Kem-Lin Fashions CC v Brunton and Another (DA1015/99) [2000] ZALAC 25 (16 November 2000)

About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Labour Appeal Court
SAFLII
>>
Databases
>>
South Africa: Labour Appeal Court
>>
2000
>>
[2000] ZALAC 25
|

|

Kem-Lin Fashions CC v Brunton and Another (DA1015/99) [2000] ZALAC 25; [2001] 1 BLLR 25 (LAC); (2001) 22 ILJ 109 (LAC) (16 November 2000)

IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA
Held
in Johannesburg
Case
No: DA 1015/99
In the
matter between:
KEM-LIN
FASHIONS CC
Appellant
and
C
BRUNTON
1
ST
Respondent
BARGAINING
COUNCIL FOR
THE
CLOTHING INDUSTRY
2
ND
Respondent
JUDGEMENT
ZONDO
JP
Introduction
[1] There
are two questions for determination in this appeal. The first one is
what the procedure is that a bargaining council
is required to
follow when it seeks to enforce a collective agreement against an
“employer”
to whom such a collective agreement has been extended by the
Minister of Labour in terms of
s 32(2)
of the
Labour Relations Act,
No 66 of 1995
(“the
Act”)
where such collective agreement contains a procedure for its own
enforcement. The second is whether the second respondent required
accreditation in terms of the Act before it could have a dispute such
as this one arbitrated under its auspices.
The
relevant facts
[2] The
appellant is a close corporation which is involved in the clothing
industry in Kwazulu- Natal. The first respondent is the
arbitrator
who gave the ruling which is the subject of this appeal. The second
respondent is the Bargaining Council for the Clothing
Industry
(Natal). The employer party to the second respondent is the Natal
Clothing Manufacturers’ Association which is an employer’s
organisation. The appellant is not one of the employers who are
members of this employers’ organisation. The employee party to
the
second respondent is the Southern African Clothing and Textile
Workers Union, a registered trade union which operates in the
textile
industry.
[3] On
the 27
th
November 1998 two collective agreements which had been concluded
between the parties to the second respondent were published in
the
Government Gazette of that date. The one was published in Government
Gazette No R1516. The other one was published in Government
Gazette
No R1517. The first one was the main collective agreement of the
second respondent. The second was the second respondent’s
Provident Fund. (
“the
Provident Fund collective agreement”
).
On the same day the Minister of Labour extended the two collective
agreements to employers and employees falling within the second
respondent’s registered scope who had not been party to the
collective agreements. The Minister did this in terms of
s 32(2)
of
the Act. As the appellant fell within the second respondent’s
registered scope, this meant that the two collective agreements
were
also extended to it.
[4] Obviously,
the two collective agreements placed certain obligations on all those
who were bound by them. One of the obligations
which the main
collective agreement placed on employers to whom it applied was the
obligation to register with the second respondent.
Another
obligation was to pay employees who fell within certain categories
at no less than certain rates of pay.
[5] The
two collective agreements contain identical dispute resolution and
compliance or enforcement procedures. As the compliance
or
enforcement procedure provided for in the two collective agreements
is identical, I will not refer to procedures in both agreements
but
will refer only to the procedure in the main collective agreement.
The compliance or enforcement procedure is the procedure
which is
required to be followed when the second respondent seeks to enforce
the collective agreements. In terms of the collective
agreements the
power to administer these collective agreements vests in the second
respondent.
[6] In
the main collective agreement the enforcement procedure is provided
for in clause 38(3). Clause 38(3) provides as follows:-
“
(3)
Compliance Procedure - enforcement
(a) The
Council shall take all reasonable steps necessary to ensure
compliance with this agreement. If, whether through its own
investigations
or through any other source, it appears that the
provisions of this agreement may have been breached, then the
following procedures
shall apply to enforce compliance.
(i) The
Secretary shall appoint a designated agent to investigate the alleged
breach;
(ii) if,
upon completion of the investigation, the designated agent has reason
to believe that an agreement has been breached, the
agent may
endeavour to secure compliance with the agreement through
conciliation;
(iii) at
the end of the conciliation process, the designated agent shall
submit a report to the secretary as to the result of the
investigation, the steps taken to secure compliance through
conciliation and the outcome thereof;
(vi) upon
receipt of the report, the Secretary of the Council in question may-
(aa) require
the designated agent to undertake further investigations; or
(bb) refer
the matter to arbitration and require the arbitrator to hear and
determine the alleged breach of the agreement, in which
case the
terms of subclause (2) above will apply to the arbitration, read with
the necessary changes required by the context; or
(cc) take
such other steps as he deem (sic) reasonable.”
[7] Clause
38(2) sets out the procedure to be followed when a dispute has been
referred to the second respondent for arbitration.
The provisions
contemplate the keeping of a panel of arbitrators who conduct
arbitrations in disputes which are referred to the
second respondent
for arbitration. The provisions are to the effect that, when
conciliation has failed and the secretary of the second
respondent
receives a request for a dispute to be referred to arbitration, he,
or, another designated official of the second respondent,
must
appoint an arbitrator from the panel of arbitrators who will
arbitrate the dispute. However, the appointment is on a rotational
basis. Although clause 38(2)(c) allows an employee of the second
respondent to be appointed to the panel of arbitrators, it says
an
arbitrator who is an employee of the second respondent will not be
eligible for appointment to arbitrate a dispute in which
the second
respondent has an interest.
[8] The
second respondent’s officials have undertaken certain
investigations in relation to the appellant. As a result of those
investigations, the second respondent believes that the appellant
could be in breach of the two collective agreements. In particular
it is alleged that the appellant has failed to register as an
employer with the second respondent. It is also alleged that the
appellant has also failed to register its employees with the second
respondent. The appellant’s answer to this is that it is not
an
employer. For that reason it maintains that the collective agreements
do not apply to it. It says the persons whom it is thought
it employs
are
“a
network of independent contractors”.
The second respondent disputes the allegation that those persons are
not employees of the second respondent.
[9] In
due course the second respondent invoked the compliance/enforcement
procedure in clause 38(3) in order to enforce the collective
agreement on the appellant. It referred the matter to conciliation
as contemplated by clause 38(a)(ii). The appellant failed to
attend
the conciliation meeting despite notice. Then, in accordance with
the provisions of clause 38(a)(iv)(bb) of the main collective
agreement, the Secretary of the second respondent referred the matter
to arbitration. The first respondent was allocated the matter.
[10] At
the arbitration presided over by the first respondent, the appellant
raised a point
in
limine
to the effect that the first respondent had no jurisdiction to
entertain the matter. The first respondent ruled against the
appellant
on the issue of jurisdiction and held that he had
jurisdiction to deal with the matter. The appellant then brought an
application
in the court a quo to review and set aside that
decision. The matter came before Basson J in the court a quo. Basson
J dismissed
that application with costs. With the leave of the court
a quo the matter now comes before us on appeal. I now turn to deal
with
the first question that this appeal raises.
The
appeal
[11] As
already indicated above, the first question to be determined in this
appeal is what the procedure is which must be followed
by a
bargaining council which seeks to enforce its collective agreement
against an employer to whom such an agreement has been extended
by
the Minister of Labour in terms of
s 32(2)
of the Act. When such
collective agreement contains a procedure for its enforcement, is it
that procedure which must be followed
or is there another procedure
that must be followed?
[12]
In terms of
s 23
of the Act a collective agreement is “a written
agreement concerning terms and conditions of employment or any other
matter of
mutual interest concluded by one or more registered trade
unions, on the one hand, and, on the other,
(a) one
or more employers;
(b) one
or more employers and one or more registered employer’s
organisations;
Section
23
of the Act sets out provisions dealing with the legal effects of
a collective agreement. It sets out on whom a collective agreement
is binding. For present purposes it is not necessary to say anymore
than simply that a collective agreement is binding on those
who are
parties to it as well as their respective members.
[13]
Section
24
deals with disputes about collective agreements.
Section 24(1)
provides as follows:
“
(1)
Every collective agreement, excluding an agency shop agreement
concluded in terms of
section 25
or a closed shop agreement concluded
in terms of
section 26
, must provide for a procedure to resolve any
dispute about the interpretation or application of the collective
agreement. The procedure
must first require the parties to attempt
to resolve the dispute through conciliation and, if the dispute
remains unresolved, to
resolve it through arbitration.”
Section
24(2)
says a dispute about the interpretation or application of a
collective agreement may be referred to the Commission for
Conciliation,
Mediation and Arbitration (
“the
CCMA”
)
in certain specified circumstances which do not obtain in this
matter.
[14]
Section
27
makes provision for the establishment of bargaining councils.
Section 28
makes provision for the powers and functions of bargaining
councils. In terms of
s 28(1)(a)
, (b) and (c) a bargaining council
has power to
“conclude collective agreements”
,
to
“enforce those collective agreements”
and to prevent and resolve disputes respectively.
[15]
Section
32
makes provision for the extension by the Minister of Labour of a
collective agreement concluded in a bargaining council to employers
and employees who are not parties to that collective agreement.
Such employers and employees are referred to in the Act as
non-parties
to distinguish them from, on the one hand, the employers
or employer’s organisations, and, on the other, trade unions and
employees
who are parties to the collective agreement.
Section 32(1)
and (2) read thus:-
“
Extension
of collective agreements concluded in Bargaining Council
(1)
A Bargaining Council may ask the Minister in writing to extend a
collective agreement concluded in the Bargaining Council to
any
non-parties to the collective agreement that are within its
registered scope and are identified in the request, if at a meeting
of the bargaining council.
(a) one
or more registered trade unions whose members constitute the majority
of the members of the trade unions that are party to
the bargaining
council vote in favour of the extension; and
(b) one
or more registered employers’ organisations, whose members employ
the majority of the employees employed by the members
of the
employers’ organisations that are party to the bargaining council,
vote in favour of the extension.
(2) Within
60 days of receiving the request, the Minister must extend the
collective agreement as requested, by publishing a notice
in the
Government Gazette declaring that, from a specified date and for a
specified period, the collective agreement will be binding
on the
non-parties specified in the notice.”
[16] In
my judgement the answer to the question under consideration at this
stage of this judgment depends on what the meaning, effect,
implications and consequences are of an extension of a collective
agreement as contemplated under of
s 32(2)
of the Act.
[17] The
purpose of the Act is stated in
s1
to be the advancement of
economic development, social justice, labour peace and the
democratisation of the workplace by fulfilling
the primary objects of
the Act. One of the primary objects of the Act is to provide a
framework within which employees and their
trade unions, on the one
hand, and, employers and employers’ organisations, on the other,
can collectively bargain to determine
wages, terms and conditions of
employment and other matters of mutual interest
(s 1(c)(I)).
Another
one is the promotion of:-
“
(i) collective
bargaining;
(ii) collective
bargaining at sectoral level;
(iii) ------------
(iv) the
effective resolution of labour disputes.”
[18] The
Act seeks to promote the principle of self-regulation
on
the part of employers and employees and their respective
organisations. This is based on the notion that, whether it is in a
workplace
or in a sector , employers and their organisations, on the
one hand, and, employees and their trade unions, on the other, know
what is best for them, and, if they agree on certain matters,
their agreement should, as far as possible, prevail.
[19]
The legislature has also made certain policy choices in the Act
which are relevant to this matter. One policy choice is that
the
will of the majority should prevail over that of the minority. This
is good for orderly collective bargaining as well as for
the
democratisation of the workplace and sectors. A situation where the
minority dictates to the majority is, quite obviously,
untenable.
But also a proliferation of trade unions in one workplace or in a
sector should be discouraged. There are various
provisions in the
Act which support the legislative policy choice of majoritarianism.
Some of them are s 14(1); 16(1); 18(1); 25(1)
and(2); 26(1) and (2);
32(1)(a) and (b); 32(3)(a),(b), (c) and (d) and 32(5); 78(b)).
[20]
The rationale behind the extension of collective agreements by the
Minister of Labour in terms of s 32(2) is to prevent unfair
competition which employers who are not party to collective
agreements concluded in a bargaining council may pose to their
competitors
who are bound by collective agreements. This is because
a collective agreement concluded in a bargaining council lays down
minimum
wages and other terms and conditions of employment to be
observed in respect of employees.
[21] If
the collective agreement is not extended to non-parties, the
non-parties would be able to pay employees at rates which are
lower
than those which their competitors who are party to collective
agreements have to pay to their employees. The result of this
would
be a serious threat to the business of those who are parties to
collective agreements. This would seriously discourage orderly
collective bargaining in general and collective bargaining at
sectoral level in particular which are part of the primary objects
of
the Act. If this were allowed, there would be little, if any, point
in any employer seeking to be party to a bargaining council.
That
would be a threat to one of the pillars of the labour relations
system in this country.
[22] It
is clear from what has been said above that the mischief which the
legislature sought to prevent by s 32 is the unfair competition
that
I have referred to. The legislature decided that the way to prevent
such mischief would be to ensure that in certain circumstances

non-parties could be subjected to the same terms and conditions as
parties to a collective agreement. That means ensuring that
everyone in a sector is subjected to the same rules. This means that
non-parties become subjected to rules to which they have not
consented and on which they have not been consulted. However, it is
open to them, if they want to have a say in such rules, to
take steps
to be part of bargaining councils and influence the rules from
inside. If they do not become part of bargaining councils,
they run
the risk of being subjected to rules decided upon by their
competitors without their input.
[23] The
Act recognises that there may be cases where subjecting non-parties
to a collective agreement concluded in a bargaining
council may
operate too harshly against them. It is for that reason that the
Act precludes the Minister from extending a collective
agreement to
non-parties in certain circumstances. Those circumstances are those
where the Minister is not satisfied that :
(a) provision
is made in the collective agreement for an independent body to hear
and decide, as soon as possible, appeals brought
against the
bargaining council’s refusal of a non-party’s application for
exemption from the provisions of the collective agreement
or the
withdrawal of such an exemption by the bargaining council (s
32(3)(e)); in this connection it needs to be stated that s 30(1)(k)
requires the constitution of a bargaining council to contain a
procedure for exemption from collective agreements;
(b) the
collective agreement contains criteria which must be applied by the
independent body when it considers an appeal, and, that
those
criteria are fair and that they promote the primary objects of the
Act. (S 32(4)(f);
(c) the
terms of the collective agreement do not discriminate against
non-parties.
In
other words non-parties cannot seek to have different rules applied
to them simply on the basis that they are not parties to
the
collective agreement.
[24] Apart
from the fact that the Act sets out circumstances in which the
Minister may not extend a collective agreement to non-parties,
the
legislature has considered that, even when the Minister has correctly
exercised his power to extend a collective agreement to
non-parties,
there may be cases in which individual businesses or entities or
employers and employees or their trade unions may experience
hardship. It is for that reason that the Act requires that every
collective agreement concluded in a bargaining council should contain
an exemption procedure in terms of which exemption from the
collective agreement or from certain of its provisions can be
granted.
The Act requires that the collective agreement should
contain a procedure for appeals against decisions of bargaining
councils refusing
exemption to an independent body.
[25] In
the light of the above, it seems to me that the effect in law of an
extension of a collective agreement in terms of s 32(2)
is that, for
all intents and purposes, a non-party is turned into a party, and, is
placed in relation to the collective agreement
on the same level as a
signatory to the collective agreement. The extension of a collective
agreement by the Minister in terms of
s32(2) means making the
collective agreement binding on employers and employees who otherwise
would not be bound by it. S32(2) says:”
... the Minister must
extend the collective agreement, as requested, by publishing a notice
in the Government Gazette
d
eclaring
that, from a specified date and for a specified period, the
collective agreement will be binding on the non-parties specified in
the notice.” It seems to me that, once it can be said that the
Minister has, in terms of s32(2), extended a collective agreement
to
an entity by publishing a notice in the Government Gazette declaring
that the collective agreement will be binding on such entity,
such
entity is bound by the collective agreement, and, cannot escape the
consequences thereof unless it is granted an exemption or
in an
appropriate case, the extension is set aside by a court of competent
jurisdiction.
[26] We
have to decide this case on the basis that there is a valid extension
of the collective agreement to, among others, the appellant.
In such
a case it is no longer open to such an entity to say: But this
collective agreement does not apply to me or does not bind
me. This
has got to be so because the whole purpose of the Minister’s
decision to extend the collective agreement and to declare
it binding
on such a party in terms of s32(2)is to render the collective
agreement applicable to, and, binding on such an entity.
Of course
such an entity may be able to take the point that a particular clause
in the collective agreement does not apply to it
but that is
different from taking the point that the collective agreement itself
does not apply to or bind such an entity.
[27] The
result of the above is that, for as long as the extension stands, it
is not open to such non-party to avoid the obligations
of the
collective agreement by saying that it is not a party to the
collective agreement or that it is not a signatory to the collective
agreement. In fact it appears inaccurate to continue to refer to such
a party as a non-party because, for all intents and purposes,
the
extension makes it a party to the collective agreement.
[28] In
the light of the above, in order to determine what procedure the
second respondent was required to follow if it sought
to enforce
the collective agreement against non-party to whom it has been
extended, one must ask what procedure the second respondent
would
have been required to follow if it sought to enforce the collective
agreement against a party which was a signatory to the
collective
agreement (s 32 (4)(g).
[29]
The above means that, except where the collective agreement or the
Act may be providing otherwise, a party which did not sign
the
collective agreement but to whom the collective agreement has been
extended is to be treated on the same basis as the parties
which
signed the collective agreement. In the absence of any provision
either in the Act or in the collective agreement sanctioning
differential treatment for non-parties, non-parties must be treated
in the same way as would parties to the collective agreement
in any
given situation once the collective agreement has been extended to
them.
[30] The
procedure for the enforcement of the main collective agreement is
contained in clause38(3). That is the procedure which the
second
respondent was required to follow in seeking to enforce the
collective agreement against the appellant. It was correct in
invoking that procedure against the appellant.
[31] The
appellant’s counsel submitted that the procedure set out in s 63 of
the Act is the procedure that the second respondent
was required to
follow. S 63 provides that any party to a dispute about
“the
interpretation or application”
of Parts A and C to F of Chapter III of the Act may refer the dispute
to the Commission for Conciliation, Mediation and Arbitration
for
conciliation and if conciliation fails, the dispute must be referred
to the Labour Court for a adjudication The basis for this
submission
was that this is a dispute about the interpretation or application of
Part C of Chapter III of the Act in that it is about
whether the
second respondent had power under section 28(1)(b) to resort to the
procedure it resorted to in order to enforce the
collective
agreement. I agree with Mr Pillemer, who appeared for the second
respondent, that section 63 can simply find no application
in this
case because this matter is not one about the interpretation or
application of any part of Parts A and B and C to F of
Chapter III
of the Act. This is a matter relating to the enforcement of the two
collective agreements. The two collective
agreements provide a
procedure for their enforcement. That is the procedure to be
applied.
[32] On
behalf of the appellant it was also submitted that the use of the
procedure that the second respondent sought to use against
the
appellant was unconstitutional in that the council was a judge in
its own case. It was submitted that the first respondent was
not
independent of the second respondent and that the result of this was
that the second respondent was arbitrating the matter itself.
It was
submitted that this was contrary to the rules of natural justice. In
my view this part of the appellant’s complaint is
a result of a
failure by the appellant to understand and appreciate how the Act
and the rules of natural justice operate. The
position is that the
majority in the sector have come together and agreed on a
procedure that they believe is an acceptable
procedure for the
enforcement of the collective agreement . That procedure applies to
them as well. It is not just a procedure
that the majority has
specially created to be used against non-parties. The appellant’s
complaints in this regard are nothing
more than the consequences of
the extension of the collective agreement to the appellant.
[33]
The situation the appellant finds itself in is a result of the
fact that the collective agreement has been extended to
it. As
long as the extension of the collective agreement remains, the
appellant is subject to the collective agreement. If
it were to
appear to the appellant that there was some unfairness about any
aspect of the application of the collective agreement
to the
appellant, there is a remedy available to the appellant to avoid
either certain provisions of the collective agreement or
the entire
collective agreement. That is the exemption procedure. In terms of
the procedure even a non-party to whom the collective
agreement has
been extended may apply to the second respondent to be exempted
from either certain provisions of the collective
agreement or from
the collective agreement as a whole. If the second respondent were
to refuse to grant the appellant exemption,
there is even provision
in the collective agreement for an appeal against such a decision to
an independent body.
[34] In
any event it is not correct to say that the second respondent sought
to arbitrate the matter itself in this case. Arbitration
should not
be required to meet the same standards as courts of law. But even
in courts of law, situations do arise which have
the same
features as the features the appellant complains about in respect of
the arbitration. In fact this Court put it to Mr
Reinecke, for the
appellant, during argument that even with the CCMA the Act
contemplated that, should the CCMA and anyone of its
employees have a
dismissal dispute for example, the dismissed employee would be
required to refer the dispute to the CCMA for conciliation.
[35]
The conciliation between such CCMA employee and the CCMA would be
conducted by a commissioner of the CCMA. If conciliation failed,
the
dispute would be arbitrated by a CCMA commissioner. In all
probability the Commissioner would be a part-time commissioner. But
that would not be because the Act requires that but it would be a
decision that may be taken at a practical level. That is very similar
to what the second respondent’s procedure entailed in this case. I
can see no reason why, if that is what the Act contemplates
in
respect of the CCMA, it should contemplate anything different in
respect of the second respondent and none was suggested to us
by Mr
Reinecke.
[36] Outside
the field of labour law similar situations can be found, too.
Magistrates are appointed by the Minister of Justice and
magistrates’
salaries are paid by the Department of Justice of which the Minister
of Justice is the political head. When a person
sues the Minister of
Justice in the Magistrates’ Court and a magistrate hears such a
trial and gives a judgement, there can be
no suggestion that it is
the Minister of Justice who has decided the case. In the light of all
the above I conclude that the appellant’s
contention in this regard
falls to be rejected.
Was
accreditation required before the collective agreements could be
enforced?
[37] It
was argued on behalf of the appellant before the first respondent as
well as in the court a quo that the second respondent
required
accreditation before it could deal with a dispute such as the one
involved in this matter. In support of this, reliance
was placed on
clause 12(1) of the constitution of the second respondent. Both the
first respondent and the court a quo found that
the correct
interpretation of clause 12.1 of the second respondent’s
constitution was that accreditation was required only in those
cases
where the Act required accreditation.
[38] It
is in s. 51 of the Act that the Act deals with the requirement of
accreditation in the performance of certain dispute resolution
functions by bargaining councils. S 51(1) says a dispute in that
section means a dispute about
“a
matter of mutual interest”
between an employer party and an employee party. Both the first
respondent and the court a quo found that, as the matter at hand
was
not one of mutual interests, s 51 did not apply and, accordingly, the
Act did not require accreditation. In my view they were
right.
[39] In
the premises the appeal must fail. I can see no reason why the
appellant should not be ordered to pay the costs of the appeal.
The
appeal is accordingly dismissed with costs.
_________________
RMM
ZONDO
Judge
President
I
agree
__________________
M.T.R.
MOGOENG
Judge
of Appeal
I
agree
___________________
M.
JOFFE
Acting
Judge of Appeal
Appearances:
For
the Appellant: Mr Reinecke SC
Instructed
by: Shepstone & Wylie
For
the Respondent: Mr Pillemer SC
Instructed
by: Dirk Coetsee Attorneys
Date
of hearing: 29 September 2000
Date
of Judgement: 16 November 2000