16 October 2011

Foreign workers of the world unite: CCMA jurisdiction in foreign international employment contracts

When there are foreign elements in a contract of employment (such as the workplace falling within another country), the contract of employment is an international contract governed by the principles of private international law.

It is the duty of a court - and by extension the CCMA - to establish not only that it has jurisdiction, but also what law it has to apply - termed "the proper law" (lex causa).

When deciding which law to apply, private international law dictates that the lex causa when dealing with employment-law related matters is either the lex loci solutionis (the law of the place of work) or the lex loci contractus (the law of the place where the contract was concluded). Which of these two laws should apply depends on the place having the closest and most real connection to the issues.

In both Parry v Astral Operations Ltd [2005] 10 BLLR 989 (LC) and Kleinhans v Parmalat SA (Pty) Ltd [2002] ZALC 57, the Labour Court (the Court) upheld the principle of party autonomy. This stipulates that parties to international contracts are free to agree, expressly or tacitly, on the specific legal system to govern the contract, termed the "proper law" of the contract.

The next issue for determination is jurisdiction. In Global Outdoor Systems Limited v Du Toit & Others (2011) 32 ILJ 1100 (LC), the Court held that if the workplace concerned is outside of South Africa, the Labour Relations Act (the LRA) does not apply.

The employer in Global Outdoor Systems was the holding company of various worldwide subsidiaries. During 2008, the parties had concluded a contract of employment, in terms of which the employee would work at the employer's Nigerian subsidiary. The contract contained a clause that stipulated that any dispute arising out of the agreement would be governed by Mauritian law.

Before his dismissal, the employee referred a dispute to the CCMA. At conciliation, the employer raised a preliminary point that the CCMA did not have jurisdiction to entertain the dispute. The Commissioner held that despite the contractual clause that the dispute fell under Mauritian law, the parties were covered by South African law, as a result of which the CCMA had jurisdiction.

On review, the Court held that the sole question that the Commissioner had to decide was the locality of the undertaking in which the employee was employed. If the locality of the undertaking was situated outside South Africa, the Court confirmed that the LRA would not apply. As the LRA finds no application, the CCMA - a creature created by the LRA - did not have jurisdiction to entertain a dispute founded in the LRA. The Court held that the locality of the undertaking in which the employee was employed was Lagos, Nigeria. Accordingly, the CCMA did not have jurisdiction and ruling was reviewed and set aside.

In terms of the Global Outdoor Systems decision, should the workplace fall within another country, it would fall outside the territorial jurisdiction of the LRA and the CCMA would have no jurisdiction over the dispute.

Multi-national businesses with staff deployed in various jurisdictions are cautioned to consider jurisdiction of the local dispute resolution forums when contracting with their staff.

Melanie Hart

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