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[2017] ZALCPE 10
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Formex Industries t/a Formex Engineering v Mibco (PR209/14) [2017] ZALCPE 10 (7 June 2017)
THE
LABOUR COURT OF SOUTH AFRICA
PORT
ELIZABETH
Not
Reportable
Case
No: PR 209/14
In
the matter between:
FORMEX
INDUSTRIES
T/A
FORMEX
ENGINEERING Applicant
and
MIBCO Respondent
Heard:
07 June 2016
Delivered:
07 June 2016
Date
edited and signed: 07 June 2017
JUDGMENT
PRINSLOO,
J
[1]
This is an application for the review in setting aside of the
decision of the Second Respondent’s (MIBCO) Appeal Committee
where it dismissed the Applicant’s appeal application in
respect of a wage exemption application.
Brief
background
[2]
A brief background to this matter is as follows; in terms of the
MIBCO main agreement wage increases are annually implemented
for the
period 1 September to 31 August.
[4]
The Applicant falls under Division C of Chapter 3 of the main
agreement and approximately 201 Formex employees falls under these
wage increase provisions.
[5]
In 2010, 2011 and 2012 Formex was granted exemption from the
stipulated percentage wage increase. This was granted by application
or appeal or review to this court. The 2013 increase was paid in
accordance with a special agreement between the Applicant and
the
relevant unions.
[6]
For the period 1 September 2013 a written wage agreement was
concluded for a period of 3 years from 1 September 2013 to 31 August
2016, referred to as the ‘exemption period’, and that is
the period relevant for this application.
[7]
The Applicant’s case is that in light of its ongoing financial
difficulties it applied for partial exemption from wage
increases for
the period 1 September 2013 to 31 August 2016. The application for
exemption was in accordance with the wage agreement.
[8]
The wage exemption application was submitted on 14 January 2014 and
amplified submissions were filed on 13 February 2014. The
Applicant
sought exemption from paying the full increase of the wage percentage
increments and sought to be exempted to the extent
that only partial
increases would be payable.
[9]
On 31 March 2014 the Applicant received the outcome of the exemption
application MIBCO as follows “
Please be
advised that your application was considered at the Wage Exemption
Board meeting held on 27 March 2014 and the board agreed
that your
application be declined.”
[10]
The Applicant subsequently lodged an appeal in respect of the outcome
of its exemption application on 14 April 2014. On 5 August
2014 the
Applicant received the outcome of the appeal wherein it was stated
that; “
Please be advised that your
appeal application was heard at the committee of party officials held
on 25 July 2014 and the committee
agreed to uphold the decision of
the Wage Exemption Board.”
No reasons
were provided for the outcome of the appeal and the Applicant’s
legal representative requested reasons for the
decision.
[11]
On 26 August 2014 the following reasons were provided in a letter
from MIBCO addressed to the Applicant. The reasons provided
to the
Applicant were as follows: “
The Wage
Exemption Board on 27 March found that the following requirements
were not met.
“
1. Financials. The projection
supplied does not make sense. The employer also applied for 3 years
exemption when this application
can only be considered annually.
2. Proof of consultation. The minutes
were not confirmed or signed off. There was no indication of which
employees were present.
There was no Annexure A signed off and
included in the application. The appeal application was therefore
dismissed and the decision
of the Wage Exemption Board was upheld.”
Summary
[12]
In summary, the appeal was dismissed for mainly two reasons. Firstly,
because the submitted projections did not make sense,
and secondly
because minutes were not signed off and there was no indication of
who was present. The dismissal of the exemption
as well as these
reasons are the subject of this current review application.
[13]
The record filed in this matter shows that the Applicant’s
appeal submissions comprised of 225 pages in total. The Applicant’s
grounds for review was set out in paragraph 32 to 37 of the founding
affidavit and 21 to 25 of the supplementary affidavit.
[14]
In the heads of argument the Applicant submitted that its grounds for
review are three main grounds and those appear from paragraph
31.1 to
31.3 in the heads of argument. Those grounds are as follows.
1.
The Appeal Committee failed to consider Formex
appeal application in the manner which was required of it in terms of
the main agreement,
namely, by considering Formex appeal submissions
and in particular the exemption criteria instead of treating the
application as
a review of the Exemption Board’s prevision
decision.
2.
There is no evidence that the Appeal Committee
attempted to apply its mind to the application before it or to seek
to obtain further
clarity when the issues were apparent and clear.
3.
The conclusion to which the appeal board came as
described in the appeal reasons and set out in MIBCO’s
answering affidavit
are, it is submitted not indicative of a body
which had considered properly at all the application which was before
it, nor are
they sufficient to justify turning down the appeal
application.
[15]
The first ground for review relates to the Appeal Committee’s
failure to consider the appeal application as required
by the main
agreement.
[16]
The Respondent’s case, and as it was argued in court today, is
that the application for exemption was defective from
the onset and
because there was no reason for the Exemption Board and subsequently
the Appeal Committee to consider that application
in its entirety.
[17]
The reason why the Respondent argues that the application was
defective from the onset relates to the reasons provided relating
to
the financial statements Mr Quixley for the Respondent argued that
the financial statements submitted by the Applicant were
not
sufficient and the second issue deals with the issue of consultation
and the fact that Annexure A to the application for exemption
was not
properly signed as is required by the Respondent.
Grounds
for review
[18]
I will deal with the first grounds for review namely that the Appeal
Committee failed to consider the appeal as required by
the main
agreement.
[19]
The Applicant’s case is that the main agreement in item 8.2(7)
thereof provides for the exemption criteria the Appeal
Committee must
consider with reference to all appeals. There are 10 factors set out
as criteria to be considered and those are,
inter
alia
, that a written motivation must be
submitted by the Applicant addressing the extent of the consultation
that took place, the scope
of the exemption required and special
economic or other circumstances which warrant exemption.
[20]
Mr Ellis, for the Applicant, submitted that there is no merit in the
Respondent’s case to say that there was no reason
for the
Respondent to consider the wage exemption application or the
subsequent appeal application on the basis that there was
no
compliance with the main agreement. Mr Ellis argued that there was
compliance in a material and substantive respect in that
Annexure A,
although not signed by the employees made cross reference to a record
of attendance contained in the bundle that accompanied
the
application and it made reference to page 6 thereof.
[21]
Be that as it may, the main agreement is clear in item 8.2(7) where
it stated that the Exemption Board must consider all appeals
with
reference to the said criteria. The appeal application that the
Applicant submitted to the Respondent dealt with all the criteria
and
it was addressed in the submissions that accompanied the appeal
application. The outcome of the appeal was communicated to
the
Applicant and that outcome was simply communicated as follows, “
Be
advised that your appeal application was head by the committee of
party officials on 25 July 2014. The committee agreed to uphold
the
decision of the Wage Exemption Board.”
[22]
When reasons were requested the issues about the financial
projections that did not make sense and the signing of the minutes
were raised. The Appeal Committee stated that the minutes were not
signed off, there was no indication of who were present and
that
there was no annexure signed off and included in the application.
[23]
The Applicant’s case is that the minutes were not signed off
but the attendance register was signed and it was explained
that the
unions did not want to participate in the process around an exemption
application. The attendance register in fact shows
who was present
and Annexure A was in fact included in the appeal application, and as
I already alluded to made cross reference
to the record of
attendance.
[24]
These were the reason for the reason for dismissing the appeal
application as set out by the Respondent. Glaringly absent from
the
reasons is any reference to the criteria set out in item 8.2(7) of
the main agreement. Whether the factors were indeed considered
is
unclear from the reasons provided and is thus necessitates a
consideration of the transcript of the appeal proceedings. The
transcript shows that the entire deliberation of the Appeal Committee
in relation to the Applicant’s appeal lasted for approximately
5 minutes and comprised 6 typed pages.
[25]
My concern is not the fact that it lasted for 5 minutes because it is
quite possible to take a proper decision in a few minutes’
time. My concern is the content of the discussion that had been
described and placed before this court. From the record placed
before
me it is apparent that the committee never properly considered the
Applicant’s application but rather took the view
that the issue
would any in event go to court and that they would meet the Applicant
in court and that they would defend the matter
in court.
[26]
There was no proper analysis of the grounds for appeal or
consideration of any of submissions made by the Applicant when the
matter served before the Appeal Committee. It is evident from the
transcript as well as the reasons provided for dismissing the
appeal
that there was no independent consideration of the appeal and the
submissions made by the Applicant. There was rather an
agreement to
uphold the decision of the Wage Exemption Board.
[27]
In argument before Court Mr Quixley for the Respondent referred me to
the very first paragraph in the transcript where the
chairperson set
out that this is an application for Formex and the technicalities
experienced as “
the financial projects
were not making sense. They also applied for 3 years whereas they can
only apply for 1. And the proof of
consultation we found to be
inadequate as the minutes were not confirmed or signed off. And there
is no indication of which employees
exactly were present. There was
no signed Annexure A.
”
[28]
I canvassed this issue with Mr Quixley in court and requested him to
show me in the record, even if his argument was correct
to say that
these were the reasons provided by the Wage Exemption Board and
accepting that his argument is correct, that the Appeal
Committee had
considered the argument or the reasons provided by the Wage Exemption
Board, where the Appeal Committee embarked
on an independent exercise
to consider and analyse the reasons as provided by the Wage Exemption
Board.
[29]
What I would have expected from the Respondent in considering the
appeal was to take those reasons and to consider whether
the
financial projections indeed were not making sense, whether indeed
there was any provision to say that the Applicant could
not apply for
3 years and I am not repeating all the other reasons provided by the
Respondents.
[30]
There was no assessment and there was no consideration. The Appeal
Committee simply sent a message to the Applicant to say
your appeal
was heard and the committee agreed to uphold the decision of the Wage
Exemption Board.
[31]
That is exactly the crux of this review application that there was no
consideration of the factors to be considered by the
Appeal Committee
and that it was simply an agreement of the decision by the Wage
Exemption Board and that is what the Respondent
communicated to the
Applicant.
[32]
This ground for review is linked with the second ground for review in
that the Appeal Committee did not apply its mind to the
application
before it and sought no clarity where the issues were unclear. In my
view there is merit in these grounds for review.
[33]
The third ground for review is that the conclusion to which the
Appeal Board came are not indicative of a body that has considered
the appeal properly. In my view this ground for review relates to the
outcome of the appeal process.
[34]
Mr Quixley argued that the Respondent was reasonable in dismissing
the appeal application because there was no compliance with
the main
agreement from the onset and that the application was defective from
the moment it was filed. I, however, cannot agree
with that argument.
[35]
In the matter of
Trafford
Trading (Pty) Ltd v the National Bargaining Council for the Leather
Industry of SA
[1]
this Court held that when considering an application such as this one
the bargaining council has to consider the grounds for exemption
as
set out in the collective agreement, to look at the submissions and
to make findings on those issues and considerations.
[36]
In
Trafford
Trading
[2]
the Court confirmed that the standard of review in exemption
proceedings is reasonableness and the question to be considered is
whether the decision is one that a reasonable decision-maker could
not reach in the circumstances. The reasons given for the decision
are not the sole determinant but all the material facts before the
committee should be taken into account.
[37]
In casu
it is evident
that the Appeal Committee did not consider the substantial appeal
application before it. It provided reasons not
only disconnected from
the issues it had to decide, but that were not sufficient or
convincing to justify the dismissal of the
application for appeal in
its entirety. The Appeal Committee had no regard for the criteria set
out in the main agreement and did
not consider the appeal application
independently. Even on the grounds that they considered the reason
for dismissal from the Wage
Exemption Board, it is evident there was
no independent consideration of those reasons. It follows that the
outcome of the decision
of the Appeal Committee was not reasonable.
[38]
I canvassed the issue of costs with both representatives and both
parties argued that costs should follow the result. I can
see no
reason to disagree.
Order
[39]
In the premise I make the following order.
1.
The ruling of the Respondent’s Exemption
Board dated 5 August 2014 is reviewed and set aside.
2.
The Applicant’s appeal in respect of its
exemption application is remitted to the Respondent for consideration
de novo
.
3.
The Respondent is to pay the costs.
__________________
Connie
Prinsloo
Judge
of the Labour Court
APPEARANCES:
For
the Applicant : Advocate Ellis
For
the Respondent: Advocate Quixley
[1]
(2010) 31
ILJ 761 (CC)
[2]
Supra