BUSINESS LAW &TAX
MARCH 2023 WWW.BUSINESSLIVE.CO.ZA
A REVIEW OF DEVELOPMENTS IN CORPORATE AND TAX LAW
Employers’ duties during lockdowns and blackouts
HARD TIMES
Courts provide more clarity on what companies •have to do when their businesses cannot operate Brian Patterson & Amy Pawson
H ENSafrica
eavy restrictions placed on business operations in SA under the Disaster Management Act (DMA) during the Covid-19 pandemic meant many employers were unable to work and consequently faced challenges in making payments to their employees in terms of their employment contracts or collective agreements. Courts are now providing more clarity on what employer obligations were when faced with supervening impossibility of performance during the initial period of the Covid-19 pandemic. In the recent decision in
Glencarol (Pty) Ltd v National Bargaining Council for the Clothing Manufacturing Industry (Northern Chamber) and Another, Van Niekerk J dealt with an application to review an arbitration award
DIFFICULTY OR OPERATIONAL CHALLENGES IN RUNNING A BUSINESS DOES NOT RESULT IN LEGAL IMPOSSIBILITY OF PERFORMANCE where the arbitrator had upheld a bargaining council’s compliance order compelling the Glencarol (Pty) Ltd (the employer) to comply with a
collective agreement relating to the payment of annual bonuses and leave pay. During the initial period of the national lockdown in 2020, the DMA Regulations prohibited the employer from conducting business and its employees were prohibited from attending work. Subsequently, when calculating its employees’ annual leave pay and annual bonuses entitlement in terms of a bargaining council collective agreement, the employer excluded this period of the “hard lockdown” from its calculation. The bargaining council did not agree with this approach. It issued a compliance order instructing the employer to comply with the clauses relating to the payment of annual leave pay and bonus-
/123RF — PIPPOCARLOT es. The arbitrator found that the employer had contravened certain clauses of the collective agreement because, among other things: ● The mere fact that it became difficult or expensive to discharge obligations did not mean that performance had become impossible; ● Nothing indicated that all players in the industry were unable or could not comply with the collective agreement; and ● If performance was objectively impossible, the parties to the bargaining council could have suspended the collective agreement’s provi-
sion, but did not do so. On review in the Labour Court, Van Niekerk J accepted that, during the period of the hard lockdown, both the employer and the employees could not perform their obligations in terms of the em-
EMPLOYEES COULD NOT LAWFULLY TENDER THEIR SERVICES AND, AS A RESULT, THE EMPLOYER WAS NOT REQUIRED TO PAY THEM
ployment contracts and that it would have been unlawful to do so. In effect, this meant the employees could not lawfully tender their services and, as a result, the employer was not required to pay them. The court further accepted the period during which the contract was, in effect, suspended did not have to be taken into account when calculating leave pay and annual bonuses. In the light of the above, the arbitrator’s award was found to be incorrect and was set aside. CONTINUED ON PAGE 2