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[2017] ZALCCT 20
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National Bargaining Council for the Road Freight and Logistics Industry v Anderson Transport (Pty) Limited and Others (C161/16) [2017] ZALCCT 20 (23 May 2017)
THE
LABOUR COURT OF SOUTH AFRICA, CAPE TOWN
JUDGMENT
NOT
reportable
Case
no: C161/16
In
the matter between:
THE
NATIONAL BARGAINING COUNCIL FOR
THE
ROAD FREIGHT AND LOGISTICS
INDUSTRY
Applicant
and
ANDERSON
TRANSPORT (PTY) LIMITED
First Respondent
SOUTH
AFRICA TRANSPORT AND ALLIED
WORKERS
UNION (SATAWU)
Second
Respondent
JJ
KITSHOFF NO
Third
Respondent
Heard
:
23 March 2017
Delivered
:
23 May 2017
JUDGMENT
RABKIN-NAICKER
J
[1]
This is an opposed application to review and set aside an arbitration
award under case number CTTU100008/4048/15. The third
respondent (the
Arbitrator) set aside a compliance order issued by the applicant on
11 August 2015. The applicant also seeks an
order condoning the late
delivery of the application. I have decided to grant condonation and
deal with the merits of the review.
[2]
On the 11 August 2015, following an investigation into a complaint by
SATAWU the applicant issued the first respondent (the
company) with a
compliance order under section 33(A) of the LRA. The order was issued
on the basis that the company’s incentive
scheme did not comply
with clause 35 of the applicant’s Main Agreement. The Main
Agreement bound parties and non-parties
in the sector from its
inception on 16 January 2012 until 29 February 2016. The Arbitrator
found that the Company had not breached
clause 35 of the Main
Collective Agreement.
[3]
Clause 35 of the Main Agreement provides as follows:
“
35.
Incentive Work
(1)
An employer may introduce an incentive scheme in terms of which an
employee’s remuneration
is based on the quantity of work done
or the employee’s output, if –
(a)
the scheme complies with this clause and has the approval of the
Council;
(b)
the registers prescribed in Clauses 50 and 51 of this Agreement are
properly kept;
(c)
an employee who is part of the scheme, is not paid less than the
amount that employee
would otherwise be entitled to in terms of
clauses 11, 14, 15 and 36 and Schedule 5.
(2)
An employer who wishes to introduce an incentive scheme must set up a
committee consisting
of an equal number of representatives of
management and elected representatives of employees to negotiate and
agree the terms of
the scheme.
(3)
The terms of an incentive scheme –
(a)
must be reduced to writing and be signed by all the members of the
joint representative
committee; and
(b)
may not be varied or terminated by any party to the scheme unless
that party –
(i)
has given all other parties notice in writing as may have been agreed
upon by
the parties who entered into the scheme;
(ii)
has complied with any other obligations set out in the scheme for
varying or terminating
the scheme.”
[4]
The company’s case before the arbitrator was that it was not
required to comply with Clause 35 of the Main Agreement.
It alleged
that:
4.1
The incentive scheme was contained in its employees’ contracts
of employment, alternatively,
that the incentive scheme was operated
in terms of an existing practice.
4.2
Since these contracts of employment (or practice) pre-dated the
promulgation of the Main
Agreement, clause 35 had no application to
the company’s incentive scheme.
[5]
The Arbitrator reasoned as follows in his Award:
“
4. Collective agreements
entered into by the Council to regulate the remuneration and benefits
negotiated by the Parties to the
Council are governed by the
Constitution of the Council. Clause 3 – EXCLUSIONS of the
Constitution of the Council reads:
3.1 The Bargaining Council shall
not
regulate
(my emphasis) or conclude agreements on:
3.1.1 ………
3.1.2 ……….
3.1.3 Bonus or incentive schemes that
are directly linked to profit or productivity or both, provided that
these schemes are negotiated
with employee representatives or
representative trade unions and that these schemes will not detract
from agreements reached in
Clause 2.1 above
[1]
.
The
meaning of the word representative in sub-clause 3.1.3 is the
ordinary meaning of 50% plus one of the employees employed by
an
employer or a trade union, whether a Party to the Council not, which
has as its members 50% plus one of employees employed by
an employer.
It
was common cause that the employees who were members of the Union had
all signed contracts of employment embracing the Incentive
Scheme at
issue. The Union represented 32% of the employees of the 1
st
Respondent.
It
was common cause that the Council had carried out bi-annual audits at
the 1
st
Respondent and that the 1
st
Respondent
was found to be compliant.
Despite
the provisions of clause 3 of the Constitution, the Council had
included clause 35 in the Main Collective Agreement to regulate
the
introduction
of incentive schemes negotiated by an employer
and its employees. In my opinion clause 35, rightly or wrongly was
intended to regulate
incentive schemes which the Constitution
specifically excluded from regulation. It follows that sub-clause
3(b)(i) regulated how
an incentive scheme must be terminated. The
Main Collective Agreement is subordinate to the provisions of the
Constitution of the
Council and to regulate how incentive schemes
must be terminated was not intended by the Constitution.
I
find that the 1
st
respondent had a compliant incentive
scheme in place. It was established or “introduced” prior
to the promulgation
of the current Main Collective Agreement of the
Council. The employees have signed employment contracts which embrace
the provisions
of the Incentive Scheme.”
[7]
It was submitted by Mr Leslie who appeared for the applicant that the
fundamental flaw in the Arbitrator’s reasoning is
that it
disregards the legal effect of a binding collective agreement as
provided for in section 23 of the LRA. In terms of section
23(3) of
the LRA a collective agreement varies any contract of employment.
[8]
Furthermore, the provisions of section 199 of the LRA must be taken
into account. These read as follows:
“
199 Contracts of
employment may not disregard or waive collective agreements or
arbitration awards
(1) A contract of employment,
whether
concluded before or after the coming into operation of any applicable
collective agreement
or arbitration award, may not-
(a)
permit an employee to be paid remuneration that is less than that
prescribed by that collective
agreement or arbitration award;
(b)
permit an employee to be treated in a manner, or to be granted any
benefit, that is less
favourable than that prescribed by that
collective agreement or arbitration award; or
(c)
waive the application of any provision of that collective agreement
or arbitration
award.
(2) A provision in any contract that
purports to permit or grant any payment, treatment, benefit, waiver
or exclusion prohibited
by subsection (1) is invalid.”
(emphasis mine)
[9]
The Arbitrator accepted that the employment contracts in question
trumped the collective agreement without enquiring into whether
as
alleged in argument, it was
in fact
the case that the
employees’ terms and conditions of employment were better than
those provided for in the collective agreement.
I agree with the
submission that in doing so he committed a material misdirection.
[10]
It was submitted on behalf of the Company that the matter before the
Arbitrator was simply whether the incentive scheme in
question had
been introduced after the promulgation of the collective agreement.
The company submits that this Court cannot examine
whether the
interpretation of the word ‘introdution’ by the
Arbitrator Commissioner is correct law, but must confine
itself to
considering whether he reached a reasonable conclusion. The Labour
Appeal Court has stated per Sutherland JA in
MacDonald's
Transport Upington (Pty) Ltd v Association of Mineworkers &
Construction Union & others
[2]
,
a case dealing with a review of a Commissioner’s interpretation
of a union’s constitution, as follows:
“
[26]
Is a 'reasonable' arbitrator entitled to be wrong on the law? In
Herholdt, the court held at para 25:
'In summary, the position regarding
the review of CCMA awards is this: A review of a CCMA award is
permissible if the defect in
the proceedings falls within one of the
grounds in s 145(2)(a) of the LRA. For a defect in the C conduct of
the proceedings to
amount to a gross irregularity as contemplated by
s 145(2)(a)(ii), the arbitrator must have misconceived the nature of
the enquiry
or arrived at an unreasonable result. A result will only
be unreasonable if it is one that a reasonable arbitrator could not
reach
on all the material that was before the arbitrator. Material
errors of fact, as well as the weight and relevance to be attached
to
particular facts, are not in and of themselves sufficient for an
award to be set aside, but are only of any consequence if their
effect is to render the outcome unreasonable.'
[27] Part of the 'material' alluded to
in Herholdt must be the text of the constitution which, logically,
must be properly read
and properly understood. Davis JA in DENOSA
postulated that the 'law' is a dimension of the factual matrix (in
the peculiar sense
used to circumscribe what it is to which an
arbitrator must apply his mind). When the arbitrator read the
document, he misunderstood
its objective meaning. Can it be said that
such a finding caused a wrong, and axiomatically, therefore an
unreasonable, result
as contemplated by Sidumo, more especially if
proper weight is to be given to the requirement, among others, that
decisions be
'lawful' mentioned by Navsa AJ in Sidumo?
[28] In Telcordia Technologies Inc v
Telkom SA Ltd, the court held that in a private arbitration, subject
to the
Arbitration Act 42 of 1965
, there was no room to complain that
the arbitrator was wrong on the interpretation of a contract, and
provided the arbitrator understood
the task presented to him, such an
error was irreparable on review. However, in Hira & another v
Booysen & another, Corbett
CJ H famously held:
'To sum up, the present-day position
in our law in regard to common-law review is, in my view, as follows:
(1) Generally speaking, the
non-performance or wrong performance of a statutory duty or power by
the person or body entrusted with
the duty or power will entitle
persons injured or aggrieved thereby to approach the Court for
relief by way of common-law
review. (See the Johannesburg
Consolidated Investment case supra at 115.)
(2) Where the duty/power is
essentially a decision-making one and the person or body concerned (I
shall call it "the tribunal")
has taken a decision, the
grounds upon which the Court may, in the exercise of its common-law
review jurisdiction, interfere
with the decision are limited. These
grounds are set forth in the Johannesburg Stock Exchange case supra
at 152A-E.
(3) Where the complaint is that the
tribunal has committed a material error of law, then the
reviewability of the decision will
depend, basically, upon whether or
not the Legislature intended the tribunal to have exclusive authority
to decide the question
of law concerned. This is a matter of
construction of the statute conferring the power of decision.
(4) Where the tribunal exercises
powers or functions of a purely judicial nature, as for example where
it is merely required to
decide whether or not a person's conduct
falls within a defined and objectively ascertainable statutory
criterion, then the Court
will be slow to conclude that the tribunal
is intended to have exclusive jurisdiction to decide all
questions, including
the meaning to be attached to the statutory
criterion, and that a misinterpretation of the statutory criterion
will not render
the decision assailable by way of common-law review.
In a particular case it may appear that the tribunal was intended to
have
such exclusive jurisdiction, but then the legislative intent
must be clear.
(5) Whether or not an erroneous
interpretation of a statutory criterion, such as is referred to
in the previous paragraph
(ie where the question of interpretation is
not left to the exclusive jurisdiction of the tribunal concerned),
renders the decision
invalid depends upon its materiality. If, for
instance, the facts found by the tribunal are such as to justify its
decision even
on a correct interpretation of the statutory criterion,
then normally (ie in the absence of F some other review ground) there
would
be no ground for interference. Aliter, if applying the correct
criterion, there are no facts upon which the decision can reasonably
be justified. In this latter type of case it may justifiably be said
that, by reason of its error of law, the tribunal "asked
itself
the wrong question", or "applied the wrong test", or
"based its decision on some matter not prescribed
for its
decision", or "failed to apply its mind to the relevant
issues in accordance with the behests of the statute";
and that
as a result its decision should be set aside on review.
(6) In cases where the decision of the
tribunal is of a discretionary (rather than purely judicial) nature,
as for example where
it is required to take into account
considerations of policy or desirability in the general interest or
where opinion or estimation
plays an important role, the general
approach to ascertaining the legislative intent may be somewhat
different, but it is not necessary
in this case to expand on this or
to express a decisive view.'
[29] In this case, it seems to me
problematic to construe the conduct of arbitrator as not applying his
mind to the task at hand.
He knew he had to interpret the
constitution. He just got it wrong. This looks more like the
situation contemplated in the third
point made by Corbett CJ in Hira.
Does the LRA contemplate that an arbitrator in the CCMA or in a
bargaining council forum, both
statutory roles, has the last word on
the proper interpretation of an instrument? If it is, the necessary
implication would have
to be that a patently wrong interpretation
would have to be upheld on review. Such a result, in my view, would
be absurd.
[30] In my view, there is much to be
said for the proposition that an arbitrator in the CCMA or in a
bargaining council forum who
wrongly interprets an instrument commits
a reviewable irregularity as envisaged by
s 145
of the LRA; ie, a
reasonable arbitrator does not get a legal point wrong. If so, the
reasonableness test is appropriate to both
value judgments and legal
interpretations. If not, 'correctness' as a distinct test is
necessary to address such matters. However,
on either basis, the
ruling in this case must be set aside.”
[11]
On this authority the Company’s argument is without merit. I
find that the Arbitrator made a gross error of law and his
patently
wrong interpretation of the collective agreement leads him to a
decision that that a reasonable decision-maker could not
make. The
Arbitrator was bound to take cognisance of the provisions of
section
23
and
199
of the LRA in his exercise of interpretation of the Main
Agreement. In particular, I emphasise the wording of
section 199(1)
i.e. :
(1) A contract of employment, whether concluded before or
after the coming into operation of any applicable collective
agreement
or arbitration award, may not-….
”. This
wording puts pay to any submission that the word “introduction”
as used in the Main Agreement should be
understood to mean that the
Collective Agreement cannot trump a previously concluded employment
contract.
[12]
The Arbitrator also grossly misdirected himself in failing to have
regard to the actual contents of the existing incentive
scheme
contained in the contracts of employment.
[13]
In the premises, I consider that this Award must be reviewed and set
aside. I consider it proper that the matter be remitted
for
re-hearing. I make the following order:
Order
1.
The Award under case number CTTU100008/4048/15 is reviewed and set
aside.
2.
The dispute is remitted
back to the Applicant for hearing anew before an arbitrator
other
than third respondent.
3.
The first respondent is to pay the costs.
__________________
H.
Rabkin-Naicker
Judge
of the Labour Court
Appearances:
Applicant
:
G. Leslie instructed by Herold Gie Attorneys (Heads drafted by LW
Ackermann)
First
Respondent
: RGL Stelzner SC instructed by Maserumule Inc
[1]
Clause 2 of the Constitution deals with the objects of the Council
and clause 2.1 reads that one of these is: “To negotiate,
conclude and enforce collective substantive agreements on wages,
benefits and other conditions of employment. By decision of
Council,
regional and sectoral differences shall be accommodated where
conditions dictate;”
[2]
(2016) 37 ILJ 2593 (LAC)