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[2013] ZALCPE 3
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NEHAWU and Others v MEC: Department of Health, Eastern Cape and Others (P118/11; P125/11; P127/11) [2013] ZALCPE 3; (2013) 34 ILJ 2626 (LC) (11 February 2013)
REPUBLIC OF SOUTH AFRICA
THE LABOUR COURT OF SOUTH AFRICA, PORT ELIZABETH
JUDGMENT
Reportable
CASE NO’S: P118/11;
125/11 & 127/11
In
the matter between:
NEHAWU
...................................................................................................
Applicants
PSA
HOSPERSA
PAWUSA
&
........................................................................................
FURTHER
APPLICANTS
and
MEC: DEPARTMENT OF HEALTH,
EASTERN CAPE
.............................................................................
First
Respondent
SUPERINTENDENT GENERAL:
DEPARTMENT OF HEALTH, EASTERN CAPE
.......................
Second
Respondent
THE PREMIER OF THE EASTERN CAPE
.....................................
Third
Respondent
MINISTER: PUBLIC SERVICE AND ADMINISTRATION
............
Fourth
Respondent
Date
of application: 26 September 2012
Date
of judgment: 11 February 2013
JUDGMENT
______________________________________________________________
VAN NIEKERK J
Introduction
[1] This application concerns a question of law
referredin terms of
section 20
of the
Arbitration Act no. 42 of
1965
(‘the Act’) for the opinion of this court.
Section 20
of the Act provides:
‘
An
arbitration tribunal may, on the application of any party to the
reference and shall, if the court, on the application of any
party,
so directs, or if the parties to the reference so agree, at any stage
before making a final award state any question of
law arising in the
course of the reference in the form of a special case for the opinion
of the court or for the opinion of counsel.
’
1
[2] I do not intend, for the purposes of this opinion,
to traverse the history of the dispute between the parties nor do I
intend,
despite the invitation and temptation to do so, to canvass
issues beyond the narrow question of law posed by the arbitrator. The
arbitrator is empowered to decide all questions of law and fact that
fall within his terms of reference, and it is not for this
court to
venture beyond the bounds of the immediate question that has been
referred. The arbitrator must necessarily be left to
complete the
process that has been entrusted to him, and to make such decisions
and rulings that may be necessary to give effect
to his mandate.
[3] The dispute between the parties is long-standing. It
has its roots in the merger of the of the public services of the
former
Ciskei, the former Transkei and the former Cape Provincial
administration into a single public service for the Eastern Cape
Province.
The present referral is made more directly in the context
of a dispute between the parties consequent on the province’s
Department
of Health granting promotions and salary increases to
certain of its employees during April to June 2009. The department
contends
that the promotions and increases were unauthorised, and
that they resulted in massive and immediate unauthorised expenditure.
Shortly after the promotions and increases had been effected, in
September 2009, the department decided to reverse those promotions
that it believed were unauthorised, and to recover the resulting
payment of augmented salaries from the affected employees in terms
of
s 38 of the Public Service Act.
[4] The
implementation of that decision has been the subject of litigation
before this court, in which the unions
inter
alia
sought
and obtained an interim interdict in March 2011 restraining the
department from reversing the promotions and increases and
recovering
the monies paid to employees.
2
[5] The parties ultimately decided to refer the
substantive dispute between them to arbitration. On 15 August 2011,
the parties
agreed to appoint Adv. Floors Brand as arbitrator. The
arbitration hearing was set down for 12 and 13 October 2011. The
arbitration
did not commence. Instead, the parties concluded a
procedural agreement in order to complete the preparatory phase of
the arbitration
and in terms of which individual employees would be
interviewed and provided with information. This process has been
referred to
as the ‘information road show’. The
arbitration was thereafter scheduled to commence on 26 January 2012.
On that date,
the parties entered into what has been termed a
‘settlement agreement’. The first few clauses of the
settlement agreement
are relevant to these proceedings, and provide
as follows:
‘
1. The parties hereto withdraw their
dispute from arbitration, subject to the agreement set out hereunder.
2. Subject to the provisions of clause 4, the promotion of the
employees of the Department of Health whose names are set out in
Annexure ‘A’ hereto is hereby reversed with the result
that the employees shall revert to the pre-May 2009
ranks/grades/levels
as held at that time and shall be paid the
salaries and/or remuneration commensurate with those
ranks/grades/levels.
3. The reversal of the promotion shall take effect on 31 March 2012.
4. The affected employees shall be considered for whatever promotion
that has, in the course of time, become lawfully due, regard
being
had to the relevant instruments, namely:
4.1 The Public Service Act, 1994 (Proclamation 103 of 1994);
4.2 The Public Service Regulations; and
4.3 any and all Collective Agreements, Circulars, Resolutions,
Directives, Arbitration awards, Court orders and the applicable
PAS
documents duly issued during the period 1994 to the date when the
employees concerned are considered for promotion in terms
of this
agreement.
N.B: for the sake of certainty, a list of the regulatory instruments
contemplated in paragraph 4.3 about shall be provided by 03
February
2012.
5. The arbitration process (referred to in clause 4 above) shall be
conducted by the Arbitrator, Mr Floors Brand, and shall take
place
from 6 February 2012 to 31 March 2012. The parties agree that the
arbitrator's terms of reference shall be those set out
in annexure
"B" hereto….
7. For those persons his assessment in terms of clause 4 takes place
after 31 March 2012, any salary adjustment will be made retrospective
to 31 March 2012. With a process referred to in clause 4 above
results in an employee been promoted before 31 March 2012, the
promotion contemplated in clause 4 above shall be implemented on the
31 March 2012…
[6] The settlement agreement was made an order of this
court on 15 February 2012.
[7] After a challenge to the arbitrator’s powers
to make rulings on which of the regulatory instruments identified in
clause
4.1 of the agreement applied, the parties agreed that the
arbitrator be mandated to ‘determine the applicability or
otherwise
of the instruments’. Despite that agreement, and
during the arbitration hearing in March and April 2012, differences
of opinion
emerged as to the application of certain instruments.
[8] On 17 April 2012, the arbitrator made an interim
ruling. In his ruling, the arbitrator records the background to the
issue before
him in the following terms:
‘
[7] At the commencement of a further
meeting held on 11 April 2012, Mr Mbenenge,indicated that his
challenge against the use of
the Collective Agreement of 1997 and
other instruments is that they are no longer valid or, for that
matter applicable because
of the new dispensation which was
introduced by the 2001 Regulations. As he put it, the affected
employees “are barred from
relying on any of the instruments
whose terms are not consistent with the provisions of the 2001
regulations”.
[8] Mr Buchanan on behalf of the PSA argued that this is a question
of law, and that notwithstanding the parties’ intention
by the
agreement to empower me to determine the applicability of the
instruments or some of them, I do not have the power in law
to
determine questions of law, which includes the validity of a
collective agreement. He requested me to rule that I do not have
the
required power to determine the question at hand and for an
indulgence to approach the Court to rule on the issue….
[9] The arbitrator concluded his interim ruling by
noting that he deemed it appropriate to refrain from deciding the
question at
hand and that he considered it appropriate for an opinion
to be sought in terms of
s 20
of the
Arbitration Act.
S
20
[10] In
Road
Accident Fund v Cloete
2010
(6) SA 120
(SCA), the Supreme Court of Appeal recently considered the
scope of s 20 of the Act. The court observed that when parties agree
to refer their dispute to arbitration, they select an arbitrator as
the judge of fact and law. Ordinarily, the award of the arbitrator
is
final. Section 20 constitutes an exception to the general principle
that the arbitrator makes a final decision on both matters
of fact
and law. Since it is an exceptional provision, and out of deference
to the principle of party autonomy, the court’s
powers under s
20 should be sparingly exercised. First, the mere fact that an
arbitrator has seen fit to state a question of law
for the opinion of
the court does not oblige the court to furnish an opinion. Secondly,
the factors that might appropriately be
taken into account in the
exercise of the discretion that the section confers (none of them
being conclusive or binding) are that
the determination is likely to
produce substantial savings in costs, and that the application was
made without delay.
3
[11] None of the parties to the present proceedings
contends that the court should not provide the opinion sought by the
arbitrator
and indeed, there are cogent reasons why the court should
do so. As the arbitrator points out in his interim ruling, the
question
of law posed is fundamental to the basis on which the
arbitration is to be conducted. In particular, if the collective
agreement
and other instruments that were applicable prior to the
2001 Regulations remain valid and in force, many of the affected
employees
may qualify for promotion and
vice versa
. Further,
the arbitrator has recognised the inevitability of an application for
review, whatever his decision. A later challenge
to the exercise of
the arbitrator’s powers may thus be obviated by the present
application. In these circumstances, I am
satisfied that the
interests of justice are served by entertaining the present
application.
[12] The respondents initially sought to broaden this
enquiry beyond that stated above,including the determination of an
alleged
counter-application that a decision by the first respondent
taken on 15 April 2009 and certain ensuing decisions taken by the
superintendent-general
for Health, are unlawful and invalid. The
counter-application was not pursued at the hearing of the
application. All that remains
for decision therefore is the question
of law stated for the opinion of the court.
The question posed by the arbitrator
[13] As I have indicated, the question of law arose in
the context of a challenge by the respondents’ counsel to the
validity
of certain of the instruments listed in the settlement
agreement on the basis
inter alia
that they were no longer
valid or applicable by virtue of the promulgation of the 2001
Regulations. Regrettably, the arbitrator
has not formulated the
question of law that he wishes to be determined with any degree of
clarity. Paragraph [17] of his interim
award comes closest to
defining the issue. It reads as follows:
‘
If I look at the basis of Mr Mbenenge’s
challenge then it is clear that it would be necessary to decide what
legal effect
the 2001 Regulations had on instruments that were
applicable prior to the Regulations coming into operation, which
includes a collective
agreement. Hence, a ruling on this issue may
have the effect that the collective agreement is no longer valid,
bearing in mind
that the LRA gives legal status to collective
agreements – see s 23 of the LRA. The new dispensation
introduced by the 2001
Regulations is clearly not consistent with, in
particular, Collective Agreement no 1 of 1997.’
[14] If regard is had to this passage and to the terms
of the award as a whole, the question of law is a crisp one can be
formulated
in the following terms: Are the applicants entitled to
rely upon the legal instruments stipulated in clause 4.3 of the
parties’
arbitration agreement notwithstanding that all or any
of them may be inconsistent with the provisions of the Public Service
Act
or the 2001 Regulations promulgated in terms of that Act?
Analysis
[15] The opinion sought does not require the court to
make any determination of the validity of any of the instruments
sought to
be introduced only on account of matters arising from the
application of the instruments, for example, whether any particular
instrument
was in fact concluded, whether the affected employees fall
within a class of employees covered by the instrument concerned, or
whether the promotion or increase at issue complies with the terms of
any particular agreement. Those are matters that relate to
internal
consistency and compliance which, if necessary, must be determined by
the arbitrator. The request for an opinion extends
only to those
instruments that the applicant contends stand in conflict with an Act
of parliament or secondary legislation, and
in particular, the
Regulations promulgated in 2001 under the PSA.
[16] The respondents contend that the agreements which
pre-date the promulgation of the 2001 Regulations fell away in the
face of
a new statutory regime, applicable from 1 May 2001, thedate
on which the Regulations came into force. They contend that the
collective
agreements concluded before the promulgation of the
Regulations have been superseded, and that at least to the extent
that they
are inconsistent with the Regulations, the union parties
may not rely on these terms.
[17] The Regulations prescribe the process by which
promotion in the public sector is governed. In short, the Regulations
require
that there be a vacant post in the approved establishment,
budgeted funds to fill the vacancy, advertisement of the vacant post,
fair selection from the pool of applicants and written approval by
the executing authority.
4
[18] Section 23 of the LRA extendsstatutory recognition
to and confers legal status on collective agreements. The section
provides
that validly concluded collective agreements are in defined
circumstances binding on the parties to those agreements, and on the
members of those parties. It is also possible in terms of s 23 (1)(d)
to make collective agreements binding on employees who are
not
members of any union party to the agreement.
[19] To the extent that the applicants contend that as a
general proposition, a collective agreement trumps any applicable
regulatory
measure, this cannot be so. Collective agreements, despite
the status conferred on them by s 23 of the LRA, are subject to the
principle of legality. It follows that a collective agreement that
contains terms in conflict with any applicable statutory instrument
must yield to the instrument, at least to the extent that the terms
of the collective agreement is inconsistent with the applicable
instrument.
[20] Given the terms of the question posed, a number of
obvious qualifications to the general proposition stated above should
be
recorded. Clause 4 of the settlement agreement requires the
arbitrator to consider each individual’s eligibility for
promotion
for the period from 1994 to date. In my view, the agreement
does not limit eligibility for promotion to the post-2001 period.
That
being so, the arbitrator is required to determine each
employee’s eligibility in accordance with the instruments then
applicable.
The 2001 Regulations do not operate with retrospective
effect. The arbitrator is therefore not precluded from considering
and giving
effect to instruments that pre-date the Regulations (in so
far as the instruments are relevant to a particular case) only
because
those instruments are inconsistent with the terms of any
Regulation. In other words, the 2001 Regulations cannot be used as a
basis
to determine the validity of instruments created before the
promulgation of the Regulations.
[21] The second qualification that I would record is
that where the terms of a statutory instrument are themselves made
subject
to any collective agreement, in the event of a conflict, the
terms of the collective agreement must prevail. The Labour Relations
Act, for example, contemplates that a collective agreement may vary
or limit even constitutionally entrenched rights.
5
The Basic Conditions of Employment Act similarly
acknowledges a degree of party autonomy by permitting parties to a
collective agreement
to vary statutory terms.
[22] In summary:
Collective agreements
are subject to the principle of legality, meaning that collective
agreements do noton account only of their
nature or the status
conferred on them by the LRA trump the provisions of any statutory
instruments. Collective agreements must
be read and applied subject
to the terms any relevant statutory instrument. A statutory
instrument may itself accord primacy
to collective agreements, in
which case the instrument must necessarily be read and applied
subject to the collective agreement.
Statutory measures,
unless expressly stated to the contrary, do not affect the validity
or application of previously applicable
instruments (including
collective agreements) only because those instruments are
inconsistent with the statutory measure. In
any dispute concerning
the rights and obligations of parties at any defined point, the
nature of those rights and obligations
must be determined in
accordance with the regulatory dispensation applicable at the time.
It follows that the
union parties in the present dispute are entitled to rely on all
collective agreements, resolutions and directives
in respect of
periods during which they were applicable, notwithstanding that all
or any of them may be inconsistent with the
provisions of the 2001
Regulations and that the arbitrator is entitled, in the discharge of
his mandate, to have regard to them.
___________________André van Niekerk
Judge of the Labour Court
Representation
For NEHAWU: Adv. M Eujen, instructed by Cheadle Thompson
and Haysom Inc.
For PSA:Adv. R Buchanan SC, instructed by Brown
Braude&VlokInc
For HOSPERSA:Adv. R Seggie SC
For the respondents: Adv. P Pretorius SC, with
Adv.Mbenenge SC, instructed by the state attorney.
1
Section
157 (3) of the Labour Relations Act provides : ‘ Any reference
to the court in the
Arbitration Act (Act
42 of 1965), must be
interpreted as referring to the Labour Court when an arbitration is
conducted under that Act in respect
of any dispute that may be
referred to arbitration in terms of this Act.’
2
The
rule
nisi
was
extended on a number of occasions until 17 August 2012, when Basson
J discharged the rule.
3
See
paragraphs [36] and [37] of the judgment.
4
See
Regulation VII, C-F.
5
For
example, s 65 of the Act permits parties to limit the scope of the
right to strike through the mechanism of a collective agreement.