Claims for damages in terms of s77(3) of the Basic Conditions of Employment Act

Aadil Patel and Inez Moosa, Cliffe Dekker Hofmeyr

In the recent judgment of Rand Water v Buckle & Stoop the Labour Appeal Court held that the Labour Court has the requisite jurisdiction to entertain a claim for damages in terms of s77(3) of the Basic Conditions of Employment Act, No 75 of 1997 (BCEA) were such damages are linked to the employment contract.

The employees had been dismissed for defrauding Rand Water of approximately R8 million and referred unfair dismissal disputes to the CCMA. Rand Water brought an application to have the matter referred to the Labour Court based on the complexity of the matter and their intention to bring a counterclaim for losses incurred.

At the Labour Court the employee’s raised a point in limine that the Labour Court lacked the jurisdiction to entertain the dispute.

The Labour Court (the court a quo) held that a claim arising from fraud amounts to a delict. Section 77(3) provides that the Labour Court has concurrent jurisdiction with the civil courts to hear and determine “any matter concerning a contract of employment, irrespective of whether any basic condition of employment constitutes a term of that contract.”

The Labour Court held that for the claim to “concern a contract of employment” it should have a direct bearing or effect on the employment contract. The claim of fraud did not have a bearing on the existence of the contract of employment as at the stage of the hearing the employment contract was no longer in existence. The court held that it did not have the requisite jurisdiction to entertain the counter claim.

On appeal the Labour Appeal Court held that on the pleadings it was demonstrated that the counter claim arose from the same facts as the employees’ dismissal dispute. The Labour Appeal Court held that the fraud was not committed against Rand Water by people unconnected to it but rather by employees’ abusing the positions that they held at Rand Water.

The Labour Appeal Court held that the Labour Court has concurrent powers with the High Courts in relation to matters concerning an employment contract. As such the Labour Court has jurisdiction over any claim for damages so long as it is connected to an employment contract. Claims are not limited to a specific category (liquid or illiquid) and as such all categories of damages are included. Furthermore a counter claim does not have to be connected to the claim in reconvention.

As a result the Labour Court has the requisite jurisdiction to entertain any claim for damages connected to an employment contract.

For more information please contact Aadil Patel, Director and National Practice Head, or Inez Moosa, Associate, Employment, Cliffe Dekker Hofmeyr on (011) 562 1124 or email [email protected] or [email protected]