Employment law update – Can an employer engage replacement labour if a strike has been suspended?

May 1st, 2021
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In National Union of Metalworkers of South Africa obo Members v Trenstar (Pty) Ltd [2021] 3 BLLR 281 (LC), members of the National Union of Metalworkers of South Africa (NUMSA) commenced strike action against Trenstar (the Company) in pursuit of a demand for a once-off taxable gratuity payment.

The strike ran for approximately one month until NUMSA notified the Company of its intention to suspend the strike and for its members to return to work. In doing so, NUMSA informed the Company that the suspension of the strike should not be construed as a withdrawal of the demand for a once-off taxable gratuity. The Company responded by serving a lockout notice and commenced employing replacement labour. As a result, NUMSA approached the Labour Court (LC) for an order interdicting the Company from engaging replacement labour on the basis that the lockout was not in response to a strike.

Before the LC, NUMSA contended that an employer may only use replacement labour while implementing a lockout in response to a strike only for as long as the strike subsists. The strike had, however, ceased and its members had tendered their services. The Company, however, contended that NUMSA could not defeat the lockout simply by suspending the strike. The underlying dispute remained alive and NUMSA’s members could go on strike at any time without giving notice. In these circumstances, the lockout was in response to the strike.

The court noted that s 76(1)(b) of the Labour Relations Act 66 of 1995 (the LRA) provides that an employer may not take into employment any person for the purposes of performing the work of any employee who is locked out, unless the lockout is in response to a strike.

The court referred to the judgment of National Association of South African Workers obo Members v Kings Hire CC [2020] 3 BLLR 312 (C) in which it was held that where the underlying issue in dispute remains unresolved and an employer has implemented a lockout, the employer is entitled not to accept the employees’ tender of services. As NUMSA had not abandoned the demand that informed the industrial action, the underlying dispute remained alive and NUMSA’s members retained the right to strike without giving the Company further notice. In these circumstances, the court found that the Company’s lockout in response to the strike was perfectly lawful, even though the strike had been suspended.

Having said this, the court found that the matter did not concern the lawfulness of the lockout, it concerned whether the Company could lawfully engage replacement labour when employees are no longer engaging in strike action. It was common cause that NUMSA’s members had tendered their services even though they had not abandoned their demand. The court found that although s 76(1)(b) refers to a ‘strike’, a proper interpretation of the section strongly suggests that the legal precondition for the use of replacement labour is not a strike but a lockout. The word ‘strike’ in s 76(1)(b) simply functions to identify the kind of lockout during which replacement labour may be used, namely a lockout in response to a strike.

Accordingly, the court held that the clear purpose of s 76(1)(b) is to permit employers to engage replacement labour when a union has initiated a strike and a lawful lockout has been instituted in response to that strike. The fact that the strike had been suspended by NUMSA shortly before the lockout was instituted was not determinative. All that was required was that the lockout was in response to a strike that was occurring at the time.

In the circumstances, the court found that NUMSA had not made out a case for the relief sought and the application was dismissed.

When can a dismissal for operational requirements be referred to arbitration?

In PGC Group of Companies (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others [2021] 3 BLLR 287 (LC), PGC Group of Companies (the Company) sought to restructure its operations and commenced a retrenchment process in terms of s 189 of the Labour Relations Act 66 of 1995 (LRA). The employee concerned unsuccessfully applied for a new position within the Company’s revised operational structure and was subsequently retrenched.

The employee referred an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA). Following conciliation, the dispute remained unresolved and the CCMA issued a certificate of outcome recording that the dispute must be referred to the Labour Court (LC) for adjudication. Notwithstanding this, the employee referred the dispute to arbitration before the CCMA in terms of s 191(12) of the LRA.

Section 191(12) of the LRA provides that an employee who is dismissed as a result of an employer’s operational requirements has the election to refer the dispute to arbitration or to the LC if:

‘(a) the employer followed a consultation procedure that applied to that employee only, …;

(b) the employer’s operational requirements led to the dismissal of that employee only; or

(c) the employer employs less than ten employees, irrespective of the number of employees who are dismissed’.

Before the CCMA, the Company submitted that s 191(12) of the LRA did not apply as more than one employee had been dismissed, alternatively that the Company did not follow a procedure that applied to the employee only. The CCMA, therefore, did not have jurisdiction to entertain the dispute. The employee, on the other hand, submitted that the Company had dismissed him after a consultation procedure that applied to him only and he was thus entitled to refer the matter to arbitration.

Based on the evidence provided, the CCMA Commissioner found that the employee was consulted on his own as an individual and that the other dismissed employees did not form part of the consultation procedure with the employee concerned. On this basis, the CCMA Commissioner held that the employee may elect to refer the matter to arbitration in terms of s 191(12) of the LRA. The Company took the CCMA Commissioner’s ruling on review.

On review, the LC noted that s 191(12) provides that employees dismissed for operational reasons may choose to refer the dispute either to adjudication or arbitration if the employer had consulted and dismissed only one employee. The certificate of outcome issued by the CCMA does not bind the parties in this regard. In the present case, the employee had chosen the latter course, and the CCMA Commissioner had accepted his unchallenged evidence that he was the only employee who had been consulted and dismissed.

The court found that the purpose of s 191(12) is to provide for speedy and less expensive dispute resolution process. Although it was common cause that the employee was consulted as part of a general process involving other affected employees, the test was whether the Company followed a consultation procedure that applied to the employee separate from the rest of the employees.

The Company relied on the fact that the employee competed with two other employees for an available position and applied the ‘last in, first out’ principle as a selection criterion for its submission that the employee formed part of a consultation process with other affected employees. The court found that the mere fact that the employee applied for a newly created position in competition with others did not mean the Company did not follow a consultation procedure that applied only to that employee.

In this regard, the court noted that the Company referred to the ‘process’ and the ‘procedure’ interchangeably. Section 191(12)(a) of the LRA, however, specifically refers to the consultation procedure and not the process. When having regard to the evidence, it was clear that there was a process in general that encompassed several affected employees, as opposed to the procedure followed in respect of the employee concerned. The procedure that the Company adopted was to consult with the employee on his own. While the wider process was continuing, the Company consulted with the employee separately from the other affected employees and an s 189(3) notice was issued to him personally.

In the circumstances, the court held that the CCMA Commissioner had correctly found that the Company had adopted a consultation procedure that applied to the employee only and that the CCMA had jurisdiction to arbitrate the dispute.

The review application was dismissed with costs. In addition, leave to appeal was refused and the Labour Appeal Court dismissed a petition for leave to appeal. The Constitutional Court also dismissed a further application for leave to appeal.

Nadine Mather BA LLB (cum laude) (Rhodes) is a legal practitioner at Bowmans in Johannesburg.       

This article was first published in De Rebus in 2021 (May) DR 39.

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