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[2015] ZALCD 46
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Mwelase and Others v Enforce Security Group and Others (D358/12) [2015] ZALCD 46 (31 July 2015)
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT DURBAN
Reportable
CASE
NUMBER: D358/12
In
the matter between:
MWELASE
FIKILE AND 46 OTHERS
APPLICANT
and
ENFORCE
SECURITY GROUP
FIRST RESPONDENT
COMMISSION
FOR CONCILIATION,
MEDIATION
AND ARBITRATION (CCMA)
SECOND RESPONDENT
COMMISSIONER
G GERTENBACH
THIRD RESPONDENT
Heard:
26 February 2015
Delivered:
31 July 2015
Summary:
Review application – terms of a contract of employment -
whether it was
permissible to contract out of the right not to be unfairly dismissed
as provided by the LRA - test was whether the
subject of the right
was intended to be its sole beneficiary - if others had an interest
in the existence of the right, such right,
could not be waived - so
too if the interests of the public were served by the conferment of
the right – award unreasonable.
JUDGMENT
Cele
J
Introduction
[1]
The Applicants seek an order to review and set aside the arbitration
award dated 18 March 2012 issued by the Third Respondent
in this
matter as a commissioner of the Second Respondent. Accordingly it is
an application in terms of section 145 (2) of the
Labour Relations
Act,
[1]
(the LRA). The First
Respondent opposed the application and the relief sought by the
Applicants.
The
Factual Background
[2]
The facts of this matter are by and large common cause.
The
First Respondent is a private security service provider and is
registered as such in terms of the Private Security Industry
Regulations Act.
[2]
It entered
into contracts with its various clients and employed registered
security officers for this purpose. The First Respondent
managed all
aspects of the services rendered by the security officers it employed
through its management structures which included
inspectors, site
supervisors and managers.
The
First Respondent placed persons on a temporary basis at various sites
of its clients.
[3] The applicants were
all employed by the First Respondent on a written contract of
employment and had been employed at Boardwalk
Shopping Centre
("Boardwalk"). Clause 3.2 with clauses 3.2.1 and 3.2.2 of
the contracts of employment sought to regulate
terms or
conditions of employment by stipulating that:
3.2
The period of employment will endure until the termination of the
contract which currently
exists between BOARD WALK or its successors
(hereafter referred to as the Client) and the COMPANY.
3.2.1
The Employee agrees that he/she fully understands that the Company's
contract with the Client might be terminated
by the Client at any
cause or might terminate through effluxion of time and that in
consequence hereof the nature of the Employee's
employment with the
Client/s and that the Employee's contract of employment shall
terminate at any time as and when either of the
events predicated
occurs. In such event this contact shall automatically terminate.
Such termination shall not be construed as
a retrenchment but as a
completion of contract.
3.2.2
The Employee agrees that he/she fully understand that the Client has
the right to demand the removal of
the Employee for any reasons
whatsoever. In these circumstances the employee expressly agrees that
in the event of being assigned
another posting which contractual
obligations determine a different wage then he/she agrees to be
deployed and compensated at that
particular rate of pay”
.
[4]
On or about 30 September 2011, Boardwalk cancelled their contract
with the First Respondent and gave them notice that the contract
would come to an end on 1 October 2011. Then on 4 October 2011 the
First Respondent informed the Applicants in writing that Boardwalk
had cancelled the contract with the First Respondent and that, in
accordance with their contracts of employment, their contracts
would
terminate on 30 October 2011. The Applicants indeed stopped working
for the First Respondent on 30 October 2011.
[5] The Applicants’
trade union advised the First Respondent that, in terms of section
189 of the Act, it was under an obligation
to retrench the Applicants
and that the Applicants were therefore entitled to receive severance
pay. The First Respondent refused
to retrench the Applicants. The
applicants referred an unfair dismissal dispute for conciliation.
When the dispute could not be
resolved, they referred it to
arbitration. The Third Respondent was appointed to arbitrate the
dispute and the chief findings he
made are essentially that:
1.
the Applicants were
employed on indefinite contracts of employment;
2.
such contracts could be
cancelled by the employer giving the required or reasonable notice of
termination when the employee's services
were no longer required or
on completion of a the project which the employee had been engaged or
on fulfilment or coming into being
of a condition of employment;
3.
the cancellation of the
contract by Boardwalk with the First Respondent led to the automatic
termination of the employees' contracts
of employment; and
4.
The employees could not
in fairness or law, claim entitlement to any form of compensation and
the referral was subsequently dismissed.
Submissions
[6]
The applicants’ submission is that the Third respondent did not
apply his mind to what the rights of the employees who
were on
indefinite contracts of employment. The question then is essentially
whether the Third Respondent considered the principal
issue before
him, evaluated the facts presented at the hearing and came to a
conclusion that is reasonable.
[3]
At the heart of the issue is the question whether the automatic
termination clauses in the Applicants’ contract of employment
is not in conflict with the protection afforded by the
Constitution
[4]
and the LRA to
any employee.
In
the present instance clause 3.2.1 of the Applicants' contracts of
employment provides that the contracts shall terminate at any
time
and that such termination shall not be interpreted
as
a retrenchment
(my emphasis) but as a completion of the contract. This clause
certainly has the effect of denying the Applicants the right to
challenge the fairness of the employer’s conduct and to enforce
any of their rights in terms of section 189 of the LRA. According
to
the applicants this amounts to a violation of the provisions of
section 5 (2) (b) of the LRA. According to the First Respondent
the
automatic termination clause fell within the exception provided in
section 5 (4) of the LRA.
[7]
The Third Respondent did summarize his understanding of the
applicants’ case and he had the following to say:
“
The
gist of the Applicant’s case is that the contract entered into
by its members should be regarded as
indefinite
contracts of employment
which
should have been terminated in terms of section 189 of the Labour
Relations Act 66 of 1995 (as amended) (LRA) and that the
dismissals
were unfair because the Respondent had failed to consult in terms of
the said section. Moreover, that the Employees
were entitled to be
paid notice pay and severance benefits.
[5]
[8]
It was submitted by the First Respondent that the Applicants’
contracts of employment were fixed term eventuality contracts
where
the end of the fixed term was defined by the occurrence of a
particular event, that is, the termination of the Boardwalk
contract. To the extent that the Commissioner found otherwise,
such finding was said to be at odds with the wording of the
contract
of employment. According to the First Respondent it is trite that in
those circumstances, there is no dismissal when the
agreed or
anticipated event materializes subject to an employee’s rights
in terms of Section 186(1) (b). The Applicants were
said not to be
seeking to rely on the provisions of Section 186(1) (b). I am
indebted to both counsel in this matter for their
submissions, but I
have been persuaded by those made by counsel for the applicants for
the approach in the resolution of issues
in this application.
Evaluation
[9]
In
Mahlamu
v CCMA & Others
[6]
the court had to decide whether it was permissible to contract out of
the right not to be unfairly dismissed as provided by the
LRA. The
court held that the test was whether the subject of the right was
intended to be its sole beneficiary. If others had an
interest in the
existence of the right, such right, it was held, could not be waived;
so too if the interests of the public were
served by the conferment
of the right. The Applicants are individual employees, as security
officers they are indeed lay persons
and are unacquainted with the
interpretation of legislation and therefore regarded as incapable of
defending themselves without
legal representation. The public has an
interest in ensuring that such persons are not exploited and as such,
their rights may
not be waived.
[10]
In
South
African Post Office v Mampeule
[7]
this court per Ngalwana AJ dealt with the validity of an automatic
termination clause in a contract of employment. The court held
that
automatic
termination provisions 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. The court
further held that these provisions are contrary to public
policy as
statutory rights conferred on employees for benefit of all employees
and are incapable of consensual validation. On appeal
the court
a
quo
’s
decision was upheld and the Labour Appeal court went further to state
that:
“
The
onus rests on South African Post Office to establish that the
‘automatic termination’ clause prevails over the relevant
provisions in the Act (referring to section 5 of the LRA) and the
clause the of the contract that established employment for a
fixed
term of five years subject to the employer’s right to terminate
the contract with due regard to fair labour practices.
A heavier onus
rests on a party which contends that it is permissible to contract
out of the right not to be unfairly dismissed
in terms of the Act. I
am in agreement with the submission made by Mampuele’s counsel,
supported by authorities, that parties
to an employment contract
cannot contract out of the protection against unfair dismissal
afforded to an employee whether through
the device of ‘automatic
termination’ provisions or otherwise because the Act had been
promulgated not only to cater
for an individual’s interest but
the public’s interest.”
[8]
[11]
Therefore, it follows from the authority in
South African Post
Office v Mampeule
that any contractual provision that infringes
on the rights conferred by the LRA or Constitution is not valid, and
even though
the employee might be deemed to have waived his or her
rights, such waiver is not valid or enforceable. In this matter, it
follows
that by finding that the cancellation of the contract between
Boardwalk and the First Respondent led to the automatic termination
of the employees’ contracts of employment, the third respondent
committed a material error of law by failing to apply his
mind to the
relevant provisions of the LRA, namely, sections 5(2) (b), 5(4) and
185. The Third Respondent found that the Applicants
were employed on
indefinite contracts of employment. This finding is not assailed in
this review application. He then came to the
conclusions that the
employees’ contracts were automatically terminated and that the
employees were not entitled to compensation.
In the premises,
the
award of the
Third Respondent stands to be
reviewed and set aside as a decision which a reasonable decision
maker
c
ould
not have
reached.
[12]
In their founding affidavit
[9]
the applicants said that their trade union advised the first
respondent to retrench the applicants and to give them the severance
pay when the contract between the first respondent and its client
ended. The need for retrenchment appears to be beyond dispute.
Whether some of the applicants’ employment could have been
saved by sacrificing employees with shorter service working for
other
clients remains a mystery. The first respondent was said to have
refused to embark on retrenchment proceedings. Also, the
first
respondent said that it offered employment to the applicants in
Durban and they declined the offer. Richards Bay, where the
applicants were employed and Durban are two places far apart to
commute daily. A period of more than three and a half years since
their dismissal, calculated from 30 October 2011, has elapsed. There
are 47 applicants involved in this matter. Taking these and
other
considerations into account, it is not reasonably practicable for the
first respondent to reinstate or re-employ the applicants.
Compensation is appropriate. In addition each applicant is entitled
to so much severance pay as is to be calculated on the basis
of his
or her years of experience with the first respondent and in terms of
the contract of employment. No such evidence is before
me. This can
be resolved by further evidence at arbitration.
Order:
1.
The arbitration award of the third
respondent in this matter is reviewed and set aside. The termination
of the Applicants' employment
constituted a dismissal for the
purposes of the LRA.
2.
The dismissal of each applicant by
the first respondent was substantively and procedurally unfair.
3.
The first respondent is ordered to
compensate each applicant in an amount of money equivalent to six
months’ remuneration,
calculated at the applicant’s rate
of remuneration on the date of dismissal.
4.
Further, the first respondent is ordered to
pay so much of severance pay as each applicant is entitled to in
terms of the contract
of employment or in terms of the law.
5.
The payment of compensation and severance
pay is to be made within 21 days from the date of this order, but not
later than 24 August
2015.
6.
In the event that parties are in dispute
about any payment to be made under 1 and 2 hereinabove, that dispute
is to be referred
to the second respondent which is to appoint a
commissioner, other than the third respondent, to hear such evidence
and to issue
an award in relation thereto.
7.
No costs order is made.
_________
Cele
J
Judge of the Labour
Court of South Africa.
APPEARANCES:
1.
For the Applicants: Ms
Q.Majam
Instructed
by Tomlinson Mnguni James Attorneys.
2.
For the First
Respondent: Ms L Naidoo.
Instructed
by Millar and Reardon Attorneys.
[1]
Act Number 66 of 1995.
[2]
56 of 2001.
[3]
Goldfields Mining SA (Pty)
LTD v CCMA
[2014] 1 BLLR
20 (LAC).
[4]
The Constitution of South Africa 1996.
[5]
See
paragraph 6 of the award.
[6]
(2011) 4
BLLR 381 (LC)
[7]
[2009] 8
BLLR 792
(LC); (2009) 30 ILJ 664 at paragraph 46
[8]
SA Post
Office Ltd v Mampeule
[2010] 10 BLLR 1052
(LAC) at
paragraph
23
[9]
See paragraph 9.