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Index August 1999 Cases cited in this Edition
CONTEMPT - Failure to abide by court order ¨ FACTS: On 17 August 1998 the First Respondent entered into a Deed of Settlement with the Applicants in respect of a dispute concerning the dismissal of the Second and Further Applicants. The Deed of Settlement was made an Order of Court on the same day. The Respondent flouted the Order of Court and the Applicants sought a committal order for contempt of court. ¨ HELD: Citing s151(2) of the Labour Relations Act, 1995 (LRA), the Court held that as a superior court, the Labour Court had powers equal to those of a Provincial Division of the High Court. Accordingly, the Labour Court has the power to enforce its orders by contempt proceedings. The aim is essentially penal. The Applicants can only succeed if they satisfy the Court beyond reasonable doubt that the Respondent is guilty of the offence. Accordingly, the Applicants must establish that:
The Court concluded that the Respondents had wilfully not complied with the Settlement Agreement made an Order of Court. When considering the appropriate penalty, the Court concluded that although imprisonment of the Second and Further Respondent was an option, it should not lose sight of the fact that its decisions should be designed to promote the effective resolution of labour disputes. As the current dispute between the parties would be resolved by the re-employment of the Second and Further Applicants, the Order should be shaped to achieve that end. The court accordingly imposed a suspended imprisonment of 15 days, without the option of a fine, on condition that the Second and Further Applicants were re-employed by the First Respondent within 14 days. ¨ COMMENT: This case re-affirms the Labour Court's jurisdiction to hold parties in contempt of Court. The case further provides clear guidelines on when a person (or a company) is in contempt of Court. This order will have a sobering effect on those who might consider not complying with a Labour Court Order. Beverley Whitehead v Woolworths (Pty) Ltd Case No. C122/98, Labour Court, Cape Town
Applicant instituted the proceedings alleging automatically unfair dismissal, alternatively, an unfair labour practice on the grounds of discrimination against her as an applicant for employment. ¨ HELD: The Court analysed the definition of "employee" as contained in Section 213 of the LRA. The Applicant must be able to satisfy the Court that the Applicant indeed worked or tendered services and received, or was entitled to receive remuneration. Accordingly the Applicant's claim that the company had committed an (automatically) unfair dismissal was unsuccessful as it was found that she was not an employee as defined in terms of the LRA. The Court then considered whether the company had committed an unfair labour practice within the meaning of Schedule 7 of the LRA. The Court found that it was not disputed that the Applicant was an applicant for employment and that it had jurisdiction to consider whether the Company's conduct constituted unfair discrimination. The Company did not deny that its conduct was discriminatory, but denied that the discrimination was unfair on the grounds that the requirement of uninterrupted job continuity was an inherent requirement of the job and that uninterrupted job continuity was rational and commercially supportable. The Court held that the test it should apply in making a determination should not be subjective opinion of the Company, but whether the Company's position is objectively justifiable. The Court held that a good yardstick to measure whether or not discrimination is based on an arbitrary ground is whether the discrimination is such that it can be sustained irrespective of the happening or non-happening of an unforeseen event. The Court held that no employer can receive any guarantee that an incumbent will remain in its employee for an uninterrupted period of any time. Moreover, in the absence of any such guarantee and the failure by the Company to have specifically required such undertaking, the requirement of an uninterrupted job continuity for 12 months was arbitrary and unreasonable. The fairness or unfairness of discrimination cannot be measured against the profitability, or for that matter, the efficiency of a business enterprise in considering what an inherent requirement of a particular job would be. The job itself must have some indispensable attribute. If the job can be performed without the requirement, then it cannot be said that the requirement is inherent, and therefore protected under the exception in Schedule 7 of the LRA. The Court accordingly held that the Company had unfairly discriminated against the Applicant within the meaning of Schedule 7 of the LRA. The Court found that compensation should not be based on patrimonial or actual loss. In determining what fair and reasonable compensation would be, the following must be taken into account:
Considering these factors, the Court awarded Applicant compensation in the sum of R200 000,00.
SALE AS A GOING CONCERN - Recognition of past service Foodgro, a division of Leisurenet Limited v Carol Keil (24 JUNE 1999) LAC ¨ FACTS: The transferor ("old employer") sold its business as a going concern to the transferee ("new employer"). The transaction was effected in the absence of agreement altering the terms and conditions of employment that applied with the old employer. The employee signed a letter of employment with the new employer shortly after the transfer, essentially incorporating the same terms and conditions of employment but recording the commencement date of her employment as the date of transfer. Some five months after the transfer, the new employer gave the employee, and twenty-eight other employees, notice of termination of their employment based on its operational requirements. The employee's employment offer was terminated on the grounds of retrenchment and the employee was paid a severance package in accordance with the length of employment with the new employer only. ¨ HELD: Contrary to s197(2) of the LRA, which provides for the variation by agreement between the parties of the terms of the transferred employment contract, s197(4) expressly provides that a transfer of a contract of employment will not alter the continuity of service, even by agreement between the parties. Accordingly, the length or continuity of employment does not constitute an obligation, or term or condition of employment, which may be modified by agreement in terms of s197(2)(a) of the LRA. Section 197(4) of the LRA was specifically enacted to procure for employees the benefit of recognition of their length of service with the old employer, which was not previously afforded to employees under the common law. The contract of employment signed by the employee with the new employer did not interrupt the continuity of her previous length of service with the old employer, notwithstanding its express terms. The employee was awarded (in addition to severance pay equivalent to one week for each year of employment with the old employer) compensation of nine months' remuneration, being the period from the date of her dismissal until the final date of the hearing of the matter. The Court lamented at the unsatisfactory effect of s194(1) which "was drafted on the assumption that the period between dismissal and bringing the matter to finality would be much shorter than it has turned out to be in practice. It is the task of the legislature to rectify this problem. There are limits to what a Court can do to alleviate this kind of situation." ¨ COMMENT: The impact of Section 197 on sales/merges has been controversial since the decision in Schutte & Others v Powerplus Performance (Pty) Ltd & Another (1999) 20 ILJ (LC). It is noteworthy that the Labour Appeal Court appears to accept that the provisions of ss197(1) and (2) are peremptory, rather than discretionary, when a business is sold as a going concern, notwithstanding that this issue has yet to be considered upon full legal argument before the LAC. The effect of s197 and the Judgments thereon to date, must be factored into the purchase price for any concern acquired. RETRENCHMENT - Offer of alternative employment Purefresh
Foods (Pty) Ltd v Dayal & Another Unreported judgment, Case D239/98 LC, DURBAN During June 1996 Applicant sold to Clover certain of its business operations. This transaction necessitated a reduction of the staff complement of the Applicant, and consequent retrenchments. Applicant procured the employment by Clover of the employees being retrenched. Clover offered the Second Respondent the same position it had with Purefresh Foods at a higher salary. Second Respondent accepted Clover's offer of employment and was released by Purefresh Foods to take up employment with Clover. The Second Respondent was then informed by Purefresh Foods that "Due to the fact that the Company has secured you alternative employment, you will not be entitled to receive a severance package". The Second Respondent challenged Purefresh Foods' non-payment of a severance package. The CCMA considered s196(3) of the Act and concluded that the employee was entitled to severance pay from Purefresh Foods. The CCMA found that the offer of alternative employment by Clover was not an offer of employment which would entitle Purefresh Foods to avoid the payment of a severance package. Applicant sought to review the award on the basis that the Commissioner had committed a gross irregularity or reached an unjustifiable decision. ¨ HELD: The Court considered the two grounds of review and held that a "gross irregularity" referred not to the result, but to the procedure adopted during the proceedings. As the Applicant's case centred around the Commissioner's failure to have applied the law, her conduct did not amount to a gross irregularity. Justifiable means "able to be legally or morally justified, able to show to be just, reasonable or correct or defensible". Whilst an error in law may give rise to an appeal, an error in law would not necessarily give rise to a review. Whilst Purefresh Foods' contention that the Commissioner's interpretation of the law was wrong was persuasive, the issue was at least debatable, considering the wording of the LRA. Whilst the LRA regulated the consequences of an employee's conduct to unreasonably refuse a viable offer of alternative employment, it was silent as to whether an employee who accepted an alternative offer of employment, forfeited his/her right to a severance payment. The Court did not decide this issue. It held that the Applicant had not satisfied it that the Commissioner's award was reviewable. ¨ COMMENT: This case again illustrates the limited scope of an aggrieved party's right to review an arbitration award. It is important that cases are well presented, on both the level of fact and argument, at arbitration proceedings to minimise possible adverse awards which might escape review even if wrong. COMPENSATION - Procedurally Unfair Dismissal Brendan Colin Vickers v Aquahydro Projects (Pty) Ltd Case No. D424/97 ¨ FACTS:
The Applicant was dismissed by Respondent on 2 September 1997. The Applicant alleged that
the dismissal was unfair due to the lack of the pre-requisite consultation process (s189
of the LRA). The Respondent alleged that it only became clear on 26 August 1997 that the Applicant would also have to be retrenched. The only discussion which took place on Applicant's retrenchment was on 1 September 1997. This consultation only centred on an attempt to agree a severance package. By then the Respondent had already decided to retrench the Applicant. The substantive fairness of the dismissal, i.e. the Respondent's financial difficulties, was not in dispute as the Applicant conceded this fact in evidence. ¨ HELD: The Court held that the dismissal was procedurally unfair and that the Respondent's breach of its obligations arising from s189 of the LRA was sufficiently serious to warrant an exercise of a discretion in favour of the Applicant in respect of the payment of compensation. When considering the compensation due to the Applicant in terms of s194 of the LRA, the Court considered the time wasted by the Applicant's abortive referral of the matter to the CCMA for arbitration. The Court held that the Respondent cannot be held responsible for the delay and reduced the calculation of the period between the dismissal of the Applicant and the conclusion of the hearing of the matter in the Labour Court. The period between the date of dismissal and the last day of the court hearing was 13 months and 26 days. The period over which compensation was to be calculated was 12 months and 16 days. Section 194(1) of the LRA does not prescribe the permissible maximum compensation. However, s194(2), limits compensation to a maximum of twelve months' pay for a substantively unfair dismissal. The Court held that if compensation under s194(1) were to exceed the equivalent of twelve months' remuneration, it would be iniquitous as it would result in compensation for a procedurally unfair dismissal exceeding that of a substantively unfair one. The Court accordingly held that compensation for a procedurally unfair dismissal is also limited to 12 months. ¨ COMMENT: This decision removes any doubt that may have existed in respect of the limit of compensation for a dismissal that is only procedurally unfair. DISCRIMINATION - Affirmative Action Appointment Eskom v Hiemstra NO & Others Case No. J2091/98 ¨ FACTS: ESKOM invited applications for the post of a vending controller. The advertisement specified that it was subject to its affirmative action stance/policy. Amongst the applicants for the position were two ESKOM employees, Ms Samuels and Ms van Coller. The Selection Committee interviewed the candidates and recommended Ms Van Coller. The Finance Manager, who was empowered to make the final decision, decided nevertheless to appoint Ms Samuels, a Coloured woman, as the Department was allegedly under-represented by "black people" (Africans, Coloureds, Asians). The matter was referred to arbitration in terms of a collective agreement and the Arbitrator was requested to determine whether the decision not to appoint Ms van Coller constituted an unfair labour practice (unfair discrimination). The Arbitrator found that the appointment of Ms Samuels constituted unfair discrimination. ESKOM took the award on review to the Labour Court. ¨ HELD: The Applicant relied on s33(1)(b) of the Arbitration Act, No 45 of 1965 as a ground for review, i.e. that the Arbitration Tribunal committed a gross irregularity in the conduct of the arbitration proceedings or exceeded its powers. In principle, both the common law and the Arbitration Act subscribes to the philosophy that parties who voluntarily choose to resolve disputes via private arbitration, are bound by the Arbitrator's findings of fact and rulings on law, subject to the Arbitrator having the necessary jurisdiction and subject to the arbitrator staying within the terms of reference. Accordingly, a review of a private arbitration is subject to a more onerous test than the review of a CCMA arbitration award. The Court found that the arbitration award was
well-structured and motivated. The Court held that the Arbitrator "identified the
issue and cut to the chase". From the award in question, it was apparent that the
Arbitrator paid considerable attention to the Applicant's affirmative action stance, but
found that it was not a policy as contemplated by the exception contained in Schedule 7.
Even if the Arbitrator came to an incorrect finding of fact, it would not constitute a
gross irregularity for the purpose of a review. ¨ COMMENT: This case again underlines the distinction between an appeal and a review. As this was a review proceeding, the Court was not entitled to question the findings made on the facts of the matter. The Court was merely able to decide whether the arbitrator in fact applied his mind properly to the matter. If the matter had been taken on appeal, the Court may have come to a different decision. Deneys Reitz has a fully fledged national Labour Division. Should you require any advice or assistance on labour law, please contact: Sandton Office: Brian Patterson, St Elmo Wilken, Daniel Hayward, Joe Mothibi, or Derek Wanblad Sandton 122 Pybus Road Sandton 2199 Durban Office: Murray Alexander, Brian Denny Durban 4th Floor The Marine Cape Town Office: Paul Presbury Cape Town Southern Life Centre Tel: (021) 418-6800 Fax: (021) 418-6900 Website This update is published for general information and is not intended as legal advice. As every situation depends on its own facts and circumstances, only specific professional advice should be relied upon. Copies of Update may be obtained from our Marketing Department. |
