During 2001, Kitsanker (Pty) Ltd (Kitsanker) concluded an agreement with a TES by the name of Abancedisi Labour Services (Abancedisi) to provide it with employees. The employees who were employed directly by Kitsanker entered into voluntary retrenchments and were immediately re-employed by Abancedisi on a limited duration contract for which their services would be at Kitsanker's disposals but the location and terms and conditions of employment remained precisely as before.
After a work stoppage during July 2001, Kitsanker required employees to sign a code of conduct to regulate industrial action. Kitsanker refused to allow any employee onto its premises who did not sign the code of conduct. Upon enquiry from the Union of Metalworkers of SA (NUMSA), Abancedisi confirmed Kitsanker's position and stated that the employees would not be paid any wages since they were only paid for work performed.
An unfair dismissal dispute was referred to the Bargaining Council in which Abancedisi claimed that the employees had not been dismissed but in fact remained on their payroll. Thereafter, the dispute was referred to the Labour Court where the same point in limine was raised and upheld.
On appeal to the Labour Appeal Court (LAC), although the cost order was found to be unfair and reversed, the LAC maintained the view that the employment relationship had continued and that the employees' situation had merely amounted to an indefinite suspension.
The employees thereafter appealed to the Supreme Court of Appeal (SCA). In reference to the employment contract, the SCA found that it was specifically linked to the Kitsanker project. As Abancedisi had made no effort to secure alternative work for the employees after the expulsion of employees by Kitsanker, and Kitsanker filled the employees' posts, the contract of employment had been terminated.
The SCA further found that Abancedisi had not paid the employees any wages, and there was nothing "even slightly resembling the characteristics of an employment relationship remaining between the parties beyond the illusory retention of employees on Abancedisi's payroll". The effect of Abancedisi's conduct was that there was material breach of the employment contract that entitled the employees to cancel it.
The LAC's view that the employees were on an indefinite suspension was found to be unsupported by the evidence. The SCA ordered that the dismissal was unfair, and Abancedisi was ordered to pay the employees twelve months' compensation each and costs.
This judgment has come hot on the heels of the amendments to the Labour Relations Act, No 66 of 1995 (LRA). In terms of s198A(3)(a) and (b) of the Labour Relations Amendments Bill (LRAB), an employee who performs a temporary service and who is the employee of the TES in terms of s198 (2), or is not performing such temporary services for the client, is deemed to be the employee of that client and the client is deemed to be the employer.
In terms of s198(4A) of the LRAB, the client of a TES is jointly and severally liable in terms of the current s198(4) of the LRA, or if they are deemed to be the employer in terms of s198A(3)(b).
The employee may then institute proceedings against either the TES or the client, or both. In addition, in terms of s198(4A)(c) any order or award that is made against a TES or client may be enforced against either.
Had this case been determined on the provisions of the LRAB, the employees could have cited both Abancedisi as well as Kitsanker. Even if they had not cited Kitsanker they could have chosen to enforce the order against either Abancedisi or Kitsanker. The LRAB accordingly requires both the TES as well as the client, to follow fair labour practices in all circumstances going forward, including the impact on employees at the end of a contract.
Andrea Taylor, Associate, Employment, Cliffe Dekker Hofmeyr
For more information please contact Andrea.taylor@dlacdh.com