Public Newsletter
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Worklaw subscribers receive a monthly newsletter containing commentary on the latest labour law cases and trends. This newsletter contains an article on 'Tax Incentives for job creation'.
We also look at three new cases: The first deals with whether a collective agreement is valid if it unfairly discriminates. The second, a SCA decision, deals with the obligation of a labour broker to provide work. The third deals considers what constitutes procedural fairness in the context of an unprotected strike.
This public newsletter is a free edited version of the subscriber newsletter.
RECENT CASES
Is a collective agreement valid if it discriminates unfairly?
A collective agreement is not simply a contract; it is a social and economic pact which regulates not only terms and conditions of employment but also expresses agreed values. But what if the agreed values are discriminatory? Does this affect the validity of the collective agreement? These issues were considered by the Labour Court in Janse van Vuuren v South African Airways (Pty) Ltd and Another (C420/06) [2012] ZALCCT 52; (2013) 34 ILJ 1749 (LC); [2013] 10 BLLR 1004 (LC) (1 November 2012).
Consider these facts: an employee was employed by SAA as an airline pilot with the rank of Senior Captain. At about the time that he turned 60, his employer (SAA) was engaged in collective bargaining with the Airline Pilots' Association of South Africa, which he was a member of. The retirement age of pilots, which had been 60 up to that time, was amongst the matters that were the subject of collective bargaining.
Whilst the collective bargaining process continued, the employee was withdrawn from flying duty and instructed to remain at home pending a recall to active duty. The employer and the Association concluded a new collective agreement, and the employee was recalled to render active service a month later. As part of the new collective agreement the pilots' retirement age was extended to 63, but pilots would be remunerated at a lower rate once they turned 60. The effect of this agreement was that overnight his remuneration became less than that of younger pilots (below the age of 60) simply because of his age.
The employee contended that this constituted age discrimination, which was prohibited by section 6 of the Employment Equity Act. SAA had also committed an unfair labour practice relating to the provision of benefits.
One of the issues that the court was required to decide was whether or not the employer had unfairly discriminated against the employee, on the ground of his age, by introducing new terms and conditions of employment ostensibly in accordance with the collective agreement. In other words, the court had to ask whether a collective agreement can be used to justify unfair discrimination.
Relying on Constitutional Court decisions, the court held that where the purpose and effect of an agreed provision is to discriminate unfairly against a minority, its origin in a negotiated agreement will not in itself provide grounds for justification. As the court noted, resolution by majority is the basis of all legislation in a democracy, yet it to is subject to constitutional challenge where it discriminates unfairly against vulnerable groups. The court therefore held that a collective agreement is subject to the Constitution and the Employment Equity Act, and is not exempt from its provisions. Parties may not contract out of the fundamental rights and protections set out in the Bill of Rights. This is all the more so as a collective agreement may acquire the status of subordinate legislation. The court concluded that the terms of the agreement were discriminatory and manifestly unfair. It served no legitimate purpose. Its effects were to cause the employee to suffer a reduction in remuneration for no other reason than his age.
This case corrects a controversial dated case (Ntsangani & others v Golden Lay Farms Ltd (1992) 13 ILJ 1199 (IC)), in which it was held that where a collective agreement discriminates against women on the basis of onerous manual work, a court may be unwilling to overturn the agreement despite the discrimination. The lesson of the SAA case is that employers and trade unions, when drafting collective agreements, must be alert to provisions which may unfairly discriminate.
A labour broker's obligation to provide work
When a client notifies a labour broker that it no longer wants the labour broker's employees on its premises, what are the legal obligations of the labour broker towards its employees?
This question arose from a situation 12 years ago - a sobering reminder of how long a case can take to be finalised when the LC decision is appealed to the LAC and then onto the SCA.
The employees were former employees of Kitsanker (Pty) Ltd, a manufacturer of mining equipment. During February 2001 the employees were voluntarily retrenched by Kitsanker and immediately re-employed by Abancedisi, a labour brokerage formed specifically for this purpose. The effect of this arrangement was that the employees were each required to sign a 'Limited Duration Contract of Assignment' (an employment contract) which rendered them employees of Abancedisi and placed their services at Kitsanker's disposal. Beyond this, nothing else changed. The location, terms and conditions of their employment remained precisely as before.
During July 2001, the employees embarked upon a two-hour work stoppage at Kitsanker's premises. On 6 July 2001, each employee was required by Kitsanker to sign a code of conduct before entering the work premises. Those who refused to do so were refused entry and were replaced with new workers. The excluded employees remained at Kitsanker's gates despite this development and left the premises to report to NUMSA's offices only when Kitsanker's management threatened to have them removed by the police.
Abancedisi's entreaties to Kitsanker to take the excluded employees back, and to the employees to sign the code of conduct so that they could return to work, was met with intransigence from both sides. Abancedisi confirmed that the employees who refused to sign the code of conduct would neither be permitted back to Kitsanker nor paid any wages since they were only paid for work performed. The employees were nevertheless not dismissed by Abancedisi as they remained on its payroll.
When NUMSA referred a dispute to the Bargaining Council alleging an unfair dismissal of the employees by Abancedisi, conciliation failed. On 28 November 2001 the employees took the matter to the LC. Abancedisi opposed the proceedings. It raised only a point in limine that the referral of the dispute was premature because it had not dismissed the employees as they remained on its payroll. The LC found that a holistic consideration of the employment contract showed that it envisaged the continuation of the relationship between the employees and Abancedisi, even after the conclusion of the assignment at Kitsanker. The LC concluded that the employees had failed to prove that Abancedisi dismissed them, and dismissed their claim with costs.
The employees' appeal to the LAC succeeded only to the extent that the costs order awarded against them was found to be unfair and reversed. The LAC reckoned that the employees 'were the principal contributors to their expulsion from Kitsanker before the completion of their assignment' as they refused to sign a reasonable and fair code of conduct, but that their employment relationship with Abancedisi nonetheless continued as the LC had found. In the LAC's view, the employees' situation amounted to an 'indefinite suspension'. Thus, they could have contested the 'suspension' at the bargaining council as an unfair labour practice or resign and sue for constructive dismissal, options which interestingly, the court itself doubted would yield success. The appeal was then dismissed with no order as to costs.
The crisp issue on appeal at the SCA in NUMSA v Abancedisi Labour Services (857/12) [2013] ZASCA 143 (30 September 2013) was whether the employees were unfairly dismissed by a temporary employment service provider / labour broker (Abancedisi), when they were (a) excluded from the premises of its client to which they were assigned and replaced with new workers; (b) thereafter not reassigned work elsewhere; and (c) not paid wages thereafter.
The SCA overturned the decision of the LAC and held that the labour broker's actions constituted an unfair dismissal. The SCA rejected the idea that a labour broker could retain employees, without work and without pay, on indefinite suspension. If work cannot be found, retrenchment must follow, or the inaction must be taken to be an unfair dismissal. The lesson is clear: if the agreement between a client and labour broker allows the client unilaterally to decide on the exclusion of the labour broker's employees, the labour broker needs to assign new work within a reasonable time or follow retrenchment procedures.
Procedural fairness in an unprotected strike
Our law distinguishes between protected and unprotected strikes and provides for the possible dismissal of strikers in an unprotected strike. But as an old case put it, the fact that the strike is unprotected is not "a magic wand.......which renders the dismissal of strikers fair". What makes a strike-related dismissal fair arose in the recent LAC case of NUMSA and Others v CBI Electric African Cables (JA 51/11) [2013] ZALAC 25 (11 October 2013).
In May 2007, the employer dismissed (but then reinstated on final written warnings) employees for engaging in an unprotected strike over a new shift system. A month later, payslips were not only issued a day later than the norm but they were also wrong- they failed accurately to reflect time worked, and reflected unexplained deductions for short time. The employer was aware of the problem and in an attempt to correct the situation it made additional payments either directly into the bank accounts of the affected employees or to the employees themselves at a later stage.
The employer's failure to pay them correctly angered the employees. The day shift, scheduled to end at 18h00 on 25 June, was disrupted when a number of employees left their workstations before the end of the shift. The night shift commenced their shift at 18h00 but abandoned their workstations at 22h00 and left the premises. Their shift was supposed to run from 18h00 to 24h00. The reason advanced by the employees for prematurely leaving their shift was that they were not prepared to work for an employer who "was not paying" them. They were dismissed.
The employer conceded that no pre-dismissal hearing was held but stated that the disciplinary code did not provide for it in the context of illegal industrial action. But what he did before dismissing the employees was to prepare an ultimatum on 25 June at about 18h00. He telephoned the union official who was handling the matter but did not get hold of him. He decided to fax the ultimatum to the Union's offices. He made no attempt to contact any other union official.
The employees appealed against their dismissal, contending that they had not been afforded an opportunity to be heard before they were dismissed. The appeal of most employees was dismissed, but four employees were found not to have participated in the industrial action and their dismissals were set aside.
The Labour Court found that the dismissals of the individual employees were only procedurally unfair and ordered the employer to pay each affected employee an amount equivalent to two weeks' remuneration.
The LC's judgment was overturned on appeal to the LAC. Item 6 (2) of the Code of Good Practice makes it clear that prior to dismissal the employer should, at the earliest opportunity, contact a trade union official to discuss the course of action it intends to adopt. The court said this is necessary for two reasons. Firstly, it affords the union an opportunity to persuade the strikers to resume work and secondly, it provides a safeguard against possible rash action by the employer. In the event that the employer decides to issue an ultimatum, which should meet the requirements of the Code, the employer must ensure that it allows the employees sufficient time to reflect on the ultimatum and to respond thereto.
There was a second aspect to the procedural unfairness: the court said there was a duty on the employer to afford the affected employees an opportunity to be heard before a decision to dismiss them was taken. The employer's failure to do so rendered its decision to dismiss the affected employees procedurally unfair.
Although the employer was found to have acted in a procedurally irregular way, it is interesting that the LAC reserved particular criticism for the striking employees. It was because of their actions that the dismissal was held to be substantively fair.
Strikes are, to put it simplistically, very stressful, and it is easy for both employers and employees to act illegally and unwisely. This case is a reminder that an unprotected strike does not relieve the employer - before dismissing - of the obligations (a) to contact a union (b) to issue a reasonable ultimatum and (c) to give an opportunity to the strikers to be heard before a decision to dismiss them is taken. The case is also a reminder to employees that they will not be protected from dismissal if they act rashly, without using grievance and collective bargaining procedures.
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Bruce Robertson
November 2013
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