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[2015] ZALCPE 25
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Peter Cooper Estates v Van Eeden and Others (PR40/2013) [2015] ZALCPE 25 (24 April 2015)
REPUBLIC
OF SOUTH AFRICA
THE
LABOUR COURT OF SOUTH AFRICA, PORT ELIZABETH
JUDGMENT
Case
No: Pr 40/2013
Not
reportable
Of
interest to other judges
In the matter between:
PETER COOPER
ESTATES
............................................................................................
APPLICANT
and
KATHLEEN MURIEL
VAN
EEDEN
..............................................................
FIRST
RESPONDENT
PATRICK
FLOOD
........................................................................................
SECOND
RESPONDENT
THE COMMISSION
FOR CONCILIATION,
MEDIATION
AND
ARBITRATION
..............................................................
THIRD
RESPONDENT
Heard
:
23 April 2015
Delivered
:
24 April 2015
JUDGMENT
VAN
NIEKERK J
[1]
This is an application to review and set aside an arbitration award
handed down by the second respondent, to whom I shall refer
as ‘the
commissioner’. In his award, the commissioner held that the
first respondent, the applicant in the arbitration
proceedings, had
been unfairly dismissed. She was awarded the equivalent of three
months’ remuneration, some R37 000, in
compensation.
[2]
The facts giving rise to the dispute between the parties are recorded
in the commissioner’s award, and I do not intend
to repeat them
for present purposes. In essence, the applicant contended that the
relationship between it and the first respondent
fell to be regulated
by the terms of what is referred to as an ‘independent
contract’ signed on 29 May 2009. In terms
of that contract, the
first respondent was appointed to act as an estate agent in return
for commissions paid on the sale of immovable
property. The contract
was terminated on 18 December 2012, on 48 hours’ notice, after
the applicant formed the view that
the first respondent was not
meeting the required performance standards.
[3]
The first respondent subsequently referred a dispute to the third
respondent, the CCMA, in which she contended that the relationship
between her and the applicant was one of employment, and that she had
been unfairly dismissed.
[4]
Arbitration proceedings were conducted on 24 April 2013 and
culminated in the award under review. In the award, after an
evaluation
of the evidence, the commissioner came to the conclusion
that the contract that existed between the applicant and the first
respondent
was one of employment, and determined further that the
applicant had been both procedurally and substantively unfairly
dismissed.
He awarded the first respondent compensation, as indicated
above.
[5]
The primary ground for review is that the commissioner erroneously
found that the first respondent was an employee, where in
truth, she
was an independent contractor. In particular, it is submitted that
the commissioner misdirected himself by failing to
attach any or
sufficient weight to the wording of the contract between the
applicant and the first respondent and by failing to
apply relevant
legal principles, and in particular, those which attach material
weight to the terms of the contract. Further, the
applicant contends
that the commissioner’s finding in relation to the unfairness
of the first respondent’s dismissal
was made in circumstances
where the commissioner exceeded his powers since his function was
limited to the decision of the preliminary
point as to the first
respondent status. Finally, it is contended that the award of
compensation was unreasonable.
[6]
It is now well-established that in respect of the first ground for
review raised by the applicant, this court does not undertake
a
reasonableness review (which ordinarily applies to awards made under
section 145 of the LRA); rather, the correctness or otherwise
of the
commissioner’s award is at issue. The court is required to
conduct what amounts to an enquiry
de novo
of the existence or
otherwise of an employment relationship. Insofar as the remaining
grounds for review are concerned, the reasonableness
test is to be
applied, i.e. the court must determine whether the decision made by
the commissioner falls outside of the band of
decisions to which
reasonable decision-makers could come on the available material.
[7]
Turning first to the relationship between the applicant and the first
respondent, the legal principles to be applied are well
established.
The court is required to determine whether or not the first
respondent was an employee by reference to the definition
of
‘employee’ in section 1 of the LRA rather than the terms
of any agreement between the parties. In other words, while
the terms
of any contract between the parties are not irrelevant, they are not
determinative of the nature of the relationship.
[8]
I did not understand Mr. Bouwer, who appeared for the
applicant, to dispute this proposition; rather, he
emphasised
the judgment of the Supreme Court of Appeal in
Niselow
v Liberty Life Association of Africa Ltd
(1998) 19
ILJ
752
(SCA), where the court dealt with a matter that concerned the
contract of an insurance sales agent who was contracted to canvass
full-time and exclusively for the respondent for applications for
contracts of insurance. The court held:
It
was common cause between the parties that an independent contractor
was not an employee as envisaged by the Act. An independent
contractor undertakes the performance of certain specified work or
the production of a certain specified result. An employee at
common
law, on the other hand, undertakes to render personal services to an
employer. In the former case it is the product of the
result of the
labour which is the object of the contract and in the latter case the
labour as such is the object (see
Smit v Workman’s
Compensation Commissioner
1979 (1) SA 51
(A) at 61B). Put
differently, ‘an employee is a person who makes over his or her
productive capacity to produce to
another; an independent contractor,
by contrast, is a person whose commitment is to the production of a
given result by his or
her labour (per Brassey ‘
The Nature
of Employment’
) (1990) 11 ILJ 889 at 899.”
In
applying this principle to the facts of the case and finding that the
appellant was not an employee but an independent contractor
conducting his own business, the SCA held that:
The
undertaking by the appellant, on a full time basis and exclusively
for respondent, to canvass for applications for contracts
of
insurance, may be more common in a contract of service than in a
contract appointing an independent contractor but is not inconsistent
with the concept of an independent contractor. The same applies to
some of the other provisions of the written agreement such as
the
provisions that the written agreement was to continue until
appellant’s death or the attainment by him of retirement
age
(see Smit at 61H).
The
SCA considered the following factors decisive - the fact that the
appellant was obliged to produce a certain result in order
to keep
the contract alive, the fact that his remuneration was commission
based, and the fact that the respondent could not direct
the
appellant as to the manner in which to achieve the result, and in
particular, how to spend his time. On this basis, Mr. Bouwer
submitted that the question the commissioner was therefore obliged to
have asked to determine whether the first respondent was
an employee
or independent contractor was whether it was the first respondent
labour or a particular result that was the object
of the contract.
[9]
In
Pam Golding Properties (Pty) Ltd v Erasmus
& others
(2010) 31
ILJ
1460 (LC), this court said the following:
I
do not understand the
Niselow formulation
to have abolished
the continuation of a multi- factoral approach established by
Smit
.
Niselow
regarded the object of the contract as a key factor to
be taken into account in determining the nature of the contract, but
it does
not so far as to suggest that this is the only relevant
factor, or that it is determinative. Post
- Niselow
, the courts
have continued to apply the ‘dominant impression’ test
(see, for example,
Stein v Rising Tide Productions cc
(2002)
23 ILJ 2017 (C)). In any event,
Niselow
has been overtaken by
a number of subsequent events and rulings. In 2002, s 200A was
introduced into the LRA to establish a rebuttable
presumption of
employment to be applied in certain circumstances. The factors listed
in s 200A, which include whether the manner
in which the person works
is subject to control or direction, whether the person forms part of
an organization, whether she is
economically dependent on the person
to whom services are provided and whether she renders services only
to one person. The value
of these factors as a guideline in
circumstances where they do not apply (the section does not apply to
persons who earn is excess
of a prescribed amount) was recognised and
applied by the Labour Appeal Court
Denel (Pty) Ltd v Gerber
(2005)
26
ILJ
1256 (LAC). This approach resonates with the
International Labour Organisation’s Employment Relationship
Recommendation, 2006,
which provides that member states should
consider defining, in their laws and regulations, specific indicators
of an employment
relationship. The specific indicators listed in
clause 13 of the Recommendation are closely aligned with the
provisions of s 200A.
[10]
This approach was affirmed in
State
Information Technology Agency (Pty) Ltd v commission for Conciliation
Mediation & Arbitration & others
(2008)
29
ILJ
2234 (LAC),
where the Labour Appeal Court held that when a court determines the
question of an employment relationship, it must
work with three
primary criteria. These are the employer’s right to supervision
and control, whether the employee formed
an integral part of the
organisation with the employer and the extent to which the employee
was economically dependent on the employer.
It was also followed in
Linda Erasmus Properties Enterprise (Pty) ltd
v Mholongo & others
(2007) 28 ILJ 1100
(LC), where the court considered the respondent in those proceedings,
also an estate agent, to be an employee
based on the requirement in
the relevant contract to the effect that the respondent was not
entitled to compete with the agency,
the agency maintained control
and supervision over her activities, she was not entitled to decide
how to split to commission except
with the consent of the agency, she
was required to comply with office rules, keep the roster and
correspondence, she was subject
to a restraint of trade and was paid
only commission.
[11]
I see no reason to depart from these decisions (which deal
specifically with the engagement of estate agents), and indeed,
I am
bound by the
SITA
judgment. In the present instance, the
terms of the agreement between the parties (which give some
indication of what precisely
was required of the first respondent)
provides, amongst other things, that the first respondent was to
devote her attention to
the business of the applicant as may be
necessary to properly discharge of duty, to carry out all reasonable
directions given to
her by the applicant and to promote and extend
the business of the applicant to the best of your ability. The
commission payable
to her on each sale amounted to 50% of the
commission paid to the applicant. The first respondent was liable for
the costs of expenses
including travelling, parking, the use of a
cell phone and entertainment. The first respondent was furnished with
a so-called ‘start-up
kit’ which included business cards,
training course, registration with the appropriate regulatory
authority, a name badge
and photograph. Paragraph 17 of the agreement
contained a restraint of trade which prohibited the first respondent,
on termination
of the agreement, from selling immovable property
within the Jeffreys Bay area for a period of three months. Paragraph
20 of the
agreement contained what is referred to as a ‘waiver
of rights’ in the form of a declaration by the first respondent
that she waves any presumption contained in section 200 A of the LRA.
[12]
Section 200 A creates a rebuttable presumption of employment provided
that any one or more of the factors listed in this section
are
present. These include the degree to which the person works subject
to the control of direction of another person, whether
the person
forms part of the organisation by which you she is engaged, whether
the business economically dependent on the person
for whom he or she
works will render services, whether the person is provided with tools
of trade work equipment and whether the
person only works of render
services to one person. Given that the right to fair labour practices
is a fundamental right in terms
of section 23 of the Constitution and
that the LRA, which seeks to give legislative expression to that
right is similarly a fundamental
right accruing to all persons who
fall within the ambit of the definition of ‘employee’,
the waiver signed by the first
respondent is of no force and effect.
Employees may contract out of the statutory protections conferred by
labour legislation only
when that legislation permits them to do so.
I do not understand the applicant’s representative to contend
to the contrary;
rather, as I have indicated, his submissions were
directed at the failure by the commissioner to give proper weight to
the terms
of the contract.
[13]
It is clear to me from the terms of that contract, to the extent that
it is determinative of the facts that characterised the
relationship
between the parties, that the first respondent was obliged to carry
out and comply with all reasonable instructions
given by the
applicant, that she was provided with a tool of the trade (at least
in the form of a cell phone) that she was required
to attend training
courses as and when required by the applicant (who carried the costs)
and that she was required to keep detailed
and comprehensive written
records which remain the property of the applicant. It cannot
seriously be disputed that the first respondent
was economically
dependent on the applicant; she was permitted to do ‘other’
work, but not to engage in the selling
of property for any other
agent. While this provision may have been necessary to protect the
applicant’s proprietary interests,
it inevitably created a
degree of economic dependency by the first respondent on the
applicant. All of these factors meet one or
more of the criteria set
out in section 200 A, and it must be presumed therefore that the
first respondent was an employee of the
applicant, and that the
applicant was her employer.
[14]
In short, there is nothing in the material before me which serves to
rebut the presumption of employment. On the contrary,
the contract
between the parties is similar to that examined by the court in the
Linda Erasmus
and
Pam Golding
judgments, and the
facts of those cases are similar, as the commissioner observed, to
the facts that exist in the present instance.
In my view, the
applicant therefore falls within the definition of ‘employee’
for the purposes of the LRA and the termination
of the contract
between the applicant and the first respondent constituted a
dismissal.
[15]
Turning next to the submission made on behalf of the applicant that
the proceedings under review were concerned only with the
jurisdictional point, that is not apparent from the record before me.
The dispute referred to conciliation is characterised as
an unfair
dismissal dispute and that is the nature of the dispute referred to
arbitration. In the absence of any indication to
the effect that
there was any express agreement or directive to the effect that the
proceedings would concern only the jurisdictional
point raised by the
applicant, I am unable to find that the commissioner committed a
gross irregularity or otherwise misconducted
himself to the
extent that intervention by this court is warranted. Similarly, to
the extent that the applicant submitted
in these proceedings that
there was no evidential basis on which the commissioner was entitled
to make an order for compensation,
that is not disclosed by the
material before the commissioner. On the contrary, the first
respondent gave evidence as to
her earnings and the computation of
her average monthly salary. While this was disputed by the witness
who testified on behalf
of the applicant, the version proffered
amounted to nothing more than a bare denial. In my view, given the
evidence by the first
respondent and the exchange between the parties
after the proceedings have been concluded, there is nothing
unreasonable about
either the quantum of the compensation awarded or
its computation. The application for review accordingly stands to be
dismissed.
[16]
There is no reason why costs ought not to follow the result.
I
make the following order:
1.
The application is dismissed, with costs.
André
van Niekerk
Judge
REPRESENTATION
For
the applicant: Mr PW Bouwer, P.W. Bouwer Attorneys
For
the respondent: TD Potgieter, T.D. Potgieter Attorneys