CCMAil
September 2007
CONTENTS
CCMA CASE ALERTS ................................................................................................................................................................................................. 2
LABOUR COURT AND APPEAL COURT JUDGEMENTS ......................................................................................................................................... 4
DECISIONS: OTHER DISPUTE RESOLUTION FORUMS .......................................................................................................................................... 7
20TH ANNUAL LABOUR LAW CONFERENCE..……………………………………………………………………………………………………………….10
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Workers with care responsibility: Is work-family integration adequately addressed in South African Labour law .............................. ….…..11
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Effective and fair performance management: Undesirable consequences ................................................................................................. ..13
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When does continued employment relationship become intolerable .......................................................................................................... ..15
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Fixed term contracts: The permanence of the temporary ............................................................................................................................. 17
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The rapid increase of Chinese imports: How do we assess the industrial, labour and socio – economics?…………….……………………21
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Mediating interest disputes better................................................................................................................................ ……………………….24
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Managing diversity in the workplace: A social justice imperative ................................................................................ ……………………….26
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The dismissal of public service employees: Applicability of the PAJA ........................................................................ ……………………….28
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Case law update: Equity in promotion and appointments ........................................................................................... ……………………….31
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Second generation contracting-out: In or out? ............................................................................................................ ……………………….33
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Appointments and promotions: Are the legal requirements clear enough?……………………………………………………………………….36
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Case law update: Individual and collective labour law………………………………………………………………………………………………40
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Transforming workplace discipline: The case for a more informal disciplinary procedure………………………………………………………48
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BCEA: Questions and answers………………………………………………………………………………………………………………………..50
GLOBAL TRENDS
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Termination of employment – The conciliation process ........................................................................................................ ……………………53
LABOUR RELATIONS IN AFRICA
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Internationally recognised core labour standards in Tanzania ......................................................................................... ……………………….56
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Job creation in Mozambique: Is labour law reform the answer…………………………………………………………………………………………59
EDITORIAL TEAM
Alucia Mdaka
Lucky Moloi
Nersan Govender
Poso Mogale
September 2007– Page 1
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By Alucia Mdaka
MP6881-06 WESUSA v Isidingo Security Services –
Commissioner: Mohlala
Collective bargaining – Organisational rights – Union with 3%
membership claiming to be majority.
The applicant, a registered trade union, sought access rights to
the respondent’s workplace and stop order payment facility for
its members’ fees. The respondent denied granting the applicant
those rights. It contended that the trade union membership
constituted only 3% of its total workforce and, therefore, it was
not sufficiently representative. It claimed that its operations were
centralised at the head office, and the various sites throughout
the country dealt with minor operational issues. However, the
applicant argued that the figure cited by the respondent was
incorrect, indicating that its total workforce was 5000.
Held: That the applicant does not meet the requirements of s 21
of the LRA, therefore, cannot be granted the organisational
rights in terms of ss 12 and 13 of the LRA. The application was,
therefore, dismissed.
MP924-07 NUM obo Moeng v Douglas Colliery –
Commissioner: Mohlala
Unfair labour practice – Promotion - Employer declining to
appoint employee to promotional post because he did not meet
requirements.
The applicant had applied unsuccessfully for the post which had
been advertised internally and externally. He contended that the
respondent had unfairly failed to promote him, claiming that he
had all the relevant experience required for the position.
The respondent claimed that, initially, the applicant was not short
listed as he did not meet the requirements. He was subsequently
short listed to the post because NUM had requested that he be
given exposure for future opportunities. It indicated that the
applicant was the third best candidate at the interviews, and was
sent for psychometric test after the first two candidates had
declined the offer. The respondent also claimed that the
applicant’s outcome of the psychometric test had revealed that
the applicant lacked certain skills. It was, therefore,
recommended that the post be re-advertised.
Noted: That the right to appoint and promote employees is
within management prerogative as long as it is exercised fairly
and equitably. The commissioner noted that the respondent’s
reasons for not appointing the applicant were reasonable.
Held: That the respondent’s failure to promote the applicant was
not unfair and did not constitute an unfair labour practice. The
application was, therefore, dismissed.
MP1761-06 SACCAWU obo Malekana v Ellerine Holdings –
Commissioner: Byrne
Constructive dismissal – Employee resigning because of
perceived lack of sympathy by employer after armed robbery at
workplace.
The applicant had suffered a psychological trauma after the
store he worked at was robbed. He took two months’ unpaid
leave to be treated by a traditional healer. The applicant claimed
that during his absence, the respondent had phoned him and
ordered him to return to work. It also instructed him to sign an
acknowledgement of debt for the money that was stolen. The
applicant resigned as he felt that the respondent was not
sympathetic to him, and alleged that he had been constructively
dismissed.
The respondent claimed that the applicant had been sent for
counselling and refused to attend. It denied forcing the applicant
to return to work, indicating that the reason for phoning him was
to check progress. It also claimed that the deduction made was
to repay the stolen money because the applicant had failed to
drop it into the safe.
Noted: That the respondent had offered the applicant an
alternative employment in a nearby branch but the applicant had
declined the offer.
Also noted: That the applicant had not made any attempt to
contact the respondent to inform it that he was not happy about
the situation.
Further noted: That the applicant’s manager had called him
upon receiving the resignation letter to discuss the matter.
Held: That the applicant’s resignation was not related to any act
or omission by the respondent. The commissioner held that
while the respondent might have shown more sympathy, the
applicant had not given management an opportunity to remedy
his complaints. The applicant was, therefore, not constructively
dismissed.
WE5165 – 06 FAWU obo Andrews & Others v Rohloff
Administration – Commissioner: Goldman
Theft – Employees dismissed for refusing to undergo polygraph
test.
The applicants were dismissed after two chicken fillets went
missing in one of the respondent’s outlets. The respondent sent
all its employees to undergo a polygraph test, but the applicants
refused to do so. They were charged with unauthorised removal
of company property and for refusal to undergo polygraph test.
The applicants were on a final written warning for a similar
offence.
September 2007– Page 2
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The applicants denied being involved in a ring of theft. They
contended that the charge for refusal to undergo polygraph test
was invalid. They indicated that they had refused to undergo a
polygraph test because they were not bound to do so. They
claimed that other employees who had been previously found
guilty for the same offence were not dismissed.
Noted: That the only fact from which the respondent had
inferred the applicants’ guilt was their refusal to undergo a
polygraph test. The commissioner noted that it is trite that
polygraph testing is not regarded by the law as being 100%
reliable and for that reason the findings with no other evidence
cannot be regarded as accurate. The applicants were not
contractually bound to undergo polygraph test.
Also noted: That the respondent had appeared to be
inconsistent in disciplining its employees, in that one of its
employees who had confessed to stealing money was not
dismissed.
Held: That the applicants’ dismissals were both procedurally and
substantively unfair. The respondent was, therefore, ordered to
compensate the applicants an amount equivalent to two months’
remuneration.
September 2007– Page 3
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By Poso Mogale
Labour Appeal Court: JA12/05
Engen Petroleum Ltd v CCMA & Others: Judges Zondo,
Japie & Musi (Acting)
Shockingly excessive sanction – Own opinion v reasonable
employer test – Interference with sanction – Award set aside.
The employee, who had a clean disciplinary record for eight to
ten years, was dismissed for tampering with the employer’s
truck monitoring system. That was in contravention of company
policy, which provided that such a contravention was “likely” to
result in a summary dismissal. At the CCMA, the arbitrator
found that the sanction of dismissal was too harsh and ordered
reinstatement. In doing so, the arbitrator had applied his “own
approach” to determine the substantive fairness of the
dismissal.
On review at the Labour Court, the application was dismissed. It
was held that the arbitrator had not committed a gross
irregularity and had not exceeded his powers.
The Labour Appeal Court was required to determine whether an
arbitrator is required to have regard to “his own opinion” on the
fairness of the dismissal or whether he should follow precedent,
inter alia, from the Supreme Court of Appeal (SCA) by applying
the “reasonable employer” test.
Noted: That an arbitrator needs to exercise a moral or value
judgment on the fairness of the dismissal as a sanction.
Also noted: That in following precedent set by the SCA, the
question was whether the sanction of dismissal had been
shockingly excessive and whether no reasonable employer
would have dismissed the employee.
Held: That there were no grounds for interfering with the
employer’s sanction of dismissal. The appeal was upheld and
the award set aside.
Case references
Nampak Corrugated Wadeville v Khoza (1999) 20 ILJ 598
(LAC)
County Fair Foods (Pty) Ltd v Commission for Conciliation,
Mediation & Arbitration & Others (1999) 20 ILJ 1701 (LAC)
Toyota SA Motors (Pty) Ltd v Radebe & Others (2000) 21 ILJ
340 (LAC)
Rustenburg Platinum Mines Ltd v CCMA & Others 2007 (1) SA
576 (A)
British Leyland UK Ltd v Swift (1981) IRLR 91 (CA)
Building Construction & Allied Workers Union of SA & Another v
West Rand Brick Works (Pty) Ltd (1984) 5 ILJ 69 (IC)
Govender v Sasko (Pty) Ltd t/a Richards Bay Bakery (1990) 11
ILJ 1282 (IC)
Chemical Workers Industrial Union v Reckitt & Coleman SA
(Pty) Ltd (1990) 11 ILJ 1319 (IC)
Tubecon (Pty) Ltd v NUMSA (1991) 12 ILJ 437 (ARB)
Transvaal Pressed Nuts, Bolts & Rivets (Pty) Ltd v President of
the Industrial Court & Others (1989) 10 ILJ 48 (N)
Trident Steel (Pty) Ltd v John NO & Others (1987) 8 ILJ 27 (W)
De Beers Consolidated Mines Ltd v CCMA (2000) 21 ILJ 1051
(LAC)
Labour Appeal Court: JA51/03
NEWU v CCMA & Others: Judges Zondo, Japie & Musi
(Acting)
Employer remedy for unfair labour practices – EEA and LRA to
be declared unconstitutional – Compelling reluctant employee
to render services – Fair procedure for resignation.
The employee had resigned with immediate effect about a
month after he was elected as deputy president of the applicant
(NEWU). His reason was “because of the manner in which the
applicant was run”. The applicant referred a dispute to the
CCMA seeking compensation, contending that the employee
had not followed a fair procedure when resigning and that that
had violated its constitutional right to fair labour practices.
A case management officer informed the applicant that the
CCMA lacked jurisdiction to entertain the matter. The applicant
then launched a review application on the ruling and sought an
order declaring the Labour Relations Act (LRA) and the
Employment Equity Act (EEA) to be unconstitutional because
they failed to provide employers with a remedy against unfair
labour practices. The Labour Court dismissed the application
and refused to grant leave to appeal. Leave was subsequently
granted on petition.
Noted: That the Constitution of the Republic of South Africa
gives everyone the right to fair labour practices. It was noted
that while actions by employers against employees were
possible under the 1956 LRA, no cases had been reported in
which employers sued employees for an unfair or unlawful
resignation.
Held: That omission of remedies for employers in the LRA and
the EEA was deliberate. They were designed to counterbalance
the inherent inequality between employers and employees. The
Constitutional Court in Ex parte Chairperson of the
September 2007– Page 4
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Constitutional Assembly: In re Certification of the Constitution of
the Republic of South Africa had approved this objective.
Also noted: That it was strange that the first employer to bring
such action happened to be a trade union.
Also held: That the order that the applicant sought would entail
compelling a reluctant employee to render service after his
resignation. The appeal was dismissed with costs.
Case reference
Ex parte Chairperson of the Constitutional Assembly: In re
Certification of the Constitution of the Republic of South Africa,
1996 (1996) 17 ILJ 821 (CC)
Labour Court: JR1965/05
Rand Water v Bracks & Others: Judge Nel (Acting)
Postponement – Single retrenchment jurisdiction.
This was a review application in which the applicant sought the
award to be nullified and set aside or alternatively be replaced
with an award declaring the employee’s dismissal to have been
fair. The grounds for review were that:
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The commissioner’s refusal to grant postponement
rendered the proceedings reviewable,
He did not have the necessary jurisdiction to hear the
matter,
His findings of unfairness in respect of the compensation
order were not justifiable,
He ignored the bundle of documents placed before him by
the applicant, and
He also failed to consider the question as to whether the
employee’s refusal to accept an alternative position was
reasonable.
At the time of her retrenchment, the employee was employed in
the Scientific Services division of Rand Water for a period of
five years. Around June 2002, Rand Water considered merging
the Engineering Services and the Water Treatment and
Technology divisions. That would have had the effect of moving
the employee to the Engineering division. The following month’s
correspondence was exchanged between the employee and
Rand Water. Meetings also took place. The employee refused
an alternative offer and was subsequently retrenched.
A dispute was referred to the CCMA. At arbitration, after the
employee had closed her case, it was agreed that the matter
would be set down for two days. Rand Water asked for
postponement as they were only notified a day prior to the
scheduled hearing date and had not had an opportunity to
prepare for their case. The employee’s representative opposed
the postponement on the basis that there was proof that notice
of set down was sent by registered mail. However, she stated
that she was happy to consent to a postponement on condition
that Rand Water tendered her client’s wasted costs. When
Rand Water indicated that it could not tender the costs, the
commissioner decided to proceed with the matter.
The employee’s representative suggested that the Rand Water
bundle was not before the commissioner because they had not
participated in the matter and had not led evidence.
On the refusal to grant postponement
Noted: That parties had agreed that the matter would be heard
between 22 June and 18 July 2005. It was noted that Rand
Water had made several attempts without success to find out
the date. However, further investigation revealed that the
notification letter was collected by Alton from Rand Water’s
office.
Held: That the reasoning of the commissioner was subject to
criticism in that in terms of CCMA rules parties were to be
provided with 21 days notice of the hearing. The commissioner
only discovered later that Alton had collected the letter. It was
clear that the commissioner was satisfied about the bona fides
of Rand Water the only issue was costs. It was held that the
commissioner had failed to sufficiently apply his mind to the
issue of postponement. Had the commissioner properly applied
his mind to considerations of prejudice, he would have been
driven to the conclusion that Rand Water would be prejudiced,
as it was not prepared to present its case. He also had the
option of ordering Rand Water to pay the wasted costs of the
employee. The Court held that had the commissioner perused
the documents presented by Rand Water that would have
possibly made an impact on the end result. It was, therefore,
held that the refusal to grant postponement was not justifiable
having regard to the reasons provided and the facts and
material presented.
Also noted: That the refusal to grant postponement had the
effect of causing Rand Water not to present any evidence in
rebuttal of the employee’s case.
Also held: That Rand Water had not had a fair hearing in the
matter. The award was, therefore, nullified.
Jurisdiction
Noted: That the employee had alleged throughout that she had
been victimised by Rand Water. It was, therefore, submitted on
behalf of Rand Water that jurisdiction of the CCMA is
dependent upon the allegations of the employee. It was further
submitted that victimisation was a form of unfair discrimination
and the employee ought to refer the dispute to the Labour
Court.
Also noted: That Rand Water contended that CCMA only has
jurisdiction when only the substantive fairness of a single
employee’s retrenchment was in issue.
Held: That s 191 (12) of the LRA must be interpreted as
meaning that such cases must still be referred to the Labour
Court and the CCMA would not have jurisdiction to hear them.
The compensation order
September 2007– Page 5
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Noted: That the only basis upon which the commissioner
awarded compensation was that Rand Water had failed to
follow the procedure required by s 189 of the LRA.
Held: That CCMA did not have jurisdiction to determine the
dispute. It was held that the fact that these issues were not
raised at arbitration did not relieve the commissioner of the
obligation to consider whether CCMA had jurisdiction.
Gross irregularities
Noted: That even if the commissioner was entitled to proceed
with the matter unopposed, he still had to apply his mind to the
evidence before him.
Held: That the commissioner only applied his mind to the
question whether the dismissal was procedurally unfair. He
ought to have applied his mind to the question whether refusal
by the employee to accept alternative employment was
reasonable or not.
Also noted: That the employee’s contract of employment
allowed change of responsibilities subject to consultation.
Relief
Held: That the court declined to substitute the award. It was
held that the matter be placed on the Labour Court trial rail at
the earliest opportunity. Rand Water was ordered to pay the
employee’s costs of suit.
Case references
Beetge v Konrad Adenauer Stiftung/Foundation (1997) 8 (6)
SALLR 24 (CCMA)
Myburgh Transport v Botha t/a SA Truck Bodies 1991 (3) SA
311 (NmSC)
Numsa v Driveline Technologies (Pty) Ltd & Another (2000) 1
BLLR 20 (LAC)
Attorney- General, Transvaal v Additional Magistrate for
Johannesburg 1924 (AD) 421
CIR v Shell Southern Africa Pension Fund 1984 (1) SA 672
(AD)
Oosthuizen & Another v Standard Credit Corporation Ltd 1993
(3) SA 891 (A)
National Coalition of Gay & Lesbian Equality & Others v
Minister of Home Affairs & Others 2000 (2) SA 1 (CC)
Legal Aid Board v John N.O 1998 (4) BLLR 440 (LC)
Labour Court: JR1551/2006
Shortridge v MEIBC & Others: Judge Ngalwana (Acting)
Union authority to conclude agreement – Setting aside
agreement in terms of s 145 of LRA.
This was an application brought in terms of s 145 of the LRA
where the applicant sought to set aside a settlement agreement
that was entered into between the third respondent and himself.
The applicant alleged that his union had negotiated the
agreement but that he had not authorised it to do so on his
behalf.
Noted: That the agreement was concluded on behalf of two
other individuals who were not joined in the current
proceedings.
Held: That s 145 of the LRA is not applicable to the setting
aside of settlement agreement. The application was dismissed.
September 2007– Page 6
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By Lucky Moloi
Chemical Bargaining Council: CHEM902
Joseph & 1 Other v Engen Petroleum Ltd: Panellist
Matshaka
Benefits - Unilateral change to terms and conditions of
employment – Removal of travel allowance.
The arbitrator had to decide whether the conduct of the
respondent constituted an unfair labour practice in terminating
travel allowance enjoyed by the applicants.
For 16 years, the applicants had enjoyed the travelling
allowance from their residences to the workplace and back.
They alleged that the respondent had unilaterally taken a
decision to remove the said allowance. They contended that the
substitute arrangement in the form of 5% salary increase was far
too less than the monetary value they had been receiving from
the travel allowance.
The applicants also claimed that the respondent was at fault as it
did not follow proper procedure prior to changing their
employment conditions. They further relied on the BCEA, which
states that for an employer to nightshift, transportation must be
available to employees at the beginning and end of their shifts.
The applicants sought the reversal of the unilateral decision
imposed on them by the respondent and re-instatement of the
travel allowance retrospectively.
The respondent did not dispute that, in 1988, it had agreed to
compensate the computer operators for shift travel by means of
a special travel allowance at the standard company rate per
kilometre. It alleged that the intention was to provide the
computer operators who work night shifts an alternative means
of getting to work safely. It claimed that that was not recognised
as a change to their substantive status with the respondent. The
respondent also alleged that in December 2003, it noted that
computer operators were coding special travel allowance that
did not meet the audit requirements and posed a risk of fines by
the South African Revenue Services for non-payment of taxes.
The respondent’s view was that shift and travel allowances could
not co-exist and, therefore, it had initiated a process which
culminated into the removal of the said travel allowance. The
respondent sought that its decision be upheld.
Noted: That the applicant on night shifts had enjoyed a special
travel allowance at the standard company rate intended to
provide them with an alternative means of getting to work.
Also noted: That the computer operators were coding the
special travel allowance that were non-compliant with audit
requirements and taxation law. The arbitrator also noted that the
applicants had averred that due to its consistent nature, it had
become custom and practice, part of the package and,
therefore, part of their conditions of employment.
Further noted: That between February and June 2004 meetings
and electronic communication between both parties give a
testimony that everybody concerned had made an input. The
arbitrator further noted that the applicants had failed to come up
with alternatives to resolve the matter. The special travel
allowance had been substituted by an additional salary
percentage of 7%, which illustrated the bona fides of the
respondent to minimise, if not to lessen, the financial hardship
now brought to bear.
Held: That the applicants had failed to discharge the onus of
proving that the dispute or respondent’s conduct had constituted
or concerned an unfair labour practice in terms of s 191(5)(a) of
the LRA.
Case references
Mauchle (Pty) Ltd t/a Precision Tools v NUMSA & Others (2003)
24 ILJ 338 (SCA)
MITUSA v Transnet Ltd (2002) 23 ILJ 2213 (LAC)
Monyela & Others v Bruce Jacobs t/a LV Construction (1998) 19
ILJ 75 (LC)
Mukhwevo & Others v ECCAWUSA (1999) 4 BLLR 358 (LC)
National Union of Mineworkers v Goldfields of SA Ltd & others
(1989) 10 ILJ 86 (IC)
Chemical Bargaining Council: CHEM3184
Schonken v PETRO SA: Panellist Diedericks
Performance rating – Reduction in performance rating.
The referral was about an alleged unfair conduct by the
respondent relating to a reduction in the applicant’s performance
rating, and its impact on his bonus.
The applicant’s performance was evaluated by his immediate
line manager and was given an absolute rating of 3.77. The
Performance Management Committee (PMC) then subsequently
rated the applicant as a 2.5 relative to his peers. It was alleged
that the consequence of that was a significant reduction in
financial compensation in the form of a bonus/incentive. The
September 2007– Page 7
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applicant, consequently, lodged an appeal against the relative
rating.
The applicant alleged that the he was neither informed of the
date of the appeal hearing, nor was he allowed to attend the
appeal hearing or be represented. He challenged the procedure
in that the same committee that reduced his rating also heard his
appeal hearing instead of the next higher level of management.
He also claimed that the members of the review committee, who
also heard his appeal, were never provided with a copy of his
written appeal, but were given a summary of his grievance. He
was of the opinion that had the committee had all the facts they
would have come to a different decision.
The respondent confirmed that the applicant’s performance was
evaluated and rated by his line manager and given an absolute
rating of 3.77. Thereafter, the PMC rated him as a 2.5 relatively
or comparatively to his peers. It stated that the PMC had
explained that the absolute rating was an outcome of
assessment and evaluation conducted by the line manager of an
employee in order to measure performance according to the
standards laid in the performance contract. The respondent
claimed that that usually determined training and developmental
needs. It also claimed that the relative rating, on the other hand,
was a standard format of evaluation agreed by labour and
management and has been used to ensure that the incentive
payout was measured in a standard method. The respondent
further claimed that it had assumed that everybody was at a
lever 3, which was equal to acceptable performance and,
therefore, the performance of each incumbent was measured
relative or comparatively to his peers. It claimed that the relative
rating had been used for the incentive payout.
Noted: That the applicant had claimed that the appeal process
was flawed because he was not invited to the hearing, the
committee consisted of the same members who had re-rated
him in the first place and they failed to consider the details of his
grievance.
Also noted: That the applicant had referred to the performance
management procedure that mentioned a procedure for dealing
with performance disputes. However, the procedure was
applicable for disputes about ratings given to employees by their
line managers after having done a performance appraisal.
Further noted: That the respondent had acknowledged that the
process was not perfect. However, there was nothing substantial
to suggest that the respondent had prejudiced or treated the
applicant differently to any of the other appellants or that they
had treated him unfairly.
Held: That there was no unfair labour practice committed by the
respondent against the applicant.
Bargaining Council for the Furniture Manufacturing
Industry, Western Cape: TECA-1392-06
Abrahams v Rapitrade 64 (Pty) Ltd t/Concept Creations:
Panellist Erasmus
Probationary employee - Probationary clause – Probationary
clause not fixed-term contract giving employer choice to renew
or terminate.
The applicant had been in the respondent’s employ for just
under two months when he received a letter informing him that
his contract would not be renewed. The applicant claimed that
he was shocked and, upon inquiry, he was told that his
performance had been unsatisfactory. He believed that he
should have been informed by the respondent that his work was
not satisfactory and also claimed that he should have been
given an opportunity to improve.
The respondent contended the probationary issue. It claimed
that the applicant was on a fixed-term contract which was about
to expire, and that he had left immediately on being informed
that the contract would not be renewed when it expired in a few
weeks time.
Noted: That the employee’s contract contained an eight-week
probationary clause, which entitled the respondent to terminate
before the expiry period for disciplinary reasons or operational
requirements. No other clause in the contract indicated that it
was for a fixed period.
Also noted: That a probationary clause does not give an
employer the right not to renew the contract if the employee
proves unsatisfactory without offering the employee counselling
and training. Since the applicant had not been offered either, his
dismissal was unfair.
Held: The applicant was awarded compensation equivalent to
three months’ remuneration.
Education Labour Relations Council: PSES162–06/07
Chetty v Department of Education & Another: Panellist
Lyster
Amendment of case – Employee applying to amend case as set
out in referral form – Nothing to preclude such applications.
After applying unsuccessfully for a promotional post, the
applicant filed a grievance, alleging irregularities in the selection
procedure and claiming that he was a more suitably qualified
candidate. He then referred a dispute to the bargaining council,
requesting on the referral form certain documents in the
respondent’s possession. In the referral, the applicant
complained only of a procedural irregularity. When the matter
was set down, the applicant contended that he was unable to
prosecute his case without the documents he had requested,
and sought an order compelling the first respondent to disclose
them.
The respondents contended that the applicant had embarked on
a “fishing expedition” relating to the merits of the appointment
when it was clear that his case was based on an alleged
procedural irregularity. The first respondent stated that it was
willing to disclose documents pertaining to the alleged
procedural irregularity, but that it was under no obligation to
disclose the balance of the documents, as they had nothing to
September 2007– Page 8
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do with the applicant’s case. The commissioner ordered the first
respondent to disclose all the documents sought by the
applicant, but excluded the application forms and CV’s of the
other applicants because the applicant’s case before the council
was based only on an alleged procedural irregularity. When the
matter resumed, the applicant sought leave to amend his referral
form. The respondents contended that the new application was
merely an attempt to circumvent the commissioner’s earlier
ruling on disclosure.
Noted: That a number of rules of practice in the CCMA and
bargaining councils are derived from the rules of practice or in
the civil courts. Neither the rules of the CCMA nor the council
dealt with the amendment of an applicant’s case as set out in
the referral form. But that did not mean that applicants could not
apply to amend their cases. In civil practice, a court has
discretion to permit an amendment of pleadings at any time
before judgment. Amendments are generally allowed where the
other party will not be prejudiced and where costs associated
with the amendment are borne by the party seeking it.
Held: That in labour law, a commissioner is not bound by the
manner in which a referring party designates the dispute. There
was accordingly nothing to prevent a party from seeking to
amend a case after referral, or to prevent arbitrators from
granting such applications where appropriate.
Also held: That the procedural grounds on which the applicant
relied were so entwined with substantive grounds, that it would
be artificial to hear the applicant on one and not the other. The
commissioner, therefore, granted the applicant leave to amend
the case set out in the referral form, and ordered the first
respondent to disclose the application forms and CV’s of the
other applicants. The applicant was ordered to pay the first
respondent’s costs.
September 2007– Page 9
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4TH -
6TH
20TH ANNUAL LABOUR LAW CONFERENCE:
JULY 2007 HELD AT THE SANDTON CONVENTION CENTRE, JOHANNESBURG
By Poso Mogale
Introduction
The conference was jointly organised by the Centre for Applied Legal Studies (University of Witwatersrand), the Institute of
Development and Labour Law (University of Cape Town), the Faculty of Law (University of KwaZulu Natal), and Butterworths - a
member of the LexisNexis Group. It was held on the 4th to 6th July 2007 at the Sandton Convention Centre, Johannesburg. The
delegates comprised of employers, organised labour, organised business, government, labour law practitioners and academics. The
Honourable Membathisi Mdladlana, the Minister of Labour, gave an opening address.
Almost related to the 19th Annual Labour Law Conference which focused on “Labour Law in the next decade: Time for Change?” the
theme for the 20th Annual Labour Law Conference was “Transformation: Expectations and constraints.” Various presenters and
speakers dealt with current issues in the labour market such as the rapid increase of Chinese imports, BEE: can there be trickle
down benefits for workers, public sector dismissals: the applicability of the PAJA and managing diversity and racism in the
workplace. The speakers included, inter alia, the Honourable Mr Justice Ray Zondo, Judge Dhaya Pillay, Ms Nerine Kahn, Mr
Zwelinzima Vavi and Professor Stefan van Eck.
During the course of the conference a range of workshops were held, with delegates attending those that were of interest to them.
Topics that were covered included:




Mediating interest disputes better.
Effective and fair performance management: undesirable consequences.
BCEA: Questions and Answers.
Discrimination on the basis of retirement.
Summaries of selected presentations are included in this publication.
September 2007– Page 10
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WORKERS WITH CARE RESPONSIBILITIES: IS WORK-FAMILY INTERGRATION ADEQUATELY ADDRESSED IN SOUTH
AFRICAN LABOUR LAW?
Presented by Lisa Dancaster
Summarised by Poso Mogale
Introduction
The paper examined legislative measures to reconcile work and
family responsibilities in different national contexts. It also
considered the adequacy of labour legislation that addresses
work and family integration in South Africa (SA). What emerged
from the presentation was the conclusion that SA presents far
greater concerns and challenges relating to care than many of
the countries that are currently addressing work-family
integration in their national policies.
The relevance of work-family integration in the South
African context
The International Labour Organisation (ILO) defines a familyfriendly employer as one that recognises the family
responsibilities of employees and accepts that such
responsibilities can have an impact on their working lives. For
the worker, balancing work and family needs can be defined as
the desire to have access to employment opportunities and earn
adequate income while looking after the caring responsibilities of
family life. SA shares the concerns of eldercare and childcare
with American and European countries and is yet to see much
progress at a national level. In African countries, it is women
who carry the greatest burden and responsibility for this care.
Furthermore, there has also been an increase in female
participation rate in the South African labour force. Perhaps it
would be the care crisis arising from the HIV/AIDS epidemic that
will force government and business to recognise the importance
of work-family integration in SA.
care for children. In addition, some countries also make
provision for the need to take time off to attend to sudden
emergencies in care giving. In a recent review of 22 countries by
members of the International Network on Leave Policy and
Research, a finding emerged that leave policy is receiving
increased attention, with most countries increasing the scope of
leave entitlements.
Leave for care emergencies
Most countries, including SA, have legislative provisions
governing the right to take emergency leave. In SA, the
legislative provision dealing with time off to care for emergencies
is contained in the Basic Conditions of Employment Act (BCEA).
In the United Kingdom (UK), the parental leave is given statutory
effect in the Employment Rights Act (ERA), which provides
workers with an entitlement to reasonable time off during
working hours to attend to family emergencies. However, there
is no entitlement to payment. A comparison of the provisions of
the BCEA family responsibility leave with the provisions in ERA
is considered in terms of:

Circumstances for utilisation – The reasons for time off in
the UK provision are wider than those contained in our
“family responsibility leave” which is limited to time off to
attend to birth, sickness and death only.

Persons for whom it can be utilised – The recipients of the
care are defined more broadly in the UK provision where
“dependant” is defined as the spouse, child, partner or a
person who lives in the same household. It also includes
any person who reasonably relies on the employee for
assistance when they fall ill or are injured. In SA, family
responsibility leave is only available for the birth or sickness
of a child. Ironically, if the absence is to attend to the death
of an individual then the scope of persons for whom it may
be utilised widens, that is, spouse or life partner, parent or
adoptive parent, grandparent, child, adopted child,
grandchild or sibling.

Duration of utilisation – Reasonable time off is not defined
in the UK provision. In SA, family responsibility leave is
limited to three days per 12-month cycle and five days in
case of domestic workers.
Legislative options for the combination of work and care
Government involvement in work-family integration at national
policy level is to some extent determined by its international
obligations. Of relevance to SA are our obligations arising from
the ratification of the Convention on the Elimination of all forms
of Discrimination against Women, the Beijing Platform, the
SADC Declaration on Gender and relevant ILO Conventions.
Sadly, SA has not ratified the Workers with Family
Responsibilities Convention.
(i) Leave options
Over time, the concept of parental leave has emerged in some
countries whereby fathers and mothers are permitted time off to
September 2007– Page 11
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
Employee qualification for utilisation – Family responsibility
leave is only available to employees who work at least four
days a week and who have worked for their employer for at
least four months.
Leave available at the birth of a child
Maternity leave
This leave is only available to women and usually limited to the
period just before and after birth. Since April 2007, female
employees in the UK have been permitted to take up to 52
weeks maternity leave regardless of their length of service with
the employer. In SA, the BCEA provides for a minimum period of
four consecutive months with job security guaranteed.
Paternity leave
At present, male employees in the UK are entitled to paternity
leave for two paid weeks to be taken within 56 days of the birth.
To be eligible, the employee must expect to have responsibility
for the child’s upbringing and be the biological father or partner
of the mother (male or female). He must also have worked for 26
weeks continuously up to the 15th week of the expected birth.
The government plans to extend this leave to six months once
maternity leave has been extended to 12 months. In SA, fathers
who wish to take leave have to do so by utilising their family
responsibility leave.
Leave available to care for a young child/other (Parental leave)
Some countries offer parental leave immediately after maternity
leave and then offer additional childcare leave, which follows
after parental leave. In the UK employees are entitled to up to 13
weeks unpaid parental leave in addition to the potential 52
weeks maternity leave available to eligible female employees
and the existing two weeks paternity leave for male employees.
In Italy, fathers who choose to use their six months parental
leave are entitled to an extra month. In December 2005,
Australian Federal Parliament passed legislation that
significantly deregulated the Australian labour market, leaving all
but a core set of minimum entitlements to be negotiated directly
between employers and employees. SA law does not make
provision for this type of leave.
(ii) Flexible work arrangements to care for children
(Childcare leave)
An investigation of flexible working arrangements requires an
examination not only on the legal regulation of the move to
flexible working arrangements but also the legal regulation to
support quality part-time work as adequately remunerated,
secure and providing access to all the benefits of standard
employment. The development of positive laws for the
adaptation of work in EU countries has occurred largely through
the EU Directive on Part-Time work, an instrument designed
outside the context of work and family and within the debates on
flexibilisation of the labour market, deregulation and employment
growth.
In April 2003, the right to request flexible work was introduced in
the UK to parents of children less than six years old and
disabled children less than 18 years. From April 2007, this right
was extended to employees caring for adults.
The Australian Council of Trade Unions succeeded in the Work
and Families Test case (2005) in achieving the right for
employees to request a return to work on a part-time basis until
the child reaches school age.
In SA, there is no separate legislative right for employees to
request flexible working arrangements. An existing legal avenue
for the right to request adaptation of working hours for the
purposes of care is that of anti-discrimination law. It is argued
that there is a need for serious debate on the introduction of a
separate legislative right to request flexible working
arrangements in SA. Before this type of legislation is considered
in SA, there is a need for research to assess what percentage of
caregivers have given up work to attend to care giving or have
been dismissed from work through absenteeism associated with
care giving. Further research needs to be undertaken to assess
whether flexible work arrangements such as job sharing or
working voluntary reduced hours would assist employees to
remain in employment, albeit, at a reduced income, in
circumstances where their caring needs may otherwise cause
them to leave the workplace.
Conclusion
One of the reasons why the work-family debate may not have
emerged to any great extent in SA is the fact that SA women
have, to a certain degree, been able to shift some of their care
responsibilities either onto domestic workers or unemployed
relatives. This is in contrast to many western countries where
there is an absence of relatively inexpensive domestic labour. In
the absence of good quality state funded child care facilities, the
choice for SA women has been to either accept poor quality care
or opt out of paid employment to assume the care themselves.
This article has highlighted the need to reassess family
responsibility leave in our law in terms of when it can be taken,
prerequisites to take it, the duration of this leave and the
definition of dependants. It has also demonstrated the need to
investigate the introduction of parental leave as a separate right
in our law in addition to the existing right to maternity leave.
Reference
Dancaster, L. 2007. Workers with care responsibilities: Is
work-family integration adequately addressed in South
African labour law? Presentation made at the 20th Annual
Labour Law Conference, 4-6 July. South Africa.
September 2007– Page 12
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EFFECTIVE AND FAIR PERFORMANCE MANAGEMENT: UNDESIRABLE CONSEQUENCES
Presented by Bheki Khumalo & Bianca Rohan
Summarised by Lucky Moloi
Introduction
Bheki Khumalo and Bianca Rohan looked at the consequences
that often confront employers in circumstances where there has
not been a fair and effective performance management. They
referred to Item 9 of Schedule 8 of the Code of Good Practice:
Dismissal which provides that:
“Any person determining whether a dismissal for poor work
performance is unfair should consider –
(a) whether or not the employee failed to meet a performance
standard, and
(b) if the employee did not meet a required performance
standard whether or not –
i) the employee was aware, or could reasonably be expected
to have been aware, of the required performance standard,
ii) the employee was given a fair opportunity to meet the
required performance standard, and
iii) dismissal was an appropriate sanction for not meeting the
required performance standard”.
A number of cases have come before the courts dealing with
issues of performance management, but their presentation
focused on two cases which enunciate some of the pitfalls that
employers need to avoid in cases where employers and
employees are dealing with performance management issues.
The first case that they looked at is the one of Gostelow v
Datakor Holdings (Pty) Ltd t/a Corporate Copilith (1993) 14 ILJ
171 (IC). According Khumalo and Rohan, this decision
enunciates the principles and guidelines in dealing with
performance management. In this case, the applicant was first
employed by the respondent in November 1989 as the manager,
Midrand Administration, Unidata, a division of the respondent.
The applicant had a Certification in the Theory of Accounting
from the University of Natal which he had obtained in 1977. He
was approached by Don Smith, the director of administration of
Unidata, in January 1991 to accept a transfer to the
respondent’s head office for a period of between twelve to
eighteen months. It was common cause that the purpose of the
transfer was to enable the applicant to gain experience at head
office with a view for future promotions within the group of
companies of which the respondent was the ultimate holding
company. A Mr. S Frankenfeld, the group financial manager and
a divisional director of the respondent, however, before the
proposed transfer was effected, also offered the applicant the
position of financial manager of Corporate Copilith (“Copilith”),
another division of the respondent. The applicant accepted that
position and commenced his duties at Copilith as financial
manager on 13 May 1991.
It appeared that before the applicant joined Copilith, the
respondent was satisfied with the manner in which the applicant
rendered his services while still at Unidata. Mr. Frankenfeld
regarded the applicant as a competent employee. There were no
complaints regarding his personality or the manner in which he
dressed. There was also no allegation that the applicant was
incompetent in the sense that he lacked the skill required to
perform the task required of him nor that he had made
unnecessary mistakes in performing those tasks. There was also
no allegation that he had failed to instruct, control or supervise
the staff working under him. The respondent had no cause to
complain about the manner in which the applicant performed his
services and conducted himself until some date subsequent to
September 1991.
The applicant was dismissed on 2 March 1992 with effect from
31 March 1992. The reasons given by the respondent for its
decision to terminate the applicant’s services were the following:
i) basic incompetence,
ii) managerial and administrative inadequacy,
iii) lack of organisation and ability to deliver the required result,
iv) the inadequate performance by him of his functions,
v) lack of diligence, and
vi) incompetence specifically relating to inability to perform his
functions adequately and to achieve his objectives.
The Court found that the lack of capability on which the
respondent relied was not caused by the applicant’s lack of
knowledge or skill. The Court concurred with the applicant that
his inability to achieve his goals was related to the increase in
the workload and the staff complement, which had decreased.
His superiors were, however, of the opinion that he should have
been able to cope despite those factors. The Court also
observed that the applicant, prior to his transfer to Copilith, was
a competent employee whose performance was adequate.
The Court further held that the employer is obliged to make an
assessment (appraisal) when the reason for dismissal is substandard performance due to lack of skill in the broader sense. A
valued judgement regarding unacceptable performance must be
September 2007– Page 13
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objective and reasonable to be valid. According to the Court, the
assessment would be incomplete if no attempt was made to
establish the reason for the employee’s shortcomings save
where the incompetence is irremediable, or an attempt was
made to assist the employee to overcome his shortcomings by
advice and guidance. The Court stated that the employer should
do a careful appraisal of the employee’s performance, discuss
his criticism with the employee, warn him of the consequences
of there being no improvement, and give a reasonable
opportunity to improve. Such an appraisal would at least show
whether the employee’s performance could be improved by
advice, guidance and additional training. The Court held that the
employer must create conditions which enable the employee to
carry out his duties satisfactorily. A failure to provide adequate
and suitably trained staff may render a dismissal for inadequate
performance unfair.
The Court held that the applicant was a competent employee
whose performance was satisfactory. It further held that the
applicant was transferred to a new position, and the demands
made to him were different and had, as a result, increased. His
performance then became, in his employer’s opinion,
unacceptable. The Court accepted the applicant’s explanation
that he could not perform all the tasks in the time available and
that he was forced to leave what he considered to be less
important aspects in abeyance. It was noted that he had
contended that his employer did not give him the support he
required. The Court held that the respondent should, in such
circumstances, have done a proper appraisal. It could not
pinpoint the reason for the inadequate performance nor could it
determine whether the applicant could be assisted to achieve
the required performance with advice and, more importantly,
adequate support by a sufficient number of trained staff without
a proper appraisal. The Court held that the employer had a duty
to assist the applicant to reach the desired standard of
performance. It further held that the failure to do a proper
appraisal makes the respondent’s opinion that the applicant was
unable to reach the required performance unreliable.
According to the presenters, the Court was critical about the
shoddy manner in which the employer denied allegations that
were raised by the applicant. On the one hand, the Court held
that the applicant gave a detailed explanation for the admitted
failure to complete all the tasks required of him. On the other
hand, the respondent’s counter-allegations were neither detailed
enough nor based on a sufficiently detailed appraisal to cast so
much doubt on the employer’s allegation. The Court, therefore,
further held that the applicant could have been transferred to his
former position or been offered other alternative positions other
than dismissal. The court held that the respondent did not
consider this possibility and, consequently, did not raise that
such a transfer was not possible as no suitable position was
available. The Court held that an employer should, before
dismissing an employee for incapacity, consider a transfer to
suitable alternative employment. In the circumstances, it was
found that the employee’s dismissal was both substantively and
procedurally unfair and an order was granted reinstating the
applicant in his employ.
From the aforegoing, it is clear, according to the presenters, that
for employers to be successful in such dismissals, employers
need to tighten performance management systems to follow
proper procedures in dismissing employees for incapacity. The
employer has to be thorough in its appraisal system.
The presenters also mentioned that a similar issue was also
raised in the case of South African Transport & Allied Workers
Union v Spoornet, Orex, Saldanha (2001) 22 ILJ 2120 (ARB).
They mentioned that in this case, the employee party was a
qualified artisan, who was appointed on 7 January 2000 as a
welder subject to the satisfactory completion of his duties during
his six months’ probationary period. The employer company
considered that in view of his previous training and qualifications
he needed no further training other than some specialised track
training which he was to have received in July 2000, but which
was deferred. On 25 August 2000 a meeting was held to discuss
his poor work performance. The employee was told that his
permanent appointment would be postponed and the matter
reviewed on 15 October. In October, he was advised that his
employment will terminate on 15 November 2000. He claimed
that his dismissal was unfair.
After considering the facts, the arbitrator was satisfied that the
employee’s work was not as good as it should have been.
However the company had failed to show that there had been
any formal assessment of the employee’s work before 25
August. According to the arbitrator, it was clear that the applicant
was not given a hearing between August and his dismissal.
While accepting the company’s contention that a qualified
artisan should not require the same level of counselling and
guidance as an employee who had to be trained in a complex
job, the arbitrator found that, on the evidence, the employer had
failed to comply with the requirements of paragraphs 8 and 9 of
Schedule 8 of the LRA 1995, relating to the dismissal of
probationary employees for poor work performance, and that the
dismissal was substantively and procedurally unfair. The
employer was ordered to reinstate the employee, subject to a
further six months probationary period.
Conclusion
The presenters concluded their presentation by stating that it is
clear that it is imperative for employers to ascertain that there
are proper assessments that are put in place for employees not
only for the sake of building up a good case in cases of
dismissal but also in respect of ensuring that employees are
clear on the standards that are required of them and there are
clear guidelines in terms of how to meet those standards.
Employees will also know when they are not meeting the
required standard.
Reference
Khumalo, B & Rohan, B. 2007. Effective and fair performance
management: undesirable consequences Presentation
delivered at the 20th Annual Labour Law Conference, 4-6 July.
South Africa.
September 2007– Page 14
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WHEN DOES CONTINUED EMPLOYMENT RELATIONSHIP BECOME INTOLERABLE?
Presented by Professor Rochelle Le Roux
Summarised by Alucia Mdaka
Introduction
Professor Le Roux’s presentation is aimed at addressing
concerns on the issue of “intolerability” in the context of sections
186 (1) (d) and 193 (2) of the Labour Relations Act 66 of 1995
(the LRA). She indicated that in terms of the LRA, the tolerability
of the employment relationship features twice: first, in the
definition of dismissal, and second, in the context of remedies for
an unfair dismissal.
Section 186 (1) (d): Constructive dismissal
Section (186) (1) (d) of the LRA is defined as the situation where
an employee terminates a contract with or without notice
because the employer made continued employment intolerable.
According to Prof. Le Roux it is trite that the employee wishing to
show that a constructive dismissal had occurred bears the onus
to prove that. In the case of Murray v Minister of Defence (2006)
8 BLLR 790 (C), the Court had required a strict proof of
constructive dismissal, and had not found that the circumstances
that the applicant had complained about constituted such a
dismissal. The presenter also gave an example of the case of
Aldendorf v Outspan International Ltd (1997) 18 ILJ 810
(CCMA). In this case, it was held that where employees could
reasonably have lodged a grievance regarding the unhappiness
before resigning, it might be hard to persuade the court or
arbitrator that there was no option but to resign.
addressed in the case of Kroukam v South African Airline Ltd
(2005) 26 ILJ 2153 (LAC), where the Labour Appeal Court (LAC)
had made it clear that there are no choices. The LAC noted that
in this regard, it is important to emphasise that the language of
section 193(2) is such that, if none of the situations set out in
subsection 2 (a) – (d) exists, the courts or arbitrator have no
discretion to grant reinstatement.
Le Roux also gave the example of Rustenburg Platinum Mines
Ltd (Rustenburg section) v CCMA & Others (2006) 27 ILJ 2076
(SCA). In this case, it was suggested that courts and labour
tribunals should defer to the employer’s assessment of a fair
sanction.
Reinstatement: What does the case law suggest?
The case of National Union of Mineworkers & Another v CCMA
(2007) 28 (ILJ) 402 (LC) addressed the issue of re-instatement.
In this case, the CCMA held that the second applicant’s
dismissal was unfair and ordered that the respondent should
award him compensation. It was noted that the refusal to order
reinstatement was based on the evidence that the parties were
not in a good relationship. On review, the LC held that the onus
is on the employer to lead evidence to prove that the
circumstances surrounding the dismissal are such that continued
employment relationship would be intolerable. The LC also held
that the arbitrator’s reason for not ordering re-instatement was
not covered by section 193 (2) of the LRA, therefore, its finding
was thus unreasonable.
When does section 193 (2) apply?
She indicated that section 193 (2) of the LRA provides remedies
for an unfair dismissal. The Labour Court (LC) or the arbitrator
must require the employer to reinstate or reemploy the employee
unless



The employee does not wish to be reinstated or reemployed,
The circumstances surrounding the dismissal are such that
a continued employment relationship would be intolerable,
It is not reasonably practicable for the employer to reinstate
or re-employed the employee, and/or
The dismissal is unfair only because the employer did not
follow a fair procedure.
Compensation should only be ordered in exceptional
circumstances when dismissal is found to be unfair. This was
The case of Uys v Imperial Car Rental (Pty) Ltd (2006) 27 ILJ
2702 (LC), also addressed the issue. The case revealed that the
respondent had claimed that it had dismissed the applicant
because of his own admission that their relationship had broken
down. Although the Court had found that the dismissal was
unfair and that the respondent should have sent the employee to
rehabilitation, reinstatement was not ordered. Prof. Le Roux
indicates that in this regard, the Court seems to have relied on
the employee’s own assessment of the relationship.
Another similar case that Prof. Le Roux presents, is the case
between Afrox Ltd v National Bargaining Council for the
Chemical Industry & Others (2006) 27 ILJ 1111 (LC). In this
case, the employee was dismissed for his conduct in that he had
exposed his buttocks to the employer’s clients after they had
provoked him. The arbitrator found that there had been several
procedural irregularities at the disciplinary hearing, because the
September 2007– Page 15
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employee had not been afforded the opportunity to crossexamine the applicants. The applicant’s dismissal was held to be
both procedurally and substantively unfair and was awarded
reinstatement. On review, the LC noted that it was undisputed at
the disciplinary enquiry that the employee had been provoked.
The LC upheld the arbitrator's finding that the dismissal was
inappropriate. It was stated that that approach was similar to the
one of Metro Cash & Carry Ltd v Le Roux No & Others (1999) 4
BLLR 351 (LC), where the arbitrator’s re-instatement of an
employee guilty of assault was endorsed by the LC.
In discussing the issue of reinstatement, the presenter further
gave the example of the case of Schreuder v Nederduitse
Gereformeerde Kerk Wilgespruit & Others (1998) 7 BLLR 713
(LC). In this case, the LC had ordered that the applicant be reinstated despite the fact that there was clear evidence that the
applicant’s relationship with his immediate superior had broken
down. Similarly, in Mathews v Hutchinson & Others (1998) 19
ILJ 1512 (LC). The LC held that the commissioner had acted
correctly in finding the employee guilty of negligence. However,
the dismissal of the employee was not warranted. The employee
was reinstated.
the first respondent, a football coach, had entered into a
coaching contract with the appellant club. The contract provided
that a breach by either of the parties entitled the other either to
cancel the contract and claim damages or to claim specific
performance. Before the expiry of his contract, the first
respondent was made a more lucrative offer by the second
respondent, and proceeded to give the appellant notice of
termination. The appellant elected to enforce the contract and
sought the declaratory that the contract was binding on the
parties and ordered a restraint to the second respondent from
taking any actions. The Court noted that specific performance
under common law is a primary remedy. Despite the personal
nature of the contract, the employer has the right to elect
whether to hold the employee or to claim specific performance,
and that the defaulting party had no right to prescribe how the
employer should make election. The Court held that the case
does not concern the termination by the respondent, but the
applicant chose to break his contract. The Court also held that it
should only exercise its discretion against specific performance
in the case of recognition hardship.
Conclusion
Furthermore, in Buthelezi v Beverage Industries (1999) 20 ILJ
2316 (LC), the Court held that the applicant had made continued
employment intolerable by supporting a newspaper article which
had damaged the company’s public image. The Court stated that
although employees are free to express their grievances against
their employers in the media, they are at risk of forfeiting their
right to be reinstated or reemployed in the situation where its
business depends on the public.
Prof. Le Roux concludes by stating that in general sense,
arbitrators are reluctant to order reinstatement and would find all
too readily that a continued relationship is intolerable. Such an
approach is inconsistent with the underlying rationale of section
193 (2) of the LRA as well as common law. In fact, case law
suggests that the cloud hanging over the continued employment
relationship must indeed be very dark for re-instatement not to
be ordered.
Common law
Reference
Prof. Le Roux mentions that reinstatement is common law’s
version of specific performance. She indicates that the issue
arose in the case between Santos Professional Football Club
(Pty) Ltd v Igensund & Another (2003) 5 SA 73 (C). In this case,
Le Roux, R. 2007. When does a continuing employment
relationship become intolerable? Presentation made at the
20th Annual Labour Law Conference, 4-6 July 2007. South
Africa.
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FIXED TERM CONTRACTS: THE PERMANENCE OF THE TEMPORARY
Presented by Professor Stella Vettori
Summarised by Alucia Mdaka
in certain respects, it had not amended the common law principle
Introduction
that a unilateral cancellation of a fixed term contract constitutes a
material breach of contract.
According to Professor Vettori, fixed term contracts were usually
associated with the completion of a certain task or as a stand in Given the generally precarious position of fixed term employees,
for another employee in his/her absence. Once that task is the LRA provides for some protection for this type of employee.
completed or the other employee is back, the employer will have Section 23(1) of the Constitution, which provides that everyone
no use for the employee who was employed in order to complete has the right to fair labour practices, may possibly, (albeit in a
that task or to act as a stand in. It is possible that the envisaged more indirect manner) afford some protection for these
task may take longer to complete than was originally foreseen or employees.
that the person who originally occupied the post is unable to
work for a longer time than what was originally envisaged. In The common law principles pertaining to the law of contract can
instances such as these it is not unusual for the fixed term also be utilised by fixed term employees to enforce their rights.
contract be renewed for an additional finite period of time. It is An aggrieved former fixed term employee should carefully
unlikely, that in these situations the fixed term employee can consider on what basis to raise his/her claim (the common law,
claim a legal entitlement to have the contract renewed on a the LRA or even the Constitution) because the amount
permanent basis.
recoverable in the form of damages and the remedies available
may differ amongst these different bases upon which a claim by
The presenter states that fixed term contracts of employment a former employee can be based. The speaker put forth the view
have advantages and disadvantages for both the employer and herein that what an aggrieved fixed term employee needs to
the employee. She mentions that employees on fixed term prove in order to have his or her contract renewed (usually for an
contracts are being at a disadvantaged situation because they indefinite period), irrespective of whether the claim is based on
have very little chances of being promoted, and also do not enjoy common law, LRA or the Constitution, is essentially the same.
the same benefits as those enjoyed by permanent employees.
Most importantly, in the absence of a tacit term or legitimate The outcome is always determined by an application of the
expectation to the contrary, a fixed term contract automatically principles fairness or reasonableness. Prof Vettori also disagrees
expires when the period contracted for comes to an end.
with the often stated contention that section 186(1) (b) of the
LRA makes changes to the common law with regard to factors
These disadvantages for the employee can translate into that give rise to a right to renewal. She argues that a subjective
advantages for the employer. That is, the employer can save belief or expectation based on an objectively reasonable
costs on contributions to pension funds and other social security interpretation of the state of affairs in the light of the conduct of
obligations. Secondly, by simply failing to renew a fixed term employer in the surrounding circumstances gives rise to a right of
contract when the expiration date is reached, the employer need renewal in terms of both the common law9 and in terms of section
not go through what can become onerous, time consuming and 186(1) (b) of the LRA.
even costly procedures that are required by the law when
dismissing employees.
The only difference is that a failure to renew a fixed term contract
in terms of the LRA may, in certain circumstances, constitute a
According to the presenter, one advantage for the employee dismissal, whilst, under the same circumstances such a failure
however, is that an employer, unless specifically agreed to in the will constitute a material breach of contract in terms of common
contract, cannot terminate the contract prior to the termination of law.
the period. In this way, a temporary employee is guaranteed
permanence at least for the duration of the fixed term. An Given the fact that the criteria for the establishment of a
example is the case of Buthelezi v Municipal Demarcation Board legitimate expectation of renewal in terms of the LRA and the
(2004) 25 ILJ 2317 (LAC). In this case, the appellant’s services criteria for the establishment of a tacit agreement for renewal in
were terminated prior to the expiry date on the basis of the terms of common law are essentially the same, and the fact that
employer’s operational requirements. The Labour Appeal Court in terms of common law a tacit agreement for renewal on a
(LAC) held that although legislation had amended common law
permanent basis can be claimed if the surrounding
circumstances justify it, Prof. Vettori sees no reason why a claim
September 2007– Page 17
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for renewal on a permanent basis cannot be made in terms of s
186(1) (b) of the LRA if the surrounding circumstances justify it. It
is a logical and obvious sequiter that if the existence of a term is
determined by the application of reasonableness to the
surrounding circumstances, so too should the content of that
term be determined by reference to the same factors.
The common law principle
At common law, a fixed term contract of employment
automatically comes to an end on expiration of the contract
unless the parties tacitly or expressly agree to renew it. Prof
Vettori indicates that in the words of Flemming DJP who states
that “a tacit term covers the parties’ intentions or what they have
stated if a bystander had asked them about their position in a
specific situation”. This discussion is limited to the implication of
tacit terms as defined by Flemming DJP or on the basis of the
parties’ intentions.
The Moorcock Doctrine
Prof Vettori indicates that the Moorcock doctrine has been
utilised on numerous occasions by the South African (SA) courts.
The SA court has in general interpreted Boowen LJ’s words with
reference to the parties’ intentions. However, it had no power to
imply terms other than on the basis of the actual intention of the
parties.
This doctrine had been applied in order to determine the actual,
subjective intentions of the parties as well as their imputed
intentions. According to Prof. Vettori, the hypothetical officious
bystander test that is generally applied in SA for the implication
of terms is based on the imputed intention. Generally the
question asked in the application of this test is how the parties
themselves would have responded to the hypothetical question
posed. The case in support of this contention indicates that even
if the parties had not considered the situation at the time of
entering into the contract, the term can be implied as common
intention if they have been alerted to the situation. In the light of
the fact that in applying the officious bystander test the parties
are presumed to be reasonable and honest.
In his presentation, Prof. Vettori mentions that the concept of
being reasonable is either dependent on the judge’s conception
thereof or its conception of what the society in general considers
as reasonable. Since the presumed intention of the parties is
determined with reference to what the judges consider to be
reasonable in the circumstances, any attempt to deny the
application of policy consideration by courts when implying the
terms is artificial. This is especially true in the light of the fact that
a reasonable man is generally considered to be “fair and honest”.
In Wilkins NO v Vogens (1994) 3 SA 130 (A) 14 C-E, in applying
the officious bystander test, Nienaber JA said that “one is
certainly entitled to assume, in the absence of indication to the
contrary that parties to the agreement are typical men affairs,
contracting on equal and honest footing without hidden motives
and reservations”.
However, there is overwhelming authority to the effect that
reasonableness alone is insufficient to convince a court to imply
a term. The criterion of business efficacy need not necessarily be
fulfilled in order to imply a term on the basis of the intention of
the parties. The issue was discussed in the case of Minister van
Landbou-Tegniese Dienste v Scholtz (1971) (3) SA 188 (A). In
this case, a term which was not necessary to render the contract
efficacious was implied on the basis of the actual intention of the
parties.
The doctrine of quasi-mutual assent and estoppel
Vettori mentioned that a basis for the implication of a term in SA
law is to give effect to the reasonable expectation to one of the
parties that the other had accepted a certain obligation. Where
no intention can be imputed to a party, it may be argued that the
party, by its conduct, had created a reasonable expectation that
it intended to be bound by the terms sought to be implied. When
applied in the context of a fixed term contract, it means that an
employee had a reasonable expectation that the contract would
be renewed, a tacit undertaking would be implied into the
contract by the employer. For example, in the case of FAGWU &
Others v Lanko Co-operative Ltd (1994) 8 BLLR 81 (IC), the
Industrial Court (IC) held that the employer had by its conduct
given all farm workers who returned at the beginning of the
season a tacit undertaking to reemployment. The basis of the
findings was that the respondent’s conduct in the past in the form
of its custom and practice had created reasonable expectations
of re-employment amongst its labourers.
In the instances where an employer conducted itself in a manner
that creates reasonable expectations on the part of its
employees, it would be precluded from denying that. The issue
arouse in the case of Coop & Others v SA Broadcasting
Corporation & Others (2004) 25 ILJ 1933 (W) where its rules
were referred to as the “doctrine of mutual interest”. In this case,
the medical scheme rules entitled retired employees to continue
with it if they so wish. They were subsidised at the same rate as
other employees, however, their employer had unilaterally
withdrew the subsidies. The applicants referred a dispute to the
High Court (HC) and sought for relief.
The respondent contended that the subsidies were gratuity and
not terms of contract of employment. The HC held that in the
absence of evidence as to whether that was a condition of
service, the doctrine of quasi-mutual assent was applicable. The
applicants were, therefore, entitled to continue as members of
the medical aid scheme post retirement as condition of service
on the same basis as other employees. The findings of the court
a quo was upheld by the Supreme Court of Appeal (SCA). The
SCA noted that the finding was the doctrine of estoppel as
opposed to that of “quasi mutual assent’. The Court held that
even though the respondent had not given its management an
actual authority to implement that scheme, it had created a
facade of regularity and approval of the scheme.
According to Prof. Vettori, the SCA’s findings are significant in
that the authority seems to favour the view that in order to
succeed in a claim based on estoppel, detriment or prejudice as
a result of the reliance must be proved.
September 2007– Page 18
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Prof. Vettori indicates that court decisions are most likely to be
predication of considerations and uniform because they render
judgments acceptable and justifiable. She states that courts
should consider fairness and reasonableness as cases in civil
jurisdiction. Prof. Vettori states that this will prevent the
contortions that judges indulge in to camouflage the real impetus
for their decisions. If they hide behind this, the law would be
prevented from developing new principles because these
principles would remain obscured and unarticulated.
economic circumstances. It was noted that common law should
be extended on the basis of policy consideration where the law is
not sufficiently flexible to cater for social and economic
circumstances. The decision was upheld on appeal and it was
held that the legal convictions of community require employers to
take reasonable steps to prevent sexual harassment in the
workplace. Similarly, in the case of K v Minister of Safety &
Security (2005) 26 ILJ 1205 (CC), the Court had extended the
common law principle of vicarious liability and found the
employer vicariously liable for the criminal acts of its employees.
The terms must not contradict any express in the contract
The general rule is that an implied term cannot take precedence
over an expressed term. That follows the circumstances where a
fixed term contract contains a clause to the effect that the
employee should not have expectations of a renewal of contract.
As in the case of Johnstone v Bloomsbury (1992) QB 333, the
Court was faced with a term implied in law which conflicted with
an expressed term, where it gave precedence to the implied
terms. In Erasmus & Others v Sewnwes Ltd & Others (2006) 27
ILJ 259 (T), the Court held that the employer prerogative
provided for in terms of an expressed terms in the contract could
be exercised unfettered, but the power to amend the contract
was the subject to standard reasonableness. The issue in this
case concerns the unilateral change of medical scheme
contributions by the respondent for its retired employees. The
respondent had unilaterally reduced the subsidies of its
employees, and the applicants sought an order restraining it from
implementing its decision. The Court found that the respondent
was bound by the contract of employment to contribute medical
schemes on behalf of the applicants.
Prof. Vettori indicates that the judgment perhaps could be used
to justify the assertion of such clause to entitle employers not to
escape a duty to renew a fixed term contract. Such terms could
be considered contrary to public policy that would not be
enforceable. She mentioned that in deciding whether the terms
should be considered contrary to public policy, reasonableness
and fairness must be had.
Reasonableness and fairness in the employment contract
The presenter indicated that the concept of “reasonableness” is
difficult to define and give a precise content. She indicated that
the courts have to determine what a reasonable person would do
in circumstances despite the vagueness and uncertainty of the
concept of the implied terms of mutual trust and confidence.
Those terms in contracts of employment combined with the
constitutional imperatives of the courts to develop common law,
add impetus to the argument in determining whether the renewal
of a fixed term contract is determined with reference to the
principles of reasonableness and fairness. In Grobler v Naspers
Bpk & Others (2004) 25 ILJ 5439 (C), the Court had extended
the common law rule of vicarious liability on the basis of vague
concepts such as “policy and the legal convictions of the
community”. The employer’s vicarious liability was extended to
include an employer’s liability for sexual harassment by its
employees. The Court held that in its duty to develop and adapt
the common law it must keep abreast with changing socio-
Prof. Vettori mentions that these judgments demonstrate that in
deciding whether or not a tacit agreement or term exists, or
whether to oblige an employer to renew a fixed term contract,
judges have to give content of vague concepts such as
reasonableness and fairness.
Renewal for indefinite or fixed period
She stated that whether the renewal of a fixed term contract
should be on fixed term basis or on a permanent basis it is
determined by the application of the principles of reasonableness
and fairness to the surrounding circumstances. The relevant
factors to determine the imputed intention of the fixed term
contract include the wording of the agreement, the genesis and
the purpose of the contract previously negotiated by the parties.
What are the remedies for failure to renew a fixed term contract
under common law?
Prof. Vettori indicates that employer’s failure to renew a fixed
term contract where there was a tacit or express agreement to
the effect that it would be renewed would constitute a material
breach of contract. The aggrieved employee would therefore
claim specific performance in the form of reinstatement and/or
damages, depending on the circumstances. If judges are
deemed to award compensation if the case claimed is based on
the common law, there is no applicable statutory limit to the
amount to be awarded. The case of Pretoria Society for the Care
of the Retarded v Loots (1997) 18 981 (LAC) seems to be
relevant to the issue. In this case, the Court noted that there are
guidelines to be considered in determining the amount of an
award for compensation. The following were the guidelines to be
considered:

There must be evidence before the court on actual financial
loss suffered by the person claiming compensation,
 There must be proof that the loss was caused by an unfair
labour practice,
 The loss must be foreseeable,
 The award must endeavour to place the applicant in
monetary terms,
 The court should be guided by the reasonableness and
fairness of the circumstances when making the award,
 There is a duty on the employer to mitigate his damages by
taking all the reasonable steps to acquire alternative
employment, and
 The benefit which the applicant receives must be
considered.
September 2007– Page 19
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What does the LRA say?
The existence of a reasonable expectation of renewal
In terms of section 186 (1) (b) of the LRA, an employer’s failure
to renew a fixed term contract on the same or similar terms
where an employee had reasonable expectations that the
contract would be renewed, constitutes a dismissal. In SA Rugby
(Pty) Ltd v CCMA & Others (2006) 27 ILJ 1041 (LC), the judge
stated that there are factors to be considered when determining
whether there was a reasonable expectation of renewal on the
same or similar terms. This includes, the nature of employment
and the reason for a fixed term contract, any assurances that the
contract would be renewed, and failure to give reasonable notice
of non-renewal of the contract. These factors would be
considered irrespective of whether the enquiry concerns the
existence or tacit agreement in terms of common law or it
concerns the establishment of a legitimate expectation in terms
of s (186) (1) (b) of the LRA. On the one hand, section 193 (1) of
the LRA provides remedies for an unfair dismissal and an unfair
labour practice (ULP) same as the one of the common law as
discussed. On the other hand, section 194 of the LRA provides
that the award for compensation cannot exceed twelve months’
salary unless the dismissal is automatically unfair.
prejudiced or jeopardised thereby”. The IC and LAC gave
content to a legitimate expectation by rendering failure to
renew it under certain circumstances of an unfair labour
practice. The example of a case that she gave was the one
of FGWU & Others v Lanko Co-operative Ltd (1994) 15 ILJ
876 (IC). The Court found, on the facts, that there was a
past practice of reemploying workers who had been
employed in previous seasons. This amounted to a tacit
undertaking to re-employ the applicants on a preferential
basis.
The Court held that the respondent had failed, on the
evidence, to demonstrate that it had applied its selection
criteria and, accordingly, it was not justified in refusing to reemploy the applicants. A refusal to re-employ in such
circumstances amounted to an unfair labour practice.
Remedies
The Constitutional Court does not provide remedies for a breach
of the constitutional right to a fair labour practices. She indicated
that one might be guided by the provisions stipulated in terms
section 194 of the LRA and remedies of the common law.
Conclusion
The constitutional right to fair labour practices
Irrespective of whether the claim for renewal of a fixed term
contract is based on common law or on statute, the
The influence of an unfair labour practice jurisdiction in terms of determination criteria for the existence of a right to renew are
the old LRA
reasonableness and fairness. She indicated that the cases
discussed have proved that the common law does in fact adhere
Prof. Vettori states that the concept of an ULP was
to principles of fairness and equity.
introduced into the SA labour law dispensation as a result of
the recommendations of the Wiehahn Commission. She
The speaker also indicates that if the existence of a term is
also stated that the first definition of an unfair labour
determined by the application of reasonableness in the
practice to be found in legislation was very open-ended and
surrounding circumstances, the content of that term should also
non-specific. It was defined as “any labour practice that in
be determined by reference of the same factors. Therefore, the
the opinion of the old Industrial Court is an unfair labour
reference on the same or similar terms in terms of section 186
practice”. This definition gave the Industrial Court (IC)
(1) (b) of the LRA should not be interpreted to refer to the
enormous leeway and amounted to a licence to legitimacy.
duration of the contract. It should refer to other provisions such
In 1980 after the legislature had intervened, the definition
as the amount of pay, job description, and working condition.
was amended, and it referred to four consequences that
She further indicated that a literal and limited interpretation of the
arose as a result of omission or an act. However, this was
section which limits expectation of renewal of a fixed term
still a general and open-ended definition requiring the IC to
contract runs contrary to the policy considerations which gave to
use its discretion to interpret it. The definition was amended
the section.
again in 1988, where it contained a list of specific unfair
labour practices with an omnibus clause that corresponded
Reference
with the old definition. Furthermore, in 1991, a new
definition was enacted, and it was defined as “any act or
Prof. Vettori, S. 2007. Fixed term contracts: The permanence
omission which has or may have the effect that an
of the temporary. Presentation made at the 20th Annual Labour
employee is, or may be unfairly affected or their
Law Conference, 4-6 July 2007. South Africa.
employment opportunities or work security is or may be
September 2007– Page 20
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THE RAPID INCREASE OF CHINESE IMPORTS: HOW DO WE ASSESS THE INDUSTRIAL, LABOUR AND SOCIO-ECONOMIC
IMPLICATIONS?
Presented by Professor Mike Morris
Summarised by Poso Mogale
Introduction
Since joining the World Trade Organisation (WTO) in 2001,
Chinese products have taken the world by storm, covering the
globe in a blanket of exported fabric and garments. The scope
and intensity of this rapid shift in global trade regimes have
occasioned a number of responses. Based on WTO protocols,
the United States (US) and European Union (EU) invoked
safeguards against specific Chinese imports in 2005/6. In a
similar spirit, the South African government, pushed by the trade
union movement, signed a restraint agreement with China
imposing quotas on imports of specific clothing and textile
product items from January 2007 to September 2008.
At an academic and policy discussion level, the rise of China as
a significant global economic player has shifted analysis and
discourse to the impact of the “Asian drivers” on the developing
and developed world. This paper attempted an analysis of the
complexity of the major dimensions governing the impact of
Chinese clothing imports on the industry and the welfare of the
mass of consumers in South Africa (SA). The conclusions of the
paper are not purely academic.
Understanding China’s impact on the globalisation of
clothing
Sustainable industrial policy is concerned with two sets of
issues, that is, industrial competitiveness and welfare issues.
Ultimately the effectiveness of government interventions is
tested against how it balances and meets these requirements.
Meeting the welfare requirement also has two dimensions –
impacting on the employment situation in a sector and
favourably affecting consumption patterns. Industrial policy
measures in sectors under stress, such as clothing and textile,
often tend to focus on either enterprise/industry competitiveness
or the welfare employment aspects in a particular sector.
In addition to industrial policy concepts, there is also a need to
set out a systematic framework for analysing and disentangling
the impact China is having on a country or a region. A further
distinction that needs to be made is between the direct and
indirect impacts. Almost all of the analysis of the impact of China
on developing countries focuses on direct, bilateral relations and
tend to miss some of the key issues of importance that are as a
result of indirect impacts. Direct bilateral impacts are often also
easily measured by charting the direct trade flows, breaking this
down by sectors, countries and overtime. These indirect impacts
occur as a result of China’s relations with third-countries that
have an indirect but potentially radical positive or negative
impact on a developing country.
The manufacturing process is segmented into a series of
individual components that are allocated to foreign suppliers on
the basis of a comparative advantage. Skill-intensive tasks
concentrate in developed nations while low-skilled, labour
intensive activities are outsourced to developing nations with low
labour costs. Large retailers, branded manufacturers and
marketers control global clothing chains by specifying critical
garment characteristics such as fabric, style and fit. Through
global sourcing capabilities, they compete against each other for
market share. The demands of consumers coupled with
globalisation have led to retailers sourcing production from the
lowest cost locations around the world. These manufacturers
either have to absorb the costs and lower their margins or
improve productivity. This allows retailers to be able to cater for
the fashion trends of the moment, changing their stock often and
producing consumers with a great variety of products. Mergers
and acquisitions have led to a higher concentration of retailers
who hold more influence over their sourcing agents and
manufacturers. The commercial buyers in these clothing value
chains are extremely demanding, insisting on lower prices,
better quality, shorter lead times, smaller quantities and supplier
acceptance of as much risk as possible. In addition, in order to
sustain market share, manufacturers have begun to offer
services to retailers of both co-ordination and production.
Currently the US, EU and Japan are the largest consumers of
textiles and clothing, yet the majority of clothing and textiles in
these countries is imported. China is currently the world’s largest
exporter of garments. Its export value of clothing has increased
by 540% from 1990 to 2004. China is also the world’s largest
exporter of textile products. Its textile exports increased by 469%
from 1990 to 2005. The significant thing about the global
dominance of Chinese clothing exports is that it has been
accompanied by a simultaneous fall in unit prices of garments.
Contrary to popular opinion, low wages are not the most
significant factor as Chinese wages are considerably higher than
other producer countries in South East Asia or Sub-Saharan
Africa. Increasing productivity and the ability to produce at large
scale have by far played a more significant role.
September 2007– Page 21
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The South African clothing industry and Chinese imports
The recent rise of a substantial black middle class and a rapidly
growing domestic economy has significantly expanded demand
and domestic clothing sales have boomed. The largest four SA
retailers account for 70% of retail sector clothing sales. The
initial spur to domestic retailers importing Chinese clothing came
at a most unfavourable moment for them – a time when the
Rand (South African currency) suffered a major devaluation.
Local clothing manufacturers saw the opportunity to export to the
US on the back of the deteriorating exchange rate. They signed
up numerous export orders, primarily to US retailers, which at
the prevailing exchange rate promised larger profits than by
supplying the domestic market. However, the local
manufacturers did not have sufficient capacity to supply both the
export and domestic markets. Many local firms consequently
cancelled their orders to the local retail chains in favour of the
more lucrative export market.
The subsequent strengthening of the Rand (South African
currency) post 2003 turned the entire scenario around, creating
both easier access to the domestic market as well as hampering
export opportunities into global market. It also coincided with the
indirect impact of global Chinese clothing exports. Exports
dropped dramatically with manufacturers reneging on their
export orders. They sought vainly to return to their previous
customers, the domestic retail chains, but the restructuring of the
domestic value chain had taken a radical turn. Large-scale
imports of clothing from China had become the order of the day.
The impact on the local clothing and textile manufacturing
industry has been profound, encompassing the competitiveness
and welfare issues outlined above.
Despite the major practical interventions being made by the
“private sector driven industrial policy” to achieve systematic
competitiveness through value chain alignment and firm level
upgrading through operations of the Cape and KZN Clothing and
Textile Clusters, these initiatives have been underplayed in the
research and policy terrains as well as public attention.
The impact of Chinese clothing imports on employment
Much has been made in the press by the unions and the
Department of Trade and Industry (DTI) of the catastrophic
competitive impact that Chinese clothing imports have had on
employment in this sector. Furthermore, the reasons for the
decline in exports of clothing and textiles from SA lie in a
multiplicity of factors, of which Chinese competition is only one
and not necessarily the dominant determinant. In terms of the
methodological issues associated with the Statistics South Africa
(STATSSA) sector sample data on the numbers of unemployed,
(Edwards & Morris: 2007) concluded that these unemployment
claims misrepresents the job losses incurred within the sectors
subject to the proposed quotas. They also concluded that these
claims are also based on inappropriate comparisons of data
drawn from different employment surveys and considerably
exaggerates the estimated job losses within the clothing and
textile fabric sectors over the past three and a half years. For
example, in 2005, although 25000 jobs were terminated, 18000
new engagements were registered, of which 60% comprised reengagements. Ultimately the only reasonably reliable
unemployment data reflecting the direct impact of cheaper
Chinese imports comes from surveys of all registered clothing
employers undertaken by the National Bargaining Council.
Therefore, in assessing the direct impact on actual numbers
employed in the industry, one has to distinguish between the
impacts on the formal part of the sector and what is happening in
the sector as a whole, including the informal sector which is
much more difficult to measure. Current evidence suggests that
the quality of employment and standards are pointedly less than
acceptable.
The direct welfare impact of Chinese clothing imports on
consumption
This requires finding the answers to a number of key questions:
Firstly, did the clothing prices have a deflationary impact in the
general basket of goods determining Consumer Price Index
(CPI) movements? If so, was the deflation experienced in
clothing due to imported clothing from China? Secondly, in order
to check this from the welfare perspective of the consumer, what
was happening to the actual prices consumers were paying for
imported clothing? The easiest way to check this welfare impact
was to focus on a welfare sub sector which was heavily
dominated by imports, that is, infants, babies and children’s
clothing and measure the movement of real prices of a set
basket of specific items whose quality and styling was kept
constant.
Commentators have mostly ignored the direct welfare impact of
Chinese clothing imports on consumption. However, on the other
hand, it is surprising that the African National Congress (ANC)
government espousing a populist political programme has not
attempted to take cognisance of this impact in its policy profile.
Furthermore, when questioned, all SA retailers interviewed
argued that imports had either remained constant or declined in
price with time. They argued that this did not represent a real rise
in cost or retail prices but was rather as a result of a historical
process of importers under-invoicing clothing items to avoid
paying the high import duties.
Another factor impacting on prices of imported items from China
and not reflected in the imported clothing (CPI), is declining
freight costs. The fall in CPI for clothing demonstrates the
increased ability of consumers to buy clothing or other goods.
The above analysis is based on the macro trade data, which
depends on the price and quantity declared to customs officials.
The price sensitive nature of children and babies clothes means
they have been the most severely impacted by imports.
Consumers are less willing to pay a premium on these items due
to their small size and short life span. However labour input
costs are as high for infant attire as for adult clothing, which
makes it prone to sourcing from low labour cost countries. Very
few domestic manufacturers now produce these items as the
mark-up is minimal and imports have boomed and imports
constitute most of the sales. This is another reason for choosing
it as a sub-sector for assessing the impact of imported clothing
September 2007– Page 22
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on retail prices and consumer welfare. The trend is very clear.
For all categories we see a steady fall in the retail price for all
children’s and baby tracksuit pants from 2003 to 2006.
Thus far, we have primarily focused on the welfare and
competitiveness impact of imports in terms of price effects. In
order to do this we have focussed on comparing process of “like
for like” garments which have stayed basically the same in
composition over the past few years. However, the global
tendency has not only been about decreasing prices. The impact
of increasing competitiveness has also seen a shift towards
better quality and greater variety.
The indirect impact of Chinese clothing imports on local
competitiveness
Stellenbosch (September 2005) which formulated the basic
principles of the value chain alignment process and led to the
major retailers joining the KZN and Cape Clothing and Textile
Clusters in March 2006, thereby not only making a
demonstration of their commitment to upgrading the domestic
industry but also providing substantial private sector funding for
the process. The 2nd Imbizo in November 2006 operationalised
this process and set in place a number of practical training and
supply chain development programmes to achieve value chain
alignment within the supply chains of each retailer. Driven by an
alliance of the clusters and the major retail chains, these
programmes have already started to yield fruit and ratchet up the
systemic competitiveness of the domestic clothing and textile
sector.
Conclusion
International competition has acted to suppress domestic prices,
as local manufacturers have had to compete with their global
counterparts. As one retailer commented, “cheap imports put
price pressure on local manufacturers to drop clothing prices”.
Producer Price Inflation Index (PPI) figures confirm this.
Increases in producer prices of clothing firms have been
significantly below the average rise in the general PPI. Between
2000 and 2004 the PPI for the economy as a whole rose by an
average of 8.9% per annum, while the clothing PPI rose by only
4.7% per annum (Business Alliance: 2005).
Domestic producers who were able to weather the impact of
trade liberalisation were forced to also decrease the prices of
their products. An example of the phenomenon of imported
garments driving costs down was provided by infants’ vests and
leggings, which, in winter 2004, were only supplied by a local
producer to a middle income-serving retailer. However by winter
2006 the same item was also sourced offshore from China. Both
the local and imported item were available in the stores at the
same retail price, which had declined by 35.5%. In order to
compete, the local producer had managed to drive cost
reductions through the factory and reduced the cost price by
40%.
The Cape and KZN Clothing and Textile Clusters were set up
respectively in 2004 and 2005 in order to assist enterprises to
upgrade their dynamic capabilities and raise their
competitiveness levels so as to be able to compete with Chinese
imports.
Finally, the crisis engendered in the industry by the impact of
Chinese imports has created the formulation and implementation
of a private sector driven process of value chain alignment
between the major clothing retailers and clothing and textile
manufacturers. This was manifested in the 1st Imbizo in
The competitive and complementary, direct and indirect, impact
of Chinese imports on SA clothing and textile sector is complex
and multi faceted. The impact of Chinese imports on the welfare
dimensions of the clothing and textile industry has been both
competitive and complementary. For many producers the past
few years have been a massive shock. Many have struggled and
failed to make the required transition. Formal employment in full
package firms has been affected the most. For the CMT sector
servicing retailers directly, or indirectly through full package
producers, has been growing rapidly. Prices across a wide
variety of garment items have dropped substantially.
With respect to the impact of Chinese clothing imports on the
competitiveness of the domestic industry, the consequences
have been both competitive and complementary. The
complementary aspects of Chinese impacts are to be found in
respect of cost, flexibility and variety of imported fabrics and
other inputs. These are however restrained by the existing tariff
schedule and, more importantly, the inability to import fabrics
duty free, which are not produced domestically. Good industrial
policy has to strike a balance between the welfare impact and
the competitiveness impact. This analysis has tried to show how
imported clothing (primarily from China) has played this role in
cheapening clothing for the mass of SA consumers. In doing so,
it has also forced local clothing producers to concomitantly
reduce prices and confront the gap in their own international
competitiveness.
Reference
Morris, M. 2007. The rapid increase of Chinese imports: How
do we assess the industrial, labour and socio-economic
implications. Presentation made at the 20th Annual Labour Law
Conference,
4-6
July
2007.
South
Africa
.
September 2007– Page 23
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MEDIATING INTEREST DISPUTES BETTER
Presented by Moe Ally
Summarised by Poso Mogale
Introduction
This is a subject that had been written about and researched
hundreds of times by world-renowned mediators from the
United States of America to Australia and everywhere in
between. Recently we have noticed an increase in industrial
action both in the numbers of strikes and their duration.
The sectors, from which many of these actions emanate, are
the more vulnerable of our work force. As much as we have
seen increased industrial action in these sectors, only about
20% are unionised. In these sectors we find that the nature of
jobs is not secure, liquid with a large number of “temporary”
workers. We also find a high involvement of labour brokers. The
terms and conditions of employment are far lower than in other
sectors. These sectors arose from the outsourcing and
privatisations of the 1980’s and 1990’s.
CCMA
business strategy or tactics. The low inflation environment does
not make life any easier for mediators or the parties.
Process
Climate
Moe argued that in order to better resolve interest disputes,
parties should do an environmental assessment of the
workplace. It is obvious that if the relationship is strained, one
should expect a tough round of negotiations. Parties would not
believe information disclosed during negotiations if there is no
trust between them. Parties should plan their negotiations well
in advance by ensuring that the climate is conducive towards
the period of negotiations. This means that parties should be
engaging each other throughout the year by exchanging
relevant information and holding discussions on issues such as
productivity, profitability, targets etc.
Conduct
Moe indicated that he had not conducted any scientific research
on the topic but that he will speak from his experience as former
National Senior Commissioner of the CCMA.
The CCMA had conducted over 3500 matters of mutual interest
and collective bargaining disputes in the 2005/2006 year. This
makes up 4% of the total caseload. The settlement rate at the
conciliation stage is between 40-50%, which is much lower than
settlements achieved in unfair dismissals disputes. Moe’s
recent experience in mediations is that parties have developed
a more hardened attitude towards each other. What he has
established is that the reasons for the industrial action are a
consequence and not the actual dispute. Parties are not
exhausting all internal processes and procedures before
declaring a dispute.
This is about grievances and disciplinary issues being dealt with
fairly and effectively. There should be none or few outstanding
disputes or grievances during negotiations period as this could
add fuel to the tensions which normally arise during the course
of the negotiations.
Characters
We should be able to have an idea of who is the “player” and
whether there had been any previous misunderstanding and
conflict between the main players. It is my view that sometimes
a Relationship By Objectives (RBO) is needed before parties
engage in collective bargaining.
Real dispute
Communications
Turning to the issue of why Moe had said that the formal issues
in dispute are a consequences of a bigger problem that exist These facts usually only surface when a mediator is in the
process of unpacking the dispute or when there is a section 150
intervention. These disputes are not always about the
percentage difference between the parties but about a much
bigger problem that exists between them. Some of these
problems seem to be about the personalities around the table,
long outstanding grievances and change in the employers’
There needs to be an ongoing open and honest engagement
between parties. The information that mediators receive is that
employers only give unions bad news when they come to the
actual negotiations and not before that, whereas unions had
read information in the newspapers that the company had done
extremely well.
Capacity
September 2007– Page 24
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It does take a level of maturity and level headedness to engage
in meaningful negotiations. It is normal that one party has a
sophisticated negotiator whereas the other party does not. This
on its own creates tension and raises other dynamics.
Mediation
When mediating interest disputes, it is important that the
mediator unpacks the dispute as much as possible. The
answers to the “real dispute” can only be found there. This will
assist the mediator in homing on the preliminary issues that
needs to be resolved, eventually leading to the formal dispute
being resolved.
stage are still under the guise of a “without prejudice”
discussion. Experience shows that in most cases, this form of
proposal is generally accepted as an alternative to their
positions to either engage in action or to break the impasse
during an industrial action. The use of an independent
mediator/facilitator is recommended who could assist parties in
resolving outstanding issues.
Summary
1)
Checking that a conducive environment exists for
negotiations, this would be the task of the ER/IR
departments.
2)
Creating the right environment, which will encourage the
parties to talk openly and honestly.
3)
The mediator should unpack the dispute and elicit as much
information as much as possible, which will assist in
identifying the real issues.
4)
The mediator should explore solutions through the use of a
problem solving method. Explain in detail what the problem
solving method is and that the discussions are without
prejudice.
Different writers and academics propose different methods of
seeking solutions. The one method, which Moe has tried with
varying degrees of success, is to use the mediation process as
a problem solving session. This should be conducted on a
“without prejudice basis”, allowing parties the opportunity to
explore possible solutions rather than focusing on their different
positions.
5)
The mediator should focus on the real issue with a view to
giving parties an alternative avenue to resolve issues, for
example, Facilitation of discussions between the parties
after the interest dispute had been settled.
6)
Putting forward a mediator’s proposal, which is a product
of parties’ joint problem solving exercise.
It does take a level of maturity and leadership to explore
solutions outside the mandated positions. The mediator must
seek clear consensus from the parties to engage in the process
of joint problem solving.
7)
Allowing parties an opportunity to report back to their
constituencies.
8)
Once the agreement is signed, ensure that a clear
implementable plan emerges which will minimise further
conflict, arising from the interpretation and application of
the collective agreement.
9)
Mediator to ensure that he/she remains independent at all
times.
The suggested method is that the mediator should make use of
flip charts to note all the points raised and work through it in a
form of questions and answers sessions, with a problem solving
approach.
The mediator when dealing with an interest dispute usually only
gets involved after the parties have unsuccessfully tried to
negotiate amongst themselves and had failed to reach an
agreement. The tension is already at a high point and the
mediator is seen as a hope for the parties either to avoid or to
avert a strike. Sometimes a robust approach is necessary
If parties are close to a solution the mediator must provide
parties with an opportunity to take the proposal back to their
constituencies before signing an agreement unless the parties
are happy to do so without further ado.
The approach during the problem solving session is very
important. If during mediation one senses that the tension is too
high to can explore a joint problem solving approach, the
traditional approach would be to pursue this process in
separate caucuses.
Reference
Ally,M.2007. Mediating interest disputes better. Presentation
made at the 20th Annual Labour Law Conference, 4-6 July.
South Africa.
The end product could be termed as the mediator’s proposal for
the parties to seek grounds for a solution. The parties at this
September 2007– Page 25
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MANAGING DIVERSITY AND RACISM IN THE WORKPLACE: A SOCIAL JUSTICE IMPERATIVE
Presented by Lance Witten
Summarised by Alucia Mdaka
Introduction
Witten, in his introduction, indicated that South Africa (SA) faces
the ongoing challenge of how to generate and maintain
processes that restore dignity, create political and economic
equity, and promote a culture of human rights. Post 1994 has
seen legislation promulgated to abolish race as a means to
organise society and thus establish the foundation for political
equity. This resulted in a fundamental improvement in SA.
He mentioned that diversity is viewed as both strength and an
asset to the organisation. Respect for diversity implies an
openness and sensitivity towards the differences of others, as
well as difference in relation to others. Therefore, organisations
must position themselves as major contributors towards this
process of eliminating racism. They must also target their own
transformation as central to its existence. Its key element is the
design and implementation of social justice policies that
sensitise members to human rights principles, and provide
concrete procedures that can be followed in the event of a
perceived violation. Moreover, it must be committed to create a
diverse workplace where individuals should have the right to
work in a community that is free from discrimination and
harassment. He supported this by stating that the commitment is
presented as a moral, legal and intellectual imperative within an
organisation’s strategic transformation agenda. The organisation
must further tackle the wider context of social and economic
conditions that underline inequality and exclusion, and that wider
context becomes possible through the design of policies that
take into account a restorative justice perspective.
What does the Act says?
The pursuit of social justice is one of the central objectives of the
Labour Relations Act 66 of 1995 (the LRA) which promotes the
democratisation of the workplace. On the one hand, the LRA is
in line with fundamental Constitutional rights, and it aims to
promote economic development, social justice and constructive
labour relations.
On the other hand, the Employment Equity Act 55 of 1998 (the
EEA) is aimed at eradicating unfair discrimination, training and
remuneration of employees, as well as to create accessible
remedies to prevent discrimination. The EEA also encourages
organisational transformation as it promotes the removal of
obstacles to employment of all South Africans and the
advancement of individuals from historically disadvantaged
groups.
How to manage racism in the workplace?
Employers should conform to an existing collective agreement
and applicable statutory provisions of policy in order to address
the issue of managing racism in the workplace in the absence of
the Code of Good Practice. Witten highlighted possible
guidelines for managing racism in the workplace, and they are
as follows:









The organisation’s position on racism,
An outline of any policy, intervention, programmes currently
in place,
Details of employment policies including but not limited to
recruitment and selection, performance management,
reward management, employment equity where racism
may have application,
Grievance procedures,
The means of communication within the organisation on
racism,
Details of procedure where complainants or perpetrators of
racism may access advice and assistance,
Formal and informal procedures,
Suggested disciplinary sanctions, and
Vicarious liability.
Witten argues that most organisations are striving to eradicate
overt racism from the workplace, and as a result, that creates
the climate for subtle and nuance forms of prejudice to surface.
One of the forms of prejudice is aversive racism, and it is
characterised by negative feelings and biasness within an
individual or group.
Strategic policy considerations
Under this heading, the presenter stated that organisations
should consider the following when implementing its strategic
policies pertaining racism in the workplace:
Reporting and implementation
The reporting and management of complaints that arise from an
alleged act of racism should not be dealt with by the
complainant’s line manager. Organisations should create and
establish an equity office where complaints regarding the issue
September 2007– Page 26
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should be addressed. The office should be resourced with
specialist personnel to handle all the complaints. The case of
SATAWU obo Finca v Old Mutual Life Assurance Company (SA)
Ltd & Another (2006) 8 BLLR 737 (LC) seems to be relevant to
the issue. In this case, the Labour Court held that the employer’s
risk to potential vicarious liability could have been reduced had
the matter been referred to a specialist office rather than that of
the applicant’s line manager.
This exposes the organisation to potential vicarious liability when
the provisions of section 60 of the EEA are not substantially
complied with.
Advisory panel
The equity office should have access to an advisory panel within
the organisation that can offer assistance and advice on any
complaint of racism.
Due diligence
The organisation should proceed with formal disciplinary action
against perpetrators of racism even if the complainants have
indicated the contrary of potential risk to the other employees by
the perpetrator in future. For example, in the case of TSI
Holdings Pty Ltd & Others v NUMSA & Others (2006) 7 BLLR
631 (LAC), the issue was whether the purpose of a strike can be
to demand the dismissal of an employee who had allegedly
made racist remarks. Union members reported that a supervisor
had uttered racist remarks at them. They referred a dispute to
the CCMA demanding that the perpetrator be dismissed. The
matter remained unresolved and they engaged on an
unprotected strike. The respondent obtained an interim order
declaring the strike unlawful, and the union argued that the strike
was protected because it was in support of an unlawful demand.
The Court noted that the critical issue was whether the strikers’
purpose was to secure the dismissal of the supervisor, or to
ensure that he was subjected to a fair disciplinary hearing. The
Court, therefore, held that the applicants had failed to prove that
there was a fair reason to dismiss the perpetrator.
Witten stated that although this case relates to strike law, it also
highlights the crucial importance of organisations dealing with
alleged incidence of racism in terms of a well designed policy.
The fact that the applicants had proposed that the perpetrator
and the complainant be subjected to polygraph test
demonstrated the lack of policy and procedure in dealing with
incidents of racism within the organisation.
Conclusion
Witten, in concluding his presentation, quoted the words of the
honourable judge Albie Sachs when he said “the people. …want
to shatter the limits apartheid imposes, not simply on what you
can do, but on what you can think”. He stated that organisations
should have a clear imperative to create a working environment
that is free of racism and one that embraces diversity. The
formulation, implementation and enforcement of social justice
policies must be seen as critical in attaining this objective.
Reference
Witten, L. Managing diversity and racism in the work: A
social justice imperative. Presentation made at the 20th Annual
Labour Law Conference, 4-6 July 2007. South Africa.
September 2007– Page 27
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THE DISMISSAL OF PUBLIC SERVICE EMPLOYEES: APPLICABILITY OF THE PAJA
Presented by Professor Stefan van Eck
Summarised by Poso Mogale
Introduction
Prof. van Eck introduced his presentation by making reference to
a discussion he had with Prof Chiomo Agoma, from the
University of Lagos, Nigeria. Prof van Eck was impressed by
Professor Agoma’s instant insight into the potential jurisdictional
uncertainties that could prevail in respect of labour dispute
resolution in the public service under South African legal
framework. The focus of the presentation falls on the following
question:
“Which is the appropriate legislation (and may I add, forum) for
unfair dismissal disputes in the public service?”
At the end of the presentation there would be an attempt to shed
more light on the ultimate question, namely whether there is
sufficient room under our present constitutional framework for
the type of specialist labour dispute resolution mechanism which
the architects of the LRA had in mind when they drafted it.
Unpacking bundles of principles
South Africans operate within a constitutional landscape, which
enshrines both “everyone’s” right to fair labour practices and the
right to fair administrative action. The Constitution also arranges
the hierarchy of courts in the country in such a manner that the
Supreme Court of Appeal (SCA) is the court of highest instance
in all matters (also in labour matters), apart from constitutional
matters.
Apart from the Constitution, South Africans have three main
sources of legal regulation that feeds into the public service
employer employee relationship, that is, the common law
contract of employment, labour legislation and the Promotion of
Administrative Justice Act 2 of 2000 (PAJA). The civil High Court
(HC) is the designated forum for the resolution of disputes under
the PAJA.
Contrasting decisions in the Labour and High Courts
Over the past couple of years, numerous cases have highlighted
the fact that a complex jurisdictional labyrinth has developed
regarding public service labour dispute resolution. It has been
witnessed that both the High and Labour Courts (LC) have been
divided under two broad categories of opinion. One school of
thought, which is well represented by acting LC judge Murphy in
SAPU & Another v National Commissioner of the South African
Police Service & Another (2005) 26 ILJ 2403 (LC), favours the
point of view that employer actions in the public service do not
fall under the PAJA definition of “administrative action” and that
the HC is not the appropriate forum to be utilised for purposes of
scrutinising employer actions in the public domain.
The other school of thought, which is endorsed by HC judge
Plasket in Police & Prisons Civil Rights Union & Others v
Minister of Correctional Services & Others (2006) 4 BLLR 385
(E), holds that nothing precludes public service employees from
approaching the general courts for purposes of the resolution of
employer-employee disputes on administrative law grounds. The
argument continues that the LRA in section 157 has not
conferred exclusive jurisdiction on the LC to entertain matters
where labour and administrative principles, which are both
underpinned by the Constitution, overlap.
Transnet Ltd & Others v Chirwa: Facts and Questions
The facts and outcome of the SCA matter Transnet Ltd & Others
v Chirwa (2007) 1 BLLR 10 (SCA) serve as an example to the
stark reality of the “mystifying complexity” of this jurisdictional
debate. The decision to dismiss Chirwa was taken on review and
was considered by Brassey AJ of the Johannesburg HC. With
reference to the pre-constitutional Zenzile matter, the Court held
that the dismissal constituted an administrative action, the
dismissal was set aside and the common-law remedies of
reinstatement and nine months’ back-pay were awarded.
Without basing his decision on the provisions of the PAJA,
Brassey AJ concluded that the rules of natural justice had been
breached.
The SCA considered the appeal against Brassey AJ’s decision
at the end of September 2006, almost four years after her
dismissal. Although three of the five judges were in favour of the
notion that employer action in the public service constitutes
administrative action, the majority decision was that public
service employees are precluded from lodging review
applications with the HC in respect of their labour related
disputes.
“No” to the PAJA and “No” to the High Court
With reference to the first question, two judges accepted that the
HC and LC have concurrent jurisdiction to decide any
constitutional matter even though it may fall under the broad
category of employment disputes. They found support for this in
September 2007– Page 28
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an earlier Constitutional Court case, Fredericks & Others v MEC
for Education & Training, Eastern Cape & Others (2002) 2 BLLR
119 (CC), where it was held that “the jurisdiction of the HC is not
ousted by section 157(1) simply because a dispute is one that
falls within the overall sphere of employment relations”.
In Fedlife Assurance Ltd v Wolfaardt (2001) 12 BLLR 1301,
Nugent AJA held that the LRA’s unfair dismissal provisions do
not have an exhaustive effect and that the LRA, therefore, does
not deprive dismissed employees of their common-law remedies
upon termination of the contract of employment.
Turning to the second question, Mthiyane JA and Jafta JA
accepted that the PAJA was promulgated with the view of
codifying administrative law principles that developed under the
common law. They held that Zenzile and the cases followed by
Brassey AJ were distinguishable from the present situation
because they were decided before the introduction of the
definition of “administrative action” in section 1 of the PAJA. The
judges opined that “ordinarily the employment contract has no
public law element to it and it is not governed by administrative
law”. When Transnet Ltd decided to dismiss Chirwa it did so as
employer and not as public functionary.
“Yes” to Administrative Action but “No” to the PAJA and
the High Court
Against the background of the views expressed by Cameron JA
in earlier SCA judgments, it did not come as a surprise that, in
his view, the door to the HC is open to reviews of employer
actions in the public sphere.
Although Cameron JA agreed with the view of the court a quo
that Chirwa was entitled to relief, he disagreed with Brassey AJ’s
approach and reasoning on two points. Firstly, he held that it is
wrong to grant public service employees a common-law remedy
based on the rules of natural justice after the promulgation of the
PAJA and secondly, that it is incorrect to order reinstatement
and nine months’ salary
Up to this point, there is not much difference between the
decisions of Cameron JA and the point of view taken by
Conradie JA.
Based on the principle that there should be great hesitation to
interfere with a constitutional guarantee such as the right to fair
administrative action and supported by the fact that the PAJA’s
list of exclusions from the definition of “administrative action”
does not mention employer action in the public service,
Cameron JA (supported by Mpati DP) concluded that judicial
review survived as remedy for public service employees.
Concluding Remarks
Conradie JA was alone in his reasoning of the matter, but
nevertheless swung the scale in favour of the argument that it
was misplaced to adjudicate the matter under the PAJA.
Conradie JA did not consider the meaning of the terms “public
power” and “public function” but held that even if it were to be
accepted that such action did constitute administrative action,
this was not the true question. He held that the “important
question is whether the structure of the legislation entails that
dismissals in the public domain be dealt with in administrative
acts”.
Conradie JA added that whereas the LRA lays down the
guidelines for procedures to be followed should an employer
decide to dismiss an employee, the PAJA provides procedural
guidelines for fair administrative decisions of public institutions of
whatever description. In his view, the PAJA covers much
broader relationships than the LRA, which regulates a more
specific relationship, namely the one between employer and
employee.
Turning to the applicable remedy, Conradie JA held that the
normal remedy for an administrative review is to set aside the
decision and remit the matter to the decision maker for
reconsideration. In the view of Conradie JA, the court a quo
misdirected itself by awarding nine months’ salary and by
reinstating Chirwa.
In conclusion, Conradie JA held that Transnet Ltd’s appeal
should succeed and that the order of the LC should be
substituted with the decision of Mthiyane JA and Jafta JA.
“Yes” to the PAJA and “Yes” to the High Court
In Prof van Eck’s view, the debate regarding the applicability of
the PAJA to an unfair dismissal dispute in the public service is
merely the tip of the iceberg to a more significant question,
namely one that relates to the future role and status of the LC
established by the LRA. The case illustrates that under the
current system there is ample room for forum shopping, that
there is an unacceptably long line of appeal (it took Chirwa 4
years to get a ruling that the disciplinary hearing must be
reconvened) and that labour dispute resolution could be an
extremely costly affair (costs were awarded against Chirwa).
The Superior Courts Bill [B3 2003] has served as a pending
death sentence over the LC for the past 3 years, which may see
the transfer of the LC’s functions to the HC. Should this
legislation eventually be passed, this could signal a new era in
the development of SA labour law.
For the moment, however, the question remains: what advice
does the labour law practitioner give to the public service
employee when he or she is being faced with the choice of
forums in a labour matter.
Firstly, South African will have to wait and see whether the
Constitutional Court has a clear answer regarding the present
debate. An appeal has been lodged against the Chirwa decision
in the Constitutional Court and the matter was heard on 13
March 2007.
Secondly, although an applicant employee in the public service
may be successful in convincing the HC that employer actions in
the public domain does constitute administrative action, the LRA
September 2007– Page 29
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contains better remedies than the PAJA which is limited to the
setting aside of the initial employer decision.
In Fedlife Assurance Ltd v Wolfaardt, the SCA held that the
LRA’s unfair dismissal provisions do not have an exhaustive
effect and that the Act therefore does not deprive dismissed
employees of their common-law remedies upon termination of
the contract of employment.
Reference
Van Eck, S. 2007.The dismissal of public service employees:
applicability of the PAJA. Presentation made at the 20th
Annual Labour Law Conference. 4-6 July. South Africa.
September 2007– Page 30
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CASE LAW UPDATE: PUBLIC SECTOR ISSUES
Presented by Nicci Whitear-Nel
Summarised by Alucia Mdaka
Affirmative Action: equity in promotions and appointments
Introduction
The aim of this paper is to reveal the very nature of case
updates that addresses the issue of affirmative action on
promotions and appointments in the public sector. She indicated
that she had tried to assemble cases that were significant and
some of which were informative and interesting in the hope that
they would provoke debate.
Nel gave the example of the case of Du Preez v Minister of
Justice v Constitutional Development & Others (2006) 27 ILJ
1811 (SE) that addressed the issue of equity on promotion and
appointments in the public sector. In this case, the applicant had
unsuccessfully applied for an advertised post. He contended that
he was not shortlisted but had relevant experience for the post.
It transpired that the shortlisting criteria had given preference to
black females. The applicant referred the matter to the High
Court (HC) alleging unfair discrimination. The HC held that the
adoption of selection criteria that created an insurmountable
barrier for appointment of some applicants was unacceptable. It
held that that had amounted to an unfair discrimination on
grounds of race and sex.
The case of Baxter v National Commissioner: Correctional
Services & Another (2006) 27 T1833 (LC) also seems to be
relevant to the issue. In this case, a coloured male applicant had
applied for, been shortlisted and interviewed for the post. The
selection committee recommended that he be appointed, but the
equity manager rejected his appointment as he had relied on the
national statistics records. The post was re-advertised and the
applicant again applied for it and this time he was not shortlisted.
The applicant challenged his non-appointment on the basis that
the respondent had erred in taking into account the equity
requirements of the national plan and not that of the regional
plan. The Court noted that the appointment of a coloured man
was consistent with the regional plan. The Court held that the
applicant had been unfairly discriminated against. The
respondent was, therefore, ordered to appoint the applicant and
pay him the salary and benefits he would have earned had he
been appointed on the first recommendation.
The issue was further discussed in Willemse v Patelia & Others
(2007) 28 ILJ 428 (LC). The applicant applied unsuccessfully for
the post in which he had been acting for several years. He was
recommended for the post by the selection panel, but was
rejected by the acting general director of the department
because he was not representative of the demographics of the
country. The Court noted that the respondent did not have an
equity plan for decision-making, and it operated within a
framework of policy statements and targets quotas. The Court
held that the relevant targets had already been met, and
therefore, the respondent’s failure to appoint the applicant on
that basis was unfair.
In the case of Public Servants Association obo Karriem v South
African Police Services & Another (2007) 28 ILJ 177 (LC), the
respondent had promoted a white policewoman over a coloured
policewoman. She alleged that she had been unfairly
discriminated against on the basis of race. The Court noted that
there had been objective justification for the appointment of the
white female. The Court, therefore, held that the applicant had
not been unfairly discriminated.
In Kavia v Minister of Correctional Services & Another (2007) 28
ILJ 597 (E), the applicant alleged that the respondent’s failure to
promote him was unfair and referred the matter to the HC
compelling the respondent to furnish written reasons for that.
The HC noted that the respondent’s failure to promote was an
administrative act within the ambit of the Promotion of
Administrative Justice Act 3 of 2000. The HC therefore, held that
the applicant was entitled to written reasons.
Disciplinary action
The case of Phutiyagae v Tswaing Municipality (2006) 27 ILJ
1921 (LC) dealt with the issue of disciplinary action. In this case,
the procedural requirements for fairness specified in the
collective agreement were not complied with when suspending
the applicant. The applicant challenged the matter and alleged
unfair suspension. The Court held that the provisions of the
collective agreement that the respondent had relied upon were
just a guide and no a rigid code to be adhered to.
In Kati v MEC Department of Finance, Eastern Cape Province
(2007) 28 ILJ 589 (E), the applicant had sought an urgent
interdict prohibiting the respondent from suspending her prior to
a disciplinary hearing. The Court noted that the urgency
requirements had not been met. It was also held that not all
unfair labour practices specified in the LRA would automatically
find a constitutional claim in the HC, and that it must first be
sought through LC.
September 2007– Page 31
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Whistleblower
The issue in the case of Tshishonga v Minister of Justice &
Constitutional Development & Another (2007) 28 ILJ 195 (LC)
was whether the applicant was entitled to compensation in terms
of the Protected Disclosures Act 26 of 2000(PDA). The applicant
was dismissed for making a press statement alleging impropriety
by his employer. The LC noted that the applicant had acted
reasonably in so doing and that he met all the requirements set
out in section 9 of the PDA. The respondent was, therefore,
ordered to pay him a maximum compensation for the
occupational detriment he had suffered.
mandamus against those responsible for ensuring compliance
with the order for reinstatement.
Implications flowing from upgraded posts
Nel indicates that the case of South African Police Servants
Association (2006) 27 ILJ 2241 (CC), the Constitutional Court
(CC) had overruled a decision by Supreme Court of Appeal on
the issue of the implications to retain the incumbent in the
upgraded position. The CC held that the employer would have
discretion as to whether to re-advertise the post or to retain the
present incumbent. However, that decision was opposed by the
High Court, but was upheld.
Enforcement
In the case between Minister of Health & Another v Bruckner
(2007) 28 ILJ 612 (LAC), the LC had issued an order directing
the appellant Minister, her director general, and her department
to reinstate the respondent. The employer refused to comply
with the order. The respondent, therefore, sought an order
declaring the appellant to be in contempt of court and committing
the Minister and her director general to jail. They appealed
against the order. The LAC, therefore, considered the
applicability of the State Liability Act 209 of 1957 and found that
it did not bar the court from ordering the Minister to be in
contempt of the court. The LAC noted that the original order for
reinstatement was made against the department and not the
Minister or her Director General. The Court therefore, held that
the proper course of action would be to apply for an order of
Similarly in Meyer v Provincial Department of Health & Welfare &
Others (2006) 27 ILJ 2055 (T), the applicant had resigned
because of the delay of his disciplinary hearing. The applicant
later sought to claim his benefits and was informed that his
resignation was not of any legal effect because he gave
defective notice. The Court noted that the respondent had
accepted the resignation in its defective terms, therefore, the
termination was binding. The Court held that the respondent
could not resile from the agreement and refuse the employee his
benefits.
Reference
Whitear-Nel, N. 2007. Case Update: Public Sector Issues
Presentation made at the 20th Annual Labour Law Conference,
4-6 July 2007. South Africa.
September 2007– Page 32
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SECOND GENERATION CONTRACTING-OUT: IN OR OUT?
Presented by Craig Bosch
Summarised by Poso Mogale
Introduction
The basis of Bosch’s paper was for employers and employees to
know when section 197 of the LRA is applicable. Its purpose is
to consider the issues surrounding the application of section 197
to second generation contracting out. If section 197 applies, the
employee’s contract of employment is transferred automatically
to a new employer. The rights and obligations between the old
employer and the employees exist between the transferring
employees and the employer. Since its introduction, the
application of section 197 has been the source of confusion and
debate.
Bosch’s first point is that what is being transferred must be a
“business” as defined, that is, the “whole or a part of any
business, trade, undertaking or service”. However, the inquiry
becomes more difficult when trying to determine whether an
entity is “part” of a business for the purposes of section 197. The
Labour Appeal Court has recently taken a very broad view of
what is a “service” for the purposes of section 197. It found that
an entity is a “service” if it performs a particular activity, meaning
that the activity itself is sufficient to bring the entity within the
ambit of section 197. This decision has been a subject of some
criticism.
His second point is that what is being transferred must be
transferred as a going concern. The case of NEHAWU v
University of Cape Town & Others (2002) 4 BLLR 311 (LAC),
was referred to. In this case, the Constitutional Court held that
this means “what is transferred must be a business in operation
so that the business remains the same but in different hands”. In
the same case, the LC was reluctant to accept that section 197
applies to outsourcing transactions as a form of business
transfer. However, a recent judgment of the LC, COSAWU v
Zikhethele Trade (Pty) Ltd & Another (2005) 9 BLLR 924 (LC)
has given a reason to consider what should be the proper
approach to the interpretation and application of section 197.
Zikhethele told the employees of Khulisa that they would be
seconded to Zikhethele pending the outcome of the proceedings
in the HC. All of Khulisa’s employees in Port Elizabeth and
Durban were transferred to Zikhethele. The ones in Cape Town
were informed that Zikhethele would decide whom of those who
had applied, would be employed. The union contended that such
applications were unnecessary because its members’ contracts
had automatically transferred to Zikhethele by virtue of section
197. Zikhethele eventually employed 104 of the 147 Cape Town
employees.
Zikhethele and Khulisa had the same managing director,
operated from the same premises as Khulisa in Cape Town,
Durban and Port Elizabeth, used the same telephone number,
fittings and other equipment used by Khulisa and its main client
and largest asset was FPT.
In giving his judgment, Murphy AJ accepted that “ a compelling
argument can be made, based on the express language in
section 197, that the requirement in section 197(1)(b) that a
transfer of business be by one employer to another precludes its
application to second generation contracting out, because in
such arrangements nothing is transferred by the old employer to
the new employer”. However, in the court’s view section 197
could apply to cases like this one for the following reasons.
Firstly, the courts have not required that there be any contractual
link between the old and the new employer for there to be a
section 197 transfer. In addition, the Court favoured a less literal
and more purposive approach when interpreting section 197. In
coming to this conclusion, the Court was guided by its obligation
to interpret section 197 in accordance with the spirit, purport and
objects of the Bill of Rights and relevant foreign jurisprudence. In
applying its analysis of section 197 to the facts before it, the
Court found that the business of Khulisa had been transferred to
Zikhethele as a going concern given that it had retained its
identity to a sufficient degree.
Discussion
COSAWU v Zikhethele Trade (Pty) Ltd
In this case, Khulisa Terminal Services (Khulisa) entered into an
agreement with Fresh Produce Terminal (FPT) to supply
terminal and stevedoring services for FPT at harbours in Cape
Town, Port Elizabeth and Durban. FPT elected to terminate its
contract with Khulisa and awarded it to Zikhethele. The
unsuccessful initiated proceedings in the High Court (HC).
In Bosch’s view, the decision is to be welcomed in certain
respects. The argument is that, in the circumstances of that
case, it is unnecessary for the Court to adopt the two-phase
approach to the transfer. That is said to be so because a
sufficient number of components of the business of Khulisa had
been transferred directly by Khulisa to Zikhethele to constitute a
transfer as a going concern. This criticism is justified, but only if
the components were actually transferred by Khulisa to
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Zikhethele. Assuming that Khulisa transferred a significant
number of the components of its business to Zikhethele, it was
probably not necessary to apply the two-phase approach
adopted by the court in the Zikhethele case. Bosch added with
the benefit of hindsight that if one accepts that “by” in section
197(1)(b) can be read as “from”, who the transfer is by and how
it happens is insignificant.
The real difficulties in the context of second generation
contracting-out arise where very few or none of the components
of the relevant “business” of the outgoing contractor are
transferred by that person, but those components are all
nevertheless transferred to the new contractor. A strict reliance
on the wording of section 197(1)(b) precludes such situations
from being covered by the section despite the fact that there has
been a transfer of the business as a going concern.
The Constitutional Court has stated, viewing section 197 through
the lens of the right to fair labour practice, that the section does
not have a single purpose. It has stated that rather, “it’s purpose
is to protect the employment of the workers and to facilitate the
sale of businesses as going concerns by enabling the new
employer to take over the workers as well as other assets in
certain circumstances. The section aims at minimising the
tension and the resultant labour disputes that often arise from
the sale of businesses and impact negatively on economic
development and labour peace. In this sense, section197 has a
dual purpose, it facilitates the commercial transactions while at
the same time protecting the workers against unfair job losses.”
Bosch’s view is that the thrust of section 197 is essentially that
employees are entitled to continue employment, on the same
terms and conditions, when the business in which they work is
transferred to another employer and after transfer remains the
same business. Loss of employment in those circumstances
would amount to the kind of “unfair job losses” alluded to by the
Constitutional Court. If one accepts this view of section 197, in
determining its applicability the mode or method of transfer is of
less importance than whether the business in question has been
transferred as a going concern. This approach is in keeping with
that of the European Court of Justice which has stated
repeatedly that the aim of the directive:
“is to ensure continuity of employment relationships within an
economic entity, irrespective of any change of ownership. The
decisive criterion for establishing the existence of a transfer
within the meaning of the directive is, therefore, whether the
entity in question retains its identity”
However, relevant foreign case law should be accorded its
proper weight bearing in mind that the European jurisprudence
in particular was a source of inspiration and guidance in the
drafting of section 197. In addition, South African courts have
endorsed the use of European jurisprudence as guidance in the
application of section197.
Various commentators have raised difficulties with accepting that
section 197 applies in the context of second-generation
contracting-out. Wallis argues that if the legislature wanted to
amend section 197 so as to bring transactions like secondgeneration contracting-out within its ambit it would have done so
in 2002 when section 197 underwent amendments. He goes on
to argue that the provisions of section 197(7), which were
introduced in 2002, reinforce the impression that the legislature
did not intend section 197 to apply where the transferor and
transferee are not in a direct contractual relationship. It has also
been pointed out that there are a number of practical difficulties
with having section 197 apply to second-generation contractingout. It puts a potential service provider at risk. There are
practical difficulties for the tenderer if section 197 applies in the
second generation contracting out.
Bosch also indicated that it should be borne in mind that a
contractor might tender for a contract on a certain basis and
then, before it actually starts to provide the relevant service,
enter into negotiations with the relevant trade union in order to
alter the consequences of section 197 by utilising section 197(6)
agreement. Section 197(3) allows a new employer, without an
agreement with the affected employees, to offer different terms
and conditions, provided they are on the whole not less
favourable than the employees had with the old contractor.
An important consideration in the Zikhethele case was the
obligation on the courts to adopt a purposive approach to the
interpretation of section 197. That obligation is apparent from
section 39(2) of the Constitution, which requires the courts to
promote the spirit, purport and objects of the Bill of Rights when
interpreting legislation. In this matter, the Court found that
reading “by” as “from” would ensure that employees affected by
first and second-generation contracting-out would receive the
same protection.
The purposive interpretation of legislation does not entitle the
courts to read legislation in any way they choose. The
fundamental question is to what extent a purposive interpretation
justifies a departure from a strict reading of section 197(1) (b) of
the LRA when such gives effect to employees’ fundamental
rights, the purpose of the LRA and the purpose of section 197.
Bosch pointed out that it is clear that in second-generation
contracting-out cases, the right of affected employees to fair
labour practices is limited in that their right to employment
security is restricted. Their right to equality is also limited in that
the law is being applied differently to people who are similarly
situated.
Assuming that the legislature sought to defend the current
wording of section 197(1)(b), it might try to show that if section
197 applied to second-generation contracting-out the service
provision industry would be adversely affected with relatively
little protection for the affected employees. Bosch further added
that, he does not know of any evidence that shows a marked
decline in the service provision industries in European countries
where legislation similar to section 197 has applied for a long
time. The consequences for employees if section 197 did not
apply would be severe in terms of loss of employment security
and the erosion of their terms and conditions of employment.
The legislature would be hard pressed to show that there is a
significant difference between initial outsourcing and second
September 2007– Page 34
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generation outsourcing such as to justify excluding the
application of section 197. The distinction seems arbitrary and
would appear even more arbitrary if it is accepted that in some
cases second-generation contracting-out can fall within section
197, but others will not, even if a business has been transferred
to the new contractor as a going concern.
The international trend has been to ensure that second
generation contracting-out is covered by the relevant protective
legislation. In Europe there have been difficulties relating to
when relevant legislation applied to changes in service provision.
The response from the United Kingdom Parliament was to
introduce new legislation that clearly delineated a broad scope
for the application of the relevant legislation. The need to amend
the UK regulations arose out of seemingly conflicting decisions
emerging from the European Court of Justice that, in turn, led to
contradictory decisions by the national courts that were tasked
with applying them. The remedy that they had adopted was to
make their regulations applicable to practically every change in
service provision. South African courts are not bound to follow
the European courts, but should be guided by their experience.
Bosch further pointed out that the difficulties associated with
section 197 applying only to transfers by the old employer are
not limited to cases involving second or further generation
contracting-out. They also arise where an employer has
outsourced a “business” and then decide to resume that activity
itself.
Conclusion
The decision of the LC has given rise to a debate around the
application of section 197 to so-called second-generation
contracting-out. The Court found that a purposive approach to
the interpretation of section 197 (1)(b) entailed that section 197
will apply when there is a transfer of a business from the old
employer to the new one as a going concern. This means that
the section can apply in cases where the effect of a transaction,
or transactions is to shift a business to a new employer,
regardless of whether the old employer is an active participant in
that shift.
Some commentators have been highly critical of this, arguing
that the approach of the Court goes beyond the limits of
purposive interpretation and completely ignores the clear
wording of section 197 (1)(b). Bosch’s suggestion is that the
section is intended to apply to situations where a new employer
takes over a business as a going concern. He had also
suggested that an interpretation of section 197 that extends it to
second generation contracting-out is in keeping with the rights to
fair labour practice and equality of employees affected by such
transfers. A further suggestion was that if the courts insist on the
old employer actively transferring the business as a going
concern because that is what the wording of section 197 (1)(b)
requires, that provision is probably not going to pass
constitutional monster. That might also be the case where a
client, having outsourced a service, decides to resume that
activity. Finally, Bosch suggests that it is difficult to imagine why
section 197 should not apply in those circumstances, other than
the barrier supplied by the “by” in section 197 (1)(b).
Reference
Bosch, C.2006. Second Generation Contracting - Out?
Presentation made at the 19th Annual Labour Law Conference.
5-7 July 1006. South Africa.
September 2007– Page 35
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APPOINTMENTS AND PROMOTIONS: ARE THE LEGAL REQUIREMENTS CLEAR ENOUGH?
Presented by Professor Alan Rycroft
Summarised by Alucia Mdaka
Introduction
In his presentation, Professor Rycroft outlines three basic
requirements for a fair appointment or promotion that
employers should take into consideration when engaging
in promotion or appointment processes. These include
that:



The procedure must have been fair,
There must have been no discrimination, and
The decisions must not have been grossly
unreasonable.
He indicates that the aim of the paper is to explore how
recent decisions interpret these requirements, and also to
evaluate whether these requirements are clear or not. He
mentions that through the use of case studies arising over
the past year, he would be able to draw some
conclusions about how arbitrators and judges are
interpreting the legal requirements.
Procedural fairness
Prof Rycroft states that while it has been accepted that
promotion and appointment processes are part of
management’s prerogatives, the shift in the past 20 years
to looking beyond substantive fairness to procedural
fairness had impacted on the processes. Section 3 (1) of
the Promotion of Administrative Justice Act 3 of 2000
(PAJA) requires that an administrative action which
materially and adversely affects the rights or legitimate
expectations of any person must be procedurally fair.
According to Prof Rycroft, whilst it could be argued that
an appointment in the public service is an administrative
act, it cannot be said that an applicant has a right or even
a legitimate expectation to a job. But nevertheless, the
norm of a procedural fairness has been accepted in
appointment practice.
Prof Rycroft states that it is now understood that the
process used must not favour one candidate over
another, that the composition of the selection committee
must be representative, that the selection process must
not be dominated by a single person, that the evaluation
of the applicants must be rationally done through testing
whether the applicant meets the minimum requirements
for the job and has the other competencies set out in the
advertisement. The rapid spread of interviewing
methodology – prepared questions, marking grids,
psychometric testing – all point to the acceptance that the
process used in making an appointment or promotion
must be seen to be fair.
In the case of Wasserman v SAPS & Others (2006) 27
ILJ 2782 (BCA), the applicant had referred a dispute to
the relevant bargaining council alleging that the
respondent’s failure to promote him was an unfair labour
practice. He claimed that he had been assessed and the
outcome revealed that he was the top candidate, but the
evaluating panel appointed the second best candidate on
the basis that he had more extensive experience. He
contended that the panel had not adhered to the criteria
set out in the South African Police Service (SAPS)
Regulations. The arbitrator noted that the panel had relied
on false information not contained in the CV of the
second best candidate, and that the chairperson of the
hearing had relied on his personal knowledge. It was also
noted that the panel had not adhered to the National
Instruction 2000, which provides that the panel’s
recommendation should be based on the criteria set out
in the regulations. The arbitrator held that the respondent
had committed an unfair labour practice in not promoting
the applicant, and it was, therefore, ordered to
compensate the applicant an amount equivalent to 12
months’ salary.
In SAPS v PSA (2006) 27 ILJ 2241 (CC) the dispute was
about the interpretation of the word “may” as set out
under regulation 24 (6) of the SAPS Regulations. It
provides that “if the National Commissioner raises the
salary of a post as provided for under subregulation (5),
he or she may continue to employ the incumbent
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employee in the higher grade if the incumbent is already
performing the duties of the post and should start
employment at the minimum notch of higher salary
range”. What was at stake was whether the
Commissioner had discretion to either advertise the post
or continue to employ the incumbent in the upgraded
post. The Supreme Court of Appeal (SCA) held that the
Commissioner did not have discretion to do so and that
the incumbent should be retained in the upgraded post
without advertising it.
On review, the Constitutional Court held that the
regulations have to be in a way that gives the
Commissioner the discretion whether to advertise or not.
However, the discretion should be exercised in a way that
it does not lead to a loss of job by a qualifying incumbent.
The issue was further addressed in the case of Baxter v
National Commissioner: Correctional Services & Another
(2006) 27 ILJ 1833 (LC). In this case, the applicant, a
coloured man, had applied for an advertised post and
was recommended to that post by the selection
committee. His recommendation was rejected by the
equity manager on the basis that there was a gap for one
African man at that salary and management level. The
post was later re-advertised as approved by the National
Commissioner. The Labour Court (LC) found that the
National Commissioner had failed to comply with the
requirements of the SAPS Regulations. The LC also
found that in terms of the provincial plan, the appointment
of a coloured man was favoured, and therefore, the
respondent was ordered to promote the applicant.
The presenter’s comment is that “this case illustrates that
courts will scrutinise the process by which departments
and employers reach their decisions”. He indicated that
“the failure to follow existing policies and procedure would
result in the procedure being declared as unfair”. He also
indicated that the case also raised the controversial and
unresolved debate of whether national or provincial
statistics are to be considered.
Non- discrimination
Prof Rycroft indicates that a fundamental right in the SA
Bill of Rights is the right of equality. On the one hand,
section 9 (1) of the Bill of Rights provides that “every one
is equal before the law and has the right to equal
protection and benefits of the law”. On the other hand,
section 9 (3) prohibits unfair discrimination directly or
indirectly against anyone on designated grounds. These
grounds were amplified in section 6 of the Employment
Equity Act 55 of 1998 (the EEA), which provides that no
person may unfairly discriminate directly or indirectly
against an employee in any employment policy or
practice on one or more of the following grounds,
including race, sex, pregnancy, marital status, family
responsibility, ethnicity, colour, social origin, sexual
orientation, age, disability, religion, HIV status, language
and culture.
The issue was addressed in the case of Stojce v
University of KwaZulu Natal (2006) 27 ILJ 2696 (LC). In
this case, the unsuccessful applicant, a Bulgarian, alleged
discrimination on the grounds that English was not his
first language, and that his qualifications and experience
were not considered. The LC noted that the applicant’s
defining characteristics did not classify him as a member
of any particular group worthy of protection. The Court
held that the respondent was justified in refusing to
appoint the applicant who could not communicate
effectively in English.
Prof. Rycroft indicates that the starting point of any
evaluation of affirmative action is the constitutionally
enshrined endorsement of affirmative action in terms of
section 9 (2) of the Bill of Rights. The significance of this
section is the link between equality and what appears to
be a form of discrimination.
He also indicates that it is worth recapping the way courts
have approached affirmative action in the past. The case
that addressed the issue of affirmative action was the one
of PSA & Others v Minister of Justice & Others (1997) 3
SA 925 (T). In this case, the Court held that the
affirmative action policies are recognised as
discrimination that bears the onus of proving fairness on
the employer. In the case between Minister of Finance v
van Heerden (2004) 6 SA 121 (CC), the CC changed the
paradigm of how to approach affirmative action. The
Court held that legislative and other measures that
properly fall within the requirements of section 9 (2) are
not presumptively unfair.
He further indicates that what was interesting is that this
CC decision was not even cited by the judge in Du Preez
v Minister of Justice & Constitutional Development (2006)
27 ILJ 1811 (SE). The applicant unsuccessfully applied
for a post and referred a dispute using Promotion of
Equality Prevention of Unfair Discrimination Act rather
than the EEA. The Court found that the applicant’s race
group was treated as an absolute barrier to appointment.
The Court noted that the policy was irrational because it
gave preference to African females who met the
requirements compared to other candidates. The Court
held that the respondent had failed to prove that the
discrimination was fair. The criteria was, therefore, set
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aside, and the respondent was ordered to re-advertise
the post.
One of the recent developments in the courts is that
which deals with challenges between applicants who both
fall into designated groups. In Henn v SA Technical (Pty)
Ltd (2006) 27 ILJ 2617 (LC), the applicant for a job, a
white female, was rejected because of employment equity
demographics. The respondent conceded that it had
discriminated against her on the basis of her race, but
argued that that it was obliged to apply affirmative action
measures, therefore, she was not unfairly discriminated
against. The Court noted that the respondent’s conduct
was not contrary to its policy, and that it was justified in
giving preference to African females who were suitably
qualified. The LC, therefore, held that the respondent was
entitled to discriminate on the basis of race as it was
complying with affirmative action as provided for in
section 6 (2) (a) of the EEA.
the case of Arries v CCMA & Others (2006) 27 ILJ 2324
(LC). The applicant’s case was that the respondent had
failed to promote her despite numerous applications for
various positions. She was rejected on the basis that she
lacked certain skills. The LC suggested that the court’s
role in assessing the substantive fairness of a decision is
that an employee can only succeed in having the exercise
of discretion of an employer to interfere if it is
demonstrated that the discretion was exercised for
insubstantial reasons, or based on any wrong principle
and/or in a biased manner.
Prof. Rycroft believes that it is important to note that the
right to challenge promotions is derived from the definition
of unfair labour practice. He argues that the test in Arries’
case was insufficient and suggests that there are certain
elements that should be met for an appointment or
promotion to be fair. These elements include the
following:
According to Prof. Rycroft, the principle that can be drawn
from these cases is that there are different degrees of
discrimination to which people within the designated
groups are subjected to. Therefore, it is not unfair
discrimination to implement affirmative action policies.

The failure to have a departmental equity plan was dealt
with in the case of Williemse v Patelia NO & Others
(2007) 28 428 (LC). The acting director general had
rejected the applicant’s recommendation because he was
not representative of the demographics of the country.
The LC emphasises the following factors in this case:



The advertisement must contain accurate
information about both minimum requirements and
preferred experience and that must be necessary for
the job,
The assessment of the candidates at the interview
must relate to the competencies required for the job,
The successful candidate must be the person who
scored the highest in the assessment, and
If there is deviation from the highest scored
candidate, there must be a sound reason to justify
that.
Not grossly unreasonable
The case between Kotze v Agricultural Research Council
of SA (2007) 28 ILJ 261 (CCMA) dealt with the issue of
minimum requirements. In this case, the applicant alleged
an unfair labour practice because the respondent had
refused to appoint him to the post that he had acted in for
several years because he did not have the formal
qualifications required for the position. The arbitrator
noted that the applicant was appointed to act in a higher
post with no formal qualifications, and that the respondent
had only considered that when the applicant had applied.
The arbitrator held that the respondent had acted in bad
faith by placing the applicant in an acting position for a
long period knowing that he did not have formal
qualifications.
Prof. Rycroft states that a decision taken by a selection
committee should not be grossly unreasonable. The issue
was addressed in the case between Goliath v
Medscheme (Pty) Ltd (1996) 5 BLLR 603 (IC). The
Industrial Court had used the “grossly unreasonable/male
fide” test to measure if there was substantive fairness in
the appointment. This test had been slightly modified in
Another case that he gave is that of De Nysschen v
General Public Service Sector Bargaining Council &
Others (2007) 28 ILJ 375 (LC). In this case, the applicant
had been acting in an upgraded post for several years,
and had applied for that post when it was advertised. The
selection committee recommended her appointment, but
the Member of the Executive Council (MEC) appointed




That the department did not have an equity plan,
The representativity targets in regards to gender
and race that had been set had already been met,
The relevant criterion was at the level of the post,
not the department as a whole, and
The applicant’s disability had been disregarded as a
consideration because it was not relevant.
The Court held that the applicant be appointed in that
post and also pay him a salary and benefits he would
have received had he been appointed to the post.
September 2007– Page 38
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another candidate to that post. The arbitrator held that the
appointed candidate was the most suitable despite the
fact that the applicant had acted in the post for several
years. On review, the LC noted that there was no
compelling evidence that the candidate was suitably
qualified for the post, because the appointment was the
result of arbitrary reasoning which was unreasonable and
unfair. The LC also noted that the respondent did not
follow procedures when there was a deviation from the
selection committee. The LC held that the discretion of
the MEC was not an unlimited one as it had to be
exercised in away that did not result in an unfair labour
practice. The Court held that there would have been no
prejudice to the department had the MEC followed the
selection committee’s recommendations. The respondent
was, therefore, ordered to appoint the applicant to the
post and also to pay her salary as if she had been
successful.
Prof. Rycroft mentions that deviation from the
recommendations of a selection committee should be
done rationally based on the factors of equity or
operational requirements.
Conclusion
He concludes by pointing out that this review of cases
revealed that courts continue to use the requirements of a
fair promotion or appointment. According to Prof. Rycroft,
cases that deal with non-discrimination have become a
contested terrain, whereas the one on rationality of
decision is a warning to decision makers that deviating
from the recommendation of the selection committee is
not to be done lightly.
Reference
Professor Rycroft, A. Appointments and Promotions:
Are the legal requirements clear enough? Presentation
delivered at the 20th Annual Labour Law Conference, 4-6
July 2007. South Africa.
September 2007– Page 39
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CASE LAW UPDATE: INDIVIDUAL AND COLLECTIVE LABOUR LAW
Presented by Shamima Gaibie
Summarised by Poso Mogale
UNFAIR DISMISSAL
Introduction

that he had, subjectively, an expectation that the
employer would renew the fixed term contract in
question on the same or similar terms,
that the expectation was reasonable, and
that the employer did not renew it or offered to
renew it on less favourable terms…”
This article focuses on the cases that had raised
significant issues. Various cases during this year have
dealt with some of the definitions of dismissal.


Termination of contract by the employer
The approach taken in the S.A. Rugby case was also
broadly adopted in the following two arbitration awards:
NUMSA obo Buthelezi & Others v LTR Appointments CC
(2005) 9 BALR 919 (MEIBC) and Swanepoel v The
Department of Water Affairs & Forestry (2005) 12 BALR
1272 (GPSSBC). Of particular importance is the
arbitration award in Brown & Another v Read Educational
Trust (2006) 6 BALR 605 (CCMA) where the applicant
employees had been employed by a Non-Governmental
Organisation (NGO) on a number of fixed term contracts
which had been renewed annually for a number of years.
Towards the end of their last employment contracts the
period of renewal of such contracts had been shorter and
the latest contract was not renewed. This was because
the funds for the project on which they worked were
exhausted. In this case, the fact that the employees knew
that their employment was linked to the availability of
finances obtained by the NGO counted against them
having a reasonable expectation of renewal.
Occasionally disputes dealing with termination of
employment turn on whether the employee has resigned
or has been dismissed. In SACWU obo Sithole v Afrox
Gas Equipment Factory (Pty) Limited (2006) 6 BALR 592
(NEIBC), the employee had resigned in terms of an email
that he sent to two managers of the company. Two weeks
later he attempted to retract the resignation. When the
employer refused to accept the withdrawal, the employee
claimed that he had been unfairly dismissed. The
arbitrator held that the employee was not dismissed.
The next case deals with an employee who was
employed indifferent capacities: Turnbull v Amazwi Power
Products (Pty) Limited (2006) 27 ILJ 237 (BCA). Turnbull
was both an employee and a director of the company. At
some stage she realised that the company's bad financial
position might impact on her personally. In line with her
perception, she formally resigned as the company's
financial director but reaffirmed her commitment to
continue serving the company as an employee. The
company informed her that they took her resignation to
include her positions of director and employee. Turnbull
then claimed that she had been unfairly dismissed. The
arbitrator found that she had no intention of resigning as
an employee.
Reasonable expectation of renewal
The general principles of the reasonable expectation
criteria were summarised by the LC in S.A. Rugby (Pty)
Limited v CCMA & Others (2006) 1 BLLR 27 (LC): "What
is clear… is that …, the employee must establish
In contrast, in the arbitration award handed down in
Ormond v Denel Aerospace Systems (2005) 26 ILJ 2494
(BCA) the arbitrator found that the employee did indeed
have a reasonable expectation of renewal because he
had been employed in relation to a specific project and
the project had not yet been finalised.
In Seforo v Brinant Security Services (2006) 27 ILJ 855
(CCMA), the employee had been employed as a security
guard on a fixed term contract, which had expired on 31
October 2004. Nothing was said between the parties and
the employee was permitted to continue working.
Approximately seven months later, a laptop computer
was stolen from the employer's premises and the
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employee was a suspect. He was called in and told that
his contract had been renewed with retrospective effect
and that it would now expire on 30 April 2005. He claimed
unfair dismissal. The arbitrator found that the employee
had been unfairly dismissed.
Temporary employment services
These types of contracts assist companies to avoid any
risks of liability for unfair dismissals. In April v Workforce
Group Holdings (Pty) Limited t/a The Workforce Group
(2005) 26 ILJ 2224 (CCMA), the applicant was employed
by a temporary employment service (the agency) and
was assigned to a client as a checker or a picker. Several
months later, the client informed the agency that it no
longer wanted to make use of the applicant's services.
The agency, accordingly, withdrew the applicant from the
client's premises and he was not given any further
assignments. The client relied on clause 4.4 of the
contract of employment, which stated that the contract
would terminate automatically if the client advised the
agency that the employee's services were no longer
required for whatever reason. The arbitrator found that
the effect of this clause was that the contract of
employment terminated automatically when the client
informed the temporary employment service that it no
longer required the services of the applicant and that
there was, accordingly, no dismissal in the
circumstances.
In Dladla v On-Time Labour Hire CC & Another (2006) 27
ILJ 216 (BCA) the client was unhappy with the work
performed by the employee. In this regard, the employee
had a history of arriving late for work. At around the time
for the renewal of the employee's fixed term contract, the
client informed the agency that the applicant was no
longer required. The arbitrator found that the agency was
the employer and that the contract had indeed expired
automatically.
In Zolwayo v Sparrow Task Force Engineering (Pty)
Limited & Another (200)] 6 BALR 599 (MEIBC) the
employee was employed by the agency on a fixed term
contract and was assigned to work for a client on a
project. When the project had been completed his
services were withdrawn. He was offered alternative
employment, which he refused. He later claimed that he
was employed by the client and attempted to hold both
the agency and the client liable for unfair dismissal. The
arbitrator found that the agency was the employer and
that the employee was aware of this. The arbitrator also
held that there had been no dismissal and that the
contract had automatically come to an end when the
project ended.
Constructive dismissal
Generally speaking, the employee must be able to
demonstrate that he could not continue to endure the
employment relationship in circumstances where it had
become "unbearable, extreme or excessive". There were
several arbitration awards that dealt with the issue of
constructive dismissal and some of them are reflected
below:

In Simpson v Forklift Rental & Technical Service
(Pty) Limited (2005) 10 BALR 1098 (CCMA) the
applicant was found guilty of sexual harassment but
later apologised for his actions to the employee
concerned. The managing director of the company
only learnt about the incident two months later and in
an angry confrontation demanded the applicant's
resignation failing which he would be dismissed. The
applicant's resignation was held to constitute a
constructive dismissal.

In Robertson v Ngubane & Company (2006) 1 BALR
82 (CCMA) the employee abandoned her job
because she was unhappy with the results of her
performance appraisal and the measures that had
been implemented by the employer afterwards. She
alleged constructive dismissal. The arbitrator held
that these were the actions that an employer was
entitled to take and that constructive dismissal was
not established.

In Olivier v Imperial Bank Limited (2006) 3 BALR
278 (CCMA) a senior manager resigned after she
had been interviewed by investigators enquiring into
an alleged offence committed by one of her
superiors. She claimed that she had been victimised
and intimidated by being treated as a criminal. The
arbitrator held that the circumstances did not give
rise to a constructive dismissal.

In Daniels v Cape Promotional Manufacturing (Pty)
Limited (2006) 27 ILJ 196 (CCMA) the employee
was accused of stealing two wallets belonging to a
client. The employee was given the option of
resigning or alternatively facing a criminal
investigation at the instigation of the client. She was
advised that if she chose the option of resignation,
the client would not pursue criminal charges. She
signed a letter choosing resignation and thereafter
claimed constructive dismissal. The arbitrator held
that the employer had exerted undue pressure on
the employee by threatening a criminal prosecution
as an alternative to resignation and that this
constituted constructive dismissal.
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Dismissals for misconduct
There were numerous arbitration awards and LC
judgments that dealt with varying circumstances relating
to misconduct and the basis for dismissal in relation to
such.
v Independent Newspapers & Others (2006) 1 BLLR 73
(LC), an employee was held to have been fairly dismissed
for sending insulting/derogatory emails about her
superiors to her colleagues. In Kalam v Bevcap (2006) 6
BALR 565 (MEIBC) the downloading and transmission of
pornography was held to be a dismissible offence.
The role of shop stewards
Alcohol
In NUMSA obo Mbali v Schrader Automotive S.A. (Pty)
Limited (2006) 2 BALR 143 (MEIBC), the employee was
charged with being under the influence of alcohol during
working hours. The employer had a zero tolerance policy
on alcohol abuse and the allegation against the employee
was based on a breathalyser test, which registered that
there was more than 0,05% alcohol per 100 millilitre of
blood in his blood stream. He was dismissed. He claimed
that he had consumed alcohol the previous night and
denied that he was under the influence of alcohol. It
appeared that the only other evidence that he may have
been under the influence of alcohol was the probable
smell of it on his breath. The arbitrator found that the
charge had not been proved.
Fraud and dishonesty
Both the LC and the arbitration awards handed down
under this topic establish the general principle that fraud
and dishonesty justifies dismissal.




In SATAWU obo Makhema & Thubakgoale v Jedidja
Couriers (2005) 9 BALR 942 (NBCRFI), fraudulent
clocking offences was held to justify dismissal.
In MOSSAWU obo Khoza v Mr Price Weekend
Material (2005) 9 BALR 961 (CCMA), the dismissal
of an employee who had failed to report theft
committed by another employee justified dismissal.
In PSA of S.A. obo Venter v Laka NO & Others
(2006) 1 BLLR 20 (LC), dismissal was justified in
circumstances where an employee was found guilty
of fraud and using information obtained in the course
of his duties for his own benefit.
In Petersen v Shoprite Checkers (2006) 3 BALR 292
(CCMA), dismissal was justified in circumstances
where the employee fraudulently changed his time
keeping records.
Internet and email
Generally misconduct in this area concerns the abuse of
internet and email facilities through the transmission or
downloading of pornography and information in
contravention of the Copyright Act 9 of 1978. In Van Wyk
The dual role of an employee who is also a shop steward
was the subject of at least one LC case and three
arbitration awards. In NUMSA & Others v Atlantis Forge
(Pty) Limited (2005) 12 BLLR 1238 (LC) the Court found
the dismissal of a shop steward, who had during the
course of an unprotected strike urged his fellow
employees to go on strike and his failure to advise them
of the consequences of such conduct was justified. The
dismissal of a shop steward for inciting workers to go on
strike in breach of a court order and for intimidating and
threatening employees who had declined to take part in a
COSATU organised national stay-away was held to be
justified.
Procedural fairness
The requirement of procedural fairness applies to all
employees. Although an investigation should, in principle,
take place before a decision to dismiss is taken, this
appears not to be an absolute rule. In Semenya & Others
v CCMA & Others (2006) 6 BLLR 521 (LAC), the LAC
found that the dismissal of the employee was
procedurally fair in circumstances where the employee
rejected the employer's subsequent offer of a hearing by
an independent person.
In Riekert v CCMA & Others (2006) 4 BLLR 353 (LC), the
Court held that an employer cannot simply depart from an
agreed disciplinary code at will but that it must show good
reason for doing so. In Avril Elizabeth Home for the
Mentally Handicapped v CCMA & Others (2006) 27 ILJ
1644 (LC), the Court took a more flexible approach to
procedural fairness. The Court signalled a more informal
approach to procedural fairness and indicated that: "there
is clearly no place for formal disciplinary procedures that
incorporate all of the accoutrements of a criminal trial,
including the leading of witnesses, technical and complex
charge sheets, requests for particulars, the application of
the rule of evidence, legal argument and the like ….”
In Old Mutual v Gumbi (2007) 52 (SCA), the following
facts were pertinent:

On 5 March 2004 the employee had submitted
claims for subsistence and travelling expenses to his
employer. The employer noticed certain
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discrepancies in the claims and invited the employee
to discuss the matter. The employee refused,
became aggressive and threatened him with assault.

Charges of misconduct were preferred against the
employee and a disciplinary enquiry was scheduled
for sometime in March 2004. The employee
produced a medical certificate for that day and did
not attend the enquiry. The employer proceeded with
the enquiry in his absence and dismissed him.

The employer later withdrew the dismissal and
reinstated him with a view to recharging him. A
second disciplinary enquiry was scheduled for 29
April 2004. The employee was represented and his
representative "adopted an aggressive and
combative attitude towards the disciplinary tribunal".
The representative also made spurious demands
like the employer’s witness statements and a letter
appointing the chairperson of the enquiry.

After heated arguments with the chairperson, the
latter granted the employee an adjournment of 30
minutes. The employee produced a medical
certificate, which indicated that he had "tension,
headache and enteritis". The chairman granted him
a further 30 minutes to recover from the headaches.
At this stage the representative indicated that they
would not return to the enquiry and in an aggressive
fashion advised the tribunal to continue in their
absence.
The Court held that the employer had satisfied the
requirement of procedural fairness.
Definition of employee
In QB v CSIR (2006) 27 ILJ 2464 (CCMA), the applicant
was offered employment with the respondent with effect
from 1 October 1996. He accepted the offer on 25
September 1996. From 1 October 1996 the employer had
stopped post retirement medical aid subsidies for all the
new employees. Accordingly, the issue requiring
determination in this matter was whether the applicant
became an employee of the respondent on 25 September
1996 or on 1 October 1996 in order to determine whether
he could claim a post retirement medical aid subsidy.
The Commissioner referred to the decision of the LAC in
Wyeth S.A. (Pty) Limited v Manqele & Others (2005) 26
ILJ 749 (LAC) in which the Court found that the literal
interpretation of an employee as defined in section 213 of
the LRA should be extended to include the person who
had concluded a contract of employment to commence
employment at a future date. The Court, accordingly, held
that the applicant became an employee on 25 September
1996 at which date all employees were entitled to post
retirement medical benefits.
The sanction of dismissal
In Rustenburg Platinum v CCMA & Others 2007 (1)
SA576 (SCA) the SCA's key findings can be summarised
as follows:
 An arbitration award issued by a commissioner of
the CCMA constitutes administrative action.
 Such an award falls to be reviewed by the LC and
may be set aside on the grounds set out in PAJA.
 Accordingly, the limited grounds of reviewing CCMA
awards set out in section 145 (1) of the LRA are no
longer applicable and have been replaced by the
grounds set out in section 6 (2) of PAJA.
 The grounds for review are in accordance with the
test laid down by the LAC in Carephone (Pty) Ltd v
Marcus & Others 1999 (3) SA304 (LAC), whether
the award of the commissioner is rationally
connected to the information before the
commissioner and the reason given for it.
 In assessing the fairness of a dismissal CCMA
commissioners should apply the "reasonable
employer" test.
Automatically unfair dismissals
Various cases during the course of this year have dealt
with some forms of automatically unfair dismissals.

In BIFAWU & Another v Mutual & Federal Insurance
Company Limited (2006) 2 BLLR 118 (LAC) a shopsteward was dismissed for dishonestly misleading
the CCMA while representing a colleague in
arbitration proceedings. The Court found that the
shop steward had been dismissed for deliberately
misleading the CCMA and for persisting in his lies
and not for exercising his rights as a trade union
representative. The Court held that his dismissal
was fair and did not constitute an automatically
unfair dismissal.
Discrimination
In terms of section 187 (1) (f), a dismissal is automatically
unfair if the reason for the dismissal is that the employer
discriminated against an employee on any of the grounds
listed, including discrimination on the basis of age.
However and in terms of section 187 (2), a dismissal
based on age is fair if the employee has reached the
normal or agreed retirement age for persons employed in
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that particular capacity. In 2004, the LAC defined "normal
retirement age" in SACTWU & Others v Ruben
Sportswear (2004) 10 BLLR 986 (LAC) as the age at
which the employer requires an employee to retire and
not the age at which the employee may retire if he or she
so wishes. On appeal, the LAC held that where
employees' contracts are silent regarding the retirement
age, the employer is not entitled to unilaterally impose a
retirement age.
A similar approach was adopted in Cash Paymaster
Services (Pty) Limited v Brown (2006) 2 BLLR 131 (LAC).
The LAC found that the employer's conduct in compelling
an employee to retire after the employer had unilaterally
reduced the accepted or mandatory retirement age
constituted an automatically unfair dismissal. The LC in
HOSPERSA obo Venter v S.A. Nursing Council (2006) 6
BLLR 558 (LC) also held in terms of the Employment
Equity Act (EEA) that the forced retirement of an
employee who had reached the retirement age which was
unilaterally set by the employer amounted to an
automatically unfair dismissal as the employer had failed
to prove that the employee had reached "an agreed or
normal retirement age".
These cases must be compared with the decision in
SOLIDARITY obo Dobson v Private Security Industry
Regulatory Authority (2004) 12 BALR 1546 (CCMA)
where the retirement age in terms of the employer's
policy was 65. The employee was however employed
when she was 68 and her services were then terminated
3 years later on the basis that she had reached the
normal retirement age. The CCMA held that knowingly
employing the applicant when she was already beyond
the normal retirement age, the employer had ignored its
own policy and the dismissal amounted to an
automatically unfair one.
provides that any dismissal for making a protected
disclosure is deemed to be an automatically unfair
dismissal. In Pedzinski v Andisa Security (Pty) Limited
(2006) 2 BLLR 184 (LC), the employee who was
employed on a half day basis for health reasons, was
required to work full days after she had reported certain
irregular share trading involving the executive director
and she was subsequently dismissed. Whilst the
employer claimed that the applicant had been dismissed
for operational reasons, the Court found that the
disclosures made by her fell squarely within the
provisions of the PDA and for that reason her dismissal
was automatically unfair.
The applicant in Tshishonga v Minister of Justice &
Constitutional Development (2007) 28 ILJ 195 (LC)
instituted a claim for compensation in terms of the PDA
before the LC. The Court held that the PDA sets out a
four-stage process that involves an analysis of the
information to determine whether it is a disclosure,
whether it is protected, whether the employee was
subjected to any occupational detriment, and what
remedy should be awarded for such treatment. The Court
noted that several requirements have to be met for a
disclosure to qualify as a general protected disclosure. In
this regard, the disclosure had to be in good faith and the
employee must have had a reasonable belief that the
information was substantially true and the disclosure
should not have been for personal gain. Pillay J was of
the view that the applicant's belief was reasonable
because it was based on two official reports, his personal
knowledge of some of the information, his knowledge of
the conduct of the Minister, the Director-General and Mr
M and the fact that no one (including the DirectorGeneral, the Public Protector, the Auditor-General and
Minister Pahad) was willing to investigate his allegations.
Dismissals in the context of transfers
Pregnancy
In terms of section 187 (1) (e) of the LRA, a dismissal is
automatically unfair if the reason for the dismissal is the
employee's pregnancy, intended pregnancy, or any
reason related to her pregnancy. In Wallace v Du Toit
(2006) 8 BLLR 757 (LC) an au pair had been dismissed
soon after announcing to her employer that she was
pregnant. Since the dismissal had been effected for a
reason related to pregnancy, it was held as automatically
unfair in terms of the EEA.
Protected disclosures
Section 187 (1) (h) of the LRA reinforces the provisions of
the Protected Disclosures Act 26 of 2000 (PDA), which
In terms of section 197 or 197A of the LRA, employees'
contracts are automatically transferred when a business
or a part of it is transferred as a going concern. In
SAMWU & Others v Rand Airport Management Company
& Others (2005) 3 BLLR 241 (LAC), the LAC had
occasion to consider a dismissal in the context of section
187 (1) (g) of the LRA. SAMWU launched an urgent
application in the LC seeking an order that the proposed
outsourcing transactions constituted a transfer in terms of
section 197 and ordering that the contracts of the relevant
employees be automatically transferred to the contractors
on the same terms and conditions. The Court indicated
that:
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"Where an employer seeks to transfer a business… to
another employer and such transfer would, if
implemented, be a transfer of business or undertaking or
service as a going concern as contemplated by section
197 of the Act and is initially prepared to let the
employees go over to the new employer but later
dismisses such employees when there is a dispute about
the terms and conditions of employment that they will
enjoy after such transfer to the new employer (which is
what happened in this case) there can be no doubt that
the reason for the dismissal of the employees in such a
case is either the transfer or a reason connected with
such a transfer…Section 187 provides that such a
dismissal is automatically unfair."
In Lotz v Anglo Office Supplies (2006) 5 BLLR 491(LC),
the dismissal of an employee prior to the transfer of part
of a business, who refused to accept transfer to the new
employer was held to be automatically unfair in terms of
section 197.
COLLECTIVE LABOUR LAW
Strikes and lockouts
Issue in dispute
In determining whether a strike or lockout is permissible,
the LAC has held that it is necessary to ascertain the real
nature of the underlying dispute. The rights dispute that
must be arbitrated or adjudicated upon in terms of the
LRA cannot be transformed into a strikable issue
(Ceramic Industries Limited t/as Betta Sanitaryware &
Another v NCBAWU & Others (1997) 6 BLLR 697 (LAC)).
In addition, while a mere demand may form the subject
matter of a dispute, it was held in SAPU & Another v
National Commissioner of the South African Police
Service (2006) 1 BLLR 42 (LC) that it is only once that
demand has been rejected that a dispute arises and that
such a dispute rather than the original demand, becomes
the "issue in dispute". The judgement in SATAWU v Coin
Reaction (2005) 26 ILJ 1507 (LC) reiterates the decision
in the Ceramics Industries case in which it was held that a
Court must "ascertain the real underlying dispute" when
determining the dispute between the parties. Accordingly,
unions must be cautious about risking the legitimacy of
their strike action by failure to give any details of the
dispute in the referral forms.
In Lobtrans S.A. (Pty) Limited v Motor Transport Workers
Union of South Africa & Others (2006) JOL 17557 (LC),
the union referred a "mutual interest dispute" to the
bargaining council for conciliation. The referral form failed
to specify the details of the dispute or the intended
outcome of the conciliation process. Several months later,
it issued a strike notice relating to lunch breaks and
incentive schemes. Whilst the Court recognised the need
not to be too formalistic, it held that a failure to specify the
dispute meant that the union had not demonstrated that it
had in fact referred to the bargaining council the disputes
on which it ultimately wished to strike.
Unlawful demand
In TSI Holdings & Others v NUMSA (2006) 7 BLLR 631
(LAC), the issue concerned a strike over a demand by the
union that the employer dismiss a supervisor for making
racist statements. The union's referral of the dispute to
the CCMA specified the desired outcome as the dismissal
of the racist manager. After conciliation had failed, the
union issued a strike notice that demanded the dismissal
of the supervisor with immediate effect. The employer
sought to interdict the strike on the grounds that the
demand was unlawful because it required the employer to
dismiss the employee in violation of his rights in terms of
the LRA. The LAC held that such a demand could only be
lawful if it called for a dismissal for a fair reason and in
terms of a fair procedure.
Referral of the dispute to a council or to the
Commission
In Johannesburg City Parks v SAMWU (2006) 7 BLLR
659 (LC), the union referred its dispute with the employer
to the South African Local Government Bargaining
Council. When it served its strike notice, the employer
sought to interdict the strike on several grounds one of
which was that the dispute should have been referred to
the CCMA since the employer did not fall under the
jurisdiction of the bargaining council. In terms of section
62 (3) of the LRA, if the union disputes that, the Court is
required to refer the dispute to the CCMA for a
demarcation determination. The Court took the view that
since the right to strike was constitutionally protected, that
right should not be lightly interfered with by technicalities
particularly in circumstances "where there had ostensibly
been compliance with the requirements of section 64 (1)
(a) of the Act".
Strike notice
In the Ceramic Industries case referred to above, the LAC
held that the purpose of section 64 (1) (b) is "To warn the
employer of collective action, in the form of a strike, and
when it is going to happen, so that the employer may deal
with that situation". In terms of this judgment, a notice that
fails to state when the strike will commence will be
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defective in terms of section 64 (1) (b). In contrast, the LC
in County Fair Foods v Hotel Liquor Catering Commercial
& Allied Workers Union & Others (2006) 5 BLLR 478
(LC), held that it would be "formalistic in the extreme" to
declare the notice invalid because it failed to specify a
time for the commencement of the strike action.
Resolution of the issue in dispute
In the case involving the main parties to the security strike
in 2006, Security Services Employer's Organisations v
SATAWU (2006) 27 ILJ 1217 (LC), the unions in the
private security services industry embarked upon a strike
in relation to disputes concerning wages and other terms
and conditions of employment. Approximately one week
later, the employer’s organisation struck a deal with the
unions (excluding SATAWU) and the bargaining council,
which effectively settled the dispute between them.
SATAWU was, however, not a party to the agreement
and continued to strike in relation to such issues. This
decision was confirmed by the LAC. The employer's
organisation sought a declaration that the strike was
unprotected because it had been settled at the bargaining
council and that SATAWU was bound by that agreement.
At issue in this case was whether SATAWU was bound
by a majority vote in terms of a simple majority system
that was different to clause 6 of the council’s constitution,
which provided that union votes on the council would be
determined proportionate to membership. This change in
the determination of union votes was an amendment that
was imposed by the bargaining council and had not been
agreed to by SATAWU. Since the wage agreement with
the other unions had been reached by simple majority
vote and not in accordance with clause 6, the agreement
was not binding on SATAWU and they were, accordingly,
entitled to continue striking.
Pickets
A dispute in respect of picketing behaviour may be
referred to the CCMA for conciliation in terms of section
69 (11) and if the dispute remains unresolved, the matter
may be referred to the LC for determination. In Makhado
Municipality v SAMWU (2006) 27 ILJ 1175 (LC) the
municipality obtained an interim interdict against SAMWU
prohibiting it and its members from damaging municipal
property and injuring and intimidating municipal
employees. SAMWU suspended its strike when the
interim order was granted. On the return date
approximately three months later, the municipality sought
a final order against the union. One of the grounds for
refusing the final order was apparently the municipality's
failure to refer the picketing dispute to the CCMA for
conciliation in terms of section 69 (8).
Ultimatums
In Modise & Others v Steve's Spar Blackheath (2000) 5
BLLR 496 (LAC), it was held that the purpose of an
ultimatum "is not to elicit any information or explanations
from the workers but to give the workers an opportunity to
reflect on their conduct, digest issues and, if need be,
seek advice before making the decision whether to heed
the ultimatum or not”. In NUMSA v Gateway Trailers
(2006) 27 ILJ 419 (BCA), the employees had engaged in
an unprotected strike over non-payment of salary
increments. The employer had issued no less than five
ultimatums within 45 minutes. The employees did not
heed the ultimatums and left the workplace to consult with
the union. The employer dismissed the employees within
75 minutes of the commencement of the strike and the
Court held that the ultimatums given were neither
adequate nor reasonable and that the ultimatums did not
give the employees an opportunity "to reflect on their
actions or to seek advice from their union" as is required
by the Code of Good Practice. The dismissals were held
to be substantively and procedurally unfair.
In NUM & Others v Billard Contractors CC (2006) JOL
17286 (LC), the Court drew a distinction between the
concepts of a hearing and an ultimatum. According to the
Court, the purpose of the hearing is to hear the
employees' explanation for their conduct and to hear their
representations on what action should be taken against
them. The purpose of the ultimatum is to give strikers a
final warning of the consequences of their actions and an
opportunity to reflect on their conduct and the issues and
seek advice before deciding what action to take.
Time periods for interdicting strikes and pickets
In County Fair Foods v Hotel Liquor Catering Commercial
& Allied Workers Union & Others (2006) 27 ILJ 348 (LC),
the employees engaged in a strike over the employer's
refusal to bargain with the trade union because it no
longer represented the majority of employees in the
workplace. The union referred its dispute for conciliation
and after the 30 day period gave the employer more than
13 days notice of its intention to strike. Section 68 (3)
states that if a union gives the employer at least 10 days
notice of the commencement of the strike, the employer
must give at least five days notice of its application for an
interdict. Whilst an advisory award had not been issued
as required by section 64 (2) in these circumstances, the
Court found that in principle, the employer would have
been entitled to the interdict until the advisory award had
been made. However, since the employer brought its
application to interdict on less than 48 hours notice it was
September 2007– Page 46
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not entitled to final relief. According to the Court, the
provisions of section 68 (3) were peremptory and the LRA
did not authorise the Court to abridge the periods. Final
relief was, accordingly, denied.
In Woolworths v South African Commercial Catering &
Allied Workers Union (2006) 27 ILJ (LC), Woolworths
sought a final interdict on the return day of its interim
order against the union and its members from picketing
within 500 metres of its stores. It also sought an order
against the union from "intimidating, assaulting, harassing
and in any other way interfering" with its business,
employees and customers. Woolworths relied on a video
recording of a group of persons wielding sticks and
obstructing entry into its premises but were unable to
identify any of the persons who were involved in such
activities as its employees. The Court refused to grant
Woolworths a final interdict on the basis that the
employees were not properly identified.
Dismissal while on a protected strike
In SATAWU v Equity Aviation Services (2006) 27 ILJ
2411 (LC), the LC held that employees who were not
members of a majority union, that had embarked upon a
protracted strike, were entitled to join the strike without
the need to give a separate notice of their intention to do
so. The Court also recognised the fact that a union was
entitled to increase its membership at any time even
during the strike and that such employees who joined the
union after commencement of the strike are entitled to
strike. In S.A. Agricultural Plantation & Allied Workers
Union v Fourie & Another (2006) 27 ILJ 2399 (LC),
negotiations between the parties reached deadlock and
no agreement could be reached on the issue of wages.
Accordingly, the trade union referred a dispute in terms of
section 64 (1) (a) to the CCMA. There was a dispute
between the parties whether the referral form had in fact
been sent to the employer, the union contended that it
had done so and the employer contended that it had not
received any fax from the union. The employer,
accordingly, argued that the strike was unprotected and,
accordingly, dismissed the applicant farm workers.
Having assessed the documentation, the Court was
satisfied that there had been a valid referral of the dispute
in terms of section 64 (1) to the other party and to the
CCMA. The strike was, accordingly, protected and the
dismissal of the farm workers was automatically unfair. In
the alternative, the Court argued that even if it was wrong
on that point, the employer had to satisfy the Court that it
had a fair reason to dismiss the farm workers and that it
had not discharged its duty in that regard.
Reference
Gaibie, S. 2007. Case law update: collective and
individual labour law. Presentation made at the 20th
Annual Labour Law Conference, 4-6 July. South Africa.
September 2007– Page 47
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TRANSFORMING WORKPLACE DISCIPLINE: THE CASE FOR A MORE INFORMAL DISCIPLINARY
PROCEDURE
Presented by David Gush
Summarised by Alucia Mdaka
Introduction
Gush argues that the judgment by van Niekerk AJ in Avril
Elizabeth Home for Mentally Handicapped was a timely
reminder of the need to carefully consider what is
required of employers when conducting disciplinary
enquiries in the workplace. The question to be asked is
whether it is time to reassess disciplinary procedures and
adopt more effective methods.
It is appropriate to consider and reflect what the Act
requires when dealing with procedure in disciplinary
matters and also what constitutes procedural fairness.
The Labour Relations Act 66 of 1995 (the LRA) certainly
does not require that the disciplinary procedure be formal.
According to Gush, section 188 of the LRA requires
employers to prove that the dismissal was effected in
accordance with a fair procedure. The section also
requires the person determining the fairness of the
procedure to take into account the Code of Good Practice
(the Code).
What does the Code of Good Practice: Dismissal
say?
The Code provides that employees should be protected
from arbitrary action whilst employers are entitled to
satisfy the Code. The presenter highlighted some
guidelines to be considered for a fair procedure when
conducting a disciplinary hearing. They include the
following:




The employer should conduct an investigation to
determine whether there are grounds for dismissal,
The employer should notify the employee of the
allegations using a formal language that the
employee understands,
The employee should be allowed the opportunity to
state his/her case in response to the allegations,
The employee should be entitled to a reasonable
time to prepare for his/her case, and

After the enquiry the employer should notify the
employee of the outcome of the hearing.
Gush mention that there has been a number of decisions
that emphasises the view that the disciplinary codes are
guidelines and that it should not be applied rigidly. In the
case between Denel v Vorster (2004) 25 ILJ 659 (SCA), it
was suggested that it would be advisable to suitably
amend the dispute procedure rather than relying on the
procedure being regarded as merely a guideline. The
applicant alleged that the respondent had failed to comply
with the company’s disciplinary code and procedure. The
Court noted that as the Code and procedure were
expressly incorporated in the conditions of employment of
employees and, the respondent was, contractually bound
to comply. The Court held that the respondent had not
followed the disciplinary procedure, and therefore, it had
breached the contract of employment.
The case of Highveld District v CCMA & Others (2002) 12
BLLR 1158 (LAC) supports the view of Denel’s case. In
this case, the Court held that while employers are
generally required to follow an agreed disciplinary
procedure, failure to do so does not necessarily render
the dismissal unfair.
Requirements for a fair disciplinary procedure.
The first question that must be asked is whether the
accusatorial or adversarial system is the most appropriate
procedure for the workplace disciplinary enquiry. This
system found its origins in the jurisprudence created by
the Industrial Court (IC) under the Labour Relations Act
28 of 1956. The slavish adherence to this procedure has
become akin to the procedure used in the criminal court
and has been perpetuated by the inclusion in collective
agreements of rigid, inflexible and detailed procedure. An
example of this is to be found in the South African Local
Government Bargaining Council: “Disciplinary Procedure
Collective Agreement”. The section dealing with
disciplinary procedure provides that the hearing should be
September 2007– Page 48
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conducted by the presiding officer who may determine the
procedure to be followed unless the parties agree that the
hearing must be adversarial in nature.
Gush indicates that a start in the transformation of
workplace discipline should begin with employers in
consultation, and reconsidering their collective
agreement. The intention of a disciplinary enquiry must
be merely a guideline to give effect to a process in order
to establish the standard of conduct required of
employees. A less formal or rigid procedure would
contribute greatly to satisfy the requirements of corrective
or progressive discipline.
He also indicates that in the light of the provisions of the
LRA, the accusatorial or adversarial are inappropriate for
disciplinary proceedings. The more appropriate process is
an inquisitorial procedure. The difference between these
systems is that the adversarial system is characterised by
opposing parties seeking to win, whereas an inquisitorial
procedure allows the adjudicator to properly ascertain the
facts surrounding the matter in the interest of both the
employer and employee. The relevant case on this issue
is the one of Rustenburg Platinum Mines Ltd (Rustenburg
section) v CCMA & Others (2006) SCA 115 (SA). In this
case, it was suggested that the Court’s decision would
throw the spotlight onto workplace disciplinary enquiries
and therefore require them to be more formal. An
inquisitorial enquiry and dialogue with the employee is
more likely to result in a more comprehensive recording
of the facts by the person conducting the enquiry.
Gush mentions that there is a tendency amongst
employers to charge employees with misconduct using
the definitions of the misconduct more appropriate to the
formal charge sheet in a criminal court. This turn to
complicate the disciplinary process because of the
language used. The most appropriate method of notifying
an employee of the allegations is in a narrative form with
a brief description of the allegations.
Conclusion
In concluding his paper, he states that the system that
has been used for disciplinary enquiries following the
criminal trial approach is not a requirement of the LRA.
The most serious consequence is that reducing the
procedure to resemble a criminal trial obscures the focus
of the disciplinary hearing, and this results in a high
volume of disputes. He indicates that the answer to
transforming the disciplinary process is that workplace
discipline must be simplified by adopting a more
inquisitorial type of procedure by allowing greater
flexibility in fact finding.
Reference
Gush, D. Transforming workplace discipline: The case
for a more informal disciplinary procedure.
Presentation made at the 20th Annual Labour Law
Conference, 4-6 July 2007. South Africa.
September 2007– Page 49
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BCEA: QUESTIONS AND ANSWERS
Presented by Dr. Avinash Govindjee
Summarised by Lucky Moloi
Introduction
According to section 87 of the BCEA, the Minister of Labour may
Avinash Govindjee introduces her paper by quoting the terms
issue
of a code of good practice (and may change or replace any
appointing the fixed term contract in the Public Works
code of good practice) after consulting NEDLAC. Any code of
Programme. The extract states that “I am pleased to confirm good
that practice or any change to or replacement of a code of good
you have been appointed to work on a task based employment
practice must be published in the Government Gazette and,
contract within a Special Public Works Programme (SPWP)
importantly, any person interpreting or applying the BCEA must
project…You must be aware that this contract is a limited term
take into account relevant codes of good practice.
contract and not a permanent job. The contract may be
terminated for one of the following reasons:
Section 50 of the BCEA is also instructive. It states that the
a) If the contractor does not get additional contracts fromMinister
the
of Labour may, if it is consistent with the purpose of the
SPWP.
BCEA, make a determination to replace or exclude any basic
b) Funding for the programme in your area comes to an end.
condition of employment provided for in the BCEA in respect of
c) You repeatedly do not perform in terms of the tasks setany
out category of employees or category of employers. A
in your work programme.
determination may not be made in respect of certain sections of
d) You have worked a maximum of 24 months within athe
60BCEA (such as those relating to the regulation of working
month cycle…
time and maternity leave). Ministerial determinations in this
regard must be made on the advice of the Employment
In addition to the conditions above all the terms and conditions
Conditions
of
Commission and must be issued by way of a notice in
employment on SPWP apply to your employment. If you breach
the Government Gazette.
any of these terms your contract may be terminated.”
The Code
So reads a portion of the standard terms and conditions of
employment which are annexed to a “Code of Good PracticePurpose
for
and application
Employment and Conditions of Work for Special Public Works
Programmes”. These documents must be read in conjunction
The preamble to the code re-iterates the reduction of
with a Ministerial Determination for special public works
unemployment and the alleviation of poverty as being a focus of
programmes issued by the Minister of Labour in terms of section
the Government of the Republic of South Africa and places
50 (1) of the Basic Conditions of Employment Act (BCEA). “Special Public Works Programmes” (“SPWPs”) within this
framework.
Relevant provisions of the BCEA
A SPWP is defined by the Code as a “short-term, nonIn terms of section 4 of the BCEA, a basic conditionpermanent,
of
labour intensive programme initiated by government
employment constitutes a term of any contract of employment
and funded, either fully or partially, from public resources to
except to the extent that –
create a public asset”.
a) any other law provides a term that is more favourable to the
employee,
The Code seeks to provide uniform guidelines for the protection
b) the basic condition of employment has been replaced,
of workers involved in SPWP’s, in particular regarding working
varied, or excluded in accordance with the provisions ofconditions,
the
payment and rates of pay, disciplinary and grievance
BCEA, or
procedures.
c) a term of the contract of employment is more favourable to
the employee than the basic condition of employment.
September 2007– Page 50
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The purpose of the Code is to provide guidance to employers
regarding important legal provisions in relevant legislation,
Unemployment insurance and compensation for occupational
without imposing any additional legal obligations. The Code
injuries and diseases
applies to all employers and to all workers hired to perform in
elementary occupations in SPWPs. An “elementary” occupation
Working on SPWPs does not qualify as a contributor in terms of
is defined as one involving unskilled or semi-skilled work. the Unemployment Insurance Act and no Unemployment
The Code adopts a task-based approach to work on SPWPs Insurance
and
Fund contributions will be paid on behalf of or by
workers engaged should only be paid fixed daily rates whereworkers
this
in SPWPs. By contrast, the Compensation for
is not possible.
Occupational Injuries and Diseases Act applies to all SPWPs and
the Code places various duties upon employers in this regard.
Beneficiaries and duration of participation
For example, an employer must pay a worker who is injured in an
accident at work and who is unable to work 75% of their wages
The Code favours non-working individuals from “the most
for a period of up to three months and this money will be
vulnerable sections of disadvantaged communities” who dorefunded
not
to the employer by the Compensation Fund.
receive any social security pension income (a maximum of one
person per household) as being the ideal beneficiaries ofAttendance
the
and hours of work
SPWPs. The Code sets targets of 60% women, 20% youth (from
18 to 25 years of age), and 2% disabled people as beingThe
the ‘no work-no pay’ principle applies in general. One exception
preferred beneficiaries of SPWPs in all occupational categories
to this is that a worker who is absent due to illness or injury and
and preference must be given to these targeted groupsis in
able to furnish proof thereof may obtain a maximum of one
selecting workers. The Code suggests the following criteriaday’s
to paid sick leave for every full month worked provided the
assist employers in targeting the poorest people:
worker works four or more days per week. A worker may not
spend more than 55 hours in any week completing tasks.
 people who come from households where the head of the
household has less than a primary school education, Discipline, dismissal and termination
 people who come from households that have less than one
Every SPWP must have a disciplinary code and a grievance
full time person earning an income, and
procedure which applies to all persons employed in the
 people who come from households where subsistence
programme. In addition, employers are directed to use the Code
agriculture is the source of income.
of Good Practice: Dismissal as a guideline when disciplining or
dismissing workers. The Code is, however, slightly broader than
Except in the unlikely event of no other local labour being
the Labour Relations Act 55 of 1995 (LRA) in specifying that the
available, no person may be employed for more than 24-months
reason for a dismissal or termination may relate to the fact that
on SPWPs within a 5-year cycle.
people have not attended the required training programmes or
have regularly not attended at work. There is also no requirement
Payment
that the employer needs to hold a formal inquiry.
The Code stipulates the following guidelines in determining rates
The Conditions
of pay for workers in SPWPs:



The rate set should take into account wages paidThe
for gazetted Ministerial Determinations applies to all employers
andif employees engaged in public works programmes. The terms
comparable unskilled work in the local area per sector,
and conditions reflected do not, however, apply to supervisory
necessary,
and managerial level of SPWP.
The rate should be an appropriate wage to offer an incentive
for work, to reward effort provided and to ensure a
reasonable quality of work. It should not be more thanThe
the Conditions also detract in significant ways from the BCEA.
For
average local rate to ensure that people are not recruitedexample, only workers who work four or more days per week
on SPWPs have the right to claim sick-pay and family
away from other employment and jobs with longer-term
responsibility leave. On maternity leave, although a worker may
prospects, and
take up to four consecutive months’ maternity leave, a worker is
Men, women, disabled persons and the aged must receive
not entitled to any payment or employment-related benefit during
the same pay for work of equal value.
maternity leave.
Interestingly, if workers are informed a day before that work will
not take place the next day, they should not be entitled to The
any Conditions also impact significantly on issues pertaining to
termination
of contract and dismissal. Any worker employed on a
payment.
September 2007– Page 51
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SPWP who is absent for more than three consecutive days
Analysis
without informing the employer of an intention to return to work is
deemed to have terminated the contract of employment.
It has been argued that the practical experience of SPWPs
Similarly, a worker who has not attended the required training
suggests that there are policy gaps that should be addressed in
events, without good reason, is deemed to have terminatedorder
the for the programme to contribute in terms of skills
contract.
development, employment creation and poverty reduction. One
of the critical policy gaps relates to the problem of a dual labour
Case law
market system – the formal labour markets enjoying a regulated
way of dealing with industrial disputes whereas some SPWP
Very few cases pertaining to SPWPs appear to have been
experiences “resemble the characteristics of a cheap, casual and
argued. In Swartbooi & 14 Others v ACV Civils (ECPE 3157-03),
unprotected labour force, belonging to a secondary labour
the applicants were all employed in terms of identical contracts
market that is not regulated”. Some working conditions are so
(based upon the standard contract annexed to the Code) under
dreadful
a
that it has been submitted that they can be
SPWP. In terms of the contract, termination was permissiblecharacterised
as
as projects which “perpetuate poverty and
mentioned in the introductory part of this article. The workers’
economic marginalisation”.
contracts were held to have been terminated prior to their
finishing of the project they were employed to perform Aand
further problem is that limited duration workers are allowed to
complete. The arbitrator held that the reason for the termination
be employed on SPWPs given the general absence of other
of employment was that the workers’ progress had not been
employment opportunities for unskilled workers. This is of great
satisfactory. As none of the other grounds for termination were
concern in that workers formerly employed on SPWPs are likely
applicable, the applicants were accordingly found to have been
to return to poverty at the conclusion of their work stint.
unfairly dismissed, considering that their fixed term contracts had
been terminated prior to the end of the term.
Avinash concluded by stating that although there is a clear need
to protect workers engaged on SPWP projects, based on the
In Mpisane v Danvon Landscapes (WE9080-02), the respondent
above criticisms, the Code and Conditions do not properly
conducted seasonally fluctuating landscape work and minor
address this need because they exclude important rights from
building works on contracted sites. The arbitrator held that there
SPWP that workers are entitled to in the formal labour market.
was no act of dismissal and that the contract had terminatedThere
by is a necessity to review these instruments and make
mutual agreement based on the fulfilment of a mutually stipulated
necessary adjustments. According to Avinash, it is interesting to
resolutive condition in the fixed-term contract.
note that section 50(9) of the BCEA provides that the Minister
may, on application by any affected party and after allowing other
Finally, in Lewis v GATA/Coast Care, the applicant affected
was
parties a reasonable opportunity to make
dismissed on the basis that he was awarded a perlemoen quota.
representations, amend or withdraw a determination issued in
The respondent argued that the project on which the applicant
terms of section 50(1).
had been engaged was a SPWP aimed at uplifting only the
poorest and most marginalised in society and that any allowance
Reference
or state benefit obtained by a worker would automatically
disqualify that worker from the programme. The respondent
Dr. Govindjee, A. 2007. BCEA: Questions and answers.
relied specifically on that portion of the Code which states Presentation
that
delivered at the 20th Annual Labour Law
persons receiving a state pension or assistance from a social
Conference, 4 – 6 July 2007. South Africa.
security system may not be employed on a SPWP. The
arbitrator held that the applicant’s dismissal was substantively
fair but procedurally unfair in the circumstances.
September 2007– Page 52
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TERMINATION OF EMPLOYMENT – THE CONCILIATION PROCESS
Extracted from the Australian Industrial Relations Commission’s website
Introduction
This summary has been drawn form a booklet titled
“Termination of Employment – The Conciliation process”,
which explains the role of conciliation conferences in
termination of employment cases before the Australian
Industrial Relations Commission (AIRC). This summary
should be read in conjunction with the DVD of the same
name – “Termination of Employment – The Conciliation
Process” accessible on the link
http://www.airc.gov.au/container.html?http%3A//www.airc.
gov.au/procedures_and_legislation/termination_of_emplo
yment/termmovie.html by clicking on Windows Media,
QuickTime or Video transcript icons. This summary is
aimed at assisting the reader to understand the
conciliator’s role, as well as what happens in and how to
prepare for a conciliation conference.
What is conciliation?
Conciliation is an informal and private process where a
conciliator, who is usually an AIRC member, assists
employees and employers to reach a settlement by
agreement. As required under the Australian Workplace
Relations Act 1996, the AIRC uses conciliation as a first
step in dealing with termination of employment cases.
Most of these cases are resolved during this process and
do not proceed on to a formal hearing. If conciliation fails,
the employee may choose to proceed to arbitration in the
AIRC, or to the Federal Court in certain circumstances. In
an arbitration, in the AIRC, a member of the AIRC hears
all the evidence in one or more public hearings and then
makes a decision, which is binding on both parties
(subject to appeal rights).
The main difference between the two processes is that in
conciliation the parties own the outcome whereas in
arbitration the outcome is imposed upon the parties
involved. Other points to remember:


The conciliator helps develop options and may make
recommendations, but makes no decision. Parties
do not have to agree to any proposed settlement.
The conference is not a trial or mini-trial – no formal
evidence is taken and no witnesses are heard.


Unlike a hearing, which can be attended by any
member of the public, the conference is private and
only those who are involved can attend.
The conciliation process, including the terms of any
agreement, is generally confidential.
Who is the conciliator?
Conciliation conferences are usually chaired by members
of the AIRC who are skilled in conciliation techniques and
understand the complexities of employment relations. The
conciliator’s role is to act as an independent, third party
who:



ensures each side has their say,
helps develop possible solutions, based on the
views of the parties and material presented, and
assists in developing an agreed settlement.
The conciliator does not take sides, but works to bring the
parties to an agreed resolution. The conciliator who
initially handles a case will not be the person who
ultimately hears and determines the application should it
proceed to arbitration.
When and where is a conciliation conference held?
A conference is held as soon as possible after an
application is lodged. Generally this occurs within about a
month, but the time can vary depending on factors such
as caseload in the AIRC or the location of the conference.
It is possible that the conference may be delayed
because the employer has made a formal objection that
needs to be dealt with by the AIRC either by written
submissions or public hearing. In such a case the AIRC
rules on whether the application should be allowed to
proceed. There are two main types of objections:


The application has been lodged outside the 21-day
time limit, and
The employee is excluded from making an
application under the Workplace Relations Act 1996.
Conferences are mostly held at the AIRC’s premises in
each capital city, but are also held in regional centres and
occasionally by telephone.
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Who attends the conference?

The employee and employer are both required to attend.
In the case of the employer, this may be an appropriate
person from senior management who has authority to
agree to a settlement. There is no requirement for a legal
representative. If a party to the dispute wishes to be
represented by a lawyer, industrial consultant or a
representative of a union or employer organisation, the
AIRC generally allows such representation.

If the applicant is unrepresented in the conference, the
conciliator will assist the applicant with advice about
procedures. The conciliator cannot, however, assist in
preparing or running the applicant’s case. The applicant
may also want to bring along a friend, relative or
community representative for support. There is generally
no objection in doing so.

What happens in the conference?
The style of each conciliator may vary but, in general, a
conference takes about one-and-a-half hours and will
include the following steps:






The conciliator explains his/her role and the manner
in which the conference is to be run,
Each side briefly outlines their story including what
happened and the relevant facts,
The conciliator may allow or ask questions,
The circumstances, and any issues arising, are
discussed. The conciliator may talk separately to the
parties,
The conciliator assists the parties to reach
agreement by identifying common ground,
suggesting possible options and sometimes by
making recommendations and assisting the parties
in drafting an agreement in writing, and
If no agreement is reached, the conciliator usually
provides the parties with an assessment of the
application’s merits and advice about further
processes. In some cases the conciliator may
recommend a way of resolving the matter.
What should be said?
This is an informal process so the parties will have some
freedom to put their cases. In general, the types of things
the parties should include are:
If you are an employee


What happened and any other relevant facts,
Why you think the termination was unfair or unlawful,
How the termination was carried out. Were you
given warnings and a chance to put your side?
What the outcome is that you are seeking through
your application.
If you are an employer



What happened and any other relevant facts,
What the reason was for termination,
How the termination was carried out. Were any
warnings given?
What you consider to be an acceptable outcome.
How do I prepare for the conference?
It will help to be well prepared. Here are some
suggestions to consider:
 Know your case. Review what happened and be
clear about relief sought. Perhaps prepare a
summary of the key events and dates.
 Documents. Ensure you bring any relevant
documents such as medical certificates, warnings or
material that sets out the terms of employment.
 Support. Consider bringing a support person and/or
representative.
 Advice. If you do not want to be represented in the
conference, for cost or other reasons, consider
seeking advice from a union, employer organisation,
legal representative or industrial consultant before
the conference.
 Legislation. You may want to look at the relevant
provisions of the Workplace Relations Act 1996 and
associated regulations. The Act can be accessed
through the AIRC’s home page, which also features
other material related to termination of employment
cases. The address is: www.airc.gov.au
 Attending the conference. While conferences are
informal, they are conducted in a proper, courteous
manner. There is no required dress, but most people
attending the AIRC dress neatly.
Interpreters
If English is not your first language you can bring along
someone with appropriate language skills to assist you or
request an interpreter. Seeking such assistance is
important if you do not feel confident that you can present
your case well in English.
What are the likely outcomes?
The conference may end with an agreed resolution, which
should be in writing to avoid misunderstanding.
September 2007– Page 54
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Alternatively, the employee may choose to discontinue
his or her application. If there is no agreement at the end
of the conference, some of the options include:



The conciliation may, in limited circumstances, be
adjourned to a later date,
The conciliator may allow a short period for the
parties to consider offers,
The AIRC issues a certificate, which includes an
assessment of the application and states that
conciliation has failed. If the employee wants to
proceed to arbitration, he or she must sign and lodge
the Election to Proceed to Arbitration form not later
than 7 days after the certificate was issued.
However, in limited circumstances the employee has
28 days to lodge the Election to Proceed to
Arbitration form.
What does it cost?
Employees are required to pay a filing fee of about $50
(altered slightly annually) to lodge an application. This fee
may be waived in cases of hardship. Inquiries about the
fee or its waiver should be directed to the AIRC in the
applicant’s regional office. There are no further AIRC
charges. In general parties bear their own costs.
However, costs may be awarded against one of the
parties in certain circumstances, such as an
unreasonable failure to settle.
Reference
Published by the Australian Industrial Relations
Commission www.airc.gov.au © Commonwealth of
Australia 2007.
September 2007– Page 55
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INTERNATIONALLY RECOGNISED CORE LABOUR STANDARDS IN TANZANIA
A Summary of the report for the World Trade Organisation General Council
Review of the trade policies of Tanzania
(Geneva, 25 and 27 October, 2006)
Introduction
Tanzania has ratified all eight ILO core labour
conventions, those on freedom of association and the
right to organise and collective bargaining, on the
elimination of discrimination in respect of employment
and occupation and on equal remuneration, on the
elimination of forced or compulsory labour, and on
abolition of child and forced labour. However, there has
been in many respects a transposition into national law
but a lack of practical enforcement, and as a result,
violations of basic human rights of workers take place
continuously throughout the country. The government of
Tanzania must enforce urgently and without delay
numerous measures to tackle this situation.
Trade union rights are extremely hard to exercise in
practice due to anti-union discrimination in the private
sector and serious restrictions on the right to strike, which
workers in some occupations are prevented from
exercising entirely. Restrictions on exercising labour
rights are worst on the island territories of Zanzibar and
Pemba, where a distinct legal regime for labour rights
prevails.
This report on the respect of internationally recognised
core labour standards in Tanzania is one of the series the
International Confederation Of Free Trade Unions
(ICFTU) is producing in accordance with the Ministerial
Declaration of the World Trade Organisation (WTO)
(Singapore 9-13 December 1996) and endorsed at the
fourth WTO Ministerial Conference (Doha, Qatar, 9-14
November 2001) in which the ministers stated: “We
renew our commitment to the observance to the
internationally recognised ore labour standards”.
These standards were further upheld in the International
Labour Organisation (ILO) Declaration on
Fundamental Principles and Rights at Work adopted by
the 174 member countries of the ILO at the International
Labour conference in June 1998. Tanzania was a
founding member of the WTO on the 1st of January 1995
and thus became subject to the legal framework of this
international body. Tanzania participated in the Ministerial
Conferences mentioned above and accepted the
commitments adopted in these global meetings. Tanzania
equally supported the “Declaration on Fundamental
Principles and Rights at Work” in the ILO in 1998.
The ICFTU has two affiliated members in Tanzania,
TUCTA (Trade Unions Congress of Tanzania) and
ZATUC (Zanzibar Trade Union Congress). Approximately
27% of the workforce that is engaged in paid formal
sector employment is affiliated to a trade union. In the
agricultural sector, an estimated five to eight percent of
the workforce is unionised. Tanzania is one of the poorest
countries in the world. The economy depends heavily on
agriculture, which accounts for almost half of the GDP,
provides 85% of exports and employs 80% of the work
force. Topography and climatic conditions, however, limit
cultivated crops to only 4% of the land area. Industry has
traditionally featured the processing of agricultural
products and light consumer goods. Real GDP growth of
more than 6% was experienced in 2005.
GDP was estimated at $12.12 billion in 2005 and was
composed of 43.2% agriculture, 17.2% industry and
39.6% services. The labour force in Tanzania constituted
19.22 million people in 2005. Tanzania’s main agricultural
products are coffee, sisal, tea, cotton, pyrethrum, cashew
nuts, tobacco, cloves, corn, wheat, tapioca, bananas,
fruits, vegetables, cattle, sheep and goats. Its main
industries are agricultural processing (such as sugar,
beer, cigarettes and sisal twine), diamond, gold and iron
mining, salt, soda ash, cement, oil refining, shoes,
apparel, wood products and fertiliser. Tanzania’s main
import commodities are consumer goods, machinery and
transportation equipment, industrial raw materials and
crude oil, its main import partners being South Africa,
China, India, UAE, Kenya, Zambia and the UK.
September 2007– Page 56
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Tanzania’s main export commodities are gold, coffee,
cashew nuts, manufacturers and cotton, its main export
partners being China, Canada, India, the Netherlands,
Japan, Kenya, Germany and the UK. In 2005 exports
stood at $1.581 billion and imports at $2.391 billion,
giving Tanzania a negative balance of trade.
Freedom of association and collective bargaining
Tanzania has ratified both ILO Convention 87 (Freedom
of Association and Protection of the Right to Organise
Convention, 1948) and Convention 98 (Right to Organise
and Collective Bargaining Convention, 1949), on 18 April
2000 and 31 January 1962 respectively.
The law allows workers to form and join a union without
prior authorisation, however, in practice many private
sector employers have adopted anti-union policies that
limit this exercise. All workers, including those classified
as essential service workers, are permitted to join unions.
The mainland and Zanzibar governments do not have the
same labour laws, and they enforce them separately. The
labour law of the mainland applies to both public and
private sector workers. The mainland’s law requires a
trade union for employees to consist of at least 20
members. Unions that do not comply with the
proceedings to register are subject to large fines,
imprisonment or both. The government equally
establishes the terms of office of trade unionists. In any
given trade union, only one union leadership position may
be occupied full time in carrying out his or her trade union
functions. All others must work full time in the enterprise
or sector in which they have been elected.
There is a high level of interference in union rights,
especially from the government registrar who has a whole
control over every aspect of trade union activity. The
Registrar possesses excessive powers, including the
possibility to deregister the smaller of two trade unions
where more than one exists in an enterprise. A trade
union must provide the Registrar annually with a list of its
membership and financial audits. The Registrar can
suspend a trade union if it considers that the latter
violates the law or its own regulations or that public
security or public orders are at risk or endangered. The
registrar can annul international trade union affiliation if it
is obtained without government approval or the
government considers the trade union is affiliating to an
organisation whose scope is broader than only employerworker relations.
On the mainland the Security of Employment Act prohibits
discriminatory activities by an employer against trade
union members; however, during the year 2005 there
were many reports of antiunion discrimination in the
formal private sector. Most labour unions report that
private sector employers, especially those attracted to the
country on the grounds of privatisation and economic
reforms, practice anti-union discrimination. Some of these
investors reportedly threaten to terminate or lay off
employees who want to join trade unions. Some
employers do not allow unions to call for and hold
recruitment meetings at their work places.
Collective agreements must be submitted to the Industrial
Court for approval and may be refused registration if they
do not comply with the government’s established
economic policy. Collective bargaining in the public sector
does not exist. Union and government representatives
each submit proposals, and the authorities make
recommendations on the basis of these, which have to be
adopted by parliament. The 2002 Public Service
(Negotiating Machinery) Bill stipulates that workers in the
public services do not have the right to collective
bargaining. Furthermore, the government sets wages for
employees of the government and state-owned
enterprises.
There is also a minimum membership requirement of 30
people for a union to be registered, excessive according
to international standards. It prevents strikes by “staff
grade officers”, which include heads of public learning
institutions. This Bill also establishes a system of
compulsory arbitration, at the authorities’ discretion, to
decide conditions and terms for public service employees.
This effectively amounts to a strike ban.
With the new labour laws in place, any disputes arising
under collective bargaining shall be referred to the
Commission for Mediation and Arbitration and, if the
mediation fails, then to the labour court for a decision.
The 2004 Labour Relations Act provided for the reduction
of the power of the Registrar of Trade Unions, Employers
Associations and Federations. The act, which applies to
the mainland but not to Zanzibar, requires a trade union
or employers association to register within six months of
its establishment. Failure to register is a criminal offence
and is subject to sanctions imposed by the lower courts.
The registrar may apply to the labour courts for what it
deems to be an appropriate order or remedy of a civil
infraction. Unlike the previous law, the 2004 Employment
and Labour Relations Act does not permit the registrar to
deregister the smaller of two trade unions when more
than one existed in an industry; to suspend trade union
for contravening the law or the union’s own rules, or to
invalidate a union’s international trade union affiliation if
certain internal union procedures are not followed.
September 2007– Page 57
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Workers can go on strike on the mainland, but must go
through a series of complicated and protracted mediation
and conciliation procedures, which can prolong a dispute
for months without resolving it. The law does not protect
those taking part in legal strikes from retribution.
Consequently, workers tend to stage illegal wildcat strikes
and walkouts because of the lengthy and cumbersome
requirements for calling a legal strike. The government
sacked 148 interns at Tanzania’s largest hospital, the
Muhimbili National Hospital in Dar es Salaam on 22nd
June 2005 after they had been on strike for just over a
week demanding increased allowances. They were also
instructed to leave their dormitories. Altogether, 111
doctors, 24 pharmacists and 13 nurses had stopped
work. They were later reinstated.
The 2004 Employment and Labour Relations Act
provided for some improvements including a reduction of
the complicated and protracted mediation and conciliation
procedures that a union is required to complete before it
is allowed to legally strike. If a strike is not in compliance
with the act, a labour court can still intervene to issue an
injunction or order the payment of a fine. However, the
Act eliminates the significant penalties prescribed under
the previous law for participating in an illegal strike. The
Act also reduced some of the excessive requirements for
registering trade union federations.
http://www.icftu.org/www/pdf/corelabourstandards2006tan
zania.pdf
An article from Daily News; Tuesday, August 14, 2007
@00:03
The newly formed Commission for Mediation and
Arbitration [CMA] has handled 925 out of 1,977 labour
disputes country wide since its formation May 2007.
Out of the 925 disputes mediated, Dar es Salaam zone
alone handled 685 about 70% of the disputes. The rest
were handled in the remaining 10 zones of Morogoro,
Tanga, Mtwara, Arusha, Mwanza, Tabora, Dodoma,
Iringa, Mbeya and Ruvuma.
The CMA Director, Cosmas Msigwa, said in Dar es
Salaam yesterday that the performance by the
Commission was regarded “as a catalyst to serving even
better the employers, employees and trade unions in the
country.”
Success has been recorded despite the fact that the
Commission, one of the organs formed through the
Labour Institutions Act of 2004, was operating with a very
limited number of arbitrators and mediators numbering 20
countrywide, he said adding;
“The CMA performance in the 60 days it has operated is
encouraging and have a direct bearing in the new labour
laws which came into effect early this year. I promise
employees, employers and trade unions of speedy
arbitration and mediation of the pending 1052 disputes to
promote stability, understanding and rights in the labour
sector,” noted the Director.
Mr Msigwa said that in an effort to see labour disputes do
not hold back the country’s efforts to register fast,
meaningful and sustainable economic development
particularly the private sector’s crucial role in generating
employments, CMA will in a near future recruit sufficient
number of arbitrators, mediators and key supporting staff.
Presenting 2007/08 fiscal year budget estimates for the
Ministry of Labour, Employment and Youth Development,
in Dodoma recently, the Minister, John Chiligati, said in
an effort to better CMA performance the Commission will
offer further training to its staff in handling labour disputes
and train employers, employees and trade unions leaders
in
labour
disputes
prevention.
.
September 2007– Page 58
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JOB CREATION IN MOZAMBIQUE: IS LABOUR LAW REFORM THE ANSWER?
Prepared by a team from Ministry of planning and development, Mozambique and Poverty and Economic Management Department
African Region, the World Bank
Summarised by Lucky Moloi
Labour reform in Mozambique
Proposed legislative changes, if enacted, are expected to affect
the demand for labour in Mozambican firms in the short and
medium term. Those changes can be grouped under three
headings: increased flexibility, reduction in labour costs, and
institutional changes, each of which is discussed below. As
important as the terms of the law itself are the decrees and
regulations that will be developed to implement it.
Increased flexibility
Length of fixed-term contract. The current law allows firms to
hire workers under fixed-term contracts of up to two years,
renewable once. The draft law would permit two renewals for the
same job in large enterprises. Medium and small enterprises
would be allowed an indefinite number of renewals during their
first 10 years of operation.
Limits to the normal working period. The current law sets the
work week at 48 hours, which would remain under the draft law.
However, the draft law would treat the 48 working period as an
average. Thus, it would be possible to work more than 48 hours
a week, but with a limit of eight hours a day, extendable to 12
hours in exceptional cases. Time worked in excess of 48 hours
would be deposited in a time bank from which the employee
could withdraw leave over the next six months. Employee would
not be allowed to work more than 70 extra hours per trimester,
or to work extra hours in two consecutive trimesters.
Temporary agencies. The draft law would allow employment
agencies to enter into provisional work contracts with workers
and to supply those workers to third parties. The services
rendered there could not be permanent or form part of the
regular, permanent activities of the third-party firm. The fixedterm work contract regime would apply to provisional work
contracts. No such provision exists in the current law.
Notice of dismissal. The current law requires firms to give
workers 90 days’ notice of termination. The draft law would cut
the notice period to 30 days.
Contracting foreign workers. Under the current law, the
contracting of foreigners requires authorisation from the Ministry
of Labour, which entails a case-by-case assessment and
analysis. Under the draft law, firms could hire foreign workers
without authorisation but would have to notify the Ministry of
Labour. Foreign workers could constitute no more than five
percent of all workers in large firms, eight percent in mediumsize firms, and 10% in small firms.
Changes in labour costs
Severance pay. Severance pay is due when an employer
terminates a permanent, full-time employee for economic
reasons. Employers may dismiss workers for the following
economic reasons:



Structural reasons, relating to reorganisation or
restructuring, a change in business activity, or a shortage of
economic and financial resources that has the effect of
causing labour redundancies,
Technological reasons, related to the introduction of new
technology, new processes, or methods of work that may
lead to labour redundancies, and
Market reasons stemming from difficulties in placing goods
or services in the market or from a reduction in the
enterprise’s activities.
In case of termination for any of the above reasons, the draft law
would set severance pay at 20 days per year of service. The
present law requires employers to pay terminated employees
with more than three years of service severance pay equal to
three months’ salary for every two years of service. Employees
with from six months to three years of service receive three
months’ severance pay. Employees with as little as three months
of service receive 45 days’ pay under the current law.
Under the current law, when a permanent employee is
terminated and the employer is not able to demonstrate the
reason was structural, technological or market related or if the
employer violates the legal rights of the worker, the amount of
severance pay is doubled. Under the draft law, the amount of
severance payable under such circumstances would be 45 days
per year of service.
When the employer terminates a fixed-term contract for a just
cause, the employer now must pay the employee for the unused
portion of the contract. This requirement would not change under
the draft law. In case no just cause is proven by the employer,
the amount of severance doubles only under the present law,
but not in the draft law.
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Leave. Under current law, permanent employees enjoy 21 days’
of annual leave (paid vacation) after completing one first year of
service and 30 days thereafter. The draft law would change
those amounts to one day per month of work in the first year,
two days per month of work in the second year, and 30 days in
the third year. Thus the change would affect only first- and
second-year employees. Workers on fixed-term contracts
between the duration of three months and one year would
receive one day of paid leave for every month of service.
Under the current law, employees should notify their employer
with five days in advance before taking unscheduled leave that
have been justified. An extensive number of days is allowed.
Under the draft law, employees must provide their employer with
at least two days’ notice before taking leave. The draft law would
impose limits on justified absences and require employees to
obtain permission from their employers before taking leave for
cultural and sports activities.
Institutional changes
Strikes in export zones. Current law prohibits strikes in export
zones. The draft law would submit strikes in duty free zones to
the same treatment as strikes affecting essential services and
activities.
Term for claiming workers’ rights. Under current law workers
must assert claims for employment-related benefits and redress
within one year. The draft law would cut that period in half.
Conflict resolution. The current law provides that conflicts may
be resolved by mediation, arbitration, or judicial process.
Mediation is voluntary. The draft law would provide a new,
alternative extrajudicial mechanism for resolving collective and
individual conflicts. Public and private entities, for-profit or nonprofit, would be licensed to offer mediation services. Both parties
would be required to make use of them. The draft law would also
make binding the decisions of arbitration panels. Grievances
would have to be filed within six months of the disputed event.
Collective bargaining. Under current law, firms with more than 10
workers must engage in collective bargaining at the firm level.
The draft law sets negotiations between the firm and workers’
representatives as the fundamental basis for collective
bargaining. It would extend the collective-bargaining system to
all enterprises, including small ones.
Size of enterprises. The draft law classifies enterprises based on
the number of workers. Large enterprises are those with more
than 100 workers. Medium enterprises employ between 11 and
100 workers. Small enterprises employ up to 10 workers.
Analysis of the proposed labour-law reform
Macroeconomic conditions and the structure of the economy are
important in determining whether a given set of labour-market
reforms will have the desired effect on employment. In this
section we analyse economic conditions in Mozambique, asking
whether they are likely to increase or decrease the employment
impact of the proposed changes to the country’s labour law.
Mozambique’s overall macroeconomic conditions have been
excellent in recent years, and this is expected to continue.
Macroeconomic stability (as indicated primarily by a low fiscal
deficit and inflation in single digits for the past few years), a good
resource base, continued improvements in the business climate,
and large foreign investment projects have combined to produce
a growth rate averaging in excess of seven percent per year for
the last 10 years. During that time, Mozambique has undertaken
reforms to improve the business climate - strengthening and
deepening the financial system and replacing an antiquated
commercial code and business registration procedures with
simpler and more up-to-date versions. Thus, the climate for a
labour law reform would seem excellent.
On the other hand, the country’s private sector is small, and
formal employment is concentrated in large firms. According to a
survey of enterprises performed in 2002 by INE, Mozambique
had just over 30,000 firms, 80% of which employed fewer than
five people (including the owner) and employed just under 16%
of the labour force in the private enterprise sector. It is probable
that such firms, most of which are family businesses, are not
greatly influenced by labour regulations. Large firms (those with
more than 100 employees) constitute just 1.5% of total firms but
employ 60% of the private sector workforce and account for
58.4% of production (table 1). Mozambique has 31 firms that
employ more than 1,000 people. These firms alone account for
26% of all private sector jobs. Because larger firms are subject
to a wider array of labour regulations, the proposed changes in
the labour law will have the greatest effect on them and their
employees.
Table 1 Number of firms, workers in service, and business volume by firm size, 2002
Number of workers
Percent of firms
Percent of workers in service
Percent of business
volume
> 100
1.4
57.1
58.5
10–99
9.1
22.9
17.5
1–9
89.5
20.0
24.0
TOTAL
100.0
100.0
100.0
September 2007– Page 60
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Surveys of manufacturing firms have shown that labour
regulation is an important constraint on the growth of businesses
in Mozambique—but by no means the only one. To better
understand the dynamics of organisational performance, the
World Bank and CTA (2002) and the Ministry of Planning and
Development of Mozambique, the University of Copenhagen,
and CTA (2006) conducted a series of surveys of entrepreneurs
that uncovered the sources of economic inefficiency. Chief
among them were:




Procedures related to clearance of goods through customs
and to the processing of refunds of value-added tax (VAT),
Corruption and sluggish performance of government
institutions that delayed the resolution of issues,
Poor infrastructure, including roads, railways, and ports that
slow the circulation of raw materials and merchandise.
Unreliable electricity was also considered as a serious
obstacle to the business performance, and
Limited access to credit and high interest rates.
Sarkar 2000 and USAID 2004 have cited additional factors that
impede business development in Mozambique (see also PARPA
II):





The lack of a culture of entrepreneurship and a shortage of
business management skills,
A shortage of workers having the technical skills needed to
enhance quality and productivity,
Limited capacity for market research,
Weak linkages with markets, and
Low levels of innovation and poor operational practices.
Perhaps the most interesting point is that while most conditions
are deemed to have improved as a result of the government’s
reform program, labour regulations are now seen as a more
serious constraint than they were previously. In a list of 18
obstacles, labour regulations rose from thirteenth place in 2002
to fourth place in 2006, tied with tax rates and unpredictability of
policies.
While Mozambique’s current labour law offers strong
employment security for those in permanent jobs, it does have
one loophole—the fixed-term contract. Workers hired under this
contract can be let go with no recourse and no severance pay
once their contract expires. Contracts may last up to two years
and be renewed once. The law specifies that fixed contracts are
to be used only for certain types of jobs and for a maximum of
four years.
Expected impact of the draft law given current conditions
Economic conditions in Mozambique are such that a positive
employment impact could be expected from reform of the
country’s labour regime, but which aspects of the proposed
changes in the law are likely to have the greatest impact on
employment? The expected impact of key provisions of the draft
law are summarised in table 8. Their survey data do not tell us
which aspects of the current labour regime are most important to
investors, but, as suggested by our review of recent international
experience, the institutional changes proposed in the draft law
would seem to be good candidates. A more efficient system of
dispute resolution would reduce both cost and risk especially
important for larger firms, which have the worst perception of the
current labour regime.
Table 8 Projected employment impact of key provisions of the draft law
Provision of draft law
Expected effect on employment
Flexibility
Fixed-term contracts
Significant impact. Firms already use these contracts, but extension of the time limit will
allow employers to keep fixed-term workers employed longer, especially beneficial for
small firms (who can use the contracts without limit) and start-ups.
Length of work week
No impact.
Temporary agencies
Moderate impact. The option of obtaining manpower from temporary agencies
increases flexibility in labour management and reduces labour costs.
Notice period
Significant impact. The significant reduction in the notice period required before
termination increases firing flexibility, putting Mozambique in a better competitive
position.
Contracting foreign workers
Limited impact. The simplification of entry into the country is not a major change from
the previous provision.
Reduction in labour costs
Severance pay for dismissal
without cause and layoffs for
economic reasons.
Moderate impact. This is one of the major changes in the law, and it affects an area
where Mozambique is an outlier among direct competitors. Since investors’ perception
of Mozambique’s labour regime has worsened since 2002, this change could have a
positive impact, although severance pay will remain high even if the draft law is
enacted.
September 2007– Page 61
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Annual leave (vacation)
Limited impact. The leave period would remain essentially the same. Reductions in the
draft law affect only workers employed for less than two years.
Other leave (sick leave,
family leave, etc.)
Limited impact. New limits on absences should reduce workplace absenteeism, but
should not have a significant impact on job creation.
Institutional changes
Dispute
(mediation)
resolution
Significant impact. Conflict mediation and the creation of extrajudicial mediation
mechanisms will simplify and shorten dispute resolution, reducing uncertainty and
management costs.
Collective bargaining
Limited impact.
Deadline
for
worker’s rights
Moderate impact. This measure reduces the firm’s obligations and thus reduces risk.
Like the item above, this provision will be more significant for large enterprises, since
small and medium enterprises do not perceive labour regulations as a major
impediment.
asserting
Strikes in duty-free zones
Limited impact. The proposal to classify strikes in duty-free zones with strikes affecting
essential services and activities offers workers in duty-free zones a limited amount of
new bargaining power, as currently they are forbidden to strike.
The proposed reductions in severance pay and in the length of
the notice period required before termination should have a
moderate impact on labour costs. In theory, such changes
should encourage a major increase in employment in the
medium term, as firms invest in riskier activities and in activities
that require hiring flexibility (for example, to respond to seasonal
or market cycles). The changes proposed in an unscheduled
leave allow firms to plan their workload more efficiently.
Fixed-term contracts give firms much more flexibility to adjust
the size of their workforce. Therefore, the proposed increase in
the degree to which small and medium-size firms can use such
contracts is expected to have a significant positive effect on
employment. Indeed, to avoid severance costs, firms may make
growing use of temporary workers hired through temporary
agencies established under the new law.
In sum, available evidence suggests that the proposed reforms
should result in modest increase in firm profits, especially in
those firms which need flexibility in hiring and firing owing to the
nature of their business. Economic analysis indicates that this
should encourage firms to invest and increase employment in
the medium term. Uncertainties on this outcome stem from the
lack of evidence on the importance of these as the binding
constraint versus other factors in the labour market, such as the
problem of the labour inspection program or the skill deficit.
Conclusions
This report assessed the principal legislative changes proposed
in the draft labour law which was pending before the
Mozambican parliament in the fall of 2006. Those changes
include provisions relating to hiring and firing workers, severance
pay and other indemnities related to dismissal, types of work
contracts, and institutions for the resolution of labour-related
disputes. Based on an analysis of international experience and
current conditions in Mozambique, it is projected that the extent
to which the proposed changes might serve to increase
competitiveness, investment, output, and employment in
Mozambique’s private enterprise sector.
Generally speaking, the changes proposed in the draft law, if
enacted, would make the labour market more flexible at a time
when private firms, especially the larger ones, perceive labour
regulation to be a major obstacle to expansion. The changes
would come at a time of overall economic expansion and after
complementary measures to remove or reduce other major
obstacles. However, even though the draft law would improve
the functioning of the labour market, Mozambique would remain
one of the least flexible countries in the region.
Reference
Job creation in Mozambique: Is labour law reform the
answer? Prepared by the Ministry of planning and development,
Mozambique and Poverty and Economic Management
Department African Region, the World Bank
September 2007– Page 62
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