Au­to­matic ter­mi­na­tion clause gets teeth drawn

Labour bro­kers will face un­fair dis­missal claims if the pro­vi­sion is en­forced

Business Day - Business Law and Tax Review - - FRONT PAGE - IRVIN LAWRENCE & JA­SON MOODLEY

OR­GAN­ISED labour has been vo­cal about the ten­u­ous na­ture of em­ploy­ment re­la­tion­ships ex­ist­ing within the “tem­po­rary em­ploy­ment ser­vices” sec­tor, more com­monly known as labour broking.

If one were to have ref­er­ence to the ex­plana­tory mem­o­ran­dum to the re­cent Labour Re­la­tions Amend­ment Bill, 2010, the Depart­ment of Labour has gone as far as say­ing that “the labour bro­kers ma­nip­u­lated this sec­tion and op­er­ated un­der the aus­pices of this sec­tion (sec­tion 198 of the Labour Re­la­tions Act 66 of 1995)” and have pro­posed that sec­tion 198 be re­pealed in its en­tirety.

On a read­ing of sec­tion 198, it be­comes clear that while an in­di­vid­ual may ten­der his ser­vices and be un­der the ef­fec­tive con­trol and su­per­vi­sion of a client (who would have con­cluded a labour sup­ply agree­ment with the labour bro­ker), the labour bro­ker re­mains the em­ployer of the em­ployee. The com­plex­i­ties of this tri­par­tite re­la­tion­ship have of­ten been prone to abuse and con­trac­tual ma­nip­u­la­tion that has sought to limit the li­a­bil­ity of the labour bro­ker and the client, leav­ing the em­ployee vul­ner­a­ble and ex­posed to abuses that would nor­mally be frowned on in a con­ven­tional em­ploy­ment set­ting.

Sec­tion 198 (4) of the Labour Re­la­tions Act con­tem­plates only four con­tra­ven­tions in which the client and labour bro­ker can be held jointly and sev­er­ally li­able by the “em­ployee”. These are a con­tra­ven­tion of a col­lec­tive agree­ment or ar­bi­tra­tion award which reg­u­lates terms and con­di­tions of em­ploy­ment, the Ba­sic Con­di­tions of Em­ploy­ment Act, as well as a de­ter­mi­na­tion made un­der the Wage Act. It is note­wor­thy to men­tion that dis­missal is not one of these and the em­ployee is con­strained to pur­sue the labour bro­ker in the event that he al­leges dis­missal.

Bear­ing this in mind, the so-called “au­to­matic ter­mi­na­tion” clauses are usu­ally in­cluded in em­ploy­ment con­tracts. The con­tent and in­tended con­se­quence of these clauses high­light the vul­ner­a­bil­ity of these “em­ploy­ees” as re­gards se­cu­rity of ten­ure, par­tic­u­larly when the client ter­mi­nates the ser­vice con­tract with the labour bro­ker.

This was high­lighted in the re­cent case of Mahlamu v CCMA and oth­ers (JR1702/09 of 30 Novem­ber 2010). The ap­pli­cant was em­ployed as a se­cu­rity of­fi­cer by Gubevu Se­cu­rity Group (Pty) Ltd, which had con­tracted with the Bombela Joint Ven­ture to pro­vide var­i­ous armed es­cort ser­vices at var­i­ous sites re­lated to the Gau­train project.

In terms of his em­ploy­ment con­tract, it was to com­mence on Oc­to­ber 23 2008 and au­to­mat­i­cally ter­mi­nate on ex­piry of the con­tract be­tween Gubevu and Bombela al­ter­na­tively, “in the event that Bombela did not re­quire the ser­vices of Mahlamu for what­so­ever rea­son”.

Dur­ing Jan­uary and Fe­bru­ary of 2009, Bombela can­celled the con­tract with Gubevu and Gubevu ad­dressed a let­ter to Mahlamu, ad­vis­ing him that ow­ing to the can­cel­la­tion of the con­tract and lack of al­ter­na­tive po­si­tions, his ser­vices were no longer re­quired. It ap­pears that Mahlamu there­after re­ferred the mat­ter to the CCMA where his claim was dis­missed on the ba­sis that his em­ploy­ment had “au­to­mat­i­cally ter­mi­nated” in terms of the pro­vi­sion in his con­tract and that he had there­fore not been dis­missed.

The ef­fect and con­se­quence of this was that Mahlamu’s ten­ure was en­tirely de­pen­dent on the will of Bombela, who was the client and not the em­ployer of Mahlamu.

Fur­ther­more, Bombela could for any rea­son, ir­re­spec­tive of the ar­bi­trari­ness of the rea­son, ad­vise Gubevu that his ser­vices were no longer re­quired and this would re­sult in the au­to­matic ter­mi­na­tion of his em­ploy­ment con­tract.

The ef­fect of this would leave Mahlamu with no re­course, ei­ther against Bombela or Gubevu.

Not to be out­done, Mahlamu then brought a re­view ap­pli­ca­tion chal­leng­ing the find­ing, con­tend­ing that the Com­mis­sioner had made a ma­te­rial er-

The com­plex­i­ties of this tri­par­tite re­la­tion­ship have been prone to abuse and con­trac­tual ma­nip­u­la­tion that has sought to limit the li­a­bil­ity of the labour bro­ker and the client, leav­ing the em­ployee vul­ner­a­ble and ex­posed to abuse.

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