Home›General›Law Reports – April 2011

Law Reports – April 2011

Law Reports – April 2011

Advocate Nicolene Erasmus

Urgent application to restrain transfer of health services from municipalities to provincial government

IMATU & another v Department of Health: Eastern Cape Province & others [2011] 4 BLLR 366 (LC)

In their (second) application for an order interdicting the transfer of primary health care workers from the municipalities in the Eastern Cape Province to the provincial administration, the applicants contended that the transfers would contravene the provisions of section 197 of the LRA. The respondents denied that the terms and conditions of employment would be changed, and further opposed the application on the basis that it was not urgent.

The court noted that the legal requirements to be satisfied in order to succeed in an urgent application are as follows:

(a) the applicant has to either show a clear right or a prima facie right in the case of interim relief;

(b) a well-grounded apprehension of irreparable harm if the relief is not granted on an urgent basis;

(d) that the applicant has no other satisfactory relief.

The case of the applicants is based on the reading of section 197(2) with that of section 197(6) of the LRA. Section 197(2) provides that:

“(2) If a transfer of a business takes place, unless otherwise agreed in terms of subsection (6) – the new employer is automatically substituted in the place of the old employer in respect of all contracts of employment in existence immediately before the date of transfer;

(a)all the rights and obligations between the old employer and an employee at the time of the transfer continue in force as if they had been rights and obligations between the new employer and the employee;
(b)anything done before the transfer by or in relation to the old employer, including the dismissal of an employee or the commission of an unfair labour practice or act of unfair discrimination, is considered to have been done by or in relation to the new employer; and
(c)the transfer does not interrupt an employee’s continuity of employment, and an employee’s contract of employment continues with the new employer as if with the old employer.”

As far as the urgency is concerned, the court notes that the question is whether the applicants have discharged their duty of showing that the matter is urgent and whether or not they deserve urgent relief. Do the facts support the contention that the matter is urgent and therefore justify jumping the queue and are there no other satisfactory remedies available to the applicants in the event that the respondents effect the transfers?

The court is of the opinion that the matter is not urgent because:

the applicants have been aware for the past three years what the intentions and plans of the respondents were regarding the transfer of the health services to the first respondent
on their own version they were already aware of the plans of the fifth and sixth respondents since the meeting of the South African Local Government Bargaining Council (the “SALGBC”) which was held on the 24 January 2010. At that meeting the applicants raised their concerns about the stand taken by the two respondents but did nothing since then until the launch of their first application.

According to the applicants the matter became urgent when they received information (a day before the hearing of their first urgent application, which was struck from the roll due lack of urgency and because the court was of the view that the applicants had other satisfactory remedies) indicating that the first respondent had held a meeting where the affected employees were informed of their eminent transfers. That meeting was held on 3 November 2010, but no explanation was tendered as to why – if their members were told about the transfers on the 3 November 2010, they only came to know about it on 22 November 2010. Another weakness in the applicants’ case is that despite this information having come to their attention a day before the hearing of the first matter they do not explain why same was not disclosed to the court on that day. It is thus my view that all this is a fabrication or an attempt at misleading this court.

In the light of the above discussion, the view expressed in the earlier judgment of this court still stands. Thus the case of the applicants stands to fail again on the ground of lack of urgency alone. In addition to this, the court held that the applicants have other satisfactory remedies in the event that the respondents fail to comply with the requirements of section 197 of the LRA.

The applicants’ application was dismissed with no order as to costs.

Automatic termination of contract of employment

Mahlamu v CCMA & others [2011] 4 BLLR 381 (LC)

The third respondent (“employer”) employed the applicant (“employee”) as a security guard. Clause 2.1 of the contract of employment reads as follows:

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.

During January and February 2009, Bombela (the client) advised the employer that the armed escort services would end with immediate effect. The employer informed the employee, and in the absence of alternative positions, the employee’s services were terminated.

At the arbitration hearing the arbitrator held that the employee’s employment contract specified that the employee’s employment would terminate automatically if for any reason the client no longer required the services of the employee. This had happened; the employee’s employment had terminated automatically and there was therefore no “dismissal” for the purposes of section 192 of the LRA. The employee’s basis for review was that the commissioner committed a reviewable irregularity in the form of a material error of law by finding that no dismissal had taken place.

In dealing with this question, the Labour Appeal Court in SA Post Office Ltd v Mampeule [2010] 10 BLLR 1052 (LAC), upheld the Labour Court’s ruling that Mampeule had been dismissed. Mampeule, the chief executive officer and a director of the company, was employed in terms of a contract that provided that his employment would terminate “automatically and simultaneously” if he ceased for any reason to hold the office of director. When the shareholders removed Mampeule as a director, his employer claimed that his employment contract had terminated automatically the moment he ceased to be a director and that there was no “dismissal” for the purposes of the Act.

The Labour Appeal Court referred to section 5 of the LRA[1] and noted that the onus rests onSA Post Office to establish that the ‘automatic termination’ clause prevails over the relevant provisions in the Act and clause 9.1 of the contract – a clause that established employment for a fixed term of five years subject to the employer’s right to terminate the contract with due regard to fair labour practices.

In the present matter the employer relies on the cancellation of the contract by Bombela as the event giving rise to the automatic termination of the employee’s contract. This “automatic termination” provision was triggered by a third party – the client, which means that the employee’s security of employment was entirely dependent on the will of the client. The client could at any time, for any reason, simply state that the employee’s services were no longer required and having done so, that resulted in a termination of the contract, automatically and by the operation of law, leaving the employee with no right of recourse. For the reasons that follow, and to the extent that the commissioner regarded this proposition to be the applicable law, he committed a material error of law that must necessarily have the result that his ruling is reviewed and set aside.

Similar clauses are found in contracts between labour brokers and their employees. The “automatic termination” clause typically provides that the contract between the labour brokers and its employee terminates automatically if and when the client no longer requires the services of the employee.

The court noted that a contractual device that renders a termination of a contract of employment to be something other than a dismissal, with the result that the employee is denied the right to challenge the fairness thereof is precisely the mischief that section 5 of the Act prohibits. However, this does not mean that there is a “dismissal” in those cases where the end of an agreed fixed term is defined by the occurrence of a particular event. There is no dismissal when the agreed and anticipated event materialises subject to the employee’s right to contend that a dismissal has occurred where the employer fails or refuses to renew a fixed-term contract and an employee reasonably expected the employer to renew the contract. In other words, if parties to an employment contract agree that the employee will be engaged for a fixed term, the end of the term being defined by the happening of a specified event, there is no conversion of a right not to be unfairly dismissed into a conditional right.

Dismissal of probationary employees employed for a fixed term

Mangope v SA Football Association [2011] 4 BLLR 391 (LC)

Mangope, the employee was appointed on a fixed term basis for three years. Provision was made for a probationary period of 3 months, the purpose of which was to afford the employer an opportunity to evaluate the performance of the employee before it confirms the appointment.

Prior to his dismissal, the employee’s probationary period was extended for another month, the reason being the fact that he had been off due to ill health and he was expected to have served the full uninterrupted period of 3 months. The first time he became aware of the complaints which could impact on his contract was during the extended period of probation when he was handed a letter of termination of employment.

It is the employee’s case that the employer ought to have evaluated his work performance and further that the employer ought to have given reasonable evaluation, instruction, training and guidance during the probationary period. This has not been done – in fact, he was often told by the employer that it was happy with his performance. At no stage was the employee given the opportunity to make representations regarding his unsatisfactory performance. The termination of his employment contract could not have been objectively and properly made in the absence of affording him an opportunity to make representations. It was the employer’s case that the employee’s performance had been poor, and that the matter could not be resolved by way of motion proceedings due to the disputes of fact.

The court held that the remedies of an employee whose employment contract has been terminated by an employer can be found in either the concept of breach of contract under the common law or the concept of unfair dismissal under the LRA. In terms of the LRA, an employee who claims unfair dismissal has to show that there was a dismissal and once that has been established the employer has to show that the dismissal was for a fair reason. In terms of the common law any material breach of the terms of an employment contract can be regarded as repudiation of the contract entitling the “innocent” party the right to accept the repudiation and sue for such a breach. This party may elect to hold the other party to the contract and claim specific performance or claim damages caused by the breach. Breach of a contract generally arises when an employee or an employer fails in a material way to comply with his or her duties as set out in the contract. In a fixed-term contract damages are generally calculated on the basis of what the employee would have earned for the remainder of the period of the contract but for the unlawful and premature termination of the contract.

There was no evidence before the court that the employee was advised that his performance was below standard. The employer did receive complaints about the work of the employee, which complaints were brought to the attention of the employee. In terms of Clause 5.5 of the contract, the employee should have been given an opportunity to make representations regarding his poor performance.

In summary, the court found as follows:

a.Regard being had to the cause of action in this matter, there are no disputes of facts in relation to the breach of the contract of employment.
b.The employer in terminating the employment contract of the employee failed to comply with its duties as set out in the provisions of the employment contract.
c.The employee has as a result of the unlawful conduct of the employer suffered damages.

The following order was made:

The decision of the employer to terminate the employee’s contract on 23 November 2009 was unlawful.
The termination of the contract amounts to breach of contract.
The employer is ordered to pay the employee in the amount of R1 777 000 as damages occasioned by the unlawful repudiation of the contract of employment of the employee.

For more information contact Nicolene Erasmus [email protected]

[1] 5. Protection of employees and persons seeking employment.—

(1) No person may discriminate against an employee for exercising any right conferred by this Act.

(2) Without limiting the general protection conferred by subsection (1), no person may do, or threaten to do, any of the following—

(a) require an employee or a person seeking employment—

(i) not to be a member of a trade union or work-place forum;

(ii) not to become a member of a trade union or work-place forum; or

(iii) to give up membership of a trade union or work-place forum;

(b) prevent an employee or a person seeking employment from exercising any right conferred by this Act or from participating in any proceedings in terms of this Act; or

(i) membership of a trade union or work-place forum;

(ii) participation in forming a trade union or federation of trade unions or establishing a work-place forum;

(iii) participation in the lawful activities of a trade union, federation of trade unions or work-place forum;

(iv) failure or refusal to do something that an employer may not lawfully permit or require an employee to do;

(v) disclosure of information that the employee is lawfully entitled or required to give to another person;

(vi) exercise of any right conferred by this Act; or

(vii) participation in any proceedings in terms of this Act.

(3) No person may advantage, or promise to advantage, an employee or a person seeking employment in exchange for that person not exercising any right conferred by this Act or not participating in any proceedings in terms of this Act. However, nothing in this section precludes the parties to a dispute from concluding an agreement to settle that dispute.

(4) A provision in any contract, whether entered into before or after the commencement of this Act, that directly or indirectly contradicts or limits any provision of section 4, or this section is invalid, unless the contractual provision is permitted by this Act.