Employment law update

March 23rd, 2016
x
Bookmark
Talita Laubscher BIur LLB (UFS) LLM (Emory University USA) is an attorney at Bowman Gilfillan in Johannesburg.

Talita Laubscher BIur LLB (UFS) LLM (Emory University USA) is an attorney at Bowman Gilfillan in Johannesburg.

Monique Jefferson BA (Wits) LLB (Rhodes) is an attorney at Bowman Gilfillan in Johannesburg.

Monique Jefferson BA (Wits) LLB (Rhodes) is an attorney at Bowman Gilfillan in
Johannesburg.

 

 

 

 

 

 

 

 

 

 

Unequal pay claims – unfounded pay disparity claim

In South African Municipal Workers Union and Another v Nelson Mandela Bay Municipality [2016] 2 BLLR 202 (LC), a female employee employed as one of five assistant directors in the Municipality’s Human Settlements Directorate alleged that she was unfairly discriminated against on the basis of sex or gender as her salary was lower than her male counterparts who performed similar work to her. In this regard, two of the male assistant directors were appointed at the same time and on the same grade as the complainant and yet were paid a higher salary than her. She also alleged that it constituted unfair discrimination for one of the other assistant directors to be employed on a higher grade than her. The Municipality sought absolution from the instance in this matter.

The Labour Court (LC) found that it was common cause that the complainant earned less than her comparators. The issue to be determined by the LC was thus whether this difference in pay amounted to unfair discrimination. In order to succeed in a claim for unfair discrimination the complainant was required to show that this differentiation was related to her gender.

In response to the complainant’s allegations of unfair discrimination, the Municipality’s justification for the pay discrepancy was that two of the assistant directors were previously engaged as project managers of the Municipality whereas the complainant was an external candidate. After their appointment to the position of assistant director they had complained in writing that their salary was less than what they had previously earned as project managers and as a result their salaries were adjusted accordingly. Thus, the Municipality alleged that the difference in salary was not because the two employees were males, but rather because of their background at the Municipality. As regards the assistant director who was employed on a higher grade than the other four assistant directors, the Municipality argued that his grade was not higher because he was a male. Instead, this discrepancy arose because the Municipality had incorrectly graded the employee and a process was underway to correct this error.

Phatshoane AJ found that the complainant had not been able to demonstrate that there was any employment policy or practice at the Municipality that favoured males over females. The complainant further conceded that she would have still complained about her pay disparity even if her comparators had been female. This demonstrated that the issue was not about gender. The LC accordingly found that the complainant failed to show that there was a causal nexus between her gender and the difference in her salary. Absolution from the instance was granted.

Automatic termination provisions in employment contracts (vis-à-vis Labour Relations Act)

In Pecton Outsourcing Solutions CC v Pillemer and Others [2016] 2 BLLR 186 (LC), a temporary employment service, Pecton Outsourcing Solutions CC (the TES), gave notice of termination of employment to all its employees on its client terminating a service agreement with the TES. In simply notifying the employees of the termination of their employment, the TES relied on a provision in the fixed term employment contracts, which provided for automatic termination of employment if the service contract with the client was terminated. The employees then referred an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA). The commissioner found that the employees had been unfairly dismissed as an employer cannot contract out of the provisions of the Labour Relations Act 66 of 1995 (the LRA). The commissioner acknowledged that there was a fair reason for the dismissal but ordered compensation as no process was followed.

The TES then instituted review proceedings in the LC alleging that the commissioner had wrongly found that the employment contracts could only be terminated by dismissal. The TES argued that the commissioner had failed to appreciate that fixed term contracts may terminate in ways other than dismissal, for example, expiry on an agreed end date. The LC was required to consider whether relying on automatic termination provisions in employees’ contracts of employments on the cancellation of a service agreement by a client constituted a dismissal and if so, whether the CCMA had jurisdiction to determine such a dispute.

The LC held that a fixed term contract can either provide for expiry on a given date or on the completion of a specified task and in such circumstances this would not amount to circumventing the provisions of the LRA. In this regard, Whitcher J did not agree with the TES that the commissioner had failed to appreciate that fixed term contracts may terminate in these circumstances. On the other hand, while the LC acknowledged that a fixed term contract may provide for termination on the occurrence of a particular event, such as where a client cancels its service contract, it cautioned that this was open to abuse and may undermine employees’ rights. Thus, such a clause would be invalid if it was used to contract out of the provisions of the LRA. The LC found that in determining whether there has been an attempt to contract out of the LRA, one should consider the content of the reason for the termination over the form of the contract governing it. According to Whitcher J, if the reason for the termination is one that typically constitutes a reason for a dismissal then it may be a situation where there is an attempt to contract out of the LRA.

It was held that, in this case, by relying on the automatic termination provisions, the TES was circumventing the provisions of s 189 of the LRA. This is because the reason for the termination in these circumstances was financial – the TES was unable to afford to employ the employees when it lost its only client. The automatic termination provisions in the employment contract deprived the employees of their rights associated with a dismissal for operational requirements, including the right to severance pay. Thus, it was held that the commissioner was correct in finding that the automatic termination provisions were invalid as they had the effect of contracting out of the provisions of the LRA. It was accordingly held that there had been a dismissal and the commissioner had jurisdiction to determine the dispute. However, as soon as the commissioner concluded that this was a dismissal for operational requirements, she should have referred it to the LC as she lacked the power to determine such a dispute. The LC accordingly set aside the award and granted the employees leave to refer the dispute to the LC.

 

 

Moksha Naidoo BA (Wits) LLB (UKZN) is an advocate at the Johannesburg Bar.

Moksha Naidoo BA (Wits) LLB (UKZN) is an advocate at the Johannesburg Bar.

 

 

 

 

 

 

 

 

 

 

Executing an order pending leave to appeal

Dintwe v Ditsobotla Local Municipality and Another (LC) (unreprorted case no J65/16, 1-2-2016)  (Tlhotlhalemaje J).

In December 2015 the applicant employee approached the Labour Court (LC) on an urgent basis to declare his suspension unlawful and that he be reinstated with immediate effect. On 23 December the LC, per Nkutha-Nkontwana AJ, having found the employee’s suspension unlawful ordered the first respondent employer to reinstate the employee as from 11 January 2016.

On 11 January the employer advised the employee that it was unable to ‘facilitate his return’ and on 18 January  the employer brought an application for leave to appeal against the aforestated order. The following day the employee was issued with a notice to attend a disciplinary hearing scheduled for 1 February.

On 22 January the employee again brought an urgent application to the LC wherein he sought Nkutha-Nkontwana’s AJ order be executed and that the operation of the order not be suspended pending the application for leave to appeal or any other subsequent appeal application thereafter.

The court per Tlhotlhalemaje J, noted that while an application for leave to appeal does stay the order appealed against, r 49(11) of the High Court Rules provides:

‘Where an appeal has been noted or an application for leave to appeal against or to rescind, correct, review or vary an order of a court has been made, the operation and execution of the order in question shall be suspended, pending the decision of such appeal or application, unless the court which gave such order, on the application of a party, otherwise directs’ (my italics).

Despite the LC not having a similar provision, r 11(3) of the Labour Court Rules nevertheless allowed the court to adopt any procedure it deemed appropriate when addressing a situation not contemplated in its rules.

Therefore, r 49(11) of the High Court Rules, read with r 11(3) of the Labour Court Rules, permits the LC to hear an application as envisaged in r 49(11).

In exercising its judicial discretion, the court referred to the decision in South Cape Corporation (Pty) Ltd v Engineering Management Services (Pty) Ltd 1977 (3) SA 534 (A), which listed the relevant considerations a court should have regard to in an application of this nature. Quoting from South Cape Corporation (supra) these factors are:

‘(1) the potentiality of irreparable harm or prejudice being sustained by the appellant on appeal (respondent in the application) if leave to execute were to be granted;

(2) the potentiality of irreparable harm or prejudice being sustained by the respondent on appeal (applicant in the application) if leave to execute were to be refused;

(3) the prospects of success on appeal, including more particularly the question as to whether the appeal is frivolous or vexatious or has been noted not with the bona fide intention of seeking to reverse the judgment but for some indirect purpose, e.g. to gain time or harass the other party; and

(4) where there is the potentiality of irreparable harm or prejudice to both appellant and respondent, the balance of hardship or convenience, as the case may be.’

In considering the issue of ‘irreparable harm’ the court took cognisance of the fact that Nkutha-Nkontwana AJ found the employee’s suspension unlawful as a result of the employer failing to afford the employee an opportunity to be heard before taking the decision to suspend him and/or failing to give the employee full details for why it took the decision to suspend him.

The court further highlighted the fact that the employer, in the initial urgent application, did not materially defend the above allegations and thus, according to Tlhotlhalemaje J, the employee’s suspension remained unlawful. The fact that the employee’s disciplinary hearing was to commence on 1 February  did not detract from the unlawfulness of his suspension.

Having balanced the impact a continued suspension would have on the employee’s dignity, reputation and self-esteem as argued by the employee, against the alleged harm the employer would be subject to should the employee return to work, the court concluded that it was the employee who would suffer irreparable harm if his unlawful suspension were to continue pending leave to appeal.

In addressing the consideration ‘balance of convenience’, the court noted that the employee’s return to work could not impact the employer’s investigations into the employee’s alleged misconduct as such investigations had already been concluded. In addition to this and returning to the findings of Nkutha-Nkontwana AJ, the court held:

‘It is therefore my view that to not order the execution of the order in circumstances where there are clear legal and procedural issues to dispense with pending the application for leave to appeal would clearly not be in the interests of either the Applicant or the Municipality. Whilst the leave to appeal is pending, and in the absence of any indication that the Municipality has attempted to correct the flaws in its intended disciplinary process against the Applicant, and in particular his suspension, it would imply that the Applicant would remain suspended with pay until the leave to appeal is finally dispensed with. This can definitely not be an ideal situation for both parties, let alone members of the public the Municipality is meant to serve. To this end then, and for reasons other than those advanced by the Applicant, the balance of convenience favours that the order be executed.’

Turning to the issue of ‘prospects of success’ Tlhotlhalemaje J found that in addition to the argument that the employer only sought to appeal against the cost order granted by Nkutha-Nkontwana AJ and not the merits per se, there were other considerations that supported a finding that that the employer had remote prospects of success if leave to appeal were granted.

Following the above the court granted the employee leave to execute the order delivered by Nkutha-Nkontwana AJ pending the application for leave to appeal. Taking into account the considerations of law and fairness, the court declined to make an order as to costs.

This article was first published in De Rebus in 2016 (April) DR 42.