Brief Summary

Labour Law — Jurisdiction — CCMA's jurisdiction to arbitrate disputes — Applicant sought to review ruling of CCMA regarding its jurisdiction over a dispute concerning non-payment of a benefits parity allowance to employees — Employees alleged breach of contract by the applicant for not providing the allowance as stipulated in their contracts — CCMA ruled it had jurisdiction to arbitrate the matter, rejecting the applicant's argument that the Labour Court had exclusive jurisdiction — Holding that the CCMA has jurisdiction to arbitrate disputes related to unfair labour practices concerning benefits, as per the Labour Relations Act, despite the applicant's claims regarding the exclusivity of the Labour Court's jurisdiction.

Comprehensive Summary

Summary of Judgment

Introduction

This was an application in the Labour Court to review and set aside a jurisdictional ruling made by a commissioner of the Commission for Conciliation, Mediation and Arbitration (CCMA). The applicant was De Beers Consolidated Mines (Pty) Ltd (the employer). The first respondent was the CCMA, the second respondent was the commissioner who issued the impugned ruling, and further respondents included the affected employees (the fourth to eleventh respondents) as well as their trade union (the third respondent).

The matter arose after the employees referred a dispute to the CCMA. Although the employer requested a jurisdictional ruling at conciliation stage, the dispute was nonetheless conciliated without such a ruling being made. The dispute was then set down for arbitration, where the employer raised jurisdiction as a point in limine and filed a notice and supporting affidavit seeking a ruling that the CCMA lacked jurisdiction to conciliate or arbitrate the dispute. The employees and the union filed no answering affidavit. On 24 April 2009, the commissioner dismissed the employer’s jurisdictional challenge and ruled that the CCMA had jurisdiction.

The review application was unopposed in the Labour Court. The court nonetheless approached the matter on the basis that it was still required to assess whether the commissioner’s jurisdictional ruling was reviewable and should be set aside. The general subject-matter of the dispute concerned whether employees were entitled (under their contracts) to receive a contractual allowance described as a benefits parity allowance, and whether a dispute about non-payment of that allowance could be determined by the CCMA as an unfair labour practice relating to benefits, or whether it fell exclusively within the Labour Court’s contractual jurisdiction under the Basic Conditions of Employment Act 75 of 1997.

Material Facts

The employees were employed on the basis of written contracts of employment titled “Offer of employment”, addressed individually to each employee. The contract provided for remuneration in the form of a total remuneration package (TRP) and incorporated an attached schedule of conditions of employment.

A particular contractual provision became central to the dispute, namely clause 9 of the annexure, headed “Benefits parity allowance”. Clause 9 recorded that a non-pensionable benefits parity allowance would be paid monthly in addition to the TRP, that it would only be payable to employees employed at specified operations (which included the relevant mine), that it would not be included for certain calculation purposes (such as performance bonuses and leave encashment), and that it was designed to compensate for additional living costs associated with city centres compared to operations.

The employees’ referral to the CCMA stated, in substance, that the employer had failed to pay the allowance as “documented and specified” in the contract and that the outcome sought was retrospective payment of the allowance as stated in the contract and conditions of employment.

The employer’s jurisdictional challenge before the CCMA was advanced on the basis that the employees’ claim was essentially one of breach of contract, contending that such disputes fell within the Labour Court’s jurisdiction and that the CCMA’s unfair labour practice jurisdiction did not extend to creating entitlement to remuneration or benefits not due under the contract. The employer further characterised the employees’ claim as a demand for a new term and condition of employment (a dispute of interest rather than a dispute of right).

The commissioner approached the matter on the basis that the dispute related to a benefit, that the employer’s challenge was concerned with the correct forum rather than the benefit itself, and that the CCMA had jurisdiction under the Labour Relations Act 66 of 1995 to arbitrate an unfair labour practice dispute concerning benefits. The commissioner also took the view that the Basic Conditions of Employment Act provisions relied upon by the employer did not establish exclusive Labour Court jurisdiction for all contractual disputes to the exclusion of other statutory fora, and concluded that both the Labour Court and the CCMA could have jurisdiction depending on how the matter was pursued.

In the review proceedings, the employer disputed that it was common cause the matter concerned a “benefit”, and maintained that the true nature of the dispute was contractual enforcement which, in the employer’s submission, the CCMA lacked power to adjudicate.

Legal Issues

The central legal question was whether the CCMA had jurisdiction to conciliate and arbitrate the employees’ dispute, framed as an unfair labour practice dispute concerning the provision of benefits, where the employees alleged entitlement to payment under their written employment contracts.

This was primarily a dispute about the proper characterisation of the claim for jurisdictional purposes and the allocation of jurisdiction between statutory fora. It concerned the application of legal principles to largely common-cause features of the referral (the contractual provision relied upon and the remedy sought), rather than a factual dispute about what occurred. The question was not whether the employees were ultimately entitled to the allowance on a correct interpretation of the contract, but whether the CCMA could lawfully arbitrate a dispute of that kind.

Court’s Reasoning

The Labour Court emphasised that a commissioner must determine the real dispute between the parties by considering the available material, including the dispute description and the outcome sought, and not merely the labels used by the parties. In this respect, the court relied on the approach set out by the Constitutional Court, namely that the arbitration system does not involve pleadings in the civil-litigation sense and that a commissioner must ascertain the substantive dispute from the referral documentation and the issues presented.

Applying that approach, the court considered what the employees had actually referred: a complaint that the employer had failed to pay an allowance “documented and specified” in the employment contract, and a request for retrospective payment. The court accepted that the commissioner had undertaken the correct inquiry into the nature of the dispute for jurisdictional purposes and had treated it as a dispute about a benefit contemplated by the unfair labour practice provisions of the Labour Relations Act.

The court then addressed the proper approach to jurisdiction, drawing on authority that jurisdiction does not depend on whether the claim will succeed on the merits. The court treated it as axiomatic that the substantive strength or weakness of the claim does not determine jurisdiction, and that a claim that may ultimately fail does not, for that reason alone, deprive a forum of jurisdiction. On this footing, the court regarded the employer’s contention—namely that the contract did not in fact entitle these employees to the allowance—as irrelevant to the jurisdictional inquiry at this stage.

Turning to the statutory framework, the court considered the Labour Relations Act provisions defining an unfair labour practice as including unfair conduct relating to the provision of benefits, and empowering arbitrators to determine unfair labour practice disputes on reasonable terms. It also considered the Basic Conditions of Employment Act provisions conferring on the Labour Court exclusive jurisdiction in respect of matters “in terms of” that Act, and concurrent jurisdiction with civil courts in respect of matters concerning a contract of employment, as well as the Labour Court’s remedial power to make determinations on contractual matters including orders for specific performance, damages, or compensation.

The court held that the employer had misconceived the nature of the jurisdictional enquiry by treating the dispute as necessarily excluded from CCMA arbitration because it related to contractual entitlement. The court reasoned that a dispute about non-payment of a benefit that an employee alleges is contractually due is capable of constituting an unfair labour practice dispute about benefits, and can be determined through arbitration. The court drew support from Labour Appeal Court authority indicating that the unfair labour practice jurisdiction regarding benefits is directed at disputes concerning benefits to which an employee is already entitled (whether by contract, collective agreement, or law), and is not intended to create new entitlements through arbitration (i.e., it does not convert a dispute of interest into a dispute of right). On the facts as presented in the referral, the employees were asserting an entitlement grounded in the written contract, which placed the dispute in the category of an arguable dispute of right capable of arbitration.

The court accepted that the Labour Court could also have jurisdiction if the dispute were pursued as a contractual claim under the Basic Conditions of Employment Act. However, it held that this did not exclude CCMA jurisdiction in relation to an unfair labour practice benefits dispute. On the court’s reasoning, the matter was one in which two fora could have jurisdiction, and the referring party was entitled to select the forum, provided that the selected forum had jurisdiction.

Finally, the court underscored that, because the employees were the parties who referred the dispute, they were in a position to choose among available fora. The court also noted that the employer could have referred a contractual dispute to the Labour Court if it wished, but that did not mean the CCMA lacked jurisdiction over the employees’ referral. On this basis, the court found no reviewable irregularity in the commissioner’s ruling and concluded that the review application was not made out.

Outcome and Relief

The Labour Court dismissed the review application and allowed the commissioner’s ruling (that the CCMA had jurisdiction) to stand.

Because the review was unopposed, the court made no order as to costs.

Cases Cited

Kusa v Tayo Young Metal Industries and Others 2009 (1) BLLR 1 (CC).

Chirwa v Transnet Limited and Others [2007] ZACC 23; 2008 (4) SA 367 (CC).

Makambi v MEC for Education Eastern Cape [2008] ZASCA 61; 2008 (5) SA 449 (SCA).

Hospisa and Another v Northern Cape Provincial Administration 2000 (21) ILJ 1066 (LAC).

Protocon (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others 2005 (26) ILJ 1105 (LC).

Legislation Cited

Labour Relations Act 66 of 1995, section 186(2)(a); section 191(5)(a) (as referred to in the commissioner’s ruling); section 193(4).

Basic Conditions of Employment Act 75 of 1997, section 74 (as referred to in the commissioner’s ruling); section 77(1); section 77(3); section 77A(e).

Constitution of the Republic of South Africa, 1996, section 34.

Rules of Court Cited

No specific rules of court were cited in the judgment.

Held

The court held that the commissioner adopted the correct approach by determining the true nature of the dispute from the employees’ referral and the remedy sought, and by treating it as a dispute concerning the provision of benefits for purposes of the unfair labour practice jurisdiction.

The court held further that the employer’s contention that the employees were not contractually entitled to the allowance was a merits issue and did not determine jurisdiction. The CCMA could arbitrate an unfair labour practice dispute about benefits where employees allege a contractual entitlement to the benefit, even though the Labour Court could also have jurisdiction over a contractual claim under the Basic Conditions of Employment Act.

The review application was dismissed, and no costs order was made.

LEGAL PRINCIPLES

A commissioner determining jurisdiction in CCMA proceedings must ascertain the real dispute between the parties by considering the referral documentation, the relief sought, and the factual matrix, and is not bound by the parties’ characterisation or labels.

The existence of jurisdiction is determined by the nature of the right asserted and the claim pursued, not by whether the claim will ultimately succeed on the merits. A claim’s potential failure does not, by itself, deprive a forum of jurisdiction.

The unfair labour practice jurisdiction concerning the provision of benefits is directed at disputes where an employee asserts an entitlement to a benefit arising ex contractu (from contract), from a collective agreement, or ex lege (from legislation), and is not intended to create new benefits through arbitration in circumstances amounting to a dispute of interest.

Where statutory schemes permit more than one competent forum to determine a dispute (for example, contractual adjudication in the Labour Court and unfair labour practice arbitration in the CCMA on the pleaded basis), the referring party may select the forum, provided the selected forum has jurisdiction on the nature of the dispute as referred.

De Beers Consolidated Mines (Pty) Ltd v CCMA and Others (JR1583/09) [2010] ZALCJHB 6 (22 January 2010)