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[2016] ZALCCT 14
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Pioneeer Foods (Pty) Ltd v Workers Against Regression (WAR) and Others (C687/15) [2016] ZALCCT 14; [2016] 9 BLLR 942 (LC); (2016) 37 ILJ 2872 (LC) (19 April 2016)
REPUBLIC
OF SOUTH AFRICA
THE
LABOUR COURT OF SOUTH AFRICA, CAPE TOWN
JUDGMENT
C
ase
no: C 687/15
In
the matter between:
PIONEER FOODS (PTY)
LTD
Applicant
and
WORKERS AGAINST
REGRESSION (WAR)
First Respondent
CCMA
Second Respondent
Commissioner C
JOHNSON N.O.
Third Respondent
Heard
:
16 March 2016
Delivered
:
19 April 2016
Summary:
Appeal in terms of s 10(8) of Employment Equity
Act. Employees alleged unfair discrimination in terms of EEA s 6(4)
(equal pay for
work of equal value). Length of service not an
arbitrary ground. Commissioner erred in finding that employer had
unfairly discriminated
against employees.
JUDGMENT
STEENKAMP
J
Introduction
[1]
This
is one of the first appeals to be decided in terms of the newly
enacted section 10(8) of the Employment Equity Act
[1]
.
That section was introduced by the Employment Equity Amendment Act
[2]
and came into operation on 1 August 2014.
[2]
The issues before the court raise the
interpretation of and interaction between ss 6(4) and 10(8) as it
relates to disputes about
equal pay for work of equal value, and
whether those claims must be founded on a listed or analogous
arbitrary ground of discrimination.
[3]
The appeal is against an arbitration award
in which the third respondent, commissioner Carlton Johnson of the
CCMA, upheld a claim
of unfair discrimination brought by Workers
Against Regression (“WAR” or “the union”) on
behalf of seven
members. Although the union did not
specifically refer to s 6(4) in its request for arbitration, it
described the issues
in dispute as follows:
“
1.
Discrimination against drivers who are non union members.
2.
Equal pay for equal work (drivers).
3.
Van assistants earning more than drivers.”
[4]
Under “outcome required”, the
union stated:
(a)
Equal pay for equal work for union’s
drivers (work of equal value).
(b)
Agreement with other union to pay our
members 20% less discriminatory.”
[5]
It was common cause that, in accordance
with a collective agreement with the Food & Allied Workers Union
(“FAWU”),
Pioneer (the appellant) pays newly appointed
employees for the first two years of their employment at 80% of the
rate paid to its
longer serving employees. The Commissioner
found that, by applying this to the seven members represented by WAR,
Pioneer
had unfairly discriminated against them in breach of section
6 of the EEA. He ordered the payment of damages and the
correction
of the remuneration rate of the employees concerned “to
100% ratio of the entry level applicable…”
[6]
Pioneer contends that the Commissioner
erred in numerous respects, which are set out at some length in its
notice of appeal.
Before I consider those grounds,
the new statutory setting must be outlined.
The
Statutory Setting
[7]
Section 6(1) of the EEA provides :
“
No
person may unfairly discriminate, directly or indirectly, against an
employee, in any employment policy or practice, on one or
more
grounds, including race, gender, sex, pregnancy, marital status,
family responsibility, ethnical social origin, colour, sexual
orientation, age, disability, religion, HIV status, conscious,
belief, political opinion, culture, language, birth
or
on any other arbitrary ground
.”
[3]
[8]
The highlighted portion was added by the
Amendment Act that came into force on 1 August 2014.
[9]
The newly enacted section 6(4) now adds the
following provision:
“
A
difference in terms and conditions of employment between employees of
the same employer performing the same or substantially the
same work
or work of equal value that is directly or indirectly based on any
one or more of the grounds listed in subsection (1),
is unfair
discrimination.”
[10]
Mr
Freund
argued that s 6(4) appears to apply only in respect of the various
grounds listed in section 6(1); i.e. it does not specifically
apply
to unfair discrimination on “any other arbitrary ground”
as referred to at the end of section 6(1). But
whether this is
correct or not, he accepted, is of little importance, since section
6(1) itself would seem to imply that an employer
may not unfairly
discriminate in respect of terms and conditions of employment on an
unlisted, arbitrary ground.
The
arbitration award
[11]
The Commissioner described the dispute as
follows:
“
It
must be determined whether [Pioneer] unfairly discriminates against
the [employees] by remunerating them at 80% ratio as opposed
to the
100% ratio applicable to the position of driver and paid to other
drivers doing the same work.”
[12]
He accepted as common cause that, in terms
of the collective agreement with FAWU, the 80% ratio would apply to
“new entrants”
for the first two years whereafter
remuneration would go to the 100% ratio.
[13]
The Commissioner accepted that the onus was
on the employees to identify and prove the arbitrary ground on which
they alleged discrimination.
And in addition, the differentiation
would amount to unfair discrimination only if the arbitrary ground on
which the differentiation
is established impairs their dignity and is
a barrier to equality.
[14]
Within this legal context, the Commissioner
found that “the difference in remuneration is not fair and not
based on rational
grounds.” He found that paying the new
entrants at 80% in accordance with the collective agreement was “in
conflict
with the requirement of equal pay for equal work”.
[15]
The Commissioner’s reason for this
conclusion was that the employees had performed services as drivers
to Pioneer through
a labour broker before they were employed by
Pioneer. For example, Shakoer Arnold was employed by Pioneer as a
driver. He resigned
and took up employment with the labour broker or
temporary employment service (TES). He was employed by Pioneer again
as from 1
November 2014. The Commissioner concluded:
“
In
the circumstances the differentiation in remuneration is unfair as it
appears to be based on the fact that the [employees’]
previous
indirect employment via the temporary employment service is ignored.
The [employees] are not new entrants in the true
sense of the word.”
[16]
Although
he accepted that the dispute before him was not one in terms of s
198A of the LRA
[4]
, the
Commissioner took into account the provision in that Act that, after
three months, the “client” is deemed to be
the employer
of an employee employed by a TES. He found that those workers had to
be employed on no less favourable terms than
existing employees; and
that the differentiation agreed to in the collective agreement was
“arbitrary and manifestly unfair.”
[17]
The Commissioner concluded that the
employees had established that Pioneer unfairly discriminates against
them and that they are
entitled to damages. He ordered Pioneer to pay
them the equivalent of the difference in remuneration between them
and the longer
serving drivers for the period 1 November 2014 to 1
August 2015. He also ordered Pioneer to correct their remuneration to
100%
ratio of the applicable grade with effect from 1 August 2015.
Evaluation
of the union’s claim
[18]
It is common cause that the union did not
allege discrimination on any of the grounds listed in section 6(1).
It follows
that, as regards the burden of proof, section 11(1) has no
application and that section 11(2) is in point. That subsection
provides:
“
If
unfair discrimination is alleged on an arbitrary ground, the
complainant must prove, on a balance of probabilities, that –
(a)
the conduct complained of is not rational;
(b)
the conduct complained of amounts to
discrimination; and
(c)
the discrimination is unfair. ”
Complainant
must prove differentiation on a listed or “other arbitrary”
ground
[19]
To establish pay discrimination it is
necessary for a complainant to show that:
19.1
the work performed by the complainant is
equal or of equal value to that of a more highly remunerated
comparator;
and
19.2
such
difference in pay is based on a prohibited ground of
discrimination.
[5]
[20]
In
order to prove that the conduct complained of “amounts to
discrimination” in terms of section 11(2)(b), the complainant
must identify the listed or unlisted arbitrary ground of
discrimination relied upon; establish that that ground is an “other
arbitrary ground”; and prove that that ground is the reason for
the disparate treatment complained of. As this Court
observed
in
Ntai
& Others v SA Breweries Ltd
:
[6]
“
Litigants
who bring discrimination cases to the Labour Court and simply allege
that there was ‘discrimination” on some
or other
‘arbitrary’ ground, without identifying such ground,
would be well advised to take note that the mere “arbitrary’
actions of an employer do not, as such, amount to ‘discrimination’
within the accepted legal definition of the concept.”
[21]
In
Louw
v Golden Arrow Bus Services (Pty) Ltd
[7]
, this Court held:
“
Discrimination
on a particular ground means that the ground is the
reason
for disparate treatment complained of. “
[22]
In
an unfair discrimination claim where the act or omission is shown to
constitute differentiation between people or categories
of people,
the Court embarks on the following two-stage analysis, as laid down
in the seminal decision of the Constitutional Court,
Harksen
v Lane N.O.
[8]
:
“
(i)
Firstly, does the differentiation amount to ‘discrimination”?
If it is on a specified ground, then the discrimination
will have
been established. If it is not on a specified ground, then
whether or not there is discrimination will depend upon
whether,
objectively, the ground is based on attributes and characteristics
which have the potential to impair the fundamental
human dignity of
persons as human beings or to affect them adversely in a comparably
serious manner.
(ii)
If the differentiation amounts to ‘discrimination’, does
it amount to ‘unfair discrimination’?
If it is
found to have been on a specified ground, then unfairness will be
presumed. If on an unspecified ground, unfairness
will have to
be established by the complainant. The test of unfairness focuses on
the impact of the discrimination on the complainant
and others in his
or her situation.”
[23]
See
also:
Ntai
& Others v SA Breweries Ltd
[9]
:
“
It
is only when such differentiation is based on or linked to an
unacceptable ground that it becomes discrimination within its
pejorative meaning.”
[24]
And
in
IMATU
& ano v City of Cape Town
[10]
the Court added:
“
The
impact of the discrimination complained of on the complainant is
generally the determining factor regarding the unfairness of
alleged
discrimination. Factors which must be taken into account include: the
position of the complainants in society and whether
they have
suffered in the past from patterns of disadvantage; the nature of the
provision or power and the purpose sought to be
achieved by it; the
extent to which the discrimination has affected the rights or
interests of complainants and whether it has
led to an impairment of
their fundamental human dignity or constitutes an impairment of a
comparably serious nature.”
[25]
It is against this analysis that the
alleged discrimination asserted by the complainants must be assessed.
Lack
of clarity during the trial as to the alleged ground of
discrimination
[26]
After all the evidence in the arbitration
had already been led, and in the course of making arrangements for
the filing of heads
of argument, the Commissioner reminded the union
that:
“…
you
need to also be very clear about what ground of discrimination you
are relying [on] in this matter.”
[27]
He emphasised that the mere fact that there
was a difference in salary, without that difference being linked to a
specific ground,
did not amount to discrimination. He directed
that only “once you have identified your ground and you’ve
submitted
your arguments” would the Appellant be in a position
to submit its heads of argument in response.
[28]
As Mr
Freund
submitted, the Commissioner’s direction at this late stage
demonstrates that the arbitration had been run without the
arbitrator,
much less the appellant, having any clear idea as to the
essence of the case against which the appellant had been called on
during
the arbitration to defend itself. If there is thought to
be any doubt in this regard, it was dispelled by the response to
the
above direction by the union’s representative, Mr Hendriks:
“
We
don’t know the ground.”
[29]
In other words, the union confirmed that
the arbitration had run its course without the union’s claiming
to know – much
less to have revealed – the unlisted
arbitrary ground on which it relied.
[30]
In its subsequently produced heads of
argument, the union for the first time asserted unambiguously that
the unlisted arbitrary
ground relied upon was the following:
“
The
applicants allege that they have been discriminated against because
they are being paid less than other employees performing
the same or
substantially the same work on an arbitrary ground. That ground is
the fact of their being newer employees, their having
started working
for [Pioneer]] later than their colleagues. It is submitted that
[Pioneer’s] conduct on paying them less
for that reason
(because there appears to be no other) was not rational, amounted to
discrimination and was unfair.”
[31]
As Mr
Freund
pointed out, it is striking that this
allegation was cast in broad and general terms and was not related in
any way to new employees
with previous service to Pioneer via a
labour broker.
[32]
Differentiation
on the basis of “being newer employees” is not an
unlisted arbitrary ground of discrimination; and a
practice of paying
newer employees at a lower rate for a two year period is in any event
neither irrational nor unfair. The
Code of Good Practice on
Equal Pay / Remuneration for Work of Equal Value
[11]
specifically states that it is not unfair discrimination if the
difference is fair and rational and is based on any one or a
combination
of the following factors:
“
the
individuals’ respective seniority or length of service”.
[33]
And
this justification must in any event be seen against the background
that the Commissioner allowed the case to proceed without
first
requiring WAR to identify what the unlisted ground of discrimination
on which its case was premised was alleged to be.
In terms of
section 138(1) of the Labour Relations Act, read with section 10(7)
of the EEA, a commissioner is obliged to determine
the dispute
“fairly”. This necessarily implies, as the
Constitutional Court has held, that he or she “must
act fairly
to all the parties”
[12]
,
including the employer. It is not fair to the employer for an
arbitration to run without the complainant union being required
to
identify – and then being held to – the unlisted
arbitrary ground of discrimination relied upon. That fact in itself
would have made the award reviewable; there can be little doubt that
it is also a valid ground for appeal.
“
Labour
broker permanency” as the ground relied upon
[34]
It is common cause that all seven of the
complainant employees had, prior to becoming employees of Pioneer on
1 November 2014, rendered
services to it for an unknown or
unspecified period “in some form of indirect labour broking or
whatever”, as the Commissioner
put in when debating the case
with Pioneer’s representative during his opening address at the
arbitration.
[35]
But the union did not assert “labour
broker permanency” as the unlisted arbitrary ground on which it
based its case
at arbitration. Had the union articulated that
previous employment by a labour broker (or by a “temporary
employment service”)
was the arbitrary unlisted ground of
discrimination on which it relied, this might have constituted a case
which was intelligible,
albeit fundamentally flawed on the facts.
It would have been flawed on the facts because it was common cause
throughout that
the 80% rate was paid to all new entrants in
accordance with a collective agreement. It thus became common cause
that the seven
members’ 80% starting rate was not caused by the
fact that they had formerly been employed by labour brokers, but by
the
fact that they – like all other new entrants –
started for two years at the 80% rate agreed with FAWU for new
entrants.
Award
contrary to the case argued by the union and not based on proved
facts
[36]
The case that Pioneer was called upon to
meet in WAR’s heads of argument was that the arbitrary ground
was “the fact
of their being newer employees, their having
started work for [Pioneer] later than their colleagues”.
Inexplicably,
the arbitrator makes no reference to this in his
award. Instead he finds that it was the employees’
“status as
former temporary employment service employees”
that triggered the difference in remuneration.
[37]
It is irregular and contrary to the
principles of fairness to find against an employer on a basis
different from that which was
argued against it and which it was
called upon to argue. The union should have been held to the case
which it argued (even though
I hold below that that case was in any
event without merit).
[38]
Moreover, the arbitrator’s finding
that it was the employees’ status as former temporary
employment service employees
that triggered the difference in
remuneration is not founded on the facts as proved. There was
no evidence to contradict
Pioneer’s evidence that the 80% rate
was paid to all those taken into its employment on 1 November 2014
(the date on which
the seven complainants were employed) and was not
paid only to former labour broker employees.
[39]
Secondly, the award overlooked the material
differences between the circumstances of the three complainants who
testified, and overlooked
the absence of evidence or relevant agreed
facts in relation to the other four complainant employees. It
unfairly and inappropriately
treated the case of Mr Shakoer Arnold as
typical of all seven.
[40]
Mr Robert Xakaza had some years previously
been employed by Pioneer but had resigned in July 2013 to take up
alternative employment
in Umtata. More than a year later,
in August 2014, he became employed by a labour broker, Capacity.
Within
three months of becoming a labour broker employee (i.e. on 1
November 2014) he was again employed by Pioneer (at the 80% rate).
Thus if Mr Xakaza is to treated as having a claim based on his former
status as a labour broker employee, he only enjoyed this
status for
three months or so. It cannot be that every driver employed by
a labour broker who has ever rendered any services
to Pioneer, no
matter how short the period concerned, thereby acquires a right to
equal terms and conditions of employment with
all its long serving
employees from the date of appointment.
[41]
It does not appear from the record that Mr
Raymond Willie had previously been employed by Pioneer. This
seems to indicate
that a previous period of direct employment with
Pioneer formed no part of the basis on which the Commissioner found
against it.
What does appear from the record is that Mr Willie
had been employed by a labour broker since 2010 and that he was then
employed
by Pioneer with effect from 1 November 2014.
[42]
Mr Shakoer Arnold was a former Pioneer
employee who, after 16 years’ service, decided in March 2011 to
resign to cash in his
provident fund. The consequence, as
he expressly volunteered in his evidence in chief, was that he had
“broken
service”. Thereafter he took up
employment with a labour broker and was again employed by Pioneer,
like the others,
on 1 November 2014.
[43]
There is no evidence at all in respect of
the other four employee applicants. Although it is common cause
that they had rendered
services to the company whilst employed by a
labour broker, there is nothing to show for what period or periods
this took place.
So far as appears from the record, it could be that
they had not served in this capacity any longer than Mr Xakaza’s
three
months.
[44]
It therefore emerges that the
Commissioner’s approach rests on nothing more than a finding
that it amounts to unfair discrimination
for the Appellant to pay a
newly appointed employee previously employed by a labour broker at a
rate lower than the rate paid to
existing long-service employees, no
matter how short the period of previous employment with the labour
broker.
[45]
That cannot be correct. Nothing in the EEA
precludes an employer from adopting and applying a rule in terms of
which newly appointed
employees start at a rate lower than existing
long-serving employees. This applies whether or not the newly
appointed employee
had previous substantial experience, whether with
the employer concerned or some other employer. It also applies
whether
or not the employee had, in the past, rendered services to
the employer concerned via a labour broker. But first it is
necessary
to refer in a little more detail to the concrete facts of
this matter.
Reason
for the differential rates
[46]
The lower rate of remuneration paid to the
seven complainants was a consequence of a term in two successive
collective agreements
between Pioneer and FAWU, concluded on 25 June
2013 and 12 August 2014 respectively. Of importance is the
fourth bullet point
in clause 2.2 of the first of these agreements ,
which provides:
“
New
entry minimums for new employees from outside the Company; to be at
80% of the current Grades in each category for two years.”
[47]
This came about because FAWU persuaded
Pioneer that it should reduce the extent to which it was then using
the services of various
forms of “precarious” employees,
including employees supplied by labour brokers. At the
same time FAWU
proposed the creation of a scale “that showed
differentiation between people who started now and people who have
been in
the company for years”. It proposed this
because “there is a lot of unhappiness from the long serving
workers,
that a person who start today, earn the same as a person
who’s been here for donkey year (sic).”
[48]
The 80% scale was applied to all “new
employees from outside the company”; it was not directed only
at persons who happened
formerly to have been employed by a labour
broker. Moreover, the lower scale would only be applicable for
the new employees’
first two years.
Differential
rates linked to periods of service
[49]
The arbitrator’s award, if correct,
has the startling implication that it is impermissible in terms of
the EEA for a South
African employer to give effect to a collective
agreement which prescribes differential rates for employees with
different periods
of service with it. The award is simply
wrong in this regard, and giving effect to such agreements does not
constitute
“discrimination” on an unlisted “arbitrary
ground”, much less “unfair” discrimination.
[50]
Differential
treatment is ubiquitous in modern life and in the workplace.
The EEA does not regulate such differential treatment
at all unless
and until it is established that it is both “not rational”
and constitutes “discrimination”.
(To constitute
“discrimination” the differentiation must take place on a
listed ground or on any “other arbitrary
ground”, as
contemplated to in section 6(1).) The following seminal
passage from the Constitutional Court’s
judgment in
Prinsloo
v Van der Linde
[13]
is directly applicable, notwithstanding the different statutory
context:
“
If
each and every differentiation made in terms of the law amounted to
unequal treatment that had to be justified by resort to section
33,
or else constituted discrimination which had to be shown not to be
unfair, the courts could be called upon to review the justifiability
or fairness of just about the whole legislative programme and almost
all executive conduct… The courts would be compelled
to review
the reasonableness or the fairness of every classification of rights,
duties, privileges, immunities, benefits or disadvantages
flowing
from any law. Accordingly, it is necessary to identify the
criteria that separate legitimate differentiation from
differentiation that has crossed the border of constitutional
impermissibility and is unequal or discriminatory ‘in the
constitutional sense’.”
[51]
The
Constitutional Court accepted
[14]
that it is impossible to regulate a modern country without
differentiation and without classifications which treat people
differently
and which impact on people differently. The Court held:
“
Differentiation
which falls into this category very rarely constitutes unfair
discrimination in respect of persons subject to such
regulation,
without the addition of a further element. What this further
element is will be considered later.”
[52]
The
Court described the common differentiation to which it was referring
as “mere differentiation” (as distinct from
“discrimination”) and held
[15]
(at para 25) :
“
In
regard to mere differentiation the constitutional State is expected
to act in a rational manner. It should not regulate
in an
arbitrary manner or manifest ‘naked preferences’ that
serve no legitimate governmental purpose…”
[53]
This approach is echoed in the EEA.
Section 6(1) prohibits unfair discrimination on any of the many
listed grounds “or
any other arbitrary ground”.
Section 11(1) places a burden of proof on the employer who is alleged
to have discriminated
on a listed ground to prove that such
discrimination did not take place as alleged, or is rational and not
unfair, or is otherwise
justifiable. But in relation to alleged
discrimination on an unlisted ground, section 11(2) obliges the
complainant to prove
that the conduct complained of “is not
rational;” and that it “amounts to discrimination”;
and that the
discrimination is “unfair”. Unless the
complainant proves that the conduct complained of “is not
rational”
that is the end of the matter. In this respect
section 11(2)(a) mirrors the approach adopted by the Constitutional
Court
in paragraph 25 of
Prinsloo
.
It is only if the differentiation is arbitrary or manifests “naked
preferences” that serve no legitimate purpose
that one even
moves on to consider whether there has been “discrimination”
and, if so, whether the discrimination was
unfair.
[54]
According
to ILO Convention 111 the criterion used in respect of an impugned
‘distinction, exclusion or preference’
on an unlisted
ground is whether that measure ‘has the effect of nullifying or
impairing equality of opportunity or treatment
in employment or
occupation.”
[16]
[55]
Mention
has already been made above of the test articulated in
Harksen
v Lane
[17]
as regards the test to be applied in determining whether a proffered
unlisted ground actually constitutes an “other arbitrary
ground”.
[18]
In
short, if the differentiation is not on a specified ground, then
whether or not there is discrimination will depend upon
whether,
objectively, the ground is based on attributes and characteristics
which have the potential to impair the fundamental
human dignity of
persons as human beings or to affect them in a comparably serious
manner.
[19]
[56]
Where a collective agreement stipulates
different pay levels for employees with different periods of service
with the employer concerned,
this is not arbitrary differentiation
(as contemplated in para 25 of
Prinsloo
);
nor is “length of service” (or being a “new
employee”) an unlisted ground meeting the test just referred
to.
[57]
Differentiation in respect of terms and
conditions of employment on the basis of length of service with the
employer concerned is,
on the contrary, a classic example of a ground
for differentiation which is rational and legitimate and, indeed,
exceedingly common.
That the lawgiver shares the view that this
is rational and legitimate is apparent inter alia from:
57.1
Regulation 7(1)(a) of the Employment Equity
Regulations 2014 , which includes “length of service” as
one of the “factors
justifying differentiation in terms and
conditions of employment”;
57.2
Section 198D(2)(a) of the LRA, which
includes “length of service” as a “justifiable
reason” for differential
treatment;
57.3
Clause 7.3.1 of the Code of Good Practice
on Equal Pay / Remuneration for Work of Equal Value.
[58]
In WAR’s heads of argument to the
Commissioner, the crux of the argument advanced was that it is not
rational to pay new employees
less than those who have been employed
longer. That was a wholly untenable legal proposition.
There is quite manifestly
a rational connection between using length
of service as a factor determining pay, and the objective of
recognising long service
and loyalty of existing employees. The
Commissioner ought to have dismissed the case on that basis alone.
[59]
Moreover, length of service with the
employer concerned as a factor affecting pay levels is not an “other
arbitrary ground”,
as contemplated in section 6(1) or in the
test laid down by the Constitutional Court. Treating people
differently in the
workplace in accordance with their length of
service with the employer does not impair their fundamental human
dignity or affect
them adversely in a comparably serious manner.
The unlisted ground proffered by the union in its heads of argument
did not
qualify. That too should have been the end of its case.
[60]
And
even if the inclusion of an “arbitrary” ground is meant
to widen the scope of discrimination in the context of equal
pay for
work of equal value, the distinction in this case – length of
service – is not arbitrary. This wider reading
of the new
subsection is discussed in these terms by Du Toit:
[20]
“
[T]he
reintroduction of the prohibition of discrimination on ‘arbitrary’
grounds cannot be understood as merely reiterating
the existence of
unlisted grounds, which would render it redundant. To avoid
redundancy, ‘arbitrary’ must add something
to the meaning
of ‘unfair discrimination’. Giving it the meaning
ascribed to it by Landman J in
Kadiaka
[21]
– that is, ‘capricious’ or for no good reason –
would broaden the scope of the prohibition of discrimination
from
grounds that undermine human dignity to include grounds that are
merely irrational without confining it to the latter.”
[61]
But even on this broader interpretation,
the differentiation between new entrants and longer serving employees
is rational, sanctioned
by collective agreement, and envisaged by the
Code of Good Practice.
Alleged
discrimination in any event not “unfair”
[62]
Even if “length of service” was
an “arbitrary” ground as contemplated in section 6(1) –
and I have
held that it is not -- paying differential rates in the
first two years of a new employee’s employment is not “unfair”
discrimination. It was simply not unfair for Pioneer to agree
with FAWU that new employees should earn less than those who
had
loyally remained in its service, and to implement this agreement.
It should also be borne in mind that, underlying the
collective
agreements, was a desire on the part of FAWU to persuade the
Appellant to create additional “permanent”
jobs, so as to
reduce the extent of utilisation of the various categories of
“precarious” employees. Absent agreement
on the 80%
rate for the first two years for such employees, there is no reason
to assume that the jobs would have been created
at all.
The very existence of the jobs must therefore weigh in the “fairness”
scale.
[63]
Moreover, Pioneer acted completely
transparently. It candidly revealed to every applicant for the
new positions that, for
the first two years, employment was to be on
the “80%” rate as provided for in the collective
agreement. The
complainants faced an election whether to agree
to this or not and – unlike some others – the seven
complainants elected
to agree, in writing.
[64]
The authorities appear to show that, where
unfair discrimination is proved, the mere fact that it is authorised
by a collective
agreement does not disclose a defence. But this
principle should not be stretched beyond its proper application.
I am persuaded
that, in determining whether there has been unfair
discrimination in the first place, it is by no means irrelevant that
the conduct
complained of is the product of a collective agreement
negotiated with a representative trade union. This is
particularly
the case where, as in this case, the reasons for
reaching agreement on the relevant point have been disclosed and are
in no sense
illegitimate and where, but for the term now objected to,
it is doubtful that the jobs concerned would ever have been created.
Failure
to make an exception in respect of former TES employees
[65]
The Commissioner may have been of the view
that it is permissible for an employer to pay new employees at a
lower rate than employees
with long service but that it is
nonetheless unfair discrimination not to make an exception in respect
of employees who have previously
rendered services to the same
employer whilst in the employ of a TES.
[66]
This approach appears to me to be contrary
to legal principle and untenable. There is no legal basis for
concluding that failing
to make such an exception amounts to unfair
“discrimination” against those formerly employed by a
TES.
[67]
The principle at stake can be illustrated
by considering various hypothetical examples cited by Mr
Freund
in his argument. Take the case of an employee employed by a company
for several years who resigns and a year or two later is once
again
employed by the same company. Because of his broken service, he
re-starts at the entry rate. Does this amount
to unlawful
discrimination? I think not.
[68]
Take another example. For some 20
years, an employee skilfully and diligently serves employer A.
He then resigns and
for the first time enters the employ of employer
B. Is employer B precluded by section 6 of the EEA from paying him at
the rate
which it pays its other new employees?
[69]
Take a third example. A driver with
no prior work experience at all works for a labour broker for three
months. He then
enters Pioneer’s employ. Is it
unlawful discrimination under the EEA that he should be paid at the
differential 80%
rate for two years? Surely not.
[70]
I am persuaded that, in each of these
cases, the application of a rule that employees entering the
employment of the employer start
off on the lower rate (e.g. 80%) on
the basis that they are “new entrants” or “new
employees” does not
constitute differentiation on an unlisted
arbitrary ground, and therefore does not constitute “discrimination”
at all.
There is nothing arbitrary or irrational about the
uniform application of a rule which sets different pay levels for
employees
with different lengths of service as employees of the
employer concerned. Even if the newly recruited employee has
the same
level of experience and expertise as the employer’s
existing long-service employees, this does not mean that applying a
differential
rate for all new employees constitutes differentiation
on an arbitrary ground, nor unfair “discrimination”.
Put
differently, there is no legal obligation to make an exception in
every instance where the newly employed employee has experience
which
is comparable to that of the employer’s long-serving employees.
Section
198A(5) of the LRA
[71]
Although the Commissioner was aware that
the case before him was not a dispute in terms of section 198A of the
LRA, he nonetheless
found that it was “necessary” to
consider the intention of that provision. He implied that
this provision
required him to find against the Appellant.
[72]
Section 198A had no application to the
dispute before the Commissioner and should therefore not have
affected its outcome.
First, the claim was brought as a claim
under the EEA and was not brought as a claim in terms of section 198A
of the LRA.
A claim brought under the EEA must be determined in
terms of, and by reference to, the EEA and not by reference to some
other Act.
Secondly, the differential treatment complained of,
which arose out of a collective agreement concluded some 18 months
before section
198A took effect, commenced before section 198A came
into force. Section 198A should not be “applied”
retrospectively.
Thirdly, on the facts section 198A(5) simply
had no application. By the time that it came into force the
employees concerned
had already become “permanent”
employees of the Appellant. There was therefore no possibility of
them being able to
bring a case pursuant to section 198A. Its
terms simply do not apply to this.
[73]
Moreover, section 198A(5) only requires
that a labour broker’s employee must be treated “on the
whole” not less
favourably than an employee of the client
performing the same work (absent a justifiable reason for different
treatment); it does
not necessarily require the basic rate of pay to
be the same. The Commissioner’s approach seems to imply,
first, that
it is permissible to focus only on one element of the
remuneration package and, secondly, that applied to the seven
complainant
employees they had been treated in a manner incompatible
with section 198A. It is, however, impossible to determine from
the record whether the three employees who testified were “on
the whole” financially better off in the employ of the
Appellant than when they were in the employ of their previous labour
broker employers. Still less is known in respect of
the
remaining four complainant employees. It is therefore quite
wrong to imply that section 198A somehow mandates a finding
against
the Appellant in respect of the claim brought against it under the
EEA.
Irrelevance
of regulations in terms of section 6(5)
[74]
Section 6(5) empowers the Minister to
“prescribe the criteria and prescribe the methodology for
assessing work of equal value
contemplated in subsection (4).”
[75]
Equal
pay for “work of equal value” is a different concept from
equal pay for “the same…work”.
“Work
of equal value” raises issues of considerable complexity which
are not regulated in any detail in the EEA itself.
And the Code
of Good Practice, which provides “practical guidance to
employers and employees on how to apply the principle
of equal pay /
work of equal value in their workplaces”,
[22]
specifically recognises length of service as a factor justifying
differentiation in pay.
CONCLUSION
[76]
In conclusion, I find that:
76.1
The differentiation complained of was not
irrational; was not based on an arbitrary unlisted ground; and was
not unfair;
76.2
The Commissioner ought therefore to have
dismissed the claim;
76.3
The Commissioner’s award should be
reversed and substituted by an order dismissing the claim;
76.4
The appeal should be upheld.
[77]
With regard to costs, I take into account
that the union had an award in its favour; that an appeal of this
nature is a novel issue
before this Court pursuant to new amendments
to the EEA; that the Union was represented by a trade union official;
and that there
is an ongoing relationship between the parties. I do
not consider a costs order to be appropriate.
Order
[78]
I therefore make the following order:
78.1
The appeal is upheld.
78.
The award is reversed and substituted with
an award that the union’s claim (on behalf of its seven
members) is dismissed.
_______________________
Anton Steenkamp
Judge
of the Labour Court of South Africa
APPEARANCES
APPLICANT:
Instructed
by:
Alec
Freund SC
Norton
Rose Fulbright.
FIRST
RESPONDENT:
M
G E Hendricks (union official).
[1]
Act
55 of 1998 (“the EEA”).
[2]
Act 47 of 2013.
[3]
My underlining.
[4]
Labour Relations Act 66 of 1995
.
[5]
Du Toit et al,
Labour
Relations Law: A Comprehensive Guide
(6
ed 2015, LexisNexis) p 705 (my underlining).
[6]
(2001) 22
ILJ
214 (LC) para 73.
[7]
(2000) 21
ILJ
188 (LC) at 197B. (Emphasis in the original).
[8]
[1997] ZACC 12
;
1998 (1) SA 300
(CC) at 325 A-D.
[9]
(2001)
22
ILJ
214
(LC) at para 17.
[10]
[2005] 10 BLLR 1084
(LC) [per Murphy AJ, as he then was] para 82.
[11]
GN 448 in
Government
Gazette
38837
of 1 June 2015 clause 7.3.1.
[12]
CUSA v
Tao Ying Metal Industries
[2008] ZACC 15
;
2009
(2) SA 204
at 224c.
[13]
1997 (3) SA 1012
(CC) para 17.
[14]
At para 24.
[15]
At para 25.
[16]
ILO Convention 111 art 1(1)(b), discussed in Du Toit et al
Labour
Relations Law: A Comprehensive Guide
(6 ed 2015) at 681.
[17]
1997 (11) BCLR 1489
(CC).
[18]
See
also
Prinsloo
at para’
s 29
to
33
;
National Coalition for Gay & Lesbian Equality v Minister of
Justice
1999
(1) SA 6
(CC) at para’
s 15
to
18
.
[19]
See
IMATU
v City of Cape Town
[2005]
10 BLLR 1084
(LC) para 82;
SAMWU
v Nelson Mandela Bay Metropolitan Municipality
[2016]
2 BLLR 202
(LC) paras 26 and 35.
[20]
Du Toit et al,
Labour
Relations Law: A Comprehensive Guide
(6 ed 2015) p 683.
[21]
Kadiaka
v Amalgamated Beverage Industries
(1999)
20
ILJ
373
(LC) para 43.
[22]
In the Code, ‘work of equal value’ is used to include
work that is the same or substantially the same or work of
equal
value as referred to in
s 6(4)
of the EEA.