EMPLOYERS ARE NOT PROTECTED BY THE CORPORATE VEIL

EMPLOYERS ARE NOT PROTECTED BY THE CORPORATE VEIL

The Labour Relations Act (LRA), in its definition section says that an employee is someone who works for an employer. However, the designers of the LRA failed to define the term ‘employer’. This renders confusing our understanding of what an employer is and what an employee is. Despite the absence of a definition of an employer the LRA uses this term very frequently in placing heavy obligations on the employer by dictating, for example, that:

  • Within 30 days of receiving a notice from a registered trade union the “employer” must meet the union to conclude a collective agreement [Section 21(3)] 
  • An “employer” must disclose to a trade union representative (shop steward) all information relevant to the performance of his/her effectively [Section 16(2]
  • A dismissal is unfair if the “employer” fails to prove the dismissal was for a fair reason or was affected in accordance with a fair procedure [Section 188(1]

It may seem that the reason for the omission of the definition of an employer is that such definition is not necessary because it is obvious. However, more than once, when deciding who is to be held liable, the question of who the employer is has been raised. Is it the contracting company or the contractor’s client? Is it the employment agency or the entity that makes use of its services? Is the closed corporation the employer or is it the members of the cc? Is it the subsidiary company or is it the holding or parent company? The answers to these questions are not always clear cut.

For example, in the case of Group 6 Security Pty) Ltd & another vs Moletsane & others (2005, 11 BLLR 1072) the employee was dismissed after an altercation with the employer. The CCMA ruled that the dismissal was unfair. The arbitrator found that the security company and one of its shareholders were jointly and severally liable for the payment of compensation to the employee and for the employee’s legal costs. The Labour Court, on hearing the review application, ruled that “the veil of a corporate entity may be pierced only when there are allegations of fraud, dishonesty or improper conduct.” In the Group 6 case the Court could find no misdoings. The shareholder who had been found by the CCMA to be jointly liable for the unfair dismissal had merely told the employee that the company was an empty shell and this did not constitute dishonesty. Also, the shareholder had not been a cited party at the arbitration hearing; he had only been a witness. The CCMA had therefore been wrong to make the shareholder jointly and severally liable for the compensation and costs to be paid to the employee.

What would have happened however, if the shareholder had been cited as a co-respondent at the CCMA and if he had been found to have committed an improper act. It is possible that the Court would have allowed the CCMA to look beneath the corporate veil for the person responsible.

In the case of Footwear Trading cc vs Mdlalose (2005, 5 BLLR 452) the employee was dismissed and won an award from the CCMA for compensation. The award was made against the employer, Fila (Pty) Ltd a company closely associated with Footwear Trading. The employee applied to the Labour Court for an order to make the CCMA’s award an order of court. Fila told the Court that it was dormant and that Footwear Trading had taken over certain of its assets. The employee also sought an order declaring Fila and Footwear Trading to be co-employers and therefore jointly and severally liable. Footwear denied that it was joined to Fila claiming that it merely carried out administrative tasks for Fila. The Labour Court rejected this and declared the two companies jointly and severally liable for the compensation payment due to the employee.

Footwear Trading then appealed against this decision to the Labour Appeal Court which found that:

  • The LRA does not define “employer” and that therefore the definition of this term must be derived from the definition of an “employee” which is someone who provides services. An employer is therefore a person who “receives services”. 
  • Legal personality may be disregarded where a corporation is a mere alter ego or conduit for another person 
  • Footwear Trading was in control of the business even if it was a separate legal entity and not technically the employer.
  • Footwear Trading was confirmed to be jointly liable for payment to the employee of compensation and the appeal was therefore dismissed.

 

The above is a warning to employers that the use of subsidiaries, associate companies and other surrogates for purposes of avoiding labour law obligations is extremely risky. It is far wiser to utilise available labour law expertise to ensure that the law is properly complied with so as to make ducking behind technicalities unnecessary.

To observe our experts debating hot labour law topics please go to www.labourlawadvice and click on the Labour Law Debate item in the menu.

BY   Ivan Israelstam, Chief Executive of Labour Law Management Consulting. He may be contacted on (011) 888-7944 or 0828522973 or on e-mail address: ivan@labourlawadvice.co.za

SUPPLEMENTARY BURSARY TRUST

SUPPLEMENTARY BURSARY TRUST

Intended for those presently in tertiary education or about to start it in 2021 whose financial situation may prevent the continuation or start of their studies.

Since this bursary supplements a student’s own financial contribution, it will not cover full costs of tertiary education at a state-recognised tertiary educational institution.

Bursaries will be awarded on academic and personal achievement, and satisfactory references.

Obtain application forms and information from: melfrieda@telkomsa.net

CLOSING DATE FOR COMPLETED APPLICATIONS

04 December 2020

Applicants will be notified of the final result of their applications after submission of certified copies of final results.

The benefit of strong boundaries

The benefit of strong boundaries

Do you often feel taken advantage of, or that you give too much without getting anything back in return – both in your personal and professional life? It might be worth considering whether this is because your personal boundaries are not clear or strong enough.

Boundaries help us prosper in our personal and professional lives by creating a healthier relationship with ourselves and others. According to Medium, “Having them in place allows us to communicate our needs and desires clearly and succinctly without fear of repercussions. It is also used to set limits so that others don’t take advantage of us or are allowed to hurt us.”

Are your boundaries clear?

What are some of the signs that you need to work on your boundaries?

  • If you find yourself consistently being a “doormat” – being taken advantage of, having difficulty saying no to others.
  • If you are a consistent people pleaser.
  • If you always find yourself looking to others for answers, and you struggle to make decisions for yourself.

To improve the situation, you’ll need to do some reflection. It’s important to start with yourself and make sure you know what you will accept and what you will not accept. 

Firstly, think about what your core values are, what your non-negotiable’s are, and what you are and aren’t willing to tolerate in your personal or work life. For example, you may decide that contributing to a non-sexist world is very important to you, and that if a friend or a co-worker makes sexist comments, you’ll speak up and object to that kind of language being used. In that way, your boundary becomes clear for the world to see, and will tell the people around you what you are and aren’t prepared to accept.

Clarify your thoughts

I would encourage you to write down your values and non-negotiables – the process really helps you clarify your thoughts, and internalise them. One you’ve written these down, make a concerted effort to be aware of the decisions that you make on a daily basis and how you behave around others. 

I would also encourage you to be aware of who you surround yourself with. Do they share the same core values as you? Do they have a moral compass? Do they have your well-being in mind? If your friends are aligned to your values, you’ll have less work to do in defending your boundaries. This can be more tricky in a workplace as you have less control over who your colleagues are, so in this instance it’s even more important that you are clear about what you are and aren’t prepared to accept.

You will find that your relationships with others will improve when you work on setting your boundaries. You will be able to communicate clearly about what you will do and won’t do, and those around you will start responding accordingly – and you’ll start gaining the respect of others once they see that you are prepared to stand up for yourself. Others need to know your boundaries just as much as you do! 

The bottom line is that setting boundaries isn’t selfish. Instead, it’s a sign that you practice self-respect and self-care, and are confident in who you are.

Yumna Aysen, Life Coach (www.ohyesitsyumi.com)

Employers: UNFAIR DISCIPLINE CAN CAUSE CONSTRUCTIVE DISMISSAL

Employers: UNFAIR DISCIPLINE CAN CAUSE CONSTRUCTIVE DISMISSAL

Constructive dismissal means that the employee resigns and claims that the resignation occurred not because the employee wanted to leave but as a result of the employer’s intolerable conduct.

Due to the fact that the employee alleges that the resignation was involuntary and was intentionally or unintentionally coerced by the employer, the resignation becomes a constructive dismissal. It is possible that this terminology originated from the idea that such a resignation submitted under duress can be seen to have been ‘constructed’ or ‘created’ by the employer.

In order to convince an arbitrator or judge that unfair constructive dismissal has in fact taken place the employee must show that:

  1. The employment circumstances are so intolerable that the employee could truly not continue to stay on
  2. The unbearable circumstances were the cause of the resignation of the employee
  3. There was no reasonable alternative at the time but for the employee to resign in order to escape the circumstances 
  4. The unbearable situation must have been caused by the employer 
  5. The employer must have been in control of the unbearable circumstances.

The labour law on constructive dismissal was born out of case law and was later codified in the Labour Relations Act No. 66 of 1995 (LRA). Section 186 (1)(e) includes in the definition of dismissal the situation where “…an employee terminated a contract of employment with or without notice because the employer made continued employment intolerable for the employee.”

It must be stressed that questionable acts of the employer will not always constitute unfair constructive dismissal. This will depend on the extent to which the employer’s conduct falls within the five tests for constructive dismissal outlined earlier in this article.

However, employers need to be careful in interpreting the meaning of these five tests. For example, test number 3, where the employee must show that he had no reasonable alternative but to resign must not be simplistically interpreted. For instance, it is often the case that the employee theoretically has the option of remaining in the employment relationship and referring an unfair labour practice to the CCMA or other tribunal. Where the employee fails to do so and resigns instead, this will not always mean that he has failed test number 3. Passing this test will depend a great deal on whether, under the circumstances at the time, the employee could reasonably have been expected to stay on in the employer’s employ for purposes of referring the unfair labour practice dispute. Truly unendurable circumstances would make such a route unreasonable.

Employees must be equally careful not to misinterpret the law. Where, for example, an employer notifies an employee of a disciplinary hearing this could genuinely be seen as unbearable to the employee. However, a resignation by the employee for purposes of avoiding the disciplinary hearing is unlikely to constitute unfair constructive dismissal. For example in the case of Mvamelo vs AMG Engineeering (2003,11 BALR 1294) the employee was informed that he was to be called to a disciplinary hearing for theft and that criminal charges would also be laid. He resigned and claimed constructive dismissal but lost the case because it was found by the arbitrator that he had resigned to avoid the disciplinary steps of which he had been notified.

However, where disciplinary steps have been taken unfairly and this renders the employment circumstances intolerable this can constitute constructive dismissal. For example, in the case of Solidarity obo Van Der Berg vs first Office Equipment (Pty) Ltd (2009, 4 BALR 406) the employee was found to have been performing his work poorly. As a result the employer decided to stop paying him his salary and replaced it with a commission structure. The employee resigned and went to the CCMA where it was found that the employee had been a victim of unfair constructive dismissal. This was because the employee could not be expected to continue employment under such intolerable circumstances.

Employers need to be extremely careful that they do not discipline employees unfairly. Otherwise the employer might have to pay tens of thousands of rands in compensation and legal costs.

To observe our experts debating hot labour law topics please go to www.labourlawadvice and click on the Labour Law Debate item in the menu.

BY   Ivan Israelstam, Chief Executive of Labour Law Management Consulting. He may be contacted on (011) 888-7944 or 0828522973 or on e-mail address: ivan@labourlawadvice.co.za. Go to: www.labourlawadvice.co.za

Employers: DISCRIMINATION CAN SICKEN EMPLOYERS

Employers: DISCRIMINATION CAN SICKEN EMPLOYERS

Section 6 of the Employment Equity Act (EEA) prohibits unfair discrimination against an employee on twenty arbitrary grounds including race, age, disability, sex and many others.

Discrimination at the workplace need not always be unfair. For example, giving company cars to managers only does not discriminate on arbitrary grounds. Managers who get cars do so because of their senior status in the establishment and other employees are therefore being fairly discriminated against.

Unfair discrimination can take many forms. For example, if an employee is sexually harassed this is a form of unfair discrimination based on sex. If a worker is paid less than his/her colleagues because he is male or she is female this would constitute prohibited gender discrimination. If a job applicant is unsuccessful because he/she is white this could be found to be unfair on the grounds of race. Where an employee is unnecessarily sidelined because he/she is disabled this could be unfair discrimination. It is also contrary to law to dismiss a disabled employee who has been incapacitated due to injuries unless the employer has first made every effort to avoid such dismissal through the implementation of a proper incapacity procedure.

For example, in the case of Standard Bank of South Africa vs CCMA & others (2008, 4 BLLR 356) the employee, Ms Ferreira was dismissed after being injured in a motor accident whilst on duty. Her position was Mobile Loans Consultant, a job that required travelling. After her accident Ms Ferreira found travelling painful and the employer therefore gave her a light administrative post. However, she requested a more responsible position as the admin post was not very challenging. The bank assigned her paper shredding work which she found demeaning and physically painful. She asked for a more comfortable chair and a head set so that she could do telesales but the bank ignored these requests. The bank later informed Ms Ferreira that they were going to transfer her to the loans department but later terminated her employment on the grounds of incapacity due to continuing absenteeism.

The CCMA found that the employer had failed to consult with the employee about the head set and to take reasonable steps to try to accommodate her as was required by Schedule 8 of the Labour Relations Act. The bank also turned down the employee’s application to be placed on early retirement. The arbitrator therefore ordered the bank to pay the employee compensation for unfair dismissal. The Bank then referred a review application to the Labour Court. According to the report the Court found that the failure of the bank to accommodate Ms Ferreira constituted unfair discrimination and that the arbitrator’s decision of unfair dismissal was reasonable. It therefore dismissed the review application and ordered the bank to pay the employee’s legal costs.

The outcome of this case has significance in a number of areas; viz:

  • The labour law is highly protective of employees
  • Where employees have been injured, especially if this occurred on duty, the employer is advised to investigate very carefully the extent of the employee’s injuries and to seek alternative ways of dealing with the employee’s resultant absenteeism.
  • It is insufficient for employers to try to accommodate disabled or injured employees. Employers are required to explore all avenues of accommodating such employees and to do everything reasonable to avoid termination.
  • Where the Labour Court believes that a party has come to Court with a weak case it will not hesitate to award legal costs against it.

 

Employers are therefore strongly advised to engage the services of their most expert labour law specialist in order to:

  • Review all their human resources and industrial relations practices and policies in the interests of checking for weaknesses, incompleteness, unwarranted assumptions and discriminatory aspects. This applies regardless of whether or not such practices appear to be for the good of employees, for the sake of safety, affirmative action or for reasons of inherent requirements of the job.
  • Assess a variety of workplace issues that may require decisions that are practical yet have to comply with labour law. Due to the fact that labour law protections of employees are so broad and so open to judicial interpretation employers need to get expert advice before making any decision that could affect employees directly or indirectly.
  • Ensure that all managers and other decision makers are trained in the endless hidden dangers for employers arising in labour law.

 

Losing unfair discrimination cases in court is not only financially costly but damage to the employer’s reputation and industrial relations can have an even worse effect on the employer’s market position and long-term viability.

To observe our experts debating hot labour law topics please go to www.labourlawadvice and click on the Labour Law Debate item in the menu.

BY   Ivan Israelstam, Chief Executive of Labour Law Management Consulting. He may be contacted on (011) 888-7944 or 0828522973 or on e-mail address: ivan@labourlawadvice.co.za.

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