Employment law update – Section 197 v Bargaining Council’s Main Agreement

April 1st, 2018
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Moksha Naidoo BA (Wits) LLB (UKZN) is an advocate at the Johannesburg Bar.

SAMWU and Another v City of Johannesburg and Others (LC) (unreported case no JR2228/2013, 2-2-2018) (Whitcher J)

When employees conclude a collective agreement, regulating terms and conditions of employment with their employer and are subsequently transferred to a new employer in terms of s 197 of the Labour Relations Act 66 of 1995 (LRA), under circumstances where the new employer falls within the scope and jurisdiction of a bargaining council, which regulates terms and conditions of employment in a main agreement; are the employees and new employer bound by the old collective agreements or the main agreement of the bargaining council?

This was the novel question before the court.

Background

The employees were previously employed by either City Power (Pty) Ltd or Johannesburg Water (Pty) Ltd, both municipal owned entities (MOEs). The applicant unions concluded plant level collective agreements with City Power and Johannesburg Water, which regulated the employees’ terms and conditions of employment.

In 2010 the first respondent, the City of Johannesburg, took a decision to integrate certain of its functions, which saw the employees being transferred into the city’s employ. This transfer was in accordance with s 197 of the LRA and for the two years that followed, the employees and the city acted in accordance with the old collective agreements.

However, in 2012 the city notified the employees that because they all fell under the jurisdiction of the South African Local Government Bargaining Council (SALGBC) they were bound by the council’s main collective agreement governing all employees’ terms and conditions of employment. Therefore, according to the city, the old collective agreements should be replaced by the bargaining council’s main collective agreement.

Negotiations over this issue deadlocked and in 2013 the city altered the employees’ terms and conditions to conform to the bargaining council’s main agreement. It was not in dispute that certain conditions as set out in the old collective agreements were more favourable when compared to the conditions set out in the main agreement.

A dispute was referred to SALGBC where the arbitrator held that the employees were bound by SALGBC’s main collective agreement.

On review the applicant unions, on behalf of the employees, argued that s 197(5)(b)(ii) made it clear that the new employer, the city in casu, was bound by the old collective agreement. Section 197(5)(a) and (b) reads:

‘(5)(a) For the purposes of this subsection, the collective agreements and arbitration awards referred to in paragraph (b) are agreements and awards that bound the old employer in respect of the employees to be transferred, immediately before the date of transfer.

(b) Unless otherwise agreed in terms of subsection (6), the new employer is bound by –

(i) …

(ii) any collective agreement binding in terms of section 23’.

It was common cause that there was no agreement between the old and new employer and employees, as contemplated in terms of s 197(6), to alter any terms and conditions of the employees once transferred. Following which the union argued that s 197(5)(b)(ii) found application and that the city was, therefore, bound by the old collective agreements.

The court noted that the primary purpose of s 197 was to protect employees against job losses and not to ‘immunise’ old collective agreements. Thus, a new employer can change an old collective agreement, post-transfer, through negotiations with employees.

As to whether the parties were bound by the old collective agreements or the bargaining council’s main agreement, and having regard to the objectives of the LRA, the court held:

‘At the time of their transfer, the employees’ terms and conditions were guaranteed by, essentially, plant level collective agreements with the MOEs. Section 197 would have protected them from unilateral variation by the new employer. However, when starting work at the first respondent, the employees entered a contractual regime governed by a species of collective agreement that, interpreting the LRA purposively, trumped the old employer’s collective agreement. No new bargaining had to happen with them to effect these changes as, once they became employees of the new employer, they became subject to the Main Agreement. Bargaining council agreements, such as Main Agreements, enjoy the status of subordinate legislation and ought to apply above the collective agreements concluded between the applicants and the MOEs.

In terms of the schema of the LRA, old collective agreements only guarantee the continuance of old conditions of service to the extent that a superseding Main Agreement is not in place at the new employer.’

In conclusion the court held:

‘A crucial factor in this dispute is that the parties to the dispute are parties to the SALGBC Main Agreement and their members [the affected employees] fall within the registered scope of the SALGBC Main Agreement. Where employees fall within the scope of two conflicting agreements, the Main Agreement must apply to them considering its status.’

The review application was dismissed with no order as to costs.

Do you have a labour law-related question that you would like answered?
Send your comprehensive question to Moksha Naidoo at: derebus@derebus.org.za

This article was first published in De Rebus in 2018 (April) DR 49.

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