CCMA DIRECTOR’S NATIONAL USER FORUM Presentation for THE SECURITY SECTOR 21 JUNE 2018

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NUMSA v Intervalve (Pty) Ltd & Others NUMSA v Intervalve (Pty) Ltd & Others [2015] 3 BLLR 205 Facts The applicant, NUMSA, referred an unfair dismissal dispute on behalf of employees who were dismissed after participating in a strike at an industrial site known as the “Pretoria Works.” The premises were shared by a number of engineering companies including Steinmüller Africa (Pty) Ltd (Steinmüller), Intervalve (Pty) Ltd (Intervalve) and BHR Piping Systems (Pty) Ltd (BHR). June 2018

NUMSA v Intervalve (Pty) Ltd & Others NUMSA referred the dispute to the appropriate bargaining council, but cited only Steinmüller as the employer. During conciliation, the representative of Steinmüller pointed out that some of the dismissed employees were not employed by Steinmüller. Those employees were employed by Intervalve and BHR. NUMSA then made a second referral where it cited all three employers, but the late referral was not condoned. The condonation ruling (condonation refused) was not taken on review by NUMSA. June 2018

NUMSA v Intervalve (Pty) Ltd & Others Seven months later NUMSA took the first referral to the Labour Court along with an application to join Intervalve and BHR. The Labour Court (LC) permitted the joinder of the additional employers (i.e Intervalve and BHR). The LC held that the three companies shared HR services and representation in the conciliation proceedings and operated out of the same premises. The LC also held that the dismissal letters that were sent to the employees were identical. June 2018

NUMSA v Intervalve (Pty) Ltd & Others The LC held that the failure to refer the other two companies (Intervalve and BHR) to conciliation was not fatal. The matter was taken on appeal and the Labour Appeal Court (LAC) overturned the LC decision and found that NUMSA had not complied with section 191 of the Labour Relations Act 66 of 1995 (LRA), which requires that a dispute must be referred for conciliation before it can be adjudicated by the LC. According to the LAC, NUMSA had not timeously referred the dispute against Intervalve and BHR to conciliation and the LC did not have jurisdiction to join the two employers. June 2018

NUMSA v Intervalve (Pty) Ltd & Others The matter was then taken to the Constitutional Court. In a majority judgment the Constitution Court (CC) concurred with the LAC judgment and held that section 191 of the LRA makes the referral to conciliation of a dismissal dispute a precondition to the LC’s jurisdiction to adjudicate a dispute. The CC also held that NUMSA had not complied with section 191 of the LRA. The close association between the three companies and the fact that Intervalve and BHR knew about the referral were not sufficient. June 2018

NUMSA v Intervalve (Pty) Ltd & Others Key notes The Intervalve decision shows that the right to join parties to proceedings can only take place if the party or parties to be joined have received notification of the referral to conciliation. The purpose of section 191 is to put each employer party individually on notice that it may be liable to adverse legal consequences if the dispute involving it is not effectively conciliated. In essence, the judgment emphasises the crucial role that the conciliation process plays in labour dispute resolution. June 2018

Aviation Union of South Africa & Another v SAA (Pty) Ltd & Others Aviation Union of South Africa & Another v SAA (Pty) Ltd & Others (2011) 32 ILJ 2861 (CC) (24 November 2011) Facts South African Airways (SAA) and LGM South Africa Facility Managers and Engineers (Pty) Ltd (LGM) entered into a written agreement whereby SAA transferred its facilities management operations business, consisting of its infrastructure and support services departments, to LGM. In terms of the agreement LGM acquired the right to conduct business on behalf of SAA for 10 years with a possibility of a renewal for a further 5 year period. June 2018

Aviation Union of South Africa & Another v SAA (Pty) Ltd & Others According to the agreement, ownership was not to be transferred. The employees involved in the infrastructure and support services departments transferred to LGM in accordance with section 1971 (1) and (2) of the LRA. The agreement included a cancellation right in favour of SAA should LGM materially change in ownership. An important term of the agreement was that LGM was obliged, upon the termination of the agreement, to transfer its right to provide services to SAA either to SAA or a third party nominated by it. June 2018

Aviation Union of South Africa & Another v SAA (Pty) Ltd & Others The outsourcing agreement was terminated due to a breach committed by LGM. LGM then invited its employees to a consultation process about the possible retrenchment process. The Aviation Union sought assurance from SAA that upon termination of the outsourcing agreement the LGM employees would be taken back to SAA. SAA took the stance that there was no legal obligation requiring it to take the LGM employees back. June 2018

Aviation Union of South Africa & Another v SAA (Pty) Ltd & Others The outsourcing agreement was terminated due to a breach committed by LGM. LGM then invited its employees to a consultation process about the possible retrenchment process. The Aviation Union sought assurance from SAA that upon termination of the outsourcing agreement the LGM employees would be taken back to SAA. SAA took the stance that there was no legal obligation requiring it to take the LGM employees back. June 2018

Aviation Union of South Africa & Another v SAA (Pty) Ltd & Others Aviation Union approached the Labour Court (LC) seeking an order declaring that the termination of the outsourcing agreement between LGM and SAA constituted a transfer in terms of section 197 of the LRA. The LC in considering the issue of whether section 197 applies to a second generation outsourcing, held that the word ‘transfer’ must be construed literally. According to the LC, for section 197 to apply, the transfer must be facilitated “by” an old employer to a new one. June 2018

Aviation Union of South Africa & Another v SAA (Pty) Ltd & Others The LC held that in a second generation outsourcing agreement the old employer, which is the party that initiated and effected the first transfer, does not play the same role. Thus, section 197 does not apply to second or subsequent outsourcing because the agreement does not involve a transfer by an old employer to a new employer. The Labour Appeal Court (LAC) rejected the proposition by the LC that the old employer must play a positive role in bringing about the transfer in order for section 197 to apply. June 2018

Aviation Union of South Africa & Another v SAA (Pty) Ltd & Others The LAC held, amongst other things, that – the literal interpretation of the word “by” which advances the argument that the old employer (transferor) must play a positive role, would undermine the very purpose of section 197 which is to protect employees against job losses in the event of a transfer of a business; a departure from the literal meaning of “by” was justified and that “by” should be interpreted to mean “from”; and that section 197 applies to second generation outsourcing because there is a transfer of a business “from” an old employer “to” a new employer. June 2018

Aviation Union of South Africa & Another v SAA (Pty) Ltd & Others The matter was then taken to the Supreme Court of Appeal (SCA). The SCA agreed with the LC and held that by interpreting the word “by” to mean “from” the LAC had made a mistake and distorted the plain meaning of section 197. The SCA held that section 197 does not apply to second generation outsourcing. The matter was then referred to the Constitutional Court. June 2018

Aviation Union of South Africa & Another v SAA (Pty) Ltd & Others The Constitutional Court (CC) held that emphasis should not be placed on the word “by”, but rather on the principle that employees will move from an old employer to a new employer. When that happens section 197 applies, provided that the business is transferred as a going concern. According to the CC, what is important is not the identity of the transferor as such, but whether there is a transfer of a business as a going concern. Once that happens, the automatic consequences of a section 197 transfer apply. June 2018

Aviation Union of South Africa & Another v SAA (Pty) Ltd & Others Key notes The CC judgment adopted a purposive approach in that it aligned itself with the purpose of section 197 which was expressed in NEHAWU v UCT 2003 (2) BCLR 154 (CC) as “a dual purpose which is to facilitate transactions and protect employees against unfair job losses” when a business is transferred as a going concern. The focus should not be so much on the identity of a transferor, but whether there has been a transfer of a business as a going concern. June 2018

Imvula Quality Protection & Others v UNISA Imvula Quality Protection & Others v UNISA 38 ILJ 2763 (LC) Facts Subsequent to the “Fees Must Fall” protests at tertiary institutions in 2015 and 2016, the University of South Africa (UNISA) entered into an agreement with the various stakeholders that UNISA would terminate outsourcing agreements it had with private security service providers and directly employ the majority of security guards previously employed by these service providers (insourcing). June 2018

Imvula Quality Protection & Others v UNISA The service providers, Imvula Quality Protection (Imvula) and Red Alert TSS (Pty) Ltd (Red Alert), contended that the termination of the agreements and UNISA’s offer of employment to the security staff constituted a transfer of a business as a going concern and section 197 of the LRA applied. They approached the Labour Court seeking a declaratory order that the insourcing agreement triggered the provisions of section 197 of the LRA and that the security staff would be automatically transferred to UNISA. June 2018

Imvula Quality Protection & Others v UNISA UNISA argued that there was no transfer of a business and thus that section 197 did not apply. The Labour Court, made reference to the Aviation Union v SAA case (referred to above) and found that the Constitutional Court had identified two scenarios: The first scenario arises when the outgoing service provider forfeits the right to provide services, whether by way of cancellation or otherwise, but does not transfer its business. In that case the right to provide the outsourced service may transfer, but no business is transferred as a going concern. [20] June 2018

Imvula Quality Protection & Others v UNISA The second scenario arises when on the termination of a service contract, when the service is either insourced or a different service provider is appointed, the business that supplies the service, including its business infrastructure, is transferred from the outgoing service provider either back to its erstwhile client or to the new service provider, as a going concern. In these circumstances, a transfer occurs as contemplated by section 197. [21] According to the Labour Court the distinction is one that has its basis in the definition of section 197(1) where a business is defined to also include a ‘service’. June 2018

Imvula Quality Protection & Others v UNISA The LC emphasised that it is the business that supplies the service that is capable of being transferred and not the “service’ itself. On the facts of the case, UNISA had terminated its contracts with the service providers and offered employment to the service providers’ employees. No assets or business infrastructure was transferred from the service providers to UNISA. The requirements necessary to trigger the application of section 197 had not been met. June 2018

Imvula Quality Protection & Others v UNISA Key notes: Mere termination of contracts for service provision does not trigger section 197. More is required ( i.e transfer of assets and business infrastructure). June 2018

Enforce Security Group v Fikile and Others Enforce Security Group v Mwelase Fikile and Others (2017) 38 ILJ 1041 (LAC) Facts Enforce Security Group (Enforce), a private security services provider, provides security officers to various clients, one of which was Boardwalk Inkwazi Shopping Centre, Richards Bay (Boardwalk). June 2018

Enforce Security Group v Fikile and Others The employment contracts of the Enforce security personnel had a clause which provided: Clause 3.2. “The period of the employment would endure until the termination of the contract which currently exists between BOARD WALK or its successors (hereinafter referred to as the CLIENT) and the COMPANY.” (sic) June 2018

Enforce Security Group v Fikile and Others Clause 3.2.1: “The Employee agrees that he/she fully understands that the Company’s Contract with the Client might be terminated by the Client at any time and for any cause or might terminate through effluxion of time and that in consequence hereof of the nature of the Employee’s employment with the company and its duration is totally dependent upon the duration of the Company’s contract with the Client/s and that the Employee’s contract of employment shall automatically terminate. Such termination shall not be construed as a retrenchment but a completion of contract’. [emphasis added] June 2018

Enforce Security Group v Fikile and Others On 30 September 2011, Boardwalk gave notice of termination of its contract with Enforce. Enforce then held meetings with the trade union representatives from NASUWU and SATAWU and offered the employees alternative employment in Durban. The union representatives held the view that a retrenchment process in terms of section 189 of the LRA and the subsequent payment of severance pay was the only way to go. They rejected the offer of alternative employment. June 2018

Enforce Security Group v Fikile and Others Enforce subsequently terminated the employment contracts of the employees. An unfair dismissal dispute was referred to the CCMA. The employees argued that they had been unfairly dismissed. The employer argued that the termination of the employment contracts did not amount to a dismissal because Enforce had not played any role in the decision by the client (Boardwalk) to terminate its contract with the employer. June 2018

Enforce Security Group v Fikile and Others Enforce argued that the definition of a dismissal, as contemplated by section 186 of the LRA, requires that there must be an act by the employer that terminates the contract. The CCMA held that the termination of the employment contracts was triggered by the termination of the agreement by Boardwalk (the client). The CCMA found that the employees had not been dismissed by Enforce and were thus not entitled to any relief. June 2018

Enforce Security Group v Fikile and Others On review, the Labour Court (LC) held that the automatic termination clause that was contained in the employee’s employment contracts was impermissible. The LC held that the termination of the employment contracts amounted to an unfair dismissal because Enforce should have embarked on a retrenchment process in terms of section 189 of the LRA. The judgment was taken on appeal to the Labour Appeal Court (LAC). June 2018

Enforce Security Group v Fikile and Others The LAC agreed with the CCMA and emphasised the basic principle in labour law that not all terminations of employment constitute a dismissal. Such circumstances where a termination of employment will not amount to a dismissal, include the occurrence of a specified event. In such a case there is no dismissal, but rather the termination of employment by operation of law The LAC held that on the facts of the case there was thus no dismissal. June 2018

Enforce Security Group v Fikile and Others Enforce was not the cause of the termination. According to the LAC, whilst it is important to guard against automatic termination clauses which seek to circumvent the right to a fair dismissal as imposed by the LRA and the Constitution, not every automatic termination clause is invalid. June 2018

Enforce Security Group v Fikile and Others Key notes: The Enforce Security judgment preceded the enactment of section 198B of the LRA (2014 amendments). A dismissal as contemplated by the LRA requires that there must be an act by the employer that terminates the contract. Not every automatic termination clause is invalid – each case to be considered on its merits. Only in cases where it is clear that the employer played a role in the termination of the employment will a dismissal arise (see the Mampeule v SA Post Office case). June 2018

AMCU & Another v Piet Wes Civils cc & Another AMCU & Another v Piet Wes Civils cc & Another (J2834/16) Facts: Judgment made following the 2014 amendments to the LRA. Employer claims fixed-term contracts terminated by operation of law. June 2018

AMCU & Another v Piet Wes Civils cc & Another Applicants claimed section 189A of the LRA applies. Judge applied section 198B (3)(b) and found, amongst other things, that – the employers were not able to justify fixing the duration of the contract; the contract was not intended to be for a fixed duration, or to terminate on the occurrence of a specified event or the completion of a specified task or project as contemplated by s 198B(1); and to place the construction of a ‘specified event’ on the cancellation of the Exxaro contract would go beyond the intention of the legislature. June 2018

AMCU & Another v Piet Wes Civils cc & Another Key notes: The use of a fixed-term contract for employees who earn below the BCEA threshold must be justifiable in terms of s198B(3) of the LRA. An automatic termination clause which allows for the termination of an employee’s services on the basis of “the whims” of a third party does not serve as a justifiable reason as contemplated in section 198B(3) of the LRA. June 2018

Q and A June 2018

In conclusion This slide presentation was developed by CCMA Part-time Commissioner Thanduxolo Qotoyi in conjunction with the CCMA Training Development Unit (June 2018). June 2018

The end June 2018