About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Johannesburg Labour Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: Johannesburg Labour Court, Johannesburg
>>
2015
>>
[2015] ZALCJHB 387
|
|
Independent Municipal and Allied Workers Union and Another v Khoza NO and Another (JR534/2013) [2015] ZALCJHB 387 (8 June 2015)
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Reportable
Case
no: JR534/2013
In the
matter between:
INDEPENDENT MUNICIPAL AND
ALLIED WORKERS UNION
First Applicant
UASA – THE UNION
Second Applicant
and
SIBONGILE KHOZA,
N.O.
Second Respondent
EKURHULENI METROPOLITAN
MUNICIPALITY
Third Respondent
Heard
:
8 June 2015
Delivered
:
6 November 2015
Summary:
Review of an award in respect of an interpretation of a collective
agreement (the “Transvaal Agreement”);
meaning to be
accorded to the definition of “contractual to holder”
also known as the CTI (contractual to incumbent)
principle.
JUDGMENT
RABKIN-NAICKER
J
[1] The
applicants seek an order reviewing, setting aside and correcting an
arbitration award arising from proceedings in terms
of section 24 of
the LRA. In the award the second respondent (the arbitrator)
dismissed the applicants’ claim.
[2]
The parties to the dispute agreed that the review of the arbitration
award was to be dealt with by way of a stated case. They
agree that
the subject of the dispute before the second respondent was the
interpretation of the Local Government Undertaking Conditions
of
Employment Agreement: Transvaal concluded in the Industrial Council
for the Local Government Undertaking (the Transvaal Agreement).
In
particular the proper meaning to be given to:
2.1
The definition of ‘contractual to holder’;
2.2
Clause 6.5 ‘Demotion’;
2.3
Clause 6.5.1.2. ‘Reorganisation’; and
2.4
Various collective agreements applicable in the EMM.
[3] This
court is required to determine whether:
3.1
The Transvaal Agreement is a collective agreement as contemplated by
the LRA;
3.2
Whether the arbitrator, in interpreting and applying the Transvaal
Agreement,
committed a reviewable irregularity.
Material
facts agreed on by the parties
[4] On 3
June 1994 an agreement was concluded between the Municipal Employers’
Organisation and the Employers’ Organisation
of Local
Authorities on the one hand and the South African Association of
Municipal Employees, on the other.
[5] This
agreement, the Transvaal Agreement, was published in Government
Gazette No. 16047 dated the 28 October 1994.
[6]
Following the coming into operation of the LRA in November 1996, the
SALBC was established, replacing the Industrial Council
for the Local
Government Undertaking. On 2 September 1997, SALGA concluded a
collective agreement with IMATU and SAMWU (the Establishment
Agreement). Employees in the sector are predominately represented by
IMATU and SAMWU. Some employees are represented by UASA.
[7] The
EMM is a member of SALGA, an employers’ organisation which
represents all municipalities throughout South Africa.
[8] The
first respondent (SALGBC) is regulated by a constitution, which
provides for collective bargaining levels at national, divisional
or
local level. Wages, annual increases and job evaluations are reserved
for national collective bargaining exclusively.
[9] Prior
to the disestablishment of the municipalities that are now part of
the EMM, each municipality remunerated their employees
on a
particular scale, ranging from a grade 9 to a grade 13. On the 21
August 2002, the EMM, IMATU and SAMWU entered into a collective
agreement titled the ‘Ekurhuleni Metropolitan Municipality
Final Collective Agreement on Placement’ (the Placement
Agreement).
[10] On
30 January 2003, the EMM passed a resolution in respect of a uniform
salary scale structure for the EMM. During 2003, the
affected
members, who occupied various positions in the disestablished
municipalities were ‘placed’ in the organisational
structure of the EMM. The letters sent to them in this regard
included the following statement:
“
No
interruption in Conditions of Employment or Service shall occur. All
employees shall retain their benefits as if their services
were not
interrupted. All staff of the Ekurhuleni Metropolitan Municipality
shall retain all their current Conditions of Employment
following
placement in the New Structure subject to any other Collective
Agreement that may emanate from the Bargaining Council
or applicable
legislations”
[11] On
24 May 2004, following the declaration of a dispute by IMATU
regarding the implementation of the grade 13 salary levels,
the EMM
entered into a settlement agreement (later made an order of court).
The settlement agreement contained the following clauses:
“
The
Respondent agrees that, irrespective of the classification of a post
in terms of the Placement Agreement by the Respondent,
the incumbent
of a post in the new Organisational Structure, shall be remunerated
in accordance with the comparable benchmark level
as already
determined by the Respondent of the Grade 13 Local Authority
Bargaining Council Scales:
Provided
that should the current salary and benefits of an employee be higher
than the bench mark level, that employee shall retain
his/her current
salary and benefits, regardless of the result of the job evaluation
in terms of TASK.
In the
event of a post being evaluated lower than the benchmark level, the
incumbent of that post shall retain the benefit of the
higher salary
attached to such post: Provided that the future annual salary
adjustments shall be withheld until the incumbent’s
salary
equals the salary scale of the TASK job evaluation.
The
effective date for implementation of this agreement shall be 1 April
2004.”
[12] The
resolution emanating from the EEM’s corporate affairs committee
in relation to the settlement agreement read as follows:
“
RESOLVED:
1.
That
the contents of the report regarding the contractual to incumbent
status of employees BE NOTED.
2.
That
employees offered a lower position RETAIN their salaries and benefits
as contractual to incumbent as defined in the Conditions
of Service.
3.
That
employees placed in lower positions RETAIN their salaries as
contractual to incumbent as defined in the Conditions of Service.
4.
That
the possibility to migrate the employees not on the Ekurhuleni scale
to the nearest higher notch BE INVESTIGATED and that a
further report
BE SUBMITTED with the full financial and other implications by end
January 2006.”
[13] On
18 June 2008, the EMM concluded an agreement with SAMWU in terms of
which it was agreed that a Grade 15 salary scale would
be implemented
with effect from 1 September 2008 (the Grade 15 Agreement). The EMM
passed a resolution in respect of this on 26
June 2008.
[14] On
30 October 2008, the EMM issued letters to the affected members which
were headed: “
Directive: Implementation of EMM salary
scales: September 2008: contractual-to incumbent (CTI) levels
”.
The letters recorded the affected members’ current
remuneration; the top notch of CTI level and the top notch of
EMM
Scale and stated:
“
Please
note that the salary scale of the CTI level that you are currently
being remunerated on is still higher than the salary scale
of the
position that you are currently occupying.
In view
of the above please be informed that you will retain your better
remuneration contractual-to-incumbent since you will not
benefit to
be placed on the EMM salary scale.”
[15] Both
of the applicants referred disputes to the SALGBC in terms of section
24, which disputes were consolidated. The IMATU
referral reads that
the issue in dispute is: “
Despite being aware of and even
confirming the status of applicants as contractual to holder in terms
of the conditions of employment
collective agreement, the respondent
disregarded that latter and unilaterally subjected the applicants to
the principal (sic) of
personal to holder at the time of adopting
Grade 15 status.”
[16] The
referral by UASA describes the issues in dispute as: “
The
interpretation and Application of various collective agreement
regarding the implementation of the Grade 13 and Grade 15 salary
scales for employees who are contractual to holder.”
[17] In
her award, the arbitrator records her brief and findings as follows:
“
To
determine whether the respondent failed to interpret and apply
various collective agreements regarding the implementation of
Grades
13 and 15 salary scales for employees who are ‘contractual to
holder.’ In her analysis of the evidence
and argument
before her, the Arbitrator found as follows:
“
My
brief is thus to determine whether the respondent has indeed
incorrectly interpreted and applied the CTI principle and the grade
13 and grade 15 salary scales thus excluding the applicants by not
placing them on the previous levels they held in addition to
them
retaining the salaries that they were earning on their previous
defunct positions.
The
determination of the same requires me to look at the CTI definition
as espoused/ contained in the Transvaal Conditions of Service
agreement, as well as the relevant provisions of the settlements
agreements that resulted into the implementation of both the grade
13
and grade 15, CTI is defined as follows:
“
Contractual
to holder”
with
regard to-
(a)
Salary/ salary scale-
Means
that the employee retains the salary / salary scale pertaining to the
post before its downgrading abolition and retains all
adjustments and
regradings so that the incumbent will never be in a less favourable
position vis-à-vis other posts which
were previously evaluated
on a par with the post, in other words as if the post was never
downgraded
Whereas
the Implementation of The Grade 13 Salary Scales dispute Settlement
agreement of the 24
th
May 2004 provides thus:
“
The
Respondent agrees that irrespective of the classification of a post
in terms of the Placement Agreement By the Respondent, the
incumbent
of a post in the new Organisational Structure, shall be remunerated
in accordance with the comparable benchmark level
as already
determined by the respondent of the Grade 13 Local Authority
Bargaining Council Scales:
Provided
that should the salary and benefits of an employee be higher than the
benchmark level, that employee shall retain his /
her current salary
and benefits, regardless of the result of the job evaluation in terms
of “TASK.”
In
the event of a post being evaluated lower than the benchmark level,
the incumbent of that post shall retain the benefit of the
higher
salary attached to such post:
Provided
that the future annual salary adjustment shall be withheld until the
incumbent’s salary equals the salary scale of
the TASK job
evaluation.”
Clause
1.4 of the settlement agreement entered into between the respondent
and SAMWU on the 18
th
June 2008 provides as follow:
“
1.4
That the parties agree to use the Grade 15 salary scales and
will further be guided by category “A”
municipalities from the SALGBC;”
The
CTI definition as captured above refers to a position that has either
been abolished or downgraded by the job evaluation. This
in simple
terms or plain English refers to a position that is no longer in
existence in the structure of the respondent.
Whilst
the regradings in the said definition refers to the newly created
positions at the time of placement when their previous
positions were
abolished, meaning that the employees were placed in new defined
levels no longer the same as the previously held
positions.
Thus
retention entails that employees retain/ keep their previous salary
scale together with its benefits and adjustments as if
the said
positions were still in existence. Such retentions has nothing to do
with the levels of the defunct or abolished positions
as the same is
now only represented by the salaries which the employees earned in
the previous abolished positions.
The
retained salaries also have nothing to do with the grades of the
defunct municipalities as the applicants would have this forum
to
believe. The simple fact that the applicant did not disapprove is
that their salaries are still higher than those of the positions
that
they occupy. Thus to claim that these scales represent the grades of
the previous defunct municipality when it is not their
case that the
two grades did not result in them earning lower salaries is an
afterthought which does not assist their case.
To
seek to be placed on the abolished levels in the downgraded positions
in which they are placed amounts to creating new levels
which in turn
would amount to them receiving new salary scales which they never
earned before. This would exactly mean what the
respondent is arguing
creation of a new right to a higher or increased remuneration.
I
think the respondent’s witness put it succinctly when he stated
that the principle of CTI is not to put any employee in
a better
position than the one he / she was previously in but is about the
employees not being in a worse off position. He further
stated that
retention is about one keeping that which they had and not about
progression as the applicant’s argument seem
to be that they
should have progressed or obtained that which they don’t have
in terms of the CTI principle.
The
same principle of retention is resonated even in the grade 13 and 15
settlement agreement that were entered into by IMATU and
SAMWU
respectively with the respondent. Nowhere is indicated in the said
agreements that the implementation of the two grades would
change the
applicant’s levels, the two actually place emphasis on the
issue of retention of higher salaries and benefits
should the
employee be placed in a post that has been evaluated lower than the
benchmark level.
It
is thus my finding in the light of the above that the applicant’s
claim should be dismissed on the basis that the respondent
has
correctly interpreted and applied the CTI principle to their
position.”
Evaluation
[18]
Mr Hulley for the EMM raised an
in
limine
point
in this court to the effect that the Bargaining Council does not have
jurisdiction to hear the dispute on the basis that the
Transvaal
Agreement was a collective agreement under the old LRA, and as such
elapsed on 31 December 1997. Mr Myburgh for the applicants
referred
the court to
EMM
v IMATU & Others
(case no. JR2535/10) in which the Labour Court per Hardie AJ dealt
with a similar challenge. In that matter the court concluded
that the
Transvaal Agreement “is a valid collective agreement and that
the commissioner had the jurisdiction to determine
the dispute on the
interpretation/application of clause 15.6.1 of the Transvaal
agreement.”
[1]
[19]
Hardie AJ found as follows:
“
[13]
In terms of Government Notice no.R 1828 published in Government
Gazette No. 16047 on 28 October 1994, the then Minister
of Labour the
Right Honorable Tito Mboweni, in terms of section 48 ( 1 ) ( a ) of
the Labour Relation s Act 28 of 1956 declared
that the provisions of
the Transvaal agreement shall be binding for the period ending 31
December 1997. On 2 September 1997, the
Second Respondent was
established in term of an Establishment Agreement, it was agreed that
all existing collective agreements
(whether concluded in a Bargaining
Council or any other Bargaining forum, including the National Labour
Relations Forum) shall,
to the extend that they are not in conflict
with the constitution, be deemed to be of full force and effect until
amended or repealed
by the Second Respondent.
[14] The
Transvaal Agreement was never amended or repealed by the Second
Respondent, and in a circular dated 9 January 1998 (circular
1 of
1998) the Second Respondent restated the situation that all existing
collective agreements remained in force in terms of clause
3.5. of
the Establishment Agreement notwithstanding that certain collective
agreement of the Old Industrial Council, such as the
Transvaal
Agreement., had expired or were due to do so in the near future.
[15] The
Applicant attempted to persuade me that the Transvaal Agreement was
not a collective agreement as contemplated by the Act,
and that as a
result, the Commissioner had no jurisdiction to entertain the dispute
in terms of section 24 of the Act. Various
arguments were advanced in
this regards. The first one is that Notice R1828 is not a collective
agreement as contemplated in terms
of section 213 of the Act, the
Transvaal clearly preceded the Act and is therefore not a collective
agreement in terms if that
Act, and the Transvaal Agreement expired
on 31 December 1997.
[16] I am
not persuaded by these arguments. The Transvaal Agreement is on all
fours with the definition of a collective agreement
as articulated in
section 213 of the Act. Notice R1828 was merely extending its
operation, and in the absence of a challenge to
its jurisdiction to
do so, I must accept that the parties to the Second Respondent had
the ability to incorporate clause 3.5. in
its Establishment
Agreement. I therefore find that the Commissioner had the
jurisdiction to determine the dispute on the interpretation/
application of clause 15.6.1 of the Transvaal Agreement.”
[20] With
respect, I see no basis to depart from the cogent reasoning set out
above, and the point in
limine
stands to be dismissed.
[21] One
of the grounds on which an employee may be demoted in terms of the
Transvaal Agreement is when there is ‘reorganisation’.
The Transvaal Agreement defines reorganisation as follows:
“
6.5.1.2
Reorganisation
6.5.2.1
If an employee’s post is declared redundant and is abolished
due to a reorganisation of the council’s service
and such
employee is demoted by the council, the employee shall retain his
post level that applied prior to such demotion as personal
to holder
or contractual to holder, as the case may be.”
[22] In
as far as the review is concerned, the applicants’ approach can
be summarised as follows:
22.1
When the Municipality “regraded” to grade 13 and grade
15, it ought to have
applied that re-grading to the post levels
occupied by employees prior to the disestablishment of the previous
municipalities;
22.2
They were entitled, in terms of the concept “contractual to
holder” in the
Transvaal Agreement, to have their post levels
adjusted upwards in accordance with the upward adjustment of the
grading of third
respondent.
22.3
In not coming to this conclusion the second respondent committed a
reviewable error of
law.
[23] It
was submitted by Mr Myburgh on behalf of the applicants as follows:
23.1
In terms of clause 3.5 of the establishment agreement (i.e. the
agreement establishing
the SALBGC) read with circular 1 of 1998, the
Transvaal Agreement remained operative until amended or repealed by
the SALGBC, which
did not occur.
23.2
The resolution passed by the EMM corporate affairs committee on 28
November 2005 (this
further to the settlement of the grade 13 grading
dispute) specifically provides for the operation of the CTI
principle.
23.3
The letters issued to the affected employees by the EMM on 30 October
2008 (this after
the EMM upgraded to grade 15) again specifically
refer to CTI levels.
23.4
The creation of the EMM constituted a
reorganisation as envisaged in clause 6.5.1.2. of the
Transvaal
Agreement. The services provided by the disestablished municipalities
were reorganised into the EMM.
23.5
After re-organisation the CTI principle endured and by its action the
EMM accepted that
the CTI principle applies in relation to its
regrading. This is reflected in its resolution of 28 November 2005
and the letters
of 39 October 2008.
[24] The
crisp issue for determination in this matter is the meaning to be
accorded to the definition of “
contractual to holder”
(which is known in practice as ‘contractual to incumbent’
– CTI) in the Transvaal Agreement. The definition reads:
“
contractual
to holder
”
with regard to
(a)
salary/salary scale-
means
that the employee retains the salary/salary scale pertaining to the
post before its down-grading/abolition and retains all
adjustments
and
regradings
so that the incumbent will never be in a less
favourable position vis-à-vis other posts which were
previously evaluated
on a par with the post, in other words as if the
post was never downgraded;
(b)
other benefits –
Means
that the employee retains all better benefits that he is entitled to
in terms of the contract until his services are discontinued
with the
council or until such other time, depending on the conditions of his
appointment or on the stipulation of the contractual
agreement”
[25]
For the applicants, it was submitted that a proper reading of the
above definition means that the affected employees were entitled
to:
25.1
retain their original post level that applied prior to their demotion
and the salary scale
pertaining to their original post level; and
25.2
all re-gradings relating to their original post level (i.e. as if
their posts were never
abolished/down graded) and;
25.3
thus the EMM’S conduct constituted a breach of the CTI
principle, in that the
affected employees were entitled to the
benefits of the regradings of the salary scales (in terms of the
collective agreements
entered into by the applicants) in relation to
their original post levels.
[26]
I cannot agree. The use of the word “
retains
”
in the CTI definition must be accorded due attention. To ‘retain’
means to “keep in place hold fixed”
[2]
.
The word is used in the definition in respect to
both
the salary level and adjustments/regradings. Further, the definition
provides that the incumbent will never be
in
a less favourable position
vis
a
vis
other posts which were
previously
evaluated on a par with the relevant posts (now downgraded or
abolished). The interpretation of the definition to mean an
entitlement
to enjoy future regradings of salary levels of posts on a
reorganised establishment (which in the result would mean that the
incumbents
would be in a more favourable position than those posts
previously evaluated on a par with their former posts) cannot be
correct.
[27]
I take note of the statement by Comrie AJA in
Pretorius
v Rustenburg Local Municipality & Others
[3]
in which the court referred to the definitions in the Transvaal
Agreement as follows:
“
The
terms 'contractual to the holder' and 'personal to the holder' are
defined. They appear at least to mean that the employee will
not
suffer a reduction in salary or other benefits, which could happen in
the case of a demotion on other grounds.”
[4]
[28] The
above interpretation is in line with an understanding of the CTI
definition which is premised on a notion of retention
of salary and
benefits by specific employees. The principle protects individual
holders of posts affected by reorganisation. It
does not protect the
post which has been demoted/abolished. The present state of the law
as regards interpretation has been set
out by Wallis JA in
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA
593
(SCA) as follows:
“
Interpretation
is the process of attributing meaning to the words used in a
document, be it legislation, some other statutory instrument,
or
contract, having regard to the context provided by reading the
particular provision or provisions in the light of the document
as a
whole and the circumstances attendant upon its coming into existence.
Whatever the nature of the document, consideration must
be given to
the language used in the light of the ordinary rules of grammar and
syntax; the context in which the provision appears;
the apparent
purpose to which it is directed and the material known to those
responsible for its production. Where more than one
meaning is
possible each possibility must be weighed in the light of all these
factors. The process is objective, not subjective.
A sensible meaning
is to be preferred to one that leads to insensible or unbusinesslike
results or undermines the apparent purpose
of the document. Judges
must be alert to, and guard against, the temptation to substitute
what they regard as reasonable, sensible
or businesslike for the
words actually used. To do so in regard to a statute or statutory
instrument is to cross the divide between
interpretation and
legislation; in a contractual context it is to make a contract for
the parties other than the one they in fact
made. The 'inevitable
point of departure is the language of the provision itself', read in
context and having regard to the purpose
of the provision and the
background to the preparation and production of the document.”
[29] In
my judgment, over and above the use of the word
retain
in the
CTI definition, the interpretation contended for by the applicants
would lead to insensible results. An employee who has
a CTI salary
scale and benefits as defined in the Transvaal Agreement was, prior
to the reorganisation of the municipal structure,
in a post that has
been down-graded or abolished. Let us take the abolished post
scenario as an example. The notion that a post
that is no longer in
existence on the establishment of a Municipality can be beneficiary
of new salary scales attached to posts
on the fixed establishment,
in terms of collective agreements entered into after that
reorganisation, is not sensible or
business like. That post no longer
exists as a financed post on a municipal establishment, it being
budgeted for on a ‘contractual-to-holder’
basis. When the
incumbent leaves the service of the municipality, the expenditure on
that holder will cease.
[30]
In view of the above, I do not think that the Arbitrator made an
error of law in her award in finding that the EMM correctly
interpreted and applied the CTI principle. I therefore make the
following order:
Order
:
1.
The application to review the award under
case number GPD 031019/060922 is dismissed.
_________________
H.
Rabkin-Naicker J
Judge
of the Labour Court of South Africa
Appearances:
For the
Applicants:
Anton Myburgh S.C. and Marlene Jennings
Instructed
by:
Savage, Jooste and Adams
For the
Third Respondents:
G. Hulley S.C.
Instructed
by:
TZ Attorneys
[1]
At
paragraph 16
[2]
New Shorter
Oxford Dictionary, Clarendon Press 1993
[3]
(2008) 29
ILJ 1113 (LAC)
[4]
At
paragraph 34 per Comrie AJA