Mahlamu v CCMA and Others (JR 1702/ 09) [2010] ZALC 182; [2011] 4 BLLR 381 (LC); (2011) 32 ILJ 1122 (LC) (30 November 2010)

Principle:

Parties to an employment contract cannot contract out of the protection against unfair dismissal afforded to the employee whether through the device of 'automatic termination' provisions or otherwise.

Facts:

Gubevu Security Group employed Mr Mahlamu as a security officer, and at the time of this dispute was contracted to provide armed escort services to the Bombela Joint Venture at various sites related to the Gautrain project. In terms of the employment contract signed between them, it was agreed that "his employment contract will automatically terminate on expiry of the contract between the Employer and the Client or in the event the Client does not require the services of the Employee for whatsoever reason."

During January and February 2009 Bombela advised Gubevu that the armed escort services at certain sites would end, with immediate effect. Gubevu then advised Mr Mahlamu that the Bombela contract had been cancelled and that in the absence of alternative positions his services were no longer required, intimating that the contract had terminated automatically on account of the fact that Bombela no longer required his services.

The arbitrator held that the applicant's employment contract specified that the applicant's employment would terminate automatically if for any reason the client no longer required the services of the employee. Since the client had stated that the applicant's services were no longer required, the applicant's employment had terminated automatically and there was therefore no 'dismissal' for the purposes of s 192 of the LRA. On that basis, the arbitrator dismissed the applicant's claim.

The arbitrator's award was taken on review. The LC on review 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 LC held that the public has an interest in ensuring that such persons are not exploited and as such, their rights may not be waived.

The LC held that parties to an employment contract cannot contract out of the protection against unfair dismissal afforded to the employee whether through the device of 'automatic termination' provisions or otherwise.

Extract from the judgement:

(VAN NIEKERK J)

[21]   These passages are clear authority for the fact that the parties to an employment contract cannot contract out of the protection against unfair dismissal afforded to the employee whether through the device of 'automatic termination' provisions or otherwise.

[22]   In short: a contractual device that renders a termination of a contract of employment to be something other than a dismissal, with the result that the employee is denied the right to challenge the fairness thereof in terms of section 188 of the LRA, is precisely the mischief that section 5 of the Act prohibits. Secondly, a contractual term to this effect does not fall within the exclusion in section 5(4), because contracting out of the right not to be unfairly dismissed is not permitted by the Act.

[23]   This is not to say that there is a 'dismissal' for the purposes of s 186(1) of the LRA in those cases where the end of an agreed fixed term is defined by the occurrence of a particular event. This is what I understand the ratio of Sindelane (supra) to be - that ordinarily, there is no dismissal when the agreed and anticipated event materialises (to use the example in Sindelane, the completion of a project or building project), subject to the employee's right in terms of s186 (1) (b) to contend that a dismissal has occurred where the employer fails or refuses to renew a fixed term contract and an employee reasonably expected the employer to renew the contract. In other words, if parties to an employment contract agree that the employee will be engaged for a fixed term, the end of the term being defined by the happening of a specified event, there is no conversion of a right not to be unfairly dismissed into a conditional right. Without wishing to identify all of the events the occurrence of which might have the effect of unacceptably converting a substantive right into a conditional one, it seems to me that these might include, for example, a defined act of misconduct or incapacity, or, as in the present instance, a decision by a third party that has the consequence of a termination of employment.

[24]   Although neither party referred to the decision, Boda AJ recently held that any clause in a contract of employment that allows a labour broker's client to undermine the right not to be unfairly dismissed is against public policy. The facts of that case are distinguishable, since it did not concern a situation where the respondent's client no longer required the employee's services for economic reasons. However, the principle that was recognised and applied by Boda AJ is consistent with the principle applied in the present instance, and I associate myself with his reasoning.

[25]   It follows that by finding that the applicant's contract had terminated automatically when Bombela advised the third respondent that the applicant's services were no longer required, the commissioner committed a material error of law. His award therefore stands to be reviewed and set aside (see Stocks Civil Engineering (Pty) Ltd v Rip NO & another [2002] 3 BLLR 189 (LAC)), and substituted by a ruling to the effect that the termination of the applicant's employment constituted a dismissal for the purposes of the LRA. To the extent that the reason for the applicant's dismissal is one related to the third respondent's operational requirements (a matter over which this court has jurisdiction), I intend to make an order to the effect that the applicant has 30 days from the date of the order to refer a dispute to this court. Alternatively, if the provisions of 191 (12) apply, the applicant is may refer any dispute about the fairness of his dismissal to arbitration under the auspices of the CCMA. Finally, there is no reason why costs should not follow the result.