South African borders no limit for CCMA

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26 Nov 2015

The Commission for Conciliation, Mediation and Arbitration (“CCMA”) has jurisdiction to hear certain employment disputes where the employee involved works outside of South Africa.

This was the finding of the Labour Appeal Court in the recent case of Monare v South African Tourism and Others (JA45/14) [2015] ZALAC 47.

In this case, Tebogo Monare was employed on a fixed-term basis as the finance and administration manager of South African Tourism at its London office. Following his dismissal for misconduct in September 2010, Mr Monare referred a dispute to the CCMA, which issued an arbitration award in his favour and directed South African Tourism to reinstate him. Aggrieved by this outcome, South African Tourism applied to the Labour Court for the review and setting aside of the arbitration award.

In the Labour Court, Van Niekerk J, in dealing with the issue of extra-territorial jurisdiction of the CCMA, relied on the earlier court decisions of Astral Operations Ltd v Parry (2008) 29 ILJ 2668 (LAC) and Genrec Mei (Pty) Ltd v Industrial Council for the Iron, Steel, Engineering and Metallurgical Industry and Others (1995) 16 ILJ 51 (A), in which it was held that the territorial jurisdiction of the application of the Labour Relations Act, 1995 had to be determined according to the locality of the undertaking carried out by the company in which an employee was employed. The Labour Court in the Monare matter reached the conclusion that the CCMA didn’t have jurisdiction to determine Mr Monare’s unfair dismissal dispute.

Van Niekerk J took into account a number of factors; namely, Mr Monare was recruited in the United Kingdom (“UK”); his contract of employment was concluded in the UK, with no right to return to South Africa to continue employment in South Africa; he misconducted himself in the UK; his disciplinary hearing was held in the UK; and he was given notice of his dismissal in the UK.

The decision of the Labour Court was, however, overturned on appeal to the Labour Appeal Court. The Labour Appeal Court found that the Labour Court was incorrect in finding that South African Tourism’s UK office was a separate and independent undertaking and, accordingly, that the locality of the undertaking of South African Tourism was in London and therefore outside the territorial jurisdiction of the CCMA and the Labour Court.

The Labour Appeal Court recognised the separateness and independence of the undertakings in Astral and Genrec Mei, but found that, in this case, the London office was not separate and divorced from its undertaking in South Africa. Coppin JA relied on section 13 of the Tourism Act, 2014, which authorises South African Tourism to open and conduct offices abroad where necessary and advisable for the effective and proper exercise of its powers, performance of its functions and carrying out of its duties.

Coppin JA concluded that South African Tourism’s London office and its South African undertaking were inextricably linked and South African Tourism had a singular objective – to promote tourism to South Africa – and it had chosen to do so through the establishment of an office in London.

This judgment illustrates the need for caution when setting up extra-territorial businesses, particularly when these entities are functionally and operationally dependent on the local office. This may mean that South African based employers may be forced to deal with employment disputes referred to the CCMA that arise outside of South Africa’s borders. In some instances, this could present a host of complications, especially where foreign legislation may be relevant to the determination of the dispute.

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)

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