Employment law update

April 25th, 2016

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.

Nadine Mather BA LLB (cum laude) (Rhodes) is an attorney at Bowman Gilfillan in Johannesburg.










Appropriate sanction

In Trans Hex Group Ltd v Commission for Conciliation Mediation and Arbitration and Others [2016] 2 BLLR 144 (LAC), the employee responded to a radio call for the lubrication of trucks at a workshop. The employee drove a company truck to the workshop without permission, without a licence and without stopping at intersections along the way. When he attempted to bring the vehicle to a stop, he failed to do so timeously and drove into a wall causing damage to both the vehicle and the wall. In spite of the employee’s 16 years of service with his employer, he was dismissed. He also received a final written warning for crashing the vehicle, causing approximately
R 100 000 damage.

The employee took issue with the fairness of his dismissal citing his long service, his immediate report of the incident and the remorse he had shown. In addition, the employer’s disciplinary code recommended a written warning as an appropriate sanction for a first offence of this nature. Aggrieved by his dismissal, the employee referred an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA).

The CCMA commissioner identified the issue for determination to be whether the employee’s dismissal was the most appropriate sanction in the circumstances. The commissioner found that the contravention of the rule by the employee did not go to the heart of the employment relationship and that his long service warranted progressive discipline. Furthermore, his behaviour was capable of correction and his personal circumstances mitigated against dismissal. Accordingly, the commissioner ruled that the sanction of dismissal was too harsh and the employee was retrospectively reinstated, subject to a final written warning. The employer subsequently took the matter on review to the Labour Court that declined to interfere with the award.

On appeal to the Labour Appeal Court (LAC), the employer contended that the commissioner had misconceived the nature of the enquiry before him in applying the incorrect test, namely, whether the dismissal was the most appropriate sanction. The employer also contended that the commissioner failed to give due regard to the seriousness of the offence and the context of the misconduct in that the employee drove through a high-risk area of the mine, causing substantial damage to company property and putting other workers’ lives at risk. In addition, the employee violated serious health and safety regulations.

The LAC found that an erroneous categorisation of an issue by an arbitrator will not justify the setting aside of an award unless such error is material to the outcome, caused unfairness or prejudice, or resulted in an award which was so unreasonable that it falls to be set aside. The LAC accepted that the commissioner had mistakenly formulated the issue for determination as whether dismissal was the appropriate sanction. The issue was rather whether the dismissal was fair. However, the LAC found that the decision reached by the commissioner was not one which a reasonable decision maker could not have reached. The appeal was thus dismissed with costs.

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









The consequences of setting aside an arbitration award post a s 197 transfer

NEHAWU obo Cornelius and Others v High Rustenburg Estate (Pty) Ltd and Another (unreported case no C459/2004, 10-2-2016) (Rabkin-Naicker J).

Section 197 of the Labour Relations Act 66 of 1995 (LRA)  is triggered when a business is transferred as a going concern and dictates the rights and obligations between an old employer, new employer and the transferred employees.

The relevant portion of s 197 for purposes of this judgment is s 197(5) which reads:

‘(a) For the purposes of this subsection, the collective agreements and arbitration awards referred to in paragraph (b) are agreements and awards that bound the old employer in respect of the employees to be transferred, immediately before the date of transfer.

(b) Unless otherwise agreed in terms of subsection (6), the new employer is bound by –

(i) any arbitration award made in terms of this Act, the common law or any other law …’.


The applicant union referred an unfair dismissal dispute on behalf of its members who had been dismissed by their employer, High Rustenburg Hydro (Hydro). At arbitration proceedings before the Commission for Conciliation, Mediation and Arbitration (CCMA) the employees’ dismissals were found to be fair. The union, thereafter approached the Labour Court (LC) to review and set aside the CCMA arbitration award.

After the CCMA award was delivered, but before the LC heard the review application, Hydro sold its business to Iprop (Pty) Ltd who in turn sold the business to the first respondent, High Rustenburg Estate (Pty) Ltd (Estate).

Subsequent to Estate acquiring the business, the LC set aside the arbitration award and substituted it with a finding that the employees’ dismissals were unfair and awarded each employee 12 months’ compensation.

The union obtained a writ and attached Estate’s property to satisfy the order of the LC.

Having heard an application challenging the validity of the attachment, the LC found that the employees were entitled to enforce their claims against Estate by virtue of the provisions in s 197.

On appeal the Labour Appeal Court (LAC) set aside the LC’s findings. The relevant portion of the LAC’s order reads:

‘(i) The dispute between the appellant and the respondent shall, in terms of Rule 58(6)(i) of the Consolidated Rules of the High Court be dealt with by way of a special case to be heard in the Labour Court.

(ii) The special case must determine whether s 197(5) of the Labour Relations Act 68 of 1995 applies to an arbitration award which was reversed by the Labour Court but only after the transfer of the relevant undertaking had taken place.’

Proceedings before the LC

In executing the order of the LAC, the LC held that the question before the court was whether ‘an award that [binds] the old employer in terms of section 197(5) [is] susceptible to review and does a new employer take on the risk of an award (which serves its interests at date of transfer), from being substituted on review subsequent to transfer, by an award that does not’.

The court examined the phrase ‘immediately before the date of transfer’ and in following past authorities held there was no reason not to afford this term its ordinary meaning. The CCMA award, was, therefore, binding on Hydro and the employees immediately before the date the business was transferred as a going concern.

Having regard to the purpose of s 197 as set out by the Constitutional Court in Aviation Union of South Africa and Another v South African Airways (Pty) Ltd and Others 2012 (1) SA 321 (CC) the LC held:

‘In my view, an award binding on the old employer immediately before date of transfer in terms of section 197(5), cannot be considered sui generis, i.e that it is an award not susceptible to review in terms of the LRA. It could not have been intended that a review judgment in respect of such an award could have no legal force and effect, if the award is reviewed and substituted subsequent to the transfer of the business. That the effect of such substitution by the Labour Court may impact on the employees of the old employer and on the new employer (who has stepped into the shoes of the old), is consistent with a constitutionally sensitive reading of section 197. In other words both employees of the old employer and new employers carry the risk that a court order may intervene after transfer, affecting the respective rights and obligations between them by virtue of section 197.  Of course this risk is tempered by the opportunity provided by section 197(5)(b) that the parties may enter into an agreement in terms of section 197(6).

I therefore find, that s 197(5) of the Labour Relations Act 68 of 1995 applies to an arbitration award which was reversed and substituted by the Labour Court but only after the transfer of the relevant undertaking had taken place. In the context of this matter’.

The court ordered that the rights the employees had against Hydro subsequent to their dismissal were rights that were transferred to Estate by virtue of s 197. For this reason the writ of execution obtained by NEHAWU was lawfully issued and the assets attached could be sold to satisfy the order of the reviewing court.

This article was first published in De Rebus in 2016 (May) DR 47.