LLW2601 – INDIVIDUAL LABOUR LAW SUMMARY NOTES

LLW2601 – INDIVIDUAL LABOUR LAW SUMMARY NOTES. South Africa is regulated by 3 main sources: 1. The Constitution 2. Labour Legislation 3. The law of contract regulated by common law AN EMPLOYEE & AN INDEPENDENT CONTRACTOR • 5 tests that have been developed by the courts & are used to determine who is an employee & who is an independent contract: 1. Control test 2. Organization test 3. Dominant impression test 4. Economic capacity test 5. Reality test • Who is an employee: Any person, excluding an independent contractor, who works for another person or for the State & receives, or is entitled to receive, any remuneration; & any other person who in any manner assists in carrying on or conducting the business of an employer • Labour law protects employees against unfair dismissal or exploitation and victimisation in the workplace • Primary aims of the LRA is to promote sound relations between employers & employees in the workplace • Independent contractor: Contracted to perform a specified task or to produce a specific result (location conductio operis) • Employee is appointed to render personal services in terms of a job description (locatio conductio operarum) 1. CONTROL TEST • Looks at the control the employer has over the work the person does, manner in which work must be done, & when & where the work must be done 2. ORGANIZATION TEST • Looks at whether the person is part & parcel of the business / organization • Person’s work must be integrated into the business – not just an accessory to the business 3. DOMINANT IMPRESSION TEST • Favoured by the courts & considers employment relationship as a whole, rather than concentrating on only one factor Individual Labour Law – LLW2601 - SUMMARY Page 2 of 53 4. ECONOMIC CAPACITY TEST • In Niselow v Liberty Life the court added a so-called ‘economic capacity test’, in terms of which an employees’ income-earning capacity is solely dedicated to the employer 5. REALITY TEST • When determining the true status of a worker, the court will look at the ‘substance of the relationship as opposed to the form thereof • Control test (code: Who is an employee): control includes the right to determine what work the employee will do, in what manner & what the working hours will be • Control may be a term of contract • Organization test – code states inter alia • Traditional workplace no longer exists & employee does not need to work from employer’s premises in order for an employment relationship to exist • Tools of trade provided by the employer should not be interpreted narrowly and may range from a modern / cellphone package to a set of screwdrivers • Dominant – impression test, code confirms the importance of this test • States there is no single decisive factor to determine the existence or absence of an employment relationship & all factors should be considered when determining the nature of the relationship EMPLOYEE INDEPENDENT CONTRACTOR Object of the contract is to render personal services Object of the contract is to perform a specified work or produce specified results Employee must perform services personally IC may usually perform through others Employer may choose when to make use of the services of the employee IC must perform work (produce result) within a period fixed by the contract Contract terminates on death of the employee Contract does not necessarily terminate on death of IC Contract also terminates on expiry of the period of service in the contract Contract terminates on completion of work or production of specified results • LRA & BCEA amended in 2002 to include a rebuttable presumption as to who would be regarded as an employee • Presumptions do not apply to people earning more than the threshold amount determined by the MOL in terms of the BCEA (Section 83A(2)) • LRA reads as follows: (Section 200A): ‘Until the contrary is proved, for the purpose of this act…, a person who works for, or renders services to, any other person is presumed, regardless of the form of the contract, to be an employee, if any one or more of the following factors are present: (a) The manner in which the person works is subject to the control or direction of another person (b) The person’s hours of work are subject to the control or direction of another person (c) In the case of a person who works for an organization, the person forms part of that organization (d) The person has worked for that other person for an average of at least 40 hours per month over the last three months (e) Person is economically dependent on the other person for whom he works or renders services (f) Person is provided with tools of trade or work equipment by the other person (g) Person only works for or renders services to one person Individual Labour Law – LLW2601 - SUMMARY Page 3 of 53 Example: Richard sold newspapers for a Sunday newspaper, Paper Palace. This was his only source of income since he was unemployed during the week. Paper Palace had an area manager who phoned the vendors every Friday to arrange when and where they will be picked up. The vendors are paid on commission basis. When Richard’s services were terminated, he claimed unfair dismissal. The first step to get access to the ‘umbrella’ of labour law protection, is to show that at least one of the factors in the presumption had been present in the work relationship. Richard held that he was an employee because he reported to the area manager, he was supplied with the tools of the trade (posters and the newspapers to sell) and he was economically dependent on Paper Palace. Richard was consequently assumed to be an employee. Paper Palace then had the opportunity to rebut this assumption. They had presented the following facts to show on a balance of probabilities that Richard was not an employee: • Richard did not form part of the organization • The area member was a mere contact person for practical arrangements • Richard was not under the control of the employer, Paper Palace • The job necessitated him to work on Sundays and to be available to sell newspapers from 05h00 – 15h00 • The employer did not control what he did, so he could choose to sit under a tree for the duration of the time if he wanted • Richards was not economically dependent on Paper Palace as a result of their doing • He was allowed to work for any other employer during the week but since he was unemployed, the selling of newspapers was his only income • However, the employer did not force him to only use his economic capacity for this purpose The dominant impression test indicated that Richard was not an employee. He could thus not pursue his claim in terms of labour law since he was an IC NON-STANDARD EMPLOYEES • LRA brought clarification and determines that ‘non-standard forms of employment’ relate to temporary employees, fixed-term employees and part-time employees • LRA regulates non-standard employment, extends more protection to vulnerable workers and promotes decent work • 3 categories of non-standard employees 1. Employees provided by a temporary employment service (TES) or so-called temporary employees 2. Fixed-term employees 3. Part-time employees 1. Temporary employment services (TES) → Who is a temporary employee? • Employed by a temporary employment service & a TES: ‘any person who, for reward, procures for or provides to a client other persons who render services to, or perform work for, the client; and who are remunerated by the temporary employment service’ • Represented by a triangular form – involves 3 parties 1. Employee 2. TES / Labour Broker 3. Client Individual Labour Law – LLW2601 - SUMMARY Page 4 of 53 • Protect temporary employees, LRA sets a restriction on the duration of the use of labour brokers and temporary employees supplied to clients • Employer may appoint a temporary employee to a client for a period of 3 months or less or as a substitute for an employee who is temporarily absent and then the period may be longer than 3 months (e.g. maternity leave) • Certain services may appoint employees on fixed-terms for longer than 3 months even though they would earn less than the BCEA threshold • Employees who earn more than the BCEA threshold of R205 433 are excluded from the protection provided by the LRA • TES / Labour broker is responsible for its statutory obligations regarding the placed worker for as long as the employee renders a temporary service to the client • If non-compliance – employee deemed to be the employee of the client and employed on an indefinite basis • Both the client and the TES / Labour broker become employers of the placed employee for the purposes of the LRA because of the deeming provision TES / Labour Broker Client Temporary employee TES / Labour Broker = Employer Client = Employer Temporary employee Individual Labour Law – LLW2601 - SUMMARY Page 5 of 53 • An employee who doesn’t provide a temporary service as defined by the Act is an employee of the TES / Labour broker • Aim of deeming provision is to restrict the employment of vulnerable workers by the TES / labour brokers to genuine ‘temporary work’ 2. Fixed-term Employees → Who is a fixed-term employee? • Refers to a contract of employment that terminates on / at: - Occurrence of a specified event - Completion of specified task or project - Fixed date other than an employees normal or agreed retirement age • Following employees are excluded from the restrictions - Employees earning more than the BCEA threshold of R205 433 py - Employees of an employer that employs fewer than 50 employees and whose business has been in operation for less than 2 years, unless the employer conducts more than one business; or the business was formed by the division or dissolution for any reason of an existing business - An employee permitted by any: o Statute o Sectoral determination o Collective agreement → When will it be allowed? • Fixed-term contract will be allowed if the employee is appointed for a period of 3 months or less • Offer a fixed-term contract, renew / extend has to be done via writing and state the reasons for it • May employ an employee on a fixed term (successive contract) for longer than 3 months only if: - Nature of the work is of a limited or define duration - Employer can demonstrate any other justifiable reason TES / Labour Broker Client Temporary employee Individual Labour Law – LLW2601 - SUMMARY Page 6 of 53 • Justifiable reasons for a fixed-term employee: 1. Replacing another employee who is temporarily absent from work 2. Employed on account of a temporary increase in the volume of work which is not expected to last beyond 12 months 3. Student or recent graduate who is employed for the purpose of being trained or gaining work experience 4. Work exclusively on a specific project that has a limited or defined duration 5. Non-citizen who has been granted a work permit for a specified period 6. Employed to perform seasonal work 7. Employed for an official public works or similar scheme 8. Employed in a position which is funded by an external source for a limited period 9. Has reached thee normal or agreed retirement age applicable in the employer’s business and continues to perform work for that employer • If an employee has been employed for longer than 24 months on a fixed term contract – entitled to severance pay when the employment is terminated • Severance is calculated as 1 week’s remuneration for each completed year of service at the end of the fixedterm contract → What will happen if there is non-compliance with the LRA • If a fixed-term contract does not comply - It is not a fixed-term contract - Employment is for an indefinite or permanent period and the fixed-term contract worker will become permanent - Employee must be treated as a permanent employee 3. Part-time employees • Employee who is remunerated wholly or partially by reference to the time that the employee works, and who works less hours than a comparable full-time employee • e.g. domestic, casual or piece worker • Paid by hour • Should be treated, on the whole, not less favourable than a comparable full-time employee • Comparable full-time employee is an employee who is paid for a full day, who is considered to be a full-time employee according to custom and practice and who performs the same or similar work as the part-time employee • Differentiation may be allowed on the basis of factors such as seniority, experience, or length of service, merit, quality or quantity of work and only other similar criteria • Employers are required to allow part-time employees to apply for job opportunities and to give them training and skills development which are on the whole not less favourable • Provisions will not apply to: - Employees earning more than R205 443 - Employees who work for fewer than 24 hours per month for a particular employer - Employees during the first 3 months of employment - An employer who employs fewer than 10 employees or fewer than 50 employees and whose business has been in operation for less than 2 years PROTECTION AND REGULATION OF ILLEGAL AND FOREIGN WORKERS • Illegal workers and foreign workers are not employees for purposes of the LRA and cannot receive any protection from the act Individual Labour Law – LLW2601 - SUMMARY Page 7 of 53 1. Illegal workers Example: Bessie is ‘employed’ by Slimy Sam to act as a drug mule. After successfully delivering the drugs, Sam refuses to pay Bessie. In terms of the common law, an unlawful contract is void (or voidable). In other words, since Bessie was ‘employed’ to perform an unlawful activity, she will not have protection under the labour law umbrella. Under criminal law, any unlawful conduct is punishable by a court of law, which means that Bessie can be prosecuted as well. • Constitution has come to the rescue of some illegal workers by developing the common-law principles so that some illegal workers will be able to receive some form of protection against unfair conduct by the illegal employer • Purpose of the LRA ‘is to advance economic development, social justice, labour, peace and the democratisation of the workplace • Section 10 of the Constitution protects the dignity of ‘everyone’ and section 23 ensures that ‘everyone’ is entitled to fair labour practices • Constitutional Court has previously held that people performing in terms of an agreement ‘akin to an employee relationship’ and which ‘in many respects mirrors those of people employed under a contract of employment’ are deserving of this protection 2. Foreign workers • Illegal foreigners will not receive protection under labour legislation since they are not employees • May still be protected by the Constitution which, inter alia, guarantees everyone’s right to dignity and fair labour practices • Immigration Act prohibits employment of an illegal foreigner • Employer who employs an illegal foreigner may not refuse to pay that worker on the basis that the worker is an illegal foreigner, and the employer will not escape liability by relying on the illegal relationship • An illegal foreigner may still be able to enforce his contractual rights against the employer LRA Illegal contract is void under the common law Constitution Can override any act & common law Section 23 gives ‘everyone’ the right to fair labour practices Illegal workers can still have right to fair labour practices Individual Labour Law – LLW2601 - SUMMARY Page 8 of 53 Answer is NO Answer is YES • The employment and protection of foreign workers are regulated by the Employment Services Act of 2014 • Act aims to regulate the employment of foreigners in order to ensure work opportunities and economic development of South African citizens, and to stop employers from treating foreign nationals badly • Employment Tax Incentive Act 26 of 2013 which provides for subsidies intended to encourage the employment of young people by the private sector employers EMPLOYERS / LABOUR BROKERS • Temporary employment services / labour brokers are required to register with the Registrar of Private Employment Services • Both client and labour broker (employer) may (jointly and severally) be held liable by the employee in the case of any contravention of labour laws THE POSITION OF A TEMPORARY EMPLOYMENT SERVICE (TES) / LABOUR BROKER 1. Issues regarding a TES / Labour Broker • Trade unions have been calling for a ban on labour brokers to increase the protection of workers against abuse, exploitation, low wages and their inadequate protection 2. Registration of Labour Brokers • TES required to register in accordance with regulations published by the MOL before it can conduct its business • This is to prevent abuse of employees associated with so-called ‘bakkie-brigades’ or ‘fly-by-night’ labour brokers When the employment is terminated the following question should be asked: Was the employment contract valid? Worker not protected under the LRA, but may be prote3cted under the Constitution Section 23 grants ‘everyone’ the right to fair labour practices Section 10 grants ‘everyone’ the right to dignity The worker is protected by the LRA against unfair dismissal Individual Labour Law – LLW2601 - SUMMARY Page 9 of 53 3. Liability of the labour broker and client • Employee may hold employer and client jointly and severally liable of the TES contravenes: - A collective agreement concluded in a bargaining council that regulates terms and conditions of employment - A binding arbitration award that regulates terms and conditions of employment - BCEA - Determination made in terms of BCEA • Joint and severally liable – employee can take action against the TES / Labour Broker or the client or both 4. Specific duties and prohibitions • Compelling the TES to promote the temporary employee with written particulars of employment in line with the requirements of the BCEA • Prohibiting the TES from employing any employee on terms and conditions of employment in contravention of the LRA, any employment law, sectoral determination or collective agreement concluded in the bargaining council to which the client belongs 5. Private and public employment agencies • 2 types: 1. Public employment services 2. Private employment Agencies (a) Public Employment Services: • Match work-seekers with opportunities • Register work-seekers, vacancies and other work opportunities • Advise work-seekers on relevant education and training • Offer vocational and career counselling • Assess work-seekers to determine suitability, place work-seekers, exchange information among labour market participants, e.g. SETAs and private employment agencies (b) Private Employment Agencies • May not charge a job applicant a placement fee unless lawfully permitted • May not deduct any money from the employee’s salary for his placement with a client • Agreement between TES and client must specify the remuneration and TES fee • TES must keep on register of work-seekers and the clients where they were placed • Any provision in breach of the above will be invalid and unenforceable • Important bodies: - Employment Services Board o Advise MOL on various issues regarding a TES and protected work for people with disabilities - Productivity South Africa o Objective will be to promote a culture of productivity in workplaces - Protected Employment Enterprises o Responsible to promote work and employment opportunities for people with disabilities THE COMMON LAW AND THE CONTRACT OF EMPLOYMENT • In order for a contract of employment to be valid, parties to the contract must have satisfied all the following common law requirements for the conclusion of the valid contract: - The parties must agree - Have capacity to enter into the contract - The contract must be lawful and possible to perform - Where the parties agreed on formalities, those formalities must have been complied with Individual Labour Law – LLW2601 - SUMMARY Page 10 of 53 • Law does not require the contract of employment to be in writing GENERAL CONTRACT PRINCIPLES • Following requirements must be met in order for the contract of employment to be valid: 1. Must be an agreement between parties. Employment contract is created through offer and acceptance 2. Parties need to agree about the work the employee has to do and remuneration he will receive 3. Parties to the contract must have capacity to act 4. Agreement must be legally possible 5. Performance under the agreement must be physically possible 6. If any formalities are prescribed for the formation of contract or i