Case summary written by Avyakta Sing and checked by Kirsten Chetty
Background
Mr Jacobson (“the Applicant”) is a medical doctor who was an employee of the Respondent, VITALAB medical practice. The Applicant was a founding director and shareholder of the Respondent as well as a director and shareholder of the property company, Strawberry Bush (Pty) Ltd (the “Strawberry Bush”), which owned the premises from which the Respondent operated. During 2016, the directors and the shareholders of the Respondent held discussions regarding the retirement age of its employees, where it was ultimately decided that 70 years old was a reasonable age at which to retire. The Applicant expressed that he was willing to remain in the employ of the Respondent beyond the age of 70 up until 75. In order to accommodate this, the Respondent agreed to conclude a series of 12-month fixed-term contracts for the five-year period, the first of which was signed on 13 May 2017.
During 2017, the Applicant resigned as a director of Strawberry Bush and the Respondent but remained a shareholder in both companies. In May 2018, the Respondent provided the Applicant with a service agreement, which proposes a settlement regarding the Applicant’s shareholdings. No agreement was reached between the parties in this regard, as such the Applicant continued to work at the practice beyond the expiry of the fixed-term contract. In July 2018, the Respondent proposed a subsequent service agreement to the Applicant, the terms of which made provision for his retirement from active practice, resignation as an employee and sale of his shares for a stipulated price. The proposal further made provision for the Applicant’s re-employment by the Respondent until 13 May 2019. The Applicant rejected the offer as he awaited receipt of the financials for both the Respondent and Strawberry Bush, maintaining that these were essential for him to make a decision as to his shares within both companies.
On 26 July 2018, the Applicant received communication from the Respondent’s attorneys stating that should the Applicant fail to sign the subsequent service agreement his employment would be terminated. In response to this, the Applicant emphasised that he would not consent to the service agreement and would continue to be a shareholder in both Strawberry Bush and the Respondent. Shortly thereafter, the Respondent advised the Applicant that his employment with it would terminate as of 31 August 2018, notwithstanding the fact that the fixed-term contract previously concluded had expired on 30 June 2018. Pursuant to this, the Applicant approached the Commission for Conciliation, Mediation and Arbitration (the “CCMA”) alleging that he had been unfairly dismissal in terms of Section 187(1)(c) of the Labour Relations Act (the “LRA”).[1]
Legal Question
Does Section 187(1)(c) of the LRA find any application in a dismissal that concerns an individual employee?
Judgement
The Applicant approached the CCMA to conciliate the matter, which subsequently failed. Thereafter, the dispute was referred to the Labour Court (the “Court”), where the Applicant alleged that his dismissal was automatically unfair on the basis that the cause of his dismissal was his refusal to succumb to the Respondent’s demand to sell his shares in both the Respondent and/or Strawberry Bush, as envisaged by the proposed service agreement. The Respondent took exception to the Applicant’s claim on the basis that the cause of action relied upon by the Applicant, for the purposes of Section 187(1)(c) of the LRA, did not concern a matter of mutual interest as is required by the aforesaid provision. Moreover, the question of the Applicant’s shareholdings in both companies, and more specifically the value thereof, is not governed by the LRA. Further, the Respondent maintained that the allegation that the Applicant’s dismissal was based on his refusal to sell his shares spoke to the relationship he had with the companies in question and not his employer. As such, the dispute at hand did not concern a mutual interest. Accordingly, the Respondent contended that Section 187(1)(c) of the LRA has no application in the present dispute and that the Applicant accordingly has no cause of action.
In determining whether the dismissal of the Applicant by the Respondent was automatically unfair the Court interpreted the wording of Section 187 (1)(c) of the LRA in terms of application. In doing so, the Court succinctly summarised the provision as meaning that “an employer could not legitimately resort to dismissal as part of the power play in a collective dispute”.[2] In addition to this, the Court emphasised that Section 187 (1)(c) of the LRA applies to collective bargaining in relation to the employment relationship, where a group is concerned, and not to individual employees. Accordingly, for this section of the LRA to be applicable, the employer in question must have made demands to no less than two employees, during the collective bargaining process, who are then subsequently dismissed for refusing to observe such demands, which was not the case in the present dispute. That being said, this provision does not preclude an employer from substantiating just reasons for any dismissal. In light of this, the Respondent’s exception was upheld by the Court who remitted the matter to the CCMA for arbitration on the merits of the Applicant’s claims based on substantively and procedurally unfair dismissal.
Value
This decision reiterates the purpose of Section 187(1)(c) of the Labour Relations Act, which is to protect the integrity of the collective bargaining process within a company.
[1] Section 187(1)(c) of the Labour Relations Act, 66 of 1995, reads as follows: ‘A dismissal is automatically unfair if the employer, in dismissing the employee, acts contrary to section 5 or, if the reason for the dismissal is- … a refusal by employees to accept a demand in respect of any matter of mutual interest between them and their employer.’ [2] Jacobson v VITALAB (2019) 40 ILJ 2363 (LC) at para 15.
