Labour Court provides much-needed correction on no work, no pay cases

Labour Court provides much-needed correction on no work, no pay cases

The Johannesburg High Court recently found in the matter of Mhlonipheni v Mezepoli Melrose Arch and Others 2020 that employees (in this case, employed by the Mezepoli and Plaka chain of restaurants) were able to tender their services during Level 5 and Level 4 of the National Lockdown, and accordingly that their salaries were owing by their employers during that period.

This resulted in their unpaid salaries being regarded as debts owed by the employers, and the employers’ self-professed inability to pay these amounts leading them to be placed into business rescue. This judgement has been criticised, not least by the writer, for its arguably incorrect approach that non-essential employees were legally entitled to tender their services during the Level 5 and Level 4 stages of the lockdown. A review of this judgment was suggested in order to correct this legal misinterpretation. Fortunately, the Labour Court has recently pronounced on the issue in the recent case of Macsteel Service Centres SA Proprietary Limited v NUMSA and Others.

Although the case dealt with an urgent application brought by Macsteel to try and prevent a strike by NUMSA (which application was ultimately unsuccessful for unrelated reasons), the judge correctly dealt with the issue of whether employees could tender their services, and therefore be entitled to payment of salary, during these restricted periods of economic activity during Level 5 and Level 4 stages of the lockdown.

In doing so, the judge found that whereas Macsteel had generously undertaken to pay 100% of salaries in March and April, and then up to 80% of employees’ salaries for May, June and July 2020, with the Unemployment Insurance Fund Temporary Employee Relief Scheme being relied upon to make payment of the balance, it in fact had no legal obligation to do so in respect of employees who were not legally able to work. The court held correctly, that those employees who “rendered no service, albeit to no fault of their own or due to circumstances outside their employer’s control, like the global covi-19 pandemic or the national state of disaster, are not entitled to remuneration and Macsteel could have implemented the principle of “no work no pay.”

The judge properly applied a detailed analysis of the employer’s situation, in also finding that where employees rendered their full services (bear in mind that for a portion of the lockdown, employers such as Macsteel were able to perform essential services, or to operate at 50% of manufacturing capacity, and as such, some employees would have been legally entitled to render services full time) these employees were in fact entitled to 100% of their salaries. The reduction to 80% was, in these cases, problematic and was a unilateral change to terms and conditions of employment.

This labour court judgment is to be welcomed, in that it confirms that the correct legal approach is that where it was legally impermissible for employees to perform services, the tendering of services by these employees is irrelevant, and the employer is entitled to implement a no work no pay principle, on the basis of the legal impossibility of both parties performing. Additionally, a case by case analysis must be adopted, and even (if necessary) assessing employees on an individual basis to assess their specific rights. This Macsteel judgement from the specialist labour court, rather than that of the High Court in Mezepoli, should be relied upon as setting out the correct approach.

By Bradley Workman-Davies, Director at Werksmans Attorneys

Termination of employment must be lawful and fair

Termination of employment must be lawful and fair

A recent case decided by the South African High Court examined the curious interplay of an employee’s rights as they arise from both the written contract of employment and, at the same time, labour legislation. 

Although the judgment may at first seem confusing, a careful analysis of its outcome sheds light on how these parallel sources of the parties’ rights and obligations operate in conjunction.

After a public and convoluted legal battle on the issues, in the matter of Old Mutual Limited and Others v Moyo and Another (2020), on January 15, 2020 a three-panel bench of the High Court in Johannesburg delivered a finding that Moyo, the former chief executive for Old Mutual, had not been unlawfully terminated and was not entitled to any relief, whether by means of damages for breach of contract or reinstatement to his positions as had been claimed by him.

The decision of the High Court revolved around Moyo’s contention that despite a provision in his contract of employment that Old Mutual was entitled to terminate his employment merely by notifying him of such termination on six months’ notice, that Old Mutual was contractually obliged to hold an internal disciplinary inquiry or a pre-dismissal arbitration before doing so.  

The High Court correctly held that the contractual entitlement to terminate on six months’ notice was unconditional and that although the agreement did in fact provide for circumstances in which an internal disciplinary inquiry or a pre-dismissal arbitration was required to be held, this was not required in the present case. As such, Old Mutual had not breached any of the provisions of the contract of employment when it notified Moyo of the termination of his employment and the termination was contractually lawful.

However, the above judgment said nothing about whether the termination of Moyo’s employment was a fair dismissal. This aspect of the employment relationship, which exists in parallel to contractual concerns, cannot be ignored because regardless of the content of an employment agreement, an employee always remains entitled to the protections set out in the Labour Relations Act, 66 of 1995, which provides that an employee may not be unfairly dismissed.  

To avoid a claim of unfair dismissal, an employer always needs to demonstrate that:

(i) it had a fair reason to dismiss the employee and (ii) that it followed a fair procedure, allowing the employee an opportunity to respond to the proposal that he/she be dismissed, before taking a decision.  

In Moyo’s case, since he elected to pursue his claim in the High Court by challenging the lawfulness of the termination, which involves an analysis of the rights of the parties in terms of the contract, and not as an unfair dismissal in the Labour Courts, which would have involved an analysis of whether Old Mutual had a fair reason to dismiss him and whether it followed a fair procedure to do so, the judgment centred solely around whether Old Mutual had an unconditional contractual right to terminate on notice and was decided correctly.

It is critical that employers do not assume from the manner in which Old Mutual terminated Moyo’s employment that it is acceptable to merely provide an employee with notice of termination, without ensuring that the termination is also a fair dismissal in terms of the Labour Relations Act. 

Should the employer act in this way, although the termination of employment may be contractually lawful, it would almost inevitably, and indefensibly, be an unfair dismissal. Since it is always the election of the employee as to which forum, he/she wishes to pursue their claim, any termination of employment should always be both a lawful termination and a fair dismissal.

Bradley Workman-Davies is a director at Werksmans Attorneys.

Labour law: All beliefs are created equal … or are they?

Labour law: All beliefs are created equal … or are they?

Did you know that your beliefs may be protected by labour laws? But how far do these protections extend. Would you be protected for climate change denialism, veganism or being a flat earther?

Most South Africans are well aware that their fundamental constitutional rights include the right of freedom of conscience, religion, thought, belief and opinion, and that these rights are valued so highly that ordinarily any infringement is a matter of constitutional law.  Labour laws are no exception to this rule. 

The Labour Relations Act recognises the application of these protected rights in the workplace by specifically creating a protected category of dismissal to ensure that if a person is fired because of their religion, belief, conscience, or political opinion, the dismissal is not just unfair, but automatically unfair and the dismissed employee is entitled to double the usual compensation. 

Also, the employee may claim that he or she has been unfairly discriminated against in terms of the Employment Equity Act and seek relief under this piece of legislation. 

The question then is raised about what kind of beliefs are worthy of this protection. 

There will, of course, be a fair consensus that religious beliefs such as those formal, traditional theological systems such as Christianity, Judaism, Hinduism, Buddhism and Islam, should be protected. But what of more “fringe” beliefs. As an extreme example, adherents to the newly created religion of Pastafarianism, in which proponents appeal to the creation of the universe, albeit as an admitted parody of other religions) by the Flying Spaghetti Monster, would be unlikely to be protected in South Africa for their beliefs. 

What of other belief systems, which may not necessarily be religious beliefs, such as pacifism, atheism, veganism, climate-change deniers or believers in a flat earth?

The only case dealing with these kinds of issues in the workplace environment is a 2008 case, Zabala v Gold Reef City Casino, in which Zabala claimed that she was dismissed because she had expressed a negative opinion about her manager having an extra-marital affair. 

It turned out she had actually stolen a cellphone and was dismissed for this reason, so the court’s thoughts on her opinion on extra-marital affairs isn’t strictly binding on any future case law.  

On this point though, the judge stated that Zabala’s opinion about extramarital affairs was a belief and a belief, whatever it may be about, falls within the specified grounds of discrimination. This may be too wide an approach to adopt, as any belief, such as that of Pastafarianism or that we live on a flat earth, may then be used as a ground to claim unfair conduct by the employer.  

In Europe at least, a more nuanced test, which takes into account whether the belief is sufficiently cogent, serious, cohesive and important, is applied. 
In South Africa, although employers must be aware that acting against an employee because of their beliefs or opinions should be approached with caution, not all beliefs are equally worthy of protection.

Bradley Workman-Davies is a director and labour law specialist at Werksmans Attorneys.

What Rica and the Labour Act say about making secret recordings

What Rica and the Labour Act say about making secret recordings

Recently, the Amabhungane Centre for Investigative Journalism challenged parts of the Regulation of Interception of Communication and Provision of Communication Related Information Act (Rica) in the Pretoria High Court.  

In making his finding, Judge Roland Sutherland found that those sections of Rica that allowed surveillance of a person’s communications were unconstitutional. This finding has been hailed as a victory for greater freedom from unlawful surveillance.

However, Rica is a broad act that covers a number of situations, thus this judgement should not be viewed as invalidating Rica in its entirety. It is important to note that when it comes to communications between individuals, especially where there is an employment relationship, Rica has an interesting intersection with labour laws.

Given the widespread availability of phones, devices and apps that enable a user to easily record conversations, the need to hide or disguise the device, the tendering of digital recordings by employees of meetings, conversations or discussions with their employers as evidence in disputes is becoming more frequent. 

However, is the act of recording a private conversation in secret, without informing the employer that it is being done, a form of actionable misconduct even if this is legal under Rica?  

This issue requires consideration of the tension between the right of any person to record a conversation, provided that such person is a party to and has consented to the recording, and the principle that an employment relationship is based on an implicit trust between an employer and an employee. 

Can the assertion be made that where recording has taken place in secret, that the employee’s conduct has led to the breakdown of this trust relationship? 

On the one hand, Rica provides for single party consent to monitoring or recording of direct communications. This means that any person (an employee) may legally intercept or record any communication with his employer/manager/direct supervisor/ HR manager or any other person in a position of authority at the workplace if the employee is a party to the communication.  

You are a “party to a communication” either when there is a direct conversation where both parties are physically talking to each other or indirectly such as when an email conversation or a conversation over an electronic system (telephone call, conference call, video call, etc) takes place. 

The only restriction is that the person who records the communication cannot be a law enforcement officer and cannot record the communication with the intention of committing an offence. 

On the other hand, since the employer-employee relationship is built on trust, recording your employer without informing them or asking for consent, even if that is legal in terms of Rica, may be problematic for the ongoing employment relationship. 

In the case of Geerdts v Multichoice Africa (Pty) Ltd (1998) 9 BLLR 895 (LAC) (Geerdts), the dismissal of an employee for recording secretly a meeting in circumstances where the employee was not present was found to be substantively fair. 

The court found that: “The managerial prerogative requires that senior employees and managers should be entitled to evaluate the work of their subordinates in circumstances of confidentiality. Any invasion of this privileged occasion has to be viewed in a very serious light. Not only does it reveal a breach of the trust that the manager will objectively evaluate such work, it also destroys the relationship as such. 

Clandestine electronic surveillance undermines good faith and fidelity, and betrays a less than honest disposition. It is difficult to see how the employer can be fairly expected to continue the employment relationship having regard to such misconduct.”

The decision in Geerdts indicates that it is most likely that if an employee were to record secretly a meeting to which he was not a party, this conduct would be recognised by a South African court to constitute misconduct leading to a sufficient breakdown of the trust relationship to warrant the employer to seek dismissal as an appropriate sanction.

To ensure that the employee’s conduct can be properly framed as misconduct, it would also be useful for the employer to have a policy that required any recordings of workplace meetings or discussions to be allowed only if consent by all parties is obtained. 

Based on the possibility of a charge of secret recording forming the basis of an allegation of misconduct, it may also justify a possible suspension of the employee pending an enquiry or further investigation into allegations of this or other misconduct. 
This would be on the proviso that there are compelling and fair reasons accepted by South African courts to suspend and that the employee would be provided with an opportunity to make representations to the employer before the suspension being implemented.

Bradley Workman-Davies is a director and labour specialist at Werksmans Attorneys. 
Salary discrimination is not automatically unfair

Salary discrimination is not automatically unfair

CASE law is beginning to develop the South African labour law around unfair discrimination which has arisen since the introduction of the “equal pay for equal work” provisions of the Employment Equity Act in 2014.

Although the Act created this right and protection for employees by introducing inequality of pay where the same work or work of equal value is performed, and although the Department of Labour released a Code of Good Practice on Equal Pay/Remuneration for Work of Equal Value in 2015, it has been left up to case law to test the principles provided for in the law. A recent case from the Labour Court provides some guidance.

In the case of Sun International Limited v Commercial and Allied Workers Union on behalf of Ramerafe (2019), the Labour Court considered the claim of a female surveillance auditor who alleged that she ought to be remunerated at the same level as a male, white colleague who occupied the same position at Sun International. The Commission for Conciliation, Mediation and Arbitration found in her favour and ordered the pay gap to be eliminated. Ramerafe was paid about 51% of her colleague’s salary.

On review at the Labour Court, it was found that although the work was the same, that the difference in remuneration was admitted by both parties, and therefore there was discrimination (in the sense of a difference existing between two comparators), this discrimination was however not unfair. The reasoning of the court to come to this conclusion cannot be faulted.

The Code of Good Practice provides that where a difference between remuneration exists, where there is the same work or work of equal value, the difference may be justified, and therefore fair, based on the individual’s respective seniority or length of service, the respective qualifications, ability, competence or potential above the minimum acceptable levels required for the performance of the job, and the individual’s respective performance, quantity or quality of work, provided that employees are equally subject to the employer’s performance evaluation system and that the performance evaluation system is consistently applied.

In Ramerafe’s case, although her colleague performed the same work, he had more years of service, seniority and a higher Private Security Industry Regulatory Authority grade. In addition, the court referred to a “market forces defence”. This justification provided that when the male colleague was recruited, his existing salary was higher than that of Ramerafe and accordingly, on the basis of a willing buyer-willing seller, Sun International had to offer him a higher starting salary to incentivise him to accept their offer and also took into account that his higher qualifications and experience demanded a premium.

The higher salary, being what the male colleague demanded and what the market justified, was accordingly a market-related force justification for the difference between his salary and that of Ramerafe. Accordingly, the court found that although there was a difference, this was not due to race or gender and was justified by the market-related premium attached to the other employee’s better experience and qualifications.

Salary differences may always provoke dissatisfaction, but provided that employers are able to justify rationally why one person is better paid than another on the basis of the factors that are fair in terms of the Code of Good Practice, the discrimination is not unfair.

Bradley Workman-Davies is a director and labour law specialist at
Werksmans Attorneys

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