Golden Arrow Bus Service (Pty) v South African Road Passenger Bargaining Council and Others (CA 4/2020) [2021] ZALAC 20; (2021) 42 ILJ 1446 (LAC) (14 May 2021)

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Golden Arrow Bus Service (Pty) v South African Road Passenger Bargaining Council and Others (CA 4/2020) [2021] ZALAC 20; (2021) 42 ILJ 1446 (LAC) (14 May 2021)

IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, CAPE TOWN
Reportable
Case no: CA 4/2020
GOLDEN ARROW BUS
SERVICES (PTY)
Appellant
and
THE SOUTH AFRICAN
ROAD PASSENGER
BARGAINING
COUNCIL
First Respondent
COMMISSIONER PAT
STONE N. O
Second Respondent
TRANSPORT AND
OMNIBUS WORKERS UNION
Third Respondent
NATIONAL UNION OF
METAL WORKERS OF
SOUTH
AFRICA
Fourth Respondent
SOUTH AFRICAN
TRANSPORT AND ALLIED
WORKERS
UNION
Fifth Respondent
UNITED
ASSOCIATION OF SOUTH AFRICA
Sixth Respondent
NON-UNIONISED
EMPLOYEES
Seventh Respondent
Heard:
18 March 2021
Delivered:
14 May 2021
Coram: Davis JA,
Coppin JA and Savage AJA
JUDGMENT
DAVIS JA
Introduction
[1]
This appeal concerns an inquiry into the
consequences of a collective agreement for a member of a bargaining
council in which a binding
agreement was concluded, notwithstanding
the opposition of the particular member. Appellant is an employer
which carries on business
within the road passenger transport
industry. Accordingly, it falls within the scope of the first
respondent and is subject of to
the latter’s main collective
agreements. Appellant contends that, as a result of that which it
describes as “a historical anomaly”
relating to the application
of an “notch” system which predated the formation of the first
respondent, a substantial disparity
exists between the wages which
appellant is obliged to pay its employees and those which its
competitors in the industry are obliged
to pay their employees.
[2]
In order to alleviate what appellant
considers to be a wage disparity problem, in June 2018, it sought a
partial exemption from the
terms of the first respondent’s main
collective agreement (‘the 2018 MCA’) which provided for an
‘across the board’ wage
increase of 9% for the year ending 31
March 2019 and for a similar 8% increase for the year ending 31 March
2020. By seeking a partial
exemption, the appellant sought to be
allowed to depart from the obligation to pay the full 8% increase to
all of its drivers in
respect of the second year of the agreement. It
emphasised that it did not seek any exemption in respect of drivers
already on the
first respondent’s scale of minimum wages who had
received the full increase of R 183.51 per week.
[3]
The application which it made for a partial
exemption meant that all other drivers regardless of their length of
service would not
receive the full 8% increase calculated on their
actual wages in the second year of operation of the 2018 MCA.
Instead, they would
receive the rand equivalent of an 8% increase on
the minimum rate, being R 183.51 per week.
The exemption
process
[4]
The application was duly considered by an
exemption panel which adopted the view that while there may be merit
in the appellant’s
argument that an untenable wage disparity had
arisen, upheld the argument that the issue could only be addressed
through a further
process of collective bargaining. It went on to
find:
‘
On
a careful reading of the application for exemption, it is also our
view that applicant for exemption is in fact seeking from us
to
“strike down” the status
quo
clause, as contained in the current Main Collective Agreement.
We would be exceeding out powers in doing so, as such may be
perceived to undermine the processes of collective bargaining.
Should the applicant be aggrieved by the status
quo
clause, which it clearly is, such should be renegotiated on its
behalf by COBEO at centralized level.’
[5]
The appellant lodged an appeal against this
decision on 31 August 2018.  On 9 August 2018, the appellate
body dismissed the appeal.
It determined thus:
‘
The
applicant is seeking confirmation or approval of its decision  to
not apply the notch increases. As mentioned, this is already
the
subject of a dispute and it is not within the powers of the Appeal
Authority to confirm what is already a fait accompli.
In
addition, the applicant is not seeking exemption from applying the
increase to the minimum notch levels, but an amendment to apply
the
increases differently. It is beyond the powers of the Appeal
Authority to grant amendments to the application of the Main
Agreement.
It would further appear that the outcome of the dispute
lodged might give more clarity on this issue.’
[6]
The appellant then launched an application
to review and set aside this ruling on 16 November 2018.
Sitting in the Labour Court,
Nieuwoudt AJ found that the appellate
exemption body had failed to consider the issues that had been placed
before it and accordingly
remitted the matter to a ‘properly
constituted appeal panel.’ The second respondent was then appointed
by the first respondent
to determine this appeal. He issued a ruling
on 13 May 2019 wherein he dismissed the appeal on the following
basis:
‘
The
exemption application is primarily based on the argument that a
primary objective of the Labour Relations Act is to promote
collective
bargaining at sectoral level and that given that the
objective of sectoral bargaining is to eliminate unfair competition
between
employers in the same industry in respect of wages, the
bargaining outcomes negotiated in the MCA undermines orderly
collective bargaining
at sectoral level and that the exemption
applied for should be granted in order for the long term survival of
centralised bargaining
in the industry sector in question.
While I accept that any part of a bargaining council collective
agreement must be capable
of a challenge in terms of an exemption
application, I find that the “safety valve” should be restricted
to motivations based
on either-
(a)
employers and/or employees experiencing or
potentially experiencing serious hardship whether it be a “financial”
or a “job security”
hardship as a consequence of complying with
the collective agreement in question, or
(b)
the collective agreement in question
results in unintended consequences for parties bound by that
agreement.
In this matter there
is no evidence that the appellant company is financially unable to
comply with the terms of the MCA.  The
company may have a
preference to distribute its revenue in other ways but this cannot be
the subject matter of an exemption.’
[7]
In his determination, the second respondent
went on to examine the purpose of sectoral bargaining:
‘
As
a consequence, the Labour Relations Act only promotes the development
of bargaining councils on a voluntary basis in the context
of
self-regulation.  I, therefore, find that any exemption
application must confine itself to issues surrounding “ability
to
comply” with the requirements of a bargaining council collective
agreement or in circumstances where the collective agreement
has
“unintended consequences”.’
[8]
The dismissal of the application for
partial exemption by the second respondent resulted in a review
application brought before the
court
a
quo
which was heard on 30 August 2019.
The judgment of
the court
a quo
[9]
Sitting in the court
a
quo
, Prinsloo J found that the second
respondent’s reasoning had not taken account of a series of
relevant facts. In the view of the
learned judge, the second
respondent had incorrectly confined his inquiry to the question of
whether the appellant had shown “undue
hardship” or “unintended
consequences”. Further, he had erred by way of the finding that the
wage disparity issues could only
be addressed through collective
bargaining.
[10]
Considerable emphasis was placed by the
parties on the wording of clause 13 of Annexure C – Exemption
Procedure of the 2018 MCA
which provides:
‘
In
considering an application, the exemption authority shall take into
consideration all relevant factors which may include, but shall
not
be limited to, the following criteria;
1.
The applicant’s past record (if
applicable) of compliance with the provisions of Council’s
Collective Agreement and/or exemption
certificates.
2.
Any special circumstances that exist or any
precedent that might be set.
3.
The interest of the industry in relation to
unfair competition, centralised collective bargaining as well as the
economic stability
of the industry.
4.
The interest of employees as regards
exploitation, job preservation, sound conditions or employment,
possible financial benefits,
health and safety as well as the
infringement of basic rights.
5.
The interest of the employer as regards its
financial stability, the impact on productivity, its future
relationship with employees
and recognised Trade Union(s),
operational requirements and the viability of the employer’s
business.’
[11]
Prinsloo J noted that ‘the second
respondent had no regard for the factors set out in clause 13 of the
exemption procedure and glaringly
absent from the appeal ruling is a
consideration of ‘all relevant factors’ which were obviously
relevant and material in deciding
the exemption application. In fact,
it was submitted to the second respondent that this was ‘a classic
special circumstances case’
with specific reference to the 59% pay
disparity.  The appellant did not request the second respondent
to reduce or freeze wages
until they go down to the minimum but
indicated that the disparity should be addressed and that the
appellant was prepared to pay
all its drivers an increase equal to or
more than the inflation rate.  Put differently, the appellant
submitted that it offered
to pay at least inflation rate at the same
Rand value increase for all its drivers.
[12]
On this basis, Prinsloo J found that
the second respondent had misdirected himself as to the nature of the
inquiry and had committed
a gross irregularity by failing to consider
the appeal on its merits. For these reasons, the appeal ruling had to
be reviewed and
set aside.
[13]
Turning to the question of relief, Prinsloo
J did not accept the appellant’s submission that the court
substituted the appeal ruling
with its own but considered that it be
in the interests of the parties and of justice to have the matter
properly decided. Accordingly,
she remitted the appeal for
consideration
de novo
.
The appeal
[14]
Appellant approached this court on appeal
against that part of the order of the court a
quo
of 17 October 2019 which remitted the
exemption appeal for hearing
de novo
before the first respondent.  At the same time, the third and
fourth respondents lodged a cross-appeal in which they contend
that
the court
a quo
did not enjoy jurisdiction in respect of the dispute. In the
alternative, they seek to appeal the court
a
quo
’s decision to review and set
aside the second respondent’s exemption appeal ruling.
Did the court
have review jurisdiction
[15]
In terms of s 158(1)
(g)
of the Labour Relations Act 66 of 1995
(‘LRA’) , subject to s 145, the Labour Court has the power to
review the purported performance
of any function provided for in the
LRA on any grounds that are permissible in law. Ms Harvey, who
appeared on behalf of the third
and fourth respondents, submitted
that the function of deciding whether to grant or refuse exemptions
of parties to collective agreement
is not one which is provided for
the in the LRA; hence s 158(1)
(g)
does not apply.  In
substantiation of this submission, Ms Harvey referred to s 30
(k)
of the LRA which provides that, in order to qualify for
registration, the constitution of a bargaining council must include
an exemption
procedure. According to Ms Harvey, it therefore followed
that it was left to the parties by private agreement to determine an
exemption
procedure.
[16]
This submission does not however engage with the appellant’s
reference to s 158(1)
(j)
which provides that the Labour Court
has the powers to deal with all matters necessary or incidental to
performing its functions
in terms of this Act or any other law.
[17]
I agree with Mr Freund, who appeared together with Mr Leslie on
behalf of the appellant, that the starting
point of the enquiry is s
30(1)
(k)
which expressly provides for the inclusion of an
exemption procedure from a collective agreement concluded by the
parties to a bargaining
council. It follows that the LRA therefore
legally mandates that every bargaining council must provide for a
procedure for exemption.
It cannot follow that there is no
supervision to be exercised by the Labour Court in respect of the
manner in which a bargaining
council conducts its activities or
complies with a mandate specifically provided for in the LRA.
Thus the grant of an exemption
from the collective agreement
concluded by the members of a bargaining council must be taken to
constitute the performance of a function
provided for in the LRA.
That a functionary is required to perform the role of deciding
whether an exemption should be granted
is manifestly a performance
conducted under the LRA and accordingly it must therefore follow
that, in terms of s 158(1)
(g)
of the LRA, the Labour Court has
jurisdiction to determine the legality of such a mandated procedure.
There is thus no need to have
recourse to s158(1)(j) to determine
this issue.
The merits of the
review application
[18]
Although the substance of the review
application decided by the court
a quo
,
other than the relief granted was only the subject of a cross appeal,
it is appropriate, in my view, to deal with the cross-appeal
and then
decide whether the decision to remit the exemption application
de
novo
should be upheld.
[19]
The appellant’s primary ground of the
successful review application had been that the second respondent had
acted ultra vires by
unduly fettering his discretion and thus
limiting the ambit of the enquiry which he was required to determine.
[20]
Much reliance was placed by Ms Harvey on
the decision in
Calibre Clinical
Consultants (Pty) Ltd v National Bargaining Council for the Road
Freight Industry
2010 (5) SA 457
(SCA)
(
Calibre Clinical Consultants
)
to the effect that, as the decision of a bargaining council was a
private domestic one, it could not be subject to a kind of review
sought by the appellant. In
Calibre
Clinical Consultants
, the parties to
the bargaining council had agreed to establish a welfare fund that
would, amongst other things, introduce and maintain
a programme to
provide anti – retroviral treatment to employees in the industry.
Eventually, the council appointed a particular
entity to be the
service provider to manage and administer the programs.
[21]
The Supreme Court of Appeal was confronted
with an appeal against a decision to appoint a particular service
provider. This necessitated
an initial enquiry as to whether a review
in this case was legally justifiable in terms of the
Promotion of
Administrative Justice Act 3 of 2000
‘(PAJA’).  Nugent JA
held at para 41:
‘
A
bargaining council, like a trade union and an employers’
association is a voluntary association that is created by agreement
to
perform functions in the interest and for the benefit of its
members.  I have considerable difficulty seeing how a bargaining
council can be said to be publically accountable for the procurement
of services for a project that is implemented for the benefit
of its
members – whether it be a medical aid scheme, a training scheme or
a pension fund or in this case its wellness programme’
.
Nugent JA then held
at para 44:
‘
That
procurement of goods and services by the council – for whatever
purpose – is not a public function – it seems to me to
find
support in the Constitution itself.  Government and its agencies
are expected to be publically accountable for the contracts
that they
conclude because they are spending public monies and there are two
principle reasons why that should be so.  In the
first place the
public is entitled to be assured that its monies are properly spent.
And secondly, the commercial public is entitled
to equal opportunity
to benefit from the bounty of the State to which they are themselves
contributories
.’
[22]
That the facts in
Calibre
Clinical Consultants
are entirely
different from those which apply to this case, is manifest.
But, even if it is correct to find that the decision
of an exemption
panel does not constitute administrative action as defined in PAJA,
most certainly it has been long established law
that decisions of
domestic tribunals may be subjected to review on common law grounds.
This position has been clear since the
decision in
Turner
v Jockey Club of South Africa
1974 (3)
SA 633
(A) where the court held that an internal tribunal which had
not afforded a jockey a fair and impartial hearing was invalid
because
the principles of natural justice were violated.  The
court in
Turner
went on to hold that, where the decision of a tribunal is vitiated by
a   disregard for the principles of natural justice,
the
matter cannot be corrected by the appeal proceedings before a higher
tribunal but only by way of a complete rehearing of the
matter
de
novo
.
[23]
Of equal relevance to this issue is the
decision in
Hendricks v Overstrand
Municipality
[2014] 12 BLLR 1170
(LAC)
where this Court recognised the broad powers of review which had been
conferred particularly in terms of s 158 (1) (h) and
by extension  by
s 158 (1) (g) of the LRA.
[24]
Murphy AJA, in a carefully considered
judgment, held at para 21 that there is strictly speaking no need to
classify the decision as
administrative action in terms of PAJA
before a review will be competent under s 158(1)
(h)
of the LRA. This provision does not say that the Labour Court may
review decisions of the State acting as employer on the grounds
of
review applicable to administrative action under PAJA.  It does
say that the Labour Court may do so on any grounds “permissible
in
law”.   Review under PAJA is only one kind of
administrative law of review. Exercises of the public power are also
reviewable on constitutional grounds of legality and rationality.
Murphy AJA then went on to say that the submission by the appellant
that review should be excluded because of the contractual arrangement
and the private nature of the powers was not well founded.
The
judicial review of contractual disciplinary proceedings is permitted
in our law. Consequently, the application for review was
permitted on
these grounds which are ‘permissible in law’ as contemplated in s
158(1)
(h)
of the LRA.
[25]
It does not appear to me that any
justifiable distinction can be drawn between a dispute dealing with
the decision of an appeal body
concerning an exemption application
and a disciplinary hearing as was the case which confronted the court
in
Hendricks
;
hence the
dicta
in
Hendriks
are relevant to the disposition of the present appeal.
Application to
the facts
[26]
Upon this legal basis, I turn to deal with
the substance of the cross-appeal. Ms Harvey’s central submission
was that the court
a quo
had been clearly wrong in finding that the second respondent had
restricted the enquiry and thus failed to consider the appeal on
its
merits leading to an unreasonable outcome.  She submitted that a
reasonable decision-maker would, on the evidence placed
before the
second respondent, have come to a similar decision because it was
reasonable to reject the special circumstances motivation
of
appellant based as it was on the alleged purpose of centralised
collective bargaining being to level wages and the consequent
argument that the effect of the 2018 MCA holding the consequence of
“unfair competition”. Further, because on a proper
consideration of the remaining four factors to be taken into account
in terms of clause 13 of the exemption procedure together with
the
omnibus provision of ‘all other relevant circumstances’, it was
reasonable deed and indeed to refuse to grant the exemption
in the
light of a purpose of the power to exempt a party from a term of a
collective bargaining agreement .
[27]
In amplification of her submissions, Ms
Harvey submitted that the prime purpose of centralised collective
bargaining was to give effect
to the legislature’s policy choice in
favour of self-regulation of the conflict between employers and
employees. For this reason,
bargaining councils are not concerned
with competition between employers which is the subject matter of the
market mechanism which
falls outside of the bargaining council’s
sphere of competence or indeed interest.  The fundamental
purpose of a collective
agreement is to establish a minimum floor of
employment conditions. To the extent that there is a power to exempt
an employer from
a negotiated term of an enforceable collective
agreement, the provision of an exemption procedure is designed to
create a “safety
valve” in an exceptional case where an
individual employer may experience hardship.
[28]
Applied to the facts of the present case,
third and fourth respondent’s argument that the 2018 MCA required
all employers to increase
their wage bill by the same percentage
could not be considered to be unfair. The bargaining parties to the
2018 MCA had agreed to
an ‘across the board’ increase to actual
wages subject to an agreed minimum floor.
[29]
It was thus a contemplated outcome that some employers would pay more
than others. Furthermore, Ms Harvey
pointed to the fact that the
appellant did not have any competitors as it was the only public
subsidised commuter bus services contracted
by the Western Cape
government. It followed that, viewed in this fashion,  the case
of the appellant fell outside of the purpose
of the exemption
provision purpose, which, in Ms Harvey’s view, was correctly
summarised by Du Toit et al as follows:
‘
The
scope for granting exemptions must be considered in the context of
the sanctity of collective bargaining agreements and the statutory
prioritisation of such agreements over individual agreements.
The purpose of the exemption mechanism, it has been emphasised
is
‘not to make a new agreement merely because the exemptions appeal
tribunal believes that the parties who concluded the CA agreed
on
unfair, inequitable, oppressive or unjust terms’ but ‘rather to
create a safety valve to deal with cases in which individual
employees or employers may experience undue hardship’ or ‘deal
with unintended consequences’.  This suggests that, as
a rule,
exemptions should be narrowly construed.
’
(
Labour
Relations Law: A Comprehensive Guide (6
th
ed) at 323-324)
[30]
Ms Harvey further submitted that beyond any
considerations raised in the factors set out in clause 13, the
exemption fell to be refused
even if the second respondent had not
taken into account of all the factors as set out in clause 13. The
reasons raised by the appellant,
to effectively circumvent the
collective agreement concluded by bargaining council of which
appellant was a member, did not justify
preferring the arguments of
the appellant over the core purpose of an agreement which was the
product of collective bargaining. Thus,
on the facts examined
holistically,  the outcome  reached by the second
respondent was nevertheless reasonable and correct
and did not stand
to be set aside.
Appellant’s
case
[31]
In defence of the judgment of the court a
quo to set aside the decision of the second respondent, Mr Freund
submitted that it was
important to look at the relevant clauses of
the 2018 MCA. Clause 3 thereof provided for a 9% ‘across the board’
increase of
the hourly wage rate of employees from 1 April 2018 to 31
March 2019 and an 8% increase of the hourly wage rate of employees
from
1 April 2019 to 31 March 2020.  Clause 30 provided thus:
‘
All
substantive terms and conditions of employment and benefits that were
applicable at an employer as at the effective date of this
agreement
and are not regulated by the agreement, shall remain in force and
effect.  Further any existing substantive terms
and condition
(sic) of employment and benefits that were applicable as at the
effective date of this agreement at a level higher
/ better than
regulated in the agreement, such higher / better terms and conditions
of employment and benefits shall continue to
apply’.
[32]
In Mr Freund’s view, the effect of clause
3 read together with clause 30 was that the appellant was obliged to
increase its drivers’
actual wages by 9% from 1 April 2018 and by
8% from 1 April 2019.  He noted that the conclusion of this
agreement had been preceded
by an industry wide industrial action.
The appellant had not voted in favour of the conclusion of the
agreement on the terms
contained therein but was outvoted by the
other members of the employer organisation.
[33]
The objection raised by the appellant to
the agreement was to the future application of the same percentage of
increases to those
of its drivers who were already earning notch
related rates which greatly exceeded the minimum wages laid down by
the first respondent.
Mr Freund contended that this ongoing
application of the 2018 MCA would entrench and indeed exacerbate the
existing wage disparity
within the appellant’s own structures and
between the appellant and the other employers in the industry.
In the first period
of the agreement ending on 31 March 2019, the
appellant implemented the 9% ‘across the board’ increase for all
drivers on the
respective actual wages. This was not the subject
matter of the exemption for which it had applied. What the appellant
did not implement
was the increase of each of the various minimum
wage thresholds; that is, it froze these thresholds at the levels
applicable immediately
before the commencement of the 2018 MCA. In
essence, the dispute giving rise to this appeal was that the
appellant had, as a past
practice, applied the ‘across the board’
increases to each of the various minimum wage threshold or notches so
that the minimum
rates for each notch increased annually. The
appellant was however of the view that the provision contained in
clause 30 of the 2018
MCA did not oblige it to apply its past
practice of increasing the minimum rates for each notch by way of the
‘across the board’
percentage. For this reason, it had granted
all its drivers the higher of a 9% increase or an increase to the
next applicable notch
as that notch had stood prior to the
commencement of the 2018 MCA. It was of the view that in order to
place the matter beyond any
reasonable doubt, that an exemption be
sought from any obligation it might be thought to have had to
increase the minimum rates for
each notch by the agreed percentage.
[34]
Turning to the second year of the
agreement, the appellant had sought an exemption to the following
effect:  while in respect
of newly appointed drivers, being
drivers employed after 1 April 2019, that the minimum rate for that
year of R 2477,43 per week
that is the 2018 minimum rate, would be
increased by 8%, But in respect of all other drivers, regardless of
their length of service,
the increase would be in respect of the rand
value, which was equivalent to 8% of the minimum rate of R 2293,92 a
week; that is R
183,51 per week.  Alternatively, if that
increase was less than the cost of living index (‘CPI’) as at 1
April 2019, the
drivers in question would receive an increase
equivalent to CPI.
[35]
As an illustration of the effect of the
grant of this exemption, the appellant compiled a table presented to
the second respondent
which indicated the disparities in remuneration
between the various categories of drivers. A driver, with one first
year of experience,
after the increase would earn R 2293,92 in the
2019 year, whereas a driver with six years’ service would earn R
3654,21 which constituted
a 59% difference in pay. However, were the
appellant’s application for the exemption to be accepted, this
would reduce to 25% by
2029.
[36]
While accepting the difference in
remuneration based on years of service may be justifiable to a point,
once a differentiation becomes
disproportionate, the appellant
contended that it was not justifiable and indeed may be regard as
unfair discrimination.
[37]
Given that competitors operated under a
different system of remuneration, the appellant contended that the
perpetuation of the status
quo was inimical to the economic stability
of the industry, undermined sectoral collective bargaining and gave
rise to a practice
of unfair competition based on very significant
wage differentials between industry participants. Compared to a case
where an employer
sought to pay less than its counterparts, in this
case the purpose of the exemption was to allow the appellant to
reduce the level
of unfair competition to which it had been subject.
[38]
Turning to the question of the interests of
employees -  the appellant’s contention was that a primary aim
of the exemption
was to reduce unjustifiable pay disparities between
employees performing the same work.  The lowest paid employees
would continue
to receive the full increases determined in terms of a
MCA, while the highest paid employees would receive increases, albeit
slightly
lower in percentage than their more lowly paid counterparts
but no lower than the CPI linked increase.  All other conditions
of employment would remain the same.
Evaluation
[39]
Despite Ms Harvey’s submissions to the
contrary, it does appear from the wording of the ruling of the second
respondent, which has
been reproduced in this judgment, that the
basis of the refusal to grant an exemption was predicated on the
principle that any evaluation
of an exemption application must be
confined to issues surrounding ability to comply with the
requirements of a bargaining council
collective agreement, or
circumstances where the collective agreement had unintended
consequences. The only unintended consequence
considered by the
second respondent was the widening pay gap which he held to be an
unintended consequence of the 2018 MCA. As the
second respondent
held: ‘The parties provided for a percentage increase on actuals,
which self-evidently widens the gap. The parties
to the agreement did
not agree to make all wages the same. Should the bargaining partners
wish to narrow pay differentials or set
a maximum level of pay or
provide for rand increases across the board instead of percentages,
they can so agree.’
[40]
Clause 13 sets out factors to be considered
and then expressly provides: ‘which may include but shall not be
limited to.’ That
certainly means that the enquiry can range beyond
the factors expressly provided for in the clause. However, among the
factors expressly
set out is ‘the interest of the industry in
relation to unfair competition’. Another is ‘its future
relationship with the employees
and recognised trade unions’.
No attention was given to these considerations, whether express
or implied by clause
13.
[41]
There is thus merit in Mr Freund’s
argument that the second respondent did not fully appreciate the
broad range of considerations
which could and should have been taken
into account by him in addressing the merits of the application for
exemption as brought by
the appellant.
[42]
In dealing with the issue of collective
agreements, albeit in terms of the discretion granted to the Minister
of Labour to extend
collective agreements to non-parties, Murphy J
held in
Free Market
Foundation v Minister of Labour and
others
[2016] 37 ILJ 1638 (GP) at para
29:
‘
Self-regulation
on the basis of majoritarianism and voluntarism is a corner stone of
the policy of industrial pluralist… the Minister
affirmed a view
that orderly bargaining would be eroded…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
.’
[43]
Accepting that the
Free
Market Foundation
case concerned itself
with an extension of the collective agreement, the fundamental point
that an exemption should be narrowly construed
and that collective
bargaining which culminates in an agreement is a reflection of the
principles of voluntarism  are  reinforced
in this  dictum.
Thus a careful approach has to be adopted in respect of an
application for an exemption. The decision to exempt
a party from the
terms of a collective agreement must be evaluated through the prism
of the principle of voluntarism. But any decision
by an exemption
panel, as was required by the second respondent, cannot invoke the
principle of voluntarism to eschew a careful examination
of the list
of criteria set out in clause 13.
[44]
A reading of the ruling of the second
respondent supports a contrary conclusion to that urged upon us by Ms
Harvey, namely that the
second respondent had impliedly understood
that there was no numerous
clausus
of circumstances which could justify the requirements of an
exemption. The express finding as set out in the written reasons
provided
indicates that the grounds on which the exemption may be
granted were limited to financial hardship or a narrow construction
of the
meaning of ‘unintended consequences’.  Regrettably
the decision omits a detailed engagement with the question of
unintended
consequences. To state the obvious: the parties did not
agree to make all the wages the same. Thus the policy reasons for the
retention
of a sector level bargaining and its effect on exemption
procedures were never canvassed by the second respondent.
[45]
Professor Halton Cheadle has described the
policy reasons for the retention of sector level bargaining as
follows:
‘
By
setting reasonable standards
applicable
to all employers in a local market
,
competition between those employers should be based on productivity
rather than the socially undesirable reduction of wages or the
extension of working hours
.’ (my
emphasis)
[46]
If employers in the same industry were able
to undercut each other on wages or should they not be bound to pay
the same wage rates,
then the harmonisation of wage rates throughout
the industry which is one of the objects of sector level bargaining
would be undermined.
[47]
This point was emphasised by this Court in
SA Clothing and Textile Workers Union v
Yarntex (Pty) Ltd t/a Bertrand Group
[2013]
34 ILJ 2199 (LAC) at para 58 namely that the purpose of centralised
bargaining is to ensure that ‘employers and employees
in these
subsectors should enjoy the same treatment to ensure that employers
compete with their counterparts in a fair manner in
order to sustain
the industry and to prevent job losses.’
[48]
The narrow approach adopted by the second
respondent to the scope of the inquiry as required in terms of clause
13 of the exemption
procedure resulted in a decision which had not
taken in account of the appellant’s central argument, namely that,
absent an exemption,
it would not be able to compete with new
entrants into the market who would only be bound to apply the base
minimum wage contained
in the 2018 MCA and that, pursuant thereto,
the appellant would be obliged to continue to maintain wage rates in
perpetuity which
were far in excess of the industry minimum This
would allow competing employers, including new entrants into the
market, to undercut
it on wages by paying a rate which is vastly
lower than that which, absent the exemption, the appellant would be
obliged to pay.
The upshot of this omission is that the second
respondent’s decision failed to do that which a reasonable
decision-maker in the
circumstances was obliged to have done, namely
to consider all the relevant factors and not limit the enquiry to but
two narrow factors,
notwithstanding that they were to be found in the
wording of clause 13.
[49]
The conclusion that a broader inquiry was
required to be undertaken by the second respondent and that the
appellant’s central argument
about unfair competition and stability
of the industry was not properly examined by the second respondent
leads inexorably to the
conclusion reached by the court
a
quo
and thus to the question of relief
to be granted in the light of this finding.
Relief
[50]
In deciding that it would be in the
interest of the parties and of justice to remit the application for
exemption for consideration
de novo,
Prinsloo J justified the order she granted as follows:
‘
The
applicant’s prayer for substitution is not sustainable in view of
the main ground for review raised namely that the second respondent
committed a gross irregularity in the proceedings with the effect
that the parties were deprived of a fair hearing and that the appeal
ruling consists of a failure to take a decision.  In light of
these complaints it is not appropriate to substitute the appeal
ruling, but rather to remit the matter for consideration de novo.’
[51]
In its appeal, the appellant contends that
the court
a quo
ought to have substituted its decision for that of the second
respondent by upholding the exemption appeal and granting the
exemption
as sought. Mr Freund submitted that the relevant facts
giving rise to exemption were common cause or not in dispute Thus all
the
material facts were contained in the record of evidence placed
before the court
a quo
which accordingly was in a position to have substituted its own
decision for that of the second respondent. Significantly the third
and fourth respondents agreed that all the relevant facts and
argument were on the record and hence this Court was in as good a
position
to make a decision as was the exemption appeal authority.
[52]
Regrettably this does not appear to be the
case. Simply put, there is inadequate evidence available to this
court to make a clear
finding on what is clearly a central issue,
namely whether the perpetuation of the status quo is inimicable to
the interest of the
industry in relation to unfair competition, the
objectives of centralised bargaining and the economic stability of
the industry.
This problem is particularly exacerbated when
consideration is taken of the submission of third and fourth
respondents, namely that
the appellant has no competitors and is the
only public subsidised commuter bus services contracted by the
Western Cape government.
There is insufficient evidence placed before
this court to evaluate the merits of this argument. Furthermore, the
fact that the bargaining
parties agreed to an’ across the board’
increase of actual wages subject to an agreed minimum floor raises
the argument that
there was a contemplated outcome that some
employers would pay more than others and that this was not a case of
unfair competition.
[53]
Appellant did not vote in favour of the
conclusion of the 2018 MCA and was outvoted by the other members of
its employer organisation
Commuter Bus Employers’ Organisation
(COBEO) but, nonetheless, it was bound by the terms of this agreement
by virtue of its membership
of COBEO.
[54]
A decision to grant an exemption will
therefore have to take careful consideration of the fact that the
appellant was a party to the
bargaining council and thus was bound by
the consequences of the outcome thereof  This fact needs to be
weighed against the
central argument of what effect this agreement is
on competition within the industry and the particular hardship to the
appellant
that might flow as a result of a failure to be granted an
exemption .The question of whether it would then be faced with
operating
its business on an uneven playing field needs to be taken
into account. None of this evidence is available in sufficient detail
for
this Court to make an informed decision.
[55]
Accordingly, the approach adopted by the
court
a quo
must be followed to the extent that the order which was granted by
the court
a quo
must be confirmed.
[56]
In the result therefore the following order
is made:
1.
The appeal is dismissed.
2.
The cross-appeal is dismissed.
3.
There is no order as to costs.
_____________
Davis JA
Coppin
JA and Savage AJA concur.
APPEARANCES:
FOR
THE APPELLANT:
Adv Freund SC and Adv Leslie
Instructed
by Edward Nathan Sonnenbergs Attorneys
FOR
THE THIRD AND FOURTH
RESPONDENTS

Adv S Harvey
Instructed
by Cheadle Thompson & Haysom Inc and Justine Delmonte &
Associates