Employment law update – Discriminating against union employees

December 1st, 2012

Safcor Freight (Pty) Ltd t/a SAFCOR Panalpina v South African Freight and Dock Workers Union (SAFDU) (LAC) (unreported case no DA17/10, 17-9-2012) (Murphy AJA)

By Moksha Naidoo

The appellant’s branches across the board ran on a wage cycle from 1 July to 30 June each year, other than its Durban branch, which ran on a wage cycle from 1 January to 31 December.

A wage agreement between the appellant and respondent union on behalf of its members at the Durban branch was concluded and ran from 1 January 2007 to 31 December 2007. The appellant extended the same increase to non-union employees at its Durban branch.

Sometime during the year, in an attempt to align the wage cycle of its non-union employees in Durban with its other branches, the appellant further offered only non-union employees a subsequent increase of 4,5%, effective 1 July 2007, as an incentive for their consent to a change in the wage cycle.

This was therefore the second wage increase non-unionised employees were offered in 2007; an increase that was not extended to union members.

The increase was however subject to the following conditions, which ultimately formed the subject of this dispute:

  • If accepted, non-union employees in Durban were not allowed to join the respondent union for the period 1 July 2007 to 30 June 2008.
  • Should they decide to become members of the union during this period, their remuneration would immediately revert to the rate they were paid prior to the 4,5% increase and any future increases would be negotiated on their behalf by the union.

The union’s attorney wrote to the appellant alleging unfair discrimination on the ground of union membership and advised that, although the proposal was made to non-union employees only, the union would also accept a change in the wage cycle if offered the same increase. In its response, the appellant took the view that a wage agreement between itself and the union was in place and bound both parties until 31 December 2007. Any proposed changes to the wage cycle for union members could be discussed during the next wage negotiations.

Unhappy with this response, the union approached the Labour Court seeking an order declaring the appellant’s conduct in breach of s 9 (right to equality) and s 23 (right to fair labour practice) of the Constitution, as well as s 5 of the Labour Relations Act 66 of 1995 (LRA).

Section 5 reads:

‘(1) No person may discriminate against an employee for exercising any right conferred by this Act.

(2) Without limiting the general protection conferred by subsection (1) no person may do, or threaten to do, any of the following –

(a) require an employee or a person seeking employment –

(i) not to be a member of a trade union or workplace forum;

(ii) not to become a member of a trade union or workplace forum; or

(iii) to give up membership of a trade union or a workplace forum;

(b) prevent an employee or a person seeking employment from exercising any right conferred by this Act or from participating in any proceedings in terms of this Act; or

(c) prejudice an employee or a person seeking employment because of past, present or anticipated –

(i) membership of a trade union or workplace forum;

(vi) exercise of any right conferred by this Act … .’

The matter came before Cele J (with the citation South African Freight and Dock Workers Union (SAFDWU) v Safcor Freight (Pty) Ltd t/a Safcor Panalpina and Others (2011) 32 ILJ 415 (LC)), who held:

‘The change was accompanied by an early salary increase for the non-unionised employees in Durban to the exclusion of the members of the applicant. The conditions attendant to the salary increase are clearly a prima facie infringement of section 5, particularly section 5(2)(a) and 5(3) of the Act. The conditions discouraged a non-union member from exercising a right protected by the Act to join a union at his or her discretion, for a specific period of time. The respondent has not really tendered an explanation for its approach in this regard’ (at para 34).

The Labour Court found the appellant’s actions were in breach of s 5 of the LRA and further infringed the rights in ss 9 and 23 of the Constitution. The court ordered the appellant to give all its employees at the Durban branch an increase of 4,5%, effective 1 July 2007.

On appeal, the Labour Appeal Court (LAC) held that the court a quo had erred in entertaining any argument based directly on the Constitution. The LAC reiterated the principle that a party cannot directly rely on the Constitution and bypass existing legislation, which was enacted to give effect to a specific right in the Constitution. In the absence of the respondent basing its claim within the framework of the LRA, the respondent could not directly rely on ss 9 and 23 of the Constitution.

This left the question as to whether or not the appellant’s conduct was in breach of s 5 of the LRA.

The starting point was to focus on the wording of s 5(1). The LAC held that although the term ‘discrimination’ was not qualified by the word ‘unfair’, consistent with the manner in which claims against unfair discrimination are approached in South African law, once the appellant’s action was seen as discriminatory, it bore the onus to prove it did not constitute unfair discrimination.

The LAC viewed the appellant’s conduct as discriminatory: Employees who were union members were economically disadvantaged on the basis of being members of the union, while non-union employees were economically advantaged in exchange for not joining the union. The onus therefore shifted to the appellant to justify its conduct.

In maintaining the argument it presented at the Labour Court, the appellant relied on the LRA’s encouragement of plural representation and multi bargaining agents in a workplace. The appellant argued that an employer who negotiates with different bargaining units (in this case employees at its Durban branch who were members of the union and those who were not) will, as a natural consequence, have different agreements with the units. Each agreement will inherently be linked to the bargaining power of each unit.

While accepting that, in principle, unequal treatment among employees as a result of plural representation is not inherently unfair, the LAC, on the merits before it, held:

‘Plural representation … means that there will indeed be times when wages and terms of employment may be more favourable for one segment of the workforce. But, in order to pass the test of legitimacy, rationality and fairness, the differentiation must be supported by a commercial rationale. The only commercial rationale offered by the appellant was the aspiration to more efficiently use managerial resources and the need to hold the union to its agreement. Both lose force (legitimacy and rationality) in the present circumstances … in view of the union’s willingness to agree to a change in cycle, and the appellant’s inconsistency in amending the terms of the non-bargaining unit members while refusing to do likewise for the bargaining unit members. It is hard to see how persisting with a redundant separate wage cycle for 10% of employees located in a single branch would achieve greater efficiency. Nor would it logically advance any industrial relations objective’ (at para 28).

The LAC further held that the differential treatment in this case could hardly be said to result from plural representation. The appellant unilaterally formulated and proposed the disparity in question, justifying it by way of a vague commercial rationale. The reasonable inference, according to the LAC, was an attempt by the appellant to weaken the position of the union.

The LAC dismissed the appeal with costs but remitted the matter to the court a quo on the issue of remedy. The LAC held that an order giving all employees a 4,5% increase would, on the face of it unjustifiably advantage union members. The only manner to decide whether to order the appellant to increase all employees’ wages by 4,5% or drop non-union employees’ wages by the same rate would be to ascertain which option, mathematically, would achieve overall equality among employees in the Durban operations.

Moksha Naidoo BA (Wits) LLB (UKZN) is an advocate at the Johannesburg Bar.

This article was first published in De Rebus in 2012 (Dec) DR 52.