When is there an agreement?

What does it mean if parties have reached agreement in principle? Does it mean that they have agreed on something, or does it mean that there are still some issues that need to be settled before the agreement is finalised? If an employer and a trade union reach agreement in principle, does that agreement constitute a binding collective agreement, or is this merely an agreement on the main points of the agreement, with finer details still to be worked out?

In SA Post Office Ltd v CWU & others (2009) 18 LC 4.2.2 the employer, tried to interdict the union from continuing with its strike action. The union represented more than 75% of the employees in the bargaining unit. The union had referred a mutual interest dispute about “salary anomalies” to the CCMA. Conciliation failed and the commissioner issues a certificate of outcome. After this, the CCMA offered to further assist with the matter and to mediate the dispute. The offer of mediation was accepted by the parties, and, in addition, it was agreed that the process would include the substantive wage negotiations for 2009/2010 (even though this was not part of the dispute originally referred to the CCMA).

In the course of the CCMA’s mediation, the parties produced a draft settlement agreement. It appears that when the parties left the CCMA offices they planned to sign the agreement a few days later. The union then proposed certain amendments which the employer accepted.

But there was a dispute over what the state of play was when the parties left the CCMA offices. The employer’s version was that an agreement had been reached on the substantive issues that were subject to the mediation (and that the strike would be called off). The union disputed that an agreement had been reached and that it undertook to call off the strike. Both parties issued communications to the effect that a settlement had been reached and that the strike was essentially over.
The crux of the matter, said the Labour Court, was whether or not the parties had reached an agreement in terms of which the dispute relating to the salary anomalies had been resolved. The Court concluded that the objective facts supported the view that an agreement was indeed reached. This is a strange conclusion, on the face of it, because section 213 of the Labour Relations Act requires a collective agreement to be a written agreement (even though the definition is silent on the question as to whether that document must be signed).

The Court concluded that the probabilities supported the conclusion that an oral agreement had been reached, an oral agreement whose terms were contained in a written document drafted by the parties. This agreement put to rest the dispute about the salary anomalies. It transpired that there were no outstanding issues when the parties left the CCMA, and that the union had suggested limited amendments to the agreement (these were accepted by the employer) – for all intents and purposes, the negotiations had reached an end. The communication issued by the union itself clearly gave the impression that agreement had been reached and that the agreement would be signed. At no stage was it said that the settlement agreement was conditional on the approval of the majority of the union’s members, and, finally, most of the union’s members returned to work after the consensus was announced.
But as is so often the case, one branch of the union had problems with the agreement. However, in this context, the majoritarian principle applied: the Gauteng branch was bound by the decision of the negotiating team and the other branches of the union (none of the other branches had any problems with the agreement). There was an agreement, in other words, and the dispute had been settled: the Court held that the parties had concluded an agreement that resolved the dispute that gave rise to the dispute. The interdict against the union was confirmed.