Multi-national employers and the application of the LRA

The Labour Relations Act (the LRA) applies to employers and employees in South Africa. It does not matter if the employer is not a South African company — the fact that the employee works for the employer in terms of an employment contract or even a less-formal employment relationship means that the LRA applies to that employment relationship: section 2 of the LRA, which contains the exclusions from the Act (the SA National Defence Force, the South African Secret Service and the National Intelligence Agency, for example) does not state that multi-national employers are not covered by the LRA.

But the issue of jurisdiction of the Labour Court did arise in the recent case of Moslemany v Unilever PLC & another (2006) 15 LC 1.1.6. The employee had been working for the employer since 1980 and he had worked on various assignments all over the world in terms of specific contracts. In February 2003 he was appointed Head of Development for a number of regions (including South and North Africa, the Middle East and Turkey). The appointment to this post was to be for a period of two to three years. In October 2005, the employer retrenched the employee with effect from 31 January 2006. To make matters more complicated: the employee claimed that his immediate superior had agreed to allow him to continue employment (but on a lower grade and in Ireland) until May 2007 — a point in time at which the employee would qualify for early retirement. The employer denied that such an agreement relating to continued employment until March 2007 had been concluded.

In interesting jurisdictional issues arose — for example, it was argued that the Labour Court of South Africa has no jurisdiction over the pension fund concerned (the fund was based in Ireland) and that the employee was to remain an order of the fund (until early retirement in March 2007) would not be competent. The employer launched three levels of challenges on jurisdictional grounds (relating to jurisdiction over persons, territorial jurisdiction arising from the cause and jurisdiction in respect of relief) and the Labour Court proceeds to deal with each of these challenges in some detail. The factual issues remain largely undecided in this case as the Labour Court here dealt only with the preliminary issues raised by the employer (and dismissed these objections).

Even more interesting is the importance the Labour Court attached to the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, adopted by the International Labour Organisation in November 2000.

In respect of what a multi-national employer is, the Tripartite Declaration says the following:

“To serve its purpose this Declaration does not require a precise legal definition of multinational enterprises; this paragraph is designed to facilitate the understanding of the Declaration and not to provide such a definition. Multinational enterprises include enterprises, whether they are of public, mixed or private ownership, which own or control production, distribution, services or other facilities outside the country in which they are based. The degree of autonomy of entities within multinational enterprises in relation to each other varies widely from one such enterprise to another, depending on the nature of the links between such entities and their fields of activity and having regard to the great diversity in the form of ownership, in the size, in the nature and location of the operations of the enterprises concerned.”

The Tripartite Declaration, signed by governments, representatives of organised labour and business deals with a number of issues, including collective bargaining, equality in employment and dealing with grievances. In respect of resolving disputes, clause 59 of the Declaration reads as follows:

“Multinational as well as national enterprises jointly with the representatives and organizations of the workers whom they employ should seek to establish voluntary conciliation machinery, appropriate to national conditions, which may include provisions for voluntary arbitration, to assist in the prevention and settlement of industrial disputes between employers and workers. The voluntary conciliation machinery should include equal representation of employers and workers.”

Dismissal is something not dealt with exhaustively in the Declaration — clause 27 of the Declaration simply states that arbitrary dismissal procedures should be avoided.