About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Labour Appeal Court
SAFLII
>>
Databases
>>
South Africa: Labour Appeal Court
>>
2020
>>
[2020] ZALAC 71
|
|
National Union of Mineworkers v Cullinan Diamond Mine, a division of Petra Diamonds (Pty) Limited (JA54/2019) [2020] ZALAC 71; (2021) 42 ILJ 785 (LAC) (14 December 2020)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case
no: JA54/2019
In
the matter between:
NATIONAL
UNION OF
MINEWORKERS
Appellant
and
CULLINAN
DIAMOND MINE, A DIVISION OF
PETRA
DIAMONDS (PTY)
LIMITED
Respondent
Heard:
25
November 2020
Delivered:
14
December 2020
Summary:
St
rike—Legal—Payment
of bonuses to non-striking employees during course of F
strike—Recourse
to permissible retaliatory economic measure by employer—Not
unfair discrimination.
Strike—Legal—Use
of retaliatory economic measures to defeat strike justified—Employer
acting out of necessity—Measures
justified.
Coram:
Coppin JA, Murphy and Savage
AJJA
JUDGMENT
MURPHY
AJA
[1] The
appellant (“NUM”) appeals against the judgment of the
Labour Court (Moshoana J) which dismissed
its claim that the
respondent had discriminated against its members who participated in
a protected strike by paying a discretionary
bonus to non-striking
employees.
[2] The
respondent operates a diamond mine in Cullinan. It employs more than
1200 employees. NUM represents over
500 employees and negotiates
wages on their behalf. On 29 August 2013, after wage negotiations
between NUM and the respondent reached
impasse, NUM and its members
commenced a protected strike. The strike lasted for 12 operational
days, and terminated on 15 September
2013.
[3] Shortly
before the commencement of the strike, on 26 August 2013, the
respondent addressed a letter to all
employees urging them to
consider its final wage offer favourably. It added that “any
employee who joins the industrial action
(even for just one day) runs
the risk of losing the potential bonus payment scheduled for end
September 2013”. The mentioned
bonus was discretionary in
nature, was usually awarded on the fulfilment of certain conditions
and was determined jointly by the
respondent and its parent company,
Petra Diamonds (Pty) Ltd. The next day, 27 August 2013, another
circular was distributed which
stated unequivocally that “once
strike action commences, striking employees will forfeit production
bonuses”. A third
communication was circulated on 28 August
2013, which included the following advice:
‘
It is important to
note that the potential bonus payment scheduled for September 2013 is
based on the company’s performance
in the 2013FY, the
completion of a successful audit of the 2013FY results and the
successful settlement of the wage negotiations
for the 2104FY without
the negative impact of a strike. The strike will definitely impact
the quantity of this bonus negatively.
The choice whether to partake
in the strike or to come to work remains the choice of each and every
employee.
The negative impact of
the strike on the company as well as the bonus of employees will be
reduced if revenue could be safely generated
during the strike
period. Employees who decide to come to work and assist the mine to
generate revenue during this period by performing
alternative and
additional duties in an exceptional manner would be considered for an
additional payment.’
[4] After
the strike ended, it was decided that all employees, whether they had
been on strike or not, would not
receive the annual production bonus,
but an exceptional performance bonus would be paid to all employees
who had worked one day
or more during the course of the strike and
had contributed to exceptional productivity and performance during
this period. A written
communication circulated on 22 October 2013
explained the situation as follows:
‘
The strategy
around the annual bonus payments in the Petra Group rewards financial
performance and production target achievement,
based on audited
results. The criteria based in assessing whether to award a bonus or
not include: 1) achieving or exceeding production
targets; 2)
achieving or exceeding profitability targets; 3) confirmation of
annual result by means of the external audit; and
4) a period free of
major disruptions leading up to the payment of the bonuses.
Considering all the
circumstances, it is Cullinan Diamond Mine’s position not to
make any performance bonus payment in September/October
2013.
The Company recognises
that certain employees contributed above and beyond their normal
duties to minimise the impact of recent
disruptions on production and
revenue losses. Therefore employees will receive an additional
payment in accordance with the Company’s
approach in rewarding
exceptional behaviour. These payments will be included in the October
pay-run.’
[5] Mr
Kemp, the respondent’s mine manager, testified that during the
strike, the mine was able with 34%
of the available man-hours (the
non-striking employees) to achieve a production level of 52% of the
expected carats. This, he asserted,
was exceptional performance
deserving of a bonus payment calculated (differently to the
discretionary annual production bonus)
in accordance with a formula
which rewarded employees not only for attendance during the strike,
but also for their individual
efforts in respect of production in
that time.
[6] NUM
questioned whether it was possible for the non-striking employees to
achieve the 52% production level when
the majority of employees were
on strike. However, it was not suggested to Mr Kemp in
cross-examination that his figures were mistaken
or and that it was
unlikely that 52% of the production target had been achieved through
the employment of only 34% of man-hours.
Kemp was adamant that the
dominant or proximate reason for the payment of the bonus, as stated
in the contemporaneous documentation,
was payment for exceptional
performance and not a reward for not exercising the right to strike.
The non-striking employees were
given the bonus not only for their
attendance at work during the strike but also for their performance
in minimising the effects
of the lost production caused by the
strike.
[7] NUM
referred a dispute to the Labour Court in which it claimed that the
payment of the bonus was “a breach
of section 5(2)
(c)(
vi)
and section 5(3) of the Labour Relations Act
[1]
(“the LRA”) as read with sections 6 and 10 of the
Employment Equity Act
[2]
(“the
EEA”) and unfair discrimination.
[8] The
EEA does not apply to discrimination of the kind alleged in this
case. The EEA governs unfair discrimination
on the proscribed and
analogous grounds listed in section 6(1) of the EEA. Discrimination
against employees exercising rights under
the LRA or participating in
trade union activities is governed principally by section 5 of the
LRA, which in relevant part reads:
‘
(1) No
person may discriminate against an employee for exercising any right
conferred by this Act.
(2) Without
limiting the general protection conferred by subsection (1) no person
may do, threaten to do,
any of the following…
(c) prejudice
an employee or person seeking employment because of past, present or
anticipated –
(i) membership
of a trade union…
(iii) participation
in the lawful activities of a trade union…
(vi) exercise
of any right conferred by this Act…
(3) No
person may advantage, or promise to advantage, an employee or person
seeking employment in exchange
for that person not exercising any
right conferred by this Act or not participating in any proceedings
in terms of this Act. However,
nothing in this section precludes the
parties to a dispute from concluding an agreement to settle that
dispute.’
[9] The
provisions of section 5 of the LRA prohibit anti-union
discrimination. Section 5(1) of the LRA is a general
prohibition,
while the specific provisions of section 5(2) and 5(3) target
particular kinds of discrimination without derogating
from the
generality of the prohibition in section 5(1) of the LRA. Although
the term “discriminate” is not qualified
with the adverb
“unfairly”, our constitutional and anti-discrimination
jurisprudence generally require that discrimination
be unfair and/or
unjustifiable in order to constitute an infringement of violation. A
contravention of section 5(1) therefore comprises
two elements:
discriminatory conduct or action, and such being unjustifiable.
[3]
[10] NUM’s
incorrect reliance on the EEA is inconsequential. Its statement of
case and the evidence leave
no doubt that it alleges discrimination
of the kind contemplated in section 5(1) of the LRA, and specifically
contends that the
striking employees were prejudiced for exercising
their right to strike conferred by section 65 of the LRA (section
5(2)
(c)(
vi) of the LRA) and that the non-striking employees
were unfairly advantaged for not exercising their right to strike
(section 5(3)
of the LRA). The Labour Court held that the evidence
did not disclose any infringement of section 5 of the LRA; nor was
there discrimination
in terms of the EEA because discriminating on
the grounds of participation in a strike was not a listed or
analogous ground, and
was in this instance in any event rational and
justifiable.
[11] The
issue on appeal is thus whether the payment of bonuses to the
non-striking employees amounted to unfair
discrimination in terms of
section 5 of the LRA.
[12] In
the past our courts interpreted the provisions of the LRA’s
predecessor, the Labour Relations Act
28 of 1956 (“the 1956
LRA”), to permit employers to resort to the payment of bonuses
to non-strikers in order to mitigate
the harmful consequences of a
legal or protected strike.
[13] In
Chemical
Workers Industrial Union v BP South Africa
,
[4]
a decision was taken by the employer during the first day of a legal
strike to pay bonuses to non-striking employees who were regarded
as
strategic to the continued operation of the business or were
requested to work longer hours than usual or to perform tasks falling
outside their job description. The bonuses were paid after the strike
ended and were justified as incentives for continuing to
work and a
reward to employees for the extra effort made to enable the
employer’s operations to continue. The employer had
never
previously paid bonuses of this kind to its employees. The Industrial
Court held that the payment of the bonuses to the non-strikers
did
not constitute an unfair labour practice in terms of section 46(9) of
the 1956 LRA.
[14] The
Industrial Court reasoned as follows:
‘
Surely, it cannot
be doubted that an employer is entitled to attempt to defeat a
strike, even a legal one, through a range of economic
weapons of his
own... The position is put thus by Fabricius and Landman Assessors
in East Rand Gold & Uranium Co Ltd v
NUM (1989) 10 ILJ
683 (LAC) at 698H-I:
'Where the bargaining
agent intends resorting to lawful industrial action in order to
resolve the impasse it is not unfair for an
employer to resort to
unilateral action which is aimed at the preservation of his property
and the viability of his business. He
would also be permitted to take
every fair and reasonable action to counteract any industrial action
to which the bargaining agent
may resort.'
Examples of the economic
weapons said to be available to an employer in the event of a strike
or impending strike are: (a) a pre-emptive
lockout, assuming that
deadlock has been reached in negotiations, (b) certain forms of
secondary lock-out, and (c) the employment
of temporary
replacement labour. To these may b
e added the
employer's ultimate economic weapon of dismissal. Bearing in mind
their possible harsh consequences for the workers,
all these economic
weapons should be resorted to by the employer with care and
circumspection… their use should be aimed
at the preservation
of the employer's property and/or the viability of his business, be
suitable and necessary for that purpose,
and constitute fair and
reasonable action on the part of the employer. There is, however, no
numerus clausus
of economic weapons at the disposal of an employer who wishes to
combat industrial action embarked upon by his employees and/or
their bargaining agent. His choice of weapon is restricted only by
the need for its use to fall within the parameters indicated.
Where
such is the case then clearly there cannot be any question of the
employer's having perpetrated an unfair labour practice.
Moreover, it
seems to me that, in such circumstances, the employer will
inevitably be seen to have acted in circumstances
of necessity, so
that, on this ground, too, his actions will be justified….
However,
the fact of the matter is that where certain of an employer's workers
elect to embark upon a strike whilst others do not,
good and
compelling economic reasons do exist
for the employer
differentiating in his treatment of striking and non-striking
workers, albeit, as in the instant case, for the
duration of the
strike only. In such circumstances, there cannot, in my opinion, be
talk of any victimization of striking workers…when
it is clear
that respondent's object in making such payment was not to
penalize applicant's striking members, but, rather,
to preserve its
business operations.’
[15] The
Appellate Division took a similar view in
SACCAWU
v OK Bazaars
(1929)
Ltd.
[5]
After
annual wage negotiations with the trade union broke down, some 7 000
employees embarked upon legal strike action in
spite of a warning by
the employer that striking employees stood to forfeit their annual
bonuses. The employer ordinarily paid
a discretionary annual bonus to
its employees. The strike endured for approximately seven weeks and
the employer later resolved
to pay an annual bonus only to those
employees who had not participated in the strike. Strikers, in
contrast, forfeited all or
part of their bonuses in accordance with
the respondent’s policy. The union contended that the
employer’s conduct constituted
an unfair labour practice.
[16] The
Appellate Division rejected the union’s argument that
irrespective of the circumstances it was always
unfair to offer
employees financial inducements to abstain from striking. Accepting
that the freedom to strike was a necessary
ancillary to effective
collective bargaining, the court was nonetheless of the view that
this did not preclude employers from taking
steps to discourage
strikes. Whether or not a particular inducement by an employer
constituted an unfair labour practice was dependent
on the
circumstances in which it occurred. The strike had caused substantial
loss to the employer and it therefore seemed anomalous
for the
strikers to claim a bonus granted in recognition of service during
the year. While the court accepted that an employer
should in
principle treat like classes of employees alike, it was permissible
to distinguish between strikers and non-strikers
and to pay an
inducement to abstain from striking. The withholding of bonuses from
all employees would be unfair to those employees
who relying on the
inducement had stayed at work.
[17] The
decisions in
CWIU v BP South Africa and SACCAWU v OK Bazaars
(1929) Ltd
were decided before the enactment of the LRA in 1995.
The question then is whether section 5 of the LRA requires a
different approach
and perhaps the prohibition of the practice of
rewarding non-strikers with bonuses for staying at work.
[18] There
is no express provision in the LRA prohibiting employers from
providing non-strikers with rewards for
the extra work or exceptional
performance they may put in during the strike. NUM’s position
is essentially that the employer’s
conduct should be seen as
undermining collective bargaining by discouraging employees from
exercising the right to strike and thereby
weakening its impact.
This, it argued, is against the object of the LRA to promote orderly
collective bargaining as the preferred
means of setting terms and
conditions of employment. By allowing the payment of bonuses to
non-strikers, the message is sent that
in future employees will be
better rewarded if they do not strike. Likewise, by rewarding
non-strikers the employer is advantaging
them for not exercising
their right to strike and is thus acting in contravention of section
5(3) of the LRA. The Labour Court
accepted this line of reasoning in
FAWU and
Others
v Pets Products (Pty) Ltd
[6]
and
in
NUM v
Namakwa Sands – A Division of Anglo Operations Ltd
.
[7]
In
those cases, the non-strikers were respectively paid vouchers and
redeployment allowances. The Labour Court found in both instances
that the practices were discriminatory and infringed the various
anti-discrimination provisions of section 5 of the LRA. NUM submits
that these decisions support the general proposition that granting
non-strikers rewards during a strike unjustifiably dilutes the
right
to strike and is prohibited.
[19] As
stated, there is no general express provision in the LRA or elsewhere
outlawing the practice of paying
bonuses to non-strikers. The issue
is whether that practice is unfairly discriminatory.
[20] As
discussed, the Appellate Division in
SACCAWU v OK Bazaars (1929)
Ltd
held that even if we accept (as we must) that the right to
strike is a necessary ancillary to effective collective bargaining,
that does not preclude employers from taking steps to discourage
strikes or to mitigate their impact. Whether employer conduct during
industrial action constitutes unfair discrimination is dependent on
the context in and reasons for which it occurred. Simply put:
was the
differentiation justified in the circumstances?
[21] There
is no denying that the impact of differential treatment between
strikers and non-strikers was disadvantageous
for the strikers. The
respondent’s intention or motive in making the payment, stated
to be innocent and not aimed at punishing
striking, does not save its
conduct from being categorised as discriminatory. Though the basis of
the differentiation may, on the
face of it, be innocent, the effect
of the differentiation is discriminatory in the narrow sense that
there is a disparate impact.
Hence, there was at the very least
indirect discrimination which was either fair or unfair.
[22] The
strongest argument supporting the contention that the payment of
rewards to non-strikers is generally
unfair is that such conduct
undermines the union as bargaining agent. However, a distinction can
be drawn between bypassing or
undermining the bargaining agent (for
instance by negotiating directly with employees during a strike or
offering employees an
additional reward for resigning their
membership of the recognised union) and the deploying of a
retaliatory measure as part of
the collective bargaining power play
during a strike.
[23] Insofar
as the policy of the LRA aims to strengthen collective bargaining as
the means of industrial self-regulation,
its success depends on
strong representative trade unions and employers acting within stable
bargaining relationships underwritten
by the right to engage in
industrial action. The possibility of an ultimate power play by
either side is a powerful inducement
for agreement and industrial
peace. As the Industrial Court suggested in
CWIU
v BP South Africa
,
collective bargaining is a two-way street. Just as the employees have
measures to compel the process to advance their interests
such as
strikes, go-slows, overtime bans, work to rule, boycotts and
picketing; so too does the employer, who may seek to protect
its
interests by resorting to the lock-out, unilateral implementation of
its last offer, the employment of temporary replacement
labour and
ultimately operational requirements dismissals when the strike
becomes dysfunctional. An employer is entitled to attempt
to thwart a
strike through these various options. In offering bonuses to
non-strikers on the eve of the strike, as happened in
this case, the
employer hopes to gain a tactical advantage before the campaign of
its employees picks up momentum at a time when
its business is not
overly vulnerable.
[8]
[24] Some
believe that the lock-out is the equivalent of the employees’
right to strike. That is not so.
The true countervailing power is the
employer’s prerogative to act unilaterally. Davies and
Freedland describe the position
as follows:
‘
A lock-out is not
the employer equivalent of a strike…the reciprocal employer
lever is really the management prerogative
to maintain or to change
the terms and conditions which the employer would pay its employees
who want to work in its operations…[T]he
ability of management
to institute changes unilaterally is perhaps the employers’
real equivalent of the employees’
strike.’
[9]
[25] Thus,
just as it is legitimate for a trade union to resort to industrial
action (temporarily suspending the
contract) in response to an
employer’s unilateral management changes, so too it may be
legitimate (depending on the circumstances)
for the employer to
respond to a strike with a unilateral exercise of the managerial
prerogative to alter temporarily the terms
of employment. Economic
sanctions underwrite the collective bargaining process. The
unilateral offer of bonuses or additional overtime
payments to
non-strikers (who may not be members of the union) is no more or less
objectionable than the employment of replacement
labour, provided the
measures are suitable and necessary (proportional) for that purpose.
[26] It
is also important for labour courts and tribunals to constrain their
intervention in the collective bargaining
process aimed at resolving
disputes of interest and the fashioning of new rights by collective
agreement. The point was eloquently
made 30 years ago by Clive
Thompson as follows:
‘
[T]he court should
tread with great circumspection on the terrain of collective
bargaining proper. It should not attempt to prescribe
to the parties
what deals are ‘fair’ or ‘unfair’; in an
essentially market-oriented economy, the substantive
outcome of
bargaining – the content of collective agreements –
should be determined by market forces. It goes without
saying that
one is assuming a market which recognises the legitimate role of
organised labour and capital. The eventual collective
deal must
reflect the relative strengths of the parties if it is to endure…On
matters monetary, the court should adopt a
hands-off policy…
Power is brought to bear in the collective bargaining process through
strikes on the one hand and lock-outs
or unilateral action on the
other. If the court interferes with the legitimate exercise of power,
it threatens the very logic of
collective bargaining. It is therefore
of paramount importance that the court should acknowledge the
co-ordinates which map out
the area of autonomous collective
bargaining. Here there should be one guiding principle: a recourse to
industrial action will
be legitimate when the parties have bargained
in good faith to impasse. Before that point, economic action is
premature and the
court should intervene to safeguard the negotiating
process; thereafter, such action is often part of the resolutive
process and
the court should be conspicuous by its absence.’
[10]
[27] The
payment of the exceptional performance bonus in this case was mooted
for the first time in the circular
of 28 August 2013, the day before
the strike commenced. The circular indicated that employees who
decided “to come to work
and assist the mine to generate
revenue during this period by performing alternative and additional
duties in an exceptional manner
would be considered for an additional
payment”. By then impasse had been reached and the parties were
positioning to bring
legitimate power to bear. The employees were
geared up to strike and the employer offered inducements for
exceptional performance
during the strike.
[28] Although
prima facie indirect discrimination, in the context of the
constitutional scheme guaranteeing the
right to engage in collective
bargaining,
[11]
the
respondent’s conduct was not unfair and was a legitimate
exercise of that right as “part of the resolutive process”.
To state the obvious, no right (including the right to collective
bargaining and the right to strike) is absolute. The rights of
both
industrial actors are subject to reasonable limitation and from time
to time require harmonisation. The respondent’s
conduct was not
inconsistent with the policy objectives of the LRA. By reason of its
temporary retaliatory nature, and the computation
of the bonus being
explicitly tailored to attendance and performance for the limited
period of the strike, the bonus was a proportional
means of advancing
the respondent’s collective bargaining objectives.
[29] As
such, the respondent’s conduct did not unfairly discriminate
against or prejudice the striking employees;
nor did it unfairly
advantage the non-strikers without legitimate reason. The
non-strikers were not advantaged for not exercising
their right to
strike. They were advantaged for their attendance and exceptional
performance during the strike. But for the exceptional
performance
the bonus would not have been paid. Accordingly, the respondent’s
conduct was not an infringement of the relevant
provisions of section
5 of the LRA.
[30] The
Labour Court accordingly did not err in dismissing the application
and the appeal hence must fail. Fairness
and the ongoing relationship
between the parties dictate that there should be no order for costs.
[31] In
the premises, the appeal is dismissed.
JR
Murphy
Acting Judge of Appeal
Coppin
JA and Savage AJA concur in the judgment
APPEARANCES:
FOR
THE APPELLANT: Adv.
Baloyi
Instructed
by Molebaloa Inc
FOR
THE RESPONDENT: Adv A
Redding SC
Instructed
by Mervyn Taback Inc
[1]
Act 66 of 1995.
[2]
Act 55 of 1998.
[3]
SAFCOR
Freight (Pty) Limited t/a SAFCOR Panalpina v SA Freight & Dock
Workers Union
(2013) 34 ILJ 335 (LAC) at para 21.
[4]
(1991) 12 ILJ 599 (IC).
[5]
[1995] 7 BLLR 1 (A).
[6]
[2000]
BLLR 781 (LC).
[7]
[2008]
7 BLLR 675 (LC).
[8]
E Cameron et al:
The
New Labour Relations Act
(Juta 1988) 95.
[9]
Davies and Freedland:
Labour
Law
(Weidenfeld & Nicholson 1979).
[10]
E Cameron et al:
The
New Labour Relations Act
(Juta 1988) 99.
[11]
Section 23(5) of the Constitution