Brief Summary

Labour Law — Exemption from collective agreement — Employer's application for exemption from wage increase provisions of main collective agreement — Appeal authority dismissing application on grounds of authority and existing disputes — Jurisdiction of Labour Court to review decision of exemption appeal body — Court finding it has jurisdiction to entertain review under section 158(1)(g) of the Labour Relations Act — Decision of appeal authority subject to review due to gross irregularity in proceedings.

Comprehensive Summary

Summary of Judgment

1. Introduction

This judgment concerns a review application in the Labour Court brought under section 158(1)(g) of the Labour Relations Act 66 of 1995 (LRA). The applicant, Golden Arrow Bus Services (Pty) Ltd, sought to review and set aside a ruling of an exemption appeal authority operating under the exemption procedure contained in a sectoral main collective agreement (MCA) concluded in the South African Road Passenger Bargaining Council of South Africa (the first respondent).

The first respondent is the bargaining council in which the applicant is registered as an employer. The second respondent, Stephen Bhana N.O., was the member of the exemption appeal body who chaired and determined the appeal decision under challenge. The third to sixth respondents are trade unions representing employees of the applicant, and the seventh respondent comprises identified non-unionised employees.

The procedural history was that the applicant applied to the relevant exemption authority for exemption from specified provisions of the MCA, was unsuccessful, and then appealed internally to the exemption appeal authority. The second respondent dismissed the appeal on the basis that he considered he lacked authority to decide it for reasons linked to (i) a pending dispute about remuneration “freezes” and (ii) the view that the applicant was effectively seeking an amendment to the MCA. The applicant then approached the Labour Court for review and setting aside of that appeal ruling.

The subject-matter of the dispute was therefore the lawfulness and reviewability of an exemption appeal decision within a bargaining council framework, and the appropriate remedy—particularly whether the Labour Court should substitute its own decision or remit the appeal for reconsideration by a properly constituted appeal authority.

2. Material Facts

A centralised collective bargaining process under the first respondent bargaining council resulted in the conclusion of an MCA for the period 1 April 2018 to 31 March 2020, to which the relevant parties (including an employers’ organisation and unions) were party. The MCA contained an exemption procedure in Annexure “C”.

The applicant sought exemption from two MCA provisions. The first was clause 3, which provided for a 9% across-the-board increase on actual wages. The second was clause 30, a status quo provision, requiring that substantive terms and conditions of employment and benefits applicable at the MCA’s effective date, and not regulated by the MCA, remain in force and effect, including wages and benefits that were higher or better than the MCA minima.

It was common cause in the review proceedings that the second respondent dismissed the applicant’s internal appeal on two stated grounds. First, he relied on the existence of a dispute (referred to the bargaining council) concerning whether the applicant had been entitled to freeze minimum remuneration levels for some employees, and reasoned that he did not have authority “to confirm what is already a fait accompli”. Second, he reasoned that the applicant was not seeking an exemption from applying increases to minimum notch levels but was seeking an amendment to apply the agreed increases differently, which he considered beyond his powers.

The court treated as material, and effectively dispositive, that the second respondent’s approach resulted in him not engaging with the merits of the exemption appeal in the manner contemplated by the exemption procedure. The judgment also records that, although respondents initially disputed reviewability, the parties ultimately agreed that the decision was reviewable, and the court proceeded on that basis.

A further material factual and procedural aspect was the debate about remedy: the applicant sought substitution (a court decision granting exemption), while other parties supported remittal. This in turn required the court to determine a key feature of the exemption procedure: whether an appeal to the appeal authority was confined to the record before the initial exemption authority (which would tend to support a “foregone conclusion” argument) or whether it was a wide appeal allowing additional material and broader reconsideration (which would tend to support remittal).

3. Legal Issues

The central legal questions the court was required to determine were whether the Labour Court had jurisdiction to review the decision of an exemption appeal body constituted under a bargaining council collective agreement, and whether the second respondent’s dismissal of the appeal was reviewable on a recognised review standard.

A closely related issue was whether the second respondent’s approach amounted to a gross irregularity (or equivalent reviewable defect), in the sense that it prevented a fair determination of the issues he was required to decide under the exemption procedure. This was primarily a question of the application of legal standards to the decision-maker’s conduct, rather than a re-evaluation of the merits of exemption.

If the decision was reviewable and fell to be set aside, the court then had to determine the appropriate remedy: whether to substitute its own decision (granting the exemption) or to remit the appeal for reconsideration. That enquiry involved a value judgment informed by constitutional and administrative-law principles concerning institutional competence, deference, delay, and whether the outcome was a foregone conclusion.

An additional legal-interpretive question arose in relation to remedy: what was the nature of the “appeal” contemplated by the exemption procedure (a wide appeal versus a strict appeal confined to the record), because that characterisation influenced whether the Labour Court could be “in as good a position” as the appeal authority to decide the exemption.

4. Court’s Reasoning

Jurisdiction under section 158(1)(g) of the LRA

Although the parties were agreed in argument that section 158(1)(g) applied, the court considered itself obliged to satisfy itself on jurisdiction. The judgment recognised conflicting Labour Court authority on whether an exemption appeal body performs a function “provided for” in the LRA for purposes of section 158(1)(g), with reference to National Union of Metalworkers of SA on behalf of Members v Metal and Engineering Industries Bargaining Council & Others and contrasting decisions in Argent Steel Group t/a Sentech Industries v MIBCO and Others and National Bargaining Council for the Clothing Manufacturing Industry (Cape) and Others v Zietsman NO and Others.

The court resolved this conflict by relying on the Labour Appeal Court decision in Trafford Trading (Pty) Ltd v National Bargaining Council for the Leather Industry of South Africa, which treated an exemption appeal body as performing a function under section 32(3)(e)(i) of the LRA (in the context of independent appeals against refusal of exemption), thereby supporting review jurisdiction under section 158(1)(g).

Although Trafford Trading concerned a non-party to the collective agreement, the court reasoned that this distinction did not warrant a different conclusion where, as here, the appeal body entertained appeals by both parties and non-parties. The judgment therefore concluded that the Labour Court did have jurisdiction to hear the review.

Reviewability and the applicable review standard

The judgment noted that the parties ultimately accepted that the decision was reviewable, and consequently it was unnecessary to decide whether review proceeded under the common law, PAJA, or legality. The court elected to apply what it described as the strictest potentially applicable test, framed as a gross irregularity standard as articulated in Goldfields Investment Ltd v City Council of Johannesburg and quoted with approval in Telcordia Technologies Inc v Telkom SA Ltd. The focus under that approach was whether the irregularity prevented a fair hearing of the issues, including where an erroneous view of the decision-maker’s function results in a misconceived inquiry.

Applying that standard, the court held that the second respondent “did not even begin to consider the appeal”, because he regarded himself as precluded from doing so by the pending dispute at the bargaining council and by his view that the applicant sought an amendment to the MCA. The judgment found this view to be erroneous, and, crucially, to have prevented the second respondent from dealing with the matter as required by the exemption procedure. On that basis, the ruling fell to be reviewed and set aside because the second respondent totally failed to consider the issues he was charged with considering.

Substitution versus remittal

On remedy, the court summarised the established approach that the usual course in review proceedings is remittal, with substitution reserved for exceptional cases. In analysing substitution, the court relied in particular on Trencon Construction (Pty) Ltd v Industrial Development Corporation of South Africa Ltd and Another, including its acceptance that substitution principles existed pre-PAJA and its endorsement of Johannesburg City Council v Administrator, Transvaal, and Another on when remittal may be departed from. The judgment highlighted considerations such as whether the outcome is a foregone conclusion, whether remittal would be a waste of time, whether there has been undue delay, and whether there is bias or incompetence warranting departure from remittal.

The court applied the Trencon framework, emphasising (i) whether the court was in as good a position as the administrator/appeal authority to decide the matter, and (ii) whether the outcome was a foregone conclusion, to be assessed cumulatively, alongside other factors such as delay.

The court held that it was not in as good a position as a properly constituted appeal authority. It reasoned that the second respondent had not decided the merits, so the court did not have the benefit of the appeal authority’s reasoning. The exemption decision was characterised as polycentric, not guided by specific statutory rules, and the exemption procedure contemplated decision-makers with potentially specialised expertise (including financial matters, industry knowledge, labour relations, and labour law). The court regarded itself as lacking experience in most of those areas, even if it could decide matters with appropriate evidence.

Nature of the appeal and whether a future appeal authority is bound to the record

A key driver of the substitution argument was the applicant’s contention that, on remittal, the other parties would gain a “second bite at the cherry” by supplementing limited submissions previously made. The judgment treated this concern as relevant only if the exemption procedure confined an appeal authority to the original record.

To interpret the nature of the appeal, the court applied the distinction in Tikly and Others v Johannes NO and Others between a wide appeal (fresh determination), a strict appeal (limited to the record), and a review. The court noted that the applicant had initially asserted that the appeal was a wide appeal, and that respondents had not disputed this on affidavit, but that the applicant later shifted to arguing for a stricter, record-bound appeal.

Interpreting the exemption procedure, the court focused on provisions incorporated into the appeal phase (including the ability to request parties to attend, to call other parties who may assist, and the requirement to consider “all relevant factors” including industry and employee interests, and employer financial stability). These features were treated as indicating a wide appeal model, not confined to the original record and not limited to deciding whether the first-instance authority was right or wrong.

The court rejected the argument that the absence of clause 1’s initial application requirements from the appeal phase meant the appeal was record-bound. It reasoned that the appeal authority’s power to hear parties not involved initially, and its obligation to consider submissions from interested parties, suggested that additional material could be sought and considered on appeal. It concluded that the appeal was in the wide sense and that a future appeal authority would not be bound to the initial record.

Delay and other discretionary considerations

The judgment found no basis to infer bias, and it did not accept that remittal would cause unacceptable delay, noting that the exemption procedure provided a 30-day period for the appeal authority to decide and that the court could issue directives to ensure timelines were met. These factors, together with the court’s institutional competence analysis and the wide-appeal nature of the procedure, supported remittal rather than substitution.

5. Outcome and Relief

The Labour Court reviewed and set aside the exemption appeal ruling issued on 9 October 2018 by the second respondent, which had dismissed the applicant’s appeal against the dismissal of its exemption application on 12 August 2018.

The court ordered that the appeal be remitted to a properly constituted appeal authority, expressly stating that the new appeal authority would not be bound to the record that served before the second respondent. The court also issued detailed directives regulating the appointment of the new appeal authority, the filing of written material, the exchange of responses, the hearing of oral submissions, and the time period within which the new appeal authority must render its decision.

There was no order as to costs, consistent with the parties’ agreement on costs.

Cases Cited

National Union of Metalworkers of SA on behalf of Members v Metal and Engineering Industries Bargaining Council & Others (2019) 40 ILJ 399 (LC).

Argent Steel Group t/a Sentech Industries v MIBCO and Others Unreported Judgment (Case No: PR150/14) [2018] ZALCPE 2 (Delivered on 30 January 2018).

National Bargaining Council for the Clothing Manufacturing Industry (Cape) and Others v Zietsman NO and Others (2013) 34 ILJ 151 (LC).

Trafford Trading (Pty) Ltd v National Bargaining Council for the Leather Industry of South Africa Unreported judgment (Case No: DA11/09) [2011] ZALAC 35.

Goldfields Investment Ltd v City Council of Johannesburg 1938 TPD 551.

Telcordia Technologies Inc v Telkom SA Ltd [2006] ZASCA 112; 2007 (3) SA 266 (SCA).

Trencon Construction (Pty) Ltd v Industrial Development Corporation of South Africa Ltd and Another 2015 (5) SA 245 (CC).

Johannesburg City Council v Administrator, Transvaal, and Another 1969 (2) SA 72 (T).

Tikly and Others v Johannes NO and Others 1963 (2) SA 588 (T).

Golden Arrow Bus Services v Central Road Transportation Board 1948 (3) SA 918 (AD).

S A Broadcasting Corporation v Transvaal Townships Board and Others 1953 (4) SA 169 (T).

Commercial Staffs (Cape) v Minister of Labour and Another 1946 CPD 632.

R v Keeves 1926 AD 410.

Shenker v The Master 1936 AD 136.

Legislation Cited

Labour Relations Act 66 of 1995 (as amended), including section 158(1)(g) and section 32(3)(e)(i).

Promotion of Administrative Justice Act 3 of 2000.

Rules of Court Cited

No specific rules of court were cited in the judgment.

Held

The Labour Court held that it had jurisdiction under section 158(1)(g) of the LRA, read with the statutory context of section 32(3)(e)(i) as explained by the Labour Appeal Court in Trafford Trading, to review a decision of a bargaining council exemption appeal body.

It further held that the second respondent’s refusal to consider the merits of the exemption appeal, based on an erroneous view that a pending bargaining council dispute and an alleged request to “amend” the MCA deprived him of authority, constituted a reviewable defect because it meant he failed to perform the function required by the exemption procedure. The decision was accordingly reviewed and set aside.

On remedy, the court held that substitution was inappropriate because the exemption appeal is a wide appeal, the issues are polycentric, and the court was not in as good a position as a properly constituted appeal authority with relevant expertise to decide the exemption. The matter was remitted to a newly appointed appeal authority, not confined to the previous record, with directives to ensure an expedited process. No costs order was made.

LEGAL PRINCIPLES

A decision of an exemption appeal body established within a bargaining council collective agreement may be reviewable in the Labour Court under section 158(1)(g) of the LRA where the appeal body performs a function contemplated by the LRA’s framework for exemption appeals, as recognised by the Labour Appeal Court in Trafford Trading (Pty) Ltd v National Bargaining Council for the Leather Industry of South Africa.

A review ground framed as a gross irregularity focuses not on whether the decision was merely wrong on the merits, but on whether an irregularity prevented a fair determination of the issues, including where a decision-maker misconceives the nature of the inquiry or their duties and thus fails to deal with the matter they are required to decide, consistent with Goldfields Investment Ltd v City Council of Johannesburg and Telcordia Technologies Inc v Telkom SA Ltd.

In administrative-law remedial choice, the default remedy upon setting aside an administrative decision is generally remittal, and substitution is exceptional. In deciding whether substitution is appropriate, the court must consider cumulatively whether it is in as good a position as the original decision-maker and whether the outcome is a foregone conclusion, while also weighing other factors such as delay, bias, and incompetence, as articulated in Trencon Construction (Pty) Ltd v Industrial Development Corporation of South Africa Ltd and Another and Johannesburg City Council v Administrator, Transvaal, and Another.

The nature of an “appeal” depends on the empowering provisions. Applying Tikly and Others v Johannes NO and Others, an appeal may be “wide” (fresh determination) rather than a strict appeal confined to the record. Where an exemption procedure empowers an appeal authority to call parties, seek assistance, and consider all relevant factors afresh, the appeal is properly characterised as a wide appeal, and the appeal authority is not necessarily bound to the record from the first-instance exemption proceedings.

Golden Arrow Bus Services (Pty) Ltd v South African Road Passenger Bargaining Council of South Africa and Others ((2019) 40 ILJ 2343 (LC)) [2019] ZALCCT 8; C1112/18 (2 April 2019)