Mwelase and Others v Enforce Security Group and Others (D358/12) [2015] ZALCD 46 (31 July 2015)

Principle:

Any contractual provision that infringes on the rights conferred by the LRA or Constitution is not valid, and even though the employee might be deemed to have waived his or her rights, such waiver is not valid or enforceable

Facts:

The employees in this case were employed by Enforce Security to provide a security service at Boardwalk Shopping Centre in Richards Bay. Their employment contracts stated that their employment would endure until the termination of the contract between Enforce and Boardwalk. In terms these contracts the employees each agreed "he/she fully understands that the Company's contract with the Client might be terminated by the Client at any cause......., (and) in such event this (employment) contract shall automatically terminate. Such termination shall not be construed as a retrenchment but as a completion of contract."

Boardwalk cancelled their contract with Enforce on 30 September 2011 and shortly thereafter Enforce informed the employees that, in accordance with their contracts of employment, their employment would terminate on 30 October 2011. They stopped working for Enforce on that date, and their union demanded they should be retrenched in accordance with s189 of the LRA and paid severance pay. When this was refused, the union referred an unfair dismissal dispute to the CCMA.

The arbitrator found that whilst the employees were employed on indefinite contracts of employment, the termination of the security contract by Boardwalk led to the "automatic termination" of their employment contracts and they could not, in fairness or in law, claim entitlement to any form of compensation. This decision was taken on review by the employees.

The LC did not agree with the arbitrator. It stated that at the heart of this dispute was "the question of whether the automatic termination clause in the contract of employment is not in conflict with the protection afforded by the Constitution and the LRA to any employee."

The LC found that parties to an employment contract cannot contract out of the protection against unfair dismissal afforded to an employee whether through the device of 'automatic termination' provisions or otherwise, because the LRA had been promulgated not only to cater for an individual's interest but the public's interest as well. Accordingly, even if they individually had consented to waiving their rights, this could not be upheld due to broader public interests.

The LC rejected the employer's submissions that the employees were effectively on fixed term contracts, with the end of the fixed term being defined not by a particular date but by the occurrence of a particular event, namely the termination of the Boardwalk contract.

The LC overturned the arbitrator's award, but found that it was not reasonably practicable to order reinstatement or re-employment, given that three and a half years had elapsed since their dismissal. The Court granted each employee six months' remuneration as compensation for unfair dismissal, plus the severance pay they would have been entitled to if they had been retrenched. If there was any dispute over calculating these amounts, this was to be referred back to arbitration for resolution.

Extract from the judgment:

(Cele J)

Evaluation

[9]   In Mahlamu v CCMA & Others the court had to decide whether it was permissible to contract out of the right not to be unfairly dismissed as provided by the LRA. The court held that the test was whether the subject of the right was intended to be its sole beneficiary. If others had an interest in the existence of the right, such right, it was held, could not be waived; so too if the interests of the public were served by the conferment of the right. The Applicants are individual employees, as security officers they are indeed lay persons and are unacquainted with the interpretation of legislation and therefore regarded as incapable of defending themselves without legal representation. The public has an interest in ensuring that such persons are not exploited and as such, their rights may not be waived.

[10]   In South African Post Office v Mampeule this court per Ngalwana AJ dealt with the validity of an automatic termination clause in a contract of employment. The court held that automatic termination provisions are impermissible in their truncation of the provisions of chapter 8 of the LRA, and possibly even, the concomitant constitutional right to fair labour practices. The court further held that these provisions are contrary to public policy as statutory rights conferred on employees for benefit of all employees and are incapable of consensual validation. On appeal the court a quo's decision was upheld and the Labour Appeal court went further to state that:

"The onus rests on South African Post Office to establish that the 'automatic termination' clause prevails over the relevant provisions in the Act (referring to section 5 of the LRA) and the clause the of the contract that established employment for a fixed term of five years subject to the employer's right to terminate the contract with due regard to fair labour practices. A heavier onus rests on a party which contends that it is permissible to contract out of the right not to be unfairly dismissed in terms of the Act. I am in agreement with the submission made by Mampuele's counsel, supported by authorities, that parties to an employment contract cannot contract out of the protection against unfair dismissal afforded to an employee whether through the device of 'automatic termination' provisions or otherwise because the Act had been promulgated not only to cater for an individual's interest but the public's interest."

[11]   Therefore, it follows from the authority in South African Post Office v Mampeule that any contractual provision that infringes on the rights conferred by the LRA or Constitution is not valid, and even though the employee might be deemed to have waived his or her rights, such waiver is not valid or enforceable. In this matter, it follows that by finding that the cancellation of the contract between Boardwalk and the First Respondent led to the automatic termination of the employees' contracts of employment, the third respondent committed a material error of law by failing to apply his mind to the relevant provisions of the LRA, namely, sections 5(2) (b), 5(4) and 185. The Third Respondent found that the Applicants were employed on indefinite contracts of employment. This finding is not assailed in this review application. He then came to the conclusions that the employees' contracts were automatically terminated and that the employees were not entitled to compensation. In the premises, the award of the Third Respondent stands to be reviewed and set aside as a decision which a reasonable decision maker could not have reached.