Dear Folks

Because of the important ramifications of its content, this is a joint newsletter to Subscribers and OHS practitioners. Subscribers have, however, the benefit of accessing the full Law Reports via their Usernames and Passwords. OHS practitioners on the other hand may feel duty bound to advise their employers of the implications of the content.

I have mentioned the Crown Chickens t/a Rocklands Poultry 2007 (SCA) civil case in a few newsletters recently. It is a decision of the Supreme Court of Appeal which firmly establishes the (legal) right of persons, who are placed in employment via labour brokers, to sue their negligent ‘employers’ for damages in cases of occupational accidents. The implications of this case is that employers may find themselves parting with a lot more money than originally anticipated in the event of an occupational accident involving such workers. Since the advent of the COID Act in January 1994, (negligent) employers have enjoyed immunity against civil suits for damages by employees or their dependants in the event of an occupational injury or death. This controversial provision has not gone down well in many quarters as it erodes established delictual rights which persons have enjoyed for centuries and which persons (employees) still enjoy in many other countries. In fact it is / was  so controversial that this prohibition had to be tested in the Constitutional Court before it was finally accepted. You should all by now be familiar with the celebrity Constitutional Court case of Jooste v. Score Supermarket Trading (Pty) Ltd 1998 (SE) where an employee of Score Supermarket Trading challenged the prohibition on civil suits by employees as imposed by section 35 of the COID Act. At the time even the Judge President of the Eastern Cape High Court felt that section 35  of the COID Act  was unconstitutional since it, inter alia, discriminated between employees and members of the public or third parties – who do enjoy the right to sue should they suffer injury at a workplace.

Ms Jooste was employed as a cashier at Score Supermarket. She fell and was injured at her workplace. She claimed that her injuries were caused by the negligence of one or more of her fellow workers during the course of their employment. She brought a common law claim for damages against Score Supermarket, who argued that the provision prevented an employee from making such a claim against an employer. Jooste responded that the provision was unconstitutional in that it violated her rights to equality, fair labour practices, and access to courts. Her equality challenge was based on the fact that the provision denies employees their common law right to claim damages from their employers. This, she maintained, places them at a disadvantage in relation to people who are not employees and who retain such a right. The High Court found that the provision violated an employee’s right to equal protection and benefit of the law. The matter was then referred to the Constitutional Court for confirmation.

The Constitutional Court said that it was clear that the challenged provision differentiated between employees and non-employees. Was this unconstitutional? The only issue was whether the challenged provision was rationally connected to a legitimate government purpose. The Constitutional Court found that the legitimate purpose of the Act is to provide a system of compensation for employees for disability or death caused by injuries or diseases in the workplace. Such a system supplants the common law right of an employee to damages from a negligent employer. Instead, it allows the employee to claim limited compensation from a fund (to which employers are obliged to contribute) even where the employer was not negligent. Therefore, viewed in the context of the Act as a whole, the challenged provision depriving employees of their common law right to damages from their employer was not arbitrary or irrational. Nor did it favour employers only. In other words, it was rationally connected to the legitimate purpose of the Act. The decision of the High Court therefore was not confirmed.

In Rieck v Crown Chickens t/a Rocklands Poultry 2005 (SE), an armed robbery took place at the defendant's (Crown Chickens) place of business. A security guard working for the defendant fired shots at the getaway car belonging to a customer and containing, amongst the robbers, the plaintiff (Mrs Rieck) who was taken hostage. She was shot and injured by the bullet. She claimed damages from the defendant in the total amount of R1 535 938,60 alleging that the defendant was vicariously liable for what she alleges to be the unlawful and negligent act of a member of its security personnel. It was accepted that she rendered a service, which was provided and paid by a labour broker, for the defendant. She was under the control of the defendant. In her claim for damages against the defendant it was averred that in terms of the definitions provided by the Compensation for Occupational Injuries and Disease Act 130 of 1993, she was not an employee of the defendant and therefore section 35(1) the Act did not apply to her claim. Furthermore that the security guard shot the plaintiff. while acting in the course and scope of his duty and that his conduct was unreasonable. The High Court ruled that she had discharged the onus resting on her to establish that the defendant's employee who fired the shot that struck her, acted negligently when he did so and that the defendant was liable for the damages. More importantly, for purposes of this newsletter, the court held that, in terms of the definitions provided by the Compensation for Occupational Injuries and Disease Act 130 of 1993, the she was not an employee of the defendant and therefore section 35(1) the Act did not apply to her claim.

On the issue of the status of her employer the court felt that if her employer was the defendant (Crown Chickens), she was precluded by section 35(1) of the Act from suing the defendant but if her employer was TMS Shezi Industrial Services (Pty) Ltd, then section 35(1) does not prevent her from suing the defendant. The definition of an employer contemplates that a person is an employer if he, she or it employs an employee in terms, obviously, of a contract of service. In order to ensure that all employees receive the protection of the Act and to eradicate grey areas, the Legislature has expressly included certain categories of persons in the definition. Because of the uncertainty that may be created when an employee's services are lent or let by an employer to another, subsection (b) of the definition provides that in such circumstances, the "permanent" employer, rather than the person to whom the employee's services are let or lent, remains the employer for purposes of the Act. When labour brokers are involved in providing labour to businesses, subsection (c) of the definition makes it clear that, irrespective of where the employee's services are rendered, and who controls the employee's day-to-day conduct in the workplace, the labour broker remains the employer for purposes of the Act. This is logical for two reasons: firstly, the contract of service is entered into by the labour broker and the employee and there is no contractual nexus between the employee and the person to whom he or she provides services; secondly, the labour broker is the employer who pays contributions to the Compensation Fund, and not the person to whom the services are rendered. The court concluded that, on interpreting the relevant sections of the Act and applying it to the facts of this case, the Crown Chickens was not the Mrs Rieck’s employer for purposes of the Act and consequently, section 35(1) of the Act does not prevent the her from suing the defendant.

Crown Chickens decided to take the case on appeal. On the question as to whether the claim against the Crown Chickens (appellant) was excluded by section 35(1) of the Compensation for Occupational Injuries & Diseases Act 130 of 1993, the Supreme Court of Appeal (SCA) focused on the provision of the Act which reads:

"No action shall lie by an employee for the recovery of damages in respect of any occupational injury resulting in the disablement of such employee against such employee's employer."

It was not disputed that Rieck was an "employee", and that she sustained an "occupational injury", as those terms are defined in the Act. The issue was only whether Crown Chickens was her "employer". The court relied heavily on the history of compensation legislation in South Africa in coming to the conclusion that it was indeed the intention of the legislator to exclude workers, supplied by labour brokers to clients, from being regarded as employees of the client. In particular the court used this history to conclude that the ‘such employer’ in the definition of an employer (in bold below) refers to the labour broker and not the client. (I always found his sentence to be ambiguous but now we know)!

If the services of an employee are lent or let or temporarily made available to some other person by his employer, such employer for such period as the employee works for that other person’.

Mrs Rieck was a party to an employment contract with a labour broker, TMS-Shezi Industrial Services (Pty). TMS-Shezi paid her salary, deducted and remitted her income tax, and made the required contributions in relation to her employment to the unemployment insurance fund and the workmen's compensation fund. TMS-Shezi, in turn, supplied her services to the Crown Chickens in return for a fee, and Rieck performed her employment duties for, and under the direction and control of, Crown Chickens. In the court’s opinion the proper meaning of the definitions in the 1993 Act was one that is consistent with the pattern of the earlier legislation. The Act contemplates that an employee generally has only one employer at any time, which is the person with whom he is in a contractual relationship of employment, even when he performs his contractual obligations for some other person. The appeal was consequently dismissed with costs.

So we now know the status  of these workers from the civil / delictual law / COID Act perspective. Can we do something to limit or prevent them from suing the client in the event of an occupational injury and where the client is found to have been negligent? Must we amend the contracts with labour brokers to include an indemnity and, if so, will it be valid? I am convinced that indemnities signed by the labour broker on behalf of the worker would be invalid since the workers must be party to this arrangement. What if the labour broker includes an indemnity clause in the contract with the employee to the effect that the employee surrenders any right to sue the client – whoever they may be – in the event of an occupational injury? In other words a (client) indemnity be made a precondition of the employee’s contractual relationship with the labour broker. I can’t see any legal obstacles. It surely isn’t contra bonos mores. (Against society’s morality). If one regards an indemnity as a contract, the most important element would be the consent of and understanding by the employee. The best scenario ultimately would be for client (employers) to individually conclude an indemnity contract with each and every person supplied by a labour broker. And that may not be very practical.

It must be remembered that this ruling does not impact upon an employer’s OHS Act (criminal statutory) and common law duty of care vis-à-vis  this type of worker. If you fail, as an employer, to protect the life and limb of these workers, you may be prosecuted as well as sued for damages. In the OHS Act and the proposed National Occupational Health & Safety draft Bill labour brokers are not defined as employers. Workers, supplied to clients, are not labour broker (temporary employment service) employees for purposes of the OHS Act and draft Bill. They are employees of the labour broker only as regards the COID Act and consequently the civil law. Section 8(2) of the National Occupational Health & Safety draft Bill states that for the purposes of this Act, a temporary employment service, or any other business or undertaking that procures or provides persons to work or supply services to a client, is not the employer of those persons, unless it directs, controls or supervises the work of those persons. Despite sub-section (2), a temporary employment service or other business or undertaking contemplated by sub-section (2) is the employer of any worker it engages for the purpose of conducting its own business or undertaking.

More about this at my forthcoming workshops where we will look closely at the elements of control and supervision, particularly (new?) explicit duties in the draft Bill.

regards

Raynard