BUSINESS LAW &TAX Employers’ duties during lockdowns and blackouts

Brian Patterson & Amy Pawson ENSafrica

Heavy restrictions placedon business operations in SA under the Disaster Management Act (DMA) during the Covid-19 pandemic meantmany employers were unable towork and consequently faced challenges inmaking payments to their employees in terms of their employment contracts or collective agreements.

Courtsare nowproviding more clarityon what employer obligations were when facedwith supervening impossibilityof performance during theinitial period of the Covid-19 pandemic. In therecent decisionin

Glencarol (Pty) Ltd v National Bargaining Council for the Clothing Manufacturing Industry (NorthernChamber) and Another, VanNiekerk J dealt with an application to review an arbitration award

DIFFICULTY OR OPERATIONAL CHALLENGES IN RUNNING A BUSINESS DOES NOT RESULT IN LEGAL IMPOSSIBILITY OF PERFORMANCE wherethe arbitratorhad uphelda bargainingcouncil’ s compliance order compelling theGlencarol (Pty)Ltd(the employer) to complywith a collective agreement relating to thepayment ofannual bonuses and leave pay.

During the initialperiod of the nationallockdown in 2020, theDMA Regulations prohibited the employer from conducting businessand its employees wereprohibited from attending work.

Subsequently, whencalculating itsemployees’ annualleave payandannual bonuses entitlementin terms of a bargaining council collective agreement,the employer excludedthis periodof the “hard lockdown” from its calculation.

The bargaining council did notagree withthisapproach. It issued a compliance order instructing theemployer to comply withthe clauses relatingto thepaymentof annual leave payand bonus-

Hard Times

es. Thearbitrator foundthat the employerhad contravened certain clauses of the collective agreement because, among other things:

● The mere factthat it became difficultor expensive to dischargeobligations did not meanthat performance had become impossible;

● Nothing indicatedthat all players in the industry were unable orcould notcomply with thecollective agreement; and

● If performancewas objectively impossible,the parties to thebargaining council could havesuspended the collective agreement s provi- sion, but did not do so.

On review inthe Labour Court,Van NiekerkJacceptedthat, duringthe periodof thehard lockdown,boththe employer andthe employees could notperform theirobligations in termsof the emEMPLOYEES COULD NOT LAWFULLY TENDER THEIR SERVICES AND, AS A RESULT, THE EMPLOYER WAS NOT REQUIRED TO PAY THEM

/123RF PIPPOCARLOT ployment contracts and that it wouldhave beenunlawfulto do so. In effect,this meant the employees couldnot lawfully tender their services and, as a result, the employerwas not required to pay them. The court furtheraccepted the periodduring whichthecontract was, in effect, suspendeddid nothaveto betaken into accountwhen calculating leave payand annual bonuses.

Inthe lightof theabove, the arbitrator saward was found to be incorrect and was set aside.