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IN THE LABOUR COURT OF SOUTH AFRICA, CAPE TOWN

Not Reportable

Case no: C258/17

In the matter between:

BIDVEST PRESTIGE CLEANING SERVICES (PTY) LTD                  First Applicant NOMTSALANE PROPERTY SERVICES (PTY) LTD                              Second Applicant

and

COMMISSIONER M R SLAMANG N.O.                                          First Respondent CCMA    Second Respondent

PROFESSIONAL TRANSPORT & ALLIED

WORKERS UNION obo MEMBERS                                                  Third Respondent

Date heard: 29 July 2020

Delivered: 27 October 2020 by means of email of the scanned judgment

JUDGMENT

RABKIN-NAICKER, J

[1]       This is an opposed application to review an arbitration award under case number WECT 12440-16 as varied. There is also a condonation application for the late filing of the record. It was filed some one month late after the variation record had been filed. I grant condonation as sought and decide the matter on the merits given what is set out below.

[2]       The issue in dispute before the first respondent (the Commissioner) was whether the applicants were entitled to severance pay in terms of section 41 of the Basic Conditions of Employment Act 75 of 1997 (BCEA). If they were, he was to determine the amount payable to each of the some 251 workers.

[3]       Section 41 of the BCEA provides as follows:

“41 Severance pay

(1)       For the purposes of this section, 'operational requirements' means requirements based on the economic, technological, structural or similar needs of an employer.

(2)    An employer must pay an employee who is dismissed for reasons based on the employer's operational requirements or whose contract of employment terminates or is terminated in terms of section 38 of the Insolvency Act, 1936 (Act 24 of 1936), severance pay equal to at least one week's remuneration for each completed year of continuous service with that employer, calculated in accordance with section 35.

(3)    The Minister may vary the amount of severance pay in terms of subsection

(2) by notice in the Gazette. This variation may only be done after consulting NEDLAC and the Public Service Co-ordinating Bargaining Council established under Schedule 1 of the Labour Relations Act, 1995.

(4)     An employee who unreasonably refuses to accept the employer's offer of alternative employment with that employer or any other employer, is not entitled to severance pay in terms of subsection (2).

(5)   The payment of severance pay in compliance with this section does not affect an employee's right to any other amount payable according to law.

(6)    If there is a dispute only about the entitlement to severance pay in terms of this section, the employee may refer the dispute in writing to-

(a)                     a council, if the parties to the dispute fall within the registered scope of that council; or

(b)                     the CCMA, if no council has jurisdiction.

(7)   The employee who refers the dispute to the council or the CCMA must satisfy it that a copy of the referral has been served on all the other parties to the dispute.

(8)      The council or the CCMA must attempt to resolve the dispute through conciliation.

(9)   If the dispute remains unresolved, the employee may refer it to arbitration.

(10)    If the Labour Court is adjudicating a dispute about a dismissal based on the employer's operational requirements, the Court may inquire into and determine the amount of any severance pay to which the dismissed employee may be entitled and the Court may make an order directing the employer to pay that amount.”

[4]       The background to the dispute was briefly set out in the Award as follows:

“19. The individual applicants were all employed as cleaners. Their employment was attached to a specific client of respondent, namely Grand West.

20.      During March 2016, Grand West indicated an intention to terminate its contract with second respondent. Respondent then activated an information sharing process with the applicants. All of the applicants were informed that their ‘fixed term eventuality contract’ was likely to terminate with effect from 30 April 2016.

21.      Grand West however required that respondent continue to render the cleaning service while a tender process was followed to find an alternative service provider. This resulted in an extension of the termination date, initially to 31 May 2016 and then finally to 30 June 2016. The applicants were all paid their accumulated benefits as well as payment to the last day of work.”

[5]       The ground for review of the Award is that the Commissioner made a clear error of law in his interpretation of section 41 of the BCEA. The Commissioner found as follows in his interpretation of section 41:

“29. Section 41(2) therefore provides three instances where an employer must pay an employee severance pay. The first instance is where an employee is dismissed for reasons based on the employer’s operational requirements. Section 41(1) stipulates what is mean by operational requirements for the purposes of section 41. The second instance is where an employee’s contract of employment terminates and the third instance is where an employee’s contract is terminated in terms of section 38 of the Insolvency Act.”

[6]       The Commissioner went on to say that Section 41 must be read in the context of “a no-fault dismissal or a no-fault termination”. He then found that the employees were entitled to one weeks’ pay for every completed year of service. It was only in the varied award that the amounts were calculated. Some of the effected employees had been employed for more than 10 years, with two employed for 15 years.

[7]       I agree with the applicants that the Commissioner made a mistake of law in his interpretation of section 41 of the BCEA. He interpreted the phrase “or whose contract of employment terminates or is terminated in terms of section 38 of the Insolvency Act, 1936 (Act 24 of 1936)” incorrectly. The clause deals with termination of an employment contract to which the Insolvency Act applies. It is trite that retrenchment pay does not apply to every termination of a contract as his reading of section 41 implies.

[8]       After his incorrect reading of section 41 of the BCEA, the Commissioner went on to state the following:

“30. The applicants in this matter were not dismissed. They were employed on a fixed term contract which terminated on the happening of an event. The event was the termination of the SLA between the first respondent and its client, Grand West. The applicants had entered into this contract with the first respondent and during these proceedings correctly did not challenge the validity of the contract. They also do not challenge the validity of the termination of the contract. The applicants also acknowledge that they were not dismissed for reasons based on the employer’s operational requirements. It is also common cause that their contracts of employment did not terminate for reasons relating to section 38 of the Insolvency Act.”>

[10]       The Commissioner’s characterization of the employees’ case does not accord with what is reflected in the transcribed record. The opening statement by the union as transcribed reads as follows:

“….Commissioner, first of all, we come across the situation whereby the company lost a contract who is one of its biggest client. And based on that, we tried to engage the company in terms of section 189 and the company refused to engage us on that clause.

And along the way, we have been aware that even though you are not engaging with at the table on behalf of our members, we are going to refer the severance pay dispute (indistinct), because it is our view that one the company lose the business, definitely people are going to lose their job in terms of that, should be entitlement to have that severance pay. And the company take us for granted on that matter and of course definitely, much as the company’s big because this company Bidvest is a national company. It’s all over.

The reason company failed even to take our members and sorted them on the other sites for that purpose, and on that basis, we feel strongly as a union that those members are entitlement for severance pay which we demand the company to pay them. Not only dispute on the Court and it’s about the code of dismissal here or dispute about dismissal.

It’s verified clean. It’s about Section 41 of this breaching of employment. This is our opening statement, Commissioner.” (my emphasis)

[11]       The employer’s opening statement dealt inter alia submissions that there was no dismissal and that the employment contract terminated by the actions of a third party and that it was “a fixed term eventuality contract”. His statement ended as follows:

“ And there’s enough case law to indicate that if a third party effects the relationship between client and the employer then that’s an automatic termination and that is what took place here, Commissioner. Also important to note that If I look at the union members sitting around the table, even some of them sitting here, even officials, have taken up the opportunity of alternative employment with the new company.

And that to me is a clear indicator that everybody was given an opportunity to source alternative employment They chose not to. Now the last point, Commissioner, that the CCMA does not have jurisdiction in this matter because there was no dismissal. Thanks Commissioner.

COMMISSIONER: On your last point, Mr Haupt it seems to me that you are not taking into consideration that the trade union clearly said this dispute is not about dismissal.

MR HAUPT Ja, I acknowledge that, Commissioner.”

[12]       No reasonable decision-maker could describe the Union’s opening statement in the way that the Commissioner did. The last paragraph of that statement is far from clear. In addition, the employer was raising a jurisdictional point that needed to be carefully examined. Over and above this, immediately after the exchange between the Commissioner and the employer’s representative above, the trade union representative made further submissions highlighting the fact that Mr Haupt himself had organized a process facilitating employment with the new company:

“MR MAGIDI: Yes. And if one can ask this simple question, taken from what they present, they have indicate that they were facilitating the employment of the employees to new company. They mentioned that.

So on that basis, if one can ask the quite simple question, how many employees has been taken over by that particular new company? How many were never been taken? So, if that facilitating has been took place, then why everybody they has been taken off?

COMMISSIONER: Why?

MR MAGIDI: Why everyone has been taken off? And if that the case Commissioner, why Section 187 (sic) has never been implemented, if that the case? Because as the core, at the core of this thing, because if you terminate the contract of employment because you lose the business, that was entitled to Section 189 actually, which the company refused to engage, because they are aware, because (indistinct) with the money for workers.”

[13]       The union representative did make the point, as reflected in the transcript that: “We are very sure that the dispute before you is severance pay. Not dismissal.” The Commissioner appears to have concluded that because the referral before him was limited to the remedy of obtaining severance pay, that the union’s position was that no dismissal took place. In so doing he undertook the enquiry before him in a misconceived manner and eschewed his duty to determine whether there was a dismissal giving rise to the right to severance pay. Instead he followed the route of looking at the provisions of section 41 without reference to this fundamental question even though the employer urged him on a number of occasions to determine the issue of whether there was a dismissal.

[14]       In Edumbe Municipality v Putini & others[1] the LAC restated the following principle:

“[35] It is a trite principle of law that for a defect in the conduct of the proceedings to amount to a gross irregularity as contemplated by s 145(2)(a)(ii) of the LRA, the arbitrator must have misconceived the nature of the enquiry or arrived at an unreasonable result. It is not only the unreasonableness of the outcome of an arbitrator’s award which is subject to scrutiny, the arbitrator ‘must not misconceive the enquiry or undertake the enquiry in a misconceived manner’, as this would not lead to a fair trial of the issues. Mere errors in the law and fact as well as other process-related errors are not sufficient to show that the arbitrator misconceived the enquiry. It must be shown that ‘the arbitrator undertook the wrong enquiry, undertook the enquiry in a wrong manner’ or ‘arrived at a decision which no reasonable decision maker could reach on all the material that was before him or her’.”

[15]       The applicants have asked that the reviewing Court substitute the finding of the arbitrator, by one that the employees were not entitled to severance pay, or remit the dispute for rehearing. In the circumstances of this matter, I am of the view that the matter should be remitted for a complete re-hearing before a Commissioner of the second respondent, who can consider whether in the circumstances of this particular case, the termination of the employment contracts should be considered in law as a dismissal or not, and if so whether the dismissal was for operational requirements. The evidence contained in the transcribed record of the arbitration does not suffice for this Court to decide this

question. There is not sufficient in the record before me to conclude whether the ultimate outcome of the Award i.e. the awarding of severance pay was reasonable or not. In these circumstances, it is in the interests of justice that the dispute be carefully considered anew. I make the following order:

Order

1.    The application for condonation is granted.

2.    The Award under case number WECT 12440-16 is reviewed and set aside.

3.    The dispute is remitted to the second respondent for re-hearing before a Commissioner other than first respondent.

H. Rabkin-Naicker

Judge of the Labour Court of South Africa

Representation:

For the Applicant:    WH Hutchinson instructed by Moodie & Robinson

For the Third Respondent: P Sharuh Attorney

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