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[2020] ZALAC 8
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National Union of Metalworkers of South Africa v Commission for Conciliation Mediation and Arbitration and Others (PA6/19; PR03/18 ; PR50/18) [2020] ZALAC 8; (2020) 41 ILJ 1629 (LAC) (18 February 2020)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, PORT ELIZABETH
LAC
Case no: PA6/19
LC Case no: PR03/18 &
PR50/18
In
the matter between
:
NATIONAL
UNION OF METALWORKERS
OF
SOUTH
AFRICA
Appellant
and
COMMISSION
FOR CONCILIATION
MEDIATION
AND ARBITRATION
First Respondent
FEIZAL
FATAAR N.O.
Second Respondent
SOLIDARITY
TRADE UNION
Third Respondent
UASA
Fourth Respondent
METAL
AND ENGINEERING INDUSTRIES
BARGAINING
COUNCIL
Fifth Respondent
MOTOR
INDUSTRY BARGAINING COUNCIL
Sixth Respondent
WIDNEY
TRANSPORT COMPONENTS (PTY) LTD
Seventh Respondent
RAMSAY
ENGINEERING (PTY) LTD
Eighth Respondent
EURO
METAL FINISHES (PTY) LTD
Ninth Respondent
AUTO
INDUSTRIAL MACHINING DIVISION
Tenth Respondent
ISANDO
FOUNDRY DIVISION
Eleventh Respondent
HUBCO
FORGINGS DIVISION
Twelfth Respondent
AUTO
INDUSTRIAL GROUP (PTY) LTD
Thirteenth
Respondent
AUTO
INDUSTRIAL FOUNDRY DIVISION
Fourteenth
Respondent
AUTOCAST
SA (PTY) LTD
Fifteenth Respondent
AUTOCAST
SA (PTY) LTD ALUMINIUM
Sixteenth
Respondent
BORBET
SA (PTY) LTD
Seventeenth Respondent
DANA
SPICER AXLE SA (PTY) LTD
Eighteenth Respondent
MW
WHEELS SA (PTY) LTD
Nineteenth Respondent
SP
METAL FORGINGS BOKSBURG (PTY) LTD
Twentieth Respondent
SP
METAL FORGINGS UITENHAGE
(PTY)
LTD
Twenty-First Respondent
TORRE
AUTOMOTIVE (PTY) LTD
Twenty-Second Respondent
ZF
LEMFORDER SA (PTY) LTD
Twenty-Third Respondent
MALBEN
ENGINEERING CC
Twenty-Fourth Respondent
Heard:
26 November 2019
Delivered:
18 February 2020
Summary:
Demarcation dispute -
Coram:
Davis and Sutherland JJA and Murphy AJA
JUDGMENT
SUTHERLAND
JA
Introduction
[1]
The controversy in this appeal is about whether the regulation of the
Terms and Conditions
of Employment of employees in businesses which
are engaged in the manufacture of components to be used in assembling
motor cars
properly belongs within the jurisdiction of the Metal and
Engineering Industries Bargaining Council (MEIBC) or within the
jurisdiction
of the Motor Industry Bargaining Council (MIBCO).
[2]
Section 62 of the Labour Relations Act 66 of 1995 (LRA) regulates
such disputes.
[1]
The two
Bargaining councils and several employers cited, in the appeal, as
the 7
th
to 25
th
respondents were parties to a demarcation enquiry. The employer
respondents made common cause with MIBCO (the 5
th
respondent) that they belonged within its jurisdiction. MEIBC (the
4
th
respondent) contended that they belonged under its jurisdiction.
NUMSA, the present appellant, likewise contended that the several
employers be regulated by MEIBC.
[3]
A commissioner issued an award in which some of the employers were
assigned to each
of the two bargaining councils. The orders made in
the award at [59] – 61] read thus:
‘
[59] The
applicants, Auto Industrial Foundry Division, Autocast SA (Pty) Ltd,
Autocast SA (Pty) Ltd Aluminium, Borbet SA (Pty) Ltd,
Dana Spicer
Axle SA (Pty) Ltd, MW Wheels SA (Pty) Ltd, SP Metal Forgings
Uitenhage (Pty) Ltd and ZF Lemforder SA (Pty) Ltd, SP
Metal Forgings
Boksburg (Pty) Ltd and Malben Engineering CC fall within the scope
and registration of the
….
Metal and Engineering
Industries Bargaining Council.
[60] The applicants, Auto
Industrial Machining Division Isando Foundry Division, Hubco Forgings
Division, Widney Transport Components
(Pty) Ltd, Ramsay Engineering
(Pty) Ltd, and Euro Metal Finishes (Pty) Ltd, fall within the scope
and registrFfitation of the fifth
respondent. They are demarcated
from the scope and registration of the fourth respondent to that of
the
……. Motor Industry
[61] Torre Automotive
falls within the scope and registration of the
[MEIBC]’
[4]
This award aggrieved several of the employers assigned to MEIBC and
also aggrieved
MIBCO who thereupon brought independent review
applications. A cross-review was brought too, about the employers
assigned to MIBCO.
The matters were consolidated. A single judgment
was given.
[2]
The judgment set
the award aside in part and dismissed the cross-review.
[5] The
order of the Review Court reads thus:
1.
That part of the award issued by the second respondent [the
commissioner] on 31 July 2017 under case number ECPE 2470-15 in which
he found that certain of the applicants in the proceedings
under
review fall within the scope of registration of the sixth respondent
[MEIBC] is reviewed and set aside.
2.
Paragraphs 59 and 61 of the award are substituted with a ruling
that
the applicants fall within the scope of the Motor Industry Bargaining
Council, and are so demarcated.
3.
The cross-review and conditional cross-review are dismissed.
4.
There is no order as to costs.
[6]
In short, the review judgment reversed the assignment of employers to
the MEIBC and
assigned them all to MIBCO. NUMSA appeals against that
judgment, seeking, in effect, an order assigning all to MEIBC.
The issue on Appeal
[7]
At the appeal hearing, the nub of the case was refined. It had become
common cause
that the award had to be set aside. The reason for
setting it aside was that the commissioner had made a material
misdirection
by subordinating the enquiry to the fact that in 1962,
there had been a Demarcation Determination by the Minister, later
modified
by a Clarification Notice in 1964 by the then Industrial
Tribunal. The substance of these instruments had the effect of
subjecting
the respondent employers mentioned in paragraph [59] of
the award, as cited above, to the jurisdiction of MEIBC. The
commissioner
incorrectly supposed that the Determination and the
Clarification remained binding on these parties in 2017 and therefore
did not
evaluate afresh the question of whether these employers
should be subjected to the jurisdiction of MEIBC. The balance of the
employers
were assigned by the commissioner to the jurisdiction of
MIBCO.
[8]
Accordingly, because the award was tainted by that irregularity, it
had to follow
that it was correctly set aside on review. The direct
consequence of such a finding, logically, is that no part of the
award could
stand or be severed and revived because the contamination
extended to the whole enquiry. Such circumstances therefore imply
that
the Review Court had to either remit the matter for a fresh
hearing or make the decision that the commissioner had been required
to make.
[9]
The parties are
ad idem
that the matter should not be
remitted. This is a correct stance because there are no facts in
contention and all the factual material
necessary to reach a decision
was before the commissioner and thus also before the Review Court.
The Review Court was therefore
correct to make a demarcation order
itself. Plainly, the self-same considerations about the factual
material are applicable to
the appeal against the Review Court’s
decision.
[10]
Thus, the question of whether to differ from the Review Court’s
judgment on the re-assignment
of the several employers to MIBCO is
straight forward: was that decision correct?
The jurisprudence of
demarcation disputes
[11]
It is at once apparent that demarcation disputes between Bargaining
Councils (or their putative
constituents) are a
sui generis
species of dispute. The very foundation of the idea that various
economic activities can be logically defined and categorised into
silo-like realms is contrived. The exercise of drawing dividing lines
between “industries” must be understood to be
artificial
and is necessary only because of the policy choices which underlie
the effort to distinguish various (frequently closely
related)
industrial activities for the purpose of segmenting the
responsibility of regulating terms and conditions of employment
into
invented convenient sectors, themselves having no objective existence
and being the product of the imagination of the policymakers.
A grasp
of what these policy decisions were made for and what was sought to
be achieved by so doing is a critical dimension of
approaching the
exercise correctly.
[12]
The notion that, for the practical purposes of regulating employment
conditions in economic activities,
by assigning some enterprises to
one or other bargaining council proceeds from the foundational idea
that “grouping”
like with more or less alike is a
sensible pragmatic approach. Central thereto is the attempt, by the
use of words, to describe
the supposedly distinguishable economic
activities in definitions which are almost always complex, wordy and
often hair-splitting.
The task aims at describing the characteristics
or attributes of industrial activities. Then, the characteristics or
attributes
of a business enterprise are described and the two are
compared. Just as it is not objectively possible to determine when
night
ends and day begins, and a practical answer depends on what you
want to pinpoint that moment for, so it is with demarcation of
so-called distinct “industries”.
[13]
Another dimension of the exercise that warrants acknowledgement is
that the exercise is as much
one of creation as of adjudication. The
meaning of words of the defined scope of a bargaining council can be
indeed adjudicated,
but that is not always enough. The management of
the reality that economic activities within the invented sectors,
sometimes differently
described, often overlap and, cannot therefore,
in logic, be truly separated, means that a pragmatic policy decision
to locate
a given enterprise on one or other side of an imaginary
fence is an inescapable aspect of the task of demarcation. It
resembles,
in some respects, an Interest Arbitration.
[3]
What is sought is what may usefully be called the “best fit”–
an idea that defies precision and is axiomatically
fact–specific.
[14] The
nature of the demarcation exercise was addressed by this court in
SA
Municipal
Workers Union
v
Syntell (Pty) Ltd & others
:
[4]
[21] In the main,
arbitrations under the LRA are those which address disputes of right
and are adjudicative proceedings proper.
In s 62, the word
'arbitration' is not used to describe the process. Indeed, if a
'demarcation' issue arises in any ordinary
adjudicative proceedings,
those proceedings must be stayed until the demarcation issue is
decided in the distinct process provided
for in s 62.
[22] The s 62 process, as
is evident from its provisions, contemplates more than a conventional
adversarial contest between interested
parties. It presupposes a
broader investigative role. In such a context, whether or not an onus
in any sense exists is not obvious.
[23] These considerations
which are imbedded in the provisions of the section underscore its
sui generis character. The s 62 process
was commented on by Francis J
in
Coin
Security (Pty) Ltd v CCMA & others
(2005)
26
ILJ
849
(LC)
at
paras
43
and
63
:
'[43] The function of a
CCMA commissioner in a demarcation dispute is a classic case of the
legislature entrusting a functionary
with the power to determine what
facts are about the making of a decision and the power to determine
whether or not they exist.
It is fundamental to the effective
operation of the Act that the commissioner must be a repository of
such power. …
[63] The demarcation
process is one entrusted to a specialist tribunal in terms of the
provisions of the Act.
The demarcation decision is one
involving facts, law and policy considerations
. In demarcation
decisions, there will, more often than not, be no one absolutely
correct judgment. Particularly in decisions of
this sort, and given
the provisions of the Act, there must of necessity be a wide range of
approaches and outcomes that would be
in accordance with the behests
of the Act. Due deference should therefore be given to the role and
functions and resultant decisions
of the CCMA in achieving the
objects of the Act. This approach will not only be consistent with
these principles, but also consistent
with the need for the Act to be
administered effectively.
[24] More recently, Van
Niekerk J affirmed this perspective in
National
Bargaining Council for the Road Freight Industry v Marcus NO &
others
(2011)
32
ILJ
678
(LC)
at
para
22
:
'It should also be
recalled that
Coin Security
is also authority for
the point that a demarcation involves considerations of fact, law and
social policy and that in these
circumstances, due deference ought to
be given to a commissioner making a demarcation award (at para 63 of
the judgment). As I
understand the judgment, in demarcation judgments
there will be, more often than not, no single correct judgment, and
that a wide
range of approaches and outcomes is inevitable. A
reviewing court should be attuned to this reality, and recognize it
by interfering
only in those cases where the boundary of
reasonableness is crossed. Further,
Coin Security
recognizes
that a demarcation is provisional — s 62(9) of the LRA requires
a commissioner to consult with NEDLAC before
making an award. As the
court in
Coin Security
observed, the case for
judicial deference is all the more compelling in these circumstances.
In short, far from encouraging
an expansive approach to a
demarcation, the
Coin Security
judgment requires
this court to recognize the specific expertise of commissioners who
undertake this task and to defer to
that expertise.'
The
factual context
[15]
The employers, who initiated the review application sought to upset
the decision in the award
to assign them to the MEIBC, were at the
time of the section 62 enquiry, subject to the jurisdiction of the
MEIBC and had been
since at least 1962. The point of the demarcation
enquiry was to test whether, in 2017, that position was still the
best fit. The
employers argued it was not.
[16]
At the enquiry, the sole witnesses were Mr Manners, the owner of two
of the enterprises and Mr
Pauw of MIBCO. Manners advanced a rationale
why the
status quo
should not continue. There was no
evidence-based rebuttal put up to sustain the status quo although the
two witnesses were cross-examined.
[17]
The common cause facts were recorded in the award. What these
recorded facts acknowledge is that
every employer is a producer of
motor car components and that their exclusive or dominant enterprise
is the manufacture of car
components. This evidence is summarised in
paragraph [7] of the award. It does not warrant repetition because
the significant inference,
drawn from the facts, is common cause: all
the businesses are predominantly or exclusively manufacturers of
motor vehicle components.
What are the
“industries” that are subject the jurisdiction of MEIBC
and MIBCO?
[18]
Each Bargaining Council has a defined scope as issued by the
Registrar of Labour Relations and
promulgated in the Government
Gazette. The full texts are too labyrinthine to digest and thus only
the portions which are pertinent
to common cause facts are addressed
in this analysis.
[19]
It is useful to begin with the scope of MEIBC. It is described
initially as the “Iron,
steel, engineering and Metallurgical
industries”. The use of plural - “industries” - is
important. It denotes
the omnibus nature of the field sought to be
regulated, a feature that becomes ever more critical in delineating
the margins of
the scope of its jurisdiction.
[20]
There are eight major areas of activity described. The primary
question is whether the employers,
save for one, properly belong in
(c), the “General engineering and manufacturing engineering and
metallurgical industries”
(GEME). It is also alleged by NUMSA
that some of the employers are also covered by (b), the area
described as the “production
of alloys and/or the processing
and/or recovery and/or refining of metals (other than precious
metals) and /or alloys from dross
and/or scrap and/or residues.”
The Plastics Industry, (g) is the location, NUMSA alleges, where one
employer, Torres, belongs,
it being the sole business working in
plastics.
[21]
First, the ramifications of being located in GEME, (c), is dealt with
and I shall return to (b)
and (g).
[5]
[22]
GEME is further defined in a suffix to the definitions, identified as
(a). That definition describes
certain activities which are carried
out on “machines”, “articles” and “vehicles”.
However,
these “vehicles” exclude “a motor
vehicle”. Moreover, this definition of GEME excludes the “motor
industry”. It must follow that the activities described herein
can be identical to the activities in the motor industry,
but for
policy reasons, are excluded from the jurisdiction of MEIBC.
[23]
What constitutes the supposedly distinct “motor industry”
is further defined in (i).
This definition is a long list of
activities related to cars in one way or another. Most are not
pertinent to the controversy.
In (i)(aj) it says this:
‘
the
business of manufacturing establishments wherein are fabricated
[6]
motor vehicle parts and/or spares and/or accessories and/or
components thereof.’
[24]
Thus, having described the GEME, and having excluded from its
purview, the “motor Industry”
as defined, the definition
goes on to exclude from the definition of motor industry, as defined,
certain types of businesses which
perform those motor industry
related activities, but under the specified circumstances are not to
be regarded as being in the motor
industry. In terms hereof,
notwithstanding the nature of the activities covered, the following
types of businesses are not regarded
as being in the motor industry:
‘
For
the purpose of this definition …. “Motor Industry”
as defined above shall not include the following:
(i)
The manufacture of motor vehicle parts and/or accessories and/or
spares and/or components in establishment
laid out for and
normally producing metal and/or plastic goods of a different
character on a substantial scale;
(ii)
…
(iii)
The manufacture and/or maintenance and/or repair of –
(aa) civil
and mechanical engineering equipment and/or parts thereof whether
or not mounted on wheels;
(bb)
agricultural equipment or parts thereof, or
(cc)
equipment designed for use in factories and/or workshops.
Provided that for the
purpose of (aa), (bb) and (cc) above, “equipment” shall
not be taken to mean motor cars, motor
lorries and/or motor trucks;
and
(dd)
motor vehicle or other vehicle bodies and/or superstructures and/or
parts of components thereof made
of steel plate of 3,175mm thickness,
when carried on in establishments
laid out for and normally
engaged in the manufacture and/or maintenance and/or repair of civil
and/or mechanical engineering equipment
on a substantial scale.”
(
underling
supplied)
[25]
Thus, it is plain that the
scale of operations
in relation to
the fabrication of motor components is a material factor in assigning
the enterprise to one or another jurisdiction.
This is illustrative
of the artificial and pragmatic borderlines that are drawn by the
definition of scope. If an enterprise is
substantially not making
motor parts, it is not in the motor industry, even if some such
products are made.
[26]
I return to the major area described in (b) of the definition of the
scope of MEIBC, alluded
to and cited above. Certain of the employers
indeed produce goods from “dross” “scrap” or
“residues”
and on a literal application that definition
covers their activity. However, that cannot be enough or be properly
evaluated in
isolation. It is an example of an overlap between two
bargaining council scope definitions. The very purpose of the
demarcation
enquiry is to determine the best fit. The considerations
pertinent thereto are addressed hereafter.
[27]
I return to the major area (g), the Plastics industry. One employer,
Torres, does not operate
in metal products, but in plastics. Both
plastics, as a substance itself, and the plastics industry are
defined in passages marked
(e) and (f):
‘“
Plastics
Industry” means the industry concerned with the conversion of
thermoplastic and/or thermosetting polymers, including
the
compounding or recycling thereof, or the manufacture of articles or
parts wholly or mainly made of such polymers into rigid,
semi-rigid
or flexible form, whether blown, moulded, extruded, cast, injected,
formed calendered, coated, compression moulded or
rotational moulded,
including in-house printing on such plastics by the manufacturers,
and all operations incidental to these activities;
“
Plastics”
means any one of the group of materials which consist of or contains
as an essential ingredient an organic substance
of a large molecular
mass and which, while solid in the finished state, at some stage in
its manufacture has been or can be forced,
i.e. cast, calendered,
extruded or moulded into various shape by flow, usually through the
application, singly or together, of
heat and pressure including the
recycling or compounding thereof, but only where such compounding and
or recycling is as a result
of the conversion for manufacture by the
same employer, but shall extrude all extrusions into mono- and
multi-filament fibres and
other activities falling under the scope of
the National Textile Bargaining Council;’
[28]
NUMSA advances an argument that these definitions to do with plastics
do not incorporate a similar
proviso, as exists in the definition of
GEME, to exclude the motor industry. This is plainly correct. The
follow-on submission
is that
ipso facto
, bereft of that
exclusion, if what Torres does, can fit into MEIBC’s plastics’
scope, that conclusion ends the debate.
In my view, this is incorrect
because it ignores the fact that what Torres does also fits into the
definition of the Motor Industry.
MIBCO’s scope includes
production of components regardless of the material from which they
are manufactured.
[29]
In the definition of the scope of MIBCO, the identical definition of
the “motor industry”
appears. MEIBC’s (i)(aj) is
identical to (j) in MIBCO’s scope. It too, in “exclusions:
(a),” excludes from
the motor industry, businesses whose
dominant enterprise is the production of non-motor vehicle parts,
including processes involving
the working of both metal or of
plastics. It must follow that establishments in which the dominant
enterprise is motor car component
manufacture, those businesses are
intended to be included in the motor industry.
The rationale in the
judgment a quo
[30]
Having set aside the award, and having not remitted it, Van Niekerk J
was at large to formulate
the order that was appropriate.
The
debate before him, as it was before this Court, was directed at the
following issues:
30.1
Insofar as the scope of the jurisdiction of
the two rival bargaining councils was circumscribed by definitions,
what was the proper
approach to the interpretative exercise in
attributing meaning thereto and what weight ought the conclusions
enjoy in the context
of a demarcation re-evaluation;
30.2
Insofar as the nature of the enterprise
could be examined through the prism of the work/ production process
or through the prism
of the end-product produced, which, if any, was
appropriate in the context of the demarcation evaluation;
30.3
Was the concept of a “value chain”
legitimate and useful in locating the businesses within the compass
of an “industry”
for the purposes of a demarcation
exercise?
30.4
What was the relevance of the history of
collective bargaining between the several employers and their
workers, and in the context
of the demarcation re-evaluation, what
was the proper weight to be attached thereto?
[31]
The rationale evinced in the judgment of Van Niekerk J, in summary,
was that (1) it was a necessary
dimension of the exercise to
interpret the definitional scope of the rivals and apply those
descriptions to the common cause descriptions
of the nature of the
enterprises,
[7]
(2) the
bargaining history under the jurisdiction of MEIBC for several
decades, though pertinent was not a weighty factor in addressing
the
question of the best –fit for those enterprises at the time of
the enquiry,
[8]
(3) an
appreciation of the end-product produced by the enterprises was a
better tool of analysis in this case,
[9]
and (4) the value chain concept was legitimate and useful in
achieving the aims of the LRA.
[10]
[32]
Van Niekerk ultimately held at [58]:
‘
In
summary: the factors disclosed by the evidence indicate that the
demarcation applicants fall within the scope of MIBCO’s
registration, the history of collective bargaining in the motor and
metal industries is based principally on a determination that
is some
60 years old and no longer binding, and the definition of scope
emphasises the outcome of the manufacturing process rather
than the
nature of that process. All of these factors, cumulatively
considered, indicate that the only reasonable outcome of the
proceedings under review is a conclusion that all of the demarcation
applicants fall outside of the MEIBC’s scope and within
the
registered scope of the MIBCO.’
[33]
The various aspects are addressed in turn.
The definitions and
the comparative exercise
[34]
The issue is whether, i
nsofar as the scope of the
jurisdiction of the two rival bargaining councils is circumscribed by
definitions, what is the proper
approach to the interpretative
exercise in attributing meaning thereto and what weight ought the
conclusions to enjoy in the context
of the demarcation re-evaluation.
[35]
The appropriate approach is well established: in
Greatex
Knitwear (Pty) Ltd v Viljoen
[11]
the
following was held at 344G – 345F:
“
When the
tribunal is called upon to determine whether a class of employers is
engaged in a particular industry it is faced with
a problem similar
to that with which the Courts have often been faced, viz. to decide
whether a particular employer is one of those
other employers, not
being parties to an agreement, engaged in a particular industry, upon
which the Minister has declared
an agreement to be binding (cf. sec.
48 (2) of the 1937 Act; sec. 48 (1)
(b)
of the 1956
Act). The cases seem to show that the matter is approached along the
following lines:
(a)
The
meaning of 'industry', as used in the agreement, is determined. This
usually requires the interpretation of
some definition appearing in
the agreement. It seems that a restrictive interpretation is often
applied, cutting down the scope
of the general words used in the
definition. Although not specifically invoked, the mode of
interpretation appears to be that
applied in
Venter
v R.
,
1907 T.S. 915
(cf.
Rex
v Scapszak and Others
,
1929 T.P.D. 980
;
Rex
v Ngcobo
,
1936 NPD 408
;
R
v Goss
,
1957
(2) SA 107 (T)
at
p. 110).
(b)
The
activities of the employer (personal and by means of his employees)
are determined.
(c)
The
activities and the definition (as interpreted) are now compared. If
none of the activities fall under the
definition,
caedit
quaestio;
if
some of the activities fall under the definition, a further question
arises: are they separate from or ancillary to
his other
activities? If they are separate he is engaged in the industry
(unless these activities are merely casual or insignificant
-
Rex
v C.T.C. Bazaars (S.A.) Ltd.
,
1943 CPD 334)
; if they are ancillary to his other activities, he is
not engaged in the industry (unless these ancillary activities are of
such
magnitude that it can fairly be said that he is engaged in
the industry within the meaning of the definition (
A.G.
Tvl v Moores (S.A.) (Pty.) Ltd.
,
1957
(1) SA 190
(AD)
).
Inherent
in this approach is the possibility that an employer may be such in
more than one industry (
Rex
v Giesker and Giesker
,
1947
(4) SA 561
(AD)
at
p. 566), despite the difficulties that may arise from such a
situation (cf.
Rex
v Auto-Parts (Pty.), Ltd. and Another
,
1948
(3) SA 641 (T)
at
p. 648).
If
the aforegoing is a correct reflection of the manner in which the
Courts have approached the problem whether an employer is engaged
in
a particular industry, it is plain that the problem is only resolved
by reference
inter alia
to the
activities of the employer.
Whether one uses the word
'activities' or 'work' seems merely a question of preference of
language. As in the case of an individual
it cannot be determined
whether he is engaged in a particular industry without reference to
his work, so also it cannot be determined
in the case of a class of
persons whether it is engaged in a particular industry
without reference to the work it does. Whether
that work is to
be called merely 'work' or a class of work seems, again, to depend on
linguistic preference or the degree of circumscription.”
(underlining supplied)
[36]
First, at the level of generality, it is the clear intention of the
definition of scope of the
MEIBC to exclude the motor industry as
defined and
vice versa
for MIBCO. An overlap exists. The
pragmatic division is then made between the two, dependent on the
scale of operations relevant
to motor industry type activities. A
double-proviso delineates the borderline: ie, by excluding motor
industry type activities
and then re-including some businesses where
the dominant enterprise is not motor industry related.
[37]
The common cause evidence establishes that the manufacture of motor
components is the exclusive
or dominant enterprise of every
respondent employer. That is also true of the businesses which
use raw material scrap and
dross and the one employer who works in
plastics; both of which are examples of overlap.
[38]
Van Niekerk J dealt directly with the definitions aspect: At [44] –
[45] he held:
‘
[44]
…. in a case (such as the present),…. what is primarily
at issue is the application of
a definition of scope to an agreed set
of facts. ….In the present instance, given MIBCO’s
definition of scope, the
commissioner was required to determine
whether the demarcation applicants’ businesses were
manufacturing establishments in
which motor vehicle parts, spares,
accessories or components were fabricated. In other words, what was
at issue was the application
of a definition to an agreed set of
facts, not unlike a jurisdictional dispute where a commissioner is
required to determine whether
an applicant is an ‘employee’
as defined, or whether he or she was dismissed.
[45]
Had the commissioner conducted the enquiry on that basis, he would
have concluded that the definition
of ‘motor industry’ in
MIBCO’s scope of registration clearly extends to the business
of the demarcation applicants,
since they conduct the business of
manufacturing establishments ‘wherein are fabricated motor
vehicle parts and/or spares
and/or accessories and/or components
thereof’. The commissioner appears to have been alive to
the inevitable outcome
of the application of the definition to the
undisputed facts. At paragraph 27 of the award, he says:
On face value, if we
compare the common cause facts relating to the applicants, as to
their business activities and that they manufacture
motor components,
and if we apply a literal interpretation, with the Certificate of
Registration of the [MEIBC] and [MIBCO], it
may be possible to
interpret that the applicants fall within the scope of the [MIBCO].
Quite why the
commissioner did not choose to apply a literal interpretation (or the
ordinary meaning) of the definition of scope
and arrive at the
foreshadowed result is not apparent from the award. Viewed thus, the
commissioner’s award was clearly wrong,
and stands to be
reviewed and set aside on that basis.”
[39]
Contrary to the contention advanced on behalf of NUMSA that this
outcome exaggerates the literal
meaning of the text, in our view, a
proper textual assessment indeed leads to the results articulated by
Van Niekerk J.
[40]
The fact that some businesses can be understood to be covered by (b)
the utilisation of scrap
must be weighed in the context of the whole.
Similarly, the utilisation of plastics in (g) must be weighed in the
whole. The best
fit is the determining factor.
The emphasis on
End-product or on Work Process
[41]
In principle, there is no logical reason why,
in vaccuo
, the
one emphasis is superior to the other as a tool of analysis. A
selection of one over the other could be rational in given
circumstances. It may be that in some cases both are appropriate to
be employed in the analysis and accordingly, one may be preferable
to
the other in given circumstances.
[42]
This debate in this case illustrates a straight contest between
process or end-product as an
appropriate tool of analysis in these
given circumstances.
[43]
It is contended on behalf of NUMSA that
work process
is the
only proper tool for the analysis and the notion of
end-product
is illegitimate. The rationale advanced is that the holy grail in
demarcation exercises is to promote fairness by producing a result
where workers who do the same or materially similar work are treated
identically. In my view, this ideal need not be questioned
as a
legitimate aspiration. However, the literal accomplishment of that
aim must yield to the pragmatism of regulatory oversight
in the real
world. Not all floor-sweepers or office cleaners are in the Cleaning
Industry. There are fitters in several industries.
Deciding which
type of woodworkers are in the building industry or in the furniture
manufacturing industry is among the epic contests
in the history of
demarcations in our law. Plainly, a given work process can be
utilised in many different enterprises, which on
a holistic
evaluation, have little or nothing in common with one another.
[44]
Van Niekerk J dealt with this notion as follows at [54] – [55]:
‘
[54]
NUMSA ….submits that the end product of a process is not
definitive of the essential character
of the operation. Rather, it
contends that if an operation involves the processing or shaping of
metal, then the operations are
to be treated as part of the metal
industry. If metalworking processes are absent, NUMSA submits that
the character of the operations
may in principle be something else,
and that the business may potentially fall within the ambit of the
motor industry, provided
that its operations fall within the
definition of that industry. This approach would be consistent with
the approach taken historically
(as demonstrated by the 1962
demarcation) - it allows for metalworkers to be treated uniformly
within a single centralised bargaining
structure, it is consistent
with the approach taken in prior decisions and it avoids the
anomalies associated with employers switching
industries when
switching production as between automotive and non-automotive
products.
[55]
What this approach ignores is the definition of scope of the MEIBC
and the MIBCO respectively.
Excluded from the jurisdiction of the
MEIBC is the motor industry, defined in paragraph (j) as ‘
the
business of manufacturing establishments
wherein are
fabricated motor vehicle parts and/or spares and/or accessories
and/or components thereof
’
. The definition makes
no reference to the form of the manufacturing process – it is
confined specifically to outcomes in
the form of parts, spares,
accessories and components, regardless of the mode of manufacture,
engineering or otherwise. For the
commissioner to disregard the
outcomes of the manufacturing process in favour of a determination
based solely on the nature of
the process, constituted a disregard
for the applicable definition and contributed to an unreasonable
result.’ (underling
supplied)
[45]
The rationale relied on by Van Niekerk J for this conclusion is, in
our view, correct. The two
industries are in their conception
distinguished by what they produce. To overlay upon that edifice a
description of the technical
work process in order to distinguish
them is alien to the invented foundations upon which they are
distinguished. To determine
the nature of the enterprise, in such a
context, end-product is an appropriate tool of analysis.
[46]
This approach is consistent with the dictum in
R v Sidersky
1928
TPD 109
at 112-113:
‘
Dr.
Reitz
,
in favour of the appeal, argued that the character of an industry is
determined, not by the kind of occupation in which the employers
are
engaged, but by the nature of the enterprise in which both employer
and employees are associated for a common purpose. Once
the character
of the industry is determined all the employees are engaged in that
industry, whatever the actual work may be which
the employer allots
to them. The accused confessedly conducts the industry of chemical
manufacture, and it would be absurd to call
him at the same time an
employer in the building industry because he employs two bricklayers,
also an employer in the engineering
industry because he employs two
engineers, also an employer in the printing industry because he
employs two printers; and then
force him as a multiple employer; to
comply with all the rules that might be binding upon these various
industries, though wholly
inapplicable to the main industry of
chemical manufacture.
I
think this argument is sound.’
[47]
It was contended that a critical factor was the ability of an
establishment that forges steel
in a mould for a motor car component,
to switch to another mould not connected with the production of motor
components. This notion
is true, but is of little weight on the facts
adduced in evidence. On the evidence, all of the businesses are in
committed relationships
to supply motor car components, some
according to particular specification, to their customers. If they
cease to pursue that enterprise
as their dominant business, that fact
can be investigated, at that time, to determine if they ought to be
reassigned to another
Bargaining Council.
[48]
Reliance was also placed by NUMSA on the decision in
CWIU
v Smith & Nephew
1997 (9) BLLR
1240.
(CCMA) to argue that technical process trumps end-product as a
tool of analysis. In my view, this contention is not borne out by
an
examination of that award.
Relying
on a dictum in
Food
and Allied Workers Union v Ferucci t/a Rosendal Poultry Farm
(1992)
13 ILJ 1271 (IC) at 1276 (a decision in the old Industrial Court)
which held:
‘
It
is now trite law that, in determining whether employees are engaged
in a particular kind of trade or industry, or, indeed, in
farming
operations, regard must be had not to the special nature of the work
which they do, but, rather to the
nature of the enterprise
in
which they and their employer are associated for a common purpose.
Further, once the nature of that enterprise is determined,
all the
employees must be regarded as being engaged therein
irrespective
of the actual work which the employer may allot them.”,
the
commissioner,
thereupon,
held;
“
The
argument on behalf of CWIU that regard must rather be had to the
nature of the product and the nature of the market cannot be
accepted. Mr Buthelezi was constrained to concede that the main
business of Smith & Nephew was in the textile industry.”’
[49]
Upon the premise that this statement in the award correctly described
the facts, the outcome
that the employer was assigned to the textile
industry was sound,
on the facts
. The efforts of that employer
to escape that assignment when about 1% of the workforce was engaged
in producing cotton goods specifically
for medical use were rightly
in vain.
[50]
Plainly the nature of that enterprise was not characterised by its
marginal participation in
the production of cotton goods for medical
use. No principle was sought to be articulated that end-product is an
illegitimate tool
of analysis.
The value chain
argument
[51]
The debate over the usefulness or legitimacy of the value chain
argument is an important one.
The resort to this rationale, as best
we are aware, is novel in demarcation disputes.
[52]
To understand its import, it is appropriate to be clear about what
the phrase can be marshalled
to perform. First, it is not a normative
concept; it is merely a handy shorthand description of certain facts.
What it describes
is the fact of a process of linked manufacture of
several parts of an ultimate product which process is, thus, highly
decentralised,
and is carried out by a multitude of independent
manufacturers who source from and supply to one another material or
components,
or indeed services, and are reliant and dependent on one
another to maintain the “chain” of supply.
[53]
In the case of the motor industry being described as a value chain,
the unrebutted evidence discloses
that the famous brand names, known
as Original Equipment Manufacturers (OEMs) whose vehicles are sold to
the public have, in recent
decades, moved from being totally involved
in fabricating all the bits and pieces that go together to make a
vehicle and have outsourced
the manufacture of distinct parts to
independent manufacturers. The metaphor of a chain is apt because the
vehicle manufacturers
are, in reality, end-user assemblers of
components bought in from what are called first tier manufacturers
who in turn subcontract
the manufacture of the parts that make up
what they supply to the OEMs to second tier manufacturers. The
production of the components
made by the respondent employers lies in
the second tier as described by this scheme of analysis.
[54]
Van Niekerk addressed this aspect thus at [56] – [57]:
‘
[56]
A related issue is that of the significance of the value chain of
which the demarcation applicants
form part. The definition of
scope aside, the demarcation applicants contend, as I have mentioned
above, that the commissioner
committed a gross irregularity and came
to an unreasonable conclusion when he rejected the applicant’s
value chain argument.
In essence, that argument is that but for the
eighth and twelfth applicants, the percentage of each demarcation
applicant’s
business that relates to the manufacture and supply
of automotive components exceeds 90%. In the case of the eighth
applicant that
figure is 80%, and 86% in respect of the twelfth
applicant. It follows, so say the demarcation applicants, that for
all intents
and purposes the entire business enterprise of each
applicant is dedicated to the value chain relevant to the motor
industry. Further,
the automotive components engineered or
manufactured must meet automotive industry specific specifications.
They are not intended
or made for use in other industries. None of
the applicants’ enterprises have discrete portions dedicated to
the manufacturer
engineering of nonautomotive components will. Put
another way, of the more than 3800 employees engaged by the
demarcation applicants,
less than 1% are engaged in work activities
not related to the production of automotive components. The
demarcation applicants
contend that to the extent that the
commissioner failed to acknowledge these facts and ignored the nature
of the end product in
making his demarcation, he committed a
reviewable irregularity.
[57]
There is considerable merit in this argument, for it is one that
aligns the business activities
of the demarcation applicants with the
sector as a whole. The demarcation applicants are an integral link in
the chain or value
system between the conception and delivery of a
motor vehicle. Manners’ evidence that the value chain or system
is the mode
in which production is conceptualized and actualized in
the motor assembly industry was not challenged. The existence of a
value
chain or system locates the demarcation applicants within a set
of activities in the motor industry in which they receive raw
materials,
add value through the manufacturing process and sell the
finished product to the customer located in the next highest tier. To
ignore this evidence had the result of an unreasonable award.’
[55]
In my view, these findings are wholly appropriate.
[56]
It was argued that in certain instances the “end-product”
of some of the respondent
businesses were not yet recognisable as
motor components and had to be finished by the next tier of
enterprises. This may be correct
but it does not, in this context,
mean that the particular business is alienated from the value chain.
The evidence tendered is
that the parts so supplied are intended for
incorporation into the chain and are not universal bits that are
intended for or can
be utilised in a wider market.
The Collective
bargaining history
[57]
As foreshadowed above, the fact that 60 years ago, or, for that
matter, last week, a Ministerial
Determination was made, is not
dispositive of the question whether a particular business should be
subject to the jurisdiction
of a particular bargaining council. The
enquiry always starts with a clean slate.
[58]
Similarly, the collective bargaining practices cannot be regarded as
conclusive of where a business
ought to belong. The collective
bargaining practice is relevant for what an account of it can
contribute to whether the status
quo is appropriate and ought to be
continued.
[59]
In this case, the collective bargaining practice was dictated by the
1962 Determination. The
evidence of Mr Manners was that the
relationship, thus dictated, had become dysfunctional because of the
evolution of the motor
industry over decades. This is a proper
premise upon which to re-evaluate the practices in place. His
unrebutted evidence was that
the motor component manufacturers are
isolated and marginalised within MEIBC by that practice. They
bargained alongside other businesses
with no commonality of product
and no common interest. Unlike other segments of the iron steel and
engineering industries that
had distinctive chambers within which to
engage, the motor component businesses were unrecognised. In our
view, these dynamics
do point towards a dysfunctionality in the
established practice and brings into question the appropriateness of
locating the businesses
under the jurisdiction of that Bargaining
Council.
[60]
The consequent question to be posed is whether there is a better fit
elsewhere. There is such
a better fit: MIBCO - where all the
competitor business in the integrated chain of manufacture can
bargain together. Mr Pauw, the
representative of MIBCO confirmed the
presence of competitors of the respondents being subject to the
jurisdiction of MIBCO.
The view of NEDLAC
[61]
As alluded to above, section 62(9) obliges the commissioner to
consult NEDLAC about the demarcation
decision being made before it is
issued.
[62]
In this case, the view of NEDLAC was obtained. NEDLAC wrote to the
CCMA on 21 November 2017.
It was a scathing rejection of the award.
Of relevance at this stage of the proceedings is the rejection of the
rationale that
the end- product analysis and the value chain thesis
were illegitimate. In as much as the commissioner ought to have
weighed the
views of NEDLAC, the judgment of the review court is
consistent with its views.
Conclusions
[63]
In the result:
63.1
It is appropriate to examine the profile
and structure of motor manufacture as it presents in 2017 and to give
weight to the transformation
of that industry over the past half
century.
63.2
The concept of a value chain and the
location of a business in an integrated process of manufacture is a
legitimate tool of analysis.
63.3
An evaluation premised on end-product
rather than work process was appropriate in the given circumstances.
63.4
A textual evaluation of the definitions of
the engineering realm and the motor manufacturing realm yields a
result that demonstrates
a functional overlap and the need for a
policy decision to draw the line of demarcation; on the facts, in
favour of the jurisdiction
of MIBCO.
The Order
(1)
The appeal dismissed.
(2)
The order of the Labour Court is confirmed.
__________________
Sutherland
JA
(Sutherland
JA with whom Davis JA and Murphy AJA concur)
APPEARANCES:
FOR
THE APPELLANT: Adv TMG Euijen SC, with him Adv F Le Roux,
Instructed
by Gray Moodliar Inc.
FOR
THE 6TH AND THE 8TH TO
25TH
RESPONDENTS: Adv C Bosch,
Instructed
by Van Zyls Inc.
[1]
The relevant text is thus:
62
Disputes about demarcation between sectors and areas
(1)
Any registered
trade union
, employer,
employee
,
registered
employers' organisation
or
council
that
has a direct or indirect interest in the application contemplated in
this section may apply to the Commission in the
prescribed
form
and manner for a determination as to-
(a)
whether
any
employee
, employer, class of
employees
or
class of employers, is or was employed or engaged in
a
sector
or
area
;
(b)
….
(2)
If two or more
councils
settle a
dispute
about
a question contemplated in subsection (1)
(a)
or
(b)
,
the
councils
must inform the
Minister
of
the provisions of their agreement and the
Minister
may
publish a notice in the
Government Gazette
stating
the particulars of the agreement.
(3)
….
(4)
When the Commission receives an application in terms of subsection
(1) …. it must appoint a commissioner to hear the
application
or determine the question, and the provisions of section 138 apply,
read with the changes required by the context.
(5)
…..(8)
(9)
Before making an award, the commissioner must consider any written
representations that are made, and must consult
NEDLAC
.
(10)
– (11)
(12)
The
registrar
must
amend the certificate of registration of a
council
in
so far as is necessary in light of the award.
[2]
The several parties were described differently as respondents in the
arbitration, the two reviews and the appeal and as a result
to
identify any one as respondent X is not possible or useful.
[3]
The phrase “
Interest
Arbitration” refers to a seemingly adjudicative process which
is in truth not adjudicative. Typically, where collective
bargaining
does not yield an agreement, Management and Labour might agree to
delegate the determination of a wage to a third
party “arbitrator”.
In truth, the arbitrator is not seized with a justiciable issue,
rather the function is to create
a new right, premised on a
balancing of legitimate considerations within fact-specific
circumstances.
[4]
(2014)
35
ILJ
3059 (LAC).
[5]
The text of the scope definitions is a plethora of a maddening
sub-texts with no clearly distinguishable numbering. The reader
must
constantly refer back to what sub-division yet another alphabetical
smorgasbord is presented to unearth what the provisions
qualify.
[6]
An argument was advanced that the term “fabricate”
should be understood to be distinct from “manufacture”.
This notion is without merit in this context. The use of the synonym
is purely stylistic.
[7]
Judgment at [55]; see too [44]- [45].
[8]
Judgment at [47] – [51].
[9]
Judgment at [52] – [55].
[10]
Judgment at [56] – [57].
[11]
1960
(3) SA 338
(T).