Herewith an important summary for our clients who are based in a foreign country, but employ staff / teams who execute their duties / functions within the borders of South Africa (SA).
When a foreign embassy is situated in South Africa it is in fact, according to law, based on foreign soil. A South African working at a South Africa based foreign embassy would therefore be subject to the labour law of that foreign country.
However, a branch of a foreign company based in or operating out of South Africa is not considered to be on foreign soil and is therefore subject to South African law. Our labour laws strongly protect South African employees, and anybody employed legally in South Africa.
Furthermore, our courts do not easily give up jurisdiction to foreign courts. Take note, in the case of August Lapple (SA) vs Jarrett & others (2003, 12 BLLR 1194)*, the dismissed employee had been the managing director of the South African subsidiary of said German company. He referred his dismissal to the Bargaining Council for the Motor Industry in South Africa.
However, the employer (in SA) disputed the council’s jurisdiction as it claimed that it had been the company’s head office in Germany that had dismissed the employee. The arbitrator ruled that the bargaining council did indeed have jurisdiction. The employer therefore referred the jurisdiction ruling on review to the Labour Court which found that:
“Foreign employers can’t escape South African labour law.” – Ivan Israelstam (South African Labour Law Consultant)
Even South Africans working outside South Africa can, in certain cases refer labour disputes to the South African dispute resolution system. For example, in the case of Kleinhans vs Parmalat SA (Pty) Ltd. (2000, 9 BLLR 879), the employee was retrenched after having worked in Mozambique. The Labour Court decided that:
In the case of Parry vs Astral Operations Ltd. (2005, 10 BLLR 989), the employee was retrenched after having worked in the position of general manager of the employer’s operations in Malawi. The Labour Court decided that:
In the light of these cases, all employers should not assume that they can hide behind foreign incorporation or foreign workplaces. In other words, they should not assume that they need not follow South African law merely because foreign elements exist in the working situation and or contracting thereof.
Instead, employers should first obtain expert labour law advice from their trusted advisor/s before terminating contracts or taking any action of any nature as governed by labour law against employees regardless of where the employee works or where the employer is based.
If you have any labour law queries or requirements then please contact Crowe DNA for assistance. Our digital Employee Relations Guide (ERG) platform covers 36 countries across Africa enabling our team of experts to advise across borders.
*Summarized and referenced by Crowe DNA with associate legal experts & partners.# 011 / 2020/21
Dale Holloway Crowe DNA (Pty) Ltd
Somerset West, South Africa
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your adviser for specific and detailed advice. Errors and omissions excepted (E&OE)