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REPORTABLE
IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT JOHANNESBURG CASE NO. JR 562/02
In the matter between :
AVBOB MUTUAL ASSURANCE
SOCIETY Applicant
and
CCMA BLOEMFONTEIN First Respondent
J MTHEMBU N.O. Second Respondent
M A PIENAAR Third Respondent
JUDGMENT
PILLEMER, AJ:
Respondent conducts business in the insurance indus try and sells its
insurance policies and its other funeral related pr oducts through the use
of agents. In 1976 the Appellate Division had occas ion to examine the
standard form contract between the Respondent and s uch an agent
appointed by it under the usual terms and condition s then applicable for
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the purpose of deciding whether the contract was on e of service or not.
The court painstakingly analysed the document highl ighting those aspects
that tended to support an employment contract and c ontrasting such
terms with those that went the other way. The issue before the court
was whether or not the “agent” was covered by the W orkmen’s
Compensation Act, 1941, which the court held meant upon a proper
interpretation of the legislation before it that it had to determine whether
or not there was a contract of service under the co mmon law. It held that
the appropriate approach in a context where there w ere indications going
both ways, was to determine what sort of relationsh ip most strongly
appears from all the facts or what the “dominant impression” is which the
contract makes upon a person. In the result the cou rt found that the
contract was not an employment contract and the “ag ent” was in fact an
agent or independent contractor. Factors that weigh ed heavily with the
court were the provisions that the agent could empl oy others to do the
work, even employ a temporary substitute, was paid commission and not
a salary, had to bind himself as surety, was not ob liged to work fixed
hours and could take leave whenever he wanted.
See: Ongevallekommisaris v Onderlinge Versekeringsgenoot skap
A.V.B.O.B. 1976(4) SA 446 (AD) (“ the AVBOB case”)
This case is a leading authority on the test and th e topic. It has been
criticised by academics but nonetheless cited with approval by the Labour
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Appeal Court in the leading case of SABC v McKenzie (1999) 20 ILJ 585
(LAC) at 590E-F. While it is clearly not binding on other agents who have
agreed to bind themselves to similar contractual te rms at the level of res
judicata it is of such strong persuasive authority and cons titutes the
proper interpretation of the standard form contract in question, that in my
view it must have the effect of rendering it practi cally impossible to argue
that the contract constitutes an employment contrac t. Factors which are
weighty and point strongly against the relationship being one of
employment because they would not generally be foun d in an
employment contract are set out in the judgment and they would apply
whatever test was used. It is also worth noting tha t the agent does not
pay UIF and PAYE and is obliged to register as a provisional taxpayer. The
conditions of appointment also use terminology that is indicative of a
relationship other than one of employment and there is no suggestion that
this is a sham. The contract reveals that it is the fruits of the labour rather
than the labour itself that is remunerated. These a re all classic pointers to
the conclusion that the relationship is that of pri ncipal and
agent/independent contractor and not one of employment.
Against that background rather surprisingly the App licant decided that
with the passage of time and in the context of the Labour Relations Act,
1995 (“the LRA”) and the definition of employee in that Act, the same
reasoning would not apply to his contract, even tho ugh it was in
substance identical to that considered in the AVBOB case. It contained
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all the indicators that militated against an employ ment relationship. Even
more surprisingly Applicant managed to persuade the Second Respondent
that it was an employment contract and that he was therefore entitled to
process an unfair dismissal dispute before the CCMA in terms of S 191 of
the Labour Relations Act, 1995 (“the LRA”). It is that decision which the
applicant seeks to review and set aside in these proceedings.
The applicant relied upon what was referred to as t he “Green Bible”,
which is a voluminous set of rules and directions t hat are binding upon
agents. These regulations find their source in the written conditions of
appointment which has a clause authorising the issuing of regulations that
do not conflict with the conditions of appointment. In my view the
features of control that are embodied in the “Green Bible” add very little
to the fact that there is a large measure of contro l in the conditions of
appointment, but notwithstanding these features they do not detract from
the interpretation of the contract as not being one of employment. Control
is not decisive and is of little value in determini ng the relationship where
the contract contains provisions inimical to an emp loyment contract and,
what is more, has actually been interpreted by the Appellate Division as
not constituting a contract of service.
I am in respectful agreement with the interpretatio n in the AVBOB case
and it follows therefore that I hold that the contract is not an employment
contract and the applicant was not an employee of t he respondent. The
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existence of an employment relationship is a jurisd ictional fact that must
be present for s191 of the LRA, under which the Thi rd Respondent
sought relief, to be applicable. If, as I find, tha t jurisdictional fact is
absent then it follows that the CCMA did not have j urisdiction to arbitrate
the dispute and its finding that it did is wrong in law and must be
reviewed and set aside for want of jurisdiction.
In Pinetown Town Council v President, Industrial Co urt
1984(3) SA 173
(N) Leon J explained the concept when he pointed out at 179B-D that
“where the jurisdiction of a tribunal is dependant on the existence of a
particular state of affairs, it cannot give itself jurisdiction by incorrectly
finding that the conditions for the exercise of jur isdiction are
satisfied….[A] determination on the jurisdictional facts is always
reviewable by the courts because in principle it is not part of the exercise
of the jurisdiction but logically prior to it.”
I respectfully agree with the above approach, which was advanced in
argument by Mr Franklin, SC for the Applicant, and on that approach I
have to make the factual finding on whether or not the conditions for the
exercise of jurisdiction were present and, if they were not, the review
must succeed for want of jurisdiction by the Arbitrator.
In this case it was common cause that I had to have regard to the terms
of the contract, which was embodied in the conditio ns of appointment or
the so-called “Akte van Aanstelling”, a letter of a ppointment and the
“Green Bible” and that this was what had been prese nted to the Second
Respondent when he heard the arbitration. It seems to me that in a case
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like this where no factual findings on evidence hav e to be made and it is
just a matter of interpretation that the review sim ply turns upon the
proper interpretation of the contract. In the circu mstance the
interpretation of the contract by the Second Respon dent is no bar to the
review succeeding if he was wrong. To the extent th at Second
Respondent’s reasoning and finding is relevant, it seems to me that he
failed to apply his mind to the AVBOB case, which w as drawn to his
attention because he referred to the test set out in that case in his award,
or to apply his mind properly to the contract as hi s finding that “the
contract is not only a subterfuge but a bizarre one designed to strip the
agents of the protection to which they are entitled according to law and
fair labour practice and to place them at the mercy of the Respondent”
flies in the face of the provisions in the contract which the Appellate
Division stressed created the dominant impression t hat it was not one of
service. There was no evidence of subterfuge. The S econd Respondent
records in his award that he is simply being asked to interpret the
contract and I am respectfully unable to appreciate how it is possible for
him to have come to the conclusion he did, bearing in mind that the
contract has obviously been in its present form sin ce at least the mid
1970’s. In my assessment he misdirected himself to such an extent that
he cannot be said to have applied his mind properly to the matter, and if it
was necessary to find that he committed a reviewabl e irregularity rather
than simply came to the wrong conclusion then in my assessment he
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committed such an irregularity. His finding was not justifiable on the
evidence that he had to consider.
The review therefore must inevitably succeed.
The Applicant argued that I was precluded from deal ing with the
substantive issue, i.e. whether the CCMA had jurisd iction, because a
certificate of outcome had been issued following th e conciliation process.
It was contended that on the strength of the judgme nt in Fidelity Guards
Holdings v Epstein & Others (2000) 21 ILJ 2382 (LAC) I could not
interfere until the certificate had been set aside. Since there was no
application before me to review the issuing of that certificate, it was
argued that I could not interfere and the review ha d to be dismissed. That
argument is without merit. If the CCMA had no juris diction to arbitrate
because the Applicant was not an employee it also h ad no jurisdiction to
conciliate and its purported action is on no releva nce once the
jurisdictional point is taken before a forum that h as power to decide the
issue and is found to be good. In any event the Eps tein decision has no
bearing on the issue in this case. It dealt only wi th the other jurisdictional
fact that has to be present before a matter may be arbitrated or
adjudicated namely the certificate that the dispute remains unresolved. It
did not deal in any way with the point in issue in this case. The general
statement in paragraph [21] of the Eptein judgment at 2389I that “as long
as the certificate of outcome stands, the CCMA has jurisdiction to
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arbitrate the dispute” has to be understood in the context of that
judgment and cannot apply to cases like the present . The Commissioner
who conciliates the dispute ought not to make any f inding on the factual
matters that bear upon jurisdiction as that is some thing that is dealt with
at arbitration and not conciliation. (See Dempster v Kahn NO & others
(1998) 19 ILJ 1475 (LC), BHT Water Treatment( a div ision of Afchem
(Pty) Ltd v CCMA and others (2002) 23 ILJ 141 (LC) at 145-6). The
issuing of a certificate of outcome is therefore no bar to a challenge of
the kind made in these proceedings.
It was also argued that the AVBOB case was of no mo ment because it
was decided before the LRA was promulgated and rela ted to a different
statute. I have dealt with these submissions above and for the reasons
there set out they are rejected. I have to decide w hether or not the
Applicant was an employee and to do so have to look principally at the
conditions of service. These reveal that the contra ct is not an
employment contract for the reasons set out above. He is therefore not
an employee, but rather an independent contractor. He has no remedies
under the LRA because by definition he is excluded from its ambit.
I accordingly make an order in the following terms:
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1. The review succeeds and the finding by the Second R espondent
that the Applicant was the employer of the Third Re spondent is
set aside.
2. It is declared that the First Respondent has no jur isdiction to
arbitrate the dispute that has been referred to it by the Third
Respondent.
3. The Third Respondent is ordered to pay the Applicant’s costs.
_________________________________
PILLEMER, AJ
Date of hearing: 24 January 2003.
Date of judgment: 31 January 2003.
For Applicant: A Franklin SC
instructed
by Deneys Reitz
For Third Respondent: J P Breytenbach
instructed
by HV Jordaan care of Symington
and De Kock (Welkom)