Njokweni and Others v Mobile Telephone Networks (Pty) Ltd (JS 612/20) [2023] ZALCJHB 250 (21 July 2023)

IN THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

Not Reportable

Case No: JS 612/20

In the matter between:

MZOLISI NJOKWENI First Applicant FERHANA DOCRAT Second Applicant GIFT NYOKA Third Applicant NISIPHO GUMEDE Fourth Applicant SALEH KADIR Fifth Applicant CHANNEL FRANCIS Sixth Applicant and MOBILE TELEPHONE NETWORKS (PTY) LTD Respondent

Heard: 08 June 2023

Delivered: 21 July 2023

Summary: Transfer of business in terms of section 197 of LRA – consequently contracts of employment continue uninterrupted – no need for employees to tender services.

Prescription – Section 12 of the Prescription Act 68 of 1969 – prescription only starts to run when debt falls due.

JUDGMENT

NKUTHA-NKONTWANA, J

Introduction

[1] This matter was transferred to the Labour Court, Durban under the case number D929/18 by the order granted by Whitcher J on 1 September 2020 and was allocated a case number JS612/20. The applicants seek arear remuneration and related benefits for the period between 1 December 2010 and 14 December 2017. The applicants also seek mora interest on the back pay with effect from 1 December 2010.

[2] The respondent, Mobile Telephone Networks (Pty) Ltd (MTN), is opposing the relief sought and has taken two legal points. Firstly, whether the applicants are in law entitled to payment of their salaries for the period from 1 December 2010 until 14 December 2017, since they did not tender their services to MTN during that period. Secondly and alternatively, whether a part of the applicants’ claims has prescribed.

[3] The parties agreed to proceed by way of a stated case. Furthermore, they agreed that I should only determine the two legal points taken by MTN. The balance of the issues, inter alia, the calculation of the quantum of the remuneration claimed and mora interest are accordingly deferred to a hearing in due course, if at all.

Summary of facts

[4] MTN has been embroiled in various litigations that emanated from the termination of the Call Centre Service Agreement (Call Centre Agreement) with Interaction Call Centre (Pty) Limited (Interaction) on 30 November 2010. In terms of the Call Centre Agreement, Interaction managed the operation of the pre-paid call centre (Call Centre) for MTN. The applicants are former employees of Interaction and were based in Durban, KwaZulu - Natal (KZN).

[5] On 1 December 2010, MTN took over the running of the Call Centres from Interaction. It selectively employed Interaction’s former employees. The applicants’ and other employees’ contracts of employment were terminated consequent to the termination of the Call Centre Agreement. The Communication Workers Union (CWU) challenged MTN’s decision to terminate its members, K Pillay and others, at the Labour Court under case number D377/11. The primary issue that served before Cele J was whether there was a transfer of a business as a going concern from Interaction to MTN as envisaged in section 197 of the Labour Relations Act[1] (LRA). He found against CWU.

[6] CWU successfully appealed the judgment of Cele J. The Labour Appeal Court (LAC) made the following order:

‘1. The appeal is upheld with costs.

2. The order of the court a quo is set aside and replaced with the following order:

2.1 It is declared that there was a transfer of a business as a going concern by the second respondent to first respondent and that such transfer falls within the ambit of section 197 of the Labour Relations Act 66 of 1995.

2.2 Second and further appellants are declared in law to be employees of first respondent effective from 1 December 2010 with no loss of service.

2.3 The first respondent is ordered to pay the appellants costs.’[2]

[7] The applicants were not members of CWU nor parties in the above litigation. Consequent to the judgment in the CWU matter, the applicants launched an application under case number D1135/16 wherein they sought a similar declaratory relief. That application was served

before Lagrange J. He delivered his judgment on 6 December 2017, declaring that the applicants were employees of MTN consequent to the transfer of a business as a going concern in terms of section 197 of the LRA with effect from 1 December 2010 and with no loss of service.[3]

[8] MTN accepted the judgment of Lagrange J. On 12 December 2017, it instructed the applicants to report for duty on 14 December 2017 at its office in Randburg, Johannesburg. The first applicant duly obliged and reported for duty at MTN’s Randburg office. The second to sixth applicants tendered their services at MTN’s Durban office despite numerous instructions to report for duty in Randburg.

[9] The second to sixth applicants were consequently charged with absconding and dismissed on 25 April 2018. They challenged their dismissal at the Commission for Conciliation, Mediation and Arbitration (CCMA). That dispute was successfully conciliated and settled between the parties on 11 March 2019 on the terms that the second to sixth applicants would, inter alia, effectively be retrenched and paid severance pay by MTN.

Tender of services in a section 197 transfer?

[10] MTN is relentless in raising the issue of failure to tender services by the transferred employees despite its previous unsuccessful attempts. In Pillay and Others v Mobile Telephone Networks (Proprietary) Limited (Pillay I)[4], the individual employees successfully launched a similar action considering that MTN was refusing to honour the order of the LAC in the CWU matter. MTN appealed the judgment of the Labour Court in Mobile Telephone Networks (Pty) Limited v Pillay and Others[5] (Pillay II) and the LAC made the following observation:

‘[21] The court a quo, in essence, held that taking into account the nature and effect of section 197 - “it would appear that it was not required of the employees to tender their services where the business employing them is transferred in accordance with section 197”, because “the employment continues uninterrupted”. It held, alternatively, that the respondents had in fact tendered their services to the appellant as “[n]othing could be a clearer tender of their service by the [respondents] than their referral of the dispute to the Labour Court concerning the applicability of s 197 and the relief they sought”.

[22] Counsel for the appellant criticised those findings and, relying on what he perceived was held by this Court in Coca-Cola SABCO (Pty) Ltd v Van Wyk[6] (“Coca-Cola”) concerning the tender of services, argued that the court a quo, therefore, erred in its finding that the respondents “were not in law to tender their services before instituting a contractual claim for remuneration”. Counsel also argued that there was no “basis in law for the court a quo’s conclusion that the mere launching of a section 197 application constituted a tender of services by the respondents”.

[23] The reliance on the decision in Coca-Cola was misplaced. In fact, that decision is authority for the proposition that an employee’s tender of her labour after the reinstatement is a tender in terms of the employment contract and the employee is therefore entitled to payment in terms of the contract of employment. In that matter, this Court’s statement concerning the tender of services turned on the question how the reinstated employee could recover remuneration between the date of the reinstatement award and the date of actual reinstatement, if she tendered her services, because the LRA does not expressly provide for relief between the date of the reinstatement award and the date of actual implementation of the award. The issue in the present matter is different. In any event, what this Court had to say about the matter in Coca-Cola seems to have been overtaken by the Constitutional Court’s judgments in Fohlisa.

[24] In any event, the argument of the appellant does not resolve the question of how and when the respondents were to tender their services in respect of a period that had already passed. Because the appellant does not seem to accept that the tender of services was implicit in the respondents’ conduct in, inter alia, launching the application for a declaratory order, and appears to suggest that the tender should be retrospective, which would clearly be a superfluous exercise.

[25] The principle is still valid, namely, that in a claim for the payment of agreed salary or wages, the employee needs not allege having

provided, or tendered the required service, but would have to prove having provided or tendered the service if the employer contends that the service has not been provided, or tendered. But the appellant’s argument in this Court, probably due to a misreading of the decision in Coca-Cola, appears to be a misconception of the requirements for making out a case for the payment of backpay, or remuneration, in general, in that it seems to suggest that the employee has to, at the outset, allege and prove having provided the service, or of having tendered to provide it, even though the employer does not dispute that fact.

[26] In any event, it is disingenuous for the appellant to contend that the respondents did not tender their services to it, when it vigorously resisted their claims that it had become their employer. The appellant had never before, including in the proceedings that culminated in this Court’s order of 21 April 2015, contended that the respondents had not rendered, or had not tendered to render services to it. And that is hardly surprising, because such a contention would have detracted from the cogency of the appellant’s denial that the respondents automatically became its employees upon transfer of the business to it. Further, there is no merit in the appellant’s assertion, that the respondents’ pursuit of the declaratory order did not imply a tender of their services to it.

[27] In fact, the appellant’s resistance of the respondents’ claims, that it was their employer, was tantamount to a repudiation of the contracts of employment with the respondents. Being innocent in the matter, the respondents would in those circumstances have been relieved of the obligation to perform their reciprocal contractual duties, or of tendering performance thereof.

[28] For the reasons stated above, the court a quo’s findings on the tender of services are unassailable.’ (Own emphasis)

[11] In this instance, both parties heavily relied on the above authority, albeit, to support divergent propositions. It is common cause that on 12 October 2016 the applicants launched the action that culminated in the judgment by Lagrange J consequent to the LAC judgment in the CWU matter that was handed down on 21 April 2015. Obviously, the applicants sought a declaratory relief six years after the section 197 transfer.

[12] MTN contends that the first applicant failed to tender their services prior to 14 December 2017 and that the second to sixth applicants failed to tender their services at all. As a result, it is contended that the applicants are not entitled to arrear remuneration for the period between 1 December 2010 and 14 December 2017. The applicants, on the other hand, contend that MTN impugn on their tender of services is untenable and must be rejected on the same basis as was in Pillay II.

[13] As a matter of fact, MTN’s unbending stance that applicants ought to have tendered their services with effect from 1 December 2010 was rejected in Pillay II because a retrospective tender of services would have been superfluous, if not impossible, as the period in question had already

passed. Even the slight spin in MTN’s contention in this instance to the effect that it did not challenge the section 197 transfer in the present instance is untenable. Equally, MTN’s reliance on the judgement in Kubeka and others v Ni-Da Transport Ltd[7] is misplaced.

[14] In Pillay II, the LAC confirmed the notion that in a claim for the payment of arrear remuneration, should the respondent employer dispute that

there was a tender of services, the applicant employees are enjoined to prove same. Yet, a distinction was made between a claim that flows from a reinstatement order and section 197 transfer of a contract of employment and aptly expounded as follows:

‘[15] The question thus arises whether this Court’s order of 21 April 2015 was a reinstatement of the respondents, and notwithstanding, whether it implicitly directed the appellant to pay to the respondents, the amount of remuneration that was due to them (restrospectively) from 1 December 2010 to 21 April 2015.

[16] If this was indeed a reinstatement order, then the Constitutional Court’s decision in National Union of Metalworkers of SA obo Fohlisa & others v Hendor Mining Supplies (A Division of Marschalk Beleggings (Pty) Ltd)[8] (Fohlisa) provides the answer to the first two issues to be determined without any need for further analysis.

[17] In Fohlisa, it appears to have been established that a (retrospective) reinstatement order, in fact, implicitly requires the employer to pay

the employees their backpay for the retrospective period. It was held that where a claim for backpay, for the retrospective period, is based on a simple reinstatement order, the claim arises from the reinstatement order and not from the employment contract, even though the employee’s entitlement to backpay flows from the reinstated contract of employment. It was further held concerning its prescription, that such a claim constitutes a judgment debt with a prescriptive period of 30 years. Regarding the exceptio non adimpleti contractus, it was held in Fohlisa that in such a case, the defence was not available to the employer in respect of the retrospective backpay (i.e. up to date of the reinstatement order), because the court that gave the reinstatement order had already, albeit implicitly, ordered payment of such backpay. The defence would only have been available to an employer if the claim arose from contract.

[18] However, despite the wording of the second paragraph of this Court’s order of 21 April 2015, it is not a reinstatement order. The respondents were never dismissed and never lost their employment, which is a necessary circumstance for reinstatement. The order of 21 April is a mere declaration of rights, without any consequential relief. It declared that when the appellant acquired the business of Interaction Call Centre, for whom the respondents were working at the time, there was “a transfer of a business as a going concern” by Interaction Call Centre to the appellant, and that the transfer fell within the ambit of section 197 of the LRA. Significantly, it goes further and declares that the respondents were, in law, the employees of the appellant from 1 December 2010 “with no loss of service”. The order clearly implied, inter alia, that as far as the respondents’ employment was concerned, the transfer was seamless, their service unbroken, and they ought to suffer no loss of “service” as a result of the transfer.

[19] Section 197(2) of the LRA spells out the position of the new employer and the employees, unless otherwise agreed by them, as contemplated in that

subsection. The same terms and conditions that were applicable to the employees under the old employer “continue in force’

under the new employer. The new employer “steps into the transferor’s shoes, and after the transfer is affected, simply

employs the transferred employees as if they had always been on its payroll”. It is thus implicit in section 197 that the new employer, like the old employer, has a duty, inter alia, to pay the employees their wages as and when they fell and fall due in terms of their, respective, employment contracts.

[20] Even though it is not a retrospective reinstatement order, this Court’s order of 21 April 2015 not only implicitly declares that the new employer is to allow the employees to work, but also that it pays the arrear remuneration that is due to them in terms of their contracts of employment, at least up to the date of the order.’[9] (Own emphasis)

[15] It is therefore evident from the above authority that the declaratory order that employees’ contracts of employment have been transferred in terms of section 197 does not constitute retrospective reinstatement order. Conversely, it is an order that “not only implicitly declares that the new employer is to allow the employees to work, but also that it pays the arrear remuneration that is due to them in terms of their contracts of employment, at least up to the date of the order”.[10]

[16] The upshot of this finding, in my view, is that the resistance by the new employer that section 197 transfer took place and the subsequent declaratory relief in favour of the employees does not interrupt or revive the employment relationship. Therefore, it is not required of the transferred employees to tender their services as the arrear remuneration for the period covered by the declaratory order, (i.e. from the effective date of the transfer to the date of the order), is due to them by the operation of the law as declared by the court order.

[17] Likewise, the applicants in this instance were not required to tender their service from the period between 10 December 2010 to 14 December 2017. Accordingly, they are entitled to be paid their arrear remuneration for this period.

[18] Even so, in Pillay II the LAC sanctioned the notion that, given the fact that the claim for payment of arrear remuneration for the period post the declaratory order is contractual, a tender of services is required and may have to be proved in the event the respondent employer disputes same. This issue does not arise in this instance as the applicants’ amended statement case limits the relief sought to the period between 10 December 2010 to 14 December 2017.

Prescription

[19] MTN’s prescription defence seems to be prompted by the fact that the applicants sought a declaratory relief after they, as contended, loafed around for six years after the effective date of the section 197 transfer. As such, it contended primarily, that the applicants’ claims prescribed on 1 December 2013, three years after the section 197 transfer. Alternatively, if prescription was interrupted by the applicants tendering their services on 14 December 2010, their claim

for payment of their salaries for the period between 1 December 2010 and 14 December 2014 has prescribed.

[20] The applicants, on the other hand, contend that it was only on 6 December 2017, upon the handing down of the judgment and order granted by Lagrange J, that their right as employees as envisaged in section197 was confirmed. As such, the running of prescription commenced thereon. In any event, so they contend further, prescription could never have commenced running up until 6 December 2017 as MTN had been denying being the debtor. To buttress this contention, reliance is placed on the Pillay II judgment where the LAC held:

‘[29] The defence of prescription is, similarly, disingenuous for various reasons, the most obvious being that it fails to address the impact which the appellant’s resistance to the respondents’ claims, that it had become their employer, and the steps taken by the respondents in that regard, had on the running of prescription.

[30] It was correctly submitted by the respondents’ counsel that the application for a declaratory order launched on 11 May 2011, effectively interrupted the running of prescription as contemplated in section 15 of the Prescription Act and that this interruption endured until this Court finally decided that application on 21 April 2015.

[31] Section 15(1) of the Prescription Act provides that “the running of prescription shall, subject to the provisions of subsection (2), be interrupted by the service on the debtor of any process whereby the creditor claims payment of the debt”. The application for the declaratory order is process as contemplated in that section. It is for the enforcement, inter alia, of the very right the respondents have to the payment of remuneration, or for the substantial enforcement of that right. Unless the appellant was the employer of the respondents it would have no obligation to pay them a salary or wages as per their contracts of employment. Obtaining a declaratory order, that the appellant was indeed their employer, was essential and, thus, effective in interrupting the running of prescription in respect of their claims for remuneration for the period 1 December 2010 up to and including 21 April 2015. In those circumstances, the claims had not prescribed.

[32] Another possible reason why the prescription defence is bad, but which was not argued by either of the parties and in respect of which I make no finding, relates to whether prescription could ever have started to run in circumstances where the appellant, effectively, denied being the debtor. In terms of section 12(1) of the Prescription Act, prescription commences when the debt is due, but in terms of section 12(3), a debt shall not be deemed to be due until the creditor has knowledge of the identity of the debtor. The respondents in this instance could only establish in law that the appellant was indeed their debtor by the declaratory order sought and eventually granted by this Court on 21 April 2015.’[11] (Own emphasis)

[21] By parity of reasoning, section 12(3) of the Prescription Act[12] finds application in this instance. Effectively, the applicants only established in law that MTN was indeed their debtor by the

declaratory order granted by Lagrange J on 6 December 2017 and prescription commenced to run consequent thereon. It follows that

MTN’s prescription special plea is bad in law and must fail.

Conclusion

[22] In all the circumstances, the MTN’s legal points stands to be dismissed. The applicants are consequently entitled to arrear remuneration for the period between 1 December 2010 to 14 December 2017. The parties shall request the Registrar of this court to set down the matter for the determination and calculation of the quantum of remuneration due to the applicants and related issues emanating from the order granted by Lagrange J.

Costs

[23] The parties pursued costs. Nonetheless, a cost order is discretionary and, since this is a labour matter, the principles of law and fairness are a major consideration. The applicants are individual litigants who must have expended much in order to vindicate their rights. So, in my view, a cost order against MTN will not offend the principles of law and fairness.

[24] I, accordingly, make the following order:

Order

1. The legal points raised by the respondent (Mobile Telephone Networks (Pty) Ltd) are dismissed.

2. The respondent shall pay the applicants (Njokweni and 5 others) the arrear remuneration due to them in accordance with their contracts of employment for the period between 1 December 2010 to 14 December 2017.

3. The calculation of the quantum of the arrear remuneration is deferred to a hearing in due course.

4. MTN shall pay the applicants’ costs.

P Nkutha-Nkontwana

Judge of the Labour Court of South Africa

Appearances

For the Applicants:

Advocate P Mhlana

Instructed by:

Allardyce & Partners Attorneys

For the Respondent:

Advocate J Van As

Mashiane Moodley Monama Attorneys

[1] Act 66 of 1995, as amended.

[2] Communications Workers Union v MTN [2015] ZALAC 65; [2015] JOL 33385 (LAC).

[3] Mzolisi Njokweni & others v Mobile Telephone Networks and Interaction Call Centre, unreported judgement under Case Number D1135/16, dated 6 December 2017.

[4] [2017] ZALCD 12; (2017) 38 ILJ 2360 (LC).

[5] [2019] ZALAC 35; (2019) 40 ILJ 2011 (LAC).

[6] [2015] ZALAC 15; [2015] 8 BLLR 774 (LAC) paras 24-26.

[7] [2020] ZALAC 55; (2021) 42 ILJ 499 (LAC).

[8] [2017] ZACC 9; (2017) 38 ILJ 1560 (CC).

[9] [2019] ZALAC 35; (2019) 40 ILJ 2011 (LAC).

[10] Ibid at para 20.

[11] Ibid.

[12] Act 68 of 1969.