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[2018] ZALCJHB 26
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South African Municipal Workers Union (SAMWU) and Another v City of Johannesburg and Others (JR2228/13) [2018] ZALCJHB 26; (2018) 39 ILJ 894 (LC) (2 February 2018)
IN
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Case no: JR 2228-13
Reportable
In
the matter between:
SOUTH
AFRICAN MUNICIPAL WORKERS
UNION
(SAMWU)
First Applicant
INDEPENDENT
MUNICIPAL AND ALLIED
WORKERS
UNION (IMATU)
Second Applicant
and
CITY
OF
JOHANNESBURG
First Respondent
MD
ALLY,
N.O
.
Second Respondent
SOUTH
AFRICAN LOCAL GOVERNMENT
BARGAINING
COUNCIL (SALGBC)
Third Respondent
Heard:
31 May 2017
Delivered:
2 February 2018
Summary:
Transfer of business - collective agreements - sections 197(5) and
197(6) of the LRA – Main/Sectoral
Agreements trump plant level
collective agreements covered by section 197(5)
JUDGMENT
WHITCHER,
J:
Introduction
[1]
The
applicant seeks to have reviewed and set aside the arbitration award
issued by the second respondent on 2 September 2013.
[2]
The first
respondent submitted in its answering affidavit that the review
application stands to be dismissed because of a significant
and
unexplained delay in its prosecution from when it was instituted on
16 October 2013. An incomplete record was filed 14 months
late on 9
March 2015 and the missing part was filed 5 months later on 19 August
2015, with no condonation application.
[3]
In
response, the applicants did not file a substantive condonation
application and instead tendered an explanation for the delay
in its
replying
affidavit,
which
is not a proper way to apply for a condonation.
[4]
They
further failed to provide a detailed and reasonable explanation for
the delay.
[5]
Moreover,
as submitted by the respondent, the applicants’ conduct of this
review is seriously prejudicial to the respondent
because the issue
which gave to the dispute occurred more than 4 years ago, in June
2013, and any decision which will require the
respondent to alter
that decision will have serious repercussions – the nature of
the dispute is such that it ought to have
been prosecuted throughout
with a sense of urgency to avoid the consequences of the respondent
having to alter a major decision
it took more than 4 years ago.
[6]
I decided,
however, to consider the merits of the review, considering it deals
with an important and novel subject matter.
The material facts
[7]
The
affected employees were previously employed by one of two municipal
entities, City Power (Pty) Ltd or Johannesburg Water (Pty)
Ltd (the
“MOEs”) which were wholly owned by the first respondent.
At the time, the affected employees’ terms
and conditions of
employment were governed by collective agreements concluded between
the applicants and City Power or Johannesburg
Water, as the case may
be (the “old collective agreements”).
[8]
During
2006, the first respondent decided to integrate all its revenue
collection and customer relations management functions. This
decision
led to the transfer of the affected employees from the MEO’s to
the first respondent. During December 2009, the
first respondent sent
letters to the employees informing them that they would be
transferred to the first respondent on terms and
conditions of
employment that are on the whole not less favourable to the employees
than those on which they were employed by the
old employer with
effect from 1 January 2010.
[9]
The
affected employees were transferred to the first respondent in
January 2010, in accordance with section 197 of the LRA. Their
terms
and conditions of employment continued to be governed by the old
collective agreements.
[10]
On 17
September 2012 the first respondent gave formal notice to the
applicants that the terms and conditions of employment of the
transferred employees would be determined by the SALGBC’s Main
Collective Agreement from the 1
st
January 2013. However, implementation was delayed to allow the
parties to negotiate at the Local Labour Forum. The discussions
deadlocked.
[11]
On 18 April
2013 the first respondent issued a further notice of its intention to
impose the SALGBC’s Main Collective Agreement
on the
applicants’ members.
[12]
During June
2013, the affected employees’ terms and conditions of
employment were altered so as to conform to those under
the Main
Agreement.
[13]
A table
indicating the differences between the old collective agreements and
the Main Agreement, which formed part of the evidence
before the
arbitrator indicates, for instance, that City Power and Johannesburg
Water female employees enjoyed 4 months’
paid maternity leave
whereas at the first respondent female employees are entitled to only
3 months’ paid maternity leave.
[14]
It is
important to note that the parties to this dispute are parties to the
Main Agreement and their members immediately on their
transfer fell
within the registered scope of the Main Agreements of the SALGBC and
SALGBC.
[15]
On perusal
thereof, I noted that a stated objective in all the Main Agreements
concluded from 2007 through to 2015 is to establish
common and
uniform conditions of service for employees falling within the
registered scope of the Council and to establish common
and uniform
procedures and monitoring processes for employers and employees
falling within the registered scope of the Council.
[16]
The
Agreements further provide that all previous conditions of service
relating to matters covered by the agreements are replaced
by the
conditions of service contained in the agreements.
The award
[17]
The
arbitrator formulated the issues for determination, as set out in the
pre-arbitration minute:
The CoJ contends that the affected
employees’ terms and conditions of employment are those
determined by the collective agreements
of the SALGBC [SALGBC’s
Main Collective Agreements].
The applicants contend that on a
proper interpretation of section 197, in particular section 197(5),
the terms and conditions of
the affected employees should be
determined by the collective agreements applicable to the [MOEs].
Which of the terms and conditions
of employment and/or collective agreements are
applicable
to
the employees transferred from the MOE’s to the CoJ?
[18]
The
arbitrator concluded that the terms and conditions of the transferred
employees are determined by the SALGBC’s Main Agreement,
i.e.
that the SALGBC’s Main Agreement has application.
[19]
He reasoned
that if regard is had to the factors listed below, the SALGBC’s
Main Agreement supersedes the transferred collective
agreements:
(i)
Sections
23(3) and 31 of the LRA.
(ii)
The
primary objective of the LRA, as enshrined in Section 1, namely
to provide a framework within which orderly collective
bargaining can
take place, with preference being given to collective bargaining at a
sectoral level.
(iii)
The
stated objectives of the sectoral collective agreements which is to
ensure uniformity and consistency of conditions of employment,
procedures and monitoring processes in an organized industry.
(iv)
The
fact that the
parties
to the dispute are parties to the SALGBC’s Main Agreement and
their members fall within the registered scope of the
agreement and
the SALGBC.
[20]
The
arbitrator reasoned that the stated
objectives
of the LRA and the Main Agreements would be negated where employees
who fall under the scope of the Main Agreement and
bargaining council
were governed by different collective agreements.
[21]
He
reasoned that the employees’ terms and conditions
of
employment became varied once they fell within the scope of the
Agreement and council.
The grounds of review
[22]
The
applicants contend that the arbitrator
wrongly
interpreted
the LRA. He failed to appreciate that, in the absence of an agreement
to the contrary in terms of section 197(5)(b)
and 197(6), section 197
(5) obliges the new employer to abide by collective agreements which
bound the old employer and further
provides the affected employees
continuity of employment on the terms set out in these collective
agreements. At the time of the
transfer the affected employees did
not contract out of this protection in terms of section 197(5)(b) and
197(6). Had the arbitrator
properly appreciated these provisions, he
would have concluded that the affected employees’ conditions of
service are regulated
by the old collective agreements; not the
SALGBC’s Main Agreements.
A legal framework
[23]
One
of the primary objectives of the LRA, as enshrined in Section 1, is
to provide a framework within which orderly collective bargaining
can
take place, with preference being given to collective bargaining at a
sectoral level.
[24]
Section
3 of the LRA provides that any person applying the LRA must interpret
its provisions to give effect to its primary objects.
[25]
This
means the interpreter is enjoined to adopt a purposive approach. When
encountering two possible meanings, the interpreter must
choose the
one more consonant with the objects of the Act. An interpretation
which limits rights should be avoided unless the contrary
appears
expressly or by necessary implication from the words of the Act, read
in its context.
[1]
[26]
In
Ceramic
Industries Ltd t/a Beta Sanitary Ware v NCBAWU and others,
[2]
the Court remarked that:
‘
[w]here
constitutional validity is not an issue it seems that an
interpretation that accords best with the general purpose of the
Act
(as set out in s 1) and the more specific purpose of a particular
section, should be followed.’
[27]
Section 23
of the LRA deals with the legal effect of collective agreements:
1.
A collective agreement binds-
a.
the parties to the collective
agreement;
b.
each party to the collective
agreement and the members of every other party to the collective
agreement, in so far as the provisions
are applicable between them;
c.
the members of a registered
trade union and the employers who are members of a registered
employers' organisation that are party
to the collective agreement if
the collective agreement regulates-
i.
terms and conditions of
employment; or
ii.
the conduct of the employers in
relation to their employees or the conduct of the employees in
relation to their employers;
d.
employees who are not members
of the registered trade union or trade unions party to the agreement
if-
i.
the employees are identified in
the agreement;
ii.
the agreement expressly binds
the employees; and
iii.
that trade union or those trade
unions have as their members the majority of employees employed by
the employer in the work-place.
2.
A collective agreement binds
for the whole period of the collective agreement every person bound
in terms of subsection (1) (c)
who was a member at the time it became
binding, or who becomes a member after it became binding, whether or
not that person continues
to be a member of the registered trade
union or registered employers' organisation for the duration of the
collective agreement.
3.
Where applicable, a
collective agreement varies any contract of employment between an
employee and employer who are both bound by
the collective agreement.
4.
Unless the collective agreement
provides otherwise, any party to a collective agreement that is
concluded for an indefinite period
may terminate the agreement by
giving reasonable notice in writing to the other parties.
[28]
Section
31 stipulates that a collective agreement concluded in a bargaining
council binds the members of registered trade unions
that are parties
to the collective agreement and the employers who are members of the
registered employers’ organization.
[29]
A
bargaining council is empowered in terms of s33A of the LRA to
enforce the collective agreements which it has concluded.
[30]
Section 197
reads as follows:
(1) …
(2) If a transfer of a
business takes place, unless otherwise agreed in terms of subsection
(6) –
(a)
the new employer is automatically substituted in the place of the old
employer in
respect of all contracts of employment in existence
immediately before the date of transfer;
(b)
all the rights and obligations between the old employer and an
employee at the time
of the transfer continue in force as if they had
been rights and obligations between the new employer and the
employee;
(c)
anything done before the transfer by or in relation to the old
employer, including
the dismissal of an employee or the commission of
an unfair labour practice or act of unfair discrimination, is
considered to have
been done by or in relation to the new employer;
and
(d)
the transfer does not interrupt an employee’s continuity of
employment, and
an employee’s contract of employment continues
with the new employer as if with the old employer.
(3)
(a)
The new employer complies
with subsection (2) if that employer
employs transferred employees on terms and conditions that are on the
whole not less favourable
to the employees than those on which they
were employed by the old employer.
(b)
Paragraph (a) does not apply to employees if any of their conditions
of employment
are determined by a collective agreement.
(4)
Subsection (2) does not prevent an employee from being transferred to
a pension, provident,
retirement fund other than the fund to which
the employee belonged prior to the transfer, if the criteria in
section 14(1)(c) of
the Pensions Funds (Act 24 of 1956), are
satisfied.
[3]
(5) (a)
For the purposes of this subsection, the collective agreements
and
arbitration awards referred to in paragraph (b) are agreements and
awards that bound the old employer in respect of the employees
to be
transferred, immediately before the date of transfer.
(b) Unless otherwise agreed in terms
of subsection (6), the new employer is bound by –
(ii)
any collective agreement binding in terms of section 23; and
(iii)
any collective agreement binding in terms of section 32, unless a
commissioner acting
in terms of section 62 decides otherwise.
(6)
(a) An agreement
contemplated in subsection
(2) must be in writing and concluded
between –
(i)
either the old employer, the new employer, or the old and new
employers acting
jointly, on the one hand; and
(ii)
the appropriate person or body referred to in section 189(1), on the
other.
[31]
It has been
held that the consequences of section 197(5)(b), that the new
employer is bound by old collective agreements, may be
avoided or
varied only by an agreement that complies with section 197(6). With
reference to section 189(1), section 197(6) establishes
a strict
hierarchy of bargaining partners with whom “contracting-out”
agreements may be concluded. Section 197(6) is
intended to ensure
that any rights under section 197(5) that are compromised are
compromised only after a process of negotiation
and agreement with a
properly authorised and legitimate representative body. In any
negotiations to conclude an agreement to vary
rights under section
197(5), the employer is required to disclose all relevant information
that will enable the relevant party
to engage effectively in the
course of the negotiations.
[4]
In
the absence of an agreement contemplated by section 197(6), the new
employer may seek, post-transfer through a process of collective
bargaining, to align the conditions of employment of the transferred
employees with those of existing incumbents.
[5]
Analysis and findings
[32]
The
primary purpose of section 197 is to protect employees against unfair
job losses, i.e. provide security of employment;
[6]
not to immunize old collective agreements against the ordinary law
regulating collective bargaining and collective agreements.
[33]
As
stated earlier on, it has been held that in the absence of an
agreement contemplated by section 197(6), the new employer may
seek,
post-transfer through a process of collective bargaining, to align
the conditions of employment of the transferred employees
with those
of existing incumbents.
[34]
To
my mind, the above alignment may also occur where the transferred
employees migrate into a sector regulated by a bargaining council
and
Main Agreements concluded therein, which binds them and regulates
conditions of service.
[35]
At
the time of their transfer, the employees’ terms and conditions
were guaranteed by, essentially, plant level collective
agreements
with the MoEs. Section 197 would have protected them from unilateral
variation by the new employer. However, when starting
work at the
first respondent, the employees entered a contractual regime governed
by a species of collective agreement that, interpreting
the LRA
purposively, trumped the old employer’s collective agreement.
No new bargaining had to
happen with them to effect these changes as, once they became
employees of the new employer, they became
subject to the Main
Agreement. Bargaining council agreements, such as Main Agreements,
enjoy the status of subordinate legislation
[7]
and ought to apply above the collectives agreements concluded between
the applicants and the MOEs.
[36]
In terms of
the schema of the LRA, old collective agreements only guarantee the
continuance of old conditions of service to the
extent that a
superseding Main Agreement is not in place at the new employer.
Parties wishing to protect more beneficial terms
and conditions in an
old plant level collective agreement ahead of a transfer of business
would have to do so in terms of variations
or exemptions introduced
into the sectoral agreement into whose ambit they are transferring.
To the extent that this weakens the
protections afforded by section
197, it, on the other hand, underscores the primacy of central
collective bargaining and I am satisfied
that any conflict between
the provisions of section 197 and section 23 of the Labour Relations
Act should be resolved with the
latter prevailing.
[37]
That
this must be so if one considers what the situation would naturally
have been, for example, had the maternity leave provision
been less
generous at the MoEs and more generous at the first respondent. There
is no way the employer could have resisted the
application of the
Main Agreement to the new employees on the basis that they would
faithfully comply with section 197 of the LRA
in applying the less
beneficial terms and conditions stipulated in the old collective
agreement until the affected employees succeeded
through bargaining
in attaining the more beneficial terms.
[38]
A
crucial factor in this dispute is that t
he
parties to the dispute are parties to the SALGBC Main Agreement and
their members [the affected employees] fall within the registered
scope of the SALGBC Main Agreement. Where employees fall within the
scope of two conflicting agreements, the Main Agreement must
apply to
them considering its status.
[39]
Finally,
if pre-existing rights and benefits are reduced to a bargained common
denominator, those affected have no legal recourse
because the LRA
promotes a model of majoritarianism that contemplates these sorts of
results for the sake of the commonwealth.
[8]
[40]
I conclude
that the arbitrator’s interpretation and findings are correct.
Order
[41]
In the
premises, the following order is made:
1.
The late
filing of the record is not condoned.
2.
The review
application is dismissed.
3.
There is no
order as to costs
__________________________
Benita Whitcher
Judge
of the Labour Court of South Africa
APPEARANCES:
For
the applicants:
Mr R Daniels of Cheadle Thompson & Haysom Attorneys
For the first respondent:
Adv. N.H Maenetje
Instructed
By:
Moodie & Robertson Attorneys
[1]
Grogan
Collective
Labour Law
(1
st
ed), referring to
NUMSA
& others v Bader Bop (Pty) Ltd & another
(2003) 24 ILJ 305 (CC).
[2]
(1997) 6 BLLR 697
(LAC).
[3]
Section 14(1)(c)
of the Pension Fund Act requires the registrar to be satisfied that
any scheme to amalgamate or transfer funds
is reasonable and
equitable, and accords full recognition to the rights and reasonable
benefit expectations of the persons concerned
in terms of the fund
rules, and to additional benefits which have become established
practice.
[4]
See generally paragraph [14] in
SAMWU
v SALGA
[2010]
8 BLLR 882 (LC)
[5]
See generally
paragraph [17] in
SAMWU
v SALGA (supra)
[6]
NEHAWU
v
University
of Cape Town & others
2003
(3)
SA 1
(CC) at para 53
[7]
See in this respect
Platinum
Mile Investments (Pty) Ltd t/a Transition Transport v SATAWU and
another
(2010) 31 ILJ 2037
LAC paragraphs [41] to [46]
[8]
Thompson and Benjamin
South
African Labour Law
Vol
1 AA1-138 to AA1-139