This article was written by Rachel Mazower, a Candidate Attorney at Norton Rose Fulbright South Africa
The jurisdiction of The Commission for Conciliation, Mediation and Arbitration (CCMA) is not geographically limited if an employment relationship that takes place outside South African borders forms part of a business undertaking based inside the country. In a recent judgment, the Labour Appeal Court confirmed that the test for jurisdiction is not where an employee is employed, but whether the overseas office is “separate and divorced” from the undertaking in South Africa.
Mr Monare was the finance and administration manager of SA Tourism in its London office. He was dismissed on the grounds that he had committed fraud and referred his dismissal to the CCMA. When the CCMA handed down an award in Mr Monare’s favour, SA Tourism took the matter on review to the Labour Court. That court questioned the jurisdiction of the CCMA of its own accord, coming to the conclusion that it did not extend to the London office.
On review of the Labour Court judgment, the Labour Appeal Court found that:
Previously jurisdiction was determined by looking at “the locality of the undertaking carried out by the company in which the employee was employed”. The CCMA typically only had jurisdiction if the undertaking in which the employee was employed, was located within any of the provinces of the country;
- The fact that Mr Monare’s contract of employment was concluded in London, that he was paid in pounds sterling and that the London office had independent information technology and auditing systems did not necessarily oust the CCMA’s jurisdiction in his unfair dismissal dispute;
- The relevant factual inquiry was not where the employee worked, but whether the London office was “separate and divorced” from the South African undertaking;
- The employer was based in Johannesburg and its juristic personality was established by statute, by which it was empowered to employ personnel in London;
- The London office therefore had no separate corporate personality, and was inextricably linked to the South African undertaking;
- The CCMA does have jurisdiction to hear a dispute of this nature.
South African employers expanding outside of South Africa’s borders should take note that if their operations abroad are seen as a mere extension of the South African undertaking, the Labour Relations Act, 1995 (LRA) may still apply to their employees working abroad. These employers should accordingly ensure that any disciplinary action is imposed in accordance with the LRA and its Code of Good Practice.