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[2018] ZALCJHB 80
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Proctor and Gamble Manufacturing SA (Pty) Ltd and Another v Mokadi and Others (JR895/16) [2018] ZALCJHB 80 (2 February 2018)
IN
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case
No. JR895/16
In
the matter between:
PROCTOR
AND GAMBLE
MANUFACTURING
SA (PTY) LTD
First Applicant
WORKFORCE
GROUP (PTY)
LTD
Second Applicant
and
AARON
MOKADI AND 40
OTHERS
First Respondents
SODEXO
SOUTHERN AFRICA (PTY) LTD
Second Respondent
COMMISSION
FOR CONCILIATION
MEDIATION
AND ARBITRATION
Third Respondent
DUMISANI
NGWENYA
N.O
Fourth Respondent
Heard:
13 July 2017
Delivered:
02 March 2018
JUDGMENT
JULY.
AJ
Introduction
[1]
This
application is brought in terms of sections 145 and 158 of the Labour
Relations Act
[1]
(LRA), to
have an award dated 4 April 2016 made by the fourth
respondent under case number: GAEK 4688-15 the auspices
of the third
respondent, reviewed and set aside.
[2]
The fourth respondent made the following
award:
"28
In the result I make the following determination:
29
The respondent (Sodexo and Workforce) are the joint or
co-employees of the applicant's within
the meaning of Section 200B.
30
The applicants are deemed to be employees of P&G within the
meaning of S198A by
virtue of the fact that P&G is determined to
be the client of its co-employee Sodexo."
[3]
The nature of the dispute that was referred
by the first respondents is clearly set out in item 3 of referral
form 7.11 as being
a dispute in terms of section 198A.
[4]
The outcome required by the first
respondents as per item 4 of the Request for Arbitration form is –
"Applicants are to be deemed
permanent employees of Proctor & Gamble Manufacturing SA (Pty)
Ltd in terms of Section 198A
(3)(b)."
[5]
The dispute remained unresolved as at
9 July 2015. Subsequently, the dispute was referred to
arbitration on or about 10
July 2015.
Factual
Background
[6]
The first applicant operates a diaper
manufacturing plant. The first applicant and the second
respondent entered into a global
service level agreement titled "
EOL
and Warehouse Services
" (SLA) for
a period of 2 years with annual escalation inflation plus 2%.
In terms of the SLA the second respondent's
scope of service is to
provide online packaging and warehouse services, and are stipulated
on pages 1 to 3 of the SLA as follows:
1.
Receiving: Emptying of goods from delivery trucks and vehicles and
storage of
these goods into designated areas on the premises as per
P&G specifications:
·
Receiving
of about 100 container trucks and 20 local trucks (pack material) per
month.
·
7
day, 24h operations.
·
Offloading
of CHEP pallets from delivery truck (about 500 pallets/day average).
2.
Line Supply: Delivery of goods to the production areas as per P&G
request:
·
Line
supply, supply of about 200 to 220 unit loads from warehouse to the
line per day (including returns to the warehouse)
·
7
day, 24h operations.
·
Pick
up RM upon order of the line, move to the line, partially drop them
into a cart, scanning
3.
Line Take Away: Collection of Goods from end of line as per P&G
request:
·
Line
take away, movement of about 500 FP pallets from the line to the
warehouse per day.
·
7
day, 24h operation.
·
Scope:
Pick up pallets at the line, compare pallet label with log book, move
to the warehouse, store in racks, scanning.
4.
Shipping: Picking of Goods and Loading of trucks and vehicles as per
P&G
specifications:
·
Shipping
of finished product, about 160 – 200 trucks per month, 60
pallets each.
·
5
day operation, 24h operation.
·
Scope:
remove pallets from racks, stack them to piles of 2, move them from a
strapping area into a truck, scanning.
General scope included in all of the
above:
i)
FLT
inspection before use, changing of batteries, checking and
maintaining water level of batteries.
ii)
Pallet
Jack scope
·
preparing
FP pallets for shipment: Strapping FP pallets with belts
·
moving
CHEP pallets from offloading area into storage area
·
"Owning"
a section of WH for standards
·
Doing
inspection while on shift, Check BIN labels
·
Maintaining
RTCIS labels in good condition within own section
·
Attach
printed labels per description to the BINS/racks, printing through
P&G."
[7]
The agreement sets out the following
further requirements
7.1
EOL teams will primarily be at the end of
the production line and WH teams will be in areas which RPM and FP
are located in the
warehouse areas.
7.2
The second respondent will have full
ownership of the designated areas as per the layout.
7.3
The second respondent is required to train
its own employees until they achieve a desired skill level.
7.4
In relation to health and safety, the
second respondent is required to comply with the first applicant's
local regulatory laws,
regulations and laws of South African
Department of Labour.
7.5 The second
respondent is required to provide, its own and maintain all necessary
Personal Protective Equipment.
This equipment must be in
compliance with the safety requirements of the first applicant.
It must further ensure that all
its workers have all appropriate
safety equipment.
7.6
All employees of the second respondent that
operate motorized vehicles must have the relevant licenses and/or
certificates and where
necessary the first applicant will provide the
initial training.
7.7
The second respondent will have the full
responsibility to maintain a training programme.
7.8
The second respondent would be required to
provide branded products and services of superior quality and must be
adequately staffed.
7.9
The second respondent is to be paid upon
presentation of an invoice.
[8]
In a questionnaire appearing in paragraph 1
on page 93 of the paginated bundle, the second respondent states that
it has 355 000
employees and 30 600 clients in 80 countries, is
recognized as a top performing company with high quality products and
service
offering, and its objective is to be able to work with a
manufacturer for each strategic product or category/ies of a product.
[9]
The second respondent in turn entered into
a sub-contractor agreement with the second applicant. In terms of the
sub-contractor
agreement, the second applicant was obliged to provide
services for the first applicant in terms of the Tender CONLAB
002-2010
incorporating annexures "B" and "C".
Annexure "B" is a facility management outsourcing services
agreement between the first applicant and second respondent.
[10]
The second applicant's core business, as
stipulated in the tender document, is the provision of staffing
solutions to all industry
sectors. It has permanent and
temporary placement labour broking and industrial staffing. In terms
of operations, the second
applicant was required to provide all
miscellaneous equipment and technology required to provide the
service and to ensure contract
continuity, contract execution and to
maintain good communication between all parties involved.
[11]
Four dedicated supervisors were assigned to
the second respondent's site, at the premises of the first applicant,
the fourth respondent
seems to be persuaded that this establishes a
client and temporary employment service relationship between the
first applicant
and the second applicant. This simply cannot be true
as the first respondents' presence at the premises of the first
applicant
is due to the simple fact that the services of the second
respondent are required on site.
Grounds
for review
[12]
The grounds for review are set out in
paragraph 47 of the first and second applicants' founding affidavit
as follows:
"47.1 The
fourth respondent failed to identify, appreciate and determine the
true issue that he was called
upon to determine and apply his mind
accordingly.
47.2 The
fourth respondent made findings that are not rational nor reasonable
in relation to the reasons
given by him and/or the facts properly
before him.
47.3 The
fourth respondent further failed to consider relevant evidence and
decided the matter which was
not brought before him, and in that
exceeded his powers.
47.4 The
fourth respondent's failure to apply his mind to the facts and the
case before him reaching a decision
that a reasonable decision maker
could not have come to.
47.5 The
fourth respondent committed gross misconduct by committing a gross
error of law.
47.6 There is
a reasonable prospect of success in that this Honourable Court would
likely reach a different
decision to that of the fourth respondent
based on the facts of the matter."
[13]
The applicant, therefore, requires this
Court to make an order as follows:–
"1. Reviewing and
setting aside the award handed down by the fourth respondent on or
about 4 April 2016, under case number
GAEK4688/15, in respect of the
determination that:
1.1 the second applicant
and the second respondent are co-employers of the first respondents
in terms of section 200B of the Labour
Relations Act 66 of 1995
("LRA"); and
1.2
the first applicant is the deemed employer of the first respondents
within the meaning of section
198A of the LRA.
2.
substituting the decision of the fourth
respondent with a decision of this Honourable Court, namely that
2.1
the second respondent is not the
co-employer of the first respondents; and
2.2
the first applicant is not the deemed
employer of the deemed employer of the first respondents.
3.
directing such respondents who oppose this
application to pay the costs of this application to pay the costs of
this application,
either singularly or jointly and severally."
The
Test for Review
[14]
Review
applications are regulated by Section 145 of the LRA, and it is
settled law that the test to be applied in applications brought
in
terms of this section is the test for reasonableness or rationality.
Simply put, the reasons for the decision must be
rational failing
which the outcome will be irrational. In other words, illogical
reasoning will lead to an irrational outcome.
[2]
Section
198 of the LRA
[15]
In terms of Section 198A, a temporary
service is defined to mean work for a client by an employee –
"(a) for a period not exceeding
three months;
(b) as a substitute for an employee of
the client who is temporarily absent; or
(c) in a category of work and for any
period of time which is determined to be a temporary service by a
collective agreement concluded
in a bargaining council, sectoral
determination or a notice published by the Minister, in accordance
with the provisions of subsections
(6) to (8)."
[16]
In terms of section 198A (3) an employee
performing a temporary service is the employee of the temporary
employment services provider.
However, an employee not performing
such temporary service for the client is deemed to be an employee of
the client, and the client
is deemed to be his employer. Such
an employee is subject to the provisions of section 198B, employed on
an indefinite basis
by the client.
[17]
In order for an arbitrator to determine
whether the temporary service employees are to be deemed employees
(in terms of section
198A(3)) , the relationship between the parties
must be one of a client and temporary employment service provider.
In this
case the first applicant has to be the client of the second
applicant, and not that of the second respondent. I therefore find
that there is no client and temporary employment service relationship
between the first applicant and the second applicant, nor
does such a
relationship exist between the first applicant and the second
respondent. Therefore, the deeming provision in section
198A does not
find application in the present circumstances. Consequently, the
fourth respondent's award must be set aside.
Analysis
of the pleadings
[18]
In paragraphs 22 and 23 of the first and
second applicants' affidavit it is stated that:
"22
It is common cause between the parties that the second applicant is a
temporary employment
service provider and that the employees
concerned are temporary employees as contemplated by S198 read with
198A of the LRA.
23
In providing these EOL services, the second respondent has chosen, at
its own behest,
to contract with a recognized temporary service
provider, namely second applicant, for the provision of resources in
the shape
of workers that are placed at P&G's plant."
[19]
According to the first respondents'
answering affidavit, paragraphs 22 and 23 of the first and second
applicant's founding affidavit
are admitted, however, the first
respondents deny that the second respondent is the client.
[20]
The first respondents allege that the
second respondent is the client of the second applicant. The first
applicant's response to
this allegation is that –
"81
The employees of the second applicant work for the first applicant as
has been demonstrated
above, and were procured to work at the first
applicant by the second respondent via second applicant."
[21]
This response does not deal with the
relationship between the first applicant and the second respondent.
It is not sensible
that the second respondent procures work from the
second applicant on behalf of the first applicant.
[22]
The first respondents admitted the
allegation contained in paragraph 17 of the first and second
applicants' founding affidavit that
the second respondent entered
into a global commercial agreement with the first applicant as a
service provider.
[23]
In paragraph 9 of the Commission for
Conciliation, Mediation and Arbitration (CCMA) arbitration award, the
fourth respondent states
the issue to be decided as
"9. whether, in the
circumstances, the applicants are deemed to be the employees of
Sodexo and/or PG for purposes of section
198A(5) of the Act."
[24]
For section 198A(5) to apply, there must be
a client and employment service provider relationship between the
first applicant and
second applicant. In the absence of such a
relationship between the two, section 198A does not apply. In light
of the service
level agreement between the first applicant and the
second respondent, on the one hand, and the subcontracting agreement
between
the second applicant and the second respondent, it is
difficult to understand how the first applicant and the second
respondent
are said to be co-employers of the first respondents.
[25]
The first applicants' contention at the
CCMA arbitration and before this Court has been consistently that
there is no such a relationship
between it and the second applicant
and therefore section 198A does not apply in so far as it relates to
it. Having read the outsourcing
agreement between the second
applicant and the second respondent, I am convinced that the
relationship between the two parties
is not one that is intended to
be subjected to regulation by section 198A. In other words, there is
no client and temporary employment
service relationship between the
parties.
Section
200B of the LRA
[26]
Instead of determining the issue before
him, the fourth respondent finds that the second applicant and the
second respondent are
co-employers in terms of section 200B of the
LRA. It is crucial to cite the provisions of section 200B which
provides:
"(1)
For the purpose of this Act and any other employment law, 'employer'
includes one or more
persons who carry on associated or related
activity or business by or through an employer if the intent of doing
so is or has been
to directly or indirectly defeat the purpose of
this Act or any other employment law.
(2)
If more than one person is held to be the employer of an employee in
terms of section
(1), those persons are jointly and severally liable
for any failure to comply with the obligations of an employer in
terms of this
Act or any other employment law."
Findings
[27]
It is not clear how the issue of liability
comes into play in this matter. The fourth respondent provides no
basis as to why the
Subsidiary Agreement between the second applicant
and second respondent falls foul of the provisions of section 200B.
[28]
Having determined that the relationship
between the second applicant and the second respondent is that of
co-employers, it is not
clear how such a relationship translates to
the application of section 198A. In his reasoning, once the first
applicant and the
second respondent became co-employers, section 198A
became applicable. I do not agree with this reasoning.
[29]
In determining the real issue before him,
the fourth respondent, in paragraph 26 of the CCMA arbitration award
states that:
"26. Having determined that
Sodexo is also an employer of the applicants, what is left to be
determined is the nature of the
relationship between the Sodexo and
P&G. The Main Agreement, as already established from the basis of
the relationship between
the entities. It is an established fact that
the purpose of the Main Agreement was to source labour to work at the
P&G plant.
This activity falls squarely with the definition of a
relationship of a Client and a TES within the meaning of sec198. P&G
was thus the client of Sodexo."
[30]
There is absolutely no factual basis for
the fourth respondent to conclude that the main agreement was
intended to procure labour.
The main agreement between the first
applicant and the second respondent was for the procurement of
services. The reliance on section
200B is misplaced and a
misconstruction on the part of the fourth respondent. The fourth
respondent's findings undermine the outsourcing
arrangement between
the first applicant and the second respondent.
[31]
There was also no basis for the fourth
respondent to refer to the second respondent as a temporary
employment service provider and
the first applicant as the client,
nor does the fourth respondent explain how section 198 applies to
co-employers. It appears
that the fourth respondent failed to
apply his mind to the issues and facts before him, and therefore his
reasoning is irrational.
[32]
In analyzing the evidence, the fourth
respondent states that it is common cause that the second respondent
was required to provide
labour to render the services of the first
applicant. This is inaccurate and is not supported by the evidence
before him. Had the
fourth respondent taken enough time to
interrogate the documents before him, I am convinced that he would
have come to a different
conclusion. There is no indication in the
affidavit that the documentary evidence was considered, and even if
it was, I am not
convinced that a thorough interrogation of the
documents was done. The evidence is very clear, beyond any doubt,
that the relationship
between the first applicant and the second
applicant was an outsourcing of services which is permitted in terms
of the LRA.
[33]
I therefore make the following order:
Order
1.
The award under case number GAEK4688-15
dated 4 April 2016 made by the fourth respondent under the
auspices of the third
respondent is reviewed and set aside.
2.
That the first applicant is not the
employer and/or deemed employer of the first respondents
3.
The matter is referred back to the third
respondent for a hearing
de novo
to
be heard by a commissioner other than the fourth respondent.
4.
There is no order as to costs.
__________________
S. July
Acting
Judge of the Labour Court of South Africa
Appearances
For
the First Applicant: Mr F Malan/
Mr J Norval
Instructed
by
ENS
For
the Second Applicant:
Advocate
Louwrens Malan
Instructed
by
Hunts (Incorporating Borkums) Attorneys
For
the First Respondent:
Advocate T Bruinders SC with Advocate E Richards
Instructed
by
Lawyers for Human Rights
[1]
Act
66
of 1995 as amended.
[2]
See:
Sidumo
and Another v Rustenburg Platinum Mines and Others
(2007)
28 ILJ 2405 (CC)
;
Heroldt
v Nedbank Limited
(2013)
34 ILJ 2795 (SCA).