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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 the role of a chairperson in managing the evidence at a disciplinary hearing. We also look at three new cases: the first dealing with restraint of trade agreements, the second with a refusal to submit to an alcohol test and the third on a refusal to promote a person in an acting position.
This public newsletter is a free edited version of the Worklaw subscriber newsletter.
Restraint of trade agreements
In a recent case heard by the Supreme Court of Appeal two key issues arose: first, can an agreement that falsely describes an employee as an independent contractor be enforced? And second, if so, can the employees be held to a restraint of trade clause in that agreement? In Automotive Tooling Systems (Pty) Ltd v Wilkens & others(2007) 28 ILJ 145 (SCA), after some time in the company’s employment, two employees (skilled toolmakers) entered into ‘independent contractor’ agreements in terms of which their status was changed from employee to independent contractor with no material change to the work they performed. These agreements contained ‘restraint of trade’ and confidentiality clauses. The employees resigned and took up employment elsewhere. The company viewed this as a breach of the restraint clause. The High Court held the service agreements to be unenforceable because they had been concluded “in fraudem legis” - with the intention of circumventing the provisions of the LRA by avoiding the employment relationship.
On appeal to the Supreme Court of Appeals, it was held that the mere fact that a contract is unsuccessfully designed to escape the provisions of the law does not mean that it is unenforceable. It is unenforceable only if the true nature of the relationship is one that the law forbids; in this case the law does not forbid the contracts of employment.
With regard to the restraint of trade clause, the court asked if the company had a ‘proprietary interest’ worthy of protection. An agreement in restraint of trade in enforceable unless it is unreasonable, which it is if it is simply designed to exclude or eliminate competition. The court found that the know-how for which the company sought protection was nothing other than the specialized skills in manufacturing machines. These skills had been acquired by the employees in the course of developing their trade and did not belong to the company. They belonged to the employees as general stock of skill and knowledge which they could not be prevented from exploiting. The restraint of trade was therefore against public policy and therefore unenforceable.
What this case reminds us is that restraint of trade clauses are notoriously hard to justify and the line between the employer’s ‘secret knowledge’ and an employee’s generalized knowledge is hard to draw. The case is also a reminder that courts do not hesitate to look at the true nature of the relationship between the parties, even if there is an agreement signed that describes the employee as an independent contractor.
Refusing to take an alcohol test
There is a sensitivity about forcing employees to undergo tests or searches. This is correct because of the right of privacy we enjoy, a right that is however limited in certain circumstances. Safety at work is a circumstance that may justify a requirement that employees submit to alcohol tests.
In Arangie and Abedare Cables (2007) 28 ILJ 249 (CCMA) the employer’s code provided that no employee should be allowed on the company’s premises if suspected of being under the influence of alcohol. An employee was not obliged to take the alcohol test but if he refused he would be required to leave the premises. The employee was fully aware of the employer’s practice of random testing for alcohol. The employee refused to blow into the scanner but said he would be prepared to take a blood test. He also refused to leave the premises although instructed three times to do so. He was found guilty of insubordination and dismissed.
At the CCMA the employee’s explanation that he refused because he believed the scanner gave false readings was rejected. A blood test took one day and was therefore not suitable for use at the workplace. The commissioner found that the employee had deliberately disobeyed the instructions given to him either to take the test or to leave the premises, and at the time was on a written warning for insubordination. The offence was sufficiently grave to render a continued employment relationship impossible. Dismissal was the appropriate sanction.
This case holds no surprises as it was resolved in the way one would expect. It is a reminder to employees that the refusal to obey reasonable instructions can result in dismissal.
Not promoting the person in the acting position
It is always a sensitive issue. A person has been asked to step into a more senior position to act until the position is filled. Normally this gives no expectation of appointment or even being interviewed for the position. If the person acting in the job is not interviewed or does not get the job, there are inevitably hard feelings. But the law has been clear: acting does not give rise to a right to the job. But sometimes facts can result in a different conclusion. In Kotze and Agricultural Research Council of SA (2007) 28 ILJ 261 CCMA an employee claimed it was an unfair labour practice for the employer to refuse to appoint him to a position in which he had acted for two years. The employer had refused because the employee did not have the formal qualifications called for in the advertisement.
The commissioner found that the employer had acted unfairly towards the applicant. Apparently having performed competently, the employee was appointed to act in a higher post. It was only when the employer advertised the post and put in barriers that he realized that the employer had no intention of appointing him to the post. It was held to be an act of bad faith nearly two years after placing an employee in a ‘career development’ position to tell him that he lacked certain formal qualifications. While it was for the employer to set the required standards, it was hypocritical and a misrepresentation not to tell the employee what those standards were. The employer was ordered to promote the employee to post level 5 and to pay compensation of R40 000 for the injury to his dignity.
What this case reminds us, in the words of the commissioner, “Honesty is as much a requirement of management as it is of subordinates”. Employers need to deal honestly and transparently with employees.
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