Remote working considered: CCMA jurisdiction lacking

Note: Footnotes omitted, emphasis added and certain personal details redacted to comply with law.

[1]         This arbitration was finalised on 10 May 2023 at the offices of the CCMA in George. The dispute is categorised as an unfair dismissal for unknown reasons in terms of section 191(5)(a)(iii) of the Labour Relations Act 66 of 1995, as amended (“the Act”).

[2]         The applicant, Ms LR (“R”), was present and was represented by Mr Jan du Plessis (“Du Plessis”). Du Plessis was allowed to represent the applicant after I had considered rule 25(6) of the Rules for the Conduct of Proceedings before the CCMA (“the Rules”) and concluded that it would be unfair to expect the applicant to proceed with the arbitration without representation. Such ruling forms part of the record of proceedings.

[3]         The respondent was represented by Mr Dawie Bezuidenhout (“Bezuidenhout”), an attorney. I questioned his credentials as he presented himself as an employee of the respondent instead of an attorney in private practice, in which capacity he would have been allowed in any event since the respondent raised jurisdictional issues, but he produced a contract of employment from the respondent. According to him, this was allowed under UK law. I left it at that, and the applicant did not wish to pursue the issue any further.

[4]         The proceedings were digitally recorded and were mostly conducted in Afrikaans, save for the evidence of the respondent’s witness.

[5]         The respondent, through Bezuidenhout, raised two jurisdictional points.

• • • Firstly, that the CCMA lacks jurisdiction because the respondent is a United Kingdom (“UK”) based company and therefore the South African labour laws did not apply to it and
    • secondly, that the applicant was never an employee of the respondent, but a “contractor”.

I heard all the evidence, but will mainly focus on the first issue, because if I uphold the respondent’s point on territorial jurisdiction, it will of course dispose of the issue and the rest of the evidence will fall away as irrelevant.

[6]         I must further say upfront that it is not disputed that the applicant’s contract was terminated by the respondent.

Issue to be decided

[7]         I am required to determine whether the CCMA has jurisdiction to determine this dispute and if I do so, determine the appropriate remedy for the unfair dismissal.

Background to the dispute

[8]         The last contract the applicant signed was called a “consultant contract” as an Account Manager dated 22 September 2021. The contract was between her and Searlco Ltd, a global affiliate marketing company. I mention this because there was evidence in relation to a different company called Searlco (Pty) Ltd, which Mr Andrew Reeve, the Chief Executive Officer of Searlco Ltd, tried to set up as a South African business, but once the relationship between the parties soured, Searlco (Pty) Ltd was annulled. Searlco (Pty) Ltd never operated as a business. There can thus be no talk of the applicant having rendered services to Searlco (Pty) Ltd.

[9]         The applicant initially earned 806 British pounds, which was paid into her bank account and converted into South African Rands at the prevailing exchange rate via a money transfer application called TransferWise. She was later given a pay hike, which the respondent claimed placed her above the statutory threshold.

[10]       The applicant requested compensation in the event that I find in her favour.

Survey of evidence

Applicant’s case

[11]       The applicant’s testimony mainly focused on whether she was an employee or not. As such, Du Plessis mainly used section 83A (“Presumption as to who is an employee”) of the Basic Conditions of Employment Act 75 of 1997 (“BCEA”) to support the applicant’s version.

[12]       The applicant testified that she was under the direction and control of a Ms Julie Wood (“Wood”). She submitted an organigram of the structure of the respondent and therein she is placed under the supervision of Wood.

[13]       She further testified that she worked more than forty hours per month and was economically dependent on the respondent as she only worked for the respondent. She was also given work equipment in the form of a laptop, and she had to return the laptop once her services were terminated.

[14]       She also mentioned that the respondent had an office in George for which they paid rent and bought office supplies for. They had no choice but to work from that office within the specific time period of 8:30am to 4:30pm from Monday to Friday. She also had to apply for leave as is normal for an employee to do and she was further subjected to a probation period.

[15]       The applicant stated that another colleague of hers, a MS, also had a dispute with the respondent and in that case, the CCMA found that Stapelberg was an employee of the respondent.

[16]       She stated further that she was given a disciplinary code which she had to read through and sign. She mentioned that she was dismissed from her employment without being provided with disciplinary charges or a disciplinary hearing.

[17]       The applicant testified under cross-examination that she only sent two or three invoices for work rendered. She also sent one last invoice when she was terminated, but she only did so because she wanted her payment and the termination letter stated that she needed to submit an invoice before payment will be effected. Other than that, she always received her salary without submitting an invoice. She was thus not obligated to submit an invoice.

[18]       MS, a colleague of the applicant whose contract was also terminated, testified that they had fixed working hours every day of the week from 8:30am to 4:30pm. They also had to be at the office every day. They had to submit leave and they were afforded paid leave. She testified further that they had to sign a document referred to as a Staff Handbook, which formed part of the contract.

Respondent’s case

[19]       Mr Andrew Reeve, the respondent’s Chief Executive Officer testified that the respondent is engaged in Affiliate marketing. They helped global businesses to promote their products online. He has known the applicant since November 2020 and she was appointed as a contractor in the role of Accounts Manager.

[20]       He testified that the applicant started rendering services from her house, but the respondent later on opened an office in Meade Street in George. The office was opened to afford the contractors to work with an uninterrupted internet supply, because there were problems with the load-shedding in South Africa and the respondent’s business required a steady internet supply. They spend around R80 000 on an inverter to ensure such. The respondent provided the equipment and the laptops, which was done to protect the data integrity of the respondent.

[21]       Reeve further testified that the respondent had no footprint in South Africa. The company they wanted to establish in South Africa (Searlco (Pty) Ltd), never came to fruition. The fact that there was an office does not mean there was a footprint. The respondent had no clients in South Africa. As such, there were also no walk-in clients requesting services in the George office. The respondent thus did not generate any income from South Africa. The clients were scattered around the UK, United States of America, Australia and New Zealand.

[22]       According to Reeve, the office in George was not divorced and distinct from the UK office. Apart from the marketing that was done online and via e-mail from South Africa, the respondent had to submit to all legislation in terms of UK Law.

[23]       He is aware of the organigram that was circulated, but that was simply to explain to the contractors the roles and responsibilities of each person in the business. The respondent does have employees in the UK, but none in South Africa. The fact that the applicant appeared on a company structure, did not make her an employee. The respondent still needed to have a head count in order to keep numbers and prepare budgets.

[24]       He mentioned that the working relationship between Julie Wood and the applicant was very good, but the fact that she had to receive instructions from Wood, did not make her an employee. She was required to show her own initiative and work mostly independently.

[25]       He testified further that the applicant paid her own taxes, unemployment insurance contributions and she had to invoice the respondent for the payments that she received. He agreed that the applicant received leave, but that was because in the UK, even a contractor is entitled to leave. Although the respondent did not recognise public holidays, they gave, not only the contractors in South Africa leave, but all their contractors in the Philippines and Pakistan and elsewhere because they did not want them to be burned out and to keep them fresh to fulfil their roles.

[26]       Reeve stated that he was aware that there is a letter dated 13 March 2022 under a Searlco Ltd letterhead stating that the applicant was an employee of the respondent, but that letter was written by herself and he only allowed such because the respondent wanted to help her to save her home. The applicant, according to him, also wrote a letter dated 10 March 2022 stating that she was an employee of the respondent. Those letters did not mean that she was an employee. The letters were not binding on the respondent.

[27]       He agreed that the applicant received more money from time to time, but that was purely based on the fact that if they do well and take on more responsibility, they will get more money. Everyone starts on a three-month probationary period while they get trained, and they can thereafter earn more based on how they perform.

[28]       Reeve also mentioned that the applicant submitted invoices initially, but they later moved to a self-billing system where the system would generate the invoices and the contractors thereafter did not have to submit an invoice for them to get paid.

[29]       Regarding the Staff Handbook, he explained that the Staff Handbook was just given to the South African contractors an overview on how the internal issues with the UK company were dealt with, but such was not binding on the South African contractors.

[30]       Lastly, he stated that the applicant’s remuneration fluctuated as the Rand/British pound rate fluctuated, but the last salary before she was terminated was above the BCEA threshold.

Analysis of evidence and argument

[31]       Section 188 of the Act provides that a dismissal is unfair if the employer fails to prove that the reason for the dismissal is a fair reason (substantive fairness) and that the dismissal was effected in accordance with a fair procedure (procedural fairness). The applicant challenges both the procedural and substantive fairness of the dismissal.

[32]       The above, however, presupposes that the parties to the dispute are subject to the provisions of the Act. In other words, that South African Employment Law is applicable to them. The respondent says that it is not. I will set out the averments made by the respondent to that effect and consider such in making the determination whether the CCMA has jurisdiction or not.

[33]       In terms of section 114(1) of the Act, the CCMA has jurisdiction in all the provinces of the Republic. Further, section 213 defines the “Republic” as the national territory of the Republic of South Africa. The CCMA, as a statutory body, is restricted to the jurisdiction conferred on it by legislation. Parties to a labour dispute thus cannot by agreement extend this jurisdiction. It follows that the Act does not have extra-territorial application and a tribunal such as the CCMA thus does not have jurisdiction to entertain a dispute where an employee’s workplace is not within the territorial boundaries of the Republic.

[34]       The critical issue in determining the primary workplace of the employee is whether the substance of the employment relationship is reflected in obligations that are due and enforceable in the Republic. As such, I am obliged to consider by factors such as the place where the employee is required to render his/her services, the place where payment is made, the location of the parties, the method of calculating remuneration and the currency of the remuneration, and the place where the relationship was entered into. However, these factors are not individually decisive.

[35]       As I said, the applicant’s main focus was on swaying me to accept that she was in fact an employee of the respondent than on the issue of the “territorial” jurisdictional point raised by the respondent. The applicant therefore did not dispute the evidence of the respondent on this issue, save for the argument that because there was an office in South Africa, there was a footprint in South Africa.

[36]       It is not disputed that the respondent is a UK based company. The business is registered and operates under UK legislation. It does not have any other businesses in South Africa that is separate and divorced from the UK business. The primary workplace of the respondent is thus the UK, and it does not pay tax and other liabilities that would otherwise accrue to a South African based company.

[37]       Further, the respondent has no clients in South Africa. It does not generate any income in South Africa. The nature and extent of the respondent’s operations in South Africa, was that the people who rendered services to overseas based clients on behalf of the respondent were provided with an office to work from as well as the tools to serve and otherwise communicate with the overseas based clients of the respondent. The office in George thus almost served as a remote office to carry on the business of the respondent.

[38]       The applicant was under the direct management control of the Chief Operating Officer, Wood, who is based in the UK. She never reported to any South African based manager. The contract was entered into online, and it is undisputed that the respondent’s address on the contract is a UK address.

[39]       The applicant’s salary was paid in UK (British) pounds at the prevailing exchange rate. The money had to be converted into South African rand, because the respondent had no bank account in South Africa.

[40]       The George office and the equipment that was supplied to assist the applicant to perform her work under her contract, does not establish a footprint in the Republic. There was no dispute that it was done to circumvent the issues related to load-shedding. The only reason there was an office was to enable the applicant and others to work uninterrupted by load-shedding.

[41]       In the end, having considered all the evidence pertaining to the territorial jurisdiction submitted by the parties, I conclude that the CCMA does not have jurisdiction to entertain the matter, as the Act does not have extra-territorial application and the applicant’s primary workplace was situated in the UK.

[42]       In the premises, I make the following ruling.

Award

[43]       The CCMA lacks jurisdiction to determine the unfair dismissal dispute because the applicant’s primary workplace is in the United Kingdom.

No cases were referred to in the above award.

 

Flynote:

Commission for Conciliation, Mediation and Arbitration – Jurisdiction – Commissioner lacking jurisdiction to entertain unfair dismissal claim of employee working in South Africa for company based in UK.

Summary: