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Worklaw subscribers receive a monthly newsletter containing commentary on the latest labour law cases and trends. This newsletter contains a provocative article on “Sustainability: the concept employers and unions needs to get their minds around.” We look at three new cases: the first looks at the test used to assess if there is a constructive dismissal; the second looks at a case which dealt with compulsory polygraph tests and extended suspension; the third looks at that vexed issue of whether someone is an employee or independent contractor.
This public newsletter is a free edited version of the Worklaw subscriber newsletter.
Constructive dismissal: what must a commissioner decide?
The employee was employed as a winemaker. In July 2009 the employer received a complaint from an irate German customer that a container of about 12000 bottles of wine purchased from the employer was oxidised. The employer took the matter up with his winemaker. Discussions took place over the next few days regarding what action was to be taken against the employee as a result.
There were letters back and forth from the parties’ attorneys. Offers were made and rejected. Before formal disciplinary charges had been laid, the employee resigned by email. The employee subsequently referred an alleged constructive dismissal dispute to the CCMA, claiming that “it was suggested to me that I resign or face charges.” The CCMA found that the employee had been constructively dismissed and ordered the employer to pay compensation equivalent to 12 months’ remuneration, amounting to R269 640. The employer went to the Labour Court to have the award reviewed and set aside.
These were the facts in Asara Wine Estate & Hotel (Pty) Ltd v J C van Rooyen & others (LC Case no: C 272/2010) Judgment given 24 August 2011. This case is important mainly for a technical point on the test for review (discussed below), but it also for highlighting just how difficult it is to establish constructive dismissal – where an employee resigns because the employer made continued employment intolerable for the employee. The court confirmed that the test for constructive dismissal is whether the employer, ‘without reasonable and proper cause, conducted itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between the employer and employee’. It is not necessary to show that the employer intended any repudiation of a contract: the court’s function is to look at the employer’s conduct as a whole and determine whether its effect, judged reasonably and sensibly, is such that the employee cannot be expected to put up with it.
The court found that the wine maker had not been constructively dismissed and had resigned voluntarily, and accordingly overturned the arbitrator’s award.
Turning to the technical point: the test for review in constructive dismissal cases
The case also supported the view that the well-known review test of ‘unreasonableness’ as set out in Sidumo does not apply in the review of an arbitration award concerning constructive dismissal. This is so because the prior question to be determined is whether the employee was dismissed; if not, the CCMA has no jurisdiction. The question whether the CCMA had jurisdiction is not to be decided on the grounds of reasonableness, but simply whether the commissioner was right or wrong. The judge concluded that “The test I have to apply, therefore, is not whether the conclusion reached by the Commissioner was so unreasonable that no commissioner could have come to the same conclusion, as set out in Sidumo, but whether the Commissioner correctly found that Van Rooyen had been dismissed.” It would seem then that the court would effectively be applying the test for an appeal (ie was the decision right or wrong?) rather than the generally accepted review test of reasonableness.
This is not uncontroversial. In terms of s 192 the employee has to establish the existence of the dismissal. This s/he does by proving (a) resignation and (b) that the employer made continued employment intolerable. This second issue concerns the merits of the case and the commissioner is going way beyond a normal jurisdictional question (eg does the LRA cover the employee? was the alleged employer really the employer?). These are preliminary points which, on review, the court can decide simply on the basis whether the commissioner was right of wrong. But intolerability is a nuanced enquiry involving an assessment of substance and procedure, which is perhaps more suited to scrutiny under the Sidumo test of reasonableness, rather than whether this assessment was simply right or wrong.
The case of polygraphs and extended suspension
A recent case of Nyathi v Special Investigating Unit  ZALCJHB 66;J1334/11 (22 July 2011) raised several issues, amongst them compulsory polygraph testing and whether an employer can continue to suspend an employee indefinitely.
This case involved an urgent application to the Labour Court in terms of which the employee sought a final order interdicting the employer from firstly, terminating her employment contract unlawfully; secondly, declaring that the decision to extend her suspension to be invalid; and thirdly, that the employee be permitted to resume her duties as Head of Business Support.
According to the employer, the employee created a document which was widely circulated by email under an anonymous name. This document contained a wide range of allegations of racism and accused the employer and its Head of doing nothing to correct it. In this document the Head was further accused of distorting facts, attempting to divide trade union members, and attempting to use black individuals to frustrate transformation efforts. The document also called on the Head to step down and EXCO to be dissolved.
According to the employer, the contents of this document were inflammatory in that it incited all black employees to disregard their reporting lines and incited them to call on the Head to step down and for EXCO to be dissolved.
In terms of her contract of employment the employee was obliged to submit to a Lie Detective and/or Voice Stress Analysis test at the discretion of the Head. The employee was instructed to undergo a polygraph examination on four separate occasions. She was informed more than once that any refusal to comply strictly with the instructions would constituteinsubordination and/or a material breach of her employment contract that would entitle the SIU to terminate her contract of employment. After a month of delays, the employee’s attorney sent the employer an e-mail saying that she refused to undergo the polygraph examination.
The employer’s policy was that suspension could only last a maximum of 90 days. After 90 days of suspension, the union wrote a letter to the employer and demanded that she return to her job. She had been advised by her employer that her suspension was extended pending the finalisation of the disciplinary procedure.
At issue before the Court was: (1) whether or not the employer was entitled to lawfully extend the suspension; and (2) whether the breach of a material term of the employment contract justified termination by the employer.
We were recently asked by a subscriber through the Worklaw helpline whether it could be misconduct to refuse to undergo a polygraph test. In this case, the court had little hesitation in saying that the employer was justified in requiring such tests. The Court accepted that the employer had sound reasons for including an obligation to submit to a polygraph in light of the core business and functions of the SIU, which is to investigate corruption and maladministration in government departments and state institutions. The court said that where it is a material term of the contract to submit to a polygraph test and the employee, by refusing to do so, repudiates this material term of the contract, the employer is entitled to terminate the contract lawfully. It is a separate enquiry whether or not the termination will be fair. In this case, this had not yet been determined, as the employee was still facing a disciplinary hearing.
On the question of the extended suspension, the court said that the purpose of a clause providing for the expiry of a suspension is to protect the employee from a protracted suspension as a method of marginalising and prejudicing the employee. The court decided that the decision to extend the employee’s suspension was unlawful, and ordered the employer to permit the employee to resume her duties as Head: Business Support.
Independent contractor or employee?
Prior to his dismissal, the ‘employee’ was engaged as the skipper on a squid vessel for 12 months, earning an amount of R618,000 based on commission. The ‘employer’ contended that the skipper was an independent contractor and not an employee for the following reasons: (a) it did not deduct UIF from his salary; (b) it had no control over him whilst he was at sea; (c) he employed his own crew; (d) he was not entitled to leave pay; (e) he determined his own pay in terms of how much squid he caught; (f) he was at liberty to work on any other vessel of his choice; (g) his tax liability was determined in terms of the tax directive.
After his dismissal, the skipper referred an alleged unfair dismissal dispute to the statutory council for determination. At the hearing before the arbitrator, the ‘employer’ raised a point in limine concerning the jurisdiction of the council to entertain the dispute because the skipper’ was not an employee but an independent contractor. The arbitrator’s decision that he was an employee was taken on review in the case of J & J Freeze Trust v Statutory Council for the Squid and Related Fisheries of SA and Others  ZALCJHB 61;P530/09 (20 July 2011).
The Labour Court held that when a court determines the question of an employment relationship, it must work with three primary criteria: (1) an employer’s right to supervision and control; (2) whether the employee forms an integral part of the organisation with the employer; and (3) the extent to which the employee was economically dependent upon the employer.
Considering those criteria, the court found that the facts weighed significantly in favour of the finding that there was an employment relationship between the parties. The court said that the written agreement, whilst not determinative of the true nature of the relationship between the parties, on its own, is significant if regard is had to other facts. The agreement made him economically dependent on the employer.
Whilst the court acknowledged that each case has to be considered on its own merits, this case is a reminder that a court will look beyond the agreement and will use a number of perspectives in weighing up the true nature of the relationship.
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