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[2013] ZALAC 15
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Food and Allied Workers Union v TSB Sugar RSA Ltd and Others (JA 57/2011) [2013] ZALAC 15; [2013] 10 BLLR 973 (LAC) (13 June 2013)
REPUBLIC OF SOUTH AFRICA
THE LABOUR APPEAL COURT OF SOUTH
AFRICA, JOHANNESBURG
JUDGMENT
Not Reportable
Case no: JA 57/2011
FOOD AND ALLIEDWORKERS UNION
..........................................................
Appellant
and
TSB SUGAR RSA LTD
.......................................................................
First
Respondent
SOUTH AFRICAN TRANSPORT AND
AND ALLIED WORKERS UNION
.................................................
Second
Respondent
NATIONAL ASSOCIATION OF SUGAR
REFINERY AND ALLIED INDUSTRY
EMPLOYEES UNION
.........................................................................
Third
Respondent
Delivered: 13 June 2013
CORAM:
Waglay
DJP, Davis JA and Tlaletsi JA
___________________________________________________________________
JUDGMENT
___________________________________________________________________
TLALETSI, JA
Introduction
This appeal is against the judgment
and order of the Labour Court (Bhoola J) confirming a
rule nisi
and interim interdict on 27 June 2011 in an application brought
by the first respondent. The effect of the order was to declare
the
strike action by the appellant as well as second and third
respondent, which commenced at 07h00 on 16 June 2011 and of which
notice was given to the first respondent on 13 June 2011 to be an
unprotected strike as contemplated in section 68 of the Labour
Relations Act, 66 of 1995 (“the LRA”) as well as
interdicting and restraining the appellant and further respondents
who were employees listed in annexure “X” from
participating in the strike. The appellant was ordered to pay the
costs of the application. The appeal is with leave of the court
a
quo
.
Factual background
It is common cause that the strike
action pertained to disputes concerning two demands namely, an
incentive scheme and funeral
benefit.
The first respondent runs sugar
farms, three mills and two refineries in three areas, namely
Malelane, Komatipoort and Pongola.
However, no dispute was declared
in respect of Pongola operations for the purposes of this matter.
There is a Bargaining Council
in existence with jurisdiction over
the sugar manufacturing and refining industry. The appellant and the
first respondent have
concluded collective bargaining agreements
which entrench certain provisions of the collective agreements
concluded at that Council
and which themselves deal with certain
conditions of employment.
It is not disputed that during
February 2010 first respondent resolved to apply an incentive scheme
for the financial year commencing
01 April 2010 and terminating on
31 March 2011. The incentive scheme and the rules applicable to it
are encapsulated in a document
headed “Staff Incentive Scheme
for TSB Sugar (RSA)”.
The amount of remuneration for the
various divisions differed. It depended on the earnings generated by
the division and the manner
in which each division achieved other
drivers (goals), such as its safety record and other agreed drivers
which support the profitability
of the relevant division.
The practice of the incentive scheme
commenced during 2007. It was introduced then to obtain the buy-in
of and incentivise the
first respondent’s employees in respect
of the earning targets by management, after approval by the first
respondent’s
shareholders. The incentive scheme was in
previous financial years successfully implemented and employees
obtained variable bonus
payments per division.
It is not disputed that certain
targets were set for the first respondent for the 2010/2011
financial year in terms of a document
attached as Annexure “A”.
This meant that should those targets be met the first respondent’s
employees qualified
for an incentive bonus payment after the end of
the 2010/2011 financial year.
According to the appellant, their
members were in the past made to understand that once each division
had achieved 70% of the
targets set by management, that division
would become eligible for payment of a
pro rata
bonus. Each
month bar graphs were placed on the notice board of each division
including, with dotted lines, the actual targets
achieved in that
division each month. The appellant avers further that based on the
graphs that have been placed on the notice
boards during the second
half of 2010; the employees were expecting to receive bonuses paid
during May 2011 since each division
had achieved at least 70% of
each target set. Their expectation, they contend, was reinforced
when braais were held and each
employee received a chicken and a
T-shirt because targets had been achieved.
It is common cause that during
November 2010 the first respondent’s Chief Executive Officer
(“CEO”) during a
“road show” showed the
employees a bar chart that depicted a significant drop in turn over
from the previous year
against the budget. According to the first
respondent a letter dated 27 January 2011 annexed to the affidavit
was distributed
to the employees. The letter advised
inter alia
,
that the criteria for the payment of the incentive bonus would
probably not be achieved. The appellant denies that the said
letter
was distributed to the employees or sent to it. In my view, nothing
turns on this denial because it is common cause that
first
appellant’s view then was that the targets that would entitle
payment of the incentive bonus were not met for that
financial year.
It is further common cause that on 05
April 2011 management of the first respondent received a memorandum
from the unions including
the appellant, indicating,
inter alia
,
that the employees at Malelane looked forward to an increased
incentive based on the fact that the intended target had been
reached according to management and that “management itself is
very proud of us” (sic). The memorandum concluded
that action
would be taken should they not “see the bonus on 24.05.2011.
We are going to take action against that”.
On 19 April 2011, the appellant sent
a letter to first respondent in which they stated that ‘we
would like to remind your
company to pay the incentive bonus for
Komati Mill employees on the pay day of Thursday 21
st
April 2011’.
During May 2011, first respondent’s
CEO undertook another “roadshow” to explain,
inter
alia
, the results for the financial year to 31 March 2011. He
also displayed a document (Annexure “F”) that showed
that
profit was merely 74% of that budgeted for.
It is common cause that the incentive
bonus payment that would have been paid in May was not paid because
according to the first
respondent, targets were not met. On 19 May
2011, the appellant referred a dispute about the incentive bonus
payment to the Bargaining
Council. In the referral document, on the
summary of the facts of the dispute, they wrote:
‘
[F]ailure
of the Company to pay incentive bonus to its Komati and Malelane
Sugar Mills employees whilst the required production
target have been
met.’
The dispute concerning the
application of the incentive scheme was conciliated on 02 June 2011.
During the conciliation, the first
respondent’s approach was
that this was not a dispute of interest but one about the payment,
or non-payment of remuneration
to which the appellant and its
members were, or were not entitled. First respondent contended,
further, that this dispute could
properly be resolved by the Labour
Court and that resolution by power play was inappropriate. A
certificate of non-resolution
indicating that the dispute may be
resolved by strike was issued by the Bargaining Council.
I now proceed to discuss the
background facts relating to the second issue which is the subject
of the dispute. It is common cause
that all employees of first
respondent are obliged as a condition of employment, to join either
of the TSB Retirement Fund or
the TSB Provident Fund. In terms of
both Funds, the first respondent funds funeral policy benefits for
its employees.
On 26 November 2010, first respondent
met with the appellant’s representatives and proposed that the
funeral policy fund
under the name of Food and Allied Workers
Funeral Fund Plan (FAWFP) be implemented for its members and that
stop order facilitates
and a subsidiary be granted by first
respondent for this purpose. First respondent responded by way of a
letter dated 09 December
2010. The body of the said letter read
thus:
‘
Our
meeting on Friday 26 November 2010, refers.
As
discussed, the request for making available stoporder facilities for
deduction of payment of funeral cover for membership of
FAWFP, as
well as a request for subsidising membership was presented to the Tsb
Executive member responsible.
The
executive confirmed as follows:
Tsb
policy remains not to allocate any new stoporders facilities on Tsb
payroll.
All
employees receive payment via their bank accounts and the FAWFP is
free to recruit participants paying via debit orders or
bank
generated stoporders from bank accounts.
An
additional funeral cover provider was introduced in 1 May 2007 on
request of FAWU shopstewards at the time. Tsb has made stoporder
facilities available to the scheme driven by FAWU and underwritten
by KGA. The scheme and facility is still in place as additional
voluntary cover.
Due
to all permanent employees belonging to a retirement fund as a
condition of employment and all Tsb related funds provide funeral
cover paid by the employer portion, no consideration can be given to
subsidise membership of any additional cover.
All
employees are free to choose to buy additional funeral cover from
any provider and paying premiums via bank accounts”.
On 14 February 2011, the appellant
wrote to the first respondent setting out its demands and proposing
a meeting on 01 March 2011.
The body of the letter reads thus:
‘
re:
Food and Allied Workers Funeral Plan
The
above refers
The
content of your letter dated 09 December 2010 regarding the above has
been noted and reported to the members on the 09
th
February 2011. Please note that the General meeting resolved and
maintained us of the following for discussion with yourself.
1.
Replacement of the current funeral scheme to the food and Allied
Workers Funeral Plan.
2.
Stop order facility on TSB Payroll.
3.
Funeral Plan subsidy by TSB of R45.75c at R20.000 funeral benefits
cover for member’s family.
We
propose to meet with yourselfs to discuss the above as follows:
Date:
01 March 2011
Time:
9hrs
Venue:
TSB Malelane
Hope
for your response to the above.
Regards’
The appellant’s
representative(s) did not arrive for the 1
st
March 2011
meeting and first respondent left the matter there.
On 17 March 2011,the appellant wrote
to first respondent regarding the dispute. They registered their
disappointment that first
respondent did not acknowledge receipt or
respond to their previous letter and that their members had been
left with no option
but to instruct appellant to declare a dispute
of “matter of mutual interest on issues contained in the very
same above
dated letter”.
On 05 April 2011, the appellant
referred a dispute about the funeral policy to the Bargaining
Council. The summary of the dispute
on the referral form was
described as:
‘
The
employer refuses to agree on proposed issue by the union of a stop
order, funeral policy and 100% cover on funeral benefit.’
The dispute was conciliated on 02 June
2011. The first respondent contended that it was prepared to grant a
stop order facilities
sought by appellant but could not replace the
existing compulsory scheme. On 10 June 2011, the Bargaining Council
issued a certificate
in respect of the funeral policy dispute
indicating
inter alia
, that the unresolved dispute could be
referred to strike or lockout action.
It is common cause that the
bargaining relationship between first respondent and the appellant
is dealt with in two collective
agreements namely; one of 30
November 1999 and another of 03 November 2005. There has been no
amendment to the agreements subsequent
to 03 November 2005.
On 13 June 2011, appellant gave
notice that they intended embarking on a strike in respect of the
two disputes. The notice stated
inter alia
that:
‘
This
serve to formally notify the company that our members and members of
other two unions will embark on a protected strike, emanating
from
the two unresolved dispute heard by the council. The above is a
compliance of
section 64
of the
Labour Relations Act 66 of 1995
.
The
48 hours notice shall calculate from 7 hours am on Tuesday to 7 hours
am on the Thursday when the strike shall be starting.
Please
note that the doors of the Union are still open to further the
negotiations to settle the dispute.
Hope
to hear from you.’ (sic)
Findings of the Labour Court
[22] The Labour Court made the
followings and conclusions:
22.1. A scheme was in place and that
there were certain production targets to be met in terms of the
scheme; the members of the
appellant and second respondent understood
that they had reached the targets;
22.2. The dispute relates to the
failure of the first respondent to pay the promised bonuses, with the
employees having reached
the targets;
22.3. This would relate to a classic
dispute of right which would render the strike prohibited in terms of
section 65(1)(c)
of the LRA;
22.4. The dispute relating to funeral
benefits is a reference to the appellant’s letter dated 14
February 2011, which is the
demand that there be a replacement of the
current scheme.
22.5. It appears common cause that the
current funeral scheme is regulated by collective agreement, hence
the demand seems to relate
to an issue regulated by a collective
agreement and it would not be appropriate that this should form the
subject of the strike.
As pointed out already the Labour
Court declared the strike unprotected and interdicted the appellant
and persons listed in the
annexure to the notice of motion from
embarking in the strike action.
The Appeal
[23] The grounds on which the judgment
of the Labour Court is challenged are that the court erred in:
23.1. finding that it was open to the
first respondent, having relied on an alleged express agreement with
respondents in its founding
affidavit, which it later admitted was
false, to thereafter rely on alleged implied or tacit agreement with
its workforce, since
this was the case the appellant was called upon
to meet,
23.2. finding that the issues in
dispute are rights issues that cannot be enforced by strike action.
23.3. in taking into account the
employees’ belief in their achievement of the production
targets when this was irrelevant
and/or insufficient to elevate the
issue in dispute to a dispute of right.
23.4. in awarding the first respondent
costs since the first respondent did not ask for such costs at the
hearing.
Section 23(2)(c) of the Constitution
guarantees the right to strike for every worker. The LRA in giving
effect to the constitutional
right to strike regulates the right to
strike in sections 64-77.
The LRA gives statutory protection to
the constitutionally entrenched right to strike while at the same
time sets out procedural
and substantive limits to the exercise of
the right. The two permissible limits relevant to this appeal are
found in section
65(1) of the Act which provides that:
‘
65(1)
No person may take part in a strike or a lock-out or in any conduct
in contemplation or furtherance of
a
strike or a lock-out if-
(a)
that person is bound by a collective agreement that prohibits a
strike or lock-out in respect ofthe
issue
in dispute;
(b)
that person is bound by an agreement that requires the
issue
in dispute to be referred to arbitration;
(c)
the
issue
in dispute is one that a party has the
right
to refer to arbitration or to theLabour
Court
in terms of
this
Act;
(d)
...’
The contentions on behalf of the
appellant in this Court, which are essentially its grounds of appeal
and the same submissions
made in the court
a quo
may be
summarised as hereunder. That the first respondent should not have
been granted the final order because the case made
out in the
founding affidavit was that the incentive bonus scheme was an
express term of the employees` contracts of employment
and later in
reply first respondent’s case was that the incentive scheme
demand must be a dispute of right because the
union said they
“expected” the payment of the bonus. Secondly, that
everything about the bonus is unilaterally determined
and is at the
sole discretion of the board and reference to targets being met is
no more than motivation of the demand and as
such cannot be elevated
to being a condition of employment. Thirdly, that the demand for the
implementation and subsidy of the
funeral scheme or benefit had
nothing to do with the employer’s existing provident and
pension funds. Lastly, that the
demands are severable and give rise
to separate relief.
Hard as I tried, I could not find
merit on the above submissions on behalf of the appellant regard
being had to the facts and
evidence in the case. The fact is,
whether the bonus scheme was introduced unilaterally or not, the
first respondents and its
employees were in agreement on the rules
of the bonus scheme and that it applied for the financial year
commencing 01 April 2010
and terminating on 31 March 2011. The
incentive scheme and the rules applicable to it are encapsulated in
the document headed
“Staff Incentive Scheme for TSB Sugar
(RSA)”.
In my view, everything point to the
fact that the appellant was not mistaken about its demand. In the
dispute referral the appellant
clearly indicated that it understood
and described the issue in dispute as “failure of the company
to pay the incentive
bonus whilst the required production targets
have been met”. As a special feature or additional information
in the referral
form the appellant stated that ‘The Company
Have Promised To Pay TheEmployees THE Incentive Bonus If They Reach
The Targets’.
The matter does not end there. In the answering
affidavit, the deponent stated categorically that:
‘
[W]e
accept that different divisions will be remunerated differently. We
only require this differentiation to be calculated according
to fixed
and defined criteria based on the pro rata achievement of targets, as
has been the case since 2007.’
It is illogical, in my view, to
contend that the demand relating to payment of the bonus is not a
right issue. The correspondence
from the appellant’s referred
to above refer to payment of the bonus as per the criteria set out
and applicable at first
respondent. Had the first respondent
complied with the strike notice and paid the bonuses as per the
targets, there would not
have been any reason for the dispute
because the appellants would have received what they demanded.
With regard to the second demand, the
dispute referred to conciliation is the introduction of a new policy
to be paid by the first
respondent. Accordingly, appellants wish to
introduce a new condition of employment. The collective agreement,
the contents of
which are common cause, determines that the
employees retain their current condition of employment and benefits.
The appellant’s
demand, be it replacement of the supplementary
voluntary funeral scheme or the compulsory provident and retirement
fund funeral
scheme is regulated by the collective agreement.
It is not open to the appellants to
introduce a new demand in the answering affidavit under the guise of
clarifying the strike
notice. The notice was clear as to what the
appellant intended pursuing through strike action and what was
required of the first
respondent to meet the appellant’s
demands. There was no need for the first respondent to go beyond
what was clear and
request clarification as suggested.
In my view, the Labour Court
committed no misdirection and was correct in its findings. As
regards the order for costs, it was
conceded that the first
respondent did not abandon its prayer for costs in the court
a
quo
. It would, in my view, be improper to interfere with the
discretion exercised by the court
a quo
in awarding the first
respondent costs. It is also in accordance with the requirements of
the law and fairness that the first
respondent be awarded its costs
on appeal.
[33] In the result, the following
order is made:
The appeal is dismissed with costs.
___________________
TLALETSI, JA
Judge of the Labour Appeal Court
Waglay DJP and Davis JA concur in the
judgment of Tlaletsi JA.
Appearances:
For the appellant: Mark Euijen
Instructed by: Cheadle Thompson
&Haysom
For the respondent: N Cassim SC
Instructed by: Savage Jooste&
Adams Inc