Individual employees cannot rely on section 187(1)(c) of the LRA to claim that their dismissals are automatically unfair - jacobson v vitalab (lc) (unreported case no js 1042/19, 28-5-219) (van niekerk j)

• South Africa

• Employment law

05-12-2019

Van Niekerk J recently held that s 187(1)(c) of the Labour Relations Act 66 of 1995 (LRA), which provides that a dismissal is automatically unfair if the reason is ‘a refusal by employees to accept a demand in respect of any matter of mutual interest between them and their employer’, cannot be relied on by individual employees.

Facts

Jacobson (the applicant) was a founding director and shareholder of Vitalab (the respondent), as well as an employee thereof. He was also, a director and shareholder of a property-owning company, Strawberry Bush, the owner of the premises in which Vitalab is situated.

During 2016, the directors and shareholders of Vitalab implemented a retirement age of 70 years. Jacobson sought to continue working until the age of 75 – subject to his good health. To effect this wish, the parties agreed to conclude various fixed term contracts of employment, the first of which, would be terminated on 30 June 2018. During 2017, Jacobson resigned as a director of Vitalab and Strawberry Bush but remained a shareholder. A dispute arose regarding the value of Jacobson’s shares in Strawberry Bush.

In May 2018 Vitalab offered Jacobson another agreement, which suggested a settlement of the dispute regarding his shareholdings in Vitalab and Strawberry Bush. Jacobson did not accept the offer and, instead, continued working at Vitalab on the same terms.

On 9 July 2018 Vitalab sent a second proposed agreement to Jacobson in terms of which–

• he would agree to retire from active practice and resign as an employee of Vitalab;
• he would sell his shares in Vitalab for a stipulated price; and
• Vitalab would reemploy him until 31 May 2019 at a stipulated nett salary.

Jacobson refused the offer.

On 26 July 2018, Jacobson was advised that unless he signed the agreement by 30 July 2018, his services would be terminated. Jacobson did not accept the offer and Vitalab terminated his services on 1 August 2018, with effect from 31 August 2018.

Jacobson argued that his dismissal was automatically unfair in that the main cause of his dismissal was his refusal to accept a demand in respect of a matter of mutual interest between himself and Vitalab.

Court findings

The court had to determine whether s 187(1)(c) of the LRA finds any application in a dismissal dispute concerning an individual employee. The court found that it did not because of the following:

• Before 2014, the section provided that it was automatically unfair to dismiss an employee if the reason for the dismissal was to compel the employee to accept a demand in respect of a matter of mutual interest between employer and employee.
• In 2014 the section was amended to provide that a dismissal is automatically unfair if the reason is ‘a refusal by employees to accept a demand in respect of any matter of mutual interest between them and their employer’ (my italics).
• The purpose of the amendment – according to the Explanatory Memorandum that accompanied the Amendment Bill – was to ‘protect the integrity of the process of collective bargaining under the LRA’. That process, by definition, contemplates combined action and participation by more than one employee.
• The new section’s wording refers to more than one employee. This demonstrates that the prohibition only applies when employers seek to force employees (plural) to extract a concession by employees to demands made in the collective context.

As such, the s 187(1)(cc) only applies where –

• an employer makes a demand;
• more than one employee is involved;
• the employees refuse to accept the demand made; and
• as a result, they are dismissed.

In the circumstances, the court held that the dispute before it did not fall within the realm of s 187(1)(c) of the LRA.

This judgment is important given that a number of individual employees legitimately relied on the pre-amendment version of the section. This is no longer possible since the advent of the new section and this recent judgment.