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[2009] ZALCJHB 65
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Department of Justice & Constitutional Development v Van Der Merwe NO and Others (JR297/08) [2009] ZALCJHB 65 (27 November 2009)
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT JOHANNESBURG
CASE
NO.: JR 297/08
REPORTABLE
In
the matter between:
DEPARTMENT OFJUSTICE &
CONSTITUTIONAL
DEVELOPMENT
APPLICANT
And
F.
J. VAN DER MERWE
NO 1
ST
RESPONDENT
THE GENERAL PUBLIC
SERVICE
SECTORAL
BARGAINING
COUNCIL
2
ND
RESPONDENT
NEHAWU
obo 58
MEMBERS
3
RD
RESPONDENT
HEARD
ON:
30 SEPTEMBER 2009
JUDGMENT
BY:
C.J. MUSI, AJ
DELIVERED
ON:
27 November 2009
[1]
This is an application to review and set aside a ruling made by the
first respondent, the commissioner,
under the auspices of the second
respondent, the bargaining council, in favour of the third
respondent, NEHAWU or the union.
[2]
During the proceedings at the bargaining council the applicant
contended that it (the bargaining council)
did not have jurisdiction
to arbitrate the dispute. It argued that the dispute was an interest
dispute and not a rights dispute.
[3]
The commissioner granted the parties leave to file affidavits wherein
they set out the factual background
and their respective arguments.
The applicant filed a lengthy affidavit wherein it sets out the
history of the dispute.
[4]
The union did not challenge the factual assertions made by the
applicant. After listening to oral arguments
the commissioner
dismissed the objection and found that the bargaining council does
have jurisdiction to arbitrate the dispute.
[5]
The factual matrix in which this matter must be adjudicated is that
set out by the applicant. Mr Pieter
Andries Du Rand a chief director
in the employ of the applicant deposed to an affidavit on behalf of
the applicant.
[6]
The following facts are set out in Du Rand’s affidavit. The
applicant has a Performance Management
System Policy (PMSP) which
seeks
inter alia
to improve its performance and to establish a performance culture.
The said policy is authorised by various pieces of Legislation
as
well as collective agreements of the bargain council. There is a
collective agreement between the union and the applicant in
relation
to the PMSP.
[7]
In terms of the said collective agreement the employees’
performance will be assessed annually
within a performance management
cycle which runs from 1 April to 31 March of each year. Depending on
an employee’s performance
rating he or she will qualify for a
performance reward of 10% or 18% of his or her salary and or pay
progression.
[8]
The PMSP provides as follows:
“
11.2
Monetary Recognition (Merit Award and
Pay Progression)
For the
purpose of this policy monetary rewards are classified as those
awards that were granted in terms of the merit system and
pay
progression as determined by the bargaining processes or through a
directive from the Minister of Public Service and Administration…
11.2.2
The manager/supervisor will make a
recommendation on rewards. The rewards relating to performance
bonuses shall be limited to 1,
5% of the wage bill for that
particular business unit or chief directorate or directorate or
office. The rewards related to pay
progression shall be limited to1%
of the wage bill of that particular business unit or chief
directorate or directorate or office.
Employees may receive pay
progression and other performance related incentive (merit award) in
the same financial year;
11.2.3
Only supervisors on the level of director
and higher shall approve the recommendations by authorising the
payment of performance
rewards. In instance where these supervisors
are making the recommendation such recommendation shall be approved
and authorised
by a manager of a higher rank”.
[9]
Clause 11.2.2 therefore sets the monetary ceiling for performance
bonuses and pay progression rewards
with reference to the annual wage
bill of the particular business unit, chief directorate, directorate
or office within which the
employees are employed.
[10]
During the relevant performance management cycle ending on 1 April
2005 the applicant decided to adhere strictly
to the budgetary
ceiling set in clause 11.2.2. The approved budget for performance
bonuses was R557-193.00 and R329-134.00 for
pay progression, in
respect of the office: Magistrate Johannesburg. After Du Rand, as the
responsible person to ultimately approve
different awards, made his
decision with regard to who will receive performance bonuses and or
pay progression there was only R903.30
left to allocate for
performance bonuses and R3 874.00 for pay progression.
[11]
These amounts were reached after the relevant supervisors – who
initially made recommendations – changed
their initial
recommendations as to who should get what. He then made the final
decision. He states that he took his decision on
who should get
performance bonuses and or pay progression awards in a rational and
fair manner.
[12]
After this exercise the acting court manager for the Johannesburg
magistrate’s office wrote an undated internal
memorandum to the
Regional Head: Gauteng wherein he stated the following:
“
REQUEST
FOR AUTHORISATION TO SPEND AN AMOUNT IN EXCESS ON PERFORMANCE
ASSESMENT: MERIT AWARD AND NOTCHES: JOHANNESNBURG MAGISTRATE’S
OFFICE
1.
PURPOSE:
The
purpose of this memorandum is to seek your approval for Johannesburg
Magistrate’s Office to spend an amount in excess
of 1,5% Merit
Awards and 1% Notches on Performance Assessment for Administration
Staff as prescribed in the New Performance System.
2.
BACKGROUND:
The
personnel expenditure for the Current Financial year is R55 904
000.00, based on 1,5% for Merit, the amount available will be
R838
560.00 and based on 1% for Notches it amount to R559 040.00. The
total amount is R1, 397 600.00. This total amount is not
adequate to
pay the deserving officials both for Merits and Notches awards.
Total
amount needed for Merits and Notches is R1 647 600.00 and the
difference is R250 000.00 for which the office need an approval.
Funds
are available from the savings of the following vacant posts.
1. Deputy
Director
= R 182 000.00 pa
3.
Assistant Directors@ R125 000.00
= R 375 000.00 pa
Total
=R557 000.00
3.
RECOMMENDATION
It is
recommended that our additional amount of R250 000.00 be allocated to
Johannesburg Magistrate to spend in excess of 1,5% and
1% to pay out
on Merit and Notches respectively to the deserving officials.”
[13]
The effect of the letter, so states Du Rand, is to increase the
budget for the payment of performance awards and
pay progression.
[14]
The union referred an unfair labour practice dispute to the council.
In its referral document it summarised the
dispute as follows:
“
Assessments
were done and performance agreements were signed. However (payments)
(for) performance bonus and notch increment were
not effected.”
[15] In
respect of the required outcome the union stated that:
“
1.
That the performance bonuses of 10% (to) the employees’ salary
be effected.
2.
That the notch increments be effected.”
[16]
What the union in effect wants is that all employees who were
assessed and found to qualify for 10% or 18% performance
bonuses and
pay progression awards should receive those irrespective of the
impact same would have on the budget of the office.
[17]
The applicant made three submissions. Firstly, that the union members
had neither a contractual nor statutory right
to the bonuses and
hence the matter was an interest dispute. Secondly, that the issue
was an interest dispute because the demand
was for the increase in
the budget allocated for the bonuses. Thirdly, that the dispute was
about remuneration and not benefits.
That being the case, so the
applicant argued, the council had no jurisdiction to adjudicate the
dispute.
[18]
The union on the other hand contended that the dispute was a rights
dispute because it related to an unfair labour
practice concerning
benefits. Secondly, that the collective agreement between the parties
contains a dispute resolution mechanism,
in terms of which disputes
of this nature should be referred to the council for Conciliation and
Arbitration.
[19]
The commissioner found that the dispute is more about the union
members’ claim to be fairly treated with
regard to the awarding
or not of performance awards in the form of merit bonuses. In his
view this was a rights dispute because:
“
on
the one hand there is a collective agreement and a policy in terms of
which consideration shall be given to the payment (or not)
of a
performance bonus to deserving employees and on the other hand as
employees have a statutory right to fair treatment when
it come to an
(existing) benefit scheme.”
He
accepted that the payment of the bonuses is discretionary but found
that, that fact does not make it less of a benefit. He accordingly
found that the payment of the bonuses is not remuneration.
[20]
It is the duty of the commissioner to ascertain whether he/she has
jurisdiction to adjudicate the dispute. See
Northern
Cape Provincial Administration v Hambidge NO & others
[1999] 7 BLLR 698
(LC) paragraph 8. This is so because lack of
jurisdiction renders the proceedings and resultant award a nullity.
In
Vidavsky v Body Corporate of
Sunhill Villas
2005 (5) SA 200
(SCA) at paragraph 14 it was said that:
“
The
authorities are clear that want of jurisdiction in judicial or quasi
– judicial proceedings has the effect of nullity
without the
necessity of a formal order setting the proceedings aside.”
[21]
In terms of section 185 (b) of the Labour Relations Act 66 of 1995
(the LRA) every employee has the right not to
be subjected to unfair
labour practices. Unfair labour practice is defined in section 186
2(a) of the LRA as
“
any
unfair act or omission that arises between an employer and an
employee involving unfair conduct by the employer relating to
the
promotion, demotion, probation (excluding disputes about dismissals
for a reason relating to probation) or training of an employee
or
relating to the provision of benefits to an employee.”
[22]
The union argued that this dispute is an unfair labour practice
dispute
“
related to the provision of
a benefit”
and therefore arbitrable.
As stated above, the applicant argued that performance bonuses and
pay progression awards are not benefits.
It was further contended
that if the awards are not benefits then the dispute is an interest
dispute which should be dealt with
in terms of collective bargaining
structures.
[23]
The importance of the distinction between right disputes and disputes
of interest, and its effect is set out in
Rycrof
& Jordaan
A Guide to SA Labour
Law, Juta, 1992 at page 169 as follows:
“
Disputes
of right concern the infringement, application or interpretation of
existing rights embodied in a contract of employment,
collective
agreement or statute, while disputes of interest (or “economic
disputes”) concern the creation of fresh
rights such as higher
wages, modification of existing collective agreements, etc.
Collective bargaining mediation and as a last
resort, peaceful
industrial action, are generally regarded as the most appropriate
avenues for the settlement of conflicts of interests,
while
adjudication is normally regarded as an appropriate method of
resolving disputes of rights.”
This
seems to be the hackneyed position. See
Hospersa
& another v Northern Cape Provincial Administration
(2000)
21 ILJ 1066
(LAC)
at paragraph 11;
Polokwane
Local Municipality
v SALGBC & Others
[2008] ZALC 29
;
(2008)
8 BLLR 783
(LC) at paragraph 22.
[24]
The categorisation of the dispute generally determines its path.
Interest disputes take the path of resolution
by way of interaction
by the parties to the dispute. Rights disputes, generally take the
adjudication route. To allow an interests
dispute to be arbitrated
under the pretext that it is a rights disputes would lead to the
subversion of the collective bargaining
process. See
Hospersa
supra at paragraph 10. The Constitutional Court has recognised the
general rule that, except in organisational rights disputes,
the
scheme of the LRA is that where a dispute may be referred to
arbitration, it is not a matter that can constitute the basis
for a
strike. See
NUMSA & OTHERS v
BADER BOP (PTY) LTD & ANOTHERS
2003 (2) BCLR 183
(CC) at paragraph 24.
[25]
The argument of the union that the collective agreement contained a
dispute resolution mechanism that must be adhered
to in these kinds
of disputes is untenable. The relevant clause of the collective
agreement reads as follows:
“
5
DISPUTE SETTLEMENT PROCEDURE
1.
In the event of either party declaring a
dispute about the
interpretation or
application
of this agreement the
declaring party to the dispute shall notify the other party in
writing thereof stating the nature of the dispute,
the reasons for
the dispute as well as the proposed terms of settlement.
2.
Upon receipt of such notice as it is
envisaged above, the representatives to a maximum of two (2) per
party shall meet within seven
(7) days to consider the dispute in an
endeavour to reach a settlement.
3.
Should the parties fail to resolve the
dispute at the meeting as envisaged above, any of the parties may
refer the dispute to the
GPSSBC for Conciliation and Arbitration”
(my underlining).
[26]
The underlined words make it clear that it is only disputes about the
interpretation or application of the collective
agreement that may be
referred to the GPSSBC for Conciliation and Arbitration.
[27]
This dispute is not about the application or interpretation of the
collective agreement. In fact the applicant
alleged, and it was not
disputed, that it stuck chapter and verse to the provisions of the
collective agreement. It is the
collective agreement that
stipulates that the amount allocated for rewards relating to
performance bonuses shall be limited to
1, 5% of the wage bill of the
particular office and that the rewards related to pay progression
shall be limited to 1% of the office’s
wage bill. When the
supervisors recommended that bonuses and pay progression rewards be
made which exceeded the 1,5% and 1% of
the offices wage bill it was
trimmed down to fall within that limit. The trimming down process
left victims in its wake. The casualties
were the result of a strict
application of the collective agreement.
[28]
The commissioner clearly misconstrued the union’s case by
stating that the dispute was about the union member’s
claim to
be fairly treated with regard to rewarding or not of a performance
reward in the form of a merit bonus. That was never
the case. The
union wanted all those who were assessed and found eligible for
performance bonuses to receive same irrespective
of the limit set in
the collective agreement. In fact Du Rand clearly and boldly
states that in taking the decisions that
he did he had regard to
budgetary constrains and fairness. He puts it thus:
“
It
needs to be pointed out that it was attempted where possible to grant
all persons deserving thereof at least notch increments
where budget
for merit was insufficient…
In
many cases I accepted the final recommendations of the supervisor and
I can therefore not understand what the applicant’s
are
complaining about in relation to my decision. In some cases I did not
but that was because I had to work within the limit of
the budget and
there were cases where in a particular division there was a limit
upon the budget that could be spent, there may
have been a few people
competing for awards and I had to make decisions by a process of
elimination. I did so in a rational and
fair manner…”
[29]
This was not disputed by the union. The internal memorandum written
by the acting court manager makes it abundantly
clear that an
additional amount in excess of the 1, 5% and 1% for performance
bonuses and pay progression should be utilized. This
was clearly an
attempt by the union to enhance an existing right and thereby
creating fresh rights.
[30
It is not in the province of arbitrators to grant awards in respect
of matters that are properly reserved
for the terrain of collective
bargaining. The arbitrator had no jurisdiction or power to order the
applicant to pay an amount in
excess of the 1, 5% and 1% limits set
in the collective agreement. That is clearly a classical interest
issue. The commissioner
exceeded his powers.
[31]
The applicant’s second argument, i.e. that performance bonuses
and pay progression awards are not benefits,
is also compelling.
[32]
It is common cause that the union members did not have a right
ex
contractu
(in terms of their employment
contracts or the collective bargaining agreement) or
ex
lege
to performance bonuses and pay
progression. The commissioner correctly, in my view, found that those
rewards were given annually,
to those who qualified, at the
discretion of the applicant. An employee cannot utilise his/her right
not to be subjected to unfair
labour practices where the employee
believes that he/she ought to enjoy certain benefits which the
employer is not willing or unable
to give to him/her, to create an
entitlement to such benefit through arbitration in terms of the LRA.
Likewise if an employer is
not willing or able to spend an amount, on
bonuses, in excess to that contractually agreed upon, the employees
can not create an
entitlement thereto by way of arbitration. Section
185 (b) sought to bring under the definition of unfair labour
practice, as defined
in Section 186 (2), disputes about benefits to
which an employee is entitled
ex
contractu
or
ex
lege
.
[33]
Remuneration is defined in section 213 of the LRA as
“
any
payment in money or in kind, or both in money and in kinds, made or
owing to any person in return for that person working for
any other
person, including the state and remunerate has a corresponding
meaning.”
[34]
The LRA does not define benefits. In
Schoeman & Another v
Samsung Electronics SA (Pty) Ltd
(1997) 18 ILJ 1098
(LC) at 1102 – 1103 it was said that:
“
Remuneration
is different from benefits. A benefit is something extra apart from
remuneration. Often it is a term and condition
of an employment
contract and often not. Remuneration is always a term and condition
of the employment contact.”
[35]
Todd AJ correctly states that the court in
Schoeman
v Samsung
supra was concerned that
if the notion of benefits is interpreted too widely, this would in
effect give parties the right to refer
to arbitration disputes that
are in essence disputes about remuneration. This would obviously
preclude industrial action over a
range of disputes over remuneration
that property fall within the realm of collective bargaining. See
Protekon (Pty) Ltd v CCMA &
Others
(2005) 7 BLLR 703
(LC) at
paragraph 18. The rationale for this is clear that where a dispute is
an interest or remuneration dispute it cannot be
arbitrated under the
guide of a benefits dispute because that would subvert collective
bargaining.
[36]
Performance bonuses and pay progression is not given arbitrarily or
to every employee irrespective of performance.
The performance of the
individual employee is assessed over a fixed period of time. If the
performance of the employee is good,
61% to 79% of the performance
objectives met; or outstanding 80% and more of performance objectives
met; that employee qualifies
to be rewarded by way of merit and or
pay progression.
[37]
These awards are clearly a
quid pro quo
for good and outstanding services
rendered. It is nothing else but remuneration for services rendered.
It is therefore remuneration
and not a benefit.
[38]
The complaint is not that the performance awards or pay progression
was unfairly given to a select few or unfairly
taken from others. The
unfairness or otherwise of the process was not an issue.
[39]
The commissioner’s ruling that he had jurisdiction to
adjudicate the dispute is clearly wrong. He has no
jurisdiction to
adjudicate an interest dispute.
[40]
The order that I propose to make will in essence have the same effect
as prayers 1 – 4 of the notice of motion.
I therefore propose
not grant any of the prayers as couched in the notice of motion.
[41]
I am of the view that the dictates of fairness militates against
making a costs order in favour of the applicant.
[42]
I therefore make following order:
a)
The first respondent’s ruling is set
aside.
b)
The first respondent has no jurisdiction to
arbitrate the dispute between the applicant and the third respondent
under case number
PSGA634/05/06.
c)
No costs order is made.
__________________
C.J.
MUSI, AJ
On
behalf of the Applicant: N.A. Cassim SC
Instructed
by : State Attorney
On
behalf of the Respondent: NEHAWU