Free Market Foundation v Minister of Labour and Others (13762/13) [2016] ZAGPPHC 266; (2016) 37 ILJ 1638 (GP); [2016] 3 All SA 99 (GP); 2016 (4) SA 496 (GP); [2016] 8 BLLR 805 (GP) (4 May 2016)

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[2016] ZAGPPHC 266
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Free Market Foundation v Minister of Labour and Others (13762/13) [2016] ZAGPPHC 266; (2016) 37 ILJ 1638 (GP); [2016] 3 All SA 99 (GP); 2016 (4) SA 496 (GP); [2016] 8 BLLR 805 (GP) (4 May 2016)

IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
DATE:
4 May 2016
CASE
NO:
13762/13
Not
reportable
Not
of interest to other judges
Revised.
In
the matter between:
FREE
MARKET
FOUNDATION
Applicant
and
THE
MINISTER OF
LABOUR
First
Respondent
THE
MINISTER OF JUSTICE AND
CONSTITUTIONAL
DEVELOPMENT
Second
Respondent
THE
BARGAINING COUNCILS LISTED
IN
ANNEXURE
“A”
Third
to Fiftieth Respondents
NUMSA
Fifty
First Respondent
SOUTHERN
AFRICAN CLOTHING AND
TEXTILE
WORKERS’ UNION
(SACTWU)
Fifty
Second Respondent
JUDGMENT
MURPHY
J
1.
This application concerns a significant constitutional challenge to
the system of collective bargaining in South Africa, and
more
particularly to section 32 of the Labour Relations Act
[1]
(“the LRA”).
2.
The applicant, the Free Market Foundation (“FMF”), is an
independent policy research and education organisation promoting
the
principles of limited government, economic freedom and individual
liberty. It is inspired by classical liberal principles and
believes
in an open society founded on the rule of law, human rights, economic
freedom and democracy.
3.
The respondents are the Minister of Labour, the Minister of Justice
and Constitutional Development and forty-seven bargaining
councils
identified in Annexure A of the notice of motion. In addition, the
Congress of South African Trade Unions (“COSATU”),
the
National Union of Metalworkers of South Africa (“NUMSA”)
and the Southern African Clothing and Textile Workers
Union
(“SACTWU”) intervened in the matter and were joined as
respondents.
4.
Section 23(5) of the Constitution enshrines the right to collective
bargaining. It provides:
“
Every trade union,
employers’ organisation and employer has the right to engage in
collective bargaining. National legislation
may be enacted to
regulate collective bargaining. To the extent that the legislation
may limit a right in this Chapter, the limitation
must comply with
section 36(1).”
5.
The national legislation contemplated in section 23(5) of the
Constitution is the LRA. Section 36(1) of the Constitution is the

provision allowing for the limitation of the rights in the Bill of
Rights by measures which are reasonable and justifiable in an
open
and democratic society.
6.
Section 1 of the LRA specifies the purpose of the LRA as follows:
“
The purpose of
this Act is to advance economic development, social justice, labour
peace and the democratisation of the workplace
by fulfilling the
primary objects of this Act, which are:-
(a) to give effect to and
regulate the fundamental rights conferred by section 23 of the
Constitution;
(b) to give effect to
obligations incurred by the Republic as a member state of the
International Labour Organisation;
(c) to provide a
framework within which employees and their trade unions, employers
and employers’ organisations can-
(i) collectively bargain
to determine wages, terms and conditions of employment and other
matters of mutual interest; and
(ii) formulate industrial
policy; and
(d) to promote-
(i) orderly collective
bargaining;
(ii) collective
bargaining at sectoral level;
(iii) employee
participation in decision-making in the workplace; and
(iv) the effective
resolution of labour disputes.”
7.
Section 3 of the LRA requires any person applying the LRA to
interpret its provisions to give effect to its primary objects;
in
compliance with the Constitution; and in accordance with the public
international law obligations of the Republic. In
Chirwa
v Transnet Ltd and others
[2]
the Constitutional Court stated that the objects of the LRA set out
in section 1 are not just textual aids to be employed where
the
language is ambiguous, rather the primary objects must inform the
interpretive process and the provisions of the LRA must be
read in
the light of its objects. The objects of particular relevance to the
constitutional challenge by FMF to section 32 of the
LRA are those
aimed at promoting orderly collective bargaining and collective
bargaining at sectoral level.
8.
Section 32 of the LRA permits the extension of collective bargaining
agreements concluded at sectoral level to persons not directly

involved in the collective negotiations and not party to the
agreement concluded in the bargaining forum, being the relevant
bargaining
council. Government policy favours such an arrangement
because it is perceived to advance: (i) the promotion of collective
bargaining
at sectoral level; (ii) the promotion of majoritarianism;
(iii) the prevention of unfair competition; (iv) the benefit of
workers
who have no collective bargaining strength to negotiate wages
and terms and conditions of employment; and (v) a pluralistic system

of industrial relations based on voluntarism (self-regulation) rather
than state interference in the collective bargaining relationship.
[3]
9.
The FMF questions the economic efficacy and morality of these policy
objectives. Its attack on the system is predicated upon
a free market
perspective opposed to the prevailing orthodoxy. From its ideological
standpoint, sectoral bargaining and the extension
of the products of
it to non-participants, far from advancing the protection of
vulnerable workers, are an impediment to the growth
of small
businesses resulting in less job creation and a higher rate of
unemployment. The present litigation is part of its broader
campaign
aimed at confronting government policy in the hope of infusing it
with a more libertarian dimension. The FMF’s position
at the
time it filed the application was that section 32 infringes various
fundamental rights enshrined in the Bill of Rights,
[4]
including the rights to equality, freedom of association,
administrative justice, dignity and fair labour practices. After the

respondents filed their answering affidavits, the FMF narrowed the
dispute by abandoning all its attacks upon section 32 of the
LRA
based on alleged violations of the Bill of Rights. Its challenge has
been reduced now to a claim that section 32 of the LRA
violates the
principle of legality under section 1(c) of the Constitution,
[5]
the so-called rule of law provision, because it permits the extension
of collective agreements to non-parties contrary to the public

interest by persons ostensibly not subject to adequate state
supervision. The constitutional principle of legality is an aspect
of
the rule of law and constrains the use of all public power. Its
precise content is matter for casuistic development by the courts.

The FMF sought to persuade us that legality requires all governmental
power to be exercised in the public interest.
Section
32 of the LRA: text, statutory context, scope and purpose
10.
The relevant part of section 32 of the LRA reads as follows:
“
(1) A bargaining
council may ask the Minister in writing to extend a collective
agreement concluded in the bargaining council to
any non-parties to
the collective agreement that are within its registered scope and are
identified in the request, if at a meeting
of the bargaining council-
(a) one or more
registered trade unions whose members constitute the majority of the
members of the trade unions that are party
to the bargaining council
vote in favour of the extension; and
(b) one or more
registered employers’ organisations, whose members employ the
majority of the employees employed by the members
of the employers’
organisations that are party to the bargaining council, vote in
favour of the extension.
(2) Within 60 days of
receiving the request, the Minister must extend the collective
agreement as requested, by publishing a notice
in the Government
Gazette declaring that, from a specified date and for a specified
period, the collective agreement will be binding
on the non-parties
specified in the notice.
(3) A collective
agreement may not be extended in terms of subsection (2) unless the
Minister is satisfied that –
(a) the decision by the
bargaining council to request the extension of the collective
agreement complies with the provisions of
subsection (1);
(b) the majority of all
the employees who, upon extension of the collective agreement, will
fall within the scope of the agreement,
are members of the trade
unions that are parties to the bargaining council;
(c) the members of the
employers’ organisations that are parties to the bargaining
council will, upon the extension of the
collective agreement, be
found to employ the majority of all the employees who fall within the
scope of the collective agreement;
(d) the non-parties
specified in the request fall within the bargaining council’s
registered scope;
(dA) the bargaining
council has in place an effective procedure to deal with applications
by non-parties for exemptions from the
provisions of a collective
agreement and is able to decide an application for an exemption
within 30 days.
(e) provision is made in
the collective agreement for an independent body to hear and decide,
as soon as possible and not later
than 30 days after the appeal is
lodged, any appeal brought against:
(i) the bargaining
council’s refusal of a non-party’s application for
exemption from the provisions of the collective
agreement;
(ii) the withdrawal of
such an exemption by the bargaining council;
(f) the collective
agreement contains criteria that must be applied by the independent
body when it considers an appeal, and that
those criteria are fair
and promote the primary objects of this Act; and
(g) the terms of the
collective agreement do not discriminate against non-parties.
(3A) No representative,
office bearer or official of a trade union or employer’s
organisation party to the bargaining council
may be a member of, or
participate in the deliberations of the appeal body established in
terms of subsection (3)(e).
(4) …
(5) Despite subsection
(3)(b) and (c), the Minister may extend a collective agreement in
terms of subsection (2) if –
(a) the parties to the
bargaining council are sufficiently representative within the
registered scope of the bargaining council;
and
(b) the Minister is
satisfied that failure to extend the agreement may undermine
collective bargaining at sectoral level or in the
public service as a
whole;
(c) the Minister has
published a notice in the Government Gazette stating that an
application for an extension in terms of this
subsection has been
received, stating where a copy may be inspected or obtained, and
inviting comment within a period of not less
than 21 days from the
date of the publication of the notice;
(d) the Minister has
considered all comments received during the period referred to in
paragraph (c).
(5A) When determining
whether the parties to the bargaining council are sufficiently
representative for the purpose of subsection
(5)(a), the Minister may
take into account the composition of the workforce in the sector,
including the extent to which there
are employees assigned to work by
temporary employment services, employees employed on fixed term
contracts, part-time employees
or employees in other categories of
non-standard employment.”
11.
Section 32 of the LRA must be read and interpreted in the context of
Part C of the LRA dealing with bargaining councils. Our
law has never
compelled the formation of centralised bargaining structures at
industry level, nor has it prohibited bargaining
outside the
statutory framework. Resort to the statutory framework was necessary
only if the parties wanted their collective agreements
to have
statutory effect at industry or sectoral level. In the legislative
scheme which existed prior to the enactment of the LRA
in 1996, the
statutory centralised bargaining forums were the industrial councils
formed by registered trade unions and employers
or employers’
organisations. The LRA preserved this voluntarist policy. The
formation of bargaining councils remains voluntary,
requires the
collaboration of both industrial partners and is accomplished by a
simple process of registration.
[6]
However, in order to promote sectoral bargaining, the LRA offers a
range of inducements for participation in bargaining councils
(for
example preferential workplace access and stop order rights).
12.
The primary functions of bargaining councils
[7]
are to conclude and enforce collective agreements in relation to
terms and conditions of employment or matters of mutual interest;
and
to prevent and resolve labour disputes. The residual functions of
bargaining councils include the power to promote, establish
and
administer various schemes including training, education, pension,
medical aid, sick pay, and unemployment schemes or funds.
Section
28(h) of the LRA confers upon bargaining councils the function of
developing policy and legislation proposals for consideration
by
relevant policy making bodies.
13.
Collective agreements are the end product of collective bargaining.
The legal effect of a collective agreement is governed by
section 23
of the LRA. A collective agreement in the first instance
contractually binds the parties to it. In terms of section
23(1)(b)
of the LRA, a collective agreement establishes contractual rights and
obligations between each party to the agreement
and the members of
every other party to the agreement in so far as the provisions are
applicable to them. It will also create rights
and obligations
between members of a union party to the agreement and employer
members of an employer organisation party in relation
to terms and
conditions of employment. And finally, section 23(1)(d) of the LRA
provides that a collective agreement binds employees
who are not
members of the union parties to the agreement provided the union
represents a majority of employees in the workplace,
provided further
that those employees are expressly identified and expressly bound in
the collective agreement. This provision
binding non-parties to the
agreement operates at workplace level.
14.
Section 31 of the LRA regulates the legal effect of collective
agreements concluded in bargaining councils. A collective agreement

concluded in a bargaining council binds only the parties to the
council who are parties to the collective agreements. Parties to
the
council who are not party to the collective agreement will not be
bound to it. This section altered the legislative dispensation

existing before 1996. Under section 27(7) read with section 48 of the
Labour Relations Act 28 of 1956 it was possible for a collective

agreement to be made binding by an industrial council on parties to
the council who were not party to the agreement. Nowadays,
under the
1996 Act, in order for parties to the council who are not parties to
the collective agreement to become bound to it,
the agreement must be
extended to them in terms of section 32 of the LRA. Thus, the term
“any non-parties” referred
to in section 32(1) of the LRA
comprises two categories: i) parties to the council who are not party
to the collective agreement;
and ii) non-parties to the council.
15.
Section 31(b) and (c) of the LRA provide for the members of parties
to a bargaining council collective agreement to be bound
to the
parties to the agreement.
16.
Within this legislative scheme, section 32 of the LRA, the impugned
provision, is the means whereby a bargaining council may
extend the
product of sectoral bargaining to non-parties to the agreement within
its registered scope that would otherwise not
be bound by it.
17.
There are a number of juridical acts at play in the process leading
to the extension of collective agreements to non-parties
at sectoral
level.
18.
Firstly, there are the contractual negotiations between the parties
in the bargaining council which ultimately result in the
conclusion
of the collective agreement.
19.
Secondly, there is the decision taken by the bargaining council
asking the Minister to extend the collective agreement to any

non-parties to the collective agreement. Section 32(1) of the LRA
stipulates a number of legal pre-requisites to the bargaining

council’s action. The collective agreement in question must be
concluded in the bargaining council. The decision to ask the
Minister
to extend it to non-parties must be by way of a resolution taken at a
bargaining council meeting. The resolution must
be supported by one
or more trade unions whose members constitute the majority of members
of all the trade union parties to the
council. Likewise, the
resolution must be supported by one or more employer’s
organisations which employ the majority of
employees employed by the
employer organisation members who are party to the council. The
request to the Minister must be in writing.
The non-parties sought to
be bound must be identified in the written request to the Minister
and they must fall within the registered
scope of the council.
20.
The third juridical act in the process of extension is the decision
of the Minister to extend the agreement in terms of sections
32(2)
and 32(3) of the LRA. The Minister’s decision-making power in
terms of these provisions is the main target of the FMF

constitutional challenge; the objection being that the duty of the
Minister to extend the agreement is in effect non-discretionary
or
mechanical and subject to limited judicial supervision. The Minister
“must” extend the collective agreement as requested.

However, before the Minister acquires jurisdiction to extend the
collective agreements, the conditions precedent to jurisdiction,
the
jurisdictional facts, specified in section 32(3) of the LRA must be
fulfilled. These are: firstly, the Minister must be satisfied
that
the numerical requirements of majoritarianism have been met;
[8]
secondly, the decision of the bargaining council must comply with the
legal pre-requisites of section 32(1);
[9]
thirdly, there must be in existence an effective exemption procedure
applying fair criteria for exemption promoting the primary
objects of
the LRA;
[10]
and fourthly, the
terms of the collective agreement must not discriminate against
non-parties.
[11]
If the
jurisdictional facts are present, the Minister “must”
extend the collective agreement as requested within 60
days of
receiving the request. She does so by publishing a notice in the
Government Gazette declaring the collective agreement
to be binding
on the specified non-parties from a specified date and for a
specified period.
21.
The non-discretionary duty (mechanical power) of the Minister to
extend bargaining council collective agreements applies only
in
situations where the majority of employees who will be covered by the
agreement once extended are members of trade unions that
are parties
to the council. This means, among other things, that the membership
of minority unions who are party to the council,
but who are not
party to the collective agreement, will be taken into account in
determining whether the numerical threshold for
extension has been
reached. The additional threshold numerical requirement is that the
members of employers’ organisations
party to the agreement must
employ the majority of all the employees within the scope of the
collective agreement once it is extended.
22.
The numerical thresholds of the level of majoritarianism required by
section 32(3) of the LRA are therefore in fact quite high;
and in
practice may prove difficult to achieve. Any obstacle of this order
can be overcome by resort to section 32(5) of the LRA.
23.
Section 32(5) confers a discretion upon the Minister to extend a
collective agreement to non-parties when the numerical thresholds
in
section 32(3)(b) and (c) have not been attained. Where the
requirements of majoritarianism are absent, the Minister “may”

extend the agreement provided other jurisdictional conditions are
present. The conditions precedent to the exercise of that discretion

are: i) a requirement that the parties to the bargaining council (not
necessarily the collective agreement) are sufficiently representative

within the registered scope of the council; ii) the Minister is
satisfied that the failure to extend the agreement may undermine

collective bargaining at sectoral level or in the public service as a
whole; and iii) the Minister has invited and considered comments
on
the application for extension as contemplated in section 32(5)(c) and
(d) of the LRA. If the jurisdictional facts exist the
Minister must
apply her mind and exercise the discretion to extend the collective
agreement or not. It is important to note that
section 208A(1) of the
LRA prohibits the Minister from delegating any of the powers,
functions and duties conferred upon her by
section 32. The Minister
accordingly must personally decide whether to extend the agreement in
terms of section 32(5).
24.
The other juridical act which can come into play after a collective
agreement is extended is a decision in relation to an application
for
exemption. Section 32 requires bargaining councils wanting to extend
collective agreements to have in place effective procedures
to deal
with applications by non-parties for exemption from the provisions of
a collective agreement and an independent appeal
body to determine
appeals against refusals and withdrawals of exemptions.
[12]
Background
to the enactment of section 32 of the LRA
25.
This scheme for the extension of collective agreements concluded in
bargaining councils differs markedly from that which existed
prior to
the enactment of the LRA in 1996. Under section 48 of Act 28 of 1956,
the Minister had a wide discretion to accede to
a request for
extension of an agreement concluded in an industrial council or not.
He could extend the agreement if he deemed it
expedient to do so. In
terms of section 48(2)(b) he had nonetheless to satisfy himself that
the parties to the agreement were sufficiently
representative of the
employees and employers in the industry. In determining whether it
was expedient to extend a collective agreement
to non-parties, the
Minister in practice would take into account i) the restrictive
effect of the provisions on business practices;
ii) the degree of
consultation with non-parties and the extent to which their views had
been given consideration by the council;
iii) the allowance made for
wage differentiation on an area basis; iv) the provision made for
small employers or new entrants to
the industry; and v) the
opportunities for small employers to obtain exemption from the
agreement.
[13]
26.
In heads of argument filed on behalf of the 20
th
respondent, the Metal and Engineering Industries Bargaining Council,
Mr Myburgh SC sketched the background to the change of legislative

policy and the political decision to constrain the discretion of the
Minister in section 32(2) and (3) of the LRA. There is no
dispute
about this history.
27.
In 1988 COSATU laid a complaint with the International Labour
Organisation (“ILO”) regarding the discretion of the

Minister not to promulgate collective agreements concluded in an
industrial council. This led to an investigation by an ILO Fact

Finding and Conciliation Commission (“FFCC”) in 1992. In
its report the FFCC emphasised that the Minister should proceed

cautiously in deciding whether to promulgate collective agreements
with the effect of converting them from contractual arrangements
to a
form of subordinate legislation. The system of industrial pluralism
and voluntarism expects the public authorities to refrain
from any
interference in order to modify the content of collective bargaining.
It concluded:
“
The Commission is
not required by its mandate to examine the exercise by the Minister
of his discretion in particular cases. However,
if the principle of
non-interference in freely concluded agreements is to be respected,
s48(1) should be amended in order that
the Minister’s role in
checking concluded agreements remains a technical one. Its purpose
should simply be to verify questions
of form or compliance with
overriding statutory provisions, such as the minimum standards set
out in the labour law. In such a
context, once he has been presented
with a request for promulgation, he should proceed to do so without
intervening in the contents.”
[14]
28.
This pronouncement, though limited to a recommendation regarding
promulgation of collective agreements as opposed to their extension

to non-parties, was relied upon by government to opt for a scheme of
extension that provides for less executive interference in
the
extension of collective agreements to non-parties. The requirement in
section 32(2) of the LRA that the Minister “must”
extend
the agreement once the jurisdictional facts are established, is
predicated upon the notion that collective bargaining at
sectoral
level will be undermined if bargaining agents in a majoritarian
setting were uncertain at the outset of negotiations about
whether or
not their agreements would be extended in terms of section 32(2) of
the LRA. An advantage from the employer perspective
is that an
extended sectoral agreement will become binding on trade union
members within the workplace of a particular employer
who are not
party to the council or the collective agreement with the result
often that they will be prohibited from taking industrial
action over
matters dealt with in the agreement by virtue of peace clauses in the
agreement and the provisions of section 65(1)(a)
of the LRA.
[15]
The compulsory extension of a majority collective agreement can
ensure orderly industrial relations and be an effective progenitor
of
industrial peace.
29.
Parliament when enacting the LRA therefore deliberately refrained
from conferring a wide discretion upon the Minister to extend

collective agreements to non-parties in those cases where the
numerical thresholds of majoritarianism are achieved. Self-regulation

on the basis of majoritarianism and voluntarism is a cornerstone of
the policy of industrial pluralism. Parliament’s choice
to make
the exemption process the main safety valve to protect the interests
of non-parties, the Minister believes, is legitimate
and justifiable.
Parliament recognised that a broad Ministerial discretion over
extensions would create uncertainty and weaken
the effectiveness of
collective bargaining. Reiterating the FFCC’s line of thinking,
the Minister affirmed her view that
orderly bargaining would be
eroded if the parties know that notwithstanding their endeavours and
hard fought agreements the Minister
had an open-ended discretion to
refuse to extend the collective agreements or to alter their terms.
Parties would have less incentive
to participate in collective
bargaining at sectoral level and would instead be incentivised to
redirect their efforts to lobbying
in an effort to persuade the
Minister. The limits on the Minister’s discretion are
ameliorated by the provision of an effective
remedy to aggrieved
non-parties in the form of an independent and impartial exemption
process.
An
overview of the FMF challenge
30.
The shift in policy in relation to the discretionary powers of the
Minister to extend collective agreements to non-parties is
at the
heart of the FMF’s constitutional challenge. As noted already,
the FMF initially mounted a wide-ranging attack on
section 32 of the
LRA in the form of a Bill of Rights review on various grounds. It has
now jettisoned most of these and relies
solely on the principle of
legality.
31.
The FMF furthermore placed substantial reliance on expert opinion
evidence and academic commentary taking issue with the economic

merits of the extension mechanism. With its change of stance, it has
backed away from engaging fully with this evidence as well.
The
economic debate has attracted media attention, generating interest
among members of the public, and remains relevant as background
to
the issues at stake. It is thus deserving of brief mention.
32.
The expert reports say that the system of extension, by equating a
grouping of organised employees and employers who share a
common
interest with counterparts who share no such common interest, erects
barriers to entry that operate to the detriment of
small firms and
the unemployed. Trade unions have a natural interest in inflating the
benefits their members receive from employment.
They are consequently
inclined to prevent undercutting by non-members. Binding non-members
by extending collective agreements setting
mandatory standards for
wages and working conditions makes undercutting more difficult. Some
employers also have a corresponding
interest in inflating the levels
at which labour is hired. Higher wages and standards increase the
costs of production for new
entrants to the industry, or those who
dissent, and thus provide a brake on unwanted competition to
established businesses. The
FMF claims the results are highly
prejudicial. Unemployment is made appreciably worse and
entrepreneurship is retarded to a material
degree. If such
“rent-seeking” is to be countenanced, then, says the FMF,
proper supervision by the state is necessary.
33.
This line of thinking and the legitimate concerns it raises form the
sub-text of the FMF challenge. The FMF recognises that
our
constitutional landscape embraces industrial pluralism, collective
bargaining and the setting of minimum standards. While it
frankly
does not embrace the system, it accepts it as the prevalent reality.
It would prefer however to see the system subject
to more effective
state control and judicial supervision. Its stance is summarised in
paragraph 13.3 of the founding affidavit
deposed to by its
chairperson, Mr Herman Mashaba, as follows:
“
Finally, it is not
disputed in these proceedings that the state may, by way of
ministerial regulation properly designed to promote
the public
interest, impose terms and conditions of employment on employers and
employees within the economy. Whether this is economically
desirable
is a matter on which the FMF has considered views, but this is a
matter beyond the compass of this application. In addition,
the FMF
accepts, for the purposes of this application that the State can, in
formulating such regulations, take the counsel of
experts and even
interest groups such as bargaining councils. What the FMF does say,
however, is that the decision on the terms
to impose must be that of
the State and, under our Constitution, it must ultimately be actuated
by a genuine understanding of the
public interest that is informed by
a proper application of the tenets of due process. The LRA’s
breach of these requirements
provides a basis for challenge not just
through the political process but also through the courts.”
34.
From this point of departure, the FMF contests the notion that
bargaining councils (in its view “private actors”)
can,
without breaching the dictates of the Constitution, be entrusted by
law with an autonomous coercive power to impose terms
and conditions
of employment on others. This, it contends, is what section 32 of the
LRA achieves by making it obligatory for the
Minister to heed a
request by a bargaining council for the extension to non-parties of
collective agreements concluded in the council.
It objects especially
to the mechanical non-discretionary power conferred upon the Minister
in terms of section 32(2) of the LRA,
and submits that the tenets of
constitutionality require that if terms and conditions of employment
are to be imposed, this can
only properly be done by an organ of
state (the Minister) appropriately charged with a substantive
discretion that is to be exercised
in the public interest and in
accordance with the principles of procedural fairness. Since no
provision is made in section 32 for
this kind of discretion or
adequate due process, section 32, in its view, is unconstitutional
for that reason.
35.
The FMF originally advanced two bases for its constitutional
challenge. The first, which I have just described, is to the effect

that section 32 impermissibly entrusts coercive statutory powers to
private actors. The second was that employment conditions are
imposed
on third parties in breach of the majoritarian principle. It all but
abandoned the second challenge in the course of argument,
while in
relation to the first it opted to narrow the scope of the attack by
constituting its case exclusively on the principle
of legality and
eschewing reliance upon any Bill of Rights violation.
The
majoritarian principle in collective bargaining and its alleged
adverse impact
36.
Although the FMF’s change in strategy has obviated the need to
canvass the alleged unconstitutional breach of the majoritarian

principle, majoritarianism is a relevant feature in assessing the
constitutionality of the statutory scheme. It is necessary therefore

to refer briefly to the FMF’s abandoned argument, as it casts
some light upon the nature and application of the majoritarian

principle under section 32 of the LRA.
37.
The usual justification for the extension of collective agreements to
non-parties is the assumed legitimacy, on the basis of
the principle
of majority rule, in propping up the collective bargain to prevent
undercutting. The system established by section
32 of the LRA,
according to the FMF, is however not one of true majority rule.
Firstly, the parties seeking extension need not
represent the
majority of employers and employees in the sector. Under section
32(1) of the LRA it is sufficient if the union side
represents a
majority of trade union members of the unions party to the council
and the employer side employs a majority of the
employees employed by
employer members of the bargaining council. Be that as it may,
section 32(3) introduces a more stringent
requirement in relation to
the decision by the Minister to accede to the bargaining council
request for extension. The Minister
can only extend the agreement if
the majority of employees within the scope of the extended agreement
are members of the trade
unions party to the council and are employed
by the employer parties. However, those employees need not be members
of the unions
assenting to the agreement. It is enough that they are
members of unions that are party to the council, even if such unions
do
not concur in the agreement. As the FMF put it, dissenters are
treated as if they are assenters. The numerical strength or
representivity
of the employers is not relevant. The applicable
consideration is the number of employees employed. A single employer
employing
the majority of workers in a sector, acting in concert with
the unions, can determine terms and conditions for all employers in

the sector. Moreover, the principle of majoritarianism is diluted by
the power of the Minister to jettison the requirements of

majoritarianism completely under section 32(5) of the LRA if
satisfied that the parties to the council are sufficiently
representative
and extension will serve orderly collective bargaining
at sectoral level. The FMF demurred further that in framing the
constituency
within which the computation of representativeness is to
be made, the LRA fails to bring prospective entrants to the industry
into
account.
38.
These derogations from true majoritarianism, the FMF contended,
constitute a breach of the principles entrenching equality in
section
9 and the freedom of association in sections 18 and 23 of the Bill of
Rights. How exactly that is the case, was not fleshed
out completely
in the founding affidavit. With its change of tack the FMF did not
persist with this line of argument and limited
itself to the
assertion that the mode of computation is not legitimate.
39.
The respondents, COSATU in particular, have put up a spirited defence
of majoritarianism and dispute the correctness of the
economic
impacts alleged in the expert reports. To the extent that any
fundamental right might be limited by majoritarianism, in
their view,
the limitation is reasonable and justifiable in terms of section 36
of the Constitution.
[16]
The
model of majoritarianism adopted by section 32 of the LRA embodies a
legislative policy choice that is specifically envisaged
and
permitted by the Constitution, the LRA and international law. The
provisions of the LRA, they argued, seek to strike an appropriate

balance between ensuring that bargaining councils and collective
agreements represent and cover a majority of the employers and

employees in the sector, while also seeking to ensure that these
systems are practicable and do not unduly depend on a strict
numerical form of majoritarianism, of the sort supported by the FMF,
based on the representivity of the bargaining agents rather
than the
coverage of the agreement.
40.
COSATU made various points in support of the system. The FMF’s
attack on the majoritarian approach in section 32, in its
opinion, is
based on a misconception of representativeness in the regulation of
collective bargaining structures and processes.
It acknowledged that
the extension of a collective agreement is indeed not dependent on
the numerical strength of employers. Instead,
section 32 is concerned
more with whether the employer parties employ the majority of
employees who fall within the scope of the
extended collective
agreement. The FMF characterises representativeness as being only
about representation rather than coverage.
International comparative
law demonstrates that a collective agreement may legitimately be
extended to all the employees in a workplace
or sectors if a
sufficient proportion of them are bound by it in the first place. At
the level of sector it is the coverage of
the agreement that is the
central issue – not the representativeness of the parties. A
collective agreement binds the members
of the union parties to the
agreement. If they constitute a sufficient proportion of the entire
workforce, then the agreement may
be extended to all of them. The
determinative consideration is not that the union ‘represents’
the whole workforce
but that the agreement covers a sufficient number
of employees to justify extension. And the policy considerations
underwriting
coverage are the promotion of orderly and stable
collective bargaining, equality of treatment, setting minimum
employment standards
and industrial peace. The central purpose of
section 32 is to secure appropriate standardisation of employment
conditions across
sectors for the protection of vulnerable employees.
41.
COSATU also challenged the FMF’s claims regarding the adverse
impact of the extension of collective agreements. In this
regard it
referred to a paper annexed by the FMF to its founding affidavit,
namely - Bhorat et al:
Analysing Wage Formation in the South
African Labour Market: The Role of Bargaining Councils
. The
article records its findings as follows:
“
One of the main
criticisms levelled against the extension of bargaining council
agreements is that large firms dominate the employer
party bargaining
during negotiations. These agreements (via the extensions) are then
imposed on parties that did not take part
in the negotiations,
particularly affecting non-party SMMEs. The aim of the requirements
in the LRA is therefore to ensure that
representivity thresholds are
met before an agreement can be extended and that SMME’s are
adequately represented on councils
(Godfrey et al 2006:1). The
extension to non-parties was the subject of fierce debate in the
mid-1990’s in terms of the unintended
consequence it ostensibly
had in increasing regulatory oversight and labour costs for SMMEs.
While it is generally difficult to
accurately estimate the share of
workers covered by extensions of bargaining council agreements,
Godfrey et al (2006: 24) has found
that of the estimated 32.6 per
cent of formally employed workers (with the total excluding all
Managers and Professionals in the
private sector) covered by
bargaining councils, only 4.6 per cent were covered by extensions to
agreements. In other words, extended
bargaining council agreements
covered a very small share of the labour force. This initial evidence
does suggest that the extension
to non-parties as a source of
potential rigidity in the labour market, may be overstated. Put
differently, the evidence that non-parties
to the main bargaining
council agreement suffered as a consequence of the automatic
extension clause is not particularly strong.”
[17]
42.
Moreover, even if there is some evidence of the adverse impacts
alleged, COSATU made the valid point that we have here to do
with a
complex set of legislative and executive policy choices bearing upon
an imperative to secure decent work conditions weighed
against the
maximisation of employment and competition. There are a variety of
factors at play with debatable economic effects,
and a range of
competing policy considerations of a polycentric character. The
economic policy preferences of the FMF, COSATU argued,
are
insufficient basis to strike down section 32 of the LRA, which is
consistent with ILO standards and justifiable in an open
and
democratic society.
The
FMF’s narrower legality challenge and the relief sought
43.
Although not explicitly acknowledged by the FMF, the arguments put
forward by COSATU probably contributed to its decision to
abandon its
second attack, restrict its challenge to the narrow legality attack
and thus avoid the need for a justifiability analysis
under section
36 of the Constitution of the impact of the extension system enacted
by section 32 of the LRA.
44.
The FMF’s first challenge, as set out above, and with which it
persists, albeit in a diluted form, is that section 32(2)
read with
section 32(3) of the LRA is inconsistent with the rule of law
provision in section 1 of the Constitution, essentially
because it
confers “unfettered” power upon bargaining councils to
legislate terms and conditions of employment for
an entire sector.
The crux of the complaint is that the limited nature of the
mechanical discretion of the Minister under section
32(2) excludes
substantive review leaving the exercise of power subject to
inadequate judicial supervision. This arrangement, it
submitted,
constitutes improper delegation to bargaining councils by the state
of core coercive functions in matters of consequence
and hence
violates the principle of legality embodied in section 1 of the
Constitution.
45.
According to the FMF, it is unconstitutional to empower “private
actors” (including bargaining councils) to determine
the terms
and conditions of employment for an industry or a sector of an
industry without the consent of the parties affected by
such an
extension, unless the determination on the substantive merits of the
extension has at least the imprimatur of state approval
that would
proceed from the exercise of a discretion properly designed to
promote and advance the public interest. The grant by
the legislature
of substantively unconstrained power to determine the working
conditions of non-parties, it alleged, infringes
both the principle
of legality and the right to just administrative action in section 33
of the Constitution by conferring on private
actors a power
“unbounded by state control”. In paragraph 38 of the
founding affidavit the FMF captured the essence
of its complaint as
follows:
“
Private actors, in
contrast to state officials, are under no duty to act in the public
interest, owe no obligation of accountability
to democratically
elected leaders and are unconstrained by the principles of judicial
review for
inter alia
rationality. Giving them the power to
impose employment terms and conditions on third parties is in breach
of the Rule of Law,
which forecloses on state action that is actually
or potentially arbitrary or capricious.”
46.
Notably, the FMF failed to explain in its founding papers why it
considered the bargaining council and the Minister to be
unconstrained
by the principles of judicial review. During the course
of argument, however, it became evident that the FMF had proceeded on
the
assumption that a decision of a bargaining council to request the
Minister to extend a collective agreement, as well as the Minister’s

act of extension, are not “administrative action” as
defined in section 1 of the Promotion of Administrative Justice

Act
[18]
(“PAJA”),
with the consequence, if that proposition is correct, that the courts
would not have the power to judicially
review the action on the bases
set forth in section 6 of PAJA, which permit review on various
grounds of legality, reasonableness
and procedural fairness.
[19]
47.
The FMF made no attempt to analyse the definition of “administrative
action” in PAJA, or the term as used in section
33 of the
Constitution, in order to assess whether the actions of the actors
involved in the extension process under section 32
of the LRA fall
within its scope. The evident assumption of the FMF, at least in
relation to bargaining councils, is that the request
to the Minister
to extend a collective agreement is not administrative action because
such bodies are private actors and not organs
of state. As will
appear later, that supposition comprises a category error or mistaken
premise.
48.
Despite that assumption and it repeatedly stating that it was not
relying on any Bill of Rights violation, the FMF in its heads
of
argument more than once referred to section 32 as being an
infringement of the constitutional right to administrative justice

(lawful, reasonable and procedurally fair administrative action) in
section 33 of the Constitution. Its stance is confused and
confusing.
The FMF described the alleged infringement of the fundamental right
to administrative justice by section 32 of the LRA
as follows:
“
The power is not
being exercised in a manner that is reasonable and procedurally fair.
Councils, comprising vested interests as
they do, can hardly be
expected to act in the public interest, and as a fact do not. In
addition, they do not call for representations
from non-parties
before seeking extensions, nor do they even invite comment on the
terms and conditions of employment they seek
to impose. To suggest
that they act arbitrarily would be to understate the objection: in
fact they act in the way that is common
to everyone given unfettered
and unaccountable powers, that is, in pursuit of their own
self-interest.”
49.
The FMF’s abandoned Bill of Rights challenge alleged that the
provisions of the statute also violated the fundamental
rights to
freedom of association enshrined in section 18 of the Constitution,
the right to dignity and fair labour practices (section
8 and 23 of
the Constitution), and the right to equality in section 9. The core
of the objection under all these grounds was essentially
the same.
Thus, the contention that freedom of association is infringed rested
upon the assertion that the system of extensions
obliges persons who
are outside the framework of the bargaining council to subscribe to
rules and regulations set without their
consent “by persons who
have no legitimate, responsive and accountable authority over them”.
The affront on dignity
and fairness was said to arise from the
obligation on employers and employees “to submit on important
matters of self-actualisation
to the exclusionary diktats of private
actors that are undemocratic, unaccountable and beyond state
supervision”. The alleged
infringement of equality was of
similar import but with the added dimension that by failing to vest
the Minister with supervisory
powers in the public interest, the
system of extension permits the imposition on non-parties of
conditions of employment that unfairly
discriminate against
work-seekers and prospective business entrants – in other
words, non-party outsiders.
50.
The FMF’s criticism of the system is founded partly on the
infringement of the individual freedom of contract implicated
by the
imposition of the collective bargain on non-parties. Through the
extension process collective agreements become binding
on non-parties
to the contract as though they themselves had subscribed to it. The
power of the Minister to extend a majority agreement
is mechanical
and non-discretionary. This means that once the conditions precedent
to jurisdiction are present the Minister is
under an obligation to
promulgate the agreement once requested by the “private actor”
bargaining council to do so.
The result is that bargaining councils
can insist upon the extension of their agreements to non-parties
irrespective of what the
public interest may demand. Upon their
extension, the agreements, which on promulgation in the Government
Gazette are a species
of subordinate legislation, become binding on
non-parties. In this way “private actors” acting in their
own interest
determine the fate of those who have not voluntarily
subscribed to the process.
51.
Hence, according to the FMF, bargaining councils have the power under
the LRA to impose and make their will legally binding
on non-parties
“without the interposition, control and direction of an organ
of state”. In effect, the bargaining councils
enjoy legislative
power even though, not being public instrumentalities bound by law to
pursue the public interest, they are at
liberty to pursue their own
self-interest and, in bargaining collectively, can be taken to do
precisely this. The arrangement,
the FMF says, is “hopelessly
unconstitutional” because “at the core of the democratic
system enshrined in the
Constitution is the principle that regulatory
decisions must be taken in the public interest and are judicially
reviewable for
a failure to promote this goal”.
52.
As already noted more than once, all the arguments based on alleged
Bill of Rights violations were abandoned by the FMF (despite
its
continued and inconsistent reliance on the fundamental right to
administrative justice) thus side-stepping the need for any

justifiability analysis under section 36 of the Constitution, the
limitation clause. Nonetheless, their rationale implicitly forms
the
basis for the allegation of constitutional inconsistency and the
remedy sought in paragraph 1 of the notice of motion, which
relief
the FMF still seeks on the basis of the narrower legality challenge
under section 1 of the Constitution.
53.
The relief pursued by the FMF is an order in terms of section 172(1)
of the Constitution, the relevant part of which reads:
“
When deciding a
constitutional matter within its power, a court –
(a) must declare that any
law or conduct that is inconsistent with the Constitution is invalid
to the extent of its inconsistency;
and
(b) may make an order
that is just and equitable ……”
54.
In paragraph 1 of the notice of motion the FMF seeks an order in the
following terms:
“
1.1 Declaring that
section 32(2) of the Labour Relations Act 66 of 1995 (“the
LRA”) conflicts with the Constitution
of the Republic of South
Africa 100 of 1996 (“the Constitution”) to the extent
that –
1.1.1 it gives a
bargaining council, which comprises mere private actors, a power
(provided the formal requirements of subsection
(3) are satisfied) to
secure, by means of a collective agreement contemplated by section
32, the imposition of binding obligations
on employers and employees
who are not members of parties to the council; and/or
1.1.2 it operates in the
absence of a substantive discretion, exercisable by the Minister or
other repository of state power in
the interests of the public, to
decline a request by a bargaining council to make a collective
agreement contemplated by section
32 binding on employers and
employees who are not members of parties to the council.
1.2 Substituting the word
“must” in section 32(2) with “may”.”
55.
The remedy sought as the appropriate solution to the alleged
constitutional inconsistency is thus an amendment by substitution,
a
form of reading-in. The substitution of the word “must”
in section 32(2) of the LRA with “may” would
replace the
Minister’s mechanical and limited discretionary power with a
discretionary power subject to more expansive judicial
review. It is
not clear whether the proposed discretion would inevitably impose an
obligation on the Minister to act in the public
interest. Prayer 1 of
the notice of motion has not been amended to introduce a
pre-requisite that a bargaining council collective
agreement may be
extended to non-parties by the Minister only if it is in the public
interest to do so. The FMF seems to assume
rather that all
administrative discretion if it is to be lawful must be exercised in
the public interest and it seeks a declarator
to that effect in
prayer 1.1.2. Accordingly, were the relief in paragraph 1.2 of the
notice of motion to be granted, and the word
“must” in
section 32 substituted by “may”, and provided further
that an exercise of the discretionary power
constitutes
administrative action in terms of PAJA, judicial review of a decision
to extend a collective agreement would be possible
not only for
non-compliance with another legal condition precedent, a substantive
ground of public interest, but also on grounds
of reasonableness and
procedural fairness under PAJA. Such a result would introduce a wide
scope of judicial review extending considerably
beyond that intended
by the legislature.
56.
In a nutshell, the FMF submitted that section 32(2) is inconsistent
with the Constitution because the courts lack adequate
review power
to strike down an extension of a collective agreement by the
Minister. It therefore seeks an order for the correction
of the
offending provision by restoring to the Minister a general discretion
constrained by a duty to act in the public interest.
The question
left begging is what standard of scrutiny by a reviewing court such a
ground of review might entail. None of the parties
addressed this
issue in evidence or argument. The vague and variable concept of the
“public interest” generally signifies
the common concern
among and the stake of citizens in the affairs of government. Acting
in the public interest is aimed at maximising
the welfare or the
well-being of the general public as opposed to the selfish interests
of individual private actors. The whole
society has a stake which
warrants recognition and protection by an administrator tasked with a
decision to be taken in the public
interest. As with other open-ended
or value–laden legal standards, the concept of the public
interest can only acquire content
and meaning as a ground and
standard of judicial review by the courts, case-by-case, prudentially
balancing the expected gains
and potential costs associated with a
relevant decision or exercise of power. Whether its inclusion in the
LRA as a ground of review
would lead to a standard of review more
protective or intrusive than the conventional administrative justice
standards of reasonableness
or rationality is uncertain and
debatable. The entire thrust of the FMF line of argument, predicated
upon its ideological adherence
to the freedom of contract as a
fundamental value, suggests that it favours a high level of scrutiny
of an order of the substantive
due process standard applied in some
circumstances by courts in the United States of America. However, in
my opinion, reading in
an obligation to act in the public interest as
a potential ground of review will not inevitably bring forth a
standard of review
akin to a requirement of “a direct and
substantial relationship” to a legitimate legislative
purpose.
[20]
Comparative
constitutional doctrine teaches that rationality normally suffices as
the preferred form of judicial scrutiny in economic
or commercial
matters. In the United States, for instance, regulatory measures
affecting ordinary commercial transactions or contractual

arrangements will not be pronounced unconstitutional unless of such a
character as to preclude the assumption that the measure
rests upon
some rational basis within the knowledge and experience of the
regulator.
[21]
I will return
to this topic later when discussing the extent of judicial
supervision available under our law in relation to the
extension
process.
57.
The fundamental premise of the FMF constitutional attack though is
that there is inadequate judicial supervision of the decision-making

involved in the extension of collective agreements to non-parties. If
that hypothesis is found to be mistaken, as all the respondents
say
it is, the constitutional challenge cannot succeed. The pivotal
enquiry in this application therefore comprises the testing
of that
premise. That exercise cannot be restricted to a myopic peering at
the power of the Minister under section 32(2) of the
LRA alone. It is
necessary to examine the legislative scheme purposively, holistically
and contextually with reference to legislative
policy and the
constitutional ethos.
58.
The various respondents filed detailed answering affidavits supported
by extensive annexures which for the most part mounted
a defence of
the collective bargaining system, bargaining councils, sectoral
bargaining and the preferred system of majoritarianism
as being
justifiable in an open and democratic society based on human rights
and in compliance with international law. And, as
already discussed,
they also took issue with the expert economic impact analysis
maintaining that the evidence does not sufficiently
support the
conclusion that the system is a significant impediment to small
enterprise development and job creation. While much
of what is said
is interesting, these averments are now less relevant owing to the
constitutional attack having been narrowed to
an alleged infringement
of the principle of legality, administrative justice and due process.
59.
The FMF in reply maintained that the respondents failed to appreciate
that its case is based on non-compliance with the principle
of
legality embodied in section 1 of the Constitution. The
misconception, it said, was evident in the reliance of the
respondents
on justifications advanced in terms of section 36 of the
Bill of Rights, which applies only to contraventions of the
fundamental
rights in the Bill of Rights. It also criticised certain
of the union respondents for exhibiting a failure to understand that
the
application is concerned not with the merits of collective
bargaining but merely with the process by which bargaining council
agreements
are extended “without proper state oversight”.
The criticisms are not entirely warranted. The respondents responded

appropriately to the FMF’s extensive Bill of Rights challenge
to both the process of extension and the majoritarian system.
The
respondents can hardly be criticised for dealing with arguments
raised by the FMF before it chose to change tack. In any event,
most
of the respondents replied adequately to the legality, administrative
justice and due process challenges, the gravamen and
implications of
which, I will demonstrate presently, have been misunderstood by the
FMF.
60.
Mr Bheki Ntshalintshali, the Acting General Secretary of COSATU, who
deposed to COSATU’s answering affidavit, criticised
the FMF’s
analysis as fundamentally misconceived. He submitted that the FMF’s
characterisation of bargaining councils
as private bodies exercising
private power is incorrect. Bargaining councils derive their power
both from the LRA and collective
agreements. They perform public
functions under the LRA. Secondly, in COSATU’s opinion, the FMF
misconstrues the nature of
the Minister’s discretion under
section 32(2) of the LRA and the manner in which the interests of
non-parties are protected
in the legislative scheme. In paragraph
13.3 of the answering affidavit Mr Ntshalintshali averred:
“
Although section
32(2) provides that the Minister “must extend a collective
agreement”, section 32(3) provides that
the Minister may not do
so “unless the Minister is satisfied” that the
substantive requirements set out in section
32(3) are met.
Accordingly, the Minister is required to form a view on whether the
requirements are met and to extend a collective
agreement only if
satisfied that they are met. This approach is more protective of the
interests of non-parties than conferring
a “free”
discretion on the Minister to extend collective agreements based on
broad policy considerations or the public
interest.”
61.
When dealing with the FMF’s assertion that section 32 of the
LRA is unconstitutional because it violates the right to
just
administrative action in section 33 of the Constitution (technically
abandoned by the FMF, but, for reasons soon to be evident,

nonetheless germane), Mr Ntshalintshali said:
“
I deny this
contention. In addition to the point I have already raised regarding
the mischaracterisation of bargaining councils
as “private
actors”, what the FMF overlooks is the impact of PAJA.
PAJA is the legislation
enacted by Parliament to give effect to section 33 of the
Constitution. Other statutes that authorise administrative
action
must now be read together with PAJA unless, upon a proper
construction, the provisions of the statutes in question are
inconsistent with PAJA. Thus, to the extent that the present context
involves administrative decision-making, the decisions in question

would be subject to the provisions of the PAJA.”
62.
Other deponents on behalf of other respondents said likewise. Thus,
Mr Deon Koen, of the National Bargaining Council for the
Road Freight
and Logistics Industry, who deposed to an answering affidavit on
behalf of a number of bargaining council, stated
in relation to this
issue in paragraph 65 of his affidavit:
“
Second, and in any
event, it is incorrect to characterise bargaining councils as
“private actors” which act without
constraints.
Bargaining councils plainly fall within the definition of “organ
of state” set out in section 239 of the
Constitution and are
subject to a range of constraints as a consequence. Various of their
decisions are subject to the Promotion
of Administrative Justice Act
3 of 2000 (“PAJA”). Moreover, an important part of the
collective bargaining system is
the requirement that non-parties be
able to seek exemption from collective agreements and have any
refusal adjudicated by an independent
tribunal. This too demonstrates
that the notion of a private actor acting without constraints is
simply not applicable.”
63.
NUMSA advanced similar arguments. In heads of argument filed on its
behalf counsel dealt with the issue as follows:
“
Applicant’s
analysis of the manner in which collective agreements are extended to
non-parties is flawed. Extension is not
achieved by the members of
the bargaining council exercising legislative power as the Applicant
contends. Extension is achieved
by a decision of the Minister. While
it is true that the Minister’s discretion in this regard is
limited, it is still the
Minister who takes the decision to extend.
Plainly, that decision is susceptible to review in terms of the
Promotion of Administrative
Justice Act 3 of 2000 (“PAJA”).
There is therefore simply no exercise of “non-reviewable
private power”
as the Applicant contends. Ultimately, as we
will seek to demonstrate below, the Applicant’s true complaint
is not about
unbridled and unchecked private power, it is about the
limited nature of the Minister’s discretion under section 32 of
the
LRA. The decision to curtail the Minister’s discretion was
however a policy decision taken by the drafters of the LRA. As
such,
we respectfully submit that it must be deferred to by the courts.
In
the alternative to the above, in the event that it may be found that
the decision to extend collective agreements to non-parties
is
effectively taken by bargaining councils or their members (which is
denied) then we submit that it is clear that in respect
of that
function bargaining councils exercise public power in terms of
legislation and are therefore organs of state as defined
in section
239 of the Constitution. The exercise of such public power is plainly
reviewable under PAJA. This being the case, there
is no merit in the
Applicant’s key complaint.
64.
The FMF did not adequately deal with these contentions in reply,
proceeded on the assumption that PAJA was not applicable and
thus did
not address the issue in its written arguments. When the matter was
raised with counsel for the FMF by the court, he opined
that if PAJA
is applicable then this would hand the FMF more than it asked for. He
in effect conceded that if PAJA does indeed
apply, COSATU would be
correct in its assertion that the FMF application was fundamentally
misconceived. In fairness though, the
FMF persisted with the
contention that the substantive conditions precedent in section 32(3)
of the LRA contain insufficient safeguards
to secure the public
interest. It submitted that the numerical requirements, the necessity
for an exemption process and the protection
of non-parties against
discrimination were not sufficient. These are requirements, in its
view, which go to process, not to substance
and policy.
65.
In addition, but related to its point about inadequate judicial
supervision, FMF alleged that the legislative scheme is also
an
excessive delegation of legislative power. It accepts that generally
it will sometimes be acceptable constitutionally to give
private
actors the power to exercise coercive statutory power. But before
that is permissible the institution must be akin to an
organ of
state. In its view, two requirements must be met: first it must be
clear that the powers being conferred are to be exercised
in the
public interest; and second, it must be evident that the powers are
of the sort that can be properly delegated to the institution
in
question. In relation to this latter point I would immediately point
out that the only relevant power or function delegated
to the
bargaining council is that of requesting an extension. Considering
the limited scope of discretion available to the Minister
under
section 32(2) of the LRA, the quasi-legislative power or function may
indeed be extensive in circumstances where majoritarianism
applies.
That being the case, is the bargaining council obliged to make the
request, and the Minister to execute it, only if in
the public
interest?
Administrative
action
66.
The entire saga thus resolves to two related decisive questions.
First, what is the nature and scope of judicial review available
in
relation to the decisions and actions involved in the extension of
bargaining council collective agreements to non-parties?
Secondly,
are bargaining councils and the Minister obliged to act in the public
interest when extending such agreements?
67.
The answer to the first question depends to some extent upon whether
the decisions and actions in question constitute “administrative

action” in terms of PAJA and are in consequence reviewable on
the grounds specified in section 6 of PAJA. None of the parties,

either in the papers or in argument, made explicit reference to the
definition of administrative action in section 1 of PAJA or
sought to
apply it to the facts. The outcome of any such enquiry and analysis
will be conclusive. The relevant part of the definition
reads:
“
administrative
action means any decision taken, or any failure to take a decision,
by –
(a) an organ of state,
when –
(i) exercising a power in
terms of the Constitution or a provincial constitution;
(ii) exercising a public
power or performing a public function in terms of any legislation; or
(b) a natural or juristic
person, other than an organ of state, when exercising a public power
or performing a public function in
terms of an empowering provision,
which adversely affects the rights of any person and which has a
direct, external legal effect
…”
68.
The first element of the definition relevant to the present enquiry
is that the action must be “a decision”. Section
1 of
PAJA defines a decision extensively with reference to specific modes
of decision which we need not consider. The introductory
part of the
definition is however relevant. A decision means “a decision of
an administrative nature made, proposed to be
made, or required to be
made, as the case may be, under an empowering provision ….”
The primary question of whether
an action or decision is indeed one
of an administrative nature is not straightforward and inescapably
depends on the context.
Deciding what is and what is not
administrative has to be done on a case-by-case basis.
[22]
Regard must be had to the source and nature of the power, its subject
matter, whether it involves the exercise of a public duty
and how
closely it is related to policy matters which are not administrative
or to the implementation of legislation. The focus
of the enquiry is
not on the arm of government to which the relevant actor belongs but
on the nature of the power being exercised.
[23]
A
real difficulty facing the court in this matter is that the various
parties presented no or little argument in relation to the
existence
or otherwise of the constituent elements of administrative action in
the juridical acts involved in the extension of
a collective
agreement, and in particular whether the decisions in question were
administrative in nature. When the question of
the definition was
raised with counsel for the FMF during argument, he accepted that
PAJA was applicable, on the basis that the
remedies available would
advance the cause of his client. Counsel for the respondents,
consistent with the averments made in the
answering affidavits,
accepted likewise.
69.
The second constituent of the definition requires the decision to be
taken by one of three possible actors: an organ of state
(a public
actor), a natural person or a juristic person (private actors). PAJA
defines these three different kinds of actors to
be “administrators”.
70.
If the administrator is an organ of state, in order for its decision
to be administrative action it must involve one of three
actions: an
exercise of power in terms of the national or provincial
constitution; the exercise of a public power in terms of legislation;

or the performance of a public function in terms of legislation.
71.
If the administrator is a natural or juristic person, other than an
organ of state, the action must involve either the exercise
of a
public power in terms of an empowering provision or the performance
of a public function in terms of an empowering provision.
72.
The remaining elements of the definition of administrative action are
that the decision must adversely affect the rights of
any person and
have a direct, external legal effect.
Judicial
review of the decision of the bargaining council
73.
In
Calibre
Clinical Consultants (Pty) Ltd and another v National Bargaining
Council for the Road Freight Industry and another
[24]
the Supreme Court of Appeal held that a bargaining council, when
managing its wellness fund and procuring services for that purpose,

performs a domestic function, and its decision in that regard was not
subject to review under PAJA. The bargaining council was
not
exercising a public power or performing a public function in that
instance. The court recognised that such might not be the
case when a
bargaining council performs other functions. There can be little
doubt that when a bargaining council requests the
Minister to extend
a collective agreement to non-parties that it does so either as an
organ of state or as a juristic person exercising
a public power or
performing a public function under legislation or an empowering
provision.
74.
Applying the definition of administrative action to the process of
collective bargaining undertaken by a bargaining council,
it seems
clear that the negotiation and conclusion of the collective agreement
will not constitute administrative action. The decision
is not of an
administrative nature, being inherently contractual; and the only
decision involved is that by the bargaining agents
to conclude the
agreement, which at that stage would have no external legal effect
outside the council.
75.
However, the request made under section 32(1) of the LRA can be
viewed differently. In order to extend its collective agreement
to
non-parties, the bargaining council must meet and pass a resolution.
The resolution must in turn generate a written request
to the
Minister identifying the non-parties to the agreement, who fall
within the registered scope of the council, and to whom
it seeks to
extend the collective agreement. The resolution must obtain the votes
of the majorities as stipulated in section 32(1)(a)
and (b) of the
LRA. Two arguments might be raised against construing the resolution
and the written request to the Minister as
administrative action. The
first is that the resolution and request are merely administrative
conduct preparatory to the making
of the decision. The decision
having direct external and an adverse effect is that of the Minister
and not the bargaining council.
Secondly, it might be argued with
reference to the nature of the power being exercised that the
resolution of the bargaining council
is a deliberative
quasi-legislative decision and thus not a decision of an
administrative nature.
76.
The requirement that administrative action should be a decision
having a direct, external legal effect is borrowed from the
German
law principle that only final decisions ought to be subject to
judicial scrutiny. If a decision requires several steps to
be taken
by different authorities, only the last of which is directed at the
citizen, all previous steps taken within the sphere
of public
administration lack direct effect, and only the last decision may be
taken to court for review.
[25]
The idea is to concentrate judicial review pragmatically on the more
important administrative decision. Instead of allowing challenges
to
intermediate or preliminary decisions, litigants are obliged to wait
until a final decision has been made.
77.
I hesitate to pronounce too definitively upon the application of this
principle in relation to a bargaining council resolution
to request
the Minister to extend a collective agreement. The scope of the
principle will depend on its concrete application and
in that sense
it is context specific. The case before us is general and abstract.
There is no challenge to a particular resolution
or request to the
Minister to extend an agreement. That caution duly observed, the
logic of the German principle may prove less
cogent in cases where,
as in the present, the final decision might comprise the exercise of
a non-discretionary mechanical power
constrained only by formal
jurisdictional facts. By contrast, where the final decision involves
an exercise of discretion, such
as one under section 32(5) of the LRA
to extend an agreement when the majoritarian threshold has not been
achieved, there are obvious
advantages in reserving review to the
final decision of the Minister. But even then, there will be cases
where the bargaining council
decision may be tainted on reviewable
grounds causing the entire decision-making process to be flawed. Much
will depend upon the
circumstances of the concrete case in which the
legal challenge arises. In some instances, viewing the two stages of
the process
as unrelated, separate and independent action, each on
its own subject to PAJA, may put form above substance, in others it
will
not.
[26]
78.
It is debatable too whether the bargaining council resolution and the
request for an extension will have direct external legal
effect or
will adversely affect the rights of non-parties until such time as
the Minister acts. The resolution and written request
to the Minister
may have an external legal effect by virtue of their seizing the
Minister with the legal obligation to act mechanically
under section
32(2) of the LRA or to exercise her discretion to extend a minority
agreement under section 32(5). Once the written
request for extension
of the agreement to the identified non-parties within the registered
scope has been received by the Minister,
she must act. She must do
what her duty dictates under section 32(2), or section 32(5),
whichever is applicable. The resolution
and the written request of
the bargaining council hence could have an external effect of some
consequence.
79.
Likewise, while the resolution and written request will not
themselves adversely affect the rights of non-parties they certainly

have the potential and capacity to do so; that potential attaining a
high level of probability where the Minister is compelled
to act
under section 32(2) of the LRA. In
Greys
Marine Hout Bay (Pty) Ltd v Minister of Public Works
[27]
Nugent JA observed:
“
While PAJA’s
definition purports to restrict administrative action to decisions
that, as fact, “adversely affects the
rights of any person”,
I do not think that literal meaning could have been intended. For
administrative action to be characterised
by its effect in particular
cases (either beneficial or adverse) seems to me to be paradoxical
and also finds no support from the
construction that has until now
been placed on section 33 of the Constitution. Moreover, that literal
construction would be inconsonant
with section 3(1) (of PAJA), which
envisages that administrative action might not affect rights
adversely. The qualification, particularly
when seen in conjunction
with the requirement that it must have a direct and external legal
effect, was probably intended rather
to convey that administrative
action is action that has the capacity to affect legal rights, the
two qualifications in tandem serving
to emphasise that administrative
action impacts directly and immediately on individuals.”
80.
As regards the possibly deliberative or quasi-legislative nature of a
bargaining council resolution, there is no textual basis
supporting a
finding that such is not a decision as defined, or is excluded from
the definition of administrative action.
[28]
There is, though, perhaps an argument that it is not one of “an
administrative nature”. Laws made by administrative

functionaries exercising delegated powers might possibly be
classified as administrative, but laws made by original legislative

bodies can seldom be so described. In
Fedsure
Life Assurance Ltd v Greater Johannesburg Transitional Metropolitan
Council
[29]
the Constitutional Court held that legislative bodies exercising
original, deliberative law making powers are not engaged in
administrative
action. The negotiation of a collective agreement
coupled with a request to the Minister to promulgate it, however,
might be regarded,
like the making of regulations, not as original
legislation but as delegated rulemaking. Under section 32 of the LRA
it is ultimately
the Minister who legislates by the act of
promulgation; and the preceding request to the Minister by the
bargaining council is
strictly speaking not legislative in nature
because that action does not result in law-making. The bargaining
council request might
thus better be seen as an antecedent
administrative part of a delegated law-making process. In
Minister
of Health v New Clicks SA (Pty) Ltd and others
[30]
Chaskalson CJ held that the making of regulations fell within the
scope of administrative action. This was not however the view
of the
majority of the court and there remains uncertainty about whether the
making of regulations by a functionary will always
be administrative
action.
81.
From the foregoing discussion it is evident that any determination of
whether a bargaining council resolution is administrative
action in
terms of PAJA will depend in the final analysis on the peculiar
facts. I incline to agree with COSATU, NUMSA, the Minister
and the
bargaining councils that PAJA ordinarily will apply and thus that the
decision of the bargaining council will be subject
to PAJA review.
The strongest argument against such a conclusion may be that the
resolution being deliberative is not a decision
of an administrative
nature. Unfortunately, as said, no argument was presented in relation
to this issue, which was not specifically
raised in the affidavits.
If the decision is administrative action then it will be reviewable
on grounds of reasonableness (at
least rationality),
[31]
legality and due process. If, on the other hand, the bargaining
council resolution is not administrative action under PAJA, it
still
will be subject to rationality and legality review under the rule of
law provision in section 1 of the Constitution.
[32]
Review in terms of the principle of legality may involve a lower
standard of scrutiny than a reasonableness review under PAJA,
but it
still can be far-reaching and includes the requirements of
rationality, legality and a duty not to act arbitrarily, capriciously

or with ulterior purpose.
[33]
There must be a rational relationship between the exercise of the
power and the purpose for which the power was given. Moreover,
there
is explicit statutory protection against discrimination. In terms of
section 32(3)(g) of the LRA the collective agreement
may not
discriminate against non-parties, a matter I will discuss later. And
hence the charge of inconsistency with the Constitution
for want of
adequate judicial supervision of the bargaining council process is
not sustainable.
Judicial
review of the decision of the Minister under section 32(5) of the LRA
82.
Although the target of the FMF challenge is section 32(2) of the LRA,
it will be better first to examine the review of the Minister’s

discretion under section 32(5) because it sets a yardstick against
which the more restricted review under section 32(2) may be
measured.
83.
Is an exercise of power by the Minister under either section 32(2) or
section 32(5) of the LRA administrative action in terms
of section 1
of PAJA? The Minister undoubtedly exercises a public power or
performs a public function in terms of legislation,
when acting in
terms of section 32 of the LRA.
[34]
The decision by the Minister to extend a bargaining council
collective agreement often will adversely affect the rights of
various
persons, particularly employers who are not party to the
collective agreement, in that it determines their obligations to
provide
work in accordance with minimum standards and conditions,
depriving them of the freedom to contract on the terms of their
choice.
The decision will also have a direct, external legal effect.
It will be determinative of employer and employee rights and
obligations
with direct bearing upon persons who are non-participants
in the statutory centralised bargaining system. Consequently, the
Minister’s
decision to extend an agreement would seem (at least
prima
facie)
to be administrative action subject to PAJA review. Here again
though, the difficult question to answer is whether the action or

decision of the Minister is of an administrative nature; or is it
executive or legislative action? The executive functions of cabinet

ministers are excluded from the definition of administrative action
in PAJA.
[35]
However, giving
effect to a bargaining council resolution does not involve the
formulation of policy or political decision-making.
It is the
implementation of legislation or the formulation of policy in a
narrower sense, a function regarded as typically administrative.
[36]
The decision is one of policy execution rather than policy
formulation.
[37]
Likewise,
while the promulgation of the agreement under section 32(2) of the
LRA may be legislative, the antecedent exercise of
mechanical or
discretionary power is not.
84.
Whenever the Minister receives a written request from a bargaining
council to extend a collective agreement transmitted to her
in terms
of section 32(1) of the LRA, the first thing she will have to do,
practically speaking, is to ascertain whether the numerical

thresholds discussed above have been achieved. She must do the math,
and, courtesy of section 208A of the LRA, she must do it personally.

As discussed already, by reason of section 32(3)(a), (b) and (c)
there are two arithmetic calculations that need to be performed.

Firstly, the Minister must determine if the resolution taken by the
bargaining council to refer a written request for extension
to her
was supported by the requisite majority.
[38]
The resolution must be supported by one or more trade unions whose
members make up the majority of members of all the trade unions
who
are parties to the bargaining council. The resolution must also enjoy
the support of one or more employers’ organisations
whose
members employ the majority of employees employed by the employers
who are members of the employer organisation that are
party to the
bargaining council. The second arithmetic calculation to be performed
by the Minister is that required by section
32(3)(b) and (c) of the
LRA. She must determine whether the majority of employees who will
fall within the scope of the collective
agreement, once it has been
extended, are members of trade unions that are parties to the
bargaining council; and additionally
she must establish whether the
members of the employers’ organisations party to the council
will employ the majority of all
employees falling within the scope of
the agreement once it has been extended.
85.
As already explained, if the Minister determines that the
majoritarian numerical thresholds and the other jurisdictional facts

in section 32(3) of the LRA are present, she is obliged to exercise
the mechanical power to extend the collective agreement and
to
promulgate it in the Government Gazette. If the majoritarian levels
in section 32(3)(b) and (c) of the LRA are not reached then
the
Minister must choose whether or not to act in terms of section 32(5)
of the LRA. Unlike section 32(3) which provides that the
Minister
“
must
”
extend once the conditions precedent in section 32(3) have been
fulfilled, section 32(5) provides that despite subsection
(3)(b) and
(c) (the numerical requirements), the Minister “
may
”
extend, provided the jurisdictional facts in section 32(5)(a)-(d)
exist. The express use of the word “may” in
the
subsection confers precisely the kind of discretionary power that the
FMF would have us read in to section 32(2) of the LRA.
Permissive
statutory language of this order leaves the Minister free to make a
choice among possible courses of action and inaction.
The
discretionary power in section 32(5) is in stark contrast to the
ministerial or mechanical power in section 32(2) which involves

little choice on the part of the Minister. Mechanical powers are more
in the way of duties.
[39]
86.
The normal requirements of administrative justice, that is legality,
reasonableness and fairness, applied flexibly and contextually,

enhance constraint and accountability in relation to administrative
action in ways different to the exercise of a mechanical power
or
duty where pre-ordained conditions precedent of legality are chosen
legislatively as the preferred means of achieving certainty
and
predictability in the advancement of policy. By deliberately electing
to limit the Minister’s discretion in a majoritarian
situation,
Parliament recognised that a broad discretion giving the Minister a
power to second guess the outcome would weaken the
effectiveness of
the majoritarian system of collective bargaining. These
considerations, however, do not apply when the Minister
exercises her
discretion to extend a product of collective bargaining which has
only the support of a minority of bargaining agents.
Such
administrative action justifiably attracts judicial scrutiny of a
more exacting standard. Where broad discretionary powers
are
conferred, there must be some constraints on the exercise of such
powers so that those affected by their exercise will know
what is
relevant or in what circumstances they are entitled to seek relief
from an adverse decision.
[40]
87.
The Minister’s power to extend a minority collective agreement
under section 32(5) of the LRA is subject to compliance
with the
mandatory and material conditions prescribed in paragraphs (a) –
(d) in the subsection. Compliance is a pre-requisite
to jurisdiction
and legality.
88.
The first condition precedent to the exercise of the power to extend
a minority collective agreement is that the parties to
the bargaining
council must be sufficiently representative within the registered
scope of the bargaining council. The phrase “sufficiently

representative” is not defined in the LRA but by implication
suggests less than majority membership within the sector. The
issue
must be determined objectively. The established practice is to
determine the matter with regard to various factors besides
numerical
representativeness, including the nature of the sector and the
organisational history within it.
89.
The FMF maintains that this requirement is otiose since a bargaining
council’s formation and its continued existence in
any event
depends on its fulfilment.
[41]
That may be so, but the obligation on the Minister to check the level
of representivity remains a safeguard. If in the process
of checking
it is determined that the bargaining council is not sufficiently
representative, the Registrar will be obliged to take
steps towards
cancellation of the bargaining council’s registration and in
such circumstances it is unlikely that any extension
by the Minister
might be regarded as reasonable.
90.
The second condition precedent to the exercise of the power in
section 32(5) of the LRA is that the Minister must be satisfied
that
the failure to extend the agreement may undermine collective
bargaining at sectoral level. The Minister will need to show

objectively that non-extension will have negative effects, such as
opportunistic bargaining at workplace level or something of
that
kind. The jurisdictional fact “is satisfied” in section
32(5)(b) of the LRA is subjectively phrased. At common
law, prior to
the adoption of our fundamental Constitution in 1994, such subjective
clauses were not subject to extensive objective
review. The court
would accept the functionary’s assurance that the state of
affairs (his or her satisfaction) existed and
would enquire no
further. There was no need to establish that there were good or
reasonable grounds for that satisfaction.
[42]
With the advent of the Constitution this approach became
unsustainable. The right to lawful and reasonable administrative
action
in section 33 of the Constitution and in section 6 of PAJA
requires the courts to satisfy themselves to any factual assumptions

on which that action is based. The Constitutional Court outlined the
position in
Walele
v City of Cape Town
[43]
as follows:
“
In the past, when
reasonableness was not taken as a self-standing ground for review,
the [decision-makers]
ipse dixit
could have been adequate. But
that is no longer the position in our law. More is now required if
the decision-maker’s opinion
is challenged on the basis that
the subjective precondition did not exist. The decision-maker must
now show that the subjective
opinion it relied on for exercising the
power was based on reasonable grounds.”
91.
The effect of this pronouncement is to make all jurisdictional facts
objectively justiciable, whatever their wording.
[44]
At most, the subjective formulation of the jurisdictional fact may
signal a need for judicial deference in the interpretation and

application of the provision, allowing for a measure of technical and
experiential expertise on the part of the decision-maker
in the
jurisdictional and factual determination pre-requisite to the
exercise of power.
92.
What is said in relation to the subjectively phrased jurisdictional
fact in section 32(5) of the LRA applies equally to that
in section
32(3) of the LRA, which I will discuss presently.
93.
The third jurisdictional prerequisite to the exercise of power under
section 32(5) of the LRA consists of the duty imposed upon
the
Minister by section 32(5)(c) and (d) to invite comments from the
public, non-parties and outsiders alike, and to consider these

comments. The jurisdictional pre-condition is aimed at ensuring
procedural fairness in fulfilment of the statutory imperative in

section 3 of PAJA which requires that administrative action which
materially and adversely affects the rights or legitimate
expectations
of any person to be procedurally fair. Like
reasonableness, procedural fairness is context specific. A fair
administrative procedure
depends on the circumstances of each case.
However, it would seem to me that the procedure in section 32(5)(c)
and (d) of the LRA
is a reasonable means of providing adequate notice
of the possibility of an extension of a minority collective agreement
and an
opportunity to make representations. In considering any
comments received the Minister will be obliged to consider all
relevant
considerations, exclude irrelevant considerations, weigh
them in good faith and without ulterior purpose, and to properly
apply
her mind to them.
[45]
94.
In short, therefore, if PAJA applies, the discretion of the Minister
to extend a minority collective agreement concluded in
a bargaining
council would be significantly constrained by the requisites of
legality and procedural fairness. Perhaps more contentious
will be
the nature and extent of any review of the Minister’s decision
under section 32(5) of the LRA on grounds of unreasonableness,
on the
assumption, of course, that PAJA is applicable.
95.
The tenor and thrust of the FMF’s challenge, particularly in
relation to the exercise of power under section 32(2) of
the LRA,
indicates that it favours review akin to substantive due process
review in the USA. This appears from its reliance on
the decision in
1936 of the United States Supreme Court in
Carter
Coal Co et al v Carter
[46]
in which it struck down provisions of the Bituminous Coal
Conservation Act delegating the power to fix, by means of collective

agreements binding on non-parties, minimum wages and maximum hours of
work for the coal industry as a whole provided the agreement
enjoyed
the support of at least a majority of producers and miners in the
industry.
96.
Before dealing with that case, something needs to be said about the
approach to review of administrative action on the grounds
of
unreasonableness in our law. Reasonableness is an open ended review
ground, subsuming within it elements of rationality and

proportionality, as well as the standard of substantive
unreasonableness expressed in the value judgment that administrative
action
is reviewable if it is so unreasonable that no reasonable
decision-maker could have taken it.
[47]
Rationality as a review ground requires that a decision be rationally
connected to the purpose for which it was taken, is supported
by the
evidence and furthers the purpose for which the legislative power was
given to the administrator.
[48]
Proportionality is not listed as a specific review ground in PAJA.
The principal aim of proportionality review is to avoid an imbalance

between the adverse and beneficial effects of an action or measure by
balancing the necessity for the action with the suitability
of the
means deployed to achieve the purpose. While this ground, as I have
just said, is not part of the suite of PAJA review grounds,
it still
plays a role in the assessment of the reasonableness of the effects
or impact of administrative action or subordinate
legislation.
97.
The standard of reasonableness in section 6(2)(h) of PAJA is borrowed
from the English case of
Associated
Provincial Picture Houses Ltd v Wednesbury Corporations
[49]
As Prof Hoexter points out, a ground of review expressed as “so
unreasonable that no reasonable authority could ever have
come to it”
offers no real clues as to the content or meaning of reasonableness.
The standard is “unhelpfully circular,
merely linking the
reasonableness of the action to the reasonableness of the actor.”
[50]
Despite that, it is clear
that all that is expected is that administrative action must be
reasonable, and what is reasonable will
depend on the context and
circumstances. The concept of reasonableness, like fairness or the
public interest, by its very nature
defies rigid definition. In
Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs
[51]
O Regan J held that what is reasonable in a particular case depends
on the circumstances and identified the following factors
as relevant
to the inquiry: the nature of the decision, the identity and
expertise of the decision-maker, the range of factors
relevant to the
decision, the reasons given for the decision, the nature of the
competing interests involved and the impact of
the decision on those
affected by it. This confirms the inherent variability of the concept
and the need for flexibility in its
application. It also points for
the need for appropriate deference by requiring a prudential
(cost-benefit) balance to be struck
between a range of competing
interests or considerations by decision-makers with technical
expertise and insight, and implies flexibility
and variation in the
application of the standard. This is what is meant when
reasonableness is referred to as being “context
specific”.
98.
Thus, a challenge on the grounds of unreasonableness to a decision by
the Minister to extend a collective agreement under section
32(5) of
the LRA will involve a balancing of the range of competing interests.
The delineation of the standard of review is best
left to a concrete
case in which the extension of an agreement is attacked as
unreasonable. But, it must be said, it seems unlikely,
if PAJA
applies, that the standard of substantive due process preferred by
the FMF would also apply.
99.
The
Carter
Coal
decision
of the US Supreme Court, referred to earlier and relied upon by the
FMF, was decided during the era following the decision
in
Lochner
v New York,
[52]
and
was influenced by the line of thinking in it. In
Lochner
the court held invalid as a deprivation of liberty without due
process of law a New York statute which limited employment in
bakeries
to a maximum of 60 hours per week and 10 hours per day. The
majority found the statute to be an unwarranted interference with
liberty
of contract. The court referred to the right to purchase or
to sell labour as part of the liberty protected by the 14
th
Amendment under which no state can deprive any person of life,
liberty or property without due process of law, and expressed concern

about the right of the individual to labour “for such time as
he may choose”, as against a police (regulatory) power
measure
that infringed on that freedom. The court struck the legislation down
on the ground that there was no direct and substantial
relationship
between securing the health of the employees (the legislative
purpose) and the regulation of the terms and conditions
of
employment.
100.
The
Lochner
decision is regarded as one of the least
defensible in American constitutional law. The direct and substantial
relationship standard
entails a high level of scrutiny. It unduly
extended the assumed liberty of contract and undeservedly narrowed
the concept of legitimate
legislative objectives by finding that the
statute had no legitimate health objective and by implication the
legislative purpose
of regulating work hours was somehow
illegitimate. As Justice Holmes noted in his dissenting minority
judgment, the majority were
imposing a value judgment as to “a
particular economic theory” on the state and federal
legislatures.
101.
The political crisis around President Roosevelt’s New Deal
ultimately led to a shift in attitude and approach and a move
away
from
Lochner
reasoning, which stubbornly persisted despite it having in effect
been overruled in 1917 in
Bunting
v Oregon
[53]
when the Supreme Court upheld a maximum hour law for factory workers.
The ultimate death knell to
Lochner
reasoning came in
Nebbia
v New York
[54]
where the court sustained as a legitimate exercise of police power,
New York’s regulation of minimum prices for retail sales
of
milk. The court departed from absolutist and libertarian notions of
freedom of contract and evolved a more deferential standard
of
constitutional and reasonableness review in relation to economic
regulation. The court held:
“
So far as the
requirement of due process is concerned, and in the absence of other
constitutional restriction, a state is free to
adopt whatever
economic policy may reasonably be deemed to promote public welfare,
and to enforce that policy by legislation adapted
to its purpose. The
courts are without authority either to declare such policy, or, when
it is declared by the legislature to override
it. If the laws passed
are seen to have a reasonable relation to a proper legislative
purpose, and are neither arbitrary nor discriminatory,
the
requirements of due process are satisfied ….”
102.
These decisions confirm that judicial review is situational and can
fluctuate in intensity. Courts adopt variable standards
of review and
judicial scrutiny depending upon the subject matter of the
litigation. Measures directly impacting on liberty or
dignity deserve
stricter scrutiny whereas commercial matters allow for governmental
intrusion which is rational. A rational basis
test sanctions judicial
deference to the proper role of the other branches of government in
economic affairs.
[55]
Hence,
when assessing the reasonableness of economic regulation, a standard
of rationality (relational rather than substantive
in nature) is
ordinarily the yardstick, not substantive reasonableness. Though
variable, substantive reasonableness is typically
a higher standard
calling for a more intensive scrutiny of the administrative
action.
[56]
A rational basis
test is deferential because it calls for rationality and
justification rather than the substitution of the court’s

opinion for that of the functionary on the basis that it finds the
decision substantively incorrect.
[57]
A condition of rationality in the relationship between the method and
outcome of decision-making, itself a species of reasonableness

review, will most likely be the standard of scrutiny applied to any
decision of the Minister under section 32(5) of the LRA if
challenged
on grounds of reasonableness.  There is no need to decide the
issue in this case; it suffices to say that structural,
prudential
and doctrinal considerations favour such an interpretation.
103.
In the final analysis, the judicial power of review in relation to
the decision of the Minister under section 32(5) of the
LRA to extend
a minority collective agreement concluded in a bargaining council, if
not extensive, is certainly adequate and
prima
facie
or presumptively consonant with the right to administrative justice
in section 33 of the Constitution. The whole gamut of appropriate

review grounds is probably available to any aggrieved litigant. But
even were it to be held that the Minister’s exercise
of
discretion under section 32(5) of the LRA is not administrative
action, on account of it being delegated legislative action,
and thus
PAJA has no application, then again it would still be subject to
legality review under the rule of law provision in section
1 of the
Constitution.
[58]
The result
will not be much different. Review on grounds of legality and
rationality will be available to aggrieved litigants.
While perhaps
not as extensive as a PAJA review, the availability of such a
safeguard negates the FMF argument that the extension
of a collective
agreement by the Minister is not subject to judicial supervision.
And, as I discuss more fully later, there is
no legal or
constitutional basis for substituting the standard of rationality in
a legality review with a requirement of public
interest.
Judicial
review of the decision of the Minister under section 32(2) of the LRA
104.
The extent of judicial supervision of the Minister’s power to
extend a majority collective agreement of a bargaining
council is
undeniably less far-reaching or protective. It is this incontestable
truth that lies at the heart of the FMF complaint.
The rationale for
a more restricted review finds validation in the principle of
majoritarianism. Where the agreement is negotiated
and concluded by
bargaining agents who represent and employ the majority falling
within its coverage, the legislature considers
it justifiable to
lower the level of Ministerial and judicial scrutiny. The FMF doubts
the legitimacy, morality and legality of
that justification. It urges
the court to hold the scheme constitutionally invalid or inconsistent
and to introduce a standard
of administrative justice applicable to
the extension of majority collective agreements under section 32(2),
if not quite equivalent
at least of similar effect to that applicable
under section 32(5) of the LRA, by converting the Minister’s
mechanical power
or duty to a discretionary power to extend
agreements only if it is in the public interest to do so.
105.
While it may be true that the review remedy in relation to exercises
of power under section 32(2) of the LRA is more attenuated,
the FMF
is guilty of overstatement when it complains that there will be no
supervision. It is inevitable from a practical perspective
that the
constitutional right to reasonable and fair administrative action
will be abridged where the action in question comprises
the exercise
of a mechanical power. In such instances the reasonableness or
rationality requirement lies in making the connection
between the
jurisdictional facts and the exercise of the non-discretionary power.
The determination of the jurisdictional facts
and the action
following upon it cannot be isolated from each other. Should the
functionary refuse to exercise the power even though
the
jurisdictional facts are present (or exercise the power when a
jurisdictional fact is not present), the administrative action
would
not only be unlawful, but also unreasonable or irrational.
106.
The jurisdictional facts set out in section 32(3) of the LRA are
moreover objectively justiciable and are preconditions to

jurisdiction and legality. They are of three kinds: the first are the
pre-requisites of majoritarianism; the second guarantee an

independent and fair system of exemption; while the third (in section
32(3)(g) of the LRA) offers protection against discrimination
–
the terms of the collective agreement may not discriminate against
non-parties. It is only once and if these objectively
justiciable
preconditions are present that the agreement can be extended. But
once they are confirmed, the Minister has no discretion
and must act
mechanically. Although her decision in this regard constitutes
administrative action, it is doubtful, once the legality
requirements
are met, that her decision will be reviewable on grounds of
substantive reasonableness or strict due process. The
legislature
consciously constructed the mechanical power to exclude a broad or
extensive reasonableness review. Where the legislative
remedy to the
perceived mischief so clearly indicates otherwise, any suggestion
that section 32(2) should be suffused with a reasonableness

requirement is misplaced. And any departure from the strict
requirements of due process may well be reasonable and justifiable
in
the circumstances.
[59]
107.
And this supposition brings us to what should have been the true (or
at least the most appropriate) question for determination
in this
application. The exclusion of reasonableness and strict due process
review in relation to the power in section 32(2) of
the LRA is a
limitation of the constitutional right to reasonable and procedurally
fair administrative action enshrined in section
33 of the
Constitution. The analysis then shifts to an investigation by the
court under section 36(1) of the Constitution as to
whether the
limitation is reasonable and justifiable in an open and democratic
society based on human rights, taking into account
all relevant
factors, including: (a) the nature of the right; (b) the importance
of the purpose of the limitation; (c) the nature
and extent of the
limitation; (d) the relation between the limitation and its purpose;
and (e) less restrictive means to achieve
its purpose. Perhaps
distracted by the rule of law argument, and the abandonment of
reliance on the Bill of Rights and section
36 of the Constitution,
none of the parties got to grips in a meaningful way in argument with
this key enquiry.
108.
In paragraph 47 of the founding affidavit the FMF made out a cogent
case that section 32(2) and (3) of the LRA infringe section
33 of the
Constitution. As described earlier, it altered course after some of
the answering affidavits were filed. Its initial
argument asserted
erroneously that coercive powers can only be exercised by organs of
state. But more pertinently, the FMF contended
further that a
coercive power must be exercised in a manner that is reasonable and
procedurally fair and that a decision-maker’s
concern must be
with the public interest before it can be reasonable (a doubtful
proposition to which I revert later). Any deficiency
in this regard,
it maintained, would be an infringement of section 33 of the
Constitution.
[60]
Confronted
with the justifiability analysis put up by some of the respondents,
the FMF changed tack and accused the respondents
of misconceiving the
application because the case now advanced on behalf of the FMF chose
not rely on a contravention of the Bill
of Rights. Despite that
stance, it complained in its heads of argument that the absence of a
reasonableness or rationality review
infringed the constitutional
right. The FMF’s precise standpoint about whether section 32(2)
of the LRA infringes section
33 of the Constitution was thus
something of a moving target and difficult to pin down.
109.
The FMF’s reliance upon a legality review under section 1 of
the Constitution seems to me to be an expedient (albeit
not very
convincing) way of avoiding a justifiability analysis under section
36 of the Constitution. If an analysis under section
36 of the
Constitution concludes that the circumscribed and limited nature of
the remedy for review of the mechanical power in
section 32(2) and
(3) of the LRA is a reasonable and justifiable limitation of the
right to administrative justice, despite excluding
review on broader
grounds of reasonableness and strict due process, then the provisions
are more than presumptively constitutional,
lawful and in compliance
with the principle of legality. A finding of constitutionality under
section 36 of the Constitution surely
will preclude any argument that
the principle of constitutional supremacy and the rule of law in
section 1(c) of the Constitution
have been violated. The
constitutional paradigm and the rule of law (encompassing the
principle of reasonable and justifiable constitutional
limitation)
are brought to bear in a section 36 analysis. If the analysis yields
a result that the mechanical power is a reasonable
and justifiable
limitation of the rights to administrative justice, the provisions of
the LRA are consistent with the Constitution
and hence there can be
no legal basis for supplying a constitutional remedy under section
172 of the Constitution in the form of
substituting the mechanical
power with a discretion and the reading in of a requirement that the
discretion may only be exercised
in the public interest or for that
matter in a reasonable and fair manner.
110.
On the basis of the limited evidence and argument placed before us in
relation to this narrow but decisive issue, it seems
to me that the
restricted judicial power of review in relation to the mechanical
power of the Minister under section 32(2) and
(3) of the LRA is
indeed a reasonable and justifiable limitation upon the right to
reasonable administrative action for the following
reasons. The
section aims to give effect to a legislative policy of industrial
pluralism, voluntarism and orderly collective bargaining
permitted by
the spirit and purport of the constitutional right to engage in
collective bargaining in section 23(5) of the Constitution,
and
international law. The perceived advantage of the constrained
discretion in section 32(2) of the LRA in a majoritarian situation
is
certainty and predictability in the outcomes of bargaining that
incentivise participation at sectoral level, which will result
in
uniformity brought about by a balance of power at that level. That is
a legitimate legislative purpose. Though there may be
forceful
ideological, moral and practical objections to that legislative
policy, due judicial deference recognises that Parliament
is free to
adopt whatever economic policy may reasonably be deemed to promote
public welfare. In
Nebbia
v New York
[61]
the US Supreme Court made the point in this way:
“
With the wisdom of
the policy adopted, with the adequacy or practicability of the law
enacted to forward it, the courts are both
incompetent and
unauthorised to deal. The course of decision in this court exhibits a
firm adherence to these principles. Times
without number we have said
that the Legislature is primarily the judge of the necessity of such
an enactment, that every possible
presumption is in favour of its
validity, and that though the court may hold views inconsistent with
the wisdom of the law, it
may not be annulled unless palpably in
excess of legislative power.”
111.
A law which has a reasonable (rational) relation to a proper
legislative purpose will not be in excess of legislative power.
Our
Constitutional Court has equally emphasised that it is not the
function of the courts to decide whether one legislative route
is
preferable to another. In
Ronald
Bobroff and Parties Inc v De La Guerre
[62]
it held:
“
The Constitution
allows judicial review of legislation, but in a circumscribed manner.
Underlying the caution is the recognition
that courts should not
unduly interfere with the formulation and implementation of policy.
Courts do not prescribe to the legislative
arm of government the
subject-matter on which it may make laws. But the principle of
legality that underlies the Constitution requires
that, in general,
the laws made by the legislature must pass a legally defined test of
‘rationality’:
‘
The fact that
rationality is an important requirement for the exercise of power in
a constitutional state does not mean that a Court
may take over the
function of government to formulate and implement policy. If more
ways than one are available to deal with a
problem or achieve an
objective through legislation, any preference which a Court has is
immaterial. There must merely be a rationally
objective basis
justifying the conduct of the legislature’.”
112.
The principle of majoritarianism in collective bargaining, based on
coverage rather than agent representivity, is consistent
with
international law. Section 39(1)(b) of the Constitution provides that
when interpreting the Bill of Rights a court must consider

international law. Likewise, section 3 of the LRA obliges the courts
interpreting the LRA to do so in accordance with the public

international law obligations of the Republic. The ILO in various
instruments has confirmed that systems of collective bargaining
with
exclusive rights for the most representative trade union are
compatible with the principles of freedom of association and
that the
extension of collective agreements to non-parties is not contrary to
the principle of voluntary collective bargaining.
[63]
Majoritarianism
is a legitimate means of fostering strong collective bargaining
agents providing a counter-balance to the organised
and collective
shareholder power of corporate employers. The system has advantages
for both employers and workers in the promotion
of orderly collective
bargaining and the avoidance of the proliferation of trade unions.
Our law is proportionately tailored in
that it does not compel
majoritarianism, it merely offers inducements and benefits for
bargaining agents in contexts where it is
achieved. The mechanical
extension of bargaining council collective agreements is one example.
Despite the subordination of individual
interests to those of the
group, the high numerical threshold requirements, together with the
additional safeguards provided in
section 32(3) of the LRA, ensure
proportionality in the system of extension and amount to a
justifiable limitation of the constitutional
rights to administrative
justice, equality and freedom of association in a majoritarian
situation.
113.
What is more, the limitation of the right of administrative justice
by section 32(2) and (3) of the LRA is ameliorated considerably
by
two of the substantive jurisdictional preconditions in section 32(3):
the necessity for an independent system of exemption and
the
protection against discrimination. These are “the main safety
valves” to protect the interests of non-parties in
a
majoritarian situation. They are purposely intended as carefully
tailored and proportional means to minimise adverse impacts
on
non-parties.
114.
Once again, it is not the place of the courts to prescribe to the
legislature about its preferred policy choices about the
means of
legislative intervention; provided they are proportionately tailored.
Parliament’s choice of this mechanism over
a broad Ministerial
discretion is a legitimate policy preference to favour the resolution
of labour issues by domestic expert tribunals.
The exemption
procedure provides several layers of protection where a majority
collective agreement has been extended to non-parties
by the
Minister. A person wishing to be exempted from an extended collective
agreement will have a right to apply to the bargaining
council for an
exemption; appeal the refusal of exemption to an independent appeal
body; and apply to have the decision judicially
reviewed and set
aside if the application is ultimately denied. The decision of the
appeal body will constitute administrative
action and hence will be
subject to PAJA review. There is uncontroverted evidence that the
exemption bodies have had some success
in practice and provide an
effective safeguard.
115.
The FMF maintains that the exemption remedy is insufficient in three
respects. It contended in general terms that the public
interest
requirement is not satisfied by the provisions governing exemption.
In its view, the process of exemption may mitigate
the hardship that
extension of a collective agreement can cause, but that is no answer
to the argument that an extension of a collective
agreement to
non-parties which is not in the public interest is unconstitutional.
However, it follows logically that if the argument
itself is wrong,
which it is, then the exemption process does play a mitigating role.
Secondly, consistent with its stratagem to
avoid a justifiability
analysis, the FMF argued that the existence of an exemption process
was “at best a factor to be taken
into account under the
limitation clause (section 36 of the Constitution)”. For the
reasons explained, a justifiability analysis
under section 36 is
unavoidable in this dispute. That being the case, the exemption
procedure is indeed a factor to be taken into
account, and a decisive
one at that. Finally, the FMF complains that the right to seek
exemption is not extended to the categories
of members of the public
most severely affected by extensions – the outsiders, the
unemployed and new employer entrants.
It did not elucidate this point
with reference to the text of the statute. I assume though that it
believes (rightly in my view)
that the provisions of section 32 can
be interpreted to limit the right to seek exemption to non-parties
identified in the collective
agreement, the bargaining council
resolution for extension and the written request to the Minister. If
that is indeed correct,
outsiders may not be able to seek exemption
but are nonetheless not entirely without a remedy. If adversely
affected, there will
be no obligation on them to exhaust domestic
remedies not available to them. They can resort to the ordinary
administrative law
and Bill of Rights remedies. The exemption remedy
is nonetheless a useful protective mechanism for those persons
immediately impacted
by any extension of a collective agreement.
116.
In addition, the Minister may not exercise her mechanical power under
section 32(2) of the LRA unless she is satisfied in terms
of section
32(3)(g) that the terms of the collective agreement do not
discriminate against non-parties. None of the parties made
any
submissions about the nature and extent of this protection. For the
reasons explained earlier, this jurisdictional fact is
objectively
justiciable. If it is in fact found that the terms of a collective
agreement do discriminate then the legal pre-requisites
to the
Minister’s jurisdiction and exercise of power will be absent.
One can anticipate that non-parties might complain that
they are not
similarly situated to the large employers and trade unions that are
members of bargaining councils and should therefore
not be similarly
treated. The Minister and the courts will need to be satisfied that
there is a rational basis for any differential
treatment.
117.
Finally, sight must not be lost of the fact that once the Minister
publishes the extended collective agreement in the Government

Gazette, as required in terms of section 32(2) of the LRA, the
agreement assumes the character of subordinate legislation.
[64]
At common law such legislation is reviewable on the grounds
enumerated in the English case of
Kruse
v Johnson
[65]
where Lord Russell famously held:
“
If, for instance,
…. [by-laws] were found to be partial and unequal in their
operation as between different classes; if they
were manifestly
unjust; if they disclosed bad faith; if they involved such oppressive
or gratuitous interference with the rights
of those subject to them
as could find no justification in the minds of reasonable men, the
Court might well say: “Parliament
never intended to give
authority to make such rules; they are unreasonable and
ultra
vires
”.”
118.
In conclusion, therefore, the contention of the FMF that the
legislative scheme for the extension of bargaining council collective

agreements is unconstitutional because of the absence of adequate
state and judicial control is wholly wrong. COSATU, NUMSA and
the
Minister are correct in their submissions that the constraints and
judicial supervision provided in the LRA, read with PAJA
or the
constitutional principle of legality, give adequate expression to the
constitutional right to administrative justice and
in practice may
prove more protective than the remedy sought by the FMF. There is a
possibility that bargaining council decisions
may be reviewed on PAJA
or rationality grounds, but even if they cannot be, the discretionary
power of the Minister to extend minority
collective agreements
certainly is reviewable on PAJA grounds or for rationality, and the
attenuated power to review the extension
of majority collective
agreements is a reasonable and justifiable limitation upon the rights
of administrative justice, by reason
of the legitimate and rational
basis for the application of the majoritarian principle in collective
bargaining, the proportional
safeguards afforded by the exemption
system, the protection against discrimination granted by section
32(3)(g) and the common law.
119.
In the premises, section 32 is not inconsistent with the Constitution
and there is accordingly no jurisdictional basis to make
an order in
terms of section 172 of the Constitution substituting the word “must”
in section 32(2) of the LRA with
the word “may”.
The
requirement to act in the public interest and the alleged excessive
delegation of legislative power
120.
There is another dimension to the FMF argument deserving of separate
consideration; albeit at risk of being repetitive. The
crux of the
FMF constitutional challenge, as we have seen, concerned the limited
scope of judicial review; the other angle to it
is the contention
that the scheme amounts to an excessive delegation of legislative
power to a private actor not obliged to act
in the public interest
and the claim that such too is inconsistent with the rule of law
requirement in section 1 of the Constitution.
As Mr Brassey SC,
counsel for the FMF, put it, the bargaining councils in effect enjoy
legislative power even though, they are
not public instrumentalities
bound by law to pursue the public interest, are at liberty to pursue
their own self-interest and do
so. The FMF’s solution to this
once again would be to bestow a discretionary power on the Minister
requiring her to act in
the public interest when deciding to extend a
collective agreement under section 32 of the LRA.
121.
The argument misconstrues the situation at a number of levels.
Firstly, the characterisation of the bargaining councils as
private
actors is misleading. The participants in the bargaining council, the
unions and the employers’ organisations might
be private
actors, and their negotiations something other than administrative
action, but the bargaining council vested with legal
personality by
the provisions of the LRA, exercising public powers and performing
public functions, is an organ of state whose
conduct in certain
circumstances will constitute administrative action or be subject to
the constitutional principle of legality.
But even were it not an
organ of state (a functionary or institution exercising a public
power of performing a public function)
in terms of section 239 of the
Constitution, but merely a juristic person exercising public power or
performing a public function,
all else being equal, its decisions in
such instances will be administrative action as defined in section 1
of PAJA or at least
subject to legality review. It is the public
nature of the power or function implicated in the action, not the
character of the
person exercising it that is relevant and
decisive.
[66]
The term
“private actor” if not a mischaracterisation is perhaps
something of a red herring. Furthermore, the bargaining
council
arguably does not exercise any legislative power. It is the Minister
under section 32(2) of the LRA who exercises the delegated
power of
law-making through the act of promulgation. The bargaining council
perhaps exercises no power at all under section 32(1)
of the LRA. It
merely makes a written request (maybe a recommendation) to the
Minister. Possibly, therefore, it only performs a
public function.
122.
That said, there is truth in the assertion that any collective
agreement normally will advance the private interests of the
parties
to the bargaining council. The safeguard against that must lie in the
judicial power of review with its inherent protection
against conduct
inter alia
tainted by ulterior purpose, arbitrariness or bad
faith, and in circumscribed instances by the legitimate claims of
majority rule
in a social democracy. The FMF believes more is
required and insists that legislative power may be exercised only in
the public
interest.
123.
The FMF’s argument in this respect (coinciding with its
argument about judicial review) is that section 1(c) of the
Constitution, the rule of law provision, would have us introduce a
free standing constitutional requirement for all legislation
that
public power should be exercised only in the public interest. Thus
Parliament may allocate public legislative power to private
actors,
only if and to the extent that they can exercise these powers in the
public interest.
124.
Mr Trengove SC, for COSATU, argued convincingly that there is no such
constitutional requirement. The clearest indication of
that is in the
definition of an “organ of state” in section 239 of the
Constitution, which is defined to mean:
“
(a) any department
of state or administration in the national, provincial or local
sphere of government; or
(b) any other functionary
or institution –
(i) exercising a power or
performing a function in terms of the Constitution or a provincial
constitution; or
(ii) exercising a public
power or performing a public function in terms of and legislation,
but does not include a court or a judicial
officer.”
The
definition is a clear indication that the Constitution is comfortable
to vest public power in private hands (any other institution)
and
imposes no duty to act in the public interest. Plainly, the power or
function performed must be for a public purpose, otherwise
it would
lose its public quality. Public power vested in a state body or a
private institution must be exercised for public purposes.
And when a
private institution exercises public power it is held to account
under the Constitution and PAJA as if it were a state
body.
125.
It is true, as Mr Trengove pointed out, that in many instances
legislation may require a public or private institution to act
in the
public interest. If that is found to be the case, such will be an
indicator that the power required to be exercised or the
function
required to be performed will be a public power or function. It by no
means follows that all public powers and functions
must be attended
by that constraint. The presence of a public interest obligation in
specific statutes does not lead to an over-arching
constitutional
principle or duty requiring all public power to be exercised in the
public interest in order to be legal. Moreover,
as held earlier, the
availability of appropriate review remedies defeats the FMF’s
claim of constitutional inconsistency,
meaning there is no legal
basis for granting relief reading in a public interest requirement to
substitute the applicable rational
basis standard.
126.
The FMF in addition placed reliance upon the decision of the Irish
Supreme Court in
McGowan
and others v Labour Court, Ireland and others
[67]
in support of its complaint of excessive delegation. The court in
that case was required to pronounce on the lawfulness of Part
III of
the Industrial Relations Act of 1946. The provisions in question
provided for a mechanism by which a group of employers
and trade
unions could apply to the Irish Labour Court to register an
employment agreement regulating remuneration and other conditions
of
employment. Once registered, the agreement was deemed to form part of
the employment contract of all employers and employees
in the sector
whether they consented to it or not. The court tested the legitimacy
of the enactment by asking
“
whether that which
is challenged as an unauthorised delegation of parliamentary power is
more than a mere giving effect to principles
and policies which are
contained in the statute itself. If it be, then it is not authorised;
for such would constitute a purported
exercise of legislative power
by an authority which is not permitted to do so under the
Constitution. On the other hand, if it
be within the permitted limits
– if the law is laid down in the statute and details only are
filled in or completed by the
designated Minister or subordinate body
– there is no authorised delegation of legislative power.”
127.
The Irish Supreme Court held:
“
This is not a
grant of a power to make regulations over a limited area subject to
explicit or implicit guidance and review. It is
an unlimited grant of
power in relation to employment terms, made to bodies unidentifiable
at the time of the passage of the legislation
and without
intermediate review. On its surface therefore, this appears to be a
fatal breach of Article 15.2.1 “Law”
is undoubtedly being
made for the State, and by persons other than the Oireachtas.”
In
other words, it concluded that there was an unconstitutional and
impermissible delegation of legislative power.
128.
Mr Budlender, led by Mr Marcus SC, counsel for the Minister,
submitted correctly that the decision is unhelpful in the South

African context because of the obvious contrasts between the two
constitutional systems and the different legislative frameworks.
He
made four points, all of which are well founded. First, in
McGowan
,
the Court emphasised that the terms of the agreement were determined
by private parties – not a subordinate public body
governed by
public law. Second, the court applied a strict approach to the
question of delegation of legislative powers and, in
particular,
concluded that such delegations to private bodies violated the
Constitution. In
AAA
Investments (Pty) Ltd v Micro Finance Regulatory Council and
Another
,
[68]
our Constitutional Court adopted precisely the opposite approach.
Third, there was no exemption provision in the Irish legislation.
On
the contrary, the Irish court emphasised that non-parties are “at
risk of enforcement by prosecution or civil claim, but
cannot seek a
variation of the agreement”. This is in complete contrast to
the exemption provisions in section 32 of the
LRA. Lastly, unlike our
Constitution, the Irish Constitution contains no fundamental right to
fair labour practices or collective
bargaining.
129.
I agree with Mr Budlender that in light of these differences the
McGowan
decision is of no assistance and cannot be relied upon
to hold that section 32 of the LRA is inconsistent with the
Constitution
on the grounds of excessive delegation of legislative
powers.
130.
In the premises, the application cannot succeed and must be dismissed
in its entirety.
Costs
131.
With regard to the question of costs, while the FMF application has
been shown in a number of respects to be misconceived,
and
fundamentally so, I have no doubt that it was motivated by the best
of intentions. Our country prides itself in the promotion
of a strong
civil society. Although there will be many opposed ideologically to
the classic liberal and free market agenda advanced
by the FMF, there
should be no quibble with its activism on behalf of small business
and the unemployed. The most intractable social
and economic problem
facing our country is the persistently high level of unemployment and
its attendant negative social consequences.
There are differing views
about how to solve it. Many will argue that as a society we need to
think outside the box and cannot
simply continue with business as
usual. The FMF is intent upon challenging the prevailing dogma. It
does so as a morally responsible
citizen whose opinion, if not
heeded, deserves at least to be heard. We need not look back far into
our history to recall that
the censured opinions of today may well
become the moral directives of tomorrow. As the Constitutional Court
said in
S
v Mamabolo,
[69]
the open market-place of ideas is all the more important to us in
this country because our democracy is not yet firmly established
and
must feel its way. For that reason civil society activists should not
be discouraged from pursuing constitutional claims for
fear of being
mulcted in costs.
[70]
132.
Moreover, although the FMF’s constitutional argument, no doubt
crafted by Mr Brassey, misses the mark, that in no way
detracts from
its elegance and admirable ingenuity. It might not have yielded what
the FMF asked for, but by compelling the debate
in the way it did,
the application in its result has usefully demarcated the parameters
of power and administrative justice in
the legislative scheme
governing collective bargaining at sectoral level.
133.
For those reasons, despite its lack of success in the application, I
am inclined not to award costs against the FMF.
The
order
134.
In the premises, the following orders are made:
i) The application is
dismissed.
ii) There is no order as
to costs.
____________________
JR
MURPHY
JUDGE
OF THE HIGH COURT
I
agree
_____________________
KE
MATOJANE
JUDGE
OF THE HIGH COURT
I
agree
_____________________
AC
BASSON
JUDGE
OF THE HIGH COURT
Date
Heard: 22 February 2016
Counsel
for Applicant: Adv MSM Brassey SC
Adv
F Rautenbach
Adv
MJ Engelbrecht
Instructed
by: Kirchmann’s Attorneys c/o Klagsbruin Edelstein Bosman De
Vries Inc.
Counsel
for the First Respondent (The Minister): Adv G Marcus SC
Adv
M Ramaepadi
Adv
S Budlender
Instructed
by: State Attorney, Pretoria
Counsel
for the Bargaining Councils: Adv G Marcus SC
Adv
S Budlender
Mr
C Mcconnachie (Pupil)
Instructed
by: Moodie & Robertson c/o Manamela Marobela & Associates
Counsel
for MEIBC (20
th
Respondent): Adv AT Myburgh SC
Adv
FA Boda
Instructed
by: Patelia Cachalia Attorneys c/o Bester & Rhoodie Attorneys
Instructed
by(31
st
-34
th
Respondents): Cliffe Dekker
Hofmeyer Inc. c/o Van der Merwe Dutoit Attorneys
Instructed
by(36
th
Respondents): Maserumule Attorneys c/o Ledwaba
Attorneys
Counsel
for 46
th
to 50
th
Respondents: Adv CR Jansen SC
Adv
VD Mtsweni
Instructed
by: KT Mokoena & Associates Inc.
Counsel
for the 51
st
Respondent (NUMSA): Adv JG van der Riet SC
Adv
H Barnes
Instructed
by: Ruth Edmonds Attorneys c/o Christo Coetzee Attorneys
Counsel
for the 52
nd
Respondent (SACTWU): Adv P Kennedy SC
Adv
N Rajab-Budlender
Instructed
by: Haffejee Roskam Savage Attorneys c/o
Macrobert
Inc.
Counsel
for COSATU (Intervening Party): Adv W Trengove
Adv
J Brickhill
Instructed
by:
Cheadle
Thompson & Haysom Inc. c/o
Macrobert
Inc.
[1]
Act 66 of 1995
[2]
2008 (4) SA 367 (CC)
[3]
Kem-Lin
Fashions CC v Brunton and another
(2001)
22 ILJ 109 (LAC) para 20-21; and
CUSA
v Tao Ying Metal Industries and others
[2008] ZACC 15
;
2009
(2) SA 204
(CC) para 56.
[4]
Chapter 2 of the Constitution
[5]
Section 1(c) provides: “The Republic of South Africa is one,
sovereign, democratic state founded on the following values:……(c)

Supremacy of the constitution and the rule of law.” This broad
constitutional principle of legality governs the use of
all public
power. It demands
inter
alia
that the exercise of public power should not be arbitrary or
irrational.
[6]
Sections 27 and 29 of the LRA
[7]
Section 28 of the LRA
[8]
Section 32(3)(b) and (c)
[9]
Section 32(3)(a) and (d)
[10]
Section 32(3)(dA), (e) and (f).
[11]
Section 32(3)(g)
[12]
Section 32(3)(dA), (e) and (f); and section 32(3A).
[13]
D du Toit et al
Protecting
Workers or Stifling Enterprise? Industrial Councils and Small
Business
(1995) 2-5.
[14]
Paras 708-710.
[15]
Section 65(1)(a) of the LRA prohibits participation in industrial
action by parties bound by a collective agreement that prohibits

industrial action in respect of the issue in dispute.
[16]
Section 36 of the Constitution permits the rights in the Bill of
Rights (Chapter 2 of the Constitution) to be limited by a law
of
general application to the extent that the limitation is reasonable
and justifiable in an open and democratic society based
on human
rights taking account of the nature of the right, the purpose of the
limitation and less restrictive means of achieving
the purpose.
[17]
Pg 79
[18]
Act 3 of 2000
[19]
The FMF’s supposition that the actions of the Minister and the
bargaining councils are not administrative action is evident
in the
argument it made (now partly abandoned) to the effect that the
statutory provisions infringed the right to lawful, reasonable
and
procedurally fair administrative action in section 33 of the
Constitution “since the current regulatory framework is
being
delineated by private actors who may be legally accountable …..
but are certainly not accountable through the democratic
political
process as organs of state”.
[20]
The renowned standard of substantive due process laid down by the US
Supreme Court in
Lochner
v New York
[1916] USSC 123
;
243 US 426
(1917) which I discuss below.
[21]
United
States v Carolene Products Co.
304 U.S. 144 (1938)
[22]
President
of the Republic of South Africa v South African Rugby Football Union
2000
(1) SA 1
(CC) para 143
[23]
President
of the Republic of South Africa v South African Rugby Football Union
2000
(1) SA 1
(CC) para 141
[24]
2010 (9) SA (SCA)
[25]
See C Hoexter
Administrative
Law in South Africa
(2ed) 228.
[26]
Minister
of Health v New Clicks SA (Pty) Ltd and others
2006 (2) SA 311
(CC) para 136-142.
[27]
[2005] ZASCA 43
;
2005 (6) SA 313
(SCA) para 23
[28]
Section 1(dd) of PAJA excludes the legislative functions of
Parliament, a provincial legislature or a municipal council from
the
definition of administrative action.
[29]
[1998] ZACC 17
;
1999 (1) SA 374
(CC) para 27
[30]
2006 (2) SA 311
(CC)
[31]
I discuss the standard of scrutiny under a reasonableness review
later in the judgment when I deal with the review of the discretion

of the Minster in terms of section 32 of the LRA.
[32]
Pharmaceutical
Manufacturers Association of SA: In re Ex Parte President of the
Republic of South Africa
[2000] ZACC 1
;
2000 (2) SA 674
(CC) para 85
[33]
Pharmaceutical
Manufacturers Association of SA: In re Ex Parte President of the
Republic of South Africa
[2000] ZACC 1
;
2000 (2) SA 674
(CC) para 91
[34]
The text of the relevant part of section 239 of the Constitution is
set out below in paragraph 124 of this judgment.
[35]
Section 1(aa) of PAJA
[36]
Permanent
Secretary, Department of Education and Welfare, Eastern Cape v Ed-U
College (PE) (Section 21)
2001 (2) SA 1
(CC) para 18
[37]
Greys
Marine Hout Bay (Pty) Ltd v Minister of Public Works
[2005] ZASCA 43
;
2005 (6) SA 313
(SCA) para 27
[38]
Section 32(3)(a) of the LRA
[39]
C Hoexter
Administrative
Law in South Africa
(2ed)
47
[40]
Dawood
and Another v Minister of Home Affairs and Others
[2000] ZACC 8
;
2000
(3) SA 936
(CC) para 47
[41]
See section 29(11) and section 61(3)(b) of the LRA
[42]
Kabinet
van die Tussentydse Regering vir Suidwes-Afrika v Katofa
1987
(1) SA 695 (A)
[43]
[2008] ZACC 11
;
2008 (6) SA 129
(CC) para 60
[44]
C Hoexter
Administrative
Law in South Africa
(2ed)
300-302.
[45]
Section 6(2)(e) of PAJA. Section 3(5) of PAJA allows administrators
to follow statutory procedures different to those in PAJA.
[46]
298 US 238, 56 S. Ct 855 (1936)
[47]
In section 6(2)(h) of PAJA
[48]
Section 6(2)(f)(ii) of PAJA
[49]
[1947] 2 All ER 680 (CA).
[50]
C Hoexter
Administrative
Law in South Africa
(2ed)
346.
[51]
[2004] ZACC 15
;
2004 (4) SA 490
(CC) para 45
[52]
198 US 45 (1905)
[53]
243 US 426 (1917)
[54]
291 US 502 (1934)
[55]
Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs
[2004] ZACC 15
;
2004 (4) SA 490
(CC) para 48
[56]
Minister
of Health and Another v New Clicks South Africa (Pty) Ltd and Others
2006 (2) SA 311
(CC) para 108
[57]
Niewoudt
v Chairman, Amnesty Subcommittee, Truth and Reconciliation
Commission
2002 (3) SA 143
(C) 164G-H
[58]
Pharmaceutical
Manufacturers Association of SA: In re Ex Parte President of the
Republic of South Africa
2000 (2) SA 674 (CC)
[59]
See sections 3(4)(a) and 4(4)(a) of PAJA
[60]
Paragraph 36.3 of the founding affidavit
[61]
291 US 502 (1934)
[62]
2014 (3) SA 134
(CC) para 6
[63]
Digest
of the ILO Freedom of Association Committee
para
950 and 1052. It may be that
Recommendation
98 of the ILO
sets a higher standard of procedural fairness than that in section
32(2) of the LRA by providing that non-parties should be given
an
opportunity “to submit their observations” before any
extension. No argument was made, or relief sought from us,
that
section 32(2) of the LRA should be corrected to provide due process
akin to that available to non-parties under section
32(5)(c) and
(d).
[64]
South
African Association of Municipal Employees (Pretoria Branch) and
Another v Pretoria City Council
1948
(1) SA 11
(T) at 17; and
S
v Prefabricated Housing Corporation (Pty) Ltd and Another
1974
(1) SA 535
(A) at 540B
[65]
[1898] 2 QB 91
at 99-100. It has been suggested that the need for
review on these grounds is diminished by reason of the existence of
Bill of
Rights review – C
Hoexter:
Administrative Law in South Africa
(2ed) 333.
[66]
AAA
Investments (Pty) Ltd v Micro Finance Regulatory Council and Another
[2006] ZACC 9
;
2007
(1) SA 343
(CC) at paras 40 et seq
[67]
[2013] IESC 21
[68]
[2006] ZACC 9
;
2007 (1) SA 343
(CC) at paras 40 et seq
[69]
[2001] ZACC 17
;
2001 (3) SA 409
(CC) para 37
[70]
Biowatch
Trust v Genetic Resources
2009
(6) SA 232
(CC).