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[2018] ZALAC 62
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National Union of Metalworkers of South Africa and Others v Arcelormittal South Africa Ltd (JA43/2017) [2018] ZALAC 62 (7 June 2018)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable/Not
reportable
Case
no: JA43/2017
In
the matter between:
NATIONAL UNION OF
METALWORKERS
OF
SOUTH
AFRICA First
Appellant
MEMBERS
LISTED IN ANNEXURE A Second
to Further Appellant
And
ARCELORMITTAL
SOUTH AFRICA LTD
Respondent
Heard:
20 March 2018
Delivered:
07 June 2018
Summary:
Urgent application granted which prevented employees from striking –
rule
nisi
confirmed on the return date – whether union
precluded from striking in order to force an employer to meaningfully
consult
with it – employer restructuring its business to curb
losses – employer consulting with union on the restructuring
process outside the prescript of section 189 of the LRA – no
notice in terms of section 198(3) issued as employer not
contemplating
retrenchment –
Held:
if the section 189 process has not
been
initiated,
the employees would also
not have a right to strike
in terms
of
section 189A(7) or (8).
Further
that when an employer invites a union to
consultation,
it is at liberty to implement its decision at
the end of the process. When however, the employer engages in sham or
unfair consultations
or implements its decision without giving the
union a proper opportunity to influence the process, the union may
embark on a strike,
subject to compliance with the provisions of the
LRA,
in order to
convince
the employer to reopen the consultations. The dispute concerned a
matter of mutual interest
and
there is nothing in the Act that precludes the
union from embarking on a strike
in
order to
force the employer
to
meaningfully consult with it before it implements its decisions
.
Labour Court ought to have discharged the rule
nisi
- appeal upheld
Cross-appeal
– employer contending that no proper service was effected –
court confirming Labour Court finding that
service in terms of the
bargaining council rules is effected by fax and that no service
affidavit is required – court finding
that there was sufficient
proof that documents were faxed – cross-appeal dismissed.
Coram: CJ Musi JA,
Jappie AJA and Savage AJA
JUDGMENT
MUSI
JA
[1]
The respondent (company) approached the Labour Court, on an urgent
basis, seeking
an interim interdict to prevent an impending strike by
its employees who were members of the first appellant (union). A rule
nisi
was
issued
. The union anticipated the return
date. The matter
was argued
and
the rule
nisi
was confirmed; effectively preventing the union’s members from
embarking on a strike. The union sought and was granted leave
to
appeal to this Court by the Labour Court. The company lodged a
cross-appeal against the Labour Court’s finding that the
dispute was properly referred for conciliation by the union.
[2]
As a result of lower steel prices, rising input costs, electricity
disruptions and
cheaper
imported
steel prices, the company’s Vanderbijlpark Works and Corporate
Services faced serious financial challenges.
In
order to
curb the downward trend in
profitability,
the
company decided to investigate various strategies that would assist
it in optimising its operations. It decided to embark on
an
industrial footprint review of its Vanderbijlpark Works and Corporate
Services. The review included engagements with its stakeholders
including organised labour.
[3]
It invited the union to form part of the consultative process in an
attempt to adopt
a collaborative approach to address its challenges.
It explained the proposed process that it intended embarking on and
favoured
the stakeholders with relevant information
in
order to
conduct a successful review. The
reasons and scope of the review process
was
set out in a letter dated 31 August 2015,
addressed to its stakeholders. It also set out measures that it had
already undertaken
in order to
achieve its purpose. In the letter, it stated that
it intends concluding the consultation process by October 2015 where
after any
viable alternatives would be carefully considered by the
management team and the board of the company before any final
decisions
would
be made
in
respect of the Vanderbijlpark Works and Corporate Services.
[4]
The company held numerous meetings with the union and Solidarity, a
trade union representing
some of the company’s employees. The
minutes of the meeting held on 25 January 2016 states the following:
‘…
It
would be realistic to assume that in some instances, conditions of
employment may change, but unilateral changes would not
be
implemented
.
Instead
it was emphasised that parties
may
have ideas to mitigate (sic). A commitment had
been made to ensure no
job losses’
.
[5]
At the meeting held on 24 and 25 February 2016, the company
reiterated that changes
to conditions of employment would not
be
implemented
unilaterally. The company
further stated:
‘
management
emphasised that parties may be in a position to offer possible means
of mitigation.
A commitment had been
made to ensure no job losses
and
this process was not a section 189 process’
.
(My emphasis)
[6]
During the meeting held on 31 March 2016, the company again confirmed
that it would
honour its commitment that there would be no
retrenchments. The issue of the deployment of some employees,
placement of employees,
the advertising of some positions and the
creation of a skills pool
were discussed
.
The parties agreed that the proposals
in
relation to
the
aforementioned
aspects
would not
be
placed
before their respective principals
without joint consultations with management and labour.
[7]
At the meeting held on 25 April
2016,
the union was informed
that
this meeting would determine what would
be
implemented
when. During this meeting, the
parties agreed on many issues. They also agreed that area committees
would be established on a per
plant basis to oversee all aspects at
different plants. The names of the committee members were supposed to
be submitted by Friday,
29 April 2016.
[8]
On 28 April 2016, the company gave all its employees feedback
with
regard to
the consultation process. It
recorded the agreements reached and indicated that the union
requested it to clarify in detail how
the protection of salaries
would work including movement to other departments. It also indicated
that the union requested it to
consider swapping employees in respect
of changing of shifts. The company further indicated that sufficient
progress
that would pave the way for a
progressive implementation of the productive ideas
had
been made.
[9]
Subsequent to
28
April 2016, the parties had further meetings
with
regard to
the implementation of the review
process. On 27 July
2016,
the
union sent an e-mail to the company wherein it
made
reference
to a meeting held on 15 July 2016
between them about the review process. It contended that at the
meeting of 15 July 2016 the company
promised to revert to it on 18
July 2016, which it failed to do. The union stated, in the e-mail,
that “we also take note
management at Vanderbijlpark are busy
implementing that
footprint
processes without any guiding document or any
agreement by parties at footprint forum (sic)”. It also
informed the company
that it had lodged a grievance about the fact
that the footprint or review process was
being
implemented
without a guiding document. The
company did not respond to this e-mail.
[10]
On 27 July 2016, the union wrote a letter to the CEO of the company
requesting his intervention because
the footprint process was
being
implemented
without any regard to the
challenges that were raised by the union during the meetings between
the parties.
[11]
On 22 September 2016, the union wrote a letter to the company
requesting permission to march
in order to
submit a memorandum of its demands to the CEO of
the company. It also pointed out that it had already declared a
dispute
in relation to
the
unilateral changes to the terms and conditions of employment of its
members. On 23 September
2016,
the
company responded and pointed out that the dispute relating to the
unilateral changes of conditions of employment had been referred
to
the Centre for Dispute Resolution and had not
been
finalised
. It
therefore
refused permission because it was of the view that
the march would be premature.
[12]
The issues raised by the union remained unresolved and its General
Secretary intervened. As a result
of his
intervention,
further meetings were held
in
relation to
the deployment of employees
during November 2016. During a meeting held on 18
November
2016, the company presented the union with a
document styled a “Framework Agreement on the Vanderbijlpark
Footprint Implementation
Process”. Neither party signed the
document.
[13]
On 8 December 2016, the company informed the union that it
cannot
stop the redeployment process. It is common cause
that the employer implemented its redeployment process.
[14]
The union referred a dispute on 1 August 2016 to the Metal &
Engineering Industries Bargaining
Council (MEIBC) for conciliation.
It classified the nature of the dispute as a unilateral change to
terms and conditions of employment.
It stated that the result that it
required was that the employer should consult with the union before
implementing any changes/movements
of employees and that the
status
quo
should remain until the parties
have consulted fully. It further stated that there was consultation
by
both parties
and the company promised to respond to issues raised by the union
but
the company failed to revert and implemented
changes by redeploying employees.
[15]
The referral was faxed to the MEIBC on 1 August 2016 at 08:27 and to
the company on 1 August 2016 at
08:21. The union attached the
relevant fax transmission reports. It is common cause that the
dispute was conciliated on 8 February
2017. The dispute remained
unresolved after conciliation
and
a
certificate of outcome to that effect was issued by the MEIBC
.
The company was present during the conciliation
but
it disputed that the referral forms
were
served
on it. The dispute, in the Labour
Court, was mainly based on the fact that there was no service
affidavit attached to the papers
of the union.
[16]
The Labour Court found that the dispute
was
properly referred
. It found that the union,
by agreeing to be part of the consultation
process
, acknowledged that it does not
engage with the employer as a bargaining partner and that its role is
limited to that of influence
only. It further found that the
consultation process ran to a close and the company
thereafter
commenced with the implementation of the outcome
of that process. The Labour Court concluded that it failed to
appreciate the basis
on which the employees were entitled to strike
in support of their demand for further consultation or to express
dissatisfaction
with the process of implementation.
[17]
The Labour Court found that where an employer engages with a trade
union to discuss proposals specifically
designed to avoid job
losses,
it is acting in compliance with the statutory
obligations and within the framework established by section 189 of
the Labour Relations
Act 66 of 1995 (The Act). Consequently, so the
Labour Court opined, a failure or refusal to act fairly in these
circumstances is
a matter that can be referred to the Labour Court
for adjudication
for the purposes of
section 65(1)(c).
[18]
Section 64(1)(a) of the Act reads as follows:
‘
Every
employee has the right to strike and every employer has recourse to
lock-out if—
(a)
the issue in dispute has been referred to a
council or to the Commission as required by this Act, and—
(i)
a certificate stating that the dispute
remains unresolved has been issued; or
(ii)
a period of 30 days, or any extension of
that period agreed to between the parties to the dispute, has elapsed
since the referral
was received by the council or the Commission; and
after that—‘
[19]
The Labour Court correctly found that
in
terms of
the dispute resolution agreement
concluded under the auspices of the MEIBC, documents may be served by
inter alia
faxing
them to the other party. It further found that there is no
requirement for a service affidavit.
[20]
The company’s only criticism of the Labour Court’s
finding was that there was no service
affidavit. There was sufficient
proof that the documents
were faxed
to both the bargaining council and the employer.
The dispute resolution agreement does not make provision for the need
for a service
affidavit. The employer was present during the
conciliation proceedings. There was indeed an attempt to resolve the
dispute, which
attempt was unsuccessful. The requisite certificate
was issued
. I can
find no fault with the Labour Court’s finding that there was a
proper referral. The cross-appeal ought to
be
dismissed
.
[21]
Section 65(1)(c) of the Act reads as follows:
‘
(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—
(c)
the issue in dispute is one that a party has the right to refer to
arbitration or to the Labour Court in
terms of this Act or any other
employment law;’
[22]
In terms of
section
189(1), an employer must consult with a relevant consulting party if
it contemplates dismissing one or more employees for
reasons based on
the employer’s operational requirements. Section 189(3)
provides as follows:
‘
(3)
The employer must issue a written notice inviting the other
consulting party to consult with it and disclose inviting all
relevant
information, including, but not limited
to
-
(a)
the reasons for the proposed dismissals;
(b)
the alternatives that the employer
considered before proposing the dismissals, and the reasons for
rejecting each of those alternatives;
(c)
the number of employees likely to be
affected and the job categories in which they
are
employed
;
(d)
the proposed method for selecting which
employees to dismiss;
(e)
the time when, or the period during which,
the dismissals are likely to take effect;
(f)
the severance pay proposed;
(g)
any assistance that the employer proposes
to offer to the employees likely to be dismissed;
(h)
the possibility of the future re-employment
of the employees who
are dismissed
;
(i)
the number of employees employed by the
employer; and
(j)
the number of employees that the employer
has dismissed for reasons based on its operational requirements in
the preceding 12 months.’
[23]
It is common cause that
a section 189(3)
notice was not issued by the company
. Mr
Boda on behalf of the employer contended that even though a section
189(3) notice
was not issued,
it
is clear that the parties were indeed engaged in a section 189
consultation process. He consequently contended that because the
employer employed more than the employees set out in the threshold in
section
189A,
the
employees would only have a right to strike after notices of
termination have been issued.
[24]
Mr Van Der Riet, on behalf of the union, contended that section 189
was not applicable to the facts
of this case. He contended that the
section 189(3) notice initiates the consultation process
in
terms of
section 189.
[25]
It is clear that the section 189(3) notice must state the
alternatives to dismissal that the employer
considered. The section
therefore
requires
the employer to consider the alternatives to dismissal on its own.
After it has issued the notice it must engage the other
consulting
parties in a meaningful joined
consensus-seeking
process in an attempt to reach consensus on
appropriate measures to avoid dismissal; to minimise the number of
dismissals; to change
the timing of dismissals
;
and
to mitigate the adverse effects of the
dismissals.
[26]
The employer in this matter did not contemplate any dismissals at any
stage during the consultation
process. It said so on numerous
occasions. It also expressly disavowed reliance on section 189. What
the employer envisaged was
to consult with the unions
in
order to
agree on the implementation of the
restructuring process that would lead to the redeployment of
employees without any employee losing
his or her job. There was
therefore
no
contemplation of retrenchments during the consultation process.
[27]
It,
therefore,
goes
without saying that if the section 189 process has not
been
initiated,
the employees would also not
have a right to strike
in terms of
section 189A(7) or (8). I am unable to agree with
the Labour Court’s conclusion that “where an employer
engages with
a trade union to discuss proposals specifically designed
to avoid job losses, it seems to me that it is acting in compliance
with
its statutory obligations and within the framework established
by s 189”. I disagree because
the
section 189 process is kick-started by the notice
in
terms of
section 189(3). The consultations
in this matter occurred outside of the statutory framework created by
section 189. There was,
as I have stated above, no contemplation of
retrenchments when those consultations occurred.
[28]
The right to strike is protected
in
the
Constitution as a fundamental right without express limitation. A
constitutional right conferred without express limitation
should not
be cut down by reading implicit limitations into it.
[1]
[29]
It is common cause that the parties were engaged in a consultation
process and not in collective-bargaining.
The Labour Court was of the
view that under these circumstances the union participated
in
order to
influence the employer’s
decision-making. I agree. It was further of the view that the
consultation process came to a close
when the employer informed the
employees about the consultation process, on 28 April 2016. I
disagree.
[31]
A proper reading of the 28 April 2016 notice makes it clear that the
consultation process
was not yet finalised
because the notice
itself
stated that the union required clarification
with
regard to
the protection of salaries and
movement of employees to other departments. The communication between
the union and the company
thereafter
also incontrovertibly shows that the consultation
process
was not yet concluded
.
There was no signed agreement between the employer and the union. The
employer only endeavored to enter into a collective agreement
with
the union during November 2016.
[32]
There was
clearly
a
disagreement between the union and the employer
with
regard to
the redeployment of employees.
The employees understood their role during the consultation process.
What they,
however,
wanted
to achieve was for the consultation process to
be
taken
to its logical conclusion where there
would either be an agreement or the company informing them that it
would implement its decision.
The union did not acquire or have an
existing right to challenge the fairness of the consultation process
in the Labour Court or
at arbitration.
[33]
The union wanted to force the employer not to terminate the
consultation process mid-stream.
This
they wanted to do by embarking on a strike. The
mere fact that the decision to restructure is
ultimately
that of the employer does not in my view deprive
the employees of the right to strike.
There
is no provision in the Act that provides
that
process related demands may not be pursued
by way of industrial action
.
[34]
To sum up, when an employer invites a union to
consultation,
it is at liberty to implement its decision at the
end of the process. When however, the employer engages in sham or
unfair consultations
or implements its decision without giving the
union a proper opportunity to influence the process, the union may
embark on a strike,
subject to compliance with the provisions of the
LRA,
in order to
convince
the employer to reopen the consultations.
[35]
The dispute concerned a matter of mutual interest
and
there is nothing in the Act that precludes the
union from embarking on a strike
in order
to
force the employer
to
meaningfully consult with it before it implements its decisions
.
The court
a quo
should have discharged the rule
nisi
.
[36]
There is no reason in the law or fairness why a costs order should
not
be made
.
[37]
I, accordingly, make the following order:
1.
The appeal
is upheld
with
costs.
2.
The order of the Labour Court is set aside and replaced with the
following:
(2.1)
The rule
nisi
issued on 24 February 2017
is discharged
with costs.
3.
The cross-appeal
is dismissed
with
costs.
_______________
C.J.
Musi JA
Jappie
AJA and Savage AJA concurred with Musi JA.
APPEARANCES
FOR THE APPELLANT:
Adv Boda SC
Instructed by Cliffe
Dekker Hofmeyr Inc
Johannesburg.
FOR THE RESPONDENT:
Adv Van
Der Riet SC
Instructed by Cheadle,
Thompson & Haysom Inc.
Johannesburg.
[1]
South
African Transport and Allied Workers Union (SATAWU) v Moloto NO and
Another
2012 (11) BCLR 1177
(CC);
2012 (6) SA 249
(CC) at para 52