Protected Disclosure of information

TSHISHONGA v MINISTER OF JUSTICE & CONSTITUTIONAL DEVELOPMENT & ANOTHER JR898/2004– case note.

This is the judgment on a point in limine raised where the Labour Court had to decide whether or not it was bound by the findings of the preceding disciplinary enquiry.

Background:

The Applicant in the matter is the deputy director-general of the Department of Justice and Constitutional Development. He was suspended on charges of misconduct for making disclosures to the media. At the disciplinary hearing it was determined that the Applicant had made protected disclosures and as a result could not suffer any occupational detriments for making the said disclosures.

Argument:

The Applicant argued that the findings of the disciplinary hearing could not be challenged by the Respondent and that the Respondent was accordingly bound to those findings. The Respondent on the other hand contended that they were neither entitled nor obliged to review a decision of an internal disciplinary enquiry and further that they were not bound, for the purposes of the trial, by the findings of the enquiry.

Judgment

The court held that the record of the disciplinary enquiry itself is only relevant as evidentiary material. It can thus be used for the purposes of cross-examination and to asses the credibility of witnesses as well as the cogency of the respective versions of the parties.

In terms of s4 of the Public Disclosures Act, an occupational detriment short of dismissal is deemed to be an unfair labour practice and any dispute in relation thereto must follow the procedure set out in the LRA and may be referred to the Labour Court for adjudication, which will be a trial de novo. On this basis, the Labour Court cannot be bound by the results of the preceding disciplinary enquiry.

In obiter, Musi J stated: “In my view, a different approach may have been called for had the applicant formulated his claim differently. Such would have been the case for instance, if he had sought from the Court an order compelling the Respondent to pay him the salary he would have earned for the duration of the suspension and the legal costs he incurred in contesting the charges at the disciplinary enquiry, this inevitably flowing from the determinations made by the disciplinary tribunal.”

Therefore, in terms of this judgment, where a matter is brought to the Labour Court, in terms of section 191 of the Labour Relations Act, the trial will be conducted de novo and the decision of a prior disciplinary enquiry will not be binding on the Labour Court.

Independent Contractors

Section 213 (f) of the Labour Relations Act 66 of 1995 defines an employee as:

“(a) any person, excluding an independent contractor who works for another person or for the state and who receives, or is entitled to receive and remuneration; and

(b) any other person who in any manner assists in carrying on or conducting the business of an employer

The exclusion of independent contractors from this definition is of paramount importance as persons who are not employees as defined, are effectively excluded from the protection afforded by the Act. A person who is considered an independent contractor therefore has no recourse for unfair dismissal etc.

This exclusion of independent contractors from the Act has led to many employers hiring staff as contractors in order to try and circumvent the provisions of the Act.

The question of whether a person is a contractor or an employee poses a fundamental jurisdictional problem when a dispute is referred under the Labour Relations Act. As such is it a question of law which the Courts (or other bodies e.g. the CCMA) have to decide on before a matter may proceed.

Several recent cases which dealt with this issue are Niselow v Liberty Life Association of Africa (1998) 19 ILJ 752 (SCA); SABC v McKenzie (1999) 20 ILJ 585 (LAC) and Dempsey v Home & Property (1995) 16 ILJ 378 (LAC)

The test of the employment relationship should begin with the actual contract of employment. However in the SABC case it was said that the parties own perceptions of the employment relationship should be taken into account as well as the manner in which the contract is carried out.

The following factors appear to be the most important and provide the bases for several aspects of an employment relationship:

  • The dominant impression
  • Productive capacity
  • Control

The Dominant Impression test.

This test was applied in Dempsey. No single factor is considered determinative on its own but the employment relationship is examined in its totality. Factors which indicate an employment relationship must be weighed against factors which indicate a contractor relationship and the dominant impression must be determined.

The most important factors which will be taken into account are:

* Supervision and control – These are probably the most important and the greater the degree of control, the more probable that the relationship is one of employer / employee.

* Degree of autonomy – The independent contractor has far more autonomy in his daily tasks as the relationship is focused on the end result and not the manner in which it is accomplished. In Dempsey’s case, it was however held that a contractor may be required to maintain a certain level of ethics.

* Results versus time – An employee is usually required to devote a certain amount of time to the employer. He gets paid for this time whether or not there is work to be performed. A contractor will generally not be tied down to specific hours as long as the desired result is obtained.

* Commission versus salary – linked to the result / time consideration, the Court will also look at how payment was effected. Commission rewards a result while salary rewards time and therefore commission tends to indicate a contractor relationship while a salary or wage tends to indicate an employee relationship. This test is however not rigidly applied.

* Benefits – The Court may also take into account whether the “employee” receives benefits such as sick leave, medical aid, car allowance, etc. These are more indicative of an employment relationship but are also not totally incompatible with a contractor relationship.

It must be stressed that when applying the dominant impression test, the Court will take into account all the elements of each type of relationship that exist in each specific case. Thus the test is by nature subjective and each set of facts will be judged on its own merits.

The Productive Capacity test

This test was used in Niselow and consisted mainly of determining whether or not the “employee” put his productive capacity at the disposal of the “employer”. It is similar to the results versus time factor which was considered under the Dominant impression test above.

In this test, the Court will examine who actually controls the employees productive capacity. In an independent contractor situation, the contractor can decide how he is going to accomplish the work and usually may hire other staff to assist with this. As long as certain basic requirements / standards are complied with, he can use his own methods to complete his tasks.

In an employer / employee situation however, the employer controls the employees productive capacity and usually has the final say over how, when and what must be accomplished. The employees production is for the benefit of the employer.

In this situation, the employer has to remunerate the employee whether or not work has been provided, as long as the employer has had the benefit of the employees productive capacity.

This test is of extreme importance, as it has been endorsed by the Supreme Court of Appeal.

Control

This is the traditional ground for determining the true nature of a work relationship. It was held in McKenzie that control is one of the most important aspects of an employment relationship. Although it is not decisive, the greater the degree of control, the greater the probability of an employment relationship.

Problematic cases: an example

A trend appears to be emerging in which employees who wish to pay less tax, enter into a Consultancy agreement with an employer and provide invoices for services rendered, consulting fees or similar. The employee then pays VAT as opposed to income tax.

This set up came before the Court in the matters of CMS Support Services (Pty.) LTD v Briggs (1998) 19 ILJ 271 (LAC) and Hunt v ICC Car Importers Co (Pty.) LTD (1999) 20 ILJ 364 (LC). Although these cases were quite different, several important principles were applied.

Without going into excessive detail, it is interesting to note that the Court will not consider itself bound to what the parties have purported to contract between themselves but will examine the true nature of the relationship. For example, in the Hunt case, the Labour Court found that the system of providing invoices was a sham intended to deceive the revenue services. The Court found that although the employee was paid on presentation of invoices, the relationship between the parties was nevertheless one of employment.

The Court in Briggs however found that the parties had in fact entered into a consultancy agreement. In this case an employment relationship had previously existed between the parties who had mutually decided to rather enter into a consultancy arrangement. The Court enforced this contract and found that no employment relationship existed.

The Court has also made it clear that parties should not be able to disguise their relationship to avoid certain consequences (e.g. paying income tax) and then revert to employee status when this is suitable. In this regard a copy of the judgement in Hunt was forwarded to the receiver of revenue (as he then was ) .

Alcohol in the workplace

Alcohol in the workplace.
The basis for any contract of employment is that the employee will
render a service to the employer in return for (usually) payment of a
sum of money. Linked to this is the understanding that the employee will
devote his full attention to his work, at least during working hours.

It may be argued that an employee who arrives at work under the influence
of alcohol will not only be unable to devote his full attention to the
tasks which he has to perform but may also constitute a danger to his
fellow employees.

Seriousness

There can be no doubt in anyone’s mind that this is a fairly serious
offence. However for the purpose of disciplinary proceedings, one will
have to determine just how serious. In most companies, a disciplinary
code is used to categorise offences and determine appropriate sanctions.
For example sleeping on the job is generally not as serious as defrauding
the company. The disciplinary code will usually contain provisions for
the issuing of warnings and will state for which offences an employee
can be summarily dismissed.

This being said, the seriousness of a specific offence will vary greatly
depending on the type of work which is being performed. Take for example
the offence of sleeping on the job. If you are a cleaner, taking a ten-minute
nap when you should be working will not impress your employer but he will
hardly be entitled to fire you for it. However, if you are a bus driver,
the same ten-minute nap will put many lives in danger and in all probability
lead to your instant dismissal.

The same can be said of the offence of drinking on the job / coming to
work under the influence of alcohol.

Certainly in any job which involves the driving of a vehicle, an employee
who comes to work drunk would constitute a huge danger to himself as well
as others. Likewise an employee whose work includes the operation of dangerous
machinery would pose a threat to himself and fellow employees if he were
not able to perform his job properly.

In terms of the regulations to the Health and Occupational Safety Act,
an employer may not allow any employee who is under the influence of alcohol
to work any machinery and the employee must be sent home. This issue was
also dealt with in the Arbitration hearing between Khumalo and Silvacel
(KN13392)

Proof

In terms of the Constitution, no person who is accused of an offence
should have to prove his own innocence. The rule of “innocent until
proven guilty” requires that (in this context) the employer will
have to put certain charges to the accused employee and will then have
to prove that he is in fact guilty of them. It is not up to the employee
to prove that he is not guilty.

It must be noted that it is not fair to dismiss an employee on the basis
of suspicion or even on the basis of a strong suspicion. The guilt of
an employee must be proven (on a balance of probabilities) before any
action may lawfully be taken against him.

So now the problem arises of how to prove drunkenness. We must remember
that an employee is entitled to a fair hearing, even in the most serious
of cases. This means that he must be given a fair opportunity to reply
to the allegations made against him. The difficulty lies in the fact that
“drunkenness” is a vague and subjective term and also in that
it may be better concealed by more “experienced” drinkers.

For traffic purposes, a person is considered “drunk” or “under
the influence of alcohol” if his blood alcohol content is higher
than 0.05, however this is not the only standard. Certain facts will be
obvious, for example the person may smell of alcohol, be unsteady and
slur his speech. In the absence of any other reasonable explanation, these
will allow the drawing of a reasonable inference that the person is drunk.

If breathalyzer equipment is available, it should be used only by a person
trained in its use and the reading should be shown to the accused party
and noted down so that it cannot be disputed later.

As the use of a breathalyzer may constitute a breach of the employees
right to privacy, his consent should be obtained first. Should he refuse,
this may further the belief that he is drunk, a point which should be
explained to the employee in the case of his refusal. In this regard,
see Mpisi and Rainbow Farms, KN762

Sanction

As with any offence, the next question is ‘what is the appropriate punishment’.
Everyone is familiar with the notion that the punishment must fit the
crime and that is what must be applied in each case.

As the seriousness of the “crime” will vary from industry to
industry and from job to job, the punishment which is to be implemented
must be decided on within the context of each individual situation.

It should be noted that dismissal is a serious step and should only be
implemented if there is no other possible alternative. Especially with
regard to an employee who shows signs of being an alcoholic, dismissal
may only make the situation worse. In many cases (e.g. the Silvacel Arbitration
case supra) a distinction is drawn between “drunkenness” and
coming to work “under the influence”. The first case indicates
an employee with an alcohol related problem and involves repeated offences
while the latter involves occasional incidents.

An employer is obliged to take an employees personal situation into account
before dismissing him and, while an employer is not legally bound to,
the possibility of rehabilitation should be considered as discussed by
the Agricultural Labour Court in Esau & ‘n Ander v Wynland Boerdery
Belange (Edms) Bpk h/a Zetler Bros. (1995) 16 ILJ 237 (ALC). This is of
course supposing that the employee agrees that such a need exists.

All this being said, cases may arise where the company has no choice
left but to dismiss the employee. If this proves to be the case, the employer
is going to have to show that reasonable chance for improvement was allowed
for and that use was made of warnings or counselling.

A Case Study.

A recent Arbitration case which dealt with this issue was Le Roy and
S.A. Express Airways GA20054.

In this case, the employee was a pilot and was dismissed after being
found under the influence of alcohol. The dismissal was then challenged
as being unfair.

At the time of the incident, no breathalyzer tests were taken and only
the evidence of witnesses was led at the disciplinary inquiry in order
to prove that the employee was under the influence (which he disputed).
The evidence consisted of the smell of alcohol on his breath, the disheveled
and tired appearance of the employee, the unsteadiness of the employee
and failure to abide by Standard Operating Procedures at a risky phase
of flight.

This was considered a dismissible offence due to the fact that many lives
were put at risk as well as the fact that the employees conduct contravened
many laws and regulations relating to aviation.

The Commissioner found the employees conduct to be “highly irresponsible”
and “incompatible with a continued relationship of trust between
an airline and a pilot” His dismissal was found to be both procedurally
and substantively fair.

Labour Brokers Unfair Dismissal

One of the recent developments in the South African workforce is the growing popularity of Labour Brokers and temporary employment services. These are agencies with whom job seekers can register and who maintain a form of database of their members. The broker will then attempt to procure temporary work assignments for its members.

From the outset we should distinguish between labour brokers and recruitment consultants. A labour broker may place the same person in several positions from time to time while a recruitment consultant is usually paid a once off fee by a firm in order to seek out possible candidates to be employed by that firm directly. Once the applicant has been placed and payment received, the agent steps out of the picture completely.

For the purposes of this paper I will deal only with the issue of labour brokers, as recruitment consultants do not present as many legal problems.

Essentially what happens in the labour broker situation is that we have three parties to the employment relationship: the “employee,” the “broker” and the “client”. The employee concludes a contract with the broker; the broker then in turn concludes a contract with the client in which the broker makes the employees services available to the client for a fee.

The employee goes to work at the clients premises, the client pays the broker (usually an hourly rate) and the broker pays the employee after deducting an agreed amount. The advantages of this relationship are many, especially as each work assignment is often temporary. The employee gets valuable exposure to the working environment without becoming stuck in a specific position, the clients have access to temporary staff when they need it and the broker makes money out of the deal.

However the problems which come with this type of set up are also plentiful. First of all, we need to establish the position of the employee in terms of the Labour Relations Act 66 of 1995. The questions around which many issues are going to revolve are first of all, is the “employee” in fact an employee or an independent contractor? and secondly, who is the employee actually employed by?

Two issues which are bound to come up at some stage are those of unfair labour practices and unfair dismissals. From a practical point of view, the first problem with which we are presented is that of responsibility. As this paper seeks only to deal with dismissal, I will not go into the unfair labour practice at this stage, although the principles involved should be substantially similar.

In a normal employment relationship, even in the absence of a written contract, it is straightforward. The employer dismisses the employee and should that employee wish to take the matter further, it is fairly obvious whom he should act against. However in a labour broker situation it is not that easy as we have the addition of a third party and a less clear-cut work relationship.

In these cases there are in fact several legal relationships: the first between the employee and the broker in which the broker agrees to try and procure temporary work assignments for the employee and the employee agrees that the broker will be entitled to deduct a certain amount or percentage from any wages earned. The second relationship is between the broker and the client. Here the broker agrees to place the employees services at the disposal of the client and the client agrees to pay the broker (usually an hourly rate). It is important to note that the client does not pay the employee but pays the broker who deducts his fee and then pays the employee. The third relationship is between the employee and the client in that the employee agrees to perform certain work for the client.

Obviously a contract of employment exists between the employee and the broker (this is supported by Section 198(2) of the Labour Relations Act as well as several cases). However the employee does not in fact place his skills and abilities directly at the use of the broker. On the other hand, the employee does place his productive capacity at the disposal of the client, which would seem to be evidence of an employment relationship, but receives no remuneration from the client. This seems to indicate two imperfect employment relationships

The reason why this causes problems is that if the employee needs to make use of certain remedies in terms of the Labour Relations Act, he can only act if he is an employee in terms of the law, and then only against his employer.

Take for example the following (fictitious) situation: Mr. Worker signs an agreement with Temps cc, an employment agency who will place him in temporary positions and will pay him R30.00 per hour. ABC stores (Pty.) LTD then approach Temps cc requesting a person to work in one of their branches on a two month contract. Mr. Worker is agreeable and begins work.

After three days Mr. Worker is accused by the manager of drinking on the job and told to get out and not come back. Mr. Worker is not happy about this and refers a dispute to the relevant council for conciliation. The first problem is who should he act against? He never entered into a formal contract of employment with ABC and was not in fact dismissed by Temps. Should he cite either as respondents, each will have a possibly valid defence.

The obvious answer is to act against both and leave the decision up to the arbitrator or Court. In fact under certain circumstances the Court my find that there is joint and several liability. In other words both client and broker may be responsible for unfair labour practices perpetrated by the client

In the above example Mr. Worker is, according to Section 198(2) of the Labour Relations Act, in fact the employee of Temps cc and therefore cannot be dismissed by ABC at all. The relationship between Temps and ABC is a contractual one and if the employee provided (Mr. Worker) is unsuitable, Temps will have to withdraw him and provide another employee to their client (ABC)

The onus to dismiss or discipline Mr. Worker is actually on Temps. They are ultimately responsible for any unfair labour practices perpetrated by their client and would therefore (in this example) have to hold a disciplinary inquiry themselves. In other words, should ABC dismiss Mr. Worker or commit any unfair labour practice against him, Mr. Worker can in fact hold Temps cc liable under the Labour Relations Act. Temps cc may then have an action against ABC under the law of contract.

In order to safeguard themselves, it would be advisable for a labour broker to include in its contract with the client, a clause to the effect that the client undertakes not to commit any unfair labour practices and that the client will not take any form of action against the employee without consulting the broker.

An interesting approach has been taken in the Employment Equity Act 55 of 1998 which states in Section 57(1) “For the purposes of Chapter III of this Act, a person whose services have been procured for, or provided to a client by a temporary employment service is deemed to be the employee of that client, where that persons employment with the client is of indefinite duration or for a period of three months or longer.”

What this means is that (for the purposes of this Act) if an employee is placed in employment with a client for more than three months, that employee becomes the employee of the client. This does not necessarily indicate that the employment contract with the broker is terminated but means that responsibility under this Act falls on the client.

As this relates only to the Employment Equity Act, it does not have any direct bearing on unfair labour practices or dismissals but it should not be ignored by the courts when deciding on relevant issues under the Labour Relations (or other) Acts

Section 198(4) of the Labour Relations Act states that “the temporary employment service and the client are jointly and severally liable if the temporary employment service in respect of any of its employees, contravenes-

a collective agreement concluded in a bargaining council that regulates terms and conditions of employment;

a binding arbitration award that regulates terms and conditions of employment;

the Basic Conditions of Employment Act;

a determination made in terms of the Wage Act.”

While this does not state anything specific about unfair dismissal, the issue may well be covered under collective agreements in many industries, especially as relates to the procedural aspect.

A recent arbitration case, which dealt with this issue, was Labuschagne and WP Construction in which the respondent was, by its own admission a labour broker who would take on various employees as independent contractors and then hire them out to clients. The important issues which needed to be determined were:

  • Whether or not the employee was in fact an employee in terms of the Labour Relations Act; and
  • The fairness (or otherwise) of the dismissal.

The Arbitrator, Mr. Preller, took into account the cases of Liberty Life v Niselow (1996) 7 BLLR 825 (LAC) as well as Medical Association of SA & others v Minister of Health & another (1997) 18 ILJ 528 (LC) and found that the employee (Labuschagne) was in fact an employee. The reasons for this are that a relationship of master and servant was present and the employee had placed his productive capacity at the disposal of the employer.

The Arbitrator then had to decide who the actual employer was. In order to decide this, he had to look no further than Section 198 of the Labour Relations Act which was discussed above. In terms of this Section, the temporary employment service (WP Construction) was held to be the employer.

On a separate issue, the Arbitrator ruled that joint and several liability existed in regard of leave pay which was outstanding.

To conclude it should be pointed out that employers are not going to be able to circumvent Labour Law by claiming that their staff are independent contractors. After the decision of the Labour Appeal Court in Niselow which was confirmed in the Supreme Court of Appeal (Niselow v Liberty Life Association of Africa LTD (1998 19 ILJ 752 (SCA)) it is clear that the courts will investigate the nature of the employment relationship before making any ruling on the issue. If the actual employment relationship is inconsistent with that of an employee (as was the case in Niselow)

And further to this, labour brokers are going to have to be careful as they can be held responsible for unfair labour practices committed against their employees by clients. The temporary employment service should therefore take an active role in any disciplinary action taken regarding their employees