Employment law update – Benefit to employees

May 1st, 2013

Apollo Tyres South Africa (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others (LAC) (unreported case no DA1/11, 21-2-2013) (Musi AJA)

By Moksha Naidoo 

Can an employee who refers an unfair labour practice dispute concerning benefits to the Commission for Conciliation, Mediation and Arbitration (CCMA) lay claim to the benefit only where it is an entitlement in terms of a contractual or statutory right?

The Labour Appeal Court (LAC) in this matter, in examining past jurisprudence, considered the different approaches to answering this question.


In response to a downturn in the economy, the appellant employer introduced an early retirement scheme to its employees. As part of the employer’s initiative, those employees whose applications to join the scheme were successful would go on early retirement and receive two months’ additional pay and a further ex gratia payment. With over 24 years’ service, the third respondent employee was refused entry into the scheme. She referred an unfair labour practice dispute in terms of s 186(2)(a) of the Labour Relations Act 66 of 1995 (LRA) to the first respondent, the CCMA.

Section 186(2)(a) of the Act states:

‘“Unfair labour practice” means any unfair act or omission that arises between an employer and an employee involving –

(a)     unfair conduct by the employer relating to the promotion, demotion, probation (excluding disputes about dismissals for a reason relating to probation) or training of an employee or relating to the provision of benefits to an employee … .’

The second respondent arbitrator dismissed the employer’s challenge that the CCMA did not have jurisdiction to hear the matter. In arriving at his findings, the arbitrator relied on certain decisions in which it was held that an unfair labour practice dispute relating to benefits did not have to be based on a pre-existing right. The arbitrator went on to find that the employer’s conduct, in refusing the employee membership to the scheme, was unfair and ordered it to pay the employee the amounts she would have received had she been accepted into the scheme, totalling more than R 123 000.

On review, the matter came before the Labour Court, per Cele J, who dismissed the employer’s application. He found that the arbitrator’s decision fell within the band of reasonableness.

The employer then approached the LAC for relief.


Counsel for the employer argued that s 186(2)(a) of the LRA could not be used by employees to create rights that did not exist and that the section was intended to give an employee recourse where he claimed unfair conduct by the employer with regard to an existing right.

The employee’s representative argued that the section in question was introduced to rescue employees who had no other remedy to address their employer’s alleged unfair conduct, either in the LRA or at common law.

In support of the employer’s argument was the decision in Hospersa and Another v Northern Cape Provincial Administration [2000] JOL 6301 (LAC), in which Mogoeng AJA stated:

‘It appears to me that the legislature did not seek to facilitate, through item 2(1)(b), the creation of an entitlement to a benefit which an employee otherwise does not have. I do not think that item 2(1)(b) was ever intended to be used by an employee, who believes that he or she ought to enjoy certain benefits which the employer is not willing to give him or her, to create an entitlement to such benefits through arbitration in terms of item 2(1)(b). … A dispute of interest should be dealt with in terms of the collective bargaining structures and is therefore not arbitrable.’

(Prior to amendments brought about by the Labour Relations Amendment Act 12 of 2002 the provision relating to benefits was item 2(1)(b).)

Over the years, this approach found favour in subsequent Labour Court and LAC decisions.

In 2004, in the matter of Department of Justice v Commission for Conciliation, Mediation and Arbitration and Others (2004) 25 ILJ 248 (LAC), the court found that the provision in the LRA relating to benefits sought to give content to the constitutional right to fair labour practice and, as such, when an employee refers a dispute relating to benefits, he is in effect exercising a right founded ex lege. Therefore, according to the LAC, the issue of the claim being a rights’ dispute or a mutual interest dispute fell away.

The LAC in the present matter considered the Labour Court decision in Protekon (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others (2005) 26 ILJ 1105 (LC), in which Todd AJ, in agreeing with the principle that an employee could not rely on s 186(2)(a) to create new rights, as set out in the Hospersa case, went on to find that it did not follow that an employee may enjoy the protection of this section only if his claim is based in contract or statute. According to the Labour Court, the section imposed an obligation on employers, when dealing with benefits, to act fairly under circumstances where they are obliged to do so contractually or statutorily, as well as under circumstances where the employer uses its discretion in deciding whether or not the employee should be granted a benefit. Therefore, when faced with a claim of this nature, the CCMA has jurisdiction to decide whether or not the employer’s actions were fair.

Following this approach, the LAC in the present matter held:

‘In my view, the better approach would be to interpret the term benefit to include a right or entitlement to which the employee is entitled (ex contractu or ex lege including rights judicially created) as well as an advantage or privilege which has been offered or granted to an employee in terms of a policy or practice subject to the employer’s discretion. In my judgment, “benefit” in section 186(2)(a) of the Act means existing advantages or privileges to which an employee is entitled as a right or granted in terms of a policy or practice subject to the employer’s discretion. In as far as Hospersa, [G4S Security Services v NASGAWU (LAC) (unreported case no DA3/08, 26-11-2009) (Tlaletsi AJA)] and [Gauteng Provinsiale Administrasie v Scheepers and Others [2000] 7 BLLR 756 (LAC)] postulate a different approach, they are, with respect, wrong.’

The appeal was dismissed with costs.

Note: Unreported cases at date of publication may have subsequently been reported.

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

This article was first published in De Rebus in 2013 (May) DR 52.

De Rebus