THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not Reportable
Case No: JR613/20
In the matter between:
HRF SCHAEFER VERVOER (PTY) LTD Applicant
and
MOKWENA, S.N.O First Respondent
NATIONAL BARGAINING COUNCIL FOR
THE ROAD FREIGHT AND LOGISTICS INDUSTRY Second Respondent
Heard: 26 November 2024
Delivered: 24 June 2025
JUDGMENT
BALOYI, AJ
Introduction
[1] The applicant seeks the review and setting aside of an award rendered by the
first respondent relating to the interpretation and application of clause 35 of
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the main collective agreement of the second respondent . In the award dated
10 February 2020 issued under the auspices of the second respondent, case
number GPRFBC 5627455641, the first respondent held that clause 35
applied to the applicant and ordered that “The interpretation of Clause 35 of
the Council’s Main Collective Agreement finds application and is binding to
the Applicant ”. Clause 35 regulates the introduction of employee incentive
schemes.
[2] The application is opposed by the second respondent.
Relevant facts
[3] No oral evidence was presented before the arbitrator and the matter was
disposed of based on written submissions and the parties respective bundles
of documents which were admitted into the record.
[4] The following facts are common cause. The applicant HRF Schaefer Vervoer
(Pty) Ltd (Schaefer) is an employer in the registered scope of the National
Bargaining Council for the Road, Freight and Logistics Council (the Council) ,
and it is subject to the main collective agreement.
[5] In 2002, Schaefer introduced a driver incentive scheme. In terms of the
scheme, drivers are remunerated above the minimum remuneration for
drivers prescribed by the main agreement from time to time. Save for
adjustments to the amounts payable, the basis of the incentive scheme has
remained the same throughout.
[6] On 16 January 2012, the simplified and consolidated main agreement came
into effect. It, inter alia, introduced clause 35. Until May 2017, Schaefer was
considered by the Council to be in compliance with the main agreement and,
following inspections by the Council’s inspectorate for compliance with the
main agreement, it was found compliant and issued wit h letters of good
standing in April 2015, May 2016 and August 2016. Things changed in May
2017 when the Council issued a report that Schaefer was non- compliant with
the main agreement and issued compliance notices that it must comply with
the main agreement and issued compliance notices that it must comply with
clause 35. Schaefer did not agree that clause 35 applied to its pre- existing
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scheme and this culminated in a referral of a dispute to the Council
concerning the interpretation and application of the main agreement, in
particular clause 35. The Council’s position is recorded in a letter to Schaefer
of 5 September 2017 as follows,
“… HFR (a reference to Schaefer) , introduced the incentive scheme some 15
years ago and such a scheme was based on the Agreement provisions which
dealt with “dual wage system”, such an agreement is no longer applicable. As
you will understand, the Bargaining Council Agreements are centrally
negotiated by parties from time to time and clauses are altered and some are
removed based on the needs and agreement of the parties. All companies
with the industry , after the Agreement has been negotiated and agreed, are
expected to implement.”
[7] The letter to Sc haefer also states that letters of good standing issued to
Schaefer in 2015 and 2016 were erroneously issued . The Council directed
Schaefer to comply with clause 35 and pursued enforcement proceedings
against Schaefer to compel compliance. As I have mentioned, the compliance
enforcement measures caused Schaefer to refer a dispute about the
interpretation and application of clause 35 to it and, conciliation having failed ,
the dispute was referred to arbitration where the arbitrator held that clause 35
applies to Schaefer. B efore me is the latest instalment in the quest for
resolution of the dispute.
[8] In the arbitration, the parties contended for their positions as recorded above.
In short, Schaefer contended that clause 35 applies to employers who seek to
introduce an incentive scheme for the first time and d oes not apply to its
incentive scheme which pre- dates clause 35. For its part, the Council
contended that the coming into effect of clause 35 abolished pre- existing
incentive schemes and that Schaefer must comply with clause 35 to
implement a new driver incentive scheme.
[9] Before the arbitrator, and in this court, there is no dispute that Sc haefer’s
[9] Before the arbitrator, and in this court, there is no dispute that Sc haefer’s
incentive scheme does not contravene the minimum wage and conditions of
employment prescribed in the main agreement. It is also so, and not disputed
that Schaefer had an exemption from the second respondent from providing
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registers in terms of clause 51 of the main agreement, as it uses electronic
monitoring. There is no evidence in the record that this exemption has been
withdrawn and so this fact too is common cause.
Discussion
[10] The application is brought in terms of section 145 and/or 158(1)(g) of the
Labour Relations Act
1 (LRA). Schaefer contends that the award of the
arbitrator is not one which a reasonable decision maker could arrive at for the
following reasons – the arbitrator’s factual findings do not account for all the
evidence and documents placed before the arbitrator; the arbitrator exceeded
his powers and he failed to properly, rationally and justifiably apply his mind to
the facts and the law in his interpretation of the agreement ; the award is not
justifiable in relation to the reasons given, it is not rational or justifiable in its
merits or outcome.
[11] The test for review is now settled. It is whether the decision sought to be
reviewed and set aside is one that a reasonable decision- maker could not
reach having regard to the evidence that was before the arbitrator2.
[12] In MacDonald’s Transport Upington (Pty) Ltd v Association of Mineworkers
and Construction Union and others 3, Sutherland JA, writing for a unanimous
court said:
“In my view, there is much to be said for the proposition that an arbitrator in
the CCMA or in a Bargaining Council Forum who wrongly interprets an
instrument commits a reviewable irregularity as envisaged by section 145 of
the LRA; i.e a reasonable arbitrator does not get a legal point wrong. If so, the
reasonableness test is appropriate to both value judgments and legal
interpretations. If not, ‘correctness’ as a distinct test is necessary to address
such matters. However, on either basis, the ruling in this case must be set
aside.”
[13] This view also found approval in National Union of Metalworkers of SA v
1 Act 66 of 1995, as amended.
2 See: Sidumo and another v Rustenburg Platinum Mines and others (2007) 28 ILJ 2405 (CC) at para
110.
3 (2016) 37 (ILJ) 2593 (LAC) at para 30.
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Assign Services 4 where the Labour Appeal Court stated that an incorrect
interpretation of the law by a commissioner constitutes a material error of law
which “will result in both an incorrect and unreasonable award … (which) can
either be attacked on the basis of its correctness or for being unreasonable” 5.
The award in the present matter must according be evaluated on this basis.
[14] The principles applicable to interpretation have been commented on by our
courts sufficiently to now be trite. I n Natal Joint Municipal Pension Fund v
Endumeni Municipality ,6 the Supreme Court of Appeal (SCA) explained the
correct approach to interpretation thus:
“The present state of the law can be expressed as follows: Interpretation is
the process of attributing meaning to the words used in a document, be it
legislation, some other statutory instrument, or contract, having regard to the
context provided by reading the particular provision or provisions in the light
of the document as a whole and the circumstances attendant upon its coming
into existence. Whatever the nature of the document, consideration must be
given to the language used in the light of the ordinary rules of grammar and
syntax; the context in which the provision appears; the apparent purpose to
which it is directed and the material known to those responsible for its
production. Where more than one meaning is possible each possibility must
be weighed in the light of all these factors. The process is objective, not
subjective. A sensible meaning is to be preferred to one that leads to
insensible or unbusinesslike results or undermines the apparent purpose of
the document. Judges must be alert to, and guard against, the temptation to
substitute what they regard as reasonable, sensible or businesslike for the
words actually used. To do so in regard to a statute or statutory instrument is
to cross the divide between interpretation and legislation; in a contractual
to cross the divide between interpretation and legislation; in a contractual
context it is to make a contract for the parties other than the one they in fact
made. The 'inevitable point of departure is the language of the provision
itself', read in context and having regard to the purpose of the provision and
the background to the preparation and production of the document.”
[15] The SCA went on to emphasis e that “from the outset one considers the
4 (2017) 38 ILJ 1978 (LAC) at para 32.
5 Ibid at para 32.
6 2012 (4) SA 593 (SCA) at para 18.
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context and the language together, with neither predominating over the
other.”7 The interpreter of a document, statute or contractor must accordingly
and as a matter of course, take context and purpose into account. For
completion, it is in my view also instructive to be mindful of the SCA’s ‘caution’
in Capitec Bank Holdings Limited and Another v Coral Lagoon Investments
194 (Pty) Ltd and Others,8 that:
“…Endumeni has become a ritualised incantation in many submissions before
the courts. It is often used as an open- ended permission to pursue
undisciplined and self -serving interpretations . Neither Endumeni, nor its
reception in the Constitutional Court, most recently in University of
Johannesburg, evince skepticism that the words and terms used in a contract
have meaning.” (my emphasis)
Is the arbitrator’s interpretation of clause 35 wrong in law?
[16] It is necessary to quote clause 35 in its entirety. It reads:
“(1) An employer may introduce an incentive scheme in terms of which an
employee’s remuneration is based on the quantity of work done or the
employee’s output, if –
(a) the scheme complies with this clause and has the approval of
the Council;
(b) the registers prescribed in Clauses 50 and 51 of this
Agreement are properly kept;
(c) an employee who is part of the scheme, is not paid less than
the amount that employee would otherwise be entitled to in
terms of clauses 11, 14, 15 and 36 and Schedule 5.
(2) An employer who wishes to introduce an incentive scheme must set
up a committee consisting of an equal number of representatives of
management and elected representatives of employees to negotiate
and agree the terms of the scheme.
7 Ibid at para 19, referring to Jaga v Dönges NO and Another; Bhana v Dönges NO and Another 1950
(4) SA 653 (A) at 662G – 663A.
8 2022 (1) SA 100 (SCA) at para 49.
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(3) The terms of an incentive scheme –
(a) must be reduced to writing and be signed by all the members
of the joint representative committee; and
(b) may not be varied or terminated by any party to the scheme
unless that party –
(i) has given all other parties notice in writing as may have
been agreed upon by the parties who entered into the
scheme;
(ii) has complied with any other obligations set out in the
scheme for varying or terminating the scheme.”
[17] The arbitrator accepts in the award that the literal meaning of ‘ introduce’ in
clause 35(1) “suggest[s] to establish or create something new .” The arbitrator
however proceeds that “the use of the word in the clause is preceded by the
word may which suggests granting of discretion of /or permission subject to
the conditions set out in the clause. Therefore, the meaning of the word
introduce in the context of the clause suggests permission to establish a
scheme subject to the conditions set out in the clause”. The logic of this
construction is not plain to see.
[18] The arbitrator further held that if clause 35 was not to apply to a pre-existing
scheme because it came into effect after the scheme was introduced, the
Council would be emasculated to discharge its regulatory obligations in
relation to such schemes. He proceeded to say:
“The Council’s only mechanism to discharge the regulatory duty is through
the main collective agreement and clause 35 is the only mechanism to
regulate incentive schemes in the m ain collective agreement. Therefore the
discretion, as suggested by the word ‘may’ , given to employers to introduce
incentive schemes is also subjected to the regulatory mechanism of clause 35
by setting out conditions which the incentive scheme should meet and subject
to the Council’s approval”.
[19] It therefore appears from the award that the arbitrator departed, in his analysis
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of the application of clause 35, from the premise that the pre-existing incentive
could not be excluded from the application of clause 35 because “ the Council
would be emasculated to discharge its regulatory obligations in relation to
such schemes ” and also “[t]he Council’s only mechanism to discharge the
regulatory duty is through the main collective agreement and clause 35 is the
only mechanism to regulate incentive schemes in the main collective
agreement”. This in my view is a misdirection as this is not the question the
arbitrator was required to answer. The dispute before him was whether , on a
proper reading of clause 35, it applies to the applicant’s pre- existing incentive
scheme.
[20] It is apparent from the award that the arbitrator did not have any regard to the
law on the effect of later legislation on rights that have accrued under previous
legislation. He failed to have regard to the settled principles of our law
applicable to the issue he was required to determine. I proceed to discuss the
applicable legal principles relevant to the present facts.
[21] There is no controversy that the main agreement has the status of
subordinate legislation
9. It follows therefore that the rules and principles
applicable to statutory interpretation must apply to the interpretation of clause
35, of course mindful that meaning must be given to the words used in that
clause, having regard to the context provided by reading the clause in the light
of the document as whole and the circumstances attendant upon it coming
into existence.
[22] As a point of departure, the principle that no statute is to be construed as
having retrospective operation unless the Legislature clearly intended the
statute to have that effect is and must be accepted as still the correct position
of our law.
[23] The Constitutional Court stated the position thus in S v Mhlungu and others 10,
that:
9 See: Platinum Mile Investments (Pty) Ltd t/a Transition Transport v SA Transport and Allied Workers
Union and others (2010) 31 ILJ 2037 (LAC) at para 41.
10 1995 (3) SA 867 (CC) at para 65.
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“… there is a strong presumption that new legislation is not intended to be
retroactive. By re troactive legislation is meant legislation which invalidates
what was previously valid, or vice versa, namely which affects transactions
completed before the new statute came into effect”.
[24] The presumption that new legislation is not intended to be retroactive remains
the correct position of our law The Court also said:
‘There is also a presumption against reading legislation as being retrospective
in the sense that, while it takes effect only from its date of commencement, it
impairs existing rights and obligations, for example by invalidating current
contracts or impairing existing property rights,’
and
“The general rule therefore is that a statute is as far as possible to be
construed as operating only on facts which come into existence after its
passing”.11
[25] In considering the question before him, the arbitrator was required and
obliged to have regard to binding principles of law applicable to the question
he was required to answer. He failed to consider whether, having regard to
the presumption against legislative retroactivity, clause 35 applied to
Schaefer’s pre-existing incentive scheme. He concerned himself with the
effect or consequence of excluding, from the application of clause 35,
schemes which pre-date clause 35 and attached a meaning not supported by
the text and context of that clause. In doing so, he committed the very sin that
the SCA in Endumeni cautioned when it said:
“Judges must be alert to, and guard against, the temptation to substitute what
they regard as reasonable, sensible or businesslike for the words actually
used. To do so in regard to a statute or statutory instrument is to cross the
divide between interpretation and legislation; in a contractual context it is to
make a contract for the parties other than the one they in fact made.”12
[26] Schaefer’s drivers presently benefit from an incentive scheme that preceded
[26] Schaefer’s drivers presently benefit from an incentive scheme that preceded
11 Ibid at para 65.
12 Endumeni (Id fn 7) at para 18.
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the enactment of clause 35. If the arbitrator is correct in his conclusion, the
consequence is that all right s which accrued to Schaefer’s drivers were
nullified because, according to the second respondent , without compliance
with clause 35, Schaefer may not operate an incentive scheme. The practical
consequence of this interpretation on rights of drivers accrued since 2012 is
obvious to see – one such consequence would be that , upon clause 35
coming into effect, drivers los e the right to the above minimum wage salaries
they were paid before the advent of clause 35 and Schaefer would have no
obligation to introduce an incentive scheme, let alone similar to that rendered
defunct by clause 35. This would be the consequence without the parties to
the main agreement having agreed this far -reaching consequence, and
without Schaefer and its drivers having agreed to end the agreed incentive
scheme. And yet, this is a consequence of the interpretation of clause 35
preferred by the arbitrator. The interpretation preferred by the arbitrator would
also mean that the exemption previously granted Schaefer falls off without
withdrawal by the Council or any such intention being recorded or apparent in
clause 35. This interpretation of clause 35 is not suppor ted by the text and
context of the provision. It in fact offends the presumption against retroactivity,
a binding principle of our law.
[27] The parties to the main agreement must have been aware of pre- existing
incentive schemes when they enacted clause 35. They could have, but
elected not to, legislate that pre-existing schemes must comply with clause 35
as if they are introduced for the first time, or that any such pre- existing
schemes were abolished upon clause 35 coming into effect . They did not
state that schemes that pre- date clause 35 would become defunct upon
clause 35 coming into effect when they could have said so. Neither did they
say that clause 35 would have retroactive effect on existing schemes – an
say that clause 35 would have retroactive effect on existing schemes – an
impracticality considering that on the plain terms of clause 35, it does not
create an obligation to retain a pre- existing scheme and, as the arbitrator
accepted, the word ‘introduce’ ‘ suggests to establish or create something
new’. This is another reason why the arbitrator’s interpretation of clause 35 is
flawed.
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[28] It is plain that t he arbitrator incorrectly interpreted clause 35 in so far as it
applies to Schaefer. There is nothing in the text of clause 35, and the context
in which it appears, which supports an interpretation that upon the advent of
clause 35, Schaefer’s pre-existing incentive schemes became defunct or was
abolished. There is also nothing in the text and context of the entire document
which gives clause 35 retroactive effect. His misapplication of the law resulted
in a reviewable award which must be set aside.
Conclusion
[29] The arbitrator erred in his interpretation of, and conclusion that Schaefer is
required to comply with clause 35 if it is to replace its (according to the
arbitrator) abolished incentive scheme. This incorrect interpretation of clause
35 resulted in the arbitrator holding and ordering that clause 35 is binding on
Schaefer and that its driver incentive scheme was no longer operational or
valid.
[30] The error of law is material as it resulted in a decision which, on a proper
interpretation of the main agreement, and clause 35 in particular, was one that
a reasonable arbitrator could not reach.
[31] It follows from the above that the award must be set aside and the applicant
must succeed in the relief it claims.
Appropriate relief
[32] Schaefer seeks that the award be substituted with a determination or order
that clause 35 does not apply to its incentive scheme and remittal as
alternative relief.
[33] I do not consider that remittal is appropriate or fair to the parties for the
following reasons.
[34] The facts relevant to the determination of the dispute are all part of the record
and therefore presently before me. The Court is therefore in as good a
position as an arbitrator would be to determine the dispute.
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[35] Much time has passed since the dispute arose and when the arbitr ator
rendered the award. A remittal will only serve to further delay the finalisation
of this matter.
[36] Neither in the answering affidavit nor in its submissions did t he second
respondent contend for a remittal. Accordingly, no case has been made out
for a remittal.
[37] The applicant does not seek any costs and it will be ordered accordingly.
[38] Accordingly, the following order is made.
Order
1. The arbitration award issued on 10 February 2020 under case number
GPRFBC 5627455641 is reviewed and set aside.
2. The arbitration award is substituted with the following order:
“Clause 35 of the main collection agreement of the second respondent
does not apply to the applicant’s driver incentive scheme introduced in
2002.”
3. There is no order as to costs.
________________________
MS Baloyi
Acting Judge of the Labour Court of South Africa
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Appearances:
For the Applicant: Mr. A Posthuma
Attorneys: Snyman Incorporated
For the Third: Adv. L Hutchinson
Instructed by: Moodie & Robertson