Eskom Holdings Ltd v National Union of Mineworkers and Others (840/2010) [2011] ZASCA 229; 2012 (2) SA 197 (SCA); [2012] 1 All SA 278 (SCA); [2012] 3 BLLR 254 (SCA); (2011) 32 ILJ 2904 (SCA) (30 November 2011)

75 Reportability

Brief Summary

Labour Law — Minimum services agreement — Dispute regarding terms of minimum services agreement under s 72 of the Labour Relations Act 66 of 1995 — Employer (Eskom) and trade unions (NUM, NUMSA) unable to agree on terms — Unions referred dispute to CCMA for conciliation and arbitration — Employer contending that CCMA lacked jurisdiction — Legal issue whether failure to agree on minimum services agreement constitutes a dispute that can be referred to CCMA under s 74 of the Act — Holding that the dispute is capable of being determined by the Essential Services Committee under s 73 of the Act, reaffirming the Labour Court's finding on jurisdiction.

Comprehensive Summary

Summary of Judgment


1. Introduction


These were appellate proceedings in the Supreme Court of Appeal concerning the jurisdictional allocation under the Labour Relations Act 66 of 1995 (LRA) in relation to disputes about minimum services in an industry designated as an essential service.


The appellant was Eskom Holdings Limited (Eskom), an employer operating in the generation, transmission and distribution of electricity. The principal opposing parties were the National Union of Mineworkers (NUM) and the National Union of Metalworkers of South Africa (NUMSA). Solidarity Union of South Africa was cited but did not participate in the appeals. The Commission for Conciliation, Mediation and Arbitration (CCMA) and the relevant CCMA commissioner were cited due to their interest in the outcome. The Essential Services Committee (ESC) intervened and aligned itself with Eskom’s stance.


The procedural history began with the unions referring a deadlock about the terms of a proposed minimum services agreement to the CCMA, asserting that the dispute was arbitrable under s 74 of the LRA. A CCMA commissioner ruled that the CCMA had jurisdiction at least to conciliate the dispute. Eskom took that ruling on review to the Labour Court, which set it aside and declared that the CCMA lacked jurisdiction. NUM and NUMSA then appealed to the Labour Appeal Court, which reversed the Labour Court and held that the CCMA did have jurisdiction under s 74. Eskom, with special leave, appealed further to the Supreme Court of Appeal.


The general subject-matter of the dispute concerned the statutory route for resolving a failure to agree on the terms of a minimum services agreement in an essential service context, and whether such a dispute is to be determined by interest arbitration in the CCMA (s 74) or by the ESC (s 73).


2. Material Facts


It was common cause that the ESC, by Government notice published in 1997 under the LRA, designated the generation, transmission and distribution of power as an essential service, and that this designation remained operative at all relevant times. The consequence was that employees engaged in that essential service were precluded from striking, subject to statutory mechanisms that may narrow the scope of what is treated as essential.


It was also not in dispute that Eskom and its employees had previously concluded a minimum services agreement which was ratified by the ESC in 1998. The unions unilaterally cancelled that agreement with effect from 31 March 2004. Thereafter, for several years, the parties attempted but failed to reach consensus on a new minimum services agreement. The court treated the key impediment as the parties’ inability to agree on the number of employees necessary to maintain an acceptable minimum service.


In April 2007, NUM and NUMSA referred the deadlock to the CCMA, characterising it as a dispute of mutual interest, and stating that Eskom’s proposal would require almost all employees to render minimum service whereas the unions contended that a far smaller proportion was required. Eskom disputed the CCMA’s jurisdiction, contending that s 74 did not apply to disputes about the terms of minimum services agreements and that the matter fell within the ESC’s remit.


On 29 June 2007, a CCMA commissioner ruled that the CCMA had jurisdiction to conciliate the dispute and directed that it be referred back for further handling. Eskom then instituted review proceedings in the Labour Court to set the ruling aside.


The Labour Court upheld Eskom’s jurisdictional challenge, set aside the commissioner’s ruling, and declared that the CCMA lacked jurisdiction. The Labour Appeal Court subsequently reversed that outcome and held that the CCMA did have jurisdiction. The present appeal concerned whether the Labour Appeal Court’s conclusion was correct.


3. Legal Issues


The central legal question was whether a deadlock about the terms of a minimum services agreement constitutes a dispute that may be referred to the CCMA for conciliation and compulsory interest arbitration under s 74 of the LRA on the basis that the employees are precluded from striking due to engagement in an essential service.


A related interpretive question was whether, if the CCMA were to determine minimum services through an arbitration award under s 74(4), that award could be treated as a “collective agreement” capable of ratification by the ESC under s 72 of the LRA, despite the statutory definition of collective agreement in s 213.


A further issue was whether, if s 74 did not apply, the LRA provided an alternative mechanism so that employees were not left without an effective remedy to narrow the practical extent of the essential service designation. This concerned the proper scope of s 73 of the LRA, which empowers the ESC to determine disputes about whether a service is an essential service or whether an employer or employee is engaged in a service designated as an essential service.


The dispute was predominantly one of law, namely the interpretation and interaction of statutory provisions allocating decision-making competence between the CCMA and the ESC, together with the constitutional interpretive backdrop relating to the right to strike.


4. Court’s Reasoning


The court located the controversy within the statutory architecture of the LRA governing strikes in essential services, the designation of essential services by the ESC, and the statutory recognition of minimum services arrangements. It emphasised that the legislature entrusted the determination of essential services—along with the power to decide related disputes—to the ESC, a specialised body with the appropriate expertise and experience.


The unions’ argument relied on the wording of s 74, contending that because employees in an essential service are precluded from striking, any resulting deadlock about minimum services should be capable of being resolved by CCMA conciliation and arbitration. The court did not accept that the mere fact that employees are strike-barred in an essential service meant that any dispute about narrowing that strike bar through minimum services fell within s 74’s arbitration pathway.


A key step in the court’s reasoning was the relationship between s 72 and the mechanism for narrowing essential-service strike restrictions through a minimum services agreement. Section 72 provides for the ESC to ratify “any collective agreement” providing for minimum services. The court considered the unions’ suggestion that an arbitration award under s 74(4) should either not require ESC ratification, or should be interpreted as falling within the phrase “collective agreement” in s 72.


The court rejected the contention that ESC ratification could be bypassed, reasoning that the legislature did not envisage a CCMA commissioner—who may lack the necessary specialist expertise—effectively determining the content of minimum services in a manner that would alter the practical effect of an ESC designation. The court treated it as incompatible with the legislative scheme that a CCMA commissioner could, by interest arbitration, set minimum service levels that would in effect define what is essential for that employer and its employees.


On the alternative contention that “collective agreement” in s 72 should be read to include an arbitration award, the court relied on the statutory definition of collective agreement in s 213 of the LRA, which requires an agreement “concluded” by trade unions and employers (or employer organisations). The court held that an arbitration award does not fit that definition and could not be treated as a collective agreement for purposes of s 72. It also reasoned that s 72 contemplates ratification of a consensus-based instrument; if the ESC were asked to ratify an imposed award, aggrieved parties could oppose ratification, which would tend to shift the ESC from ratification to dispute determination in a manner inconsistent with that framework.


The court then addressed the unions’ concern that excluding s 74 arbitration would permit an employer to frustrate the restoration of the right to strike by refusing to conclude a minimum services agreement. The court accepted the significance of the right to strike under s 23(2)(c) of the Constitution and reiterated that the LRA must be interpreted consistently with constitutional values and in a manner that avoids impermissible limitation of that right, within the statute’s own structure and primary objects.


Against that backdrop, the court considered the alternative statutory route identified by the ESC, namely s 73. The court interpreted s 73(1)(a) and (b) as sufficiently broad, in the minimum services context, to permit the ESC to determine disputes about whether particular services, categories of work, or categories and numbers of employees should be regarded as engaged in an essential service for purposes of maintaining an acceptable minimum service. It reasoned that, because a ratified minimum services agreement under s 72 has the effect that the agreed minimum services are “to be regarded as an essential service” in respect of that employer and its employees, disputes about what must be included in that minimum service are disputes about the extent of what should be treated as essential for those parties. The court therefore held that disputes about the staffing level and categories required to provide an acceptable minimum service were capable of determination by the ESC under s 73.


In the court’s view, this construction of s 73 did not strain the language of the provision, and it achieved an interpretation that placed the least limitation on the right to strike by providing a mechanism through which employees not required for minimum service could regain the ability to strike, even if consensus with the employer could not be reached.


On this reasoning, the court concluded that the Labour Appeal Court erred in holding that the dispute could be determined under s 74 by the CCMA. The proper forum with determinative power was the ESC under s 73, not the CCMA under s 74.


5. Outcome and Relief


The appeal was upheld. The Supreme Court of Appeal set aside the order of the Labour Appeal Court and substituted it with an order dismissing the unions’ appeal to the Labour Appeal Court, with costs. This had the effect that the Labour Court’s order stood, namely that the CCMA lacked jurisdiction to deal with a dispute arising from a failure to agree on the terms of a minimum services agreement.


NUM and NUMSA were ordered to pay Eskom’s costs in the Supreme Court of Appeal, including the costs of two counsel where so employed.


Cases Cited


Eskom Holdings Ltd v National Union of Mineworkers and Others (840/2010) [2011] ZASCA 229; 2012 (2) SA 197 (SCA); [2012] 1 All SA 278 (SCA); [2012] 3 BLLR 254 (SCA); (2011) 32 ILJ 2904 (SCA).


South African Police Service v Police and Prisons Civil Rights Union and Another 2011 (6) SA 1 (CC).


Minister of Safety and Security v Sekhoto 2011 (5) SA 367 (SCA).


Investigating Directorate: Serious Economic Offences and Others v Hyundai Motor Distributors (Pty) Ltd and Others; In re Hyundai Motor Distributors (Pty) Ltd and Others v Smit NO and Others [2000] ZACC 12; 2001 (1) SA 545 (CC).


Chemical Workers Industrial Union v Plascon Decorative (Inland) (Pty) Ltd (1999) 20 ILJ 321 (LAC).


Legislation Cited


Constitution of the Republic of South Africa, 1996 (Act 108 of 1996), ss 23(2)(c) and 36.


Labour Relations Act 66 of 1995, ss 3, 65(1)(d)(i), 70, 71, 72, 73, 74, 112, 213.


Rules of Court Cited


No rules of court were cited in the judgment.


Held


The Supreme Court of Appeal held that a dispute arising from a failure to agree on the terms of a minimum services agreement in an industry designated as an essential service is not a dispute that may be resolved by CCMA conciliation and arbitration under s 74 of the Labour Relations Act 66 of 1995.


It held further that such a dispute is capable of determination by the Essential Services Committee under s 73 of the LRA, because disputes about which employees, categories of employees, and staffing complements are required to provide an acceptable minimum service constitute disputes about whether services are essential and whether employees are engaged in a designated essential service.


LEGAL PRINCIPLES


Statutory provisions within the Labour Relations Act 66 of 1995 allocating institutional competence must be interpreted in a manner consistent with the Constitution, including the right to strike, while respecting the legislature’s design that specialised functions relating to essential services are entrusted to the Essential Services Committee.


A “collective agreement” in s 72 of the LRA, read with the definition in s 213, refers to a written agreement concluded by trade unions and employers (or their organisations) and does not extend to an arbitration award imposed under s 74(4).


Disputes about the content and scope of minimum services—including disputes about the number and categories of employees required to maintain an acceptable minimum service—are capable of being framed as disputes about whether services are essential and whether employees are engaged in a designated essential service, and may accordingly be determined by the ESC under s 73 rather than through CCMA interest arbitration under s 74.

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Eskom Holdings Ltd v National Union of Mineworkers and Others (840/2010) [2011] ZASCA 229; 2012 (2) SA 197 (SCA); [2012] 1 All SA 278 (SCA); [2012] 3 BLLR 254 (SCA); (2011) 32 ILJ 2904 (SCA) (30 November 2011)

Links to summary

THE SUPREME COURT
OF APPEAL
OF
SOUTH AFRICA
JUDGMENT
Case No:
840/2010
In
the matter between:
ESKOM HOLDINGS LIMITED
….....................................................................
Appellant
and
NATIONAL UNION OF MINEWORKERS
….......................................
First
Respondent
NATION OF UNION OF METALWORKERS OF
SOUTH AFRICA
…........................................................................
Second
Respondent
COMMISSION
FOR CONCILIATION MEDIATION
AND ARBITRATION
…......................................................................
Third
Respondent
COMMISSIONER M D ALLY NO
…................................................
Fourth
Respondent
SOLIDARITY UNION OF SOUTH AFRICA
…....................................
Fifth
Respondent
and
THE ESSENTIAL SERVICES COMMITTEE Intervening Party
Neutral
citation:
Eskom Holdings v National Union of Mineworkers
(840/2010)
[2011] ZASCA 229
(30 November 2011)
Coram:
Brand, Van Heerden, Cachalia, Leach and Seriti JJA
Heard:
14 November 2011
Delivered:
30 November 2011
Summary:
Labour – minimum services
agreement under
s 72
of the
Labour Relations Act 66 of 1995
in an
industry designated as an essential service – employer and
employees unable to agree on the terms of such an agreement

their dispute capable of being determined by the Essential Services
Committee under
s 73
of the Act.
___________________________________________________________________
O R D E R
___________________________________________________________________
On appeal from:
Labour Appeal Court (Davis JA,
Patel JA and Hendricks AJA concurring):
The following order is made:
(1) The appeal succeeds with the first and second
respondents being ordered to pay the costs of the appellant, such
costs to include
the costs of two counsel where so employed.
(2) The order of the Labour Appeal Court is set aside
and substituted with the following:

The appeal is dismissed, with costs.’
___________________________________________________________________
J U D G M E N T
__________________________________________________________________
LEACH JA ( Brand, Van Heerden, Cachalia and Seriti JJA
concurring)
:
[1] The crisp issue arising for decision in this appeal
is whether a failure to agree on the terms of a minimum services
agreement
is a dispute between an employer and a trade union which
can be referred to compulsory interest arbitration by the Commission
for
Conciliation, Mediation and Arbitration
1
(the CCMA) under the provisions of s 74 of the Labour
Relations Act 66 of 1995 (the LRA). As set out more fully below, the
issue
came before the Labour Court which held that the CCMA lacked
the necessary jurisdiction to determine such a dispute whereas, on

appeal, the Labour Appeal Court held otherwise. With special leave,
the appellant now appeals to this court, seeking to reaffirm
the
order of the Labour Court.
[2] The appellant is a private company, albeit an
extremely large organisation, which generates, transmits and
distributes electricity
throughout this country. The first, second
and fifth respondents are trade unions who represent employees of the
appellant. As
they have also been both applicants and appellants at
various stages of the history of this litigation, I intend to refer
to them
collectively as ‘the unions’ and to them
individually by using the first respondent’s acronym ‘NUM’,

the second respondent’s acronym ‘NUMSA’ and the
fifth respondent’s name ‘Solidarity’.
[3] Only NUM and NUMSA have appeared to oppose the
appeal. Solidarity has been cited as a respondent but it played no
part in the
appeals both to the Labour Appeal Court and to this
court. The Commissioner whose decision was reviewed in the Labour
Court, as
set out below, and the CCMA were also cited as respondents
due to their interest in the matter but they too played no part in
the
appeal. The Essential Services Committee (the ESC), established
under s 70 of the LRA, was granted leave to intervene in this appeal

as an interested party. In doing so, it has aligned itself with the
appellant in seeking to set aside the order of the Labour Appeal

Court.
[4] Although the right of workers to strike is enshrined
in s 23(2)
(c)
of the
Constitution, that right is not absolute
2
and may be limited in terms of a law of general
application to the extent that such limitation may be reasonable and
justifiable
in an open and democratic society.
3
It is widely recognised, both in this country and
abroad, that in certain circumstances, it will be reasonable and
justifiable to
limit the right to strike, particularly in times of
national emergency or in services where a strike is likely to harm
the public.
4
Thus the LRA provides that no person may take part in a
strike if ‘that person is engaged in an essential service’
5
and defines an ‘essential service’ as
meaning:
6

(a)
a
service the interruption of which endangers the life, personal safety
or health of the whole or any part of the population;
(b)
the Parliamentary
service;
(c)
the South African
Police Service.’
[5] The task of determining which services should be
regarded as essential services has been entrusted by the legislature
to the
ESC, its functions being defined in s 70(2) inter alia as:

(a)
to
conduct investigations as to whether or not the whole or part of any
service is an
essential
service, and then to decide whether or not to designate the whole or
part of that service as an
essential
service;
(b)
to
determine
disputes as to
whether or not the whole or a part of any service is an essential
service.’
[6] In
s 71
of the LRA the ESC’s powers and procedures in designating a
service as an essential service are detailed as follows:

(1)
The
essential service
s committee
must give notice in the
Government
Gazette
of
any investigation that it is to conduct as to whether the whole or a
part of a service is an essential service.
(2) The notice must indicate the
service or the part of a service that is to be the subject of the
investigation and must invite
interested parties, within a period
stated in the notice-
(a)
to submit written
representations; and
(b)
to indicate whether
or not they require an opportunity to make oral representations.
(3) Any interested party may
inspect any written representations made pursuant to the notice, at
the Commission's offices.
(4) The Commission must provide
a certified copy of, or extract from, any written representations to
any person who has paid the
prescribed fee.
(5) The essential services
committee must advise parties who wish to make oral representations
of the place and time at which they
may be made.
(6) Oral representations must be
made in public.
(7) After having considered any
written and oral representations, the essential services committee
must decide whether or not to
designate the whole or a part of the
service that was the subject of the investigation as an essential
service.
(8) If the essential services
committee designates the whole or a part of a service as an essential
service, the committee must
publish a notice to that effect in the
Government Gazette
.
(9) The essential services
committee may vary or cancel the designation of the whole or a part
of a service as an essential service,
by following the provisions set
out in subsections (1) to (8), read with the changes required by the
context.
(10) The Parliamentary service
and the South African Police Service are deemed to have been
designated an essential service in terms
of this section.’
[7] On 12 September 1997, by way of a notice published
under s 71(8) of the LRA
7
,
the ESC declared the ‘generation, transmission and distribution
of power’ (the industry in which the appellant operates)
to be
an essential service. That declaration still stands and was operative
at all times material to this appeal.
[8] However, it is acknowledged both in this country and
internationally that not all the workers employed in an industry
declared
to be an essential service need to be precluded from
striking for that service to continue to operate at an acceptable
level. This
has given rise to the concept of a ‘minimum
service’ which is intended to allow certain workers in an
industry designated
as an essential service to strike while at the
same time maintaining a level of production or services at which the
life, personal
safety or health of the whole or part of the
population will not be endangered. Recognising this the legislature,
presumably in
a bid to prevent the declaration of an industry as an
essential service from impinging unnecessarily on the right to
strike, provided
in s 72 of the LRA that:

The
essential services committee may ratify any collective agreement that
provides for the maintenance of minimum services in the
service
designated as an essential service, in which case
the agreed minimum services are
to be regarded as an essential service in respect of the employer
and its employees; and
the provisions of section 74 do
not apply.’
8
[9] There is no obligation placed upon employers and
their employees to conclude minimum services agreements, and for many
reasons
unnecessary to detail such agreements have not proved to be
popular in practice. One of the very few that have been agreed was
concluded between the appellant and its employees and ratified by the
ESC in 1998.
9
However, the unions unilaterally cancelled that
agreement with effect from 31 March 2004 and, for several years
thereafter, they
attempted unsuccessfully to reach consensus with the
appellant on a new minimum services agreement. Although the appellant
was
in principle not averse to doing so, the stumbling block appears
to have been in agreeing on the number of employees necessary to

provide an acceptable minimum service.
[10] Finally, in April 2007, the unions referred the
dispute concerning the terms of a proposed new minimum services
agreement to
the CCMA. In doing so, they classified the dispute as
being one of ‘mutual interest’ and summarised the facts
of the
dispute in the following terms:

(The
appellant) was designated as an essential service by the Essential
Services Committee. The Unions and (the appellant) have
now
deadlocked on the Minimum Services Agreement after more than two
years of negotiations. (The appellant's) proposal is that
almost 100%
of employees render minimum service whereas Unions submit that 10% is
a required minimum servic
e.’
The unions then stated that they required a minimum
services agreement ‘that does not declare every employee in
Generation,
Distribution and Transmission to be a minimum service’.
[11] As appears from this, the attitude of the unions
was that the CCMA should either conciliate the dispute in regard to
the terms
of a new minimum services agreement or, should it fail to
do so, determine those terms by arbitration. This would be a process
that would result in a new minimum services agreement being imposed
on the parties by way of an award. However, the appellant disputed

the CCMA's jurisdiction to do this, contending that s 74 of the LRA
(to which I shall later refer), under which the unions had
purported
to act in approaching the CCMA, was of no application to a dispute
concerning the terms of a minimum services agreement
and that the
remedy of the unions lay in approaching the ESC to narrow the
designation it had made under s 70.
[12] The matter came before the CCMA on 20 June 2007.
After hearing argument, the Commissioner ruled on 29 June 2007 that
the CCMA
‘has the power to conciliate any dispute that has been
referred to it in terms of (the LRA)’ before going on to
conclude
that to answer the legal questions raised would mean that
she would ‘be arbitrating on these matters without having the
necessary
powers to do so and that these legal questions should be
dealt with at an arbitration/adjudication stage’. She then
proceeded
to rule that ‘the CCMA has the jurisdiction to
conciliate the issue in dispute’ and referred the dispute back
to the
CCMA for the appointment of another Commissioner to deal with
the matter.
[13] Unhappy at the outcome, and contending that there
was no rational link between what the CCMA had been requested to
address
and its decision, the appellant applied to the Labour Court
to review this ruling. The review was opposed by the unions who
supported
the decision that the dispute could be resolved under s 74.
The essential issue which the Labour Court was called on to decide

was that mentioned at the outset of this judgement, namely, whether a
dispute over a failure to agree on the terms of a minimum
services
agreement is a dispute which may be referred to the CCMA for
conciliation and arbitration.
[14] The Labour Court (AC Basson J) upheld the
appellant's argument and concluded that the dispute could not be
referred to the
CCMA. It therefore reviewed and set aside the
Commissioner‘s decision and declared ‘that the CCMA does
not have the
jurisdiction to deal with a dispute arising from a
failure to agree on the terms of a minimum services agreement’.
[15] It was the turn of NUM and NUMSA to be unhappy at
the outcome of proceedings, and they proceeded to appeal to the
Labour Appeal
Court (as mentioned above, Solidarity did not appeal
but was cited as a respondent). On 23 August 2010, the Labour Appeal
Court
(Davis JA, Patel JA and Hendricks AJA concurring) upheld the
appeal, set aside the order of the Labour Court and substituted in

its stead an order dismissing the review of the CCMA's decision and
declaring ‘that the CCMA has jurisdiction to deal with
a
dispute arising from a failure to agree on the terms of the minimum
service agreement’. It is against against this order
that the
present appeal lies.
[16] At the heart of the dispute lies s 74 of the LRA,
the relevant provisions of which read as follows:

(1)    Any
party to a
dispute
that is
precluded from participating in a
strike
or a lock-out because that party is engaged in an
essential
service
may refer the dispute in writing to
(a)
a council, if the parties to the dispute fall within the
registered
scope
of that council; or
b)      the
Commission, if no council has jurisdiction.
(2)     The
party who refers the dispute must satisfy the council or the
Commission that a copy of the
referral has been served on all the
other parties to the dispute.
(3)     The
council or the Commission must attempt to resolve the dispute through
conciliation.
(4)     If
the dispute remains unresolved, any party to the dispute may request
that the dispute be resolved
through arbitration by the council or
the Commission

(the
Commission is of course the CCMA).
[17] The unions’ contention is that once the
generation, transmission and distribution of power had been declared
an essential
service in 1997, the appellant’s employees were
precluded from striking. Accordingly, once they became deadlocked
with the
appellant as to the terms of a minimum services agreement,
that was a dispute that could be referred to the CCMA under s 74(1),

and the CCMA was then obliged to attempt to resolve the dispute
(namely the terms of what the minimum services agreement should
be)
through conciliation under s 74(3) and, should the dispute remain
unresolved, to refer it to arbitration under s 74(4).
[18] The Labour Court rejected this approach. It
concluded that as the legislature had entrusted the determination of
essential
services to the ESC, and as s 72 provided for the
ratification of a ‘collective agreement’ and not an
arbitration award,
the legislature could not have intended such an
award to be ratified by the ESC; and therefore could not have
intended a dispute
as to the terms of such an award to be submitted
for arbitration by the CCMA under s 74. On the other hand the Labour
Appeal Court
held that the Labour Court had ‘elided’
10
past’ the wording of s 74 by relying on s 72 to
conclude that the CCMA lacked jurisdiction. Simply put, the view of
the Labour
Appeal Court was that the Labour Court had either ignored
or not properly appreciated the provisions of s 74.
[19] In this court counsel for the unions sought to
defend the Labour Appeal Court’s order by arguing that the
dispute as
to the terms of a minimum services agreement could indeed
be resolved by arbitration under s 74. In that regard counsel
submitted,
first, that it was unnecessary for an award under that
section to be ratified by the ESC and, in the alternative that if
ratification
was necessary, the reference to a ‘collective
agreement’ in s 72 should be construed so as to include an
arbitration
award under s 74(4).
[20] This first contention was tentatively advanced and,
even though not specifically abandoned, counsel did not seriously
persisted
in advancing it. This attitude was justified as there is no
merit in the point. As I have said, the determination of what is an

essential service and to what extent such a declaration may be varied
or pared down either under s 71(9) or under s 73 (to
which I
shall refer more fully below) is a task entrusted by the legislature
solely to the ESC, a body equipped with specific skills
and
experience to determine such important issues. The legislature surely
did not envisage a CCMA commissioner, probably lacking
both the
necessary expertise and experience, to determine a minimum services
agreement which would vary the effects of a declaration
made by the
ESC.
[21] Turning to the question of ratification of an
arbitration award under s 72, it was argued by the unions that it was
necessary
to interpret the LRA in such a way as to give effect to the
fundamental rights conferred by s 23 of the Constitution, including

the right to strike, and that if the phrase ‘any collective
agreement that provides for the maintenance of minimum services’

in s 72 was not interpreted to include an arbitration award under s
74(4), workers employed in an essential service industry whose

services were not essential for the operation of a minimum service at
an acceptable level would be prevented from striking if their

employer simply refused to conclude a minimum services agreement. It
was therefore the unions’ argument that although a collective

agreement arrived at by consensus differs in nature from an
arbitrator’s award which is imposed upon parties unable to
reach
consensus, both have binding force and therefore fulfil the
same function. Consequently, so it was argued, an arbitration award

can be viewed as an alternative form of a collective agreement –
and thus susceptible to ratification under s 72.
[22] The immediate problem that I have with this
argument is that a ‘collective agreement’ is defined in s
213 of the
LRA as meaning:

a
written agreement concerning terms and conditions of employment or
any other matter of mutual interest concluded by one or more

registered trade unions, on the one hand and, on the other hand
(a) one or more employers;
(b) one or more registered
employers’ organisations;
(c) one or more employers and
one or more registered employers’ organisations
.’
I do not see how an arbitration award could ever be
construed as being a collective agreement in terms of this definition
and, indeed,
counsel for the appellant conceded that it would be a
‘big ask’ (I adopt his phrase) for a court to do so.
Moreover,
s 72 envisages the ESC ratifying an agreement reached by
consensus. However if it was called upon to ratify an arbitration
award imposed due to a lack of consensus, any party
aggrieved by the award would probably seek to oppose ratification
which would
lead to the ESC being called on not to ratify the award
but to decide the dispute.
[23] In these circumstances I have no doubt the
legislature did not intend an arbitration award under s 74 to be
construed as a
collective agreement as envisaged in s 72 of the LRA.
That being so, and as questions as to the determination of essential
services
have been entrusted solely to the ESC, I do not see how a
dispute between employers and their employees about the terms of a
minimum
services agreement (which will determine between them what is
an essential service) can be construed as a dispute capable of
resolution
under s 74.
[24] It was argued by the unions that this could never
have been intended by the legislature as it would leave employees in
a designated
essential service whose services were not required to
provide an acceptable minimum operation in an essential service, but
who
were unable to reach agreement with their employer on a minimum
services agreement, high and dry and without any remedy to recover

their right to strike. The ESC, however, submitted that such workers
would not be without statutory protection as they could either

approach the ESC to vary or cancel the designation of the whole or
part of the service as an essential service under s 71(9)
or
invoke the provisions of s 73. The former option, although a
theoretical possibility, is hardly a practical one as it would

require the detailed procedures prescribed in ss 70(1) to (8) to
be followed – a time-consuming, costly and involved
procedure.
However dispute resolution under s 73 would not. The section
provides:

(1)
Any party to a dispute
about
either of the following issues may refer the dispute in writing to
the essential
services
committee ─
(a)
whether
or not a service is an essential
service;
or
(b)
whether
or not an employee or employer is engaged in a service designated as
an essential
service
.
(2) The party who refers the
dispute to the essential services committee must satisfy it that a
copy of the referral has been served
on all the other parties to the
dispute.
(3) The essential services
committee must determine the dispute as soon as possible.’
[25]
The
ESC’s contention in this regard is that as a minimum services
agreement, as between employer and employee, deals with
what is an
essential service and whether any employee or category of employees
should be regarded as being engaged in an essential
service, it is
empowered under s 73(1)
(a)
and
(b)
to determine a dispute between an employer and its
employees concerning the terms of a minimum services agreement. The
appellant
firmly opposed this. Its counsel argued that the conclusion
of the minimum services agreement was a voluntary matter so that, if

agreement could not be reached on the terms thereof, its employees
had no option but to ‘lump it’ (he apologised for
the
crudity of the phrase) – that being a consequence of the ESC’s
designation of the industry as an essential service.
The unions were
initially also somewhat dismissive of the ESC’s suggestion, as
although they were prepared to concede that
the issue of whether an
employee’s services were to be regarded as being essential
could be decided under s 73, they had
difficulty in accepting that
disputes in regard to what is an acceptable skeleton staff required
to work to provide a minimum service,
which is the true stumbling
block in the present case, are capable of being resolved under the
section. However their counsel gradually
warmed to the idea, stating
that the unions would accept it as ‘second prize’.
[26] Memories have clearly dimmed with the passage of
time. Dhaya Pillay, who was the chairperson of the ESC at the time
the appellant
concluded the initial minimum services agreement with
its employees in 1997, recounts
11
that in September 1997 a minimum services agreement
concluded between Eskom and certain trade unions was submitted to the
ESC for
ratification under s 72. However, although the agreement
would have been binding as between the appellant and those unions who
had signed this agreement, the position was unsatisfactory as there
were certain trade unions who had not agreed to the terms of
the
agreement. As the implementation of a minimum services agreement is
best effected through maximum cooperation of all the parties,
the ESC
invited Eskom and all the trade unions to meet to discuss the issue.
Eventually the parties agreed to disagree on whether
a certain part
of essential service was essential, and this disagreement was
referred to the ESC for determination as a dispute
under s 73(1)
(a)
.
A hearing was convened but, as evidence about the service unfolded,
the proceedings were interrupted and negotiations were resumed.
At
one stage the ESC pointed out that if a dispute arose as to whether a
particular employee was employed in an essential service,
it could be
dealt with by the committee under s 73(1)
(b)
.
In the light of this, the process resulted in consensus between the
parties and the signing of the minimum services agreement
which was
then ratified by the ESC.
[27] Of course the fact that in the past the provisions
of s 73 were used to negotiate the terms of a minimum services
agreement
does not mean that the section was correctly applied or
that the legislature intended it to be used in that way. Nevertheless
it
is of some illustrative significance that the parties themselves
at that stage successfully used those provisions for that purpose
.
[28] The issue is whether, properly construed, the
provisions in question are capable of being employed as suggested by
the ESC.
In interpreting statutes in the light of the Bill of Rights,
it is necessary to read the legislation ‘in ways which give
effect to its fundamental values’.
12
In regard to the LRA in particular, it is necessary to
remember that:

The
statute itself requires in s 3 that it be interpreted to give effect
to its primary objects, and in conformity with the Constitution

(Constitution of the Republic of South Africa (Act 108 of 1996)) and
South Africa’s public international law obligations.
Section 1
expresses the LRA’s primary objects amongst others as “to
give effect to and regulate the fundamental rights”
conferred
by s 23 of the Constitution (para
(a)
);
and to promote “orderly collective bargaining” (para
(d)
(i)).
“Conformity with the Constitution” entails inter alia
that the provisions of the LRA must be considered against
the
background of the Constitution, which is the supreme law of the land
and which itself requires that this court when interpreting
the LRA
promote the spirit, purport and objects of the Bill of Rights.

13
In a similar vein, in
South
African Police Service v Police and Prison’s Civil Rights Union
& another
Nkabinde
J reminded us that an important purpose of the LRA is to give effect
to the right to strike and that the process of interpretation
should
give effect to that purpose ‘so as to avoid impermissibly
limiting the right to strike’.
14
[29] Bearing the importance of the fundamental right to
strike in mind, the legislature would hardly have expected employees
working
within a designated essential service industry whose services
were not required in order to provide an acceptable minimum essential

service to have no remedy should agreement not be reached with their
employer on a minimum services agreement. One of the functions
of the
ESC is to determine disputes and alleged disputes on whether or not
the whole or part of any service is an essential service
– s
70(2)
(b)
– a function closely allied to that prescribed
in s 73(1)
(b)
viz to determine whether or not an employer or
employee is engaged in a service designated as an essential service.
And while a
‘minimum service’ is not defined in the LRA,
it is evident that s 72 had in mind a minimum service of a designated
essential service whereby the ambit of the designated essential
service is reduced as between employer and employees to the minimum

service ─ resulting in those employees who are not required to
perform the minimum service regaining the right to strike.
[30] In these circumstances, and in the context of a
minimum services agreement which, if ratified, is to be regarded
under s 72
(a)
as being ‘an essential service in respect
of the employer and its employees’, a dispute as to whether or
not the services
of certain employees or categories of employees are
required to maintain an acceptable minimum service is capable of
being construed
as a dispute in regard to whether such employees’
services are an ‘essential service’ or whether they are
‘engaged
in a service designated as an essential service’
as envisaged by s 73(1)
(a)
and
(b)
. Accordingly, for
example, the issue whether the services of employees who tend the
appellant’s gardens is an essential service
or whether such
persons are engaged in a service designated as an essential service,
seems readily to be capable of resolution
under this section. But by
the same token, a dispute as to how many employees in which
particular categories are necessary to provide
a minimum service at
an acceptable level, seems to me to be equally capable of being
construed as a dispute in regard to what service
should be regarded
as an essential service or the number and category of employees
needed to be engaged in the service designated
as an essential
service – and therefore susceptible to determination by the ESC
under s 73.
[31] This conclusion does no violence to the language
used in the section and places the least limitation upon the
fundamental right
to strike as it facilitates a process under which
the employees of an employer are not obliged to ‘lump it’
if agreement
cannot be reached on the terms of a minimum services
agreement in an industry in which their right to strike has been
curtailed.
[32] It follows in my view that the Labour Appeal Court
erred in finding that the dispute between the parties as to the terms
of
the minimum services agreement is a dispute which could be
conciliated or arbitrated under s 74 of the LRA. It is a dispute
which
the only the ESC could determine under the provisions of s 73
(as it contended in this court). The order of the Labour Appeal
Court
thus cannot be allowed to stand.
[33] In the result the following order is made:
(1) The appeal succeeds with the first and second
respondents being ordered to pay the costs of the appellant, such
costs to include
the costs of two counsel where so employed.
(2) The order of the Labour Appeal Court is set aside
and substituted with the following:

The appeal is dismissed, with costs.’
_____________________
L E Leach
Judge of Appeal
APPEARANCES:
For Appellant: R Sutherland SC (with him F Boda)
Instructed by:
Cliffe Dekker Hofmeyr Inc, Johannesburg
Naudes Inc, Bloemfontein
Lovius Block, Bloemfontein
For Respondent P Kennedy SC (with him H Barnes)
Instructed by:
Cheadle Thompson & Haysom, Johannesburg
McIntyre & Van der Post, Bloemfontein
For Intervening party N Cassim SC
Instructed by:
Routledge Modise t/a Eversheds
Johannesburg
Lovius Block, Bloemfontein
1
Established
under s 112 of the LRA.
2
South
African Police Service v Police and Prisons Civil Rights Union &
another
2011 (6) SA 1
(CC) para 20.
3
Section
36 of the Constitution.
4
See
eg Cooper ‘Strikes in Essential Services’ 1994 (15)
ILJ
903-4 and Roskam
Essential
and Minimum Services and the Right to Strike
(report prepared for the Employment Promotion Programme
http://www.commerce.uct.ac.za/research_units/dpru/?q=node/52
)
at 6-8.
5
Section
65(1)
(d)
(i).
6
Section
213.
7
Paragraph
1(f) of Government notice No 1216 of 12 September 1997.
8
The
precise meaning and effect of s 72
(b)
has been a matter of
debate and confusion that is unnecessary to attempt to resolve for
purposes of this judgment.
9
A
brief history of the negotiations leading up to and the
circumstances under which this agreement was concluded may be found

in Dhaya Pillay’s article ‘Essential Services Under The
New LRA’ 2001 (vol 22)
ILJ
1 at 29-31.
10
The
word ‘elide’ is not in common use. It is defined in the
Shorter Oxford English Dictionary as ‘to crush out’,
‘to
destroy (the force of evidence)’, ‘to omit (a vowel, or
syllable) in pronunciation’.
11
See
the article mentioned in footnote 9 at p 29-30.
12
Per
Harms DP in
Minister of Safety and Security v Sekhoto
2011
(5) SA 367
(SCA) para 15 referring to
Investigating
Directorate: Serious Economic Offences and others v Hyundai Motor
Distributors (Pty) Ltd & others; In re Hyundai
Motor
Distributors (Pty) Ltd & others v Smit NO and others
[2000] ZACC 12
;
2001
(1) SA 545
(CC)
(2000 (2) SACR 349
;
2000 (10) BCLR 1079)
paras
21-26.
13
Per
Cameron JA in
Chemical Workers Industrial Union v Plascon
Decorative (Inland) (Pty) Ltd
(1999) 20 ILJ 321 (LAC) para 18.
14
Note
2 above
para 30.