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[2016] ZALCPE 29
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NUM obo Milisa and Others v WBHO Construction (Pty) Ltd (PS16/13) [2016] ZALCPE 29; [2016] 6 BLLR 642 (LC) (15 March 2016)
REPUBLIC OF SOUTH
AFRICA
IN
THE LABOUR COURT OF SOUTH AFRICA, PORT ELIZABETH
JUDGMENT
Not
Reportable
Case
no: PS16/13
In
the matter between:
NUM
obo THOBELA MILISA AND 53
OTHERS
Applicant
and
WBHO CONSTRUCTION
(PTY)
LTD
Respondent
Heard:
4-5
May 2015
Delivered:
15
March 2016
Summary:
A
clause in a contract of employment which gives the employer the right
to dismiss employees at will and in contravention of the
Labour
Relations Act 66 of 1995
is invalid.
JUDGMENT
LALLIE,
J
[1] The
respondent built the Hemmingways Hotel and Casino ('the project').
The individual applicants ('the applicants')
were amongst the workers
who were employed at the project while the building was still under
construction. They were employed as
general workers on purported
fixed term contracts in 2012. In their statement of case, they
submitted that their contracts of employment
were oral. They were
informed by the employee of the respondent who assisted them sign
their contracts that they would cease working
once the project was
completed. However, on 3 December 2012, before the project was
complete, they were issued with letters of
the termination of their
contracts as from 19 December 2012. They submitted that subsequent to
their dismissal, the respondent
continued with the construction of
the project which was scheduled for completion on or about 7 July
2013.
[2] The
applicants submitted that their dismissal constituted an unlawful
premature repudiation of their fixed
term contracts of employment as
the respondent was by law not entitled to terminate the contracts
before the completion of the
project They also claimed that their
dismissal was unfair and in violation of section 189 of the Labour
Relations Act 66 of 1995
('the LRA'). The legal issues that the
applicant sought this court to determine were whether the applicants'
fixed term contracts
were linked to the duration of the project;
whether the project was completed when the applicants' contracts were
terminated; whether
the respondent was entitled to terminate the
contracts when it did; whether the applicant's dismissals were
lawful; whether the
applicant's dismissals were fair; whether the
respondent was entitled to dismiss the applicants for operational
reasons; whether
the respondent had a valid reason for dismissing the
applicants; and whether the respondent followed the required
procedure before
dismissing the applicants.
[3] The
respondent denied having dismissed the applicants unlawfully,
unfairly or for its operational requirements.
It alleged that it
employed the applicants on fixed term contracts as concrete workers
and general workers in the project whose
formal contract for purposes
of construction was for the period of September 2011 to 8 February
2013. As the respondent needed
different skills at different times,
it needed the applicants' skills at the initial stages of the project
and not for the duration
of the project. The employment relationship
between the parties was terminated on 19 December 2012, owing to
effluxion of time
and in terms of their written fixed term contracts
which stipulated that each individual applicant would remain in
employment for
'the duration of his skills requirement on the
contract'. Between September and November 2012, the respondent
terminated fixed
term contracts of about 80 employees as it no longer
required their skills. The applicants were the last group of general
workers
and concrete workers whose skills were required up to 19
December 2012. The respondent retained a group of about 20 to 30
employees
who attended to additional functions allocated to the
respondent by the client in the first three months of 2013.
[4]
The
parties reached an agreement on the names of the 18 individual
applicants who are properly before court. They are applicants
1,3,4,6,7,9,10,13,14,15,21,22,26,27,32,34,35 and 49 on the list of
names of applicants in Annexure "A" to the statement
of
case. The applicants' attorneys received copies of their contracts of
employment after close of pleadings a fact which had an
impact in the
manner in which their case was presented. The applicants' argument
that their contracts of employment would endure
until the end of the
project is untenable because they conceded having signed the
contracts of employment which provide that they
would remain in the
respondent's employ for the duration of their skills requirement in
the project. The applicants argued that
their contracts of employment
did not constitute fixed term contracts but were maximum term
contracts. A fixed term contract endures
until the end of an agreed
fixed term or the occurrence of a particular event. The applicants
relied on
Nkopane
and Others v Independent Electoral Commission
[1]
where a
maximum term contract was defined as an agreement 'that the
employment will terminate at the latest on a specified date'.
It is
common cause that the parties entered into a contract which was for
the duration of the applicants' skills requirement on
the project. As
the contract stipulated that the applicants would work until their
skills were no longer required and for as long
as the applicants'
skills were required, they would continue working for the respondent.
The requirement of the applicants' skills
determined the duration of
their contracts. The applicants' argument that their contracts of
employment were maximum term contracts
is therefore valid.
[5]
The
applicants argued that they had been unlawfully and unfairly
dismissed by the respondent in violation of the LRA. The respondent
denied dismissing the applicants and submitted that the employment
relationship was terminated by effluxion of time as their skills
were
no longer required. The respondent relied on the automatic
termination clause of the contract of employment which provides
that
the contract would endure for the duration of the applicants' skills
requirement on the project. Advancing their argument
that they had
been dismissed, the applicants submitted that a maximum duration
contract is terminated before the expiry date only
on good cause
shown if the employee is in material breach and if such condition is
agreed for the employer's operational requirements.
The applicants
also relied on
Mahlumu
v CCMA and Others
[2]
where
the court referred with approval to the following
dictum
of
SA
Post Office Ltd v Mampeule:
[3]
'The onus rests on SAPO
to establish that the 'automatic termination' clause prevails over
the relevant provisions in the Act [referring
to section 5] and
clause 9.1 of the contract [a clause that established employment for
a fixed term five years subject to the employer's
right to terminate
the contract with due regard to fair labour by practices]. A heavier
onus rests on a party which contends that
it is permissible to
contact out of the right not to be unfairly dismissed in terms of the
Act. I am in agreement with the submission
made by Mampeule'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.'
[6] In
South African Post Office v Mampeule (supra)
and
Mahlamu v
CCMA and Others,
the automatic termination provisions were
triggered by a third party, however, both decisions are applicable to
the matter at hand
although the automatic termination provision has
been triggered by the respondent. In the contracts of employment, the
parties
agreed to recognise that provisions of the
Labour Relations
Act of 1995
as amended from time to time would apply in respect of
their contracts. The court in
SAPO (supra)
held that parties
to an employment contract may not, through an automatic termination
provision, contract out of the protection
against unfair dismissal.
Section 5
(2)(b) of the LRA provides as follows:
'(2) ...
No person may do, or threaten to do, any of the following –
(b) prevent
an employee or a person seeking employment from exercising any rights
conferred by this Act or from
participating in any proceedings in
terms of this act; or
(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.'
Section
185 of the LRA provides that every employee has the right not to be
unfairly dismissed. Section 188 of the LRA provides
that a dismissal
that is not automatically unfair, is unfair if the employer fails to
prove the fairness of the dismissal for the
employee's conduct,
capacity the employer's operational requirements and that the
dismissal was effected in accordance with a fair
procedure.
[7] The
applicants argued, correctly, that the automatic termination
provision of their contracts entail a unilateral
and subjective
assessment by the respondent, which grants it unfettered discretion
to decide when the applicants' skills were no
longer required.
Because of the nature of the duties of a general worker, the decision
whether his or her skills are no longer
required is subjective. It is
common cause that on the applicant's last working day they were told
to sign for the letters of the
termination of their contracts. Both
witnesses for the respondent could shed no light on how the
respondent came to the conclusion
that the skills of the applicants
were no longer required as opposed to the 20-30 general workers who
the respondent elected to
retain until February 2013. Ms Vumendlini
(Vumendlini), who gave the applicants their letters of the
termination of their contracts,
led no evidence as to the manner in
which the respondent reached the decision that the applicants' skills
were no longer required.
The evidence of the respondent's second
witness, Mr De Klerk (De Klerk), that the applicants' skills were no
longer required after
19 December 2012, was inconsistent with its
papers that after December 2012, work continued at the project for
several months.
[8] The
automatic termination provision in the applicants' contracts of
employment is invalid as it is in flagrant
disregard of provisions of
the LRA which preclude employers from terminating employees'
contracts at will and in violation of the
provisions of the LRA which
protect employees against unfair dismissal. The respondent terminated
the applicants' contracts of
employment without notice thus
dismissing them as envisaged in section 186(1)(a) of the LRA. The
reason the respondent proffered
for the dismissal was that it no
longer had work for the applicants. The respondent therefore
dismissed the applicants for its
operational requirements. When the
respondent contemplated dismissing the applicants for its operational
requirements, it was required
to comply with the mandatory provisions
of section 189 of the LRA and ensure that the applicants' dismissal
was both substantively
and procedurally fair. It failed to do.so
rendering the termination of the applicants' contracts of employment
for the respondent's
operational requirements substantively and
procedurally unfair.
[9] The
applicant sought maximum compensation for unfair dismissal for
operational requirements of the respondent
which is equivalent to an
applicant's 12 months' remuneration calculated at each applicant's
rate of remuneration on the date of
their dismissal. Section 194 of
the LRA requires compensation for unfair dismissal to be just and
equitable in all the circumstances.
Having considered the submissions
made in respect of compensation, I am of the view that the maximum
compensation is not just and
equitable in the circumstances of the
matter at hand. The applicants worked for the respondent for about a
year. When they took
up employment they were aware that the
employment was not permanent. The contract of Vumendlini who was
dealing with accounts was
terminated at the end of February 2013. Her
undisputed evidence was that she had to finish paper work before
leaving the respondent's
employ. The date of the termination of
Vumendlini's contract forms part of the circumstances which require
consideration in determining
fair and equitable compensation for the
applicants. It is fair and equitable in all the circumstances of this
matter to award each
applicant compensation which is equivalent to
remuneration he would have earned over a period of three months,
calculated at each
applicant's rate of remuneration on the date of
dismissal.
[10] I
could find no reason for costs not to follow the result.
[11] In
the premises, the following order is made:
11.1 The
termination of the contracts of employment of the individual
applicants constituted dismissal for the
respondents' operational
requirements.
11.2 The
dismissal of the individual applicants for the respondent's
operational requirements was substantively
and procedurally unfair.
11.3 The
respondent is ordered to pay each applicant compensation equivalent
to remuneration each applicant would
have earned over a period of
three months, calculated at each applicant's rate of remuneration on
the date of dismissal.
11.4 The
respondent is to pay the applicant's costs.
Lallie,
J
Judge
of the Labour Court of South Africa
Appearances
For
the Applicant: Advocate
Grogan
Instructed
by: Wesley
Pretorius & Associates
For
the Respondent: Mr
Niehaus of Minnaar Niehaus Attorneys
[1]
(2007) 28
ILJ
670
(LC) at para 64.
[2]
[2011] 4 BLLR 381
(LC) at para 8.
[3]
(2010) 31
ILJ
2051 (LAC).