Employment law update

Talita Laubscher BIur LLB (UFS) LLM (Emory University USA) is an attorney at Bowman Gilfillan in Johannesburg.

Monique Jefferson BA (Wits) LLB (Rhodes) is an attorney at Bowman Gilfillan in Johannesburg. 

Mutual termination agreements

The applicants in Schroeder and Another v Pharmacare Ltd t/a Aspen Pharmacare [2015] 2 BLLR 168 (LC) each signed a ‘mutual termination settlement agreement’ in terms of which they agreed, inter alia, that their employment with Aspen would terminate by mutual agreement on 16 February 2011. It is not apparent from the judgment why the applicants concluded these agreements or what process preceded the conclusion of these agreements. In any event, notwithstanding having concluded the agreements, both applicants subsequently referred an unfair dismissal claim against Aspen to the bargaining council. The presiding arbitrators held that the council lacked jurisdiction to entertain the disputes because of the existence of the agreements. The arbitrators accordingly held that the individual employees were not ‘dismissed’ but that their employment came to an end by mutual agreement. 

The applicants did not challenge the jurisdictional rulings by way of a review to the Labour Court. Instead, on 30 January 2012, the applicants filed a statement of case in the Labour Court in accordance with r 6 of the Labour Court Rules in terms of which they sought an order to set aside the settlement agreements and for reinstatement with retrospective effect. Aspen raised two special pleas in defence: First, it argued that the applicants unduly delayed in challenging the validity of the separation agreements; and second, that the court lacked jurisdiction to determine the dispute.

This matter turned on whether the Labour Court has jurisdiction to set aside an agreement (on grounds such as duress or misrepresentation) entered into between an employer and employee in terms of which a termination is mutually agreed. Van Niekerk J held that it is well-established that the Labour Court’s jurisdiction must be established with reference to the applicants’ pleadings. In this case, there was no reference to any provision of the Labour Relations Act 66 of 1995 (LRA) that confers jurisdiction on the Labour Court to determine the validity of a settlement agreement. Van Niekerk J held that the court has jurisdiction to make a settlement agreement an order of the Labour Court (see s 158(1)(c)). In addition, the court may determine whether an agreement induced by duress or misrepresentation ought to be set aside in the context, for example, of an alleged unfair dismissal for a reason related to the employer’s operational requirements. However, in those circumstances, the court exercises jurisdiction by virtue of the fact that the reason for the dismissal (such as the operational requirements of the employer) falls within the court’s jurisdictional ambit. Nowhere in the LRA is the Labour Court empowered to consider the validity of a settlement agreement per se. With reference to the Basic Conditions of Employment Act 75 of 1997 (BCEA), the court held that it has jurisdiction in terms of s 77 in respect of matters arising from employment contracts. The applicants in this case did not argue that the dispute about the validity of the settlement agreements was a matter that arose from their employment contracts, and consequently the court held that it was not an issue that it was required to decide.

In the circumstances, the applicants’ claim was dismissed.

Referral of claims in terms of the Employment Equity Act 55 of 1998

In South African Transport and Allied Workers’ Union obo Members v South African Airways (Pty) Ltd and Others [2015] 2 BLLR 137 (LAC), the South African Transport and Allied Workers’ Union (SATAWU) referred an unfair discrimination dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA) on behalf of certain of its members. The dispute was not resolved and a certificate of non-resolution was issued on 14 November 2011. SATAWU referred the matter to arbitration, which was set down for 12 March 2012. The arbitrating commissioner ruled that the CCMA did not have jurisdiction to arbitrate the dispute since it related to alleged unfair discrimination and should, therefore, have been referred to the Labour Court. SATAWU filed its statement of case in the Labour Court on 12 June 2012, about seven months from the date of the certificate. SATAWU contended that the statement of case was only filed in June due to the internal processes that had to be followed at the union before a decision could be taken to institute proceedings in the Labour Court. It explained that the shop steward who was handling the matter referred it to the union’s local Kempton Park office on 30 April. From there it was referred to the provincial office which, in turn, had to refer it to the union’s head office. The attorneys were only instructed to act on 24 May 2012 and the first consultation with the attorneys took place on 25 May 2012. A subsequent consultation with the affected employees took place on 6 June 2012; a meeting on the matter took place with the SATAWU president on 11 June; and the statement of case was filed on 12 June 2012. 

The applicants’ claim concerned alleged recruitment discrimination following the appointment of external candidates (two males and one female) allegedly in violation of the South African Airways (SAA) recruitment policy to the exclusion of the three internal female applicants. 

SATAWU applied for condonation of the late filing of its statement of case. SAA opposed the condonation application. The matter came before the Labour Court on 12 December 2012 and the application for condonation was dismissed. The Labour Court held that the statement of claim had to be filed within 90 days of the date of the certificate of non-resolution, namely, by 12 February 2012. The statement of claim was, therefore, four months out of time. The court held that the explanation for the delay in filing the statement of case was weak, and so were the applicants’ prospect of success on the merits. 

SATAWU appealed to the Labour Appeal Court (LAC). With reference to NEHAWU obo Mofokeng and Others v Charlotte Theron Children’s Home [2004] 10 BLLR 979 (LAC) the court (per Tlaletsi DJP) confirmed that the applicable time period to refer an unfair discrimination dispute to the Labour Court following the issuing of a certificate of non-resolution is 90 days. Considering the Labour Court’s reasoning on condonation, the LAC was of the view that although the delay was lengthy, it was adequately explained. As regards the merits of the unfair discrimination claim, the court stated that the claims were not well-articulated in the statement of claim, but in view of the fact that the onus of proof is on the employer to establish fairness, one should loath to shut the door for the employees in cases of this nature. The LAC furthermore observed that SATAWU had all along intended to have the dispute adjudicated, which was evident from the timely referral of the dispute to arbitration, albeit that this was the wrong forum. The court therefore held that condonation should have been granted and the appeal was successful.

Moksha Naidoo BA (Wits) LLB (UKZN) is an advocate at the Johannesburg Bar.

Termination in breach of a statutory provision – a dismissal or nullity?

Edcon v Steenkamp and Others (LAC) (unreported case no JS648/13, JS51/14, JS350/14, 3-3-2015) (Murphy AJA with Tlaletsi DJP and Musi JA concurring). 

Section 189A of the Labour Relations Act 66 of 1995 was introduced to ‘enhance the effectiveness of consultation in large scale retrenchments’ and allows parties to appoint a facilitator to facilitate consultation between them.

If a facilitator is not appointed then in terms of s 189A(8): 
(a) a party may not refer a dispute to a council or the Commission unless a period of 30 days has lapsed from the date on which notice was given in terms of s 189(3); and
(b) once the periods in s 64(1)(a) have elapsed –
(i) the employer may give notice to terminate the contracts of employment in accordance with s 37(1) of the Basic Conditions of Employment Act 75 of 1997.

The period referred to in s 64(1)(a) is a 30 day period or until such time as a certificate of non-resolution is issued. 

In National Union of Mineworkers v De Beers Consolidated Mines (Pty) Ltd (2006) 27 ILJ 1909 (LC), Freund AJ had occasion to interpret s 189A(8). In that case the union, acting in terms of s 189A(8)(a), referred a dispute to the Commission of Conciliation, Mediation and Arbitration (CCMA) on 30 March 2006. The following day the employer gave its employees notice of termination advising them that their last working day would be 30 April 2006. The union approached the Labour Court arguing that the notice was premature and in breach of s 189A(8)(b). The court held that an employer can only serve a termination notice once 30 days have lapsed from the time the dispute was referred to the CCMA or once a certificate of non-resolution concomitant to the dispute referred, was issued. De Beers gave notices of termination a day after a dispute was referred to the CCMA and therefore acted in breach of a statutory provision (ie, s 189A(8)(b)) rendering the notices invalid. As part of the court’s reasoning Freund AJ relied on the peremptory language used in s 189A(2)(a) which reads:
‘In respect of any dismissal covered by this section –
(a) an employer must give notice of termination of employment in accordance with the provisions of this section.’

In an unrelated case the Labour Appeal Court (LAC) in De Beers Group Services (Pty) Ltd v NUM [2011] 4 BLLR 319 (LAC), when faced with a similar situation wherein the employer retrenched its employees before the 30 day period had expired from when the union referred a dispute to the CCMA, relied on Freund AJ reasoning and held that not only were the termination notices invalid but the ensuing dismissals were also invalid. Davis JA held:
‘In short, if the employer fails to comply with the mandatory requirement of consultation in terms of section 189(2) and moves to terminate the employment in breach of these provisions, then the dismissal must be considered to be invalid and accordingly of no force and effect’. 

Edcon, the employer in casu, approached the court for a declaratory order. 

Edcon sought an order declaring the decision of the LAC in De Beers was wrong in that a termination in breach of the time periods set out in s 189A(8), should not be deemed void where employees are automatically reinstated as a result of the employers non-compliance with a procedural issue. Under such circumstances, according to Edcon, a court should accept that there was indeed a dismissal and from there decide whether the dismissal was fair or not.  

Given the importance of the case, the Judge President directed that the matter be heard by the LAC acting as a court of first instance. 

In brief, Edcon’s declaratory was launched in response to three separate applications brought against it by employees whom Edcon retrenched and who relied on the principle set out in De Beers to argue their dismissals were void and, therefore, they should be automatically reinstated retrospectively. In all three applications the employees did not allege their dismissals were unfair but rather in breach of s 189A(8).

As a starting point the LAC held that the definition of ‘dismissal’, as set out in the LRA is wide enough to include an invalid termination in breach of statutory or contractual notice period. 

Having made this point the court went on to say that a mere non-compliance with a statutory provision does not automatically lead to a nullity. Various factors must be taken into account in deciding whether such breach leads to any consequential act being declared void. These factors include the subject matter of the prohibition, its purpose in the context of the legislation, any statutory remedy which is provided in the event of a breach, any inconvenience that may flow from invalidity. 

The court held that if a statute provides a remedy when one of its provisions are breached or if the declaration of invalidity would have disproportionate or inequitable consequences, then these would be significant factors to support the conclusion that the breach in question does not lead to a nullity. 

In analysing s 189A in its entirety, the LAC noted that there was a statutory remedy available to employees. In terms of s 189A(9) when an employer does not comply with the time periods set out in s 189A(7) and (8) and in so doing issues a premature notice of termination, it is open for the employees to give the employer notice to embark on a protected strike. Under this section employees would be entitled to embark on strike action without first having to refer a dispute to the CCMA and waiting for a certificate before giving the employer notice to strike. Alternatively employees may approach the Labour Court on an urgent basis, in terms of s 189A(13) to order the employer to reinstate the employees or prevent the employer from dismissing the employees until such time as the former complies with a fair procedure. 

In addition, the court held that compensation was the only remedy available to an employee whose dismissal was unfair for procedural reasons only. However, any violation of the time periods set out in s 189A(8), which must be considered a procedural issue, will be met with reinstatement on the basis that such a breach leads to a consequential dismissal being void – this according to the LAC went against the general scheme of the LRA. The remedy of compensation, as opposed to automatic reinstatement as a result of a statutory breach, under such circumstances would lead to a more proportionate and less capricious consequence. 

In arriving at this conclusion the LAC held:
‘In the premises, we are persuaded that non-compliance with section 189A(8) of the LRA was not intended by the legislature to result in the invalidity or nullity of any ensuing dismissals. Consequently, we are of the opinion that the decisions in De Beers Group Services (Pty) Ltd v NUM and Revan Civil Engineering Contractors and Others v NUM were wrongly decided.’
The court ordered the declaratory relief Edcon sought with costs.

• Moksha Naidoo will be conducting a one day labour law seminars on behalf of the Legal Education and Development arm of the Law Society of South African at various provinces in June 2015. For more information and to register please visit www.
lssalead.org.za and click on labour law seminar.