SA Broadcasting Corporation (Soc) Ltd v CCMA

Freelance service providers (JR745/16) [2017] ZALCJHB 76 (8 March 2017) per S Snyman AJ:        

  • CCMA arbitration proceedings – Review of proceedings, decisions and awards of arbitrators – Test for review – Review concerning issue of jurisdiction as to whether employment exists – Test of rationally and reasonableness does not apply – issue considered de novo on the basis of right or wrong award
  • Employment – consideration of nature of relationship – principles considered – assessment and determination of evidence – relationship not one of employment but independent service providers / contractors
  • Unfair labour practice – no unfair labour practice relating to benefits as no employment relationship exists – not necessary to consider review concerning arbitrator making no finding on benefits – review dismissed
  • CCMA arbitration proceedings – award that employment relationship exists wrong – award reviewed and set aside – substituted with award dismissing dispute

See also:

Excerpts from judgment without footnotes

[4]   In deciding both these review applications, the proper point of departure is to first decide the applicant’s review application which concerns a challenge of the finding that the individual respondents were employees of the applicant.  If this review application is decided in favour of the applicant, there will be simply no need to decide the review application of the individual respondents, because it would mean that no employment relationship exists between the parties, and consequently no unfair labour practice jurisdiction would exist.    I will therefore proceed in deciding the applicant’s review application, commencing with first setting out the relevant facts.

The relevant facts

[5]   Fortunately, the factual matrix in this instance was either common cause, or mostly undisputed. The disputed facts related to mostly irrelevant issues.  I will only set out those facts relevant to deciding whether the individual respondents were indeed employees of the applicant.

[6]   The applicant conducts business as a public broadcaster. It has a large number of its own employees, but also engages the services of a number of individual persons as independent service providers.   All these persons offer the kind of services that entails a particular skill attaching to such person, especially where it comes to technical personnel.  Technical personnel include camera operators, editors, lighting technicians and similar personnel involved in the production and editing of broadcasts.

[7]   Where it came to the individual respondents, they all rendered services as video editors. They were not employed by the applicant, but were all engaged as independent contractors.  The applicant does have its own video editors under its employ, but this did not include the individual respondents.

[8]   The individual respondent had each been engaged by the applicant in terms of written contracts. Their periods of engagement commenced between 2005 and 2009, respectively, and consisted of a number of contracts signed by them styled as ‘independent contracts’.  The most current contract concluded between the individual respondents and the applicant commenced on 1 April 2014, and was set to terminate on 31 March 2017 (‘the contracts’).

. . . . .

[20]   The testimony also revealed that from an organizational perspective, there was a recognised distinction, which had been existence for a long period of time, between what was called ‘freelancers’ and the full time employees of the applicant. Freelancers were independent contractors, separate from the applicant’s employees.  The individual respondents conceded this, and in essence their case was that this state of affairs should be changed and they had to be ‘converted’ to being employees.

. . . . .

[26]   Because this review application concerns an issue of jurisdiction, the review test as enunciated in Sidumo and Another v Rustenburg Platinum Mines Ltd and Others[1] does not apply.

As said in Fidelity Cash Management Service v Commission for Conciliation, Mediation and Arbitration and Others[2]:

‘….  Nothing said in Sidumo means that the CCMA’s arbitration award can no longer be reviewed on the grounds, for example, that the CCMA had no jurisdiction in a matter or any of the other grounds specified in section 145 of the Act.  If the CCMA had no jurisdiction in a matter, the question of the reasonableness of its decision would not arise ….  ’ (emphasis added)

. . . . .

[28]   In the case of a wrong decision by a CCMA arbitrator where it comes to the issue of jurisdiction, the decision of the arbitrator would be reviewable on objectively justiciable grounds.[1] It does not matter what the reasoning of the arbitrator may have been, it is up to the Court to, from an objective perspective, decide whether the requisite jurisdictional facts exist.

In Universal Church of the Kingdom of God v Myeni and Others[2] the [Labour Appeal] Court said:

‘… the value judgment of the commissioner in a jurisdictional ruling has no legal consequence and that it is only a ruling for convenience.  Therefore, the applicable test is simply whether, at the time of termination of his relationship with the church, there existed facts which objectively established that Mr Myeni was indeed the employee of the church.  If, from an objective perspective, such jurisdictional facts did not exist, the CCMA did not possess the requisite jurisdiction to entertain the dispute, regardless of what the commissioner may have determined.’

. . . . .

[30]   Turning to the specific instance of the existence or not of an employment relationship as an issue of a jurisdictional fact needed to clothe the CCMA with jurisdiction, the [Labour Appeal] Court in Sanlam Life Insurance Ltd v Commission for Conciliation, Mediation and Arbitration and Others[1] held:

‘It was, therefore, incumbent upon the Labour Court to deal with the issue whether or not there had been an employment relationship between the appellant and the third respondent and, therefore, whether the CCMA had the requisite jurisdiction to deal with the dispute… The Labour Court was called upon to decide de novo whether there was an employer-employee relationship between the parties.  It was not called upon to decide whether the commissioner’s findings were justifiable or rational.’

. . . . .

Evaluation

. . . . .

[35]   The LRA was never intended to banish the genuine independent service agreement concluded with individual service providers to the scrap heap of history, in favour of a default employment relationship.  

What the LRA was intended to do was to provide protection to unsophisticated and disenfranchised persons, in an environment where jobs are scarce and unemployment is rife, which persons would do and sign anything just to get a job.  Further, the LRA was intended to protect employees against unscrupulous employers seeking to abuse the common law of contract to escape employment law obligations.  In these kind of circumstances, it can hardly be contradicted that the CCMA and Labour Court would be entitled to intervene and classify the relationship between the parties for what it really was – an employment relationship.

. . . . .

[38]   Since the case in casu is one where, on the evidence, Section 200A does not apply, the point of departure in deciding the nature of the relationship between the applicant and the individual respondents would be the contracts that they had concluded with one another.  In LAD Brokers (Pty) Ltd v Mandla[1] the [Labour Appeal] Court said:

‘… The legal relationship between the parties is to be determined primarily from a construction of the contract between them.  …’

[39]   In simple terms, the best place from which to establish the intention of the parties is to consider what is contained in the contract.  In fact, Mathonzi, who testified for the applicant, testified that the intention in concluding the contracts was that that the individual respondents would be independent contractors.

In Phaka and Others v Bracks NO and Others[2] the [Labour Appeal] Court said:

‘The repetitive references in the contract to the nature of the relationship, and the painstaking effort to define it, leave no doubt that the intention of the parties was to establish relationships overtly on a different footing to the previously existing employment relationships.  This is confirmed … by the express wording of the contract and the purport of its terms …’

[40]   Considering the contracts as they stand, it is clear from the terms thereof that it does not read like an employment contract. It is in fact specifically provided that it is not an employment contract.  In terms of the contracts, the individual respondents provide services as video editors at a payment rate per shift, and are not paid for work done per se. 

They can also perform whatever external work they want, and decide themselves whether they want to work a shift or not.  Overall, and if the contracts are considered as a whole, the most sensible meaning and underlying purpose that can be extracted therefrom is that the relationship between the parties is not one of employment, but that of independent service providers.

. . . . .

[42]   . . . . .

The approach adopted by the individual respondents is in essence that of propagating that the contract must be ignored when deciding the nature of the relationship between the parties.

That approach is not correct.  In Reddy v Siemens Telecommunications (Pty) Ltd[1] the [Supreme Court of Appeal] said:

‘… Contractual autonomy is part of freedom informing the constitutional value of dignity, and it is by entering into contracts that an individual takes part in economic life.  In this sense freedom to contract is an integral part of the fundamental right referred to in section 22.  Section 22 of the Constitution guarantees “[e]very citizen .  .  .  the right to choose their trade, occupation or profession freely” reflecting the closeness of the relationship between the freedom to choose a vocation and the nature of a society based on human dignity as contemplated by the Constitution.  …’

There is no reason why this kind of approach should not equally apply when considering the contracts, and how they should be applied in establishing the relationship between the parties.

[43]   The above being said, and specifically considering the authorities analysed above, the enquiry however does not end just with a consideration of the contracts and what they contain, even though it may be an important consideration. In State Information Technology Agency (Pty) Ltd v CCMA[2], Davis JA postulated the following test to consider whether an employment relationship exists, despite what is contained in a contract:

‘For this reason, when a court determines the question of an employment relationship, it must work with three primary criteria:

    • an employer’s right to supervision and control;
    • whether the employee forms an integral part of the organisation with the employer; and
    • the extent to which the employee was economically dependent upon the employer.’

. . . . .

[45]   A pertinent example of this kind of situation, in a related industry to the one in casu, can be found in Kambule v CCMA[1] where the [Labour] Court dealt with a radio presenter that concluded an independent contract with the radio station.  As part of the reasons for accepting that the presenter was an independent contractor, the Court considered the following:

‘The fact that the station’s contract with Kambule as a radio personality was clearly because it wanted to harness his unique style of presentation and edgy programme content to its station profile.  …’

. . . . .

[47]   Further considerations are that the individual respondents were not subject to the discipline of the applicant, only reported for work when they wanted or were required, and were not managed or controlled like the full time employees of the applicant. In fact, and if an individual respondent could not make a shift, they would ‘lose it’, and this would not attract any kind of discipline for not being available.  In short, this kind of control exercised by the applicant was in the form of the proper deployment of available resources, and again not the kind of control and supervision normally associated with an employment relationship.  In SA Broadcasting Corporation v McKenzie[1] the [Labour Appeal] Court held as follows:

‘The employee is subordinate to the will of the employer.  He is obliged to obey the lawful commands, orders or instructions of the employer who has the right of supervising and controlling him by prescribing to him what work he has to do as well as the manner in which it has to be done.  The independent contractor, however, is notionally on a footing of equality with the employer.  He is bound to produce in terms of his contract of work, not by the orders of the employer.  He is not under the supervision or control of the employer.  Nor is he under any obligation to obey any orders of the employer in regard to the manner in which the work is to be performed.  The independent contractor is his own master.’

The application of the aforesaid dictum to the facts in casu points towards the existence of an independent contracting relationship, and not one of employment.

[48]   In LAD Brokers [2] the [Labour Appeal] Court applied the above ratio in McKenzie as follows:

‘… It is not unusual for independent contractors to be subject to some measure of contractual control in respect of standards, employees, working hours and the like.  That is not the type of control referred to by this court in the quoted portion of the judgment.  The control envisaged … is immediate and recurring.  It is incorrect to describe contractual terms which are of a limiting nature or introduce some sort of supervision in respect of set standards as derogating from the notional footing of equality between the contracting parties in an independent contractual relationship.  Such limitations upon conduct or standard do not bring about the supervision or control envisaged by this court…’

. . . . .

[55]   A further issue to consider in determining whether the individual respondents are a part of the applicant’s organization is the fact that deductions were made from the invoice payments to the individual respondents, for taxation, and that IRP5’s are provided to the individual respondents reflecting this.  Whilst it is so that this may point in the direction of the existence of an employment relationship, it is not decisive per se.

In Total SA (Pty) Ltd v National Bargaining Council for the Chemical Industry and Others[1] the [Labour] Court said:

‘Whilst I agree with the third respondent that the use of payslips, PAYE and UIF deductions are factors that may point towards an employment relationship, that does not constitute conclusive evidence of the true nature of the relationship.  Similarly, as has been stated in a number of decisions of the court, non-usage of payslip or PAYE and UIF deductions are not indicative of the true nature of the relationship.’

. . . . .

[59]   All of the above considerations lead me to the conclusion that the individual respondents were not part of the organization of the applicant. They were, for the want of a better description, and as they are actually called, freelancers.  They tendered services of their own volition, and were allocated work when available and needed.  They did not form part of the normal employee administration, and were paid for actual work done on the basis of invoices submitted.  This criterion therefore also points to the existence of an independent contracting relationship, rather than an employment relationship.

[60]   This only leaves the criteria of economic dependency. It can be legitimately argued that the individual respondents are indeed economically dependent on the work they receive from the applicant.  It does not take much insight to appreciate the harm that the individual respondents would suffer should they be deprived of such work.  But this kind of dependency and possible harm in itself is not sufficient to establish the existence of an employment relationship, and would be a situation experienced by most independent service providers who dedicate most of their services to one customer.

In Beya [1] the [Labour] Court said:

‘… In fact, and in my view, an independent contract service provider who dedicates most of its services to one customer would equally be dependent, from an economic perspective, on such customer.  Similarly, where this customer terminates the service relationship with such service provider, it would be economically prejudicial to the service provider.  But the service provider still remains economically active and can seek work elsewhere.  …’

. . . . .

[61]   . . . . .

In State Information Technology Agency[1] Davis JA referred with approval to an article by Paul Benjamin[2] where the learned author said:

‘A starting-point is to distinguish personal dependence from economic dependence.  A genuinely self-employed person is not economically dependent on their employer because he or she retains the capacity to contract with others.  Economic dependence therefore relates to the entrepreneurial position of the person in the marketplace.  An important indicator that a person is not dependent economically is that he or she is entitled to offer skills or services to persons other than his or her employer.  The fact that a person is required by contract to only provide services for a single ”client’ is a very strong indication of economic dependence.  Likewise, depending upon an employer for the supply of work is a significant indicator of economic dependence.’

. . . . .

[64]   I thus conclude that the individual respondents are not employees of the applicant. In summary, my reasons for so concluding are based on

  • what the written contracts between the parties specifically provide for and contain,
  • the lack of existence of any direct control and supervision normally associated with an employment relationship,
  • the fact that the individual respondents are not integrated into the organization of the applicant as is the case with all the applicant’s other employees, and
  • finally the absence of sufficient economic dependency.

Overall, the dominant impression created by the contracts and the real relationship between the parties is that of independent contractors.[1]

[65]   Because the individual respondents are not employees of the applicant, but independent contractors, they could not have pursued an unfair labour practice dispute as contemplated by Section 186(2) of the LRA against the applicant.  The CCMA, and with it the second respondent, accordingly had no jurisdiction to entertain the dispute of the individual respondents.

Their claim should have been dismissed on this basis, and the second respondent was wrong in not doing so.   Therefore, the award of the second respondent falls to be reviewed and set aside.