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[2019] ZALAC 63
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Solidarity obo Members employed in motor industry v Automobile Manufacturers Employers Organisation (AMEO) and Others (JA11/17) [2019] ZALAC 63; [2020] 2 BLLR 142 (LAC); (2020) 41 ILJ 419 (LAC) (16 October 2019)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case
no: JA11/17
In
the matter between:
SOLIDARITY
obo MEMBERS EMPLOYED
IN
MOTOR INDUSTRY
Appellant
and
AUTOMOBILE
MANUFACTURERS
EMPLOYERS’
ORGANISATION (AMEO) First
Respondent
NISSAN
SA (PTY) LTD
Second
Respondent
TOYOTA
SA (PTY) LTD
Third
Respondent
VOLKSWAGEN
OF SOUTH AFRICA
(PTY)
LTD Fourth
Respondent
FORD
MOTOR COMPANY OF SOUTH
AFRICA
(PTY) LTD
Fifth
Respondent
BMW
SA (PTY)
LTD
Sixth
Respondent
GENERAL
MOTORS SA (PTY) LTD
Seventh
Respondent
MERCEDES-BENZ
SA (PTY) LTD
Eighth
Respondent
NATIONAL
BARGAINING FORUM
(AUTOMOBILE
INDUSTRY)
Ninth
Respondent
NATIONAL
UNION OF METAL WORKERS
OF
SOUTH AFRICA (NUMSA)
Tenth
Respondent
Held: 12
September 2019
Delivered: 16
October 2019
Summary:
Lawfulness of the agency shop agreement – Union contending that
the conclusion of the agency shop agreement null
and void
ab
initio
as it did not comply with section 25(3) of the LRA
and that any fees deduction unlawful – parties to the agency
shop
agreement amended the collective agreement to comply with
section 25(3) – Union still contending that an agency shop
agreement
that does not comply with the LRA is void
ab initio
and cannot be amended to cure unlawful deductions made in terms
thereof.
Held
that the original collective agreement did not comply with section
25(3) of the LRA, and was null and void
ab initio
and
incapable of rectification. However, the agency shop agreement is a
collective agreement which could be amended and not rectified
-
Rectification is a remedy designed to correct the failure of a
written contract to reflect the true agreement between the parties
to
the contract. The NBF did not seek to rectify clause A3 of the
collective agreement because it did not reflect the true intention
of
the parties. It amended the collective agreement to ensure
enforceability by repealing the original version and substituting
it
retrospectively with a compliant version. Appeal dismissed with costs
– Labour Court judgment upheld.
Coram:
Coppin JA, Murphy and Kathree-Setiloane AJJA
JUDGMENT
MURPHY
AJA
[1]
The appellant (“Solidarity”) appeals against the judgment
of the Labour
Court (Lallie J) delivered on 16 August 2016 dismissing
its application for orders
inter alia
declaring two clauses of
a collective agreement concluded in the National Bargaining Forum –
Automobile Industry (the NBF
Agreement on Wages and Conditions of
Employment for the period of 1 July 2013 to 30 June 2016) null and
void and interdicting the
respondents from deducting a “bargaining
fee” from its members’ salaries and directing the
respondents to repay
any amount that had already been deducted.
[2]
Solidarity is a trade union which, in 2016, had 853 members employed
in the automobile
manufacturing sector. It was not however admitted
as a member to the National Bargaining Forum – Automobile
Industry (“the
NBF”) because it was not a representative
trade union. The first respondent is the Automobile Manufacturers
Employers’
Organisation (“AMEO”) an employers’
organisation. The second to eighth respondents are automobile
manufacturers
and the employers of Solidarity’s members. The
ninth respondent is the NBF and the tenth respondent is the National
Union
of Metal Workers of South Africa (“NUMSA”) a
representative trade union of employees in the industry and a member
of
the NBF.
[3]
The NBF is a forum in which collective bargaining negotiations take
place. It is not
a bargaining council established in terms of section
27 of the Labour Relations Act
[1]
(“the LRA”).
[4]
Collective bargaining in the NBF has been ongoing since 1993.
Solidarity is the successor
of two trade unions, the SA Yster, Staal
en Verwante Nywerhede Unie and the SA Workers Union which, at
different times, were parties
to collective agreements concluded in
the NBF. Since 2004, NUMSA has been the majority union in the NBF.
[5]
On 12 June 2014, a collective agreement was concluded in the NBF for
the period 1
July 2013 to 30 June 2016 (‘the collective
agreement”). The collective agreement was “a composite”
NBF
agreement on wages and conditions of employment applicable to all
hourly paid employees in the Automobile Manufacturing Industry.
The
parties to the collective agreement were AMEO, the second to eighth
respondents (“the employers”), and NUMSA, the
majority
union in the sector.
[6]
Clause A3 of the collective agreement incorporated an agency shop
agreement as contemplated
in section 25(1) of the LRA providing for
the deduction of a bargaining fee. Section 25(1) of the LRA reads:
‘
A
representative trade union and an employer or employers’
organisation may conclude a collective agreement, to be known as
an
agency shop agreement, requiring the employer to deduct an agreed
agency fee from the wages of employees identified in the agreement
who are not members of the trade union but are eligible for
membership thereof.’
[7]
Agency shop agreements are less intrusive than closed shop agreements
which compel
employees to be members of majority trade unions. An
agency shop agreement does not compel membership of the union but
only requires
employees who benefit from the fruits of collective
bargaining achieved by the majority union to pay an agency fee.
[8]
Clause A3 of the collective agreement reads:
‘
3.1
The parties agree that a bargaining fee will be deducted from hourly
paid non-Union members’
weekly remuneration, subject to:
3.1.1
Each employer shall pay to the NBF the bargaining fee deducted and
provide a record of non-Union employees
the total amount deducted and
the period to which deductions relate. The NBF will hold such monies
in a national banking account
for distribution proportionally to the
Union parties to this agreement, on a quarterly basis. For
application of this clause, the
membership of the Union parties will
be reviewed on an annual basis.
3.1.2
Non-Union members for the purposes of this clause mean employees who
are covered by this Agreement who do
not have Union subscriptions
deducted from their remuneration for payment to a registered Trade
Union which is party to this agreement.’
[9]
The wording of Clause A3 was identical to the agency shop
arrangements in earlier
collective agreements concluded since 1998.
In the past, the bargaining fee deductions were paid to both
Solidarity and NUMSA.
In more recent years the bargaining fees have
been received exclusively by NUMSA.
[10]
Clause B9 of the collective agreement set the bargaining fee at 1% of
the weekly wages of each
non-union employee.
[11]
According to Solidarity, despite NUMSA being entitled to receive the
bargaining fees from 1 July
2013, the employers only began deducting
the bargaining fees as required by the collective agreement from 1
February 2015. On 7
April 2015, Solidarity addressed a letter to AMEO
contending that clause A3 did not comply with the requirements of
section 25(3)
of the LRA in various respects, and that the agency
shop agreement in the clause was without legal effect and the
deductions from
its members’ salaries of the “bargaining
fee” were accordingly unlawful. It sought assurances that no
further
deductions would be made and that its members would be
reimbursed.
[12] The
relevant provisions of section 25(3) of the LRA read:
‘
An
agency shop agreement is binding only if it provides that –
(a)
Employees who are not members of the representative trade union are
not compelled
to become members of that trade union;
(c)
the amount deducted must be paid into a separate account administered
by the representative
trade union; and
(d)
no agency fee deducted may be –
(i)
paid to a political party as an affiliation fee;
(ii)
contributed in cash or kind to a political party or a person standing
for election
to any public office;
(iii)
used for expenditure that does not advance or protect the
socio-economic interests of
employees.’
[13]
On 13 May 2015, Solidarity filed an application with the Labour Court
for an order declaring
clauses A3 and B9 of the collective agreement
to be null, void and without force and effect for non-compliance with
the requirements
of section 25(3) of the LRA. In its founding
affidavit, Solidarity contended that clause A3 of the collective
agreement was invalid
and void
ab initio
for three reasons. It
submitted that the agency shop agreement did not comply with: i)
section 25(3)(a) of the LRA in that it contained
no provision that
employees who are not members of the representative trade union are
not compelled to become members of that trade
union; ii) section
25(3)(c) of the LRA in that it provided for the monies collected to
be paid to the NBF rather than into a separate
account administered
by the representative trade union; and iii) section 25(3)(d) of the
LRA because clause A3 did not provide
mechanisms by which the use of
monies handed over to the representative trade union can be monitored
once distributed, as contemplated
by clause 3.1.1.
[14]
Solidarity also sought interdictory relief prohibiting further
deductions, as well as orders
compelling AMEO and the employers to
repay the amounts deducted from the salaries of its members under the
impugned clauses. In
the alternative, it sought an order declaring
section 25 of the LRA unconstitutional. It no longer pursues this
relief.
[15]
On 15 May 2015, AMEO, the employers and NUMSA entered into a second
collective agreement (“the
second collective agreement”)
at the NBF. Clause 1 of the second collective agreement explains its
purpose as follows:
‘
1.1
Clause A3 of the NBF Agreement concluded between the parties for the
period July 1, 2013 to June 30, 2016 (the NBF Agreement),
read in
conjunction with Clause B9, makes provision for the deduction of a
bargaining fee from hourly paid non-union members’
weekly
remuneration.
1.2
Solidarity, acting on behalf of its members, insofar as they are
included amongst the non-union employees provided for in Clause
A3 of
the NBF Agreement, has objected to the deductions made from the
remuneration of its members.
1.3
In order to address the objection, and any potential dispute, the
parties agree to the following distinct and separate amendments
as
set out below.’
[16]
The second collective agreement provided for two amendments. Clause 2
of the second collective
agreement amended the collective agreement
by inserting Clause A3.2, the relevant part of which reads:
‘
The
parties acknowledge and agree for the period from 1 July 2013 to the
date of (this amendment) to the insertion of the following
clause:
3.2.1
Non-union employees have not been compelled to become members of the
Trade Union that is party to this Agreement….
3.2.3
The Trade Union which is party to this Agreement confirms that all
monies distributed to such Trade Union
by way of a bargaining fee
(a)
have been paid into and are retained in a separate account
administered by the Trade
Union which is party to this Agreement;
(b)
have not been and will not be paid to a political party as an
affiliation fee;
(c)
have not been and will not be contributed in cash or kind to a
political party or
a person standing for election to any public
office;
(d)
have not been and will not be used for expenditure that does not
advance or protect
the socio-economic interests of employees covered
by this Agreement.’
[17]
The purpose of the amendment in clause 2 of the second collective
agreement was to afford retrospective
legality and validity to the
deduction of the bargaining fees during the period of 1 February 2015
to 15 May 2015.
[18]
Clause 3 of the second collective agreement provided for prospective
amendment of the collective
agreement for the period of 15 May 2015
until 30 June 2016 (the expiry date of the collective agreement). It
sought firstly to
ensure compliance with section 25(3)(c) of the LRA
by providing for future payments to be made to NUMSA rather than to a
bank account
administered by the NBF. Thus, clause A3.1.1 of the
collective agreement was deleted and replaced by the following:
‘
Each
employer will pay to NUMSA the bargaining fee deducted and provide a
record of the numbers of non-Union employees, the total
amount
deducted and the period to which deductions relate.’
[19]
Clause 3 of the second collective agreement further sought fuller
compliance with the other provisions
of section 25(3) of the LRA by
amending the collective agreement to insert clause A3.3 which reads:
‘
The
parties agree that for the period from the date of the amendment
giving rise to the insertion of this clause into the NBF Agreement,
to 30 June 2016:
3.3.1
Non-union employees are not compelled to become members of the Trade
Union which is party to this Agreement…..
3.3.3
All monies distributed by way of a bargaining fee to the Trade Union
which is party to this Agreement shall
be paid into in a separate
account administered by such Trade Union;
3.3.4
No bargaining fee deducted in terms of this Agreement may be
(a)
paid to a political party as an affiliation fee;
(b)
contributed in cash or kind to a political party or a person standing
for election
to any public office;
(c)
used for expenditure that does not advance or protect the
socio-economic interests
of employees covered by this Agreement.’
[20]
Clause 4 of the second collective agreement expressly provided for
the period of operation of
the amendments. In terms of clause 4.1 of
the second collective agreement, the amendment in clause 2 was
“effective retrospectively
from 1 July 2013, to the date of
this amendment”. Clause 4.2 of the second collective agreement
provided that the amendment
in clause 3 would be “effective
from the date of this amendment to 30 June 2016”.
[21]
On 22 May 2015, the attorneys acting for AMEO and the employers
addressed a letter to Solidarity
informing it of the amendments to
the collective agreement effected by the second collective agreement
and requested it to reconsider
its position and tendered its costs in
the application. On 29 June 2015, Solidarity advised AMEO and the
employers that it was
willing to settle the dispute provided they
complied with prayers 5 and 6 of the notice of motion requiring the
re-payment of the
deductions made prior to the second collective
agreement. Agreement was not reached and the litigation proceeded.
[22]
Solidarity did not amend its notice of motion or file a supplementary
affidavit in response to
the conclusion of the second collective
agreement. However, in its replying affidavit, it averred that an
agency shop agreement
that does not comply with the LRA is void
ab
initio
and cannot be amended to cure unlawful deductions made in
terms thereof. It also contended in argument that the amendments, in
any event, did not fully comply with section 25(3)(d) of the LRA.
[23]
The Labour Court in its judgment failed to determine whether prior to
the amendments clause A3
of the collective agreement complied with
the requirements of section 25(3) of the LRA. It dismissed the
application solely on
the basis that the NBF was entitled to amend
the impugned clause with retrospective effect, and that the amendment
cured the defects
of the original version.
[24]
The appeal requires consideration of two issues: the compliance of
the original version of clause
A3 with the statutory requirements and
the effect of the amendments.
[25]
Section 25 of the LRA regulates the circumstances in which, and the
purposes for which, monies
generated by agency shop arrangements may
be collected, distributed and used. The provision is a reasonable
limitation of the constitutional
rights of affected employees to
freedom of association but is circumscribed by prudential
constraints. Agency shop agreements are
binding only if they comply
with the requirements of section 25(3) of the LRA.
[26]
It is indisputable that the original version of clause A3 did not
comply with section 25(3) of
the LRA, and its non-compliance was the
most logical and probable reason for the NBF concluding the second
collective agreement
amending it. Clause A3 of the collective
agreement did not contain any provision that employees who are not
members of the representative
trade union are not compelled to become
members of that trade union. Furthermore, it did not comply with
section 25(3)(c) of the
LRA requiring that the monies collected to be
paid to the union.
[27]
In
Greathead
v SA Commercial, Catering & Allied Workers Union,
[2]
the SCA declared an agency shop agreement not in compliance with
section 25(3) of the LRA to be unenforceable. It rejected the
notion
that the requisite provisions may be incorporated by implication. The
LRA requires an agency agreement specifically to provide
for the
matters prescribed in section 25(3) of the LRA and the failure to so
provide will render the agreement not binding and
unenforceable. The
original clause A3 of the collective agreement did not provide for
the matters in section 25(3) of the LRA and
was therefore
unenforceable. Thus, prior to its amendment, clause A3 did not
empower the employers to deduct a “bargaining
fee” from
the salaries of members of non-signatory parties.
[28]
The question then is whether the amendments cured the irregularity of
the initial version of
clause A3 and whether it served to render
lawful the deductions from the salaries of Solidarity’s
members.
[29]
There is no basis for any successful challenge to the prospective
agency shop agreement applicable
from 15 May 2015 to 30 June 2016
concluded in clause 3 of the second collective agreement. That
agreement meets the requirements
of the definition of a collective
agreement in section 213 of the LRA
[3]
and complies with section 25(3) of the LRA. Solidarity, however,
submitted that the amended prospective version of clause A3 did
not
comply with section 25(3)(d) of the LRA because it lacked mechanisms
to ensure that the monies so distributed were not used
in a manner
and for the prescribed prohibited purposes prohibited. Section
25(3)(d) does not prescribe any particular mechanisms
to ensure
compliance. It is sufficient if the agency agreement contains
provisions in relation to the prohibitions. There is no
evidence in
this case that any of the prohibitions were contravened. The
submission is accordingly without merit and there is no
other basis
to challenge the prospective amendment.
[30]
With regard to the retrospective amendment of the collective
agreement by clause 2 of the second
collective agreement, Solidarity
relies on the following
dicta
of the SCA in
Greathead:
‘
The
respondent submits that if the issue of non-compliance had been
raised before the court a quo the respondent would have been
entitled
to seek rectification of the agreement to accord with the true
agreement of the parties. The problem facing the respondent
in this
regard is that non-compliance with the provisions of s 25(3) gives
rise to an agreement which is formally invalid for want
of compliance
with statutory formalities. For these reasons the agreement is
incapable of rectification.’
[4]
[31]
Solidarity submits on this basis that clause A3 could not be
rectified retrospectively. The proper
course for the NBF wishing to
rectify the collective agreement, it submitted, was either to apply
to court for rectification or
to terminate the agreement and conclude
a fresh one.
[32]
The NBF in effect did terminate the agreement going forward by
replacing it prospectively with
the agreement in clause 3 of the
second collective agreement. The question is whether the
dicta
in
Greathead
impose a requirement that retrospective
rectification could only have been achieved by judicial decree. But
even then, it was argued,
an agreement may be rectified only if it is
valid. An agency shop agreement that does not confirm with the
requirements of section
25(3) is invalid
ab initio
and
incapable of rectification.
[33]
The concept of rectification is not the same as the concept of
retrospective amendment of a collective
agreement. Rectification is a
remedy designed to correct the failure of a written contract to
reflect the true agreement between
the parties to the contract. It
enables parties to give effect to their actual agreement.
[5]
The NBF did not seek to rectify clause A3 of the collective agreement
because it did not reflect the true intention of the parties.
It
amended the collective agreement to ensure enforceability by
repealing the original version and substituting it retrospectively
with a compliant version.
[34]
Clause 2 of the second collective agreement is in itself a collective
agreement which replaced
the earlier unenforceable one. The key
question is whether it was permissible for clause 2 of the second
collective agreement to
operate from a date earlier than its
conclusion, as provided for by clause 4.1 of the second collective
agreement.
[35]
Collective agreements are peculiar statutory instruments. They obtain
their legal force and effect
from section 23 of the LRA. They are
both contractual and legislative in effect. They advance the
legislative policy aimed at encouraging
employers and unions to
regulate their relationships by collective bargaining. The terms of
collective agreements of one kind or
another (such as agency shops,
closed shops and agreements extended by the Minister in terms of
section 32 of the LRA) are often
applicable to non-parties.
[36]
There is no express statutory prohibition on the retrospective
operation of collective agreements.
However, it is generally presumed
that the law maker does not intend statutory instruments to be
retrospective in their operation.
The presumption is of course
rebuttable, expressly or by necessary implication, even where the
instrument impacts negatively on
vested or existing rights.
[6]
[37]
Section 23(2) of the LRA provides that a collective agreement will
bind every person bound in
terms of section 23(1) of the LRA for the
whole period of the collective agreement. From this provision, it is
clear that the operative
period of a collective agreement is a matter
for the parties to it. As such, and as often happens, it is possible
for the parties
to a collective agreement to make it applicable from
a date earlier than its conclusion. Although imposing reasonable
limitations
on other rights, retroactive operation in some instances,
such as the present, will promote the purpose of orderly collective
bargaining.
[38]
Hence, clause 2 of the second collective agreement, constituting a
lawful agency shop agreement,
applied retrospectively to 1 July 2013
and the bargaining fees deducted in the period 1 February 2015 to 15
May 2015 were deducted
lawfully in terms of it. Insofar as the
original clause A3 of the collective agreement may have been
unenforceable between 1 February
2015 and 15 May 2015, any claims
that may have arisen during that time have been rendered moot by the
repeal and retrospective
substitution of the original clause A3 by
clause 2 of the second collective agreement.
[39]
Consequently, the Labour Court did not err in dismissing the
application.
[40]
For these reasons, the appeal is dismissed with costs including where
applicable the costs of
senior counsel.
_________________
JR
Murphy
Acting
Judge of Appeal
I
agree
_________________
P
Coppin
Judge
of Appeal
I
agree
_________________
F
Kathree-Setiloane
Acting
Judge of Appeal
APPEARANCES:
FOR
THE APPELLANTS:
Adv c Goosen
Instructed
by: SVS Attorneys
FOR
THE RESPONDENTS:
Adv A Redding SC
Instructed
by Chris Baker & Ass
FOR
THE 10
TH
RESPONDENT:
Adv C Orr
Instructed
by Ruth Edmond Attorneys
[1]
Act
66 of 1995.
[2]
[2000] ZASCA 142
;
2001 (3) SA 464
(SCA) paras 12 and 22
[3]
[3]
It is a written agreement concerning matters of mutual interest
concluded between a registered trade union and several employers
and
an employers’ organisation.
[4]
At para [13].
[5]
See for example
Intercontinental
Exports (Pty) Limited v Fowles
1999 (2) SA 1045
(SCA)
at
1051H
.
[6]
Curtis
v Johannesburg Municipality
1906 TS 308
, 311