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Worklaw subscribers receive a monthly newsletter containing commentary on the latest labour law cases and trends. This newsletter contains an article which looks at "Equal pay for equal work - how is discrimination proved?". We also discuss three new cases: The first and second cases look at different outcomes in cases where the employer claimed there was no dismissal, merely the automatic termination of fixed term employment contracts triggered by certain events. In the third case the LAC brings certainty to whether a breakdown in trust needs to be proved to justify the fairness of a dismissal.
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We have pointed out in a previous Newsletter (see June 2016) that there seems to be a fundamental shift in what the CCMA and labour courts have in the past required, namely evidence not only of the misconduct, but also separate evidence that the misconduct has destroyed the trust relationship. The LAC has perhaps recently now made its strongest statement on this issue in Impala Platinum Ltd v Jansen and others (2017)26 LAC 1.11.4 also reported at  4 BLLR 325 (LAC).
Consider the facts of this case: J was employed as a Training Manager from 1983 until his dismissal for misconduct in 2007. In 2002 ministerial regulations were promulgated with the aim to create and ensure a safe underground mining working environment. All mining companies had to ensure that workers rendering service in an underground mining environment had been practically and theoretically assessed and declared to be fit to render services in one of two categories - Competent A or Competent B. Each employer or any service provider accredited by the Mining Qualification Authority was responsible for the assessment of the competency test.
The employer issued an instruction that before an individual rendered services in the underground environment, he or she must have successfully completed the theoretical and practical components of Competent A or Competent B certification. It was not disputed that J was in charge and therefore responsible to ensure compliance with the instructions and the Regulations. J however, contrary to the instruction, ordered his subordinates to allow workers including those of its service provider, Vuselela, who had only completed the theoretical component of the competency certificate to work and/or train underground.
It then transpired that Vuselela was a business co-owned by J's wife and his stepdaughter. The employer, on investigating this issue further, discovered that J exercised undue influence on service providers who provided services to the employer to make use of Vuselela's services for the provision of the competency training. The employer charged J with misconduct. The charges included gross negligence in having allowed workers to perform underground duties without being declared competent; and, for non-compliance with company values, policies and procedure in creating a conflict of interest by unduly promoting the use of a company called Vuselela, owned by his wife, to train workers. J was found guilty and dismissed at a disciplinary hearing. His internal appeal suffered similar fate.
J referred an unfair dismissal dispute to the CCMA challenging both the procedural and substantive fairness of his dismissal. In dismissing the procedural challenge, the commissioner found that viewed holistically, the procedure adopted by the appellant was fair because it gave J full opportunity to state his case and he failed to attend the disciplinary hearing. Concerning the substantive fairness of the dismissal, the commissioner found that J was grossly negligent in allowing Vuselela's employees to render services underground in the mines by instructing his subordinates to overlook that those workers were not certified to be underground as required by the regulations. The commissioner further found that J's conduct was premeditated, deliberate and aimed at promoting his wife's business. Dissatisfied with the award, J sought to have the award reviewed and set aside. He was successful; the Labour Court held that the sanction was inappropriate because no evidence was led to the effect that the trust relationship had broken down as the result of J's offence; and that the conduct of the commissioner had created an impression of bias against J.
These two issues were considered on appeal. The LAC held that where an employee is found guilty of gross misconduct, it is not necessary to lead evidence pertaining to a breakdown in the trust relationship as it cannot be expected of an employer to retain a delinquent employee in its employ. The LAC clarified that the SCA judgment of Edcon Limited v Pillemer NO turned on its own facts and did not establish as an immutable rule that an employer must always lead evidence to establish a breakdown in the trust relationship in order for the sanction of dismissal to be appropriate.
Consider these facts:
- A labour broker or service provider signs a contract to render specific services to a client, and to fulfil the contract employs extra staff on fixed term contracts;
- It could be that the service contract is for a specific period or an indefinite period terminable by notice;
- It is made clear to the new staff that they have been employed solely because of the contract with the client.
The LAC recently had to consider a similar situation in Enforce Security Group v Mwelase and Others (DA24/15)  ZALAC 9 (25 January 2017), which overturned the previous approach adopted by the LC in Mwelase and Others v Enforce Security Group and Others (D358/12)  ZALCD 46 (31 July 2015).
Here are the facts of this case: A private security services company, Enforce Security Group, provided security officers to its various clients contracted to it, including Boardwalk Inkwazi Shopping Centre (Boardwalk), Richards Bay. In terms of the contracts of employment with the employees, the period of employment commenced on a specified date and it was stated that "the period of the employment would endure until the termination of the (service) contract". The employment contracts also stated that the employees agreed that their employment was totally dependent on the duration of the service contract with the client.
On 30 September 2011, Boardwalk gave notice of termination of its contract with Enforce with effect from 31 October 2011. As a result of the termination notice Enforce held meetings on 3& 4 October 2011 with the shop stewards from NASUWU and SATAWU, the trade unions representing the employees. Enforce offered the affected employees alternative employment in Durban. The offer was rejected by the employees' representatives. All the employees were then handed letters notifying them of the cancellation of the contract by Boardwalk, offering them alternative employment in Durban, and that their respective contracts of employment would terminate on 31 October 2011 if they did not take up the offer of alternative employment.
Dissatisfied with their 'dismissal', the employees referred an unfair dismissal dispute to the CCMA. The commissioner concluded that the client's termination of the agreement with Enforce led to the automatic termination of the employees' employment contracts and therefore the employees were not entitled to any form of compensation. The application was consequently dismissed.
On review, 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 held that any contractual provision that infringes on the rights conferred by the LRA or Constitution is not valid, and even though an employee might be deemed to have waived his or her rights, such waiver is not valid or enforceable. The LC found that there was an obligation on Enforce to have embarked on a retrenchment exercise and that it refused to do so. Regarding alternative offers of employment, the LC held that Durban and Richards Bay are places too far apart to commute daily.
Enforce appealed against the LC's decision, and the LAC set it aside. The LAC stressed that dismissal only occurs when an employer's own act terminates the contract. Where employees have agreed that there will be automatic termination if a third party withdraws from the contract, there is no dismissal - the definition of dismissal requires that there must be an act by the employer terminating the contract. Where the end of the fixed term is defined by the completion of a specified event, such as the cancellation of a service contract, this is the proximate cause for the automatic termination of the employees' employment contracts and does not constitute a dismissal. The LAC accordingly found that Enforce was not obliged to retrench the employees.
BUT read on.....
In another, subsequent case ( and subsequent to the 2014 LRA Amendments) an urgent application was made for an interdict in terms of s 189A(13) of the LRA. The employees were members of AMCU and employed by the respondents, Piet Wes Civils CC and WaterkloofSkoonmaakdienste CC respectively. They alleged they had been dismissed for operational requirements; that it was a large scale retrenchment contemplated by s 189A of the LRA; and that there was no consultation. They sought reinstatement pending a proper consultation process in terms of s 189A(13).
Both employers provided services to Exxaro coal mine as contractors. They entered into various contracts with Exxaro to perform certain tasks. When Exxaro terminated their contracts on one month's notice, they terminated the employees' contracts as a direct result of losing the Exxaro contracts. The employers claimed that the workers were not dismissed, as they were employed on fixed term contracts that had expired and their employment terminated 'by operation of law'.
The Labour Court in AMCU and Others v Piet Wes Civils CC and Another (J2834/16, J2845/16)  ZALCJHB 7 (13 January 2017) granted the interdict, ordering the reinstatement of the employees pending retrenchment consultations. The Court held that there is a dismissal when a service provider terminates the contracts of employment because the client has terminated its contract with the service provider. The Court said that to interpret termination on a 'specified event' to include the cancellation of the contract by the client goes beyond the intention of the legislature. The Court said the onus is on the employer to prove that there was a justifiable reason for fixing the term of the contract and that the term was agreed. But in this case it was not a genuine fixed term contract contemplated by s 198B(4)(d); therefore, it was in contravention of s 198B(3) and therefore deemed to be of indefinite duration. The clause on which the respondents relied was against public policy.
So how can we reconcile these two cases?
One of the "justifiable reasons" for a fixed term employment contract contemplated by s198B(4)(d) is an instance where the employees work exclusively on a specific project that has "a limited or defined duration". But the LC in the AMCU case found that this was not what had happened: Exxaro simply terminated its contracts with the two service providers on notice, and there was no indication that a specific project had come to an end. The contract was not intended to be for a fixed duration, or to terminate on the occurrence of a specified event or the completion of a specified task or project as contemplated by s 198B(1).
Because the LC in AMCU felt that indefinite employment contracts were effectively disguised as fixed term contracts, it refused to accept a contractual provision that provides for the automatic termination of the employment contract at the behest of a third party or other external circumstances, saying this undermines an employee's rights to fair labour practices. The LC said such a term is 'contrary to public policy, unconstitutional and unenforceable'.
The LAC in Enforce did not find that the contract was unenforceable. It accepted that employment was dependent on an on-going contract with the client and it was fair that the employment contract could be terminated if the client terminated its contract with the client. The LAC did not interrogate whether the contract with the client was justifiable in terms of s 198B(4). This was probably correct because the termination took place before the 2014 amendments to the LRA and these could not be enforced retrospectively. The AMCU case fell to be decided in terms of the amended LRA. It is unhelpful when courts make starkly different findings. But the lesson is clear: unless the contract between a client and a service provider is genuinely of a fixed term nature, courts may well follow the AMCU reasoning, requiring the service provider to retrench the displaced employees.
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