Employment law update – Striking in support of a demand for equal pay

October 1st, 2019

In Comair Ltd v National Union of Metalworkers of South Africa and Others [2019] 8 BLLR 812 (LC), Comair had established an Employment Equity Forum (the EEF) in accordance with the provisions of the Employment Equity Act 55 of 1998 (the EEA) to deal with, inter alia, issues relating to allegations of discrimination in the workplace. The National Union of Metalworkers of South Africa (NUMSA) raised an equal pay grievance with the EEF, claiming pay differentiation on the basis of race or ethnicity. NUMSA demanded that Comair eliminate the alleged unfair discrimination and referred a dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA).

At the CCMA, the parties reached an agreement that the matter would be dealt with by an internal working committee. At the first meeting of the working committee, Comair tabled several proposals to deal with the pay differentiation dispute, but NUMSA rejected the proposals and demanded that the wages of the majority of the employees be increased to those of the highest paid employees. The parties in the meantime entered into a two-year wage agreement. Notwithstanding this, NUMSA again referred a pay differentiation dispute, as a dispute of mutual interest, to the CCMA. After an unsuccessful conciliation of the dispute, NUMSA served a notice of intention to strike on Comair.

Comair approached the Labour Court (LC) on an urgent basis seeking an order declaring the strike action by NUMSA unprotected and further interdicting them from participating in such strike action. Comair contended that the strike action was unprotected for three reasons:

  • The true nature of the dispute was that of an equal pay dispute, which is to be resolved by way of adjudication or arbitration in terms of the provisions of the EEA.
  • The dispute was regulated by the wage agreement entered into between the parties.
  • In the absence of a secret ballot, NUMSA’s members could not engage in strike action.

NUMSA claimed in turn that, pursuant to Comair disclosing its pay information, it was satisfied that the pay differences were not in fact based on race or ethnicity and accordingly, the dispute did not fall within the scope of the EEA. The dispute was rather a matter of mutual interest relating to the terms and conditions of employment. Moreover, the wage agreement between the parties did not regulate the issue of pay differentiation.

The LC held that the starting point was to determine the true nature of the dispute from all the relevant facts. In these circumstances, the court must have regard to the substance and not the form of the dispute and the court is not bound by the CCMA’s characterisation of a dispute. Having regard to the history of the matter, the court noted that NUMSA had publicly declared that the majority of Comair’s white workers were paid more than its black workers and had accused Comair of being a ‘racist company’, labelling the pay discrepancies as ‘modern day Apartheid’.

An assessment of NUMSA’s case showed that it demanded that employees who perform the same work in the bargaining unit should receive the same pay. Although the difference in pay was no longer alleged to be based on race or ethnicity, what NUMSA asserted was that there was no substantively good reason or justification for the difference. Accordingly, the court held that the essence of the dispute was equal pay for equal work.

A demand for equal pay for equal work falls squarely within the scope of s 6(4) of the EEA and has to be referred to the LC for adjudication or, by consent, to the CCMA for arbitration. As NUMSA was no longer alleging that the discrimination was based on the grounds of race or ethnicity, the court found it must, therefore, be alleging discrimination on an ‘arbitrary ground’. That being so, NUMSA would have to prove that the pay differentiation was based on an arbitrary ground before the LC or the CCMA in terms of s 10 of the EEA.

Since the dispute giving rise to the strike could be resolved by way of adjudication or arbitration, the strike was precluded by s 65(1)(c) of the Labour Relations Act 66 of 1995, which section provides that no person may take part in a strike if the issue in dispute is one that a party may refer to arbitration or to the LC.

The strike action was declared unprotected and NUMSA was interdicted from participating in strike action over the demand.

Non-payment of a retention bonus

In Solidarity obo Scholtz v Gijima Holdings (Pty) Ltd [2019] 8 BLLR 774 (LAC), Mr Scholtz (Scholtz), employed by Gijima Holdings as a programmer, concluded an Employee Loyalty Incentive Scheme agreement (ELIS agreement) with Gijima Holdings. In terms of the ELIS agreement, Scholtz would be paid a retention bonus equal to 50% of his annual salary in September of each year and would be required to remain in the employ of Gijima Holdings for a period of 12 months in respect of each retention bonus already paid.

Gijima Holdings later notified Scholtz of its intention to terminate the ELIS agreement. Scholtz, dissatisfied with Gijima Holding’s decision, received his final retention bonus in September 2014 and, thereafter, tendered his resignation with effect from November 2014. Gijima Holdings deducted the retention bonus from Scholtz’s termination payments.

Solidarity, acting on behalf of Scholtz, instituted proceedings in the Labour Court (LC) claiming payment of the retention bonus. Gijima Holdings opposed the proceedings and argued that it was entitled to effect the deduction in terms of the provisions of the ELIS agreement as Scholtz was bound to remain in its employ for a period of 12 months following the payment of the retention bonus. Solidarity, on the other hand, argued that the deduction ought not to have been made because Gijima Holdings had unilaterally terminated the ELIS agreement and Scholtz was consequently no longer bound by its terms.

The LC held that Gijima Holdings was entitled to deduct the retention bonus because it had complied with the terms of the ELIS agreement and that the deduction did not breach s 34 of the Basic Conditions of Employment Act 75 of 1997 (the BCEA) because it had been made by agreement.

Aggrieved by the outcome, Solidarity took the LC’s decision on appeal and contended that the LC erred in holding that the deduction was based on an agreement because the ELIS agreement had been unilaterally terminated by Gijima Holdings. It also argued that assuming that Gijima Holdings was entitled to make the deduction, it could not have deducted more than a quarter of Scholtz’s remuneration as this is precluded in terms of s 34(2)(d) of the BCEA.

The key issue on appeal was whether Gijima Holdings was entitled to deduct the retention bonus from Scholtz’s termination payments following his resignation. The Labour Appeal Court (LAC) noted that it had not been part of Solidarity’s pleaded case that the deduction of the bonus was impermissible in terms of s 34 of the BCEA, as Solidarity contended on appeal. The court was of the view that Solidarity’s argument on the applicability of s 34 of the BCEA was misplaced and unsustainable. A deduction in terms of s 34 is made to reimburse an employer for loss or damage in circumstances set out in s 34(2) and was not applicable in Scholtz’s case.

The purpose of the ELIS agreement was to encourage employees to remain in service for the period covered by the retention bonus. The LAC found that the retention bonus created reciprocal obligations: Scholtz was not entitled to claim payment of the bonus unless he had performed by working for Gijima Holdings for a period of 12 months after receipt of the bonus. The provisions of the ELIS agreement made it clear that employees were to repay the whole of the bonus if they terminated their services before the expiry of the retention period. Scholtz had failed to produce evidence to prove his claim that Gijima Holdings had compromised its right to claim counter-performance from him by terminating the ELIS agreement.

The LAC held that Scholtz had acted in bad faith by accepting the retention bonus and resigning a month later. Scholtz ought to have appreciated that the consequence of accepting the retention bonus meant that he was obliged to remain in the employ of Gijima Holdings for a further 12-month period.

The appeal was dismissed with costs.

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

This article was first published in De Rebus in 2019 (Oct) DR 25.