Business Day Law & Tax (July 2023)

BUSINESS LAW & TAX

Getting smart about smart drugs in the workplace

BITTER PILL TO SWALLOW

Lauren Salt ENSafrica

Globally, there is a rising trend in the misuse of prescription drugs, including those used for treating attention deficit hyperactivity disorder (ADHD), such as Ritalin and Adderall While previous research largely centred around the misuse of ADHD drugs in tertiary education, an increasing body of research shows an increase in people’ s interest in improving cognitive functioning to gain a competitive edge in the workplace which, in turn, leads to a rise in the prevalence of smart drugs in the workplace

WHAT ARE SMART DRUGS?

People suffering from ADHD have lower levels of dopamine in the reward centre of the brain Dopamine levels play a pivotal role in memory, movement, motivation, mood and attention ADHD drugs stimulate the production of dopamine (and

TACKLING THE MISUSE OF ADHD DRUGS IN THE WORKPLACE WOULD REQUIRE A MULTIPRONGED APPROACH

other neurotransmitters) and /or increase its availability through inhibiting its uptake in the brain For individuals

suffering from ADHD, taking these drugs can bring their cognitive functions to their normal levels

However, when used by those who do not suffer from ADHD, studies have shown that these individuals are likely, in certain circumstances, to experience greater cognitive functioning In the context of the workplace, those who “dope” with ADHD drugs are likely to demonstrate higher than normal cognitive abilities which enables them to work longer hours, concentrate for extended periods and perform certain tasks at an improved standard

This is why these drugs have been dubbed “smart drugs” when misused

WHAT IS THE IMPACT OF

SMART DRUGS ON THE WORKPLACE?

While the idea of having supercharged workers might be appealing to employers in the always-on, competitive work environments of today, it is important to emphasise the downside of permitting or turning a blind eye to such doping practices in the workplace

These drugs, classified in the same category as methamphetamine, are associated with a number of fairly serious side effects As with many prescription drugs in this class, if the dosage is not consistent or properly managed it can lead to addiction and withdrawal, the symptoms of which may manifest

in a mental and/or physical crash In addition, users may also be taking the drugs to mask other serious issues such as burnout, chronic fatigue and other exhaustion causing conditions

Although permitting or condoning the misuse of smart drugs in the workplace carries many risks and ramifications, the most pertinent of these are those related to health and safety

In extreme examples, a withdrawal-induced crash could affect the health and safety of not only the employee using the drugs, but those around them too when, for example, the employee operates dangerous machinery or is responsible for the well-

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being of others

• Employers need to distinguish users of prescribed drugs for mental disorders from those abusing them CONTINUED ON PAGE

In the SA context, employers have a positive obligation in terms of the Occupational Health and Safety Act, 1993 to create a healthy and safe working environment for employees as far as is reasonably practicable This involves conducting a risk assessment and implementing risk mitigation measures for any risks identified However, navigating and regulating the use (and misuse) of prescription drugs, particularly those used for treating ADHD, is no easy feat

To conduct a risk assessment, the employer would need to require all those

Get smart about smart drugs

CONTINUED FROM PAGE 1

using ADHD drugs to disclose their use This presents challenges from a data privacy and unfair discrimination perspective point of view as this information would qualify as sensitive/special personal information in most jurisdictions with data privacy laws

There is also no easy way to determine whether the drugs are physiologically required or not This means, in the absence of proof that employees got the drugs through dishonest or illegal means, that the employer will have no real way of testing whether the drugs are being misused

Accordingly, tackling the misuse of ADHD drugs in the workplace would require a multipronged approach, which may very well tie into other measures the employer implements to prevent burnout and similar issues

CONCLUSION

To mitigate the negative consequences of smart drugs in the workplace, employers must be mindful of the hours their employees are working and the rest periods they are observing Employers should also actively ensure employees are aware of the dangers of misusing prescription drugs and the negative consequences the unregulated use of, or dependency on them, could have for their short- and long-term health and the safety of others around them

Employers should create a culture where employees are encouraged to speak out about any pressure they may feel to take smart drugs, either as a consequence of their working conditions or their co-workers’ (mis)use of them They should also be encouraged to flag with the employer any knowledge they may have of employees procuring these drugs through nefarious means, including where there is informal dealing of the drugs in the workplace

SENSITIVITY

Having said this, when implementing any of these measures, employers must be acutely aware of the need to be sensitive to those employees who use ADHD drugs for valid reasons and be careful not to, in their efforts to outlaw the misuse of these drugs, create an environment which ostracises those genuinely suffering with the disorder Indead, employers must proactively manage the situation

LATERAL THINKING

MAFR not a silver bullet

Evan Pickworth BD Law & Tax Editor

The corporate sector and auditing profession have the small but feisty East Rand Member District of Chartered Accountants to thank for achieving clarity on the status of mandatory audit rotation

These guys certainly took the fight to the statutory body controlling that part of the accountancy profession involved with public accountancy in SA, the Independent Regulatory Board for Auditors (Irba) After all, this was a decision meant to kick in this year but which has been in the making for a full five years, causing much ruckus in an industry that has become used to multidecade audit-client relationships of trust

In a decision which received a lot of media attention in June, the Supreme Court of Appeal (SCA) reviewed and set aside Irba’ s proposed mandatory audit firm rotation (MAFR) rule as promulgated on June 5 2017 in the Government Gazette

The legal battle to get the

their voluminous tome and, as the ruling above shows, they were not impressed

In fact, they said the record was awash with reports and unnecessary material not required for the adjudication of the matter

The court also expressed its displeasure in numerous matters at the disregard for the rules in the preparation of the record The necessary record to resolve the application “should not have exceeded seven volumes”

The court said both parties were responsible for the state of the record, hence the 50% ruling

This would no doubt have stung, but is in line with a number of recent rulings by judges fed up with litigants wasting time or getting embroiled in minutiae and general nastiness

but then discontinued it for certain sectors There is no reason SA will be penalised in any way for not doing it either

appeal heard was also highly acrimonious and led the SCA to rule that the attorneys for both the appellants and the respondents can recover only 50% of the costs associated with the preparation, perusal and copying of the record in the appeal

It is indeed hard to believe that a matter as fairly straightforward as this could put Leo Tolstoy s War and Peace in its shade for volume Intrepid bibliophiles who have read War and Peace will know that getting through the 1,225 pages is a trial albeit a rewarding one Yet the record in this audit case comprised an astonishing 15 volumes and 2,633 pages!

The attorneys should indeed be applauded for their alacrity and ardour but they forgot that five busy and time-pressed appeal judges would have to wade through

In context the decision does not mean there is no hope for mandatory audit rotation just that it must be done within the ambit of the law and rules for the profession The added cost, red tape and lack of authority to make rules were in the spotlight

This all mattered as the change was going to essentially dictate to companies and boards how to manage their affairs

CRIMINALS

The issue is not about the principle of rotation it does make sense Countries such as Australia, China, Denmark, Finland, France, Germany, Greece, Malaysia, the US and UK do have it in place

But as the head of a leading audit firm told me recently, countries such as Spain, Italy and Poland do not have a mandatory audit rotation rule either and it has not hit their investments or economies

Other emerging-market countries such as South Korea, Argentina and Brazil initially adopted the policy

But to get there, if Irba and legislators change the law through amendments to the act the industry and corporate sector must buy in

It will never be appropriate to position mandatory audit rotation as a silver bullet to stop scandals and corruption Criminals are too sophisticated and a thousand steps ahead for something like this to stop them Blaming auditors every time they fail to spot something in good faith is not the answer to all SA s corruption ills Blaming them when they are party to the corruption is a completely different matter altogether

The auditing CEO I spoke to is quite right in saying that while the ruling is important in achieving clarity, the focus should actually be on making an even more robust annual assessment of independence The industry is also more

than willing to work with Irba in ensuring the highest possible standards are maintained in line with the duties and responsibilities of Irba’ s legislated mandate

There is absolutely no reason for Irba to feel aggrieved when a company does not rotate after 10 years Many companies may, in fact, rotate as part of their striving for greater independence

But there are many reasons companies may stick with their most trusted firms one being cost Starting up a new audit firm is stressful and can take at least the first year just to onboard them There are also clear risks that things may be missed in those early years

Then there is the issue of trust Companies should be able to choose who they think is the best

In the judgment, Irba was seen as acting beyond its authority in pushing these changes through the way it did Quite simply, the Auditing Professions Act 26 of 2005 is pretty clear in setting out the objects and functions of the Irba They are set out in section 2 of the act and include the regulation of audits performed by auditors, setting and maintaining requisite standards of competence and ethics, and providing for disciplinary procedures

Section 4 confines Irba’ s rule-making power to the prescription of standards in respect of defined functional areas Simply put, Irba may not exercise a power not conferred on it by its founding legislation nor can it act in a manner that is inconsistent with the act

MAFR, however, is not a standard of competence or a professional standard The net effect of the MAFR is that it imposes a broad restriction on companies, audit committees and their current and future shareholders from appointing an audit firm of their choice

At the same time, it prohibits audit firms from accepting appointments even if selected by a company

It is also important to note that SA already has worldclass independence rules in place Section 92 of the Companies Act 71 of 2008 regulates individual audit tenure and provides that an individual auditor or designated auditor may not serve as an auditor of a company for more than five years It provides for a cooling-off period of two years between the appointment cycles

What should change going forward is compliance must become even more prominent and robust than before, no matter whether rotation is mandatory or not

• It’ s OK that mandatory audit firm rotation has come a cropper

IT WILL NEVER BE APPROPRIATE TO POSITION MANDATORY AUDIT ROTATION AS A SILVER BULLET TO STOP SCANDALS AND CORRUPTION

BLAMING AUDITORS WHEN THEY ARE PARTY TO THE CORRUPTION IS A COMPLETELY DIFFERENT MATTER ALTOGETHER

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Trademarks: pints and ploys in UK

• Two media brouhahas underline the need to be diligent in your handling of intellectual property

Chiraag Maharaj

ENSafrica

Navigating the intricate world of intellectual property (IP) disputes can lead to intriguing developments, and two recent cases in the UK have caught the attention of legal enthusiasts and curious observers

If you follow international IP law developments, you ’ll know UK supermarkets regularly feature in IP disputes

MARKS & SPENCER

Marks & Spencer (M&S) is, of course, a British institution

You might imagine that the retailer is well informed when it comes to launching new brands M&S recently decided to add a particular Tshirt to its collection, featuring the name “Craft Beer Co” on the front and back

CRAFT BEER CO

There’ s a company called Craft Beer Co, which was started by two friends in 2011, and now has seven pubs in London and one in Brighton

The company complained about M&S’ s adoption of the name “Craft Beer Co”

TRADITIONS

The traditional way of dealing with a trademark dispute

goes something like this: the aggrieved party consults with a lawyer, who then sends the alleged trademark infringer a nasty and threatening letter, and then sends the client a nasty bill, under cover of a letter making it clear it would be a mistake not to pay it But tradition is so yesterday!

TWITTER

Craft Beer Co, didn’t bother with lawyers It took to Twitter: “What’ s the idea with these T-shirts?” , “Can we expect a royalties cheque in the post?” , “Surely one iconic British institution shouldn’t be ripping off another ”

THE M&S RESPONSE

M&S did not contest the claim It said it had adopted the name “Craft Beer Co” “in good faith” It insisted it takes IP “ very seriously” and took the decision to remove the product “ so we can investigate further”

M&S made the point that “the graphics on the back and chest add a distinctive theme”

JUST A BOO BOO?

The UK press loves IP disputes and they quickly picked up on this story Craft Beer Co co-owner Martin Hayes said this in the most British of

ways: “I’ m not angry about it, but it is a little annoying I’ ve got a lot of respect for M&S

“It’ s an iconic British business and I think somebody’ s just made a bit of a boo boo really, but I’ m sure it will be sorted out ”

Hayes went further, saying that “ we ’ re a relatively small business so I don’t think we ’ll be taking on a PLC this isn’t Aldi v Marks & Spencer” , a reference to the highly publicised Colin the Caterpillar case This then prompted Aldi itself to join in the fun with a tweet of its own: “Oh how the tables have turned ”

LESSONS

This story brings home the importance of trademarks in a number of ways

● The importance of creating the right trademark;

● The importance of clearing the trademark by way of searching;

● The importance of protecting the trademark through registration;

● The importance of understanding how fascinated the press is by trademark disputes; and

● The importance of recognising how getting trademark issues wrong can lead to serious reputational damage

WAGATHA CHRISTIE

A recent posting in the IPKat blog deals with an IP angle of the Wagatha Christie saga It was inspired by the fact that Rebekah Vardy has managed to secure a trademark registration in the UK for the name WAGATHA CHRISTIE in a number of classes

REBEKAH AND COLEEN

Rebekah Vardy is the wife of footballer Jamie Vardy Jamie’ s fame has made Rebekah a “WAG” , a term used to describe the wife or girlfriend of a celebrity Rebekah was recently involved in acrimonious litigation with another WAG, Coleen Rooney, the wife of footballer Wayne Rooney

For some time, Rebekah and Coleen moved in the same circles But at some point, Coleen concluded that someone in her circle was leaking stories to the press She suspected that someone was Rebekah

DETECTIVE

Coleen then decided to play detective, setting up a sting operation that involved a fake story that was only made available to Rebekah When this story appeared in the press, Coleen knew that her suspicions had been correct: the mole was indeed

Rebekah Coleen put the following breathless message on Twitter: “It’ s Rebekah’ s account “

Cue high court proceedings that became known as the Wagatha Christie case, a play on the name Agatha Christie, the famous crime writer High court proceedings that went in favour of Coleen Rooney, mind you

IP lawyer Neil Wilkof posted an interesting and slightly whimsical piece on this story on the IPKat blog recently

MEME

Wilkof despairs somewhat at the fact that WAGATHA CHRISTIE a mere “cultural meme ” has in fact been registered as a trademark

Despite this, he concedes that it probably is fair game because it belongs to no-one

He accepts that WAGATHA CHRISTIE is distinctive and that it can act as a badge of origin

He queries whether there might be an element of bad faith present here, but he doesn’t press the point He argues that we need to look at context when assessing trademark registrations

● Reviewed by Ilse du Plessis, an executive in ENSafrica’ s IP department

Lost submersible and the presumption of death

Mtho

Maphumulo

Adams & Adams

At the end of June the news was dominated by the missing Titan submersible

Social media platforms were abuzz One of the interesting questions that seemed to be prominent was the question of whether insurance claims could be submitted if the passengers of the submersible were not found

For purposes of this article they will be discussed in an SA context as if the incident occurred locally

PRESUMPTION OF DEATH ORDERS

The interested party it can

be a family member, employer, partner and so on can bring an application for a missing passenger of the craft to be presumed dead The application is brought on an ex parte basis

In the absence of a catastrophic event, presumption of death orders are rare They are, however, a useful tool to utilise in catastrophic events as there are almost incontestable grounds to argue for the order to be granted

Considering that there is no actual dead body, the court, in making a decision, is only circumscribed to circumstantial evidence

Thus, the founding affidavit of the applicant will

have to explicate the grounds upon which the court should grant the order for presumption of death

Over the years, the courts have highlighted that the outcome of such cases, like every case, is bound upon the peculiar facts and circumstances

ELAPSED

TIME

Previously, the courts always held the view that the missing person must have been absent for at least seven years before such an order could be granted This is no longer the case While the length of time that has lapsed since the disappearance is an important factor, the courts no longer pin any number of months

and/or years in this regard

In addition to the length of disappearance, factors such as health conditions of the missing person at the time of disappearance; the place where s/he was last seen; whether there was any lifethreatening event(s) near or around the location where s/he was last seen; the lifestyle and habits of the missing person and so on are considered

In this case of the missing submersible, the facts and the circumstances are considerably less complex The passengers identities are known; the circumstances around which they have disappeared are known; the

risky nature of the circumstances around which they disappeared is known; and the less likely possibility of survival is also known

These factors, in addition to others that may find application, would play a significant role in the determination of the application

It s important to note that the fact that a court has granted this order does not necessarily mean that an insurance policy will respond

If the insurer does not challenge the presumption of death order, the insurer can still rely on other normal grounds for repudiating the claim, such as misrepresentation and non-disclosure

Even more interesting, some nonindemnity insurance policies expressly exclude cover for death resulting from adventurous activities

While presumption of death orders are rare, they remain a pivotal tool in dealing with instances where a person is missing

In law (and in general), the death of a person is a significant event from which several legal consequences flow Therefore, where there are meritorious grounds for bringing such an application, one should not hesitate to do so, in order to bring about legal certainty to the affairs of the missing person

/JASON ALDEN BLOOMBERG

Call for comment on ECA bill

arrangements; address spectrum sharing; improve the facilities leasing framework and its pricing principles; and provide for competition regulation

Ahmore Burger-Smidt

Werksmans

The Electronic Communications Amendment Bill, 2022 has been published for comment and aims to introduce an array of significant amendments to the Electronic Communications Act 36 of 2005 (ECA)

It is advisable for businesses to be alive to the potential impact these amendments could have and what implications they may pose for the industry as a whole Interested parties have until July 23 to make submissions

In essence, the bill aims to provide for a new licence category for electronic communications facilities services; enable the minister to make a national standard bylaw for a uniform wayleave process; enable spectrum sharing; regulate mobile virtual network operator (MVNO) services, terms and conditions, including maximum wholesale pricing; regulate international roaming

Some of the above aims could arguably be welcomed by industry participants but others require scrutiny Of interest is also the aim of the bill to grant the Independent Communications Authority of SA (Icasa) concurrent jurisdiction with the Competition Commission to enforce one another’ s decisions

● New licence category: The object of these new licence categories is to bring electronic communications ser-

networks and facilities by telecoms providers for a tenant via an agreement with the landlord will be enabled by the rapid deployment across municipalities

● Spectrum sharing: This amendment essentially allows Icasa to share the spectrum of licensees who have failed to use their spectrum for a period of two years with licensees in underserviced areas Icasa will be mandated to prioritise the assignment of unused spectrum to community networks Icasa will have to approve any sharing of highdemand spectrum due to the importance of mobile competition but may also need to be notified of spectrum that is not in high demand The bill prescribes that when Icasa is determining the potential competition impact, it may consult the commission

oped in SA due to the lack of incentives by larger networks to provide access

pricing regulations must be fair, reasonable, nondiscriminatory, cost effective and reflect competitive commercial arrangements

vice providers, such as tower companies, within the licensing framework of the act These facilities will subsequently have wholesale regulations and licensing conditions imposed against them

● The standard by-law: This amendment proposes a uniform wayleave process where the instalment of electronic communications

● MVNO services: An electronic communications network service licensee with access to international mobile telecommunications radio frequency spectrum, with network coverage of 90% of the population will have to provide roaming and MVNO services

This amendment aims to address what is perceived to be roaming arrangements that are not competitively priced and that contribute to raising rivals’ costs Furthermore, it is the view that MVNOs are not well devel-

The aim of the bill is to remove barriers to MVNO operations and to introduce competitive benefits It is expected by the authority that based on the outcome of the bill that the number of MVNOs may increase, which will require an appropriate regulatory framework

● Roaming: There are new provisions which will be made for international roaming such as Southern African Development Community roaming regulations The bill aims to empower Icasa to prescribe regulations which regulate the roaming agreements and pricing with international service providers

● Facilities leasing frame-

CONSUMER BILLS

work: In terms of the bill, licensees will be regulated and will have to lease facilities The amendment will replace the reasonability test for access with principles of access prescribed by Icasa Therefore, when Icasa denies access, consideration would not be in terms of reasonableness but rather the principles of access

The principles of access will be prescribed by Icasa and once a facility is listed as essential, access will be compulsory There is also an amendment dealing with wholesale price regulation which allows Icasa to prescribe pricing rules applicable to different types of electronic communications facilities, essential facilities, roaming and MVNOs These

● Competition regulation: Icasa may conduct a market inquiry if there is reason to believe that any market segment impedes or restricts competition in its area Icasa will be able to determine actions which will remedy any adverse effects on competition The objective of this proposed amendment is to improve the market review process in line with the market inquiry process of the Competition Act 89 of 1998 This provision will allow Icasa and the commission to enforce one another’ s findings with the envisaged aim of promoting competition

The implication will be that once a competition finding is made by the commission, an inquiry will not need to be repeated by Icasa

Icasa will also be able to perform competition assessments as part of its licensing functions and will have the power to prescribe regulations which will determine the relevant processes and procedures

What is apparent from the proposed amendments is that the ECA will be impacted to a substantial degree The bill will be open for written submissions for a period of 30 working days from the date of publication

We have no right to unfairly judge others’ rights

As we come out of pride month and youth month, it is worth reflecting that when the bill of rights uses the word “ everyone ” in the equality clause it means just that It gives equal protection and benefits of the law to everyone

The ink was hardly dry on the constitution in 1995 when the Constitutional Court declared the death penalty unconstitutional and explained the values that have protected all of us ever since While public opinion may have some value, it is no substitute for upholding the values in the bill of rights, if necessary by recourse to the courts, without fear or favour

If public opinion were decisive, there would be no need for the Constitutional Court because parliament has a mandate from the majority of the public That argument was relied on by the apartheid regime The very reason for the establishment of the new

legal order is to protect the rights of minorities and every individual Someone convicted of murder has the same rights to equal protection as the president

This has been starkly illustrated recently in relation to the theft of money from the farm of the president We have heard hundreds of times from the media and the public that “he owes us an explanation” Any lawyer will advise you that, if a charge is laid against you, there is a right to remain silent Like most principles in law, the Romans had a phrase for it: nemo tenetur se ipsum accusare (“ no person is bound to accuse themselves”) That right to

silence, which can be exercised by everyone even when accused of a misdemeanour, is one of the many rights that must be respected

Pride month reminds us that no-one may unfairly discriminate against others on any of many systemic grounds mentioned in the bill of rights Gender, sex and sexual orientation are only a few of the prohibited grounds But this does not mean people with a different gender or sexual orientation to you or me is any sense different from anyone else in relation to basic human rights It is not a question of being fair to people, say, who fall within LBGTQI+ gender or orientation That label is not necessary because there is a separate LGBTQI+ community Labels become necessary because people unfairly discriminate against others, even against those in the majority as in the case of the universal discrimination

against women That differentiates us from, for instance, the US constitution where politicians can load the courts with judges holding a specific view and override years of entrenched and established basic rights

In SA the core value of our constitution is human dignity The courts have recognised many times that the right to employment is an essential part of that obligation That right begins with every child being entitled to basic nutrition and basic education, made accessible through reasonable measures by the state These are not rights invented for our constitution You don t need international conventions nor bills of rights to recognise how important it is that we embrace these rights practically and not just conceptually It starts from the recognition that everyone means everyone

This brings me back to the point that the bill of rights protects what the

Constitutional Court, in the death penalty case, called the social outcasts and marginalised people of our society People are not marginalised because of anything they have done

They are marginalised because other people impose self-created values that discriminate unfairly

A simple example: sex work in SA is criminalised

The law assumes that sex workers are deliberately embarking on criminal acts

This is inexcusable in a country with the levels of unemployment and poverty of SA If a country like New Zealand can decriminalise sex work, what possible basis can there be for not doing so in our constitutional

democracy where most of those involved in sex work are involved out of necessity, not choice And even it that were not the case, there is no reason and no constitutional basis for sex workers to be marginalised and criminalised

Pride month and youth month are just examples of the bigger picture We recognise the basic rights of people in all kinds of ways

There is some right or other being celebrated on virtually every day of the calendar These are not rights of separate classes of persons we have to give special attention to We are all equal individuals

Every case is an example of why everyone not only has equal rights but that everyone has an obligation not to judge unfairly whether any other individual has equal rights

● Patrick Bracher (@PBracher1) is a director at Norton Rose Fulbright

IF PUBLIC OPINION WERE DECISIVE, THERE WOULD BE NO NEED FOR THE CONSTITUTIONAL

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• If it is passed as written, the amendment will have substantial effects

THE AIM OF THE BILL IS TO REMOVE BARRIERS TO MVNO OPERATIONS AND TO INTRODUCE COMPETITIVE BENEFITS

How to avoid falling victim to genericide

• Businesses and consumers lose out when a trademark is reduced to an everyday term

Kaajal Nagindas

& Kay Rickelman

Foreign Counsel Spoor & Fisher

Genericide –(n ) the process by which a brand name loses its distinctive identity as a result of being used to refer to any product or service of its kind ”

Genericide of trademarks occurs when a trademark, originally distinctive and associated with a specific product or service, becomes so widely used that it loses its unique status and becomes a common term for the general product or service itself In other words, the trademark becomes generic, lacking the ability to identify and distinguish the source of origin of the goods or services

This happens when people call products by a name that is widely recognised (ie the trademark) rather than by the actual product name

Take this example: “Rachel had to put on a bandaid after she fell while using her rollerblades, since the kleenex she had used was insufficient to wipe away her blood ”

When a trademark becomes generic, it loses its legal protection, as trademarks are meant to identify and distinguish the source of goods or services

When a trademark undergoes genericide, it poses

significant challenges for the trademark owner as it can no longer be protected as a trademark, ultimately weakening the brand’ s identity and exclusivity

HOW DO TRADEMARKS

BECOME GENERIC?

The genericide of trademarks can be attributed to several factors One significant reason is the widespread and consistent use of a trademark over an extended period, resulting in it becoming deeply ingrained in the public consciousness When a trademark becomes synony-

GENERICIDE CAN CREATE CONFUSION AND DIMINISH THE ASSURANCE OF QUALITY ASSOCIATED WITH SPECIFIC BRANDS

mous with a particular product or service, consumers tend to use the trademark as the common, generic term Insufficient efforts by trademark owners to enforce their rights and educate the public about the distinction between the trademark (ie brand name) and the generic term can also contribute to the genericide Genericide also occurs when the trademark owner is the only manufacturer of

the product, so consumers end up referring to the product as the brand name

EFFECT OF GENERICIDE

Genericide has significant impacts on both trademark owners and consumers For trademark owners, the loss of distinctiveness and legal protection can be detrimental to their brand’ s reputation and market position

Genericide undermines the ability to differentiate their products or services from competitors, leading to potential loss of market share and decreased brand value Without exclusive rights to their trademark, owners may find it challenging to enforce against infringers, further weakening their position in the marketplace

On the consumer side, genericide can create confusion and diminish the assurance of quality associated with specific brands When a trademark becomes a generic term, consumers may no longer associate it with a particular source of origin, which can lead to uncertainty and a decline in consumer trust

Overall, the impact of genericide highlights the importance of trademark protection and the need for trademark owners to manage and preserve the distinctiveness of their brands

Here are some popular items which people may use to describe the product, instead of using the generic

term, which is in italic:

● App originally a trademark owned by Apple for a digital distributing platform;

● Band-Aid a trademark owned by Johnson & Johnson for an adhesive bandage;

● Bubble Wrap a trademark by Sealed Air for cushioned packing material;

● Crock-Pot a trademark by Sunbeam Products for slow cookers;

● Dictaphone a trademark by Nuance Communications for dictation machines;

● Fibreglass a trademark by Owens Corning for glass wool;

● Hoover a trademark by the Hoover Company for vacuum cleaners;

● Jacuzzi a trademark by Jacuzzi for hot tubs;

● Jet Ski a trademark by Kawasaki Heavy Industries for a personal watercraft;

● Lava Lamp a trademark by Mathmos Lava Lamp for a liquid motion lamp;

● Rollerblades a trademark by Nordica Sports Company for inline skates;

● Velcro a trademark by George de Mestral for hook and loop fasteners;

● Styrofoam a trademark by Dow Chemical Company for expanded or foamed polystyrene;

● Post-It a trademark by 3M for sticky notes;

● Play-Doh a trademark by Hasbro for modelling clay;

● Sellotape a trademark by Hinkle Consumer Adhesives

for clear adhesive tape;

● Speedo a trademark by Speedo for swim briefs;

● Tipp-Ex a trademark by Tipp-Ex & Co for correction

fluid;

● Tupperware a trademark by Dart Industries for plastic storage containers; and

● Thermos a trademark by Thermos GmbH and Thermos LLC for a vacuuminsulated flask

There have been notable instances where trademark owners are preventing genericide and are preserving the distinctiveness of their brands One such example is the brand “Coke” , which has managed to maintain its identity as a cola brand through extensive policing by the proprietor of the brand, Coca-Cola, of incorrect use

A further example is “Google” , where they are trying to ensure that the brand name is not used as a verb, thus protecting it as a trademark for search engines

These cases demonstrate the importance of proactive brand management and

MANAGING YOUR TRADEMARK TO ENSURE IT DOES NOT BECOME GENERIC IS A VITAL PART OF YOUR BUSINESS

efforts by trademark owners to prevent genericide and preserve the unique identity of their brands

STRATEGIES TO PREVENT GENERICIDE

There are several strategies that can be employed to avoid genericide of trademarks:

● Use the trademark as an adjective to the generic term (in other words, add a descriptor after the trademark) such as Vaseline petroleum jelly or Kleenex facial tissues

● Avoid using the trademark as a verb for example, to google

● Avoid using the trademark as a noun for example, hoover

● Do not use the trademark in a plural form for example, Legos instead of Lego bricks

● Add the word “brand” after the trademark for example, John Deere brand

● If possible, offer more than one product or service so that the brand does not become generic for a category

● In marketing campaigns, advertise the general, descriptive term alongside of the trademark

● Use special forms or capitalisation to distinguish trademarks from the generic term

● Monitor use by licensees

● Use the trademark symbol to signify ownership

● Monitor your trademark and protect it against infringement

Proactively managing your trademark to ensure it does not become generic is an important and a vital part of your business Once a trademark becomes generic, it will no longer be protected as a trademark and will be able to be freely used by third parties Back to our sentence about Rachel, we should refer to the trademarks mentioned as adjectives, describing the noun: “Rachel had to put on a Band-Aid® adhesive bandage after she fell while using her Rollerblades® inline skates while going down the road since the Kleenex® tissue she used was insufficient to wipe away her blood

Trade-offs needed in SA to make four-day week a reality

Jonathan Goldberg & Grant Wilkinson

Global Business Solutions

In April, the subject of a reduced working week for SA came up in a parliamentary Q&A session

A study conducted by researchers at Oxford University found SA has one of the longest working weeks in the world and this prompted the discussion

The government noted that research had previously been conducted into the state of the working week in SA

However, new data needed to be collected

The Basic Conditions of Employment Act (BCEA) states that workers are allowed to work a maximum of 45 hours per week (this does not include overtime)

However, these stipulations do not apply to senior managers or those who earn above the threshold (as of March 1 2023 the threshold was set at R241,110 59 per year ) Under a collective agreement, working hours can be averaged out over four months

THE FOUR-DAY WORK WEEK IN SA

Although popularised in recent years, the notion of the four-day work week was around for most of the 20th century In 1928 economist John Maynard Keynes predicted that the 15-hour work week would become the norm in the next century

Fast forward to the 21st century and in many countries the shortened working week has been implemented with great success

For instance, in one of its Japanese subsidiaries, Micro-

soft applied the four-day work week and productivity increased by 40% Overall, according to an article entitled Four-day work weeks are good for your health, a large study finds written by Jamie Ducharme, the fourday work week improves employees health by reducing anxiety and stress as well as enabling better sleep and more time for exercise The article appeared on the time com website A four-day work week could be applicable to some organisations Less time in

meetings and more time to focus on outputs can get an organisation to that point

What SA cannot afford is a reduction in working time without an increase in productivity or a reduction in pay So, for instance, in a factory working in a sevenday shift cycle, you could have a shift system accommodating a four-day working week with fewer hours worked That would, however, have to be with reduced pay or a guaranteed increase in productivity Covid-19 pushed us into a

new reality where South Africans and the world had to embrace technology and the new world of work While a four-day work week could be possible if the factors above are addressed, one suspects this would be a challenge to implement practically in the SA context across the variety of sectors operating here

As a result, it may be a journey rather than an event to get to this point But as Covid-19 showed us, never say never South Africans are innovative and resilient

BUSINESS LAW & TAX

Africa and critical minerals

Richard

Martin Baker McKenzie

Driven by the energy transition, the demand for critical minerals is expected to rise sharply, more than doubling by 2030 and quadrupling by 2050, with revenues reaching $400bn a year, according to the International Energy Agency’ s World Energy Outlook 2022

The growth in demand for major clean energy technologies and the need to deliver on the energy transition require huge quantities of critical minerals, for which announced supply capacity will not be adequate The market is recognising this, as demonstrated in recent price growth for many critical minerals (such as lithium, nickel and aluminium) This, in turn, has triggered increased investment in mineral exploration and production

As the world’ s top producer of many critical minerals, Africa has a special role in powering the global energy transition, with its critical mineral store expected to provide many opportunities for the continent in the next few years Among other

things, the continent is a major producer (and home to huge undeveloped resources) of metals including cobalt, copper, bauxite, chromium, high-purity iron ore, platinum group metals, lithium and rare-earth metals

Increasing interest from the major players in Africa’ s raw materials is evident in recent policy announcements from the EU and the US Both have emphasised the need to mitigate commodity supply chain risks and develop strategic agreements with countries able to

extraction, processing and recycling In addition, the recently agreed carbon border adjustment mechanism regulation will charge importers of a number of key products from carbon-intensive industries (for example steel, iron, cement and fertilisers) based on their embedded greenhouse gases, to “level the playing field” with domestically produced products that must pay the EU emissions trading system charge

NEGOTIATING

The intention is to prevent the dilution of EU carbon-reduction efforts by increasing emissions outside its borders, through the relocation of production to countries that have less ambitious policies to fight climate change

supply responsibly sourced critical minerals

In March 2023, the European Commission proposed its Critical Raw Materials Act, which aims to secure the EU’ s access to minerals and metals critical for net-zero technologies, including by strengthening international engagement and facilitating

The EU also recently announced that it was negotiating to source critical minerals from the Democratic Republic of Congo (home to much of the world’ s cobalt) and that it intended to do the same with other African countries such as Rwanda, Gambia and Zambia

The EU already has an agreement in place with Namibia in this respect

Similarly, the US signed the Inflation Reduction Act (IRA) into law in August 2022

The law permits subsidies for electric vehicles only if 40% of their critical minerals were mined or processed in the US or in a country with which the US has a free trade agreement Other clean energy technologies such as wind and solar do not need domestically sourced critical minerals to qualify for the subsidies, but the act includes a 10% bonus credit to incentivise companies to use locally sourced critical minerals in their clean energy components

The IRA names 50 applicable critical and rare-earth minerals for the energy transition, including cobalt, lithium, chromium and neodymium (used in turbine magnets), all of which are

TAXING MATTERS

abundant in Africa

At present, the majority of Africa’ s critical minerals are exported in the form of ores or concentrates Certain countries, including Namibia and Zimbabwe, have imposed export restrictions on some of their unprocessed critical minerals, noting that they are losing income by exporting raw materials They are planning to develop the capacity to process these minerals locally

The African Continental Free Trade Area, implemented in 2021, has acted as a strong impetus for African governments to address their infrastructure gaps, enhance and streamline supply chains, improve climate policies that fulfil net-zero commitments,

boost manufacturing capacity and overhaul regulation relating to trade, cross-border initiatives, investmentfriendly policies and capital flows It is expected that the trade in mineral commodities in Africa will benefit from these reforms, and that (among other factors) this will result in African countries undertaking a more active role in the sustainable processing of metals and minerals, better capitalising on the continent’ s vast mineral resource base

For Africa, the focus is firmly on how the global demand for critical minerals can be translated into sustainable growth of its mineral mining operations and production facilities, and how it can be ensured this growth will benefit the continent and its people, not just in terms of the demand for critical minerals but in how the continent can make use of its own resources to ramp up its energy transition and provide much-needed access to clean power

Consideration also needs to be given to the development and implementation, in the near future, of new policies in the EU and US dealing with decarbonisation across the full commodity supply chain, which are intended to preserve current off-take markets for commodities in these regions

It is time to develop the law on tax rectification

Rectification is a wellestablished common law right Scholars have described it as an equitable remedy that generally provides contracting parties with the right to correct mistakes where their common intention has not been reflected in instruments, such as a contract or resolution

In a fiscal environment, examples of such common mistakes that parties can rectify include error in corpore (performance), error in persona (mistake relating to the identity of the parties) and error in negotio (a mistake relating to a juristic act)

SA law remains relatively underdeveloped with the use of rectification in tax matters

The problem is that tax consequences generally arise out of agreements and instruments in the year of assessment in which they are concluded Still, parties may identify the common mistake that needs to be

rectified only in subsequent years Reported cases have dealt only with the consequences for contracting parties and none has involved the SA Revenue Service (Sars) as a litigant nor considered the fiscus’ s apparent interest in a rectified instrument

Rectification has been a longstanding remedy in many foreign jurisdictions

After the Juliar decision in 2000, rectification in tax-related cases in Canada has become very popular There is a trend that Canadian courts are broadening the grounds for equitable relief through rectification in tax matters

The UK has a similar dispensation and allows for

rectification in tax matters, but only under particular circumstances A recent example (of failed rectification) is MV Promotions Ltd and another v Telegraph Media Group Ltd and another [2020] EWHC 1357 (Ch)

The parties invited HM Revenue & Customs (HMRC) to join these proceedings since it has an interest in the outcome arising out of closure notices (similar to income tax assessments) issued by HMRC

In that case, it was argued that income from a broadcasting contract should be recognised and taxable in the hands of former international cricketer Michael Vaughan rather than in MV Promotions (MVP) MVP is the limited company through which Vaughan provides his nonplaying services to third parties, including his services as a cricket commentator

In 2008, MVP entered into a contract with a broadcaster Vaughan was

named as the counterparty who would provide the services Subsequently, the contract was amended to replace Vaughan with MVP as the named counterparty Invoicing under the contract occurred between MVP and the broadcaster, and not Vaughan

JUDGMENT

When the contract was renewed in 2011, the same errors were made as in 2008, likely due to an oversight, and again Vaughan was named the counterparty HMRC assessed Vaughan on the receipts, and the parties applied to the court for an order of rectification The high court judgment noted, regarding rectification, that:

The party seeking rectification must show that:

(1) the parties had a common continuing intention, whether or not amounting to an agreement, in respect of a particular matter in the instrument to be rectified; (2) there was an outward expression of accord; (3) the

intention continued at the time of the execution of the instrument sought to be rectified; (4) by mistake, the instrument did not reflect that common intention ”

In finding against (tax) rectification, the court noted that the broadcaster, MVP and Vaughan had effectively resolved the difficulty over the mistake about the identity of the true counterparty to the 2011 contract among themselves but not in respect to HMRC The question was whether this should have led the court to refuse to exercise its discretion in rectifying that contract

The court answered in the affirmative, declining rectification

The judge noted that an unusual feature of the case was that there was no evidence of any apparent tax-based motive for the 2011 contract It was essentially a tax-based claim in a non-tax-based setting

The court noted: the court will not order rectification of a document if the parties rights will be unaffected and if the only effect of the order will be to secure a fiscal benefit for one or more of them

Clearly, the hurdle for rectification in tax matters in foreign jurisdictions is high One expects a similar high hurdle will be set if SA tax law develops in line with foreign jurisdictions That notwithstanding, development in this area will significantly interest Sars and taxpayers

● Pieter Janse van Rensburg is a director at AJM Tax He also serves as a nonexecutive director on the board of the SA Institute of Taxation

CLEARLY, THE HURDLE FOR RECTIFICATION IN TAX MATTERS IN FOREIGN JURISDICTIONS IS

Blunt, Kieran Whyte, Marc Yudaken, Christopher Jones & Matthew

• The focus is on translating demand into growth

AT PRESENT, THE MAJORITY OF AFRICA’S CRITICAL MINERALS ARE EXPORTED IN THE FORM OF ORES OR CONCENTRATES

HIDDEN GEMS

/123RF ASSISTANT

BUSINESS LAW & TAX

New light on restraint of trade

whether such claim arise from contract, delict, operation of law, equity, fairness or otherwise”

Bradley Workman-Davies & Kelly Sease Werksmans

The question of the enforceability of a restraint of trade was dealt with in Warwick Wealth (Pty) Ltd v Anderson and Others (C178/2023) [2023]

ZALCCT 22

In this case the court had to determine whether a former employee whose employment contract contained a restraint of trade clause had been in breach after soliciting a sponsorship using the confidential information she acquired while she was under the employ of her former employer for the benefit of her new employer

The court found that there was a valid and enforceable restraint provision in the contract between the parties, and that since it was determined that Anderson had in fact acted in the manner complained of, she had been in breach of the restraint and such breach continued to prejudice

Warwick Wealth’ s protectable interests

In Wheelwright v CP de Leeuw Johannesburg (Pty) Ltd [2023] JOL 57978 (LAC) the labour appeal court (LAC) had to interpret the meaning of a clause incorporated in a settlement agreement concluded after the dismissal of an employee and determine whether such clause extin-

February 28 2010, and which incorporated a restraint of trade undertaking Shortly before the expiry date the parties verbally agreed that the employment relationship would continue on a permanent basis subject to the same terms and conditions

guished rights arising out of the enforceability of a restraint of trade enjoyed by the former employer

In this case, on April 26 2007 Wheelwright and his employer entered into a fixed-term employment agreement which would automatically terminate on

In September 2010, Wheelwright was appointed as an associate quantity surveyor by the employer and as such was required to enter into a further restraint of trade agreement with the employer, which replicated the previous agreement’ s restraint clause This agreement was concluded on September 10 2010 In August 2015, Wheelwright became a director of the employer’ s board of directors and also purchased 20% of the issued share capital of the employer

The employer subsequently suffered financial distress due to the Covid-19 pandemic, which resulted in a salary reduction for all employees, including its directors Dissatisfied with the salary reduction, Wheelwright claimed this was in

breach of his employment agreement and opted to be retrenched A dispute regarding the calculation of Wheelwright’ s severance pay arose, but notwithstanding this dispute the employer went ahead with Wheelwright’ s retrenchment

Dissatisfied with the terms of the retrenchment he referred a dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA) alleging unfair dismissal and failure to pay the current amount of severance pay due to him

At the arbitration proceedings the parties settled the dispute in terms of an agreement prepared by the CCMA which was concluded

VIEWPOINT AFRICA

on October 21 2021

The settlement agreement consisted of two separate documents (being a standard form document and Annexure A thereto) The standard form document contained a clause stating that the settlement agreement was entered by the parties in that they “agree to the full and final settlement of the dispute referred to by the CCMA as well as in full settlement of all statutory payments due to the applicant as reflected in paragraph 5 of this agreement”

The settlement agreement elsewhere stated that it was concluded “in full and final settlement of all and any claims which the parties may have against each other

When an opportunity arose for Wheelwright to work on a project not relating to the employer, the employer sought to enforce the restraint which was contained in the September 2010 contract of employment

However, Wheelwright took the view that the CCMA settlement agreement had extinguished the restraint agreement and as such that he was free to work on the project

The labour court initially held that Wheelwright had breached the restraint agreement because the claim only arose after the signing of the settlement agreement, which led to an appeal

On appeal before the LAC, it held that the provisions of the CCMA settlement agreement which purported to settle any and all disputes had to include disputes arising out of an alleged breach of the restraint undertakings which were contained in the September 2010 contract of employment

The use of the words “all and any claims” , the LAC found, meant exactly that

Courts have to consider public policy concerns

The Supreme Court of Uganda ruled recently in the keenly awaited appeal by Ham Enterprises against Diamond Trust Bank Uganda and Diamond Trust Bank Kenya

The court held that a lending transaction between a foreign bank and an Ugandan borrower does not constitute “transacting financial institutions business” as defined by the Financial Institutions Act 2004 (FIA)

This finally clarifies that a foreign lender does not require a licence from the Bank of Uganda (BoU) under the FIA to extend credit to Ugandan borrowers

Regardless of the finding of the court on the alleged illegality, this does not absolve a borrower from repaying its debts

In 2020, the high court shook the Ugandan market when it held that it was illegal for a foreign bank to lend money to a Ugandan borrower without a licence from BoU under FIA

The high court further held the loan agreement between the foreign bank and the Ugandan borrower unenforceable Ham

Enterprises borrowed money from Diamond Trust Bank Uganda (DTBU) and Diamond Trust Bank Kenya (DTBK)

A dispute arose when the borrower defaulted on its loan repayments and the borrower instituted a suit in the high court against DTBU and DTBK At trial, the borrower argued the loan agreements with DTBK were illegal and unenforceable due to DTBK carrying out financial institutions business in Uganda without a licence from BoU

The high court agreed

The decision of the high court threw the market into disarray, given the large number of foreign lenders to Ugandan businesses

The high court allowed the borrower to escape liability on the loan and walk away without repaying the borrowed funds, inflicting

financial loss to DTBK’ s investors

The decision was appealed to the Court of Appeal and then to the supreme court

The Supreme Court determined whether DTBK, as a foreign bank, engaged in transacting financial institutions business within Uganda and thereby required a licence under the FIA

The FIA prohibits a person from transacting any deposit-taking or other financial institutions business in Uganda without a valid licence The court stated that the key criterion to determine if a person is transacting financial institutions business in Uganda is whether that person holds money on deposit from Uganda, from which it extends loans to borrowers

In this case, the court found that the funds disbursed to the borrower had been transmitted by DTBK and were not deposits from Uganda DTBK did not receive or hold any deposits in Uganda and indeed did not lend the borrower out of any such deposits

As a result, the court

found that the FIA did not apply to DTBK as a foreign bank Furthermore, it held that the syndicated loan transaction between DTBK was lawful and referred the case back to the high court for retrial before another judge to determine the outstanding obligations owed by each party

This case settles an important point of law on the legality of transactions between foreign lenders and Ugandan borrowers Foreign lenders can carry on their business in Uganda with confidence, knowing that their lending transactions are enforceable under Ugandan law

Even if the court had found it illegal for a foreign lender to advance a loan to a Ugandan borrower without a licence from the BoU, the borrower would still have been obligated to repay the loan Under the Contracts Act 2010, a person who receives advantage under a void agreement is still bound to restore it or pay compensation to the person from whom they received the advantage In other words, the borrower would still have to repay the debt to DTBK

A similar conclusion was arrived at by the Supreme Court of Zambia in almost identical circumstances In the case of Zambia Extracts Oils and Colourants Ltd v Zambia State Insurance Pension Trust Fund (SCZ Judgment No 31 of 2016), a borrower from an entity not licensed under the Zambian Banking and Financial Services Act challenged a borrowing as illegal and sought to evade repayment

The court found that, where a statute (as does the FIA) imposes a penalty for contravention of its provisions, it cannot be the intention of the legislature to also void the contracts entered into in contravention of the law or at punishing the transgressors twice, that is, by imposing criminal sanctions and by voiding

THIS CASE SETTLES

their contracts as this would amount to double jeopardy

The court further stated that to allow the borrower to walk away with such a substantial sum without repaying it would be unconscionable and contrary to public policy and public interest

The courts must consider public policy concerns before invalidating such contracts For example, a finding that a contract made with an unlicensed banker is invalid would mean that persons who had deposited money with such unlicensed banker would be unable to recover money that such unlicensed banker had lent as it would be disabled from performing its own obligations, including those owed to its depositors

A

POINT OF LAW ON THE LEGALITY OF TRANSACTIONS

BETWEEN FOREIGN LENDERS AND UGANDAN BORROWERS

Given the great demand for affordable credit in the Ugandan market, this confirmation by the highest court, that doors are open to foreign lenders without a requirement for licensing, is good news for the market

● Rehema Nakirya Ssemyalo and Phillip Karugaba are from ENSafrica Uganda

• Two cases illustrate when such an agreement is enforceable and when it is extinguished

THE EMPLOYER SUFFERED FINANCIAL DISTRESS … WHICH RESULTED IN A SALARY REDUCTION FOR ALL EMPLOYEES

SHACKLED

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Employees who refuse to work overtime

were unfair

Thato Maruapula & Lutho Zono ENSafrica

Deliberate refusal to comply with a reasonable and lawful instruction can constitute a form of misconduct, known as insubordination, and can lead to a disciplinary hearing

The recent decision of the labour court in Amcu v Andru Mining (Pty) Ltd and Others dealt with the question of whether an employer ’ s instruction to work overtime qualifies as a reasonable and lawful instruction and if noncompliance amounts to insubordination

Andru Mining (Pty) Ltd charged four of its employees with gross insubordination when they refused to obey an instruction given by their site manager to work overtime in order to meet its production goals The employer alleged that this refusal resulted in a loss of production The employees were found guilty and dismissed following an

internal disciplinary hearing

Aggrieved by this outcome, the employees referred an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA)

However, the CCMA upheld the dismissal and the employees then sought to review the award in terms of section 145 of the Labour Relations Act, 1995

LABOUR COURT

The court reviewed and set aside the award and found that the dismissal of all four employees had been unfair Central to this finding was section 10 of the Basic Conditions of Employment Act, 1997 (BCEA)

According to this section,

HOWEVER, THE EMPLOYMENT CONTRACTS OF THE THREE OTHER EMPLOYEES DID CONTAIN AN OVERTIME CLAUSE

an employer may not require an employee to work overtime except in instances where there is an “agreement” between the parties

In the absence of such an agreement, the instruction to work overtime would be deemed unlawful

The court found that none of the four employees had validly agreed to work overtime The contract of employment of one of the employees did not contain a clause to work overtime; there was therefore no obligation for her to work overtime

However, the employment contracts of the three other employees did contain an overtime clause that required them to work overtime In this situation, section 10(5) of the BCEA had to be considered This section provides that an agreement to work overtime that is concluded when the employee commences employment, or that is concluded within the first three months of employment, lapses after one year

The court found that two of these employees had been

employed at the company for more than one year when the instruction to work overtime had been issued

As a result, the overtime agreements in their contract had already lapsed in terms of in section 10(5) of the BCEA Consequently, in the absence of an agreement to work overtime, the court found the instruction to the two employees to work overtime was unlawful and that they were not guilty of insubordination

However, the fourth employee’ s employment contract had an overtime clause but he had not been in employment for more than a year As such, the instruction to work overtime was lawful for this employee Despite this, the court considered the sanction of dismissal for the fourth employee’ s insubordination

It took into account the gravity of the rule breached; the

reason for his dismissal; the harm caused by the employee ’ s conduct; and the fact that this was a first offence The court determined the sanction of dismissal for insubordination was disproportionate and unfair

The court ultimately reviewed and set aside the CCMA award with a finding that the dismissals were substantively unfair and ordered reinstatement with retrospective full back pay

Importantly, the court considered whether an “agreement” to work over-

THE COURT CONSIDERED THE SANCTION OF DISMISSAL FOR THE FOURTH EMPLOYEE’S INSUBORDINATION

time can be implied from an employee’ s conduct in cases where there is either no agreement to work overtime or the overtime clause in the employment contract has lapsed

Although the court recognised the possibility of such an agreement, it found that in this case there was no evidence to show that there was an “implied or tacit” agreement for the employees to work overtime

It is important to bear in mind that section 10 of the BCEA does not apply to senior managerial employees or employees who earn above the threshold salary referred to in section 6(3) of the BCEA which is currently R241,110 59 per annum

● Reviewed by Peter le Roux, an executive consultant in ENSafrica’ s employment department

Validity of restraint of trade agreements

Bradley Workman-Davies & Kelly Sease

Werksmans

In many cases when employers hire executive-level, management or key employees, there is a recognition that these hires can impact the success of the business, due to the individual s recognition in their industry, or knowledge and experience, or client and customer relationships, or a combination of all of these qualities

Equally, employees can gain invaluable experience and form meaningful networks due to their positions at their employer

As such, it is not uncommon that employers seek ways to protect their proprietary interests after executive or key employees leave the organisation One such way is by incorporating restraint of trade provisions/clauses in

employment contracts

This is an important innovation since there is nothing implicit in the employment relationship which allows for post-termination protection against unfair competition Any such protections must be concluded in contract between the parties

This is so that in the event

of termination of the key person s employment, the restraint of trade clauses operate to restrict the employee from taking up employment of similar work/nature in competition with their former employer

Although these kinds of undertakings are fairly restrictive of an individual s

rights to conduct a trade of their own choosing, and the constitutionality of such undertakings is sometimes queried, it must be appreciated that in SA these kinds of restrictive covenants are prima facie enforceable by a court However, since the courts are sensitive to the inroads which these kind of

undertakings make on an individual s basic rights, the courts always reserve the discretion to assess the reasonableness of the restraints

When deciding whether restraints are valid and enforceable, courts will consider various factors, such as whether the employer has a protectable interest and result in being potentially prejudiced by the employee and whether the restraint is reasonable and against public policy Specifically, any posttermination restrictions must be for a reasonable specified period and should operate only within a specific geographical location

It is evident that enforceability of restraint of trade clauses is not as simple and straightforward as one may think The enforceability of a restraint of trade agreements/clauses may involve making a value judgment by

the court tasked with enforcement to decide whether the restraint is reasonable in balancing the various rights and interests of the parties, and therefore enforceable

When drafting such clauses or agreements employers should consider all possible circumstances surrounding the termination of the employment to enjoy the full benefits arising therefrom

Also, care should be taken when settling disputes with employees

When contractual relationships have been concluded which would usually endure beyond the termination of the employment relationship, these should be specifically carved out from the ambit of a settlement, failing which the approach of the labour appeal court in Wheelwright (see article on pg 8) would be likely

• Labour court spells out why dismissals of Andru Mining employees for insubordination

NHI bill leaves key questions up in the air

Martin Versfeld, Prelisha Singh, Glenn Penfold & Robert Appelbaum Webber Wentzel

The National Health Insurance (NHI)

Bill was recently adopted by the parliamentary portfolio committee on health and was approved by the National Assembly on June 14 2023 It will now be tabled before the National Council of Provinces

The bill provides for the establishment of the NHI Fund aimed at promoting the laudable purpose of universal access to quality healthcare It is envisaged that the fund will purchase healthcare services and products from accredited service providers and health establishments, including hospitals which we refer to, collectively, as service providers including private service providers that choose to contract with the fund

Many stakeholders and experts have raised concerns that the NHI scheme envisaged in the bill is unaffordable, particularly as it would require an extensive administrative apparatus A related concern is the extent to which NHI will rely on the public healthcare system to deliver services, and the capacity of that system to provide an acceptable quality of services

Given the dire state of

public healthcare in our country, it is surprising that the government persists with plans to spend vast resources on implementing NHI Those resources would greatly improve the delivery of quality healthcare and universal access to that care if they were deployed directly in the public health sector

In view of the questions about the affordability of NHI, the provisions of the bill providing for the income of the fund are of particular interest

WHAT THE DOCTOR ORDERED?

annually “in the prescribed manner and in accordance with the provisions of this act” Given its importance to sustainable access to healthcare, one would at least have expected the bill to make clear that the payment rates must be set at a level that allows providers to cover their efficient costs and make a reasonable return

Clause 49 states that the fund’ s chief source of income will be money appropriated annually by parliament This must be appropriated from collections of, among others, general tax revenue, a payroll tax and a surcharge on personal income tax

This taxation regime is, however, difficult to reconcile with clause 2, which states that the fund will be funded through mandatory prepayment (a term that is defined as compulsory pay-

ment for health services before they are needed in accordance with income levels”) and clause 55(1)(t), which empowers the minister to make regulations on “all fees payable to the fund”

One of the challenges in interrogating the NHI scheme envisaged in the bill is that it leaves many of the key issues to be determined later

For example, the extent of the benefits to be covered by the fund and the rate of reimbursement both of which are crucial to assessing both the affordability of NHI and its impact on the provision of quality healthcare are not yet known (see clause 10(1)(g))

MEDICAL SCHEMES

The bill also leaves a broad range of matters for the health minister to prescribe through regulations

These matters include the rules on portability, which will allow patients to be treated by service providers other than those with whom they are registered (clause 7(2)(b)); the referral pathways between service providers (clause 7(2)(d)(ii)); the coding systems to be employed (clause 39(5)(b)); the relationship between the fund and medical schemes (clause 55(1)(n)); and “the scope and nature of prescribed healthcare services and programmes and the manner in, and the extent to which, they

must be funded” (section 55(1)(w))

The bill’ s preamble states that its purposes include to “create a single framework for the public funding and public purchasing of healthcare services, medicines, health goods and healthrelated products” and to “eliminate the fragmentation of healthcare funding”

A key question that arises is what role medical schemes will continue to play and, indeed, whether they will be able to continue to exist Clause 33 of the bill stipulates that once the minister has determined that NHI has been fully implemented, medical schemes “ may only offer complementary cover to services not reimbursable by the fund” Similarly, clause 6(o) states that users of healthcare services are entitled to “purchase healthcare services that are not covered by the fund through a complementary voluntary medical insurance scheme” In other words, medical schemes may not cover healthcare services that are covered by the fund

Since the fund is intended ultimately to cover a comprehensive range of benefits, the bill envisages that the businesses of medical schemes will shrink dramatically, which may, of course, threat-

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en their continued existence

This regime is likely to face constitutional challenge, including on the basis that it infringes: (a) the right to access healthcare services, by forcing many people who currently access private medical care via medical scheme funding to rely on what is currently a woefully inadequate public healthcare system; (b) the property rights of medical schemes and their administrators; and

(c) the right to freedom of trade, occupation and profession

Another crucial issue is how the bill will regulate accredited service providers Clause 39(2) imposes onerous requirements for accreditation, including the submission of a “budget impact analysis” One area of concern, as mentioned above, is that the bill does not clarify how reimbursement rates will be determined Clause 10(1)(g) simply states that the fund must set payment rates

Another cause for concern is that clause 38(6) envisages that an accredited service provider must procure health-related products (including medicines and medical devices) according to the fund’ s formulary, and that suppliers listed in the formulary must deliver directly to the service provider or establishment To the extent that this clause requires private service providers to procure from suppliers chosen by the fund, this blurs the line between public and private procurement, reduces competition and unduly restricts private service providers in the conduct of their business

The role that the bill contemplates for the minister is also potentially problematic

For example:

● Clauses 4(1) and 7(1) provide that the fund must purchase healthcare services “in consultation with the minister” (which our courts have held means that the minister’ s concurrence is required) It is wholly impractical to require the minister to concur in the purchase of healthcare services

● It is unclear to us why the minister must agree on detailed issues that require the application of clinical judgment, such as the benefits to be determined by the fund’ s benefits advisory committee and the formulary to be employed by the fund (clauses 25(5)(c) and 38(5))

While seeking to secure universal access to quality healthcare is generally supported and rightly so the bill represents an overhasty effort to fundamentally restructure the public health service with potentially devastating consequences for healthcare providers and consumers alike

Important BEE changes in proposed listing amendments

Verushca Pillay, Jarryd Hartley & Simon Mateus Baker McKenzie

On June 15 2023, the Johannesburg Stock Exchange (JSE) published an announcement proposing certain amendments to listing requirements, including a new section 23, which is a self-standing section containing the listing requirements relating to a listing on the BEE segment of the JSE

Sections 23 1 to 23 3 mirror the current requirements for a listing of securities on the BEE segment, as set out in

sections 4 32, 4 32A, and 4 32B of the listings requirements As a reminder, these requirements include that trading in BEE securities must be restricted to a BEEcompliant person pursuant to the use of either a BEE contract or a BEE verification agent Such requirements also provide for the terms that an applicant issuer must comply with in relation to the use of the BEE contract or BEE verification agent to regulate the ownership and trading in its securities by BEE-compliant persons

In terms of the current

requirements for a listing of securities on the BEE segment, an applicant issuer must also meet the basic listing criteria in sections 4, 15, 19, 20 or 21 of the listings requirements

RINGFENCED

Section 23 1(a) makes provision for listing as a BEE SPV (defined as a special purpose entity created with the specific objective of facilitating a BEE transaction ) as an alternative to listing as an issuer that is capable of meeting such basic listing criteria

A BEE SPV must have

committed capital or subscribed capital of at least R10m prior to listing and must have assets that are held by a trust, ringfenced entity or through an issuer that has insolvency remoteness from the arranger or issuer of the underlying assets, and which must be administered by trustees or directors in the interests of the shareholders of the SPV

The SPV s assets may be listed or unlisted It does not have to have a financial history; it may be a newly incorporated entity without assets or historical financial

information provided that its latest audited balance sheet is included in the pre-listing statement

BENEFIT

The introduction of provisions to enable the listing of a BEE SPV is encouraging The immediate benefit would be to enable the listing and trading in BEE securities from the outset of a BEE ownership transaction, thus potentially boosting participation by a broad section of public BEE shareholders in the transaction and providing them with access to liquidity

The issuer of the assets held by the SPV will have the benefit of an evergreen BEE shareholder with a broad BEE-compliant shareholder base

Section 23 contains more detailed requirements for the listing of securities of a BEE SPV It sets out the continuing obligations and makes provision for the publishing of circulars and announcements by issuers listed on the BEE segment

The JSE has invited comments on the proposed amendments by close of business on July 17

• Funding, the benefits to be covered and the role of medical schemes have not been determined

MANY STAKEHOLDERS AND EXPERTS HAVE RAISED CONCERNS THAT THE NHI SCHEME IS SIMPLY UNAFFORDABLE

MEDICAL SCHEMES WILL SHRINK DRAMATICALLY WHICH MAY, OF COURSE, THREATEN THEIR CONTINUED EXISTENCE

ChatGPT is a new route for cyberthieves

Kayla Casillo & Alexander Powell ENSafrica

OpenAI has rolled out a ChatGPT application programming interface (API) and made it available to the public, enabling companies to incorporate customised ChatGPTfunctionality (such as content generation or summarisation) into their platforms or systems

However, using the ChatGPT API, or any API for that matter, comes with certain risks concerning cybersecurity, availability and functionality, and data protection, which will need to be carefully monitored and mitigated if necessary

CYBERSECURITY

The ChatGPT API can serve as an additional attack vector within the organisation, where cybercriminals can seek to gain access to the company ’ s API key According to OpenAI, a compromised API key may allow a person to gain access to the API, which not only could result in your API credit account being consumed and depleted therefore leading to unexpected charges, but also

result in potential data losses and disruption to ChatGPT access Furthermore, if a cybercriminal gains access to the ChatGPT API key, they may be able to unlawfully harvest or exfiltrate company data by accessing the company ’ s databases Therefore, cybersecurity concerns remain one of the key risks that a company will need to mitigate when using the ChatGPT API

functionality will be to the business and assess this against the extent to which they wish to rely on a thirdparty tool

DATA PROTECTION AND CONFIDENTIAL INFO

To the extent that users disclose confidential information or personal information on the platform, there is a risk that the API incorporated into the platform may expose the company to data privacy risks, including the unauthorised access to or disclosure of sensitive information which may be stored in thirdparty databases

AVAILABILITY AND FUNCTIONALITY

The availability and functionality of the ChatGPT API is dependent on a third party (for example OpenAI) If ChatGPT’ s API is experiences downtime, it is likely that the company will experience disruption to the functionality of the ChatGPT component incorporated in its platform Companies should evaluate how critical ChatGPT’ s

Although OpenAI recently updated its data usage policy to reduce the period for storage of personal data to 30 days before it is deleted and to exclude the usage of personal data for model improvement purposes, these changes may not entirely mitigate the risks and companies may still be susceptible to disclosed company data being used as an input to further train Chat GPT

ILLEGAL AND MALICIOUS CONDUCT

It may be possible for cybercriminals to bypass the ChatGPT API’ s anti-abuse restrictions by using the ChatGPT

API as a means to execute cyberattacks by generating malware code, phishing emails and the like Cybercriminals have become sophisticated in their approach to cyberattacks, and there is a risk that the cybercriminals will set up Telegram bots which are linked to, and capable of, prompting ChatGPT to generate such illegal and malicious content

Security is one of the biggest concerns regarding the use of the ChatGPT API, and a company should ensure it applies best practice and measures for API key safeguarding, which include:

● Always using a unique API key for each team member on the company ’ s account;

● Not sharing API keys (which is prohibited by OpenAI’ s terms of use);

● Never committing API keys to repositories;

● Using a key management service; and

● Monitoring the token usage and rotation of API keys when needed

As an alternative to using ChatGPT’ s API, a company can develop its own artificial intelligence language model Large language models (LLMs) can be easily replicated and deployed within an insulated enterprise environ-

ment Recent examples, such as the Stanford University’ s Alpaca, show that LLMs may be less costly to develop and offer similar functionality and advantages to ChatGPT This approach may mitigate the company ’ s exposure to risks surrounding the company ’ s intellectual property, data privacy and disclosure of confidential information

As a secondary alternative, OpenAI has recently started releasing ChatGPT plugins, which are tools that allow ChatGPT to connect to a company ’ s API to retrieve information from the company in order to retrieve realtime information or to assist users with certain actions

Since the ChatGPT plugins would be connected to a company ’ s system and granted access to certain company information in realtime, the risks are akin to those identified for the ChatGPT API, and could expose the company to security vulnerabilities, performance impacts and delays, and compatibility issues causing reduced functionality of the system

The risks associated with the use of ChatGPT plugins can be mitigated by implementing the following measures:

● Evaluation and curation of

plugins;

● Conducting security assessments;

● Updating plugins regularly;

● Setting up user access control;

● Establishing a contingency plan; and

● Training users on the acceptable use of the ChatGPTplugin Therefore, if a company plans to integrate the ChatGPTAPI or plugins into its systems, the company should ensure it has implemented all necessary safeguards to mitigate the identified potential risks referred to in this article, most importantly ensuring the company stores and maintains the confidentiality of its API keys and deploys measures to counteract the possibility of security vulnerabilities caused by the use of the ChatGPT API or plugins Regardless of whether a company is looking to use the free or premium version of ChatGPT within its organisation, use the ChatGPT API or use ChatGPT plugins, the company should have a formal policy in place to ensure and promote the responsible use of artificial intelligence and associated tools within the organisation, and should provide adequate training to users on the associated risk

Insured pays dearly for partly dodgy claim

Evan Pickworth

BD Law &Tax Editor

While many may believe that good luck does not last forever but good insurance does, this was not the case for the rather luckless respondent in a recent key decision

In Discovery Insure Limited v Masindi (534/2022)

[2023] ZASCA 101 (June 14 2023) the SCA had to decide whether a partly fraudulent and partly genuine claim arising from the same incident results in the forfeiture by the insured of the claim in its entirety

While this may be a bitter pill for many insured to swallow, the court found the

clause was clear and unambiguous and explicitly provided that on breach of its terms Discovery would be entitled to terminate the policy with retrospective effect from the date of the incident giving rise to the claim So, when the respondent purported to submit his claim on November 11 2016 there was no longer an extant insurance policy because it had already been terminated with retrospective effect from November 10 2016 the date of the incident pursuant to the clause Discovery was entitled to a refund of all moneys it previously paid to the respondent Before this, the high court only ordered

repayment of R675,000 for accommodation (with interest and costs) this was the partly fraudulent part of the claim

The respondent took out the policy for specified insured risks, described as a Discovery Insure Plan, to insure, inter alia, his dwelling in Pretoria and household contents, against certain risks resulting in total loss or damage howsoever caused The policy provided, among other things, that if the risks insured against eventuated, resulting in damage to his residence, rendering it unsuitable for human habitation, Discovery would be obliged to compensate the respondent for the

resultant damage to the buildings and household contents, and, where applicable, to reimburse the respondent for his out of pocket expenses incurred for what the policy described as emergency accommodation

The policy further provided that if any portion of a claim lodged with Discovery by the respondent is fraudulent, Discovery would be entitled to cancel the policy with retrospective effect from the date of the reported incident, or alternatively the actual date of the incident, whichever was the earlier

Consequently, Discovery asserted it had a right to reclaim all amounts paid to

the insured, namely the respondent in this instance, subsequent to the retrospective cancellation date

On November 11 2016, following the occurrence of the risk insured against, the respondent submitted a single claim under the building section of the policy for losses caused by storm damage to his residence

The claim had two components: first, the cost of repairs to the respondent s residence and damage to household contents and, second, emergency accommodation Consequently, at various times from

December 7 2016 to May 25

2017 Discovery paid to the

respondent the aggregate amount of R1,594,980 12 in settlement of both components of the claim

The court analysed the law as well as the contractual clause in detail It found that the clause is clear and unambiguous and explicitly provides that on breach of its terms, Discovery would be entitled to terminate the policy with retrospective effect from the date of the incident giving rise to the claim

As forfeiture clauses of this kind are now common features in insurance contracts, policyholders should be wary of trying to dupe their insurer by squeezing through something not allowed

• Additional risks to data and for infiltration will have to be carefully monitored by companies AS AN ALTERNATIVE TO USING

’S API, A COMPANY CAN DEVELOP ITS OWN

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AfCFTA investment disputes

INVESTING IN AFRICA

Chandni Gopal, Sarah McKenzie & Yael Shafrir Webber Wentzel

On February 19, AU heads of state agreed to adopt a protocol on investment to the African Continental Free Trade Area (AfCFTA) agreement

The protocol aims not only to encourage intra-Africa investment flows and opportunities but also to protect the sustainable development of member states and to incorporate environmental, social and governance (ESG) principles in a way that is relevant to Africa

While the adopted protocol is not publicly available, the final draft version provides insight into its objectives and how member states will seek to achieve them

Currently, foreign investment on the continent is regulated by a complex web of regional, bilateral and national investment treaties The protocol seeks to replace bilateral investment treaties through the renegotiation of a regional investment treaty

One of the protocol’ s important stated objectives is to provide a sound legal framework for the prevention, management and settlement of investment disputes

This issue has been rather contentious While the latest draft protocol includes provisions related to state-state dispute settlement (article 44) and dispute prevention and grievance management (article 45), it does not currently contain concrete provisions on dispute resolution when

these measures have failed

Article 46, which deals with dispute resolution, indicates that rules and procedures governing dispute resolution will be negotiated and set out in an annex which will be finalised and adopted within 12 months of the date that the protocol is adopted

It is not surprising that the annex remains the subject of scrutiny and protracted negotiation between AfCFTA member states

The resolution of trade disputes between investors and states is a complex and thorny issue on the continent

Historically, investment treaties have included investor-state dispute settle-

in the host state courts ISDS provisions were a breakthrough, giving investors a direct right of recourse and protection They were widely assumed to boost foreign direct investment

However, because ISDS provisions give investors an almost unfettered power to institute proceedings directly against sovereign states, they have been criticised for limiting governments’ ability to regulate as they see fit These regulations would relate to, for example, furthering public policy goals, protecting the environment or, in SA’ s case, advancing BEE

For this reason, both SA and Tanzania have passed laws steering investment disputes away from ISDS

BALANCE

Although the annex on dispute resolution is still in draft form, it is anticipated, based on an earlier draft of the protocol that included a first version of the annex, that it will include the possibility of international arbitration

especially sustainable development

ment (ISDS) provisions

These provisions provide that an investor from one country (the “home state”) who has invested in another country (the “host state”) can bring a claim directly against the host state in an arbitral forum, rather than in the domestic courts of the host state Without ISDS, investors wanting to enforce their rights would have to seek the intervention of their home government, if the actions of a host state caused them harm or loss of profit, or they would have to rely on actions

A statement by the task force responsible for finalising the annex suggests that the relevant “dispute resolution mechanisms could include, among others, utilising the dispute settlement body established under the AfCFTA protocol on dispute settlement or arbitration or domestic or regional courts”

If some version of arbitration is included in the annex, it is encouraging that the latest available version of the protocol seeks to balance investor protection with the right of member states to regulate their own affairs,

For example, article 13 provides that measures taken by member states that are “designed and applied to protect or enhance legitimate public policy objectives such as, but not limited to, public morals, public health, prevention of diseases and pests in animals or plants, climate action, essential security interests, safety and the protection of environment” should not be construed as a breach of the protections afforded to foreign investors

This approach is in keeping with AfCFTA’ s affirmation of the importance of ESG principles and objectives in a way that is relevant to Africa

It is also in line with a recommendation by the Uncitral working group on ISDS reform that investors’ access to ISDS ought to be circumscribed in sensitive policy areas

In addition, an entire chapter of the protocol is dedicated to sustainable development-related issues,

which reaffirms the right of member states to regulate and adopt measures aimed at promoting sustainable development Article 24 specifically provides that measures taken by member states to comply with international obligations under relevant treaties will not constitute a breach of the protocol This is

lier draft of the protocol) that the annex is likely to include a mechanism that allows member states to file counterclaims This would allow host governments to invoke relevant international treaties such as those relating to human rights, ESG imperatives and sustainable development in defending claims and would allow member states to counterclaim for breaches of investor obligations set out in the protocol

The AfCFTA creates the largest free trade area in the world in terms of geographical size and population, and it has the potential to radically transform trade and investment in Africa

especially important in the context of climate commitments such as the Paris Agreement and the need to phase out fossil fuels, a move that could otherwise breach investment protections

Linked to this, there has been a suggestion (based on what was included in an ear-

As the annex is negotiated, member states will need to engage with difficult questions about whether or not to include ISDS, and how to ensure adequate investor protection more broadly While the stakes are high, there is an opportunity for Africa to forge a new approach in this highly contested area

• Protocol’ s objectives include providing a sound legal framework to solve complex and thorny issues

THE ANNEX REMAINS THE SUBJECT OF SCRUTINY AND PROTRACTED NEGOTIATION

BETWEEN AFCFTA MEMBER STATES

THERE IS AN ENTIRE CHAPTER OF THE PROTOCOL DEDICATED TO SUSTAINABLE DEVELOPMENTRELATED ISSUES

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