I have recently received instructions certain Labour Consultants, and my mandate was to provide a legal opinion regarding the jurisdiction of the CCMA and subsequently the Commissioner to entertain a dispute, based on a claim for unfair dismissal, where the Applicant (the employee) is an illegal foreign national.
The Labour Court had to deal with exactly the same question in the matter of Discovery Health Limited v Commission For Conciliation, Mediation and Arbitration and Others (JR 2877/06) [2008] ZALC 24; [2008] 7 BLLR 633 (LC); (2008) 29 ILJ 1480 (LC) (28 March 2008). The Court had to deal with the question whether a foreign national who works for another person without a work permit issued under the Immigration Act is an “employee” for the purposes of the Labour Relations Act.
The short version of the facts is as follows: The Third Respondent, Lanzetta, was an Argentinean national. He entered the country legally on a study permit during 2001, and remained on a valid study permit until 31 December 2002. On 1 January 2003, he obtained a temporary residence permit, valid for a period of three months. He also applied for a work permit, which he obtained on 8 May 2003, permitting him to work until 31 March 2004. The work permit was later extended, to permit him to work for Multi-Path Customer Solutions (Pty) Ltd only, until 31 December 2005. This work permit forms the subject of the present dispute. On 18 April 2005, Discovery Health (which appears not to be associated with Multi-Path) (referred to as the Applicant) offered the Third Respondent employment, with effect from 1 May 2005, as a call centre agent. The Third Respondent accepted the offer. The Third Respondent avers that during September 2005 he requested his manager to provide him with the necessary documentation to enable him to renew his work permit. He says that the Applicant’s management gave him the necessary documents on 2 December 2005 and that their tardiness resulted in his work permit expiring at the end of December 2005. The Applicant contends that when it came to the company’s attention that the Third Respondent did not have a valid work permit, it terminated the Third Respondent’s employment.
On 4 January 2006, the Applicant called the Third Respondent to a meeting. At the meeting, attended by three of the Applicant’s managers, they handed the Third Respondent a letter, which read as follows:
“Dear German
Re Work Visa
It has come to our attention that your work visa, allowing you to work in South Africa, has expired. Accordingly, we regret there is no longer a legal basis for your employment at Discovery. As such, your employment at Discovery must terminate with immediate effect.”
The letter was signed by Corné Quinn, the service manager.
The Third Respondent subsequently referred a dispute to the CCMA, alleging that the Applicant had unfairly dismissed him.
The Applicant denied that the CCMA had jurisdiction primarily because, so it contended, only an ‘employee’ as defined by s 213 of the Labour Relations Act (LRA) may claim the protections that the Act affords. The argument is this: the statutory definition contemplates that an ‘employee’ is a party to a valid contract of employment. Since the contract of employment concluded with the Third Respondent (a foreign national not in possession of a valid work permit) was tainted with illegality, the Third Respondent’s contract was not valid and he was therefore not an ‘employee’ as defined in the LRA. Because the Third Respondent was not an ‘employee’, he could not claim the right not to be unfairly dismissed and the CCMA had no jurisdiction to arbitrate his dispute with the Applicant.
The Commissioner ruled that the Third Respondent was an employee, and that the CCMA had the jurisdiction to determine his unfair dismissal dispute. The merits of the dispute have not been determined – the arbitration hearing was postponed pending the outcome of these proceedings in which the Applicant seeks to review and set aside the Commissioner’s jurisdiction ruling.
In order to determine whether the Commissioner erred in concluding that the CCMA had jurisdiction to entertain the Third Respondent’s claim, the Labour Court had to deal with two separate but related enquiries.
The first is whether the contract of employment concluded between the Applicant and the Third Respondent was invalid because of the fact that the Third Respondent did not have a permit issued under the Immigration Act that entitled him to work for the Applicant.
If the contract was invalid, the question that then arises is whether that conclusion is of any consequence. What this enquiry raises is the question whether the definition of ‘employee’ in s 213 of the LRA is necessarily underpinned by a common law contract of employment. If it is not, then it follows that the illegality of a contract in terms of which a person is engaged to perform work does not necessarily nor decisively determine whether that person is an ‘employee’. On the other hand, if the statutory definition of ‘employee’ is necessarily predicated on a valid common law contract of employment, then the argument that a person engaged to perform work in terms of an underlying contract that is invalid can never be an ‘employee’, must succeed.
On the question of whether there was a valid employment contract between the Applicant and the Third Respondent, the Labour Court had to examine the applicable legislation, and further had to determine whether the legislature intended that a contract of employment concluded in circumstances where any party to the agreement was in breach of the legislation is necessarily invalid.
Section 38(1) of the Immigration Act reads:
“Employment –
(1) No person shall employ -
(a) an illegal foreigner;
(b) a foreigner whose status does not authorise him or her to be employed by such person; or
(c) a foreigner on terms, conditions or in a capacity different from those contemplated in such foreigner’s status”.
Section 49(3) of the Act states:
“(3) Anyone who knowingly employs an illegal foreigner or a foreigner in violation of this Act shall be guilty of an offence and liable on conviction to a fine or to imprisonment not exceeding one year, provided that such person’s second conviction of such an offence shall be punishable by imprisonment not exceeding two years or a fine, and the third or subsequent convictions of such offences by imprisonment not exceeding three years without the option of a fine.”
Section 49(1)(a) of the Act makes it an offence for a foreign national to enter, remain in or depart from the Republic of South Africa in contravention of the Act. However, the Labour Court did not consider the implications of this section, as it was common cause that the Third Respondent was lawfully resident in the country at the time of his dismissal.
Section 39(2) of the Constitution requires that when a Court interprets legislation, it must ‘promote the spirit, purport and objects of the Bill of Rights.’
In NUMSA & others v Bader Bop (Pty) Ltd & another (2003) 24 ILJ 305 (CC) the Constitutional Court emphasised that if a statute is capable of interpretation in a manner that does not limit fundamental rights, then that interpretation should be preferred. The Court qualified this rule by stating:
“This is not to say that where the legislature intends legislation to limit rights, and where that legislation does so clearly but justifiably, such an interpretation may not be preferred in order to give effect to the clear intention of the democratic will of parliament. If that were to be done, however, we would need to be persuaded by careful and thorough argument that such an interpretation was indeed the proper interpretation and that any limitation caused was justifiable as contemplated by s 36 of the Constitution.”
The Labour Court determined that the right to fair labour practices is a fundamental right. It also found that there is no clear indication from the terms of s 38(1) of the Immigration Act (or any of the Act’s other provisions) that the statute intends to limit that right, or accomplish more than to penalise persons who employ others on unauthorised terms. It also found that the Act does not penalise the conduct of any person who accepts or performs work that is not authorised. The Act does not explicitly proscribe contracts concluded with those who are engaged to render work in circumstances where their engagement is unauthorised, nor does it provide that contracts are not enforceable in those circumstances.
The Court further determined:
“There is a sound policy reason for adopting a construction of s 38(1) that does not limit the right to fair labour practices. If s 38(1) were to render a contract of employment concluded with a foreign national who does not possess a work permit void, it is not difficult to imagine the inequitable consequences that might flow from a provision to that effect. An unscrupulous employer, prepared to risk criminal sanction under s 38, might employ a foreign national and at the end of the payment period, simply refuse to pay her the remuneration due, on the basis of the invalidity of the contract. In these circumstances, the employee would be deprived of a remedy in contract, and if Discovery Health’s contention is correct, she would be without a remedy in terms of labour legislation. The same employer might take advantage of an employee by requiring work to be performed in breach of the BCEA, for example, by requiring the employee to work hours in excess of the statutory maximum and by denying her the required time off and rights to annual leave, sick leave and family responsibility leave. It does not require much imagination to construct other examples of the abuse that might easily follow a conclusion to the effect that the legislature intended that contract be invalid where the employer party acted in breach of s 38(1) of the Act. This is particularly so when persons without the required authorisation accept work in circumstances where their life choices may be limited and where they are powerless (on account of their unauthorised engagement) to initiate any right of recourse against those who engage them.”
The Court concluded that:
“Far from defeating the purposes of the Immigration Act, to sanction a claim of contractual invalidity in these circumstances would defeat the primary purpose of s 23 (1) of the Constitution which is to give effect, through the medium of labour legislation, to the right to fair labour practices.”
The Court therefore found that by criminalising only the conduct of an employer who employs a foreign national without a valid permit and by failing to proscribe explicitly a contract of employment concluded in these circumstances, the legislature did not intend to render invalid the underlying contract. For this reason, the contract concluded between the Applicant and the Third Respondent on 1 May 2005 was valid, and remained so until its termination by the Applicant on 5 January 2006. The Third Respondent was therefore an ‘employee’ as defined in the LRA, and the CCMA had jurisdiction to determine the unfair dismissal dispute referred to it.
Because of the above findings on the validity of the employment contract between the Applicant and the Third Respondent, it was not necessary for the Court to consider the second enquiry.
However, the Court did consider the second enquiry, i.e. whether the definition of ‘employee’ in Section 213 of the LRA depend on a valid underlying contract of employment.
After taking into consideration principals of international law and domestic jurisprudence, the Court found that the definition of ‘employee’ extends beyond an employment contract.
The Court concluded as follows:
“(a) The contract of employment concluded by Discovery Health and Lanzetta was not invalid, despite the fact that Lanzetta did not have a valid work permit to work for Discovery Health. For this reason, Lanzetta was an ‘employee’ as defined in s 213 of the LRA and entitled to refer the dispute concerning his unfair dismissal to the CCMA.
(b) Even if the contract concluded between Discovery Health and Lanzetta was invalid only because Discovery Health was not permitted to employ him under s 38(1) of the Immigration Act, Lanzetta was nonetheless an ‘employee’ as defined by s 213 of the LRA because that definition is not dependent on a valid and enforceable contract of employment.”
I must however point out that there may be a distinction between work that is illegal, and work that is alleged to be illegally performed. The above case is a typical of the latter, i.e. work that is alleged to be illegally performed.
