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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 deals with "Speaking your mind in the workplace: what are the limits?" We also discuss three new cases: The first case deals with the consequences of an arbitrator failing to understand the nature of the dispute. The second case considers whether there is a transfer of a business in an 'insourcing' situation. The third case looks at termination of a fixed term contract.

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


When an arbitrator fails to understand the nature of the dispute

It is often difficult when misconduct involves a criminal act, to know what the employer must prove. Must the employer prove the criminal law elements of the crime, especially intention? Or is it enough to establish general misconduct in terms of a breach of the employer's policies or rules? And how must an arbitrator assess the misconduct, particularly if it happens away from the workplace?

In a recent case, a policeman was found guilty and dismissed for contravening SAPS Discipline Regulations by committing assault and attempted murder. Aggrieved with his dismissal, he referred an unfair dismissal dispute to the bargaining council. The evidence at arbitration was that the policeman was off duty and was not in uniform when driving with a colleague and two other people in an unmarked SAPS vehicle. He stopped the vehicle next to a woman who was standing in the road with a relative, N. The policeman and his colleague did not identify themselves as police officers after stopping, although the employee accepted that he had a duty to do so. An argument ensued between the policeman and N, which culminated in N being slapped, before the policeman drew his firearm and pointed it at N. Two others arrived at the scene and the policeman fired several shots from his firearm. The policeman's car, driven by his passenger, then drove into one person, knocking him down. The two people who arrived on the scene were shot - one in his arm and the other in his back.

The arbitrator accepted the policeman's version that he had fired a warning shot which had ricocheted and hit one person. The arbitrator however also found that no evidence was placed before him that it was the bullets from the policeman's firearm that had struck the two persons who were shot. Given that a cartridge which did not match the policeman's firearm was found on the scene, the arbitrator found that this suggested that the policeman was not the only person firing shots. Since insufficient evidence had been placed before him to reach a conclusion that the policeman had the intention to kill the two who were shot, the requisite intent was found lacking and the dismissal of the policeman was found to be substantively unfair. The policeman was retrospectively reinstated into his employment with the SAPS.

Dissatisfied with the award, the SAPS brought an application for its review in the Labour Court. The Labour Court found that the arbitration award showed "little comprehension of the employee relations context" in relation to both the charges against the policeman and the standard of conduct to be upheld by members of the SAPS in the communities in which they serve. The Court took the view that the arbitrator ought properly to have considered whether the policeman had acted with recklessness. Instead, the arbitrator had arrived at a conclusion on his own theory of ballistic matters which was speculative and unsupported by the evidence. The Court concluded that "(t)his defect, and in addition, the arbitrator's failure to understand the nature of the dispute he had to arbitrate, renders the award reviewable." Since it was found to be inappropriate to substitute the decision of the arbitrator, the matter was remitted back to the bargaining council for hearing de novo before a different arbitrator.

On appeal to the LAC in Mashigo v SAPS & others [2018] 10 BLLR 943 (LAC), it was confirmed that the Labour Court could not be faulted for arriving at the conclusion that the arbitrator had failed "to understand the nature of the dispute he had to arbitrate" and that this rendered the award reviewable.

The lesson of this case is this: Where the role of the arbitrator is to determine the fairness of a dismissal, it may constitute a gross irregularity if the arbitrator adopts an unduly formalistic approach to the proceedings and narrows the enquiry to a focus on whether intent to commit a crime has been proved, and not whether the employee's conduct constituted a breach of the employer's disciplinary code.

Insourcing (not outsourcing) - when is it a transfer of a business?

A distinctive feature of a recent case involved a university that embarked on a programme of 'insourcing', employing personnel rendering security services at the university's premises and who had previously been employed by two security companies, iMvula and Red Alert. This case is somewhat different from the standard s197 dispute, in which a company is alleged to have purchased or otherwise acquired a business as a going concern from another company.

The dispute in Imvula Quality Protection (Pty) Ltd and Others v University of South Africa [2018] 12 BLLR 1151 (LAC); (2019) 40 ILJ 104 (LAC) focussed on whether UNISA's termination of the service contracts with both security companies, taken together with its decision to employ the majority of those who had previously been employed by those companies, constituted 'a transfer of a business as a going concern' for the purposes of s197 of the LRA.

UNISA, under political pressure to insource, had entered into a shared service agreement in terms of which the obligations of a new independent service provider were to provide equipment and infrastructure, torches, radios, guard tracking and monitoring equipment registers, vehicles and staff uniforms. By contrast, UNISA would employ the human resources required for the security service. The obligation of the new service provider would include the provision to UNISA of managers and supervisors employed by the service provider to ensure the overall management of the security service.

In the Labour Court it was held that s197 of LRA was not applicable. After analysing the relevant agreements, the LC concluded that the true position was that the contract for the provision of services between UNISA and iMvula and Red Alert came to an end, and that no part of the infrastructure for the conducting of the business of providing a security service was to be transferred to UNISA. In those circumstances, UNISA's decision to insource in terms of the shared services model and the offers of employment consequently made to some of iMvula and Red Alert's staff, did not trigger s197.

The Labour Appeal Court dismissed the appeal against the LC judgment, and agreed that the insourcing was not covered by s197. The LAC held that UNISA had taken in a range of people who had previously been employed by iMvula and Red Alert as security guards, and entered into employment contracts with them. At the same time, it did not seek to run a security business, whether in whole or in part - this was the significance of the shared service agreement. The business of providing security at the campuses of UNISA constituted more than simply the existence of a group of guards patrolling the campus without management, equipment or strategy with regard to their responsible deployment. None of these tasks was taken over by UNISA. The LAC concluded that this arrangement could not be said to fall within the meaning of a transfer of a business as a going concern, as contemplated by s197.

This case reminds us that the facts of each case will determine whether s197 applies: an arrangement in which most of the fundamentals of the business - eg assets, equipment, employees etc - are not transferred to a new employer will not be said to fall within the meaning of a transfer of a business as a going concern, as contemplated by s197.

Termination of employment when a client terminates its contract with a service provider

When a fixed-term contract expires, the contract comes to an end automatically - there is no dismissal. A 'fixed term contract' is defined in section198B(1) of the LRA to mean a contract of employment that terminates on (a) the occurrence of a specified event, or (b) the completion of a specified task or project. In addition section 198B(4)(d) of the LRA provides that the conclusion of a fixed term contract will be justified if the employee is employed to work exclusively on a specific project that has a limited or defined duration.

Is the term "specific project" wide enough to cover the situation where a client cancels a service contract? That was the question in a recent case where two employers - Piet Wes Civils CC and Waterkloof Skoonmaakdienste CC - provided services to Exxaro coal mine as contractors 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 employees' union brought an urgent application in terms of s189A(13) of the LRA. It was alleged that the employees had been dismissed for operational requirements; that it was a large scale retrenchment contemplated by s 189A; and that there was no consultation. They sought reinstatement pending a proper consultation process in terms of s 189A(13).

The Labour Court 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 s198B(4)(d); therefore, it was in contravention of s198B(3) and therefore deemed to be of indefinite duration. The clause on which the employers relied was against public policy.

In the Labour Appeal Court in Piet Wes Civils CC and Another v AMCU and Others [2018] 12 BLLR 1164 (LAC); (2019) 40 ILJ 130 (LAC), the appeal by the employer was dismissed. The LAC confirmed that a contract duration linked to the supply of work contracts by clients cannot be construed to equate to the occurrence of a "specified event", "the completion of a specified task or project" or "a fixed date", as contemplated by s198B(1).

The reason for this is that a "specified event", "the completion of a specified task or project" or a "fixed date" does not constitute a possibility that future contracts may not be supplied by an employer's clients. This remains a possibility and nothing more than that. It is by no means a specified event which in future will arise, nor is it related to the completion of a task or project or a fixed date, but is an operational risk which may occur under which the business operates.

This case is a reminder that our law requires the employer to bear the risk of operational changes during a fixed term contract. The case confirms that terminating a fixed term contract before the ending date or the completion of a project is likely to constitute a dismissal.

ARTICLE: Speaking your mind in the workplace - what are the limits?

By Prof Alan Rycroft

We live in an era when it is lawful for employees to strike. In the course of industrial action, employees often express how they feel about their employer. But in other contexts, speaking negatively about the employer has resulted in dismissal. Where is the line drawn between protected speech and unprotected speech?

Worklaw subscribers will be aware that this same dilemma has occurred in other situations. Israel Folau, a leading Australian rugby player, is currently embroiled in a dispute with his employer over instagram posts he made about 'hell awaiting homosexuals', justifying these comments on the basis of his religious beliefs.

Prof Alan Rycroft, in his article, discusses an appropriate employer response to managing freedom of expression by employees.

Read more (note - only available to Worklaw subscribers)


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Bruce Robertson
May 2019
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