South Africa: Can South African Labour Law Apply To Employees Working In Other Countries? The Jurisdiction Of South African Labour Forums In Respect Of Employees Working Abroad And The Legal Principles Of Extra-Territoriality

In South Africa, the question of territorial jurisdiction over labour disputes is not a new question but is a question that is certainly worth considering carefully given that fissured workplaces have become a global reality with many South African entities employing people to do work in foreign countries.

This has become a prevalent reality in the new world of work, including in remote work or hybrid models of work, and in terms of which, could have a dual or multi-territorial impact in terms of a particular country's jurisdiction pertaining to employment.

South African Case Law

Turning to an earlier authority on this matter, in Astral Operations Ltd v Parry¹ ( "Astral case") the Labour Appeal Court ('LAC') found that the test of whether there is jurisdiction in a particular case is whether the employer's undertaking, in which the employee was employed, is carried on inside or outside South Africa. A single employer may have more than one undertaking that forms part of its operations, so the question is whether the undertaking in which the employee works is within South Africa. If so, South Africa's labour forums would have jurisdiction. As such, jurisdiction is not determined by whether the employer has an undertaking that operates in South Africa as well as one abroad, but whether its undertaking (in respect of where an employee works at) is separate as an undertaking and within the jurisdiction of South Africa. If the undertaking falls within the locality of South Africa, our labour forums will naturally have jurisdiction. If, on the other hand, it does not, South African labour forums will therefore not have jurisdiction.

Following this decision, the LAC developed a flexible and substance-over-form approach when applying the test as set out in the Astral case. To this end, the next significant decision was in Monare v SA Tourism & others² ("Monare"), in which the LAC expanded on the Astral case and unpacked the meaning of "an employer's locality of undertaking". In this case, the Court held that in order for the employer to have two separate undertakings (one extraterritorially and one locally), the undertakings must be divorced from each other. As such, in accordance with the Court's reasoning, although the employee at all relevant times worked outside of South Africa and the South African employer (the SA Tourism Board) had a separate office in London, the LAC held that if the undertaking is interrelated or inextricably linked to the South African entity (in that, it cannot be divorced from the South African undertaking), South African labour law, and thus jurisdiction, would still apply. The Court in Monare found that the SA Tourism Board's office in London was an 'extension' of the employer in South Africa (it was part and parcel of it), and therefore held that South Africa had jurisdiction to determine the employment dispute.

The LAC confirmed these previous authorities in Robineau v Schenker SA (Pty) Ltd & Others ("Schenker").³ In this matter, the contract of employment was concluded between an employee and a South African company that formed part of a German multinational corporation. However, the contract of employment stated that it was governed by the laws of Mozambique given that the workplace was in Mozambique. The LAC found that the location of the workplace is not the same as carrying on 'of the undertaking' and instead one needs to examine the substance of the working relationship (rather than the form or what is stipulated in the contract). In this case (of Schenker), the LAC held that there was jurisdiction as the Mozambican operation was part and parcel of the South African undertaking for the following reasons:

• there was no Mozambican entity with separate legal personality;
• there was no independence between the South African entity and the Mozambican branch.The computers operating in the Mozambique office were linked directly to the South African entity's computer system and all of the assets were owned by the South African entity. Accordingly, the 'entities' were considered to be interrelated and not divorced from each other as separate undertakings; and
• the LAC also considered that the employment contract incorporated South African statutory provisions albeit that a provision in the addendum provided that Mozambique law would be the governing law of the contract.

In the Labour Court decision of MECS Africa (Pty) Ltd v Commission for Conciliation, Mediation & Arbitration & others⁴("MECS Africa"), the Court interpreted and applied the Astral case in the context of a South African temporary employment service ('TES') that had an employee that worked for its clients outside of South Africa's borders. In these facts, the Court found that the employer conducted its labour broking business in the place where it recruited and procured labour, and not in the place where its clients have operations. As such, since the South African employer recruited and found labour in South Africa, the Court found that the place of the employer's undertaking was in South Africa and, that the CCMA, in turn, had jurisdiction.

In contrast, and in the relatively more recent case of Sorrell v Petroplan Sub-Sahara Africa (Pty) Ltd ("PSA case"),⁵ the Labour Court took a different approach. In this matter, an individual employee agreed to provide superintendent services to the clients of Petroplan Sub-Sahara Africa ('PSA'), a South African entity. The Court accordingly found the facts of MECS Africa to be similar or analogous in the matter that it had to determine. The Court, however, disagreed with the findings of MECS Africa and held that it is not the place where the employer conducts its business that determines the place of employment, but rather the location of the actual workplace. The Labour Court considered that although the employer (the PSA) conducted its labour brokering business in South Africa, the place where it recruits and procures labour was not the place where the employee was required to render their services. Additionally, the Court found that the employee's work did not involve the recruitment and procurement of labour by PSA but related to the business of PSA's client at its operation in Mozambique. Consequently, the Labour Court held that the workplace was separate and divorced from the PSA's business of engaging clients to work on the sites of clients and was indeed located in Mozambique. Based on this reasoning, the Court found that the locality of undertaking that the employee was engaged in was in Mozambique. Thus, the Labour Court (in the PSA case) did not have jurisdiction.

Conclusion

Given the latest authority, it must be emphasised that a South African labour forum's jurisdiction is not simply determined by an individual's employment contract with any one entity. The question of extra-territorial jurisdiction is ultimately a matter of substance over form, where various factors will be considered, and in which the location of where those services are rendered being one of those factors.

It is also yet to be seen how such legal authority would apply, or whether our present legal authority needs to be further developed, in cases of employment in the relatively new world of remote work (as set out in the introduction of this article), specifically in circumstances where there may be a dual or multi-territorial jurisdictional impact.

Footnotes

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.