Public Newsletter
Worklaw is a subscription based labour law service developed by leading South African labour lawyers and arbitrators. Worklaw gives you all you need to manage labour law at the workplace. Go to www.worklaw.co.za
Worklaw subscribers receive a monthly newsletter containing commentary on the latest labour law cases and trends. This newsletter's article looks at the law relating to a recent very topical subject - 'Private views in public spaces: social media and racism' and includes comment on the recent Gareth Cliff Idols judgment.
We also look at three new cases: The first case looks at a recent judgment which found that the Employment Equity plan of the SAP contravened the EEA. The second case looks at a practice commonly called 'garden leave', when the employer requires a resigning employee to comply with a contractual notice period but does not require the employee to work during this period and prevents the employee from working for anyone else. The third case looks at whether the 'old' employer in a s197 'transfer of a business as a going concern' is bound by agreements concluded before the employees transfer to the new employer.
This public newsletter is a free edited version of the subscriber newsletter.
RECENT CASES
Affirmative action: why the SAPS got it wrong
Trade union Solidarity brought an application to challenge the validity of the South African Police Service Employment Equity Plan applicable from 1 January 2010 until 31 December 2014. Solidarity sought a declarator (that's a court decision declaring what the law is) that the plan was invalid and of no force and effect because it contravenes sections in the EEA, the SAPS Act, PAJA and the Constitution.
By the time final submissions were made, the 2010 - 2014 plan had virtually run its course. The relief sought was primarily declaratory but it was also to restrain SAPS from implementing the plan by applying quotas based on demographic representation, or to make appointments based on such criteria. The Labour Court, in Solidarity v Minister of Safety and Security and Others (J879/12) [2016] ZALCJHB 15 (26 January 2016), found that the EE plan did contravene the EEA. The court clarified these principles:
- Rather than relying on national census figures of the general population for the purposes of the EEA, an employer must compare the economically active portion of the population - both nationally and provincially - against which the composition of the workforce is assessed;
- Whether numerical targets in an EE plan can be construed as quotas will depend on the rigidity with which they should be pursued, which will depend on the interpretation of the wording of the plan;
- An EE plan should contain a provision that tells decision makers under what circumstances the pursuit of the targets can yield to other considerations when recommending or making an appointment.
Garden leave? Another kind of notice period
Mr. Godfrey Motsa was employed by Vodacom in January 2007. On 23 December 2015, Motsa resigned. In an urgent application in Vodacom (Pty) Ltd v Motsa and Another (J 74/16) [2016] ZALCJHB 53 (9 February 2016), Vodacom sought a final order to enforce the terms of Motsa's employment contract. In particular, Vodacom sought to hold Motsa to a notice period of six months as stipulated in his contract of employment (in the form of what is known as 'garden leave' - ie stay at home and don't work for anyone) and a restraint of trade preventing him from working for a competitor for a further period of six months after the expiry of the notice period. Motsa maintained that he was entitled to take up employment elsewhere from 1 January 2016, but he acknowledged that he was bound by the restraint and confidentiality undertakings.
The Labour Court held that Motsa failed to establish that Vodacom had waived its rights to enforce the notice period and held that there was no reason why Motsa should not be held to the terms of his contract. Motsa's contract expressly afforded Vodacom the discretion to enforce the agreed period of 'garden leave'. Motsa was therefore bound by Vodacom's election to enforce the 'garden leave' clause of his contract, which terminates on 30 June 2016. Vodacom was also held to be entitled to enforce the post termination restraint agreement.
This decision supports these principles: If an employee gives notice, the employer may require the employee to spend a whole or part of the notice period at home but the employee remains entitled to remuneration during the notice period. Whilst there is normally no relationship between a 'garden leave' clause and a restraint of trade agreement, any period of enforced commercial inactivity prior to the termination of employment is relevant to the assessment of the reasonableness of any restraint that applies post termination.
Is the 'old' employer in a s197 transfer still bound by contractual obligations?
On 1 April 2001, following the transfer of a business as a going concern in terms of Section 197 of the LRA, employment contracts were transferred from the City of Johannesburg to an entity called Super Fleet Power Plus Performance, and then to the respondent, Fleet Africa (FA). The City of Johannesburg concluded an outsourcing agreement with FA in terms of which the City's vehicles were serviced and maintained. When the outsourcing agreement expired, the business of servicing and maintaining the City's vehicles was transferred, in terms of S197, back to the City of Johannesburg. This transfer constituted the "second generation outsourcing agreement/second outsourcing agreement".
After the date of transfer of the business back to the municipality, FA concluded voluntary retrenchment agreements with certain employees who had continued rendering services to FA, the parties not being aware at that stage that the transfer was covered by s197 of the LRA. When these employees subsequently claimed employment with the City of Johannesburg as a result of the application of s197, FA claimed the retrenchment agreements were no longer binding. The employees then sought an order that these agreements, which would result in them receiving substantial severance payments from FA, were valid and binding.
The primary issue was the timing of the substitution of the new employer (the City of Johannesburg) in the place of the old employer (FA). FA argued that in terms of s197, the City of Johannesburg was automatically substituted in its place as the employer on the date of the transfer of the business, and as FA was therefore not the employer of the applicants when the retrenchment agreements were concluded, these agreements were, consequently, invalid and unenforceable.
The Labour Court in Senne and Others v Fleet Africa (Pty) Ltd (J2888/14) [2016] ZALCJHB 48 (12 February 2016) did not agree with FA's submissions. It held that on the facts presented, FA was undoubtedly the employer of the applicants when the retrenchment agreements were concluded, and that the applicants were entitled to enforce the retrenchment agreements. The court said that whilst a consequence of s197 is that, pursuant to a transfer of a business as a going concern, "the new employer is automatically substituted in the place of the old employer", the timing of the substitution is something to be determined on the facts of each case - it does not follow that the substitution always occurs simultaneously (ie at the same time) with the transfer of the business from the old employer to the new employer.
The Court gave examples of when the substitution of the new employer in the place of the old employer does not factually occur simultaneously with the transfer of the business: these included circumstances under which the old and new employers and the affected employees agreed that, after the transfer, the affected employees would continue rendering services to the old employer for a specified period of time, or when the parties at that time were not aware or were not in agreement that their circumstances constituted a transfer of a business under s197 of the LRA.
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Bruce Robertson
February 2016
Copyright: Worklaw
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