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[2018] ZALAC 10
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National Bargaining Council for the Clothing Manufacturing Industry (KZN Chamber) v Glamour Fashions Worker Primary Co-Operative Limited and Others (DA04/2017) [2018] ZALAC 10; (2018) 39 ILJ 1737 (LAC); [2018] 9 BLLR 876 (LAC) (15 May 2018)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, DURAN
Not Reportable
Case no: DA04/2017
In the matter between:
NATIONAL BARGAINING COUNCIL FOR THE
CLOTHING MANUFACTURING INDUSTRY
(KZN
CHAMBER)
Appellant
and
GLAMOUR FASHIONS WORKER PRIMARY
CO-OPERATIVE LIMITED
First respondent
SUGARBAY WORKERS CO-OPERATIVE
LIMITED
Second respondent
SRN MANUFACTURING WORKER PRIMARY
CO-OPERATIVE LIMITED
Third respondent
FANTASY PRIMARY WORKER CO-OPERATIVE
LIMITED
Fourth respondent
MASAKHE CLOTHING WORKER
CO-OPERATIVE
LIMITED
Fifth respondent
KZN MANUFACTURERS WORKER
CO-OPERATIVE
LIMITED
Sixth respondent
RICHARD LYSTER N.O.
Seventh respondent
Heard:
22 March 2018
Delivered: 15
May 2018
Summary
:
Bargaining council sought declaratory order that the provisions of
the Co-operatives Act 14 of 2005 (COA) do not prevail over
the Labour
Relations Act (LRA) and that members of worker co-operatives are
employees within the meaning of s 213 of the LRA. Application
dismissed by the Labour Court. On appeal found that the appellant
sought no order of
invalidity
and that any conflict between the LRA and the COA, in as far as such
exists, must be interpreted consonantly with the
LRA.
Appeal
dismissed with no order as to costs.
Coram: Musi JA, Hlophe and Savage
AJJA
Judgment
SAVAGE AJA
Introduction
[1]
This
appeal, with the leave of the Court
a
quo
,
is against the judgment and order of the Labour Court (Whitcher J)
dismissing an application brought by the KwaZulu Natal Chamber
of the
National Bargaining Council for the Clothing Manufacturing Industry
(KZN-NBCCMI) for a declaratory order that the provisions
of item 6 of
Part 2 of Schedule 1 to the Co-operatives Act 14 of 2005 (COA) do not
prevail over the
Labour Relations Act 66 of 1995
; that members of
worker co-operatives are employees within the meaning of s213 of the
Labour Relations Act 66 of 1995 (LRA); and
that the co-operatives and
their members are bound by the provisions of the LRA.
[2]
In
its application before the Labour Court, the KZN-NBCCMI sought an
order against the first to sixth respondents (the respondents),
all
worker co-operatives, to compel discovery in certain bargaining
council arbitration proceedings and that the respondents do
not
conduct business as genuine worker co-operatives. In addition,
declaratory relief was sought concerning the applicability of
the LRA
to employees of worker co-operatives.
Applicable statutory provisions
[3]
An
“employee” is defined in s 213 of the LRA as:
‘
(a)
a
ny
person, excluding an independent contractor, who works for another
person or for the State and who receives, or is entitled to
receive,
any
remuneration
;
and
(b)
any other person who in any
manner assists in carrying on or conducting the business of
the
employer.’
[1]
[4]
Section
210 of the LRA provides that:
‘
If
any conflict, relating to the matters dealt with in this Act,
arises between this Act and the provisions of any
other law
save the Constitution or any Act expressly amending this
Act, the provisions of this Act will
prevail’.
[5]
Item
6(1) of Part 2 of Schedule 1 of the COA
[2]
states that:
‘
A
member of a worker co-operative is not an employee as defined in
terms of the Labour Relations (Act 66 of 1995) or the Basic
Conditions of Employment Act, 1997 (Act 75 of 1997)’.
[6]
Section
71
of the
Co-operatives Amendment Act 6 of 2013
, which has been
passed by Parliament but not as yet promulgated by the President, is
to substitute item 6 of
Part 2
of Schedule 1 to the COA as follows:
‘
Application
of labour legislation
6(1)
An employee of a worker co-operative is any member or non-member of a
co-operative who satisfies
the definition of ‘employee’
as defined in the Labour Relations Act, 1995 (Act No. 66 of 1995).
(2)
All worker co-operatives must comply with labour legislation.
(3)
Despite subsection (1), a co-operative may apply to a bargaining
council with jurisdiction
over the sector within which the
co-operative operates or, where there is no such bargaining council,
to the Minister of Labour
for full or partial exemption from the need
to comply with applicable labour legislation in respect of employees
of the co-operative.
(4)
The bargaining council or the Minister of Labour, as the case may be,
may only grant
an exemption in terms of sub-section (3) if reasonably
satisfied that there are good grounds for doing so.
(5)
The Minister must, in consultation with the Minister of Labour,
within six months
from the date of commencement of the
Co-operatives
Amendment Act, 2013
, and thereafter from time to time, make
regulations determining what constitutes good grounds for the
purposes of subsection (4).’
Background
[7]
The
KZN-NBCCMI issued compliance orders against the respondents, all
registered worker co-operatives, for failing to register as
employers
with the bargaining council. Thereafter, it sought to enforce such
compliance orders against the respondents using the
mechanisms of the
bargaining council. This required that the KZN-NBCCMI show at
arbitration that each of the respondents was not
a
bona
fide
worker co-operative, but a sham designed to circumvent the provisions
of the LRA.
[8]
On 16
July 2015, the seventh respondent (the arbitrator), refused a special
plea raised by the respondents and ordered that they
produce certain
documents related to the constitution and operation of their
respective co-operatives. Thereafter, on 13 January
2016, the
KZN-NBCCMI applied to the Labour Court for an order that the
respondents be directed to produce and deliver the documents
as
ordered on 16 July 2015. In addition, an order was sought declaring
that:
1.
the
respondents do not conduct business as genuine worker co-operatives;
and
2.
item
6 of
Part 2
of Schedule 1 of the COA does not prevail over the
provisions of the LRA, with the result that members of worker
co-operatives
are employees in terms of
s213
of the LRA and worker
co-operatives and their members are bound by the provisions of the
LRA.
[9]
The
Labour Court dismissed the application before it with no order as to
costs, finding that a blanket declaratory order could not
be made in
that the members of legitimate workers’ co-operatives did not
fall under the definition of “employee”
in the LRA. The
LRA and the COA were found to serve different purposes. Furthermore,
the Court took the view that the COA did not
amend the LRA and
“
a
constitutionally healthy interpretation of the relevant provisions of
the statutes
”
permitted a conclusion
that
members
of a legitimate workers’ co-operative do not fall under the
definition of “
employee”
in the LRA.
Rather,
the problem is the misuse of the co-operative form by unscrupulous
employers, who create sham co-operatives.
Submissions on appeal
[10]
At
the hearing of the appeal, the KZN-NBCCMI indicated that it intended
to abandon the enforcement proceedings instituted against
the
respondents at arbitration and no longer sought an order that the
respondents did not conduct business as genuine worker co-operatives.
The appeal, therefore, proceeded only on the issue of the declaratory
relief sought, namely whether the applicable provisions of
the LRA
prevailed over item 6 of
Part 2
of Schedule 1 of the COA. This, it
was contended by the appellant, remained a live issue of national
importance, given what the
KZN-NBCCMI considers to be a clear
conflict between the provisions of the COA and the LRA.
[11]
The
respondents opposed the appeal on the basis that since no order of
statutory invalidity was sought in the application of the
law, it
remained relevant whether the respondents operated as sham
co-operatives. Furthermore, since a sham cooperative, set up
illegally, may be deregistered by the Registrar of Cooperatives, it
was not necessary for the KZN-NBCCMI to seek the declaratory
relief
it did given that an alternative remedy existed. As to any claim of a
conflict between the statutory provisions, the relevant
executive
authorities such as the Minister of Trade and Industry, the Minister
of Labour and/or the Registrar of Cooperatives should
have been
joined to the proceedings. The failure to do so had the result that
there was no explanation placed before the Court
why the amendment to
item 6(1) of the COA has been passed by Parliament but not as yet
promulgated by the President. The appeal,
it was submitted, should
for these reasons be dismissed with costs.
Discussion
[12]
In
its application to the Labour Court, the KZN-NBCCMI sought no order
of invalidity against any provision of the COA. Rather, by
way of
declaratory relief, it sought a declaration that item 6 of
Part 2
of
Schedule 1 of the COA does not prevail over the provisions of the
LRA; that worker co-operatives and their members are bound
by the
provisions of the LRA; and that members of worker co-operatives are
employees as defined in
s213
of the LRA.
[13]
While
s158(1)(a)(v)
of the LRA permits the Labour Court to make a
declaratory order, neither the LRA nor the Rules of the Labour Court
prescribe the
circumstances in which an order may be made.
[3]
S21(1)(c)
of the
Superior Courts Act 10 of 2013
provides that a High Court
may “
in
its discretion, and at the instance of any interested person,…
enquire into and determine any existing, future or contingent
right
or obligation, notwithstanding that such person cannot claim any
relief consequential upon the determination
”
.
[14]
Declaratory
relief is of particular value in a constitutional democracy in
enabling courts, after a consideration of relevant circumstances,
to
declare the law with it then left to other arms of government, the
executive and the legislature, to decide how best to observe
the
law.
[4]
In
deciding whether a declaratory order should be made, the court
applies a two-stage test: firstly, it must be satisfied that the
applicant is a person interested in an existing, future or contingent
right or obligation. Secondly, if so satisfied, the court
must decide
whether the case is a proper one for the exercise of the discretion
conferred on it.
[5]
Whether
alternative
remedies exist is a factor to be taken into account by the court in
the exercise of its discretion;
[6]
and while the public interest may be a factor,
[7]
declaratory relief should not be granted where the issue raised is
hypothetical, abstract and academic.
[8]
[15]
While
item 6
of
Part 2
of Schedule 1
provides
that
a
member of a worker co-operative is not an employee
as
defined in
s213
of the LRA,
s210
of the LRA makes it clear that the LRA is to prevail in the event of
a conflict between the matters dealt with in the LRA and the
provisions of any other law. It follows therefore that if a member of
a worker co-operative falls within the definition of an employee
in
s213
of the LRA,
the
provisions of the LRA must prevail. As such, there is no conflict
between the two statutes, when the COA is concerned with the
members
of a worker co-operative and the LRA is concerned with employees.
[16]
Since
legislation has been enacted to give effect to both the rights of
members of worker co-operatives and employees,
[9]
and with there being no conflict between the statutes as they stand,
a proper case was not made out for the relief sought by the
KZN-NBCCMI. T
he
Labour Court cannot, therefore. be faulted for dismissing the
application before it.
[17]
For
these reasons, the appeal cannot succeed. There is no reason in law
and fairness why costs should not follow the result.
Order
[18]
For
these reasons, the following order is made:
1.
The
appeal is dismissed with costs.
_________________
Savage AJA
Musi JA and Hlophe AJA agree.
APPEARANCES:
FOR
THE APPELLANT:
Ms
C Nel
Instructed
by MacGregor Erasmus Attorneys
FOR
THE FIRST TO SIXTH RESPONDENTS: Mr M E Stewart
Instructed
by Omar & Associates
[1]
A
different meaning to employee is given in
s78
of Chapter V of the
LRA.
[2]
Section
6(2)
reads: Despite subsection (1), a worker co-operative
is deemed to be the employer of its members who work for the
co-operative
for the purposes of the following Acts: (
a
)
The Skills Development Act, 1998 (Act No. 97 of 1998); (
b
)
the Skills Development Levies Act, 1999 (Act No. 9 of 1999); (
c
)
the Occupational Health and Safety Act, 1993 (Act No. 85 of 1993);
(
d
)
the Compensation for Occupational Injuries and Diseases Act, 1993
(Act No. 130 of 1993); (
e
)
the Unemployment Insurance Act, 2001 (Act No. 63 of 2001); and
(f)
the
Unemployment Insurance Contributions Act, 2002 (Act No. 4 of 2002).
[3]
National
Employers' Association of South Africa v Minister of Labour
[2012]
2 BLLR 198
(LC)
at paras 17-18.
[4]
Rail
Commuters Action Group v Transnet Ltd t/a Metrorail (Rail Commuters)
2005
(2) SA 359 (CC); 2005 (4) BCLR 301 (CC) at para 108.
[5]
Shoba
v Officer Commanding, Temporary Police Camp, Wagendrift Dam, and
Another
1995
(4) SA 1
(A)
at 14G-I and other cases referred to therein.
[6]
National
Employers' Association of South Africa v Minister of Labour
[2012]
2 BLLR 198
(LC)
at paras 17-18;
Director
of Public Prosecutions v Mohammed N.O.
2003
4 SA 1
(CC);
Trinity
Asset Management (Pty) Ltd v Investec Bank Limited
2009
4 SA 89
(SCA)
at para 40.
[7]
African
Bank Limited v Weiner and Others
[2003]
4 All SA 50 (C) at para 39.
[8]
London
Clubs International (Overseas) Investments (Pty) Ltd v Free State
Gambling and Racing Board and Others
[2005]
ZASCA 35 at para 39.
[9]
See
Mazibuko
and Another v City of Johannesburg and Others
2010
(4) SA 1
(CC);
[2010]
3 BCLR 239
(CC)
at para 73 in which the Constitutional Court made it clear that
“
where
legislation has been enacted to give effect to a right, a litigant
should rely on that legislation in order to give effect
to the right
or alternatively challenge the legislation as being inconsistent
with the Constitution”.