The Labour Relations Act (the LRA) applies to employers and employees in South Africa. It does not matter if the employer is not a South African company — the fact that the employee works for the employer in terms of an employment contract or even a less-formal employment relationship means that the LRA applies to that employment relationship: section 2 of the LRA, which contains the exclusions from the Act (the SA National Defence Force, the South African Secret Service and the National Intelligence Agency, for example) does not state that multi-national employers are not covered by the LRA.
But the issue of jurisdiction of the Labour Court did arise in the recent case of Moslemany v Unilever PLC & another (2006) 15 LC 1.1.6. The employee had been working for the employer since 1980 and he had worked on various assignments all over the world in terms of specific contracts. In February 2003 he was appointed Head of Development for a number of regions (including South and North Africa, the Middle East and Turkey). The appointment to this post was to be for a period of two to three years. In October 2005, the employer retrenched the employee with effect from 31 January 2006. To make matters more complicated: the employee claimed that his immediate superior had agreed to allow him to continue employment (but on a lower grade and in Ireland) until May 2007 — a point in time at which the employee would qualify for early retirement. The employer denied that such an agreement relating to continued employment until March 2007 had been concluded.
In interesting jurisdictional issues arose — for example, it was argued that the Labour Court of South Africa has no jurisdiction over the pension fund concerned (the fund was based in Ireland) and that the employee was to remain an order of the fund (until early retirement in March 2007) would not be competent. The employer launched three levels of challenges on jurisdictional grounds (relating to jurisdiction over persons, territorial jurisdiction arising from the cause and jurisdiction in respect of relief) and the Labour Court proceeds to deal with each of these challenges in some detail. The factual issues remain largely undecided in this case as the Labour Court here dealt only with the preliminary issues raised by the employer (and dismissed these objections).
Even more interesting is the importance the Labour Court attached to the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, adopted by the International Labour Organisation in November 2000.
In respect of what a multi-national employer is, the Tripartite Declaration says the following:
“To serve its purpose this Declaration does not require a precise legal definition of multinational enterprises; this paragraph is designed to facilitate the understanding of the Declaration and not to provide such a definition. Multinational enterprises include enterprises, whether they are of public, mixed or private ownership, which own or control production, distribution, services or other facilities outside the country in which they are based. The degree of autonomy of entities within multinational enterprises in relation to each other varies widely from one such enterprise to another, depending on the nature of the links between such entities and their fields of activity and having regard to the great diversity in the form of ownership, in the size, in the nature and location of the operations of the enterprises concerned.”
The Tripartite Declaration, signed by governments, representatives of organised labour and business deals with a number of issues, including collective bargaining, equality in employment and dealing with grievances. In respect of resolving disputes, clause 59 of the Declaration reads as follows:
“Multinational as well as national enterprises jointly with the representatives and organizations of the workers whom they employ should seek to establish voluntary conciliation machinery, appropriate to national conditions, which may include provisions for voluntary arbitration, to assist in the prevention and settlement of industrial disputes between employers and workers. The voluntary conciliation machinery should include equal representation of employers and workers.”
Dismissal is something not dealt with exhaustively in the Declaration — clause 27 of the Declaration simply states that arbitrary dismissal procedures should be avoided.
Monday, April 12, 2010
Friday, April 9, 2010
GETTING BACK TO WORK . . .
Recovering from the festive season
Gradually, life (especially working life) is returning to normal. Some lucky ones are still on leave, only returning to work later in January. But for many, it is now a question of picking up where we left off at the end of 2003, putting the festivities behind us and easing back into the swing of things.
For many employers, the issue is to gear back up to full productivity as soon as possible: many employees are still in holiday mood (or mode), exchanging pictures and stories about their vacations and their celebrations. Getting employees back to work at this time of year is not an easy task, as many employees will take some time to fully realise that their break is something of the past and that their focus must now return to their work.
Speculating about 2004
2004 is, of course, an election year, and that will mean, inevitably, that public attention will largely shift to the political arena, until the elections have run their course. Much politicking is to be expected, and media attention will no doubt focus largely on the parties, their campaigns and the politicians seeking (re)election.
From a labour relation’s perspective, however, things will probably trundle along for the largest part of the year. In some sectors, debates about collective bargaining, bargaining structures (such as recognition agreements and bargaining councils), deliberations as to the relative advantages and disadvantages of centralised (as opposed to plant-level or company-level) bargaining will continue. These are difficult choices to make, and difficult debates that will, no doubt, continue to exercise the minds of employers and trade unions in some sectors.
This year may also see the final demise of the Labour Court as we know it, and the functions exercised by that Court will be transferred to specialist panels of the High Court. We have alluded to this issue and the debates about the Labour Court and its survival on IR Network during 2003, and it remains to be seen whether the legislature, once the fuss around the election is over and done with, can still get around to resolving this very real and pertinent question.
What effect will this transfer to the High Court have on our labour law? Some think that common law principles and considerations, including contractual principles, will enjoy more prominence than they have in the Labour Court or the Labour Appeal Court. Others believe that the High Court will deal with labour matters in more or less the same way and using the same basic approach of the Labour Court. The question as to how and whether the High Court’s approach will differ from that of the Labour Court remains open.
Dismissals will continue, and, in some sectors, retrenchments of some scale may be necessary as employers find themselves facing up to international competition and other economic factors beyond their control (such as the relative strength of our currency). It seems that more and more employers are opting for ‘lean and mean’ operations, especially in manufacturing. On the services side, however, organisations seem to be getting bigger all the time. Considering the developments in labour law in 2003, more and more employers may opt to change terms and conditions of employment, and, if employees refuse to accept the new changes, retrench them to make place for employees who will work under the new conditions.
No doubt further developments will take place in the context of misconduct dismissals, especially relating to procedural aspects. Last year we noted a number of cases arising from the procedural side of these dismissals, especially the difficult question of legal representation. It may be that our law on this point becomes even more complicated, making it more difficult for employers to comply with the requirements of procedural fairness.
What wage bargaining will look like is, at this early point in the year, anybody’s guess. If inflation remains low and interest rates follow suit, significant pressure may be placed on trade unions to lower their demands. It may be that we see even lower percentage increases than we did last year. It is also unclear as to whether we’ll see the same number of strikes that we saw last year — seen generally, last year’s big strikes related more to organisational issues (restructuring, contracts of employment, temporary workers) than to wages — the most notable exception being the close call in the mining sector (even there issues such as job grading cropped up).
Buckle your seat belts!
No doubt, whatever 2004 delivers, it will be an exciting year for all of us here at IR Network. As usual, we’ll keep you posted with all the new developments in the field as and when they happen. 2004, with the election and other big social issues (employment equity, skills development) may just prove to be a bumpier ride than we perhaps expect it to be! So buckle up and come and enjoy the IR ride through 2004 with us!
Gradually, life (especially working life) is returning to normal. Some lucky ones are still on leave, only returning to work later in January. But for many, it is now a question of picking up where we left off at the end of 2003, putting the festivities behind us and easing back into the swing of things.
For many employers, the issue is to gear back up to full productivity as soon as possible: many employees are still in holiday mood (or mode), exchanging pictures and stories about their vacations and their celebrations. Getting employees back to work at this time of year is not an easy task, as many employees will take some time to fully realise that their break is something of the past and that their focus must now return to their work.
Speculating about 2004
2004 is, of course, an election year, and that will mean, inevitably, that public attention will largely shift to the political arena, until the elections have run their course. Much politicking is to be expected, and media attention will no doubt focus largely on the parties, their campaigns and the politicians seeking (re)election.
From a labour relation’s perspective, however, things will probably trundle along for the largest part of the year. In some sectors, debates about collective bargaining, bargaining structures (such as recognition agreements and bargaining councils), deliberations as to the relative advantages and disadvantages of centralised (as opposed to plant-level or company-level) bargaining will continue. These are difficult choices to make, and difficult debates that will, no doubt, continue to exercise the minds of employers and trade unions in some sectors.
This year may also see the final demise of the Labour Court as we know it, and the functions exercised by that Court will be transferred to specialist panels of the High Court. We have alluded to this issue and the debates about the Labour Court and its survival on IR Network during 2003, and it remains to be seen whether the legislature, once the fuss around the election is over and done with, can still get around to resolving this very real and pertinent question.
What effect will this transfer to the High Court have on our labour law? Some think that common law principles and considerations, including contractual principles, will enjoy more prominence than they have in the Labour Court or the Labour Appeal Court. Others believe that the High Court will deal with labour matters in more or less the same way and using the same basic approach of the Labour Court. The question as to how and whether the High Court’s approach will differ from that of the Labour Court remains open.
Dismissals will continue, and, in some sectors, retrenchments of some scale may be necessary as employers find themselves facing up to international competition and other economic factors beyond their control (such as the relative strength of our currency). It seems that more and more employers are opting for ‘lean and mean’ operations, especially in manufacturing. On the services side, however, organisations seem to be getting bigger all the time. Considering the developments in labour law in 2003, more and more employers may opt to change terms and conditions of employment, and, if employees refuse to accept the new changes, retrench them to make place for employees who will work under the new conditions.
No doubt further developments will take place in the context of misconduct dismissals, especially relating to procedural aspects. Last year we noted a number of cases arising from the procedural side of these dismissals, especially the difficult question of legal representation. It may be that our law on this point becomes even more complicated, making it more difficult for employers to comply with the requirements of procedural fairness.
What wage bargaining will look like is, at this early point in the year, anybody’s guess. If inflation remains low and interest rates follow suit, significant pressure may be placed on trade unions to lower their demands. It may be that we see even lower percentage increases than we did last year. It is also unclear as to whether we’ll see the same number of strikes that we saw last year — seen generally, last year’s big strikes related more to organisational issues (restructuring, contracts of employment, temporary workers) than to wages — the most notable exception being the close call in the mining sector (even there issues such as job grading cropped up).
Buckle your seat belts!
No doubt, whatever 2004 delivers, it will be an exciting year for all of us here at IR Network. As usual, we’ll keep you posted with all the new developments in the field as and when they happen. 2004, with the election and other big social issues (employment equity, skills development) may just prove to be a bumpier ride than we perhaps expect it to be! So buckle up and come and enjoy the IR ride through 2004 with us!
ONCE AGAIN: A RIGHT TO AFFIRMATIVE ACTION
In May 2003, the Labour Court’s decision in Harmse v City of Cape Town (2003) 12 LC 6.15.1 saw the light of day — causing a flurry of interest, media coverage, commentary and criticism (this judgment was reviewed in the IR Network editorial of 18 May 2003). The City of Cape Town, the employer, decided not to short-list the applicant employee for any one of three posts it had advertised, and the employee alleged that he was unfairly discriminated against on the basis of race, political beliefs, lack of relevant experience and/or other grounds.
One of the most important statements made by the Labour Court in this important judgment was that affirmative action is more than just a defence in the hands of the employer and that it should not be confined to this limited role in the elimination of unfair discrimination in the workplace. Affirmative action, the Court held, indicates a more active role than being merely a passive defence against claims of unfair discrimination. Affirmative action entails pro-activeness and self-activity on the part of the employer.
Failure to appoint
The newest decision on this point is Dudley v City of Cape Town & another (2004) 13 LC 1.19.1. In November 2001, the City of Cape Town (the employer) advertised a post of Director: City Health; the applicant employee (a black female medical doctor) applied for the post. So did the second respondent, a white male medical doctor. But at the time, the employee was already serving as the employer’s interim manager: health. Three candidates were shortlisted after the interviews and the City Manager, in the labour consultation with the City’s executive management team, appointed the white male.
The employee requested all information relevant to the decision to appoint the second respondent and not her; dissatisfied with the information provided by the employer, the employee lodged a grievance. A dispute was referred to the SA Local Government Bargaining Council, but the council was of the view that it did not have jurisdiction to hear the matter — it was referred to the CCMA instead. The dispute was classified as an unfair labour practice dispute and unfair discrimination.
In the Labour Court the employee mounted a case with four components: unfair discrimination, affirmative action, the employer’s constitutional obligations and an alleged unfair labour practice.
In respect of unfair discrimination, the employee alleged that the criteria applied by the city in selecting the white male and the manner in which these criteria were applied resulted in direct discrimination against her. Her claim under affirmative action was based on her contention that the employer’s decision to appoint the white male and not herself breached its obligation to implement affirmative action measures in terms of Chapter III of the Employment Equity Act. Similarly, she claimed that the City had breached, amongst others, her constitutional right to equality in terms of section 9(2) and her right to fair labour practices in terms of section 23(1) of the Constitution. She also alleged that her constitutional right to dignity (section 10 of the Constitution) had been infringed.
Her unfair dismissal claim was based on her allegation that the appointment process followed by the employer did not comply with its own policy, that it was arbitrary, irrational, unprofessional and unfair to the employee; that the process was discriminatory against black women and that it failed to give effect to the employer’s affirmative action obligations.
The employer raised an exception to the employee’s claims, meaning in essence that it claimed the employee’s case is not sound in law. While the fact that the employer raised exceptions may make the decision somewhat difficult to read, it does not detract from the importance of this case (and the Harmse decision was also a case related to the exceptions raised by the employer). One of the most important grounds on which the City excepted was that the Labour Court had no jurisdiction, it said, to hear a matter where the aggrieved employee had failed to exhaust the monitoring, enforcement and compliance procedures set out in Chapter V of the Act. This looks simple, but it goes to the heart of the matter — can an individual employee who has not been promoted approach the Labour Court and claim that the employer has failed to comply with Chapter III of the Employment Equity Act?
Analysing the Employment Equity Act
At the heart of the Labour Court’s judgment is its analysis of the Employment Equity Act (EEA) 55 of 1998. One of the most important aspects the Court had to deal with was whether the employee was correct in trying to deploy as a ‘sword’ a principle that was intended as a ‘shield’ for the employer — or was she correctly asserting that affirmative action is a positive instrument which she (an individual applicant in this case) was entitled to wield. At stake here is the distinction between Chapter II of the Employment Equity Act (prohibition against unfair discrimination) and Chapter III of the Act, which relates to affirmative action measures. The question was whether an individual employee, such as the applicant in this case, had the right to use the affirmative action provisions of Chapter III as a ‘sword’ in respect of compelling the employer to appoint her.
In this context, the Labour Court had the following to say:
‘More particularly, it is the City's argument that: affirmative action measures are to be formulated and implemented on a group basis; since they will inevitably involve a degree of discrimination against some persons within a previously advantaged group they require protection; to this end, affirmative action incorporates the function of shield. Mr Rose-Innes, for the City, underlined the distinctions to be drawn between the prohibition against unfair discrimination contained in Chapter II and the detailed provisions for measures to be taken to implement affirmative action set out in Chapter III.
A comparison of these two chapters shows that there are indeed points of distinction that are significant for this case. The prohibition against unfair discrimination is directly enforceable by a single aggrieved individual or by the members of an affected group. Whether or not there has been discrimination is a matter of law and the application of the law to the facts. That is a matter for the decision of this Court or an arbitrator and the content of the prohibition is not in any way the subject of consultation between employer and employees.
By contrast, the structure of Chapter III is such that, by definition, it is intended to and can be brought into operation only within a collective environment. This is inherent in the nature of the duties of an employer outlined in section 13(2). Those are: consultation, analysis, preparation of an employment equity plan and reports to the Director-General on progress in the implementation of the plan. Each of those phases is given statutory content.’ (paragraphs [41]-[43])
In essence, what the Labour Court was saying is that Chapter II (unfair discrimination) can be enforced by either an individual or a group, while Chapter III (affirmative action) relates to issues subject to consultation between the employer and the employees. Chapter II of the EEA does not contain any provisions imposing a duty to consult with employees.
Enforcement and dispute resolution
This distinction between the prohibition of unfair discrimination and affirmative action in the EEA is mirrored by the distinction in the means of enforcement. Section 10 of the EEA provides for enforcement of unfair discrimination matters first by reference to the CCMA, and then the matter is referred to the Labour Court. When it comes to the enforcement of Chapter III (affirmative action), however, Chapter V of the EEA applies.
While the Labour Court does have jurisdiction in matters arising under Chapter II of the EEA, the Court affirmed that individuals have no power to bring affirmative action cases directly to the Labour Court.
Not to follow Harmse
The Labour Court also referred to the earlier decision in the Harmse case, but felt compelled to disagree with the approach outlined there:
‘I regret that I am unable to follow this result. In my respectful view, the learned Judge has not sufficiently maintained the distinction between Chapters II and III that the interpretation of the Act requires. In general, for the reasons set out in this judgment, if due affirmative actions measures have not been applied by a designated employer that gives rise to an enforcement issue under Chapter III and not an unfair discrimination claim under Chapter II.’ (paragraph [75])
For employers, no doubt the most important aspect of the new Dudley decision is that the Labour Court held that there is nothing in the Employment Equity Act that brings about an individual right to affirmative action.
One of the most important statements made by the Labour Court in this important judgment was that affirmative action is more than just a defence in the hands of the employer and that it should not be confined to this limited role in the elimination of unfair discrimination in the workplace. Affirmative action, the Court held, indicates a more active role than being merely a passive defence against claims of unfair discrimination. Affirmative action entails pro-activeness and self-activity on the part of the employer.
Failure to appoint
The newest decision on this point is Dudley v City of Cape Town & another (2004) 13 LC 1.19.1. In November 2001, the City of Cape Town (the employer) advertised a post of Director: City Health; the applicant employee (a black female medical doctor) applied for the post. So did the second respondent, a white male medical doctor. But at the time, the employee was already serving as the employer’s interim manager: health. Three candidates were shortlisted after the interviews and the City Manager, in the labour consultation with the City’s executive management team, appointed the white male.
The employee requested all information relevant to the decision to appoint the second respondent and not her; dissatisfied with the information provided by the employer, the employee lodged a grievance. A dispute was referred to the SA Local Government Bargaining Council, but the council was of the view that it did not have jurisdiction to hear the matter — it was referred to the CCMA instead. The dispute was classified as an unfair labour practice dispute and unfair discrimination.
In the Labour Court the employee mounted a case with four components: unfair discrimination, affirmative action, the employer’s constitutional obligations and an alleged unfair labour practice.
In respect of unfair discrimination, the employee alleged that the criteria applied by the city in selecting the white male and the manner in which these criteria were applied resulted in direct discrimination against her. Her claim under affirmative action was based on her contention that the employer’s decision to appoint the white male and not herself breached its obligation to implement affirmative action measures in terms of Chapter III of the Employment Equity Act. Similarly, she claimed that the City had breached, amongst others, her constitutional right to equality in terms of section 9(2) and her right to fair labour practices in terms of section 23(1) of the Constitution. She also alleged that her constitutional right to dignity (section 10 of the Constitution) had been infringed.
Her unfair dismissal claim was based on her allegation that the appointment process followed by the employer did not comply with its own policy, that it was arbitrary, irrational, unprofessional and unfair to the employee; that the process was discriminatory against black women and that it failed to give effect to the employer’s affirmative action obligations.
The employer raised an exception to the employee’s claims, meaning in essence that it claimed the employee’s case is not sound in law. While the fact that the employer raised exceptions may make the decision somewhat difficult to read, it does not detract from the importance of this case (and the Harmse decision was also a case related to the exceptions raised by the employer). One of the most important grounds on which the City excepted was that the Labour Court had no jurisdiction, it said, to hear a matter where the aggrieved employee had failed to exhaust the monitoring, enforcement and compliance procedures set out in Chapter V of the Act. This looks simple, but it goes to the heart of the matter — can an individual employee who has not been promoted approach the Labour Court and claim that the employer has failed to comply with Chapter III of the Employment Equity Act?
Analysing the Employment Equity Act
At the heart of the Labour Court’s judgment is its analysis of the Employment Equity Act (EEA) 55 of 1998. One of the most important aspects the Court had to deal with was whether the employee was correct in trying to deploy as a ‘sword’ a principle that was intended as a ‘shield’ for the employer — or was she correctly asserting that affirmative action is a positive instrument which she (an individual applicant in this case) was entitled to wield. At stake here is the distinction between Chapter II of the Employment Equity Act (prohibition against unfair discrimination) and Chapter III of the Act, which relates to affirmative action measures. The question was whether an individual employee, such as the applicant in this case, had the right to use the affirmative action provisions of Chapter III as a ‘sword’ in respect of compelling the employer to appoint her.
In this context, the Labour Court had the following to say:
‘More particularly, it is the City's argument that: affirmative action measures are to be formulated and implemented on a group basis; since they will inevitably involve a degree of discrimination against some persons within a previously advantaged group they require protection; to this end, affirmative action incorporates the function of shield. Mr Rose-Innes, for the City, underlined the distinctions to be drawn between the prohibition against unfair discrimination contained in Chapter II and the detailed provisions for measures to be taken to implement affirmative action set out in Chapter III.
A comparison of these two chapters shows that there are indeed points of distinction that are significant for this case. The prohibition against unfair discrimination is directly enforceable by a single aggrieved individual or by the members of an affected group. Whether or not there has been discrimination is a matter of law and the application of the law to the facts. That is a matter for the decision of this Court or an arbitrator and the content of the prohibition is not in any way the subject of consultation between employer and employees.
By contrast, the structure of Chapter III is such that, by definition, it is intended to and can be brought into operation only within a collective environment. This is inherent in the nature of the duties of an employer outlined in section 13(2). Those are: consultation, analysis, preparation of an employment equity plan and reports to the Director-General on progress in the implementation of the plan. Each of those phases is given statutory content.’ (paragraphs [41]-[43])
In essence, what the Labour Court was saying is that Chapter II (unfair discrimination) can be enforced by either an individual or a group, while Chapter III (affirmative action) relates to issues subject to consultation between the employer and the employees. Chapter II of the EEA does not contain any provisions imposing a duty to consult with employees.
Enforcement and dispute resolution
This distinction between the prohibition of unfair discrimination and affirmative action in the EEA is mirrored by the distinction in the means of enforcement. Section 10 of the EEA provides for enforcement of unfair discrimination matters first by reference to the CCMA, and then the matter is referred to the Labour Court. When it comes to the enforcement of Chapter III (affirmative action), however, Chapter V of the EEA applies.
While the Labour Court does have jurisdiction in matters arising under Chapter II of the EEA, the Court affirmed that individuals have no power to bring affirmative action cases directly to the Labour Court.
Not to follow Harmse
The Labour Court also referred to the earlier decision in the Harmse case, but felt compelled to disagree with the approach outlined there:
‘I regret that I am unable to follow this result. In my respectful view, the learned Judge has not sufficiently maintained the distinction between Chapters II and III that the interpretation of the Act requires. In general, for the reasons set out in this judgment, if due affirmative actions measures have not been applied by a designated employer that gives rise to an enforcement issue under Chapter III and not an unfair discrimination claim under Chapter II.’ (paragraph [75])
For employers, no doubt the most important aspect of the new Dudley decision is that the Labour Court held that there is nothing in the Employment Equity Act that brings about an individual right to affirmative action.
Case update from the Labour Appeal Court
New cases on retirement age and operational requirement dismissals
By the very nature of things, some of the controversial decisions of the Labour Court gradually make their way to the Labour Appeal Court, and often, by the time the Labour Appeal Court finalises the appeal, the controversy is long forgotten. But it is usually in decisions such as these that the Labour Appeal Court sets out principles and clarifies issues (or muddles the waters even more, of course).
Retirement age
Close to the end of 2002, the Labour Court held that an employer who had dismissed employees on the ground of their age (60) constituted an automatically unfair dismissal in terms of section 187(1)(f) of the Labour Relations Act. These employees had been transferred from one employer to another, and the new employer had set a new retirement age at 60. In the Labour Court, the issue was whether 60 was indeed the normal age of retirement, because the old employer did not have a retirement policy in place. The Labour Court’s decision (SACTWU Sportswear & others v Rubin Sportswear (2002) LC 6.12.5) was discussed in the editorial of 18 December 2002.
The Labour Appeal Court has now handed down its decision in Rubin Sportswear v SACTWU & others (2004) 13 LAC 1.11.14. For the Labour Appeal Court, the fundamental question in this case whether the employer could unilaterally fix the employees’ retirement age.
Just what is ‘normal’?
Section 187(2) of the Labour Relations Act provides that a dismissal based on age may be fair if the employee has ‘reached the normal or agreed’ retirement age. The union, on behalf of the employees, argued that the dismissal of the employees by the new employer constituted an automatically unfair dismissal and that the new employer, by fixing the age of retirement, had unilaterally changed the terms and conditions of employees — something the new employer had no right to do. The employer’s argument was that the employees in question had reached the ‘normal’ retirement age of 60 when they were dismissed, and, by virtue of the exception set out in section 187(2) of the LRA, the dismissal was not automatically unfair. This meant that the Labour Appeal Court had to find out whether there was a ‘normal’ retirement age of 60 applicable to the employees who had been dismissed.
The Court rejected the employer’s argument that by unilaterally fixing the retirement age at 60, that age had become the ‘normal’ retirement age. What is a normal retirement age, the Court held, depends on the meaning of the word ‘normal’ as used in section 187(2) of the LRA.
And here the stage is set for an excruciatingly detailed judicial analysis of the word ‘normal’. After wading through a number of dictionaries and trawling through cases decided by the High Court, the Labour Appeal Court comes to the conclusion ‘that the word “normal” as used in section 187(2) really means what is says’ (at paragraph [19]). It would also be conceivable that one employer could have different ‘normal’ retirement ages for different categories of employees within its workforce (for example, there could be different retirement ages for professionals and artisans).
On the facts of the case, the Labour Appeal Court held that the new employer had no right to unilaterally impose a new condition of employment on the employees concerned because their terms and conditions of employment did not include a ‘normal’ retirement age — the new employer was attempting to unilaterally introduce a new condition of employment:
‘In my view a certain age cannot suddenly become a normal retirement age for employees or for a certain category of employees simply because the employer wakes up one morning and decides that he wants a certain age as the normal retirement age for his employees or for a certain category of his employees.’ (paragraph [22])
The employer had some options: it could either have engaged in a consensus-seeking process with the employees to establish an agreed retirement age, or, as a result of long practice, a certain age becomes the ‘normal’ retirement age. The employer could have instituted a lock-out, the Court added, to force the employees to agree to 60 as the retirement age.
The Labour Appeal Court dismissed the appeal, agreeing with the Labour Court that the dismissal of these employees were automatically unfair because the dismissals were based on their age.
The return of FAWU and General Food Industries
One of the first editorials I ever wrote for IR Network at the end of 2002 was a discussion of the Labour Court’s decision in FAWU v General Food Industries Ltd (2002) 11 LC 5.2.12. The most important facts were that the employer and the union had reached agreement on a wage increase of 6% — a short while later the employer tried to engage with the union about possible retrenchments (the employer was contemplating outsourcing), stating that the retrenchment discussions had nothing to do with the wage settlement. The union thought otherwise, namely that the employer was trying to undermine the collective agreement — to ‘save’ itself what it had agreed to pay by retrenching workers. This, the union argued, meant that the retrenchments were unfair because of section 187(1)(c) of the Labour Relations Act (unfair for an employer to dismiss an employee because the employee failed to agree to the employer’s demand in respect of any matter of mutual interest between the parties).
On the facts, the Labour Court agreed with the union, holding that the company used the retrenchment and labour outsourcing as an instrument for undermining the status of the collective agreement and as an instrument to undermine the status of the union as the exclusive recognised collective bargaining agent of its members.
Much discussion ensued — the correctness (or otherwise) of this case was discussed in journals and conferences, and here on IR Network the view was that the Labour Court had left out some important considerations. One of the most important issues raised here and elsewhere was the relationship or link between the wage agreement and the retrenchment — was there any causal connection between the fact that the employer had agreed to a 6% increase and the outsourcing?
But some things had happened in the meantime, of course, and these events changed the playing field somewhat. The Labour Appeal Court, in two important judgments, clarified the relationship between retrenchments, on the one hand, and automatically unfair dismissals because of the employees’ refusal to accept a demand (section 187(1)(c)) on the other hand. This meant that when the Labour Appeal Court now heard General Food Industries Ltd v FAWU (2004) 13 LAC 5.3.3 (also reported in [2004] 7 BLLR 667 (LAC)) the union could no longer argue that the employer’s act of dismissing the employees, in the context of the wage agreement, amounted to an automatically unfair dismissal.
Substantive fairness
However, the question remained as to whether the retrenchment of the employees as part of the outsourcing process was substantively fair. The Labour Court had come to the conclusion that the commercial rationale presented by the employer did not provide a reasonable basis for the retrenchment of some 58 employees. The union argued, for instance, that it was inappropriate for the employer to retrench employees in order to reduce its wage bill or to increase profits.
On this point, the Labour Appeal Court confirmed the view it seems to hold at present, namely that the LRA recognises dismissal for operational reasons of the employer, but it does not distinguish between the survival of the business which is under threat and a business which is profitable and wanting to make even more profit:
“I am of the judgment that a natural consequence of the Fry’s Metals judgment is that, all things being equal, a company is entitled to insist by economic restructuring that a profitable centre becomes even more profitable. It is also clear from the evidence that the appellant [the employer] required flexibility on the part of the employees’ terms and conditions of employment in order to be competitive. The respondent [union] did not offer such flexibility. In my view that need of the appellant also provided a fair reason to dismiss the employees when they were not able to prepared to offer such flexibility to the appellant. Accordingly, I am of the view that the dismissal of the employees concerned was substantively fair.’ (at paragraph [62] of the judgment)
Procedural issues: where should labour consultation take place?
The second important issue raised in this appeal relates to the consultation process and whether it should have taken place at a national level or a plant-level (or even a regional level). In this regard, the Labour Appeal Court held that the real question is not at which level the consultations should have taken place, but whether there was a fair consultation process before the dismissals. Did the fact that the consultation process took place at the local level mean that the consultation process was unfair? The Court’s view here was that if the union’s local team was incapable of dealing with the issues, the team could have been increased (by including senior officials and national office-bearers, for instance). The union did not do this. The union’s case, the Labour Appeal Court concluded, was based on its view that it would have been more convenient (to the union) to hold the consultations at a national level instead of at a plant level. This, the Court held, clearly correctly, would never be sufficient for deciding whether the dismissal that followed these consultations were procedurally fair or not.
Some other interesting points also arise in the context of this case, such as disclosure of information. The Labour Court held that the dismissals were procedurally unfair because the employer had not disclosed sufficient information about the fact that the contractor was offering the dismissed employees employment. On the facts, the Labour Appeal Court held that the union did not do what was asked to do if it wanted information and that the employer was not to blame if FAWU did not have certain pieces of information.
The value of appeal
One of the most striking aspects of these appeal decisions is the fact that they deal, in detail, and in close and careful analysis, with the issues raised, and that no-one could possibly claim that the Labour Appeal Court merely rubberstamps decisions of the Labour Court. The Labour Appeal Court appears very balanced in its examination of the issues and the way in which it considers real and practical issues facing employers (such as increased competition, a wish to increase profits, restructuring and dealing with the implications of restructuring). This is not to say that the Labour Appeal Court is overly employer-friendly (as some may have thought and claimed after the Fry’s Metals case), but in recent judgments the quality of the reasoning and the care of the analyses have been nothing short of impressive.
Will the High Court, once it has swallowed the Labour Court and Labour Appeal Court, be able to do the same?
By the very nature of things, some of the controversial decisions of the Labour Court gradually make their way to the Labour Appeal Court, and often, by the time the Labour Appeal Court finalises the appeal, the controversy is long forgotten. But it is usually in decisions such as these that the Labour Appeal Court sets out principles and clarifies issues (or muddles the waters even more, of course).
Retirement age
Close to the end of 2002, the Labour Court held that an employer who had dismissed employees on the ground of their age (60) constituted an automatically unfair dismissal in terms of section 187(1)(f) of the Labour Relations Act. These employees had been transferred from one employer to another, and the new employer had set a new retirement age at 60. In the Labour Court, the issue was whether 60 was indeed the normal age of retirement, because the old employer did not have a retirement policy in place. The Labour Court’s decision (SACTWU Sportswear & others v Rubin Sportswear (2002) LC 6.12.5) was discussed in the editorial of 18 December 2002.
The Labour Appeal Court has now handed down its decision in Rubin Sportswear v SACTWU & others (2004) 13 LAC 1.11.14. For the Labour Appeal Court, the fundamental question in this case whether the employer could unilaterally fix the employees’ retirement age.
Just what is ‘normal’?
Section 187(2) of the Labour Relations Act provides that a dismissal based on age may be fair if the employee has ‘reached the normal or agreed’ retirement age. The union, on behalf of the employees, argued that the dismissal of the employees by the new employer constituted an automatically unfair dismissal and that the new employer, by fixing the age of retirement, had unilaterally changed the terms and conditions of employees — something the new employer had no right to do. The employer’s argument was that the employees in question had reached the ‘normal’ retirement age of 60 when they were dismissed, and, by virtue of the exception set out in section 187(2) of the LRA, the dismissal was not automatically unfair. This meant that the Labour Appeal Court had to find out whether there was a ‘normal’ retirement age of 60 applicable to the employees who had been dismissed.
The Court rejected the employer’s argument that by unilaterally fixing the retirement age at 60, that age had become the ‘normal’ retirement age. What is a normal retirement age, the Court held, depends on the meaning of the word ‘normal’ as used in section 187(2) of the LRA.
And here the stage is set for an excruciatingly detailed judicial analysis of the word ‘normal’. After wading through a number of dictionaries and trawling through cases decided by the High Court, the Labour Appeal Court comes to the conclusion ‘that the word “normal” as used in section 187(2) really means what is says’ (at paragraph [19]). It would also be conceivable that one employer could have different ‘normal’ retirement ages for different categories of employees within its workforce (for example, there could be different retirement ages for professionals and artisans).
On the facts of the case, the Labour Appeal Court held that the new employer had no right to unilaterally impose a new condition of employment on the employees concerned because their terms and conditions of employment did not include a ‘normal’ retirement age — the new employer was attempting to unilaterally introduce a new condition of employment:
‘In my view a certain age cannot suddenly become a normal retirement age for employees or for a certain category of employees simply because the employer wakes up one morning and decides that he wants a certain age as the normal retirement age for his employees or for a certain category of his employees.’ (paragraph [22])
The employer had some options: it could either have engaged in a consensus-seeking process with the employees to establish an agreed retirement age, or, as a result of long practice, a certain age becomes the ‘normal’ retirement age. The employer could have instituted a lock-out, the Court added, to force the employees to agree to 60 as the retirement age.
The Labour Appeal Court dismissed the appeal, agreeing with the Labour Court that the dismissal of these employees were automatically unfair because the dismissals were based on their age.
The return of FAWU and General Food Industries
One of the first editorials I ever wrote for IR Network at the end of 2002 was a discussion of the Labour Court’s decision in FAWU v General Food Industries Ltd (2002) 11 LC 5.2.12. The most important facts were that the employer and the union had reached agreement on a wage increase of 6% — a short while later the employer tried to engage with the union about possible retrenchments (the employer was contemplating outsourcing), stating that the retrenchment discussions had nothing to do with the wage settlement. The union thought otherwise, namely that the employer was trying to undermine the collective agreement — to ‘save’ itself what it had agreed to pay by retrenching workers. This, the union argued, meant that the retrenchments were unfair because of section 187(1)(c) of the Labour Relations Act (unfair for an employer to dismiss an employee because the employee failed to agree to the employer’s demand in respect of any matter of mutual interest between the parties).
On the facts, the Labour Court agreed with the union, holding that the company used the retrenchment and labour outsourcing as an instrument for undermining the status of the collective agreement and as an instrument to undermine the status of the union as the exclusive recognised collective bargaining agent of its members.
Much discussion ensued — the correctness (or otherwise) of this case was discussed in journals and conferences, and here on IR Network the view was that the Labour Court had left out some important considerations. One of the most important issues raised here and elsewhere was the relationship or link between the wage agreement and the retrenchment — was there any causal connection between the fact that the employer had agreed to a 6% increase and the outsourcing?
But some things had happened in the meantime, of course, and these events changed the playing field somewhat. The Labour Appeal Court, in two important judgments, clarified the relationship between retrenchments, on the one hand, and automatically unfair dismissals because of the employees’ refusal to accept a demand (section 187(1)(c)) on the other hand. This meant that when the Labour Appeal Court now heard General Food Industries Ltd v FAWU (2004) 13 LAC 5.3.3 (also reported in [2004] 7 BLLR 667 (LAC)) the union could no longer argue that the employer’s act of dismissing the employees, in the context of the wage agreement, amounted to an automatically unfair dismissal.
Substantive fairness
However, the question remained as to whether the retrenchment of the employees as part of the outsourcing process was substantively fair. The Labour Court had come to the conclusion that the commercial rationale presented by the employer did not provide a reasonable basis for the retrenchment of some 58 employees. The union argued, for instance, that it was inappropriate for the employer to retrench employees in order to reduce its wage bill or to increase profits.
On this point, the Labour Appeal Court confirmed the view it seems to hold at present, namely that the LRA recognises dismissal for operational reasons of the employer, but it does not distinguish between the survival of the business which is under threat and a business which is profitable and wanting to make even more profit:
“I am of the judgment that a natural consequence of the Fry’s Metals judgment is that, all things being equal, a company is entitled to insist by economic restructuring that a profitable centre becomes even more profitable. It is also clear from the evidence that the appellant [the employer] required flexibility on the part of the employees’ terms and conditions of employment in order to be competitive. The respondent [union] did not offer such flexibility. In my view that need of the appellant also provided a fair reason to dismiss the employees when they were not able to prepared to offer such flexibility to the appellant. Accordingly, I am of the view that the dismissal of the employees concerned was substantively fair.’ (at paragraph [62] of the judgment)
Procedural issues: where should labour consultation take place?
The second important issue raised in this appeal relates to the consultation process and whether it should have taken place at a national level or a plant-level (or even a regional level). In this regard, the Labour Appeal Court held that the real question is not at which level the consultations should have taken place, but whether there was a fair consultation process before the dismissals. Did the fact that the consultation process took place at the local level mean that the consultation process was unfair? The Court’s view here was that if the union’s local team was incapable of dealing with the issues, the team could have been increased (by including senior officials and national office-bearers, for instance). The union did not do this. The union’s case, the Labour Appeal Court concluded, was based on its view that it would have been more convenient (to the union) to hold the consultations at a national level instead of at a plant level. This, the Court held, clearly correctly, would never be sufficient for deciding whether the dismissal that followed these consultations were procedurally fair or not.
Some other interesting points also arise in the context of this case, such as disclosure of information. The Labour Court held that the dismissals were procedurally unfair because the employer had not disclosed sufficient information about the fact that the contractor was offering the dismissed employees employment. On the facts, the Labour Appeal Court held that the union did not do what was asked to do if it wanted information and that the employer was not to blame if FAWU did not have certain pieces of information.
The value of appeal
One of the most striking aspects of these appeal decisions is the fact that they deal, in detail, and in close and careful analysis, with the issues raised, and that no-one could possibly claim that the Labour Appeal Court merely rubberstamps decisions of the Labour Court. The Labour Appeal Court appears very balanced in its examination of the issues and the way in which it considers real and practical issues facing employers (such as increased competition, a wish to increase profits, restructuring and dealing with the implications of restructuring). This is not to say that the Labour Appeal Court is overly employer-friendly (as some may have thought and claimed after the Fry’s Metals case), but in recent judgments the quality of the reasoning and the care of the analyses have been nothing short of impressive.
Will the High Court, once it has swallowed the Labour Court and Labour Appeal Court, be able to do the same?
Thursday, April 8, 2010
PROMOTIONS AND NON-APPOINTMENT DISPUTES: A ROUND-UP OF CASES
We have seen a steady stream of promotion or, more accurately, non-promotion cases here on IR Network as employees challenge their employers’ decisions not to promote them. In this regard, recent decisions have included numerous CCMA and bargaining council arbitration awards and even decisions of the Labour Court and Labour Appeal Court.
The difference between non-appointment and non-promotion
The first important issue is the question of whether the employer’s decision in respect of a certain post relates to a non-appointment or a non-promotion. This issue was raised in the recent decision of the Labour Appeal Court in Department of Justice v CCMA (2004) 13 LAC 1.11.6. (also reported under [2004] 4 BLLR 297 (LAC)). The Department of Justice advertised (internally and externally) the post of Chief State Law Advisor. Requirements for the post included admission as an advocate and the possession of an LLB degree. From the many applications, a shortlist of four candidates was drawn up. After interviewing these four applicants, the selection committee stated that it was not in a position to recommend any one candidate for appointment to the post. The post was advertised again and the entire process was repeated; eventually, one candidate was appointed for a fixed term of 12 months. But one of the present State Law Advisors was aggrieved by this fixed-term appointment; he was of the view that he complied with the requirements. From the perspective of this aggrieved employee, of course, the issue in dispute was the fact that the employer had not promoted him.
The issue was referred to the CCMA and the commissioner not only held that the CCMA had jurisdiction, but also that the Department had committed an unfair labour practice. The Department then applied in the Labour Court for an order setting aside the CCMA award. The Labour Court dismissed this review application, but it did set aside that part of the CCMA award that ordered the Department to pay the aggrieved employee a considerable sum of money.
On appeal, the first issue raised was that of jurisdiction — whether the CCMA, acting in terms of the unfair labour practice definition, had the power to hear the matter (at the time, unfair labour practices were regulated in Schedule 7 of the Labour Relations Act; they now appear in section 186 of the Act). One of the arguments raised by the Department was that the dispute did not relate to promotion at all, but that it related to the appointment or filling of a post instead.
On this point, the Labour Appeal Court held that the decision not to appoint the employee to the post amounted to a decision not to promote him, and that this decision fell within the ambit of the unfair labour practice decision. However, at the same time, if someone from outside the organisation (who is not an ‘employee’ for the purposes of the definition of the unfair labour practice definition, of course), was not appointed, that non-appointment did not constitute a dispute about a promotion. An applicant who has not been appointed can dispute the employer’s decision on the basis of non-promotion:
‘That difference arises from the fact that each one of the two candidates has a different relationship with the decision – maker in this regard. The one is an employee of the decision-maker whereas the other has no existing employment relationship with the decision-maker.’ (see paragraph [58] of the judgment).
A long and complicated judgment, but still an important one in the context of disputes about the employer’s decision not to promote an employee. The Labour Appeal Court expressly approved of the approach taken in Mashegoane & another v The University of the North (1997) 2 LC 1.1.93.
As far as the merits of the case were concerned, the fact that the Department had not, at the relevant point in time, filled the post on a permanent basis was found to be decisive by the Labour Appeal Court:
‘In an unfair dismissal case the employee must first establish the fact of a dismissal before there can be any inquiry into whether the dismissal was unfair. If he fails to prove a dismissal, that is the end of the matter. The same applies to a matter such as this one. An employee who complains that the employer’s decision or conduct in not appointing him constitutes an unfair labour practice must first establish the existence of such decision or conduct. If that decision or conduct is not established, that is the end of the matter. If that decision or conduct is proved, the inquiry into whether the conduct was unfair can then follow. This is not one of those cases such as disputes relating to unfair discrimination and disputes relating to freedom of association where if the employees proves the conduct complained of, the legislation then requires the employer to prove that such conduct was fair or lawful and, if he cannot prove that, unfairness is established. In cases where that is intended to be the case, legislation has said so clearly. In respect of item 2(l)(b) matters, the Act does not say so because it was not intended to be so.’ (paragraph [73]).
Legitimate expectations
If an employee has an expectation of being promoted to a certain post, of course, it becomes more probable that he or she will dispute the employer’s decision if the decision is not in his or her favour. This often happens in the context of an employee’s acting, sometimes for an extended period, in a higher position, only to find that someone else is promoted or appointed to that position.
In Communications Workers Union and others / South African Post Office (2004) 13 CCMA 6.9.4 the applicant employees had been requested to act in certain positions for almost then years. Some of these positions were subsequently advertised, but of the ten employees who had acted in these positions, only four were appointed. One of the issues that arose is whether these employees had a legitimate expectation that they would be appointed to these positions.
For the CCMA commissioner, this did not constitute a dispute about promotion, but a dispute about the employer’s failure to appoint the applicant employees to these positions. The commissioner concluded that the employees were indeed reasonably entitled to expect that they would be appointed to the positions, or, at the very least, that they would be accorded preferential treatment. The factors the commissioner took into account included the unreasonably long period the applicants served in their acting capacity, the failure of the employer to adhere to a rotation policy and the praises the employees received while they were acting in the positions. Their experience, their qualifications and the fact that they met the requirements for the posts were also relevant.
The employer argued that only the employees themselves had this expectation in their minds, and that it was therefore a purely subjective expectation. That may be so, said the commissioner, but this expectation was to a significant extent reinforced by the employer through its actions and inactions.
The issue of legitimate expectations also arose in Gurarnah / South African Weather Services (2004) 13 CCMA 6.9.1. The employee applied for a higher position knowing full well that she did not have the necessary experience for the job. However, she claimed, at the CCMA, that she had a real and legitimate expectation, based on factors including the fact that she had been invited to be part of a mentoring programme, academic strudies that she had completed on her own and by means of the employer’s bursary scheme and her ability to carry out the job functions of the position she aspired to. On the facts, the CCMA commissioner held that the employee was not entitled to any relief.
Processes and procedures
In some of the new cases and awards, the procedures and processes followed by the employer were flawed. In Meyer / South African Police Service (2003) 12 SSSBC 6.9.15 the employee applied for advertised posts, but his evaluation mark (accorded to him by his commanding officer) had been reduced by 21% — without him having been given an opportunity to make representations or to be heard. This lowering prejudiced the employee’s promotion opportunities on more than one occasion, and the bargaining council arbitrator ordered the payment of compensation. Interestingly enough, the arbitrator did not order the payment of a year’s salary, as requested by the employee, but ordered the payment of the difference between the employee’s present salary and what he would have earned if he had been promoted.
It is now clear that arbitrators and CCMA commissioners can (and will) consider the conduct of the selection, appointment or promotion process, and that it will scrutinise the actions or omissions of the employer and the selection committee with some care. In Coetzee / South African Police Service (2003) 12 SSSBC 6.9.12 the way the selection committee reached its decision, the factors it took into account (and the factors it failed to take into account) were analysed in detail, and the arbitrator concluded that the decision of the selection committee to appoint someone else to the post was unreasonable and irrational and, because it disregarded the objective standards of the criteria applicable to the post, it was both substantively and procedurally unfair.
The realities of promotion
In virtually all cases, disputes about promotion or non-appointment to a post are highly emotionally charged disputes as the employee concerned may be experiencing considerable disappointment, and sometimes justified fury, at the conduct of the employer and its managers or officials. In spite of the emotions, however, these kinds of disputes remain factual disputes, sometimes becoming extremely complex evaluations of the employer’s conduct, its policies, procedures and documents (see, for example, Basson / South African Police Services (2004) 13 SSSBC 6.9.1). Employers need to deal with promotion and related differences and disputes with some care, knowing that a CCMA commissioner or a bargaining council arbitrator can, and will, scrutinise the employer’s conduct in painstaking detail. Promotions need to be handled in a substantively and procedurally fair manner, itself enough of a challenge. If considerations such as the employee’s legitimate expectation enters into the picture, the matter rapidly becomes more complicated and, in the end, neither the employee nor the employer may be the real ‘winner’.
The difference between non-appointment and non-promotion
The first important issue is the question of whether the employer’s decision in respect of a certain post relates to a non-appointment or a non-promotion. This issue was raised in the recent decision of the Labour Appeal Court in Department of Justice v CCMA (2004) 13 LAC 1.11.6. (also reported under [2004] 4 BLLR 297 (LAC)). The Department of Justice advertised (internally and externally) the post of Chief State Law Advisor. Requirements for the post included admission as an advocate and the possession of an LLB degree. From the many applications, a shortlist of four candidates was drawn up. After interviewing these four applicants, the selection committee stated that it was not in a position to recommend any one candidate for appointment to the post. The post was advertised again and the entire process was repeated; eventually, one candidate was appointed for a fixed term of 12 months. But one of the present State Law Advisors was aggrieved by this fixed-term appointment; he was of the view that he complied with the requirements. From the perspective of this aggrieved employee, of course, the issue in dispute was the fact that the employer had not promoted him.
The issue was referred to the CCMA and the commissioner not only held that the CCMA had jurisdiction, but also that the Department had committed an unfair labour practice. The Department then applied in the Labour Court for an order setting aside the CCMA award. The Labour Court dismissed this review application, but it did set aside that part of the CCMA award that ordered the Department to pay the aggrieved employee a considerable sum of money.
On appeal, the first issue raised was that of jurisdiction — whether the CCMA, acting in terms of the unfair labour practice definition, had the power to hear the matter (at the time, unfair labour practices were regulated in Schedule 7 of the Labour Relations Act; they now appear in section 186 of the Act). One of the arguments raised by the Department was that the dispute did not relate to promotion at all, but that it related to the appointment or filling of a post instead.
On this point, the Labour Appeal Court held that the decision not to appoint the employee to the post amounted to a decision not to promote him, and that this decision fell within the ambit of the unfair labour practice decision. However, at the same time, if someone from outside the organisation (who is not an ‘employee’ for the purposes of the definition of the unfair labour practice definition, of course), was not appointed, that non-appointment did not constitute a dispute about a promotion. An applicant who has not been appointed can dispute the employer’s decision on the basis of non-promotion:
‘That difference arises from the fact that each one of the two candidates has a different relationship with the decision – maker in this regard. The one is an employee of the decision-maker whereas the other has no existing employment relationship with the decision-maker.’ (see paragraph [58] of the judgment).
A long and complicated judgment, but still an important one in the context of disputes about the employer’s decision not to promote an employee. The Labour Appeal Court expressly approved of the approach taken in Mashegoane & another v The University of the North (1997) 2 LC 1.1.93.
As far as the merits of the case were concerned, the fact that the Department had not, at the relevant point in time, filled the post on a permanent basis was found to be decisive by the Labour Appeal Court:
‘In an unfair dismissal case the employee must first establish the fact of a dismissal before there can be any inquiry into whether the dismissal was unfair. If he fails to prove a dismissal, that is the end of the matter. The same applies to a matter such as this one. An employee who complains that the employer’s decision or conduct in not appointing him constitutes an unfair labour practice must first establish the existence of such decision or conduct. If that decision or conduct is not established, that is the end of the matter. If that decision or conduct is proved, the inquiry into whether the conduct was unfair can then follow. This is not one of those cases such as disputes relating to unfair discrimination and disputes relating to freedom of association where if the employees proves the conduct complained of, the legislation then requires the employer to prove that such conduct was fair or lawful and, if he cannot prove that, unfairness is established. In cases where that is intended to be the case, legislation has said so clearly. In respect of item 2(l)(b) matters, the Act does not say so because it was not intended to be so.’ (paragraph [73]).
Legitimate expectations
If an employee has an expectation of being promoted to a certain post, of course, it becomes more probable that he or she will dispute the employer’s decision if the decision is not in his or her favour. This often happens in the context of an employee’s acting, sometimes for an extended period, in a higher position, only to find that someone else is promoted or appointed to that position.
In Communications Workers Union and others / South African Post Office (2004) 13 CCMA 6.9.4 the applicant employees had been requested to act in certain positions for almost then years. Some of these positions were subsequently advertised, but of the ten employees who had acted in these positions, only four were appointed. One of the issues that arose is whether these employees had a legitimate expectation that they would be appointed to these positions.
For the CCMA commissioner, this did not constitute a dispute about promotion, but a dispute about the employer’s failure to appoint the applicant employees to these positions. The commissioner concluded that the employees were indeed reasonably entitled to expect that they would be appointed to the positions, or, at the very least, that they would be accorded preferential treatment. The factors the commissioner took into account included the unreasonably long period the applicants served in their acting capacity, the failure of the employer to adhere to a rotation policy and the praises the employees received while they were acting in the positions. Their experience, their qualifications and the fact that they met the requirements for the posts were also relevant.
The employer argued that only the employees themselves had this expectation in their minds, and that it was therefore a purely subjective expectation. That may be so, said the commissioner, but this expectation was to a significant extent reinforced by the employer through its actions and inactions.
The issue of legitimate expectations also arose in Gurarnah / South African Weather Services (2004) 13 CCMA 6.9.1. The employee applied for a higher position knowing full well that she did not have the necessary experience for the job. However, she claimed, at the CCMA, that she had a real and legitimate expectation, based on factors including the fact that she had been invited to be part of a mentoring programme, academic strudies that she had completed on her own and by means of the employer’s bursary scheme and her ability to carry out the job functions of the position she aspired to. On the facts, the CCMA commissioner held that the employee was not entitled to any relief.
Processes and procedures
In some of the new cases and awards, the procedures and processes followed by the employer were flawed. In Meyer / South African Police Service (2003) 12 SSSBC 6.9.15 the employee applied for advertised posts, but his evaluation mark (accorded to him by his commanding officer) had been reduced by 21% — without him having been given an opportunity to make representations or to be heard. This lowering prejudiced the employee’s promotion opportunities on more than one occasion, and the bargaining council arbitrator ordered the payment of compensation. Interestingly enough, the arbitrator did not order the payment of a year’s salary, as requested by the employee, but ordered the payment of the difference between the employee’s present salary and what he would have earned if he had been promoted.
It is now clear that arbitrators and CCMA commissioners can (and will) consider the conduct of the selection, appointment or promotion process, and that it will scrutinise the actions or omissions of the employer and the selection committee with some care. In Coetzee / South African Police Service (2003) 12 SSSBC 6.9.12 the way the selection committee reached its decision, the factors it took into account (and the factors it failed to take into account) were analysed in detail, and the arbitrator concluded that the decision of the selection committee to appoint someone else to the post was unreasonable and irrational and, because it disregarded the objective standards of the criteria applicable to the post, it was both substantively and procedurally unfair.
The realities of promotion
In virtually all cases, disputes about promotion or non-appointment to a post are highly emotionally charged disputes as the employee concerned may be experiencing considerable disappointment, and sometimes justified fury, at the conduct of the employer and its managers or officials. In spite of the emotions, however, these kinds of disputes remain factual disputes, sometimes becoming extremely complex evaluations of the employer’s conduct, its policies, procedures and documents (see, for example, Basson / South African Police Services (2004) 13 SSSBC 6.9.1). Employers need to deal with promotion and related differences and disputes with some care, knowing that a CCMA commissioner or a bargaining council arbitrator can, and will, scrutinise the employer’s conduct in painstaking detail. Promotions need to be handled in a substantively and procedurally fair manner, itself enough of a challenge. If considerations such as the employee’s legitimate expectation enters into the picture, the matter rapidly becomes more complicated and, in the end, neither the employee nor the employer may be the real ‘winner’.
PRE-EMPLOYMENT DISMISSAL
In terms of section 185 of the Labour Relations Act 66 of 1995 (LRA), employees (and only employees) enjoy protection against unfair dismissal. The question as to who is an employee has always been a vexed question in our law: at present, our courts use the ‘dominant impression’ test to ascertain whether an applicant is indeed an employee, an independent contractor or something else (for instance, a director of a company, a partner or a member of a close corporation). The most recent (and, for that matter, one of the most useful) decision on the test for distinguishing between an employee and an independent contractor is SABC v McKenzie (1999) 8 LAC 6.11.1. The fact that only employees are protected against unfair dismissal has, of course, led to considerable problems of jurisdiction — the CCMA can, for instance, proceed with a conciliation of an unfair dismissal dispute if (and only if) the applicant is indeed an employee.
Obtaining the status of employee
In view of the fact that only someone who qualifies as an ‘employee’ enjoys protection against unfair dismissal, it appears, at first sight, to be nonsense to talk about pre-employment dismissal. However, the question has arisen as to when a person becomes an employee: when he or she agrees to the employment, signs a letter of appointment, signs the employment contract, or when he or she begins working? Does the fact that a person receives a letter of appointment in May indicating that she will begin working in July mean that this person is an ‘employee’ for June? Or does she only become an employee when she commences her duties with the employer?
From a contractual perspective, of course, it is worth bearing in mind that, technically speaking, someone who has been dismissed is no longer an employee. However, our law changes this common law rule by providing specifically for remedies relating to the unfair termination of employment. There is no such clarity in respect of when employment begins. Often a clause in an employment contract will specify when the contract or when the employment commences. But there may not be such a clause; even if there were, disputes may still arise. The contractual issue here is that of offer and acceptance: whether the employer’s offer had been accepted by the employee (as a rule, once an offer has been accepted, it cannot be revoked).
In the Labour Appeal Court
Woolworths (Pty) Ltd v Beverley Whitehead (2000) 9 LAC 6.12.2 is one of the best-known and, for that matter, one of the most controversial decisions ever handed down by the Labour Appeal Court. The importance of this case lies in the fact that it deals with issues such as discrimination on the grounds of pregnancy. The applicant was not appointed to a post; she argued that the employer’s failure to appoint her was based on the fact that she was pregnant.
But one of the issues before the Labour Appeal Court was whether the employer could change its mind:
“In that event the question that arises is whether, between the date of the interview and the date of the taking of the final decision by the employer on which of the candidates he gives the job to, an employer is not entitled to change his mind about which candidate he thinks is the best for the job. Clearly, an employer is entitled to change his mind between those two events provided he has not yet made an offer to anyone of the candidates. In my judgment it is irrelevant whether the change of mind is due to his own reconsideration of issues or whether he has spoken to a colleague or an adviser. The fact of the matter is that the period between the interview and the taking of the final decision is for the employer to consider all the candidates – their strengths and weaknesses as well as what his/her business requirements are before he makes the final decision to give the job to one of the candidates or, indeed, not to give the job to anyone of the candidates.” (at paragraph [22] of the judgment).
The Labour Appeal Court’s judgment in this case focused on other issues — it does not devote much attention to the issue of when employment starts. But before the matter got to the Labour Appeal Court, however, a judge in the Labour Court had considered the issue in some detail.
In the Labour Court
In Whitehead v Woolworths (Pty) Ltd (1999) 8 LC 6.12.4 the Labour Court held that it is not sufficient for an applicant to prove that a contract of employment had been concluded. The fact that there was an employment contract merely means that the applicant has a contractual claim, but it does not mean that the applicant is an employee for the purposes of protection in terms of the LRA. The contact of employee comes into existence, the court held, at the point where the employer’s offer is accepted, but the LRA’s protection only comes into effect at the point in time where the applicant ‘actually commences her performance or at least tenders performance in terms of the contract’ (paragraph [7]).
In Jack v Director-General Department of Environmental Affairs (2002) 11 LC 6.9.3 the employee received a letter of appointment and resigned his position in order to take up the new job. The day before commencing work with the new employer, however, the employee was told that there had been an administrative error and that his appointment had been cancelled. The settlement between the parties (reached before the matter went before the Labour Court) provided that the employee would be employed for a one year period only. The remaining issue before the court was the issue of costs: one of the points raised by the employer in this regard was that the person was not an employee because he had not yet rendered services and had not yet been remunerated — this meant, argued the employer, that the Labour Court did not have jurisdiction to order payment of costs. The Labour Court rejected this argument, ordering the employer to pay the employee’s legal costs.
More recently, the issue of termination of the relationship before the employee tenders or renders services was at issue in Wyeth SA (Pty) Ltd v Manqele & others (2003) 12 LC 7.1.1. The employee was offered a position as sales representative. A written employment contract was concluded on 15 March 2000, providing that the employment was to commence on 1 April 2000. But before 1 April came around, however, the employer informed the employee that it was no longer prepared to employ him. The reasons for this related to a motor vehicle: according to the employer, it was agreed that the employee could purchase a new motor vehicle; used vehicles were not allowed. However, the vehicle selected by the would-be sales representative turned out to be used. The employer regarded this as being a serious misrepresentation.
The ‘employee’ referred the matter to the CCMA, and one of the jurisdictional issues raised before the CCMA was whether the person was an ‘employee’. The CCMA concluded that he was (by virtue of the employment contract), and the employer sought to have the award reviewed and set aside on that point.
In an admirably lucid judgment, the Labour Court held as follows:
‘The interpretation of the definition of “employee” adopted in Whitehead v Woolworths (Pty) Ltd (supra) [the Labour Court decision referred to above] necessarily consigns a person such as the first respondent, who is an employee party to a valid contract of employment to become effective on a later date, to a jurisprudential limbo unless and until that party physically renders services in terms of that contract. Persons in these circumstances may well have resigned from their existing employment and put themselves at considerable financial risk in the expectation of commencing work in terms of an agreement that is binding on both parties at common law. To deny the statutory protection of the security of employment conferred by the LRA in the interregnum between the conclusion of a valid contract of employment and the physical commencement of work seems to me to be contrary to a purposive interpretation of the definition of “employee”.
A less literal approach to the statutory definition of employee is further justified by the extent of the constitutional protection of employment rights. Section 23(1) of the Constitution provides that “[e]veryone has the right to fair labour practices”. The choice of the word “everyone” was deliberate; other constitutional labour rights extend to a “worker”.
A person who is an employee party to a binding contract of employment is obliged to commence work, and entitled to receive remuneration on the date that the parties agree that these respective rights and obligations will commence. In my view, the term “employee” as defined in section 213 of the LRA and the requirement that a person “work” for another to be an employee extends to a person who is contracted to work.’ (paragraphs [20]-[22]).
The Labour Court rejected the employer’s review application.
Unsettled
While this point in our law appears to be unsettled, the decision of the Labour Court in Wyeth is extremely persuasive. One of the very few decisions to deal exactly with this point, its approach is perhaps preferable over the literal and technical approach of the Labour Court in the first Woolworths decision. It is also clear, especially on the facts of this case, that there is a lot at stake, especially for the employee. An employee would suffer considerable prejudice if he or she were to resign from one position in order to take up another, only to find that the employer does not intend to comply with the provisions of the employment contract. It should be borne in mind, however, that the unfair dismissal protection (as it was extended in the Wyeth decision) is only one option at the disposal of the employee — he or she could always approach either a civil court (or the Labour Court in terms of section 77 of the Basic Conditions of Employment Act) on the basis of breach of contract.
Obtaining the status of employee
In view of the fact that only someone who qualifies as an ‘employee’ enjoys protection against unfair dismissal, it appears, at first sight, to be nonsense to talk about pre-employment dismissal. However, the question has arisen as to when a person becomes an employee: when he or she agrees to the employment, signs a letter of appointment, signs the employment contract, or when he or she begins working? Does the fact that a person receives a letter of appointment in May indicating that she will begin working in July mean that this person is an ‘employee’ for June? Or does she only become an employee when she commences her duties with the employer?
From a contractual perspective, of course, it is worth bearing in mind that, technically speaking, someone who has been dismissed is no longer an employee. However, our law changes this common law rule by providing specifically for remedies relating to the unfair termination of employment. There is no such clarity in respect of when employment begins. Often a clause in an employment contract will specify when the contract or when the employment commences. But there may not be such a clause; even if there were, disputes may still arise. The contractual issue here is that of offer and acceptance: whether the employer’s offer had been accepted by the employee (as a rule, once an offer has been accepted, it cannot be revoked).
In the Labour Appeal Court
Woolworths (Pty) Ltd v Beverley Whitehead (2000) 9 LAC 6.12.2 is one of the best-known and, for that matter, one of the most controversial decisions ever handed down by the Labour Appeal Court. The importance of this case lies in the fact that it deals with issues such as discrimination on the grounds of pregnancy. The applicant was not appointed to a post; she argued that the employer’s failure to appoint her was based on the fact that she was pregnant.
But one of the issues before the Labour Appeal Court was whether the employer could change its mind:
“In that event the question that arises is whether, between the date of the interview and the date of the taking of the final decision by the employer on which of the candidates he gives the job to, an employer is not entitled to change his mind about which candidate he thinks is the best for the job. Clearly, an employer is entitled to change his mind between those two events provided he has not yet made an offer to anyone of the candidates. In my judgment it is irrelevant whether the change of mind is due to his own reconsideration of issues or whether he has spoken to a colleague or an adviser. The fact of the matter is that the period between the interview and the taking of the final decision is for the employer to consider all the candidates – their strengths and weaknesses as well as what his/her business requirements are before he makes the final decision to give the job to one of the candidates or, indeed, not to give the job to anyone of the candidates.” (at paragraph [22] of the judgment).
The Labour Appeal Court’s judgment in this case focused on other issues — it does not devote much attention to the issue of when employment starts. But before the matter got to the Labour Appeal Court, however, a judge in the Labour Court had considered the issue in some detail.
In the Labour Court
In Whitehead v Woolworths (Pty) Ltd (1999) 8 LC 6.12.4 the Labour Court held that it is not sufficient for an applicant to prove that a contract of employment had been concluded. The fact that there was an employment contract merely means that the applicant has a contractual claim, but it does not mean that the applicant is an employee for the purposes of protection in terms of the LRA. The contact of employee comes into existence, the court held, at the point where the employer’s offer is accepted, but the LRA’s protection only comes into effect at the point in time where the applicant ‘actually commences her performance or at least tenders performance in terms of the contract’ (paragraph [7]).
In Jack v Director-General Department of Environmental Affairs (2002) 11 LC 6.9.3 the employee received a letter of appointment and resigned his position in order to take up the new job. The day before commencing work with the new employer, however, the employee was told that there had been an administrative error and that his appointment had been cancelled. The settlement between the parties (reached before the matter went before the Labour Court) provided that the employee would be employed for a one year period only. The remaining issue before the court was the issue of costs: one of the points raised by the employer in this regard was that the person was not an employee because he had not yet rendered services and had not yet been remunerated — this meant, argued the employer, that the Labour Court did not have jurisdiction to order payment of costs. The Labour Court rejected this argument, ordering the employer to pay the employee’s legal costs.
More recently, the issue of termination of the relationship before the employee tenders or renders services was at issue in Wyeth SA (Pty) Ltd v Manqele & others (2003) 12 LC 7.1.1. The employee was offered a position as sales representative. A written employment contract was concluded on 15 March 2000, providing that the employment was to commence on 1 April 2000. But before 1 April came around, however, the employer informed the employee that it was no longer prepared to employ him. The reasons for this related to a motor vehicle: according to the employer, it was agreed that the employee could purchase a new motor vehicle; used vehicles were not allowed. However, the vehicle selected by the would-be sales representative turned out to be used. The employer regarded this as being a serious misrepresentation.
The ‘employee’ referred the matter to the CCMA, and one of the jurisdictional issues raised before the CCMA was whether the person was an ‘employee’. The CCMA concluded that he was (by virtue of the employment contract), and the employer sought to have the award reviewed and set aside on that point.
In an admirably lucid judgment, the Labour Court held as follows:
‘The interpretation of the definition of “employee” adopted in Whitehead v Woolworths (Pty) Ltd (supra) [the Labour Court decision referred to above] necessarily consigns a person such as the first respondent, who is an employee party to a valid contract of employment to become effective on a later date, to a jurisprudential limbo unless and until that party physically renders services in terms of that contract. Persons in these circumstances may well have resigned from their existing employment and put themselves at considerable financial risk in the expectation of commencing work in terms of an agreement that is binding on both parties at common law. To deny the statutory protection of the security of employment conferred by the LRA in the interregnum between the conclusion of a valid contract of employment and the physical commencement of work seems to me to be contrary to a purposive interpretation of the definition of “employee”.
A less literal approach to the statutory definition of employee is further justified by the extent of the constitutional protection of employment rights. Section 23(1) of the Constitution provides that “[e]veryone has the right to fair labour practices”. The choice of the word “everyone” was deliberate; other constitutional labour rights extend to a “worker”.
A person who is an employee party to a binding contract of employment is obliged to commence work, and entitled to receive remuneration on the date that the parties agree that these respective rights and obligations will commence. In my view, the term “employee” as defined in section 213 of the LRA and the requirement that a person “work” for another to be an employee extends to a person who is contracted to work.’ (paragraphs [20]-[22]).
The Labour Court rejected the employer’s review application.
Unsettled
While this point in our law appears to be unsettled, the decision of the Labour Court in Wyeth is extremely persuasive. One of the very few decisions to deal exactly with this point, its approach is perhaps preferable over the literal and technical approach of the Labour Court in the first Woolworths decision. It is also clear, especially on the facts of this case, that there is a lot at stake, especially for the employee. An employee would suffer considerable prejudice if he or she were to resign from one position in order to take up another, only to find that the employer does not intend to comply with the provisions of the employment contract. It should be borne in mind, however, that the unfair dismissal protection (as it was extended in the Wyeth decision) is only one option at the disposal of the employee — he or she could always approach either a civil court (or the Labour Court in terms of section 77 of the Basic Conditions of Employment Act) on the basis of breach of contract.
Employer consistency and organisational rights
Organisational rights in context
For smaller, less powerful trade unions, organisational rights represent an important method of building up a power-base amongst the employer’s employees. By gaining access to the employer’s premises, arranging for trade union subscriptions or dues to be deducted from employees’ remuneration or having trade union representatives or shop stewards recognised by the employer, the union can increase its membership till it is in a position to bargain, on an equal footing, with the employer.
In terms of the Labour Relations Act 66 of 1995 (the LRA), unions may acquire organisational rights in a number of ways: by concluding a collective agreement (often, but not always, a recognition agreement) with the employer, or by virtue of the union’s being a party to a bargaining or statutory council. But in order to conclude a collective agreement or be admitted to a bargaining council, a union requires a certain strength in numbers. What happens if it does not have the numbers?
In this case, a trade union may seek to obtain organisational rights by means of the procedures set out in the LRA — section 21 of the LRA provides that the union must notify and meet with the employer with a demand in respect of the organisational rights it wishes to exercise. The employer and union must then seek to reach an agreement, and, if this fails, the issue may be referred to the CCMA (and only to the CCMA) for the purposes of conciliation and arbitration.
For the purposes of this arbitration, one of the core issues, almost invariably, is whether or not the applicant union is sufficiently representative for the purposes of exercising organisational rights. The LRA distinguishes between organisational rights for majority trade unions, and organisational rights for unions that are ‘sufficiently representative’. Very often, the question is whether or not a minority union’s representivity is sufficient.
Consistency
If an employer has granted (or continues to grant) organisational rights to a minority trade union that represents only 6% of the employees in the workplace, however, it appears that the employer cannot argue that another minority union must represent at least 20-25% of the employees in the workplace. CCMA commissions appear to take a negative view of these inconsistent arguments.
In Organisation of Labour Affairs (OLA) v Old Mutual Life Assurance Co (SA) (2003) 12 CCMA 4.7.3 the applicant trade union had requested rights of access to the employees and the right to have trade union dues deducted by the employer and paid directly to the union (stop-order facilities). In terms of the LRA, unions that are ‘sufficiently representative’ could obtain these rights. But the union’s level of representivity lay at a mere 2%. For the CCMA commissioner, however, this was not the end of the story:
‘The practice in the past has clearly been to recognise unions with membership of similar numbers to that now held by the applicant. In the absence of a policy or any response from the company as to what membership is required the union refers to the company’s public statement and concludes that this is the guideline. In my opinion it would be unreasonable for the company to leave the union in a vacuum, merely ignoring the numbers issue and responding that membership is not sufficient without ever indicating what it considers to be sufficient. In these circumstances the union is quite entitled to look at current practice as a guide line.
The company argues that the current numbers have a history which justifies their inconsistent treatment of the applicant. Firstly SATAWU [another union active in the company] used to have a lot more members. This is not accepted as a reason to differentiate, the current membership irrespective of history seems to be the criteria. Secondly BIFAWU [a third active union] has been put on terms. This may be relevant if they are denied facilities given their very low membership. Thirdly, SACCAWU is a business partner. This raises serious issues of Business Ethics and Corporate Governance which are outside the terms of this arbitration. Suffice to say for the purposes of gaining recognition I totally reject this as a facilitating factor.’
For the CCMA commissioner, consistency of treatment of unions was a decisive factor in considering the fairness:
‘The Labour Relations Act is a statute designed to promote fairness in the workplace. A cornerstone of fairness is consistent treatment. I find that the company has granted facilities to unions with fewer members indicating their understanding of sufficient representation. In doing so they are bound to grant this union facilities as stipulated in sections 12 and 13 of the Labour Relations Act.’
In Group 4 Falck (Pty) Ltd v DUSWO (2003) 12 CCMA 4.7.1 the union’s membership had been dramatically reduced as a result of the employer’s restructuring, and the employer notified the union that it intended with withdraw the organisational rights the union had informally enjoyed as the union was no longer sufficiently representative. It was clear, said the CCMA commissioner, that the union was not a majority union, and that it was therefore not entitled to majority union rights (recognition of shop stewards or disclosure of information). But this left the issue of rights such as deductions and access to the employees.
Again, it was relevant what the employer’s approach had been in respect of another minority trade union:
‘Insofar as the section 12 and 13 rights are concerned, it seems that the employer has contradicted itself as to what constitutes sufficient representivity. On the one hand, it says that it would regard 20-25% as sufficiently representative. However, the employer is prepared to grant these rights to SATAWU [the other union], which currently enjoys 6,1% representivity or 114 members. One might argue that the employer regards this as sufficient, after the amalgamation. The employer has however indicated that it has not applied for withdrawal of these rights from SATAWU because of its national representivity and its presence at central bargaining levels. Insofar as central bargaining is concerned, DUSWO does not enjoy any such rights, nor does it enjoy recognition or any other bargaining rights, so this argument is not relevant. Insofar as SATAWU’s national representivity is concerned, the employer has stated that it regards the Western Cape as the workplace for the purpose of determining levels of representivity. SATAWU’s national high representivity therefore does not place it in a more favourable position than any other union in the Western Cape. It would therefore appear that the employer has by its own argument set the threshold of representivity at 6,1% or 114 members.’
In terms of the commissioner’s award, the applicant union was given four months to increase its membership to the level of 114 members or 6.1%.
Moving the goal-posts
From a legal point of view, this resembles estoppel: the employer is estopped from relying on a higher level of representivity if it has already granted or maintains organisational rights with other unions at a much lower level of representivity. The argument is a compelling one: that the employer must treat minority unions in a consistent and fair manner — on the face of it, it would be unfair for the employer to peg representivity for one union at 6% and then demand, from a different union, that it represent at least 20% of the employees before it may exercise organisational rights. This would, in the normal case, constitute an unfair moving of the goal-posts. Exceptions to this rule are hard to think of: an employer would have to present very compelling reasons indeed if in its approach it distinguishes between one minority union and another in this way.
For smaller, less powerful trade unions, organisational rights represent an important method of building up a power-base amongst the employer’s employees. By gaining access to the employer’s premises, arranging for trade union subscriptions or dues to be deducted from employees’ remuneration or having trade union representatives or shop stewards recognised by the employer, the union can increase its membership till it is in a position to bargain, on an equal footing, with the employer.
In terms of the Labour Relations Act 66 of 1995 (the LRA), unions may acquire organisational rights in a number of ways: by concluding a collective agreement (often, but not always, a recognition agreement) with the employer, or by virtue of the union’s being a party to a bargaining or statutory council. But in order to conclude a collective agreement or be admitted to a bargaining council, a union requires a certain strength in numbers. What happens if it does not have the numbers?
In this case, a trade union may seek to obtain organisational rights by means of the procedures set out in the LRA — section 21 of the LRA provides that the union must notify and meet with the employer with a demand in respect of the organisational rights it wishes to exercise. The employer and union must then seek to reach an agreement, and, if this fails, the issue may be referred to the CCMA (and only to the CCMA) for the purposes of conciliation and arbitration.
For the purposes of this arbitration, one of the core issues, almost invariably, is whether or not the applicant union is sufficiently representative for the purposes of exercising organisational rights. The LRA distinguishes between organisational rights for majority trade unions, and organisational rights for unions that are ‘sufficiently representative’. Very often, the question is whether or not a minority union’s representivity is sufficient.
Consistency
If an employer has granted (or continues to grant) organisational rights to a minority trade union that represents only 6% of the employees in the workplace, however, it appears that the employer cannot argue that another minority union must represent at least 20-25% of the employees in the workplace. CCMA commissions appear to take a negative view of these inconsistent arguments.
In Organisation of Labour Affairs (OLA) v Old Mutual Life Assurance Co (SA) (2003) 12 CCMA 4.7.3 the applicant trade union had requested rights of access to the employees and the right to have trade union dues deducted by the employer and paid directly to the union (stop-order facilities). In terms of the LRA, unions that are ‘sufficiently representative’ could obtain these rights. But the union’s level of representivity lay at a mere 2%. For the CCMA commissioner, however, this was not the end of the story:
‘The practice in the past has clearly been to recognise unions with membership of similar numbers to that now held by the applicant. In the absence of a policy or any response from the company as to what membership is required the union refers to the company’s public statement and concludes that this is the guideline. In my opinion it would be unreasonable for the company to leave the union in a vacuum, merely ignoring the numbers issue and responding that membership is not sufficient without ever indicating what it considers to be sufficient. In these circumstances the union is quite entitled to look at current practice as a guide line.
The company argues that the current numbers have a history which justifies their inconsistent treatment of the applicant. Firstly SATAWU [another union active in the company] used to have a lot more members. This is not accepted as a reason to differentiate, the current membership irrespective of history seems to be the criteria. Secondly BIFAWU [a third active union] has been put on terms. This may be relevant if they are denied facilities given their very low membership. Thirdly, SACCAWU is a business partner. This raises serious issues of Business Ethics and Corporate Governance which are outside the terms of this arbitration. Suffice to say for the purposes of gaining recognition I totally reject this as a facilitating factor.’
For the CCMA commissioner, consistency of treatment of unions was a decisive factor in considering the fairness:
‘The Labour Relations Act is a statute designed to promote fairness in the workplace. A cornerstone of fairness is consistent treatment. I find that the company has granted facilities to unions with fewer members indicating their understanding of sufficient representation. In doing so they are bound to grant this union facilities as stipulated in sections 12 and 13 of the Labour Relations Act.’
In Group 4 Falck (Pty) Ltd v DUSWO (2003) 12 CCMA 4.7.1 the union’s membership had been dramatically reduced as a result of the employer’s restructuring, and the employer notified the union that it intended with withdraw the organisational rights the union had informally enjoyed as the union was no longer sufficiently representative. It was clear, said the CCMA commissioner, that the union was not a majority union, and that it was therefore not entitled to majority union rights (recognition of shop stewards or disclosure of information). But this left the issue of rights such as deductions and access to the employees.
Again, it was relevant what the employer’s approach had been in respect of another minority trade union:
‘Insofar as the section 12 and 13 rights are concerned, it seems that the employer has contradicted itself as to what constitutes sufficient representivity. On the one hand, it says that it would regard 20-25% as sufficiently representative. However, the employer is prepared to grant these rights to SATAWU [the other union], which currently enjoys 6,1% representivity or 114 members. One might argue that the employer regards this as sufficient, after the amalgamation. The employer has however indicated that it has not applied for withdrawal of these rights from SATAWU because of its national representivity and its presence at central bargaining levels. Insofar as central bargaining is concerned, DUSWO does not enjoy any such rights, nor does it enjoy recognition or any other bargaining rights, so this argument is not relevant. Insofar as SATAWU’s national representivity is concerned, the employer has stated that it regards the Western Cape as the workplace for the purpose of determining levels of representivity. SATAWU’s national high representivity therefore does not place it in a more favourable position than any other union in the Western Cape. It would therefore appear that the employer has by its own argument set the threshold of representivity at 6,1% or 114 members.’
In terms of the commissioner’s award, the applicant union was given four months to increase its membership to the level of 114 members or 6.1%.
Moving the goal-posts
From a legal point of view, this resembles estoppel: the employer is estopped from relying on a higher level of representivity if it has already granted or maintains organisational rights with other unions at a much lower level of representivity. The argument is a compelling one: that the employer must treat minority unions in a consistent and fair manner — on the face of it, it would be unfair for the employer to peg representivity for one union at 6% and then demand, from a different union, that it represent at least 20% of the employees before it may exercise organisational rights. This would, in the normal case, constitute an unfair moving of the goal-posts. Exceptions to this rule are hard to think of: an employer would have to present very compelling reasons indeed if in its approach it distinguishes between one minority union and another in this way.
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