Employment law update

December 1st, 2016
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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.

Section 197 transfers: Can the new employer be joined to proceedings subsequent to the conciliation process?

In Temba Big Save CC v Kunyuza and Others [2016] 10 BLLR 1016 (LAC), the respondent employees alleged that their dismissals were automatically unfair as Big Save had not complied with s 197 of the Labour Relations Act 66 of 1995 (the LRA) when it purchased the business of ACE Wholesalers. Big Save had not been a party to the conciliation proceedings and the respondent employees then sought to join Big Save to the proceedings in the Labour Court (LC). Big Save filed an answering affidavit out of time. The LC, per Steenkamp J, joined Big Save to the proceedings and refused to allow Big Save’s answering affidavit on the basis that it was filed out of time. Big Save then appealed the decision of the LC.

Big Save argued that the LC should not have granted the joinder because the respondent employees had not referred the automatically unfair dispute against Big Save for conciliation. Instead, the referral had only been made in respect of the ‘old employer’, ACE Wholesalers. In this regard, Big Save relied on the Constitutional Court (CC) decision in National Union of Metalworkers of SA v Intervalve (Pty) Ltd and Others (2015) 36 ILJ 363 (CC) (see employment law update ‘Joinder v Jurisdiction’ 2015 (March) DR 39),  in which it was held that referral for conciliation is a prerequisite to the LC having jurisdiction over unfair dismissal disputes and thus the LC was not permitted to join a party to the proceedings when that party had not been a party to the conciliation process.

The LC considered the judgments in Intervalve and agreed that a party cannot be joined to proceedings if it was not a party to the conciliation process. However, it interpreted the CC’s decision in Intervalve to mean that in disputes involving s 197 of the LRA it was not necessary to refer both the old employer and the new employer to conciliation and the new employer could in fact be subsequently joined to proceedings.

The Labour Appeal Court (LAC), per Waglay JP, held that the general principle is that a referral to conciliation is a precondition to the LC having jurisdiction to determine a dispute about an unfair dismissal and thus, it is not permissible to join a party that was not party to the conciliation proceedings at a later stage. However, the LAC held that this principle is not applicable where a dismissed employee refers an unfair dismissal dispute against his or her employer and then subsequently discovers that the business has changed hands and thus their relief lies against a new employer in terms of s 197 of the LRA.

This is because the consequences of s 197 are that the new employer steps into the shoes of the old employer in respect of all rights and obligations of the old employer, including pending litigation. Thus, if the dispute is referred to conciliation in respect of the old employer, it would not be necessary to refer the dispute to conciliation in respect of the new employer as the new employer would simply step into the shoes of the old employer.

The LAC found that there was no basis to interfere with the LC’s decision regarding joinder as it was up to the trial court to determine whether or not s 197 applied. The appeal was accordingly dismissed with costs.

Reconstruction of record in review proceedings

In Francis Baard District Municipality v Rex NO and Others [2016] 10 BLLR 1009 (LAC), the municipality instituted review proceedings in respect of an arbitration award in which reinstatement was ordered. The record of the arbitration proceedings was only partially complete in that the testimonies of some of the witnesses were not transcribed.  Furthermore, the evidence of the employee was only partly transcribed. The employee objected to the record and suggested to the municipality that the parties attempt to reconstruct the record.

A few months later, the attorneys for the municipality responded that it would not be possible to reconstruct the record as no notes of the evidence lead at the arbitration had been taken. It advised the employee that the municipality would stand and fall by the partial record and invited the employee to file an answering affidavit based on the partial record.

The LC, per Morgan AJ, refused to determine the review based on the partial record as there were missing parts that were material to the dispute. In determining whether to dismiss the review application or remit it to the bargaining council, Morgan AJ found that a diligent attempt had not been made to reconstruct the record. The review application was accordingly dismissed.

The municipality appealed against the decision of the LC on the basis that the LC’s decision was incorrect as the matter could have been determined based on the partial record, failing which, the matter should have been remitted to the bargaining council for a fresh hearing. It was also argued that sufficient weight had not been given to the municipality’s right to institute review proceedings.

The LAC, per Musi JA, held that it is the duty of the applicant in review proceedings to take all reasonable steps to ensure that the record placed before the court is as complete as possible. In circumstances where there is an incomplete record before the court, the court must determine whether the missing parts of the record are material to the dispute. The next inquiry is whether the applicant took all reasonable steps to reconstruct the record. This must be determined by the facts on a case by case basis. In this case, the municipality had refused to try and reconstruct the record as per the employee’s suggestion.

As regards the right to review proceedings, Musi AJ held that review proceedings should not be dismissed lightly. However, after considering the facts of this case, Musi AJ was of the view that the other factors outweighed the right to review proceedings and the municipality only had itself to blame for the situation it found itself in. The appeal was accordingly dismissed with costs.

 

 

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.

The Prescription Act: Consistent or inconsistent with the LRA?

FAWU obo Gaoshubelwe and Others v Pieman’s Pantry (Pty) Ltd (unreported case no: JA20/15, 8-9-2016) (Sutherland JA (Ndlovu JA and Murphy AJA concurring)).

Does the Prescription Act 68 of 1969 apply to unfair dismissal disputes referred to the Commission for Conciliation, Mediation and Arbitration (CCMA) and if so, is prescription interrupted when a dispute is referred to the CCMA in terms of s 191(1) of the Labour Relations Act 66 of 1995 (the LRA)?

These were the questions before the Labour Appeal Court (LAC).

Prior to the hearing of this appeal, the LAC, in three consolidated matters of Myathaza v Johannesburg Metropolitan Bus Service (SOC) Ltd t/a Metrobus Mazibuko v Concor Plant Cellucity (Pty) Ltd v Communication Workers Union on behalf of Peters (2016) 37 ILJ 413 (LAC) had recently held that the Prescription Act did apply to arbitration awards. This decision, however, did not dispose of the aforestated questions, which sought to determine whether litigation under the LRA, prior to rendering an award or judgment, is subject to the Prescription Act.

Background

The appellant union, Food and Allied Workers Union (FAWU) referred an unfair dismissal dispute to the CCMA on behalf of its members on 7 August 2001. An arbitrator found that the CCMA did not have jurisdiction to hear the dispute and directed the parties to the Labour Court (LC). FAWU’s application to review the arbitrator’s ruling was dismissed by the LC on 9 December 2003, whereafter FAWU filed a statement of claim at the LC in March 2005 in pursuit of its members unfair dismissal claim.

The respondent pleaded prescription of the claim, which was eventually upheld by the LC at trial, in May 2014.

FAWU turned to the LAC.

Material to this appeal was s 16(1) of the Prescription Act, as well as s 210 of the LRA.

Section 16(1) reads:

‘Subject to the provisions of subsection (2)(b), the provisions of this chapter shall, save in so far as they are inconsistent with the provisions of any Act of Parliament which prescribes a specified period within which a claim is to be made or an action is to be instituted in respect of a debt or imposes conditions on the institution of an action for the recovery of a debt, apply to any debt arising after the commencement of this Act.’

Section 210 reads:

‘If any conflict, relating to the matters dealt with in this Act, arises between this Act and the provisions of any other law save the Constitution or any Act expressly amending this Act, the provisions of this Act will prevail.’

Among FAWU’s arguments on appeal was that an extinction of a labour dispute by way of prescription runs contrary to the aims and purpose of the LRA, which is to promote labour stability and peace. Hence in light of the public interest placed on labour peace, due weight should be given to the effect of s 210 of the LRA, which – as a result thereof – ought to exclude the Prescription Act in matters dealt with under the LRA.

The LAC noted that the argument based on public policy and equity were rejected in Myathaza where the LAC held that once the requirements for a plea of prescription have been met, a court is bound to uphold such a plea without having regard to the considerations of equity and public policy. The LAC in casu saw no need to disturb the legal position as set out in Myathaza.

A further argument advanced by FAWU was that the LRA sets out specific time frames for disputes to be referred to the CCMA, for conciliation to take place and for adjudication thereafter. Thus the LRA created its own time frames for when claims are made and actions instituted and in addition, gives a court or an arbitrator the power to condone a party for not adhering to such time frames. Not only was this an inconsistency, between the two statutes as contemplated in s 16(1) of the Prescription Act, this inconsistency further meant that neither the LC nor an arbitrator could condone a period longer than three years even if the party applying for condonation could establish good cause.

In addressing this argument the court began by stating that inconsistency between statutes is not borne out of a mere difference in procedure between the two statutes. ‘What is required is an examination of the relevant provisions to determine whether the two statutory regimes are functionally “inconsistent”; if they can be reconciled, there cannot be an inconsistency’. Put differently, do the relevant sections in the LRA and that of the Prescription Act share the same purposes; if so there would be no inconsistency between the two statutes.

The employer argued that the LRA and the Prescription Act are not inconsistent with one another. In arguing this point the employer gave the following interpretation:

‘An appropriate and useful approach to the interpretation of the two statutes is to imagine each as constructing a regime which may be overlaid upon one another as a pair of concentric circles. The outer circle is the Prescription Act which extinguishes debts upon the expiry of three years. The inner circle is the LRA which requires of parties to refer a dispute within 30 or 90 days during which conciliation may occur, and upon expiry and the failure of conciliation efforts, a party has 90 more days to refer the matter to the Labour Court or go to arbitration as the case may. In the present case, that next step was to the Labour Court by the filing of statement of case. The discretion of the Labour Court to condone late filing operates within, and not in competition with, the scope of the periods stipulated by the Prescription Act.’

Therefore according to the employer, s 191 creates time bars and not an alternative to the Prescription Act, and thus there was no inconsistency between the two statutes.

In accepting this argument the LAC held that the powers of a court to grant condonation is not a substitution or alternative to prescription.

The court further rejected the argument that a claim for reinstatement, as was the claim made by FAWU on behalf of its members at the LC, was not a debt as envisaged in the Prescription Act.

Having made these findings and in answering the first question posed, the court found that the Prescription Act applied to all litigation conducted under the LRA including disputes referred under s 191.

The next issue was whether FAWU’s referral to the CCMA on 7 August 2001, interrupted prescription in terms of s 15(1) of the Prescription Act which reads:

‘The running of prescription shall, subject to the provisions of subsection (2), be interrupted by the service on the debtor of any process whereby the creditor claims payment of the debt’ (my italics).

Section 15(6) defines the word ‘process’ as:

‘… includes a petition, a notice of motion, a rule nisi, … a third party notice referred to in any rule of court, and any document whereby legal proceedings are commenced’ (my italics).

FAWU argued that the debt arose on dismissal and that the referral to the CCMA interrupted prescription in terms of s 15(1) of the Prescription Act.

While the LAC agreed with the submission that the debt arose on dismissal, it nevertheless rejected the argument that a referral to the CCMA interrupts prescription. The court held:

‘What section 15(1) of the Prescription Act requires to interrupt prescription is a “process … whereby legal proceedings are commenced”. A referral does not do so because a referral does not commence legal proceedings. … A referral is no more than a condition to be fulfilled to obtain access to a forum that can adjudicate a dispute.

In the case of a matter that must, like the present one, be ventilated in the Labour Court, the referring party must after the referral and exhaustion of conciliation in terms of section 191(5)(b) “refer the dispute to the Labour Court for adjudication”, which involves, in accordance with Rule 6(1) of the Labour Court Rules, the filing of a statement of case, which, in terms of section 191(11)(a), must be done within 90 days of the certificate of non-resolution. This is the act [which] initiates, as the text expressly states, “adjudication” (as distinct from conciliation) and which, for that reason constitutes the “process” which interrupts prescription.’

The appeal was dismissed with no order as to costs.

 

This article was first published in De Rebus in 2016 (Dec) DR 48.