About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Johannesburg Labour Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: Johannesburg Labour Court, Johannesburg
>>
2020
>>
[2020] ZALCJHB 45
|
|
Mandonsela and Others v South African Local Government Bargaining Council and Others (JR1754/18) [2020] ZALCJHB 45 (13 February 2020)
IN
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not
Reportable
Case
no: JR1754/18
In
the matter between
:
LAWRENCE
MADONSELA AND 194 OTHERS Applicant
and
SOUTH AFRICAN LOCAL
GOVERNMENT
BARGAINING
COUNCIL
First
Respondent
TIMOTHY
BOYCE
N.O. Second
Respondent
EKHURULENI
METROPOLITAN MUNICIPALITY
Third Respondent
HLANIKI
INVESTMENT HOLDINGS (PTY) LTD
Fourth Respondent
Heard:
14 January 2020
Delivered:
13 February 2020
JUDGMENT
PATEL,
AJ
Introduction
[1]
This is an application to review and set aside an award issued by the
Second Respondent
on 7 June 2018 under the auspices of the First
Respondent. In his award, the Second Respondent found that the
Applicants had been
dismissed by the Third Respondent. The dismissals
of the Applicants were procedurally unfair. He awarded the Applicants
3 months
compensation for their unfair dismissal. He also found that
no temporary employment service relationship exists between the Third
and Fourth Respondent.
Background
facts
[2]
The Applicants were mostly employed by the Third Respondent as
plumbers and cleaners.
[3]
The Applicants were employed by the Third Respondent over two
employment periods.
The first employment period endured from 3 March
2014 to 30 June 2015. During this period two consecutive fixed term
contracts
were signed between the Applicants and the Third Respondent
(First Employment Period). The second employment period endured from
15 December 2015 to 31 August 2016 (''the Second Employment Period)
.
A fixed term contract of employment was concluded during the
Second Employment Period.
First
Employment Period (3 March 2014 – 30 June 2015)
[4]
The first fixed term contract
was signed in February 2014 ('the First Contract'), with
the
Applicants due to begin work on 3 March 2014. It terminated by the
effluxion of time on 3 March 2015. The First Contract was
concluded
before the Labour Relations Amendment Act
[1]
which came into effect on 1 January 2015.
[5]
Upon the termination of the First Contract, the second fixed term
contract (the Second
Contract) was signed between the Applicants and
the Third Respondent on 3 March 2015 and expired on 30 June 2015.
The
Second Employment Period (15 December 2015 – 31 August 2016)
[6]
The Second Employment Period
commenced on 15 December 2015 the Applicant signed a third
fixed-term
contract (the Third Contract) which expired on 31 August 2016.
There was a lapse of approximately 5 and a half
months between the
Second and Third Contract.
[7]
The Third Contract differed from the First and Second Contract in
that it was signed
between the Applicants, the Fourth Respondent and
the Gauteng Enterprise Propeller (GEP). The GEP is a separate legal
entity established
in terms of Section 2 of the Gauteng Enterprise
Propeller Act
[2]
of the Gauteng
Provincial Legislature. The Third Respondent was not a party to the
Third Contract.
[8]
The Fourth Respondent was engaged by the Third Respondent to amongst
others programme
manage the services to the GEP. The GEP was engaged
by the Third Respondent to co-ordinate a "
job-creation
programme
" (the programme), in which the Applicants were
supposed to partake.
[9]
After the commencement of the Second Contract the Applicants referred
a dispute, categorized
on the referral form as a 198A dispute
[3]
to the First Respondent. It was conciliated on 11 November 2015 and
referred for arbitration on 18 January 2016 (the first dispute).
This
dispute dealt with whether the Applicants were permanently employed
by the Third Respondent pursuant to section 198A. (TES
Dispute).
[10]
On 8 June 2015 and whilst still operating during the First Employment
Period under the Second
Contract, the Applicants received letters of
termination from the Third Respondent notifying them of their
upcoming termination
of employment at the expiry of the contract on
30 June 2015. On 30 June 2015, the Applicant's tendered their
services to the Third
Respondent but were turned away because their
fixed-term contracts had terminated by effluxion of time.
[11]
On 7 September 2016, the Applicants referred a second dispute to the
First Respondent (the second
dispute). They classified the nature of
their dispute as a dismissal (Dismissal dispute).
[12]
In terms of all three fixed term contracts, the Applicants earned
R2000.00 per month and worked
eight hours per day. The Applicants'
salaries were paid by the Third Respondent under the first two
contracts and by the Fourth
Respondent under the Third Contract.
[13]
On 31 January 2018, the Second Respondent issued a joinder ruling in
terms of which the Fourth
Respondent was joined as a party to the
second dispute. On 22 February 2018 and under an application by the
Applicants, the Second
Respondent issued a ruling consolidating the
first and second disputes
The
Arbitration Award
[14]
On 7 June 2019, the Second Respondent issued his arbitration award.
In respect of the Dismissal
Dispute, the Second Respondent stated as
follows:
''9.
This dispute concerns the alleged unfair dismissals of the applicants
on 30 June 2015 when the applicants' second fixed term employment
contract with the 1
st
respondent
(
hereinafter referred to as
the
Municipality) expired. The alleged dismissals are predicated on the
assertion that, when the second fixed term employment contract
with
the Municipality expired on 30 June 2015, the applicants' employment
contracts with the Municipality were deemed to be of
indefinite
duration in terms of
Section 198B(5)
of the
Labour Relations Act 66
of 1995
, as amended (the Lra). It was common cause that the
applicants earned less than the threshold prescribed by the Minister
of Labour
in terms of Section 6 (3) of the Basic Conditions of
Employment Act.''
[15]
In respect of the TES Dispute, the Second Respondent summarised the
nature of the dispute as
follows:
''10.
This dispute concerns the contention that the applicants were deemed
to be
permanently employed by the
Municipality (and, therefore, dismissed by the Municipality) when
their fixed term employment contracts
with Hlaniki, a temporary
employment service (TES), expired on 31 August 2016. The Applicants'
argument
in respect of
the second
arbitration is based on Section 198A and Section 198B of the LRA.''
[16]
In respect of the Dismissal dispute the Second Respondent had to
determine whether the Applicants
were unfairly dismissed. If they
were, what was the appropriate remedy.
[17]
In respect of the TES Dispute the Second Respondent had to determine
whether the Applicants were
permanently employed by the Third
Respondent pursuant to section 198A of the Labour Relations Act
[4]
(LRA).
[18]
The Applicants contended, amongst others:
"In respect of
the first dispute the Applicants were permanently employed by the
Third Respondent by virtue of section 198B
of the LRA. They were
unfairly dismissed by the Third Respondent on termination of the
Second Contract. The Second Respondent
should have reinstated
them as oppose to awarding them compensation."
[19]
Regarding the Second Dispute the Applicants contend that the Third
Respondent is their employer
by virtue of section 198A of the LRA.
They further contend that the Third Respondent was a client of the
Fourth Respondent even
though:
19.1
the Third Respondent is not party to the contractual agreement
between the Fourth Respondent and GEP;
19.2
the Third Respondent regarding the Third Contract paid no
remuneration to the Applicants; and
19.3
the GEP was not a party to the arbitration hearing
[20]
The issues to be determined were correctly identified by the Second
Respondent as the following:
First
Arbitration
a)
Whether the Applicants were dismissed by the Third Respondent on 30
June 2015.
b)
Whether, if the Applicants were dismissed, there was a fair reason
for their dismissals.
c)
Whether, if the Applicants were dismissed, the dismissals were
preceded by a fair procedure
Second
Arbitration
a)
The issue to be determined regarding the Second Arbitration is
whether the Applicants were deemed permanently
employed by the Third
Respondent when their fixed term employment contracts with the Fourth
Respondent expired on 31 August 2015.’
[21]
After considering the provisions of the LRA, the Second Respondent
concluded:
''In respect of the
first arbitration, the Second Respondent took heed of the fact that
the Second Contract exceeded the three (3)
month period set in the
LRA and found that the nature of the work being performed under the
Second Contract was ongoing in nature
and not of a limited or
definite duration. It was further found that section 198B(3) and
section 198B(4) of the LRA could not be
used to provide a justifiable
reason for fixing the terms
of the contract
as
the contract was neither an official public works scheme or similar
public job creation scheme and the work was
of
an
ongoing
nature
and therefore
the Applicants were also not employed to work exclusively on a
specific project
that has a limited or defined
duration
.
In light of the above,
the Applicants were dismissed when they were prevented from rendering
services to the Third Respondent after
30 June 2015 and therefore
discharged the onus on them to prove that they had been dismissed. It
was further found that although
the Applicants sought reinstatement,
such a remedy was not reasonably practicable in the circumstances as
the Third Respondent
never had the intention of permanently employing
the Applicants.
As such, it
was found
that the only suitable remedy would be that of a compensation award
and compensation equal to three (3) months remuneration
to each of
the Applicants was awarded.
Turning to the second
arbitration, the deeming clause contained in section 198A(3)(b) of
the LRA only applies when there is a tripartite
relationship between
employees, a temporary employment services and a client. However, the
Third Contract
which was
concluded
between the Fourth Respondent and GEP, and
, on
the other hand,
the Applicants, created no such tripartite
relationship.
As such, there
was no
temporary employment service and no client, the employment
relationship was one between the Applicants, the Fourth Respondent
and GEP.
Therefore, regardless
of whether the conclusion of the fixed term contract was or was not
justified in terms of section 198B(4)
of the LRA, it was axiomatic
that the Applicants cannot be deemed to be permanently employed by
the Third Respondent. The Applicants
were found to have failed to
discharge the onus on them to prove that they were dismissed.''
Grounds
of review
[22]
The Applicants allege that the Second Respondent committed a material
error in law in failing
to look beyond the written terms of the Third
Contract concluded between the parties and in doing so, misidentified
the true nature
of the enquiry when determining whether a temporary
employment services relationship existed between the Fourth
Respondent, the
Third Respondent and the Applicants.
[23]
The Applicants further allege that the Second Respondent had to look
beyond the written terms
of the contracts concluded between the
parties and instead confined himself to the description of the
parties as they appeared
on the Third Contract.
[24]
The Third Respondent did not file a cross review against the Second
Respondent's decisions. The
Third Respondent accepted that the Second
Respondent's decision was reasonable insofar as he found that the
Applicants were permanently
employed by the Third Respondent. It also
accepted that 3 months compensation was one that a reasonable
commissioner could arrive
at because of the Applicant's dismissal by
the Third Respondent.
Evaluation:
the unfair dismissal claim
[25]
The issue I am required to determine is whether the Second
Respondent's compensation award of
three months was reasonable in the
circumstances or, as sought by the Applicants, whether the Applicants
should be reinstated.
[26]
In
SACCAWU
and others v Woolworths (Pty) Ltd
[5]
(SACCAWU),
the Constitutional Court held:
''[46]
Reinstatement
must be ordered
when a dismissal is found to be
substantively unfair unless one of the exceptions set out in s 193(2)
applies…
[47]
As affirmed by this court previously,
the fact
that
a significant period might have lapsed from
the
date of
dismissal to
the
date of
the judgment is not a bar to reinstatement.
An
employee whose dismissal is substantively unfair should not be
disadvantaged by the delays of litigation where she or he has
not
unduly delayed in pursuing the litigation.''
[27]
The Constitutional Court in
SACCAWU
further held that:
''[50]
An employer must lead evidence as to why reinstatement is not
reasonably practicable
and the onus is on the employer to demonstrate
to the court that reinstatement is not reasonably practicable…''
[28]
Of specific importance to the inquiry is section 193(2)(c) of the
LRA. In this respect, I agree
with the Second Respondent when he
concluded that reinstatement is not reasonably practicable because
there was never an intention
by the Third Respondent to employ the
Applicants permanently. It was not reasonable to permanently employ
the Applicant as the
work was for a limited duration. Therefore, the
Second Respondent's award in awarding compensation as oppose to
reinstatement is
one that a reasonable commissioner sitting in the
position of the second respondent would have arrived at.
[29]
In terms of section 194(1) of the LRA, compensation awards must be
just and equitable in all
the circumstances but cannot exceed 12
months.
[30]
The Constitutional Court in
South
African Revenue Service v Commission for Conciliation, Mediation and
Arbitration and Others
[6]
stated as follows regarding compensation awards:
''[50]
To compensate or not to compensate and if compensation is to be
awarded for what
period, is a function of the judicious exercise of
the discretionary power that an arbitrator or the court has in terms
of section
194(1) of the LRA. Zondo JP outlined the
applicable
factors in these terms:
“
There are many
factors that are relevant to the question whether the court should or
should not order the employer to pay compensation.
It would be
both impractical as well as undesirable to attempt an exhaustive list
of such factors. However, some of
the relevant factors may be
given. They are:
. . .
(b)
Whether the unfairness of the dismissal is on substantive or
procedural grounds or both substantive
and procedural grounds;
obviously it counts more in favour of awarding compensation as
against not awarding compensation at all
that the dismissal is both
substantively and procedurally unfair than is the case if it is only
substantively unfair, or, even
lesser, if it is only procedurally
unfair.
(c)
In so far as the dismissal is procedurally unfair, the nature and
extent of the deviation
from the procedural requirements; the minor
the employer’s deviation from what was procedurally required,
the greater
the chances are that the court
or
arbitrator may justifiably refuse to award compensation; obviously,
the more serious the employer’s deviation from what
was
procedurally required, the stronger the case is for the awarding of
compensation.
(d)
In so far as the reason for dismissal is misconduct, whether or not
the employee was guilty or
innocent of the misconduct; if he was
guilty, whether such misconduct was in
the
circumstances of
the case not sufficient to constitute a fair
reason for the dismissal.
(e)
The consequences to the parties if compensation is awarded and the
consequences to the parties
if compensation is not awarded.
(f)
The need for the courts,
generally speaking
,
to provide a remedy where a wrong has been committed against a party
to litigation but also the need to acknowledge
that
there are cases where no remedy should be provided despite a
wrong having been committed even though these should not be frequent.
(g)
In so far as the employee may have done something wrong which
gave
rise to
his dismissal but which has been found not to have
been sufficient to warrant
dismissal,
the impact of such conduct of the employee upon the employer or its
operations or business.
(h)
Any conduct by either party that promotes or undermines
any
of
the objects of the Act, for example, effective resolution
of disputes.''
[51]
Generally speaking
, an unfair dismissal
ought to earn an employee compensation where reinstatement is not
feasible
by reason of
the intolerability
of the continued working relationship…
[52]
In terms of our law compensation is not automatic. It is a
discretionary matter. A whole
range of factors must be taken in to
account to determine whether compensation has to be paid and if so,
for how many months.
In this regard one
of the key factors is the need to ensure that employers
are not inadvertently encouraged by the non-payment of compensation
to adopt
a shotgun approach of dismissing employees without
affording
them the opportunity to be
heard. Employees are
ordinarily vulnerable because, unlike employers, they
do
not often have
the resources
necessary
to vindicate their rights by prosecuting cases
all
the way up
to this Court. Condoning the flouting
of laws that govern the fate of people’s livelihood is a matter
so serious that
it always requires greater sensitivity and care.''
[31]
Having regard to the principles set out above, the Applicants length
of service at the Third
Respondent, the manner in which their
contracts were terminated and the reasons for their termination
I am of the view that
a compensation award equal to 12 months'
remuneration to each of the Applicants constitutes ''
just and
equitable
'' compensation in the circumstances.
[32]
Consequently the Second Respondent's award regarding compensation is
not one which a reasonable
commissioner sitting in the position of
the Second Respondent would have come to. The Second Respondent's
award of compensation
in respect of the Unfair Dismissal dispute is
reviewed and set aside. It is replaced with an order that the Third
Respondent must
pay each of the Applicants an amount of 12 months
remuneration as compensation for their unfair dismissal.
Evaluation:
the TES dispute
[33]
The Applicants contends that the Fourth Respondent is a temporary
employment service under the
Third Contract and that the Third
Respondent is a ''
client
'' in terms of section 198B of the
LRA.
What
is a temporary employment service?
[34]
In terms of section 198 of the LRA, a temporary employment service is
defined as follows:
''(1)
In this section, “temporary employment services” means
any person who, for
reward, procures for or provides to a client
other persons -
(a)
who perform work for the client; and
(b)
who are remunerated by the temporary employment service.''
[35]
In the case of
Proctor
and Gamble Manufacturing SA (Pty) Ltd and Another v Mokadi and
Others
[7]
(
Proctor
and Gamble
)
this Court held in respect of temporary employment services:
''[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.''
[36]
In
Assign
Services (Pty) Limited v National Union of Metalworkers of South
Africa and Others
[8]
(''Assign
Services'')
the Constitutional Court stated as follows:
''[73]
In evaluating these arguments, it is necessary first to consider the
“triangular”
nature of the TES/client/placed employee
relationship. The triangular relationship exists to split the
functions of the employer
between the TES and the client for a fee.
However, the functions for which the TES is responsible seldom relate
to the actual
work of the employee.
Their
primary responsibilities are to pay
and manage the human
resources component of employment, while the day-to-day management,
work allocations and performance assessment
in
most circumstances
are conducted by the client only. The
client is also responsible for the employees’ working
conditions because employees
are placed on the client’s
premises. Importantly, the client also has the power to
discontinue the employee’s
services.
In a
sense, the
TES is merely the third party that delivers the
employee to the client. The employee does not contribute to the
business of
the TES except as a commodity. And, on a practical
level, the contract between a TES and a placed worker seldom
constitutes
an employment contract.
[74]
In LAD Brokers, the Labour Appeal Court held that the common law does
not necessarily regard the TES
as the employer of the placed
workers.
In truth, a
TES can
operate without concluding contracts of employment with the workers
it places. All that is required for the TES to constitute
a statutory
employer in terms of section 198 of the LRA is that it places workers
with clients for a fee and remunerates those
workers.
Of
course, this
is less onerous than the test for establishing
conventional employment either at common law or in terms of the
relevant
definitions. It is
therefore incorrect to contend that a TES is usually in an employment
relationship with workers it places
with clients.''
[37]
The Labour Court in
Mandla
v LAD Brokers (Pty) Ltd
[9]
correctly pointed out that a contract between an employee and a
temporary employment service creates a unique and
sui
generis
tripartite
relationship in which the employee renders personal services not to
the employer but to the employer's client. Even though
a client can
influence certain employment decisions in such a temporary employment
service's arrangement, the parties, by section
198, may structure
their relationship ''
in
this way even if the principal purpose is to make the labour broker
(and not its client) the person who is responsible for managing
employees and ensuring compliance with the various statutes that
regulate employment rights.
''
[10]
[38]
The service level agreement concluded between the Third Respondent
and the Fourth Respondent,
following a tender process, appointed the
Fourth Respondent as the project management company to manage the
Lungile Mtshali Poverty
Alleviation Project on behalf of the Third
Respondent for the period 11 December 2015 until 11 December 2018. A
reading of this
agreement shows that the Fourth Respondent is not
operating as a temporary employment service, but as a project
manager. The Fourth
Respondent's core business as agreed upon by the
Applicants is not the provision of labour. If this is not the Fourth
Respondent
core business, it cannot be regarded as a Temporary
Employment Service Provider
Who
is the Client?
[39]
Counsel for the Applicants submit that, on a purposive reading of the
service level agreement
entered between the Fourth Respondent and the
Applicants, the Fourth Respondent is operating as a temporary
employment service.
Referring to the authorities I have set out
above, a temporary employment service creates a tripartite
relationship, where there
is an employer (the temporary employment
service), the employer's client and the employees, who perform work
not for the employer,
but for the employer's client.
[40]
The Applicants submit that the Third Respondent is the client,
despite the Third Respondent not
being a party to the agreement
concluded between the Fourth Respondent and the Applicants. The
Applicants therefore submit that
a commercial or contractual
relationship between the employer and the client is unnecessary for a
temporary employment service
to be found to exist. I cannot agree
with this submission. There is no basis for this Court to disregard
the express wording of
an agreement or to ignore the practical
application of the argument.
[41]
As correctly held in
Proctor and Gamble
, to determine whether
employees are employees of a temporary employment service deemed to
be employees in terms of section 198A(3),
the relationship between
the parties must be one of a client and temporary employment service
provider
.
Should this not be the case, the deeming provision
in section 198A does not find application.
[42]
In
Assign Services
, the Constitutional Court considered the
triangular nature of the temporary employment service/client/placed
employee relationship
and stated that the triangular relationship
exists to split the functions of the employer between the temporary
employment service
and the client for a fee. The Court in
Assign
Services
went further and stated, on a practical level, the
contract between a temporary employment services and a placed worker
seldom
constitutes a contract of employment.
[43]
For the Fourth Respondent to be regarded as a temporary employment
service, there must exist
a client. On the Applicants version, the
Third Respondent constitutes the client, the Fourth Respondent
constitutes the temporary
employment service and the Applicants
constitute the employees. However, in line with the jurisprudence, a
commercial or contractual
relationship must exist between the client
(Third Respondent), the temporary employment service (the Fourth
Respondent) and the
employees (the Applicants). No such relationship
exists
[44]
The Applicants have provided insufficient legal reasons why I should
ignore the express written
terms of the Service Level Agreement, the
commercial relationship which existed between the Fourth Respondent
and the GEP; and
the fact that there was no contractual or commercial
relationship between the Third and Fourth Respondent.
[45]
In the premises the following order is made:
Order
1. The
order of compensation awarded by the Second Respondent is reviewed
and substituted with an order that the
Third Respondent is ordered to
pay compensation equal to twelve (12) months' remuneration to each of
the Applicants.
2. The
Applicant's remaining grounds of review against the arbitration award
are dismissed.
3. There is
no order as to costs.
_________________________
A.
Patel
Acting
Judge of the Labour Court of South Africa
Appearances:
For
the applicant
:
Ms J
Lawrence from Lawyers for Human Rights
For
the respondent
:
N
Damase of Majang Incorporated Attorneys
[1]
No. 6 of 2014.
[2]
No. 5 of 2005.
[3]
In terms of
s 198A
of the
Labour Relations Act, No. 66 of 1995
[4]
No. 66 of 1995, as amended.
[5]
(2019)
40 ILJ 87 (CC).
[6]
2017 (2) BCLR 241
(CC) (8 November 2016).
[7]
(JR895/16) [2018] ZALCJHB 80 (2 February 2018).
[8]
2018 (11) BCLR 1309
(CC) (26 July 2018).
[9]
[2000]
9 BLLR 1047 (LC).
[10]
NUM
v Billard Contractors CC
[2006]
12 BLLR 1191
(LC) at para 79.