Foreign Employers Cannot Escape SA Labour Law

Dec 11, 2019

When a foreign embassy is situated in South Africa it is in fact, according to law, based on foreign soil. A South African working at a South African-based foreign embassy would, therefore, be subject to the labour law of that foreign country. However, a branch of a foreign company based in South Africa is not considered to be on foreign soil and is therefore subject to South African law.

For example, in the case of August Lapple (SA) vs Jarrett & others (2003, 12 BLLR 1194) the dismissed employee had been the managing director of the South African subsidiary of the German company. He referred his dismissal to the Bargaining Council for the Motor Industry in South Africa. However, the employer disputed the council’s jurisdiction as it claimed it had been the company’s head office in Germany that had dismissed the employee. The arbitrator ruled that the bargaining council did indeed have jurisdiction. The employer, therefore, referred the jurisdiction ruling on review to the Labour Court which found that:

  • Although the employee had been employed by the German parent company, the employee had also been employed by the South African subsidiary
  • The bargaining council did have jurisdiction to hear the matter
  • The employer was to pay the employee’s legal costs.

Even South Africans working outside South Africa can, in certain cases, refer labour disputes to the South African dispute resolution system. For example, in the case of Kleinhans vs Parmalat SA (Pty) Ltd. (2000, 9 BLLR 879) the employee was retrenched after having worked in Mozambique. The Labour Court decided that:

  • An agreement by the parties as to where jurisdiction lies does not bind the Court.
  • South African law was “impliedly” incorporated into the employment contract and this gave the South African courts jurisdiction
  • The contract was concluded and cancelled in South Africa
  • The employee’s salary was paid in South Africa and was paid in rand
  • The termination letter was written by the employer who considered the Mozambican operation as its own
  • The Court, therefore, did have jurisdiction to hear the case.

In the case of Parry vs Astral Operations Ltd. (2005, 10 BLLR 989) the employee was retrenched after having worked in the position of general manager of the employer’s operations in Malawi. The Labour Court decided that:

  • Both parties were based in South Africa
  • The parties had agreed that the employer’s (South African) policies would apply
  • The employer had not approved the contents of Malawian law
  • Both parties had when signing the contract, been under the impression that they were concluding it under South African law
  • The Labour Court, therefore, had jurisdiction
  • The employee was entitled to damages for breach of contract, balance of relocation costs, share options, accrued profit shares, salary, notice pay, severance pay and compensation equal to 12 months’ remuneration. In addition, the employer had to pay part of the employee’s legal costs.

In light of these cases, employers should not assume that they can hide behind foreign incorporation or foreign workplaces. That is they should not assume that they need not follow South African law merely because foreign elements exist in the working situation.

Source: Labour Law Advice

Author:

Wallace Albertyn

Wallace Albertyn is a Senior Associate and Legal Advisor at LabourMan Consultants.

Recent LabourTalk Articles

Parental leave amendments

Parental leave amendments

Under the Basic Conditions of Employment Act, employees who wish to access the revised parental leave benefits of 10 days per annum are now able to do so with full rights. These...

Watch what you say to avoid dismissal

Watch what you say to avoid dismissal

The right to freedom of expression can be limited through the balancing of conflicting rights and the potential harm caused in particular circumstances. In this article, we...

When Remorse Makes Dismissal Unfair

When Remorse Makes Dismissal Unfair

Case law reveals countless reasons given by CCMA arbitrators for an employer’s dismissal decision to be deemed unfair. For example, in the case of Moloi vs Quthing...

LabourTalk Newsletters

Subscribe and receive labour related information

Follow us

 

© 2020 ~ All Rights Reserved