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[2017] ZALCD 11
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Pillay and Others v Mobile Telephone Networks (Proprietary) Limited (D377/13) [2017] ZALCD 11 (4 May 2017)
IN
THE LABOUR COURT OF SOUTH AFRICA, DURBAN
JUDGMENT
Reportable
Case
no: D377/13
In
the matter between:
SOMAHKHANTI
PILLAY & 37 OTHERS
Applicants
and
MOBILE
TELEPHONE NETWORKS
(PROPRIETARY)
LIMITED
Respondent
Heard:
26 October 2016
Delivered:
04 May 2017
Summary:
Application for an order directing the respondents to give effect to
the consequences of the Appeal Court judgment that
the applicants
were employees of the respondent as a consequence of a section 197
transfer of a business as a going concern Viz
that the applicants be
paid their remuneration from the date of the transfer of the going
concern to the date of the Labour Appeal
Court judgment. Application
granted.
JUDGMENT
GUSH J
[1]
This
application arises as a result of the decision in the Labour Appeal
Court under case number DA10/13 in which matter the Labour
Appeal
Court set aside the decision of this Court in case number D377/11 and
made the following order:
‘
Accordingly
the following order is made:
1.
The
appeal is upheld with costs.
2.
The
order of the court
a
quo
is set aside and replaced with the following order:
2.1
It is
declared that there was a transfer of a business as a going concern
by the second respondent to the first respondent and that
such
transfer forms within the ambit of
section 197
of the
Labour
Relations Act 66 of 1995
.
2.2
Second
and further appellants are declared in law to be employees of the
first respondent effective from 1 December 2010 with no
loss of
service.
2.3
The
first respondent is ordered to pay the appellants’ costs.
[2]
Given
the order of the Labour Appeal Court, the second respondent in the
original application is not a party to these proceedings.
[3]
In
this application, the applicants apply for an order declaring that
the respondent is obliged to do all things necessary in order
to give
effect to the order of the Labour Appeal Court that the applicants
were declared to be employees of the respondent with
effect from 1
December 2010 with no loss of service.
[4]
In
particular, apart from an order for costs, the applicants
specifically apply for two distinct orders:
a.
Firstly,
an order directing the respondent to provide each of the applicants
with contracts of employment as contemplated by
section 29
of the
Basic Conditions of Employment Act 75 1997
containing terms and
conditions no less favourable than other employees of the respondent
performing similar work and backdated
to 1 December 2010;
b.
And
secondly an order directing the respondent to pay to the applicants
the remuneration due to them “from 1
st
December 2010 to date, (inclusive of mora interest with effect from
1
st
December 2010).”
[5]
At
the outset, the parties confirmed and agreed that only those
applicants set out in the list attached hereto marked “A”
are parties to this application. The applicants are the remaining
applicants who have not withdrawn their claim against, or who
have
not accepted voluntary severances packages from the respondent.
[6]
The
detailed background to the matter is set out in the judgment of the
Labour Appeal Court and I do not intend to repeat it save
to record
the following salient facts that are relevant to this application.
a.
With
effect from 1
st
December 2010, the respondent in this matter took transfer of the
business operated by Interaction Call Centre (Pty) Limited.
b.
The
applicants were all employees of Interaction Call Centre (Pty)
Limited, the second respondent in the initial application.
c.
The
respondent denied that the takeover of Interaction Call Centre (Pty)
Limited constituted a transfer of a business as a going
concern and
accordingly section 197 of the Labour Relations Act 66 of 1995 (LRA)
was inapplicable and therefor refused to recognise
the applicants as
employees.
[7]
As
a result, the applicants applied to this Court for an order declaring
the transaction to be a transfer in terms of section 197
of the LRA
and, accordingly, they be declared employees of the respondent from 1
December 2010 with no loss of service. The applicants
included in
their prayer for relief an order directing the respondent to take the
applicants into its employ in accordance with
the LRA.
[8]
This
application was dismissed by this Court and the applicants
successfully appealed to the Labour Appeal Court against this
decision.
The decision of the Labour Appeal Court was handed down on
21 April 2015.
[9]
It
is apparent from the pleadings that after the judgment of the Labour
Appeal Court, despite an attempt to settle the consequences
of the
judgment, the matter was not settled.
[10]
After
receiving the judgment, the applicants claimed payment from the
respondent of their remuneration from 1
st
December 2010 to date. When their claim was rejected by the
respondent the applicants filed this application.
[11]
Before
the matter was heard during the course of the exchange of pleadings,
the respondent made a tender for the payment of the
applicants’
remuneration for the period 22
nd
April 2015 to 27
th
June 2016 (the date on which this application was filed). During
argument the applicants indicated that they accepted this tender.
[12]
What
remains to be determined by this Court is whether the applicants are
entitled to an order:
a.
Directing
the respondent to comply with
section 29
of the
Basic Conditions of
Employment Act 75 of 1997
and
b.
That
the applicants are entitled to their remuneration for the period 1
December 2010 to the 21
st
April 2015 and directing the respondent to pay the applicants.
[13]
In
response to and in defence of the applicants’ claim, the
respondent raised only three defences to the applicants’
claim.
Although these points are designated as “points
in
limine
”
in the respondent’s answering affidavit they constitute and
were argued as the respondent’s defence and the
sole basis of
the respondent’s opposition to the applicants’
application.
[14]
The
three defences to the applicants’ claim raised by the
respondent are:
A.
CLAIM
FOR SPECIFIC PERFORMANCE: PROVING TENDER OF SERVICES
The
relief sought by the applicants in prayer 1(b) of their notice of
motion, properly construed, is a claim for specific performance.
The
applicants are therefore required to lead oral evidence to prove,
inter
alia
,
when they tended the services to the respondent. Accordingly, motion
proceedings inappropriate and the applicant should instead
institute
action to claim such specific performance.
[1]
B.
TRANSFER
OF CONTRACTS AND TENDER OF SERVICES:
The
respondent averred that the effect of the Labour Appeal Court
judgment was that the contracts of employment of the applicants
were
transferred
from Interaction Call (Pty) Ltd to the respondent with effect from 1
December
2010. The respondent pleaded that the applicants had failed to tender
their services to the respondent on 1 December 2010
and according
they were not entitled to their remuneration. “The applicants
are not entitled to be remunerated until such
time as they tender the
services to the [respondents]”.
[2]
C.
PRESCRIPTION:
The
relief sought by the applicants in prayer 1(b) of their Notice of
Motion, properly construed as a claim for specific performance,
being
the monthly remuneration which falls due at the end of each calendar
month with effect from 31 December 2010 against their
tender of
service to the respondent. The applicants served and filed this
application and 6 July 2016. Accordingly, the applicants’
claim
to remuneration which allegedly became due and payable during the
period 31 December 2010 to 30 June 2013 has prescribed
in terms of
the
Prescription Act 68 of 1969
.
[3]
[15]
In
summary, the only defences the respondent raises against the
applicants’ claim are:
a.
that
the applicants’ claim is for specific performance and that the
applicants accordingly are required to lead oral evidence
to prove
that they tendered their services to the respondent prior to 21 April
2015;
b.
That
the applicants’ contracts of employment were
transferred
from Interaction Call Centre (Pty) Ltd on 1 December 2010, and
accordingly the applicants were required to tender their services
to
the respondent at the time of the transfer. As the applicants only
tended the services to the respondent on 21 April 2015 their
claim
for payment of remuneration before 21 April 2015 is fatally
defective.
c.
That
the applicants’ claim for remuneration for the period 31
December 2010 to 30 June (sic) 2013 has prescribed.
A
Claim for specific performance:
[16]
The
respondent aver that as the applicants’ claim is for specific
performance, the claim should have been brought by way of
action and
that the applicants were required to lead oral evidence to prove that
“
inter
alia
they tendered their services to the respondent”.
[4]
[17]
I
shall firstly deal with the respondent’s averment that the
applicants did not tender their services to the respondent, an
averment that is central to two of the respondent’s defences to
the applicants’ claim.
[18]
It
is abundantly clear from the pleadings and the judgments of both this
Court and the Labour Appeal Court that immediately following
the
takeover of Interaction Call Centre (Pty) Ltd by the respondent, a
dispute arose regarding whether the transaction constituted
a
transfer of a business as a going concern as envisaged by
section 197
of the LRA.
[19]
As
a result of this dispute, the applicants timeously referred the
matter to the Labour Court for determination. The basis of the
referral was simply that the applicants regarded the transaction as a
transfer of a business as a going concern as envisaged by
section 197
of the LRA and, that accordingly, their employment contracts of
employment with Interaction Call Centre (Pty) Ltd continued
uninterrupted
with the respondent.
[20]
Included
in their notice of motion the applicants asked for an order that they
be declared employees of the respondent.
[21]
Section
197
provides that the contracts of employment of employees continue
uninterrupted as do the rights and obligations between the “new
employer and the employees”.
[5]
Taking into account the nature and effect of this section, it would
appear that it is not required of the employees to tender their
services where the business employing them is transferred in
accordance with
section 197.
The employment continues uninterrupted.
[22]
If,
however, employees are required to tender their services, the
applicants argued that they had, in fact, tended their services
to
the respondent.
[23]
Nothing
could be a clearer tender of their services by the applicants than
their referral of the dispute to the Labour Court concerning
the
applicability of
section 197
and the relief they sought.
[24]
I
am accordingly satisfied, in so far as it may be required, that the
referral of this dispute by the applicants stands as incontrovertible
proof of the tender of their services to the respondent.
[25]
It
is clear from the relief sought by the applicants in their notice of
motion that their claim is specifically a contractual claim
for
payment of their remuneration consequential upon the Labour Appeal
Court’s judgment that the acquisition of Interaction
Call
Centre (Pty) Ltd by the respondent constituted a transfer of a
business as a going concern.
[26]
The
effect of the Labour Appeal Court’s judgment is that the
respondent was “automatically substituted in the place
of
[Interaction Call Centre (Pty) Ltd] in respect of all contracts of
employment [and] all the rights and obligations between [Interaction
Call Centre (Pty) Ltd] and the [applicants] … continued in
force as if they had been rights and obligations between [the
respondent] and [the applicants].
[6]
[27]
The
only defence the respondent offers in response to the applicant’s
claim is the averment that the applicants were obliged
to lead oral
evidence of their tender of services.
[28]
The
respondent pleads in their response to the applicants’ claim
that oral evidence is only required to prove a tender of
their
services. There is nothing in the pleadings to suggest that besides
that evidence the applicants are obliged to lead oral
evidence. The
respondent does not raise any other defence that may have required
the applicants to lead oral evidence.
[29]
In
the circumstances, therefor, in respect of this defence, as I am
satisfied that there was, in fact, a tender of services (if
required), the fact that the applicants brought their claim by way of
application as opposed to an action is of no consequence.
B
Transfer of contracts and tender of services
[30]
The
foundation of the respondent’s second defence to the
applicant’s claim also lies on its averment that the contracts
of employment were transferred and that there was therefore, as a
result of the transfer, a requirement that the applicants tender
their services to the respondent as from 1 December 2010 in order to
be entitled to their remuneration.
[31]
As
I have set out above, I am satisfied that even if there was a need
for the applicants to tender their services, the application
brought
by the applicants constituted such a tender. It is clear that the
respondent has based this defence on its apparent misunderstanding
of
the provisions of
section 197
and the effects thereof. In the
pleadings and in argument, the respondent repeatedly averred that the
contracts of employment of
the applicants were
transferred
from
Interaction Call Centre (Pty) Ltd to the respondent.
[32]
What
the respondent fails to appreciate is that, despite the heading to
section 197
viz, “Transfer of contract of employment” the
wording of the section does not deal with or contemplate the transfer
of the contracts of employment but deals with the “transfer of
a business or part thereof as a going concern”
[7]
and the consequences thereof.
[33]
The
provisions of the section set out very clearly what the consequences
are of a transfer of a business or part thereof as a going
concern on
the contracts of employment of the employees.
‘
(2)
If a transfer of a business takes place, unless otherwise agreed in
terms of subsection
(6) –
(a)
the new employer is automatically substituted in the place of the old
employer in
respect of all contracts of employment in existence
immediately before the date of transfer;
(b)
all the rights and obligations between the old employer and an
employee at the time
of the transfer continue in force as if they had
been rights and obligations between the new employer and the
employee;
(c)
anything done before the transfer by or in relation to the old
employer, including
the dismissal of an employee or the commission of
an unfair labour practice or act unfair discrimination, is considered
to have
been done by in relation to the new employer; and
(d)
the transfer does not interrupt an employee’s continuity of
employment, and
employee’s contract of employment continues
with the new employer as if with the old employer.’
[8]
[34]
The
use of the word” transfer” or “transferred”
in relation to the employees in sub sections (3) (5) and
(7) is
merely descriptive of the employees and does not alter the legal
effect of
Section 197(2)(a).
This must particularly be so given the
definition of the word “transfer” in
section 197(1).
[35]
As
regards the second “point
in
limine
”
or defence raised by the respondent, I am not persuaded that the
applicants’ claim is fatally defective for want of
a tender of
their services.
C
Prescription
[36]
The
third defence raised by the respondent to the applicants’ claim
is one of prescription. The respondent avers that the
applicants’
claim is for specific performance viz. the payment of their
remuneration for the period 31 December 2010 to 21
April 2015, and
that the claim for payment (this application) was only served on 6
July 2016. The respondent avers that accordingly,
the remuneration
for the period 1 December 2010 to 30 June 2013 has prescribed in
terms of the
Prescription Act 68 of 1969
.
[37]
Section
12
of the
Prescription Act specifically
provides that prescription
will only run from the date on which the debt falls due.
12.
When prescription begins to
run
.
(1) Subject to the provisions of
subsections (2) and (3), prescription shall commence to run as soon
as the debt is due.
[38]
At
the time of the transfer of the business of Interaction Call Centre
(Pty) Ltd to the respondent, there was a dispute as to whether
the
transfer fell within the ambit of
section 197.
Accordingly, it cannot
be said that the debt (viz. the employees’ remuneration) was
due. The debt only became due after the
judgment of the Labour Appeal
Court to the effect that the transfer was one envisaged by
section
197.
Having so decided the consequence of the Labour Appeal Court’s
judgment was that the respondent was automatically substituted
as the
applicants’ employer and became liable to the applicants for
the payment of their remuneration. As the debt in respect
of the
remuneration only fell due on 21 April when the Labour Appeal Court
handed down judgment the running of prescription commenced
on that
day.
[39]
I
am therefor satisfied that the remuneration due to the applicants has
not prescribed.
[40]
A
further issue requiring determination is the applicants’ claim
for
mora
interest on the remuneration payable to applicants. The applicants
claim that as they are entitled to their remuneration from 1
December
2010 they are entitled to mora interest.
[41]
As
the debt only fell due on 21 April 2015 when the Labour Appeal Court
handed down judgment mora interest can only run from that
date. I am
satisfied that the mora interest is only due from 21 April to date of
payment.
[42]
The
claim for payment of the applicants’ remuneration for the
period from the date of the Labour Appeal Court judgment was
the
subject of the tender by the respondent which tender the applicants
accepted. It is not necessary therefor to deal with this
matter any
further. This tender and the acceptance thereof is helpful in
determining the basis of the calculation of the remuneration
due to
the applicants from 1 December 2010 to 21 April 2015.
[43]
The
applicants in their prayer for relief also sought an order directing
the respondent to provide the applicants with contracts
of employment
in accordance with the
Basic Conditions of Employment Act. In
the
light of the accepted tender there is nothing in the papers to
suggest that the applicants are unaware of the terms and conditions
of their employment at the time of the transfer of Interaction Call
Centre (Pty) Ltd. The same terms and conditions apply to their
current employment with the respondent. The quantum of their
remuneration forms part of the settlement of the applicants’
claim post the Labour Appeal Court’s judgment and it is
unnecessary to make such an order.
[44]
This
matter has unfortunately dragged on much longer than is desirable.
The delay however is not directly due to the conduct of
either party.
It was simply a consequence of the time litigation takes.
[45]
There
is no reason why the costs should not follow the result as the
applicants have been substantially successful.
[46]
In
the circumstances and for the reasons set out above, I make the
following order:
a.
The
respondent is ordered to pay the applicants the remuneration due to
them in accordance with their contracts of employment for
the period
1 December 2010 up to and including 21 April 2015.
b.
The
calculation of the quantum of the remuneration is to be based on the
principles applied by respondent to the calculation of
the amount of
the tender, accepted by the applicants, in respect of the
remuneration payable to the applicants for the period from
22 April
2015 to 5 July 2016.
c.
The
respondent is ordered to pay the applicants interest on the amount
referred to above at the prescribed rate from 22 April 2015
to date
of payment.
d.
The
respondent is ordered to pay the applicants’ costs.
D H
Gush
Judge of the Labour Court
of
South
Africa
APPEARANCES:
FOR THE
APPLICANT:
Adv. M
Pillemer
Instructed
by: B Purdon Attorneys
FOR THE
RESPONDENT:
Adv. M van As
Instructed
by Mashiane Moodley Monama Attorneys
[1]
Pleadings page 33
Paragraph 4 and 5 of the answering affidavit.
[2]
Pleadings page 34
Paragraph 7 8 and 9 of the answering affidavit.
[3]
Pleadings pages
34/5 paragraphs 11,12 and 13.
[4]
Pleadings page 33.
[5]
Section 197(2).
[6]
Section 197(2)(a)
and (b) of the LRA.
[7]
Section197(1)(b).
[8]
Section 197(2).