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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 'Disciplinary action after resignation', in the light of a recent LC judgment that has caused some comment.

We also look at three other new cases: Firstly we discuss the recent Constitutional Court judgment where the impact of the 'K' word in the SARS workplace was considered. Secondly we deal with another recent Constitutional Court judgment on how to apply s 197 of the LRA to a transfer of a business as a going concern, as opposed to merely the service provided by that business. The third case is a recent LAC judgment on transport for night shift employees as required under the BCEA.

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


Racism in the work place: The 'K' word

A white anti-smuggling officer employed by SARS, after an altercation with his black superior, said 'Ek kan nie verstaan hoe kaffirs dink nie' ["I cannot understand how kaffirs think."] (Charge 1); and 'A kaffir must not tell me what to do' (Charge 2).

As required by a collective agreement between SARS and the unions in its workplace, SARS arranged a disciplinary enquiry. The employee pleaded guilty and a sanction was negotiated by the chairperson of the disciplinary enquiry with the representative of SARS in those proceedings. The sanction imposed was: (a) a final written warning valid for six months; (b) suspension without pay for 10 days; (c) an order that the employee undergo counseling.

Upon receipt of the report on the outcome of the disciplinary enquiry, the SARS Commissioner changed the sanction from a final written warning to dismissal. This was however done without affording the employee the opportunity to contest the appropriateness of the more serious dismissal sanction. As a result, the employee challenged the fairness of his dismissal by referring an unfair dismissal dispute to the CCMA for conciliation and later arbitration.

The main issue the arbitrator was called upon to decide was whether the SARS Commissioner was in law entitled to substitute the sanction as he did. The arbitrator concluded that it was legally impermissible for the Commissioner to substitute the sanction imposed by the chairperson of the disciplinary enquiry. The legal basis for the arbitrator's approach was that SARS had, in terms of the collective agreement that binds it, effectively waived its common law powers to reverse the decision of the chairperson of the disciplinary enquiry. The arbitrator ordered the restoration of the position as it was before the Commissioner's intervention. After concluding that the employee's dismissal was unfair, the arbitrator immediately ordered his reinstatement without appearing to take into account section 193(2) of the LRA, which outlines those circumstances under which an unfair dismissal would not automatically require re-instatement or re-employment.

SARS challenged the award in the Labour Court, but the LC dismissed the application on the basis that the collective agreement did not permit SARS to substitute the sanction imposed by the chairperson. Aggrieved by that outcome, SARS again challenged the reversal of the dismissal in the Labour Appeal Court on essentially the same grounds. That challenge was also unsuccessful, which then resulted in the matter being referred to the Constitutional Court in South African Revenue Service v Commission for Conciliation, Mediation and Arbitration and Others [2016] ZACC 38.

The main issue in the Constitutional Court concerned SARS's application to have that part of the arbitrator's award that required reinstatement, reviewed and set aside. The SARS Commissioner's unprocedural act that resulted in the unfair dismissal was not challenged. The Constitutional Court ordered that reinstatement be replaced with compensation calculated as 6 months' pay.

Whilst the dismissed employee guilty of racism 'walked away' with 6 months' pay as compensation, the CC took the opportunity to explain fully the devastating impact of racism in the workplace. The Court said that the use of the word 'kaffir' is the worst of all racial vitriols a person can ever direct at an African in this country. Where such injurious disregard for human dignity and racial hatred is spewed by an employee against his colleagues in a workplace, the Court said that ordinarily renders the relationship between the employee and the employer intolerable. The Court referred to the LAC judgment in Crown chickens (Pty) Ltd t/a Rocklands Poultry v Kapp & others (2002) 23 ILJ 863 (LAC) in which Zondo JP said the following (para 37):

"The attitude of those who refer to, or call, Africans "kaffirs" is an attitude that should have no place in any workplace in this country and should be rejected with absolute contempt by all those in our country - black and white - who are committed to the values of human dignity, equality and freedom that now form the foundation of our society........The courts must deal with such matters in a manner that will 'give expression to the legitimate feelings of outrage' and revulsion that reasonable members of our society - black and white - should have when acts of racism are perpetrated."

Transfer: business or service?

We have reported on several cases where the dispute was whether a transfer of a business or part of it fell under s 197 of the LRA. This section was designed to guarantee continuity of employment for employees where there is a change of ownership of a business that continues to operate as a going concern.

Recently this difficult area of law was considered by the Constitutional Court in Rural Maintenance (Pty) Limited and Another v Maluti-A-Phofong Local Municipality (CCT214/15) [2016] ZACC 37 (1 November 2016). In this case a municipality, responsible for the provision of services to its residents, allowed its electricity services to fall into disrepair. In 2011 the municipal manager entered into an Electricity Management Contract (EMC) with a private company (Rural) to operate and manage the municipal electricity distribution network for a period of 25 years, after which the obligation to supply electricity to residents would revert to the Municipality. In terms of the EMC 16 employees were transferred under section 197 of the LRA by the Municipality to Rural.

Rural started its performance under the provisions of the EMC on 1 September 2011. It expanded the workforce to 127 employees and incurred significant expenditure on the purchase of network materials, specialised vehicles, the compiling and recording of details of the Municipality's electrical distribution infrastructure, the mapping of townships within the Municipality's geographical area, and software systems in relation to the provision of the electrical services. It also purchased immovable property for offices and staff accommodation. This all cost in the region of R96 million.

In August 2013 the Municipality informed Rural that it considered the EMC to be null and void because the then municipal manager did not have the requisite authority to conclude the EMC with Rural. The latter disputed this and contended that this conduct amounted to a repudiation of the Municipality's obligations under the EMC, entitling it to cancel the agreement. This contractual dispute is still pending in the Free State High Court.

Despite the pending action in the High Court, Rural provided the Municipality with information about the identities of the 127 employees, their employment contracts and organisational structure in the beginning of October 2014. It also handed over what it termed the "possession of the Network and the Capital Assets". It proposed an agreement of the transfer of the 127 employees under section 197 of the LRA to the Municipality, which the Municipality refused to accept.

Rural then sought relief in the Labour Court for an order declaring that there had been a transfer of business as a going concern by it to the Municipality and that the employment contracts of the 127 employees should accordingly be transferred to the Municipality. The Labour Court granted the relief, but the Labour Appeal Court overturned that decision on the basis that Rural had failed to discharge the onus of showing, on the probabilities, that a transfer of a business as a going concern had taken place and that the very business conducted by Rural had been transferred back to the Municipality. The test was whether the Municipality would have been able to continue business seamlessly after the 'transfer', it being common cause that certain components of Rural's business that supplied electricity services were not handed back to the Municipality.

When the matter was referred to the Constitutional Court the Municipality argued that the business was not transferred to it as a 'going concern'. At best it received an obligation to provide electricity to the residents but it never received Rural's computers, systems, stationery, vehicles, equipment etc. It also did not receive their debtor's book or an inventory of Rural's business. So it was argued that Rural was not transferred as a going concern.

Rural on the other hand argued that the business comprised the infrastructure for the provision of electricity services and the employees dedicated to that business. Handing over of peripheral assets such as software, vehicles and stationery were not essential for the transaction to constitute one in terms of section 197 of the LRA. The EMC agreement did not contemplate that such assets would ever transfer to the Municipality as part of the business.

The Constitutional Court had to decide whether a transfer of a fully functional business in its expanded form was necessary for it to fall within s 197. The Court was clear that one business could not try to transfer the obligation to take over all employees to the new owner under the guise of s 197, but nevertheless retain for itself the means it used to conduct the business. The court said while the protection of employees is the primary concern of s 197, employees are also protected by the retrenchment provisions in section 189. The choice in this case was which employer should be responsible for the workers affected by the change in circumstance.

The Constitutional Court accepted that for a transfer of a business as a going concern to occur, not all the assets of the business have to be transferred and that it depends on the nature of the business. But in this case the assets that Rural did not transfer back to the Municipality were essential to the profitability and operation of the business. Without these crucial assets, the Municipality could not have carried on the business without major difficulties. Applying what it called the "factual application of a flexible test", the Court concluded that there had been no transfer of the business to the Municipality as a going concern.

The outcome in this case is similar to the approach adopted in SATAWU and Another v MEC: Gauteng for Roads & Transport and Others (J1142/15) [2015] ZALCJHB 204 (15 July 2015) which found that, in order for s197 to apply, what must be transferred is the business that supplies the service, and not the service itself. But it is of major concern that this Constitutional Court decision was decided by a majority judgment, with not all the judges agreeing with the outcome. If the best of our judges differ so radically on how to interpret s197, employers are justified in being confused.

Transport for night shift employees

Last year we reported that the Labour Court, in TFD Network Africa (Pty) Ltd v Singh N.O and Others (C 571/11) [2015] ZALCCT 40 (6 May 2015) had ruled that Section 17(2)(b) of the BCEA regulating transport for employees doing "night work", is applicable to all employees who work between 18h00 and 06h00. An employer must ensure transportation is available but this does not mean the employer has to provide the transport. In deciding whether "transportation is available", one looked at the facts and circumstances of a particular case and applied a common sense approach.

This ruling has now been confirmed by the LAC in TFD Network Africa (Pty) Ltd v Singh N.O. and Others (CA16/15) [2016] ZALAC 50 (8 November 2016). The LAC set down the following general principles:

  • The clauses relating to night work apply regardless of gender, geographical location, whether it is light or dark at 18h00 or 06h00, and whether the employee lives in a dangerous area or one considered to be safe.

  • The preponderance of the working shift does not have to fit within the hours of 18h00 to 06h00 for the employee's work to constitute night work.

  • Safety is most definitely one of the considerations regarding whether 'transport is available' in relation to night work. The LAC referred to item 4.2.5 and 10.3.2 of the Code of Good Practice on the Arrangement of Working Time to justify the view that employers should ensure that employees on night work are able to obtain safe, affordable transportation between their places of residence and their workplace.

  • As regards the meaning of "shift" falling within the night work period, when the word "shift" is used, it means the end of the working day including overtime.

But perhaps the most important aspect of the LAC decision refers back to the facts of the case - a refusal to work the night shift because transport was not available. The LAC confirmed that where the required transport was not available to an employee required to perform night work, the employee is entitled to raise the absence of those protective measures as a defence to a charge of failing to work or disobeying an instruction.


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Bruce Robertson
November 2016
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