Monique Jefferson BA (Wits) LLB (Rhodes) is an attorney at Bowman Gilfillan in Johannesburg.
Extension of bargaining council collective agreements to non-parties
In Free Market Foundation v Minister of Labour and Others [2016] 8 BLLR 805 (GP), the Free Market Foundation (FMF) challenged the constitutionality of s 32(2) of the Labour Relations Act 66 of 1995. Section 32 (2) provides that the Minister of Labour must extend collective agreements concluded in bargaining councils should their members request such and should certain preconditions be satisfied. The FMF initially challenged the constitutionality of s 32 on the basis that it infringes the rights to equality, freedom of association, administrative justice, dignity and fair labour practices. The FMF subsequently abandoned this point and instead challenged s 32(2) solely on the basis that the grounds of judicial review in respect of the extension of collective agreements were inadequate. In this regard, the FMF argued that s 32 violated the principle of legality as it permitted the extension of collective agreements to non-parties, contrary to public interest. It argued that in order to satisfy the requirement of legality, the governmental power must be exercised in the public interest.
The court was required to consider the scope of judicial review in respect of the extension of collective agreements to non-parties, as well as whether the Minister must act in public interest when extending collective agreements to non-parties.
In determining the scope of judicial review, the court considered whether the exercise of the Minister’s power under s 32(2) constitutes administrative action. The court held that the actual conclusion of collective agreements through a collective bargaining process does not constitute administrative action. However, when the Minister exercises power under s 32 this does constitute administrative action and has significant consequences for non-parties.
The Minister is not afforded discretion in determining whether or not to extend the agreement in the event that the council has complied with the requirements of s 32(2). In such circumstances, the Minister must extend the agreement. The FMF argued that the Minister’s duty to extend the agreement is non-discretionary and subject to limited judicial supervision. However, before the Minister extends the collective agreement certain preconditions must be met. Firstly, the Minister must be satisfied that the numerical requirements of majoritarianism have been met. This would be satisfied if the majority of employees who will be covered by the agreement once extended are members of trade unions that are parties to the council. Furthermore, the decision of the bargaining council must comply with legal prerequisites and finally there must be an exemption procedure in place applying fair criteria to be exempted from the extension. It must also not discriminate against non-parties. It is only if all these requirements are satisfied that the Minister must extend the agreement. The court noted that the numerical thresholds for majoritarianism are quite high and in many instances may be difficult to achieve.
Where the majoritarianism requirements are not met then the Minister may extend the collective agreement provided that other jurisdictional conditions are met. For example, the parties to the bargaining council must be sufficiently representative within the registered scope of the council; the Minister must be satisfied that the failure to extend the agreement would undermine collective bargaining at sectoral level or in the public service as a whole; and the Minister must have invited and considered comments on the application to extend.
The FMF proceeded on the assumption that a decision of a bargaining council to request the Minister to extend, a collective agreement, as well as the ‘administrative action’ as defined in the Promotion of Administrative Justice Act 3 of 2000 (PAJA). It was for this reason that it argued that the discretion should be limited by a duty to act in public interest. The FMF conceded that if PAJA is indeed applicable then this would be more than the relief that they sought from the court.
No parties led evidence as to whether PAJA applied and thus the court did not make a ruling on the application of PAJA. However, Murphy J stated that he inclined to agree that PAJA would ordinarily apply to the decision of a bargaining council to request the extension of a collective agreement. On the other hand, Murphy J was of the view that the negotiation and conclusion of a collective agreement would not constitute administrative action. Murphy J held that if the Minister’s decision to extend is administrative action then it would be reviewable on the grounds of reasonableness, legality and due process. If it is not administrative action under PAJA then it would still be subject to the rationality and legality review under the rule of law provisions in the Constitution.
Given the fact that there are appropriate review remedies available to the FMF, it was held that s 32 was not unconstitutional – it was based on the principle of majoritarianism – which is consistent with international law. It was accordingly held that there is no requirement that the statutory power to extend a collective agreement must be exercised in the public interest.
The application was dismissed but no costs were ordered against the FMF as it was found that the application had been made in good faith in the interests of small businesses and the unemployed.
Moksha Naidoo BA (Wits) LLB (UKZN) is an advocate at the Johannesburg Bar.
Error in law – reviewable or not
Opperman v CCMA and Others (unreported case no C530/2014, 17-8-2016) (Steenkamp J).
Under what circumstances may an employer impose a harsher sanction at an internal appeal hearing in comparison to the sanction handed down to the employee at the initial disciplinary hearing? This was one of the key questions before the court on review.
The applicant employee was given a ‘severe written warning’ after she had failed a breathalyser test. Unhappy with the outcome the employee challenged her sanction at an internal appeal hearing. Having heard the evidence of both parties the internal appeal tribunal changed the employee’s sanction to a dismissal.
At the Commission for Conciliation, Mediation and Arbitration (CCMA) the three issues before the second respondent arbitrator were –
On the first issue the arbitrator held the employer had not breached the parity principle. In respect of the second issue the arbitrator found that the employer’s disciplinary code was silent on whether an appeal chairperson could impose a harsher sanction or a less harsh sanction to that imposed at the disciplinary inquiry. For this reason the arbitrator concluded he was ‘unable to find that the appeal chairperson has exceeded his powers without being pointed as to which powers he exceeded’.
In addressing the third issue the arbitrator referred to the decision of Rennies Distribution Services (Pty) Ltd v Bierman NO and Others [2009] 7 BLLR 685 (LC) and held that the employee was not forewarned that a more severe sanction could be imposed on her at the appeal inquiry and furthermore she was not given an opportunity to advance reasons why her sanction should not be changed to dismissal. For these reasons the arbitrator found the employee’s dismissal procedurally unfair but substantively fair.
On review the main argument before the court was that the arbitrator committed an error in law by not following the ratio in the Rennies judgment which settled the circumstances in which an appeal hearing could deliver a harsher sanction (ie, the second issue before the arbitrator).
Having considered the judgment by Basson J in Rennies, the court held:
‘Basson J expressly held that, except where express provision is made for such a power, a chairperson on appeal does not have the necessary power to consider imposing a harsher sanction. Secondly, even if it has such a power the chairperson must adhere to the fundamental principles of natural justice which require that audi alteram partem must be afforded to the employee who may be prejudiced by the imposition of a more severe sanction. In this case, Harmony Gold’s disciplinary code did not give the chairperson on appeal the express power to increase the sanction on appeal; and what is more, Ms Opperman was not given the opportunity to make submissions why a harsher penalty should not be imposed.’
While the arbitrator’s findings on whether the employee should have been afforded an opportunity to be heard before a harsher sanction was imposed on her, was in keeping with the Rennies judgment, he nevertheless committed an error in law by not following the ratio pronounced by Basson J, in particular, the circumstances when a chairperson on appeal can impose a harsher sanction.
In finding the arbitrator committed an error in law, the court thereafter considered whether the arbitrator’s error rendered the award reviewable.
Instructive to this question was the judgment of the Labour Appeal Court in Democratic Nursing Organisation of SA on behalf of Du Toit and Another v Western Cape Department of Health and Others (2016) 37 ILJ 1819 (LAC) where Davis JA held:
‘Since the advent of the Constitution of the Republic of South Africa Act 1996 (the Constitution), the concept of review is sourced in the justifications provided for in the Constitution and, in particular, that courts are given the power to review every error of law provided that it is material; that is that the error affects the outcome.’
Davis JA went further to say:
‘… it would appear that the concept of error of law is relevant to the review of an arbitrator’s decision within the context of the factual matrix as presented in the present dispute; that is a material error of law committed by an arbitrator may, on its own without having to apply the exact formulation set out in Sidumo, justify a review and setting aside of the award depending on the facts as established in the particular case.’
In considering this judgment and others, the court held that in failing to follow the legal principle in Rennies, the arbitrator committed a material error in law. Even if this fact alone was not sufficient to set aside the award on review, the fact that the error ultimately led the arbitrator to arrive at an unreasonable decision; warranted the reviewing court’s intervention. For this reason the award was set aside.
Although it was not necessary to consider the issue of parity once the court arrived at the above finding, the court nevertheless found the arbitrator’s decision with regard to the parity principle was unreasonable. This was based on the fact that the employer, at arbitration, could not adequately explain why other employees guilty of the same offence only received a final written warning whereas the employee’s misconduct was met with dismissal.
In setting aside the award the court replaced the arbitrator’s findings with an order that the employee’s dismissal was both procedurally and substantively unfair and that she be retrospectively reinstated subject to the ‘severe’ final written warning imposed on her by the chairperson of the disciplinary inquiry. The court did, however, limit the employee’s back pay to the period from when she was dismissed to the date of the arbitration award. No order as to costs were made.
These articles were first published in De Rebus in 2016 (Oct) DR 45.
