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Worklaw subscribers receive a monthly newsletter containing commentary on the latest labour law cases and trends. This month`s newsletter contains an article discussing a recent important case on corporate restructuring. We also look at two new cases, one in which the employee claimed she had been unfairly dismissed because of her pregnancy, and the other on an attempt by an employer to shed its status as an employer through structuring itself as a co-operative.

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


Dismissal and pregnancy

When a woman alleges an automatically unfair dismissal has taken place as a consequence of her pregnancy, who bears the onus of establishing this?
The concept of an automatically unfair dismissal derives from s 187 of the LRA, which sets out a list of reasons for dismissal that result in the dismissal being called "automatically unfair", potentially resulting in higher compensation being awarded.

This question arose in Wardlaw v Supreme Mouldings (Pty) Ltd (2004) 25 ILJ 1094 (LC). On her return from maternity leave after four months, an employee was dismissed for gross negligence and a gross dereliction of duty. She alleged this was really about her taking maternity leave and, even if there had been negligence, there had been no corrective discipline taken.

The court held that the employer, if it disputes that the dismissal was automatically unfair, bears the onus of showing that a fair reason exists that is unrelated to her pregnancy. The employer led evidence that the employee’s negligence and inadequacy in critical areas of her work only became apparent when she went on maternity leave. The court accepted that this evidence had established that the dismissal was not a vindictive reaction to her maternity leave and the inconvenience of her absence at a time of severe administrative pressure. There was no factual causation between her pregnancy and her dismissal (and it was not even the ‘proximate’ cause) and therefore not an automatically unfair dismissal.

Trying to avoid being an employer

Many employers find their employment law obligations onerous and many have gone the out-sourcing route to avoid the complications of the law. A recent arbitration award had to consider whether the status of a co-operative was a way in which an employer could distance itself from its employees and not be regarded in law as their employer.

In National Bargaining Council of the Leather Industry of South Africa and Ballucci Footwear, Woodpecker Workers Co-operative Ltd, Job Procurement Workers Co-operative (BC Arbitration 6 September 2004) Ballucci, a footwear manufacturer, was a contributing member of the Council until 20 September 2003. At that date, all employees of the company were employed directly by Ballucci. Two other entities were then created as co operatives, namely Woodpecker and Jobpro. Ballucci allegedly outsourced its entire production to Job Pro, which engaged Woodpecker to execute the work. Most of Ballucci employees became members of Woodpecker and their employment at Ballucci was terminated. Ballucci informed the Council that it did not regard itself as obliged to retain membership with the Council or pay dues.

The Council argued that the evidence established that Ballucci had created a structure to evade payment to the Council, by making it appear that Ballucci is no longer an employer. The arrangement, it was argued, is a sham or ‘scheme’ (to use the Receiver of Revenue’s terminology). Production at Ballucci continued unhindered and unchanged. Salaries continued to be paid by Ballucci directly into employees’ back accounts.

The arbitrator found that the apparent outsourcing of production to Jobpro was a sham, with the further outsourcing by Jobpro to Woodpecker also a sham. It was the arbitrator’s opinion that Ballucci remained the employer of those who were employed in its premises. Accordingly, it was found that Ballucci fell within the scope of the National Bargaining Council of the Leather Industry of South Africa, and was obliged to pay Council dues.


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Bruce Robertson
September 2004
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