
See
also
Chillibush
v Johnston
[2010]
6 BLLR 607
(LC
)
in which the court held that it is not permissible in the labour-law
context to allow an employer to negotiate contractually
the terms of
a dismissal in advance.
[39]
[2011]
4 BLLR 381 (LC)
[40]
At
paragraph [13].
[41]
In
answering this question the court relied upon the finding of the UK
Court of Appeal in
Igbo
v Johnson Mathery Chemicals Ltd
1986 IRLR 215
(CA)
.
[42]
Mahlamu
388
referring to Brassey,
Commentary
on the
Labour Relations Act
>
RS
2 of 2006 A9-6
[43]
At
paragraph [46].
[44]
[2014]
JOL 31668
(LC) at para 63.
[45]
1941
AD 43
at 47.
[46]
(2001)
22
ILJ
1813 (LAC) at para 15.
[47]
(1997)
18
ILJ
544 (LC) at 547H-I.
[48]
Mampeule
(LAC), supra.
[49]
[2010]
8 BLLR 852
(LC) at 868.
[50]
At
paragraph [92], Boda AJ stated, with reference to
Sindane
(supra
):
‘
The
respondent claimed that his services had terminated according to the
terms of his fixed-term contract, which provided that
it would last
only while the client required his services, and denied that the
applicant had been dismissed. The Court agreed
with this submission.
Although the facts of this case are distinguishable from the present
case, because dismissal is not what
is in issue, it seems to me that
this approach gives far too much emphasis to the rights of parties
to contract out of the Act.
It seems to me that this approach
violates section 5(2) of the Act because it prevented the employee
from exercising the rights
under section 189 of the Act’.
[51]
See
Tamara
Cohen,
in
the
ELRC
Labour Bulletin
,
July 2013 (published through Obiter, Faculty of Law, University of
KwaZulu-Natal).
[52]
Tamara
Cohen
supra
.
[53]
In
subsection (4E).
[54]
Unreported
LAC case no JA 14 / 2004 dated 28 February 2006 ; see also
Arthur
Kaplan Jewellers (Pty) Ltd v Mariet Van Deventer
Unreported LAC case no JA 54 / 03 dated 21 February 2006 at par 11
[55]
(2003)
24
ILJ
373 (LAC) at para 24 – 25
[56]
(2000)
21
ILJ
1347
(LC) at para 28
[57]
(2006)
27
ILJ
292
(LAC) at para 69
[58]
(2008)
29
ILJ
2286 (LC)
[59]
Item
11 of the
Code
of Good Practice: Operational Requirements
provides: ‘If an employee either accepted or unreasonably
refused to accept an offer of alternative employment, the employees
statutory right to severance pay is forfeited’