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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 xenophobia and its impact on the workplace. We also look at three new cases: The first looks at whether an employer can lock-out non-striking employees. The second looks at whether an agreement to demote can result in an unfair labour practice dispute. The third looks at agreements which provide for 'automatic termination' of employees of a TES when the client cancels the contract. It was also one of the first cases that has considered the interpretation of the new 'non standard' employment provisions of the new s198B under the recent LRA amendments.

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


Can an employer lock-out non-striking employees?

Wage negotiations at a bargaining council deadlocked. Two of the unions in the sector, SATAWU and TOWU, gave notice that they would commence with a protected strike. One of the other unions operating in the transport sector, the Transport and Allied Workers Union of South Africa (TAWUSA), representing 26% of the employees, had resigned from the bargaining council.

In response to the strike notice, the employer gave notice to the recognised trade unions, including TAWUSA, of its intention to lock-out all employees in the bargaining unit. Non-union employees in the bargaining unit were also informed of the impending lock-out. As TAWUSA members were not on strike, the union alleged that the employer had implemented an unlawful lock out against its members. Its members continued to tender services as usual.

When this matter was dealt with by the Labour Court, it said, in interpreting the definition of lock-out, that it presupposed that the employees should have refused to accept a demand of the employer. It concluded that "a lock-out must be directed at employees with a demand." The LC was also of the view that the employer did not show what demand, if any, it wanted TAWUSA's members to accept. It concluded that section 64(1)(c) of the Act contemplated that the lock-out notice should be given to any trade union that is a party to the dispute - and as TAWUSA was not a party to any dispute, its members could not be locked-out. The LC ordered the employer to discontinue with the lock-out against TAWUSA's members. The employer was unhappy with this decision and appealed to the LAC.

On appeal, the LAC in Putco (Pty) Limited v Transport And Allied Workers Union of South Africa and Another (JA106/13) [2015] ZALAC 14 (5 May 2015), stressed that intention of all parties (including TAWUSA) was to enter into a collective agreement that would be binding on all employees and employers within the industry. All the parties were aware that the will of the majority would prevail during the negotiations. Although the will of the majority prevails, the minority would benefit if the negotiations yielded positive results. Likewise the minority would be prejudiced or disadvantaged if the negotiations do not yield any fruit. The question was therefore: Should the minority be spared when the employer decides to lock-out its employees?

The LAC held that the definition of lock-out in the Act does not state that it should only be directed at striking employees. The definition is clear and unambiguous that a lock-out "means the exclusion by an employer of employees from the employer's workplace..." The LAC set aside the LC decision that had ordered the employer to discontinue with the lock-out against non striking TAWUSA's members.

The effect of this LAC judgment is that an employer can exclude from the workplace all employees - striking and non-striking - who do not accept the employer's demand, when it decides to institute a lock-out.

When is an agreement to demote an unfair labour practice?

A manager, after years of absenteeism because of ill health, was counselled and warned about the impact that her health was having on the employer's operations. At a certain stage she was admitted to hospital and placed on medication. She informed the employer that this medication had side-effects which made her sleepy and impaired her concentration levels. On one occasion the employee left the store because she was feeling sleepy. She left through the front entrance and not the staff entrance of the store. In doing so, she failed to clock out. She also failed to declare that she was off-site. As a result, the employer instituted disciplinary action against her. The manager said that the side-effects caused by the medication were the cause of her incapacity. She was issued with a final written warning.

The position did not improve. The employee was then suspended pending an investigation into her capacity to undertake the functions of an administrative manager, owing to her health and performance. An incapacity hearing was chaired by an external chairperson who ruled that owing to her excessive absenteeism and her response to previous counselling sessions, dismissal was the appropriate sanction.

However, as an alternative to dismissal, the chairperson offered her a demotion to the position of the receiving supervisor. After some communication, the employee accepted the demotion by means of an email.

Subsequently, the employee complained to the CCMA that the employer had committed an unfair labour practice by demoting her. At arbitration the commissioner held that that the employee had agreed to accept demotion as an alternative to dismissal and reasoned that because of this the CCMA did not have jurisdiction to arbitrate the dispute. In an earlier case (First National Bank Ltd (Wesbank Division) v Mooi NO & others (2009) 30 ILJ 336 (LC)) it was held that the powers of commissioners of the CCMA to rule on the interpretation and application of settlement agreements is confined to collective agreements in terms of s 24 of the LRA. The commissioner followed this approach and ruled that the CCMA lacked jurisdiction due to the existence of the agreement, but adding that if the CCMA had jurisdiction she would have found that the employer had not committed an unfair labour practice.

The employee was dissatisfied with the ruling. She launched an application in the Labour Court to review and set aside the ruling. The Labour Court granted the relief sought. The issue was whether, in the face of an agreement between the parties that the employee accepted demotion to a lower position, she was nevertheless entitled to refer an unfair labour practice dispute concerning her demotion to the CCMA. The LC held that what may fall within the ambit of the definition of the unfair labour practice is described in broad terms, as 'unfair conduct ... by the employer... relating to ... demotion'. This could encompass something more than the act of demotion itself, and the commissioner in dismissing the claim based on consent to demotion indirectly curbed the ambit of the claim. The LC was satisfied that the arbitrator misdirected herself in deciding the matter on a jurisdictional basis.

The employer appealed to the LAC. The LAC, in Builders Warehouse (Pty) Ltd v Commission for Conciliation, Mediation And Arbitration and Others (PA 1/14) [2015] ZALAC 13 (5 May 2015), confirmed that an agreement about demotion does not prevent a dispute about that demotion simply because there is an agreement. The fact that there is an agreement that an employee accepts demotion is not a complete defence to an unfair labour practice dispute, because a dispute may develop over the implementation of that agreement.

The LAC dismissed the employer's appeal, which confirmed the LC's decision to refer the matter back to the CCMA for a further arbitration to be held afresh. This case is a reminder that a "full and final" settlement agreement may not prevent an unfair labour practice dispute from arising, due to the broad definition of an unfair labour practice.

Contracts providing for 'automatic' termination of employment

The LC in SATAWU Obo Dube and Others v Fidelity Supercare Cleaning Services Group (Pty) Ltd (JS 879 / 10) [2015] ZALCJHB 129 (17 April 2015), recently considered whether a contract could provide for the automatic termination of employment, in the event of a service agreement being terminated. It was also one of the first cases that has considered the interpretation of the new 'non standard' employment provisions of the new s198B under the recent LRA amendments.

A cleaning contractor (Fidelity Supercare) concluded a cleaning service level agreement (SLA) with the University of the Witwatersrand (Wits University). Three employees of Fidelity Supercare were placed at Wits University. They were all members of SATAWU. The employees were employed in terms of written contracts of employment that provided their employment would terminate "on the date appearing on the schedule or the date upon which the contract which exists between the company and the customer terminated or on the retirement date, whichever date occurs first". The contract also provided that "the employee specifically acknowledges that he/she fully understands that the company's contract with the customer might be terminated by the customer... and the employee fully understands that there will be no entitlement of severance pay".

During 2009, Wits University gave notice to Fidelity Supercare terminating the service level agreement. Fidelity Supercare advised all employees in writing that the SLA with Wits University was ending and recorded that their employment would consequently terminate in terms of their employment contracts. It was common cause that none of the employees was consulted by the employer in terms of section 189 of the LRA, and this was the crux of the employees' case that their dismissals were unfair.

Before the termination of the SLA, Fidelity Supercare entered into a new SLA with Wits University, which envisaged a vastly reduced staff complement and service for a period of one year. Fidelity Supercare issued notices to the employees advising that Fidelity Supercare had positions available at Wits University and invited its employees to apply for those vacant positions. There were 7 vacant positions at the level of supervisors, and 162 cleaner positions. Neither Dube nor any of the other applicants applied for placement in the vacancies despite encouragement by Fidelity Supercare. As a result, their contracts were terminated. The employer submitted that it did not dismiss them for operational reasons, and that their contracts had automatically terminated at the end of December 2009 in terms of specific provisions of their contracts of employment.

The LC, despite some earlier judgments to the contrary, confirmed that a contractual provision that provides for the automatic termination of the employment contract at the behest of a third party, contradicts employees' rights in labour law and undermines rights to fair labour practices. It is contrary to public policy, unconstitutional and unenforceable.

In passing, the LC also considered the new 'non standard' employment provisions of the new s198B under the recent LRA amendments. Section 198B (1) provides that a fixed-term contract of employment means a contract of employment that terminates on-

  1. the occurrence of a specified event;
  2. the completion of a specific task or project; or
  3. a fixed date, other than an employee's normal or agreed retirement age,

Even with regard to higher earners not covered by sections 198A-D, the LC expressed the view that a fixed term contract of employment that defines an 'event' in sub-section 198B (1) (a) as including the fact that where a client terminates its contract with the employee's employer, or demands the removal of the employee from the client's workplace, that that should result in the automatic termination of the employee's contract of employment, is against public policy, section 5 of the LRA and the fundamental rights of employees in s185 of that Act. The interpretation of 'event' must be taken on a narrow, than a wider, approach purposefully to maximise the protection of job security and other constitutionally recognised labour rights and practices.

Despite the LC finding in this case that the employees' contracts did not terminate automatically as result of the termination of the SLA and that they were dismissed for operational reasons, the failure by the applicants to consider reasonable alternative employment resulted in the LC refusing to award compensation. The LC concluded that the employee could have avoided her dismissal by accepting the offer of reasonable alternative employment. This, the court submitted, negated any procedural unfairness in the matter. The LC felt that the employer 'bent backwardly' to ensure that as many employees as possible would get taken on the new contract, and that it had acted 'prudently and fairly' in the circumstances.

This case is a cautionary reminder to employers utilising 'non standard' employment contracts. A labour broker / TES or an employer utilising fixed term contracts, may not use automatic termination provisions at the instance of a client to avoid fair dismissal procedures in terms of the LRA. Fair retrenchment provisions have to be used and severance paid. But where employees refuse to accept offers of reasonable alternative employment, they may not receive compensation from the court.


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Bruce Robertson
May 2015
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