AUSA and Others v SAA Soc Ltd and Others (J1506/15) [2015] ZALCJHB 258 (17 August 2015)
As a matter of legal principle, a retrenchment agreement can validly be extended to non-party employees in terms of s 23(1)(d) of the LRA.
Facts:
This was an application to interdict SAA and SAAT from proceeding with a large-scale retrenchment exercise pending compliance with a fair procedure. SAA had entered into a collective agreement with NTM, UASA and SACCA (who jointly represent some 80% of employees in the SAA workplace) and SAA management employees (through their representatives). The agreement relates only to SAA, and not to SAAT. In terms of the agreement, the parties reached consensus on: the existence of an economic rationale for the retrenchment; selection criteria; the termination date; severance pay; the timing of dismissals, and so on. Importantly, the retrenchment agreement reflects that it is extended to non-party employees in terms of section 23(1)(d).
The essential question in this matter was whether a retrenchment agreement concluded with unions representing the majority of employees in the workplace, and extended in terms of section 23(1)(d), serves to settle any dispute that non-union members and minority union members have about the retrenchment process. The Labour Court held that as a matter of legal principle, a retrenchment agreement can validly be extended to non-party employees in terms of section 23(1)(d). On the facts of this matter, it held that it was permissible to do so.
Extract from the judgment:
Myburgh, AJ
[20] Regarding the issue of the extension of the retrenchment agreement, according to Mr Ngcukaitobi, section 23(1)(d) (or regulation 10) could not serve as a basis to bind non-party employees to the retrenchment agreement in this matter, for the following reasons:
- Where an all-comers consultation model had been agreed to, an employer cannot change tack when it suits it to a majoritarian model. The companies were bound by their own election in respect of the model (or method) of consultation.
- The retrenchment agreement impermissibly served to: (i) deprive non-party employees of the individual rights afforded them by the LRA to a fair procedure; (ii) deprive minority unions of their statutory entitlement to consultation in terms of section 189(1)(b)(ii) and thus frustrate their ability to engage in meaningful consultations; and (iii) "obliterate" the right to access to information. Put differently, the purpose of the retrenchment agreement was to evade the operation of sections 189 and 189A, which cannot be countenanced.
- The only rights that are expressly afforded to majority unions (or coalitions) under section 189A is the right to request facilitation by the CCMA in terms of section 189A(3), with the section (overall) not contemplating the conclusion of a retrenchment agreement with the majority and extension of it to the minority.
- While the right to strike can be limited by a collective agreement extended to non-parties, there exists no comparative section binding non-parties to a retrenchment agreement.
- Regarding regulation 10, it could not be used as a legal basis for the extension of the retrenchment agreement, because it only allows an employer and a union/s representing the majority to enter into an agreement "for the purposes of section 189A(2)", which does not extend to the conclusion of a retrenchment agreement. What it means (so it was argued) is no more than that the majority may agree to vary the time periods for facilitation or consultation, as per section 189A(2)(c). ......................................
[26] To begin with the first question, in two judgments this court has answered it in the affirmative. The first is Tsetsana v Blyvooruitzicht Gold Mining Co Ltd [1999] 4 BLLR 404 (LC), where Jammy AJ held:
"The applicant's contention that he is not bound by the terms of agreements concluded by a trade union of which he is not a member, is without substance or foundation. The retrenchment agreement of August 1997 is unquestionably a collective agreement which binds, inter alia, employees who, although not members of a registered trade union which is a party to it, are employed in the workplace to which it applies and in which that trade union enjoys majority representation of the employees there employed."[27] The second is Sigwali& others v Libanon (A division of Kloof Gold Mine Ltd) [2000] 2 BLLR 216 (LC), where Ngwenya AJ held:
"In casu, it is common cause that NUM represented the majority of the employees in respondent's business. It is not disputed that the agreement identifies the employees affected by it with sufficient particularity. Even if it was disputed, it is my view that the agreement clearly identifies the employees as set out in section 23(1)(d)(i). Consequently in my view the agreement concluded between the NUM and respondent binds not only those employees who are members of the NUM but also non-members as contemplated above."[28] While it may appear objectionable that section 23(1)(d) can be used in this way, so as to deprive individuals (and thus their unions) of the right to challenge the fairness of a retrenchment process, the section permits all collective agreements to be extended in terms thereof - and is not limited in its scope to only agreements that do not involve a deprivation of rights. Indeed, most collective agreements extended in terms of section 23(1)(d) involve depriving non-party employees of some or other right - for example, the right to strike.
[29] The fact that this is permissible is underscored by section 189(1)(a), which has been interpreted as meaning that an employer and a majority union can enter into a collective agreement upfront to the effect that, in the case of a retrenchment exercise, the employer will only consult with the majority union. Where it then does so, any retrenchment agreement concluded with the majority union will then bind non-union and minority union members. The LAC put this as follows in Aunde South Africa (Pty) Ltd v NUMSA [2011] 10 BLLR 945 (LAC):
"Where an employer consults in terms of agreed procedures with the recognised representative trade union in terms of a collective agreement which requires the employer to consult with it over retrenchment, such an employer has no obligation in law to consult with any other union or any individual employee over the retrenchment. If such a consultation exercise culminated in a collective agreement that complies with the requirements of a valid collective agreement, all employees including those who are not members of the representative trade union that consulted with the employer are bound by the terms of such collective agreement irrespective of whether they were party to the consultation process or not."[30] The conclusion of a retrenchment agreement further to a process of consultation and its extension in terms of section 23(1)(d) has the same effect, and is unobjectionable. As held in Chamber of Mines (supra), section 23(1)(d) is amongst numerous sections in the LRA which encapsulate the legislative policy choice of majoritarianism. That choice is based on the legislature's assumption that it would best serve the primary objects of the LRA of labour peace and orderly collective bargaining. The conclusion of a retrenchment agreement with a majority union (or coalition) and extension to non-party employees accords with this.
[31] Regarding the applicants' submissions that section 189A does not contemplate the extension of a retrenchment agreement concluded with the majority consulting party, and that while the right to strike can be limited by a collective agreement extended to non-parties, there exists no comparative section binding non-parties to retrenchment agreements, I do not agree with either of them. Sections 189 and 189A constitute a legislative process designed to get the parties to attempt to reach consensus, which will, if successful, typically result in the conclusion of a collective agreement. Such a collective agreement - like all collective agreements - is then capable of being extended in terms of section 23(1)(d) (if the requirements are met). If the employees covered by the retrenchment agreement sought to strike over the retrenchment, the collective agreement would (like any other comparable one) serve as a basis for the strike being unprotected in terms of (at least) section 65(3)(a)(i).
[32] Regarding the applicants' attack on SAA's reliance on regulation 10, this is not an issue that I need decide. Irrespective of the scope of the regulation, I have found that, as a matter of legal principle, a retrenchment agreement can be extended to non-party employees in terms of section 23(1)(d).
[33] Turning to the second question, the main thrust of the applicants' case on this issue is that the companies were bound by their election to follow an all-comers model of consultation involving a single facilitation process, and could not change tack. In support of this contention, the applicants rely on a judgment of this court in which it was found that where the employer elects to consult with a union and separately with non-union members (on an individual basis), it is obliged to do so. The applicants also rely on judgments of the LAC, in which the retrenchment of NUMSA members was found unfair where the employer stopped consulting with NUMSA over the retrenchment in circumstances where UASA had obtained majority representation, but where the employer failed to conclude either a section 189(1)(a) agreement or a retrenchment agreement with UASA (that might then have been extended to NUMSA members). To my mind, these judgments are of no assistance to the applicants. Amongst other things, neither of them dealt with the conclusion of a retrenchment agreement, and an extension of the agreement in terms of section 23(1)(d).
[34] The applicants also rely on this finding by the Constitutional Court: "When exercising an election, the law does not allow a party to blow hot and cold. A right of election, once exercised, is irrevocable particularly when the volte face is prejudicial or is unfair to another." In my view, this again fails to take account of what transpired in this matter. While it is so that the parties agreed that there would be a single facilitation process involving all-comers, I can find no evidence to suggest that the companies (or the unions for that matter) thereby waived their rights to conclude a retrenchment agreement on a per company basis, and to extend any such agreement in terms of section 23(1)(d). It would also be difficult to infer this, because notwithstanding the single facilitation process, the obligation to comply with sections 189 and 189A rests with each separate (statutory) employer, and any retrenchment agreement and extension thereof would have to be in the name of that employer.
[35] The parties thereupon engaged in a dynamic process of consultation over a period of some 3 1/2 months. The process did not produce an agreement at both SAA and SAAT, but it did produce consensus within SAA over the retrenchment with everyone, except NUMSA. Different to NUMSA, the consenting employee parties were not in dispute with SAA over the disclosure of information. The consenting parties then concluded the retrenchment agreement on 24 July 2015, which was extended in terms of section 23(1)(d), in circumstances where the three recognised unions had 80% representation within the SAA workplace. Amongst other things, this served to settle the disclosure dispute vis-a-vis SAA, as is typically the case with any extension to a dissenting minority. Seen thus, this was not a case of SAA having undergone a volte face to the prejudice of NUMSA and the employee consulting parties at SAAT. Instead, it is a case of labour law at work.
[36] Allied to the above, insofar as the applicants contend that where an employer commences consultations with a number of unions (as occurred in this matter), it is bound by that election and cannot "change tack" by concluding an agreement with a majority union coalition (as occurred in this matter), this is clearly wrong. The fallacy, of course, lies in the fact that section 189(1)(c) compels the employer to consult with all unions whose members are likely to be affected by the retrenchment, with it not being a matter in respect of which the employer makes an election. If the applicants were correct in their contention, this would mean that an employer could never settle a retrenchment, unless all the unions agreed, which is at odds with the legislative policy choice of majoritarianism (and section 23(1)(d)).
[37] As mentioned above, the applicants also contend that the retrenchment agreement ought not to be upheld beyond the parties thereto, because the companies consulted in bad faith in: not disclosing information; breaching the agreement reached with the CEO; entering into the retrenchment agreement while the disclosure application was pending; and concluding the retrenchment agreement in a "cavalier" fashion. In my view, the short answer to all of this is that the retrenchment agreement, and its extension to non-party employees, constitutes, in effect, a settlement of any and all such complaints (which have thus been extinguished).
[38] Another answer lies in the acknowledgement of the fact that consultations over large-scale retrenchment, which may culminate in strike action in terms of section 189A, overlap with a process of collective bargaining. Where that process produces a collective agreement (which is then extended to non-party employees), provided the agreement is lawful, this court will not intervene to scrutinise the bargaining conduct of the parties or the terms of the agreement, any more than it would intervene in the case of a protected strike to pass judgment on the merits of a demand. This is so because when it comes to the regulation of collective bargaining, the LRA has adopted a voluntarist system.
[39] A final point relates to the legal construction that the applicants advance in seeking to avoid the operation of the retrenchment agreement, and the relief that they seek. As set out above, the applicants seek an order that the companies should "not ... give effect to" the retrenchment agreement and that to "the extent necessary", the agreement should be "set aside". However, having accepted that the retrenchment agreement is valid inter partes, the best that the applicants can hope to achieve is an order that no effect should be given to the retrenchment agreement in relation to them, and that the agreement be set aside in relation to them. For the reasons set out above, to my mind, there exists no basis for the grant of any such relief.
[40] Turning finally to the third question, once it is accepted that as a matter of legal principle a retrenchment agreement can be extended in terms of section 23(1)(d) to non-party employees, and that there exist no unique facts in this matter that somehow causes a different result, this, in my view, puts paid to the applicants' claim in relation to the retrenchment at SAA. As stated above, the retrenchment agreement (as extended) constitutes, in effect, a settlement of any dispute falling within the scope of the agreement that non-party employees (and thus their unions) may have had.
[41] In the result, the application as against SAA fails.