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South Africa Judgment

Labour Court

Khan v Local Trans and Another (C690/2009) [2010] ZALC 327 (20 April 2010)

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01

Holding and result

The court found that the CCMA commissioner failed to properly consider whether the applicant's employment had truly terminated or whether the service agreement was a device to avoid labour law obligations. The evidence showed that the applicant continued to perform the same work, under threat of losing his job, and that the employer's actions were aimed at circumventing statutory responsibilities. This constituted an irregularity in the condonation ruling. The prospects of success were not properly assessed, and the applicant may still have been an employee at the time of dismissal. Therefore, the condonation ruling was set aside and the matter referred back to the CCMA for reconsideration by another commissioner.

Court disposition

Application to review and set aside the CCMA condonation ruling is granted. The matter is referred back to the CCMA for determination by another commissioner.

Orders

  • The condonation ruling award dated 26 August 2009 under CCMA case number WECT 11412/09 is reviewed and set aside.
  • The first respondent is required to remit the dispute to another commissioner for determination.
  • There is no order as to costs.

02

Material facts

Parties

T A Khan

Applicant

Local Trans

Respondent

Commissioner

Respondent

Amounts and remedies

  • Monthly Salary Under Employment Contract: ZAR 7,500
  • Monthly Take Home Pay Under Service Contract: ZAR 3,500
  • Daily Pay Under Service Agreement: ZAR 200

03

Procedural history

  1. Posture

    Review Application / Application to Review and Set Aside CCMA Condonation Ruling

04

Questions and positions

Legal issues

Party arguments

Applicant
The applicant argued that he entered into the service agreement under duress, as refusal would result in loss of employment and income. He maintained that the arrangement was a façade to avoid the employer's labour law responsibilities, and that he continued performing the same duties as before. The reduction in salary and the employer's retention of the vehicle indicated that the employment relationship persisted.
Respondent
The respondents did not oppose the application. The CCMA commissioner had previously found that the applicant was not an employee at the time of dismissal, relying on the existence of the service agreement and concluding there was no prospect of success for condonation.

05

Court’s reasoning

  1. 01

    Labour Relations Act, 1995

    A purported change in contractual relationship that is designed to avoid statutory labour obligations does not necessarily terminate the employment relationship for the purposes of labour law.

  2. 02

    Sidumo and Another v Rustenburg Platinum Mines Ltd and Others 2007 (6) SA 376 (CC)

    A commissioner must properly consider the prospects of success when determining a condonation application for late referral of a dismissal dispute.

06

Ratio, limits and disposition

Ratio decidendi

The court found that the CCMA commissioner failed to properly consider whether the applicant's employment had truly terminated or whether the service agreement was a device to avoid labour law obligations. The evidence showed that the applicant continued to perform the same work, under threat of losing his job, and that the employer's actions were aimed at circumventing statutory responsibilities. This constituted an irregularity in the condonation ruling. The prospects of success were not properly assessed, and the applicant may still have been an employee at the time of dismissal. Therefore, the condonation ruling was set aside and the matter referred back to the CCMA for reconsideration by another commissioner.

Obiter and limits

  • If the service contract was merely an attempt to avoid employment law obligations, the applicant would still be considered an employee for the purposes of the Labour Relations Act.
  • The period of delay in referring the dispute would be substantially reduced if the employment relationship was found to have continued.

Court disposition

Application to review and set aside the CCMA condonation ruling is granted. The matter is referred back to the CCMA for determination by another commissioner.

  • The condonation ruling award dated 26 August 2009 under CCMA case number WECT 11412/09 is reviewed and set aside.
  • The first respondent is required to remit the dispute to another commissioner for determination.
  • There is no order as to costs.

Source and reliance status

Labour Court

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Judgment text

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Source document

Labour Court

Judgment

[2010] ZALC 327

C690/2009

JUDGMENT

1

IN THE HIGH COURT OF SOUTH AFRICA

(WESTERN CAPE HIGH COURT, CAPE TOWN)

CASE NUMBER: C690/2009

DATE: 20 APRIL 2010

In the matter between:

T A KHAN ..........................................................................................................Applicant

and

LOCAL TRANS ........................................................................................1st Respondent

COMMISSIONER ...................................................................................2nd Respondent

J U D G M E N T

CHEADLE, AJ:

This is an unopposed application to review and set aside a ruling of the second respondent, a Commissioner at the CCMA refusing

condonation for the late referral of a dismissal dispute to the CCMA. The principal reason for the refusal of condonation appears from the Commissioner’s notes, namely that there was no prospect of success. The Commissioner concluded this on the basis that that the applicant had entered into a service agreement with the third respondent in February 2009 and was accordingly not an employee when he was dismissed in April 2009.

It is clear from the founding affidavit that he entered into the service agreement because, if he did not do so, he would no longer be employed and he could not afford to be without an income. In his testimony, the applicant confirmed what is said in that affidavit.

Although he describes himself as an independent subcontractor in those three months, it is evident from testimony that he gave before me, that what transpired was an offer to accept the so-called service agreement or lose his job. Although the service agreement was described as an owner-driver arrangement, the vehicle belonged to the employer. The employees continued to do exactly what they had done before 31 January 2009. In terms of the service agreement, he was paid R700 per day from which the sum of R500 for rental of the owner’s vehicle was deducted, amounting to effective take home pay of R200 per day.

This meant that the applicant earned R4 000 less a month than he did under his employment contract. Under that contract he received R7 500 a month whereas he only took home R3 500 under the service contract. The applicant also testified the 3rd respondent told him that he did not want to have the responsibility of reporting to the bargaining council and paying various amounts of money to it and that he wanted owner drivers instead. As the applicant stated, the object of this service agreement was to avoid

his labour law responsibilities.

It follows that the second respondent failed to properly apply his mind to whether or not the applicant had in fact terminated his employment on 31 January 2009 and whether that termination and the new service contract, was a ruse to reduce the applicant’s

salary and to avoid the obligations of the bargaining council and the employment laws. Having failed to take this into account, it follows that the commissioner committed an irregularity and accordingly should have granted the condonation ruling based on the applicant’s prospects of success.

Moreover if in fact the service contract was simply an attempt to avoid the obligations of the employment laws, the employee would

still be an employee for all intents and purposes when he was dismissed on 29 April, which of course would also mean that the period of delay would be substantially reduced.

For these reasons, the matter is referred back to the CCMA for it to appoint another commissioner to hear the matter. So I make the following order:

1. The condonation ruling award dated 26 August 2009 under CCMA case number WECT 11412/09 is reviewed and set aside.

2. The first respondent is required to remit the dispute to another commissioner for determination.

3. There shall be no order as to costs, the matter being unopposed.

_____

CHEADLE, AJ

/bw /...

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Authorities

Authorities used by the court

Cases, legislation, regulations, and constitutional provisions identified in the available record.

Sidumo and Another v Rustenburg Platinum Mines Ltd and Others 2007 (6) SA 376 (CC)

Case cited

Labour Relations Act, 1995

Legislation

Legislation referenced in the available case record.

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