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[2016] ZALAC 62
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Vanchem Vanadium Products (Pty) Ltd v National Union of Metalworkers of South Africa obo Members (JA33/16) [2016] ZALAC 62; (2017) 38 ILJ 926 (LAC) (8 December 2016)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case no: JA33/16
In
the matter between:
VANCHEM VANADIUM
PRODUCTS (PTY)
LTD
Appellant
and
NATIONAL UNION OF
METALWORKERS
OF SOUTH AFRICA obo
MEMBERS
Respondent
Heard:
22 November 2016
Delivered:
08 December 2016
Summary:
Dispute concerning the binding effect of a main collective agreement
between parties. Although
employer excluded from the main collective
agreement, evidence proving that parties by their conduct (referring
matter to the bargaining
council , deducting of monthly fees, payment
to the funds…) seem to have assumed that employer bound by the
main collective
agreement. Moreover, subsequent collective agreements
signed between parties incorporated terms of the main collective
agreement.
Appeal upheld and Labour Court’s judgment set aside.
Coram:
Tlaletsi DJP, Coppin
et
Landman JJA
JUDGMENT
TLALETSI
DJP
[1]
The
crisp issue to be decided in this appeal is whether the respondent’s
members employed by the appellant (“the employees”)
are
bound to the terms of the Main Agreement concluded between the
parties to the Metal and Engineering Industries Bargaining Council
(“the MEIBC”). The consequences of a finding that they
are bound by the terms of the said Main Agreement are that the
appellant has acquired the right to implement the lay-offs and
short-time provided for in the Main Agreement. A finding to the
contrary would mean that the appellant could not rely on the Main
Agreement for the implementation of the lay-offs and short-time.
[2]
This
appeal emanates from motion proceedings launched in the Labour Court
on urgent basis in which the respondent, a trade union
acting on
behalf of the employees who are its members, sought orders in the
following terms:
‘
2.1
That it be declared that the Respondent’s lay-off of the
Applicant’s members as from
Saturday, 12 September 2015 and/or
its subsequent implementation of short time as from Saturday 2015,
was unlawful;
2.2
That the Respondent be ordered to:
2.2.1
Forthwith allow the Applicant’s members to return to the
workplace;
and/or
2.2.2
Pay the Applicant’s members all wages forfeited as a
consequence of the Respondent’s
aforesaid unlawful conduct.
2.3
That the Respondent pays the costs of this Application.’
[3]
The
Labour Court (per Nkutha-Nkontwana AJ) essentially found that the
appellant’s business operation was unambiguously excluded
from
the Main Agreement by Part 1 clause 1(3)(e) of the Main Agreement
and, as such, its unilateral implementation of the lay-off
and
short-time provisions was unlawful and granted the orders sought by
the respondent.
[4]
In
view of the limited issue to be decided, the concessions made on
appeal and the view I take of this matter, it shall not be necessary
to burden this judgment with a lengthy historical background that led
to the dispute. It shall however suffice to state what follows.
[5]
The
appellant is a vanadium producer. Its production at the appellant’s
plant is dependent upon ore supply from the Mapochs
Mine which
together with its owner, Highveld Steel are under business rescue.
Mapochs Mine ceased to operate during April 2015
and after a brief
period of renewed operation, ceased its operations again on 9 August
2015.
[6]
It
is common cause that as at 9 August 2015, Mapochs Mine had surplus
stocks of “lumpy” ore available to sell to the
appellant.
However, for the appellant to use the said “lumpy” ore it
first had to crush and screen it at additional
expense as it needed
“fines” for its operations.
[7]
Mapochs
Mine was willing to reduce the price of “lumpy” ore by
50%. According to the appellant, if the employees agreed
to a
reduction of their total cost to company of 30%, the appellant would
be able to carry on production, although still at a loss.
As at
September 2015, the appellant was incurring monthly losses of R49
million. The appellant’s salaried staff, non-unionised
employees and the trade union Solidarity agreed to the proposed wage
reduction pursuant to consultation meetings held on 1 and
8 September
2015. However, the respondent did not respond to the proposal. This
move left the appellant with no option but to implement
the lay-off.
The appellant also invoked a consultation process provided by section
189A of the Labour Relations Act 66 of 1995
(Act).
[8]
The
Main Agreement expressly limits the duration of a lay-off to a period
of eight weeks. However, in this case the appellant could
not resume
production since the appellant remained without ore. As the plant
remained dormant for several weeks, the appellant
implemented
short-time purporting to act as provided for in the Main Agreement.
The short-time was implemented solely for the maintenance
of the
plant. The intention was that maintenance be done without the
appellant incurring its full wage liability since it was unable
to
produce.
[9]
The
appellant’s worsening financial situation forced it into
business rescue.
[10]
In
the Labour Court and in this Court, the appellant had two main
contentions made by Mr GC Pretorius SC. The first was that the
question, relating to whether it was bound by the Main Agreement as a
whole, is
res
judicata
because of an arbitration award issued by Commissioner Walele
relating to a dispute between the parties which was referred to the
Bargaining council, and because of a judgment of the Labour Court in
a dispute between the same parties. The second main contention
was,
that all the terms of the Main Agreement were incorporated into the
employment relationship between the appellant and the
respondent’s
members as a result of a collective agreement concluded by them
during January 2011 (“the January 2011
collective agreement’)
.
[11]
Mr
Niehaus, who appeared on behalf of the respondent, contended that the
arbitration award and the judgment of the Labour Court,
confirming
the binding nature of the terms of the Main Agreement, dealt with
different questions to the ones before the Court
a
quo,
and were, in any event, decided erroneously. Further, that although
the terms of the Main Agreement had been adopted by the parties
in
the January 2011 collective agreement, the collective agreement was
subsequently cancelled by the respondent, resulting in the
main
Agreement ceasing to bind the parties.
[12]
Part
1 Clause 1(3)(e) of the MEIBC Main Agreement specifically provides
that excluded from its ambit are enterprises engaged in
the
production of iron and/or steel and/or ferro-alloys. Since the
appellant’s operations fell within these exclusions, the
Main
Agreement is not applicable to it. However, despite this exclusion,
at least at the time of the award of commissioner Walele
and the
judgment of the Labour Court the parties in this matter seem to have
assumed that the appellant was bound by the terms
of the Main
Agreement. This fact is evident from the approach adopted by the
respondent in the proceedings which formed the subject
matter of
Commissioner Walele’s arbitration award, as well the judgment
of the Labour Court by Van Niekerk J. In both these
proceedings, the
binding effect of the Main Agreement on the appellant was not
challenged and, as such, those proceedings were
decided on the
assumption that the appellant was bound by the Main Agreement.
[13]
It
is common cause that on 7 January 2011, the appellant and the
respondent concluded a collective agreement, termed “Agreement
on Conditions of Employment”. It is significant that the
agreement states in clause 1 that:
‘
The MEIBC
conditions of employment and related wage increase are applicable and
negotiated centrally. And no employee will be worse-off
in terms of
the current actual rates and benefits unless stated in this
agreement’
.
[14] This clause
expressly makes the the provisions of the Main Agreement relating to
the conditions, as well as those related wage
increases, applicable
to the parties. Clause 6 of the same collective agreement provides
that future adjustments will be implemented
annually on receipt of
the collective agreement between the MEIBC and the related employers’
organisations.
[15] Mr Niehaus, on
behalf of the respondent, conceded that clause 1 indeed gave the
appellant the contractual right to implement
lay-off and short-time.
However, the respondent’s defence was that the aforesaid
collective agreement is no longer applicable,
because it was
cancelled by the respondent in terms of s 23(4) of the Act by giving
reasonable notice to the appellant. In this
regard, the respondent
relies on the letter dated 26 June 2012. In the letter, the
respondent accuses the appellant of breaching
the collective
agreement and purports to cancel it. The alleged, unspecified breach
was in writing contested by the appellant.
[16] The Labour Court
seems to have accepted that the collective agreement was validly
cancelled by the respondent and rejected
the appellant’s claim
that it had a contractual right to implement the lay-offs and
short-time. The Labour Court thereafter
proceeded to consider other
subsequent plant level agreements such as the Strike Settlement
Agreement (concluded on 5 December
2012) and the Supplementary
Conditions of Employment Agreement (which was signed and came into
operation on 30 May 2014) and concluded
that the those agreements did
not provide for the lay-offs and short-time.
[17] The difficulty
confronting the respondent relating to the purported cancellation of
the January 2011 collective agreement is
that its cancellation is
disputed. The notice of cancellation does not state in what respect
the appellant had breached the collective
agreement. In response to
the notice, a letter was forwarded to the respondent on 6 July 2012
disputing any breach on the part
of the appellant and,
inter alia
,
stating that the parties are bound by the Main Agreement.
[18] There are objective
factors that show that the parties are bound by the terms of the Main
Agreement by incorporation in the
7 January 2011 collective
agreement.
·
The
subsequent agreements concluded in 2012 and 2014, referred to above,
evince a clear linkage with the Main Agreement. Clause
1.1 of the
2012 agreement provides that the parties have agreed that “variation
of all conditions of employment contained
in Annexure A shall be
determined and be based on the terms and conditions of the signed
MEIBC Main Settlement Agreement”.
Clause 4 of the Supplementary
Conditions of Employment Agreement records that the agreement “must
be read with the provisions
of the Strike Settlement Agreement of 5
December 2012 which indicates that the Employees’ conditions of
employment must be
linked to the Main Agreement of the MEIB”.
·
The
appellant deducts monthly contributions of its employees and pays
them over to the metal industry’s benefit funds, including
the
Engineering Industries Pension Fund and Metal Industries Provident
Fund.
·
The
respondent’s members have repeatedly referred disputes to the
MEIBC and have relied on the provisions of the Main Agreement
in
support of their disputes.
·
The
appellant has been issued with a Certificate of Registration dated 23
July 2015 which declares that the appellant has complied
with the
registration requirements of MEIBC. It is lamentable that the
respondent’s answer to the certificate is that the
person who
signed the certificate did so in a month in which he was serving a
notice of termination of his services with the MEIBC
thereby
suggesting some irregularity without providing any sound basis for
doing so.
·
In
2011, the MEIBC’s GRO Committee, a committee which deals with
exemption applications, accepted that the appellant was bound
by the
Main Agreement and accordingly exempted the appellant from the wage
increase for the year 2011/2012.
[19] I am therefore
satisfied that the parties are bound by the terms of the Main
Agreement. The Labour Court misdirected itself
in finding to the
contrary. The appeal should therefore be upheld. As regards costs,
both parties submitted that costs should follow
the result. I am
persuaded that it would be according to the requirements of the law
and fairness that costs follow the result
of the appeal. The
employment of two counsel is, in my view, justified. The Labour Court
made no order as to costs. I see no reason
to interfere with that
decision and the dismissal of the application of the respondents in
that court will not attract an adverse
costs order.
[20] In the result, the
following order is made:
a)
The appeal is upheld and the order of the Labour Court is set aside
and replaced with
the following:
“
The
application is dismissed”.
b)
The respondent is to pay the costs of the appeal, including the costs
of employing
two counsel.
_____________________
Tlaletsi
DJP
Coppin
et
Landman
JJA concur in the judgment of Tlaletsi DJP.
APPEARANCES:
FOR THE
APPELLANT:
Adv GC Pretorius
SC and Adv HM Viljoen
Instructed
by Cowan Harper Attorneys
FOR THE RESPONDENT:
Mr
Minnaar Niehaus of Minnaar Niehaus Attorneys