Territorial jurisdiction of the Labour Court: divorcing the actual workplace from the employer’s undertaking

In our globalized world, home may still be where the heart is. It is not necessarily where the court is. Global trends in multi-jurisdictional employment outsourcing and cross-border employment have frequently given rise to various legal challenges, of relevance the application of territorial jurisdiction of the courts and tribunals. More narrowly, which court, tribunal or legal forum must be approached for dispute resolution purposes. 

Fairly recently, the Labour Court in Sorrel v Petroplan Sub-Sahara Africa (Pty) Ltd (19 January 2023) held that it lacked territorial jurisdiction to determine a number of contractual and compensatory claims following a termination of the contractual arrangement which involved the rendering of services in Mozambique.

Briefly, the background to this matter entailed a consultancy agreement that was concluded between a company registered in the British Virgin Islands and a company registered in the United Kingdom. In terms of the agreement, the services of a Logistic Superintendent were to be provided in Mozambique to two separate Mozambique entities/ clients. 

Owing to legal compliance hurdles, the consultancy agreement, although concluded, was never implemented. Sorell being the beneficial owner of the British Virgin Islands company instead concluded an arrangement with Petroplan Sub-Sahara Africa (Pty) Ltd (“PSA”), a South African company, to perform Mozambique related services in Mozambique, providing the same services that would have been provided under the halted consultancy agreement. In a letter dated 24 June 2021, PSA terminated Sorell’s services. Sorell claimed that he was an employee of PSA and referred an automatic unfair dismissal dispute to the CCMA and thereafter to the Labour Court. PSA disputed that Sorell was an employee. It argued rather that he was an independent contractor.

Before the question of the true nature of the relationship could be answered, the Court first had to determine whether the claims of the employee fell within its territorial jurisdiction. Significantly, the employment relationship and the enforceability of the agreement was dependent on certain conditions being met, namely, Sorell having to obtain a Mozambican and/or South African visa, as well as the place where the services were to be rendered, being Mozambique. Owing to the Covid-19 pandemic, Sorell’s actual presence in Mozambique to render the services to PSA’s clients was delayed. Nevertheless, this is where the contractual arrangement envisaged that services were to be rendered, and where they were ultimately rendered.

The Court held that the undertaking where the employee was employed (which may be situated beyond its territorial jurisdiction), has to be separate and divorced from the employer's undertaking which is located within the jurisdictional territory of the relevant forum. The Court was primarily concerned with where the individual actually rendered services and the actual workplace the individual was envisaged to be engaged in. The Court’s jurisdiction is not simply determined by an individual’s putative employment relationship with any one entity. In this case, Mozambique was determined as the actual workplace beyond the territorial jurisdiction of the Labour Court, despite PSA having procured Sorell’s services in South Africa.

The mere fact that a company operates in South Africa, does not mean that every employee will be entitled to the protection of the South African courts/ forums to adjudicate disputes which arise in the employment relationship. Courts will consider various factors in order to determine the territorial jurisdiction, importantly, where the services are ultimately rendered.

This case highlights the importance of applying a legal lens to assessing risk when concluding cross-border type and multi-jurisdictional employment and contractual working relationships.  

We trust that you found this article informative, please email info@hjw.co.za for assistance with multi-jurisdictional employment matters and complicated cross-border contractual arrangements.

By Alexi Rosenzweig, candidate attorney, and Rowan Bauer, attorney, working in the employment law practice area at HJW Attorneys, a boutique law firm based in Fourways, Johannesburg.

This article is provided for informational purposes only and should not be substituted for legal advice on any specific matter. Any opinions expressed herein are subject to the law as at the time of writing and will change in accordance with any change in the law. We recommend that you contact HJW Attorneys at info@hjw.co.za directly for advice applicable to your specific matter.