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[2018] ZALCD 5
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Bean v Thee and Others (JR1842/16) [2018] ZALCD 5 (22 June 2018)
IN THE LABOUR COURT OF
SOUTH AFRICA, DURBAN
Not
Reportable
Case no: JR1842/16
In the
matter between:
ANNABEL
BEAN Applicant
and
COMNMISSIONER
JOSEPH WILSON THEE First
Respondent
COMMISSION FOR
CONCILIATION
MEDIATION
AND
ARBITRATION Second
Respondent
EDCON
LTD Third
Respondent
Heard: 20 June 2018
Delivered: 22 June 2018
Summary: Review of award
on jurisdiction - Applicant failing to establish that she was an
employee – application for review
dismissed.
JUDGMENT
GUSH. J
Introduction
[1]
On 4 July 2015 the first respondent handed
down an arbitration award under case number GAJB25968-15 in which
award the first respondent
found that the applicant had failed to
discharge the onus that she was an employee and that accordingly the
second respondent did
not have jurisdiction to hear the dispute
thereby dismissing the applicant’s application.
Background
[2]
The
applicant had in July 2003 worked as a consultant at the third
respondent but was employed by a consulting firm. This had entailed
the applicant “
mov[ing]
permanently onto the Edcon [third respondent] site still working for
Accenture”.
[1]
The applicant rendered services to the third respondent as a
consultant or service provider and was not employed by the third
respondent. In 2007 the applicant left Accenture and commenced
employment with InDeed as a consultant. The applicant continued to
render services to the third respondent still as a consultant,
however, this time as an employee of InDeed.
[3]
17 February 2008 the applicant entered into
a fixed term employment contract with the third respondent for a
period of eighteen
months. At the expiry of the eighteen-month
contract the applicant entered into a second fixed term contract for
a further period
of twelve months. This contract was to, and did,
automatically expire on 6 August 2010.
[4]
At the conclusion of this contract the
third respondent advised the applicant that the human resource
policies of the third respondent
did not permit an extension to or a
new contract of employment to be entered into.
[5]
For a variety of reasons mainly due to the
applicant’s requirement that she work flexible hours to enable
her to deal with
the children it was agreed that the applicant would
enter into a consultancy agreement with the third respondent to
provide services
relating to specific projects. The agreement
entailed the applicant registering as a service provider and
invoicing the third respondent
for the work performed in attending to
specific projects at an hourly rate. The number of hours required in
respect of the projects
was not stipulated and appears to have
depended upon the specific project itself.
[6]
It
is clear from the record of the arbitration that the applicant
understood quite clearly from her own evidence that she understood
the nature of this agreement. It was put to her that she was going to
be a service provider to which replied “I absolutely
was”.
[2]
[7]
Pursuant
to the applicant’s agreement with the third respondent to
become a consultant or service provider, the applicant
applied to be
registered as a supplier to the third respondent under the name
“Annabel Bean Consulting”.
[3]
[8]
Part two of this application deals with the
terms and conditions and in particular the “terms of payment”
where it records
that the applicant had agreed to be paid “within
seven days of invoice”. The applicant provided the third
respondent
with a letter of reference from her bank as part of the
application. The applicant was duly registered as a supplier under
the
name “ANNABELBEAN CONSULTING”.
[9]
In accordance with this agreement the
applicant commenced submitting tax invoices to the third respondent
for her consulting services
that reflect
inter
alia
the following information:
9.1
The invoices were issued by “Annabel
Bean Consulting” marked “Tax Invoice”;
9.2
That Annabel Bean Consulting is not “VAT
registered”;
9.3
The invoice number and the Vendor number
was 15086;
9.4
The invoices appear to have been submitted
for payment randomly for work done during either one month, two
months or three months
at a time;
9.5
That
the invoice was for “project implementation” for a
specific period and for a specific project description and an
amount.
In explanation of the amount the invoice refers to a “project
hourly breakdown” and in so far as can be calculated
such
services were rendered at an hourly rate of approximately R1302 per
hour;
[4]
[10]
A
summary of the payments made to the applicant are included in the
bundle.
[5]
This document records
the “supplier payment history” for the supplier
“ANNABELBEAN CONSULTING”. From this
report it appears
that the applicant invoiced the third respondent for amounts ranging
between R 80 639-00 and R626 504-00 per
invoice for services
rendered.
[11]
On 5 November 2015 the applicant was
advised by the third respondent that her consulting services were no
longer required. Shortly
thereafter the applicant referred a dispute
to the second respondent now alleging not only that she was an
employee but that she
had been unfairly dismissed.
[12]
After conciliation the dispute was referred
to arbitration and at the arbitration proceedings the third
respondent denied that the
applicant was an employee and that
accordingly the second respondent did not have jurisdiction to
consider the matter.
[13]
At the arbitration proceedings both parties
handed in a bundle of documents and agreed that they were what they
purported to be.
Only the applicant gave evidence. At the conclusion
of her evidence the third respondent’s representative indicated
that,
in light of the evidence of the documents produced and that of
the applicant, both in chief and in cross examination, he would
submit in argument that the applicant had not established that she
was an employee. Both parties then presented their argument to
the
first respondent.
The
award
[14]
In
his award the first respondent, having considered the argument and
the evidence in his analysis, concluded that the test to be
applied
was that of the dominant impression of the contract. The first
respondent was also mindful of the provisions of section
200A (1)
[6]
of the Labour Relations Act (LRA)
[7]
.
The first respondent sets out that although the applicant earned more
than the threshold set out in subsection (2)
[8]
,
he regarded the factors listed in subsection (1) as a guide for
determining whether the applicant was an employee or an independent
contractor.
[15]
The first respondent was also mindful of
the fact that the third respondent led no evidence at the arbitration
but relied on the
documentation provided and the evidence given by
the applicant both in chief and under cross-examination. Applying an
“objective
assessment” to the “totality of the
circumstances in this case” the first respondent concluded that
the applicant
had not established that she was an employee.
[16]
The first respondent found that the terms
and conditions applicable to the applicant’s employment on the
two fixed term contracts
were no longer part of the subsequent
conditions. He was not persuaded by her claim that she regarded the
new conditions as that
of an employee and not as an independent
contractor.
[17]
The first respondent recorded that the
applicant had confirmed that she worked flexi hours, submitted
invoices, had not been taxed
and would invoice the third respondent
for the hours worked even at home. This, the first respondent
concluded, was not consistent
with the working conditions of an
employee.
[18]
The first respondent, correctly in my view,
dismissed the applicant’s contentions that being invited to and
attending Christmas
parties and being provided with parking as
constituting objective grounds indicating employment as opposed to
being a service provider.
Evaluation
[19]
In
matters of this nature the test on review is not that as spelt out in
section 145 of the LRA. The test is whether on the evidence
and
material placed before the first respondent, is his decision
correct?
[9]
[20]
It
is pertinent to record that at the commencement of cross examination
of the applicant she emphatically stated that she regarded
herself as
a service provider.
[10]
[21]
The first respondent quite correctly found
that the terms and conditions that prevailed when she was an employee
were not the terms
and conditions that prevailed in the subsequent
contract where the applicant was registered as a service provider.
These differences
pertinently included that when employed in
accordance with the fixed term contracts the applicant’s salary
was paid to her
net less income tax (PAYE), UIF contributions,
provident fund contributions and that her benefits included the use
of the third
respondents discount buying card.
[22]
After
commencing what the applicant herself described as “absolutely”
a service provider agreement there is nothing
in the evidence or
documentation that suggests that the parties to that agreement had
changed the independent contractor contract
to one of an employment
contract. To have done so would have required an express agreement to
that effect with the necessary changes
to
inter
alia
the treatment of income tax and the benefits of the Basic Conditions
of Employment Act
[11]
(BCEA).
[23]
As is dealt with in the pleadings and the
record, the applicant is clearly a well-educated experienced
consultant. She has previous
experience of having worked for the
third respondent both as an employee and a consultant. It was her
evidence that she had worked
as a consultant or service provider to
the third respondent for some years prior to the two fixed term
contracts before resuming
her consultancy role.
[24]
To suggest, as she would have had the first
respondent believe, she was uncertain of her situation is beyond
comprehension. It was
common cause that the applicant at no stage
sought clarity from the third respondent.
[25]
It defies all credible belief that someone
of the applicant’s seniority, experience and education would
not have addressed
this issue during the contract if she was
uncertain as to her status. The applicant conceded that from the
commencement of her
consultancy not only was she was no longer
enjoying the benefits of the BCEA, such as paid leave, sick leave
etc. that she had
enjoyed when an employee; but also that the third
respondent was not deducting PAYE from the payments made to her on
the strength
of her invoices. Despite this the applicant made
no enquiry. It is highly improbable that the applicant at any stage
prior
to the termination of her contract regarded herself as an
employee.
[26]
The
fact that the applicant happily accepted payment of her invoices in
full with no deductions for tax or any other benefit suggests
that
the applicant did not regard herself as an employee. In this regard
the applicant merely said that her tax consultant advised
her on
dealing with this but provided no proof that she was paying income
tax on what she would have had the first respondent believe
was a
salary. In the matter of
Callanan
v Tee-Kee Borehole Casings (Pty) Ltd & another
[12]
the court said the following:
“
Having said that,
I must also point out that the applicant cannot have his proverbial
cake and eat it. He cannot say that he was
not the respondent's
employee as a machinist for purposes of taxation (or for wishing to
avoid the pension scheme of the industrial
council), but
simultaneously claim that he should be regarded as an employee for
the purposes of the Labour Relations Act.”
[27]
The test in determining whether the
applicant was an employee or an independent contractor requires the
court to consider in all
the circumstances what the parties intended
and what the legal relationship was between the parties. The dominant
impression test,
whilst it has been criticised is still the basis for
a determination. On the evidence and the documents placed before the
first
respondent the clear “dominant impression” was one
of an independent contractor agreement that accorded in practice
and
agreement in all respects with what the parties intended the
relationship to be.
[28]
That the applicant’s evidence was but
a pale pastiche of the factors listed in section 200A(1) is a further
indication that
the issue of employment was only raised as an
afterthought when her service provider contract was terminated in an
attempt to seek
compensation. For the duration of the service
provider contract the applicant provided services to the third
respondent both at
the third respondents premises and at home. It is
apparent from the record and documents that the applicant herself
determined
the number of hours she worked in attending to the
projects the third respondent required her to complete. The variation
in the
number of hours invoiced and the apparent erratic infrequency
of the invoices does not suggest in any way that the applicant was
being paid a monthly salary.
[29]
The work the applicant did for the third
respondent was, according to her invoices, on particular projects.
This does not suggest
that the applicant was an employee “subject
to the control” of the third respondent.
[30]
She did not apply for leave when not
performing services to the third respondent but as matter of courtesy
would advise the third
respondent when she was not available. The
hours the applicant worked were neither confined to being performed
at the third respondent’s
premises nor was there any suggestion
that the third respondent controlled the hours the applicant
invoiced.
[31]
In this matter the realities of the
relationship were simply that the parties expressly agreed to enter
into a service provider
arrangement with a clear understanding as to
the nature of the agreement. Pursuant to that arrangement the
applicant rendered services
to the third respondent in compliance
with the agreement, invoicing the third respondent only for the work
done. The only logical
conclusion is that the applicant only worked
those hours that she was required to attend to the projects to which
the third respondent
wanted the applicant to attend to.
[32]
There was no evidence to suggest that at
the commencement of the contract the parties were unclear as to the
nature of the contract
and the relationship between the parties. To
the contrary the applicant’s evidence was that she was
“absolutely certain
as to the nature of the relationship”
viz. service provider.
[33]
In the circumstances and for the reasons
set out above I am not persuaded that the award of the first
respondent is reviewable.
Costs
[34]
As
for costs the applicant’s counsel suggested that costs should
only be awarded if the applicant was successful. The third
respondent
argued that costs should follow the result. Even though costs do not
usually follow the result in Labour matters
[13]
,
I am satisfied, taking into account the requirements of law and
fairness and the conduct of the parties that the applicant should
be
ordered to pay the third respondent’s costs.
Order
[35]
In the premise, the following order is
made:
1.
The applicant’s application is
dismissed with costs.
______________________
D. H. Gush
Judge
of the Labour Court of South Africa
Appearances:
For the applicant: Adv. A
Makka
Instructed
by: Schindlers attorneys
For the respondent: M
Maeso of Shepstone and Wylie
[1]
Transcript page 11 lines 14 and 15.
[2]
Transcript page 61 at line 15.
[3]
Transcript - Respondents documents page 187/8.
[4]
Transcript Bundle of documents pages 194 to 204.
[5]
Transcript Bundle of documents pages 205 to 208.
[6]
200A. Presumption as to who is employee
(1) Until the contrary
is proved, a person, who works for or renders services to any other
person, is presumed, regardless of
the form of the contract, to be
an employee, if any one or more of the following factors are
present:
(a) the manner in which
the person works is subject to the control or direction of another
person;
(b) the person’s
hours of work are subject to the control or direction of another
person;
(c) in the case of a
person who works for an organisation, the person forms part of that
organisation;
(d) the person has
worked for that other person for an average of at least 40 hours per
month over the last three months;
(e) the person is
economically dependent on the other person for whom he or she works
or renders services;
(f) the person is
provided with tools of trade or work equipment by the other person;
or
(g) the person only
works for or renders services to one person.
[7]
66 of 1995, as amended.
[8]
(2) Subsection (1) does not apply to any person who earns in excess
of the amount determined by the Minister in terms of section
6(3) of
the
Basic
Conditions of Employment Act
.
[9]
SA Rugby Players Association and Others v SA Rugby (Pty) Ltd &
others (2008) 29 ILJ 2218 (LAC)
[10]
supra
[11]
75 of 1997.
[12]
(1992) 13 ILJ 1544 (IC)
[13]
Zungu v Premier of the Province of KwaZulu-Natal and Others (2018)
39 ILJ 523 (CC)