Solidarity Trade Union v National Economic Development and Development Council ('NEDLAC') and Others (2018/32607) [2018] ZAGPJHC 574 (14 September 2018)

80 Reportability

Labour Law

Brief Summary

Labour Law — Review of administrative decision — Application for review of NEDLAC's decision not to consider trade union's section 77 notice — Trade union contending that NEDLAC failed to follow its own procedural guidelines and unlawfully determined it lacked jurisdiction — Court finding that NEDLAC's decision was irrational and unlawful as it failed to consider whether the matter was of a socio-economic nature, thus warranting reconsideration of the trade union's application.

Comprehensive Summary

Summary of Judgment

1. Introduction

This matter concerned an urgent, opposed application for judicial review in the Gauteng Local Division, Johannesburg. The applicant, Solidarity Trade Union, sought to review and set aside a decision of the first respondent, the National Economic Development and Development Council (NEDLAC), relating to the processing of a notice delivered under section 77(1)(b) of the Labour Relations Act 66 of 1995 (LRA).

The review was directed at NEDLAC’s decision, communicated as having been made on 21 August 2018 following agreement by its Standing Committee on 17 August 2018, that Solidarity’s section 77 notice was to be deemed not to have been considered as contemplated in section 77(1)(c) of the LRA, with the consequence that any protest action flowing from the notice would not enjoy statutory protection under the LRA.

The second and third respondents were the Presidency of the Republic of South Africa and the Minister of Trade and Industry, respectively. Although they were the intended respondents to Solidarity’s demands in the section 77 process, they played no part in the proceedings before the High Court, and were likewise not involved at NEDLAC level in light of the stance taken by NEDLAC’s Standing Committee.

The general subject-matter of the dispute was whether NEDLAC had jurisdiction and power to consider Solidarity’s section 77(1)(b) notice, which related to concerns about certain Employee Share Ownership Plans (ESOPs) said to be connected to BBBEE/BEE legislative provisions and related schemes, and whether protest action could be pursued as protected protest action under section 77 of the LRA.

2. Material Facts

On 25 July 2018, Solidarity served on NEDLAC a notice in terms of section 77(1)(b) of the LRA. The notice set out Solidarity’s reasons for intended protest action and the nature of that protest action, as section 77(1)(b) requires. NEDLAC convened a meeting on 17 August 2018 at which Solidarity made oral submissions intended to clarify the contents of its notice.

Solidarity’s complaint, as relied upon by the court, was that certain ESOPs—including those proposed and adopted by companies in South Africa such as Sasol and Vodacom, and then in the process of being implemented—constituted unfair and unlawful conduct allegedly prejudicial to Solidarity’s members. Solidarity asserted that these ESOPs infringed the socio-economic rights and interests of its members, and further contended that the ESOPs were also prejudicial to the socio-economic and other rights of members of the public more generally.

NEDLAC, through its Standing Committee, adopted the position that it lacked authority to consider Solidarity’s demands as contained in the section 77 notice because, in its view, the issues implicated the interpretation, application, and implementation of BBBEE/BEE legislation and policies, which NEDLAC contended fell outside its powers. NEDLAC’s stance was premised on its understanding of its founding instruments and enabling framework, including the proposition that its competence was confined to considering significant policy changes before implementation or, in the case of legislation, before introduction into Parliament.

Solidarity approached the High Court on an urgent basis, contending (as accepted by the court) that absent expedited relief, Solidarity’s ability to embark on protected protest action under section 77 would effectively be placed on hold while the effects of the ESOPs would continue to prejudice its members. The court accepted that the matter was urgent.

3. Legal Issues

The central question for determination was crisply framed by the court as whether NEDLAC had correctly decided that it lacked the necessary jurisdiction to consider Solidarity’s referral under section 77 of the LRA.

Although Solidarity advanced both procedural and substantive grounds of review—procedurally invoking compliance with NEDLAC’s own guidelines and contending non-compliance with section 4 of the Promotion of Administrative Justice Act 3 of 2000 (PAJA), and substantively challenging the rationality and lawfulness of NEDLAC’s jurisdictional conclusion—the court identified the decisive issue as one of law, namely the proper interpretation and application of NEDLAC’s powers under its enabling legislation to the undisputed fact that a section 77 notice had been submitted and rejected on jurisdictional grounds.

The dispute therefore primarily concerned a legal question (NEDLAC’s statutory authority and jurisdiction), together with the application of that law to the facts (whether the subject matter of Solidarity’s notice was capable of being considered by NEDLAC within its statutory remit).

4. Court’s Reasoning

The court approached the matter by focusing on the statutory scheme governing protected protest action under section 77(1) of the LRA, emphasising in particular the requirement in section 77(1)(c) that “the matter giving rise to the intended protest action” must have been considered by NEDLAC or another appropriate forum in which the parties concerned can participate to resolve the matter.

In addressing the character of “socio-economic” interests, the court referred to the statement by Mlambo J (as he then was) in Government of Western Province v Congress of South Africa Trade Unions and Another (Case no: C162/98), to the effect that there is no all-embracing definition of “socio-economic interests of workers”, and that the scope was left wide in the LRA such that overly strict definition would be contrary to the Act’s design. This reference framed the context in which section 77 protest action is intended to operate, although the decisive reasoning in this judgment turned on NEDLAC’s statutory powers and functions rather than a final determination of the socio-economic character of the dispute.

NEDLAC’s opposition was based on an asserted limitation of its authority to considering significant social and economic policy changes only before implementation or before introduction of legislation into Parliament. The court evaluated that contention by reference to the National Economic, Development and Labour Council Act 35 of 1994 (the NEDLAC Act), particularly section 5, which sets out NEDLAC’s objects, powers and functions.

The court held that, on the text of section 5, NEDLAC’s statutory powers were sufficiently broad to empower it to do what Solidarity sought. The court highlighted section 5(2)(f) in particular, which empowers NEDLAC to work in close co-operation with state departments, statutory bodies, programmes and other forums and non-governmental agencies engaged in the formulation and the implementation of social and economic policy. The court reasoned that, even on this provision alone, NEDLAC was empowered to consider Solidarity’s request as set out in its section 77(1)(b) notice.

On that basis, the court concluded that NEDLAC’s contention that it lacked power to entertain Solidarity’s section 77(1)(b) application had no merit. The jurisdictional refusal was therefore susceptible to review, and the decision deeming the notice not to have been considered, with the resultant declaration that protest action would not be protected, stood to be reviewed and set aside.

Having found that NEDLAC’s jurisdictional stance was wrong in law, the court ordered that the matter be remitted to NEDLAC for consideration under section 77(1)(c) in accordance with NEDLAC’s applicable procedure guideline.

5. Outcome and Relief

The court granted the urgent review application.

The decision of NEDLAC dated 21 August 2018, arising from the Standing Committee’s agreement on 17 August 2018, was reviewed and set aside. This was the decision that Solidarity’s notice be deemed not to have been considered in accordance with section 77(1)(c) of the LRA, and that the protest action envisaged in the notice would therefore not be protected under the LRA.

Solidarity’s section 77(1)(b) notice and application dated 25 July 2018 was remitted to NEDLAC for consideration in terms of section 77(1)(c) of the LRA, in accordance with NEDLAC’s Procedure for Considering Notices of Possible Protest Action.

NEDLAC was ordered to pay Solidarity’s costs of the urgent application, including costs relating to the hearings on 11 September 2018 and 13 September 2018.

Cases Cited

Government of Western Province v Congress of South Africa Trade Unions and Another (Case no: C162/98)

Legislation Cited

National Economic, Development and Labour Council Act 35 of 1994

Labour Relations Act 66 of 1995

Promotion of Administrative Justice Act 3 of 2000

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that NEDLAC’s decision that it lacked jurisdiction to consider Solidarity’s section 77(1)(b) notice was incorrect in law, having regard to the breadth of NEDLAC’s empowering provisions under section 5 of the NEDLAC Act, including its authority to co-operate with bodies involved in the formulation and implementation of social and economic policy. Consequently, the decision deeming Solidarity’s notice not to have been considered under section 77(1)(c) of the LRA, and the associated conclusion that protest action would not be protected, was reviewed and set aside, and the notice was remitted to NEDLAC for proper consideration.

LEGAL PRINCIPLES

Section 77 of the Labour Relations Act 66 of 1995 establishes a statutory framework for protected protest action to promote or defend the socio-economic interests of workers, subject to compliance with the procedural requirements in section 77(1), including consideration of the matter by NEDLAC or another appropriate forum as contemplated in section 77(1)(c).

The ambit of “socio-economic interests of workers” is not susceptible to an all-encompassing definition and is context-dependent; the scope is left wide rather than narrowly confined, consistent with the LRA’s design, as reflected in the approach referenced from Government of Western Province v Congress of South Africa Trade Unions and Another (Case no: C162/98).

NEDLAC’s powers and functions under section 5 of the National Economic, Development and Labour Council Act 35 of 1994 are framed broadly. In particular, section 5(2)(f) empowers NEDLAC to co-operate with state departments and other bodies engaged in both the formulation and implementation of social and economic policy, supporting the conclusion that NEDLAC is not confined only to pre-implementation or pre-Parliamentary consideration in the manner asserted by it in this dispute.

Where a statutory body refuses to consider a matter on an incorrect understanding of its jurisdiction under its enabling statute, that jurisdictional determination is reviewable and may be set aside, with the matter remitted for reconsideration in accordance with the proper legal framework and applicable internal procedures.