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[2012] ZALCJHB 169
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Fakude and Others v Kwikot (Pty) Ltd (JS 661/05) [2012] ZALCJHB 169; [2013] 6 BLLR 580 (LC); (2013) 34 ILJ 2024 (LC) (27 December 2012)
THE REPUBLIC OF SOUTH AFRICA
the labour court of South Africa, JOHANNESBURG
judgment
Reportable
Of interest to other judges
case no: JS 661/05
In the matter between:
IVON FAKUDE & 25 OTHERS
...............................................................
Applicant
and
KWIKOT (PTY) LTD
...........................................................................
Respondent
Heard: 14 May 2012
Date delivered
:
27 December 2012
Summary: Stated case- point in
limine
regarding
dismissal of applicants. Union concluding an agreement to terminate
employment of minority members. Section 200, union
has power to make
decision without consent of members. Economic duress- principle.
JUDGMENT
MOLAHLEHI J
Introduction
The applicants in these proceedings claim that their dismissal by
the respondent during March/April 2005, was both substantively
and
procedurally unfair. They contend that the reason for their
dismissal by the respondent was for operational reasons and
therefore the fairness of their dismissal should be assessed amongst
others on the basis of the selection criterion used by the
respondent. They do not, as will appear later in this judgment,
dispute the validity of the collective agreement.
The respondent on the other hand contends that the applicants were
not dismissed but their employment was terminated by agreement
with
the union.
The applicants did not dispute the existence of the agreement,
neither that the agreement was by definition a collective agreement
as envisaged in section 23 of the Labour Relations Act (the LRA).
1
Subsequent to the signing of the collective agreement, each
individual applicant signed agreements which set out the packages
which were to be paid to each one of them. These agreements are also
not disputed except that the applicants contend that they
signed
them under duress.
The parties agreed that the court should determine the following
issues by way of the stated case in terms of Rule 33 of the
rules of
the High Court, read with rule 11 of the Labour Court Rules
2
.
In the stated case, in terms of Rule 33 of the Rules of the High
Court, the parties agreed that the court should determine the
following
3
.
‘
3.1.1 Whether the termination of the
applicants’ employment by way of agreement between the
respondent and NUMSA constitutes
a ‘dismissal’ in terms
of section 186 of the LRA.
3.1.2 Whether the conduct of the respondent referred to in 2.21 above
amounts to duress that would entitle the applicants to avoid
the
settlement agreement.”
The parties further agree that the stated case be determined on the
basis of the common cause facts set out in the pre-trial
minutes.
The common cause facts
It is common cause that a large number of the respondent’s
workforce engaged in several unprotected industrial actions
over
several years, including during April 2005.
The applicants who were members of the National Union of
Metalworkers of South Africa (NUMSA), a majority union, were
dismissed
following the agreements referred to earlier. There are
other employees whose membership of NUMSA is disputed by the
respondent
and they are:
‘
2.4.1 SJ Sello Moloi;
2.4.2 Milton Makhoba;
2.4.3 Victor Mucavele
2.4.4 Aubrey Mohlakwana; and
2.4.5 Petrus Moropa”
It is also common cause that subsequent to the industrial action
between 23 to the 31 March 2005, the respondent initiated mass
disciplinary action against a large number, of the workforce,
including the applicants. It would appear that the disciplinary
proceedings were instituted against about 100 employees.
At the commencement of the disciplinary hearing NUMSA, assisted by
its attorney sought an amicable solution to the problem with
the
respondent. Although an agreement could not be reached between the
parties as to the issue of the discipline, the parties
agreed to
appoint a private mediator to facilitate the negotiations. The
facilitated negotiations were successfully concluded
with an
agreement during September 2005.
It would appear that subsequent to the conclusion of the agreement
and in line with the provisions of clause 1 of the agreement
the
respondent submitted the core list consisting of 42 employees. A
further list was submitted after certain names which appeared
in the
initial list were removed. It was on the basis of this list that the
applicant's employment contracts were terminated.
The majority of
those who participated in the industrial action were not dismissed
but were issued with final written warnings.
The essence of the
agreement was that those employees whose names appear in the list
would be terminated and the others would
receive severance package.
The list consisted of 26 employees, who were required to sign for
the packages they each were to receive.
The issues in dispute are recorded as follows in the pre-trial
minutes:
“
2.23 All facts pleaded and not agreed to
above.
2.24 Whether MM Makhoba and TG Makhubu signed settlement agreements
with the respondent. The respondent will revert on this issue.
2.25 Whether LM Hlongwane was dismissed, and whether he was
subsequently re-employed. The respondent will revert.”
The issues for determination
The first issue to determine is whether the termination of the
employment of the applicants by way of the above agreement
constitutes
a dismissal in terms of Section 186 of the LRA
4
.
The second issue is whether the conduct of the respondent in
requiring the applicants to sign an agreement for payment of their
packages constitutes duress, which would have the effect of
vitiating the agreement.
Applicants’ case
As indicated earlier the applicants do not dispute the fact that the
collective agreement was concluded between the parties,
the
consequence of which was termination of their employment. It was
however argued on behalf of the applicants that the court
should not
"enforce" the agreement as "the circumstances
enforcing it might violate public policy”.
Relying on the cases of
Bredenkamp v Standard Bank
and
Barkenhuizen v Napier
5
,
Mr Manchu, for the applicants argue that even if the court was to
find that prima facie the agreements were not unconstitutional,
they
were such that the court should rule that they were unenforceable
because the offended public policy. I will revert to these
two
judgments later in this judgment.
In addition to the issue of public policy considerations, attempt
was also made to introduce, an exception to the application
of the
agreement as concerning some of the individuals on the basis that
they were not members of the trade union.
The other argument on behalf of the applicants is that their
dismissal was unfair because the agreement did not provide for a
fair selection criteria. It was for this reason that it was argued
on behalf of the applicant that the dismissal was unfair because
there was no compliance by the respondent with the requirements for
a fair dismissal based on operational reasons.
As concerning the agreement signed by the individual applicants, it
was suggested that the applicants are entitled to avoid the
agreement, firstly because the terms thereof are questionable and
also because they were concluded on the basis of duress.
It should be noted that in terms of the collective agreement
provision was made for the deadlock breaking mechanism in the event
of a disagreement about employees who were to be on the list. In
terms of the deadlock breaking mechanism the power was given
to the
employer. It should also be noted that there was no evidence that
the deadlock breaking mechanism was introduced by way
of
misrepresentation or other underhanded methods.
Evaluation
The applicants’ contention in relation to the issue of the
collective agreement is based on two legs. The first leg is
that,
despite accepting the validity of the agreement, it is unenforceable
because the individual applicants did not give their
consent to its
conclusion. The second leg to the applicant's contention is that
which conflates the provisions of section 189
of the LRA
6
and the situation were the parties have reached a consensus as to
how their employment relationship is to be terminated without
necessity of having to go through the process set out in that
section.
The first argument on behalf of the applicants is on its proper
analysis based on the notion that trade unions are agents of
their
members. In other words, trade unions as agents of their members
have as a matter of law, to seek approval from members
before
concluding any agreement.
The general principle based on the proper interpretation of the
common law and legislation is that a trade union has the power
and
authority to take decisions to settle disputes in the interests of
its members, in particular in the interests of the majority
and at
times to the detriment of the minority members. This principle has
its basis in the notion of majoriterianism and Freedom
of
Association. In terms of this principle a decision taken by a union
cannot be vitiated by the fact that the decision was taken
without
having regard to the interest of the minority members.
Trade unions specifically derives their power to make decisions on
behalf of their members in terms of the provisions of Section
200 of
the LRA which provides as follows:
‘
(
1)
A registered
trade
union
or
registered
employers’
organisation
may
act in any one or more of the following capacities in any
dispute
to
which any of its members is a party -
(a) in its own interest;
(b) on behalf of any of its
members;
(c) in the interest of any of
its members.
(2) A registered
trade union
or a registered
employers’ organisation
is entitled to
be a party to any proceedings in terms of
this Act
if one or
more of its members is a party to those proceedings.’
The issue of the power and authority to make decisions by registered
trade unions as envisaged in section 200 of the LRA has received
attention in a number of the decisions of the Labour Court.
In
Manyele & Others V Maizecor (Pty)
Ltd & Another
7
,
the court held that:
“
These last two mentioned categories warrant
examination. To act in the interest of any of its members would be
evidenced by an application
by a union where, other than asserting
its representative capacity, it need not cite any of its members as
such. This would cover
situations where a controversy affected
members other than personally or individually, in other words,
intrinsically collective
interests. It might be regarded as a species
of class action. Where a union “acts on behalf of ”
members, it does
not “become” the agent of those members,
because its pre-existing representative relationship already
constitutes the
foundation for that status and power. In my view, the
union’s role under this rubric is akin to that of a curator
ad
litem
in civil proceedings; that is to
say, the union is the party in the proceedings. Philosophically, the
union constitutes the institutional
embodiment of the several members
involved in the dispute.”
[27]
In
Mzeku v Volks Wagen SA
(Pty) Ltd and Others
8
at 57 to 58 the court held that:
“
[57]
It
is clear to us that the effect of sec 200(1) is to give a union that
is registered - as opposed to one that is not registered-
a statutory
right to represent any of its members in anyone or more of the three
capacities there set out. This, therefore, means
that in this matter
the union was entitled to act on behalf of the appellants in dealing
with the first respondent about the conduct
of the appellants which
threatened not only their own employment but also the employment of
many of its other members who were
not on strike. If the union was
entitled to act on behalf of the appellants, the first respondent had
to respect that right. The
way to respect that right was to deal with
the union on the basis that it was acting on behalf of its members.
For the commissioner
to have found, as he did, that the first
respondent was not entitled to deal with the union as a
representative of the appellants
was to make a finding that is
contrary to the express provisions of the Act.
[28] The court
further explained the powers and the authority of the union to act on
behalf of members in the middle of paragraph
[58] where it says the
following:
[58] It is,
therefore, clear also that sec 200(1) gives a registered union the
right to act on behalf of its members when there
is a dispute
involving anyone or more of its members and that sec 202(1) takes
this further and provides that, once a registered
trade union acts,
as it is entitled to, on behalf of its members, the employer has a
right not to serve documents on the individual
members themselves but
to serve them on the union. It provides that such service on the
union is as good as service on the members
of the union themselves.
If this is so, the position must be that even with regard to the
giving of the opportunity to be heard,
the employer is entitled to
deal with the union.”
[29] The above authorities indicate that a trade union is entitled to
take any decision on behalf of either the majority or the
minority of
its members without necessarily having to obtain the members’
consent, even if such a decision is to adversely
affect those
members. In other words members affected by a decision taken by a
union without their consent are bound by such a
decision and are
unable as a matter of principle to withdraw from such an agreement.
9
Any decision taken by a trade union either detrimental or beneficial
to some of its members cannot be said to be unconstitutional
because
the trade union would have derived the power to act in that
particular manner in terms of the provisions of section 200
of the
LRA which in turn has its basis in terms of section 23 of the
Constitution.
10
[30] In the present instance it is apparent that the union acted in
the interests of the majority at the expense of the minority.
The
fact that the minority are adversely affected by the decision taken
by the union is immaterial because in law, those affected
by the
decision joined the union voluntarily and in the exercise of their
Freedom of Association.
[31] Turning to the two judgments referred to earlier and which the
applicants relied on in support of their case, it is important
to
note that the facts and the circumstances in both cases are
distinguishable from the facts in the present case. The underlying
principles that inform the agreement under discussion are also
different. However, the broader principles are the same.
[32] In the
Barkehuizen’s
case the issue concerned the
constitutionality of a time limitation-clause in the short-term
insurance policy. The clause in question,
provided that the insured
had to institute proceedings within three months after the claim had
been rejected by the insurer. The
insured contended in that case that
the time limitation-clause denied him his right of access to the
courts which is guaranteed
by section 34 of the Bill of Rights.
The court found that the common law has always recognised the
right of an aggrieved person to seek assistance of a court of law and
that the term of contract, which deprives a party of that right, is
contrary to public policy. The court further found that section
24
does not only reflect the foundational value that underlies the
constitutional order but also constitute public policy.
11
[33] The Supreme Court of Appeal in the the
Bredenkamp
matter,
dealt with a clause in a contract between the bank and a client which
entitled the bank to unilaterally cancel the contract
without
affording the client a hearing. The client argued that the clause was
unfair and unenforceable because it prejudiced his
future right of
contracting with other banks. In dismissing the appeal Harmse DP
held:
‘
[60] I find it difficult to perceive the
fairness of imposing on the bank the obligation to retain the client
simply because other
banks are not likely to accept that entity as a
client. The appellants were unable to find a constitutionality niche
or other public
policy considerations justifying their demand. There
was, accordingly, in the words of Moseneke DCJ, no ‘unjustified’
invasion of a right expressly or otherwise conferred by the highest
law in our land.”
Exceptions.
[34] In terms of section 23 (1) (d) of the LRA,
12
employees who are not members of the trade union or trade unions
party to the agreement are bound by such an agreement if they
are
identified in the agreement and the agreement expressly states that
those employees are bound by the agreement.
[35] It follows from the above that even if Mr Sello Moloi, was not a
member of the trade union he is in terms of section 23 (1)
(d) bound
by the decision taken by the union. His case is further not assisted
by the fact that he signed the individual settlement
agreement.
[36] As indicated earlier, the applicants signed the individual
settlement agreements in which they each individually accepted
the
packages given to them by the respondent in full and final settlement
of any claim they may have against the respondent. However,
the
applicants seek to renege from these agreements on the basis that
they were forced to sign them under the thread that they
would not
receive the packages if they did not sign those agreements.
[37] The basic and general principle of our law is that economic
pressure to conclude an agreement does not constitute duress.
It
would however appear that in special circumstances of a given case
our courts would be willing to consider rating economic pressure
as
duress.
13
The reason for not treating economic pressure as duress is explained
by Nugent JA in
Medscheme Holdings (Pty) Ltd v Bamjee
14
in the following terms:
‘
[18]
For it is not unlawful, in general, to cause economic harm, or even
to cause economic ruin, to another, nor can it generally
be
unconscionable to do so in a competitive economy. In commercial
bargaining the exercise of free will (if that can ever exist
in any
pure form of the term) is always fettered to some degree by the
expectation of gain or the fear of loss. . . (H)ard bargaining
is not
the equivalent of duress, and that is so even where the bargain is
the product of an imbalance in bargaining power. Something
more –
which is absent in this case – would need to exist for economic
bargaining to be illegitimate or unconscionable
and thus to
constitute duress.’
[38] The requirements for a successful avoidance of the contract on
the basis of duress is set out in
Arend v Astra Furnitures
15
(Pty) Ltd at 306 as follows:
“
Duress may take the form of inflicting
physical violence upon the person of a contracting party or of
inducing in him a fear by
means of threats. Where a person seeks to
set aside a contract, or resist the enforcement of a contract, on the
ground of duress
based upon fear, the following elements must be
established:
(i) The
fear must be a reasonable one.
(ii) It must be caused by the threat of some considerable evil to the
person concerned or his family.
(iii) It
must be the threat of an imminent or inevitable evil.
(iv) The threat or intimidation must be unlawful or contra bonos
mores.
(v) The
moral pressure used must have caused damage.
Conclusion
[39] In my view the collective agreement
concluded by NUMSA on behalf of the employee does not offend the
Constitution neither is
it contrary to public policy. There is
therefore no basis to treat it as unenforceable. The termination of
the employment of the
applicants was a result of a binding collective
bargaining agreement.
[40] As concerning the individual agreement, I
am of the view that the applicants have failed to make out a case for
vitiating their
agreements on the basis of duress. The agreements are
accordingly binding on the applicants.
[41] In light of this, the applicants are not
entitled to pursue their claim of unfair dismissal. In the
circumstances of this case
I see no reason both in law and fairness
why the costs should not follow the results.
Order
[42] In the premises, the respondent’s
point in
limine
that the applicants were not dismissed is upheld and accordingly the
applicants’ claim is dismissed with costs.
_______________________
Molahlehi J
Judge of the Labour Court of South Africa
APPEARANCES
FOR THE APPLICANT: Norton Rose (incorporated as Denys Reitz)
FOR THE RESPONDENT: Tshiqi Zebediela Inc
1
Section
23
of the LRA reads as follows
:
“
Legal
effect of collective agreement
(1) A collective agreement
binds -
(a) the parties to the
collective agreement;
(b) each party to the
collective agreement and the members of every other party to the
collective agreement, in so far as the
provisions are applicable
between them;
(c) the members of a
registered trade union and the employers who are members of a
registered employers’ organisation that
are party to the
collective agreement if the collective agreement regulates -
(i) terms and conditions of
employment; or
(ii) the conduct of the
employers in relation to their employees or the conduct of the
employees in relation to their employers;
(d) employees who are not
members of the registered trade union or trade unions partyto the
agreement if -
(i) the employees are
identified in the agreement;
(ii) the agreement expressly
binds the employees; and
(iii) that trade union or
those trade unions have as their members the majority of employees
employed by the employer in the workplace.
2
Rule
11(3) of the Rules of the Labour Court reads as follows: ‘If a
situation for which these rules do not provide arises
in proceedings
or contemplated proceedings, the court may adopt any procedure that
it deems fit in the circumstances’.
3
The
relevant part of
Rule
33 of the Rules of the High Court reads as follows
:
‘
Special
Cases and Adjudication upon Points of Law;
(1)
The parties to any dispute may, after institution of proceedings,
agree upon a written statement of facts in the form of a
special
case for the adjudication of the court.
(2)
(a) Such statement shall set forth the facts agreed upon, the
questions of law in dispute between the parties and their
contentions thereon. Such statement shall be divided into
consecutively numbered paragraphs and there shall be annexed thereto
copies of documents necessary to enable the court to decide upon
such questions. It shall be signed by an advocate and an attorney
on
behalf of each party or, where a party sues or defends personally,
by such party.
4
Section
186 of the LRA reads as follows:
186. Meaning of dismissal
and unfair labour practice
(1) "Dismissal" means
that- (a) an employer has terminated a contract of employment
with or without
notice;(b) an employee reasonably expected the
employer to renew a fixed term contract of employment on the same or
similar terms
but the employer offered to renew it on less
favourable terms, or did not renew it; (c) an employer
refused to allow
an employee to resume work after she- (i)
took maternity leave in terms of
any law, collective agreement or
her contract of employment; or (ii)
was absent
from work for up to four weeks before the expected date,
and up to eight weeks after the actual date, of the birth of her
child; (b)
an employer who dismissed a number of employees for
the same or similar reasons has offered to re-employ one or more of
them
but has refused to re-employ another; or(c) an employee
terminated a contract of employment with or without notice because
the employer made continued employment intolerable for the
employee. (d) an employee terminated a contract of employment
with or without notice because the new employer, after a transfer in
terms of section 197 or section 197A, provided the employee
with
conditions or circumstances at work that are substantially less
favourable to the employee than those provided by the old
employer.
(2) “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) 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 reinstate 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 No.
26 of 2000), on account of the employee having
made a protected disclosure defined in that Act.
5
[2007] ZACC 5
;
2007
(5) SA 323
6
The
essence of Section 189 is that it provides for an approach to be
adopted by an employer when it contemplates dismissal of
an employee
based on operational requirements.
Section 189 (1) of the LRA reads as follows:
(1) When an employer
contemplates dismissing one or more employees for reasons based on
the employer's operational requirements,
the employer must consult-
(a) any person whom the
employer is required to consult in terms of a collective
agreement;(b ) if there is no collective agreement
that requires
consultation –(i) a workplace forum, if the employees likely
to be affected by the proposed dismissals are
employed in a
workplace in respect of which there is a workplace forum; and (ii)
any registered trade union whose members are
likely to be affected
by the proposed dismissals; (c) if there is no workplace forum in
the workplace in which the employees
likely to be affected by the
proposed dismissals are employed, any registered trade union whose
members are likely to be affected
by the proposed dismissals; or(d)
if there is no such trade union, the employees likely to be affected
by the proposed dismissals
or their representatives nominated for
that purpose.
7
2002]
10 BLLR 972
(LC)
8
2002]
10 BLLR 972
(LC)
9
See
also NUMSA v CCMA and Others
(
2000) 11 BLLR 1330
(LC) at para
[32].
10
Section
23 of the
Constitution
reads as follows:
Everyone has the right to
fair labour practices.
Every worker has the right
to form and join a trade
union;
to participate in the
activities and programmes of a trade union; and
to strike.
Every employer has the
right
to form and join an
employers' organisation; and
to participate in the
activities and programmes of an employers' organisation.
Every trade union and every
employers' organisation has the right
to determine its own
administration, programmes and activities;
to organise; and
to form and join a
federation.
Every trade union,
employers' organisation and employer has the right to engage in
collective bargaining. National legislation
may be enacted to
regulate collective bargaining. To the extent that the legislation
may limit a right in this Chapter, the
limitation must comply with
section 36(1).
National legislation may
recognise union security arrangements contained in collective
agreements. To the extent that the legislation
may limit a right in
this Chapter, the limitation must comply with section 36(1).
11
Section
34 of the Constitution reads as follows
:
“
34.
Access to courts
Everyone has the right to
have any dispute that can be resolved by the application of law
decided in a fair public hearing before
a court or, where
appropriate, another independent and impartial tribunal or forum
.”
12
Section
23 (1) (d) of the LRA reads as follows:
“
(
d)
employees who are not members of the registered trade union or trade
unions party to the agreement if -
the employees are
identified in the agreement;
(ii) the agreement expressly
binds the employees; and
(iii) that trade union or
those trade unions have as their members the majority of employees
employed by the employer in the workplace.”
13
See
Van Den Berg & Kie Rekenkundige Beamtes v Boomprops
1028 Bk
1999 (1) SA 780
(TPA), a judgement which was referred with
approval by the Supeme Court of Apeal, in the Van Den Berg & Kie
Rekenkundige Beamtes,
supra.
14
See
Supreme Court of Appeal in Medscheme Holdings (Pty) Ltd v Bamjee
2005 (5) SA 339
(SCA).
15
Arend
v Astra Furnitures (Pty) Ltd
1974 (1) SA 298