Court name
Labour Court Main Division
Case number
51 of 2012

Swarts v Tube-O-Flex Namibia (Pty) Ltd and Another (51 of 2012) [2013] NALCMD 8 (27 March 2013);

Media neutral citation
[2013] NALCMD 8
Smuts J

CASE NO: LCA 51/2012


In the matter between:





Neutral citation:
Swarts v Tube-O-Flex Namibia (Pty) Ltd (LCA 51/2012) [2013] NALCMD
8 (27 March 2013)


Heard on: 15 February

Delivered on: 27 March

Flynote: Appeal
against an arbitrator’s ruling that the appellant was not an
employee of the first respondent. Question arising as to whether this
was a question of fact or law and thus not appealable under s 89 of
Act 11 of 2007. The court concluded that it was a question of law and
not appealable.


The appeal is accordingly
dismissed for this reason. No order as to costs is made.



[1] The question raised in this appeal
is whether the appellant is an employee of the respondent for the
purpose of the Labour Act, 11 of 2007 (the Act). An arbitrator ruled
that he is not an employee. The appellant appeals against that
ruling. An antecedent question which arises for determination in this
appeal is whether the arbitrator’s ruling on this issue
constitutes a question of law or not, and thus appealable.

[2] These questions have
arisen in the following way. The appellant referred a dispute to the
office of the Labour Commissioner in July 2012, complaining of a
unilateral change to his terms and conditions of employment. The
complaint was against the first respondent. (It is referred to as the
respondent in this judgment. The arbitrator was incorrectly cited as
the second respondent. He is referred to by his designation.)

The proceedings before
the arbitrator

[3] When the dispute was
referred to conciliation and arbitration, the respondent took the
point that the appellant was not an employee and that there was
accordingly no jurisdiction to determine the dispute. Although the
ruling by the arbitrator initially referred to the matter arising in
the course of conciliation, it would appear that the arbitrator was
appointed as such to determine the dispute. The ruling which he made
was in the exercise of his functions as an arbitrator.

[4] The arbitrator heard
evidence on this preliminary issue. The manager of the respondent
testified on its behalf whereafter the appellant gave evidence. Most
of the relevant factual matter was not in dispute between the

[5] It emerged that the
appellant is a shareholder (15%) and a director of the respondent. He
had been employed by the respondent for some 22 years. During that
period he was primarily involved in sales on its behalf. He worked
his way up to the position of managing director. He retired when the
majority shareholding in the respondent changed hands. He remained a
director and shareholder and was asked to stay on and continue with
sales. His designation was changed to that of sales director.

[6] The appellant was
paid on a commission basis (which the board sought to change by means
of a resolution to which the appellant had not consented, giving rise
to the referral).

[7] The appellant had
been engaged in sales in this way for some six year after his
retirement. His commission was however calculated with reference to a
percentage of all the respondent’s sales in respect of which a
certain gross profit percentage had been achieved, and not with
reference to the sales he himself had generated. It was not in issue
that he conducted sales on behalf of the respondent and in doing so
was subject to the ultimate control of the respondent’s
managing director and could be disciplined by the latter.

[8] The appellant was
provided with a motor vehicle and cellphone for the purpose of
conducting sales. His working hours were not regulated as was the
case with other employees. He was not required to be in attendance at
the respondent’s offices at designated hours. His evidence was
that he only performed administrative functions at the respondent’s
offices. He conducted sales by using the cellphone provided to him
and seeing clients on site and not at the respondent’s offices.
It was not contested that his hours at work and mode of operation
were accepted by the respondent’s managing director and that
this had been the case for the past six years following his

[9] It was also not
disputed that the appellant did not take or claim annual leave. It
would appear that he took time off and attended to sales at his own
discretion. It was also not placed in dispute that the appellant
assisted employees of the respondent engaged in sales in the
execution of their duties by providing advice to them and assisting
them in their work.

[10] The respondent’s
manager testified that the respondent had approximately ten employees
comprising sales persons, accountants, store assistants, cleaners and
a driver. Each of them had a contract of employment. The appellant
did not have such a contract after his retirement.

[12] It emerged as
undisputed that the appellant’s remuneration was designated as
director’s fees in the books of the respondent. The appellant
was not registered at the Social Security Commission as an employee.

[13] The appellant
testified that his remuneration was different to the other directors.
He would not provide invoices but received payment from the
respondent as a percentage of its total sales. He further testified
that he did not engage in any sales or employment for any other
entity. He also testified that his sales were in excess of any other
sales person employed by the respondent because of his experience and
connections. He pointed out that in addition to his commission
earnings, he would, like other shareholders, receive dividends. He
pointed out that when the managing director requested him to be at
the business during its usual working hours, he had pointed out to
him that he was not a permanent employee and had declined to do so.

The arbitrator’s

The arbitrator found that the applicant is not an employee of the
respondent. He cited a number of cases which dealt with the question
of whether a director can be classified as an employee with full
employee benefits as contained in Labour Act

[15] In determining
whether the applicant is an employee or not, the arbitrator relied on
the factual circumstances surrounding the arrangement between
applicant and the respondent. He relied on the case of Secretary
of State for Business, Enterprise and Regulatory Reform v Neufled and
[2009] EWCA Civ 290 CA where it was stated that:

on the vexing
question it held that whether a shareholder or director is an
employee is a question of fact for Employment Tribunal to determine
(Arbitral Tribunal in the case Namibia.’ (sic)

The arbitrator further relied on what is termed the ‘pragmatic
approach’ discussed in the work by Parker,
Law in Namibia
, where it is stated:

England, the issue of whether a person is an employee is a question
of fact.’

work continued,
after reference to English

is therefore submitted that whether a person is an employee is a
question to be resolved by the determiner of fact. However, where the
question a person is an employee turns solely on the interpretation
and application of a written contract of employment then, the
question is a question of law.’

[17] The arbitrator also
referred to Secretary of State for Business, Enterprise and
Regulatory Reform v Neufled and Howe
[2009] EWCA Civ where it is

. . .a director of
a company will not, merely by virtue of being a director, be an
employee. He will have to prove more than his appointment as a
director. Has he been paid a salary or just fees for being a
director? Has he acted as an employee, for example, by working the
hours required by his contract and not taking more than the holiday
entitlement under it?’

if there is no
written contract then this will be an important consideration and may
suggest there is no employment relationship. Nonetheless, the conduct
of the company and the individual may enable the Tribunal to conclude
that there is such a relationship.’

[18] The arbitrator
stressed the following facts in coming to his conclusion:

  • That the
    applicant, is first of all, one of the Directors on the board of the

  • That the applicant is
    shareholder and owner of the respondent with 15% of stake;

  • That the applicant is
    Sales Director for the respondent;

  • That the applicant is
    remunerated by way of a commission which according to the
    respondent’s witness is reflected as the Director’s fees
    in the respondent’s books of account;

  • That the applicant does
    not have working hours, nor does he ask or apply for leave, and;

  • That the applicant is
    issued with the respondent’s cellphone and provide with the
    vehicle’. (sic)

The arbitrator also referred to the statement made by applicant in
his evidence in chief that ‘. . .there was an agreement between
or among the directors and shareholders . . . this was not an
employment contract (agreement)’ and further that ‘. . .
Mr Victor ( Managing Director) at one point had tried to make him
work 08h00 – 17h00, which he denied’.

[20] Taking these aspects
into account and the ‘King report’s recommendation on the
“appropriate balance of power and authority of the board”
being exercised by these two directors/shareholders,’ the
arbitrator resolved once and for all that there was no contract of
employment between the respondent and the applicant and to find
otherwise would be a fallacy.’ (sic)

The appeal

[21] The arbitrator was
at pains to point out that he considered the question as to whether
the appellant was an employer of the respondent is one of fact. He
did so with reference to the work by Parker, J and English authority.
The view expressed by Parker J on the issue is also with reference to
English authority. It is not quite clear to me why the arbitrator
made so much of the issue.

[22] Mr Boltman who
appeared for the appellant pointed out that the English statute, the
Employment Rights Act, defines an employee as an individual who has
entered into or works under a contract of employment. The existence
or otherwise of an employment contract would, it seems to me, be a
question of fact, as has been found by the English courts.

[23] The definition of
employee in the Act would however appear to cast the protective net
of the Act somewhat wider by defining an employer thus:

means an individual, other than an independent contractor, who –

for another person and who receives, or is entitled to receive,
remuneration for that work; or

any manner assists in carrying on or conducting the business of an

[24] The related
definition of employer is in the following terms:

means any person, including the State who –

or provides work for, an individual and who remunerates or expressly
or tacitly undertakes to remunerate that individual; or

an individual to assist that person in any manner in the carrying or,
conducting that person’s business.”

A recent amendment to the Act added s 128A
which created a
presumption of employment arising in the following circumstances:

the purpose of this Act or any other employment law, until the
contrary is proved, an individual who works for or renders services
to any other person, is presumed to be an employee of that other
person, regardless of the form of the contract or the designation of
the individual, if any one or more of the following factors is

manner in which the individual works is subject to the control or
direction of that other person;

individual’s hours of work are subject to the control or
direction of that other person;

the case of an individual who works for an organization, the
individual’s work forms an integral part of the organization;

individual has worked for that other person for an average of at
least 20 hours per month over the past three months;

individual is economically dependent on that person for whom he/she
works or render services;

individual is provided with tools of trade or work equipment by that
other person;

individual only works for or renders services to that other person;

other prescribed factor.”

[26] Section 89(1) of the
Act restricts appeals to this court against awards of arbitrators to
any question of the law alone. The question arises as to whether this
question is one of law or fact.

When I raised this issue with Mr Boltman, he first argued that the
arbitrator’s finding was unreasonable or was not reasonably
made and for this reason constituted a question of law alone. When I
queried this, he referred me to
v Nantinda
an unreported judgment of this court which relied on earlier
decisions of this court for the view that it constitutes a question
of law if an appellant can show that an arbitrator’s conclusion
could not have reasonably have been reached. This is entirely
different to the proposition put forward by Mr Boltman of a ruling
being unreasonable or that an arbitrator was unreasonable in making
an award. In
reliance was placed upon
the approach adopted by the full court in
and Other v Van Wyk
summarised in Nantinda
as follows6:

full bench in that matter made it clear that a conclusion reached (by
a lower court) upon evidence which the court of appeal cannot agree
with would amount to a question of law. This approach is also
consistent with that of a subsequent full bench decision in Visagie v
Namibia Development Corporation
the court, in my respectful view, correctly adopted the approach of
Scott JA in Betha and Others v BTR Sarmcor
a question in law would amount to one where a finding of fact made by
a lower court is one which no court could reasonably have made. Scott
JA referred to the rationale underpinning this approach being that
the finding in question was so vitiated by a lack of reason as to be
tantamount as be no founding at all. That in my view aptly describes
the finding of the arbitrator in this matter. As was further stated
by Scott JA, it would amount to a question of law where there was no
evidence which could reasonably support a finding of fact or “where
the evidence is such that a proper evaluation of that evidence leads
inexorably to the conclusion that no reasonable court could have made
that finding…’

On the question as to the distinction between questions of fact and
law, Scott, JA in Betha v BTR Sarmcol
with respect lucidly
explained the position thus (after referring to not dissimilar
provisions in the then applicable Labour Relations Act, 28 of 1956
which also essentially restricted further appeals to questions of

the extent to which it (then court of appeal) may interfere with such
findings is far more limited than the test set out above (to findings
of fact in criminal appeal). As has been frequently stated in other
contexts, it is only when the finding of fact made by the lower court
is one which no court could reasonably have made, that this Court
would be entitled to interfere with what would otherwise be an
unassailable finding. (See
for Inland Revenue v Strathmore Consolidated Investments Ltd

1959 (1) SA 469 (A) at 475 et seq;
for Inland Revenue v Trust Bank of Africa Ltd

1975 (2) SA 652 (A) at 666B--D.) The inquiry by its very nature is a
stringent one. Its rationale is presumably that the finding in
question is so vitiated by lack of reason as to be tantamount to no
finding at all.

limitation on this Court's ordinary appellate jurisdiction in cases
of this nature applies not only to the LAC's findings in relation to
primary facts, ie those which are directly established by evidence,
but also to secondary facts, ie those which are established by
inference from the primary facts. The reason is that the drawing of
an inference for the purpose of establishing a secondary fact is no
less a finding of fact than a finding in relation to a primary fact.
(See Magmoed v Janse van Rensburg and Others 1993 (1) SA 777
(A) at 810H--811G.)

follows that it is not open to this Court to depart from a finding of
fact by the LAC merely on the grounds that this Court considers the
finding to be wrong or that the LAC has misdirected itself in a
material way or that it has based its finding on a misconception. It
is only when there is no evidence which could reasonably support a
finding of fact or where the evidence is such that a proper
evaluation of that evidence leads inexorably to the conclusion that
no reasonable court could have made the finding that this Court will
be entitled to interfere.

do not understand the decision in Atlantis Diesel Engines (Pty)
Ltd v National Union of Metalworkers of South Africa
1995 (3) SA
22 (A) to be inconsistent with the above proposition. The 'finding'
of the LAC referred to at 31I with which this Court disagreed was not
a finding of fact in the true sense but a finding involving a value
judgment. (Compare Media Workers Association of South Africa and
Others v Press Corporation of South Africa Ltd ('Perskor')
(4) SA 791 (A) at 795C--797J.)

provision in s 17C(1)(a) limiting the Court's jurisdiction in
relation to findings of fact is somewhat anomalous inasmuch as the
LAC does not hear evidence and has before it the same material which
is before this Court. It does not therefore have the advantages of a
court of first instance and is in no better position than this Court
to make findings of fact. However, Parliament in its wisdom decided
to make the LAC the final arbiter on issues of fact. It may well be
that its reason for doing so is related to the composition of the LAC
or simply to limit the number of appeals coming to this Court. But
whatever the reason, this Court is not entitled, because it
disapproves of the wisdom of the provision, simply to ignore it or
apply some test different from the well-established test which is to
be applied when there is no appeal on questions of fact.’

It would follow that this court would not interfere with findings of
fact, even where these entail drawing an inference for the purpose of
establishing a secondary fact – such as employment –
unless they are findings which no court could reasonably have made.
As was stressed by Scott, JA in relation to a similarly worded
provision, the legislature has for its own reasons – presumably
primarily related to the need for obtaining finality and certainty
expeditiously in labour disputes, also evident in the shorter
peremptory prescriptive provisions – decided that appeals from
arbitrators are to be confined to questions of law alone. This court
is obliged to give effect to that legislative choice made,

even though arbitrators have frequently shown in appeals
to this court that they have some difficulty in making proper factual
determinations. This court is thus not free to substitute its own
findings of fact for those of the arbitrator, unless no reasonable
court could have made them.

The arbitrator quoted both the definition of employee and s 128A in
his ruling. After referring to the latter, he correctly acknowledged
that a presumption of employment would arise if one of the
eventualities spelt out in the section were to be established
and also correctly,
that this presumption is

After referring to the facts, the arbitrator found that,

although the appellant
assisted the respondent in its business, he was not an employee of
the respondent and set aside his complaint which would need to be
based upon an employment relationship. Although the arbitrator did
not expressly find that the respondent discharged the onus upon it of
establishing that there was not an employment relationship,

his finding after a
reference to this presumption and his treatment of the facts would
indicate that he found that the respondent had rebutted the

The finding that the appellant was an employee is in my view a
finding of fact of the kind described by Scott JA as a secondary
fact, established by inference from the primary facts. As he
stressed, it is no less a finding of fact than a finding in relation
to a primary fact.

The finding reached by the arbitrator on what was a tricky factual
question before him was not in my view one which no reasonable court
could have reached in the circumstances. He had prefaced his analysis
of the facts with the applicable statutory test in the light of the
presumption brought about by s 128A. He then referred to authorities
before approaching the
facts in finally reaching his conclusion on the question. It is thus
not open to me to substitute a finding of fact (of employment) for
that of the arbitrator (of no employment), even if I were inclined to
reach a different conclusion. That course is not open to me by virtue
of s 89 of the Act which has limited appeals to his court on
questions of law alone.

[34] The question raised
by this appeal, thus not being one of law alone, means that it is not
open to me to interfere with the factual ruling made by the
arbitrator. This court does not have jurisdiction to do so. The
appeal is accordingly dismissed for this reason. No order as to costs
is made.






Instructed by G.F Köpplinger
Legal Practitioners


Instructed by Sisa Namandje & Co.

South African case he cited was Brown v Oak Industries (SA) (Pty)
(1987) 8ILJ 510 (IC) but not the considered and closely
reasoned appeal judgment delivered by a full bench reported as Oak
Industries (SA) (Pty) Ltd v John NO and Another
(1987) 8 ILJ 756

applicant in fact stated that ‘Mr Victor did say nothing

by Act 2 of 2012

22/3/2012, case No. LC 38/2008.

NR 102 (HC) at 105 D-E.

par [28].

NR 219 (HC) at 224 C-H.

(3) SA 349 (SCA).

at 405.

section thus creates a presumption of employment where one or more
of the eventualities set out are established. It makes it clear that
a court is to have regard to the substance of the relationship,
rather than the contractual form or designation used. This is in
keeping with the approach of Denel (Pty) Ltd v Gerber (2005)
26 ILJ 1256 (LAC).

also Magmoed v Janse Van Rensburg and Others 1993(1) SA 777
(A) at 810H-811G for the instructive treatment of the subject by
Cortbett, AJ.

surprising omission from the authorities referred to was Paxton v
Namib Rand Desert Trails (Pty) Ltd
1996 NR 109 (LC) where this
court provided a helpful and detailed analysis on the question of
whether a person is an employee or not, including explaining that
the expression in the definition of the words “any other
person who in any other manner assists in the carrying on or
conducting of the business of any employer,” also contained in
the 1992 Labour Act, would not prize the common law’s grip
from the statute in determining whether the relationship was one of
employment or not.