Maserumule Consulting will be celebrating its 10th anniversary in August. It all started when Barney Jordaan, fresh from teaching full-time and Ulrich Stander, who had just bade fairwell to the corporate world, established Jordaan·Stander in 1999 with the aim of providing specialist advice and training on all aspects of employment law and employment relations. We can still recall an incident from those early days when managers from a well-known corporate brand visiting our offices (whilst still in Durbanville) were overheard by our PA commenting on our rather sparse boardroom: ‘Well, at least we’re not paying for their furniture’ !

Through the years we have built up and served a variety of clients across many sectors, including a number of listed and multi-national corporations. In April 2006, Jordaan·Stander concluded an agreement with a top Gauteng firm of labour attorneys, Maserumule Incorporated, in terms of which four of their directors acquired a 35% shareholding in the company, resulting in a name change to Maserumule Consulting.

During 2007 the Maserumule Group expanded its service offering with the addition of Maserumule People Solutions.  Today the Maserumule Group of Companies renders consulting and training services, human resource services and offers litigation assistance throughout South Africa.

Our sustained growth and success over the past 10 years is largely due to long term relationships established with trusted clients who supported us throughout, even with name changes and becoming more ‘corporate’. 

We respect and value the contribution our clients have made and are still making to the growth and development of the Maserumule Group. 

We remain committed to the same high levels of service with the objective of becoming the leading multi-disciplinary practice in employment law, employment relations and training, in order to make a substantial difference to the organisational welfare of our clients.

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Labour flexibility is a key business advantage. Flexibility has two core components – flexible contract terms (e.g. the ability for management to alter working hours according to business needs) and flexibility in terms of termination of employment. It is the latter aspect that has attracted the most attention from trade unions and others who are concerned about job security issues. Given the perception that it is difficult to dismiss a worker in South Africa (one which is largely misplaced) employers devise contractual arrangements that would, on the face of it, make it easier for them to terminate a worker’s services. Fixed term contracts and temporary employment services (‘labour brokers’) are the favoured mechanisms for achieving this.

This contribution focuses on labour brokers in the light of a recent decision of the High Court of Namibia in which views were expressed by the court that were highly critical of, and antagonistic towards, the labour broking industry. The decision is important for us, as the views expressed therein will undoubtedly add fuel to the fires of those agitating against the industry.

The issue before the court concerned an amendment to the Namibian Labour Act in terms of which labour broking is prohibited and punishable as a criminal offence. The applicant in the matter, Africa Personnel Services, sought an order against the Namibian Government and others to the effect that the amendment was unconstitutional because it allegedly infringed the applicant’s constitutional right to conduct its business. The court dismissed the application, holding that the constitutional right to conduct a profession, trade, occupation or business only applies in respect of activities that are lawful. Labour broking, the court held in a unanimous judgment, is an unlawful practice as it involves ‘the letting and hiring of persons as if they were chattels’ (goods). This practice, the court said, is not only not part of the law of the contract of employment but also ‘smacks of the hiring of a slave by his slave-master’. It therefore did not deserve constitutional protection but had to be rooted out. Note that the common law relating to the contract of employment is the same in Namibia as it is in the RSA.

What are the implications? Both terms of the LRA and the BCEA make provision for temporary employment services / labour brokers and therefore legalizes the hiring of the services of employees through labour brokers. However, given that labour flexibility in general, and the use of labour brokers in particular, remains a politically controversial issue, one should expect that the Namibian judgment will offer strong support for those arguing for the industry to either be regulated more effectively, or to be banished altogether.

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What is an employer’s duty when an employee complains about sexual harassment (or for that matter any other kind of discrimination) in the workplace?

Harassment on any of the grounds listed in s 6(1) of the Employment Equity Act 55 of 1998 (‘EEA’), including sexual harassment, is regarded as a form of discrimination in terms of the EEA. Section 60 of the same Act states that when an employee has contravened a provision of the EEA, such contravention must immediately be brought to the attention of the employer and the employer must then consult all relevant parties and take all necessary steps to eliminate the alleged unfair conduct. If the employer fails to act accordingly s 60(3) of the EEA then provides that ‘If the employer fails to take the necessary steps referred to in subsection (2), and it is proved that the employee has contravened the relevant provision, the employer must be deemed also to have contravened that provision’. This creates potential personal liability for the employer resulting from the conduct of one of its employees, which might include some serious financial ramifications. Apart from the above, it now further seems from the recent labour court decision in the matter of Dial Tech CC v Hudson & another [2007] JOL 19639 (LC) that the financial implications for an employer could be even more damaging than initially thought.

During June 2004 Ms Hudson, an ex-employee of Dial Tech CC (‘the employer’), referred two disputes to the CCMA, i.e. a discrimination dispute arising from alleged sexual harassment and a constructive dismissal dispute. Keep in mind that both disputes arose from the same set of facts. It was common cause that the MD of the employer downloaded pornographic material from the internet at the office and as his computer was linked to that of the employee, the material also popped up on the employee’s screen. After the employee complaint about this, the pornographic pop up was removed, but was replaced by a pornographic screen saver. To aggravate the situation even more, the employee alleged that after she had lodged the complaint, the MD started to ignore her, refused to speak to her and ignored her work and related correspondence. As a result of this ‘intolerable’ work situation the employee resigned and instituted the aforementioned two claims against the employer. The claims were based on an alleged failure by the employer to take reasonable steps to prevent pornographic material from appearing on the employee’s computer screen and as such failing to take reasonable steps to safeguard her from sexual harassment in the workplace. The employer failed to attend any conciliation hearing and the discrimination dispute was thereafter referred to the LC, whereas the unfair dismissal dispute was referred for arbitration. The employer again failed to attend any of these processes, as a result of which the LC granted default judgment against the employer in the amount of R58 080.00. The CCMA also granted a default arbitration award against the employer in the amount of R58 080.00, being a maximum of 12 months’ compensation. The employer at a very late stage decided to join the party and argued that the award granted by the LC was erroneously granted as compensation had already been awarded to the employee by the CCMA in the unfair dismissal dispute. The LC should therefore not have awarded compensation to the employee for the discrimination claim as well, as it arose out of the same set of facts as the dismissal claim. The employer averred that the MD and the employee had viewed pornographic material together on a number of occasions, during which the employee never complained about it. However, when the employee did complain, the MD immediately took steps to remove the material from the computer screen. The MD admitted that he must have failed to remove it properly as the material thereafter appeared as a screen saver. This was not a deliberate omission, but merely an ‘error’ on his part. The employer placed reliance on the so-called ‘once and for all’ common law principle, which in general provides that an employee has to claim all damages already sustained and still to be sustained, flowing from the same cause of action, in one action.

The court held that the 'once and for all’ principle did not apply in this case and as such an argument that the constructive dismissal and discrimination claims should have been instituted in one claim did not have any merit. With the introduction of the EEA, sexual harassment was now deemed to be a form of unfair discrimination which afforded employees relief, whether they resigned or not. Whilst the cause of action in both the constructive dismissal and sexual harassment cases arose from the same set of facts and circumstances, their remedies were located in completely different and separate statutes, in this case the LRA and the EEA. In the present matter the constructive dismissal dispute arose out of the failure by the employer to correct the intolerable environment that had been created by its MD. The dispute concerning unfair discrimination arose out of the failure by the employer to take reasonable steps to prevent sexual harassment in the workplace. There was no provision in the LRA and the EEA that required the court, in awarding compensation for sexual harassment, to take into account any compensation that might have been awarded by the CCMA for an unfair dismissal dispute.

The employer was therefore ultimately faced with two awards against it, both in the amount of R58 080.00 for the same transgression. So what should employers learn from this case? Employers should realise that there is a fairly stringent duty on them to create a safe and discrimination free working environment (in terms of the EEA). Employers should thus be aware of the fact that where an incident of discrimination, whichever form it may take, is brought to their knowledge, they need to act quickly to remedy the situation. This includes prompt investigation of the complaint, instituting disciplinary action if the facts support this, and offering assistance to the victim.

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What does one do with whistleblowers who refuse to testify in a disciplinary hearing because they fear intimidation? 

In a recent arbitration in the matter of TAWUSA obo Khumalo & others vs Supergroup, the employer applied to the arbitrator for leave to have the testimony of its main witness (referred to in the proceedings as ‘witness X’) heard in camera and not in an open forum. The witness was willing to testify, but for fear of his life he was not willing to testify in an open forum. In considering this request the arbitrator requested the respondent to call another witness to testify under oath, and in open forum, regarding the reasons why in camera proceedings were required. This witness was subjected to cross-examination. This witness’s evidence was briefly as follows:

He was a manager of the respondent and was approached by witness X with information regarding theft. An investigation was conducted based on this information provided by witness X.
Witness X’s testimony was crucial for the respondent’s case as he witnessed certain incidents and overheard certain discussions. Witness X was a reliable employee, but for fear of intimidation and his safety he was not willing to testify in an open forum.
The dismissed employees were all gun owners and therefore witness X had reason to believe that his life might be endangered, as his evidence contributed to their dismissals.
The witness provided the commissioner with an affidavit deposed to by witness X at the SAPS, although witness X’s name was blocked out to protect his identity. The applicant was able to read the affidavit and take note of the evidence contained therein and it was obvious that this evidence was crucial.

The witness did however concede under cross-examination that witness X had not been intimidated yet and no SAPS case had been opened. The arbitrator concluded, after a analysis of the law, that he had a discretion to allow in camera evidence. He further ruled, based on the considerations outlined above, as well as the fact that the witness’s evidence about the events leading to dismissal could be corroborated by verbal evidence of others, he would allow witness X to testify in camera.

Employers are often faced with a situation where someone with critical information about the wrongdoing of a colleague ‘blows the whistle’, but is reluctant to testify against the colleague for fear of intimidation or harm. The case discussed here illustrates two points: first, that employers cannot deny the accused employee the opportunity to see and question his or her accuser based purely on the assumption that the whistleblower is justified in his or her reluctance to testify. A proper foundation for this fear has to be established. Second, it shows that where there are valid grounds for the witness’s concerns, it is possible to design a process that would, on the one hand, provide protection to the reluctant witness, while at the same time giving the alleged transgressor the best possible opportunity of questioning the evidence against him or her.

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As of 1 January 2009, the provision of “communication” assets and services by an employer to its employees will no longer constitute a taxable benefit in the hands of the employee, where such assets/services are used primarily for business purposes, with the employee’s personal use being incidental thereto.

If the above conditions are met, the following assets and services could be provided by employers to employees on a tax-free basis: modems on fixed lines of all kinds (dial-up, ADSL, data lines), removable storage (memory sticks, external hard drives), printers, laptops, desktops, fax machines, office/work related software, line rentals, subscriptions for internet access, 3G cards etc. The
employer entity also receives a tax benefit in that wear and tear on all assets can be claimed over the relevant write-off periods, and it may also claim a full tax deduction of the cost of all services provided (e.g. the cost of line rental, 3G subscriptions, etc).

Timetable for the 2009 tax filing season

The 2009 tax filing season commenced on 1 April 2009, and we recommend that the following tax deadline dates are diarised:

We recommend that all taxpayers aim to submit their tax returns as early as possible, in order to receive their tax assessments and refunds timeously, and avoid the last minute rush and possible delays.
The SARS turnaround time for numerous individual taxpayers in respect of the 2008 tax filing season was excellent, and many taxpayers received their tax refunds and tax assessments literally within days of the electronic submission of their returns.
We also recommend that the SARS e-filing system is used for submission, as the assessments seem to be generated quicker, and the on-line objection process has been simplified.

News from SARS

Abolition of stamp duty
In terms of a recent SARS media release, Stamp Duty was abolished as of 1 April 2009. Such abolition is however, not retrospective, and taxpayers remain liable for all outstanding stamp duties up to 31 March 2009. Parties in possession of existing stocks of revenue stamps have until 31 October 2010 to claim a refund of the cost of these stamps from their relevant SARS office.

Sale of going concern
SARS recently released a draft interpretation note for comment, dealing with the sale of a going concern for Value-Added Tax (“VAT”) purposes. The draft interpretation note, inter alia, contains guidelines in respect of the various requirements for a transaction to qualify as the sale of a going concern and, therefore, zero rating for VAT purposes. The requirement that the assets necessary for the carrying on of the business need to be disposed of to the recipient, is interpreted as also including the lease or rental of such assets.

Furthermore, there is also an interesting paragraph on addendums to sale agreements. One of the requirements to qualify as a going concern sale is that this must be stated clearly in a written agreement. Where an existing agreement does not contain such provision, this may be added by way of an addendum to the agreement. However, in terms of the draft interpretation note, this will only be sufficient if the date on which the addendum is signed is prior to the end of the tax period “during which the time of supply for the going concern occurs”.

Wear-and-tear allowances on small items
According to a draft interpretation note dealing with wear-and-tear allowances, released by SARS in March 2009, the allowance for small items has been increased to R7000.  A small item is an item “which normally functions in its own right, does not form part of a set and is acquired at a cost of less than R7000 per item”. Such items may be written off in full in the year of acquisition or when the items are brought into use.

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Maserumule Consulting is a proud co-presenter of the Juta Annual Labour Law Update.

Juta's Annual Labour Law Seminar, a practical one-day update will equip your organisation to deal with the current tough economic climate.

The expert speakers will present an overview of the most important case law and statutory developments affecting the employment relationship, and provide all the relevant information to ensure your HR issues are in place. Four topical current issues will also be debated by the panel.

Delegates will receive a 4-monthly electronic newsletter service incorporating key case law and commentary, written by the panel, keeping you informed ALL YEAR ROUND!

Seminars will be held as follows:

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