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[2011] ZALCJHB 95
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Ekurhuleni Metropolitan Municipality v South African Local Government Bargaining Council and Others (JR3020/09) [2011] ZALCJHB 95 (9 November 2011)
21
REPUBLIC OF SOUTH AFRICA
Reportable
Of interest to other
judges
THE LABOUR COURT OF
SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Case no: JR3020/09
In the matter between:
EKURHULENI
METROPOLITAN MUNICIPALITY
….....................................
Applicant
and
THE SOUTH AFRICAN
LOCAL GOVERNMENT
BARGAINING COUNCIL
…...............................................................
First
Respondent
PROFESSOR K GOVENDER
N.O.
…...........................................
Second
Respondent
A J DU PLESSIS AND
2210 OTHERS
…..................
Third
and Further Respondents
Heard
: 06 October
2011
Delivered
: 09
November 2011
Summary:
Interpretation of a collective agreement and the power of an
arbitrator to categorise the municipality.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
LOUW AJ
[1] The Applicant seeks
to review and set aside an arbitration award made by the second
respondent under the auspices of The South
African Local Government
Bargaining Council (SALGBC) case no HQ 050701.
[2] The third to further
respondents referred a dispute to the SALGBC concerning the
‘interpretation/application of Wage Collective
Agreements
(WCA’S).’
[3] The outcome which
they sought was phrased as ‘increase in wages in respect of
different grades and in terms of the wage
agreements’.
[4] Under paragraph 8 of
the referral form creating space for special features/ additional
information concerning the dispute, the
respondents stated:
‘
the
Applicants want the municipality to interpret/apply wage agreements
from 2003 onwards by increasing wages on the basis of the
municipality being a grade 6 (formerly 16) or at least a grade 15
municipality.’
[5] Prior to commencing
the arbitration process to determine the dispute between the parties,
they served and filed Statements of
their respective cases.
[6] In summary and only
dealing with the salient features of their case, the respondents
stated as follows:
‘
National
Wage Negotiations and Collective Agreements
Wages in local
government are negotiated annually at national level;
Upon conclusion of the
negotiations the wage increase is implemented on the basis of
schedules which are drawn reflecting the
actual amounts of the
increases to be implemented by local government
These schedules which
are drawn up distinguish between various municipalities insofar as
each municipality may have a different
“grading”
The establishment of
remuneration according to a grading system has been in existence
since 1976.
The grading system was
originally created in terms of the Remuneration of Town Clerks Act
to determine criteria for the establishment
of a wage level for Town
Clerks (now Municipal Managers) in the various municipalities
according to the size and sophistication
of the different
municipalities. The reasoning for establishing these grading systems
was that Town Clerks and other employees
in a specific municipality
would have similar levels of responsibility and therefore receive
similar remuneration.
The same approach was
followed in regard to The Remuneration of Public Office Bearers Act
(POBS) insofar as specific criteria
was also adopted in regard to
the determination of the remuneration of public office bearers to
benchmark local authorities is
similar size and sophistication.
Although a statutory
system similar to the grading system for town clerks and elected
officials was never established relative
to the remuneration of
employees the practice developed that WCA’s, which are
concluded at national level, would also be
applied on a graduated
basis in line with the grading of the municipality
Accordingly the “grading
system”
forms an integral part of the current collective
bargaining system
(my emphasis)
The Current Dispute
between the EMM (applicant in casu) and the employees (the second
respondents in
casu
)
In August 2000, the
Minister of Provincial and Local Government issued Notice 803
concerning the grading of Municipal Councils,
which were thus graded
on a point system based on the rates income and the number of
registered voters.
In terms of this Notice,
municipal councils were categorised from level 1-16, with level 16
being the highest.
The points system
adopted in this Notice utilised the same criteria as had been
applied for grading purposes previously.
On 19 September 2000,
the Greater East Rand Metropolitan Council (GERMC), into which the
City Council of Greater Benoni (BMC)
was incorporated, and
predecessor of applicant (EMM), passed a resolution to the effect
that the GERMC was a level 13 council
as it had 81.24 points.
The GERMC commissioned
an investigation into its correct grading as a municipal council in
terms of which it was subsequently
established that it is in fact a
grade 16 council
On 4 December 2000, the
Minister of Local Government issued a new Notice in terms of which
the salaries and allowance for councillors
were to be determined
(ROB 2000). This Notice by the relevant Minister once again laid
down the same criteria (i.e. rates income
and registered voters) but
replaced the 1 to 16 levels to 1 to 6.
The GERMC accepted a
grading of 6 on 13 December 2000 for purposes of remunerating its
elected councillors.
On 3 January 2003, the
new formed Respondent (the applicant in
casu
) adopted a
resolution to the effect, that for purposes of remunerating its
employees, a grade 13 schedule was to be applied,
as a result of
which, the agreed percentage increases in the WCA of 2003 was
implemented by applying those increase on a grade
13 schedule.
The resolution adopted
on 3 January 2003 had the effect of misaligning the remuneration of
employees and public representatives
despite previous arbitration
awards and a labour court judgment in regard to BMC.
Legal issues that
arise from the facts
This dispute involves
the interpretation and/or application of the annual wage Collective
Agreements entered into and between
SALGA, IMATU and SAMWU, in the
years from 2003 onwards
The third to further
respondents claim that on a correct interpretation of the Wage
Agreements, the third to further respondents
and all other employees
of the Applicant and not only the councillors of the Applicant
should have been remunerated on a grade
16/6 level from 2003.
It is submitted by the
third to further respondents that it could never have been the
intention of the parties to the WCA that
that the remuneration of
the second respondent and their other colleagues should be
calculated according to a grading system
which is inconsistent with
the grading applied for purposes of the remuneration of its public
office bearers.
The third to further
respondents further submitted that insofar as the WCA does not
expressly provide for the upgrading of employees’
remuneration
in accordance with those factors which informed the grading of
municipalities for purposes of remunerating its public
office
bearers, clause 5.6 of the Wage Agreement of 2003 provides that the
parties agree to undertake to conclude a collective
agreement on the
categorisation of a municipality and that an implied term exists
that the parties will apply the grading system
based on a grading
achieved in terms of the exiting POB at the relevant time.
By paying only its
councillors on a grade 16 level and its employees on a ‘fictional
level 13, the Applicant failed to comply
with its obligation under
the WCA to remunerate all employees according to the correct
grading.
In addition to basing
its claim against the Applicant on the interpretation of the Wage
Agreement, the second respondent submitted
that the custom in regard
to the implementation of wages in accordance with the grading system
has become established
inter alia
by the fact that:
Applicant has itself
given effect previously to the interpretation that the grading
system is an integral part of the determination
of the
implementation of the WCA expressly resolving that it is graded as a
grade 13 for purposes of calculating wages.
Other local authorities,
and specially the previous authorities that amalgamated to form the
Applicant, have consistently applied
the grading system and the
principle of adjusting wage levels to the correct grading
A previous decision by
an arbitrator as well as the labour court has given recognition to
the principle that the grading system
should be equally applied to
employees and public office bearers.
The second respondent’s
contention was that a custom and practice has developed
in terms
of which municipalities across the country
(my emphasis) will
remunerate all employees and not only its councillors having regard
to the particular grade of that municipality,
and that this custom
or practice has become sufficiently established to be read into the
WCA by necessary implication
[7] In essence, thus the
third to further respondents based their prayer for the relief they
sought as a right they acquired in
the WCA dated 5 November 2003
and/or a custom or practice which was sufficiently established in
2003.
[8] In its Statement of
Case, and once again in summary and only dealing with the salient
features of the their case, the Applicant
stated as follows
‘
National
Wage Negotiations and Collective Agreements
It admitted that wages
in local government are negotiated annually at national level. It,
however pointed out that such regime
existed only since 1998 and the
first national agreement was for the year July 1998 to June 1999. No
regulation of wages and
salaries occurs in any other forum.
Constituent municipalities implement the national agreement without
variation.
It denied that national
collective agreements are accompanied by schedules, as alleged.
During the era of the LRA of 1956, some
Industrial Councils and some
municipalities crafted schedules for themselves but that process has
never existed in respect of
the SALGBC.
It agreed that the
grading system was originally created in terms of the Remuneration
of Town Clerks Act to determine criteria
for the establishment of a
wage level for Town Clerks (now Municipal Managers) in the various
municipalities according to the
size and sophistication of the
different municipalities. The reasoning for establishing these
grading systems was that Town Clerks
and other employees in a
specific municipality would have similar levels of responsibility
and therefore receive similar remuneration.
It admitted that the
grading of municipalities was provided for in POBS 2000, but the
objectives thereof and criteria thereof
are substantively different
from the objective of and the criteria stipulated in the RTC.
The Applicant denied a
practice developed that WCA’s, which are concluded at national
level, would also be applied on a
graduated basis in line with the
grading of the municipality
Insofar as the third and
further respondents claimed that the grading system (in line with
the grading of a municipality in accordance
with the POBS 2000 or
its subsequent successors) forms an integral part of the current
collective bargaining system, the Applicant
pointed out that since
2001, the parties to the SALGBC have been in negotiations about job
evaluation and grading. The third
to further respondent were and
remained bound by decisions taken by their respective bargaining
agents to determine salaries
in relation to a national job grading
system
The Current Dispute
between the EMM (Applicant in
casu
) and the
employees (the
third to further
respondents in
casu
The Applicant denied
that the point system adopted in the G N803 utilised the same
criteria as had been applied for grading purposes
previously.
The Applicant denied
that the GERMC passed a resolution that it was level 13 council
(according to the POBS 2000), or that the
GERM commissioned an
investigation into its correct grading, and stated that the
applicant in fact graded itself as a grade 6
municipality by
applying the provisions of the POBS 1998 on 13 December 2000.
Legal issues that
arise from the facts
(a) In essence, the
applicant admitted that the dispute is about the interpretation of a
collective agreement on terms and conditions
of employment in respect
of the year 2003/2004 and later years, and that the scope of the
dispute was set out in the Request for
arbitration.
(b) The Applicant also
stated that there is no practice as alleged.
(c) It further more
simply denied any legal basis for the acquiring of a right stipulated
by the third to further respondents.
[9] Premised on both
Statements of Case filed with the SALGBC, and the oral and
documentary evidence submitted to the arbitrator,
the arbitrator
issued an award in terms of which he ordered the Applicant to
remunerate its employees on a basis that the Applicant
‘must be
deemed to be grade 15 municipality as from the date in 2003 when it
implemented the “grade 13” salary
scales’,
including an order to make these payments retrospectively to 2003.
[10] Considering the
legal issues that arise from the facts as set out by the first
respondent in paragraph (a), under the same
heading, it should have
been clear that as far as they were concerned the dispute involves
the interpretation and/or application
of the annual WA’s in the
years from 2003 onwards, and more particularly the WA dated 5
November 2003.
[11] In essence
therefore, the second respondent was required to interpret the
provisions as contained in paragraph 5.6 of the WA
dated 5 November
2003.
[12] Perhaps it is
opposite to, at this stage, sketch succinctly the historical context
relevant to the issues as they arose on
the pleadings alluded to
above, and in some instances quoting from the founding affidavit of
the Applicant.
[13] Prior to 1994, local
government in South Africa was managed chiefly, as a provincial
affair. The employees in local government
were subject to the Labour
Relations Act of 1956. Collective bargaining took place within
Industrial Councils that were set up
on a regional basis. Some large
Cities, like Johannesburg and Pretoria had a dedicated Industrial
Council. Smaller towns were members
of regional industrial councils,
like the industrial council for the Local Government undertaking:
Transvaal. The towns on the
East Rand which later in 2000 were
amalgamated to form the Applicant were members of this Industrial
Council.
[14] One legislative
intervention in local government was the Remuneration of Town Clerks
Act, 115 of 1984 (RTCA) Its purpose was
to regulate the remuneration
of the Town Clerks, the forerunner of the present Municipal Manager.
The RTCA applied to every municipality,
and provided for a grading
system for local authorities which is then used to determine,
inter
alia
, the remuneration of town clerks. In terms of the RTCA,
local authorities were classified into groups, and graded on a scale
of
1 to 15 on the basis of a formula determined by thirteen factors
‘i.e. the certified revenue of the authority, the number
of
erven, the number of electricity meters and sewerage connections,
roads, housing, water and sewerage purification fire tenders
and
ambulances and the number of trading licences issue and library
books’. The level of grading of the remuneration of Town
Clerk
was determined by the Board on Remuneration and services Benefits for
town clerks established in terms of the RTCA. As no
official may be
paid more than the town clerk, the grading also determined the
remuneration of all other posts in the local authority
linked to the
grading systems, and therefore referred to as the “’inkage’
practice. The RTCA was repealed in
1996.
[15] When the RTCA was
repealed, the State ceased to set salary limits for the town
clerk/CEO of the municipality. It is trite that
the Municipal Systems
Act, 32 of 2000 (Systems Act) commenced on 1 March 2001. The Systems
Act made it abundantly clear that the
municipality now set the
remuneration for municipal managers, and they were accordingly
outside the purview of collective bargaining.
The remuneration rate
of the municipal manager was no longer a factor in determining the
scope of collective bargaining for other
employees of a municipality
which now takes place nationally in the SALGBC.
[16] The evidence of the
witnesses before the first respondent, and according to the award
issued by the second respondent was the
following. During the
existence of the RTCA salary scales were provided for each grade of
municipality premised on the thirteen
factors as set out in terms of
the RCTA. These schedules were initially devised by the Industrial
Councils and later by the Bargaining
Councils. In the past there had
been 16 categories or grades of municipalities. These grades were
subsequently reduced to 6 in
December 2000 for purposes of
remunerating public office bearers. When the Applicant came into
being there were nine different
councils all of which were graded on
different levels. Some of these component municipalities changed its
grading over a period
of time. According to one witness’s
recollection Springs changed from a grade 11 to 12. Benoni changed to
a grade 13 (which
together with Boksburg were incidentally the
highest grade among all of the eventual components which formed the
Applicant).
[17] One witness
testified that the percentage increase agreed on in the Industrial
Council would be applied to a specific salary
scale applicable to the
particular grade of the municipality; thus still speaking of the
system under the RTCA. The same witness
testified that none of the
Wage Agreements that followed the coming into existence of the
Applicant made any reference to abolishing
the scales issued by the
Industrial Council. There was no deviation from this established
system especially considering the reference
to two specific documents
relating to the salary scales provided by the Bargaining Council
(referring to salary scales drawn up
by the Industrial Council) for a
grade 11 municipality during the period 1 July 2001 to 30 June 2002.
The witness could not recall
when the Bargaining Council stopped
issuing the scales, but was clear that the municipalities never
deviated from implementing
the existing scales. According to the
second respondent’s findings the latter evidence was never
contradicted
[18] Another witness
called before the first respondent testified that he prepared salary
scales for the bargaining council for
the old Transvaal and
subsequently for the Bargaining council for Gauteng from about 1987
to 2002/3.
[19] The second
respondent, and premised on the evidence alluded to, reached the
following conclusions as set out hereunder in paragraphs
[21] to
[39].
[20] There are no
statutory provisions in the Systems Act preventing a municipality
from re-grading itself. The evidence showed
that the components parts
of the Applicant, including itself, re-graded itself in 2003 to grade
13 and subsequently grade 15 in
2008. The practice under the RTCA
thus continued long after the repeal of the RTCA.
[21] The POBS provides a
framework for the determination of the salaries and allowances for
elected political functionaries. Neither
the POBS nor any other
regulation regulates the practices pertaining to the remuneration of
employees of a municipality. Since
every trade union and employer’s
organisation has been afforded the right to engage in collective
bargaining premised on
the LRA and section 23(5) of the Constitution,
it is evident that the salaries of employees be determined through
collective bargaining
in the SALGBC. The repeal of the RTCA and the
continued collective bargaining process at the SALGBC is not
incompatible with the
custom that once a percentage increase was
agreed upon at the SALGBC or previous Bargaining Councils it was to
be applied uniformly
to municipalities of the same grade.
[22] No evidence was led
to indicate that the custom of applying the existing scales did not
continue. The uncontested evidence
was that re-grading occurred and
salaries accordingly adjusted. Mr Rudman, the first witness for the
first respondent, confirmed
that he is aware of the WA of 28 June
2002. Rudman stated that although there were ‘issued about how
to determine the categorisation
of municipalities, there was no
deviation from the principle that the category of a municipality
determined the salary scale to
be paid to its employees’.
[23] Referring to two
specific documents, one a letter from the Gauteng provincial
Government to the Boksburg transitional council
(now forming part of
the Applicant] indicated that a statutory mechanism for re-grading
had ceased to exist with the repeal of
the RTCA. The letter stated
that legislation for a new remuneration system for local government
was to be passed, and that it was
agreed at MINMEC (a committee
comprising the minister and members of the executive councils) that
no local government would be
re-graded in the interim. According to
the second respondent this particular letter, including a circular
issued to all local governments
and recommending that a moratorium be
placed on salary increases pending the transformation of
municipalities , were merely couched
in the form of request or
recommendations, and, presumably, not an indication that the
‘linkage’ practice ceased to
exist. This conclusion by
the second respondent was also premised on his reference to different
sphere of government in its distinctive,
interdependent and
interrelated status.
[24] Despite these
request and recommendation from the Provincial Government to local
authorities, the municipalities continued
to re-grade itself. In the
absence of applicable national or provincial legislation
municipalities were within their powers to
re-grade. Once of the
constants in this process was the fact that municipalities continued
to re-grade and then pay their staff
in accordance with the higher
salary scale applicable after the re-grading exercise. The repeal of
the RTCA did not therefore have
the effect of legally interrupting
the custom that similarly graded municipalities must be remunerated
on the same salary scales
.
[25] The fact that salary
scales continued to be issued up and until 2002, indicates that the
custom continued after the demise
of the RCTA, and during the period
when bargaining occurred in the SALGBC.
[26] The evidence of the
Applicant’s only witness accepted that when the Applicant
re-graded in 2008, it adopted the salary
scales applicable to a grade
15-municipality. As no new salary scales were issued by the
Bargaining Council after 2003, these salary
scales must have been in
existence prior to that and continued to be used.
[27] In his analysis of
the WA of 2003, the second respondent, first of all referred to the
evidence given by Mr Rudman that prior
to the adoption of the
grade-13 to be implemented by the Applicant, each council remunerated
its employees in accordance with salary
scales issued by the
Bargaining Council. The Bargaining council would issue different
scales for each grade of municipality. The
percentage increase agreed
upon would then simply be applied to the relevant salary scale.
According to him, no evidence was led
to indicate the contrary.
[28] The second
respondent concluded that the drafters of the WA clearly premise
clause 5 on the understanding that the salary scales
in respect of
the various grades of municipalities will be used to determine the
exact increase that each employee would receive.
Subject to improving
the pay packages of the lowest paid employees the differential
between various grades was preserved. This
is explicit recognition
that employees at similarly ‘situated’ municipalities
must be similarly remunerated. The existence
of the grading itself is
recognition that municipalities have vastly different
responsibilities, duties and obligations. Clause
5 of the WA is
premised on and incorporated the custom referred to.
[29] If a municipality
had unfettered discretion to grade up and down irrespective of
objective criteria, it would have considerable
latitude and
discretion to determine the wages to be paid to its employees. This
clearly could not have been the intention of the
WA’s. Thus,
when a municipality is re-graded the new grade has to correlate to
and proportionate with the responsibilities,
duties and obligations
of that municipality. This obligation is also implicit in the WA’s.
[30] Similarly, a
re-grading in terms of POBS could only occur if the prescribed point
allocated for the number of registered voters
and in respect of rates
income has been obtained. These two criteria are used to measure the
responsibilities, duties and obligations
of the municipality. The
second respondent was satisfied that one a decision is made to
re-grade a municipality then, in terms
of the custom, the WA and
applicable law , the choice of grade must bear a direct correlation
between to the responsibilities duties
and obligations of that
municipality. There is nothing in the WA and neither have I been
referred to any binding collective agreement
that prohibits
municipalities from re-grading.
[31] Clause 5.6 of the WA
commits the parties to finalise a collective agreement on
categorisation of municipalities within a period
of three months. All
the parties recognised that it is necessary to have agreement on
categorisation of municipalities.
[32] On 3 January 2003,
the Applicant approved a proposal to adopt a grade 13 as the basis of
calculating remuneration. The explanation
that appears from the
resolution selecting grade 13 is that ‘prior to
disestablishment, the majority of the SDC’s were
a grade 13
local authority and the employees remunerated at this level.’
This explanation, the second respondent found appears
to support the
speculation of Rudman as to why the Applicant opted for grade 13.
Rudman’s speculation that as a result that
certain component
municipalities were graded at 13, the remuneration of employees could
not be reduced. Thus in order to achieve
a uniform salary structure
and not to reduce the remuneration of any employee within the
Applicant, the Applicant adopted grade
13.
[33] The second
respondent remarked that the Applicant did not place any evidence
before him to show that the adoption of the grade
13 regime followed
an assessment, appraisal and application of objective criteria
relating to responsibilities, duties and obligations
which would
justify that decision. Following Rudman’s opinion and another
witness’s understanding of current negotiations,
all
Metropolitan Councils would be in category 8, a category attracting
the highest salary scale. In the same breath, he concluded
that ‘this
evidence’ was not disputed. Wolfaardt also testified that to
the ‘best of his knowledge’ the
other Metropolitan
Councils such as Pretoria (sic), Johannesburg, Cape Town and Durban
are all remunerated at grade 15.
[34] With reference to
the strike in 2008, and the adoption of a resolution to pay
remuneration on grade 15, this is an explicit
recognition by the
Applicant that it is a grade 15 municipality, and that it should
remunerate its employees accordingly.
[35] As a result of it
being common cause that the Applicant resolved to grade itself as a
municipality deemed to be a grade 6 in
terms of the then POBS, and
the Applicant’s counsel’s argument that the criteria and
grading in terms of the POBS applied
exclusively to public office
bearers and that the criteria were vastly different from those used
in the RTCA to grade municipalities,
the second respondent was of the
view that these differences were more apparent than real. The second
respondent then embarked
upon stating, which was clearly his opinion,
as to what the yardsticks should be to determine the nature, extent
and scope of the
obligations, responsibilities and duties of
municipalities.
[36] He continued to
state that for purposes of his award, the resolution taken on 13
December 2000 by the Applicant is evidence
of the Applicant
re-grading itself as being in the top category of municipalities in
the assessment of its responsibilities, duties
and obligations. The
second respondent was further of the view that no reason, logic or
principle existed for a municipality to
grade in the top rank for
purposes of the POBS and in a much lower category for the purpose of
remunerating its employees.
[37] According to the
second respondent, no evidence was led to show any significant change
in the responsibilities, duties and
obligations of the Applicant in
2003 as compared to 2008.
[38] In conclusion,
the second respondent was satisfied that there was an
established trade custom and usage in the local government sector to
be graded
in accordance with their responsibilities, duties and
obligations, and that the grade of the municipality determined the
salary
scales to be used to remunerate its employees. He was
satisfied that the trade usage or custom survived the repeal of the
RTCA
and continued under the present dispensation. When a
municipality elects to re-grade, it has to ensure that the new grade
directly
correlates with its responsibilities, duties and
obligations. The WA was premised on the continued existence of these
customs.
The decision of the Applicant to grade itself as a grade 13
is in violation of the WA read with applicable and binding trade
custom
and usage. The first respondents’ rights in this matter
thus accrue directly from the WA dated 5 November 2003.
[39]
In
terms of the Wage Agreement (WA) dated 28 June 2002, the parties to
this agreement (i.e. SALGA and IMATU) entered into what was
essentially a multi-term wage increase for the 2002 to 2005 financial
years. Importantly,
this agreement also set out
two further aspects namely, that the parties also agreed on the
‘categorisation’ of municipalities
in principle to which
effect they hereby undertake to finalise a collective agreement on
categorisation of municipalities within
a period of three months
starting from 1 July 2002.
[40] In terms of the WA
dated 5 November 2003, the parties to this agreement (i.e. SALGA,
IMATU and SAMWU entered into yet another
collective agreement for the
period 19 July 2002 up to and including 30 June 2005. The object of
this agreement was set out as:
To make provision for the rate of pay
and for matters incidental thereto for all employees and employers
who fall into the registered
scope of the council (i.e. the SALGBC)
This agreement was once
again essentially a multi-term wage increase for the 2002 to 2004
financial years. This agreement also set
out two further aspects
namely, that the parties also agreed on the ‘categorisation’
of municipalities in principle
to which effect they hereby undertake
to finalise a collective agreement on categorisation of
municipalities within a period of
three months from the date of
signature of the agreement (i.e. 5 November 2003), thus ostensibly
lengthening the period agreed
upon with IMATU from 1 October 2002 to
4 February 2003 (the unnumbered clause in the WA dated 28 June 2002
on page 2 thereof,
and paragraph 5.6 of the WA
dated 5 November 2003).
[41] It is common cause
that this last mentioned agreement, insofar as it related to the
so-called categorisation issue, including
a similar agreement in the
WA dated 28 June 2002 was not concluded as at 30 January 2003.
[42] The WA dated 5
November 2003, however, also included terms and conditions insofar as
it concerned the possibility that the
parties may not be in agreement
as to the interpretation and application of this agreement. These
particular terms and conditions
included an obligation on the
General-Secretary or Regional Secretary to investigate any such
dispute and attempt resolve it by
issuing a directive. In the event
of the dispute about the interpretation of the WA of 5 November 2003
not being resolved, such
a dispute should eventually be arbitrated
upon. This is exactly what ultimately led to the award issued by the
second respondent
under case number HQ 050701.
[43] It is of critical
importance that the strike issue resolved in June 2008 needs to
canvassed and considered. During, and what
was described by the
second respondent as ‘a somewhat bruising strike’, the
Applicant and SAMWU (not the unions as
alleged) entered into an
agreement on 18 June 2008 (SA). The SA made it abundantly clear that
the primary purpose of the SA was
to end the
strike
(my emphasis). Some of the salient
points in the SA were the following:
‘
There is
agreement that on the principle that Ekurhuleni cannot fall below
municipalities of a similar size in handling the matter
of grading
That the parties agree to use Grade 15
salary scales and will further be guided by category “A”
municipalities form
the SALGBC.
That the implementation on the demand
for payment from the date of the appointment of employees be done
with effect from 31 July
2008.
This agreement constitutes the entire
agreement between the parties and the parties further agree that any
amendments thereto shall
be reduced to writing and must be signed by
both parties. The agreement is effective from date of signature.’
[44]
The
Applicant attacks the award on basically two different grounds.
The first ground of the challenge is that the second
respondent misconceived the questions to be answered, and as a result
rendered
an award that was unreasonable.
[45] In order for
misconception of the issues to constitute a ground for review, it
must be material in that such misconception
or misdirection must have
prevented a fair trial of the issues. I am of the view that whilst it
may be so that the second respondent
‘muddled his way through
the issues’ he ultimately identified the correct issues to be
determined, namely whether there
was a tacit term in the WA that
municipalities remunerate its employees based on a grading system
which is directly linked to the
magnitude of its responsibilities,
duties and obligations in respect of its service delivery
obligations. He found that there was
based on an established trade
and custom. Whether such a custom or trade usage survived the repeal
of the RTCA is, in my view,
for purposes of my eventual consideration
whether the award was reasonable of no significance.
[46] Even If such a
custom or trade usage was established and applied within the
Applicant and its component parts, which is in
reality the only fact
that was proven by the evidence, then the following question arises.
If the custom was allegedly still in
use from 2000 to 2003, then why
did the first respondent not pursue similar rights for this
particular period?
[47] The second ground of
the attack is premised on a submission that the award rendered was at
odds with the evidence adduced,
both oral and documentary. That is to
say, the Applicant challenged the second respondent’s finding
that there was a tacit
term contained in the relevant WA that a
similar grading system as that applied in respect of Public Officials
also applied to
the remuneration of employees, was not a finding that
a reasonable decision maker could have reached.
[48] In my view, the
second respondent did not at any stage consider the import of clause
5.6 of the WA of 5 November 2003 coupled
with the evidence of Mr
Nciza and had as a consequence failed to weigh up the evidence in a
balanced manner and disregarded this
relevant and important evidence
before him. See
Vodacom (Pty) Ltd v Commission for Conciliation,
Mediation and Arbitration and Others
(JR1412/05 dated 11 November
2010)
[49] The Applicant
submitted that the second respondent wholly misunderstood the
implications of the collective bargaining process
and the strike that
occurred on the issue of re-grading that led to a collective
agreement in June 2008, thinking it corroborated
the existence of the
claimed right, when in truth it effect was to prove the exact
opposite. In consequence, so it was argued the
award cannot stand.
Once again the alleged ‘re-grading’ in June 2008 is of no
relevance for purposes of either deciding
whether the parties
negotiated a collective agreement from 5 November 2003 up to and
until 30 July 2008.
[50] As referred to
above, it was common cause that the parties had agreed as part of the
WA that they would reach agreement sometime
in the future as to how
municipalities would be categorised for the purpose of remunerating
employees. This tends to indicate that
the parties had abandoned the
old custom and practice in terms of simply adopting the grading
applicable based on the principles
either emanating from the RTCA or
the POBS. As such, it cannot be the case that the previous custom and
trade formed a tacit term
of the WA. The second respondent did not
understand the import of clause 5,6 of the WA of 5 November 2003.
This being the case,
the second respondent’s finding in this
regard is not one which a reasonable decision maker could have
reached in the circumstances.
[51] I may add that a
further question also needs to be considered namely: whether the
second respondent’s finding that the
resolution taken by the
Applicant on 30 January 2003 constituted a re-grading of itself for
purposes of remunerating its employees
was within the scope of his
powers. Even if it did somehow constitute a re-grading as decided
upon in the WA of 28 June 2008, which
it did not, was it within the
powers of the second respondent to find that the Applicant must be
categorised according to a certain
grade in order for the Applicant
to remunerate its employees accordingly?
[52] There can be no
doubt that the only obligation placed on the Applicant was to enter
into negotiations with IMATU and SAMWU
so as to agree on the
‘categorisation’ of municipalities and an undertaking to
finalise a collective agreement on categorisation
of municipalities
within a period of three months starting from 1 July 2002, but in
reality extended to 4 February 2003. As I have
stated before, this
undertaking was not adhered to. The non-adherence to this undertaking
did not give the second respondent the
power to step into the shoes
of the parties and categorise the Applicant himself. However, that is
exactly what the second respondent
did. He based his categorisation
on,
inter alia
, on his opinion as to how and on what basis a
municipality should grade itself for purposes of remunerating its
employees, on his
conclusion that the Applicant allegedly confirmed
its grading to be allegedly admitting as much on 19 June 2008, when
this admission
was clearly intended in June 2008 for purposes of
ending the strike action by SAMWU, and only to the extent that such
and admission
shall operate as from 31 July 2008.
[53] I fully agree with
counsel for the Applicant that the second respondent wholly
misunderstood the implications of the collective
bargaining process
and the strike that occurred on the issue of re-grading that led to a
collective agreement in June 2008, thinking
it corroborated the
existence of the claimed right, when in truth its effect was to prove
the exact opposite.
[54]
The
second respondent in concluding that the Applicant should in 2003 be
deemed as a grade 15 municipality alluded to equity factors
quite
irrelevant to the rights issued before him. This is borne out by his
observation that:
‘
I can see no
reason and logic or in principle for a municipality to be graded in
the top rank for purposes of remunerating the political
office
bearers and in a much lower category for the purposes of remunerating
its employees.’
[55] This was manifestly
not the question he was asked to decide. As correctly pointed out by
counsel for the Applicant that even
if assuming the validity of the
observation (in my view actually an important part of the reasons for
his ultimate order in deciding
on the categorisation of the
applicant), it introduced an equity norm into an inquiry as to what
might justify a difference. In
this regard,
I may
also add my own observation, without obviously constituting this as a
reason for my eventual order, that there may be very
cogent reason
why there should be a difference. In instances where municipalities
were formed by various component municipalities
differing in size, it
must be borne in mind that political office bearers immediately
assume responsibilities for the entire area
whereas the typist or
security guard still only accept responsibility in the Nigel or
Brakpan area of the amalgamated municipality
[56] The second
respondent analysed the WA of 5 November 2003 in a lengthy three
pages of the award. His analysis of the agreement
cannot be faulted.
He, however, and with reference to the all-important clause 5.6,
merely stated as follows:
‘
Clause 5.6
commits the parties to finalise a collective agreement on
categorisation of municipalities within a period of three months.’
The second respondent
continued his exposition of Mr Nciza’s (the only witness for
the applicant) evidence as follows:
‘
All the
parties recognise to have agreement on categorisation of
municipalities. Mr Nciza described one of the main goals in the
earlier negotiations process as paying the same salary for the same
job. He later indicated that the present dispute between the
parties
regarding categorisation centred on the factors to be taken into
account of the municipalities. At no stage did he indicate
that
municipalities would not be able to re-grade in the future.
I
understand his evidence to mean that once agreement is reached on the
criteria for re-grading, employees in similar graded municipalities
will be similarly remunerated in terms of the process agreed upon .
’
[57] Not even the second
respondent’s further reference to Mr Nciza’s evidence
that the Applicant would always be placed
in the top category,
coupled with the second respondent’s assertion that Mr Nciza is
an ‘
integral
part of one of the teams negotiating a new categorisation regime
did nothing to alert him
to the clear and unambiguous provisions contained in clause 5.6 of
the WA of 3 November 2003.’
[58]
In
Commercial
Workers Union of SA v Tao Ying Metal Industries and Others,
1
the court found the role
of the reviewing court to be limited to deciding the issues raised by
the party seeking the review. It
may not raise issues not raised by
the party seeking the review. A party seeking review was bound by the
grounds contained in the
review application. A litigant might not on
appeal raise a new ground of review. These principles were subject to
the qualification
that where a point of law was apparent on the
papers, but the common approach of the parties proceeded on a wrong
perception of
the law, the court was obliged,
mero
motu
,
to raise the point of law and to require the parties to deal with it.
Accordingly, the court found that the SCA was entitled
mero
motu
to
raise the issue of the commissioner's jurisdiction and to require
argument thereon.
[59] The Applicant did
not explicitly raise the jurisdiction of the second respondent to
embark on an exercise ‘to categorise’
the applicant with
effect from 1 July 2003. However in their papers and in oral
argument, the Applicant raised the issue of the
second respondent’s
powers, when the applicant argued that the second respondent
misunderstood the implications of the collective
bargaining process
and strike that occurred on the issue of re-grading that led to a
collective agreement in June 2008, and that
the grading of a
municipality for purposes of remunerating its employees is a matter
that has to be collectively bargained in the
SALGBC.
It was
submitted on behalf of the third and further respondents
that:
‘this dispute arose because the parties could not agree on what
the grade of the municipality should be for the purposes
of
remunerating its employees’. No evidence was tendered by the
third and further respondents, and nowhere was it argued
on their
behalf that the WA of 5 November 2003 made provision that should the
parties not agree on ‘the categorisation’
of a
municipality (in c
asu
the Applicant) that such a
categorisation was now left to the SALGBC.
[60]
In
Tao
Ying Metal Industry (Pty) Ltd v Pooe NO and Others,
2
,
the court stated as follow:
‘
The
authority of an arbitrator is confined to resolving the dispute that
has been submitted for resolution and an award that falls
outside
that authority will be invalid. As pointed out by Mustill and Boyd in
the context of commercial arbitration (but the principle
is equally
applicable to labour arbitrations):
“
If
[an arbitrator] awards on issues which have not been left to him for
decision, he commits misconduct and may also be acting in
excess of
jurisdiction”.’ [Footnote omitted]
[61] See also
SA
Rugby Players Association and Others v SA Rugby (Pty) Ltd and Others
3
where the court, stated
as follows:
‘
The CCMA
[SALGBC] is a creature of statute and is not a court of law. As a
general rule, it cannot decide its own jurisdiction.
It can only make
a ruling for convenience. Whether it has jurisdiction or not in a
particular matter is a matter to be decided
by the Labour Court. In
Benicon
Earthworks & Mining Services (Edms) Bpk v Jacobs NO & others
(1994)
15 ILJ 801 (LAC)
at
804C-D, the old Labour Appeal Court considered the position in
relation to the Industrial Court established in terms of the
predecessor to the current Act. The court held that the validity of
the proceedings before the Industrial Court is not dependent
upon any
finding which the Industrial Court may make with regard to
jurisdictional facts but upon their objective existence. The
court
further held that any conclusion to which the Industrial Court
arrived on the issue has no legal significance. This means
that, in
the context of this case, the CCMA [SALGBC] 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. In Benicon's case the court said
at 804C-D: C
“
In practice,
however, an Industrial Court would be short-sighted if it made no
such enquiry before embarking upon its task. Just
as it would be
foolhardy to embark upon proceedings which are bound to be fruitless,
so too would it be fainthearted to abort the
proceedings because of a
jurisdictional challenge which is clearly without merit.”
In my view the same approach is
applicable to the CCMA [SALGBC
]’
[My emphasis]
[62] In the present case,
the second respondent
issued an order in terms of which he ordered the applicant to
remunerate its employees on a basis that the
Applicant ‘must be
deemed to be grade 15 municipality as from the date in 2003 when it
implemented the “grade 13 salary
scales”’,
including an order to make these payments retrospectively to 2003.
Whilst it is so that the third and further
respondents claimed for a
correct interpretation of the WA of 5 November 2003; that it could
never have been the intention of the
parties to the WA of 5 November
2003 that employees should not be paid other than on a grading
system; and that an implied term
exists that the parties will apply
the grading achieved in terms of the existing POBS at the relevant
time, the important fact
of the matter remains that it was
specifically left to the parties to negotiate on the issue of
categorisation of the Applicant
and all other municipalities. At the
time of entering into the WA of 5 November 2003, all parties to the
agreement would have been
well aware of the POBS, and could simply
have inserted what the third and further respondents alleged to be
‘an implied term’
as a specific stated term.
[63] In my view, the
second respondent took it upon himself to determine the
categorisation of the Applicant. The second respondent’s
failure to apply his mind to the validity of the clear and
unambiguous language of the WA of 5 November 2003 and assuming a
responsibility
contrary to what had been entrusted to him constitute
misconduct to such an extent that his award cannot stand. The second
respondent
simply did not have the jurisdiction to categorise the
Applicant.
[64] In view of the
on-going relationship between the parties, and the failure of the
applicant to have concluded a collective agreement
‘on the
categorisation of the municipality’, I am of the view that no
order should be made with regard to the costs
of this review
For the foregoing
reasons, the following order is made:
The award is set aside.
No order is made with
regard to the costs of this review.
______________________
LOUW AJ
APPEARANCES:
APPLICANT: Advocate R
Sutherland SC with advocate Robert Liphosa instructed by Du Plessis
De Heus & van Wyk, Benoni
THIRD AND FURTHER
RESPONDENTS Edward Nathan
Sonnebergs Inc, Sandtom, attorney F Malan appearing
1
(2008)
29 ILJ 2461 (CC).
2
[
2007]
7 BLLR 583
(SCA) at para 5.
3
(2008)
29 ILJ 2218 (LAC) at para 40.