Employment law update

Talita Laubscher BIur LLB (UFS) LLM (Emory University USA) is an attorney at Bowman Gilfillan in Johannesburg.

Monique Jefferson BA (Wits) LLB (Rhodes) is an attorney at Bowman Gilfillan in Johannesburg. 

Compensation in unfair discrimination cases

In South African Airways (Pty) Ltd v GJJVV [2014] 8 BLLR 748 (LAC) an airline pilot, Van Vuuren, reached the retirement age of 60 on 5 August 2005. At the same time a collective agreement with the union was being negotiated in terms of which the retirement age would be increased to 63. Agreement on the increased retirement age of 63 was in fact reached on 19 August 2005, but the collective agreement was signed only in November 2005. While the collective agreement was being finalised Van Vuuren was asked to remain at home on standby. When he resumed his duties in December 2005 he received a reduced salary which was lower than that of his younger colleagues who performed the same work. The collective agreement further provided for a reduction in rank and status of pilots over the age of 60 who flew internationally. Van Vuuren approached the Labour Court alleging unfair age discrimination. At the same time, he also referred an unfair labour practice dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA) as his period of absence while he remained at home on standby, pending the finalisation of the collective agreement was incorrectly deducted from his accumulated annual leave. 

The Labour Court found that in terms of the Employment Equity Act 55 of 1998 (the Act), unfair discrimination is prohibited and the only two permissible defences to unfair discrimination are –
• the taking of affirmative action measures consistent with the Act; or 
• exclusion on the basis of inherent requirements of the job. 

South African Airways (SAA) argued that age was an inherent requirement of the job and that the reduction in salary was justified as it was intended to limit costs. SAA also argued that the reduced salary did not constitute unfair discrimination as the employees all had the choice whether to retire at the age of 60 or to continue with employment on reduced terms and conditions. 

The Labour Court, per Shaik AJ, held that the exercise of a choice that results in unfair discrimination cannot render the discrimination fair. A contractual term that violates the Constitution is by definition contrary to public policy and therefore unenforceable. The fact that the discriminatory provisions were contained in a collective agreement was therefore no justification. Thus, the Labour Appeal Court found that the Labour Court had correctly found that Van Vuuren had been unfairly discriminated against.

As regards the relief granted, the Labour Court awarded the difference in the amount that Van Vuuren earned and the amount that he would have earned had the unfair discrimination not taken place. In addition, he was awarded compensation equal to 12 months’ remuneration, approximately R 1,4 million (see 2013 (Dec) DR 45).

SAA took issue with the relief ordered. The Labour Appeal Court, per Coppin AJA, noted that the Act empowers the Labour Court to award both damages and compensation, and thus contemplates patrimonial and non-patrimonial loss. The award of damages is based on the actual financial loss suffered and is aimed at restoring the employee to the position he would have been in had the unfair discrimination not occurred. On the other hand, compensation for the purposes of the Act is awarded for non-patrimonial loss such as injury to human dignity (solatium). Courts are generally more conservative with regard to awarding compensation for non-patrimonial loss. The Labour Appeal Court found that when awarding both compensation and damages there must be a balance of the two to ensure that the total amount is fair to both the employee and the employer, and that there is no duplication of relief. In this case, the employee had sought relief in the amount of R 100 000. However, the Labour Court had awarded compensation of over R 1,4 million, which was in addition to the damages awarded for the difference in salary. The Labour Appeal Court held that there was not a sufficient explanation as to why this relief was granted. 

In the circumstances, the Labour Appeal Court found that the compensation that had been granted by the Labour Court was grossly excessive because there was no reasonable relationship to the injury suffered. It also exceeded the amounts awarded in previous similar cases. It was accordingly found that this was an exceptional matter that required the Labour Appeal Court to interfere with the compensation award and determine an appropriate amount afresh as it was in the interests of justice to do so. It was found that compensation of R 50 000 was just and equitable for non-patrimonial loss and the compensation was reduced accordingly. It was also pointed out that, in unfair discrimination cases, it is preferable to award an actual Rand amount rather than to link the amount to a certain number of months’ remuneration. 

Admission of telephonic evidence

In Simmers v Campbell Scientific Africa (Pty) Ltd and Others [2014] 8 BLLR 815 (LC) the commissioner in an arbitration allowed a complainant in a sexual harassment case to give evidence telephonically because she was in Australia. The applicant instituted review proceedings in respect of the arbitration award alleging that the admission of evidence via telephone was irregular. The Labour Court considered the fact that the complainant had time to compose herself while giving evidence because of delays and broken connections and that the commissioner was unable to observe her demeanour. Nevertheless, the Labour Court found that these were arbitration proceedings and it would have been extremely expensive to fly the complainant to South Africa to give evidence. Steenkamp J was of the view that the commissioner had dealt with the matter in an appropriate and expedient manner. It was found that the complainant could be cross-examined and therefore it did not prevent the employee from having a fair hearing. Thus, the admission of telephonic evidence did not constitute a reviewable irregularity.
• See page 28 of this issue.

Moksha Naidoo BA (Wits) LLB (UKZN) is an advocate at the Johannesburg Bar.

Question:

Section 49(3) of the Basic Conditions of Employment Act 75 of 1997 (BCEA) allows for an employer and employee to replace or exclude a basic condition of employment to the extent permitted by the BCEA.

Can you provide a list of what provisions in the BCEA can be excluded or replaced by agreement between an employer and individual employee, and in particular if the amount to be paid for overtime or time off given in lieu of payment for overtime, can be varied by agreement?

Answer: 

The right to overtime is contained in Chapter 2 of the BCEA. I shall respond directly to the question posed and thereafter discuss other issues pertaining to Chapter 2 of the Act, which practitioners should be aware of. 

There are certain instances in which an employer and employee can agree to vary certain rights in this chapter, but they are limited to the following:

In terms of s 9 an employee may not work more than 45 hours per week. Subsection 2 states that an employee whose duties include serving members of the public, may agree to extend his or her working hours by 15 minutes a day but not more than 60 minutes per week, to enable him to continue with such duties after his ordinary hours of work.

Meal intervals are governed by s 14 which states that an employer is obliged to give a meal interval of one continuous hour to an employee working for five continuous hours. Subsection 5 allows for a written agreement that reduces the meal interval to not less than 30 minutes – or dispense with it – if the employee works for fewer than six hours a day.

Section 15 deals with daily and weekly rest periods. In terms of a daily rest period, an employer must give an employee 12 consecutive hours in-between consecutive shifts, and 36 consecutive hours off within a week, which should include a Sunday. Subsections 2 and 3 allow for an agreement between employer and employee to change this to ten hours between shifts and 60 hours every two weeks respectively. 

Section 16 provides that an employee should be paid double his or her rate for working on a Sunday. However subs 3 allows parties to agree that the employee receives his or her normal rate of pay plus paid time off equivalent to the difference in value from what he or she received to what he or she was entitled to receive. 

Section 10 states that any overtime worked must be by consent of the employee. Subsection 2 says that an employee must receive at least 1 1/2 times his or her normal rate of pay for any over time worked. However subs 3 allows for an agreement between the individual parties whereby an employee would be paid their normal rate of pay for the overtime worked and receives 30 minutes time off with full pay for every hour of overtime worked. 

Other than this limited leeway, individual parties would not be entitled to reduce the rate of pay for overtime further. A collective agreement, concluded at a bargaining council and which applies to all the role players within such sector, can reduce overtime further in terms of s 49(1). For example a certain category of employees in the motor industry receives 1 1/3 times their normal rate for any overtime worked. 

It would be prudent to point out that s 49(3) must be read with ss 4 and 5 of the Act.

Section 4 states that a basic condition of employment constitutes a term in an employment contract, unless other applicable laws provide a more favourable term or parties have agreed to more favourable terms or a basic condition has been excluded, varied or replaced in accordance with the provisions of the Act. 

Section 5 states that the Act takes precedence over any agreement concluded before or after the Act came into effect. 

Therefore the circumstances in which individual parties can agree to vary basic conditions are limited to what the Act provides. Any agreement that is contrary to what the Act provides and which leaves the employee with a less favourable term, would be invalid.  

In October last year one of the issues the Labour Court had to decide in Ludick v Rural Maintenance (Pty) Ltd (2014) 35 ILJ 1322 (LC), was whether an employee is entitled to his leave pay upon resignation after he had, in his employment contract, agreed that he would forfeit any leave that had not been taken within a specific period of it being due to him. A term in his employment contract held that any leave that had not been taken within 30 days from the employer’s financial year end (that being 28 February each year) would be forfeited. The employee’s leave cycle ended in January every year and he resigned more than a month after the financial year end but within six months from when his previous leave cycle ended. On the strength of the aforementioned agreement; the employer did not pay out any accrued leave due to the employee from his previous leave cycle. The court examined this agreement and found it to be contrary to s 20(4) of the Act which states that an employer must grant an employee leave not later than six months after the employee’s previous leave cycle. The court held:

‘The Act imposes an obligation on an employer to grant leave before the expiry of the six-month period. … The Act does not contemplate that an employee who does not take leave accrued in an immediately preceding leave cycle at an agreed or determined time during the six-month period following that cycle is necessarily denied that leave, or on termination of employment, its value.  

A provision in a contract would … seem to me therefore to deny the plaintiff the benefit of a statutory basic condition of employment, which in terms of s 4 of the Act, must be read down into his employment contract.’

The court ordered the employer to pay the employee all leave which he did not take in his previous leave cycle despite the controversial term in the employment contract. 

While I am mindful that the word ‘exclude’ appears in s 49(3), in my view, this should not be interpreted to mean that by agreement individual parties can abandon certain rights and obligations set out in the Act. It would be more appropriate to interpret the word to mean parties can exclude a specific right and obligation and replace it with what the Act provides.

Having said that an employer can be excluded from certain obligations set out in the Act by way of a Ministerial variation as contemplated in s 50 of the Act.  

In National Union of Mineworkers v Namakwa Sands – A Division of Anglo Operations Ltd (2008) 29 ILJ 698 (LC), when faced with a segment of its workforce engaged in industrial action, the employer requested non-striking employees to work overtime. The employer’s operations ran continuously for 24 hours a day, which meant that those who agreed to work overtime were limited to a maximum of ten hours overtime per week, as provided for in s 10(1)(b) of the Act. This caused the employer to apply for a determination in terms of s 50 whereby the employer’s obligation to limit an individual employee’s overtime to ten hours a week was extended to 20 hours a week. 

Employers under the jurisdiction of a bargaining council can likewise apply to a duly appointed panel within the council to be exempt from certain obligations contained in a collective agreement. 

Chapter 2 of the Act

In terms of s 6 of the Act, the rights contained in Chapter 2 – with the exception of s 7 which regulates working time – do not apply to senior managerial employees, travelling salespersons that regulate their own working hours and employees working less than 24 hours a month. 

In addition to this, certain rights listed in Chapter 2 are not applicable to employees earning in excess of the Ministerial threshold, which as of 1 July 2014 is set at R 205 433,30 per annum.

These rights, (as indicated by the footnote associated with these rights in the Act) are:
• Section 9: Limitations on ordinary hours of work.
• Section 10: Overtime work and payment.
• Section 11: Compressed working week.
• Section 12: Averaging of hours of work.
• Section 14: Provision of meal intervals.
• Section 15: Daily and weekly rest period.
• Section 16: Pay for work on Sundays.
• Section 17(2): Night work.
• Section 18(3): Public holidays.

While those employees earning above the threshold cannot lay a statutory claim to these rights, nothing prevents them, by way of an agreement with the employer, to incorporate any one of these rights specifically into an employment contract. 

A variation of a basic term and condition can be varied only if the employee has a statutory right to the term and condition in question and not only a contractual right to same. 

• The author of the question posed two unrelated questions. I shall respond to the second question in a later edition. 

Do you have a labour law-related question that you would like answered? Please send your question to derebus@derebus.org.za