Article 72/2022

Extra-territorial jurisdiction

The scenario is as follows: a South African citizen is employed by a foreign branch of his or her employer.  In order to obtain the required foreign work permit, it is required that such employee’s employment contract states that the foreign law of the country where the employee works is applicable.  On what basis did the labour appeal court recently hold that, despite such contractual terms, the CCMA has jurisdiction to determine employment-related issues of such employee?  In order to determine the jurisdiction of the CCMA in respect of extra-territorial scenarios, what is the meaning to be attached to ‘location of the employee’s workplace’ as opposed to ‘the place where the employer carries on an undertaking’?

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In Robineau v Schenker SA (Pty) Ltd and Others (2020) 31 SALLR 149 (LAC); (2020) 41 ILJ 1648 (LAC), the labour appeal court adopted the following approach:

the locality of the undertaking where the employee was employed prior to the dismissal

  • in Genrec Mei v Industrial Council for Iron, Steel, Engineering and Metallurgical Industry 1995 (1) SA 563 (A), the above test was formulated and subsequently applied by the labour appeal court in Astral Operations v Parry (2008) 29 ILJ 2668 (LAC)
  • in the Astral matter, the labour court, in applying the aforesaid test, held that the LRA did not apply to the dispute, seeing that the employee was employed by operations in Malawi and not by operations in South Africa
  • in Astral, at paragraph [18], Zondo JP (as he then was) considered that the Genrec approach should be applied to the question of jurisdiction under the LRA and stated as follows:

‘Having considered the Genrec decision I am of the view that in that case the Appellate Division decided the application or non-application of the old Act to the dispute in the case according to the locality of the undertaking carried on by Genrec in which the respondent employees were employed (see what the Court a quo was reported to have said at 6D–E, 7C–8B). I propose to use the same criterion to decide the issue in the present matter. I am mindful of the fact that in Genrec the Appellate Division was dealing with a case in which the locality of Genrec’s undertaking where the respondent employees worked was of particular significance because in terms of the old Act the jurisdiction of the industrial council – which was in issue in that case – was linked to both the undertaking carried on as well as the area in respect of which the industrial council was registered. Nevertheless, I do not think that that factor should make a material difference because, even under the current Act, a similar issue could arise involving a bargaining council as under the current Act a bargaining council’s jurisdiction in respect of an employer depends upon the type of undertaking which the employer runs and whether the area in which the employer conducts such undertaking falls within the territorial scope of the bargaining council. In such a case the Supreme Court of Appeal would probably follow the same approach in deciding whether the Act applied or whether the bargaining council has jurisdiction in respect of a similar dispute.’

  • applying this approach to the facts, Zondo JP went on to find, at paragraph [20]:

‘[W]hen one has regard to the facts of the Genrec case and the facts of this case, one would realise that it would be very difficult to distinguish this case from the Genrec case. In both cases the employer had a business operated from the Republic. In both cases the employee was or employees was or were resident in the Republic. In both cases the employer had an operation outside South Africa. In both cases the employee or employees had entered into specific contracts of employment requiring them to work outside South Africa. In the light of all of this it was decided in Genrec that the Act did not apply prior to its amendment. In the light of all of this I am of the view that the Act did not apply to the appellant’s operation in Malawi and that the Labour Court had no jurisdiction to entertain the respondent’s claims.’

is the undertaking outside South Africa separate and divorced from the South African operation?

  • the labour appeal court, in Monare, per Coppin JA, placed considerable emphasis on the absence of the jurisdictional question having been raised in the pleadings.  However, the learned judge of appeal then went on to say:

‘[35] In Astral, the employer’s Malawian subsidiary, where the employee worked, was separate and divorced from the employer’s South African undertaking. The Malawian undertaking was an incorporated concern with a separate personality. It was an independent company. In Genrec Mei, the court also emphasised the separateness and independence of the employer’s undertaking in Durban, from its undertaking on the oil rig, where the employee was employed.

[36] The nub of the issue in this case, is not about where appellant was employed, because it is common cause that he was employed in the first respondent’s London office, but whether the London office was an undertaking of the first respondent, which was separate and divorced from its undertaking in the Republic of South Africa. In my view it certainly was not.’

  • the respondent employer, in Monare, was the SA Tourism Board.  It is a creature of statute, established as a juristic person in terms of the Tourism Act 72 of 1993.  But its statutory pedigree notwithstanding, the key finding of the labour appeal court was the following, at paragraph [41]:

‘The office in London, where the appellant was employed, is an office as those contemplated in section 13(d). Its opening and conduct was probably necessary, or considered advisable, by the first respondent for the effective and proper exercise of its functions and the carrying out of its duties. The office does not have a separate corporate personality. It is part and parcel of the first respondent, which is one undertaking. The fact that the office was in London does not make it a different undertaking. It is most clearly not “divorced or separated’ from the first respondent South African national undertaking, but it is inextricably linked to it. The first respondent’s main objective is a singular objective, to promote tourism to the Republic and it has chosen to do so, inter alia, through the establishment of an office such as the London office.’

  • in summary, the fundamental finding in Monare was one of substance over form: the office in London could not be regarded as separate from the undertaking of the respondent, which was located in South Africa, and, as such, was not to be treated as separate from South Africa;
  • in conclusion, the labour appeal court found that, if the undertaking outside South Africa is separate and divorced from the South African operation, the LRA did not apply, whereas, if such undertaking is integral to the South African undertaking, the LRA does apply – in Robineau, the above approach was followed and it was found, on the facts of the matter, that the operation outside South Africa was not separate and divorced from the South African undertaking and, therefore, the LRA was applicable

With reference to Potgieter v Samancor Chrome Ltd t/a Tubatse Ferrochrome (2022) 33 SALLR 190 (LC) and Van Rensburg and Others v Department of Justice and Correctional Services and Others (2022) 33 SALLR 280 (LC); (2022) 43 ILJ 2110 (LC).

In what instances does the jurisdiction of the supreme court of appeal trump the jurisdiction of the labour appeal court?

Where an employer prematurely terminates a fixed-term contract and the employee challenges such termination as being unlawful and claims damages and not specific performance, the labour court has up to now ordered damages even though same is an unliquidated claim for damages.