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[2014] ZALCJHB 18
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BIFAWU obo Members v Zurich Insurance Co SA (J175/12) [2014] ZALCJHB 18 (7 January 2014)
REPUBLIC OF SOUTH
AFRICA
IN THE LABOUR COURT
OF SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Reportable/Not reportable
Case no.:J 175/12
In
the matter between:
BIFAWU
obo MEMBERS
Applicant
and
ZURICH
INSURANCE CO. SA
Respondent
Heard: 7 January 2014
Summary: The nature of
an Employer’s obligation to consult transferring employees or
their representatives on a Section 197
transfer.
Test for making a
settlement agreement an order of Court.
JUDGMENT
WILKEN,
AJ
Introduction
[1] This is an
application to make a settlement agreement an order of Court in terms
of Section 158(1)(c) of the Labour Relations
Act 60 of 1995 (“
LRA”).
Background
[2] The settlement
agreement in question was concluded under the auspices of the
Commission for Conciliation, Mediation and
Arbitration (“CCMA”)
in respect of the dispute referred to the CCMA by the Applicant
concerning the outsourcing of
Respondent’s liability function.
Respondent contemplated the transfer of all employees engaged in its
liability function
to a third party service provider.
[3] The Applicant
contended the Respondent was obliged to engage it in consultation in
terms of Section 197(6)(a) and (b)
of the LRA.
[4] For reasons
that do not appear from the Court file, the Respondent concluded a
settlement agreement with the Applicant
at conciliation on the
following terms:
‘
1.
The parties to meet not later than 30 November 2011 to discuss and
finalise employment contracts as per Section 197 of
the LRA.
2.
During the same meeting parties could consult on matters as per
document A’”
[5] Document A
lists the following documents:
‘
1.
Old contracts of employment (ZISCA);
2.
New contract of employment (Trustco);
3.
Agreement between ZISCA and Trustco,;
4.
ZISCA Group Strategy;
5.
Service Level Agreements’”
[6] It is common
cause no meeting as envisaged took place, and that only some of the
documents were provided by the Respondent
on or about 2 December
2011. Whilst it is not clear exactly when the Respondent’s
employees transferred to the third party
service provider, it is
common cause that the transfer occurred.
The
obligation to consult
[7] The purpose of
the LRA is to,
inter
alia,
give
effect to fundamental rights entrenched in the Bill of Rights of the
Constitution of South Africa, of 1996 including
the right to
fair labour practices. The purpose of Section 197 of the LRA, is to
give effect to the right to fair labour practices
in relation to the
transfer of businesses on the one hand, and also to facilitate
commercial transactions to avoid the constraints
common law places
upon the transfer of contracts of employment.
[1]
[8] At the hearing
of this matter, it appeared to be common cause that all the employees
represented by the Applicant, barring
one transferred back to the
Respondent during 2012. Nothing however, turns on that in the
application, as it is not the substance
of the transfer(s) which is
at stake, but the process agreed upon (as opposed to the substance)
of the 2011 transfer.
[9] Section 197 of
the LRA lays down the minimum requirements employers must comply with
when the whole or part of a business
transfers as a going concern.
Employers are not prevented from concluding agreements to bestow
greater rights upon employees, or
the trade unions of such employees
than that contained in Section 197. Whilst it may not be necessary in
terms of Section 197 of
the LRA to engage a trade union in
consultation with employees who transfer on terms in compliance with
Section 197(2) from the
older employer to the new employer, nothing
prevents the employer from concluding an agreement that it will
nevertheless consult.
Analysis
[10] Respondent
submitted the settlement agreement ought not be made an order of
Court as:
10.1 Respondent was
not required by law to consult with Applicant;
10.2 Respondent had
no
locus standi
in respect of the employees it represents,
they, or some at least, not being members of the Applicant and/or
they or at least some
having terminated the union’s mandate;
and
10.3 it would not
be possible to comply with the agreement.
[11] The settlement
agreement concluded under the auspices of the CCMA clearly amounted
to an agreement creating rights for
the Applicant greater than that
provided for under Section 197 of the LRA. Such interpretation is not
only consistent with the
agreement concluded, but also with the
communication by the Respondent to its employees. An email sent by
“People Management”
of the Respondent dated 13 December
2011 is instructive:
‘
Dear
Colleagues
Casper
Kruger, the HR Manager of TRUSCO, will be visiting our offices today
to issue letters of appointment to transferring staff.
We
are unable to transfer your employment to TRUSCO until the union is
in agreement with this process. This means that all your
CPC
information will stay the same and will only be changed on the date
of transfer.
Please
contact Arno Jacobs for consultation should you have any further
queries.
Regards
People
management’
[12] This
communication by the Respondent, which was transmitted after having
concluded the settlement agreement with the
Applicant, stands in
stark contrast with the position the Respondent takes in its
opposition to the application to have the settlement
agreement made
an order of Court. In fact, the Respondent does not deny that it did
not comply with the terms of the settlement
agreement, but contends
that it was not obliged to consult as Section 197 does not oblige it
to consult with the Applicant. Whilst
the Respondent contended in
argument there was substantial compliance with the settlement
agreement, this line of argument was,
correctly so, abandoned.
[13] The Respondent
further contends that the Applicant had no authority to represent the
transferring employees as some of
the employees were not members of
the applicant and some had requested their transfer.
[14] The
Respondent’s arguments relating to lack of
locus standi
and Respondent not being required by law to consult Applicant is
without any merit for the following reasons:
14.1 whilst Section
197 may not require consultation in circumstances where employees
transfer in terms provided for in terms
of Section 197(2) read
together with Section 197(3) of the LRA, nothing prevents an employer
from concluding an agreement which
requires consultation such as the
one concluded between the Applicant and Respondent;
14.2 it is
incomprehensible on what basis the Respondent can contend that there
was no obligation to consult if its own communication
to employees
clearly stated the union’s agreement was required to effect the
transfers;
14.3 by engaging
the employees directly regarding the transfer it not only excluded
the Applicant improperly, but acted in
a manner directly in conflict
with the agreement concluded with the Applicant;
14.4 the
Respondent’s questioning of the Applicant’s authority is
at odds with it engaging and concluding an agreement
with Respondent
in respect of the very same employees. If the Respondent wished to
challenge the Applicant’s authority it
should have done so that
time of the conciliation or lay a proper basis for such challenge in
the answering affidavit and not attempt
to do so in its heads of
argument. The purpose of heads of Argument is to elaborate on those
submissions and facts contained in
the record of proceedings and the
affidavits filed and not to introduce new facts.
[15] Whilst Section
159(1)(c) of the LRA grants the Labour Court jurisdiction to make a
settlement agreement concluded in
respect of the matter arising
within the scope of the LRA an order of Court, this does not mean
that the order is there for the
taking. The Labour Court has
discretion to make it an order of Court, even if it otherwise meets
the criteria provided for in Section
158(1)A read together with
Section 158(1) of the LRA.
[2]
[16] The purpose of
making a settlement agreement an order of Court is to enforce
compliance with the settlement agreement.
The Court will refuse to
make a settlement agreement which is ambiguous or equivocal, and
therefore open to dispute, an order of
Court. Before the Labour Court
will grant an order sought in terms of Section 159(1)(c) of the LRA,
it must be satisfied at the
very least that:
‘
(i) The
agreement is one which meets the criteria set out in s158 (1)(c) read
together with Section 158(1)A of the LRA;
(ii)
that the agreement [or award] is sufficiently clear to have enabled
the defaulting party to know exactly what it is required
to do in
order to comply with the agreement [or award]; and
(iii)
there has not been compliance by the defaulting party with the terms
of the agreement [or the award].”
[3]
[17] Even if the
Court is satisfied with all of the above it must nevertheless
exercise its discretion whether to grant or
refuse the order, which
discretion will require the Court to take relevant facts and
circumstances into account such are necessary
to satisfy the demands
of law and fairness. There is no closed list of factors to be taken
into consideration by the Court when
exercising its discretion.
[18] In the present
circumstances I am disinclined in making the settlement agreement
concluded at the CCMA an order of Court
for the following reasons:
18.1 the agreement
concluded was aimed at the very best to ensure that transferring
employees would transfer to the service
provider on terms and
conditions on the whole not less favourable than those which applied
during their employment with the Respondent.
Whilst it was advanced
from the Bar by Mr Nhlapo that employees did not transfer as
contemplated in terms of Section 197(2), it
is evident from the
papers filed in the Court file that this was indeed the intention of
the Respondent;
18.2 it is common
cause no consultation took place as agreed between the parties. As
the envisaged consultation sought to
ensure employees transfer on
terms on the whole not less favourable than those which governed
their employment whilst in the employ
of the Respondent, and there is
no evidence that employees transferring on terms on the whole not
less favourable, no purpose will
be served in making the agreement an
order of Court;
18.3 if employees
did indeed transfer on terms on the whole less favourable (as was
contended by Mr Nhlapo when arguing the
application), the employees
and/or the union could challenge their transfer and the terms thereof
and the fact that the Respondent
failed to comply with an agreement
to consult to ensure that this did not occur, would be a factor the
tribunal considering such
dispute will take into account; and
18.4 the employees
transferred to the third party service provider more than 2 years
ago, making it wholly impractical to
require the parties to now
engage in consultation on events which happened so long ago
especially if they had, all but all, transferred
back to the
Respondent. As indicated above, if the employees are aggrieved on the
terms of their transfer, the trade union or the
employees have a
remedy to pursue to address their concerns.
[19] Both parties
are seeking their costs in this matter. The Applicant for having been
required to launch this application
on account of Respondent’s
non-compliance with the agreement and the Respondent for having
opposed what it believes is a
misplaced application.
[20] The normal
rule that costs follow the result does not apply to Labour Court
proceedings. The issue of costs in Labour
Court proceedings depends
on law and fairness. Policy considerations requires the Labour Court
to adopt an approach which would
not deter litigants from defending
or prosecuting
bona
fide
actions for fear of adverse costs awards.
[4]
Factors such as the continued relationship,
bone
fides
of the parties in bringing and defending proceedings instituted
matter, and the financial state of the parties are all considerations
which are relevant.
[5]
The
bona
fides
of the Applicant and the common cause fact that Respondent did not
comply with the agreement is a material factor to take into
account
why Applicant ought to be awarded its costs despite the Court not
making the settlement agreement an order of Court, but
the likely
continued relationship with the Respondent is a factor in favour of
the Respondent why costs should not be awarded against
it. On
the other hand, the undisputed failure of the Respondent to comply
with the agreement concluded counts heavily against
the Respondent
being granted its costs of opposing the application despite it being
successful. In the circumstances I make no
order as to costs.
Wherefore,
I make the following order:
1.
The Application is dismissed.
2.
Each party to pay its own costs.
Wilken,AJ.
Acting Judge of the
Labour Court of South Africa
23 January 2014
APPEARANCES:
FOR
THE APPLICANT: Mr Nhlapo of BIFAWU
FOR
THE RESPONDENT: Mr Sangoni of Norton Rose Fullbright
[1]
NEHAWU
v University of Cape Town
(2003) 24 ILJ 95 (CC) at para 14.
[2]
C
Maryka Greef v Consol ‘Glass (Pty) Ltd
(unreported decision of the LAC), Case No. CA02/12 delivered on 21
May 2013, followed in
South
African Post Office Limited and CWU obo Permanent Part Time
Employees
(unreported decision of the LAC), Case CA15/12 delivered on 28
August 2013.
[3]
South
African Post Office Limited
supra
at para 21.
[4]
MEC for
Finance, Kwa Zulu-Natal and Another [
2008]
6BLLR 540 (LAC).
[5]
Ball v
Bambalela Bolts (Pty) Ltd
[2013] 9 BLLR 843
(LAC).