by Tony Healy | Oct 5, 2018 | Case Law
On 26 July 2018, the Constitutional Court handed down a landmark judgment in the application against a judgment of the Labour Appeal Court, to determine the correct interpretation of section 198A(3)(b) of the Labour Relations Act. This Concourt judgment has caused quite an uproar, and spawned a raft of written opinions on its implications, especially from, unsurprisingly, and predictably, the TES (temporary employment service) industry and its promoters.
The lack of flexibility in our labour law regime is, in our view, a significant deterrent to economic growth and unemployment. Our firm overwhelmingly supports the overhauling, and reduced regulation, of labour legislation to enhance economic growth and to promote growth in employment, in tandem with other initiatives. However, one must be realistic and accept that regardless of these world views, role players are obliged to do business in accordance with prevailing legislation. Understanding the interpretation of Statutes, and authoritative case law, must be undertaken dispassionately, without blinkered, self-interest motivated, glasses.
The TES, colloquially known as labour broker, industry, has been given a severe bloody nose in this Concourt judgment. That it has swiftly engineered a widespread avalanche of communication is unsurprising. After all, TES profits are heavily bolstered by permanently, rather than temporarily placed, employees with clients.
So what are we to make of the judgment?
The judgment must be understood in the context of the introduction of section 198A of the Labour Relations Act, which came into operation on 1 January 2015, and regulates ‘temporary employment service’ employment to a period not exceeding three months. It’s worth highlighting that this amendment to the LRA therefore, quite clearly, sought to reverse a growing trend of TES employee usage on a permanent basis. Put differently, temporary employment service usage was intended to be temporary, not permanent.
In the Assign Concourt case, the Concourt was required to answer the question – does section 198A(3)(b) of the LRA give rise to the client becoming the sole employer for the purposes of the LRA after three months, in respect of employees earning below the BCEA threshold (R17 000.00 per month), or are the client and the TES dual employers thereafter?
The Concourt held that, to begin with, for the first three months of the placement of a TES employee with a client, it’s business as usual. In terms of section 198(2) of the LRA, the TES is the designated employer of the placed employee, although the client is jointly and severally liable for, inter alia, BCEA and sectoral determination breaches.
However, the Concourt importantly held that after three months, the TES client becomes the sole employer of the placed employee, for the purposes of the LRA, and let’s not forget, the LRA is the dominant employment statute. The judgment held, at paragraph 54, that “A plain reading of section 198(3)(b) [of the LRA] clearly distinguished between employees employed by the TES for temporary work and those deemed to be employed by the TES’s client where work is not temporary”. This is important, and focuses on the growing reliance on the permanent usage of ‘temporary’ employment service employees for labour flexibility purposes.
In addition to becoming the sole employer of the placed employee after three months, for the purposes of the LRA, the TES client is required to furthermore ensure that the placed worker is also, per section 198A (5) of the LRA, “treated on the whole not less favourably than an employee of the client performing the same or similar work, unless there is justifiable reason for different treatment”. This implies that the erstwhile TES employees must be remunerated at a level similar to that of their new permanent colleagues, after three months of having been placed with the client, and be granted any other permanent employment benefits, such as a provident fund and medical aid membership.
Fixed term contracts of employment are also transferred after three months, but only remain in force for the duration of the remainder of the fixed-term period.
Much has been made of paragraph seventy-five of the judgment by labour brokers and their promoters which provides, inter alia, that after three months “the triangular relationship then continues for as long as the commercial contract between the TES and the client remains in force and requires the TES to remunerate the workers”.
After three months, assuming an ongoing client/TES commercial relationship, the TES does have, for example, BCEA responsibility, but why would a client need, or even want, to maintain this relationship, especially when wages and conditions of service must now be placed on par, with the invariably huge contingent liabilities with which clients will be burdened? The cost-savings and flexibility historically associated with TES usage vanished I any event, even before this Concourt judgment.
The judgment addresses this in holding that, at paragraph sixty-four “A TES’s liability only lasts as long as its relationship with the client and while it (rather than the client) continues to remunerate the worker. Nothing in law prevents the client and the TES from terminating their contractual relationship upon the triggering of section 198A(3)(b), with the client opting to remunerate the placed employees directly …. if this happens … the TES will then fall out of the relationship entirely”. This is precisely why the TES community is currently pressing their clients to sign new SLA’s.
The TES industry undoubtedly provides a valuable service, but this has all but been curtailed to include genuine ‘temporary’ employment services. It’s a TES after all, not a PES (permanent employment service).
Many employers will, in our view, rightly conclude that this judgment renders TES usage beyond three months, uneconomical. Going forward, in the main, the premium paid to a TES will be for the limited benefits of payroll administration and a finders fee for placed workers.
Finally, this judgment has effect from 1 January 2015, namely the implementation date of the LRA amendments the Concourt was called upon to interpret.
This judgment does unfortunately yet further curtail labour flexibility. It cannot however be wished away; it is what it is.
by Tony Healy | Oct 5, 2018 | Discipline & dismissal
On occasion, employers are faced with circumstances in which an employee resigns to avoid disciplinary action. In fact, some collective agreements in the Public sector, specifically allow for employees to resign at any time prior to a finding being made, after which the disciplinary hearing is stopped.
The dilemma has been that it has been arguable that an employee can, in fact, summarily resign, meaning that the employment relationship terminates immediately. The upshot of this is that the employer faced a conundrum, namely, is it possible to discipline an employee if the employment relationship has already been terminated by the employee’s summary resignation?
The recent Labour Court case of Mark Michael Coetzee v The Zeitz Museum of Contemporary Art Africa Foundation Trust & others (Case number C517/2018), handed down on 14 June 2018, dealt with this precise issue.
The employee “was handed (an) invitation to make written representations and given a document entitled ‘precautionary suspension from employment’. The following day, the employee informed the employer that “he wanted to tender his immediate resignation since (he didn’t) want to hurt anyone or (the employer)”. A statement was released to the press that “an enquiry into (the employee’s) professional conduct has been initiated by the trustees … (the employee) has tendered his resignation.
In correspondence to the employee’s attorneys, the employer’s attorneys recorded that “As matters presently stand … our client regards your client as having resigned with effect from 16 May 2018, subject to four week’s notice as provided for in terms of the law”. The employer argued that it had never agreed with the employer that his resignation would have immediate effect, or waive the employee’s notice period.
The Labour Court judgment noted that the employer argued that “The material issue in dispute in this application is whether the (employer) in fact accepted the immediate resignation of the (employee) ..”.
The Labour Court held that “the Court is bound to find that the tender of notice was not accepted as an immediate resignation”. The upshot of this is that employer’s are entitled to elect whether, or not, to accept an employee’s resignation, and to hold an employee to their statutory and, or, contractual notice period, and to continue with any disciplinary process it wishes to initiate against an employee. It follows that any disciplinary hearing would need to be concluded before the end of the applicable notice period.
This principle was confirmed in Sihlali v SA Broadcasting Corporation Ltd (2010) 31 ILJ (LC), in which it was stated that an employee breaches the employment contract when they leave their employment without giving the required period of notice. Employees have a contractual obligation to render their services for the duration of their contractually binding notice period. As such, the employment relationship terminates at the end of the notice period, not on date of resignation. There is however nothing prohibiting the employer from agreeing to waive the whole, or part of, a notice period, but a n employee has no right to unilaterally do so.
In circumstances where an employer conducts a disciplinary hearing prior to the end of a notice period, any subsequent dismissal would be the true nature of the termination of employment, not the employee’s resignation.
In similar, but different, circumstances, employees may be offered an opportunity to resign, as an alternative to facing disciplinary action. It would however be deemed unfair for an employee to be offered an option to resign to avoid dismissal; this would amount to constructive dismissal.
Many employers take no action against employees who resign in the face of disciplinary action, as they are quite willing to resolve the matter at hand in that fashion. Other employers are not quite so flexible, and are of the view that, in principle, it is important to pursue all employees for misconduct, regardless of whether the employee has resigned, or not.
by Tony Healy | Oct 4, 2018 | Miscellaneous
The CCMA has been a part of the employment law landscape for approximately twenty three years and, as are Bargaining Councils, it is tasked with the adjudication of many employment disputes if and when conciliation fails, the vast majority of which are related to alleged unfair dismissal. Approximately eighty percent of all labour disputes are resolved by way of conciliation, with the majority of unresolved labour disputes being referred to arbitration.
Arbitration hearings are conducted around the country on a daily basis in a growing number of CCMA offices countrywide. It’s a win/lose process.
As much as labour arbitration is not conducted with quite the same degree of legality as is the case in Magistrate and High Courts, users will tell you that it is still a process which requires a keen understanding of such subjects as the law of evidence, the burden of proof, and even protocols, to a degree. This has been the experience of our firm in representing parties in arbitration across the country, over many years.
Certain basic principles must be fully understood.
To begin with, arbitration cases are hearings de novo. This means that the arbitration hearing hears the case afresh, and is not a review of the employer’s original decision. Employers are not required to ensure that dismissal decisions are perfect, but they must be fair and reasonable.
Arbitrators are entitled to conduct arbitration hearings “in a manner that the Commissioner considers appropriate in order to determine the dispute fairly and quickly”. As such, commissioners may, for example, depart from the normal rules of evidence (such as the admission of hearsay evidence).
In practice, Commissioners vary markedly in style; some will say very little, whilst others will assume a far more inquisitorial role.
Cases must be proved on the balance of probabilities which, put simply, means that it must be proved that the employee is probably guilty, versus the burden of proof in a criminal court, which is proof beyond reasonable doubt. This means that the brden of proof in disciplinary an arbitration hearings is less than that in criminal cases. Anotehr way to describe the burden of proof in disciplinary and arbitration hearings is that the probabilities that the employee is guilty must be grater than the probabilities that the employee is not guilty
The relationship between proof and evidence must be grasped. Cases are proved utilising evidence such as eye witnesses, documents, photographs and CCTV footage. Add to this the so-called argument (persuasive closing summary statements and submissions), and the ‘proof’ (evidence and argument) is complete.
All cases are, at least potentially, assessed on the basis of two types of fairness. To begin with, the employer must prove that an employee was dismissed in a procedurally fair manner. In short, this obligates the employer to comply, at the very least, with the Labour Relations Act’s Code of Good Practice: Misconduct & Incapacity (LRA Schedule 8), or the employer’ disciplinary procedure and code where applicable.
This includes granting the employee sufficient time to prepare for a disciplinary hearing normally no less than 48 hours) and granting the employee the right to an interpreter, the right to be represented and the right to call witnesses, in the course of presenting a defence.
Dismissals must also be substantively fair – fair reason, sufficient proof, consistently applied and an appropriate (ie: not unduly harsh) sanction.
Substantive fairness is invariably assessed by Commissioners in accordance with a factual inquiry into whether or not the employee contravened rule, was the rule in question valid/reasonable and was the employee aware of the rule, or could they be expected to have reasonably had knowledge of the rule?
Witnesses are subjected to an evidence-in-chief, cross-examination, re-examination line of questioning.
by Tony Healy | Oct 3, 2018 | Discipline & dismissal
Earlier this month, the Labour Court passed judgment in a review application regarding a constructive dismissal case, between Agricultural Research Council v Silas Ramashowana and Others (Case number: JR1432/15). Constructive dismissal cases are interesting for a number of reasons, and are specifically addressed in Section 186(1)(e) of the Labour Relations Act, which states that “dismissal means that an employee terminated employment with or without notice because the employer made continued employment intolerable for the employee”.
In this particular Labour Court case, the employee had been employed as a Divisional Human Resource Manager. On commencing employment with the employer, he was issued a company laptop, and signed a Due Care Agreement, in which he undertook to exercise due care in safeguarding the laptop which had been placed in his possession. In addition thereto, this agreement also made provision for the employee being liable for the monetary value of the replacement of the laptop, in the event that it was lost due to his negligence.
On 21 December 2012, the laptop allocated to him was stolen from his motor vehicle. The insurer refused to pay a claim for the replacement of the laptop, as its investigations revealed no forced entry into the vehicle of the employee.
The employer, after having conducted its own investigation, held the employee liable for the loss of the laptop, as its investigation had led them to conclude that the employee had been negligent in regards the theft of the laptop from his motor vehicle. As a result, the employer deducted the replacement cost of the laptop in three equal payments in October, November, and December 2013.
The employee was aggrieved by these deductions, as he was of the view that he had not been afforded an opportunity to state his side of the story. The employee was of the view that he had simply been an unfortunate victim of crime, which was common in the area in which the laptop had been stolen from his motor vehicle. It was further the view of the employee that criminals had jammed his vehicle’s car lock system, and had thereby gained access to his vehicle to steal certain of his personal belongings, as well as the company laptop. The employee had reported this to the South African Police Services.
Subsequent thereto, the employee refused to attend an enquiry into the loss of the laptop, as he was of the view that the employer simply wanted to rubberstamp its deductions from his salary. The employee then resigned on 1 March 2015, stating that “I hereby resign as a Divisional Human Resource Manager… albeit under duress because of the amount of R11 567.00 which was unlawfully deducted from my salary”.
The CCMA held that the employee was constructively dismissed, and the employer made application to the Labour Court in terms of Section 145 of the Labour Relations Act, seeking an order reviewing and setting aside the arbitration award made in favour of the employee.
The employer’s review was premised on its claim that the Commissioner had committed a material error in law, was that “the Commissioner had committed a material error in law when he wrongly applied the principles relating to constructive dismissal”.
The Labour Court judgment highlighted the three requirements in order for constructive dismissal to be established. Authority was quoted confirming that “…the first is that the employee must have terminated the contract of employment. The second is that the reason for termination of the contract must be that continued employment has become intolerable for the employee. The third is that it must have been the employee’s employer who had made continued employment intolerable. All these three requirements must be present if it is to be said that a constructive dismissal has been established. If one of them is absent, constructive dismissal is not established”.
This principle was put differently in the Labour Appeal Court case of National Health Laboratory Service v Yon and Others (Case Number…), in which it was held that “… a constructive dismissal occurs when an employee resigns from employment under circumstances where he or she would not have resigned but for the unfair conduct on the part of the employer toward the employee, which rendered continued employment intolerable for the employee”.
The Labour Court judgment went on to quote the Constitutional Court finding in Strategic Liquor Services v Mvumbi and Others (Case number…) by noting that that in this case it was held that “the test for constructive dismissal does not require that the employee should have no choice but to resign, but only that the employer should have made continued employment intolerable. Ultimately, the test remains whether it was reasonable to resign in order to escape the intolerable working environment”. In the Labour Court judgment regarding the employee who resigned due to the employer having allegedly unlawfully deducted the replacement cost of the laptop from his salary, the court held otherwise.
The Labour Court in this case emphasized the fact that the employee had resigned some 15 months after the deductions he was complaining of were effected. The Labour Court continued “also, as a senior Human Resources Manager with access to legal advice, he knew what recourse was available in a case of unlawful deduction”. The Labour Court also reiterated that “the employer may recover loss incurred due to the fault or negligence of an employee in terms of Section 34(2) of the Basic Conditions of Employment Act”.
The Labour Court found it “very opportunistic” of the employee “to use the incident that took place 15 months prior to the date of his resignation to support a case of constructive dismissal”. Unsurprisingly, the Labour Court held that there was no constructive dismissal, and that the employee had failed to prove that the employer had made his continued employment intolerable. Furthermore “the Commissioner evidently misconstrued the nature of the enquiry”.
by Tony Healy | Oct 2, 2018 | Miscellaneous
Given the pressing economic times we live in, it’s not surprising that the so-called gig economy is evolving at the pace it is. It is a gig economy in which many choose to hire themselves out on a project basis, from gig to gig.
Another way of making ends meet is to simply take on more than one job, in order to keep the family finances in shape. But when does this become ‘moonlighting’, and is this even OK? The notion of moonlighting was first coined as a phrase in the early 1950’s, and was used to refer to someone holding a second job, especially at night, “working by the light of the moon”.
The question arises as to whether, or not, an employer has any right to object to an employee holding down a second, and even a third, job, whilst being employed by them.
As a point of departure, it is important to understand that all employees have a duty of serve their employer in good faith. This means a number of things, including an obligation to protect, further and enhance the interests of the employer. It follows that, for example, an employee cannot do so if they work for employer A by day, and employer B at night. Both employers would be faced with an employee who is exhausted. It is for this reason that many employers forbid moonlighting, which, by and large, is conducted clandestinely by an employee.
In the Labour Appeal Court case of SAPPI Novoboard (Pty) ltd v Bolleurs (1998 – 19 ILJ 784), it was held that “If an employee does anything incompatible with the due or faithful discharge of his duty to his master, the latter has the right to dismiss him …”.
In the main, it is prudent for employers to prohibit moonlighting, unless of course the employee is not employed, and only working part-time (for example mornings only) or on certain days of the week. If the employer elects to forbid moonlighting, it should be clearly incorporated in the employee’s contract of employment and, better still, reinforced in a company policy.
According to the Labour Court judgment in the Martin East judgment, the dismissal of the employee was fair.
An employment contract could include such a clause, declaring that “The employee undertakes during the period of his, or her, employment not to be directly or indirectly engaged in, or employed by, or otherwise associated with, either or on a full-time or part-time basis, any business or organisation or company or corporation or person, whether such activity is of the same or similar business interest as that of …………… (Pty) Ltd, or not”. Such a clause in an employment contract would be valid, and enforceable, in the event that the employee is fully employed.
The Labour Court case of Martin East v Bullbring & others (Case number C1051.14) dealt with the question of moonlighting, amongst other things.
The employer had a clear rule prohibiting moonlighting, yet the employee had facilitated a training workshop for five days, for his own account, without having sought, or obtained, authorisation from the employer to do so. To make matters worse, he had been on duty for his employer for at least part of the time he had facilitated the workshop for his own personal benefit.
So there you have it. Moonlighting cases in our courts are relatively few in number. However, it is undoubtedly clearly understood that employees have a duty of good faith to their employers, and as such, must ensure that they do not act in a manner which undermines the interest of their employer.
On the other hand, if employers object to their staff moonlighting, it is of prime importance that this be recorded in a contract of employment, together with a policy on this prohibition. In addition, there must be proof that the employee has prior knowledge of the rule prohibiting moonlighting.
Moonlighting will not always necessarily justify dismissal, and each case would need to be judged on its own merits.
