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[2018] ZALCJHB 55
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National Employers' Association of South Africa (NEASA) and Another v Minister of Labour and Others (J1475/15) [2018] ZALCJHB 55 (15 February 2018)
Of
interest to other judges
THE
LABOUR COURT OF SOUTH AFRICA,
HELD
AT JOHANNESBURG
C
ase No: J 1475/15
In
the matter between:
NATIONAL
EMPLOYERS’
ASSOCIATION
OF SOUTH AFRICA
(‘NEASA’)
First Applicant
PLASTIC
CONVERTORS
ASSOCIATION
OF SOUTH AFRICA
(‘PCASA’)
Second Applicant
and
MINISTER
OF LABOUR
First Respondent
METAL
AND ENGINEERING
INDUSTRIES
BARGAINING COUNCIL
(‘MEIBC’)
Second Respondent
PARTIES TO THE MEIBC
Third
to Thirty Fifth
Respondents
(set out in the
Notice of
Motion)
Delivered
:
15 February 2018
Summary:
(Review – decision to extend bargaining council administration
agreement to non-parties – non-compliance
with provisions of s
32(3), 32(5) read with s 32(1) – minister could not reasonably
have been satisfied that jurisdictional
pre-requisites for exercising
her discretion under s 32(5) to decide whether or not to extend the
agreement to non-parties had
been met – Minister also
unreasonably concluding that s 32(3)(f) requirement met when she
purportedly exercised her discretion
under s 32(5) –
application not moot merely because agreement elapsed – just
and equitable remedy, declaration of invalidity)
JUDGMENT
LAGRANGE
J
Background
[1]
This application is brought by National Employers’ Association
of South Africa (‘NEASA’) and Plastic Convertors
Association of South Africa (‘PCASA’) to set aside the
decision by the Minister of Labour (‘the Minister’)
to
extend the Consolidated Registration and Administrative Expenses
collective agreement concluded between certain parties in Metal
and
Engineering Industrial Bargaining Council (‘MEIBC’ or
‘the Council’) to non-parties under Government
Notice
R758 (GG 39043 dated 31 July 2015) under section 32 (2) read with
section 32 (5) of the Labour Relations Act 66 of 1995
(‘the
LRA’). The notice also declared that the agreement had been
concluded in the bargaining council and was binding
in terms of s
31(1) of the LRA. The review application is a review of
administrative action brought under section 158 (1) (g) of
the LRA.
[2]
The application was opposed by the first respondent, (‘the
Minister’), the second respondent (‘the council’)
and the thirty-fifth respondent (‘NUMSA’).
[3]
The agreement was extended to
non-parties for the period 10 August 2015 until 30 June 2016. It had
already expired some four and
a half months before the application
was heard, but had been launched in September 2015. The application
was heard jointly with
a separate application under case number JR
75/15 to set aside the decision of the Minister to renew and extend
the main agreement
of the council, in which judgement has been handed
down previously.
[1]
As the agreement had already expired a few months before the
application was heard in October 2016, the respondents contend
the
review application was moot.
[4]
A day before the application was heard on 18 October 2016, the
applicants applied to amend the relief sought to include an
additional alternative prayer that the decision to request the
Minister to extend the agreement should only be reviewed and set
aside to the extent necessary.
[5]
The applicants also asked the court to strike down section 32(5) of
the LRA as unconstitutional, in so far as it might be necessary.
That
provision permits the Minister to extend an agreement where parties
to the bargaining council in which a collective agreement
is reached
are not representative enough to require the Minister to extend the
agreement under section 32(3), but are nonetheless
‘sufficiently
representative’ within the scope of the council and that the
Minister is satisfied that, a failure to
extend it may undermine
collective bargaining in the sector. It was not necessary to consider
this relief in view of the decision
on the review application.
[6]
Insofar as the Minister was late in filing her answering affidavit, I
am satisfied no material prejudice was occasioned by this
and the
late filing thereof should be condoned.
Background
[7]
The General Secretary of the Council convened a Special Management
Committee (MANCO) meeting to be held on 3 February 2015.
The agenda
referred amongst other things to a draft resolution that would be
tabled. The wording of the draft resolution read:
“
It is thus resolved
That, subject to a postal vote in
terms of section 10(3) of the Constitution:
For the Consolidated Registration and
Administration Expenses Agreement (as amended) to take effect for a
period of five years from
1 April 2015.
To request the Minister of Labour in
terms of section 32 of the LRA to publish and extend to non-parties:
An amendment to the Consolidated
Registration and Administration Expenses Agreement in respect of the
registration and administration
expense levies to be increased by a
rate of 9.5%.
The extension of the Consolidated
Registration and Administration Expenses Agreement (as amended) to
take effect for a period of
five years from 1 April 2015
alternatively the date of publication of the notice by the Minister
confirming the extension.”
[8]
At the meeting, a resolution was taken to request the extension of
the existing Registration and Administration agreement for
five
years, save that the 9.5% increase was abandoned as part of the
resolution.
[9]
NEASA representatives attended the meeting. Other employer
organisations belonging to SEIFSA whose representatives attended
the
Manco meeting were: Cape Engineers and Founders Association
(CEFA); KwaZulu-Natal Engineering Industries Association
(KZNEIA); South African Engineers’ and Founders’
Association (SAEFA); and Light Engineering Industries Association
of
South Africa (LEIA) employing about 37 % of the employees employed by
employers which were members of employer parties to the
council.
[10]
However, the LEIA representative, Mr Trentini (‘Trentini’),
placed on record at the meeting that he was also voting
on behalf of
21 other SEIFSA-affiliated employers’ organisations, which like
PCASA, were parties to the council but do not
have any
representatives’ seats on any of the council’s
structures, including Manco. NEASA objected to Trenitini’s
purported attempt to exercise a proxy vote and called on him to
produce the mandates, which he would not do. The resolution was
voted
on by show of hands and the president expressly excluded the
purported proxy votes exercised by Trenitini and only counted
only
the votes of the trade union representatives and the four
representatives of SEIFSA affiliates. Consequently, insofar as these
four representatives were the only ones able to vote in favour of the
request to have the agreement extended, the applicants contend
that
the employer organisations voting in favour of the resolution did not
meet the minimum representation criteria of section
32 (1) (b) of the
LRA.
[11]
On 12 February 2015 the council submitted its first extension request
(‘the first extension request’) to the Minister
under
section 32(1) of the LRA. Attached to the first extension request was
a “Resolution” document signed by the council’s
President and General Secretary purporting to be a “true
extract” from the minutes of the 3 February MANCO meeting.
The resolution stated that the 3 February MANCO meeting had been
solely aimed at extending the period of operation of the 2011
Admin
Agreement but that 25 employer organisations affiliated to SEIFSA had
voted at the meeting, in favour of the extension, rather
than only
the four organisations whose representatives attended the meeting.
The resolution was described in the following
terms:
“…
to request the Minister
of Labour to extend the period of operation of the Registration and
Administration Expenses Collective Agreement
concluded in the
Bargaining Council for a further period of five years ending 31 March
2020”
Following
communications between the Department of Labour (“the
department”) and council staff concerning problems with
the
request, the council withdrew the first extension request and on 20
February made a fresh application for extension (‘the
second
extension request’). However, the schedule of the 2015 Admin
Agreement attached to the agreement contained a number
of amendments
to the 2011 Admin Agreement, which the applicants contended had never
been validly adopted by the council and in
particular were not in the
agreement considered by Manco at the 3 February meeting.
[12]
In April 2015, the Minister duly published a notice in terms of
section 32(5)(c) of the LRA, inviting representations
from the
public in response to the extension request. On 22 May 2015 the
applicants filed representations in response to the invitation.
In
their representations, among other things, they pointed out perceived
defects in the council’s section 32(1) request and
advanced
other reasons why it should be refused. In particular, they pointed
out the 3 February resolution was only intended to
extend the period
of operation of the 2011 Admin Agreement, but the Admin Agreement
contained in the second extension request entailed
a number of
amendments which the council had not deliberated on.
[13]
On 27 May 2015, five days after the applicants filed their
representations, the council then submitted a second, “certified
resolution”, also signed by the Secretary and President, and
again purporting to be a “true extract” of the minutes
of
the 3 February MANCO meeting. NEASA contends the submission of this
second resolution was prompted by its own representations.
The
second certified resolution now reflected that MANCO had
decided both “to extend the period of operation of the
Registration and Administration Expenses Agreement …”
and to “
effect such
consequential amendments as
may be required in terms of the Labour Relations Amendment Act
6/2014
”. Obviously this purported resolution was a
variation of the original one filed with the initial extension
request.
[14]
After receiving submissions from the council, the Minister agreed to
the extension request on 21 July 2015. She accepted, notwithstanding
the applicants representations that the agreement “…was
approved in accordance with s 32(1)…” of the
LRA.
Mootness
[15]
Although this point would ordinarily be determined without
entertaining the merits of the application, the relevant questions
to
be considered in relation to this question also fall to be considered
with the question of an appropriate remedy and will be
discussed
there.
Grounds
of review
[16]
The main grounds of review may be summarised as follows:
16.1 Various factual
pre-requisites were absent which meant that
there
was both no collective agreement concluded by the council and no
decision by the bargaining council to request the extension
of the
collective agreement which complied with the provisions of subsection
32(1). On what was before her, the Minister
could not have been
satisfied that those requirements were met and could not have
extended the agreement under s 32(3) read with
s 32(5).
16.2
Secondly,
the Minster acted in a procedurally unfair manner in extending the
agreement.
16.3
Thirdly,
she failed to apply her mind properly in considering various factors
listed under s 32(3)(e),(f) and (g) of the LRA.
16.4
Fourthly
she failed to apply her mind properly under s 32(5)(b) in considering
if the extension of the agreement would undermine
collective
bargaining.
16.5
Fifthly,
she took irrelevant considerations into account in considering
whether the agreement accommodated small and medium enterprises
(‘SMME’s’).
16.6
Sixthly,
the agreement was arbitrary and irrational in providing for a minimum
flat rate contribution for employers of ten or fewer
employees, which
had the effect of requiring them to pay higher levies per employee
than employers with eleven or more workers.
16.7
The
agreement was unenforceable because it imposed interest rates in
excess of the maximum rates in the
National Credit Act, 34 of 2005
and extending the agreement with these provisions to non-parties was
ultra vires the Minister’s powers.
[17]
Because of my findings in respect of the first ground of review, it
is not necessary for me to deal with all of them, though
it is
possible some of those mentioned in paragraphs 16.3 and 16.6 above
might also have had merit.
Evaluation
The
Minster’s decision to extend the Administrative agreement and
the requirements of
s 32
[18]
Section 32
, as it then was
after the amendments to the LRA effected on 1 March 2015
[2]
,
read:
32. Extension of collective agreement
concluded in bargaining council
(1)
A bargaining council may ask the Minister in writing
to extend a
collective agreement concluded in the bargaining council
to any
non-parties to the collective agreement that are within its
registered scope and are identified in the agreement
if at a
meeting of the bargaining council
-
(a)
one or more registered trade unions whose members constitute
the
majority of the members of the trade unions that are party to the
bargaining council vote in favour of the extension; and
(b)
one or more registered employers' organisations, whose members
employ the majority of the employees employed by the members of the
employers' organisations that are party to the bargaining council,
vote in favour of the extension
.
(2)
Within 60 days of receiving the request, the Minister must
extend the
collective agreement, as requested, by publishing a notice in the
Government Gazette declaring that, from a specified
date and for a
specified period, the collective agreement will be binding on the
non-parties specified in the notice.
(3)
A collective agreement may not be extended in terms of subsection
(2) unless the Minister is satisfied that-
(a)
the decision by the bargaining council to request the extension
of
the collective agreement complies with the provisions of subsection
(1)
;
(b)
the majority of all the employees who, upon extension of the
collective agreement, will fall within the scope of the agreement,
are members of the trade unions that are parties to the bargaining
council;
(c)
the members of the employers' organisations that are parties
to the
bargaining council will, upon the extension of the collective
agreement, be found to employ the majority of all the employees
who
fall within the scope of the collective agreement;
(d)
the non-parties specified in the request fall within the bargaining
council's registered scope;
(dA)
the bargaining council has in place an effective procedure to deal
with applications
by non-parties for exemptions from the provisions
of the collective agreement and is able to decide an application for
an exemption
within 30 days;
(e)
provision is made in the collective agreement for an independent
body
to hear and decide , as soon as possible and not later than 30 days
after the appeal is lodged, any appeal brought against
-
(i) the bargaining council’s
refusal of a non-party’s application for exemption from the
provisions of the collective
agreement;
(ii) the withdrawal of such an
exemption by the bargaining council;
(e)
provision is made in the collective agreement for an independent
body
to hear and decide , as soon as possible, any appeal brought against
-
(i)
the bargaining council’s refusal of a non-party’s
application for
exemption from the provisions of the collective
agreement;
(ii)
the withdrawal of such an exemption by the bargaining council;
(f)
the collective agreement
contains criteria
that must be applied by the independent body
when it considers an appeal, and that those criteria are fair and
promote the primary
objects of this Act; and
(g)
the terms of the collective agreement do not discriminate
against
non-parties.
(3A)
No representative, office-bearer or official of a trade union or
employers’
organisation party to the bargaining council may be
a member of, or participate in the deliberations of, the appeal body
established
in terms of subsection (3)(e).
…
(5)
Despite subsection (3)(b) and (c), the Minister may extend a
collective agreement in terms of subsection (2) if
(a)
the parties to the bargaining council are sufficiently representative
within the registered scope of the bargaining council;
(b)
the Minister is satisfied that failure to extend the agreement
may
undermine collective bargaining at sectoral level or in the public
service as a whole;
(c)
the Minister has published a notice in the Government Gazette
stating
that an application for an extension in terms of this subsection has
been received, stating where a copy may be inspected
or obtained, and
inviting comment within a period of not less than 21 days from the
date of the publication of the notice; and
(d)
the Minister has considered all comments received during the
period referred to in paragraph
(c).
(5A)
When determining whether the parties to the bargaining council are
sufficiently
representative for the purposes of subsection (5)(a),
the Minister may take into account the composition of the workforce
in the
sector, including the extent to which there are employees
assigned to work by temporary employment services, employees employed
on fixed term contracts, part-time employees or employees in other
categories of non-standard employment.
(6) (a)
After a notice has been published in terms of subsection (2), the
Minister, at the request
of the bargaining council, may publish a
further notice in the Government Gazette
(i)
extending the period specified in the earlier notice by a further
period determined by the Minister
; or
(ii)
if the period specified in the
earlier notice has expired,
declaring a new date from which, and a
further period during which, the provisions of the earlier notice
will be effective.
(b)
The provisions of subsections (3) and (5), read with the changes
required by the context, apply in respect of the publication of
any
notice in terms of this subsection.
(7)
The Minister, at the request of the bargaining council, must
publish
a notice in the Government Gazette cancelling all or part of any
notice published in terms of subsection (2) or (6) from
a date
specified in the notice.
(8)
Whenever any collective agreement in respect of which a notice has
been published in terms of subsection (2) or (6) is amended,
amplified or replaced by a new collective agreement, the provisions
of this section apply to that new collective agreement
.
(9)
For the purposes of extending collective agreements concluded
in the
Public Service Co-ordinating Bargaining Council or any bargaining
council contemplated in section 37(3) or (4)-
(a)
any reference in this section to an employers’ organisation
must be read as
a reference to the State as employer; and
(b)
subsections (3)(c), (e) and (f) and (4) of this section will not
apply.
(10)
If the parties to a collective agreement that has been extended
in
terms of this section terminate the agreement, they must notify the
Minister in writing.
(11)
A bargaining council that has a collective agreement extended
in terms of this section must ensure that the independent appeal body
is able to determine appeals within the period specified
in
subsection (3)(f).”
(emphasis added)
[19]
In an earlier case of
National
Employers Association of South Africa and Others v Minister of Labour
Metal and Engineering and Others
[3]
,
Watt-Pringle AJ found that the council’s
submission
to the Minister to extend the purported collective agreement referred
to in the submission and reflected in the Government
Gazette No.
36338 of 12 April 2013 did not comply with section 32 (1) of the LRA
in that
:
“
2.1 No such
collective agreement was ever concluded under the auspices of the
bargaining Council; and
2.2 No valid decision was ever taken
to request the extension of the purported collective agreement to
non-parties pursuant to section
32 (5) or at all.”
[20]
The grounds of review mentioned
in paragraph 15.1 above are very similar to grounds on which
Watt-Pringle AJ decided the case before
him. In that instance, the
court was concerned with the extension of the main agreement, in
which certain additions had been made
to the wage schedule.
[4]
They also coincide with the one of the grounds of review in
National
Employers’ Association of SA & others v Minister of Labour
& others
[5]
,
which I decided previously .In that case, I cited the following
extract which sets out the standard of scrutiny the Minister’s
discretion must meet when deciding to extend an agreement where the
numerical requirements do not satisfy the requirements of s
32(1)(a)
or (b) and the Minister must decide whether to extend an agreement
under s 32(5):
“
[98] In the
Free
Market
[6]
case,
the court followed the approach in
Walele
[7]
with
specific reference to how the minister’s discretion under s
32(3) and 32(5) should be exercised, viz:
‘
[84]
Whenever
the minister receives a written request from a bargaining council to
extend a collective agreement transmitted to her in
terms of s 32(1)
of the LRA, the first thing she will have to do, practically
speaking, is to ascertain whether the numerical thresholds
discussed
above have been achieved. She must
do
the math, and, courtesy of s 208A of the LRA, she must do it
personally. As discussed already, by reason of s 32(3)
(a),
(b)
and
(c)
there are two arithmetic
calculations that need to be performed. Firstly, the minister must
determine if the resolution taken by
the bargaining council to refer
a written request for extension to her was supported by the requisite
majority.
The resolution must be supported by one or more
trade unions whose members make up the majority of members
of all
the trade unions who are parties to the bargaining council.
The resolution must also enjoy the support of one or more employers’
organisations whose members employ the majority of employees employed
by the employers who are members of the employers’
organisation
that are party to the bargaining council. The second
arithmetic calculation to be performed by the minister
is that
required by s 32(3)
(b)
and
(c)
of the
LRA. She must determine whether the majority of employees who will
fall within the scope of the collective agreement,
once it has been
extended, are members of trade unions that are parties to the
bargaining council; and additionally she must establish
whether the
members of the employers’ organisations party to the
council will employ the majority of all employees
falling within the
scope of the agreement once it has been extended.
[85]
As already explained, if the minister determines that the
majoritarian numerical thresholds and the other jurisdictional facts
in s 32(3) of the LRA are present, she is obliged to exercise the
mechanical power to extend the collective agreement and to promulgate
it in the
Government
Gazette
.
If the majoritarian levels in s 32(3)
(b)
and
(c)
of
the LRA are not reached then the minister must choose whether or not
to act in terms of s 32(5) of the LRA. Unlike s 32(3),
which provides
that the minister “must” extend once the conditions
precedent in s 32(3) have been fulfilled, s 32(5)
provides that,
despite subsection (3)
(b)
and
(c)
(the
numerical requirements), the minister “may” extend,
provided the jurisdictional facts in s 32(5)
(a)-(d)
exist.
The express use of the word “may” in the subsection
confers precisely the kind of discretionary power that
the FMF would
have us read in to s 32(2) of the LRA. Permissive statutory language
of this order leaves the minister free to make
a choice among
possible courses of action and inaction. The discretionary
power in s 32(5) is in stark contrast to the
ministerial or
mechanical power in s 32(2) which involves little choice on the part
of the minister. Mechanical powers are more
in the way of duties.
[86]
The normal requirements of administrative justice, that is legality,
reasonableness and fairness, applied flexibly and contextually,
enhance constraint and accountability in relation to
administrative action in ways different to the exercise of a
mechanical
power or duty where pre-ordained conditions precedent of
legality are chosen legislatively as the preferred means of achieving
certainty and predictability in the advancement of policy. By
deliberately electing to limit the minister’s discretion in
a
majoritarian situation, parliament recognised that a
broad discretion giving the minister a power to second
guess
the outcome would weaken the effectiveness of the majoritarian
system of collective bargaining. However, these considerations do
not
apply when the minister exercises her discretion to extend a product
of collective bargaining which has only the support of
a minority of
bargaining agents. Such administrative action justifiably
attracts judicial scrutiny of a more exacting
standard. Where broad
discretionary powers are conferred, there must be some constraints on
the exercise of such powers so that
those affected by their exercise
will know what is relevant or in what circumstances they are entitled
to seek relief from an adverse
decision.
[87]
The minister’s power to extend a minority collective
agreement under s 32(5) of the LRA is subject to compliance
with
the mandatory and material conditions prescribed in
paras
(a)
to
(d)
in the subsection.
Compliance is a prerequisite for jurisdiction and legality.
[88]
The
first condition precedent to the exercise of the power to extend a
minority collective agreement is that the parties to the
bargaining
council must be sufficiently representative within the
registered scope of the bargaining council. The phrase “sufficiently
representative” is not defined in the LRA but by implication
suggests less than majority membership within the sector. The
issue
must be determined objectively. The established practice is to
determine the matter with regard to various factors besides
numerical
representativeness, including the nature of the sector and the
organisational history within it.
[89]
The FMF maintains that this requirement is otiose since a bargaining
council’s formation and its continued existence
in any event
depends on its fulfilment.
That may be so, but the obligation
on the minister to check the level of representativeness remains a
safeguard.
If in the process of checking it is determined
that the bargaining council is not sufficiently representative, the
registrar
will be obliged to take steps towards cancellation of
bargaining council’s registration and in such circumstances it
is unlikely
that any extension by the minister might be regarded as
reasonable.
[90]
The second condition precedent to the exercise of the power in s
32(5) of the LRA is that the minister must be satisfied that
the
failure to extend the agreement may undermine collective
bargaining at sectoral level.
The minister will need to show
objectively that non-extension will
have negative
effects, such as opportunistic bargaining at workplace level or
something of that kind. The jurisdictional fact “is
satisfied”
in s 32(5)
(b)
of the LRA is subjectively phrased. At
common law, prior to the adoption of our fundamental Constitution in
1994, such subjective
clauses were not subject to
extensive
objective
review. The court would accept the functionary’s assurance that
the state of affairs (that is, his or her satisfaction)
existed and
would enquire no further. There was no need to establish that there
were good or reasonable grounds for that satisfaction.
With the
advent of the Constitution this approach became unsustainable. The
right to lawful and reasonable administrative action
in s 33 of
the
Constitution and in s 6 of PAJA requires the courts to satisfy
themselves as to any factual assumptions on which that action
is
based.
The Constitutional Court outlined the position
in
Walele v City of Cape Town & others
as
follows:
“
In
the past, when reasonableness was not taken as a
self-standing ground for review, the
[decision-maker’s]
ipse dixit
could have been
adequate. But that is no longer the position in our law. More is now
required if the decision-maker’s
opinion is challenged on the
basis that the subjective precondition did not exist.
The
decision-maker must now show that the subjective opinion it relied on
for exercising the power was based on reasonable grounds
.”
[91]
The
effect of this pronouncement is to make all
jurisdictional facts objectively justiciable, whatever their wording.
At most, the subjective
formulation of the jurisdictional fact may
signal a need for judicial deference in the interpretation and
application of the provision,
allowing for a measure of technical and
experiential expertise on the part of the decision maker in the
jurisdictional and factual
determination
prerequisite to the exercise of power.
[92]
What
is said in relation to the subjectively phrased jurisdictional fact
in s 32(5) of the LRA applies equally to that in s 32(3)
of
the LRA, which I will discuss presently.’
[99]
From the above, it is clear that in deciding if the minister’s
decision that the prerequisites of s 32(3) had been
met, the
same standard of reasonableness as set out in para 91 of the Free
Market Foundation decision must apply in this
case.
[100]
The First issue the minister had to decide was if she was satisfied
that the decision by the bargaining council to request
the extension
of the collective agreement complied with the provisions of s
32(1).”
[8]
(footnotes omitted, emphasis added)
Minister’s
finding that the decision to request the extension of the
Administration agreement complied with s 32(1) read with
sections
32(5) and 32(3)(a)
[21]
Section 32 (5) permits the Minister to extend a collective agreement
under subsection (2) “(d)espite subsection 3 (b)
and (c)”.
Although this allows the Minister to extend the agreement where the
necessary numerical thresholds are not achieved
in terms of those
subsections s 32(5) does not allow her to extend the agreement in
spite of section 32 (3)(a). In terms of that
subsection she must
still be satisfied that the decision to request the extension of the
collective agreement complies with section
32 (1). In essence that
requires the Minister, at the very least, on receiving a written
request to extend a collective agreement
purportedly concluded in the
bargaining council, to be satisfied there was a meeting of the
bargaining council at which the requisite
numerical requirements of
subsections (a) and (b) were met by the trade union and employer
organisation parties which voted in
favour of the extension of the
agreement. In view of the dictum in the
FMF
judgement, the
Minister must have had reasonable grounds for concluding that those
requirements were met.
[22]
It is not in dispute that the extended agreement, which included
amendments that had not been tabled at the meeting on 3 February,
was
never subjected to a postal vote in terms of s 10(3) of the council
constitution. The postal ballot which was completed by
20 February
merely asked representatives to confirm that Manco be authorised to
“…
proceed with the extension of the period of
operation
of the Registration and Administration Expenses
Agreement in accordance with the recommendations as set out in
covering letter
hereto” (emphasis added). Secondly, the
decision also did not meet the numerical threshold stipulated in s
32(1)(b) of the
LRA because on the council’s own record of that
meeting the chairperson excluded from the counting of the employer
organisation
votes the 21 ‘proxy votes’ of the 21 SEIFSA
affiliates purportedly exercised by Trenitini. The Minister simply
took
the second certified resolution at face value as evidence that
the decision was compliant. In the answering affidavit, the
Minister’s
explanation is that having received the resolution,
“… which,
prima facie
, was passed by
the Manco of the Council
to extend the agreement to non-parties
and to renew the period of operation of the agreement to 2020…(t)he
Minister
had no reason to disbelieve this
” (emphasis
added) .The Minister also claims that she had no reason to doubt the
integrity of Manco and its decisions.
[23]
However, the Minister had before her ample material that ought to
have raised reasonable doubts in her mind about whether the
agreement
she was being requested to extend satisfied the requirements of the
section. Firstly, she had the minutes of the meeting
of 3 February in
which it is clear that in so far as there was a proper decision
regarding the Administration agreement, it was
simply to extend it
until 2020. That was what was recorded in the first purported ‘true
extract’ of the minutes of
the meeting signed by the president
and the secretary on 20 February. However, she also had before her
another purported ‘true
extract’ from the minutes (only
received by the Department on 27 May 2015) which now claimed that the
resolution had also
requested consequential amendments. Even at face
value, one of these purported extracts could not have been true and
the Minister
was duty bound to make further inquiries when faced with
this manifest contradiction, before blithely accepting that the
second
extract was correct, even though the first extension request
had been withdrawn. In itself, the manifest contradiction between the
two supposedly true versions of the resolution ought to have raised
doubts in her mind about what extension decision, if any, was
actually taken at the 3 February meeting. There is no rational
explanation why she simply accepted the second version of the
resolution
as being the correct one. Her doubts ought to also have
been alerted by the fact that the minutes of the meeting did not
support
the second version of the resolution.
[24]
Secondly, when the applicants made their representations to the
Minister on 22 May 2015, they brought to the Minister’s
attention that the Manco meeting on 3 February had not been called
upon to request the extension of an amended administration agreement
and that the amendments had not been agreed to in conformity with
clause 10 of the Council Constitution. Moreover, it ought to
have
been obvious from the Department’s own correspondence with the
council that various amendments particularly in relation
to the
exemption provisions had been proposed by the Department itself
after
the first request for extension was received. The council’s
response as set out in its letter explaining the “consolidated
agreement” dated 20 February 2015 which details the amendments
and references some of them directly to the Department’s
queries could only have been amendments made
after
the
interaction with the Department. Accordingly, there was no reasonable
basis for assuming that these amendments had been considered
by the
meeting on 3 February 2015, because logically that meeting could not
have considered amendments made in response to queries
raised after
the meeting was held. That to ought to have alerted the Minister to
the fact that a subsequent Manco resolution was
essential to confirm
that those amendments were also mandated by a decision of a meeting
which satisfied the requirements of section
32 (1).
[25]
The amendments included in the second extension agreement were not
mere formalities. They included the extension of the scope
of the
agreement to three distinct types of economic activity previously not
covered by the existing agreement. The letter motivating
this
amendment was based on a Manco resolution of 26 November 2013, but
that resolution was only in respect of the main agreement
and not the
administration agreement, and in any event there was no evidence
that, that resolution met the requirements of section
32 (1) either.
Further, amendments were made to clause 9 (1)(c) of the existing
agreement without that being placed before Manco
and a new clause 9
(1) (d) was included also without being canvassed by Manco. A number
of other amendments were introduced, which
were not even brought to
the attention of the department. The important point about these
changes is simply that with the addition
of these alterations, it is
simply inconceivable on any rational basis that the ones which were
disclosed could have been part
of the resolution adopted by the
Council on 3 February 2015, and could only have been the subject of a
subsequent Council decision,
for which there was no evidence before
the Minister.
Non-inclusion
of criteria in the agreement for exemption appeals
[26]
The extended agreement also did not contain criteria that must be
applied by the independent appeal body considering an appeal
against
a decision on an exemption application. Under s 32(3)(f) the Minister
also had to be satisfied that such criteria were
contained in the
agreement and that they were fair and promoted the objects of the
LRA. Clause 9(5)(c ) alluded to the presence
of such criteria , but
the other provisions in clause 9 merely deal with aspects of the
exemption application procedure. Despite
being aware of the omission
to include such criteria in the agreement, the Minister was
content to rely on the existence
of the exemption criteria in the
council’s exemption policy as satisfying the two requirements
of s 32(3)(f).
[27]
Part of what the Minister was required to satisfy herself of under s
32(3)(f) could not have been more simple to determine,
namely if the
exemption criteria were set out in the agreement itself. That
evaluation is so elementary, it barely involves the
exercise of
judgment, unlike the second consideration which requires the minister
to determine if the criteria in the agreement
are fair and promote
the objects of the LRA. Yet the Minister sidestepped determining if
the agreement contained the criteria.
This is not a mere question of
technical compliance. Firstly, parties seeking exemptions should not
have to source a separate document
from the council to determine what
the criteria are. The LRA intended such criteria to be published as
part of the agreement so
they were as accessible as the terms of the
agreement itself. Secondly, the criteria contained in a policy
adopted by the council
could be amended by the council, without
having to be scrutinised by the Minister to determine if the amended
criteria are fair
and promote the objects of the LRA.
[28]
The Minister could not reasonably have concluded that exemption
criteria included in a policy that was not part of the agreement
was
substantially the same as those criteria being included in the
agreement itself.
Minister’s
conclusion that the requirements of s 32(1)(b) were met
[29]
Quite apart from this, the respondents brought to the Minister’s
attention that the numerical requirements of section
32(1)(b) could
not have been met. She was expressly referred to the ruling by the
President himself that the 21 SEIFSA organisations,
purportedly
represented by Trenitini acting as their proxy “…did not
vote therefore they are not counted in the meeting”.
Accordingly, as the four remaining employer organisations who could
and did vote only represented employers employing 94533 employees,
according to the Council’s own figures, which amounted to 37.5%
of employees employed by employer organisations which were
party to
the Council, on the representativity figures determined by the
Department. In addition, her attention was drawn to the
serious flaws
with the alternative explanation that Trenitini could lawfully
exercise a proxy vote on their behalf in any event
was seriously
flawed, even if the president’s own ruling that the proxy votes
of 21 SEIFSA affiliates could not be counted
ought to be ignored
despite never being set aside. In light of this, the Minister could
not reasonably have been satisfied that
this important numerical
prerequisite had been met.
Conclusions
[30]
In light of the reasons given
in paragraphs [21] to [25] above, I am satisfied for these reasons
alone that the Minister could not
reasonably have assumed that the
extension of the final version of the agreement had been the subject
matter of a vote by the relevant
parties. This has nothing to do with
whether or not council procedures were properly complied with and
accordingly nothing to do
with the correct interpretation of section
206 of the LRA and is distinguishable from the case of
National
Employers' Association of SA v Metal & Engineering Industries
Bargaining Council & others
[9]
where the court held that despite manifest non-compliance with
constitutional decision-making procedures of the Council in
requesting
the extension of a collective agreement, section 206 of
the LRA immunised that decision from being set aside on account of
those
irregularities.
[10]
Secondly, in light of paragraphs [26] to [28], the minister could not
have reasonably concluded that the requirements of s 32(3)(f)
were
met, when she purportedly exercised her discretion under s 32(5).
[31]
In respect of the employer organisations’ non-compliance with
the numerical representation requirements of section 32(1)(b),
this
issue is a straightforward question of compliance with the statutory
requirements. Simply put, it relates to the fact that,
given the
president’s ruling that the proxy votes did not count in the
tally of employer organisations voting in favour of
the extension of
the administrative agreement, the requirements of that sub-section
were not met. For the reasons mentioned above,
the Minister could not
reasonably have been satisfied on the information before her that the
threshold was met and accordingly
the jurisdictional prerequisites
for exercising her discretion under section 32(5) was not fulfilled,
namely that even if the request
to extend the agreement in its
consolidated form had been decided on at the Council meeting of 3
February 2015, it was not a decision
of the Council which complied
with the requirements of section 32(1)(b). Consequently, her decision
to extend the agreement to
non-parties for this reason also was not
valid.
[32]
In summary, the Minister could not reasonably have been satisfied
that the prerequisites for the exercise of her discretion
to extend
the Consolidated agreement that was presented to her had been met.
Accordingly, the extension of the agreement was invalid
and it is
necessary to determine an appropriate remedy which is dealt with
below.
Mootness
and Remedy
[33]
In the light of my conclusions above, the Minister’s decision
to extend the Administrative agreement was invalid. That
does not
necessarily mean the extension of that agreement to non-parties must
be set aside.
[34]
One of the
considerations would be that the issue under consideration is
effectively moot or of little practical significance. In
National
Employers' Association of SA v Metal & Engineering Industries
Bargaining Council & others
[11]
the LAC cited the Constitutional Court decision in
National
Coalition for Gay & Lesbian Equality & others v Minister of
Home Affairs & others
[12]
in which it was held that:
'A
case is moot and therefore not justiciable if it no longer presents
an existing or live controversy which should exist if the
court is to
avoid giving advisory opinions on abstract propositions of
law.'
[35]
In the LAC case, the appeal against a review judgment in respect of
the council’s decision to request the extension of
the
agreement had been overtaken by events because the Minister had since
extended the agreement in any event. In this instance,
the agreement
was not in force at the time the matter was argued, having expired
over four months’ previously. It obviously
of little practical
consequence for affected parties’ obligations going forward
whether the extension of the agreement is
set aside.
[36]
However, the validity of the agreement would nonetheless affect past
obligations incurred as a result of the agreement being
in force, in
particular to pay the levies imposed by that agreement. Consequently,
the agreement still created legal obligations
during the time it was
in force and it is not unimaginable that the council might still be
seeking to recover arrear contributions,
which it can do so long as
it can state without fear of correction that the agreement was
validly extended to non-parties. There
may also be instances where a
dispute exists over liability to pay the levies imposed by the
agreement while it was in force and
an employer had collaterally
disputed its liability on the basis that the agreement was invalidly
extended. In the case of members
of parties to the agreement, such a
defence could not be raised because they are bound to the agreement
even if it had not been
extended by the Minister.
[37]
Therefore, the status of the
extended agreement cannot be said to be of no practical consequence
even if only that it determines
historic liabilities that non-party
employers might have incurred. Accordingly it is not a moot issue. In
arriving at this conclusion
I have considered the judgment in
Workforce Group (Pty) Ltd v
Motor Industry Bargaining Council and Others
[13]
in which the court accepted that a matter concerning an extended
agreement which had expired was moot. That case is not particularly
helpful because the parties agreed the dispute over the validity of
the agreement was moot. As far as it can be discerned from
that
judgment, the impugned provision in the agreement concerned
restrictions on the use of temporary employment services and it
is
not obvious how any declaration that the agreement was a nullity
could have had any practical consequences for parties that
might have
been in breach of those restrictions in the past.
[38]
In
Bengwenyama
Minerals (Pty) Ltd & others v Genorah Resources (Pty) Ltd &
others
[14]
,
the Constitutional Court held that:
‘
[84] It would be
conducive to clarity, when making the choice of a just and equitable
remedy in terms of PAJA, to emphasise the
fundamental constitutional
importance of the principle of legality, which requires invalid
administrative action to be declared
unlawful. This would make it
clear that the discretionary choice of a further just and equitable
remedy follows upon that fundamental
finding. The discretionary
choice may not precede the finding of invalidity. The discipline of
this approach will enable courts
to consider whether relief which
does not give full effect to the finding of invalidity, is justified
in the particular circumstances
of the case before it. Normally this
would arise in the context of third parties having altered their
position on the basis that
the administrative action was valid and
would suffer prejudice if the administrative action is set aside, but
even then the “desirability
of certainty” needs to be
justified against the fundamental importance of the principle of
legality.
[85] The apparent anomaly that an
unlawful act can produce legally effective consequences is not one
that admits easy and consistently
logical solutions. But then the law
often is a pragmatic blend of logic and experience. The apparent
rigour of declaring conduct
in conflict with the Constitution and
PAJA unlawful is ameliorated in both the Constitution and PAJA by
providing for a just and
equitable remedy in its wake. I do not think
that it is wise to attempt to lay down inflexible rules in
determining a just and
equitable remedy following upon a declaration
of unlawful administrative action. The rule of law must never be
relinquished, but
the circumstances of each case must be examined in
order to determine whether factual certainty requires some
amelioration of legality
and, if so, to what extent. The approach
taken will depend on the kind of challenge presented — direct
or collateral; the
interests involved and the extent or materiality
of the breach of the constitutional right to just administrative
action in each
particular case.’
[15]
[39]
In
Khumalo
& another v MEC for Education, KwaZulu-Natal
,
[16]
the Labour Appeal Court also held that:
‘
In reviewing and considering
whether to set aside an administrative action, courts are imbued with
a discretion and may in the exercise
thereof refuse to order the
setting aside of an administrative action, notwithstanding
substantive grounds being present for doing
so (Oudekraal Estates
(Pty) Ltd v City of Cape Town & others
2010 (1) SA 333
(SCA) at
para 33) (Oudekraal 2). Section 17(1)(b) of the Constitution and s 8
of PAJA are statutory provisions providing the source
of the courts’
discretion. In terms of s 172(1)(b) of the Constitution a court, when
deciding a constitutional matter within
its powers, may make any
order that is just and equitable, including an order suspending the
declaration of invalidity for any
period. Similarly, under s 8(1) of
PAJA the court in proceedings for judicial review in terms of s 6(1),
may grant any order that
is just and equitable (Bengwenyama Minerals
(Pty) Ltd & others v Genorah Resources (Pty) Ltd & others
2011 (4) SA 113
(CC) at para 82; Oudekraal Estates (Pty) Ltd v City
of Cape Town & others
2004 (6) SA 222
(SCA)(Oudekraal 1);
Chairperson, Standing Tender Committee & others v JFE Sapela
Electronics (Pty) Ltd & others
2008 (2) SA 638
(SCA) at para
28).’
[40]
In this instance, the attack is a direct one on the validity of the
extension of the agreement to non-parties. The breach of
the right to
fair administrative action concerned the unlawful exercise of the
Minister’s power to extend the agreement to
non-parties in the
absence of there being reasonable grounds for her being satisfied
certain pre-requisites for exercising her
power had been met. On the
other hand, the agreement did not increase the contributions which
all employers covered by the 2011
Administrative agreement would
previously have been paying, given that the 9.5 % increase proposal
was abandoned. It is true that
some employers who had previously not
been covered by the agreement were now included. Like other employers
who were not members
of parties to the agreement, they were entitled
to raise a collateral attack on the validity of the extension if they
were opposed
to their inclusion. There was no evidence of widespread
non-compliance or a multiplicity of disputes raised by those
affected.
[41]
In the circumstances, I believe that the most just and equitable
approach is that a declaration of invalidity would preclude
those
purportedly given rights by the administrative action from extracting
outstanding performance by those affected by the action,
but without
undoing past performance by those who had acceded to comply with the
extended agreement even though they could have
raised a collateral
attack on its validity.
Costs
[42]
Although the ultimate relief granted is limited, the Minister ought
never to have extended the agreement for the reasons above,
at the
very least until such time as she could be justifiably confident that
the agreement she was extending was one that had been
the subject
matter of a decision by the Council, quite apart from whether or not
the extension would pass muster for other reasons
such as the absence
of exemption criteria and other problems identified in the other
grounds of review not considered above. Moreover,
some of the
amendments were not insubstantial and in the case of the absence of
exemption criteria in the agreement were a material
departure from
the requirements of the LRA. In the circumstances, the applicants
were justified in attacking the validity of the
extension. In the
circumstances there is no reason why costs should not follow the
result.
Order
[1]
The late filing of the first respondent’s answering affidavit
is condoned.
[2]
Government notice R 758 published in Government Gazette 39043 on 31
July 2015 is declared
invalid and of no force or effect.
[3]
The first, second and thirty-fifth respondents are jointly and
severally liable for the
applicants’ costs, including the costs
of two counsel, the one paying the others to be absolved.
_______________________
Lagrange
J
Judge
of the Labour Court of South Africa
APPEARANCES
APPLICANTS:
AJ
Freund SC assisted by G
Leslie
instructed by Anton
Bakker
Inc.
FIRST
RESPONDENT:
H
Maenetje SC assisted by JM
Ramaepadi
instructed by the
State
Attorney
SECOND
RESPONDENT
N
A Cassim SC assisted by V
September
instructed by
Patelia
Cachalia Attorneys
THIRTY-
FIFTH RESPONDENT:
J
G Van der Riet SC assisted
by
C Orr instructed by
Haffegee
Roskam Savage
Attorneys
[1]
National Employers’
Association of SA & others v Minister of Labour & others
(2017) 38
ILJ
2034 (LC)
[2]
Government Notice No. 1877. 13 December 1995
[3]
(JR860/13) [2014] ZALCJHB 524 (12 December 2014) (‘the Watt
Pringle decision’),
[4]
At para [19] of the judgment.
[5]
(2017) 38 ILJ 2034 (LC)
[6]
Free
Market Foundation v Minister of Labour & others (2016) 37 ILJ
1638 (GP)
[7]
Walele v City of Cape Town
& others
2008 (6) SA
129 (CC).
[8]
At 2068-2071
[9]
(2015) 36
ILJ
732 (LC)
[10]
At 740, para [15].
[11]
(2015) 36
ILJ
2032
(LAC) at 2035, para [6].
[12]
2000 (2) SA 1 (CC)
[13]
(20076/2014)
[2015] ZASCA 66
(15 May 2015)
[14]
2011 (4) SA 113
(CC)
[15]
At 146-7.
[16]
(2013) 34
ILJ
296
(LAC)