Key changes to the labour laws in 2015 – part 3: ARBITRATION, THE LABOUR COURT AND REVIEW

PRIVATE ARBITRATION

Where an employer and employee have made no other agreement about resolution of disputes between them, their disputes are generally conciliated and, if not required to go to the Labour Court, arbitrated by the CCMA or a bargaining council, in terms of the Labour Relations Act, in what is known as “compulsory arbitration”. However some employers and employees agree up-front in employment contracts to bypass the system of compulsory arbitration, and rather have disputes resolved by way of private arbitration. Private arbitration services are provided by private companies, as opposed to compulsory arbitration which is provided by the CCMA, set up by statute, or bargaining councils, set up by industry-wide agreements.

In the past, if the CCMA accepted a dispute referral but then realised that the parties had agreed to private arbitration, the CCMA would generally decline to hear the matter, and insist that it be referred instead to the relevant private arbitrator as per the parties’ agreement.

The legislature identified abuse of the scope for private arbitration, however, and has amended the Labour Relations Act this year to require the CCMA to hear disputes, even where they ordinarily would not have the power to do so owing to a private arbitration clause in an agreement. This amendment applies (1) when an employee who earns less than R205 000* per year (*subject to change)  is required by the agreement to pay any part of the costs of the private arbitration, and (2) when the private arbitrator nominated in the agreement is not independent of the employer.

THE LABOUR COURT AND ARBITRATION

Where the Labour Court receives a referral of a dispute which ought to have been referred to arbitration, the court may either refer the dispute to arbitration or continue with the proceedings and make only an order which an arbitrator would have been empowered to make. In the past, the Labour Court could only continue with the proceedings with the consent of all the parties. As of 2015, the parties’ consent is no longer necessary, and instead the court can determine that it is expedient to continue and do so regardless of any objection by either party.

MORE RESTRICTIONS ON REVIEW APPLICATIONS

While the majority of review applications are no doubt brought in good faith, as mentioned in a previous post, they have also been much abused as delaying tactics and for employers in particular to evade compliance with awards despite there being no real prospect of overturning the awards. Some review applications have languished in court files for years, and employees have lacked the knowledge or means to force matters along effectively.

In a further attempt to tighten the reins on abuse of review applications, and resultant unnecessary delays and cost increases in proceedings, the legislature has determined that, as of 2015, no review may be brought of any decision or ruling made during conciliation or arbitration until the issue in dispute has been finally determined. The exception shall be when the court is of the view that it is just and equitable to hear the review at an earlier stage. This will prevent many a party from abandoning arbitration hearings on the first day, and holding the process hostage by filing reviews of minor determinations made by an arbitrator before even hearing evidence on the main issue.

Key changes to the labour laws in 2015 – part 1: EASIER ENFORCEMENT OF CCMA AWARDS

The long-awaited Labour Relations Amendment Act came into effect, in large part, on 1 January 2015. It brought about a number of changes in both individual and collective labour law. In this series, we consider the key changes affecting individual labour law, and of which employees and employers alike should take note.

Prior to 2002, an employee who succeeded at the CCMA but whose employer ignored the CCMA’s award, had a steep hill to climb to get satisfaction. The employee would need to approach the Labour Court and have the award made an order of court, before having a writ of execution issued and handed to the sheriff of the court. This involved a full application to court supported by an affidavit, to be served under the rules of court, and awaiting and responding to any notice of opposition and answering affidavit from the employer. The employee would need to appear before a judge to secure an order against the employer. It was a complex and intimidating process for a layperson, time-consuming, and could increase costs drastically.

In 2002, the law was changed in order to assist employees in enforcing awards. Instead of approaching the Labour Court with a full application on notice and on affidavit, the employee returned to the CCMA to have the award certified. Once the award was certified, the employee went to the Labour Court to have a writ of execution against the employer issued over the counter. This was handed to the sheriff of the court for enforcement. This was a much simpler, cheaper, quicker process. However many employees still found the process, in particular dealing with two institutions, confusing and frustrating.

As of 2015, the process for enforcement is even more streamlined. Our law now states that an arbitration award may be enforced as if it were an order of the Labour Court in respect of which a writ has been issued. An employee battling with a recalcitrant employer must still have the award certified at the CCMA as previously, but then can take her certified award directly to the sheriff of the court for execution. There is no longer any need to involve the Labour Court, provided the award requires the employer to pay over money (as opposed to doing something – such as taking the employee back into employment. Where the award requires the employer to do something, other than pay over money, contempt proceedings in the Labour Court remain appropriate.)

The new law only applies prospectively, to arbitration awards issued after 1 January 2015.

The tariffs and procedures for enforcement and execution will be those that apply in the magistrates courts, which seems appropriate given that in almost all cases the amounts of money involved in awards will fall within the monetary jurisdiction of the magistrates courts (R300 000,00 or less).

Employee or independent contractor?

The question whether someone is an employee or an independent contractor is one which the courts and CCMA have had to consider time and again over many years.

The issue continues to crop up in legal disputes, because an independent contractor does not have the rights and protections of an employee.

The point is usually raised as a “jurisdictional” issue, which means that a decision-maker handling a dispute must decide the issue before they are entitled to consider the main dispute. This can be decisive in an unfair dismissal or similar dispute. If a person who claims unfair dismissal is not an employee but an independent contractor, then there is no question of unfair dismissal, and the legal dispute will not be considered further in that form. An independent contractor must instead rely upon the terms of the contract, in much the same way that businesses enforce contracts between them.

The Labour Court examined the question again recently, when a radio DJ approached the CCMA with an unfair dismissal dispute. The CCMA found that he had not shown that he was an employee, and refused to consider his claim of unfair dismissal. He approached the Labour Court and argued that the CCMA’s ruling was wrong, asking the Court to compel the CCMA to consider his unfair dismissal claim.

The Labour Court ultimately agreed with the CCMA that the facts showed that the DJ was not an employee.

Various aspects of the matter did suggest that the DJ might possibly have been an employee. His contract referred to a monthly salary, and salary reviews, for example.

However, the radio station for which the DJ had presented a show, had referred to him in all documentation as an independent contractor rather than an employee, and he had failed to challenge this. This suggested that he had been under no illusion that he was an employee.

He furthermore delivered invoices to the radio station for his “salary”, via a close corporation, which had other employees whom he paid to assist him with his radio show.

The Court indicated that the most important decisive factors to consider were whether the DJ was economically dependent on the radio station, whether he was subject to the radio station’s supervision and control, and whether he formed an integrated part of the radio station’s organisation.

The Court found that, although the DJ did not pursue other commercial activities outside of his work for the radio station, this was because he chose not to, and he was not truly economically dependent on the radio station. He was contractually entitled to pursue other work for non-competitors of the radio station, although he did not pursue it.

The Court found further that the DJ enjoyed extensive control over the number of hours he spent preparing his radio show, and also over show content, and was not truly under the supervision and control of the radio station as an employee would be.

Finally, although the DJ was issued with business cards and branded clothing by the radio station, this was not indicative that he was an employee, but was merely to facilitate marketing of the radio show.

Anyone approaching the CCMA should be prepared to lead evidence to show that they are an employee, in case this point is challenged. Employees should be alive to the impact that decisions about the wording of contracts and arrangements for payment may have on their status and rights. Someone who is truly an employee should not lightly agree to a scheme whereby they invoice for fees via a company, for tax or other reasons, as they may unwittingly affect the nature of their relationship and the protections they enjoy. The courts seldom assist persons in “having their cake and eating it too”.

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Impossibility of Performance in the Workplace

Imagine that you own an optometry practice located in a busy shopping mall. A fellow tenant of the mall accuses your employee of theft, and the management of the mall bans your employee from ever setting foot in the mall again. She can no longer enter your office at the mall without being ejected by mall security.

Obviously, in these circumstances, you are relieved from the duty to employ the employee concerned, and you simply terminate her contract – right? Wrong.

Our case law indicates that cases such as these – known as “supervening impossibility of performance” cases – must be treated as cases of incapacity. Cases of incapacity include instances where an employee becomes sick or injured, and therefore unable to perform their work, in whole or in part, and on a temporary or permanent basis.

The law sets out duties with which the employer must comply in such cases. In essence, the law expects the employer to accommodate and assist an employee who is incapacitated. The extent to which this must be done depends on the facts of each case. Where the incapacity arose in the course of the employee’s employment – for example a shop assistant falls off a ladder while packing goods on shop shelves, and injures herself – more is expected from the employer. More is also expected from a large employer who has “deep pockets” and can better afford to be generous.

In some cases, the period for which the employee cannot work is short, and the employer can do without the employee or get by through hiring a temporary replacement.

If, in the circumstances, the employee will be prevented from working for a period which is unreasonably long, the employer cannot simply dismiss and replace the employee, but must first consider all options short of dismissal. This might include, in the case of the optometrist’s employee, transferring her to another branch located outside of the mall from which she was banned. It might include adapting the employee’s work circumstances – for example,  providing seating to an employee who would normally be required to work standing – or adapting the employee’s duties to accommodate her incapacity. It might also involve providing the employee with alternative work if this is available – and as a last resort before dismissal a demotion might be justified.

It may well be that, having investigated all of these options together with the employee, there is no alternative to dismissal. Then the employer can rest assured that he or she has treated the employee fairly and that the resultant dismissal will be both substantively and procedurally fair. In the absence of taking the trouble to investigate these options, however, any dismissal is likely to be both substantively and procedurally unfair, and ultimately prejudicial to both parties.

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Disputes with Pension Funds

What can a member or former member of a pension fund do to resolve a dispute with the fund, or with their employer about their participation in the fund?

Four main types of disputes arise:
• The fund may exercise its powers improperly, or do something which it is not entitled to do;
• The fund can be poorly administered, causing you prejudice;
• You and the Fund may disagree on an important fact or matter of law;
• Your employer may not be fulfilling its duties where your membership of the Fund is concerned.

The Pension Funds Act sets out the procedure you may follow in order to have your dispute addressed.

First, you are required to send a written complaint to the Fund (or employer, if applicable). You must keep a copy of your complaint as well as your proof that it was sent. They have 30 days in which to respond to your complaint. If they do not respond, or if their response does not resolve the dispute to your satisfaction, you may take the matter to the Pension Funds Adjudicator (PFA).

The PFA has a simple online form which enables you to submit your complaint to them quickly and easily. It is found on their website at http://www.pfa.org.za. You can only submit a complaint to the PFA once you have first complained to the Fund (or employer) and 30 days have elapsed.

The online form helps ensure that you submit all necessary information. In brief, this includes your personal details, the Fund’s details (or employer’s), your dates of joining and leaving the Fund (or employer), your complaint in detail, the outcome you desire, as well as proof that you first complained to the Fund (or employer). Copies of all relevant documents must be supplied.

The PFA may require a written response from the Fund (or employer) and may also investigate the matter further by phoning the parties or engaging in correspondence. A decision will be made in writing and communicated to the parties, and this decision has the force of a judgment of a court. If the PFA rules that the Fund must make a payment to you of money, then this is enforceable via the sheriff of the Court in the same way as a court order.

Dismissal for comments made on Facebook

“But one cannot be happy in a family business, especially when the kids join the company after you have been there for six years and they try everything in their power to make you look stupid.”

“Now we have the son working there as well who has no idea but is pretending he has a clue!”

“Had a day from hell! “

“My boss was a total meanie 😦 no idea how to treat people let alone management.“

“From so called ‘professionalism’ 2 dumb brats runnin a mickey mouse business.”

Do any of the above Facebook posts sound familiar? If you are an employee, hopefully not – or it is worth having (at the least) a very careful check on your privacy settings.

Although the employee who posted the comments above did not name her company or the persons she was referring to, and claimed that her Facebook page was private, her employer was able to view and print content from her page and lawfully dismissed her as a result.

When rejecting the employee’s challenge to her dismissal for posting the comments, the CCMA arbitrator found that by leaving her Facebook page public, the employee had waived any protections her posts might otherwise have enjoyed as private communications. It was highly likely that some people viewing the posts knew to whom the employee was referring (especially as her Facebook friends included colleagues and ex-colleagues), and there was a real potential that the comments would harm the company’s and individuals’ reputations.

The employee was guilty, at the very least, of gross insolence, if not insubordination, and dismissal was justified.

Even with privacy settings in place, disrespectful posts about an employer could find their way to the employer’s notice (especially if your Facebook friends include colleagues or friends of colleagues) and could result in disciplinary action. It does not matter that the posts are made outside of working hours and from a home computer.

The bottom line? The arbitrator in one case pointed out that “if employees wish their opinions to remain private, they should refrain from posting them on the internet”. Or, in the colourful turn of phrase of American technology journalist Erin Bury: “Don’t say anything online that you wouldn’t want plastered on a billboard with your face on it”. This advice applies equally to Facebook, Twitter, as well as any other online forum.

High earners to lose legal protections?

Another major change to our employment law is on the way via a new section 188B to be added to the Labour Relations Act.

At present, all employees have recourse to the CCMA (or a bargaining council or private arbitration) and the Labour Court if they are dismissed and feel that the reason behind it or the procedure followed was not fair.

New section 188B will effectively strip employees earning above a certain amount – still to be determined by the Minister of Labour – of the right to challenge the fairness of their dismissals in the vast majority of cases. Provided the employer gives the employee three months’ written notice of his or her dismissal (or longer if required by their employment contract) or pays out the equivalent salary instead of notice, and the dismissal is not for an automatically unfair reason, the dismissal will be regarded by the law as fair (regardless of what the actual circumstances might be).

A dismissal is automatically unfair if it is motivated by reasons such as:

  • Retaliation for exercising a legal right from the LRA, including participation in a lawful strike, or for whistle-blowing;
  • Arbitrary grounds such as the employee’s race, gender, religion, age, ethnicity, sexual orientation or identity, pregnancy and so on;

unless it can be justified due to an essential requirement of the employee’s job or a normal or agreed retirement age.

Once the amendment has been signed into law, the exclusion will apply to all new employment contracts entered into (where the earnings exceed the threshold). Two years later it will also apply to all pre-existing employment contracts.

Employees who lose their rights of recourse due to this amendment will still have the option of enforcing any contractual obligations of the employer through the civil courts. They will have to show that the employer has acted unlawfully with reference to their agreement, rather than unfairly. Affected employees will be well-advised to participate actively in the negotiation and drafting of their employment contracts, in order to retain their rights to the greatest extent possible.

It remains to be seen where the threshold will be set. Until there is clarity in this regard, it is a matter of grave concern that many employees may be stripped of protections which they have come to regard as their basic right. When setting the threshold, the Minister will be required to consult NEDLAC and to consider the extent to which those employees “by reason of their earnings level, level of skill or position” have the bargaining power to ensure that their contracts of employment protect them adequately against unfair dismissal.

Fixed term employment contracts – new law!

The Labour Relations Act will soon be amended to change the law on fixed term employment (meaning for example employment “for one month”, “until X returns from maternity leave”, or “until we complete project Y”).

 1. The amended Act will impose new requirements when an employer employs a person on a fixed term contract, and will restrict their right to do so for
 longer than six months in total.
2. An employer must make an offer of fixed term work in writing, and must state in writing the reason for the offer being for a fixed term only.
3. Fixed term employment may only exceed six months in total if the work itself is of a limited or definite duration, or if the employer can show any other good reason (the amended Act gives a number of examples which will be accepted as good reasons). Failing this, the employment will be deemed to be indefinite, regardless of what the contract might say, and the employer will have to retain the employee in employment or follow fair procedures to dismiss the employee for a fair reason.
4. Where fixed term employment beyond a total of 24 months is justified (instead of indefinite employment), the employee will be entitled to severance pay from the employer, similar to a retrenched employee, when the work comes to an end – unless the employer offers the employee another job, or secures one for him or her.5. The amended provisions will not apply where the employee’s annual salary is over R172 000,00, or where the employer is a small one with fewer than 10 employees, or where the employer is a new, sole business of less than two years’ standing with fewer than 50 employees. (The last provision is intended to prevent employers from circumventing the law by artificially slicing up businesses or reintroducing old businesses in new forms.)

The new provisions will hopefully put an end to abusive practices whereby employers have denied staff job security for no good reason, and avoided meeting their legal obligations to dismiss employees fairly. The legislature has sought to strike a balance, however, by allowing short-term flexibility and by making exceptions for small and new businesses and high-earning employees.

This is not the only major development on the cards in employment law – more updates still to come with deal with other changes in the pipeline affecting both employees and employers.