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Territorial application of the LRA

October 2014

In the recent case of South African Tourism v Tebogo Brian Monare and Others, the Labour Court raised the issue, meru moto, of the territorial application of the Labour Relations Act 66 of 1995 (the LRA).

The case pertained to an employee, employed by South African Tourism (the Company), a South African company established in terms of South African legislation. The employee worked in the UK branch of the Company. His contract of employment was concluded outside of the Republic of South Africa. The employee was under the direct management control of the UK branch. Further, the UK branch operated independently of the South Africa branch of the Company in that it had its own IT systems, its own controls, time management and staff. Its premises were subject to a separate audit. 

The court held that in order to determine whether or not it had the territorial jurisdiction to entertain a labour matter, two factors needed to be considered. Firstly, the territorial application of the LRA and secondly, whether the employee's employment fell within the territorial jurisdiction of the LRA. 

In determining the territorial application, section 114(1) of the LRA provides that the CCMA has jurisdiction in all the provinces of the Republic. The Republic is defined in section 213 as the national territory of the Republic of South Africa. Since the CCMA is a statutory body, it is restricted to the jurisdiction conferred on it by legislation and parties cannot by agreement extend this jurisdiction. It is trite that the LRA does not have extra-territorial application and thus a court does not have jurisdiction to entertain a claim in terms of the LRA where an employee's workplace is not within the territorial boundaries of the Republic.

On the issue of whether a labour dispute falls within the territorial jurisdiction of the LRA, the location of the primary workplace of the employee is vital. 

In determining the primary workplace of the employee, the court considered the case of Serfontein v Balmoral Central Contracts SA (Pty) Ltd (2000)21 ILJ 1019, which held that the CCMA is required to determine if the substance of the employment relationship is reflected in obligations that are due and enforceable in the Republic. The substance of the relationship may be determined by factors such as the place where the employee is required to render his services, the place where payment is made, the location of the parties, method of calculating remuneration and the currency of the remuneration, and the place where the relationship was entered into. However, these factors are not individually decisive.

The Appeal Court has previously stated that the territorial application of the LRA is to be determined by whether the employee's undertaking is located inside our outside of the Republic. Where the business operated from South Africa, but the operations and work of the employee were outside of the Republic, the court does not have jurisdiction. An exception to this is where an employee is employed by a temporary employment service company. If the temporary service employment company is based in South Africa, but the employee's services are rendered to a company outside of the Republic, the employee's primary workplace is still considered to be South Africa. Accordingly, a South African court will have jurisdiction to entertain the matter.

Therefore, the primary consideration of the application of the LRA and the jurisdiction of the courts in labour matters is the location of the undertaking carried out by the employer (also known as the “primary workplace” of the employee). However, courts should be cautious not to use this as the only factor, as it is a question of fact to be determined by reference to all of the available evidence.
 
On this basis, the Labour Court in South African Tourism v Tebogo Brian Monare and Others concluded that it did not have jurisdiction to entertain the matter, as the LRA does not have extra-territorial application and the employee's primary workplace was situated in the UK.  

The team

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