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[2015] ZALCD 66
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Pecton Outsourcing Solutions CC v Pillemer NO and Others (D1256/13) [2015] ZALCD 66; [2016] 2 BLLR 186 (LC); (2016) 37 ILJ 693 (LC) (12 November 2015)
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT DURBAN
Reportable
Case No: D1256/13
In
the matter between:
PECTON
OUTSOURCING SOLUTIONS CC
Applicant
and
PILLEMER,
B N.O.
First
Respondent
CCMA
Second
Respondent
THULASIZWE
SHOZI & 205 OTHERS
Third
& Further Respondents
Heard:
9 September 2015
Delivered:
12 November 2015
Summary:
Dismissal - fixed term contract may lawfully terminate
automatically by the coming into being of an event,
thus no dismissal
- however, an automatic termination clause that prevents employees
exercising their rights in terms of the LRA
is unenforceable and such
a termination therefore a dismissal - Temporary Employment Services -
automatic dismissal clauses –
validity thereof – unlawful
and invalid in certain circumstances – Jurisdiction - CCMA
lacking jurisdiction over mass
retrenchments even if already seized
with determining whether a dismissal occurred
JUDGMENT
Whitcher
J
Introduction
[1]
This is an application to review and set aside the CCMA award of the
first respondent, (the “commissioner”) in which
she found
that the applicant dismissed the third and further respondents
(“respondents”) and that this dismissal was
procedurally
unfair.
Background
Facts
[2]
For ten years, the applicant supplied temporary employment services
solely to Unilever, in terms of a service agreement.
The
applicant placed the respondents all at Unilever, its only customer.
[3]
Each respondent signed and concluded a fixed term contract of
employment with the applicant, the fixed term being directly linked
to the continuation of the service agreement between the applicant
and Unilever. The relevant term of the agreement was:
‘
On
cancellation of the service contract between Pecton Outsourcing
Services and the client (Unilever), this employment contract
shall
automatically terminate. Such termination shall not be
construed as a retrenchment, but shall be a completion of the
contract’
[4]
At the end of 2012, Unilever approached the applicant and sought a
reduction in the rates of pay of the personnel supplied to
it by the
applicant. Unilever demanded that the applicant reduce the pay
rates or face having its service agreement terminated.
At the
time, the applicant had some 400 employees on site at Unilever.
[5]
The applicant duly reduced the employees’ rate of pay.
This led to a number of disputes and disruption of work.
In May
and June 2013 there were intermittent unprotected strikes by the
applicant’s employees at Unilever.
[6]
Unilever were displeased by the unprotected strikes. In July 2013,
the applicant’s employees again embarked upon an unprotected
strike at Unilever. Their demand was that they be paid the
difference between their present salaries and the salaries they
earned before the reduction.
[7]
In a letter received by the applicant on 23 July 2013, Unilever gave
the applicant notice in writing of the termination of the
whole
service agreement with the applicant.
[8]
The applicant took the view that, as the service agreement between
the applicant and Unilever formed the basis of the employment
of the
respondents, their employment with the applicant also automatically
terminated.
[9]
On 24 July 2013, the applicant gave the respondents notice that their
contracts of employment had terminated in terms of the
specific
provision referred to above. The notice recorded that
termination took place on the basis as provided for in the
employment
contracts, and was thus an automatic termination based on contract
completion.
[10]
The respondents lodged an unfair dismissal dispute at the CCMA.
The
CCMA award
[11]
At the CCMA, the applicant contended that the respondents were
not dismissed by
it at all but rather that their contracts of employment expired when
Unilever cancelled its service contract with
the applicant.
[12]
The commissioner found that the respondents were dismissed by the
applicant. The commissioner accepted that such dismissal
was
substantively fair. But, because the dismissal was not preceded
by any kind of process, the commissioner found the dismissal
to be
procedurally unfair, and awarded compensation.
The
review test on jurisdictional rulings
[13]
The applicant’s case is based on two issues, the first being
whether the respondents were indeed dismissed, and the second
being
whether the CCMA, even if these respondents were dismissed, had
jurisdiction to entertain any dispute about the fairness
of such
dismissals. Both of these issues concern the jurisdiction of
the CCMA.
[14]
Where it comes to the issue of jurisdiction of the CCMA, the Labour
Appeal Court in
Fidelity
Cash Management Service v CCMA and Others
[1]
held that if the CCMA had no jurisdiction in a matter, the question
of the reasonableness of its decision would not arise.
[15] In
Trio
Glass t/a The Glass Group v Molapo NO and Others
[2]
,
and where considering a review based on the issue of the existence of
a dismissal, the Court held:
‘
The
Labour Court thus, in what can be labelled a 'jurisdictional' review
of CCMA proceedings, is in fact entitled, if not obliged,
to
determine the issue of jurisdiction of its own accord. In doing so,
the Labour Court is not limited only to the accepted test
of review,
but can in fact determine the issue
de
novo
in order to decide whether the determination by the commissioner
is right or wrong.’
[16]
Consequently, I must determine this matter
de
novo
,
deciding whether the commissioner’s findings are objectively
correct and not whether her decision was one that no reasonable
decision maker would have taken.
The
existence of a dismissal
[17]
The commissioner made the following factual determinations:
a.
The respondents concluded an employment contract with the applicant
containing the specific term as set out
above;
b.
The respondents embarked upon an unprotected strike in July 2013, but
the employment of the respondents did
not terminate because of the
unprotected strike. However, they did carry some fault as a
result for what happened to them;
c.
Unilever terminated the service agreement with the
applicant and this was the actual reason for the termination
of the
employment of the respondents;
d.
Unilever was the applicant’s only customer and the only place
where the applicant could provide work
to employees.
e.
The notices of termination of employment presented to the respondents
specifically stated that employment purportedly
automatically
terminated in terms of contract completion, with specific reference
to the employment contract itself.
[18]
The applicant contends that the only basis for the commissioner’s
finding that the respondents were dismissed was a conclusion
of law,
to the effect that a contract of employment can only be terminated in
terms of the LRA and, further, that an employer cannot
contract out
of the LRA or the liability to pay notice pay or severance pay.
The applicant further argues that this legal
conclusion is wrong and
constitutes a misdirection. It argues that an employment
contract may lawfully terminate in ways
other than dismissal, such as
the expiry of a fixed term contract.
[19]
The relevant portion of
the definition of dismissal in the LRA is Section 186(1)(a). It
states that: ‘Dismissal means
that an employer has terminated
employment with or without notice’. Dismissal is thus an
employer-driven termination
of
a
contract of employment. However, a contract of employment may
lawfully terminate in ways other than the employer undertaking
some
action that leads to the termination. A fixed term contract
may, for instance, expire by effluxion of time,
the
completion of a particular task or the happening of a specific
event. The applicant is correct that the enactment of s186
of
the LRA did not, as a general rule, prevent the continued
enforceability of fixed terms contracts in terms of which employment
may be automatically terminated (see
Fedlife
Assurance Ltd v Wolfaardt
[3]
).
[20]
I do not understand the commissioner, though, to have stated that
automatic terminations of fixed-term contracts are necessarily
unlawful. The applicant overstates the extent of her possible
error. When, in the award, the commissioner says: “The
law in this respect is plain. Contracts of employment must
be
terminated
in terms of the Labour Relations Act and an employer cannot contract
out of its terms or the liability to give notice or pay retrenchment
pay” (emphasis added), implicit in this formulation is that the
employer indeed performed the termination.
[21]
On a plain reading of the respondents’ contracts
,
the commissioner may well have made an error by assuming that the
applicant performed any terminations. This is since the contracts
provided for automatic termination should Unilever cancel the
underlying service contract. When this event happened, the
fixed term contracts were apt to expire and the employer did not have
to do anything other than inform the respondents of this
legal
fact. On the other hand, if there was a reason in law for
the commissioner declining to enforce the termination
clause relied
upon by the applicant, then the terminations could only have been
dismissals, by definition,
effected
by
the applicant. In this case, the commissioner would have had
jurisdiction to pronounce on the substantive and procedural
fairness
of the employer-driven terminations.
[22]
In my view, therefore, the only potentially sustainable complaint
against the commissioner is her ruling that the automatic
termination
clause was an attempt to contract out of the applicant’s
retrenchment obligations in terms of the LRA.
It seems clear
that because she adopted this view she declined to enforce the
automatic termination clause and thus assumed jurisdiction
over the
dispute as a dismissal matter.
[23]
There are three classes of automatic termination clauses in
fixed-term contracts: those providing for the expiry of the contract
on a set date, the completion of a set task or the happening of an
event. The clause most open to abuse, in the sense of
‘contracting out’ of an
employee’s
LRA right not to be unfairly dismissed,
is
the happening of an event. These clauses should rightly attract the
scrutiny of the CCMA and courts to ensure that, however craftily
they
are drafted, temporary employment service employees’ rights
under the LRA are not circumvented and public morality is
not
offended by their enforcement.
[24]
The LRA anticipates that some employers, exploiting their superior
bargaining position at the time a contract is concluded,
may attempt,
in contract form, to prevail upon employees not to exercise some of
their rights in terms of the LRA. Relevant
portions of section
5 of the LRA read as follows:
5.
Protection of employees and persons seeking employment
(2)
Without limiting the general
protection conferred by subsection (1), no person may do,
or threaten
to do, any of the following-
(b)
prevent an employee or a person seeking
employment from exercising any right conferred by this Act
or from
participating in any proceedings in terms of this Act
(4)
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.”
[25]
In
Mahlamu
v CCMA and Others
[4]
,
the Court dealt with an automatic termination clause in an employment
contract that provided for automatic termination in the
event of a
particular customer of the employer no longer requiring the services
of the particular employee, or the customer no
longer wishing to deal
with the particular employee. The Court held as follows in this
regard:
[5]
‘
In
short: 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 s 188 of the LRA, is precisely the
mischief that
s 5 of the Act prohibits. Secondly, a contractual term to this effect
does not fall within the exclusion in s 5(4),
because contracting out
of the right not to be unfairly dismissed is not permitted by the
Act.
’
[26]
The applicant submitted that the reasoning of the commissioner, to
the extent that it flowed from the
ratio
in
Mahlamu,
was,
in essence, that all termination provisions in fixed term contracts
linked to the specific event of a loss of customer contracts
by an
employer fell foul of Section 5 of the LRA. The applicant
submitted that this reasoning cannot be correct, even in
terms of the
judgment in
Mahlamu
.
This is because the Court in
Mahlamu
went
on to hold:
[6]
‘
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. This is what
I understand the ratio of
Sindane
to be - that ordinarily, there is no dismissal when the agreed and
anticipated event materializes (to use the example in
Sindane
,
the completion of a project or building project), subject to the
employee's right in terms of s 186(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. 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.
’
[27]
I have already found that the commissioner’s brief summation of
the law is best understood to have already, impliedly,
discounted the
enforceability of the automatic termination clause in question
because, in her view, it impermissably contracted
out of the LRA.
Thus the commissioner did not fail to appreciate that fixed term
contracts may terminate in ways other than
dismissal and,
specifically, that they may lawfully terminate by the coming into
being of an event. The contention that she
misdirected herself
on this fundamental legal point is a red-herring. It seems that
because the commissioner found that the
automatic termination clause
ought not to be enforced, the subsequent termination became a
dismissal at the applicant’s instance.
If the
commissioner committed any jurisdictional error it was to find that
the automatic termination clauses impermissibly sought
to contract
out of the LRA. It is this question I will proceed to examine.
[28]
The court in
Mahlamu
found
that enforcement of a contractual term that provided for the
termination of a temporary employment service employee’s
contract at the whim of a client was at variance with Section 5 of
the LRA:
[7]
‘
In
the present instance, the upshot of the commissioner's award is that
the applicant's security of employment was entirely dependent
on the
will (and the whim) of the client. The client could at any time, for
any reason, simply state that the applicant's services
were no longer
required and having done so, that resulted in a termination of the
contract, automatically and by the operation
of law, leaving the
applicant with no right of recourse. For the reasons that follow, and
to the extent that the commissioner regarded
this proposition to be
the applicable law, he committed a material error of law that must
necessarily have the result that his
ruling is reviewed and set
aside.
’
[29]
The applicant seeks to distinguish the termination clause invoked in
the present case from the clause found to be impermissible
in
Mahlamu
on the basis that the latter applied where the event of a fixed term
employment contract was defined with reference to actual conduct
of
the employer itself, either of its own accord or as a result of the
whims and demands of its customer, in respect of a particular
employee.
[30]
The Court in
Mahlamu
referred with approval to
Sindane
v Prestige Cleaning Services
[8]
,
where the court said the following:
‘
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 s 186(1) of the
LRA, and
more particularly, in terms of s 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. 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)
(subject to what is
stated below in respect of the remedies provided for by the LRA to an
employee who has signed such a contract)
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 s
186(1)
(a)
.
Thus, the contract terminates automatically when the termination date
arrives, otherwise, it is no longer a fixed-term contract
….
’
[31]
The applicant argued that central to the reasoning by the Court in
Sindane
was
the fact that a fixed term contract is not terminated because of an
act by the employer.
[32] Summarising
the law, the applicant contends that what the Courts have determined
in the case of terminations of fixed contracts
based on an event, is
that where the event is orchestrated by the employer, or where it
could have been avoided, or where the true
cause of the termination
is not the lapse or completion of the contract, or where the
termination is directly linked to the whims
of a customer of the
employer vis-à-vis that particular employee, the employer's
reliance on the fixed-term contract would
still be deemed a dismissal
of the employee. It argues that none of these apply
in
casu
as the client terminated the contract. Specifically, the
employer itself did not initiate the action or event that gave rise
to the termination and the third party conduct that gave rise to the
termination was not aimed at the particular employee himself
or
herself.
[33]
I can appreciate the distinction the applicant draws between the
client in
Mahlamu
who
targeted an individual while the underlying contract with the
temporary employment service (TES) remained in place and the client
in this matter who cancelled the entire service contract, essentially
targeting every employee as well as the temporary employment
service
(TES). However, to quote the legal mischief identified in
Mahlamu
fully, the automatic termination clauses in both matters left the
employees’
security of employment “entirely dependent on
the
will
(and the whim) of the client” (emphasis added).
[34]
It seems to me that asking whether
the
‘true cause’ of the termination is the lapse or
completion of a contract begs the question of whether, in the
circumstances
of each case, the termination clause is enforceable
given section 5 of the LRA.
[35]
I further do not see how the employer in
Mahlamu
could be said to have initiated the termination of the employee’s
contract whereas the applicant herein did not. It
is the fact
that an automatic termination clause is deemed impermissible in law
that causes the termination effected thereby to
be at the instance of
the employer, and thus a dismissal. It is not the other way
around where an employer is deemed to have
acted to terminate the
contract and therefore the automatic termination clause is not
permissibly invoked. The applicant in this
matter had the same
options open to it as the employer in
Mahlamu
.
Faced with the will of its client that the applicant’s TES
employees would no longer provide services on the client’s
site, it could either dismiss them procedurally or invoke an
automatic termination clause. The applicant’s invocation
of the automatic termination clause is, as in
Mahlamu
,
the proximate action causing the termination of employment
contracts. At the risk of repeating myself, the real question
is whether this clause was enforceable or not.
[36]
I was referred to
Twoline
Trading
413
(Pty) Ltd t/a Skosana Contract Labour v Abram Mongatane and Others
[9]
where Snyman AJ, (coincidentally also the attorney for the applicant
in this matter) found that:
‘
where
a client of the temporary employment service unilaterally and even
without reason terminates the service agreement with the
temporary
employment service and/or demands the removal of employee(s) of the
temporary employment service from its site and/or
excludes such
employees from its site, this cannot in itself and on its own
constitute a deemed act of dismissal by the temporary
employment
service of its employees. It is what the temporary employment service
itself does or does not do, about this, that could
constitute an act
of dismissal.
’
[37]
Snyman, AJ further held:
[10]
‘…
..
It is often the case that in the temporary employment service
environment, the employment contract of the employees would provide
that the employment of the employee of the temporary employment
service would automatically terminate upon the termination of the
service agreement between the client and the temporary employment
service or where the employee is removed from the client's site.
What
this means is that the occurrence of a particular event brings about
the automatic termination of the employment of the employee
of the
temporary employment service. ….
’
[38]
He concluded:
[11]
‘…
.
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.
’
[39]
In its heads of argument, the applicant provided an example of the
application of the reasoning in
Twoline
Trading
:
“if the entire service contract between the employer and the
customer is cancelled by the customer
per
se
,
this event would not constitute a dismissal but an automatic
termination, but where the customer demands from the employer that
a
particular employee be removed from its site or the contract and this
demand is then considered by the employer to be the termination
event, this then would be a dismissal.”
[40] The applicant
further argued that a pertinent example of a circumstance of employer
conduct forming the basis of a purported
automatic termination (and
thus dismissal) is where the employer removes an employee as a
director and the automatic termination
event is defined as the
employee ceasing to be a director. In such a case, it is clear
action by the employer that gives
rise to the event, in other words a
direct nexus between the conduct of the employer itself and the
occurrence of the event exists.
Examples of this can be found
in the judgments of
SA
Post Office Ltd v Mampeule
[12]
and
Chillibush
Communications (Pty) Ltd v Johnston NO and Others
.”
[13]
[41]
The applicant therefore argues that the present matter is not one of
the instances of where the termination event of the fixed
term
contract would constitute a dismissal. The termination of the
respondents’ contracts was not conduct relating
to or directed
at a particular employee (namely the respondents) or an act of the
employer. It flowed from the loss of a
service agreement
between the applicant as employer and its customer, Unilever, as a
whole.
[42]
This line of reasoning does not persuade. First, it strikes me
as an artificial and arbitrary distinction between whether
the
security of employment of one or all employees is adversely affected
by the will of a client. In this case, the client’s
will
over the employees was just as unilaterally imposed as in
Mahlamu
even though its aim was less pointed. Second, as mentioned
above, whether a termination of an employment contract is an act
initiated by the employer depends on a prior legal determination of
whether the automatic termination clause should or should not
be
enforced. This is perfectly in line with our legal regimen in which
contracts of employment are enforced unless a statute or
collective
agreement provides otherwise.
[43]
I prefer an approach that starts by examining, in all cases where the
termination of TES contracts of employment are triggered
by the will
of a client, whether the underlying cause of the termination,
in
relation to the TES employer
,
is one for which employees typically are dismissed. These are
reasons relating to misconduct, incapacity, operational requirements
or no reason at all. In this determination, the courts
should recognise the
content
of the reason
for
the termination over the
form
of
the
contractual
device
covering
it. If the facts show that the reason for termination of the
contract is one that typically constitutes a reason
for a dismissal,
then this is a clue that, as the commissioner succinctly put it,
there may be an attempt to ‘contract out’
of section 188
of the LRA. In the absence of evidence to the contrary, the
termination thus becomes a dismissal and the underlying
reasons for
it will be ventilated in forums the LRA has set aside for this
purpose.
[44]
Once the adjudicator of a dismissal dispute has a case before him or
her in which an employer asserts the operation of an automatic
termination clause in a fixed term contract but the facts of the
matter disclose a reason relating primarily to the conduct or
capacity of employees or the financial means of the TES, then such an
adjudicator acquires jurisdiction over the matter as a dismissal
dispute mainly because of the unenforceability of the contractual
term.
[45]
In this case, the reason for termination, in relation to the
applicant, was financial. It had lost its only client and
could
no longer afford to retain its employees. Whether the employer
acted to ‘dismiss’ them after losing the
contract with
Unilever is irrelevant. The automatic termination clause had the
effect of depriving the employees of the right to
have an operational
requirements termination ventilated in court. Typically a
termination for this reason would attract,
at the very least,
severance pay. In terms of section 5 of the LRA, this clause
should not be enforced and the commissioner
was correct to decline to
do so.
[46]
By contrast, an automatic termination clause based on an event, such
as that a fixed term contract terminates when a permanent
employee
returns to work after absence, will not be affected by the rule
above. First, there is no mischief of a client exercising
its
will against the employee whose fixed term contract is terminated.
Second, the return of an absent employee is not a
reason for
termination plausibly situated within the realm of dismissal.
What this means is that fixed term contracts relying
on happenings
other than the unilateral exercise of a client’s will are in
the clear. This approach is, in my view,
necessary at a policy
level to cure the ill of TES providers constructing employment
contracts that, while not inviting cancellation
by a client in times
of conflict with labour, certainly signal that the TES, and by
extension the client, will not suffer significant
legal and financial
consequences should the client, for good reason or bad, turn its face
against the workforce as a whole.
[47]
The commissioner, in a succinct manner, made a perfectly correct
decision. To the extent that her reasoning contradicted the
ratio in
Two
Line Trading,
supra, the latter judgment, is with respect, wrong. I associate
myself in this regard with the reasoning of Mosime, AJ who after
considering the logic,
inter
alia,
of
Mahlamu
held:
[14]
“
[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.”
[48]
This ground of review must accordingly fail.
Did
the commissioner have jurisdiction to hear a retrenchment dispute?
[49]
The commissioner accepted that the respondents had been dismissed by
the applicant for operational requirements. The
commissioner
determined that the respondents should have been dismissed in terms
of the procedural requirements of Section 189.
[50]
The applicant submitted that if indeed there existed a dismissal,
then the conclusion of the commissioner that this dismissal
would be
based on operational requirements would be undoubtedly correct.
[51]
All the respondents were simultaneously dismissed for the exact same
reason. They all pursued their dispute as an unfair
dismissal
dispute to the CCMA.
[52]
In terms of Section 191(5)(b) of the LRA, disputes about the fairness
of a mass dismissal for operational requirements can
only be
determined by the Labour Court, and the CCMA has no jurisdiction to
entertain the same.
[53]
The applicant correctly submitted that it does not matter whether the
CCMA was seized with the matter. The moment the
commissioner
determined that there existed a dismissal for operational
requirements, she had no power to decide on the fairness
of that
dismissal, and was compelled to have adjourned the arbitration so the
dispute could be referred to the Labour Court for
adjudication.
[54]
In
Parliament
of the Republic of SA v Charlton
[15]
the LAC held as
follows, with regard to the jurisdiction of the Labour Court,
reasoning which applies just as well to the CCMA:
‘
Therefore,
once it is apparent to the court that the dispute is one that ought
to have been referred to arbitration, the court may
stay the
proceedings and refer the dispute to arbitration or it may, with the
consent of the parties, and if it is expedient to
do so, continue
with the proceedings sitting as an arbitrator. It cannot deal with
the dispute outside the ambit of these provisions.
Accordingly, it
has no power to proceed to adjudicate the dispute on the merits
simply because it is already seized with the matter.
To do so would
be in conflict with the provisions of s 157(5) and s 158(2) of the
LRA.
In
resolving labour disputes a clear line must be drawn between the
different fora that have been set up by the LRA.’
[55]
The applicant correctly submits that it does not matter what the
respondents may have classified the reason for their alleged
dismissal to be. Once the commissioner determined what she
considered to be the real reason for the dismissal, this moved
the
dispute to beyond her power to determine. In
Wardlaw
v Supreme Mouldings (Pty) Ltd
[16]
,
the LAC held:
‘…
it
seems to us that the employee's allegation of the reason for
dismissal as contemplated by s 191(5) is only important for the
purpose of determining where the dispute should be referred after
conciliation but the forum to which it is referred at that stage
is
not necessarily the forum that has jurisdiction to resolve the
dispute on the merits finally. That may depend on whether it
does not
later appear that the reason for dismissal is another one other than
the one alleged by the employee and is one that dictates
that another
forum has jurisdiction to resolve the dispute on the merits.’
[56]
Applying this ratio, the Court in
Goldfields
Mining SA (Pty) Ltd (Kloof Gold Mine) v CCMA and Others
[17]
held:
‘…
.
An employee is entitled to refer a dispute to this court or require
that a dispute be arbitrated on the basis of the reason for
dismissal
alleged by the employee. It is the referring party's categorization
of the dispute (and nothing more) that triggers either
the
arbitration or the adjudication of the dispute. To the extent that it
can be said that an arbitrator or this court assumes
jurisdiction
upon the referral of a matter, the Labour Appeal Court has described
this as a 'provisional assumption of jurisdiction.
Although
the Wardlaw decision dealt with a matter referred to this court that
the employer party contended ought to have been referred
to
arbitration (the converse is the case in the present instance), the
principle to be applied is that jurisdiction is conferred
on the
CCMA, on a provisional basis, by the referring party's categorization
of the reason for dismissal.’
[57]
The applicant argued however that provisional jurisdiction cannot be
final jurisdiction. Final jurisdiction is determined
by the
true reason for the dismissal, once established. And,
in
casu
,
with such reason being operational requirements, final jurisdiction
only lay with the Labour Court to adjudicate the fairness
of such
dismissal. I endorse this view.
[58]
This then only leaves Section 191(12), which provides:
‘
If
an employee is dismissed by reason of the employer's operational
requirements
following
a consultation procedure in terms of section 189 that applied to that
employee only,
the employee may elect to refer the dispute either to arbitration or
to the Labour Court
’
(emphasis
added).
[59]
Section 191(12) cannot apply as the dispute involves 206 employees.
[60]
The commissioner thus had no jurisdiction to hear the retrenchment
dispute. For this reason the award falls to be reviewed
and set
aside.
[61]
The applicant had a measure of success so I do not believe a cost
order would be appropriate.
Order
[62]
Consequently, I make the following order:
(1)
The
arbitration award issued by the first respondent is reviewed and set
aside on the basis that the first respondent lacked jurisdiction
to
hear a retrenchment dispute.
(2)
The
individual respondents may refer their dismissal for adjudication
before the Labour Court.
(3)
There
is no order as to costs.
_________________________________
Whitcher J
Judge of the Labour
Court of South Africa
APPEARANCES:
For
the
Applicant:
Snyman Attorneys
For
the Third and Further Respondents:
Adv N S V Mfeka instructed by Maseko Mbatha Attorneys
[1]
(2008) 29 ILJ 964 (LAC) at para 101.
[2]
(2013) 34
ILJ
2662 (LC) at para 22. This dictum was referred to with
approval
in Kukard v GKD
Delkor (Pty) Ltd
(2015) 36
ILJ 640 (LAC) at para 12 footnote 2.
[3]
(2001) 22 ILJ 2407 (SCA) at para 17 –
18
[4]
(2011) 32 ILJ 1122 (LC)
[5]
Id at para 22
[6]
Id at para 23
[7]
Id at para 10
[8]
(2010) 31 ILJ 733 (LC) 16
[9]
[2014] JOL 31668
(LC) at para 58
[10]
Id at para 60
[11]
Id at para 63
[12]
(2010) 31 ILJ 2051 (LAC) at para 21
[13]
(2010) 31 ILJ 1358 (LC) at para 28
and 38 – 39
[14]
Satawu obo Dube and Others v
Fidelity Supercare Cleaning Services Group (Pty) Ltd
(JS
879/10 [2015] ZALCJHB 129).
[15]
(2010) 31 ILJ 2353 (LAC)
[16]
(2007)
28
ILJ
1042 (LAC)
at para
23 – 24
[17]
(2010) 31 ILJ 371 (LC) at para 15