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[2017] ZALCJHB 7
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AMCU and Others v Piet Wes Civils CC and Another (J2834/16, J2845/16) [2017] ZALCJHB 7; (2017) 38 ILJ 1128 (LC); [2017] 5 BLLR 501 (LC) (13 January 2017)
THE LABOUR COURT OF
SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Reportable
Of
interest to other judges
C
ase
no: J 2834/16
J 2845/16
In
the matter between:
AMCU
First applicant
AMCU MEMBERS
Second and further
applicants
and
PIET WES CIVILS CC
Respondent (in J
2834/16)
WATERKLOOF
SKOONMAAKDIENSTE
CC
Respondent (in J
2845/16)
Heard
:
14 December 2016
Delivered
:
13 January 2017
Summary:
Urgent application in terms of LRA s 189A(13) –
application to reinstate employees pending proper consultation over
dismissals
for operational requirements. Respondents say that
employees were not dismissed for operational requirements but fixed
term contracts
terminated by operation of law. LRA s 198B considered.
Employees reinstated until employers comply with fair procedure.
JUDGMENT
STEENKAMP
J
Introduction
[1]
This
is an urgent application in terms of s 189A(13) of the LRA.
[1]
The second and further applicants are members of the first applicant,
the Association of Mineworkers and Construction Union (AMCU).
They
were employed by the respondents, Piet Wes Civils cc and Waterkloof
Skoonmaakdienste cc respectively. They say they have been
dismissed
for operational requirements; that it was a large scale retrenchment
contemplated by s 189A of the LRA; and that there
was no
consultation. They seek reinstatement pending a proper consultation
process in terms of s 189A(13). The respondents say
that the workers
were not dismissed, for operational requirements or at all. They were
employed on fixed term contracts; the contracts
expired; and their
contracts of employment terminated by operation of law.
Background facts
[2]
AMCU initially brought two separate
applications against Piet Wes and Waterkloof, the two respective
employers. They have been consolidated.
Where it is necessary to draw
a distinction, I shall do so.
[3]
Both respondents provide services to Exxaro
coal mine as contractors. They entered into various contracts with
Exxaro to perform
certain tasks. Exxaro terminated the contracts on
one month’s notice. The respondents terminated the employees’
contracts
as a direct result of losing the Exxaro contracts.
[4]
It is common cause that neither respondent
entered into a consultation process with AMCU or the employees in
terms of s 189 of the
LRA. They say it was not necessary: the
employees were all employed on fixed term contracts. Although no
fixed termination dates
were specified, the contracts were contingent
upon the respondents’ contracts with Exxaro. The employment
contracts would
only endure for so long as the respondents received
work from Exxaro.
[5]
Exxaro terminated its contracts with the
respondent in November 2016 on one month’s notice. In turn, the
employment contracts
were terminated. By the time this application
was heard, the employment contracts had already terminated (on the
respondents’
version) or the respondents had dismissed the
employees (on the applicants’ version). Either way, they are no
longer employed.
[6]
The applicants seek an order in terms of s
189A(13) of the LRA, forcing the respondents to consult. The
respondents say that is
simply not a factor: the workers were
employed on limited duration contracts; the contracts expired; ss 189
and 189A are not applicable
and no consultation is called for.
The legal principles
[7]
In order to evaluate the applicants’
claim properly, it must first be considered whether any consultation
was called for in
terms of s 189; or, as the respondents contend,
whether the contracts of employment simply terminated by operation of
law.
Application of s 189B
of the LRA
[8]
Piet Wes Civils had a contract with Exxaro
that was only due to expire in 2021. But Exxaro terminated it on one
month’s notice.
Waterkloof Skoonmaakdienste entered into
different contracts for different tasks, but those have also been
terminated on notice.
[9]
The
respondents say that, in their contracts of employment, the workers
agreed that their contracts of employment would only endure
so long
as the respondents were contracted to Exxaro. In the case of
Waterkloof, the employment contracts contained this clause:
[2]
The
duration of the agreement is subject to the following terms and
conditions:-
As
long as the EMPLOYER is supplied with the same work contracts by
his clients. The EMPLOYER has no alternative employment
at his
disposal for the EMPLOYEE should the work contract with his client
expire;
[10]
Section
198B of the LRA came into operation on 1 January 2015.
[3]
It provides that an employer may employee an employee
[4]
on a fixed term contract or successive fixed term contracts for
longer than three months only if –
(a)
the nature of the work is of a limited or
definite duration; or
(b)
the employer can demonstrate any other
justifiable reason for fixing the term of the contract.
[11]
One
of the listed justifiable reasons is when the person is employed to
work exclusively on a specific project that has a limited
or defined
duration.
[5]
In such a case, if
the person is employed for longer than 24 months, the employer must
pay the employee on expiry of the contract
one week’s
remuneration for each completed year of service.
[6]
[12]
The respondents have tendered payment of
this amount. AMCU rejected it; its stance is that the employers must
embark on a consultation
process in terms of s 189. It does not
accept that the employment contracts are governed by s 198B(4)(d).
Instead, it relies on
s 198B(5):
‘
Employment
in terms of a fixed term contract concluded or renewed in
contravention of subsection (3) is deemed to be of indefinite
duration.’
[13]
The
onus is on the employer to prove that there was a justifiable reason
for fixing the term of the contract and that the term was
agreed.
[7]
[14]
It is common cause that the clause quoted
above is contained in the employment contracts. But, argued Mr
Cook
,
it is not a genuine fixed term contract contemplated by subsection
4(d); therefore, it is in contravention of subsection 3 and
therefore
deemed to be of indefinite duration. The clause on which the
respondents rely, he argued, is against public policy and
pro
non scripto.
[15]
In neither employer’s case was the
nature of the work for which it employed the employees “of a
limited or definite
duration” as contemplated by s 198B(3)(a).
Instead, it was linked to the employer being supplied with work by
“his
clients”, i.e. Exxaro. Have the employers
demonstrated that that was a “justifiable reason” for a
fixed term
contract as contemplated by s 198B(3)(b)? If the employers
discharge that onus, the contracts will justifiably be seen as being
for a fixed term and the employers’ defence should succeed; but
if not, the employment of the employees will be deemed to
be of a
fixed duration in terms of subsection 5 and the employers would have
to consult over any contemplated dismissals for operational
requirements.
[16]
One of the “justifiable reasons”
contemplated by subsection (4)(d) is an instance where the employees
are employed to
work exclusively on a specific project that has “a
limited or defined duration”. But that was not the case here.
Exxaro
simply terminated its contracts with the two employers on
notice; there is no indication on the papers that a specific project
had come to an end. The employers have not demonstrated a justifiable
reason for fixed term contracts in that regard. An example
of a real
justifiable reason in terms of this subsection would have been, for
example, where Exxaro had contracted the respondents
to clean up a
specific mine, or to do so within a specified time. This is not such
an example.
[17]
In
a matter decided before the enactment of s 198B,
Fidelity
Supercare Cleaning (Pty) Ltd v Busakwe NO
[8]
,
the Court found in a review application that the commissioner’s
interpretation of a similar clause in an employment contract
was not
unreasonable and that the employee was entitled to severance pay. The
employment contract provided for the situation where
the employer
loses the contract on which the employee was employed – much
the same as the case here. The employer argued
that, where there is a
cancellation of a service contract, the employment contract
automatically terminates on the date of termination
of the
applicant’s service agreement with the client. The arbitrator
found that the employee was not employed on a fixed
term contract. In
the context of that contract, he did not accept the employer’s
argument that the applicant’s contract
was for a fixed term, or
that it would mean that once the employer’s client cancels a
contract or terminates it, the employees’
contracts should or
would automatically terminate “by operation of law”. And
Bhoola J found that the award was not
unreasonable. I agree.
[18]
More
recently, shortly after s 198B came into operation, the Court came to
a similar conclusion in a case involving the same company.
[9]
The Court, with reference to
Sindane
v Prestige Cleaning Services
[10]
and
Mahlamu
v CCMA
[11]
,
expressed
the view (albeit
obiter
)
that ‘event’ in s 198B(1)(a) does not include termination
of a contract by a client of the employer. And with reference
to s
198B, the Court continued:
‘
Given
the expressions about the decisions by this court in
Mampeule
[12]
,
Nape
[13]
and
Mahlamu
[14]
,
supra,
the view expressed in
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 [and] is disallowed by labour market
policies. It is contrary to public policy,
unconstitutional and
unenforceable (Grogan “The Broker’s 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.’
[19]
On the facts of the case before me, I hold
a similar view. The contract was not intended to be for a fixed
duration, or to terminate
on the occurrence of a specified event or
the completion of a specified task or project as contemplated by s
198B(1). And to place
the construction of a ‘specified event’
on the cancellation of the Exxaro contract would, in my view, go
beyond the
intention of the legislature. The very purpose of the
enactment of s 198B was to provide security of employment, except in
circumstances
where a fixed term contract is clearly justified, such
as seasonal work or employment to carry out a specific task or to do
so
within a specified period. To make the workers’ employment
contingent upon the whims of a third party that can simply terminate
the contract between it and the employer on notice, does not fit that
purpose. The employers have not, in my view, discharged the
onus of
showing that there was a justifiable reason to employ the workers on
a fixed term contract for more than three months,
as contemplated by
s 198B(3)(b). The employment contracts were either of an unlimited
duration or must be deemed to be of an indefinite
duration as
contemplated by s 198B(5).
[20]
Given that finding, the employment
contracts did not terminate automatically when Exxaro terminated its
contracts with the employers,
Piet Wes and Waterkloof
Skoonmaakdienste. The termination of the Exxaro contracts may well be
a justifiable and fair reason for
dismissing the employees for
operational requirements; but that can only be ascertained after a
proper consultation process in
the form of a meaningful joint
consensus-seeking process as contemplated by s 189 and s 189A.
Application of s
189A(13)
[21]
Section 189A(13) has as its purpose to
compel an employer in large scale retrenchments to follow a fair
procedure if it has not
done so.
[22]
As
the learned authors in
Labour
Relations Law: A Comprehensive Guide
[15]
point out, “the purpose of providing for application
proceedings rather than ordinary referral is presumably to simplify
and expedite the resolution of disputes about procedural unfairness.”
Hence this urgent application.
[23]
The
authors of
South
African Labour Law
[16]
explain:
‘
The
procedural dimension of retrenchment has been hived off from the
substantive dimension. The idea is that if a union or employee
sees a
failure in the consultative process, they should not stand on their
rights but act at once, and approach the court for appropriate
relief. The intent no doubt is to allow for early corrective action
so that a process failure will not escalate into a substantive
injustice.’
[24]
The
Constitutional Court recently gave a comprehensive judgment dealing
with the provisions of s 189A. In
Steenkamp
v Edcon Ltd
[17]
Zondo J (for the majority) discussed s 189A(13) in circumstances such
as these, where the employees had already been dismissed:
‘
[161]
If an employer has already dismissed employees without complying with
a fair procedure,
the consulting party may apply to the Labour Court
in terms of subsection (13)(c) for an order reinstating the employees
until
the employer has complied with a fair procedure. The
significance of the remedy of reinstatement in subsection (13)(c) is
that it is made available even for a dismissal that is unfair only
because of non-compliance with a fair procedure. That
is
significant because it is a departure from the normal provision that
reinstatement may not be granted in a case where the only
basis for
the finding that the dismissal is unfair is the employer’s
failure to comply with a fair procedure.
In such a case
the norm is that the Labour Court or an arbitrator may award the
employee only compensation.
[162]
Subsection (13)(d) provides that a consulting party may apply to the
Labour
Court for an award of compensation “if an order in terms
of paragraphs (a) to (c) is not appropriate”. It seems
to
me that the phrase “if an order in terms of paragraphs (a) to
(c) is not appropriate” constitutes a condition precedent
that
must exist before the Court may award compensation. The
significance of this condition precedent is that its effect
is that
the Labour Court is required to regard the orders provided for in
subsection (13)(a) to (c) as the preferred remedies in
the sense that
the Labour Court should only consider the remedy in subsection
(13)(d) when it is not appropriate to make any of
the orders in
subsection (13)(a) to (c).
[163]
This is a reversal of the legal position that obtains in the case of
dismissals
for the employer’s operational requirements governed
by only section 189 where dismissal is only procedurally unfair and
not substantively unfair as well. In these cases the Labour
Court is required not to order reinstatement at all. So,
in
making the remedy of reinstatement available for a procedurally
unfair dismissal and also making it one of the preferred remedies
in
subsection (13), the Legislature has gone out of its way to give
special protection for the rights of employees and to protect
the
integrity of the procedural requirements of dismissals governed by
section 189A.
[164]
The extensive remedies in subsection (13) provide at least partial
compensation
for the fact that in respect of disputes concerning the
procedural fairness of dismissals the employees have been deprived of
the
right to adjudication that other employees have. In part
the extensive remedies in subsection (13) for non-compliance with
procedural fairness have been provided because of the importance of
the pre-dismissal process.’
[25]
In this case, it is common cause that
there’s been no consultation: the employers did not think it
necessary. The primary
remedy prescribed by the legislature and
endorsed by the court is that of reinstatement until the employers
have complied with
a fair procedure.
[26]
The employees who have been dismissed –
clearly for operational requirements arising from the cancellation of
the Exxaro contracts
– must be reinstated until the employers
comply with a fair procedure. That holds true for all but 18 of the
Piet Wes employees.
Piet Wes
[27]
In
the case of Piet Wes Civils, there is a dispute of fact on the papers
regarding the fate of 18 of the 43 affected employees.
The employer
says their contracts of employment terminated at the end of August or
beginning of September 2016; AMCU denies it,
averring that Piet Wes
recalled them and that they continued working until 11 November 2016,
when they received notices of termination.
The turnstile records
purporting to show that they went back to work are not comprehensive.
The dispute regarding these 18 employees
[18]
must be referred to oral evidence. Theirs is a dispute that falls
within the circumstances mentioned by Du Toit et al in the context
of
applications in terms of s 189A(13):
[19]
‘
An
application, unlike a referral, contemplate argument on the papers
without necessarily leading evidence. Where facts are in dispute,
however, the matter may have to be postponed for the hearing of oral
evidence and the result, including costs, may be much as before
[LC
Rule 7(7)].’
[28]
With regard to the remaining Piet Wes
employees, I rule that they were employed for an indefinite duration
in terms of s 198B of
the LRA and that their union, AMCU, must be
consulted about their termination for operational requirements
following on Exxaro’s
termination of its contract with Piet
Wes.
Waterkloof
Skoonmaakdienste
[29]
The same considerations apply with regard
to the 104 Waterkloof employees. The employer must consult with AMCU
over the termination
of their contracts. They must be reinstated
pending that consultation process.
Conclusion
[30]
I find that the employees were employed for
an unlimited duration pursuant to the provisions of s 198B of the
LRA. They were dismissed
for operational requirements, being the loss
of the Exxaro contracts. The employers have not consulted in terms of
ss 189 and 189A
of the LRA. They must be compelled to do so. The
employees must be reinstated until the employers have complied with a
fair procedure,
as contemplated by s 189A(13)(c).
[31]
The
LRA contemplates a facilitated consultation process of 60 days after
a written notice of contemplated dismissals for operational
requirements in terms of s 189(3).
[20]
It seems to me to be in line with the purpose of the Act that, once
the workers have been reinstated, the parties should be given
a
further 60 days to consult – preferably with the assistance of
a facilitator -- after the date of this judgment. However,
I make no
order in this regard, other than to stipulate that the employers must
follow a fair procedure.
Costs
[32]
The upshot of this judgement is that the
employees have not been dismissed. There is also an ongoing
relationship between AMCU and
the employers. I do not consider a
costs award to be appropriate at this juncture in law or fairness.
Order
[33]
I therefore make the following order:
33.1
The respondents in case numbers J 2834/16
and J 2845/16 respectively, Piet Wes Civils cc and Waterkloof
Skoonmaakdienste cc, are
ordered to reinstate the employees listed in
each application, except as set out below.
33.2
The respondents are ordered to reinstate
the employees as contemplated in s 189A(13) of the LRA until they
have complied with a
fair procedure.
33.3
The dispute regarding the 18 Piet Wes
employees listed in Annexure “SM 5” to the founding
affidavit in case no J 2834/16
is referred to oral evidence.
33.4
The dispute with regard to the following
four Piet Wes employees listed in Annexure “SM 6” to the
founding affidavit
in case no J 2834/16 has been withdrawn and this
order does not apply to them:
33.4.1
Knowledge Boshielo;
33.4.2
Charles Gebina;
33.4.3
Phillip Mosema; and
33.4.4
Jonas Maluleka.
33.5
There is no order as to costs.
_______________________
Steenkamp
J
APPEARANCES
APPLICANT:
A
L Cook
Instructed
by Larry Dave attorneys.
RESPONDENTS:
E
J Steenkamp
Instructed
by Cavanagh & Richards.
[1]
[1]
Labour Relations Act 66 of 1995
.
[2]
The Piet Wes contracts contained a similar clause.
[3]
Government Gazette 38317 of 19 December 2014.
[4]
Who earns less than the threshold prescribed in s 6(3) of the Basic
Conditions of Employment Act (currently R205 433, 30 per
year).
[5]
LRA s 198B(4)(d).
[6]
s 198B(10)(a).
[7]
s 198B(7).
[8]
[2010] 3 BLLR 260
(LC).
[9]
SATAWU
obo Dube & ors v Fidelity Supercare Cleaning Service Group Ltd
[2015]
8 BLLR 837
(LC); (2015) 36
ILJ
1923
(LC) para [51].
[10]
[2009] 12 BLLR 1249 (LC).
[11]
[2011] 4 BLLR 381 (LC).
[12]
SA Post
Office v Mampeule
[2010]
10 BLLR 1052 (LAC).
[13]
Nape v
INTCS Corporate Solutions (Pty) Ltd
(2010)
31
ILJ
2120 (LC).
[14]
Mahlamu
v CCMA
[2011]
4 BLLR 381 (LC).
[15]
Du Toit et al,
Labour
Relations Law : A Comprehensive Guide
(6
ed 2016) at 497.
[16]
Thompson & Benjamin,
South
African Labour Law
(Service no 66, 2016) at AA1-517.
[17]
(2016) 37
ILJ
564
(CC);
2016 (3) BCLR 311
(CC);
[2016] 4 BLLR 335
(CC);
2016 (3) SA
251
(CC) paras 161-164.
[18]
Listed in annexure “SM 5” to the founding affidavit and
Annexure “A” to Ms Steenkamp’s redacted
heads of
argument.
[19]
Labour
Relations Law : A Comprehensive Guide
6
ed 2016) at 497. See also
NDPP
v Zuma
[2009] ZASCA 1
;
2009 (2) SA 277
para [26].
[20]
s 189A(7).