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[2013] ZALCPE 21
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Spitzbak (Pty) Ltd t/a Koelkor Meat World v Commission for Conciliation Mediation and Arbitration and Others (P 30/2011) [2013] ZALCPE 21 (26 June 2013)
Not reportable
REPUBLIC OF SOUTH AFRICA
THE LABOUR COURT OF SOUTH AFRICA,
IN PORT ELIZABETH
Case no: P 30/2011
In the matter between:
SPITZBAK (PTY) LTD t/a
KOELKOR MEAT WORLD
Applicant
and
COMMISSION FOR
CONCILIATION MEDIATION AND ARBITRATION
First
Respondent
FLOORS BRAND
N.O.
Second
Respondent
FOOD AND ALLIED WORKERS
UNION OBO MEMBERS
Third
Respondent
Heard: 03 February 2012
Delivered: 26 June 2013
Summary:
(Review – demarcation dispute – test of
review of demarcation determinations- determination set aside).
JUDGMENT
LAGRANGE, J
Introduction
The applicant in this matter has applied to review and set aside a
demarcation ruling by the second respondent, a CCMA Commissioner.
The Commissioner found that the applicant was engaged in the
Wholesale and Retail Sector and that the provisions of Sectoral
Determination 9 are applicable to its employees.
The arbitrator's determination
The arbitrator made the determination after hearing evidence from
both parties. In reaching his conclusion he relied on the evidence
given by the employer, which he found was essentially confirmed by
the evidence of two employees of the applicant, who had testified
for the interested union (‘FAWU’) and its members. For
the sake of convenience, the arbitrator's summary of evidence
is set
out below. The arbitrator highlighted the following:
2.1. A shareholder of the company, Mr Rautenbach, testified that the
main activity of the company was to buy livestock from farmers,
slaughter it and then sell the meat in bulk to enterprises like
Shoprite, Pick ‘n Pay, Spar, other butcheries,
et cetera
and the general public. He conceded that "from time to time"
it also bought carcasses, chicken and even fish from other
vendor's
which it sold to the enterprises mentioned and the public.
2.2. The company had a number of vehicles used to collect livestock
and carcasses from suppliers and to deliver products to its
clients
in Humansdorp, Jeffreys Bay and Port Elizabeth. A smaller vehicle was
used to sell meat products to the general public
around Humansdorp,
but this was a very small part of the applicant’s business
bringing in only approximately R60,000 per
annum, whereas its gross
annual turnover at the time of the hearing was R 42 million per
annum.
2.3. The company also had its own premises in Port Elizabeth where
meat was deboned and sold, and it had cold storage facilities
at its
premises in Port Elizabeth and Humansdorp.
The company's legal representative at the hearing had argued that
the main activity of the applicants business was slaughtering
and
therefore it was essentially an abattoir rather than a business in
the wholesale and retail trade.
The arbitrator summarised his evaluation of the evidence thus:
“
14. Mr Rautenbach's evidence explains
the operations of the respondent and his evidence is not disputed.
From his own evidence it
is clear that the respondent buys livestock,
slaughter and stores it in its own cold room facilities
for
the sole purpose
of
selling it in bulk or in smaller quantities to cooperative
enterprises and the general public. Furthermore, the respondent
delivers
the sold this products with its own delivery trucks to its
clients. In my view
the extent of
the buying, storing, selling and distribution is of such a magnitude
that it cannot be said to be ancillary to the
slaughtering
done by the respondent. Even if I accept
that more than 50% of the respondent’s staff is engaged in the
slaughtering process,
the
slaughtering process is not separate from the other activities of the
respondent
. As I have said the
procuring of livestock is for slaughtering and the
slaughtering
and storage for the purpose of selling it to any person
,
whether in bulk or not. The
slaughtering
process is, within the current operations of these respondent, only a
link in the chain of events of the procurement
and the ultimate
selling and distribution
of the
meat products.
15. Another indication that the respondent is engaged in wholesale
and retail business is, as conceded by Mr Rautenbach, that the
Rautenbach, from time to time, even buys carcasses, chicken and fish
from Venice for the purpose of selling it to other enterprises.
Hence, I am of the view that the current operations of the respondent
falls squarely within the definition of the Wholesale and
Retail
Sector as set out above."
(emphasis added)
Section 1 of the Wholesale And Retail Sectoral Determination defines
the wholesale and retail sector of South Africa as:
"The sector in which employers and employees are
mainly or
wholly
engaged or highly associated for
the purposes of
procuring products
from any supplier or manufacturer
for the
purpose of sale to any person
, whether on wholesale or retail
basis; and, in addition, includes any other activities engaged in by
an employer in the wholesale
and retail sector including, but not
limited to, merchandising, warehousing or distribution operations
that are incidental to,
supportive of the employer's enterprise ...”
Grounds of review
The applicant's first ground of review is that the arbitrator
misconstrued section 1(2) of the sectoral determination in finding
that the core business of the applicant was wholesale or retail in
character. It further argues that the arbitrator’s conclusion
was unsupported by any evidence and was therefore unreasonable. In
its supplementary grounds of review the applicant added an
alternative approach to reviewing the determination according to the
standard of reasonableness. The applicant contended that
in making
the determination the arbitrator was in fact making a jurisdictional
ruling and, as such, the decision had not only
to be reasonable but
also correct.
Further supplementary grounds of review were that: the arbitrator
failed to consider whether or not the business of the applicant
involved the procuring of "products" from suppliers or
manufacturers; the arbitrator failed to determine whether or
not the
business was only or mainly one that fell within the ambit of the
sectoral determination; he failed to consider the various
categories
of employees described in the sectoral determination, and failed to
determine the nature of the work performed by
its employees. It
further claims that the arbitrator went beyond his remit in
declaring that the employer was bound by the provisions
of the
sectoral determination.
Evaluation
Is the test of review a purely objective one?
Before considering other grounds of review, it is necessary to
briefly address the contention that the arbitrator's determination
ruling is one that must be correct and not merely reasonable because
it allegedly entails a jurisdictional finding. It will often
be the
case that the consequence of a demarcation reading will directly or
indirectly have the effect of determining the jurisdiction
of a
bargaining Council or the applicability of a sectoral determination
or collective agreement. Demarcation disputes do not
arise in the
abstract, but are commonly the result of a dispute about whether or
not an employer is obliged to comply with conditions
of employment
set out in one or other such instruments.
It is important to bear in mind however that demarcation rulings
usually do not concern the jurisdiction of the CCMA itself to
make
such rulings. An arbitrator seized with determining a demarcation
dispute, in the absence of other types of incidental jurisdictional
challenge, such as a claim that another commissioner had already
ruled on the same issue, is determining a question which the
LRA has
specifically assigned to the CCMA to determine, in the same way that
a Commissioner is empowered to determine the fairness
of a dismissal
for specified reasons. Thus, section 62(1)(a) of the LRA
specifically assigned to the CCMA the power to determine
"...whether
any employee, employer, class of employees or class of employers, is
or was employed or engaged in a sector or
area...”
When
determining the fairness of a dismissal or which sector and employer
or employees engaged in, a Commissioner is determining
an issue the
statute has specifically empowered the Commissioner to deal with.
Provided other jurisdictional preconditions have
been met, the
arbitrator’s finding in a demarcation dispute has no bearing
on that arbitrator's own jurisdiction to make
the ruling. If the
arbitrator had to first determine a dispute over whether or not
jurisdictional pre-requisites for exercising
the power to make a
demarcation brooding had been met, that would entail making a
finding about the arbitrator's own jurisdiction.
That is not a
question which the arbitrator is empowered to decide, and will
always be vulnerable to be set aside on the basis
that the
arbitrator acted outside of his or her jurisdiction.
Consequently, although it may seem paradoxical that the arbitrator
is determining an issue that has jurisdictional consequences,
that
is an issue the statute has assigned to the CCMA to determine. The
test of review applicable to such a ruling is no different
from the
test which applies to other decisions falling within the remit of an
arbitrator's power in terms of the LRA. As a result,
it is not
necessary for an arbitrator’s decision on a demarcation
question under section 62 (1)(a) to be correct, but merely
to be
reasonable, and the applicant's ground of review based on the
correctness of the decision must fail.
Other grounds of review
In determining the retail or wholesale character of the business,
the arbitrator ought to have had regard to the job description
of
persons covered by Sectoral Determination 9: Wholesale and Retail
Sector. The definitions of job descriptions in the determination
are
as follows:
"“
displayer”
means an employee who
prepares window, promotional or sale display material, whether
internally or externally;
...
“
driver”
means an employee who drives a motor
vehicle for purposes of deliveries or to perform other activities on
behalf of an employer
and who holds the requisite licence;
...
“
fork-lift operator”
means an employee who operates a mobile
power-driven hoist used in the loading, unloading, moving or stacking
of products and who
holds the requisite license;
“
general assistant
”
means an employee who is engaged in any
one or more of the following duties –
accompanying or assisting a driver or other employee who drives a
vehicle, but not driving the vehicle;
accompanying any employee who uses tools, but not using tools
independently;
affixing postage stamps or labels;
assembling boxes by hand;
breaking up scrap metal;
carrying or moving goods, by means other than a power-driven
device;
changing wheels or repairing punctures;
cleaning machinery, premises, vehicles, furniture, implements,
tools, utensils or goods on the employer’s premises;
cleaning or plucking poultry;
cleaning, cutting, filleting, scaling or slicing raw fish;
collecting cash in the case of c.o.d. sales or accepting written
orders;
cutting by hand, paper, samples, linoleum, mats, curtain rods,
netting wire, wire or other articles or commodities;
cutting up scrap metal;
delivering or conveying letters, parcels, messages or goods by
means other than by a motor vehicle with an engine capacity
exceeding
100 cm²;
driving an animal-drawn vehicle;
feeding into or drawing off from vats, tanks or other containers;
feeding or taking off from automatic or semi-automatic machines,
moving belts or platforms;
filling bins or dump baskets with goods;
filling, capping, corking or labeling bottles or other
containers;
folding or enveloping mail;
grading eggs according to size;
hanging clothing, packages or other goods on rails or hooks or in
gondolas, racks or shelves;
ironing;
loading or unloading vehicles;
making or maintaining fires or removing refuse or ash;
making tea or similar beverages for, or serving tea or similar
beverages to employees, the employer or guests;
marking, branding or stenciling goods by hand;
melting scrap lead
mending bags or sacks by hand or machine;
mending or altering second-hand clothing for sale;
mixing by hand the ingredients of animal or poultry foods the
mass of which has been measured beforehand or otherwise
predetermined;
nailing or repairing boxes or crates;
oiling or greasing machinery of vehicles, other than motor
vehicles;
opening or closing doors, windows, bales boxes or other packages;
operating an addressograph, photostat, or a duplicating machine;
operating any power-driven machine not specifically mentioned
elsewhere in this clause;
operating a portable pump;
packing goods for dispatch or delivery, including packing goods
at point of payment;
packing, placing or stacking goods in cabinets or on counters,
gondolas, racks or shelves;
repetitive marking of prices on goods by means of a rubber stamp
or other marking device, under supervision;
repetitive mass-measuring or repetitive measuring; or mass
measuring for stock;
setting up or dismantling corrugated or fibre board boxes or
similar containers;
sorting goods;
strapping or wiring boxes;
tending, cleaning or feeding animals;
unpacking goods;
using rubber or other stamps, involving no discretion;
washing uniforms, overalls or protective clothing;
wrapping parcels;
...
“
manager”
means an employee who is authorised by
an employer to manage the activities of a business or part of a
business or to manage the
employees in a business or part of a
business;
“
merchandiser”
means an employee who draws goods from a
storage area, cleans shelving, unpacks and prices products and
removes damaged or expired
goods;
...
“
sales assistant”
means
an employee who prepares products and services for sale, attends to
customers’ enquiries, assembles products for customers
and,
with the authority of an employer, accepts payment for products or
services sold;
“
sales person”
means an employee employed to perform
the tasks of a sales assistant and who receives, in addition to the
minimum wage mentioned
in clause 3, commission payments in terms of
clause 4;
“
security guard”
means an employee who guards, protects
or patrols an employer’s establishment, buildings, property and
goods;
“
shop assistant”
means an employee who packs,
replenishes, marks, assembles or assists in the dispatching of
products on instruction from a more
senior employee;
“
supervisor”
means
an employee who is authorised by an employer or manager to be
responsible for the efficient performance and behaviour of other
employees;..”
It is clear from the definitions above, apart from a few very
specific exceptions in the description of tasks and that a general
worker might perform, that the functions performed by employees in
the sector do not involve the transformation or processing
of
intermediate products into final products which are qualitatively
different from the products supplied to the business. This
is
something that the arbitrator should have considered when deciding
whether or not the applicant was engaged in the sector.
Moreover, even though the arbitrator accepted that more than half
the employees were engaged in the slaughtering operation, he
decided
that this transformative process was simply incidental to the
distribution of meat products. It is difficult to understand
how the
arbitrator could reasonably have come to this conclusion. With
limited exceptions, the "products" which the
business
procured as supplies are in the form of livestock. The applicant is
not running a business even similar to something
like a feedlot in
which the quality of livestock is merely improved until it is in a
marketable condition for resale or slaughter.
The applicant is
engaged in turning livestock into consumable fresh meat products,
which it then sells to retail providers of
fresh meat or final
consumers. It is not reselling the livestock but the meat products
it extracts from its slaughtering operations
using that supply of
livestock. The nature of the products it procures and the products
it sells are quite distinct even if the
end product is wholly
derived from the livestock supplied.
Further, the fact that it also delivers these end products to its
customers and that it transports the livestock provided by
suppliers
to its processing operation is no different from a manufacturer of
fertiliser using its own vehicles to collect raw
materials and to
deliver the end products to customers. Those logistical operations
are incidental to its main operation as a
manufacturer and not vice
versa.
In the circumstances I am satisfied that the arbitrator failed to
have regard to the primary character of the business which
the
applicant was engaged in. Had he done so, it would have been
difficult for him to escape the conclusion that the sector in
which
the applicant was engaged was not the wholesale or retail sector,
but in the slaughtering and sale of fresh meat.
Conclusion
In the light of the analysis above, I am satisfied that the
arbitrator’s demarcation ruling should be set aside. I believe
there is also sufficient basis for substituting the determination of
the arbitrator, with a finding that the applicant is not
engaged in
the Wholesale and Retail Sector as contemplated in Sectoral
Determination 9.
Although the arbitrator claimed that Nedlac had been consulted about
the award in terms of section 62(9) and ‘supported
the award’,
that process has no bearing on the substantive validity of the
determination. However, if indeed the arbitrator
had shared his
findings with Nedlac before issuing the award, that would have
amounted to improper conduct on his part and would
also have
justified setting the determination aside on that ground alone.
Order
The demarcation determination of the second respondent dated 26
October 2010 under case number ECPE 3219-10 is reviewed and set
aside.
The second respondent’s determination is substituted with a
determination that the applicant is not engaged in the wholesale
and
retail sector as contemplated by Sectoral Determination 9: Wholesale
And Retail Sector (GG 24207,R 1600, dated 19 December
2002) as
amended.
As the matter is unopposed no order is made as to costs.
_______________________
R LAGRANGE, J
Judge of the Labour Court of South Africa
APPEARANCES
APPLICANT: J G Grogan instructed by S C Heystek Attorneys