CASE UPDATES by Dr. Mohamed Alli Chicktay B.Proc LLB. LLM. Ph.D.

1. CASE UPDATES by Dr. Mohamed Alli Chicktay B.Proc LLB. LLM. Ph.D. Senior Law Lecturer at the University of Witwatersrand Mediator and Arbitrator

2. Case updates have been divided under the following headings • Contract cases • Dismissal cases • Strikes • Transfer of business • Trade Union liability

3. Contract cases

4. Motor Industry Staff Association and Another v Silverton Spray painters and Panel beaters (Pty) Ltd) ([2012] ZALAC 42 • Facts: During 2008, the employer started experiencing financial difficulties and as a result initiated a promotional campaign. As part of the campaign, the employee was instructed to physically go to the prospective clients to promote the business of the company and to procure work. • The employee blatantly refused to comply with this instruction. • The employee maintained that the distribution of brochures company clients did not form part of his job description and the instruction the employer gave amounted to a unilateral amendment of the terms and conditions of his employment.

5. The Labour Appeal held that that employees do not have a vested right to preserve their working obligations completely unchanged as from the moment when they first begin work. It is only if changes are so dramatic as to amount to an entirely different job that there is a right to refuse to do the job in the required manner. • It not a material change to the terms and conditions of the employee's core duties but simply a variation in his work practice. • The employee did not have a vested right to preserve his working obligations completely unchanged as from the moment when he first began to work." • Accordingly, the Labour Appeal Court dismissed the employee's appeal.

6. Dismissal Cases

7. National Union of Mineworkers obo Selemela v Northam Platinum Ltd [2013] ZALAC 10 • Facts: On 20 August 2005,Selemela was dismissed for insubordination. • At the CCMA Selemela’s dismissal was found to be substantively unfair The commissioner felt that the employees prior warning for insubordination had expired and could not be taken into account. • The LAC held that an employee’s written warnings, even after they have lapsed, may be taken into account, in determining the fairness of his or her dismissal especially where the employee concerned is found to have a propensity to commit acts of misconduct at convenient intervals falling outside the period of applicability of the written warnings.

8. Eskom Holdings Limited v Fipza and another (LAC) Case no. JA 56/10 • Facts: The applicant worked for Eskom in 2006 but was dismissed for misconduct when she had failed to return to Eskom timeously after her sabbatical. She was informed in her termination letter that she would be able to apply for other jobs at Eskom if the opportunity arose. • In 2008 she applied for another job at Eskom. She went for an interview and thereafter offered a position. As a result she resigned from her current position. • Shortly thereafter Eskom retracted the offer that it had given her. Eskom stated that the applicant had lied to Eskom by not disclosing in her CV or in her interview that she had previously been dismissed by Eskom for Misconduct.

9. The labour Appeal court stated that it is generally not a requirement that a CV should provide reasons for leaving previous employment. It is a document whereby a job seeker aims to market himself or herself concisely and succinctly to potential or prospective employers. • Recruitment forms also do not require one to provide reasons for leaving ones previous employment unless one is specifically asked this question in the form. Recruitment forms need to be filled incompletely, accurately and truthfully. • The court found in favour of the former employee and referred the matter back to the CCMA for an appropriate remedy

10. The Law Society of the Northern Province v Minister of labour and others (2012) 33 ILJ 2798 (GNP) • FACTS: 25(1)(c) of the CCMA rules denies employees a right to legal representation at arbitration proceedings where the reason for the employees dismissal relates to misconduct or incapacity. The commissioner can however allow for legal representation if the commissioner and all parties consent, it would be unreasonable not to allow legal representation, the complexity of the dispute, public interest and having regard to the comparative abilities of the parties. • The Law Society questioned the constitutionality of r25(1)(c) arguing that it violates their members constitutional right to participate in the profession.

11. The court found the rule to be unconstitutional for the following reasons; • irrational • costs • Would lawyers obstruct the process. The court thus found r25(1)(c) to be unconstitutional and gave parliament 36 months to amend the rules.

12. Solidarity and Another v Public Health and Welfare Sectorial Bargaining Council and Others (JA 71/10) [2013] ZALAC 2; [2013] 4 BLLR 362 (LAC); • FACTS: Section 17(5)(a)(i) of the Public Service Act 103 of 1994 entails is that if an employee absents himself from official duties for a period exceeding one month without having obtained permission from his head of the department, he shall be deemed to have been discharged from the Public Service on account of misconduct with effect from the first day on which he began the absence. • An employee who was suspended took employment elsewhere during his suspension. As a result his contract was terminated. The employer argued that the employee was not dismissed but his contract had been terminated by operation of law in terms of section 17(5)

13. The LAC stated that In this case the employee did not have the permission of the head of the department when he assumed other employment. • The employee’s conduct fell within the circumstances envisaged in s 17(5)(a)(i) and (ii) of the PSA. • Even though on suspension he remained an employee of the department and was subject to its authority in terms of the contract of employment. • The department was also contractually obliged to pay his remuneration during the suspension period. • Accepting or assuming other employment amounts to being absent from duty because the employee is now rendering his services to another employer which is irreconcilable with his employment

14. Summary of principles • One can take into account warnings that have expired especially where the employee has a propensity to commit the same offence. • One does not need to state ones reasons for ones dismissal in ones CV or in the application. • 25(c) of the CCMA rules was declared unconstitutional and Parliament was given 3 years to amend the law • If one is suspended one is not allowed to take employment elsewhere

15. Strikes

16. SATAWU & Others v Moloto NO & Another (2012) 33 ILJ 2549 (CC) • Facts: SATAWU and Equity Aviation Services (Pty) Ltd (Equity Aviation) entered into a recognition agreement in terms of which the union was the recognised bargaining agent of all the workers employed by Equity Aviation. • When negotiations failed the matter was referred to conciliation. • When conciliation failed the union sent the employer a strike notice stating that:” “We intend to embark on strike action on 18 December 2003 at 08H00. • Equity Aviation argued that this notice was sent only on behalf of SATAWU members and that non member had failed to send a notice in accordance with section 65 thus participating in an unprotected strike justifying dismissal.

17. Both the Supreme Court of appeal and the minority judgement in the Constitutional Court found in favour of the employer. • They agreed with the employer that a purposive interpretation of the provisions is necessary. • In order to serve any purpose at all, the notice must be issued by, or on behalf of, the parties who intend to strike. • This approach promotes orderly collective bargaining as it enables the employer to reasonably determine the extent of and properly prepare for the looming strike.

18. The majority in the Constitutional Court disagreed. • The language used by the Legislature expressly requires only notice of the commencement of the strike to be given to the employer by “anyone involved in the dispute”, and does not oblige every participating employee to issue the notice to exercise the right to strike. • Interpreting the section to mean what it expressly says is less intrusive of the right to strike; • To require more information than the time of its commencement in the strike notice from employees, in order to strengthen the position of the employer, would run counter to the underlying purpose of the right to strike in our Constitution – to level the playing fields of economic and social power already generally tilted in favour of employers.

19. In this case the union, which represented the dismissed strikers in the wage negotiations and attempted conciliation under section 64(1)(a) before embarking on strike action, was competent also to give the single notice • To hold otherwise would place a greater restriction on the right to strike of non-unionised employees and minority union employees than on majority union employees. • It is these employees, much more than those who are unionised or represented by a majority union, who will feel the lash of a more onerous requirement.

20. The LAC judgment is in line with a number of other LAC • County Fair Foodsv Hotel Liquor Catering Commercial and Allied Workers Union and Others (2006) 27 ILJ 348 (LC).The notice need not specify the precise time of the day when the strike will start. • Tiger Wheels Babelegi (Pty) Ltd t/a TSW International v National Union of Metalworkers of SAand Others (1999) 20 ILJ 677 (LC).Employees are not obliged to commence striking at the time indicated in the notice provided that it is within a reasonable time thereafter. • Transportation Motor Spares v National Union of Metalworkers of SA and Others (1999) 20 ILJ 690 (LC).If employees who have already commenced striking temporarily suspend the strike, they need not issue a fresh notice to strike or refer the dispute for conciliation again.

21. Ahlesa Blankets (pty) Ltd v South African Clothing and textile Workers Union (SACTWU) Case No: CA 5/2010 • FACTS: Employees refused to work on a shift system and partook in an unprotected strike. They were given a ultimatums, a hearing and were ultimately dismissed. • The court stated that when determining whether employees dismissal for participating in an unprotected strike is substantively fair one must have regard to item 6(1) of the code together with item 7(b). Item 6(1) determines whether strike procedures were complied with and the extent of non-compliance. It also looks at whether the strike was in response to unjustified conduct by the employer. • Item 7(b) requires a tribunal to consider a number of factors when determining whether dismissal is an appropriate sanction.

22. While the unprotected strikers had fallen foul of item 6(1) by failing to comply with any strike procedures without provocation their dismissal was not justified in terms of item 7(b). The short duration of the strike, absence of violence during the strike action, and the fact that the employees had a clean disciplinary record made the penalty of dismissal unfair

23. South African Clothing Textile Workers Union (SACTWU) and Others v Yarntex (Pty) Ltd t/a Bertrand Group (PA07/10) [2013] • At 15h30, on 17 September 2008, strike action commenced at Bertrand's premises. The employer provided the strikers with three ultimatums, the unprotected strikers were reminded that they were on a final written warning and that they had to return to work or be dismissed. They were also asked to make representations. They failed to make any representations and were dismissed. • The labour appeal Court found their dismissal to be both substantively and procedurally fair. Procedurally they were given a chance to make representations and substantively they did not comply with strike procedures and were on a final written warning.

24. FAWU obo M Kapesi And 31 OthersvPremier Foods LTD Case no: CA7/2010 • Facts: Employees partook in a violent strikes where a number of non strikers were beaten. Instead of conducting disciplinary proceedings for misconduct violent strikers were dismissed for operational reasons. • The court held that the employer could choose to dismiss violent strikers for operational reasons as oppose to misconduct. • The court found that the employers selection criteria was unfair as it could not be proven that the employees who were retrenched committed violence during the strike. Many witnesses were either afraid to testify or were missing. • Principle: one can dismissed violent strikers for operational reasons but tone needs sufficient proof when applying this as a selection criteria.

25. Summary of principles • Section requires a notice to be given by anyone and not by all the employees who intend to strike • When determining the whether a dismissal of unprotected strikers are substantively fair one must have regard to item 6(1) and item 7(2) of the code. • One can dismiss violent unprotected strikers for operational reasons

26. Transfer of Business

27. Section 197: Outsourcing and franchise agreements • Outsourcing is where a contractor puts out a service in exchange for a fee. The outsourcing contract is usually for a fixed period of time. At the end of the contract it goes out to tender once again • In NEHAWU v UCT (2003) 24 ILJ 95 (CC) the Constitutional Court stated that section 197 could apply to outsourcing. • The Court said that "In deciding whether a business has been transferred as a going concern, regard must be had to the substance and not the form of the transaction. • Relevant factors include • whether assets were transferred , whether or not workers are taken over by the new employer, whether customers are transferred and whether the same business is being carried on by the new employer.”

28. Aviation Union of SA & another v SA Airways (Pty) Ltd & Others [2012] 3 BLLR 211 (CC) • When employees have already been transferred to a company who has won the tender and the contract is terminated the question is whether employees would be transferred back to the tendering company (insourcing) or to the new company (2nd generation outsourcing) • Facts: In 2000 LGM and SAA concluded an outsourcing agreement for 10 years with SAA having the option to renew it. The parties agreed that LGM would provide the facilities management operations for a feeand that all of SAA employees who worked in those departments would be transferred to LGM. In June 2007 SAA terminated the agreement. • Aviation Union sought an assurance from SAA that upon termination of the outsourcing agreement LGM’s employees would be transferred back to SAA. SAA disagreed.

29. The Labour Court held that the section 197 does not apply to a second generation outsourcing or subsequent outsourcing agreement because the agreement does not involve a transfer by an “old employer” to a “new employer” as required by section 197. • The Labour Appeal Court rejected the literal meaning adopted by the Labour Court and preferred an interpretation that would advance the purpose of job protection. • The majority judgment of the Supreme Court of Appeal agreed with the Labour Court that the word “by” in s197 referred to transfers from the old employer to the new employer The minority judgment held, there must have been a transfer of services “from” LGM to SAA.

30. The Constitutional Court stated that what matters during the factual inquiry is the substance of the transaction as opposed to its form. • Substance to be inferred from the cancellation agreement • LGM became obliged to sell all fixed assets back to SAA • LGM to transfer or assign all third party contracts to SAA • Both parties to surrender information pertaining to the scope of work belonging to the other party . • LGM would no longer be entitled to the lease SAA property. • impossible for LGM to continue to conduct its business Court thus concluded that there was a transfer of business.

31. PE Pack 4100 CC v Sanders and Others [2013] 4 BLLR 348 (LAC), • A franchise agreement existed between Cell C and the respondents (as the original franchisees). In April 2010 Cell C cancelled the franchise agreements with the original franchisees and entered into a franchise agreement in respect of the same store with the appellant. • The first respondent, who was an employee of the original franchisees, assumed that his employment contract would automatically be transferred to the new franchisee. • Cell C disagreed and asserted that it was not buying back the franchise but had merely terminated the franchise as it was entitled to do. • The Court a quo held that the takeover of the business by the new franchisee did constitute a transfer of business as a going concern

32. In considering whether section 197 applies in the case of franchise agreements, the LAC stated that the nature of the business model is the key to the resolution of the problem. • Upon termination of the franchise agreement, the franchisor is free to conclude a new franchise agreement with its preferred franchisee. • The core assets and infrastructure and branding used in the business are retained at all times by the franchisor. • The franchisor controlled the business and owned the infrastructure, • The LAC thus found that typical franchise arrangements, such as the one in question, do not trigger the transfer provisions of the LRA.

33. Criticism: The majority judgment gives too much protection to franchisors at the expense of employees. Employees who work at a franchise are denied the application of section 197. The franchisor would be allowed to terminate franchising agreements without providing any protection to employees. • If one applies the principles from the UCT judgement there is a transfer in this case. While the franchisee did not own the assets he did transfer the use of the infrastructure back to cell C and thus to the franchisee. Some of the staff were transferred to the new franchisee. All the customers were transferred to the franchisee as they held cell c contracts. The new franchisee continued the same business as the old franchisee.

34. NUMSA Obo Ketlhoilwe & 44 Others v Abancedisi Labour Services CC • Facts: Kitsanker asked employees, who were provided by a labour broker to sign a code regulating strike action, which they had refused to do. As a result they were not allowed back into the premises. • NUMSA took the labour broker to court alleging that they were unfairly dismissed. The court held that the employees were not dismissed. They were at liberty to sue the respondent for unfair labour practice based on their apparent indefinite suspension or, alternatively, they could resign and sue the respondent for constructive dismissal in terms of section 186(1)(f) of the LRA.

35. NB Principle: The court obiter accepted the principle stated in Nape v INTCS Corporate Solutions (Pty) Ltd(2010) 31 ILJ 2120 (LC); [2010] 8 BLLR 852 (LC where the Labour Court stated that agreements, which provided the client with the power to remove the employee from its premises for any reason whatsoever, was against public policy and an unlawful breach of the employee’s right to fair labour practices in terms of the LRA. The Court held that the labour broker could resist the client’s unlawful demand by undertaking the following: • The labour broker is entitled to approach a court to compel the client not to unfairly dismiss an employee. • If the court were to reinstate an employee into the employ of the labour broker, the labour broker may enforce such an order against the client to give effect to the employee’s rights to fair labour practices.

36. Relevant Principles: • To determine whether there is a transfer of a business one must look at substance over form. Were assets transferred (moveable and immovable) • Were employees transferred • Were customers transferred • Is the new employer doing the same business as the old employer • Were third party contracts transferred. • Were confidential information pertaining to the scope of work transferred

37. Trade Union Liability

38. SA Transport & Allied Workers Union & Another v Garvas (2012) 33 ILJ 1593 (CC) • Facts|: The South African Transport and Allied Workers Union (SATAWU) had organised a gathering in Cape Town. During the gathering, private property was damaged. • Section 11 of the Gatherings Act states that a trade union will be liable unless the damage was not reasonably foreseeable and that it took all reasonable steps within his or its power to prevent the act or omission in question. • SATAWU challenged the constitutional validity of the law that imposed liability on organisers. The Union contended that the defence allowed by the law unjustifiably limits the right to freedom of assembly in section 17 the Constitution. It argued that one could not take reasonable steps to prevent damage if the damage was not reasonably foreseeable.

39. Justice Jafta of the Constitutional Court stated that t if one interprets “and” to mean “or” this would avoid the absurd interpretation and by so doing promote the right of freedom of assembly. • In a majority judgment, Mogoeng CJ held that the law aims to afford victims effective recourse where a gathering becomes destructive and results in injury, loss of property or life. The majority held that the defence provided for by the law is viable and that the limitation on the right to freedom of assembly in section 17 of the Constitution is reasonable and justifiable, because it serves an important purpose and reasonably balances the conflicting rights of organizers, potential participants and often vulnerable and helpless victims of a gathering or demonstration which degenerates into violence.

40. Ngcobo v FAWU [2012] 10 BLLR 1035 (HCKZN) • Two employees were members of the Food and allied workers union • Their employer dismissed them for operational reasons. • They instructed FAWU to handle their unfair dismissal claims . • FAWU failed to do so • They instituted action in the High Court alleging that FAWU owed them the money that Nestlé should have been ordered to pay them. • Justice Swain decided that FAWU had agreed to assist them but failed to do so and ordered FAWU to pay 12 months damages of R214,464 • This was upheld by the SCA • Principle: A trade union could be held liable for breach of contract if it fails to act on behalf of its members when it is required to do so.

41. Summary of principles • A trade union would be liable for damage caused during protest organised by the union if they fail to take reasonable steps to prevent such damage. • Where a trade union fails to act on its mandate it could held accountable to its members