F & J Electrical CC (applicant) was awarded contracts by the City of Tshwane and City of Johannesburg for electrical reticulation services. In June 2008, the contract with the City of Tshwane expired and the applicant lost that contract, leading to financial difficulties. On 23 January 2009, the applicant dismissed approximately 30 employees with effect from 31 January 2009, citing operational requirements. The Metal and Electrical Workers Union of South Africa (MEWUSA) referred an unfair dismissal dispute to the National Bargaining Council for Electrical Industries for conciliation in February 2009. Conciliation failed on 3 March 2009. The union then referred the matter to the CCMA for arbitration. The CCMA commissioner ruled that he had no jurisdiction as the reason for dismissal was operational requirements, and directed the matter to the Labour Court. On 7 October 2009, the union referred the dispute to the Labour Court. The applicant failed to respond to the statement of claim. The Labour Court granted a default judgment ordering the applicant to pay each employee compensation equal to 24 months' remuneration (over R1 million total). The Labour Court's order was based on a finding that the employees were dismissed for their union membership, despite the employees initially claiming they did not know the reason for dismissal. This finding was based on affidavits filed by the employees before the default hearing but not served on the applicant. The applicant applied for rescission of the default judgment, which was dismissed by the Labour Court and leave to appeal was refused by both the Labour Court and Labour Appeal Court.
1. Leave to appeal is granted. 2. The appeal is upheld. 3. There is no order as to costs in this Court and in the Labour Appeal Court. 4. The order of the Labour Court is set aside and replaced with the following: (a) The order of this Court granted by default against the respondent is rescinded. (b) The respondent is granted leave to deliver its response to the applicant's statement of claim within ten court days from the date of this order. (c) There is no order as to costs.
Under section 165(a) of the Labour Relations Act 66 of 1995, a court may rescind an order that was erroneously sought or granted in the absence of a party without the applicant having to show good cause - it is sufficient to demonstrate that the order was erroneously granted. An order is erroneously granted where: (1) the court failed to satisfy itself that it had jurisdiction (including compliance with the 90-day time limit in section 191(5) of the LRA and any necessary condonation); (2) the court relied on material (such as affidavits) that had not been served on the absent party; (3) the court relied on allegations that materially contradicted the applicant's pleaded case without requiring oral evidence to resolve the inconsistency; and (4) the court made findings on serious matters (such as constitutional rights violations) without ensuring procedural fairness and proper evidentiary foundations. Courts must be vigilant to ensure jurisdiction exists and procedural fairness is maintained, even in default proceedings.
The Court made several obiter observations: (1) It was unclear why the union referred the matter to the CCMA for arbitration rather than to the bargaining council which had conducted conciliation and clearly had jurisdiction - as a general rule, the CCMA has no jurisdiction where a bargaining council exists within whose scope the parties fall. (2) The Court expressed skepticism about the employees' sudden acquisition of knowledge regarding the reason for dismissal (changing from "unknown" to "union membership"), suggesting this was "very conveniently" timed to secure double the compensation when the applicant would not be present at the default hearing to dispute this new version - though the Court noted this was "difficult to believe," it did not make a definitive finding on this point. (3) The Court noted it was questionable whether it was permissible at all for the union and employees to use affidavits in what were trial proceedings in the Labour Court. (4) The judgment contains implicit criticism of Mr. Mavhandu (whether he was a labour consultant or HR manager) for failing to properly handle the matter on behalf of the applicant.
This case clarifies important principles regarding rescission of default judgments in labour matters under section 165(a) of the Labour Relations Act. It confirms that, unlike rescission under the common law (Rule 42(1)(b)), an applicant under section 165(a) need not establish good cause - it is sufficient to show the order was erroneously granted. The judgment emphasizes the importance of courts ensuring they have jurisdiction before adjudicating disputes, particularly in relation to the time limits prescribed by section 191(5) of the LRA. It also establishes that courts must not rely on material not served on the opposing party, especially in default proceedings, and must ensure procedural fairness even when granting default judgments. The case highlights the courts' duty to scrutinize inconsistencies in a party's case and require oral evidence where material contradictions exist, particularly where serious findings (such as violations of constitutional rights) are at stake. It serves as a warning against parties attempting to manipulate default proceedings to obtain enhanced remedies by changing their version of events when the opposing party is not present to contest the new allegations.