An objective approach to determining the fairness of a disciplinary sanction

It seems clear to me that an arbitrator or judge in determining if a disciplinary sanction if fair is making a value or normative judgment. I believe that this is what is meant when the constitutional court in Sidumo said a commissioner in undertaking this function must exercise his or her own sense of fairness.  However these words, ‘ his own sense of fairness’ have been fundamentally misunderstood by judges and arbitrators alike.  The prevalent interpretation of how a decision maker should go about making this value judgment endorses a subjectivist or parochial approach to the exercise of value judgments.  I submit that this is an incorrect interpretation of how this value judgment should be exercised

Firstly let me explain what I mean by the parochial approach. The statement “in deciding the fairness of a disciplinary sanction, the employer must exercise his own sense of fairness’ can be interpreted in at least two ways. Firstly it could mean that the evaluation of the fairness of the sanction must take place relative to that particular decision maker’s personal values. For example, on this approach a commissioner  evaluating a employer’s decision to dismiss for stealing a pie would look for a fit with his or her personal values. If the commissioner believes that dismissal for petty theft is unfair, on this view, the commissioner must find that the employer’s sanction is unfair.  Secondly, exercising one’s own sense of fairness could mean that it is the commissioner that must exercise this value judgment but that it must be objectively exercised in that a sanction must be evaluated in relation to values which are generally accepted by our society as a whole whether or not the individual commissioner subscribes to those values or not. Using the above example, an employer’s decision to dismiss for theft could only be judged to be unfair if such an action would be inconsistent with the public values of the society on whose behalf he exercises his judgment .  On the parochial approach, the yardstick is personal mores whereas on an objective approach the yardstick is bona mores or pubic values.

I believe that there are strong arguments against the parochial approach.

Firstly the nature of the office of an arbitrator or commissioner. The commissioner or arbitrator is a public function. The South African public has through the Nedlac process which resulted in the Labour Relations Act, given CCMA arbitrators the power to resolve disputes on their behalf.  It cannot be the case that “we” have asked these arbitrators to impose their own personal values on “us”.

Secondly, one of the functions of the law is to give guidance to the public in general as to what is permissible or what is not. The law can only serve this function if the outcome of any particular dispute is predictable. That is to say the law can only serve this purpose if we can predict with reasonable certainty what legal consequences attach to a certain action. If it is permissible for arbitrators to impose their own values in determining the fairness of a disciplinary sanction, the outcome becomes largely unpredictable and the law ceases to be able to achieve one of its chief functions.  Lastly, moral theorists often associate correct moral decision making with objectivity. It is true that unlike making a factual or empirical judgment such as “the employee arrived late for work”, a value judgment like “it is fair to give the employee who arrived late to work a written warning”, cannot said to be true or false.  However many philosophers (such as John Rawls and Ronald Dworkin) argue that value judgments are objectively justifiable and some judgments can be accepted or rejected on an objective basis. For example Rawls this objective justification consists in its “reflective equilibrium” or lack thereof with our fundamental moral convictions. For Dworkin, justification consists in an integration with the principals of dignity.  On objective approach to evaluating the fairness of a disciplinary sanction encourages moral justification and leads to greater scrutiny and better decision making.

When the Constitutional Court says a commissioner must exercise his or her own sense of fairness, it does not mean that the commissioner must impose his or her own values but rather that it is the commissioners function to make this judgment, as opposed to any of the parties to the dispute but must do so in accordance with publicly acceptable values.  We have these values. They are contained in the constitution.  The arbitrator in evaluating the fairness of an employer’s decision to dismiss or sanction an employee, the arbitrator must look for a fit with values generally accepted by the South African public. One way to achieve this would be to ask, would a reasonable member of the South African public, imbued with these public values, upon a consideration of all of the relevant circumstances consider this sanction to be fair?  If yes, then the sanction should adjudged to be fair irrespective of whether the arbitrator in his personal capacity would not have decided likewise.  This would result in more consistent and better decision making. 

Amendments to Labour Legislation - an update

The latest  news regarding the proposed amendments to existing labour legislation which has stirred up so much controversy is that the draft bills have been rejected by Nedlac as being badly drafted and have been sent back to be re-drafted. This is what was reported at the beginning of this monthSee News24. I have done some research and cannot find any further news on this issue. There is no clarity as to the details of the complaints regarding the bills as they were. However the Financial Mail said that the fact that COSATU supported the position that the bills were untenable in their current form was a positive signFinancial Mail. When and if the new drafts become available, I will provide you with a summary and analysis of them. 

A bit of a rant

Dear Reader.

I apologise for being absent for some time. You can thank our dear department of labour for that. I have been embroiled in a dispute regarding the de-registration of an employers organisation. It seems that the Registrar of Trade Unions is hell bent on deregistering as many Trade Unions or Employers Organisations as possible. At this stage the motive is unclear but in my opinion, it is not motivated by altruistic concern. A number of organisations have been de-registered for financial irregularities. I do not have any issue with this because I believe that the only justification that limitations or the impositions regarding the registration of trade unions and employers organisations can have is to protect their members ( and by extension members of the public) from being fleeced or having their money used for unauthorised or otherwise illegitimate purposes. However the department has de-registered a number of Trade Unions and Employer Organisations that in the registrars infinite wisdom do not constitute "genuine " employers organisations. This clearly smacks of the imposition of value judgements by a person not even democratically elected. I know that this practice is being constitutionally challanged in matters that are pending before the Labour Court. I hope that sanity prevails but I am certainly not holding my breath. The Labour Court it seems is more than willing to protect the registrar. On balance, the net effect of this strategy will be to undermine the stability of Labour Relations. I say this because a number of what are in my view responsible employer organisations are being or have been de-registered. When I say responsible organisations, I mean organisations that are professionally run, who conduct themselves in an ethical manner and who have over a period of time created close relationships between the employers they represent and the labour they employ. The registrar has often cast the reasons for the de-registration in the widest possible terms so as constitute no reasons at all and have de-registered these associations without first engaging them in a meaningful way with the purpose of remedying practices which the department finds offensive. 

One of the registrar's "beefs" is that the Trade Union and Employer Organisation is being used as fronts by attorneys and dare I say it "Labour Consultants" to represent their clients in the CCMA and Labour Court. One obvious way to remove this problem is to open up the right to represent in these fora. In the United Kingdom and in Botswana, anybody can represent anyone else in the employment tribunals and in the Industrial Court respectively. Why not do the same thing here? Those jurisdictions did not descend into chaos.   The argument is that firstly the limitation on representation was and is a negotiated settlement between Business, Labour and the State. In other words it was negotiated between anybody but the ordinary South African citizen. Big business, organised labour and the state do not speak for the average person who has the misfortune of finding themselves at the CCMA for whatever reason. I suspect that if you had to conduct a survey amongst South African citizens that the current limitation on representation at the CCMA and Labour Court would not be supported by the majority. The other argument against this is that it would allow unscrupulous "fly by night" consultants with little or no knowledge, skills or experience in labour litigation to operate in the various dispute resolution fora. I do not believe that the current restrictions on representation are a panacea to this evil. In my experience (and I appear on average in the CCMA and Labour Court three times a week) officials from so called "genuine " and well established trade unions such as NUMSA and SACCAWU have minimal litigation skills and often lose cases because of a lack of skill. The most highly regulated group i.e legal practitioners are expressly excluded from representing litigants in the most common type of disputes before the CCMA i.e dismissal disputes for misconduct and incapacity. It is also argued that lawyers complicate and extend the life of disputes. I believe this to be a myth. In my experience when a litigant is unrepresented, it is likely to take longer to resolve that dispute. I suspect that the restrictions on representation further vested interests of the established trade unions. It is high time that this monopoly is broken and we adopt a more mature, practical and principaled approach to this issue. 

Let me know your views.

Enjoy your weekend, over and out.

Suspending an employee, part II

In my previous post, I argued that an employee should be given an opportunity to be heard on why he should be suspended before he is suspended. However there are situations where an opportunity to be heard after an employee is suspended may be fair. 

As set out in my previous post, the right to be heard before being suspended arises from the rules of natural justice. Our courts have recognized that a hearing or opportunity to be heard after the decision has been made fulfills the requirements of natural justice. In Mamabolo v Rustenberg Town Council click here , the Supreme Court of Appeal said that:

'In certain instances a court may accept as sufficient compliance with the rules of natural justice a hearing held after the decision has been taken, where:

There is a sufficient interval between the taking of the decision    and its implementation to allow for a fair hearing; The decision-maker retains a sufficiently open mind to allow himself to be persuaded that he should change his decision andThe affected individual has not thereby suffered prejudice.' 

This principle was also endorsed by the Labour Appeal Court in Semenya & Others v CCMA & Othersclick here, where the court had this to say: 

The third respondent’s contention that the opportunity to be heard was not good enough because it was offered after the decision to dismiss her had been taken requires close examination. It is not our law that an opportunity to be heard that is given after the relevant decision has been taken is never good enough. Although generally speaking such an opportunity should be given before the decision can be taken, there are circumstances where an opportunity to be heard that is given after the decision has been taken is acceptable...I do not propose to set out a list of situations where an opportunity to be heard that is given or offered after the decision has been taken is acceptable. Probably it is not advisable to attempt to give an exhaustive list of such situations. However, it seems to me that, where it can be said that the opportunity to be heard that is given after the decision has been taken is no less fair than the opportunity that should have been given before the decision could be taken, it ought not to make a difference that it was offered after the event'

It seems to me that the general rule is that an opportunity to be heard should a general rule be given before the decision is made to suspend. However there are certain situations where an opportunity to be heard after the decision is made is acceptable. The guiding principle is whether it would be fair to do so. Fairness here is a function of two considerations. Firstly, whether the decision makers mind remains open and the opportunity to make representations is real and not merely "lip service.” Secondly, where there has been no prejudice to the employee or where the hearing after the fact cures the prejudice. 

In light of the above, I would like to amend my original advice on the steps to take when suspending an employee and add the following addition, amendment, or proviso. If giving the employee an opportunity to be heard before he or she is suspended is impractical or where it would be counter productive, I would adopt the following procedure. I would, as suggested before with as little fanfare as possible give the employee a notice of provisional suspension, stating the reasons of the suspension and give him or her an opportunity to make representations as to why the provisional suspension should not be made permanent. In addition, if possible I would have my HR manager conduct this process and then direct the employee to make representations to another higher-level manager. In other words the decision to suspend the employee provisionally should not be made by the same person who is to make the decision as to why the suspension should not be confirmed. 

An example of the relevant notice could be as follows:

' Dear Mr. X

 We have made a provisional decision to suspend you. The reasons for this provisional decision are as follows:

1. 

2. 

etc 

You have until the______________ to make written representations to Mr. Y , the M.D as to why the provisional suspension be confirmed. If the decision is confirmed you will be suspended on full pay pending the outcome of a disciplinary hearing’

Suspending an employee pending disciplinary action

Suspension as a holding operation

There are two categories of suspension. There is what has been called suspension as a 'holding operation'. This refers to a situation where an employee is suspended pending the outcome of disciplinary proceedings. There is also suspension as a form of disciplinary action. This post will focus on the former. I will look at the procedures that need to be followed in suspending an employee and when or for what reasons you can suspend an employee pending the outcome of disciplinary proceedings. 

The applicable legal principles

Prior to the decision of the Labour Court in Koka v Director-General Provincial Administration North   West Government [1997] 7 BLLR 874 (LC), there were conflicting views as to whether suspension as a holding operation fell within the ambit of the unfair labour practice definitions of the Labour Relations Act. The significance of this issue was that if it did, employees could refer a dispute to the CCMA if they were suspended pending the outcome of disciplinary proceedings and could be awarded, amongst other forms of relief, compensation, if it was held that the suspension was unfair. In Koka, the Labour Court held that suspending employees as a holding operation did fall within the ambit of a "labour practice" as contemplated by the unfair labour practice provisions of the act. The Koka decision was also significant in that it now followed that an employer had to have a fair reason for suspending and employee and had to follow a fair procedure in suspending an employee.

However, it seems that an employee may have other causes of action if they are suspended in this manner. Firstly, there may be other statutory provisions, which regulate the issue such as in the case of public service employees. Secondly, there may be a collective agreement dealing with the issue. Thirdly, there may be contractual provisions, which regulate the issue of suspension. In a number of cases it was held that there was an implied term in any contract of employment that employer had to deal with the employee in a fair manner. However, it seems that this contention has been rejected by the Supreme Court of Appeal in SA Maritime Safety Authority v McKenzie (2010) 31 ILJ 529 (SCA). A person seeking to rely on a contractual cause of action in respect of a suspension cannot rely on some general implied term of fairness. They could only rely on express or tacit terms of the contract dealing with the issue of suspension or fairness. 

A right to be heard before being suspended

In Koka (supra), the court per Landman J as he then was held that there was no right to be heard or to make representations before a decision is made to suspend. A number of decisions by the Labour Court, as well as arbitrators of the CCMA or other bodies held the view that there was no right to be heard before being suspended. However, a number of recent decisions have held that that a person has a right to be heard as to why they shouldn’t be suspended before they are suspended. The reason for this is most recently expressed in Dince & Others v Department of Education Northwest Province, where the court stated that because a suspension affects one's right to dignity and to work, an employee must be given an opportunity to be heard before a decision is taken to suspend him or her. The court based the right to be heard in the concept of fairness, citing case authority for the fact that the audi alter pater principle is merely an expression of the requirement of fairness. In light of the Mckenzie (supra) decision, the right to be heard cannot be located in some general implied contractual term to deal fairly, but these decisions still support the contention that the principle of fairness, as contained in the LRA, would require that a person be given an opportunity to be heard before a decision is made to suspend them. 

Of course there are always exeptions to the rule and there may be certian situations where a failure to give expression to the right to be heard would not be unfair. These are the so called ‘emergency’ situations and are seen in the context of a suspension where giving a person a right to be heard would be impossible or would result in damage to persons or property. 

Do you have to have a reason to suspend? 

Typically, employers suspend employees where the charges against them are serious, such as theft, fraud or assault. However, in a number of recent decisions by the Labour Court (for example, see Mogothle v Premier of the North West Province & anotherCity of Johannesburg Metropolitan Municipality v SAMWU & others and Dince (supra) ), the courts affirmed that three requirements must be met before an employee may be suspended. The first has been already dealt with, namely an employee must be afforded a right to be heard before he or she is suspended. The other two requirements are that the employer must be satisfied that the allegations against the employee are serious and that the employer must establish that the continued presence of the employee at the workplace might jeopardize any investigation into the alleged misconduct, or endanger the well-being or safety of any person or property. It is not enough that the allegations are serious. The second part of the reasoning process must be satisfied. 

Must an employee be paid whilst on suspension?

Unless a contractual or collective agreement allows you not to pay employees during a suspension or unless the employee consents to this, the failure to pay a person during a suspension would constitute a breach of the contract and or of the Basic Conditions of Employment Act. I am aware of one arbitrators decision which held that if the period of the suspension is extended as a result of a request of a postponement of the disciplinary proceedings by the employee, it is not unfair not to pay for that extended period. However, the reasoning in this decision is dubious and even if it was not unfair, it would be unlawful and the employee would be able to claim under the BCEA or contract for payment of those monies. So as a general rule, the employee must be paid during the period of suspension. 

Conclusion(s)

In light of the aforementioned legal principles, before suspending an employee, I would apply the following principles:

1. Conduct a proper investigation. Ensure that the allegations are serious. Serious allegations would include dishonesty, especially theft or fraud, assault threatening or intimidating behavior or harassment or competing with the business. Look for evidence that would support the contention that if the person is not suspended they are likely to interfere with the investigation, such as destroy evidence and or threaten or intimidate witnesses etc, or to support the contention that there is a reasonable risk that they may destroy company property or hurt persons. A reasonable apprehension of this may arise as a result of the nature of the alleged misconduct and or out of the circumstances under which the misconduct is alleged to have taken place. For example, it may be argued that in the event that the circumstances are that an employee is suspected of threatening or assaulting an employee, a reasonable suspicion that the employee may harm that employee once he has learnt of the charges against him may be sustainable. However, there must be substance to the allegations in the first place. 

2. Inform the employee that you intend to suspend him or her, give the reasons and invite the employee to make representations as to why they should not be suspended. This need not be a formal hearing but an informal discussion. The dilemma employers face is that they think that if employees are given time to make such representations, they may cause damage. However, there are ways in which the risk of this may be mitigated. Firstly, you could do it at the end of the working day and give the employee a chance to make representations by the start of the next working day or in certain situations, where you feel that the employee may damage property or contact fellow employees even if given a short time to make representations, you could ask them to make representations to you immediately after you have informed them of your intention to suspend and the reasons therefore. 

3. Don't make a spectacle of it. The less other employees know about and the more privately it is done, the better. This is so because the impact on the employee’s dignity in such circumstances is diminished and this may have an impact on the fairness of the suspension or the compensation awarded in the event it is found to be unfair.

4. Ensure that the period of suspension is for a short as period as possible.

Dismissal for Petty Theft

Shrinkage due to theft by employees, particularly within the retail industry, remains a persistent and prevalent problem. It can, if not dealt with in an appropriate manner, be the death knell of a business. Consequently, dismissal for theft, unauthorized consumption and or unauthorized removal or possession of property remains one of the major reasons for dismissal within South Africa. 

In this post, I will look at a number of principles or factors that should be considered by employers when deciding whether or not to dismiss an employee for petty theft and in the event that they do, what evidence they should produce, should the employee challenge their dismissal.

In understanding what petty theft is, I include theft, unauthorized possession and or removal of property belonging to the employer, which is of minimal or negligible value. 

Assuming that you can prove that the employee is guilty, the following factors need to be considered.

1.  It seems that our law draws no meaningful distinction between acts of theft and cases of unauthorized possession or unauthorized removal of property for the purposes of evaluating the fairness of the sanction of dismissal. Theft is a very specific offense and you are required to prove the intent to permanently deprive the owner of ownership of the item in question. It is not always easy to prove such intent. That is why I recommend that the employer implement very specific rules relating to the possession and or removal of company property. If an employee breaches such a rule, it is not necessary to prove that he or she had the intent to steal. All you need prove is that the employee is in possession of the property or has consumed the property in circumstances when he or she should not have been in possession or consumed the property. The reason why little, if any, distinction is drawn between theft and unauthorized possession or removal is that rules relating to the latter are implemented to prevent the former and, therefore, breaches of these types of rules are seen in a serious light. It should be noted, however, that these rules and or procedures should be clear, they should be designed to prevent theft, they should be clearly communicated to employees and employees should be warned that they may be dismissed if they breach these rules.  

2.  Employers must be aware that in assessing whether or not to dismiss an employee for petty theft, they may not merely rely on the fact that an employee has or has attempted to remove company property. It has become increasingly clear that all relevant circumstances must be taken into account when assessing what a fair sanction is in the circumstances. What is relevant and in what way it is relevant will be discussed below. 

3. The first factor that may play a part is the value of the item. There are conflicting decisions as to whether the value of the item in question is a factor to be considered in evaluating the fairness of a disciplinary sanction. It seems that the position is that the value of the item in question carries little or no weight in the assessment process (see De Beers Consolidated Mines Ltd v CCMA & Others  for example). However, the reality is that many arbitrators as well as some judges do consider the value of the item as being significant.

4.  There is also the question of the employees’ length of service and disciplinary record. It stands to reason that a person’s disciplinary record is always relevant in determining the issue of sanction. However what if the employee is, for example, caught eating a pie and she has a clean disciplinary record. Does this mean that you should not dismiss? No. The vast majority of decided cases have held that you can dismiss for petty theft even if this is the employee’s first offence. However, I would suggest that at least one of two factors have to be present where there is a clean service record. If either the trust relationship has been irreparably broken or the circumstances sustain the contention that the employee is unlikely to reform to his or her conduct in the future there is due motive for a dismissal despite a clean service record.

What about length of service? Although many consider length of service to constitute a mitigating factor in and of itself, I believe that this is incorrect. In De Beers Consolidated Mines Ltd v CCMA & Others the LAC said that length of service is only material, which can support the contention that the employee’s actions were anomalous and it is unlikely to be repeated. Thus where an employee has a significant period of service and a clean disciplinary record, an inference may be drawn that the incident was a ‘once off’ and is unlikely to be repeated. However, there may be other factors present that may negate or prevent such an inference from being drawn. One of these factors is discussed below. Another factor may be that the nature of the business and or of the employee’s position may be such that you cannot take a risk that the offence may be repeated. For example, where the employee is a security guard or is the financial director.

5.  Whether the employee acknowledges his or her wrongdoing or denies that he or she is guilty is an important factor to consider. In a number of cases it has been held that the fact that an employee has created a mendacious account of what occurred and or where he or she denies that he or she is guilty, the presence of such factors strongly supports the contention that dismissal is appropriate (see Miyambo v CCMA & Others  and Shoprite Checkers (Pty) Ltd v CCMA & others for example). This is so because firstly a person who refuses to acknowledge their wrongdoing is unlikely to reform their conduct and secondly by denying their wrongdoing, they compound their initial dishonesty and demonstrate a dishonest disposition.

6. I also suggest that the nature of the employee’s job and their duties and responsibilities also are important factors. If the employee were in a position where trust is particularly important, this would support the contention that dismissal is appropriate. However, this does not mean that if an employee is not in a position where trust is of particular importance, that dismissal would not be appropriate.

7.    The circumstances in which the petty theft occurred may also be of importance. If, for example, an employer has been suffering shrinkage or has a shrinkage problem at the time of the offence or indeed prior to the offence, this would serve to justify taking strict action against employees who engage in petty theft. If an employer has a ‘zero tolerance’ policy, it is advisable to provide reasons at arbitration as to why such a policy is necessary. Prevention of shrinkage is such a reason and this reason would have even more resonance if the employer has or is suffering shrinkage.

8.   Lastly I would say that the impact of the misconduct on the trust relationship is the most important factor. It is true that by the very nature of dishonesty, when an employee steals or attempts to steal, there is a significant impact on the trust relationship. However, it is not sufficient merely to boldly allege that the trust relationship has broken down. I would suggest that, if you are seeking to justify a dismissal for theft at arbitration, you explain why the trust relationship has broken down. It is particularly important that you call the employee’s immediate superior to come and give evidence that he or she no longer trusts the employee to carry out their duties.

This post is for informational purposes only and is not intended to substitute for legal advice. It is strongly recommended that you seek advice before instituting disciplinary action against an employee for petty theft and or presenting a case before the relevant tribunal. The writer of this post does not accept any responsibility of whatsoever nature for any consequences that may follow from relying on the contents of this post.

Grant Ray-Howett

When is a secondary strike protected?

In SALGA v South African Municipal Workers Union (http://www.justice.gov.za/labourcourt/jdgm-lbac/lbac2011.htm), the Labour Appeal Court for the first time considered the meaning of section 66(2) of the Labour Relations Act 66 of 1995 ( as amended).

Section 66 (2) of the LRA provides that, a person may participate in a secondary strike if the primary strike complies with the requirements of the LRA, that a written notice has been given to the relevant party in terms of section 66(2)(b) and 'the nature and extent of a secondary strike is reasonable in relation to the posible direct or indirect effect that the secondary strike may have on the business of the primary employer'. It was the meaning of this last requirement that was at the heart of the matter in the SALGA judgement.

However before we deal with this decision, it may be useful for laypersons to understand the difference between a primary and secondary strike. This is perhaps best illustrated by way of an example. Lets imagine that the members of union X go on strike against VW South Africa in order to compel the employer to give into a wage demand. Sometime later, union X calls for a strike at Michelin Tyre manufactures who supply tires to VW in order to compel VW to give in to their wage demands. The withholding of labour in respect of VW would constitute the primary strike. The withholding of labour in respect of Michelin Tyres would constitute the secondary strike. A secondary strike should also be distinguished from a sympathy strike. In the case of the former, the purpose of the strike is by impacting on the business of the secondary employer to effect a impact on the business of the primary employer with the purpose of compelling the primary employer to give into the demands of the union involved in the primary strike. In the case of the latter, no such effect is necessary. The purpose of a sympathy strike is simply to voice support for another strike.

In SALGA v SAMWU matter, the material facts were as follows. The respondent trade union SAMWU was engaged in strike in respect of National Goverment. It then gave notice that it sought to enagage in a secondary strike at municipal level in support of its primary strike. SALGA then brought an application before the Labour Court to inderdict the secondary strike on the basis that inter alia, the proposed secondary strike at Municipal level would have no effect on the National Goverment and that therefore the requirment as per section 66(2)(c) has not been met. Essentially SALAG's position what the the secondary strike was not reasonable. The court a quo ( the Labour Court ), per Van Niekerk AJ as he then was disagreed and found that the proposed strike did comply with the requirments of section 66 (2)(c) ( See SALGA v SAMWU [2008] 1 BLLR 66 (LC) ).  SALA then appealed against the decision to the Labour Appeal Court.

On appeal, the LAC upheld the decision of the LAC. However in comming to its decision, the court per Waglay, JA made the following points:

1. The test as per section 66(2)(c) of the LRA is a proportionality test. That is to say that the effect or potential effect on the buisness of the primary employer must be proportionate to the harm caused to the buinsess of the secondary employer. The court said that:

' Under the head of proportionality, the court must weigh the effect of the

secondary strike on the secondary employer and the effect of the nature and

extent of the secondary strike on the business of the primary employer. The

sub-section does not require actual harm to be suffered by the primary

employer but that there must be the possibility that it may. The harm that the

employer may suffer is not required to be direct. It may be harm that indirectly7

affects the business of the primary employer. It would, therefore, in every

case require a factual inquiry to determine whether or not the possible effect

the secondary strike will have on the business of the primary employer is

reasonable. The harm that may be suffered by the secondary employer must

be proportional to the possible effect the secondary strike  may  have on the

business of the primary employer.'

This finding was significant because prior to the decision by the LC in this matter, the courts had rejected a proportionality approach to section 66(2)(c). The decision by the LAC now clarifies the position in that it has endorsed a proportional approach.

2. SALGA argued that in order for the strike to be protected as a secondary strike, it must aim to put pressure on the secondary employer who will in turn pressurise the primary employer into giving in to the demands in question. This arguement was rejected by the court. The LAC said that all that was required is that the secondary stikers must show that thier strike may have a direct or indirect effect on the buisness of the primary employer. That is to say the reasonablness of the strike is not measured against the capacity of the secondary employer to infleunce the primary employer.

3. Local Goverment is sufficiently integrated with National Goverment and that as Local Goverment provides various support and services to Provincial and National Goverment, a strike a local goverment level may potentiay have an impact on the operations of the Provincial and National Goverment.

Please note that the above post was for informational purposes only. The author of the post does not accept liability resulting from the use of this information. Anyone who is faced with a secondary strike must seek the opinion of the appropriate professional.

Grant Ray-Howett.

Employers be wary of using fixed term contracts

Beware of automatic termination clauses in fixed term contracts!

Many service providers provide services in terms of a limited duration contract to other businesses. For example, a cleaning or security company has a two-year contract with another company to provide cleaning and or security services at particular sites. From a human resource perspective, these types of service providers face the problem of having to retrench or relocate employees working on these sites when the contract expires and is not renewed by the client.

In order to avoid these difficulties, these service providers typically conclude fixed term contracts with their employees, which provide for the “automatic” termination of the employment contract upon the termination of the contract with the client. Normally, clauses in these sorts of contract will read as follows:

‘  This employment contract will commence on 2008/10/23, and will automatically terminate on the expiry of the contract between the employer and the client, alternatively, in the event where the Client does not require the services of the Employee for whatsoever reason.’

The rationale behind the use of such contracts is that if employment contract terminates as a result of the occurrence of a certain event, such as the termination of the contract with the client, the termination arises as a matter of law and does not constitute a dismissal in terms of section 186 of the Labour Relations Act 66 of 1995 (as amended) (The LRA). It is said that these contracts terminate automatically. This rationale has found judicial approval in a number of cases, most recently in Sindane v Prestige Cleaning Services [2009] 12 BLLR 1249 (LC).  The obvious advantage of contracts which terminate automatically is that, these terminations are not subject to the requirements of fairness as set out in the LRA.

However, in a recent decision, the Labour Court has held that the termination of contracts in this way may constitute dismissals in terms of the LRA. In Mahlamu v CCMA & others [2011] 4 BLLR 381 (LC), the court was asked to review and set aside a decision, by a CCMA commissioner, that the termination of a contract of employment in the manner described above did not constitute a dismissal in terms of the LRA constituted a material mistake of law. In this matter, the employer had concluded a contract of employment with their employees that included the following clause:

  ‘2.  Employment period

This employment contract will commence on 2008/10/23, and will automatically terminate on:

A)Expiry of the contract between the employer and the client alternatively

B)In the event where the Client does not require the services of the Employee for whatsoever reason.’

The contract with the client had run its term and the client had then terminated the contract. The employee in this case was then simply informed that, in terms of the aforementioned clause, his contract had been terminated. The employee referred a dismissal dispute to the CCMA. At the CCMA, the employer raised the point that the termination of the contract did not constitute a dismissal in terms of the LRA. The commissioner agreed and dismissed the dispute. The employee then referred the commissioner’s decision to the Labour Court for review. The crisp issue before the court was whether the commissioner’s ruling was legally correct or not.

The court found that such a clause was, in essence, an attempt to contract out of the employee’s right not to be unfairly dismissed, and was thus contrary to public policy and as such was invalid in terms of section 5 of the LRA.    As such, the court found that the commissioner’s decision, that the termination of the contract did not constitute a dismissal, constituted a material mistake of law. The court set the decision aside and found that the employee had been dismissed and referred the matter to trial court to determine the fairness of that dismissal.

The purpose of this post is not to provide a critique of the judgment, but to unpack the consequences for employers who rely on such clauses in their contracts.

The consequences for employers who rely on such clauses are as follows:

Firstly, the judgment means that the employer cannot contract out the employees right not to be unfairly dismissed, and that contractual provisions, whose purpose or effect is to remove the right not to be unfairly dismissed and or to dispute the fairness of a dismissal, will be deemed to be invalid and no force and effect will be given to them. The court relied on the provisions of clause 5 of the LRA in this regard. For my part, having forgotten about the provisions of clause 5 of the LRA, I feel that practitioners, and laypersons alike, should look at the provisions of that clause again. Very briefly, clause 5 provides that any contractual clause that seeks to directly, or indirectly, limit the provisions or rights of a person in terms of the LRA is invalid unless the provisions are permissible in terms of the LRA.

Secondly, and more precisely, clauses which link the termination of the contract of employment to some external event, such as the termination of the contract between the service provider and the client, will, it seems, in the absence of some justifying purpose other than to avoid the provisions of the LRA, relating to the fairness of a dismissal, be invalid in terms of the LRA.

Thirdly, in the event that a client does terminate a contract with a service provider, employers cannot simply rely on such automatic termination clauses and simply inform their employees that their contracts are thereby terminated. Employers will have to ensure that there is a fair reason for the termination of the contract and that a fair procedure is followed.

This does not mean that the employer is without recourse should a client terminate a service agreement. The employer can still terminate the contract by way of operational requirements (retrenchment) provided that there are no other viable alternatives and a fair procedure has been followed. Another, less reliable, option would be as follows: If an employer realises that, if a client had to cancel a contract, they may not have work available for employees, they could place such employees on, what I call, permanent part time contracts. The essence of such contracts is that the right to work and to be paid is not ongoing and that those rights are linked to the availability of work. Thus, when a contract with a client is terminated, the employee’s contract is not terminated, but they are merely sent home because there is no available work. Such clauses in contracts are similar to short time arrangements, which are permissible in law. However, there is no guarantee that the CCMA, Bargaining Council or Labour Court may also find such clauses invalid in the light of the constitutional imperative as interpreted by the Constitutional Court to protect employees.

Please note that this post is not meant to substitute legal advice and should an employer or employee find himself or herself faced with this situation, they are advised to contact an attorney or some other such professional prior to deciding on any course of action.