Employment law update – Right to an increase?

April 1st, 2012

By Talita Laubscher

The applicant in Farhana v Open Learning Systems Education Trust [2012] 1 BLLR 48 (LC) instituted two claims in the Labour Court. The first related to an alleged unfair retrenchment and the second to alleged victimisation when she did not receive a 10% increase that her colleagues had received. The respondent did not file a statement of opposition and the matter accordingly proceeded on a default basis.

As regards the unfair retrenchment claim, Farhana contended that on 16 November 2009 she was informed that the respondent had lost an important donor and accordingly there was insufficient funding to continue its operations. On 18 November Farhana was informed that she was not required to return to work and that the respondent was not able to make any further salary payments to its employees. Despite this, the SABC continued to flight programmes produced by the respondent. The court, per Molahlehi J, held that Farhana had proven that she was dismissed for operational reasons and that the reason for her dismissal was questionable. Because the respondent had failed to prove the contrary, the court held that Farhana’s retrenchment was unfair and awarded her severance pay and 12 months’ remuneration as compensation.

Concerning the victimisation claim, Farhana contended that she did not receive the 10% increase because she had brought allegations of serious financial irregularities to the attention of the chairperson of the board of the respondent. She accordingly contended that she was unfairly discriminated against, victimised and subjected to an unfair labour practice.

The court held that where an unfair discrimination claim is based on a ground not listed in s 6(1) of the Employment Equity Act 55 of 1998 (EEA) the complainant must establish unfairness and must provide evidence that the act complained of went so far as to affect her human dignity. The fact that the complainant suffered from ‘injured feelings’ was not sufficient. The court held that Farhana had failed to specify exactly on what ground she had been discriminated against and that she had failed to discharge the onus of proving discrimination.

In considering whether the non-payment of the salary increase constituted an unfair labour practice, the court held that payment of the salary increase had to be a ‘benefit’ for the purposes of s 186(2) of the Labour Relations Act 66 of 1995 (LRA). A claim for an increase, so the court found, did not fall within the ambit of a ‘benefit’. Increases, instead, are economic demands that have to be resolved by means of negotiation; they are not ‘benefits’ that are subject to resolution through arbitration or adjudication. The court accordingly held that the respondent’s failure to pay Farhana the 10% increase did not amount to an unfair labour practice.

Making a settlement agreement an arbitration award

The issue the court had to determine in Consol Glass (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others [2012] 1 BLLR 42 (LC) was whether the Commission for Conciliation, Mediation and Arbitration (CCMA) has jurisdiction to make a settlement agreement an arbitration award before a dispute has been referred to the CCMA.

In this case, Greeff, the third respondent, was employed by the applicant as an accounts manager. In about October 2010 the applicant commenced a retrenchment consultation process and on 8 October 2010, while still employed, Greeff entered into a written agreement with the applicant in terms of which her services would terminate on 30 November 2010 and in terms of which the benefits she would be entitled to were set out. It was agreed that, depending on the applicant’s requirements, Greeff might be required to work her notice period. The agreement also provided that the package and benefits due to her would be in full and final settlement of all claims she had against the applicant and that she would be precluded from disputing the fairness of the termination of her employment.

Greeff subsequently asked to be released from her duties with effect from 18 October 2010 but the applicant refused and insisted that she had to work her entire notice period. It then wrote to her to place on record that it had accepted her resignation that she had allegedly tendered on 12 October 2010. Greeff denied that she had resigned and contended that the applicant had acted in breach of the settlement agreement. The applicant, on the other hand, contended that Greeff had resigned prematurely; that she had, therefore, acted in breach of the settlement agreement; and that it was no longer required to pay her any severance pay.

Greeff applied to the CCMA to make the settlement agreement an arbitration award in terms of s 142A of the LRA. The commissioner did not hear oral evidence or argument and on 25 November 2010 he handed down an award in terms of which the settlement agreement was made an arbitration award.

The applicant applied to the Labour Court to have the ruling reviewed and set aside on two grounds, namely that the CCMA did not have jurisdiction to enable the commissioner to make the award that he made; alternatively that he had acted erroneously by failing to take into account relevant considerations concerning Greeff’s alleged breach. The applicant also contended that the commissioner had not followed procedure by failing to hear oral evidence and argument.

The court, per Steenkamp J, noted that if the CCMA did not have jurisdiction that would be the end of the matter. Steenkamp J further stated that whether the CCMA has jurisdiction in any particular case is a factual question and that the reasonableness test as set out in Sidumo and Another v Rustenburg Platinum Mines Ltd and Others [2007] 12 BLLR 1097 (CC) did not apply to such an inquiry.

The court noted that the commissioner described the settlement agreement as one ‘in terms of which the dispute that had been referred to the CCMA was settled’. This was patently wrong. The only matter Greeff had referred to the CCMA was the application to have the settlement agreement made an arbitration award. Section 142A provides that the CCMA may ‘make any settlement agreement in respect of any dispute that has been referred to the commission, an arbitration award’ (my emphasis). This language is clear: It is only where a dispute has already been referred to the CCMA and the parties agreed to settle that dispute that the CCMA commissioner may make the settlement agreement an arbitration award. It is not required that the dispute must have been referred to arbitration; a referral to conciliation would suffice. But, in the absence of any dispute referral to the CCMA, the commissioner simply lacked jurisdiction to entertain the application. The commissioner’s ruling was accordingly reviewed and set aside.

Talita Laubscher BIur LLB (UFS) LLM (Emory University USA) is an attorney at Bowman Gilfillan in Johannesburg.

This article was first published in De Rebus in 2012 (April) DR 53.