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Yes – the LAC probably did get it right. I say “probably” because the decision was made on a very technical interpretation of the inter-relationship between sections 41(2) and 84 of the BCEA. Section 41(2) specifies severance pay as 1 week for each year of completed service. Section 84 defines “continuous service” for the purpose of calculating the amount of severance pay. It says “continuous” service means uninterrupted service with one employer. But it allows a break in service up to a maximum of 12 months.
Barrier’s employment continued seamlessly after he reached the retirement age of 65. He was retrenched 4 years later and accepted a VSP. His severance pay was calculated for the period after the retirement age and to the date of retrenchment. He reserved his rights to claim severance pay for the period before his retirement as well. The CCMA arbitrator said he was entitled to the period before retirement.
The Labour Court disagreed. It said the period before retirement age did not count because his employment contract had ended on the reaching retirement age.
The LAC said this was wrong – it concluded that both periods before and after the retirement age should be counted. This was because it was “continuous” service as defined in section 84. The employer was ordered to pay severance pay for the period before and after the retirement date.
It is notable that the reason for termination in this case was retrenchment. So the LAC’s focused correctly on the interpretation of the BCEA sections in the retrenchment situation. But what if the reason for termination was not retrenchment – but simply notice of termination for reaching the retirement age? Sections 41 and 84 would not be applicable. There would be no need to consider issues of continuous service or severance pay calculations. This may be a viable and cheaper option for employers?
The party must be joined as a respondent if there’s sufficient evidence to show that it has an interest in the relief claimed. A typical example is an old employer who is jointly and severally liable with the new employer for the relief claimed by employees in a s197 transfer case.
Yes – they are entitled to waive their rights to severance pay. This is provided they are fully informed of their rights and they do so voluntarily with no duress. This would be an odd situation if it were to occur. And it would be equally as odd if an employer were to be “forced” to pay severance pay to an employee who did not want to be paid for whatever reason!!
A distinction should be made between an employee’s legal right vs an employer’s reciprocal legal obligation. In this case…the employee’s BCEA right to severance pay and the employer’s obligation to pay it. If the employee waives his or her right, the employer’s obligation falls away. But the employer obligation does not fall away if the employee does not waive the right.
Q1: No – an employer can’t retrench employees without incurring a liability to pay at least the statutory minimum severance package of 1 year for each completed year of service. Section 41 (2) of the BCEA makes the payment compulsory. However, the employer can delay payment if it can’t afford to pay immediately. It must commit to an agreed payment plan or to pay when it can afford to. The retrenched employee in this case remains a creditor of the employer after the date of retrenchment.
Q2: Yes – an employer can legitimately use s189 as the primary mechanism for cutting costs. The Con Court confirmed this in its recent judgement in Numsa v Trident Steel in October 2020. In making this seminal judgement, the Con-Court took account of the context in which businesses must compete to survive and prosper in the modern economy. It said –
“In an ever-changing economic climate characterised by increasing global competition, operational reasons not only relate to the downsizing of the workforce, but also to restructuring the manner in which an existing workforce carries out its work.”
However, the court stressed that the primary reason must be for genuine operational reasons – it must not be a substitute for wage negotiations in the traditional collective bargaining process. It warns employers that
“Courts must guard against disguised retrenchments that take place where collective bargaining prevails. Courts can police opportunistic or disingenuous employers by determining the true reason for the dismissals.”
Yes, I think the court would have interpreted the “forced leave” differently because of the lockdown.
I agree with Michael’s take that van Vuuren’s case was a kind of “suspension” for operational reasons. The same principle could apply in the case of employees being forced to take leave because of the lockdown.
The reasons for both would be operational requirements – but the causes would be different. The cause in van Vuuren’s case was for reaching retirement age – an internal policy. The cause for other employees was the lockdown – a statutory intervention.Another difference was the provision of TERS in the lockdown to help compensate for the forced leave. It effectively recognized that employees could face forced “suspension” due to exceptional circumstances during the lockdown. TERS was not available in the van Vuuren case – nor was UIF because he was still employed.
A court would probably consider these differences and come to a different conclusion to the one in van Vuuren’s case.
I note Ingrid Lewin’s opinion that the CCMA was right in this case based on her reference to the LAC’s decision in the Karan case. There is a compelling argument that the employer who allows an employee to continue working past retirement age should not be stuck with staff members who have endless employment merely because they were allowed to work past retirement age. So Ingrid may well be correct that the employer should be able to make the retirement call at any time after the retirement age has been reached to avoid ‘infinite’ employment.
But I’m still not 100% convinced of this. In Karan, even though there was no agreement on the retirement age – there was an agreement that the employer could give notice of termination at any time at its discretion. In effect this became the agreed condition for continued employment after the retirement age – Scenario 2.
But what if there is no agreement or condition as in Frey du Toit – Scenario 3? The possibility still exists in my opinion that the employee may be entitled to due process before dismissal. But the employer may equally be able to dismiss based on age after retirement age without incurring liability for an automatically unfair dismissal. The rationale for this would be equivalent to “fair discrimination” as found in the EEA. This in turn is on the assumption that “normal retirement age” in 187 (2) (b) is the equivalent of a statutory version of an expiry date in a fixed term contract. And like continued employment after the expiry of an FTC – an employee would be entitled to the rights to fair dismissal.
PATRICK DEALEYes the CCMA was correct on the facts of the case. The Labour Court and LAC cases show that a distinction must be made between 3 possible factual scenarios in a case where the employee continues working after the normal retirement age.
Scenarios
1. The employer and the employee agree to a later retirement date.
2. They agree that the employer can decide when the later retirement date will be.
3. They do not agree on a later retirement date or how it will be decided.The employer would be protected by Section 187(2)(b) in scenarios 1 and 2 but not in scenario 3.
In scenario 3, the termination of employment would qualify as a “dismissal” if the employer simply gave notice of termination for having past the normal retirement age. The employee would be entitled to the same rights of procedural and substantive fairness as any other permanent employees. The termination without following the requirements for a fair dismissal could potentially constitute an automatically unfair dismissal based on age.
No – the employer was wrong. An agreed retirement age is equivalent to the expiry date of a fixed term contract. If the employer allows the employee to keep working after the expiry date, the employee must be treated as a permanent employee. The employer impliedly waives the expiry date of the retirement age or the end date of the FTC as the case may be.
So the employer waived the retirement age of 60 in this case study. So the three employees remained as permanent employees and were entitled to their rights under the LRA. This included the right to a fair retrenchment process.
It follows that s187 (2)(b) did not protect the employer after the employees passed the age 60. Quite the contrary: the employer could be penalized for using their age to select the three for retrenchment. This would constitute discrimination based on age. Their dismissals would thus be automatically unfair and expose the employer to payment of 24 months’ compensation to each of the three.
Yes –the LAC got it right.
It’s evident that the court applied the “dominant impression test” to decide the case. This test seeks to determine who controls the working relationship between the parties.
An independent contractor controls the manner in which a service is provided to a client. An employer controls what work must be done and the manner in which it must be done.
There are different reasons why parties may prefer an independent contractor relationship: a business to minimise the labour law obligations of an employment relationship – and an employee (usually skilled) to minimise the tax obligations in an employment relationship.
The labour court formulated a number of features of a working relationship to assess whether a party is an employee or an independent contractor. The features indicate who has the most control the working relationship.
The features were later codified as 7 indicators and added to the LRA in a new section 200A. An employment relationship will be proved if any one or more of these indicators is shown to exist on the facts of a particular working relationship.
The factors which the LAC considered in the Chep case closely resemble the indicators in section 200A. The dominant impression test revealed that Chep in fact controls the manner in which the work is done. C-Force’s attempt to reinvent itself as an independent service provider instead of a hirer of labour was shown
to be a sham.No – nepotism probably won’t pass muster as discrimination on “any other” or “unlisted” arbitrary ground. This is because the notion of “dignity” has taken on a special meaning in the context of past social injustices – especially in South Africa. It is distinct from nepotism which has been practiced throughout history. It is associated more with corruption and notions of unfairness than discrimination.
The test for Discrimination on unlisted grounds was clearly articulated by the Labour court in
Stojce v University of KwaZulu-Natal and Another (2006) as follows –“The test is that the differentiation must impair the fundamental dignity of people as human beings because of attributes or characteristics attached to them. Not every attribute or characteristic qualifies for protection against discrimination. Smokers, thugs, rapists, hunters of endangered wildlife and millionaires, as a class, do not qualify for protection.
What distinguishes these groups from those who deserve protection?
The element of injustice arising from oppression, exploitation, marginalization, powerlessness, cultural imperialism, violence and hardship endured by particular groups or the worth and value of their attributes, are qualifying characteristics that distinguish differentiation from unfair discrimination….”
In my opinion, the literal interpretation is correct: ie if the retrenchment qualified and started as a “large scale” retrenchment in terms of 189A, it should end as a 189A -even if only one or less than 10 employees are retrenched at the end of it. This outcome would mean that the 189A facilitation succeeded in reducing the anticipated “large scale” retrenchment down to a “small scale” retrenchment of only one employee. There would be no need to replace the initial 189(3) with a new one to cite one employee. The process would already have been followed and finalised.
DISMISSAL OF STRIKERS FOR CARRYING STICKS AND SJAMBOKS
The LAC would be correct in ruling the dismissal to have been fair if there was evidence to show that any of the individual strikes used their sticks in a threatening manner with intent to cause harm. This would be to distinguish such a person from others who simply brandished them in a non-threatening manner in the uniquely SA tradition which Michael correctly refers to.
In terms of the Dangerous Weapons Act 15 of 2013 a “dangerous weapon” means “any object, other than a firearm, capable of causing death or inflicting bodily harm, if it were used for an unlawful purpose.” Section 2 (a) says the Act does not apply to several activities including “Possession of dangerous weapons in pursuit of any lawful employment, duty or activity;” This implies that carrying a stick which could otherwise be used to cause harm during a strike is not in itself an offence.
However, section 3(1) provides that the possession of a dangerous weapon (such as a stick during a strike) under circumstances which may raise a reasonable suspicion that the person intends to use it “…for an unlawful purpose, is guilty of an offence…”
Section 3(2)provides relevant factors which should be taken into account to determine whether a person intends to use the weapon for an unlawful purpose. These include the time and place where the person is found, the behaviours of the person, the manner in which the object is carried and displayed and any other relevant factors.
If the LAC found, in the facts of this case, any significant presence of factors indicating the unlawful misuse of the carried items or factors justifying a reasonable suspicion of the intention of such misuse of the carried items then its decision was correct. If there were no such factors, the Constitutional Court could come to a different decision.
Yes – they certainly are entitled to cross-examine their accusers. Cross-examination lies at the heart of ensuring fair and due process. It’s first purpose is to test the truth or veracity of allegations made against an accused. It’s second purpose is to test the accuser’s version versus the accused’s version. This happens when the accused “puts his or version” to the accuser’s witnesses. Without this technique of “cross” testing conflicting versions in search of the truth, the adjudicator would be left to choose between two mutually exclusive and untested versions standing starkly alongside each other. This makes it impossible to plausibly assess which of the two untested versions is more or less probable than the other.
Yes – the LAC was certainly correct. This is a timely and very welcome reminder of how far we’ve strayed from the basic concepts of the LRA – and of how we need to radically rejig the way disciplinary enquiries should be conducted in the workplace.
Way back in 2008, the Labour Court attempted the re-enforce the original thinking of the LRA – that internal disciplinary enquiries should be conducted with the minimum of formality provided they comply with the principles of natural justice. They should not be conducted as if they are criminal trials in the high court with lawyers taking complicated and obstructive technical procedural points.
Despite this laudable attempt, disciplinary enquiries in the workplace have increasingly morphed into looking and being run like criminal trials. The employee has become the “accused”. The company representative has become the “prosecutor”. The alleged acts of misconduct have become the “charges”. And the findings have become the “verdict”.
It’s not surprising that the criminal form of enquiries has led to assessing evidence and deciding outcomes based on narrow interpretations of the charges as happens in criminal trials. This strict application of criminal law has produced “not guilty” outcomes because the employer failed to prove one or more the elements of a charge.
The LAC made the following refreshing and instructive observations in the EOH case –
“However, by the same token, courts and arbitrators must not adopt too formalistic or technical an approach. It normally will be sufficient if the employee has adequate notice and information to ascertain what act of misconduct he is alleged to have committed. The categorisation by the employer of the alleged misconduct is of less importance.
The principle in such cases is that provided a workplace standard has been contravened, which the employee knew (or reasonably should have known) could form the basis for discipline, and no significant prejudice flowed from the incorrect characterisation, an appropriate disciplinary sanction may be imposed. It will be enough if the employee is informed that the disciplinary enquiry arose out of the fact that on a certain date, time and place he is alleged to have acted wrongfully or in breach of applicable rules or standards.”
The return to simplicity will only work if the parties are “brave” enough to wean themselves off the strict formality habit. And the CCMA and Labour Court will need to encourage and support the shift to a less legalistic approach.
I agree with Michael’s analysis that the jobs became redundant because the managers refused to accept the 3 day week. This made the retrenchments necessary for operational reasons.
The Labour Court recently considered a similar issue in Numsa vs Trident Steel . The Court said it first had to decide what the real reason for the dismissal was. The purpose was to determine whether the dismissals were for operational requirements or if they qualified as an automatically unfair dismissal in terms of s187 (1) (c).
It said three elements must exist for the dismissals to qualify as an automatically unfair dismissal. –
1. There must be clear evidence of a demand,
2. There must be a refusal to agree to that demand, and
3. The dismissal, objectively viewed, must be as a result of that refusal.The Labour Court found in the Trident Steel case that these elements did not exist. The real reason for the dismissals was for operational reasons which made the dismissals substantively fair.
