Van Niekerk J, with the benefit of the Constitutional Court judgment in AUSA v SAA & Others, revisited the factual test applicable to the transfer of a business as a going concern.

In this regard and at para [37] Van Niekerk J held that:-

1. “The fact that Phoenix and Tube City will not take transfer of the plants is an important factor, but not in itself an overriding one”.

2. “the factual circumstances particularly to be taken into account in determining whether the conditions for a transfer of whole or part of a business as a going concern for the purposes of s 197 are met are primarily”

2.1. “the degree of similarity of the activity carried on before and after the transfer and the type of undertaking concerned”, and

2.2. “the question whether or not the majority of the employees are to be taken over by the new employers”.

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In South African Municipal Workers Union (SAMWU) v South African Local Government Association [2011] ZALAC 22 Mlambo JP at para [15] found that a collective agreement should be interpreted in line with the dicta in National Education Health and Allied Workers Union v University of Cape Town and Others [2002] ZACC 27; 2003 (3) SA 1 (CC) the Constitutional Court at para 41 stated that “[t]he declared purpose of the LRA ‘is to advance economic development, social justice, labour peace and the democratisation of the workplace’. This is to be achieved by fulfilling its primary objects, which include giving effect to s 23 of the Constitution. It lays down the parameters of its interpretation by enjoining those responsible for its application to interpret it in compliance with the Constitution and South Africa’s international obligations. The LRA must therefore be purposively construed in order to give effect to the Constitution”.

Mlambo JP then at para [16] gave an indication of exactly how the said dicta should be applied by recording that the commissioner presiding “proceeded to interpret the agreement in a practical manner that he deemed was fair and equitable in those circumstances” applicable.

Van Niekerk J once put it mildly by stating that “Section 135 (5) [of the Labour Relations Act, Act 66 of 1995 (‘the LRA’), to the extent that it considers the issuing of a certificate to be mandatory, sits uncomfortably with those provisions of the Act that regulate the statutory dispute resolution process beyond the conciliation stage”.

Sec 135(5)(a) of the LRA records that:-

“When a conciliation has failed, or, at the end of the 30 day period or any further period agreed between the parties… [t]he commissioner must issue a certificate stating whether or not the dispute had been resolved”

The section it sits “most” uncomfortable with is section 191(5)(1)(a) of the LRA which records that: –

“If a council or a commissioner has certified that the dispute remains unresolved, or, if 30 days have expired since the council or the Commission received the referral and the dispute remains unresolved… [t]he council or the Commission must arbitrate the dispute at the request of the employee…”

In Fidelity Guards Holdings (Pty) Ltd v Epstein and others [2000] ZALAC 8 Zondo JP at para [12] held that

“It is the setting aside of the certificate of outcome that would render the CCMA or the council to be without the jurisdiction to arbitrate”

He then stressed this point para [14] and recorded that: –

“I also agree with the views expressed by the court a quo in par 15 of its judgement. There the learned judge had this to say: “‘To my mind jurisdiction of the court under section 191(5) flows from the existence of the appropriate certificate in those classes of dispute which have to be referred to the court'”.

Van Niekerk J in Bombardier Transportation (Pty) Ltd v Mtiya and Others [2010] ZALC 34; (2010) 31 ILJ 2065 (LC) ; [2010] 8 BLLR 840 (LC) (“the Bombardier-case”) at para [14] held that “[a] certificate of outcome is no more than a document issued by a commissioner stating that on a particular day, a dispute referred to the CCMA for conciliation remained unresolved. It does not confer jurisdiction on the CCMA to do anything that the CCMA is not empowered to do, nor does it preclude the CCMA from exercising any of its statutory powers. In short a certificate of outcome has nothing to do with jurisdiction. If a party wishes to challenge the CCMA jurisdiction to deal with an unfair dismissal dispute, it may do so, whether or not the certificate of outcome has been issued. Jurisdiction is not granted or afforded to it by a CCMA commissioner issuing a certificate of outcome. Jurisdiction either exists as the fact or it does not”.

This view is based on interpreting section 135(5)(a) of the LRA in a manner so as to accentuate the fact that the certificate is to provide clarity as to whether the dispute was resolved or not. This view however appear to have lost site of the next section, i.e. section 136 of the LRA which records that “[i]f this Act requires a dispute to be resolved through arbitration, the Commission must appoint a commissioner to arbitrate that dispute if a commissioner had issued a certificate stating that the dispute remains unresolved; and within 90 days after the date on which that certificate was issued, any party to the dispute has requested that the dispute be resolved through arbitration”.

This section makes it clear that the certificate must stipulate that the dispute remains unresolved. One might thus pose the question whether the CCMA would have jurisdiction to arbitrate the dispute where the certificate erroneously records that the dispute has been resolved?

What immediately comes to mind is the famed dicta of Zondo JP in Fidelity Guards Holdings (Pty) Ltd v Epstein and others [2000] ZALAC 8 (“the Fidelity Guards-case”) where he at para [12] clearly stated that “[i]t is the setting aside of the certificate of outcome that would render the CCMA or the council to be without the jurisdiction to arbitrate” and at para [14] that “I also agree with the views expressed by the court a quo in par 15 of its judgement. There the learned judge had this to say: ‘To my mind jurisdiction of the court under section 191(5) flows from the existence of the appropriate certificate in those classes of dispute which have to be referred to the court'”.

The said dicta on the face of it seems in direct conflict with the Bombardier-case but Van Niekerk J overcomes this problem by at parra [9] recording that it “is not clear to me that the judgment serves as authority for the assertion that a certificate of outcome affords the CCMA jurisdiction to arbitrate an unfair dismissal dispute. In truth, Fidelity Guards is concerned only with the proposition that a failure to review an administrative act timeously may result in that act acquiring the force of law (in the sense that it will not be susceptible to review) even though the act is invalid and unlawful”.

This is clearly not the case, Zondo JP’s remarks are clearly to the fact that the issuing of a certificate of outcome constitutes a jurisdictional fact entitling the matter to proceed to arbitration.

One might further pose the question as to why Van Niekerk J’s judgment in the Bombardier-case is even mentioned if it appear clearly in conflict with the dicta of the Labour Appeal Court.

The need for further scrutiny came about in consequence of the following statement by Landman AJA in BMW South Africa (Pty) Ltd v NUMSA obo Members [2011] ZALAC 24 (“the BMW-case”) at para [30] where he states that “[t]he Labour Court declined to review and set aside the CCMA’s certificate of outcome citing Van Niekerk J in Bombadier Transportation (Pty) Ltd v Miya NO and Others (2010) 8 BLLR 840 (LC) at para 15. This approach is the correct one. See Waglay JA (as he then was) in Gillet Exhaust Technology (Pty) Ltd t/a Tennaco v NUMSA on behalf of Members and Another (2010) 31 ILJ 2552 (LAC) [“the Gillet-case”] at para 17″.

At the outset it need be noted that the said case dealt with a certificate issued in relation to strike action (where neither sections 135 or 136 of the LRA find application). Waglay DJP in the Gillet-case at para [17] also dealt with a certificate where sections 135 and 136 of the LRA where not applicable and correctly recorded that “[t]he appellant’s prayer for the setting aside of the certificate of non-resolution of the dispute is misconceived. I say this because whether the certificate of non-resolution is valid or not, in this case this did not affect the legality of the strike the employees may have been planning to embark upon. This is so because in terms of s64(1) (a) (i) and (ii) of the Act a strike will be a protected strike even if there is no certificate of non-resolution of the dispute provided that a period of 30 days from the date of the referral of the dispute to conciliation has lapsed and all the other requirements of s64 of the Act have been complied with”.

There is thus no nexus between the Bombardier-case and the BMW-case. In as far as the Court a quo in the BMW-case relied on Van Niekerk J’s dicta it may be argued that it is correct as in matters where sections 135 and 136 are not applicable, Van Niekerk J’s remarks cannot be faulted. It is further true that sections 135 and 136 of the LRA are unfortunate and that Van Niekerk J’s approach is to be preferred and that statutory intervention pertaining to the said sections are required. The judgment however remains patently in conflict with that of Fidelity Guards and Ladman AJA’s acceptance of the judgment must thus be interpreted as both obiter and limited to its effect on certificates where sections 135 and 136 of the LRA finds no application.

The employee was employed in terms of a number of renewed fixed term contracts.

 

The employee was eventually offered a further fixed term contract which the employee declined on the basis as surmised by the LAC in the following terms “[o]nce an employee has established a reasonable expectation of a renewal of a fixed term contract, an obligation is created to renew this contract indefinitely on the same or similar terms, subject to a fair reason for refusing to do so. Therefore, once a contract has been renewed because there was a reasonable expectation of a renewal, taking into account the series renewal of the employee’s fixed term contract in the past, this expectation creates an obligation to renew indefinitely and, in this fashion, the obligation transforms so as to create a duty upon the employer to offer the employer a permanent contract”. [at para 16]

 

The Court, per Davies JA found that had the employee not been offered a further fixed term contract, then depending on the evidence, she could be entitled to proceed in terms of s186(1)(b) of the LRA. That would, however, not be a case based, as is this one, on a different form of employment, being a permanent contract. The words chosen by the legislature, absent an amendment to the legislation, cannot carry the burden of third respondent’s case in that it covers a restrictive set of circumstances, namely a reasonable expectation of a renewal of that which had previously governed the employment relationship, namely a fixed term contract which had previously been enjoyed, which had now expired and, by virtue of the factual matrix created, at best, a reasonable expectation of a renewal. [at paras 21 and 22].

 

One need however differentiate between a true fixed term contract and one used merely to circumvent either probation or the application of the law pertaining to dismissal

The employee obtained an arbitration award in her favour awarding her compensation in the amount of R 95 401. The employee however sought reinstatement and took the award on review. The employer some time later applied to have the review application dismissed on the basis of the employee’s failure to prosecute her review application. The employer succeeded and the employee shortly thereafter sought payment of the R 95 401 awarded to her. This despite, the employee then sought leave to appeal against the order dismissing her review application.

The Labour Court, per Lallie AJ, found that on the doctrine of peremption was applicable as the employee in seeking payment of the amount awarded accepted the order dismissing the review application. The employee was thus precluded from applying for leave to appeal as that would constitute her taking up two totally inconsistent positions.

The Labour Appeal Court recently stressed certain principles to reinstatement.  As such it was remarked that onus plays no role in determining whether an employee should be reinstated and that the decision is solely motivated by fairness to both parties.

 

In casu the employee was reinstated following an arbitration hearing where his dismissal was found to have been both procedurally and substantively unfair.  This decision  was unsuccessfully taken on review and consequently on appeal to the Labour Appeal Court.  The Labour Appeal Court found that the Labour Court correctly concluded that the award was not susceptible to review.  the Labour Appeal Court however went further and based on the fact that  the employee was not keen to work in a certain area and that a period of six years have passed since the issuing of the award, set aside the order to reinstate.  It might be noted that both these issue arose after the award was issued.

 

The employee appealed the matter to the Supreme Court of Appeal where Snyders J concluded that “[w]hen the LAC embarked on an investigation of facts that occurred subsequent to the award in relation to a determination of an appropriate remedy, it acted as if it was sitting as a tribunal of first instance and was therefore at large to impose such remedy as it deemed appropriate – which it was not. The LAC remained bound to the same test in relation to the remedy as to the merits of the appeal before it. As such the LAC misconceived the nature of its function, by imposing a remedy it regarded as appropriate in the circumstances having itself found that there was no ‘defect’ in the award made” [at paragraph 10].

 

The conclusion reached by Snyders J is not surprising and correct.  What is however of interest is the Labour Appeal Court’s recent willingness to come to the assistance of employers in circumstances where they are required (subsequent to an unsuccessful appeal) to retrospectively reinstate an employee.

In casu the employer by way of letter and in the absence of any enquiry terminated the employment of the employee.  This was done, apparently on advice from the Department of Home affairs, on the basis of the employee using South Africa using a false SA Identity document.

The Labour Appeal Court, per Ndlovu JA concluded that it was never found that the employee’s Identity Document was false and that as such the dismissal was both procedurally and substantively unfair (at paragraphs 21, 27 and 28).

Ndlovu JA however found that the employee should not be reinstated as the trust relationship had broken down completely and irretrievably, in consequence of certain post dismissal statements made by the employee in relation to senior personnel of the employer (at paragraph 34)

Interestingly Ndlovu JA expressly reiterated that “[w]hether or not an unfairly dismissed employee should be reinstated, as contemplated in section 193(2) of the LRA, the overriding consideration in the enquiry should be the underlying notion of fairness between the parties, rather than the legal onus, and that ‘[f]airness ought to be assessed objectively on the facts of each case bearing in mind that the core value of the LRA is security of employment.’ (Equity Aviation Services (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration & others (2008) 29 ILJ 2507; also reported as [2008] ZACC 16; [2008] 12 BLLR 1129 (CC) at para 39)” (at paragraph 34).

It is thus clear that the Labour Appeal Court is giving due effect to the pronouncement by the Constitutional Court pertaining to fairness to both parties when considering reinstating an employee.