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[2013] ZALAC 3
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Apollo Tyres South Africa (Pty) Ltd v Commission for Conciliation Mediation and Arbitration and Others (DA1/11) [2013] ZALAC 3; [2013] 5 BLLR 434 (LAC); (2013) 34 ILJ 1120 (LAC) (21 February 2013)
REPUBLIC OF SOUTH
AFRICA
THE LABOUR appeal
COURT OF SOUTH AFRICA, DURBAN
reportable
Case no: DA1/11
In the matter between:
APOLLO TYRES SOUTH
AFRICA (PTY) LIMITED
.................................................
Appellant
and
COMMISSION FOR
CONCILIATION MEDIATION
AND ARBITRATION
.....................................................................................
First
Respondent
COMMISSIONER ALMEIRO
DEYZEL
...................................................
Second
Respondent
KURCHID GOOLAM HOOSEN
...................................................................
Third
Respondent
Heard: 31 August 2012
Delivered: 21 February
2013
Summary: What
constitutes “benefit” by virtue of section 186 (2) of the
LRA- does the early retirement scheme initiated
by the appellant
constitute a “benefit” as contemplated in section 186 (2)
of the LRA? - is “benefit” limited
only to an entitlement
which arises
ex contractu or ex lege?-
“
benefit”
in terms of the LRA means existing advantages or privileges to which
an employee is entitled
ex contractu or ex lege
or
granted in terms of a policy or practice subject to the employer’s
discretion.-
Hospersa, GS4 Security
and
Scheepers
not followed-
early retirement
scheme constituted a “benefit”. Appeal dismissed with
costs.
Coram:
Musi AJA, Patel JA and Hlophe AJA (concurring)
__________________________________________________________________
JUDGMENT
___________________________________________________________________
MUSI AJA
[1] This is an appeal
against the judgment of the Labour Court (Cele J). This judgment
deals with the question whether an employee
who alleges that his/her
employer committed an unfair labour practice in relation to the
provision of benefits will only have a
remedy if such employee can
prove that he/she has a right or entitlement to the benefits
ex
contractus
or
ex lege.
[2] The third respondent,
Hoosen, was employed by the appellant. The appellant initiated an
early retirement scheme for some of
its employees. Hoosen applied but
was refused entry into the scheme. She resigned and whilst serving
notice she referred an unfair
labour practice dispute to the first
respondent (CCMA). The second respondent, acting under the auspices
of the CCMA, ruled in
her favour. The appellant unsuccessfully took
that decision on review. A subsequent application for leave to appeal
was refused.
Leave to appeal was however granted by this Court.
[3] Hoosen commenced her
employment with the appellant on 1 April 1984. The appellant, a tyre
manufacturing company, not being immune
to the economic pressures
that affected many companies decided, in order to stay afloat, to
reduce the number of its employees
in the wake of the lower demand
for its products.
[4] Dr Ceneviz, the Chief
Executive Officer of the appellant, addressed various groups of its
employees during 2008 and informed
them about the early retirement
scheme that the appellant intended to initiate. Dr Ceneviz requested
all interested employees to
approach their immediate seniors.
Subsequent to these meetings, a notice relating to the scheme was
placed on the notice board
at the appellant’s premises. The
said notice stated that the early retirement scheme (the scheme) only
applied to monthly
paid staff between the ages of 46 and 59. It also
stipulated that a successful applicant will receive two months
additional pay
and an
ex-gratia
payment computed on a sliding
scale depending on the age of the applicant, for example a 46 year
old applicant will receive R95
000.00 while a 49 year old applicant
will get R80 000.00 and a 59 year old R10 000.00. It further
stipulated that the normal retirement
benefits would be applicable
and that entry into the scheme is subject to management’s
discretion.
[5] Hoosen showed
interest in the scheme and consulted Mr Ramphal, her immediate
senior. He informed her that he will discuss the
issue with his
senior. Ramphal, as agreed with Hoosen, discussed the matter with Mr
Mittal, the Financial Director. Ramphal informed
Hoosen that Mittal
had refused and that she may discuss the matter with him. She
approached Mittal and asked him why she was refused
entry into the
scheme and he referred her to the human resources department. Neither
Ramphal nor Mittal told her that an applicant
had to be between 55
years and 59 years in order to qualify.
[6] She approached the
Human Resources Manager, Mr Coller, who was allowed to retire early
in terms of the scheme, who referred
her to Mr Basil Smith. When she
approached Smith he told her that there is nothing that he can do if
she had been refused entry
into the scheme.
[7] On 8 October 2008,
Hoosen sent an electronic mail (e-mail) to Ramphal wherein she stated
the following:
‘
As per my
discussions with you, my intention is to leave at the end of October
2008 and to take the 1
st
of October (sic) up to the 7
th
as unpaid leave. If you do not agree with this, I will make my last
working day the 15
th
of November. Please let me know whether I would qualify for early
retirement as per the HR notice on Early Retirements. Please
note
that I have been in Dunlop’s employment for 24 years and 7
months. I will provide a letter to you once we confirm the
above.’
It is common cause that
1
st
October should read 1
st
November
.
[8] On 10 October 2008,
Ramphal sent an e-mail to Douw Van der Walt (Van der Walt), the Human
Resources Director, and stated that:
‘
Kay is 49
years old and she has asked if she qualifies for the early retirement
package. Kay will be leaving on 15 November.
She would also like to know if she
qualifies for a proportionate amount of her Bonus.
Please advice your recommendation and
clearance from India of the Retirement package. Further, I would like
to recommend that Kay
gets a proportion of her bonus (since it is
almost year end).’
Van der Walt responded
thus:
‘
I have
checked policy and past practise (sic). You need to be employed at 31
December 2008, to qualify for the bonus...so no bonus
unfortunately.
On the early retirement, she needs to be 55 to qualify for this and
that is what we have applied in the business
up to date.’
[9] Ramphal discussed
Hoosen’s request with van der Walt and
inter alia
informed him that Hoosen’s duties would be distributed amongst
other employees including Ms Cindy Narismulu, who was later
requested
to shadow Hoosen to see what work she was doing.
[10] After Ramphal
informed her that her application had been refused she approached van
der Walt and asked him if she could appeal
against the refusal
because she was unaware of the age (55) requirement. He said he had
already made up his mind because she will
have to be replaced. She
told him that the phrase “subject to management’s
discretion” could be abused and asked
him if he would mind if
she procured legal advice on the phrase. He said she can go and see
an attorney or if she wants to refer
the matter to the CCMA she is
welcome but if ‘she touched him he would get her for that
afterwards’. After the conversation
she submitted her
resignation letter on 13 October 2008 to Ramphal who accepted the
resignation on 14 October 2008. She was to
leave the appellant’s
employment on 14 November 2008.
[11] On 29 October 2008,
she sent an e-mail to Ramphal wherein she requested him to review her
request to be allowed into the scheme.
She requested him to furnish
her with reasons should she still not be allowed into the scheme. On
30 October 2008, he sent her
the correspondence between him and van
der Walt referred to above.
[12] Hoosen referred an
unfair labour practice dispute to the CCMA. The referral documents
were served on 11 November 2008 and came
to the appellant’s
attention on 12 November 2008. The following day she was requested to
leave and a farewell party that
was arranged for her was cancelled.
[13] Ramphal confirmed
that Hoosen’s functions were given to other employees.
Narismulu was given approximately 50% of Hoosen’s
functions and
a slight increase in salary. He further confirmed that Hoosen was not
replaced with the result that there was one
less employee in his
department which translated into a cost saving for the appellant. He
further confirmed that two other employees
who were below 55 were
allowed into the scheme because of ill health.
[14] At the arbitration
the appellant argued that the CCMA has no jurisdiction to arbitrate
the dispute because there was no employment
relationship at the time
that the dispute was referred to it. This argument was rejected with
reference to
Velimor
v University of Kwazulu- Natal and Others.
1
[15] The second point
raised at the CCMA was that the early retirement package was not a
benefit in respect of which the CCMA has
jurisdiction and in any
event that it was not unfair not to grant Hoosen the early retirement
package. The second respondent ruled
that the CCMA has jurisdiction
to arbitrate the dispute. He referred to and relied
on
Protekon (Pty) Ltd v CCMA and Others
2
and Department of
Justice v CCMA and Others
3
for his conclusion. On
the issue of fairness, he found that it was unfair to deny Hoosen
entry into the scheme. He ordered the appellant
to pay Hoosen R123
637.22 which represents what she would have received had she been
granted the early retirement benefit
viz
two month’s salary
(R43 637.22) plus the amount of the
ex
gratia
payment
based on her age (R80 000.00).
[16] The appellant took
the matter on review and argued that the second respondent determined
the jurisdiction issue incorrectly.
It was also argued that the
Hoosen had disqualified herself from participating in the scheme, by
resigning. During the arbitration
proceedings, the second respondent
refused an application by the appellant for a postponement to call
van der Walt as a witness.
The appellant argued that the refusal was
unfair. Lastly it was contended that the refusal to allow Hoosen to
participate in the
scheme was not unfair.
[17] The court
a
quo
rejected
all the appellant’s arguments and dismissed the application.
The court
a
quo
however
found that the second respondent’s ruling that the scheme was a
benefit that falls within the purview of section 186
(2) (a) of the
Labour Relations Act 66 of 1995 (the Act)
4
is a decision that fell
within the band of reasonableness. The court
a
quo
further
said that the ‘debate about which of the decisions of this
court is (sic) correct or is to be preferred on what constitutes
benefits as is embarked upon by the applicant belongs to an appeal
and not a review’. In my view, the court
a
quo
misinterpreted
the appellant’s argument. The argument was that the CCMA does
not have jurisdiction to adjudicate the dispute
because the scheme is
not a benefit as contemplated in Section 186 (2) (a) of the Act. The
question is therefore not whether the
second respondent acted
reasonably or reached a conclusion that a reasonable commissioner
could not reach but whether his finding
is wrong or right. Put
differently the enquiry ought to be whether the second respondent was
correct in ruling that the CCMA had
jurisdiction to adjudicate the
dispute. See
City
of Cape Town v SAMWU obo Jacobs and Others.
5
[18] In its petition the
appellant states categorically that it does not seek to challenge in
any material respect the factual findings
of the Commissioner. It
further stated that:
‘
The
principal issues on which the Applicant seeks leave to appeal is
whether the early retirement scheme initiated by the Applicant
and
for which Hoosen applied and was refused entry, constituted a benefit
as contemplated in Section 186 (2) of the Labour Relations
Act, 1995
(the Act)
.’
The petition was granted
on this basis and the matter was argued on this basis. That is the
issue that falls to be determined by
this Court.
[19] Section 186 (2) (a)
of the Act reads as follows:
‘
Unfair
labour practice means any unfair act or omission that arises between
an employer and an employee involving-
Unfair conduct by the employer
relating to the promotion, demotion, probation (excluding disputes
about dismissals for a reason
relating to probation) or training of
an employee or relating to the provision of benefits to an
employee
;’
[20] There is no shortage
of judgments and academic writings wherein it is endeavoured to
capture the essence of and define the
word “
benefit
”
in the context of section
186 (2)(a) of the Act.
6
What is clear from all
the judgments and academic literature is that the word is, in this
context, imprecise and defies definition.
[21] In
Schoeman
and Another v Samsung Electronics SA (Pty) Ltd
,
the court discussed the meaning of the word “
benefit
”
which is defined as
‘Advantage or an allowance to which a person is entitled to
under insurance or social security...’
7
.
It concluded that:
‘
Commission
payable by the employer, forms part of the employee’s salary.
It is a
quid
pro quo
for
services rendered just as much as a salary or a wage. It is therefore
part of the basic terms and conditions of employment.
Remuneration is
different from “benefits.” A benefit is something extra,
apart from remuneration. Often it is a term
and condition of an
employment contract and often not. Remuneration is always a term and
condition of the employment contract.’
8
[22] In
Northern
Cape Provincial Administration v Commissioner Hambidge NO and Others
,
the court found that
remuneration is an
essentialia
of a contract of
employment and that other rights or advantages or benefits accruing
to an employee by agreement are termed
naturalia
to distinguish them from
the
essentialia
of the contract of
employment.
9
[23] In
Sithole
v Nogwaza and Others
,
the views expressed in
Hambidge
NO and Longmile
were
endorsed. The learned Judge went on to say that the benefit must have
some monetary value for the recipient and be a cost to
the employer.
A benefit is, according to the Judge, something which arises out of a
contract of employment.
10
[24] These decisions were
influenced by policy considerations in order to keep the distinction
between disputes over rights and
conflicts of interests pure and in
separate compartments. This consideration is important because such a
categorization and separation
purport to give meaning to Section
65(1) (c) which proscribes industrial action over disputes that the
parties can refer to arbitration
or the Labour Court i.e. disputes
over rights.
11
A wide definition of
benefits would, so it is said, undermine the right to strike which is
constitutionally entrenched.
12
In
Gaylard
v Telkom SA Ltd
it
is stated:
‘
If the term
‘benefit’ is so generously interpreted so as to include
any advantage or right in terms of the employment
contract, even
wages, item 2 (1) (b) would all but preclude strikes and lock-outs.
This was plainly not what the legislature had
in mind. Therefore
wages and salaries, in other words remuneration should be excluded
from the term ‘benefits
.’
13
[25] The distinction that
the Courts sought to draw between salaries or wages as remuneration
and benefits is not laudable but artificial
and unsustainable. The
definition of remuneration in the Act is wide enough to include
wages, salaries and most, if not all extras
or benefits. Remuneration
is defined as:-
‘
Remuneration
means any payment in money or in kind made or owing to any person in
return for that person working for any other person,
including the
State, and remunerate has a corresponding meaning
.’
14
[26] Many benefits that
are payment in kind form part of the
essentialia
of practically all
contemporary employment contracts. Many extras are given to employees
as a
quid
pro quo
for
services rendered just as much as a wage is given as a
quid
pro quo
for
services rendered. The cost to employer package has become, for many
employees and employers, a standard contract of employment.
PAK Le
Roux points out that extras are often important issues during the
negotiation of contracts of employment and the link between
salaries
or wages and benefits or extras is illustrated by the fact that
contributions to medical aid schemes and pensions and
provident
schemes are often agreed to on the basis of a ‘salary
sacrifice’ because this is a tax effective way of structuring
an employment package.
15
[27] PAK Le Roux further
points out that it appears to be illogical to prevent employees and
employers from embarking on a strike
or lock-out on the issue of a
pension scheme or medical aid scheme (which could have considerable
value for an employee and substantial
costs for an employer) and
compelling them to submit such disputes to arbitration, while
allowing them to strike over a commission
which could form a
relatively small part of the total “package” or a car
allowance.
[28] In
Protekon
(Pty) Ltd v CCMA and Others
,
it was correctly, in my
view, stated that the concern that a wide definition of ‘benefit’
might curtail the right to
strike needs not persist. According to the
learned Judge, one must look at the nature of the benefit dispute in
order to decide
whether it is a dispute that must be settled by way
of industrial action or adjudication. This is so because disputes
over the
provision of benefits may fall into two categories: firstly
where the dispute concerns a demand by employees that a benefit be
granted or reinstated irrespective of whether the employer’s
conduct in not agreeing to grant or in removing the benefit is
considered to be unfair. This kind of dispute can be settled by way
of industrial action. Secondly, the dispute may concern the
fairness
of the employer’s conduct. This kind of dispute may be settled
by way of adjudication. This in my view also puts
paid to Mr
Pretorius’ argument that the wide construction would delineate
some items of remuneration as benefits thereby
sacrificing clarity.
The learned Judge also pointed out with reference to
Maritime
Industries Trade Union of SA and Others v Transnet Ltd and Others
,
16
that there are many types
of disputes in respect of which parties enjoy an election whether to
resort to industrial action or to
seek adjudication.
[29] Having decided that
employees in disputes over benefits may choose to engage the employer
in the collective bargaining arena
rather than try to demonstrate
unfairness in the sense contemplated in the unfair labour practice
definition, the learned Judge
stated that the Act does not appear to
preclude employees from doing both at the same time. This might be
true but it is clearly
contrary to what was said in
Maritime
Industries
17
that:
‘
However, if
a dispute about a unilateral change of conditions of employment can
properly fall within the provisions of item 2 (1)
(b) of Schedule 7,
it will nevertheless be arbitrable
.
“Strikeable”
and arbitrable disputes do not necessarily divide into watertight
compartments. Although in relation to
dispute resolution the Act
contemplates the separation of disputes into those that are resolved
through arbitration, those that
are resolved through adjudication and
those that are resolved through power-play, there are disputes in
respect of which the Act
provides a choice between power-play on the
one hand, and arbitration on the other as a means for their
resolution.’
[30] In
Monyela
and Others v Bruce Jacobs t/a LV Construction,
Zondo J (as he then was)
pointed out that a dispute about a unilateral change of an employee’s
terms and conditions of employment
is a right dispute in respect of
which a strike would be permissible under the LRA because it is not
hit by the provisions of section
65 (1)(c) of the LRA.
18
So, although the Act
seems not to preclude employees from engaging the employer in the
collective bargaining/ industrial action
arena and the
arbitration/adjudication forum, it is clear that the whole scheme of
the Act as stated in
Maritime
Industries
is
to give employees an election. Having employees involved in strike
action and resorting to arbitration or adjudication at the
same time
over the same dispute would throw the whole system in disarray and
create unnecessary confusion and uncertainty.
[31] Mr Pretorius argued
that an employee may not rely on the provisions of section 186(2)(a)
to create a right that does not exist
and that the section is
intended to give an employee recourse in cases of unfair conduct in
respect of an existing right. According
to him, fairness and clarity
dictate that unfair conduct should be impeachable only in relation to
existing rights. His submission
was that
Hospersa
provides
clarity, it respects the rights/interest divide which permeates the
Act, it avoids a situation where new rights may be
created by
recourse to the unfair labour practice jurisdiction and it
successfully avoids a duplication of remedies.
[32] Mr Purdon, on the
other hand, argued that section 186(2)(a) was meant to come to the
rescue of employees such as Hoosen who
have no other remedy in the
LRA or the common law. According to him, if the term benefit is
construed wider than mere contractual
entitlements it will be in sync
with the purpose and effect of the residual unfair labour practice
jurisdiction. He argued that
Hospersa
was wrongly decided.
[33] In
Hospersa
it was said that:
‘
[9] It
appears to me that the legislature did not seek to facilitate,
through item 2(1)(b) , the creation of an entitlement to a
benefit
which an employee otherwise does not have. I do not think that item
2(1)(b) was ever intended to be used by an employee,
who believes
that he or she ought to enjoy certain benefits which the employer is
not willing to give him or her, to create an
entitlement to such
benefits through arbitration in terms of item 2(1)(b) . It simply
sought to bring under the residual unfair
labour practice
jurisdiction disputes about benefits to which an employee is entitled
ex contractu (by virtue of the contract of
employment or a collective
agreement) or ex lege (the Public Service Act or any other applicable
Act). The appropriate example
of such benefits cited by Mr Tip is
that of an employer who has established a provident fund for the
benefit of his employees and
who for one reason or another decides to
deny his employees the benefits of such a provident fund or to
terminate some employees'
membership or to deny membership to new
employees notwithstanding the fact that it is a condition of their
employment that they
would automatically qualify for membership and
the benefits flowing from it. In those circumstances an employee
would have a right
to the benefits in question which she or he would
be entitled to enforce in terms of item 2(1)(b) . The dispute
relating to what
the second appellant claims seems to be a
dispute
of interest whereas item 2(1)(b) was designed only for disputes of
right. As I shall presently demonstrate the second appellant
has not
established any right to the acting allowance.
[10] A
dispute of interest should be dealt with in terms of the collective
bargaining structures and is therefore not arbitrable.
A dispute of
interest should not be allowed to be arbitrated in terms of item
2(1)(b)
read
with item 3(4)(b)
under
the pretext that it is a dispute of right. To do so would possibly
result in each individual employee
theoretically
cloaking
himself or herself with precisely the same description of the dispute
that is the true subject-matter of collective bargaining.
And if such
an individual employee could legitimately insist on his or her
particular case being separately adjudicated, whether
through
arbitration or otherwise, the result would inevitably be a
fundamental subversion of the collective bargaining process
itself.
(See by way of example
Public
Servants
Association
& others v Department of Correctional Services
(1998)
19 ILJ 1655 (CCMA)
at
1669C-E and 1674D-E.) If individuals can properly secure orders that
have the effect of determining the evaluation of differing
interests
on the merits thereof, then the distinction between disputes of
interest and disputes of right would be distorted and
the collective
bargaining process self-evidently would become undermined. The
following extract as well as the definition not only
explain the
meaning of a dispute of interest and a dispute of right, but also
highlights the correct procedure to be followed in
their resolution.
[11] “Broadly speaking, disputes
of right concern the infringement, application or interpretation of
existing rights embodied
in a contract of employment, collective
agreement or statute, while disputes of interest (or ''economic
disputes')
concern the creation of fresh
rights, such as higher wages, modification of existing collective
agreements, etc. Collective bargaining,
mediation and, as a last
resort, peaceful industrial action, are generally regarded as the
most appropriate avenues for the settlement
of conflicts of
interests, while adjudication is normally regarded as an
J
appropriate method of resolving disputes of right.”
Rycroft & Jordaan A Guide to
SA Labour Law
(Juta 1992) at
169. This is consistent with what I have said above.’
[34]
Hospersa
has
been followed in numerous judgments of this Court and the Labour
Court. It has been criticised by this Court. It was not followed
by
the Labour Court in at least two judgments.
[35]
Hospersa
was cited with approval
in
Gauteng Provinsiale Administrasie v Scheepers and Others.
19
This matter was decided
based on the provisions of the Public Service Act 103 of 1994 and the
Public Service Labour Relations Act
105 of 1994 (PSLRA) which did not
provide for the right which Scheepers wanted to enforce. The court
rejected the argument that
an unfair labour practice included a broad
general “right” not to be unfairly treated because all
practices which were
unfair would,
under
the PSLRA,
have
qualified as “unfair labour practices”. The court found
that the PSLRA makes it clear that for an unfair labour
practice to
be justiciable, it had to involve a dispute of right. Importantly,
however,
the Court said:
‘
Moreover,
unfair labour practice, as traditionally understood, involved the
infringement of a right, that the right (one thinks
for example of
the entitlement of an employee to be heard before dismissal for
misconduct) was judicially created pursuant to the
powers given to
the Industrial Court by statute, and not by contract or legislation
did not make it less of a right.
’
20
The Court clearly
recognised that the unfair labour practice dispensation does create
rights. This is a significant shift from the
notion espoused in
Hospersa
that the right to a benefit must be derived from
statute, contract or a collective agreement.
[36]
In
GS4
Security Services (SA) (Pty) Ltd v NASGAWU and Others
,
an unreported judgment of
this Court which was delivered on 26 November 2009, after the
Department
of Justice v CCMA and Others
matter,
the approach set out in
Hospersa
was
unconditionally
accepted.
21
The Court quoted
paragraphs 9 and 10 of
Hospersa
and
concluded as follows:
‘
My
understanding of what Mogoeng AJA is
inter
alia
saying is that, in order for respondents to bring a successful claim
under item 2(1)(b) of Schedule 7 they have to show that they
have a
right arising ex contractu or ex lege. It is only then that having
established the right, that the commissioner would have
jurisdiction
to entertain the dispute as a dispute of right
.
’
[37] It is unfortunate
that the Court in
GS4
Security Services
did
not consider what was said in both the majority and minority
judgments in the
Department
of Justice v CCMA
matter.
In both judgments it is categorically stated that item 2(1)(b)
creates a right not to be treated unfairly in relation to
promotion,
demotion, disciplinary action short of dismissal, training and the
provision of benefits.
22
[38] The proposition that
the unfair labour practice dispensation created rights as explained
in
Scheepers
was
also not considered by the court in
GS4
Security Services.
The
unreserved acceptance of
Hospersa
by this Court in
GS4
Security Services
to
the exclusion of other cases where a different view was enunciated
renders it difficult for me to embrace the judgment or to
endorse it
in the wake of the criticism to which the
Hospersa
judgment was subjected,
as I will demonstrate presently.
GS4
Security Services
is
therefore susceptible to and deserving of the same criticism visited
upon
Hospersa.
[39] In
Eskom
v Marshal and Others,
the
Labour Court reluctantly followed
Hospersa.
.
23
The learned Judge opined
that employees might have a justiciable legitimate expectation to a
substantive right but did not make
a definitive finding on the issue
because
Hospersa
was binding on him. This
case represents an attempt to break free from the rigid approach
which
Hospersa
represented
.
Our law relating to the
doctrine of legitimate expectation does however not support the
notion that substantive rights may be acquired
on the strength of the
doctrine. One can, at this stage of our jurisprudential evolution,
only acquire procedural rights based
on the doctrine of legitimate
expectation.
24
[40] In
Department of
Justice v CCMA,
the issue of whether an unfair labour practice is
confined to disputes of right created
ex contractu
or
ex
lege
only was raised. The majority said the following:
‘
Counsel
for the Department also submitted that a dispute such as the one in
the present matter was a dispute of interest and not
a dispute of
right and that item 2(1)(b) contemplated disputes of right and not
disputes of interest. The right he was referring
to is a right ex
contractu or ex lege. He submitted that an unfair labour practice is
confined to disputes of right created ex
contractu or ex lege. The
answer to this argument is simply that item 2 of Schedule 7 is one of
the statutory provisions that seek
to give content to the
constitutional right to fair labour practices which is entrenched in
the Constitution. It creates a statutory
right not to be subjected to
an unfair labour practice that takes the form of conduct spelt out
therein. Item 2(1)(a) confers on
both an existing employee and an
applicant for employment a right not to be subjected to an unfair
labour practice taking the form
of unfair discrimination. Item
2(1)(b) confers on an existing employee a right not to be subjected
to an unfair labour practice
that takes the form of conduct relating
to promotion, demotion, training of an employee, disciplinary action
short of dismissal
and the provision of benefits to an employee.
The
obligation that item 2(1)(a) places on an employer is an obligation
not to act unfairly towards an employee and an applicant
for
employment by way of conduct constituting unfair discrimination. The
obligation that item 2(1)(b) places on an employer is
not to act
unfairly towards an existing employee in relation to promotion,
demotion, disciplinary action short of dismissal, the
training of an
employee and the provision of benefits to an employee. The right that
an applicant for employment and an employee
have under item 2(1)(a)
and the right that an employee has under item 2(1)(b) are rights
conferred on them ex lege. For that reason
a dispute concerning
whether the conduct of an employer relating to promotion is an unfair
labour practice is a dispute of right
and not a dispute of interest.
Accordingly I am unable to uphold the contention by Counsel for the
Department in this regard
’
.
25
[41] Mr Pretorius argued
that the majority was guilty of circular reasoning. I disagree. It is
also clear from the reasoning in
the majority and minority judgment
and the judgment of
Scheepers
that the unfair labour practice
dispensation creates rights and that an employee has an
ex lege
right created by section 186 (2)(a) not to be treated unfairly in
relation to promotion, demotion, training and the provision of
benefits.
[42] Section 23(1) of the
Constitution provides that: ‘everyone has the right to fair
labour practices’. It has been
said that our Constitution is
unique in constitutionalising the right to fair labour practices and
that the concept is incapable
of precise definition. It was further
stated that:
‘
The concept
of fair labour practice must be given content by the legislature and
thereafter left to garner meaning, in the first
instance, from the
decisions of the specialist tribunals including the Labour Appeal
Court and the Labour Court. These courts and
tribunals are
responsible for overseeing the interpretation and application of the
LRA, a statute which was enacted to give effect
to section 23(1).’
26
This is exactly what was
done in
Department of Justice v CCMA.
The majority judgment
did not overrule the assertion in
Hospersa
that the source of
a benefit must be found to exist
ex contractu
or
ex lege.
Mr Pretorius argued, correctly in my view, that the
Department of
Justice
matter still begs the question as to whether a benefit is
confined to a contractual benefit or not.
[43] The minority
judgment broke ranks with
Hospersa
and found its assertion
that the entitlement to a benefit must be grounded in contract or
legislation to be wrong. Goldstein AJA,
in his minority judgment
in
Department of Justice v CCMA
, said the following:
‘
Whatever the
position it seems to me, respectfully that the view expressed in
paragraph [9] that item 2 (1) (b) provided only for
rights which
arose
ex
contractu or ex lege
,
is clearly wrong. If that were so, the provision would have been
redundant since such rights would have been enforceable in the
absence of item 2 (1) (b). It is significant that item 3 (4) (b)
expressly provided for a dispute referred to, inter alia, in item
2
(1) (b) to be resolved through arbitration. It is significant too
that the introductory words in item 2 (1) and the cardinal
words in
item 2 (1) (b) concerned on unfair labour practise and unfair
conduct. Just as the LRA provides for disputes arising from
unfair
dismissals in respect of which there are no contractual remedies or
remedies at common law, to be resolved by arbitration,
so was item 2
(1) (b) designed for situations where neither the contract of
employment nor the common law provided an employee
with a remedy
.
’
27
[44] This issue, whether
the benefit must be an entitlement which arises
ex
contractu or ex lege
was
considered by the Labour Court in
Protekon
(Pty) Ltd v CCMA and Others.
The
Labour Court correctly stated that
Hospersa
is authority for the view
that the unfair labour practice jurisdiction cannot be used to assert
an entitlement to new benefits,
to new forms of remuneration or to
new policies not previously provided for by the employer. The Labour
Court then stated that
it does not follow from this that an employee
may have recourse to the CCMA’s unfair labour practice
jurisdiction only in
circumstances in which he/she has a cause of
action in contract law.
28
[45] The Labour Court
pointed out that there are many employer and employee rights and
obligations that exist in many employee benefit
schemes. In many
instances employers enjoy a range of discretionary powers in terms of
their policies and rules. The Labour Court
further pointed out that
section 186 (2) (a) is the legislature’s way of regulating
employer conduct by super imposing a
duty of fairness irrespective
whether that duty exists expressly or implicitly in the contractual
provisions that establishes the
benefit. The court continued and
stated that the existence of an employer’s discretion does not
by itself deprive the CCMA
of jurisdiction to scrutinize employer
conduct in terms of the provisions of the section. It concluded that
the provision was introduced
primarily to permit scrutiny of employer
discretion in the context of employee benefits. I agree with this
conclusion.
[46] I also agree, with
qualification, with the Labour Court’s conclusion that there
are at least two instances of employer
conduct relating to the
provision of benefits that may be subjected to scrutiny by the CCMA
under its unfair labour practice jurisdiction.
The first is where the
employer fails to comply with a contractual obligation that it has
towards an employee. The second is where
the employer exercises a
discretion that it enjoys under the contractual terms of the scheme
conferring the benefit.
[47] The first instance
is in sync with the
Hospersa
approach. The second instance
calls for qualification. Mr. Pretorius argued that the effect of the
judgment is that there must
be contractual terms even in instances
where the employer exercises a discretion. If that is indeed what the
Labour Court meant,
then I cannot agree with it. I am of the view
that the Labour Court used the words “contractual terms”
loosely. It
did not mean that the source of the discretion must be
found in a contract. It is in my view clear that if one has regard to
the
context of the whole judgment and the Labour Court’s
conclusion that it actually meant when the employer exercises a
discretion
under the terms of the scheme conferring the benefit.
Therefore even where the employer enjoys a discretion in terms of a
policy
or practice relating to the provision of benefits such conduct
will be subject to scrutiny, by the CCMA, in terms of section 186
(2)
(a).
[48] The facts of this
matter clearly illustrate that the
Hospersa
approach, that the
benefit must be an entitlement that is rooted in contract or
legislation, is untenable. Hoosen had,
in
terms of her employment contract, a right to retirement benefits. The
contract did not make provision for a right to voluntary
early
retirement benefits. She would therefore, on the
Hospersa
approach,
be able to challenge,
by way of arbitration,
any unfairness relating
to the ordinary retirement benefits. When the appellant decided to
accelerate the existing contractual benefits
and retained a
discretion to grant the accelerated benefits,
the
benefits would strangely morph into something less than benefits
because according to the
Hospersa
approach she does not
have a contractual right to the accelerated retirement benefits.
The employer would then
have a license to act with impunity. She would thus not have recourse
in the civil courts, because no contract
came into being,
nor would she have a
remedy in terms of section 186 (2) (a) of the Act to challenge the
patent unfairness because there is no underlying
contractual right to
the benefits. Being a single employee she would in accordance with
Schoeman
v Samsung
not
have the right to strike.
29
Clearly the notion that
the benefit must be based on an
ex
contractu or ex lege
entitlement
would, in a case like this, render the unfair labour practice
jurisdiction sterile.
[49] In
South
Africa Post Office Ltd v CCMA and Others
,
the Labour Court found
the reasoning in
IMATU
persuasive but considered
itself bound by the authority of the Labour Appeal Court with
reference to
Hospersa,
Scheepers and GS4
Security Services.
30
[50] In
IMATU
obo Venter v Umhlathuze Municipality,
the
Labour Court followed the
Protekon
approach.
It then concluded that:
‘
The more
plausible interpretation is that the term “benefits” was
intended to refer to advantages conferred on employees
which did not
originate from contractual or statutory entitlements, but which have
been granted at the employer’s discretion
.
’
31
It seems to me that the
court in
IMATU
was concerned that if benefits include a
statutory or contractual right or entitlement, the right to strike
may be curtailed. As
pointed out above employees will have an
election to strike or go the arbitration/adjudication route in
respect of many rights
disputes. In my view, the better approach
would be to interpret the term benefit to include a right or
entitlement to which the
employee is entitled (
ex contractu or ex
lege
including rights judicially created) as well as an advantage
or privilege which has been offered or granted to an employee in
terms
of a policy or practice subject to the employer’s
discretion. In my judgment “benefit” in section 186
(2)(a)
of the Act means existing advantages or privileges to which an
employee is entitled as a right or granted in terms of a policy or
practice subject to the employer’s discretion. In as far as
Hospersa, GS4 Security
and
Scheepers
postulate a
different approach they are, with respect, wrong.
[51] This approach will
also put paid to the anomaly created by
Hospersa.
An employee
who wants to use the unfair labour practice jurisdiction in section
186 (2) (a) relating to promotion or training does
not have to show
that he or she has a right to promotion or training in order to have
a remedy when the fairness of the employer’s
conduct relating
to such promotion (or non-promotion) or training is challenged. On
the other hand where an employee wants to use
the same remedy in
relation to the provision of benefits such an employee has to show
that he or she has a right or entitlement
sourced in contract or
statute to such benefit.
[52] The early retirement
benefit in
casu
was initiated by the employer and offered to
all monthly paid employers between the ages of 46 and 59. It is not
in dispute that
Hoosen was 49 years old and was paid a monthly wage.
It is common cause that she did not have a contractual entitlement to
the
early retirement benefits and that the benefits were to be
granted at the employer’s discretion. The issue that remains to
be considered is whether that discretion was exercised unfairly.
[53]
It
has been said that unfairness implies a failure to meet an objective
standard and may be taken to include arbitrary, capricious
or
inconsistent conduct, whether negligent or intended.
32
[54] When the CEO
addressed the employees,
only
two criteria
viz
:
age and being a monthly paid employee were mentioned as criteria for
eligibility subject to management’s discretion. The
notice was
also to the same effect.
[55] When Hoosen enquired
from and applied
via
Ramphal he did not know
of any other criteria except the two mentioned in the preceding
paragraph. When Hoosen spoke to Mittal and
later to Coller neither of
them told her about any disqualifying factor that made her
ineligible.
[56] It is only when
Ramphal escalated her application to Van der Walt that the first
disqualifying factor, i.e. that she had to
be between 55 years and 59
years old to qualify, was mentioned. When she enquired why two
employees who werse below 55 were allowed
to go on early retirement
she was told that in order for an employee under 55 to qualify that
employee must also suffer from ill-health.
[57] When she approached
Van der Walt he told her that her application was refused because she
will have to be replaced. This was
clearly not true because Ramphal
told him that her duties and responsibilities will be distributed
amongst other employees. It
is common cause that this was indeed
done. It is also common cause that she was not replaced.
[58] Mr Pretorius argued
that her post was not redundant because Cindy Narismulu had to do
most of her work after she resigned.
That is beside the point. The
question is whether her position was retained in the same form and
shape with the same duties and
responsibilities. The answer to this
question is clearly in the negative. When Narismulu took over
Hoosen’s position it had
far less duties and responsibilities
because the other duties and responsibilities were distributed
amongst other employees. Her
post, as it was when she was in the
applicant’s employ, was no more. Her post was clearly redundant
and she was not replaced.
This translated into a saving for the
appellant.
[59] It is clear that the
appellant kept on shifting the goal posts. This was in all
probability done in order to make sure that
she is given an
“acceptable” reason why she does not qualify for the
scheme. It is clear that there is no acceptable,
fair or rational
reason why she was not allowed to participate in the scheme. The
employer did not exercise its discretion fairly.
It is significant
that another seemingly healthy employee who was under 55 also
applied. Whether he was allowed entry into the
scheme is irrelevant.
The fact is he too did not know about the further requirements that
he had to suffer from ill-health if he
is under 55 and that there
must be no need to replace him if he wants to be admitted into the
scheme.
[60] In my view, Hoosen
qualified to participate in the scheme and was unfairly disallowed to
participate therein. In my judgment
the appellant committed an unfair
labour practice by not allowing her to go on early retirement.
[61] The quantum of the
award of the second respondent is not in dispute. The only issue that
remains to be considered is costs.
[62] The appellant acted
in a deplorable manner towards Hoosen. When she approached Van der
Walt and asked him whether she could
get a legal opinion on the issue
of managerial discretion he threatened her, no he in fact intimidated
her. When the referral documents
were served on the appellant, she
was told to leave with immediate effect. So despicable was its
conduct that a farewell party
that was arranged for her was
cancelled. That is not the way to treat an employee who has, by all
accounts, given more than 24
years of dedicated and excellent
service. The appellant ought to be mulcted in costs.
[63] I accordingly make
the following order:
(a) The appeal is
dismissed.
(b) The appellant is
ordered to pay the costs of the appeal.
_______________
CJ MUSI AJA
I agree
_____________
Patel JA
I agree
____________
Hlophe AJA
APPEARANCES:
FOR THE APPELLANT: Mr
Pretorius SC
Instructed by Farrel Inc
Attorneys (Durban)
FOR THE FOURTH
RESPONDENT: Brett Purdon Attorneys (Durban)
1
(2006)
27 ILJ 177 (LC) at paragraph 16.
2
[2005]
7 BLLR 703
(LC).
3
[2004]
4 BLLR 297
(LAC).
4
See
paragraph 19 below.
5
[2009]
9 BLLR 882
(LAC) at paragraph 28. The appellant in its petition and
before us was of the view that the true question is whether the
cause
of action was a good one or not depending primarily, on
whether the early retirement package constituted a benefit. Even on
this
construction the reasonableness test would not be applicable.
6
See
SA Chemical Workers Union
v
Longmile United
(1999) 20
ILJ 244 (CCMA) and
IMATU obo Verster
v
Umhlathuze
Municipality
[2011] 9 BLLR 882
(LC) footnote 7. Section
186(2)(a) replaced Item 2(1)(b) of schedule 7 of the Act.
7
The
concise Oxford Dictionary 6
th
ed: JB Sykes ed.
8
[1997]
10 BLLR 1364
(LC) at 1368 G-H.
9
(1999)
20 ILJ 1910 (LC) at paragraph 13.
10
(1999)
20 ILJ 2710 (LC) at paragraph 47.
11
Section
65(1)(c) reads as follows: ‘No person may take part in a
strike or lock-out or in any conduct in contemplation or
furtherance
of a strike or lock-out if the issue in dispute is one that a party
has the right to refer to arbitration or in the
Labour Court in
terms of this Act”.
12
Section
23(2)(c) of the Constitution of the Republic of South Africa 1996
reads: ‘Every worker has the right to strike.’
13
(1998)
19 ILJ 1624 (LC) at paragraph 22, See also
Hospersa and Another
v
Northern Cape Provincial Administration
(2000) 21 ILJ 1066
(LAC) at para 9 and 10 with which I deal with at paragraphs 33 to 35
infra
.
14
Section
213 of the Act.
15
PAK
Le Roux: ‘Preserving the Status Quo in Economic Disputes in
Contemporary’
Labour Law
Vol 6 no 11 June 1997 par 93
at p97.
16
(2002)
23 ILJ 2213 (LAC).
17
At
paragraph 106.
18
(1998)
19 ILJ 75 (LC) at 85. He also refers to other such rights disputes
that may give rise to a lawful strike.
19
(2000)
7 BLLR 756
(LAC) at paragraph 6. Mr Pretorius did not refer us to
this matter and did not rely on it.
20
At
paragraph 11.
21
Unreported
judgment case no DA3/08.
22
See
paragraphs 53 and 54 of majority and paragraph 17 of minority
judgment.
23
(2002)
23 ILJ 2251 (LC).
24
See
Mayer
v
Iscor Pension Fund
(2003) 5 BLLR 439
(SCA) at
paragraphs 25-28.
25
See
paragraphs 53 and 54. The majority judgment was written by Zondo JP
with Mlambo AJA concurring.
26
per
Ngcobo J as he then was in
NEHAWU v University of Cape Town and
Others
(2003) 24 ILJ 95 (CC) at paragraph34.
27
See
paragraph 14.
28
At
paragraphs 32 and 33.
29
Supra
at 1367. See however the persuasive argument of Grogan to the effect
that a single employee has the right to strike. Unfair conduct
the
meaning of “benefits” Employment Law Journal March 1998
page 11 at p12.
30
(C293/2011)
[2012] ZALCCT 23 (18 June 2012) at paragraph 29.
31
At
para 21.
32
Du
Toit et al:
The
Labour Relations Act
of 1995
2
nd
ed at 443.