Brief Summary

Labour Law — Collective Agreement — Interpretation and application of collective agreement regarding translation of nurses — The Western Cape Department of Health appealed against an arbitration award that ordered the translation of employees in the Gastroenterological Unit to the speciality stream under the Occupational Specific Dispensation for Nurses (OSD) — Employees contended they were improperly translated to the general stream while colleagues in similar roles were translated to the speciality stream — The arbitrator found that the employer's interpretation was too narrow and failed to comply with the collective agreement, ordering the translation of employees to the speciality stream — Labour Court upheld the arbitrator's decision — Appeal dismissed with costs.

Comprehensive Summary

Summary of Judgment

1. Introduction

This matter was an appeal to the Labour Appeal Court against a judgment of the Labour Court delivered in review proceedings. The underlying dispute concerned the interpretation and application of a collective agreement regulating the implementation of the Occupational Specific Dispensation for Nurses.

The appellant was the Western Cape Department of Health (the employer). The dispute was pursued by the Democratic Nursing Organisation of South Africa (DENOSA) on behalf of its members (the affected nurses, cited as the first respondents). The proceedings also cited the Public Health and Social Development Sectoral Bargaining Council (the forum under whose auspices the arbitration was conducted) and the arbitrator (third respondent).

In the procedural history, the nurses (through their union) referred a dispute to the bargaining council concerning the employer’s implementation of the OSD translation measures. The dispute was arbitrated, and the arbitrator issued an award ordering the employer to translate the employees to the speciality stream retrospectively. The employer then brought a review application in the Labour Court, which was dismissed with costs. Leave to appeal was granted, and the matter then came before the Labour Appeal Court.

The general subject-matter of the dispute was whether nurses working in a gastroenterology unit at a tertiary hospital fell to be translated, under the relevant OSD provisions, to posts in the general nursing stream or instead to the speciality nursing stream, with the attendant remuneration and career progression consequences.

2. Material Facts

A collective agreement was concluded on or about 10 September 2007 between the Department of Health (as employer) and the relevant trade unions representing nurses. This agreement was incorporated into Resolution 3 of 2007, commonly referred to as the Occupational Specific Dispensation for Nurses (OSD).

The dispute centred on clause 3.2.5.3 of the OSD, which regulated the translation of Professional Nurses (Registered Nurses) to speciality posts. In essence, the clause provided for translation to speciality posts where a professional nurse occupied a post in a nursing speciality and either (a) possessed a specified post-basic clinical nursing qualification listed in Government Notice R212, or (b) did not possess such a qualification but had been permanently appointed in a speciality unit and had performed the duties satisfactorily as at 30 June 2007, in which case translation would occur as a once-off measure to the first relevant salary scale.

The relevant employees worked in the Gastroenterological Unit at Groote Schuur Hospital, a level three tertiary academic hospital. They complained that, when implementing the OSD, the employer translated them to the general stream, whereas they contended they should have been translated to the speciality stream. They also pointed to the fact that nurses performing similar work at Tygerberg and Worcester hospitals (who had been trained by them) were translated to the speciality stream and obtained OSD benefits.

It was common cause that the affected employees were permanently employed and that they had been performing their duties satisfactorily. It was also not disputed that the employees did not hold the post-basic clinical nursing qualification contemplated in Government Notice R212, and accordingly their case depended on whether they were in a “speciality unit” for purposes of clause 3.2.5.3(i)(b).

The employer’s position was that gastroenterology did not fall within a speciality stream and that, because there was no post-basic qualification for gastroenterology nursing, the unit could not be treated as a speciality unit for OSD translation. The employer further asserted, through evidence led in arbitration, that the translation of the employees at Groote Schuur Hospital was correct and that the translation at Tygerberg was incorrect, with steps allegedly contemplated to reverse it.

The arbitrator noted, among other things, that the collective agreement did not define or list speciality posts; that the appellant had to act fairly in deciding which units were to be regarded as speciality; that the work performed in the gastroenterology unit was highly specialised; and that the employer’s interpretation of “speciality function” was too narrow and did not fit the purpose of the collective agreement. The arbitrator ultimately found non-compliance with the collective agreement and ordered the employer to translate the employees to the speciality stream retrospectively from 1 July 2007.

3. Legal Issues

The central legal questions before the Labour Appeal Court concerned whether the Labour Court was correct to uphold the arbitration award in review proceedings. In substance, the dispute required determination of the following issues.

The first issue was whether the arbitrator exceeded her powers by determining that the gastroenterology unit should be treated as a speciality unit for purposes of applying the OSD, in circumstances where the employer contended that the classification of units as “speciality” fell within managerial prerogative.

The second issue was whether the arbitrator (and Labour Court) failed properly to take account of the employer’s reliance on an internal departmental instrument, Circular 139/2007, which the employer contended provided a definitive classification of speciality units and posts for translation purposes.

The third issue was the review-related question whether, applying the reasonableness standard invoked in the judgment, the arbitrator’s interpretation and application of clause 3.2.5.3 was one that a reasonable decision-maker could reach on the material before her.

These issues primarily concerned the application of law to fact: the meaning and application of a collective agreement provision to the operational setting in which the nurses worked, and the permissible scope of employer discretion in implementing a collectively bargained agreement. The matter also involved an evaluative component regarding fairness in the interpretation and application of collective agreements, as described in the judgment.

4. Court’s Reasoning

The Labour Appeal Court located the dispute within the stated objectives of the OSD, which included introducing an occupationally specific remuneration and career progression system providing for career pathing, pay and grade progression, recognition of experience, increased competencies, and performance, “with a view to attracting and retaining nursing professionals” in the public health sector. The Court treated this purpose as relevant context for interpreting and applying the OSD provisions dealing with translation to speciality posts.

Turning to clause 3.2.5.3, the Court reasoned that the employees could not qualify under the subcategory requiring a post-basic clinical nursing qualification listed in Government Notice R212, because they did not have such qualifications. Their case therefore depended on whether they fell within the clause permitting translation as a once-off measure where a nurse had been permanently appointed in a speciality unit and performed the duties satisfactorily as at 30 June 2007. The Court held that permanency of employment and satisfactory performance were not genuinely in dispute; the practical impediment was the employer’s position that the unit was not a speciality unit.

A key aspect of the Court’s reasoning was that the OSD collective agreement did not define “speciality unit” and that there was nothing in the agreement suggesting that, in the absence of a definition, it was the employer’s prerogative unilaterally to determine the meaning of that term for purposes of resolving disputes about entitlement. The Court stressed that the OSD was the product of collective bargaining, and the employer could not unilaterally vary or impose its own interpretation of it without specific authority in the agreement.

The Court addressed the employer’s reliance on the Public Service Act 103 of 1994, including provisions relating to the Minister’s regulatory powers and delegation, and the Department’s reference to a process involving a Director-General circular and a provincial moderation meeting culminating in Circular 139/2007. The Court accepted that this process occurred outside bargaining structures and was not sanctioned by the collective agreement. It held that it would be incorrect and unfair to treat the Public Service Act as conferring a prerogative on the employer (through departmental functionaries) to impose its understanding of a bargained agreement on the other parties.

In this regard, the Court placed particular emphasis on section 5(4) of the Public Service Act, which provides that any act by any functionary in terms of that Act may not be contrary to relevant collective agreements. The Court also referred to section 5(6), which deems collective agreement provisions (concluded after the relevant amendment) to be ministerial determinations for conditions of service, and permits directives to elucidate or supplement such determinations only if not in conflict with or derogating from the agreement. This statutory context supported the Court’s conclusion that departmental managerial action could not override the agreed terms or displace the statutory role of an arbitrator in resolving interpretation and application disputes.

The Court then confirmed that the arbitrator had authority to determine disagreements about interpretation and application of the collective agreement, and that managerial powers could not “trump” the statutory powers of an arbitrator tasked with interpreting and applying a collective agreement. In setting out the interpretive approach, the Court stated that an arbitrator must consider the aim, purpose, and terms of the collective agreement, bear in mind that a collective agreement is not like an ordinary contract, and take into account the primary objects of the Labour Relations Act, including the effective, fair, and speedy resolution of disputes. The Court added that an arbitrator is expected to adopt an interpretation and application that is fair to the parties.

Applying these principles to the facts, the Court held that the arbitrator had been “alive” to what was required. The arbitrator considered the purpose of the OSD and the evidence relevant to the nature of the employees’ work, including that the work was more specialised than general nursing work, that gastroenterological nursing fell under medical and surgical science speciality (as presented in evidence), that training occurred on the job, and that the employees trained nurses in similar units who were translated to the speciality stream.

The Court rejected the contention that the arbitrator improperly relied on the evidence of a specialist gastroenterologist. It held that the arbitrator was entitled to consider both the evidence of the Department’s nursing director and the specialist medical practitioner to give meaning to the concepts of “speciality function” and “speciality unit”, and to evaluate whether the employer’s interpretation—advanced through internal processes and circulars—was correct. The Court described the specialist’s evidence as “crucial” to the issue to be determined and held it would be illogical to discount it solely because the witness was not a nurse.

Finally, on the review standard, the Court held that the arbitrator’s decision was not one that a reasonable decision-maker could not reach and was justified by the material before the arbitrator. The Labour Court therefore did not err in upholding the award and dismissing the review.

5. Outcome and Relief

The Labour Appeal Court dismissed the appeal and upheld the Labour Court’s order. The practical effect was that the arbitrator’s award remained in place, namely that the employer was ordered to translate the affected employees to the speciality stream, retrospectively from 1 July 2007.

On costs, both parties contended that costs should follow the result. The Court held that the requirements of law and fairness justified an award of costs in favour of the successful party. The appeal was dismissed with costs.

Cases Cited

Northern Cape Forests v South African Agricultural & Allied Workers & others (1997) 18 ILJ (Labour Appeal Court).

South African Municipal Workers Union v South African Local Bargaining Council and Others (2012) 33 ILJ 353 (Labour Appeal Court).

Legislation Cited

Labour Relations Act 66 of 1995, including section 24.

Public Service Act 103 of 1994, including sections 3(1), 5(4), 5(6), and 41(1), and item 15(i) of Schedule 7 to the Labour Relations Act (as referenced through section 5(4)).

Public Service Amendment Act, 2007 (as referenced in section 5(6) of the Public Service Act).

Government Notice R212 (as amended) (as referenced in clause 3.2.5.3 of the OSD).

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The Labour Appeal Court held that the OSD collective agreement did not confer a unilateral prerogative on the employer to determine the meaning of “speciality unit” in a manner binding on other parties to the collective agreement. In the absence of specific authority in the collective agreement, departmental circulars and internal moderation processes could not override collectively bargained terms or displace the arbitrator’s statutory authority to interpret and apply the agreement.

The Court held further that, in interpreting and applying a collective agreement, an arbitrator must consider its purpose and terms, must approach collective agreements as distinct from ordinary contracts, and must adopt an interpretation and application that is fair to the parties and consistent with the objectives of the Labour Relations Act.

On the facts, the Court held that the arbitrator was entitled to consider the evidence presented (including expert evidence about the nature of gastroenterology work) and to find that the employer’s interpretation was too narrow and inconsistent with the spirit and purpose of the OSD. The arbitrator’s award was held to be reasonable and not reviewable. The appeal was dismissed with costs.

LEGAL PRINCIPLES

A collective agreement arising from collective bargaining is not to be treated as an ordinary contract for interpretive purposes. The decision-maker tasked with interpreting and applying such an agreement must consider its aim, purpose, and all its terms, and should adopt an interpretation that promotes the effective, fair, and speedy resolution of labour disputes and is fair to the parties.

Where a collective agreement does not expressly authorise unilateral employer determination of contested interpretive questions, an employer has no general prerogative to impose its preferred interpretation and application of the agreement on the other parties. The arbitrator, acting under the Labour Relations Act dispute-resolution framework, has authority to determine disputes regarding the interpretation and application of a collective agreement.

In the public service context, managerial or administrative action taken under the Public Service Act may not be contrary to applicable collective agreements, and any directive intended to elucidate or supplement an agreement for implementation purposes may not conflict with or derogate from the agreement. On this basis, internal processes and circulars adopted outside the collective bargaining framework cannot override the collective agreement’s meaning as determined through statutory dispute resolution.

On review-related evaluation, an arbitration award concerning interpretation and application of a collective agreement is not to be set aside where the outcome is one a reasonable decision-maker could reach on the material before the arbitrator.

Western Cape Department of Health v MEC Van Wyk and Others (CA1/2013) [2014] ZALAC 25; [2014] 11 BLLR 1122 (LAC); (2014) 35 ILJ 3078 (LAC) (5 June 2014)