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[2011] ZALCJHB 37
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Independent Municipality and Allied Trade Union v Umhlathuze Municipality and Others (D 644/09) [2011] ZALCJHB 37; [2011] 9 BLLR 882 (LC); (2011) 32 ILJ 2144 (LC) (6 May 2011)
IN THE LABOUR COURT
OF SOUTH AFRICA
(HELD AT
JOHANNESBURG)
CASE NO: D 644/09
In
the matter between
INDEPENDENT
MUNICIPAL AND ALLIED TRADE UNION
obo
FJ VERSTER
Applicant
and
UMHLATHUZE
MUNICIPALITY
1
st
Respondent
SOUTH
AFRICAN LOCAL GOVERNMENT BARGAINING COUNCIL
2
nd
Respondent
AS
DORASAMY N.O.
3
rd
Respondent
______________________________________________________________________
JUDGMENT
______________________________________________________________________
LAGRANGE, J
Introduction
The applicant in this
matter was appointed to act as a project management unit manager in
a Municipal Infrastructural Grant project.
He was continuously
employed in this acting capacity between 01 December 2004 and 30
June 2007, which comprised two distinct
periods of appointment, the
first running from 1 December 2004 to 30 June 2006, and the other
from 01July 2006 to 30 June 2007.
The applicant was paid
an acting allowance for the second period but not for the first. It
seems that a requisition for the payment
of an acting allowance was
approved in both cases, subject to certain conditions.
The applicant pursued
internal procedures to resolve a grievance over the failure to pay
him an acting allowance for the first
period and after these
procedures had been exhausted without success the matter was
referred to the South African Local Government
Bargaining Council.
The applicant claimed that the failure to pay him the acting
allowance for the first period amounted to an
unfair labour practice
in terms of section 186 (2) of the Labour Relations Act, 66 of 1995
('the LRA').
The arbitration award
On 10 July 2009, the
applicant’s claim was dismissed by the third respondent ('the
arbitrator'). In a succinct award, the
arbitrator reached the
following conclusions:
"18. The
applicant has the locus standi to lodge the dispute;
19. Acting allowance
does not constitute a benefit in terms of section 186 (2) (a) of the
LRA.
20. The Council does
not have jurisdiction to entertain the dispute."
(sic)
In reaching the critical
conclusion in paragraph 19 of his award, the arbitrator relied on a
number of decisions of the Labour
Court. Firstly, he took account of
the Labour Court decisions in
Samsung
Electronics
and
Gaylard
cases which made a
distinction made between a benefit and remuneration.
1
He also made reference
to the Labour Appeal Court decision in the
Hospersa
case
which effectively confirmed the finding of the court
a
quo
2
that a claim for an
acting allowance in the absence of a right based in contract, a
collective agreement,
or
a right arising
ex
lege
,
is simply a dispute of interest over a demand for further
remuneration.
3
In support of his
conclusion the arbitrator also cites the following dictum of
Landman, J in the earlier
Hambidge
decision:
“
However
a claim that an employer has acted unfairly by not paying the higher
rate cannot be said to concern a benefit even if its
receipt would be
beneficial to the employee. It is essentially a claim or a complaint
that the complainant has not been paid more
for a certain period for
carrying extra responsibilities. It is a salary or wage issue. It is
not about a benefit. It is about
a matter of mutual interest. The
interpretation by the commissioner is wrong in law. It was central to
her decision. She did not
have jurisdiction to entertain the dispute
and to decide it in the way she did.
”
4
The review application
The sole question on
review is whether or not the arbitrator was correct in finding that
the council did not have jurisdiction
to entertain the dispute on
the basis that an acting allowance does not constitute a benefit in
terms of section 186 (2) (a)
of the LRA.
Unlike other matters
which an arbitrator is called upon to decide, an arbitrator's
decision about whether or not she or he has
jurisdiction, is not
subject to review on grounds of reasonableness. The essential
question is whether the arbitrator correctly
determined the
existence or absence of her jurisdiction over the matter, not
whether the determination of her jurisdiction was
reasonable or
not.
5
For this reason, I will
not deal with the parties contentions regarding the reasonableness
of the arbitrator’s decision.
In its heads of
argument,
the
first respondent (‘the municipality’) sought to
resurrect an argument it had made to the effect that the referral
of
the unfair labour practice claim to the second respondent bargaining
council (‘the SALGBC’) almost two years after
the
completion of the acting period in respect of which he was claiming
payment meant that the application should be dismissed
on this basis
alone, in the absence of condonation being granted. The arbitrator
dealt with this contention in paragraph 13 of
his award. He found it
is trite law that,
in
the absence of the employer ever having taken steps to set aside the
certificate of outcome on review,
it
was barred from raising this at the arbitration. Although he did not
cite authority for his conclusion on this jurisdictional
question,
his conclusion is soundly grounded in the decision in
Fidelity
Guards Holdings (Pty) Ltd v Epstein NO & others
(2000)
21
ILJ
2382
(LAC)
.
6
The characterisation
of an acting allowance as a benefit
Section 186(2) of the
LRA reads:
“
'Unfair
labour practice'
means
any unfair act or omission that arises between an employer and an
employee involving-
(a)
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 ;
(b)
the unfair suspension of an employee or any other unfair disciplinary
action short of dismissal in respect
of an employee ;
(c)
a failure or refusal by an employer to re-instate or re-employ a
former employee in terms of any agreement;
and
(d)
an occupational detriment, other than dismissal, in contravention of
the Protected Disclosures Act, 2000
(Act 26 of 2000), on account of
the employee having made a protected disclosure defined in that Act.”
The labour courts and
arbitrators have long wrestled with the precise ambit of what
constitutes a ‘benefit’ in terms
of section 186(2)(b).
7
The view that prevailed
initially is contained in the LAC decision in
Hospersa
.
In that case, the LAC effectively decided that the meaning of a
benefit in what was previously set out in Item
2(1)
(b)
of
schedule 7 to the LRA, before it was repealed in 2002
8
,
is that it must be an
existing entitlement in a contract, collective agreement or statute.
In short,
it
must be an existing legal entitlement and not a new entitlement
which the employee is seeking to establish by means of an unfair
labour practice claim.
9
Since
Hospersa
was
decided more nuanced interpretations of the scope of an unfair
labour practice concerning a benefit have been advanced.
10
A strong policy
consideration underlying the decision in
Hospersa
was that to
widen the concept of benefits to include claims to receive some
material advantage, which an employee is not entitled
by virtue of
either a contract, collective agreement or statute, would seriously
undermine the distinction between rights and
interest disputes.
Consequently, it would also blur the concomitant division between
disputes that must be decided by an adjudicative
process and those
that fall to be decided in the cut and thrust of collective
bargaining:
“
[10]
A dispute of interest should be dealt with in
terms of the collective bargaining structures and is therefore
not
arbitrable. A dispute of interest should not be allowed to be
arbitrated in terms of item 2(1) (b) read with item 3(4) (b)
under
the pretext that it is a dispute of right. To do so would possibly
result in each individual employee theoretically cloaking
himself or
herself with precisely the same description of the dispute that is
the true subject-matter of collective bargaining.
And if such an
individual employee could legitimately insist on his or her
particular case being separately adjudicated, whether
through
arbitration or otherwise, the result would inevitably be a
fundamental subversion of the collective bargaining process
itself.
(See by way of example Public Servants Association & others v
Department of Correctional Services
(1998)
19 ILJ 1655 (CCMA)
at
1669C-E and 1674D-E.) If individuals can properly secure orders that
have the effect of determining the evaluation of differing
interests
on the merits thereof, then the distinction between disputes of
interest and disputes of right would be distorted and
the collective
bargaining process self-evidently would become undermined. The
following extract as well as the definition not only
explain the
meaning of a dispute of interest and a dispute of right, but also
highlights the correct procedure to be followed in
their resolution.
[11]
'Broadly speaking, 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 right.' Rycroft
&
Jordaan A Guide to SA Labour Law (Juta 1992) at 169. This is
consistent with what I have said above.”
11
In the subsequent LAC
decision in the
Department of Justice
case, the court was
concerned with an unfair labour practice claim about the employer’s
failure to permanently appoint an
employee to a position in which he
had been acting temporarily. The court found that the referral had
been premature because
the employer had yet to take a decision
not
to appoint him. Importantly for present purposes, the LAC made it
clear that an unfair labour practice claim is a distinct statutory
right which an employee can assert independently and it is not one
that is merely contingent on the existence of some other legal
obligation:
“
[53]
Counsel for the department also submitted that a
dispute such as the one in the present matter was a dispute
of
interest and not a dispute of right and that item 2(1) (b)
contemplated disputes of right and not disputes of interest. The
right he was referring to is a right ex contractu or ex lege. He
submitted that an unfair labour practice is confined to disputes
of
right created ex contractu or ex lege. The answer to this argument is
simply that
item
2 of schedule 7 is one of the statutory provisions that seek to give
content to the constitutional right to fair labour practices
which is
entrenched in the Constitution. It creates a statutory right not to
be subjected to an unfair labour practice that takes
the form of
conduct spelt out therein.
”
12
(emphasis added)
Goldstein AJA, writing
the minority judgment in the same case effectively concurs with the
majority view in this respect but drew
out the natural inferences
flowing from this conceptualisation of the unfair labour practices.
The learned judge postulated that
it would be meaningless if an
unfair labour practice claim were confined only to claims to
pre-existing rights originating
ex contractu or ex lege
:
“
Whatever
the position it seems to me, respectfully, that the view expressed in
para 9 that item 2(1)(b) provided only for rights
which arose ex
contractu or ex lege, is clearly wrong.
If
that were so, the provision would have been redundant since such
rights would have been enforceable in the absence of item 2(1)(b)
.
It is significant that item 3(4)(b) expressly provided for a dispute
referred to, inter alia, in item 2(1)(b) to be resolved through
arbitration.
It
is significant too that the introductory words in item 2(1) and the
cardinal words in item 2(1)(b) concerned an 'unfair labour
practice'
and 'unfair conduct'. Just as the LRA provides for disputes arising
from unfair dismissals in respect of which there
are no contractual
remedies or remedies at common law, to be resolved by arbitration, so
was item 2(1)(b) designed for situations
where neither the contract
of employment nor the common law provide an employee with a remedy.
”
13
(emphasis added)
In the
Protekon
judgment, Todd AJ reached a similar conclusion to Goldstein AJA,
apparently without having had sight of the LAC decision:
“
[33]
It does not, however, follow from this that an
employee may have recourse to the CCMA's unfair labour practice
jurisdiction only in circumstances in which he has a cause of action
in contract law. If that was the case there would have been
little
purpose in introducing the specific unfair labour practices
contemplated in s 186 of the LRA.”
14
In
Protekon
the
court also sought to delineate two distinct classes of benefit that
might be claimed under the unfair labour practice jurisdiction,
namely contractual and statutory based benefits which an employer
fails to comply with, and discretionary benefits provided by
an
employer:
“
[36]
It follows from this that there are at least two instances in which
employer’s conduct in relation to the provision of
benefits may
be subjected to scrutiny by the CCMA under its unfair labour practice
jurisdiction. The first is where the employer
fails to comply with a
contractual obligation that it has towards an employee in relation to
the provision of an employment benefit.
The second is where the
employer exercises a discretion that it enjoys under the contractual
terms of the scheme conferring the
benefit.
”
15
Protekon
also
usefully makes the point that concerns about blurring the line
between those issues which are justiciable and which are the
subject
matter of collective bargaining are not best resolved by trying to
draw a bright line between remuneration and other
benefits. Rather,
the question can be
decided by a proper conceptualisation of the true nature of the
dispute between the parties and not how they
have characterised, or
‘packaged’ it.
16
A union may demand
acting allowances as a matter of right in collective bargaining,
or an employee might
challenge a failure to pay an acting allowance to him on the basis
that the employer has unfairly exercised
its discretion not to pay
the allowance when his situation is compared to others who were
given the allowance. If an entitlement
to an allowance is included
in a collective agreement, individual employees could only dispute a
non-payment of the allowance
as an interpretation or application
dispute, or possibly as a matter of enforcing terms and conditions
of employment. If the
concept of a benefit in section 186(2)(b)
properly speaking refers to non-mandatory benefits, workers could
not resort to the
unfair labour practice remedy to resolve a dispute
about the payment of allowances in these circumstances.
Conversely, if an unfair
labour practice award had been issued which laid down parameters for
the exercise of an employer’s
discretion when granting an
allowance, then the granting of allowances would be regulated to a
degree by the award. In terms
of section 65(3)(a)(i) employees could
not pursue protected strike action over the granting of the
discretionary allowances given
the existence of such an award,
though they might well pursue demands for future changes to the
allowance regime.
If this
conceptualisation of a ‘benefit’ in the unfair labour
practice jurisdiction is correct, then there may well
be
restrictions on employees pursuing collective bargaining and
adjudicative approaches simultaneously, and the suggestion by
Todd
AJ to the contrary might, with respect, need qualification.
17
Following the decisions
in
Department
of Justice
and
Protekon
,
the learned author
PAK
Le Roux
has
trenchantly asked why the unfair labour practice claim relating to
benefits needs to embrace contractual remedies at all.
18
Indeed,
it
is difficult to understand why the legislature would have singled
out disputes over one narrow class of contractual employment
conditions for adjudication by arbitration, when those disputes
could just as easily have been dealt with under the ordinary
law of
contract. If benefit disputes simply constitute one type of
contractual claim, then why did the 2002 amendments,
which gave the labour
court jurisdiction over contractual claims under section 77(3) of
the BCEA,
leave
the determination of contractual benefit claim disputes to
arbitration? It is hard to discern any principled reason for
retaining this split jurisdiction over contractual entitlements. It
is true some benefits may arise
ex
lege
even
though they may also create contractual entitlements, but then if a
‘benefit’ refers only to an entitlement originating
in
statute why not make that clear? The more plausible interpretation
is that the term ‘benefits’ was intended to
refer to
advantages conferred on employees which did not originate from
contractual or statutory entitlements, but which have
been granted
at the employer’s discretion.
What the brief review of
the case law and academic commentary reveals is that there has been
a shift in the conceptualisation
of the ambit of the unfair labour
practice claim at least in relation to the notion that a
pre-requisite for bringing such a
claim is proof of a pre-existing
right.
Le
Roux
argues
that a rejection of the narrow approach in
Hospersa
is
implicit even in the majority decision in
Department
of Justice.
19
I agree.
Once this conceptual
hurdle has been overcome, it stands to reason that an unfair labour
practice dispute over an acting allowance,
in
which an employee is making the claim on the basis that it was
granted to him or others in similar circumstances on other
occasions, is a claim that the employer has unfairly refused to
confer the benefit on the occassion in question. This does not
amount to a demand to make the benefit obligatory in the future. The
latter claim would properly be the subject matter of collective
bargaining. It is still true that if the employee is successful in
his unfair labour practice claim this might clarify the factors
the
employer ought to consider in granting or refusing to grant the
benefit in the future and might mean that it will be easier
to
predict when the benefit is likely to be granted, but that does not,
in principle, make the dispute one about the creation
of new rights.
In adopting the view of
an acting allowance that he did, the arbitrator did not consider the
later developments in the law. Had
he done so he would have taken a
broader view of his jurisdiction to determine the dispute before him
and would not have dismissed
the employee’s claim so easily.
In the circumstances, I believe that the arbitrator’s
interpretation of what constituted
an arbitrable dispute led him to
mistakenly exclude the employee’s claim for payment of an
acting allowance for his first
term in an acting capacity from the
ambit of his jurisdiction. Consequently, the arbitrator’s
award must be set aside.
Relief
Having set the original
award aside, the remaining issue is the appropriate relief. The
applicant did not ask the court to substitute
the arbitrator’s
award with a determination of the merits of the claim in the event
he was successful. He merely requested
that it either be remitted to
the bargaining council for a hearing
de novo
, or simply that
the award be substituted with an award confirming the bargaining
council’s jurisdiction to arbitrate the
dispute.
The first form of relief
essentially encapsulates the second and there seems no reason not to
refer it back to the second respondent
for a determination of the
merits of the applicant’s claim.
Order
In the light of the
above an order is made in the following terms:
The third respondent’s
award dated 9 July 2009 is reviewed and set aside, and replaced
with a finding that the second
respondent does have jurisdiction to
determine the applicant’ unfair labour practice dispute over
the non-payment of
an acting allowance from 1 December 2004 to 30
June 2006.
The unfair labour
practice dispute is remitted to the second respondent to set the
matter down for a hearing before an arbitrator
other than the third
respondent.
At the hearing of the
matter the arbitrator shall consider the record of the first
arbitration together with such additional
relevant evidence as the
parties may wish to lead.
The first respondent
must pay the applicant’s costs.
ROBERT
LAGRANGE
JUDGE OF THE LABOUR
COURT
Date of hearing: 26
November 2010
Date of judgment: 06
May 2011
Appearances:
For the applicant: Mr
M Futcher of Futcher Attorneys
For the first and
second respondents: Mr R Monk of Livingston Attorneys
1
Schoeman
v Samsung Electronics (Pty) Ltd
(1997)
18 ILJ 1098 (LC)
and
Gaylard
v Telkom SA Ltd
(1998)
19 ILJ 1624 (LC)
,
2
Reported
as
Northern Cape Provincial Administration v Commissioner
Hambidge NO & others
(1999) 20
ILJ
1910 (LC)
3
Hospersa
& Another v Northern Cape Provincial Administration
(2000) 21
ILJ
1066 (LAC)
at 1069-1070,
paras [8] and [9]
4
Hambidge
at 1914, par [17].
5
See
SA Rugby Players Association & Others v SA Rugby (Pty) Ltd
& Others
(2008) 29
ILJ
2218
(LAC)
at 2229-2230, paras [39] – [40], where Tlaletsi, JA
said
inter alia
:
“
This
means that, in the context of this case, the CCMA may not grant
itself jurisdiction which it does not have. Nor may it deprive
itself of jurisdiction by making a wrong finding that it lacks
jurisdiction which it actually has. There is, however, nothing
wrong
with the CCMA enquiring whether it has jurisdiction in a particular
matter provided it is understood that it does so for
purposes of
convenience and not because its decision on such an issue is binding
in law on the parties.”
This
statement by the learned judge is equally applicable in this matter.
6
At
2387, par [12]
7
Some
examples are:
Public Servants Association obo Botes &
others v Department of Justice
(2000) 21
ILJ
690 (CCMA)
at 698A-B (in which the employees employees had
not sought to rely on an existing contractual entitlement, but
either on a right
to fair treatment under the unfair labour practice
jurisdiction or, alternatively, on a legitimate expectation to
receive the
benefit, but the commissioner dismissed their claim
principally on the basis of the decision in
Hambidge
);
Salstaff and Spoornet
(2002) 23
ILJ
1956 (BCA)
at 1960A-1961B (in which the arbitrator followed
the decision in
Hospersa
also holding that benefits clearly
did not include remuneration, which is more extensive than merely
salaries, and further held
that the need to interpret the LRA in a
way that did not unjustifiably restrict the right to strike was a
further reason for
interpreting the scope of a benefit
restrictively);
Ithala Development Finance Corporation Ltd
(1) (2002) 23
ILJ
408 (CCMA)
at
416C-417F (in which it was held that a dispute over a benefit is a
dispute of right and because the vehicle allowance in question
was
an established contractual right it could be enforced under the
unfair labour practice jurisdiction);
Protekon (Pty) Ltd v
Commission for Conciliation, Mediation & others
(2005)
26
ILJ
1105 (LC)
(in which the court held
effectively that: the true ratio of
Hospersa
was that an
unfair labour practice claim could not be used to establish a
previously non-existent entitlement to a benefit, but
not that a
contractual right , nor presumably, a statutory or collective
agreement based right, needed to proven, before an unfair
labour
practice could be claimed [at 1113, par [33]]; that the distinction
between remuneration and benefits was not a useful
one [at 1110,
paras [19] and [20]], and that it was an unfair labour practice for
an employer to unilaterally withdraw a discretionary
travel
allowance and replace it with compensation [at 1115, par [46]]);
Kopke and Futura Footwear
(PTY) LTD (2006) 27
ILJ
2476 (CCMA)
at 2485 (in which the arbitrator considered the
approach in
Protekon
but following
Hospersa
found that
a prize in a sales competition was not a pre-existing entitlement
and therefore not a benefit, and in any event found
that it would
not have been unfair to refuse to award it to the applicant on the
facts of the case);
De Beers Consilidated Mines (Pty) Ltd v
Commission for Conciliation, Mediation and Arbitration & others
(2010) 31
ILJ
2087 (LC)
at 2095F-2096B
(in which the court decided that a benefit to which an employee was
contractually entitled could either be referred
to arbitration under
the unfair labour practice jurisdiction, or to the labour court in
terms of
section 77
of the
Basic Conditions of Employment Act 75 of
1997
)
8
Item
2(1)(b) was replaced by
section 186(2)(b)
.
9
See
Hospersa & Another v Northern Cape Provincial
Administration
(2000) 21
ILJ
1066
(LAC)
at 1069-1070, par [9], where the learned Mogoeng AJA
stated:
“
[9]
It appears to me that the
legislature did not seek to facilitate, through item 2(1) (b) , the
creation of an entitlement to a
benefit which an employee otherwise
does not have. I do not think that item 2(1) (b) was ever intended
to be used by an employee,
who believes that he or she ought to
enjoy certain benefits which the employer is not willing to give him
or her, to create an
entitlement to such benefits through
arbitration in terms of item 2(1) (b) . It simply sought to bring
under the residual unfair
labour practice jurisdiction disputes
about benefits to which an employee is entitled ex contractu (by
virtue of the contract
of employment or a collective agreement) or
ex lege (the Public Service Act or any other applicable Act).”
10
See
the
Protekon
and
De Beers
decisions cited in the
previous footnote and the minority judgment of Goldstein AJA in the
Department of Justice
case (see fn 12 below).
11
Hospersa
at 1070-1071
12
Department
of Justice v Commission for Conciliation, Mediation &
Arbitration & Others
(2004) 25
ILJ
248 (LAC),
per Zondo, JP at 267
13
Department
of Justice
, at 288, par [14]
14
Protekon
,
at 1113
15
Protekon
,
at 1114
16
Protekon
,
at 1111-1112, paras [21] – [25]
17
Protekon
at 1111-1112
,
viz:
“
[25]
Where disputes over benefits are concerned, its seems to me, there
can be little objection to workers choosing to tackle
the employer
in the collective bargaining arena rather than trying to demonstrate
unfairness in the sense contemplated in the
unfair labour practice
definition. The LRA does not appear to preclude them from doing both
at the same time. (This is in contrast
to the election to resort to
either arbitration or industrial action in relation to
A
organizational
rights: s 21 read with s 65(2) of the LRA; and the election to
resort to either adjudication or industrial action
now provided for
in s 189A, with specific reference to s 189A(10).)
”
18
PAK
Le Roux,
What is an employment “benefit” ?
,
Contemporary Labour Law, Vol 15, no 1, August 2005 at pages 5 -6
19
Ibid,
p 4