South Africa: Divorced Or Inextricably Linked? Determining Extra-Territorial Jurisdiction

Section 114 of the Labour Relations Act (LRA) provides that the Commission for Conciliation Mediation and Arbitration (CCMA) has the power to hear and determine a dispute between an employer and an employee where the undertaking of the employer is located within any of the provinces of the Republic of South Africa.

Rule 24 of the CCMA Rules further breaks down the issue of jurisdiction as to the specific region where a dispute should be adjudicated. Rule 24 provides that the province where the cause of action arose or where the principal place of business is located will have the necessary jurisdiction to adjudicate the matter.

The complexity arises when a business with extra-territorial offices finds itself in a labour dispute. In the Labour Appeal Court (LAC) matter of Monare v SA Tourism & Others (2016) 37 ILJ 394 (LAC), the Court asked a determining question on the jurisdiction as to whether the undertaking abroad is "divorced and separated" or inextricably linked to the South African office. In this matter, the employee averred that his employer was located in Johannesburg, South Africa, although the employee was placed and worked at the office situated in London, England. The employee referred an unfair dismissal dispute to the CCMA after he was dismissed in London. There was no jurisdictional point raised by either party at the arbitration, and the Commissioner found that the employee's dismissal was subsequently unfair and awarded reinstatement. The award was subsequently taken on review by the employer.

The Labour Court (LC) raised a mero motu jurisdictional point and later found that the CCMA did not have the necessary jurisdiction based on the fact that the London office operated independently from its South African offices, and the award was then set aside. The employee did not leave the matter and appealed the Labour Court's decision on jurisdiction.

The Labour Appeal Court (LAC) ruled that the question was not where the employee was employed because it was common cause that the employer's London office employed him. The question remained if the London office was an undertaking of the company, separate and divorced from its undertaking in the Republic of South Africa. The Court ruled that it was not, and as such, the jurisdiction of South African Courts was confirmed, and the LAC entertained the matter. The critical factor in determining jurisdiction is whether the location where the employee was deployed is a separate undertaking independent from his South African employer.

The test to establish territorial jurisdiction is rooted in proving two distinct elements, confirmed in the case of Lime Global Ltd v Myhill E NO & Others (JR 827/18) [2020] ZALC JHB 144. In this matter, the employee served their employer in the United Kingdom remotely from South Africa. There was no evidence before the Court to suggest that the employer conducted a separated and divorced undertaking in South Africa and concluded that the employer's business was based in the United Kingdom. The Court alluded that to prove jurisdiction of the CCMA, the employer had to carry on a separate and divorced undertaking business situated within the jurisdictional territory of the CCMA and that the employee should have been employed by such an undertaking. In this matter, the Court further held that should there be no proof of the two distinct elements, the CCMA will have no jurisdiction to entertain the dispute.

The easiest way to dissect the two determining factors lies within the contract of employment, which will contain the name of the business, registration details and business address. If the company operates independently abroad, then the contract of employment will be signed in the name, place, and stead of the specific office and in terms of that particular location's labour regulating laws. Suppose the company abroad operates inextricably to the South African company and office. In that case, the contract of employment will be in line with the labour law of South Africa, which will give the CCMA the necessary extra-territorial jurisdiction to adjudicate the matter.

Rule 22 of the CCMA states that the onus is on the referring party to prove jurisdiction. Should an employee refer a dispute to the CCMA, it must be accompanied by the necessary proof that the CCMA has jurisdiction to entertain the dispute. Employers recruiting employees for employment abroad should seek advice from their Employer's Organisation when it comes to disputes pertaining to jurisdiction.