JUDGMENT ON THE INTERPRETATION OF THE "DEEMING PROVISION" – SOLE OR DUAL:

by with No Comment EMploymentLatest Payroll NewsUncategorised

The Labour Court handed down judgment on September 8th 2015 in a highly anticipated interpretation ruling relating to the recent amendments to the Labour Relations Act (LRA).

Kirsten Caddy Senior Associate in the Employment practice at Cliffe Dekker Hofmeyr (CDH),  explains, “The judgment provides clarity on the interpretation of the “deeming provision” contained in section 198A of the LRA, which provides that the client of a temporary employment service (TES) is deemed to be the employer of TES employees who earn less than the earnings threshold (currently R205 433.30 per annum), and who have been placed at the client for more than three months.The judgment confirmed that the client does not become the sole employer. Rather, the Court held that the TES continues to be the employer.”

Caddy says that has been much debate as to whether the deeming provision means that the client of a TES becomes the sole employer or the dual employer of the TES employees.  Prior to today’s judgment, a number of decisions emanating from the CCMA and bargaining councils have declared the deeming provision to mean that the client becomes the sole employer of the TES employees after three months.

“In Assign Services v CCMA and others (8 September 2015), the court was tasked with determining whether the commissioner had erred in his interpretation of the deeming provision. The commissioner, too, found that the deeming provision meant that the client of the TES became the sole employer of the TES employees who earn less than the earnings threshold, and who had been placed at the client for more than three months,” Caddy explains.

“The court stated that the true issue for determination was whether the TES continues to be the employer of the TES employees (notwithstanding the application of deeming provision) and, therefore, is concurrently vested with the rights/obligations and powers/duties generated by the LRA.

“The court found that the TES continues to be the employer of the TES employees, even after the application of the deeming provision. There is no reason, in principle or practice, why the TES should be relieved of its statutory rights and obligations towards the TES employees merely because the client acquires a parallel set of such rights and obligations.  The deeming provision does not invalidate the contract of employment between the TES and TES employee or derogate from its terms,” explains Caddy.

Aadil Patel, Director and Head of the CDH Employment practice notes, “The court further made the important finding that the deeming provision is expressly made only to operate for the purposes of the LRA and that it therefore serves to amplify or expand the protections afforded to employees and not to substitute the TES employee’s protections vis-à-vis the TES with protections vis-à-vis the client.”

“The current legal position is that TES employees remain the employees of the TES and, by virtue of the deeming provision, can now assert their rights against the clients of the TES as well. The finding of the Labour Court therefore supports the “dual employer” approach and TES employees do not transfer to the client as the sole employer,” explains Patel.

“The Labour Court has clarified the interpretation of the deeming provision to the satisfaction of TES and their client’s alike. However, this is likely not to be end of the debate around this very contentious amendment to the LRA,” he adds.

Labour Court rules on 'maternity' leave for fathers

by with No Comment Latest Payroll NewsMaternity Leave
The case MIA v State Information Technology Agency (Pty) Ltd (D 312/2012) [2015] ZALCD 20 turned on whether an employer’s refusal to grant a male employee ‘maternity leave’ amounted to unfair discrimination on the grounds of gender, sex, family responsibility and sexual orientation in terms of s6 of the Employment Equity Act, No 55 of 1998.
© Cathy Yeulet – 123RF.com© Cathy Yeulet – 123RF.com

On 23 May 2010, an employee of State Information Technology Agency (Employer) entered into a civil union with his spouse in accordance with the provisions of the Civil Union Act, No 17 of 2006 (Civil Union Act). A little over a year later – in line with s292 of the Children’s Act, No 38 of 2005 (Children’s Act) – the employee and his partner entered into a surrogacy agreement with a surrogate mother. The spouses agreed that the employee would take the role ordinarily performed by the birthmother. In anticipation of the birth of their child, the employee applied for paid maternity leave for four months. The Employer refused to grant him this leave because the employee was not the biological mother of his child.

The law governing maternity leave is set out in s25 of the Basic Conditions of Employment Act, No 75 of 1997 (BCEA) which provides that:

  1. An employee is entitled to at least four consecutive months’ maternity leave.
  2. An employee may commence maternity leave:
  3. at any time from four weeks before the expected date of birth, unless otherwise agreed;
  4. “…”

The Employer’s policy mirrored the above provision with one exception: the word may was replaced by shall, so that the policy dictated that the maternity leave “shall be taken four weeks prior to the expected date of birth or at an earlier date.” Though this small but significant change was left uncontested, the Labour Court indicated that the policy was more restrictive than the rights coffered by the BCEA, thus suggesting that the wording would not survive scrutiny.

While on the one hand the Employer’s maternity leave policy diluted rights granted in the BCEA, on the other hand, the Employer was more generous than the legislation prescribed because the policy also afforded employees two months’ maternity leave on full salary to permanent employees, adopting a child younger than 24 months’ old.

Initial offer refused

Against this background, the Employer initially offered the employee family responsibility leave or special unpaid leave, and then compromised slightly by offering the employee two months’ paid adoption leave and two months’ unpaid leave. Objecting to this inequality, the employee referred a dispute to the CCMA. After being denied relief by the CCMA, the employee sought an order from the Labour Court.

The Employer’s refusal pivoted on the argument that its policies and the BCEA only covered female employees and reiterated that the BCEA was silent on the issue of leave for surrogate parents.

The Employer denied that its policy was discriminatory and relied on the word ‘maternity’ as being the defining character of the leave, submitting that such leave was only available to female employees. The Employer also argued that the maternity leave policy was specifically crafted for employees who give birth. The underlying basis for this contention was that pregnancy and childbirth creates an undeniable physiological effect that prevents biological mothers from working during some stages of pregnancy and during the post-partum period.

Constitutional rights of a child

As pointed out by the Labour Court, the Employer’s argument ignored the fact that the right to maternity leave in terms of the BCEA is an entitlement that is not solely linked to the welfare and health of the child’s mother but also connected to the child’s best interests. To disregard this duality would be to deny s28 of the Constitution, which states, “every child has a right… to family care or parental care.” Similarly, the Children’s Act confirms that a child’s interests are paramount in all matters concerning the care, protection and wellbeing of the child.

In light of the above, the Labour Court ruled that “there is no reason why an employee in the position of the applicant should not be entitled to ‘maternity leave’ and equally no reason why such maternity leave should not be for the same duration as the maternity leave to which a natural mother is entitled.”

Although this specific matter scrutinised the Employer’s maternity policy and its application, the Labour Court acknowledged that in order to properly address the issue of paternity leave, the legislation and BCEA would need to be amended to safeguard the protections afforded in the Civil Union Act and the Children’s Act.

Policy review may be needed

This decision paves the way for heterosexual fathers who are primary caregivers of their babies to argue that they too should be entitled to ‘maternity’ leave in appropriate circumstances. The judgment does not create a general right for maternity leave by fathers but highlights the circumstances under which the Labour Court may be willing to come to the assistance of employees who are of the view that their employer’s policies do not provide them with appropriate rights or protection. Employers seeking to avoid such claims could proactively consider their internal policies against the judgment and determine the risk in the event of a court application.

LABOUR LAW : EMPLOYEES MUST PUT EMPLOYER’S INTERESTS FIRST

by with No Comment department of labour

South African labour law gives employees a plethora of rights against the employer. So much so that many employers wonder whether the resultant burden on them makes it worth continuing to run the business. For example, employees have, amongst others, the right to:

•    Join trade unions
•    Go on strike
•    Procedural fairness at disciplinary hearings
•    A fair reason for dismissal

•    Protection form unfair demotions
•    Be promoted under certain circumstances
•    Minimum wages in many cases
•    Sick leave, holiday leave, maternity leave and compassionate leave
•    Overtime pay
•    Consistent treatment
•    Protection from unfair discrimination
•    Representation at CCMA by a trade union representative

On the other hand labour legislation gives employers few rights; and those that they do have are very restricted. That is, employers may exercise limited rights as long as, in doing so, they do not infringe the numerous rights given to employees.

However, one area that employers can exercise their rights is that of fiduciary duty. This means that the employee has, in certain ways, the duty to put the employer’s interests first. This does not mean that the employee must, as a way of benefiting the employer, forfeit his/her rights to leave, legal working hours or fair discipline. It does mean that the employee may not advantage himself/herself unfairly at the expense of the employer.

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Specifically, this means that the employee may not:

•    Place him/herself in a position where his/her interests conflict with those of the employer
•    Make a secret profit at the expense of the employer
•    Receive a bribe or commission from a third party
•    Misuse the employer’s trade secrets
•    Give a third party the employer’s confidential information.

While this principle applies generally to employees it applies more strongly to senior employees. In deciding on the extent of fiduciary duty that an employee has the courts consider a number of factors including:

•    The degree of freedom that the employee has to exercise discretion in making and executing business decisions
•    The opportunity for the employee to exercise this discretion in his/her own interests
•    The extent to which the specific circumstances open the employer to abuse of the employee’s discretion
•    The extent to which the employer relies on the employee for expertise and judgement in conducting the business
•    The extent to which the employee is in a position of trust.

Clearly, the more junior the employee the less these fiduciary factors are likely to prevail. That is, with some exceptions, junior employees normally do not have the right or duty to make crucial business decisions or the opportunity to misuse decision-making power.

The line between who is a senior employee and who is not and the line between who is in a position of trust and who is not are blurred. Whether, for example, a junior salesperson is in a position of trust or not depends on the specific circumstances of each case. Therefore, in order to protect itself from employees acting against the employer’s interests every employer should:

•    Build in checks and balances that prevent the abuse of power
•    Inform all employees of their fiduciary duties in relation to their positions of trust
•    Make sure employees at all levels know the seriousness of breach of their fiduciary duties
•    Take swift, fair and consistent action against employees who breach their fiduciary duties
•    Obtain expert legal advice before acting against suspects.

 

FIRST PUBLISHED on 16 APR 2015  by IVAN ISRAELSTAM