About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Johannesburg Labour Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: Johannesburg Labour Court, Johannesburg
>>
2015
>>
[2015] ZALCJHB 162
|
|
National Union of Metalworkers of South Africa obo Mdluli and Others v Custom Harness Manufacturer (J918/2005) [2015] ZALCJHB 162 (29 May 2015)
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Not Reportable
Case no: J918/2008
NATIONAL UNION OF
METALWORKERS OF SOUTH AFRICA obo J MDLULI AND 8 OTHERS
Applicants
and
CUSTOM HARNESS
MANUFACTURER
Respondent
Heard:
28 May 2015
Delivered:
29 May 2015
JUDGMENT
TLHOTLHALEMAJE,
AJ
Introduction:
[1]
The
dispute brought before the court by way of a statement of claim
pertains to whether the dismissal of the individual applicants
was
automatically unfair as contemplated in section 187 (1) (g) of the
Labour Relations Act
[1]
. The
individual applicants seek retrospective reinstatement, or in the
alternative, compensation.
[2]
At trial, the applicants had led the
evidence of two witnesses, after which Adv Beaton SC on behalf of the
respondent had made an
application for absolution from the instance.
Background and common
cause facts:
[3]
The applicants were initially employed by
an entity known as Allprod (Pty) Ltd (“Allprod”) until
their dismissal on
31 March 2007. Upon their dismissals they were
paid a severance package calculated at one week per year of service.
A dispute pertaining
to unfair dismissal on account of operational
requirements was referred to MIBCO in April 2007 and could not be
resolve at a conciliation
hearing held on 23 May 2007.
[4]
The general nature of the individual
applicants’ work was to make an electrical wire connections and
harnesses that would
be used in the auto electrical systems of motor
vehicles. It was further common cause that the general sequence of
their work was
to first cut the wires, crimp and roll them, then
thereafter process them into harnesses that would then be injected
with silicone.
At the end of that process the work will be quality
assured.
[5]
In their initial statement of claim, the
applicants had disputed the procedural and substantive fairness of
the retrenchments. On
27 November 2013, they had filed an amended
statement of case contending that their dismissals were automatically
unfair, on the
basis that they were dismissed as a result of a
transfer of the business of Allprod to the new employer, Custom
Harness Manufacturer
CC
[6]
In the parties signed pre-trial minutes,
the applicants alleged that;
6.1
The business of Allprod (Pty) Ltd was transferred as a going concern
to the respondent;
6.2
They were offered a fixed term contract on 30 March 2007 by a Mr.
Bradish their manager
at Allprod, which contract was for a fixed
period of three months.
6.3
The work that was performed by the applicants at Allprod is still
being performed by other
employees of the respondent that have been
employed or transferred in the applicants’ stead;
6.4
The work that was performed by the applicants is still being
performed by their replacements
at the new site of the factory in
Silverton;
6.5
Those employees of Allprod that agreed to sign the fixed terms
contract are still employed
by Custom Agencies and are still carrying
out the same and/or similar duties that they carried out while
employed by Allprod.
6.6
The senior managers that the applicants had daily contact with while
employed at Allprod,
viz, Marius Van Wyk, Simon Bradish and Dirk
Kunz, if not actual directors of the same respondent were employed by
the Allprod in
the same or similar capacities.
The applicable legal
principles in respect of applications for absolution from the
instance:
[7] The jurisdiction of
this Court to grant absolution in appropriate circumstances is
derived from the provisions of section 151(2)
of the Labour Relations
Act which provides that;
‘
The
Labour Court is a superior court that has authority, inherent power
and standing, in relation to matters under its jurisdiction,
equal to
that which a court of a provincial division of the Supreme Court has
in relation to matters under its jurisdiction’
.
[8]
The test to be applied by the Court in considering such applications
is whether there is sufficient evidence upon which a reasonable
person could find for the applicant or, as it has also been
expressed, the question is whether there is such evidence, assuming
it to be true, upon which a reasonable Court might, not should, give
judgment against the respondent
[2]
.
In
Minister
of Safety and Security v Madisha and Others
[3]
this Court per Basson J summarised the principles within the context
of civil law as follows;
‘
It
is trite in civil law that a (civil) court may grant absolution from
the instance in appropriate circumstances. Very briefly,
this means
that evidence is insufficient for a finding to be made against the
defendant (in a civil trial). Absolution from the
instance may thus
be granted at the close of the plaintiff’s case when it appears
that there is no evidence to support the
plaintiff’s claim or
if there is insufficient evidence upon which a court, acting
reasonably might find for the plaintiff.
The court is then entitled
to ‘absolve the defendant from the instance’
.
The effect of such a decision is to
bring to an end the proceedings. The test to be applied in deciding
whether or not absolution
should be granted has been set out by the
Appellate Division in Claude Neon Lights (SA) v Daniel
1976 4 SA 403
(A):
‘…
[W]hen
absolution from the instance is sought at the close of the
plaintiff’s case, the test to be applied is not whether
the
evidence led by the plaintiff establishes what would finally be
required to be established, but whether there is evidence upon
which
a Court, applying its mind reasonably to such evidence, could or
might (not should, nor ought to) find for the plaintiff’.
Automatically
unfair dismissals:
[9]
In terms of Section 187(1), a dismissal is automatically unfair if
the employer, in dismissing the employee, acts contrary to
section 5,
or if the reason for the dismissal is-
‘
(g)
a transfer, or a reason related to a transfer, contemplated in
section 197 or 197A’
[10]
Central
to the question whether the individual applicants’ dismissal
constituted an automatically unfair dismissal because
they were not
transferred to Custom Agencies when Allprod was allegedly
transferred, is whether the business of the latter was
transferred as
a going concern for the purposes of section 197 of the LRA. The
primary purpose of section 197 is to safeguard the
rights of
employees when there is a transfer of business as a going concern and
the business changes hands
[4]
.
The pertinent subsections of Section 197 read as follows:
‘
(1)
In this section and in section 197A
(a)
‘business’ includes the whole or a part of any business,
trade, undertaking
or service; and
(b)
‘transfer’ means the transfer of a business by one
employer (‘the old
employer’) to another employer (‘the
new employer’) as a going concern.
(2)
If a transfer of a business takes place, unless otherwise agreed in
terms of subsection
(6) –
(a)
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;
(b)
all the rights and obligations between
the old employer and an employee at the time of the transfer
continue
in force as if they had been rights and obligations between the new
employer and the employee;
[11]
The question that arises at this point therefore, is whether the
applicants have led sufficient evidence upon which this Court,
applying its mind reasonably to that evidence, could or might find
for them in the case that they have presented.
In
order to establish automatically unfair dismissal, the applicants
first have to establish that a dismissal did take place, and
once a
dismissal is established, the question is whether it was
automatically unfair.
[12] In this case, it was
common cause that the individual applicants’ services were
terminated by Allprod. As to whether
that dismissal is automatically
unfair as contemplated in section 187 (1) (g) on account of the
operation of section 197 is determined
by asking the question whether
there (a) a transfer; (b) of a business (or part of a business, or a
service); and (c) as a going
concern.
[13]
The test for determining whether a business was transferred as a
going concern was laid down in
Nehawu
vs University of Cape Town and Others
,
[5]
where the Constitutional Court emphasised that:
“
In
deciding whether a business has been transferred as a going concern
regard must be had to the substance and not the form of the
transaction. A number of factors will be relevant to the
question whether a transfer of a business as a going concern has
occurred, such as the transfer or otherwise of assets both tangible
and intangible, whether the workers are taken over by the new
employer, whether customers are and whether or not the same business
is being carried on by the new employer. What must be
stressed
is that this list of factors is not exhaustive and that none of them
is decisive individually”
[6]
The
evidence:
[14]
Ms Josephine Mdluli’s testimony on behalf of the applicants was
as follows;
14.1
She was initially employed by Allprod with effect from October 1999.
Her position was that of an Assembler,
which essentially entailed
cutting, and assembling of wiring (harnesses), and connecting these
to connectors.
14.2
Custom Agencies had moved to the premises of Allprod on a date she
could not recall, and it was also involved
in the business of
connecting wires even though the harnesses it manufactured were
different from those of Allprod. She testified
that Custom Agencies’
production process was similar to that of Allprod as it involved the
cutting, crimping and rolling
of wires. Custom Agencies’ also
used the same or similar machines as operated by Allprod.
14.3
The management team of Allprod included Marius Van Wyk, Simon Bradish
and Dirk Kunz.
14.4 On
28 February 2007, Bradish had issued the employees with notices from
Allprod informing them that it was
going to close down on 31 March
2007.
14.5
Towards the end of March 2007, the employees were individually handed
copies of fixed term contracts which
they were required to sign. The
contracts were for a fixed period of three months, and were to be
entered into with Custom Agencies.
The employees were further
informed that if they did not sign the contracts, they would be
without employment and would not be
permitted to enter the premises.
14.6
She and other employees did not sign the contract and were prohibited
from reporting for duty.
14.7
The cause of their dismissal was that they had refused to sign the
fixed term contract with Custom Agencies.
14.8
Under cross-examination, Mdluli could not state who Allprod’s
biggest customers were. She however testified
that Netstar was one of
the clients for whom Allprod had assembled wires between August 2006
and March 2007.
14.9
Mdluli further under cross-examination testified that she did not
know what the end products produced by
Allprod were, and further
contended that she did not know what its relationship was with other
companies. She conceded that the
employees were informed that Allprod
was going to close down as it was ‘short of money’, but
however denied that they
were ever told that its contract with
Netstar had been terminated.
14.10 Mdluli could
not respond when it was put to her that Custom Agencies also supplied
wiring to refrigeration industries
and also made tow bars. She
however conceded that she in particular had nothing to do with the
manufacturing of harnesses for Quantum
vehicles.
14.11 Mdluli
further denied when it was put to her that when told to sign the
fixed term contracts, they were also told that
the periods of the
contracts may be assessed. She however conceded the other employees
who had signed those contracts had continued
their employment with
Custom Agencies beyond three months, and that had she done so also,
she would still have been employed by
Custom Agencies.
14.12 She conceded
when it was put to her that Allprod produced automotive tracking
devices, whilst Custom Agencies did not
do so in 2007. Under
re-examination however, she testified that the harnesses she
assembled were not those as assembled by Custom
Agencies even though
the employees of the two entities helped each other.
[15]
Ms. Salome Mokoena’s testimony on behalf of the applicants was
as follows;
15.1
She was also employed by Allprod from 1995 and was responsible for
cutting of wires with the use of a machine.
She denied that in
January 2007 Custom Agencies was operating from the premises of
Allprod.
15.2
She was one of the employees that had signed the fixed term contract
with Custom Agencies and had continued
her employment which was
subsequently turned permanent until April 2015.
15.3
During her employment under Custom Agencies, she had performed the
same functions as under Allprod, using
the same machine. Marius Van
Wyk, Bradish, “Lockie” and Justice Lamola had continued
to be the managers under Customer
Agencies for a period of one year.
Evaluation:
[16]
A consideration
in deciding applications for
absolution application is that of the question of onus. In this case,
the applicant chose to commence
with their case, and what this
therefore implies is that they must establish a
prima
facie
case that the dismissal as
established, fell within the purview of section 187 (1) (g) of the
LRA.
[17]
In contending that absolution should be granted, Adv Beaton SC on
behalf of the respondent had submitted that the applicants
had not
prima facie
, demonstrated that there was a transfer of the
same business as a going concern in the light of the differences in
products produced
and sold; that there was no evidence to
substantiate the allegation that the two entities produced the same
product and serviced
the same clients.
[18]
It was further submitted on behalf of the respondent that the only
evidence before the court in regards to the reason for the
dismissal
was that the employees had refused to sign the fixed term contract
with Custom Agencies, having been told that Allprod
was to closed
down for financial reasons, and thus far, nothing was mentioned by
either of the two witnesses called that the dismissals
were due to a
transfer of a business.
[19]
On behalf of the applicants, Mr. Cartwright submitted that a
prima
facie
case was laid out requiring a response from the respondent.
In this regard, it was submitted that Mdluli had testified to
different
codes being used for harnesses which was the end product of
the production process of the two entities. It was further submitted
that after Allprod closed down, the employees once transferred to
Custom Agencies continued to perform the same functions as before,
utilising the same machines; serviced the same customers were under
the same directors and management.
[20]
It was conceded that before the transfer, Custom Agencies performed
different tasks, but that on the objective facts presented,
there was
indeed a transfer as contemplated in section 197 of the LRA. Mr
Cartwright further submitted that the employees lost
their jobs as a
result of Custom Agencies attempting to avoid the operation of the
provisions of the LRA and by offering them fixed
term contracts. To
this end, it was contended that there was a case laid out for a
finding to be made on a balance of probabilities
that there was
indeed a transfer of the business, and that the dismissals were
therefore automatically unfair.
[21]
In
Frannann
Services (Pty) Limited v Simba (Pty) Limited and Anothe
r
[7]
this
Court, (Per Van Niekerk J), quoting with approval the European Court
of Justice, held that;
‘
The
general rule remains that in
Süzen
v Zehnacker Gebäuderenigung GmbH Krankenhausservice
[1997] IRLR 255
(ECJ) where the court held that the mere fact that
the service of the old and new awardees of a contract is similar does
not support
the conclusion that an economic entity has been
transferred – “an entity cannot be reduced to the
activity entrusted
to it’.
[8]
[22]
In line with the above principles, the difficulties encountered in
this matter are as follows;
22.1
Allprod and Custom Agencies utilised the same premises. Despite there
being some form of relationship between
the two entities, Mdluli
could not state who was Allprod’s biggest customers were; did
not know what the end products of
Allprod were and did not know what
its relationship with other companies was.
22.2
Mdluli conceded that the employees were informed that Allprod was
going to close down as it was ‘short
of money’. She could
however not respond to various material propositions put to her that
distinguished the operations of
the two entities. She had
nevertheless conceded when it was put to her that Allprod produced
automotive tracking devices, whilst
Custom Agencies did not do so in
2007.
22.3
Mokoena’s evidence was equally unhelpful as she could not in
clear terms tell the difference between
the different wirings she was
required to produce as compared to what Custom Agencies produced.
Ultimately however, Mdluli’s
evidence was that the employees
were dismissed for not signing the fixed term contract with Custom
Agencies.
22.4
The reliance by the applicants on the Certificate issued by the
Registrar of Companies regarding Allprod
dated 10 October 2013
[9]
does not take their case any further. The certificate only indicates
that Allprod’s deregistration was final, and that the
management team identified by the witnesses as being part of both
Allprod and Custom Agencies, viz Kunz and Bradish are cited in
the
certificate as directors of Allprod.
[23]
In the light of the above difficulties, and having had regard to the
substance of the alleged transfer, it is further taken
into account
that the evidence in regard to Allprod’s ex-employees having
been taken over, and utilising the same machines
as they had used
whilst employed by All prod remains uncontested. Furthermore, the
mere fact that the employees now with Custom
Agencies perform the
same functions as before with Allprod does not support the conclusion
that there was a transfer. The evidence
tendered thus far was also
weak in regards to who the customers of the two entities are or were,
and even if the same business
was being carried on by Custom
Agencies, it is not from the evidence, clear as to what the end
product of that service is.
[24]
Flowing from the concession that before the alleged transfer, Custom
Agencies had performed different functions, even though
the two
entities’ employees helped each other, a further difficulty
arises from the fact that what appears to have taken
place in this
case was a closure of Allprod as a result of operational
requirements. Whether there were proper consultations and
whether
there were substantive reasons for the closure is a matter which is
not being pursued or before the Court. Be that as it
may, just prior
to the closure, the employees were offered fixed term contracts with
Custom Agencies which some had accepted whilst
the applicants in this
case had not. Despite the two witnesses denying that they were
informed that the contracts would be assessed,
it was nevertheless
common cause that those employees who had accepted the contracts
ultimately were permanently employed. On the
evidence led thus far,
the applicants appeared to have been dismissed for no reason other
than that they had refused to accept
the fixed term contract, and
there is no basis for a conclusion to be reached,
albeit
on a
prima facie
basis, that indeed there was a transfer of
Allprod’s business as a going concern as contemplated in
section 197 of the LRA.
[25]
The principles applicable to automatically unfair dismissals as
contemplated in section 187 (1) of the LRA were set out in
In
SACWU
and Others v Afrox Ltd
[10]
where
the Labour Appeal Court held that:
‘
The enquiry into
the reason for the dismissal is an objective one, where the
employer’s motive for the dismissal will merely
be one of a
number of factors to be considered……..I would
respectfully venture to suggest that the most practical
way of
approaching the issue would be to determine what the most probable
inference is that may be drawn from the established facts
as a cause
of the dismissal, in much the same the most probable or plausible
inference is drawn from circumstantial evidence in
civil cases….’
[26]
In line with the principles set out in
Afrox
,
the Labour Appeal Court again in
Kroukam
v SA Airlink (Pty) Ltd
[11]
,
held
if the ‘
dominant
or principal
reason or reasons
’
for
the dismissal was a reason listed in section 187(1), the dismissal
would be automatically unfair, and further added that;
‘…
.
even
if the reasons that I have found to constitute the dominant or
principal reason or reasons for the dismissal did not constitute
the
principal or dominant reasons for the appellant's dismissal, I would
still find that the dismissal was automatically unfair
if such
reasons nevertheless played a significant role in the decision
to dismiss the appellant. In my view for policy considerations,
where
such reasons have influenced the decision to dismiss to a significant
degree, the dismissal should be dealt with as an automatically
unfair
dismissal in order to deter as many employers as possible from
entertaining such illegitimate matters as, for example, racism
and
the exercise of rights conferred by the Act as factors in their
decisions to dismiss employees.”
[12]
[27] In summary, on the
facts disclosed by the evidence as presented by the two witnesses,
and as further admitted in the pleadings
and the pre-trial minute,
the legal issues determine the matter against the applicants. The
most probable inference to be drawn
from the established facts and
the evidence as presented, is that the cause of the dismissal, if not
the most
proximate
or
real
cause, is the fact that the
individual applicants had declined an offer of fixed term employment
with Custom Services as an alternative
to retrenchments.
[28] In the light of the
above considerations and conclusions, it is found that the applicants
have not presented sufficient evidence
to support their claim of
automatically unfair dismissal, upon which this Court, acting
reasonably might find for them. In these
circumstances, the
respondent is absolved from the instance.
Order:
i.
The application for absolution from the
instance is granted
ii.
There is no order as to costs.
__________________
Tlhotlhalemaje, AJ
Acting
Judge of the Labour Court of South Africa
APPEARANCES:
On
behalf of the Applicants:
Mr. D Cartwright of D Cartwright Attorneys
On
behalf of the Respondent:
Adv RG Beaton SC
Instructed
by:
De Villiers & Du Plessis Attorneys
[1]
66
of 1995 as amended
[2]
See
Zeffertt
et al: The South African Law of Evidence
at page 164 – 165 and the authorities referred to.
[3]
(2009)
30 ILJ 591 (LC) at para 19
.
[4]
Horn
and Others v LA Health Medical Scheme and Another
[2015] ZACC 13
at para
[59]
[5]
2003
(3) SA 1
(CC) See also
City
Power (Pty) Ltd v Grinpal Energy Management Services (Pty) Ltd and
Others
(CCT133/14)
[2015] ZACC 8
(20 April 2015) at para [36]
[6]
At para 56
[7]
(2013) 24 ILJ 897 (LC) at par 7
[8]
Frannann
,
supra
,
at para 12.
[9]
Page 4 of the applicants’ bundle
[10]
(1999) 20 ILJ 1718 (LAC) at para 32
[11]
2005) 26 ILJ 2153 (LAC) at para [96]
[12]
At
para [103]