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Worklaw subscribers receive a monthly newsletter containing commentary on the latest labour law cases and trends. In this newsletter we look at three new cases: the first deals with the obligation of a subsequent employer in a s197 transfer to respect the years worked at the transferring employer for the purposes of severance pay. The second case looks at what constitutes consistency or parity of treatment when two employees are involved in misconduct. The third case looks at a decision that limits an employer’s liability for sexual harassment in terms of s 60 of the Employment Equity Act.

In our article we look at the charge often used in disciplinary hearings: “bringing the employer into disrepute”. In this article we outline the difficulties in this charge and make suggestions on the way charges should be made.

This public newsletter is a free edited version of the Worklaw subscriber newsletter.


When a business is transferred as a going concern, can the employees forfeit years of service?

An employee, Roos, was employed by Iscor from 1970 onwards. In 1998 he was the manager of the IT division. In that year Iscor sold its IT division to AST as a going concern. AST agreed to employ all IT employees on the same terms and conditions as existed before the effective date, unless other conditions were negotiated with any of the employees.

After the transfer IT employees were given two options. The first option was to continue their employment with AST on the same terms and conditions of employment as pertained at Iscor or to accept new employment with AST on terms and conditions offered by AST.  The second option was to decline transfer and be retrenched. Roos accepted the first option “as a new employee on the conditions of employment offered by AST.” Four years later he was retrenched and paid severance pay for the period that he worked for AST.

Roos referred a unfair dismissal dispute to the Labour Court and contended that he was entitled to severance pay for each year of service with Iscor. The Labour Court found in his favour and ordered the payment of such severance pay along with other relief.

On appeal to the LAC (AST Holdings (Pty) Ltd v Roos [2007] 10 BLLR 891 (LAC)) AST contended that it was permissible to conclude an agreement with employees to forfeit their years of service with Iscor in exchange for new and improved conditions of service as it had done in the case of Roos. Roos argued that his years of service would be lost should he accept a transfer and that this induced him to accept the offer to become a new employee on the AST terms and conditions. He was under the incorrect impression and he was for that reason not bound by the agreement.

Section 197(4)(d) of the LRA states that a transfer does not interrupt an employee’s continuity of employment, and an employee’s contract of employment continues with the new employer as if with the old employer. The Labour Appeal Court held that it is unlawful and contrary to the express provisions of section 197(4) regarding continuity of employment for a new employer to seek a transferring employee’s agreement to the forfeiture by him of his period of service with the previous employer. The Court held that parties may alter the terms of the transferred contract, but they cannot escape the fact of its existence. Because an employee's continuity of employment is not a right or obligation, or a term of the employment contract, express provision was made in s 197(4) that the transfer of the employment contract would not interrupt that continuity. There is no provision in it, similar to s 197(2), which allows the parties to alter an employee's continuity of employment by agreement.

It is important to realize that s 197 was substantially amended in 2002. Section 197 now contains provisions regulating this situation. The old employer must address the issue of severance pay and must make arrangements regarding it otherwise the severance pay liability remains intact.  The old employer must in terms of section 197(7) agree with the new employer to a valuation of the leave pay and severance pay that would have accrued had there been a retrenchment at the date of the transfer and must conclude a written agreement specifying which employer is liable for that or how payment of it is to be apportioned between the two employers.

What does consistency mean?

An employee had been dismissed for dishonesty. The commissioner found the employee guilty of the offences she was charged with but held the sanction to be inappropriate and for this reason decided to overturn the dismissal. The commissioner was influenced by the following factors: (a) Another employee involved in the dishonest transaction had been given a final written warning and received a suspension as opposed to being dismissed; (b) The employee`s years of service; (c) The procedures concerning the sales of scrap to employees were not strictly adhered to by the employer. The employer took the arbitrator`s decision on review.

When the matter can before the Labour Court in Hullet Aluminium (Pty) Ltd v Bargaining Council for the Metal Industry and others (2008) 29 ILJ 1180 (LC) the employer contended that the commissioner committed a gross irregularity in placing undue emphasis on the sanction accorded to the second employee who was charged and found guilty of failing to follow company procedure. The employer also criticized the commissioner for failing to take into account the fact that the employee was charged with an offence of gross dishonesty and also that the employee persisted with her denials both during the disciplinary and the arbitration hearing.

In particular the employer contended that the commissioner misapplied the principles relating to inconsistency and placed undue emphasis on the years of service of the employee. The Labour Court found for the employer, holding that there was a basis for distinguishing between the two employees and that the Commissioner had misapplied the parity principle. When deciding the issue of parity (consistency), the comparative gravity of the misconduct of the employee who seeks to rely on that principle should receive serious attention. The failure to show remorse and persisting in denials both during the disciplinary and arbitration hearings can be a ground for distinguishing between two employees. It is unfair to expect an employer to take back an employee when she has persisted with her denials and has not shown any remorse. An acknowledgement of wrong-doing on the part of an employee goes a long way in indicating the potential and possibility of rehabilitation including an assurance that similar misconduct would not be repeated in the future.

Liability for sexual harassment you didn’t know about?

in Mokoena and Another v Garden Art (Pty) Ltd and Another (2008) 29 ILJ 1196 (LC) two employees lodged a claim for damages against their employer after they were allegedly sexually harassed by their supervisor. The employees argued that the employer’s failure to take proper steps to prevent, to eliminate or prohibit sexism and “genderism” being perpetrated at the workplace by certain of its employees constituted direct and unfair discrimination against the applicants. The claim was opposed by the employer on the basis that when the complaints were brought to it, it investigated the matter and no evidence of sexual harassment could be proven.

The court was required to interpret s 60 of the Employment Equity Act which states:

  1. If it is alleged that an employee, while at work, contravened a provision of this Act, or engaged in any conduct that, if engaged in by that employee’s employer, would constitute a contravention of this Act, the alleged conduct must immediately be brought to the attention of the employer.

  2. The employer must consult all relevant parties and must take the necessary steps to eliminate the alleged conduct and comply with the provisions of this Act.

  3. If the employer fails to take the necessary steps referred to in subsection (2), and it is proved that the employee has contravened the relevant provision, the employer must be deemed also to have contravened that provision.

  4. Despite subsection (3), an employer is not liable for the conduct of an employee if that employer is able to prove that it did all that was reasonably practicable to ensure that the employee would act in contravention of this Act.”

The court said that Section 60 of the EEA applies where it has been brought to the attention of the employer that sexual harassment has taken place and as a result of the employer’s inaction, further sexual harassment takes place, which renders the employer liable. For the applicants to succeed they must prove that the conduct amounts to sexual harassment, that the employer knew about it, failed to take proper steps to prevent or eliminate or prohibit the sexism and “genderism” and it is this failure that makes it liable. The court said that where there is one incident of sexual harassment, which is brought to the attention of the employer immediately after the incident, an employer will not be held liable in terms of section 60 of the EEA. The aggrieved employee may then have to consider a different basis to hold the employer liable.


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Bruce Robertson
July 2008
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