REPORTABLE
IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT JOHANNESBURG
CASE NO: JS586/02
In the matter between:
MANGAUNG LOCAL MUNICIPALITY Applicant
and
SOUTH AFRICAN MUNICIPAL
WORKERS UNION Respondent
JUDGMENT
MASERUMULE AJ:
1. The applicant seeks payment of compensation in terms of
section 68(1)(b) of the Labour Relations Act, 66 of 1995 (“the
Act”), for losses allegedly suffered as a result of an unprotected
strike by members of the respondent. The matter was heard by
way of default as the respondent did not serve and file any
opposing papers nor appear on the date of hearing. The
statement of claim was served by hand on the respondent at its
offices in Bloemfontein and I am accordingly satisfied that there
was proper service in terms of the rules.
2. The applicant called three witnesses to testify in support of its
case.
3. Messrs Adriaan Van der MerweX, applicant’s electrical
engineer, Vincent Tsoenyane, its Director: Personnel and
Llewellyn Claasens, its Chief Personnel Officer, testified in
support of applicant’s claim. Their evidence is summarized
below.
4. The applicant recognizes the respondent as the collective
bargaining agent on behalf of its members employed by the
applicant. The applicant is a member of SALGA, the employers’
organization in the local authority sector, and the respondent
has some 120 000 members in the sector. Disputes that arise at
applicant are raised with the local shop stewards and branch
committee before the regional office in Bloemfontein is required
to intervene. Intervention from respondent’s regional office is
sought if the dispute cannot be resolved by the shop stewards
or branch committee.
5. On 14 January 2002, employees in the electrical department at
Bloemfontein commenced with an unprotected strike action by
refusing to work. These employees also blockaded the entrance
to and exit from the applicant’s electrical department, with the
result that some 300 vehicles and employees could not leave
the premises to go and render electrical services to residences
and business. The striking employees demanded that they be
addressed by applicant’s councilors.
6. Two councilors and members of the applicant’s management,
including Tsoenyane, met with respondent’s shop stewards in
the electricity department on 14 January 2002. This meeting
ended in chaos and the applicant could not establish what the
striking employees’ grievances were.
7. The strike continued on 15 January 2002. The striking
employees once more blockaded entrances to and exits from
the electrical department, with the same result as the previous
day.
8. On 16 January, the applicant addressed a letter to the
respondent and NEHAWU and MESHAWU, two members who
also had members employed by the applicant. In this letter, the
applicant advised the respondent that:
8.1 its members had embarked on a work stoppage, the reasons for
which were unknown to the applicant;
8.2 the applicant was willing to engage in negotiations with
representatives of the respondent to resolve the
problems/grievances amicably;
8.3 the respondent should furnish the applicant with a list of the
grievances which led to the strike;
8.4 the respondent should advise its members to resume duties by
not later than the same day, i.e. 15 January 2002; and
8.5 that the principle of no work, no pay, would apply.
9. The applicant met with the respondent’s branch committee on
16 January at 15h00. The applicant was informed that the
reason for the strike was because the striking employees felt
that the applicant was unfairly discriminating against black
residents in the provision of electrical services in Greater
Bloemfontein and also that white employees were being treated
more leniently than black employees in respect of the same
disciplinary offences. There was a further demand that a white
employee be suspended, failing which the strike would
continue.
10. The respondent replied to applicant’s letter of 15 January on 16
January. In its reply, the respondent stated that:
10.1 it had not been possible to respond to the letter by the date
requested;
10.2 the respondent was willing to negotiate with the applicant;
10.3 the striking employees had expected to be addressed by the
applicant’s municipal manager and director of Human
Resources on 14 January , which did not happen;
10.4 its shop stewards were available that day to meet with the
applicant to discuss the striking employees’ grievances.
11. The letter did not address applicant’s request that the
respondent should advise its members to resume their duties.
12. The strike continued on 17 January. On 18 January, the strike
spread to applicant’s Botshabelo’ administrative department and
involved more than a thousand employees.
13. On 18 January, the applicant sought and was granted an
interdict by this court against the respondent, MESHAWU and
the striking employees. The interim interdict issued on 18
January was subsequently confirmed on 15 February 2002. The
prayers sought and granted interdicted all the respondents from
participation in the strike “or in any conduct in contemplation or
in furtherance of such strike” and ordered the respondents to
return to work and fulfill their obligations in terms of their
employment contracts.
14. The striking employees returned to work on 21 January 2002 in
compliance with the interdict obtained by the applicant.
15. As a result of the strike and the blockade of the electrical
department’s entrances and exits, the applicant was unable to
carry out electrical services, repairs and installations during the
period 14 to 18 January 2002. The applicant’s claim is for
compensation in the amount of R272 541.84.
16. The compensation claimed is based on the amount of notional
income that the applicant would have earned from the operation
of its electricity department. I say notional because the income
referred to is based on applicant’s system of subdividing its
various departments into separate cost centers, of which the
electricity department was one. Each cost center has a budget,
based on income derived from the services that it renders to
other cost centers. The latter is calculated on the basis of hourly
tariffs that attach to different categories of employees,
depending on their skills: unskilled employees are charged out
at a lower hourly tariff than artisans and semiskilled employees.
Thus, although there is no actual exchange of money,
accounting entries reflect what the income of each cost center
is, as well as the expenditure incurred in producing the income.
This forms the basis of the budget for each cost center.
17. In the case of the electricity department, the income claimed by
the applicant as having been lost as a result of the strike by
respondent’s employees is based on the income that the
electricity department would have generated during the strike
and which it did not as a consequence of the strike. In this
respect, applicant’s claim is twofold.
18. Firstly, the applicant claims compensation for lost income based
on the amount that the striking employees would have
generated, calculated on the basis of their hourly rates, had
they worked during the period of the strike. This loss is thus
directly attributable to the strike itself, i.e. it arises as a result of
the refusal by the employees to perform their normal duties.
19. Secondly, the applicant claims for income lost as a result of the
nonstriking employees being unable to work during the strike,
nonstriking employees being unable to work during the strike,
as a result of the striking employees’ blockade of the entrances
and exits to the electricity department. The blockade made it
impossible for nonstriking employees and vehicles to go and
perform their duties, in respect of which they would have
debited other costs centers, thereby generating income for the
electricity department, and ultimately, the applicant.
20. The distinction between these two grounds of applicant’s will
become apparent later in this judgment.
21. In respect of both claims, the method used to calculate he
income is based on fixed costs, represented by licence fees and
insurance for the vehicles owned by the department and used to
render electrical services. The variable costs, such as fuel and
repair costs, have been excluded, as these vehicles were
actually not used during the strike. In this respect, the applicant
relies on the fact that it was unable to earn income and profit
that would offset these fixed costs. The other component of the
claim is based on the income that the employees, both strikers
and nonstrikers, would have generated had they worked,
based on their respective hourly rates.
22. Lastly, the applicant claims compensation for overtime
payments that it made to nonstriking employees, whose
overtime work was necessitated by the striking employees’
refusal to work.
The law
23. It is important to point out at the outset that applicant’s claim
arose and the losses were allegedly suffered prior to 1 August
2002. Accordingly, its claim must be adjudicated on the basis of
Section 68 of the Act as it was prior to the coming into effect of
Act 2 of 2002, (“the Amendment Act”). The Amendment Act
effected certain changes to section 68 of the Act which would
lead to a different result in this case, were the Act as amended
applicable.
24. Section 68(1)(b) of the Act prior to its amendment by the
Amendment Act provided as follows:
“68(1) In the case of any strike or lockout, or any conduct in contemplation or in
furtherance of a strike or lockout, that does not comply with the
provisions of this Chapter, the Labour Court has exclusive jurisdiction
(a) to grant an interdict or order to restrain
(i) any person from participating in a strike or any conduct in contemplation or
in furtherance of a strike;
(ii) any person from participating in a lockout or conduct in contemplation or
in furtherance of a lockout.
(b) to order the payment of just and equitable compensation for any loss
attributable to the strike or lockout , having regard to
(i) whether
(aa) attempts were made to comply with the provisions of this Chapter and the
extent of those attempts;
(bb) the strike or lockout or conduct was premeditated;
(cc) the strike or lockout or conduct was in response to unjustified conduct by
another party to the dispute; and
(dd) there was compliance with an order granted in terms of paragraph (a);
(ii) the interests of orderly collective bargaining;
(iii) the duration of the strike or lockout or conduct; and
(iv) the financial position of the employer, trade union or employee
respectively.” (own underlining)
25. It is immediately apparent from the above provisions that
section 68 confers two different powers on the Labour Court.
Firstly, and in terms of section 68(1)(a)(i) and (ii), the court is
conferred with power to interdict a strike or lockout or any
conduct in contemplation of a strike or lockout that does not
comply with the provisions of Chapter VI of the Act. Accordingly,
the court may interdict not only a strike or lockout that is
unprotected, but may also interdict other conduct associated
with a strike or lockout, such as unlawful conduct by striking
employees. Indeed, the court issues such interdicts on a regular
basis.
26. Secondly, section 68(1)(b) confers on the court power to order
payment of just and equitable compensation, for any loss
attributable to the strike or lockout that does not comply with
the provisions of Chapter VI of the Act. One cannot but
immediately notice the absence of “conduct in contemplation of
or furtherance of a strike or lockout” in Section 68 (1)(b). The
powers of the court to award just and equitable compensation in
terms of section 68(1)(b) is thus limited to situations where the
loss is attributable to an unprotected strike or lockout. This
power does not extend to losses that attributable to other things,
such as the conduct of strikers or the employer who has
instituted the lockout.
27. I am fortified in my conclusion by the judgment of the Labour
Appeal Court in Stuttafords Department Stores Limited v SA
Clothing and Textile Workers Union (2001) 22 ILJ 414 (LAC).
Zondo JP, in analyzing sections 67 and 68 of the Act, and in
particular, in considering the Labour Court’s jurisdiction to grant
compensation in terms of section 68(1)(b), says the following:
“[32] Section 67 sets out in great detail the effects, implications and
consequences of protected strikes and lockouts as well as of conduct in
contemplation or in furtherance of such strikes or lockouts. A reading of
contemplation or in furtherance of such strikes or lockouts. A reading of
section 68 reveals the same in respect of unprotected strikes and lockouts
and, to a rather limited extent, conduct in contemplation or in furtherance
of such strikes or lockouts. ” (own emphasis)
28. The reason for the reference to “ a limited extent ” in relation to
conduct in contemplation or in furtherance of strikes or lockouts
is not hard to find. It lies in the absence of reference to conduct
in contemplation or furtherance of strikes and lockouts in
section 68(1)(b).
29. I am also fortified in my view by the subsequent amendment of
section 68(1)(b), to which the words “ or conduct ” have been
added after “ strike or lockout ”. The amendment now makes it
possible for the court to adjudicate a claim for payment of
compensation in respect of a loss that is attributable to conduct
in furtherance of an unprotected strike or lockout.
30. In Rustenburg Platinum Mines Limited v Mouthpeace Workers
Union (2001) 22 ILJ 2035 (LC) at 2041DE, the court, per
Farber AJ, held that:
“…it must be demonstrated that the party sought to be fixed with liability
(under section 68(1) of the Act) participated in the strike or committed acts
in contemplation or in furtherance thereof . This much is evident from the
provision of subsection 1(a) which, in its delineation of the nature of the
acts which might legitimately form the subjectmatter of n interdict or
restraint, identifies who might be held accountable therefore. ” at 2041D
E (own underlining)
31. The reference in Rustenburg Platinum , supra, to a party being
held liable for committing acts in contemplation or furtherance of
an unprotected strike or lockout is, with respect to the learned
judge, not a correct interpretation of the section. As already
indicated, section 68(1) of the Act deals with two distinctive
matters. The one, being subsection (1)(a), relates to the grant of
interdictory relief and no more. The other, being subsection (1)
(b), relates to the payment of compensation. Each power is
contained in a separate subsection and there is no justifiable
reason, in my view, to import into subsection (1)(b) words which
are patently not there. Farber AJ relies on the fact that the court
are patently not there. Farber AJ relies on the fact that the court
is granted power to interdict unprotected strikes and lockouts,
as well as conduct in contemplation or furtherance thereof to
conclude that the powers of the court in relation to ordering
payment of compensation also extent to conduct in
contemplation or furtherance of such strikes or lockouts. Such
an importation is, in my view, unwarranted, particularly in the
absence of any finding by Farber AJ that there is a lacuna in
section 1(b).
32. In any event, Farber AJ was dealing with a case where the
losses claimed were attributable to the unprotected strike itself.
The applicant in Rustenburg Platinum, supra, did not rely on
any conduct in contemplation or furtherance of the strike for its
claim. Its case was that as a result of the strike as manifested
by employees’ refusal to work, it had lost a day’s production, the
value of which was quantified. The claim thus fell squarely
within the provisions of section 68(1)(b). That part of the
judgment, in so far as it refers to liability attaching to losses
arising out of conduct in contemplation or furtherance of an
unprotected strike or lockout is, therefore, orbiter. In so far as it
may represent what Farber AJ considered to be the correct
interpretation of section 68(1)(b) prior to the promulgation of the
Amendment Act in relation to what gives rise to liability under
that section, I consider the judgment to be clearly wrong and I
am accordingly, not bound to follow it, cf JDG Trading (Pty) Ltd
v Brundson (2000) 21 ILJ 501 (LAC) at 517A, and the
authorities cited therein.
33. It follows that for the court to come to the assistance of the
applicant in the present matter, the applicant must show that it
suffered some loss, which is attributable to an unprotected
strike and further that the respondent is liable for such loss, see
Rustenburg Platinum, supra at 2041DE.
Rustenburg Platinum, supra at 2041DE.
34. On the uncontested facts before me, the strike by applicant’s
employees from 1418 January 2002 did not comply with the
provisions of Chapter IV of the Act. No dispute was referred to
the CCMA nor was notice given of the strike as required by
section 64(1)(b) of the Act. There is no evidence before me that
there was a collective agreement that contained strike
procedures and that the employees who participated in the
strike or the respondent complied with such procedures. The
strike was thus unprotected and a cause of action would thus
arise in respect of any losses that the applicant may have
suffered as a result of the strike.
35. The second issue is whether the applicant suffered any loss
which is attributable to the strike.
36. On the uncontested evidence before me the applicant did suffer
losses. I am mindful of the fact that the nature of the income
that the applicant says it lost is not quantifiable by reference to
production lost or profit forfeited. The fact of the matter is that
when the electricity department renders electricity services, it
charges a fee. In the case of services supplied or rendered to
businesses, there is an actual loss suffered in so far as such
services were not rendered, and could not be charged for as a
result.
37. The real question is whether the applicant has shown that the
losses that it suffered are attributable to the strike by
respondent’s members.
38. As already indicated, a portion of the claim is in respect of loss
of income arising from the striking employees’ refusal to work
and overtime payments to nonstriking employees who worked
such overtime as a result of the strike. Such a loss is
attributable to the strike and the applicant is entitled to claim
compensation in respect thereof. This is so because had the
employees worked, they would have generated such income for
the applicant. Their refusal to work is thus the cause of the loss.
Similarly, had the employees worked, it would not have been
necessary for the applicant to require other employees to work
necessary for the applicant to require other employees to work
overtime and consequently, no overtime payment would have
been payable. The overtime portion of the loss is thus also
attributable to the strike.
39. The portion of the loss that relates to income lost as a result of
nonstriking employees being unable to go and work due to the
blockade of entrances to and exits from the electricity
department, cannot be said to be attributable to the strike. The
evidence is clear that such loss arose as a result of the unlawful
conduct of the striking employees who, in furtherance of their
unprotected strike, blockaded entrance to and exit from the
electricity department, with the result that nonstriking
employees and vehicles could not leave to render electrical
services. This portion of the loss, therefore, is attributable to
conduct in furtherance of the unprotected strike and is not
recoverable under section 68(1)(b) of the Act.
40. The amount of R272 5410.84 claimed is made up of losses
suffered as a result of the strike itself and conduct in furtherance
of the strike. This brings me to the question of who is liable to
pay this amount or any amount that the court may consider to
be fair and equitable.
41. In Rustenburg Platinum , supra, the court settled the union with
liability in that case because it concluded, on the evidence
before it, that the union had instigated the strike and had also
committed acts in furtherance of the strike. (at 2043B). I have
already expressed my views about the correctness of the
judgment in so far as it relates to liability for losses arising out of
conduct in furtherance of a strike or lockout, as the case may
be. The finding that the union was liable to pay compensation
because it was found to have instigated the strike, appears to
me to be sound.
42. In the present matter, the applicant is claiming compensation
from the respondent only and not from its members who
participated in the strike, none of whom have been joined as
participated in the strike, none of whom have been joined as
respondents. The applicant submitted that the respondent is
liable on various grounds. Firstly, because it associated itself
with the striking employees. Secondly, because it failed to
persuade its members to end the strike after being requested to
do so. Thirdly, because it never expressed its disapproval of the
strike to the applicant or the striking employees who were its
members. Fourthly, because it instigated the strike. Before
dealing with applicant’s submissions, it is necessary to first
examine whether section 68(1) provides any guide as to who is
liable for the payment of compensation for a loss suffered as a
consequence of an unprotected strike.
43. Section 68(1)(b) does not say who should be ordered to pay
compensation for a loss suffered as a result of an unprotected
strike. It simply confers powers on the court to order the
payment of such compensation. However, if one looks at the
subsection as a whole, and in particular, the factors that a court
is required to consider in determining whether to order payment
of compensation as set out in (1)(b)(i)(iv), it is clear that either a
trade union or its members or both can be held liable.
Employees would be liable because they participated in the
strike and are to that extent, the direct cause of the losses
suffered by their employer. A trade union can be liable if it calls
for a strike which is unprotected and which leads to losses by
the employer, as was the case in Rustenburg Platinum . The
question is whether a trade union can be held liable not
because it called for or instigated the strike, but because it failed
to take any steps to bring the strike to an end, i.e. by omission.
44. In the present case, the submission that the respondent
instigated the strike is not supported by the evidence. The
evidence indicates that the employees arrived at work on 12
evidence indicates that the employees arrived at work on 12
January 2002, and without any warning, refused to work. There
is no indication that the respondent was aware of the
employees’ intention to strike or of the strike itself when it
initially started. There is no evidence that the respondent
communicated with the employees or the applicant prior to the
commencement of the strike, regarding the possibilities of such
a strike. The respondent cannot, therefore, be held liable to pay
compensation to the applicant on this ground.
45. The remaining three grounds on which the applicant says the
respondent is liable to compensate it all relate to the
respondent’s alleged failure to act and bring the strike to an
end. I include herein the submission that the respondent
associated itself with the strike because support for this
proposition is based on respondent’s failure to take any action
to end the strike.
46. The respondent was made aware of the strike on 15 January
2002 and was specifically requested to get the striking
employees to return to work. In its response in the letter dated
16 January, the respondent did not dispute the fact that its
members were taking part in an unprotected strike, nor did it
claim that it was not obliged to take steps to bring the strike to
an end. It merely stated that it could not respond earlier and that
its shop stewards were available for a meeting. The respondent
itself did not sent a union official to speak to the striking
employees. It was content to leave the resolution of the strike to
the shop stewards. It did not send a union official to attend the
meeting of 16 January. It did not give the undertaking sought by
the applicant that it would take steps to end the strike or advise
its members to end the strike. The strike only came to an end
after the applicant obtained an interdict from this court.
47. I am of the view that where a trade union has a collective
bargaining relationship with an employer, and its members
embark on unprotected strike action and the trade union
becomes aware of such unprotected strike and is requested to
intervene but fails to do so without just cause, such trade union
is liable in terms of section 68(1)(b) of the Act to compensate
is liable in terms of section 68(1)(b) of the Act to compensate
the employer who suffers losses due to such an unprotected
strike. Similarly, if a trade union elects to delegate the
responsibility to resolve the strike to its shop stewards
employed by the employer facing an unprotected strike, and
such shop stewards fail to discharge the same obligation that
the trade union has, the trade union is also liable to compensate
the employer for any losses that it has suffered as a result of
such strike. The obligation arises because the trade union, as a
party to a collective bargaining relationship with the employer,
has a duty to ensure that its members comply with the
provisions of the Act in relation to such an employer when they
seek to exercise their collective power by way of strike action.
48. In arriving at the above conclusion, I have also had regard, for
comparative purposes, to the provisions of Item 6 of Schedule
8, relating to the dismissal of employees engaged in an
unprotected strike. The guidelines there provide for the
employer to solicit the assistance of a trade union official to
discuss the course of action that the employer intends to adopt,
clearly, with a view that the union official should intervene and
prevent dismissals, if that is what the employer contemplates
doing, by securing a return to work by the striking employees.
This guideline indicates that a trade union shoulders some
responsibility with regard to participation by its members in an
unprotected strike. This responsibility extends to liability to
compensate an employer where the trade union fails to
discharge its duty of intervening during unprotected strikes by at
least attempting to secure a return to work by its members.
49. In the present matter, over and above the fact that the union
was aware of the strike, its shop stewards at the electricity
department were aware of and participated in the strike. They
took part in meetings with the applicant and instead of agreeing
to call of the strike, made demands in support thereof. In
addition, the evidence was that the branch committee, which
addition, the evidence was that the branch committee, which
includes shop stewards outside of the electricity department,
was part of the meting with the applicant on 16 January 2002
and did not take any steps to end the strike. The respondent,
having made it clear in its letter of 16 January that its shop
stewards were available to meet with the respondent to discuss
the striking employees’ grievances, delegated responsibility to
them to take whatever steps were necessary to deal with the
strike. The obligation to advise the striking employees that the
strike was unprotected and that they should return to work,
rested on the branch committee. They did not do so and as a
result, the strike continued and the applicant incurred losses in
the process.
50. I am accordingly satisfied that the respondent is liable to
compensate the applicant for losses that the latter suffrered as
a result of the unprotected strike by respondent’s members.
51. In so far as the amount that the respondent is liable to pay is
concerned, I am of the opinion that a robust approach is
appropriate for determining the amount. A message needs to be
send to the respondent and its members that given the ease
with which a protected strike can be embarked upon,
unprotected strikes will not be tolerated. At the same time, the
court must have regard to the fact that the compensation
payable will be paid from the respondent’s coffers, and
consequently, the funds of its other members who were not
involved in the strike will probably be used to make such
payment, to the latter’s detriment.
52. Taking all the above factors into account, I accordingly order
that the respondent should pay the applicant compensation in
the amount of R25 00000, payable within 30 days of the date of
this judgment. The respondent is also ordered to pay applicant’s
costs on an unopposed scale.
On behalf of the Applicant: Adv N Snellenberg, instructed by
Honey & Partners Attorneys Inc
On behalf of the Respondent: No appearance
Date of hearing: 7 August 2002
Date of judgment: 13 December 2002.
___________________________
MASERUMULE AJ