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[2012] ZALCCT 41
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South African Municipal Workers Union v Syntell (Pty) Ltd and Others (C917/2010) [2012] ZALCCT 41; [2013] 2 BLLR 207 (LC); (2013) 34 ILJ 1263 (LC) (12 October 2012)
15
REPUBLIC
OF SOUTH AFRICA
THE LABOUR COURT OF
SOUTH AFRICA, CAPE TOWN
JUDGMENT
Reportable
Case no: C917/2010
In the matter between:
SOUTH AFRICAN
MUNICIPAL WORKERS UNION
.........................................
Applicant
and
SYNTELL (PTY) LTD
...........................................................................
First
Respondent
COMMISSION FOR
CONCILIATION
MEDIATIONAND
ARBITRATION
...................................................
Second
Respondent
D.I.K WILSON N.O
..............................................................................
Third
Respondent
Heard: 13 June 2012
Delivered: 12 October
2012
Summary: Application
to review a demarcation award, consultationwith NEDLAC in terms of
section 62 (9) of the LRA - should an audi
right be read into the
provision where a commissioner changes his initial ruling.
JUDGMENT
Rabkin-Naicker,
J
[1] This is an opposed
application in which the applicant union seeks to have a demarcation
award issued by the Third Respondent
(the Commissioner) reviewed and
set aside. The First Respondent(the company) opposes the application.
The relief sought by the
union is that the dispute be remitted back
to the CCMA for determination anew.
Background
[2] During 2010, the
company and the City of Cape Town and other municipalities
established in terms of the Local Government Housing
Structures Act
117 of 1998, entered into an agreement whereby the company was to
provide certain traffic related services to the
municipalities.
[3] The company is a
technology business, providing technology solutions through a
combination of products and services. Its employees
are in the main
skilled technology professionals employed to develop, maintain and
deliver products and services. It was not disputed
on the papers that
90% of its staff are engineers and design staff. According to the
company, it provides products and services
to certain authorities
outside of the local government sphere as well as companies in the
private sector.
[4] The company’s
roads safety division provides technology products and services to
these authorities, including to municipalities,
who are responsible
for road safety. The products and services are utilised to assist
these authorities to fulfil their road safety
duties. Examples of the
products and services provided by the company include: so-called
smart roadblocks, which is technology
that enables automatic number
plate recognition; comprehensive systems; integrated systems to
enable the production of traffic
fines, summons and warrants
documentation in respect of traffic law contravention; an automated
online payment services for the
payment of traffic fines by
offenders.
[5] The company also has
a revenue collection division and a traffic management division which
provides products and services to
national and provincial road
agencies, major toll companies in Southern Africa and municipalities
to assist them with traffic control.
The sorts of products and
services supplied in this regard include traffic light controllers,
systems for the remote management
of traffic flows, equipment for
collecting traffic data, traffic counting and weigh in information.
These products and services
facilitate the relevant authorities
planning and management of traffic on the roads.
[6] The contracts with
the City of Cape Town municipality and the George municipality which
were referred to in the arbitration
proceedings under review, were
contracts for the supply of road safety- related products and
services, rather than traffic management
services. The company avers
that neither Cape Town nor George municipalities have outsourced a
complete municipal service to it.
It further alleges that each
municipality is itself responsible in law for delivering municipal
services to the respective local
communities. The products and
services supplied by the company to the municipalities are used by
them as part of what they need
to deliver their services, but there
are other elements that they execute themselves or procure from other
companies in order to
deliver the services required by their mandate.
It is also not the case that the employees of the municipalities were
transferred
from the municipalities to the company when it was
awarded the contracts in question. The company uses its own staff,
supervised
and managed by it, to fulfil its obligation under the
contracts.
The union on its part,
alleges that the company provides “a significant and critical
part” of the municipalities’
traffic management services.
As an example it states in reply that the company supplies equipment
to create so-called electronic
roadblocks. This involves the use of a
van supplied by the company and manned by one of its employees. That
person, it submits
is thus performingthe traditional role of the
municipal employee. The union refers to paragraphs 31.1-31.7 of the
answering affidavit,
and admits that the company supplies the George
municipality with the following:
“
31.1
A combination at least 6 digital speed and red-light cameras at fixed
sites, which were to be rotated between sites as determined
by the
Traffic Chiefs of the George Municipality;
31.2 The supply of at
least 2 mobile digital speed cameras for use by the traffic
enforcement officials of the George Municipality;
31.3 The supply of
maintenance, repair and calibration services in respect of the
equipment supplied under the agreement;
31.4 The supply of
training to the municipality’s traffic officers on how to
properly operate the equipment supplied;
31.5 The supply of the
latest technology cameras and license plate recognition system for
use by the municipality;
31.6 The supply of a back
office contravention management system (e.g. a helpdesk, call centre
and administrative processes necessary
to capture traffic offences
and prepare the necessary documentation to be used by the
municipality in pursuit of offenders);
31.7 The supply of expert
testimony in court proceedings for the enforcement of traffic
violations.”
[7] On 3 June 2010, the
union referred a dispute to the CCMA in terms of 62(1) of the LRA
seeking a determination to the effect
that the company’s
business ( as it applied to the union’s members employed by the
company) fell within the jurisdiction
of the South African Local
Government Bargaining Council (the SALGBC). It was admitted by the
company that the union had, at the
time of the arbitration
proceedings, recruited a total of 40 members of the company’s
workforce of 340 employees.
[8] On 7 July 2010, a
hearing took place before the Commissioner in terms of section 62 (4)
of the LRA. At the conclusion of the
proceedings they were adjourned
in order for the Commissioner to comply with section 62(9) of the
LRA, by consulting with NEDLAC.
The CCMA may choose not to call for
written representations in the Government Gazette in terms of section
62 (7) of the LRA. In
this case, the consultation with NEDLAC,
entailed the drafting of a demarcation ‘ruling’ to be
directed to NEDLAC within
14 days.
[9] On or about 18 July
2010, the Commissioner prepared a demarcation ruling which was
transmitted to NEDLAC but not to the parties.
Under the heading
‘provisional award ( to be confirmed by NEDLAC)’ the
Commissioner stated as follows:
“
I
find that the operations of [first respondent] insofar as they
concern the provision of traffic management and associated services
to municipalities, fall within the registered scope of the South
African Local Government Bargaining Council. The collective
agreements
of the SALGBC are binding on the company and the
applicable employees for the duration of the municipal contracts in
pursuance
of which the said employees are employed.”
[10] On or about 17
August 2010, the executive director of NEDLAC directed a letter to
the national director of the CCMA indicating
that the standing
committee of NEDLAC did “not support” the draft award
issued by the Commissioner. Reasons for this
view were contained in
the letter.The said draft awardsubsequently came into the union’s
possession through the COSATUrepresentative
to NEDLAC, the union
being an affiliate of that trade union federation.
[11] On or about 26
August 2010, the parties to the demarcation dispute received a
Demarcation Award from the CCMA dated 18 July
2010. Under the heading
“Award” the following is stated:
“
I
find that the operations of [first respondent] do not fall within the
registered scope of the South African Local Government Bargaining
Council. The collectiveagreements of the SALGBC are not binding on
the company and its employees”.
Grounds of Review
[12] The Applicant union
raises two primary grounds of review. In respect of process, it
contends that the Commissioner committed
gross misconduct in relation
to his duties and made an award which exceeded his powers in that he:
“deferred to, rather than
consulted with, NEDLAC when making
his final determination under section 62and having come to alter his
initial views ( as reflected
in the provisional ruling), he failed to
grant parties a hearing so that they might make representations in
respect of the concerns
expressed by NEDLAC.”As regards
substance, the union contends that the final demarcation Award made
by the Commissioner is
not one that a reasonable commissioner could
make and constitutes a gross error of law.
[13] In an affidavit
deposed to by the Commissioner and filed in the proceedings before
me, he avers that he was uncertain about
his initial approach to the
dispute that he had provisionally arrived at in the ruling, and that
it was his consideration of the
input received by him from NEDLAC and
other Commissioners, together with further reflection on the issues
that caused him to reach
a different conclusion. The company submits
that the Commissioner was entitled to change his mind and the
conclusions that he may
have preliminary reached at any time before
making his Award.
[14] It is also the
company’s case that the Commissioner is not obliged to inform
the parties to the dispute of his preliminary
views or why he changed
these. The preliminary ruling is not issued to the parties to the
dispute in terms of section 62. It is
only created to facilitate the
Commissioner’s discharge of his duty to consult NEDLAC under
section 62 (9) of the LRA, and
this consultation duty is owed by him
only to NEDLAC and not to the parties, who have already had the
opportunity to make representations
and state their case in
connection with the dispute.
[15] The company further
submits that in consulting NEDLAC and in order to give proper due
consideration to its input, the Commissioner
was obliged to retain an
open mind and this is what he did in this matter. The company further
denies that the parties are entitled
to a hearing when a Commissioner
changes his initial view in this manner.
The applicable legal
principles
[16] The
Local Government
Municipal Systems Act 32 of 2000
provides in
section 76
, that a
municipality may provide a municipal service through (a) an internal
mechanism;(b) an external mechanism by entering into
a service
delivery agreement with –(i) municipal entities; (ii) another
municipality; (iii) an organ of state; (iv) a community–based
organisation or other non–governmental organisations; or (v)
any other institution, entity or person legally competent operator
business activity. The company falls into the last category.
[17]
It
is trite that in demarcation disputes the character of an industry (
or “sector” and “area” ) is determined
by the
nature of the enterprise in which both employer and employees are
associated for a common purpose. The precise work that
each employee
is involved in is not significant.
1
[18] In the Award,
the Commissioner found
that the union could not refute the following: that none of the
affected employees worked from municipal
premises; that the employees
worked on the premises of the company and their work was clearly
associated with the company for the
sole purpose of its respective
undertakings. He also found that the union had not discharged its
onus of proving the extent of
the association of the affected
employees with the municipalities.A further finding was that the
tender contracts involved were
of limited duration and there was no
guarantee that the company would win future tenders from the
municipalities in future,
as
it had competitors in the country. The Commissioner therefore
concluded that the company was a service provider to municipalities
and not a local government organisation in its own right, and should
not therefore fall under the SALGBC.
[19] The company avers
that the Commissioner was correct in that at the time of the
arbitration proceedings the company had no employees
stationed atthe
municipal offices of the City of Cape Town or George municipalities,
and that the union had only put up an unsubstantiated
denial in
response to the company’s evidence to the effect that three of
its employees had, in the past, worked at the municipal
premises of
the Cape Town municipality, but no longer did so.
[18] Considerable
reliance was placed by the union at the arbitration on the award in
Workforce Group (Pty) Ltd v MEIBC (2008) 29 ILJ (CCMA)
. In
that matter, the arbitrator found that the employees who had been
placed by a temporary employment service (TES) in order to
provide
services to a client, must fall under the jurisdiction of the
client’s Bargaining Council. In the award under review,
the
Commissioner distinguished the
Workforce Group
awardin the
following manner:
“
In
the matter of Workforce Group (Pty) Ltd v MEIBC (2008) 29 ILJ 2636
(CCMA) it was stated that an employer might well be engaged
in
morethan one industry. That case dealt with the temporary employment
service (Labour Broker) which placed its employees in various
undertakings in different industries, and the Commissioner’s
findings was that the employees fell within the scope of the
respective industries in which they were placed. In that case,
however the employees were working from the premises of the clients
respective undertakings.”
[19] The definition of
“local government undertaking“ as contained in the
constitution of the SALGBC reads: ”The
undertaking in which the
employer and employees are associated for the institution ,
continuance or finalisation of an act, scheme
or activity undertaken
by a Municipality and by municipal entities as established in terms
of the
Local Government Municipal Systems Act
, 32 of 2000.” In
respect of the facts before him, and the said definition, the
Commissioner found as follows:
“
In
the absence of concrete evidence relating to the work performed by
the respondent’s employees in servicing the municipal
contracts
(the exact extent of the work being disputed by the parties) I do not
believe that the applicant has discharged the onus
of proving that
the respondent’s employees were involved in municipal contract
work as opposed to private client work. It
is possible that some
employees may work only on municipal contracts, while others may work
only with private sector clients, and
yet others may perform work
related to both.
A further factor to be
taken into account is that the respondent’s contracts with the
municipalities are of limited duration,
and in three years’
time it might not be involved in any municipal work whatsoever.
Respondenthas competitors in its field
of expertise, and it might not
necessarily win future tenders. There is no evidence that any of its
competitors, who perform similar
work, fall under the jurisdiction of
the SALGBC.
On the whole it seems to
me that the respondent is a service provider to the municipalities,
and is not a local government organisation
in its own right. It is a
private enterprise, and should not fall under the auspices of the
Local Government Bargaining Council.
It is not (and its employees are
not) under the control of the various municipalities. It is therefore
not a “local government
undertaking.”
[20] The submissions on
behalf of the company in respect of reliance on the
Workforce
Group
award emphasise the fact that a TES has a unique tripartite
relationship with its clients (with whom it places employees), and
its
employees. In terms of such relationship, employees of the TES
are made available to the client and the client uses these employees
(usually directly supervising and managing them in the process) as
part of its organisation to pursue its own purposes. The TES
employees who are placed by it with aclient are not involved or
associated in a common purpose with the TES in the conduct of its
own
business activities. They also do not perform work for, or in
association with the TES in the conduct of its own business
activities.
[21] In the award, the
arbitrator stated as follows:
“
As
I pointed out in the earlier Workforce demarcation, in labour broker
placements one cannot talk of a common purpose between a
collective
of employees and the broker. In the language of Sidersky, each
s 198
employee associates individually with the broker in a separate
undertaking, the nature of which can only be defined with reference
to the client’s ( de facto employer’s) enterprise in
which the employee is placed. In applying the Sidersky approach,
each
such arrangement involving the placement of the employee with a
client, is then classified as a separate undertaking or enterprise
in
which the broker associates with the employee for the common purpose
of placing the latter with a specified client, the nature
of which
undertaking can then only be defined with reference to that of the
client with whom the employee is placed, with the demarcation
consequence that each such placement will fall to be demarcated in
the industry and bargaining council under which the client’s
enterprise falls, in the absence of any contrary definition found in
the Act or registered scope of respondent regulating this
issue
otherwise, as occurred in the workplace demarcation earlier cited .
In terms of this analysis, the activity of placing the
employee with
the client is characterized for demarcation purposes as synonymous
with the client’s enterprise in which the
employee is placed.”
[22] I must agree with
the submission by the company that the
Workforce
Group
award’s
own reasoning, it cannot apply to a situation in which a company is
not a TES in relation to its clients. The union
does not suggest that
the company is a TES, but relies on the fact that it places its
employees,
whom
it alleges are specifically engaged for this purpose, into positions
to perform the services ordinarily undertaken by municipalities,
their clients.
Is there a basis for
Review?
[23] In terms of the test
for substantive unreasonableness, the
Sidumo
test, I do not consider
that this application has laid any basis to establish that the
outcome of the arbitration is one that a
reasonable decision maker
cannot reach.In demarcation awards, as this court has held, a wide
range of outcomes and approaches is
inevitable
2
The disputes are by
nature policy laden.
[24] In regard to
process-related unreasonableness, there are two aspects to consider,
both of which are alleged to have constituted
a gross irregularity
under section 145(2) of the LRA.
3
The
allegation that the Commissioner made a material error of law,
is based on his
application of the
Workforce
Group
award,
and as set out above,
cannot be sustained. The
distinction between the company in this case and a TES,
was correctly drawn by
the Commissioner on his reading of the saidaward.
[25]
The
second process-related ground of review relates to the issue of
whether the parties should have been given a second hearing
after
NEDLAC had expressed its view. Section 62 of the LRA provides in sub
- section 9 and 10 that:
“
(9) Before
making an award, the commissioner must consider any written
representations that are made, and must consult
NEDLAC
.
(10) The
commissioner must send the award, together with brief reasons, to the
Labour Court and to the Commission.”
[26] The notion that an
audi
right
should be read into the provisions allowing for a second hearing for
the parties if, after due consultation, a commissioner
comes to a
different conclusion from that contained in his original ruling, is
problematic. It militates against the approach of
this court that in
demarcation disputes, a degree of deference is apposite.
4
Such an interpretation
also fails to giver requisite weight to the fact that provision for a
full hearing for the parties is already
contained in section 62. What
is suggested by the union’s submissions is in essencethat there
be an opportunity for the parties
to tacklethe views expressed by
NEDLAC, in the process of a demarcation dispute. In my view this
would negate the social policy
factors so important in such disputes,
and is clearly not
envisaged by section 62. An arbitrator comes to his final decision,
taking the submissions of
both parties, and NEDLAC,
into
account.
[27] In addition, I wish
to point out that decision makers, including judges, can change their
approach to a matter any number of
times before a decision is finally
handed down. This is not out of the ordinary, and is particularly
consistent with a process
in which a decision–maker is bound by
statute to make a final award, after consultation, with a body or
bodies.
In the result, I make the
following order:
The application is
dismissed.
The Applicant is to pay
the costs.
_____________________
H. Rabkin-Naicker
Judge of the Labour Court
Appearances:
Applicant: Cheadle
Thompson & Haysom Inc
First Respondent: Edward
Nathan Sonnenbergs
1
R
v Sidersky
1928 TPD 109@
112/113; Coin Security (Pty) Ltd v CCMA &
OTHERS (2005) 26 ILJ 849 (LC) at para 54
2
Coin
Security (Pty) Ltd v CCMA & others (2005) 26 ILJ 849 (LC);
National Bargaining Council for the Road Freight Industry
v Marcus
NO & others (2011) 32 ILJ 678 (LC)
3
The
term process-related unreasonableness is used in the sense outlined
in Southern Sun Hotel Interests v CCMA & Others (2010)
31 ILJ
452 (LC) at para 17; Herholdt v Nedbnk Ltd (2012) 23 ILJ 1789 (LAC)
para 24
4
NBCRFI
v Marcus NO & Others supra at para 63