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[2014] ZALAC 45
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Registrar of Labour Relations v Consolidated Associated of Employers of South African Region (JA5/13) [2014] ZALAC 45; [2014] 11 BLLR 1107 (LAC); (2015) 36 ILJ 182 (LAC) (18 September 2014)
REPUBLIC
OF SOUTH AFRICA
IN
THE LABOUR APPEAL COURT OF
SOUTH
AFRICA, JOHANNESBURG
JUDGMENT
Not Reportable
Case no: JA5/13
In
the matter between:
THE
REGISTRAR OF LABOUR RELATIONS
Appellant
and
CONSOLIDATED
ASSOCIATION OF EMPLOYERS
OF
SOUTH AFRICAN REGION (CAESAR)
Respondent
Heard:
27 August 2013
Delivered:
18 September 2014
Summary: Deregistration of
employer’s organisation. Registrar deregistering respondent
because no functioning as a genuine
employer’s organisation.
Labour Court setting aside deregistration and finding that registrar
relying on unfounded facts
and mere rumours. Appeal. Evidence showing
that respondent not a genuine employer’s organisation –
respondent a labour
consultancy organisation clothed as an employer’s
organisation. Appeal upheld with costs- Labour Court’s judgment
set
aside. Respondent deregistration confirmed.
JUDGMENT
FRANCIS
AJA
Introduction
[1]
This is an appeal against the judgement and order of the court
a
quo
by Molahlehi J after he upheld an appeal by the respondent -
the Consolidated Association of Employers of South African Region
(CAESAR)
in terms of section 111(3) of the Labour Relations Act 66 of
1995 (the LRA) against the decision of the appellant, the Registrar
of Labour Relations (the registrar), to deregister the respondent.
CAESAR was deregistered on the basis that it had ceased to be
a
genuine employer’s organisation. The appellant was granted
leave to appeal by the court
a quo.
[2]
The appellant has applied for condonation for the late filing of the
record and heads of argument which was opposed. A proper
case has
been made out for condonation and is granted in the circumstances.
The
background facts
[3]
An organisation called “Konfederasie van Wergewers van
Suidelike Afrika” (COFESA) was registered as a confederation
by
the registrar on 6 November 1990 in terms of section 80(1) of the
Labour Relations Act 1956. In January 1996, COFESA resolved
to form
an employers’ organisation called CAESAR as an arm of COFESA to
assist in its activities and/or to represent it at
negotiations
and/or discussions and/or mediations and/or conciliations and/or
arbitrations. CAESAR was registered as an employer’s
organisation by the registrar on 11 February 1997 in terms of section
96(7)(a) of the LRA.
[4]
In a letter dated 13 July 2004, the registrar raised certain queries
with CAESAR after it had received CAESAR’s documentation,
including the financial statements for the year ended 31 December
2003. CAESAR replied to the registrar’s letter with theirs
dated 6 August 2004, including certain financial statements for the
years 1998 to 2004, minutes of meetings, membership lists and
contracts for employees.
[5]
After the registrar had received further documents and
correspondences from CAESAR, the registrar filed a submission on 20
July 2007 and a notice in terms of section 106(2)(B) of the LRA was
forwarded to CAESAR with an accompanying letter on 20
July
2007. The registrar advised that as a result of the documentation
before him, he was of the opinion that CAESAR was an organisation
for
gain of individuals and was no longer functioning as a genuine
employers’ organisation as envisaged in the LRA. All interested
parties were invited to make written representations within 60 days
of the date of the notice about why CAESAR’s registration
should not be cancelled. Although the registrar was not obliged to
furnish reasons why he intended to cancel the registration of
CAESAR,
he furnished certain further information to CAESAR by letter dated 30
July 2007.
[6]
CAESAR brought an urgent application in the Labour Court requesting
inter alia
that the Court make an order that the registrar be
interdicted and be restrained from publishing a notice in terms of
section 106(2)(B)
of the LRA on 27 July 2007. The registrar filed an
answering affidavit to this application with certain annexures. The
application
was thereafter settled between the parties in terms of a
settlement agreement dated 17 August 2007 which was made an order. In
terms of the said settlement agreement, CAESAR was to make written
representations to the registrar on or before 7 September 2007.
In
terms of paragraph 3 of the order, the registrar would consider
CAESAR’s representations and would furnish CAESAR with
his
decision whether or not to proceed with section 106(2B) LRA notice.
CAESAR submitted written representations to the registrar
on 7
September 2007.
[7]
Thereafter on 20 May 2009, the registrar forwarded a further letter
to CAESAR stating that he was still of the opinion that
CAESAR was an
organisation for gain and not a genuine employer’s organisation
as envisaged by the LRA. The registrar attached
a notice in terms of
section 106(2B) to be published in the Government Gazette on 29 May
2009. A supplement to the first submission
was also submitted to
CAESAR.
[8]
On 3 July 2009, the registrar forwarded a further letter to CAESAR
stating that on 30 July 2007 a letter was sent to CAESAR
setting out
the reasons for the decision to publish the notice of intention to
cancel the registration. CAESAR was also given a
list of all
documents on which the registrar relied for his decision. In terms of
the settlement agreement, CAESAR would then file
its representations
for consideration and after the registrar had considered those
representations, he would furnish CAESAR with
his decision whether or
not to proceed with section 106(2B). The registrar had considered
those representations on 20 May 2009
and took a decision to proceed
with the section 106(2)(B) notice. The registrar’s decision was
communicated to CAESAR in
a letter dated 20 May 2009 in terms of the
settlement agreement and a notice of intention to cancel was
published on 29 May 2009.
A copy of the reasons for the decision to
publish the notice of his intention to cancel the registration of
CAESAR was also attached
to the notice.
[9]
On 13 July 2009, CAESAR submitted a report by a company called Tsedo
Commercial Investigations (Pty) Ltd about the registrar’s
notice of intention to cancel CAESAR’s registration. On 16 July
2009, it submitted further representations to the registrar.
[10]
The registrar replied to those representations on 20 July 2009
stating that all the representations submitted by CAESAR within
the
timeframes mentioned in the Government notice would be taken into
consideration before a decision to cancel its registration
was made.
The letter also stated that the office of the registrar would make a
decision to cancel or not to cancel the registration
of CAESAR in
terms of the provisions of section 106(2A) after all the legislative
requirements had been complied with. On 31 July
2009, CAESAR made
certain further representations to the Minister of Labour.
[11]
In a letter dated 31 August 2009 to CAESAR, the registrar advised
that CAESAR’s representations to the Minister had been
forwarded to him and that the contents thereof would be considered
before making a decision whether to cancel its registration.
[12]
The registrar thereafter drafted a final submission on 13 November
2009 and submitted a letter to CAESAR in terms of section
106(2A) in
terms of which CAESAR’s registration was cancelled effective
from 13 November 2009. The registrar advised that
interested parties
were invited to make written representations within 60 days of the
date of notice about why CAESAR’s registration
should not be
cancelled. The registrar considered representations made by CAESAR
and other interested parties. The registrar stated
that he was
satisfied that CAESAR was an organisation for gain and not a genuine
employers’ organisation, as envisaged by
the LRA.
[13]
On 16 November 2009, CAESAR lodged an appeal to the Labour Court
against the decision of the registrar and later filed an amended
appeal.
[14]
On 3 December 2009, the registrar forwarded a letter to CAESAR’s
attorney, B J Coetzee, stating that after he had considered
all the
facts, he was satisfied that it had ceased to function as a genuine
employer’s organisation. The letter also dealt
with certain
developments from time to time and
inter alia
dealt with the
reasons why it concluded that CAESAR was not functioning as a genuine
employers’ organisation.
[15]
On 5 August 2010, CAESAR filed an urgent application in the Labour
Court against the registrar, seeking
inter alia
an order
declaring that the operation of the decision of the registrar to
cancel its registration, be suspended pending the outcome
of its
appeal against the registrar’s decision. The application was
dismissed by Steenkamp J on 16 August 2010.
The
decision of the court a quo
[16]
CAESAR proceeded with the appeal, which was heard by Molahlehi J. The
court
a quo
said that the registrar had found that CAESAR was
not a genuine employer’s organisation but one for gain because
of its relationship
with COFESA. CAESAR did not dispute that it has a
relationship with COFESA but contended that the relationship was not
for an ulterior
motive but was a relationship based on the right to
freely associate. The court held that there is nothing in the
guidelines that
prohibits the two organisations from associating with
each other. The legal problem in the relationship would arise if it
was to
be shown that the relationship is for the purposes other than
that provided for in the law, i.e. the right to form an employer’s
organisation is used as a sham for profit making. At best for the
registrar, the problem it has with the relationship is based
on
suspicion particularly on the history of COFESA.
[17]
The court
a quo
said that the registrar had said that by its
nature the relationship between CAESAR and COFESA was based on a
‘retainer’
in terms of which CAESAR’s members
appear on a fee at the CCMA in the dispute process. CAESAR does not
deny that members
who require assistance at the CCMA are charged a
fee by agreement because its R20.00 membership fee per annum was
insufficient
to cover its running costs. The court said that the only
evidence which the registrar had relied on about the issue of the
relationship
between the two organisations which suggests some profit
motive, was the arbitration award wherein some individuals appeared
before
the CCMA commissioner and claimed to be representing both
COFESA and CAESAR. The court said that the commissioner’s
finding
remained his or her opinion and could not properly be
regarded as being definitive of the nature of the relationship
between the
two organisations. At best for the registrar, it should
have regarded the contents of the arbitration award as nothing but an
allegation
that required further investigation on his part. The issue
that the commissioner was confronted with during the arbitration
proceedings
was not to determine whether the relationship between the
two organisations was for the purposes of making a profit. The court
said that the evidence before the registrar was therefore
insufficient to conclude that the relationship between COFESA and
CAESAR
was such that it could on the basis of the arbitration award
make CAESAR not to be a genuine employer’s organisation.
[18]
The court said that the same applied to the report of the audit of
Tsedo Commercial Investigator (Pty) Ltd (Tsedo). The registrar
had
overlooked the fact that it is stated amongst others in the report
under the heading: “Restriction and Limitation”,
that
they, Tsedo were not required to undertake an audit or a review made
in accordance with International Standards on auditing
or
International Standard on Review Engagements (or relevant national
standards or practices) and they consequently they do not
express any
audits. They stated that the scope of their work was limited to a
review and analysis of documentation and information
made available
to them and specific enquiries undertaken to pursue their mandate.
They did not verify the authenticity and validity
of the
documentation made available to them. They included information that
they had obtained verbally in their report. They cannot
verify that
the information is credible or truthful and said that they had
referred to various legal provisions in the report.
Since they are
not a legal practice, they would refer to their legal representative
to make any legal interpretations with respect
to their findings.
They said that any recommendation made in the report should only be
acted upon after consultation with their
legal advisors. They said
that they did not discuss the contents of the report with the subject
of the investigation.
[19]
The court
a quo
held that similarly, a failure to comply with
the provisions of clause (1) of CAESAR’s constitution is not a
proper basis
to conclude that it was an organisation operating for
gain. The same applies to the issue of membership of CAESAR. The
registrar
had found that CAESAR is an organisation for gain because
it failed to place appropriate qualifications on its membership. The
court held further that more was required than a simple accusation
that an organisation is profit driven simply because of its failure
to state the qualification for its membership in its constitution. On
the question of the leadership of CAESAR, the registrar had
relied on
the allegation that a Mr Moody was not an employer and that besides
it being raised late in the process of deregistration
of CAESAR, it
is not clear why it could be said that it is indicative of the fact
that CAESAR is disguised as an organisation for
gain. There is no
evidence indicating how much Moody was earning and whether the
position he occupied was intended to be as a disguise
to benefit
someone else.
[20]
The court
a quo
said that when looking at the issue of the
financial statements of CAESAR, it is clear that CAESAR recorded a
nominal profit over
the period between 1998 and 2008 which averaged
R173.12 per month. The question that arises is whether that nominal
profit could
be regarded as a “gain”. The LRA does not
define the word ‘gain’ and the literal meaning of the
word ‘gain’
involves something more than a mere receipt
of payment. The court referred to various authorities dealing with
the concept not
for gain and said that the making of a ‘gain’
is not necessarily a contravention of the object, ‘not for
gain’
as envisaged in the law. What is determinative of the
nature of the object ‘not for gain’ is the manner in
which the
‘gain’ is utilised or distributed. The object
would be defeated or undermined if the ‘gain’ was
distributed
or used for the purposes other than those of advancing
the interest of the organisation and or its members. In other words
the
object of ‘not gain’ would be defeated if the ‘gain’
is shared amongst the officials of the organisation
in the form of
bonuses or other terms of payment to them.
[21]
The court
a quo
concluded that except for the finding that the
respondent made a profit, there is no indication why that constituted
contravention
of the law. There was no evidence about how the profit
was distributed or used. The court upheld the appeal with costs and
set
aside the registrar’s decision to cancel CAESAR’s
registration.
The
grounds of appeal
[22]
The appellant has raised several grounds of appeal. It is not
necessary to repeat those grounds of appeal. The main complaint
is
that the court
a quo
erred in failing to find on the facts
that CAESAR is not a genuine employer’s organisation and that
COFESA was using CAESAR
for an ulterior motive. The court
a quo
should have found that COFESA was using CAESAR as a vehicle for
enriching individuals as set out in clause 32 of the guidelines.
The
court
a quo
had placed too much emphasis on the question
whether CAESAR was an organisation for gain. This was only one of the
factors that
the registrar took into consideration when determining
whether CAESAR could be described as a genuine employers’
organisation.
The parties contentions
[23]
It was contended on behalf of the appellant that CAESAR is not a
genuine employer’s organisation but was a labour consultancy.
COFESA was using CAESAR for an ulterior motive and using it as a
vehicle to enrich individuals as set out in the guidelines. The
appellant therefore submits that the appeal should be upheld.
[24]
The respondent contended that the registrar’s decision to
cancel CAESAR’s registration is an administrative action.
The
entire process of the registration was unfair in that the registrar
failed to disclose to CEASAR the source of documents relied
on for
his conclusions; relied on documents that were unidentifiable,
contrary to a court order to supply a complete list of all
documents
he relied upon and his own assurance that he relied only specific
documents, relied on documents that were never disclosed
to the
respondent; failed to apply the
audi partem
rule before he
made a final decision; relied on documents that are historic and
failed to take cognisance of facts and circumstances
that have
changed; misinterpreted documents and failed to apply his mind
properly to the documents before him and took unduly long
from
invoking the provisions of the LRA to cancel CAESAR's registration
until deregistering it.
[25]
It was further contended on behalf of the respondent that CAESAR was
an organisation to gain and had a profit motive without
sufficient
and reliable evidence to substantiate the claim.
[26]
It was contended that the formation of CAESAR must be viewed in
context. After the 1995 LRA was implemented, COFESA which used
to be
a confederation could no longer be so in terms of the LRA. It had
lost its status and it is not an employer’s organisation.
The
members of COFESA took the decision to register an employers’
organisation to represent them at the bargaining councils
and at the
CCMA. This was prior to the guidelines. Before that there were just
mere guidelines. The guidelines were issued and
it was a question
about how they now had to behave themselves. The guidelines had not
been implemented at the time and they had
acted without guidelines.
The registrar had to look at their conduct after the guidelines were
promulgated on 10 October 2003.
They were entitled to charge a fee in
terms of the ILO guidelines.
Analysis of facts and arguments
raised
[27]
The registrar is a creature of statute. He derives his powers from
the LRA and guidelines promulgated in terms of the LRA.
25. During
the period 1996 to 2002, the function of the registrar was restricted
to determine whether a trade union or employers’
organisation
had adopted a name that met the requirements of the LRA and other
certain requirements. If those requirements were
met, the registrar
was obliged to register the trade union or employers’
organisation. Certain amendments to the LRA came
into force in 2002
and the registrar was then given the additional authority in terms of
section 95(7) of the LRA not to register
any trade union or
employers’ organisation unless he was satisfied that the
applicant was a genuine trade union or employer’s
organisation.
In the explanatory memorandum to the bill the following was stated:
‘
There
are also strong indications that some financial and insurance brokers
have become active in the establishment and the affairs
of trade
unions and employers’ organisations in order to market
financial or insurance products. In one instance a
Magistrate’s
Court ordered the transfer of a union’s assets and all records
(in effect the registration and management)
to an insurance broker.
This broker then attempted to continue by cloaking its activities
under the banner of a union.
The status quo was partially
restored but only after a lengthy, resource-absorbing and
time-consuming process.
The
operation of certain labour consultancies that have registered as
employers’ organisation undermine effective dispute
resolutions. These organisations tend to recruit their members
from small businesses that are inexperienced in respect of
labour
relations matters. Once gullible employers have joined, they
are frequently faced with exorbitant fees. This
creates a
negative impression of the Labour Relations Act and its dispute
resolution institutions and undermines the efforts of
genuine
organisations participating in collective bargaining structures to
recruit such employers. This in turn negatively
impacts on the
participation by certain employers’ including small employers
in bargaining councils.
The
proposed amendments to s 95 are intended to discourage the formation
and registration of trade unions and employer’s organisations
that are not genuine, by introducing a requirement that they be
genuine or bona fide and giving the registrar of labour relations
the
power to refuse to register organisations which are not. The Minister
will have the power to issue guidelines concerning whether
or not a
trade union or employers’ organisation is bona fide. Any
refusal to register a trade union on these grounds
will be subject to
appeal to the Labour Court.
The
International Labour Organisation has expressed the view that this is
in keeping with its standards concerning the promotion
of collective
bargaining and freedom of association.’
[28]
The registrar must ensure that an entity such as a trade union or
employers’ organisation meets the requirements of the
LRA and
that it is a genuine trade union or employers’ organisation.
Once an employers’ organisation, such as CAESAR
is registered,
section 98 of the LRA imposes obligations on it to maintain books and
records of its income, expenditure, assets,
liabilities, which
records must be audited and be made available for inspection. In
terms of section 99 of the LRA, duties are
imposed on the employers’
organisation to maintain a list of its members and copies of the
minutes of the meetings that it
holds. Section 100 of the LRA imposes
a further obligation on CAESAR to provide, by 31 March of each year,
a statement certified
by its secretary that accords with its records
and which shows the number of members at 31 December of the previous
year, together
with any other related details that may be required by
the registrar. At the same time, the employers’ organisation is
obliged
to submit an audited report and a certified copy of the
financial statements to the registrar. In terms of section 100(c),
the
registrar may request in writing, within 30 days of receipt of
the financial statements from the employers’ organisation,
an
explanation of any matter that relates to the statement of
membership, the auditor’s report or the financial statements.
[29]
In terms of section 106 of the LRA, the registrar may cancel the
registration of a trade union or employers’ organisation
by
removing its name from the appropriate register. In terms of Section
106(2A) of the LRA, the registrar may cancel the registration
of a
trade union or employers’ organisation by removing its name
from the appropriate register if the registrar is satisfied
that the
trade union or employers’ organisation is not, or has ceased to
function as, a genuine trade union or employers’
organisation
or, as the case may be; or has issued a written notice requiring the
trade union or employers’ organisation
to comply with sections
98, 99 and 100 within a period of 60 days of the notice and the trade
union or employers’ organisation
has, despite the notice, not
complied with those sections. In terms of section 106(2B) of the LRA,
the registrar may not act in
terms of subsection (2A) unless the
registrar has published a notice in the Government Gazette at least
60 days prior to such action
giving notice of the registrar’s
intention to cancel the registration of the trade union or employer’s
organisation;
and inviting the trade union or employers’ or any
other interested parties to make written representations as to why
the
registration should not be cancelled.
[30]
Section 106 of the LRA was promulgated in the public interest of
protecting members of a trade union or employers’ organisation,
in particular ensuring that funds contributed by them are utilised
for the purpose of benefitting such members. A trade union and
employers’ organisation occupies a position of trust concerning
the management of funds contributed by members. Section 106
is
protective in nature with the object of protecting members who pay
their membership fees on a regular basis where it appears
that
officials are involved with no other reason but to advance their own
selfish business interests.
[31]
In determining whether a trade union or employers’ organisation
is a genuine trade union or employers’ organisation,
the
Minister published certain guidelines in terms of section 95(8) of
the LRA. Clause 1 of the guidelines provides as follows:
‘
This
document contains guidelines published by the Minister of Labour, in
consultation with NEDLAC, that are to be supplied by the
Registrar of
Labour Relations in determining whether an applicant for registration
in terms of the Labour Relations Act is a genuine
trade union or a
genuine employers’ organisation. In terms of section
95(7) of the Labour Relations Act, the Registrar
may only register a
trade union or an employers’ organisation if the Registrar is
satisfied that it is a genuine trade union
or an employers’
organisations. In addition in terms of section 106(2A) of the
Labour Relations Act, the Registrar
may cancel the registration of a
trade union or an employers’ organisation that is not, or has
ceased to function as, a genuine
trade union or employers’
organisation, as the case may be.’
[32]
Clause 3 of the guidelines provides as follows:
‘
In
order to determine whether an organisation is genuine, it will be
necessary for the Registrar to examine the actual operation
of the
organisation. In the case of an applicant, particular attention
will have to be paid to the manner in which the organisation
was
established and formed. In the case of an existing
organisation, attention will have to be to the actual activities
and
functioning. In evaluating whether a trade union or employer’s
[sic] organisation is genuine, the Registrar must
take into account
all relevant factors.’
[33]
Clause 32 of the guidelines deals with the fact that an employers’
organisation may not be an organisation for gain.
The purpose of this
requirement is to prevent employers’ organisations from being
used as vehicles to enriching individuals
or as a cover for
profitmaking in business. In evaluating whether an employers’
organisation has a genuine financial operation,
it is important to
examine its actual financial operation. The factors which the
registrar may take into consideration that may
indicate that an
employers’ organisation is in fact operating for the gain of
the individuals are that unrealistically high
salaries or allowances
are paid to the officials, office bearers or employees of the
employers’ organisation; interest free
or low interest loans
are made to officials, office bearers or employees, and those loans
are not repaid; family members of office
bearers or officials are
employed by the employers’ organisation and income earned by
the employers’ organisation is
not used for the benefit of the
organisation and its members, but is paid out to officials, office
bearers or employees.
[34] Clause 34 provides as follows:
‘
Usually
the major source of revenue for employers’ organisation is
likely to be a subscription paid out on a regular basis.
The
financial arrangements made with members of an employers’
organisation in respect of litigation, particularly dismissal
disputes, may be an indicator whether the employers’
organisation is in fact operating for the gain of certain
individuals.’
[35]
In deciding whether a trade union or employers’ organisation is
genuine, the registrar must
inter alia
give particular
attention to the manner in which the organisation was established and
formed. In the case of an existing organisation,
attention must be
paid to its actual activities and functioning. In evaluating whether
a trade union or employers’ organisation
is genuine, the
registrar must take into account all relevant factors.
[36]
The functions of the registrar are set out in section 109 of the LRA.
This includes keeping a register of registered employers’
organisations etc. He fulfils an important regulatory and custodial
function in terms of the LRA and is responsible for protecting
members of the public against some of the serious consequences which
they may suffer when dealing with unscrupulous trade unions
and
employer’s organisations which either do not comply with the
provisions of the LRA and/or are not genuine organisations
but, in
fact, profitmaking enterprises. The registrar has a discretion when
exercising his powers in terms of section 106(2)(a)
of the LRA. He
has wide powers and must still act within the confines of the law and
give reasons for his decision. He must allow
an applicant to make
representations before making his decision. He does not have
unfettered powers in terms of the LRA.
[37]
The question to be determined in this matter is whether CAESAR was in
fact a genuine employer’s organisation or a profit
making
business and an association for gain.
[38]
It is clear from the documents that were placed before the court
a
quo
that the registrar acted on documents and information
supplied by CAESAR. He therefore acted in terms of the powers
afforded to
him by the LRA. He examined all the documentation
provided for by CAESAR in terms of sections 98 and 100 and found that
CAESAR
had ceased to be a genuine employers’ organisation and
that its registration should be cancelled. In the registrar’s
opinion, there were adequate reasons to justify his decision to
cancel CAESAR’s registration. There were five reasons for
the
cancellation of the registration of CAESAR. These were because of its
relationship with COFESA; that it is a labour consulting
business;
its questionable leadership; that it is not functioning in terms of
its constitution and collective bargaining.
[39]
The registrar had in his first submission dated 20 July 2007 raised
the nature of the relationship between CAESAR and COFESA.
This was
also raised in letters dated 26 and 30 July 2007, in a submission
dated 13 November 2009 and a letter dated 3 December
2009. The
registrar took into account the fact that COFESA was registered as a
confederation on 6 November 1990 and that its true
nature was unclear
since section 80(1) of the LRA does not provide for the registration
of confederations, but only provides for
the registration of
federations. It is clear that in January 1996, COFESA resolved to
form an employers’ organisation with
the name of CAESAR as an
arm of COFESA to assist in its activities or representing it at
negotiations and/or discussions and/or
mediations and/or
conciliations and/or arbitrations. In terms of the amended
constitution of COFESA, the following was
inter alia
added:
‘
3.11
Representation at negotiations/discussions/mediations/conciliation/
arbitrations, including councils/conciliation
boards and other
statutory and non-statutory forums;
3.12
That a section be formed to assist employers on all levels of
negotiations and representation.
That this section functions
under the name “Consolidated Association of Employers of
Southern Africa Region, CAESAR
.’
[40]
COFESA could not undertake the abovementioned functions because it
was registered as a confederation on 6 November 1990 and
not as an
employers’ organisation. Its true nature as an organisation is
unclear since section 81 of the 1956 LRA, in terms
of which it was
registered, did not provide for registration of confederations but
only for federations. From its inception, COFESA
had mixed membership
consisting of federations, associations as well as direct
members/individual companies. The registrar claims
that COFESA was
not a federation as it claimed but in fact a consultant to an
employer body charging clients rates for its services.
It
specifically found that CAESAR was used as an organ that was
responsible for dispute resolution only. It said that the operations
of the two organisations are so interlinked that it is difficult for
anyone to separate the organisations from one another. CAESAR
was
being used as a tool to further the objectives of COFESA.
[41]
The question is whether there is any substance or support for the
registrar’s contention that the operations of CAESAR
and COFESA
are so interlinked that it is difficult for anyone to separate the
organisations from one another and that CAESAR was
being used as a
tool to further the objectives of COFESA. The answer to the question
raised is an overwhelming yes.
[42]
The following is stated in a joint newsletter of COFESA and CAESAR
for 2002 and 2003:
‘
CONSOLIDATED
ASSOCATION OF EMPLOYERS OF SOUTH AFRICA
To
enable COFESA’s officials to assist employers in terms of Sec
200 of the LRA in conciliation procedures on the same level
as the
trade union organisation organises, CAESAR was registered at the
Department of Labour on 11 February 1997 in terms of the
new LRA
1995.
Dual
membership:
In
terms of a previous resolution of COFESA members, COFESA members now
also have membership of CAESAR. An amount of R20.00
is paid
over in respect of every member as membership fee. Our dispute
resolution officials represent our members at the CCMA and
at
arbitration hearings in terms of their CAESAR certificates.’
[43]
CAESAR and COFESA has made no attempt to hide the fact that they are
one and the same thing and that CAESAR was established
to focus on
the professional level, while COFESA, provides other services like
funeral cover and medical aid cover. This relationship
was also
provided for in clause 4.8 of the constitution of the organisation,
which reads as follows:
‘
Employers
who are paid-up members of the confederation of employers of Southern
Africa shall for the purpose of this constitution
be deemed to be
subject to clause 5, be founder members.’
[44]
From the list of services offered by COFESA there can be no doubt
that there is a profit motive. For example the document at
page 350
which is headed COFESA Consulting Service, sets out their
professional services and fees. The standard consulting fees
for a
consultation is R375 per hour; Arbitration R440 per hour; Labour
Court R495 per hour; Travelling time R165 per hour and Distance
R2
per kilometre. On the other hand it is also clear from the facts that
professional services are provided for by CAESAR on behalf
of COFESA.
This appears more clearly from the application for membership forms
of CAESAR which is at page 688. The CAESAR membership
fee is R20.00
per annum, however, the legal costs per month are set out to be
debited on a monthly basis and a member can chose
the type of cover
that it needs for example cover at R300 per month for R10 000
cover per annum. At page 689, the fees structure
regarding services
at the CCMA or Bargaining Council level is charged at special
membership rates as set out in paragraph 2 of
the service level
agreement and membership conditions. They deal with the hourly rate,
dispute resolutions, conciliations, arbitrations,
labour court and
labour appeal court matters, as well as travelling time and
kilometres. Clause 3.6 provides that the member, by
signing the
agreement, agrees to pay on presentation of an invoice for
representation at the CCMA, Bargaining Council or Labour
Court at the
rates set out in clause 2 of the agreement.
[45]
The annual report of COFESA and CAESAR for 2002 and 2003 states the
following under the heading:
‘
COFESA
SERVICES EXTENDED TO FOCUS
ON NEEDS OF EMPLOYERS:
Retainer
To
help the cash flow of members, our advisors analyse the labour
relations needs of a member and work out a monthly retainer to
cover
the cost of all consultancies, disciplinary hearings, appeal
hearings, contracts and other labour issues. HR functions
such
as recruitment and selection form part of this service.
Legal
Cost Cover
To
avoid the enormous risks and legal costs in the event of unfair
labour practices we provide Legal Cost Cover at a monthly premium.
It covers legal costs in units of R10 000 per annum for disputes
at the CCMA, Arbitrations or at the Labour Courts.’
[46]
The inter-dependence of the two organisations can also be inferred
from the following facts:
46.1 Tsedo filed a
report for CAESAR on 13 July 2009 which report appears at pages 101
etc. It is stated in paragraphs
49 and 51 of the report that since
the registration of CAESAR, COFESA supported CAESAR as CAESAR could
not survive on a membership
fee of merely R20.00 per annum. Further
that many of the services rendered by COFESA are covered by
membership fees. Where the
services are at an additional cost, the
members are invoiced by either COFESA or CAESAR. It is stated at
paragraph 51 of the report
that CAESAR is not an independent
organisation since members do not decide on how payments should be
made. It is stated that many
of the services rendered by COFESA and
by CAESAR are covered by membership fees. Where those services are at
an additional cost,
the members are invoiced by either COFESA or
CAESAR.
46.2 In paragraph 56
of the Tsedo report, it is stated amongst others that employers
require proper representation,
the best they can afford because they
run enormous risks due to complex labour legislation. Employers
therefore need expert advice,
which comes at a price. Tsedo also
compares on the same page the organisational fee structure of CAESAR
to that of other consultants
like SEESA, another employer’s
organisations which was deregistered by the registrar on the basis
that it was operating as
a labour consultant. This is a clear
indication that CAESAR is not a genuine organisation but a
consultancy disguised as an employers’
organisation.
46.3 The report also
confirms that CAESAR was established as a vehicle for COFESA to
continue its business of
providing individual services to its
members. COFESA charges consultation fees and other fees as per the
tariff mentioned above
and CAESAR then does the professional
assignments for which fees are paid.
46.4 A
jurisdictional ruling was granted by the CCMA on 25 September 2007
where it was found on the evidence and
documentation before the
commissioner that it was clear that COFESA was trying to use a
CAESAR’s certificate of registration
to access the CCMA. COFESA
was therefore denied access to represent members at the CCMA under
the pretence of CAESAR. The commissioner
also ruled that the CCMA was
to serve the ruling on the registrar for investigation into the
activities of CAESAR and COFESA.
46.5 Documentation
referring to Angus Slaghuis and H Wessels again confirms the
inter-relationship between CAESAR
and COFESA. The first is a
certificate issued by COFESA stating that Angus Slaghuis is a paid up
member in good standing of COFESA
and CAESAR from 1 April 2007 to 31
March 2008. The second is a certificate by CAESAR stating that F H
Wessels is a dispute resolution
official of CAESAR from 1 January
2007 to 31 December 2007. It is signed by the secretary of CAESAR and
by a director of COFESA.
It contains the registration numbers of both
organisations.
[47]
The respondent’s contentions are baseless. It is clear from the
background facts that the appellant had engaged the respondent
before
it took its final decision to deregister it. The
audia altem
partem
principle was adhered to when the appellant had engaged
with the respondent. The documents that the registrar acted on were
identified
and the respondent knew what the allegation was against it
and had made representations that were considered by the appellant
and
were correctly rejected. It is correct that the guidelines were
promulgated on 10 October 2003. The respondent contended that before
that there were no guidelines and that the registrar should have
looked at their conduct after that. This implies that before that
they were operating as a labour broker but once the guidelines were
issued they ceased to act like they use to. The evidence that
was
placed before court was that the respondent’s conduct
continued. I have already in paragraph 46 set out what facts the
registrar took into account in arriving at its decisions. These
happened after October 2003.
[48]
It is clear from the aforementioned facts that CAESAR is an
organisation for gain and therefore not a genuine employers’
organisation as envisaged in the LRA and the guidelines referred
thereto. The registrar’s finding and conclusion about the
relationship between COFESA and CAESAR was correct. It is also clear
from the evidence that was placed before the court
a quo
that
members were also charged for the services that were provided to them
without any input from their side. Legal costs were included
for
representations at institutions such as the CCMA. Members are charged
per hour for services offered by labour consultancies.
This is
clearly a labour consultancy organisation disguised as a registered
employers’ organisation. CAESAR is effectively
a part of a
consultancy business and is thus operating as an organisation for
gain.
[49]
I am satisfied that the court
a quo
erred when it found that
the registrar had acted on mere suspicion. Sufficient evidence was
placed before it that CAESAR is not
a genuine employer’s
organisation and it should have dismissed the respondent’s
appeal.
[50]
The appeal succeeds in the circumstances.
[51]
It would be in accordance with the requirements of the law and
fairness that costs should follow the result.
[52]
In the circumstances, I make the following order:
52.1 The appeal is
upheld with costs.
52.2
The decision of the court
a
quo
is set aside and replaced with an order that registrar’s
decision to deregister the respondent is confirmed.
__
__________
Francis AJA
Tlaletsi
DJP and Mokgoatlheng AJA concur in the judgment of Francis AJA
APPEARANCES:
FOR THE APPELLANT
: H
Woudstra SC
Instructed by State Attorney
FOR THE RESPONDENT
: D J
Coetzee of Dirk Coetzee Attorneys