Of prostitutes and foreigners

Invalid contracts and the LRA

In two recent judgments, the Labour Court has dealt respectively with claims by a
foreigner and a “sex worker” that they were unfairly dismissed. John Grogan
examines the judgments, and finds that foreigners without work permits are better off
than prostitutes.

What do prostitutes and foreigners working in South Africa without work permits have
in common? It took an Argentinean national and a woman who worked for a Cape
Town “massage parlour” to establish the link: both, it turns out, are “employees”
within the meaning of the statutory definition of that term. But the similarity ends
there. The Labour Appeal Court has now decided that foreign nationals working
without work permits may bring actions for unfair dismissal under the Labour
Relations Act 66 of 1995, but that prostitutes may not.

Discovery Health Limited v CCMA & others [2008] 7 BLLR 633 (LC) and “Kylie” v
CCMA & others [2008] 9 BLLR 870 (LC) both involved claims of unfair dismissal. When
the disputes came before the CCMA, the arbitrating commissioners had to consider
whether they had jurisdiction to entertain them. In Discovery Health the employer
argued that when it employed the Argentinean, Mr Lanzetta, his work permit had not
been renewed so he could not be an employee because the contract was invalid.

That argument assumed that the statutory definition of “employee” contemplates that
an employee is a party to a valid contract of employment. That assumption had
already been accepted by the commissioner in “Kylie” (see “Kylie” / Van Zyl t/a
Brigittes [2007] 4 BALR 338 (CCMA)). She reasoned, inter alia, that because part of
the work performed by “Kylie” was prohibited under the Sexual Offences Act 23 of
1957, as amended by Act 32 of 2007 (“the SOA”), the LRA did not apply to her and
that:
“[t]he fact that sex workers are not specifically excluded in terms of section 2 of the LRA
does not mean as argued that they are included. If that were so it could be argued that
any person who is paid by another to undertake an activity which is criminalised would be
able to access the LRA as well as other statutes enacted for the protection of workers and
thus the majority of cases referred would be in favour of the applicant. Further, the
commissioner would not be able to implement the remedy of first choice being re-
instatement or re-employment.”

It followed, said the commissioner, that “sex workers” (or, as the legislature has
termed them in section 20 of the SOA, “persons living on earnings of prostitution or
committing or assisting in the commission of indecent acts”) could not be
“employees”, and that the CCMA accordingly lacked jurisdiction to entertain the
dispute.

In Discovery Health, the commissioner reasoned differently. He accepted the

employee’s argument that whether or not a person falls within the definition of
employee depends not on the existence of a valid contract of employment, but on the
existence of an employment relationship between the parties. Even though the
commissioner recognised that the employment relationship could not continue after
Lanzetta had lost his work permit, he could see no reason why Lanzetta should not
enjoy protection under labour legislation before his employer took the decision to
terminate the relationship. The commissioner accordingly ruled that the CCMA had
jurisdiction to entertain the dispute.

On review, the Labour Court adopted approaches different from both commissioners,
but in each case confirmed the respective commissioners’ findings. In Discovery
Health the court noted that, although the Immigration Act 13 of 2002 (“the
Immigration Act”) prohibits employing foreigners without work permits, the only
consequence of so doing is that the employer is guilty of an offence. While the courts
may once have held the view that a contract is void even if only one party is subject
to a criminal penalty (see Standard Bank v Estate Van Rhyn 1925 AD 266 and Lende v
Goldberg [1983] 1 All SA 437 (C)), that has never been a general proposition. Apart
from the fact that each statute must be independently interpreted, all legislation must
now be interpreted in the light of the Constitution. Mr Lanzetta’s constitutional right to
fair labour practices was at stake.

The question, according to the court, was whether ruling a contract between an
employer and an illegal immigrant void would defeat the purpose of the Immigration
Act. In the court’s view it would do the contrary; if Discovery Health’s argument were
to be accepted, it would mean that unscrupulous employers could employ foreigners
for periods convenient to themselves, then disavow their contracts and leave the
foreigners remediless. This would not only encourage the very “mischief” the
Immigration Act was designed to prevent. It would also frustrate the primary purpose
of section 23 of the Constitution of the Republic of South Africa, 1996 (“the
Constitution”), which confers a right to fair labour practices on “everyone”. If the
validity of the contract was not affected by the employee’s loss of his work permit, it
followed that, even if a valid contract is a prerequisite to parties acquiring the status
of employee and employer within the meaning of the statutory definition of those
terms, Lanzetta was an employee, and the termination of that contract by Discovery
Health constituted a dismissal within the scope of the statutory definition of that term.