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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 on equal pay for equal work, whether unequal pay constitutes unfair discrimination and how disputes of this nature can be processed. We look at two new cases: the first deals with whether an employee in an illegal activity is covered by labour legislation – the very recent LAC judgement in the well publicised case of Kylie the s..x worker. (note: we have to ‘censor’ the newsletter to enable it to get past organisational spam filters) –The second deals with whether an employer, during a strike, can apply the policy of ‘no work, no pay, no benefits’ and refuse to pay contributions to medical aid, pension funds and the like during a strike.
This public newsletter is a free edited version of the Worklaw subscriber newsletter.
Are s..x workers (and other illegal employees) covered by our labour legislation? Can they claim unfair dismissal?
The very recent Labour Appeal Court judgement in the well publicised case of Kylie v CCMA & others (LAC Case No: CA10/08 dated 26 May 2010) has some important implications for parties in an illegal employment relationship - eg employees working illegally due to being underage or not having a valid work permit. In this case Kylie was a s..x worker and her employment was terminated, apparently without a prior hearing. The dispute was referred to arbitration but before evidence could be heard, it was challenged whether the CCMA had jurisdiction to hear the matter in the light of the fact that the appellant had been employed as a s..x worker and accordingly her employment was unlawful. The CCMA handed down a ruling in which it concluded that it did not have jurisdiction to arbitrate on an unfair dismissal in a case of this nature. Kylie took this ruling to the Labour Court on review.
In the Labour Court Cheadle AJ held that the definition of an employee in s 213 of the LRA was wide enough to include a person whose contract of employment was unenforceable in terms of the common law. However, he held that a s..x worker was not entitled to protection against unfair dismissal as provided in terms of s 185 (a) of the LRA because it would be contrary to a common law principle which had become entrenched in South Africa’s Constitution that courts ‘ought not to sanction or encourage illegal activity’.
On appeal to the Labour Appeal Court, the LAC’s starting point was s 23(1) of the Constitution which provides that ‘everyone has the right to fair labour practices’. The illegal activity of a s..x worker was held not in itself to prevent the s..x worker from enjoying a range of constitutional rights. The test is what constitutional protections are necessarily removed from a s..x worker, given the express criminal prohibition of their employment activities. Judge Davis noted that because s..x workers cannot be stripped of the right to be treated with dignity by their clients, it follows that in their relationship with their employers the same protection should hold. Once it is recognised that they must be treated with dignity not only by their customers but by their employers, s 23 of the Constitution, which at its core, protects the dignity of those in an employment relationship, should also apply.
However, in SA there has been an absolute rule that courts will not assist a person to enforce an illegal contract. While the court possesses a certain amount of discretion to determine whether a contract is illegal, once it has determined this, it follows ‘as a necessary and inflexible consequence that no action could be based thereon’.
The LAC held that even if there was no valid contract, there was an employment relationship and in terms of that relationship, Kylie fell within the scope of the LRA. Accordingly, the question arose as to whether a court could, in the light of the existing approach to illegal contracts, provide her some remedy if she could prove her allegation that she had been unfairly dismissed. The LAC held that a s..x worker forms part of a vulnerable class by the nature of the work performed and is subject to potential exploitation, abuse and assaults on her dignity. On this basis, the LAC found there was no principled reason by which she should not be entitled to some protection designed to protect her dignity, in terms of the constitution and the LRA.
On this basis, the LAC found that the CCMA does have jurisdiction to deal with the Kylie matter, and referred it back to the CCMA. It then went on to provide some guidance as to what a suitable remedy for unfair dismissal might be in this case. The LAC held that it would be against public policy to reinstate Kylie even if she could show, on the evidence, that her dismissal was unfair. But that conclusion should not constitute an absolute prohibition to, at least, some protection provided under the LRA, a protection which can reduce her vulnerability, exploitation and the erosion of her dignity. For similar reasons the LAC held that compensation for a substantively unfair dismissal may be inappropriate, if compensation for substantive unfairness is regarded as a monetary equivalent for the loss of employment, and given that the nature of the services rendered by the dismissed employee are illegal. The LAC recognised however that monetary compensation for a procedurally unfair dismissal has been treated as a solatium for the loss by an employee of her right to a fair procedure (a solatium is a legal term generally describing compensation for suffering a loss or hurt feelings). This kind of compensation is therefore independent of the loss of illegal employment in this case and would therefore appear to be applicable in the appropriate case where the services rendered by the employee are classified as illegal.
‘No work, no pay, no benefits’ during a strike
In SAMWU v City of Cape Town & others (2010) 31 ILJ 724 (LC), a number of employees embarked on a protected strike for three days. As part of their terms and conditions of employment, employees were entitled to receive the employer contributions to various benefits such as medical aid, pension fund, housing subsidy and group life insurance.
Following a report prepared by the employer there was continuous engagement between the employer and the municipal trade unions over the policy 'no work, no pay, and no benefits'. But no collective agreement was reached. The employer opted not to pay the employer portion of the payments to the medical aid scheme, pension fund, housing subsidy and group life insurance pro rated to the number of days that the employees were on strike. It regarded the three-day strike as unpaid leave and it required the striking employees to pay both the employer and the employee contributions in respect of these benefits.
A dispute developed between the employer and trade union regarding the implementation of the policy 'no work, no pay, no benefits'. The union referred the dispute for conciliation, describing the dispute as an alleged unfair labour practice pertaining to benefits as envisaged in s 186(2) (a) of the LRA. It sought an order compelling the employer to pay to the affected employees the monetary value of the benefit contributions they had lost. The dispute was not resolved at conciliation, and was referred to arbitration.
At the arbitration the concerns expressed by the trade union were that -
- the contributions to the benefits were not appropriately to be regarded as remuneration for purposes of 'no work, no pay';
- the policy would adversely affect the right of its members to take part in a strike;
- the withholding of contributions could lead to policies being cancelled or other adverse actions in respect of individual employees.
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