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[2010] ZALCJHB 5
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Carlbank Mining Contracts (Pty) Ltd v National Bargaining Council for the Road Freight Industry and Others (JR1592/07) [2010] ZALCJHB 5 (21 July 2010)
Delivered
210710
Reportable
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT BRAAMFONTEIN
CASE
NUMBER: JR 1592/07
In
the matter between:
CARLBANK
MINING CONTRACTS (PTY)
LTD Applicant
and
NATIONAL
BARGAINING COUNCIL FOR THE
ROAD
FREIGHT
INDUSTRY 1
st
Respondent
E
FOURIE
N.O
2
nd
Respondent
JOHN
MOSOEU
3
RD
Respondent
JUDGMENT
VAN
NIEKERK J
Introduction
[1]
This application raises the following question: Should this court
enforce a term of an employment contract that requires disputes
to be
referred to private arbitration, in circumstances where the parties
are subject to the jurisdiction of a bargaining council
that has
concluded a collective agreement providing for the resolution of
disputes under the auspices of the council? Put another
way, can an
employer and employee who are bound by a collective agreement
concluded in a bargaining council ‘contract out’
of the
agreement, at least in so far as it concerns the resolution of
disputes, by agreeing to refer disputes to private arbitration?
At
first blush, the answer seems obvious – commonly held wisdom is
that the Labour Relations Act encourages private dispute
resolution,
and if parties agree in a contract of employment that any disputes
arising between them will be privately arbitrated,
then
pacta sunt
servanda.
But the LRA also promotes collective bargaining at
sectoral level, and establishes mechanisms for collective agreements
concluded
in bargaining councils to be extended to all employers and
employees in the sector for which the council is registered, and to
bind them to those agreements unless an exemption has been granted by
the council. Many bargaining councils that have been accredited
to
perform dispute resolution functions have concluded collective
agreements to establish structures and processes for the resolution
of disputes between parties who fall within their registered scope.
This case raises the potential tension between these two objectives.
Factual
background
[2]
The third respondent (“Mosoeu”) was employed by the
applicant as a motorbike driver. Whether Motsoeu was employed
for a
fixed term is disputed, but in May 2007, Mosoeu claimed that the
applicant had dismissed him, in circumstances that are not
relevant
to these proceedings. He referred a dispute to the first respondent
(“the council”) in terms of the council’s
Exemptions and Dispute Resolution Collective Agreement (‘the
collective agreement’). He claimed that his dismissal
was
unfair and sought reinstatement into the applicant’s employ.
It is common cause that at the relevant time, the
collective
agreement was binding on the parties by virtue of their engagement
within the council’s registered scope, and
the extension of the
agreement to non-parties in terms of s 32 of the LRA.
[3]
At the conciliation meeting convened by the council on 29 June 2007,
the applicant’s representative contended that the
council did
not have jurisdiction to entertain the dispute, because the terms of
Mosoeu’s contract required the matter to
be referred to
arbitration. The relevant clause reads as follows:
“
13.
DISPUTE PROCEDURE
In the event of a
dispute arising as a result of this agreement, the dispute will be
submitted to arbitration in terms of the
Arbitration Act 42 of 1965
,
by way of written notice thereof. The arbitration will be held within
2 weeks of same being requested or as soon thereafter as
an appointed
Arbitrator is available.
The Arbitrator will be
selected from the Tokiso list of panelists.
”
[1]
It
is not disputed that the applicant’s policy is to meet the full
costs of any arbitration conducted in terms of the agreement,
or that
Tokiso is a reputable dispute resolution agency that is entirely
independent of the applicant.
[4]
The second respondent, who presided over the meeting, ruled that
clause 13 of the contract did not oust the council’s
jurisdiction to deal with the dispute in terms of the collective
agreement. In essence, the second respondent reasoned that
to
the extent that the contract of employment purported to do so,
section 191 of the Labour Relations Act (“the LRA”)
afforded the council’s collective agreement precedence and that
the arbitration agreement constituted a waiver of a right
conferred
by the collective agreement. Specifically, she found that the
agreement afforded Motsoeu less favourable treatment
than that
contemplated by the collective agreement, since Motsoeu would have to
seek out Tokiso and contribute to the costs of
the arbitration. Since
the matter could not be settled, she issued a certificate of outcome
reflecting that the dispute remained
unresolved.
[5]
The applicant originally sought to review and set aside the
certificate of outcome, on the basis that the first respondent (“the
council”) had no jurisdiction to deal with the dispute between
the parties. In the light of this court’s judgment in
Goldfields Mining South Africa (Pty) Ltd (Kloof Mine) v CCMA &
others [ref], the applicant did not persist with this claim, but
pursued its contention that the second respondent’s ruling
to
the effect that the council had jurisdiction to conciliate and
arbitrate the dispute should be reviewed and set aside.
The
relevant regulatory provisions
[6]
The collective agreement was concluded between the employers’
organisation that is a party to the council (the Road Freight
Employers’ association) and the Motor Transport Workers’
Union, the Professional Transport Workers’ Union of
South
Africa, the Africa Miners’ and Allied Workers’ Union, and
the South African Transport and Allied Workers’
Union, and the
Transport and Allied Workers’ Union. The scope of the
agreement extends to the whole of the Republic,
and to those persons
for whom minimum wages are prescribed by the council’s wage
agreements, and their employers. The collective
agreement is binding
on the parties to the present dispute by virtue of the extension of
the agreement in terms of s 32 of the
LRA.
[7]
Clause 5 of the collective agreement regulates the resolution of
disputes. The preamble to the clause, hardly drafted in the
clearest
terms but significant in these proceedings, reads:
“
All disputes
shall, if required by the Act {the LRA}, be referred to the Council
for conciliation and arbitration.”
Clause
5 (2) concerns dismissal disputes. The preamble to the clause reads
“Other disputes referred to Council in terms of
the Act”.
Clause 5 (2) (a) reads as follows:
“
A party who
intends referring a dispute to Council on the grounds that his/her
dismissal was unfair shall –
(i)
in the event if internal remedies being available, immediately
after dismissal have initiated the process to exhaust all internal
remedies; or
(ii)
if there is a recognition agreement in force which provides a
dispute resolution process, have followed it;
before
any dispute can be referred to Council.
The
balance of clause 5 is concerned with the regulation of conciliation
and arbitration procedures in unfair dismissal disputes.
Grounds
for review
[8]
Adv Pretorius SC, who with Adv. F Venter appeared for the applicant
in these proceedings, submitted that the parties were bound
by the
contract of employment, and that the proper forum for the resolution
of Mosoeu’s unfair dismissal dispute is private
arbitration.
To the extent that the council had relied on clause 5 of the
collective agreement to conclude that the private
arbitration clause
should not be enforced, the clause requires that disputes “
shall
be referred to the council
if required
by the
Act”
(my emphasis). Since the LRA does not require or
compel a referral to be made to the council, the council has no
monopoly on dispute
resolution in respect of those parties who fall
within its registered scope. It accordingly remains open to parties
who are bound
by the collective agreement to elect to refer a
dismissal dispute to private arbitration, and there is no reason why
this election
may not be exercised in anticipation of any dispute, in
a contract of employment.
[9]
This is a compelling argument, and I would extend it by noting that
the use of the word “shall”, in the present
context,
confers permission as opposed to creating a duty. In these
circumstances, “shall” is ordinarily read as “may”.
In other words, the use of the word “shall” does not
denote a mandatory action; the preamble means no more than that
disputes may be referred to the council for resolution. In any event,
as Mr. Pretorius submitted, the use of the word “shall”,
qualified as it is by the requirements of the LRA, necessitates an
examination of the provisions of the LRA that regulate the referral
of disputes. The LRA does not compel parties to refer disputes to the
CCMA or to bargaining councils with jurisdiction; they do
so at their
election. There is no bar to a party electing to settle a dispute at
any stage of the statutory process, even in circumstances
where a
bargaining council has commenced conciliation or arbitration
proceedings, by agreeing to have the dispute determined by
private
arbitration. Why then should the parties not be at liberty to reach
the same agreement as a term and condition of employment?
[10]
Adv Barnes, who appeared for the first and third respondents,
submitted that there were at least two reasons why arbitration
agreements such as the one concluded between the parties should not
be enforced. The first submission is based on s 23 of the LRA,
the
second on s199.
[11]
Section 23 (3) provides:
“
Where
applicable, a collective agreement varies any contract of employment
between an employee and employer who are both bound by
the collective
agreement”
Section
199 reads as follows:
“
(1) A contract
of employment, whether concluded before or after the coming into
operation of any applicable collective agreement
or arbitration
award, may not -
(a)
permit an employee to be paid remuneration that is less than
that prescribed by that collective agreement or arbitration award;
(b)
permit an employee to be treated in a manner, or to be granted
any benefit, that is less favourable than that prescribed by that
collective agreement or arbitration award;
(c)
waive the application of any provisions of that collective
agreement or arbitration award.
(2)
A provision in any contract that purports to permit or grant any
payment, treatment, benefit,
waiver or exclusion prohibited by
subsection (1) is invalid.”
[12]
There can be no doubt that s 23 (3) of the LRA is authority for rte
proposition that a collective agreement containing a particular
mode
of dispute resolution takes precedence over the terms of any
individual contract.
[2]
However, to the extent that s 23 (3) may have varied Motsoeu’s
contract of employment by substituting clause 13 for
the provisions
of the collective agreement, this begs the question of whether the
collective agreement obliges a party to refer
a dispute to the
council. For the reasons recorded above, in my view, it does not.
Section 23 (3) of the LRA is therefore not a
bar to an agreement to
refer dispute arising from a contract of employment to private
arbitration.
[13]
The submission based on s 199 is more compelling. It finds support in
the recent decision by this court,
SACWU obo Stinise v Dakbor
Clothing (Pty) Ltd & others
(2007) 28
ILJ
1318 (LC).
In that case, Nel AJ held that a private arbitration clause in a
contract of employment constituted less favourable
treatment and thus
a waiver of a provision of a collective agreement in terms of s 199
(1) (c), and that the clause was accordingly
invalid. I do not read
the judgment to establish a generally applicable principle to the
effect that a collective agreement concluded
by a bargaining council
that regulates dispute resolution necessarily precludes parties from
agreeing to refer to a dispute to
private arbitration. The conclusion
reached by Nel AJ and its application to the circumstances of the
present case must be evaluated
in the light of the wording of s 199.
Nel AJ appears to have accepted that the arbitration agreement that
was the subject of challenge
in the matter before him treated the
affected employee in a manner that was less favourable than the terms
of the collective agreement.
I do not read the judgment to establish
a general principle to the effect that s 199 always excludes the
application of any private
arbitration agreement - the terms of the
collective agreement are a relevant factor, as are the terms of the
arbitration agreement.
[14]
Section 199 contemplates the protection of employee interest at three
levels. The first, not relevant in these proceedings,
relates to
minimum wages – ss (1) (a) prohibits any term of an employment
contract that provides for an employee to be paid
remuneration in an
amount less than that prescribed. Subsection (1) (b) prohibits any
contractual term that permits an employee
to be treated in a manner,
or to be granted any benefit, so as to be less favourably treated
than the terms prescribed by a collective
agreement. Thirdly, ss (1)
(c) prohibits the waiver of the application of any provision of a
collective agreement.
[15]
I deal first with the issue of waiver. In the absence of any
right to refer a dispute to the council, there can be no
question of
any waiver of that right. Put another way, if the collective
agreement does not establish a provision in terms of which
a party is
compelled to refer a dispute to the council and only the council,
then by agreeing to refer a dispute to private arbitration,
there can
be waiver of the application of the council’s agreement. In so
far as any less favourable treatment is concerned,
on the facts of
this case, Motsoeu has not been subjected to less favourable
treatment as contemplated by ss (1) (b). Clause 13
of the employment
contract contemplates that disputes will be referred to a credible
private dispute resolution agency (ironically,
the same agency
utilised by the council in the exercise of its dispute resolution
functions) at no cost to the employee. In the
present instance, the
benefit or treatment for the purposes of s 199 (1) (b) is not to the
right to refer a dispute to a bargaining
council – it is to
have an employment dispute expeditiously determined by an independent
third party at no cost. That
is what clause 13 accomplishes. In
these circumstances, I fail to appreciate how it can be said that 199
(2) precludes the parties
from agreeing to refer disputes to private
arbitration. .
[16]
Following the reasoning of
Dakbor Clothing
, the answer would
be different, in my view, where a private arbitration agreement
provides for a dispute resolution process that
is less favourable to
the employee. If, for example, the nominated arbitrator appears to be
less than qualified or impartial, or
where the employee is obliged to
contribute toward the cost of the arbitration proceedings, it seems
to me that a bargaining council
or this court would be empowered,
after an evaluation of the arbitration agreement, to decide that the
agreement provides for less
favourable treatment than that provided
by any collective agreement concluded by the council, and that the
agreement is therefore
invalid. In the present instance, to the
extent that the second respondent considered that Mosoeu was
prejudiced by the agreement
both in having to locate Tokiso and to
face the possibility of a contribution to the costs of the
arbitration, neither of these
factors is born out by the facts.
[17]
Did the bargaining council in any event have discretion to arbitrate
the dispute? Both counsel referred to s 147 of the LRA.
Section 147
(6) contemplates the referral of a dispute to the CCMA in
circumstances where it becomes apparent that the dispute
ought to be
resolved through private dispute resolution in terms of a private
agreement between the parties to the dispute. The
section provides
that the CCMA may either refer the dispute to the appropriate person
or body for resolution through private dispute
resolution procedures,
or appoint a commissioner to resolve the dispute in terms of the Act.
There is no equivalent provision in
respect of bargaining councils.
In these circumstances, s 147 offers no assistance, and matters such
as the present must be determined
by reference to the wording of the
relevant arbitration and collective agreements.
[18]
Both counsel referred to
Parekh
v Shah Jehan Cinemas (Pty) Ltd
1980
(1) SA 301
(D), Ms Barnes to submit that notwithstanding the
arbitration agreement, the council retained jurisdiction to entertain
the dispute;
Mr. Pretorius to submit that nothing in that decision
that entitled the bargaining council to assume jurisdiction. To
the
extent that the court held that an arbitration agreement does not
axiomatically serve to oust jurisdiction,
[3]
it does no more than reaffirm that an arbitration agreement does not
deprive the court of its ordinary jurisdiction over the disputes
that
it encompasses. But it does not follow that a bargaining council, a
creature of statute, retains any inherent right of supervision
over
private arbitration proceedings between parties within its registered
scope, even less does it mean that the council has a
discretion to
prevent or call a halt to any private arbitration and tackle the
dispute itself.
[4]
[19]
In summary, to the extent that the second respondent failed properly
to consider the relevant provisions of the collective
agreement and
took into account speculative, incorrect and therefore irrelevant
considerations, her ruling that the council retained
jurisdiction to
conciliate and arbitrate the dispute referred to the council by
Motsoeu is reviewable.
[5]
[20]
Finally, in relation to costs, this application was brought as a test
case. The outcome it would seem has important implications
for both
the applicant and the bargaining council. For this reason, and having
regard to the discretion that s 162 of the LRA confers
on the court,
I do not intend to make any order as to costs.
I
accordingly make the following order:
1.
The second respondent’s ruling that the first respondent
retained jurisdiction to entertain the dispute referred to the latter
on 25 May 2007 is reviewed and set aside.
2.
There is no order as to costs.
ANDRE
VAN NIEKERK
JUDGE
OF THE LABOUR COURT
Date
of application: 15 July 2010
Date
of judgment: 21 July 2010
Appearances:
For
the applicant: Adv PJ Pretorius SC, with Adv F Venter
Instructed
by: Bowman Gilfillan Inc
For
the respondent: Adv H Barnes
Instructed
by: Moodie & Robertson Attorneys
[1]
Despite its lack of detail, it is not disputed that clause 13
constitutes an arbitration agreement. To the extent that the
agreement does not refer expressly to unfair dismissal disputes,
this is not an issue raised on the papers, but to the extent that
the contract provides that the employee’s services may be
terminated in terms of any relevant legislation, any dispute
about
unfair dismissal clearly arises from the agreement.
[2]
See
Johnson
v CCMA & others
[2005]
8 BLLR 7096
(LC), referring to
Mthimkhulu
v Commission for Conciliation, Mediation & Arbitration &
another
(1999) 20
ILJ
620 (LC). See also
SAB
v CCMA & others
[2002] 9 BLLR 894
(LC) where in the context of a dispute concerning
a collective agreement that established a private arbitration
procedure, Ntsebeza
AJ held that the CCMA’s jurisdiction is
ousted.
[3]
See
Cosmo
Health (Pty) Ltd v Commission for Conciliation, Mediation and
Arbitration
(2005)
26
ILJ
467 (LC) where this principle was referred to and applied in the
context of s 147 (6).
[4]
The
Arbitration Act does
not apply to any arbitration conducted by a
bargaining council - see
s 51
(8) read with
s 146
of the LRA.
[5]
See
CUSA
v Tao Ying Metal Industries and others
[2009]
1 BLLR (CC) at para [134] (per O’Regan J).