Strike cases — an update

It’ll never end, one supposes — the process of interpretation and application of the Labour Relations Act (LRA). Just when we thought that major issues had been settled, interesting and important new decisions emerge from the Labour Court and the Labour Appeal Court that cast new light on issues such as the definition of a strike. An recent editorial (2 August 2006) looked at a number of strike cases: two new and important decisions have now appeared here on IR Network, decisions with profound practical implications for employers.

Parties to councils and the identity of the employer

Section 64(1) of the LRA sets out the procedural requirements for a protected strike. In essence, the issue in dispute must be referred to either a bargaining council or the CCMA for conciliation, and notice must be given to the employer (48 hours’ notice or seven days’ notice if the employer is the state). But section 64(3) contains exceptions to this rule — the procedural requirements do not apply to a strike (or a lock-out) if the parties in dispute are members of a bargaining council and the dispute has been dealt with by that council in accordance with its constitution (section 30(1) provides that the constitution of a bargaining council must provide for a procedure to be followed if a dispute arises between the parties to the bargaining council).

But what happens if a company or organisation is a wholly owned subsidiary of another company or organisation and the subsidiary is itself not party to the bargaining council? Would it suffice if the matter is dealt with in the bargaining council, or must the union refer the issue in dispute to the CCMA instead? These are some of the issues that arose in SAA (Pty) Ltd v SATAWU (2006) 15 LC 9.6.2. The union concerned referred a dispute relating to restructuring of Transnet to the Transnet Bargaining Council and notified the council that strike action was to follow. SAA itself did not receive a notice of a strike — neither a primary strike nor a secondary strike. SAA had been transformed to an independent company but it was wholly owned by Transnet, but it was not itself party to the bargaining council. The strike related to demands made in respect of the restructuring (unbundling) of Transnet and one of the demands made by the union was that SAA should be transferred back to national government.

The union argued that its strike action was aimed at ending the “unilateral decision-making” by Transnet as these decisions would have a direct impact on not only terms and conditions of employment, but also the employee’s employment security. It had been proposed that if a business unit (such as SAA) is transferred, there should be a no-retrenchment guarantee for a period of three years. The issues in dispute therefore fell within the ambit of matters of mutual interest (a part of the definition of a strike as it appears in section 213 of the LRA). The restructuring process, the union also argued, was being driven by Transnet (and not SAA) — it would therefore be impractical to refer the same dispute to various bargaining councils and the CCMA.

The question was whether the fact that the issue in dispute had been referred to the Transnet bargaining council was sufficient for the strike to enjoy protected status. The Labour Court found that there is a connection between SAA and Transnet’s business activities and that the interests of their employees would overlap in many respects. But, the Court continued, it was also necessary to pay due attention to the identities of the parties in this case. SAA was not the same as Transnet, even though Transnet wholly owned SAA. The fact that Transnet held all the shares in SAA does not mean that it was the employer in respect of the employees for the purposes of the strike.

One could go further, of course: the Government is the sole shareholder in Transnet — would this fact mean that the Government is the employer of the employees for the purpose of a strike? This argument, the Court held, would disregard all legal principles applicable to separate legal entities — it would mean that the ultimate shareholder should be sought out and held responsible for any activities of a subsidiary and its employees.

The union should at least have declared some dispute with SAA and should have engaged SAA in discussions regarding the issues arising from the dispute. But the union engaged only Transnet and not SAA. In respect of the procedures, the Labour Court held that a dispute with SAA should have been referred to the CCMA and not to the bargaining council to which SAA was not a party. The Labour Court held that the strike action the union intended to take would be unprotected and granted an interdict prohibiting the union from going on strike.

The strike and the demand

The decision of the Labour Appeal Court in TSI Holdings (Pty) Ltd & others v NUMSA & others (2006) 15 LAC 9.6.1 is of considerable importance for both employers and unions — it focuses attention on the nature of the union’s demand. Two union members reported that a supervisor had made racist remarks and the union suggested that the matter should be referred to arbitration. The employer’s next move was perhaps not the wisest: it suggested that both the employees who had reported the racist remark to the union and the supervisor concerned should take polygraph tests. The union then headed for the CCMA, stating that its desired outcome was the dismissal of the racist manager. Conciliation failed and the union notified the employer that it was intending to go on strike — again the demand was for the dismissal of the supervisor with immediate effect. The employer suspended the supervisor and proposed that a disciplinary enquiry should be convened for the purposes of his dismissal; the hearing to be chaired by a neutral third party.

The Labour Court came to the conclusion that the union’s demand was not that the supervisor be unfairly dismissed or even that he should be denied a hearing. The demand was not for the employer to engage in an unfair dismissal. For the Labour Court, the demand itself was therefore not an unlawful demand. See TSI Holdings (Pty) Ltd & others v NUMSA & others (2004) 13 LC 9.5.1.

In the Labour Appeal Court, the employer argued that the union’s demand for the supervisor’s dismissal was an unlawful demand that a strike that consisted of a concerted refusal to work in support of an unlawful demand could not be a protected strike. The counter-argument was that the purpose of the strike on which the union had embarked was to have the supervisor subjected to a fair disciplinary process and that the union was prepared to accept the outcome of that disciplinary process.

Section 213 of the LRA, as regards the definition of a strike, reads as follows:

‘strike’ means the partial or complete concerted refusal to work, or the retardation or obstruction of work, by persons who are or have been employed by the same employer or by different employers, for the purpose of remedying a grievance or resolving a dispute in respect of any matter of mutual interest between employer and employee, and every reference to ‘work’ in this definition includes overtime work, whether it is voluntary or compulsory…”

The Labour Appeal Court analysed this definition in some detail and identified three categories of a strike. Some strikes have a demand, some strikes relate to a grievance, and others relate to a dispute. If the action by the employees (refusal to work, retardation or obstruction of work) is accompanied by a demand, the demand is the issue in dispute. In the present case the Court held that this was a strike relating to a demand and the next enquiry was whether (a) the employer must dismiss the supervisor, or (b) that the employer should subject the supervisor to a fair disciplinary process — the outcome of this process could be either dismissal or continued employment. On the facts of the case, the Court found that the purpose of the concerted refusal to work (to use the terms of the statutory definition) was to compel the employer to dismiss the supervisor.

The next question was whether the demand was a lawful demand. Here the court assumed, without deciding in favour of the employer, that it is permissible in our law to engage in a strike in support of a demand that the employer dismiss an employee fairly:

“Let us say that employees found guilty of fraud have consistently been dismissed in a particular company for many years but in one case the employer decides that in a particular case he will not dismiss the employee because of some unacceptable reason such as that he is white and the others who had been dismissed for similar offences were Black. Let us assume that the loss resulting from such fraud for the employer is a million rand. It seems that in such a case, if the employee was guilty of such serious misconduct that would, quite clearly, be a fair reason for his dismissal. In such a case it may well be that, if there was a disciplinary inquiry and such employee was found guilty of such serious misconduct but was not dismissed on such unacceptable grounds as racist grounds, a demand that the employer dismiss such employee cannot be said to be a demand for the employer to act unfairly. It may well be that in such a case it is arguable – and I put it no higher than that – that such a demand may form part of a protected strike.” (at [39])

But would the dismissal of the supervisor be fair? There was no evidence before the Labour Appeal Court that if the employer had dismissed the supervisor as demanded by the union, the employer would have been able to prove that he had made the racist remarks and that there was a fair reason for a dismissal. In other words, the Court could not, on the evidence, make any finding as to whether there was a fair reason for the employee to dismiss the supervisor. This also entailed that if the employer had dismissed the supervisor as demanded, the dismissal would have been unfair — a violation of the supervisor’s right not to be unfairly dismissed (see section 185 of the LRA).

It was a matter of evidence, said the Court, and even those persons accused of racist are entitled to fair treatment — a determination of their guilt and a consideration as to whether they should be dismissed:

“However, all I am saying is that in the record before us no attempt was made to prove that he had used the racist language, probably because it was thought that the determination of the question whether or not he had used such language would be dealt with in another forum. Racism continues to be a cancer in our society. The workplace is no exception to this. Employers, unions, employers’ organisations and employees should play their role in eradicating it. Of course, in this regard only lawful and fair means are acceptable. This is no licence for people accused of racism to be treated unfairly for they too, are entitled to be dealt with fairly in the determination of whether they are guilty or not of racist conduct and whether or not in a particular case they should be dismissed. However, the situations which would render unfair the dismissal of a person guilty of racist conduct resorted to in the full knowledge that it is racist or racially offensive must be very limited. It is hoped that, if the complainants’ complaint has not been resolved, it can still be, and will be, subjected to an inquiry or process which would either result in an amicable resolution thereof or which will result in a determination that will put finality on whether or not the complainants were subjected to the racist and offensive language to which they accuse Mr Van Zyl [the supervisor] of having subjected them.” (at [45])

There was no doubt, held the Court, that a demand such as one made by the union in this case fell outside the category of demands that can be supported by a refusal to work. Put differently, the purpose of the concerted refusal to work (or retardation of work or the obstruction of work) in the definition of a strike may not be conduct that would violate another employee’s right not to be unfairly dismissed. The Labour Appeal Court upheld the appeal against the decision of the Labour Court.

New principles

It has always been a somewhat difficult issue to determine whether the issue in dispute giving rise to a strike has been dealt with in terms of the correct procedure and has been referred to the correct labour dispute resolution body. The decision of the Labour Court in SAA (Pty) Ltd v SATAWU (2006) 15 LC 9.6.2 goes some way in clearing up at least some of those difficulties. But for some, the Labour Court’s strict focus on the fact that SAA was a legally separate entity may well be turning a blind eye to the reality of power and economic control, management and prerogative existing between a subsidiary and its parent company.

The decision of the Labour Appeal Court in TSI Holdings (Pty) Ltd & others v NUMSA & others (2006) 15 LAC 9.6.1 has shed light not only on the interpretation of the definition of a strike, but has also effectively placed another limitation on the right to strike — that a strike may not relate to a demand that is unlawful or a demand that the employer violate another employee’s right to fair treatment before dismissal. A new slant to strike law indeed, and essential reading for both employers and employees.