September and Others v CMI Business Enterprise CC (CCT279/16) [2018] ZACC 4 (27 February 2018)

Principle:

  1. In terms of CCMA Rule 15 a CCMA commissioner is not bound by a party's categorisation of the nature of the dispute and has the right and power to investigate and identify the true nature of the dispute.
  2. The CCMA referral form and certificate of outcome constitute prima facie evidence of the nature of the dispute conciliated but if it is alleged that the nature of the dispute is different from that reflected on such documents, the parties may adduce evidence as to the nature of the dispute.

Facts:

Three coloured employees left their jobs as a result of alleged racial discrimination which manifested itself in physical, verbal and mental abuse. In October 2011, they referred an 'unfair discrimination' dispute to the CCMA for conciliation, but it remained unresolved. They then instituted proceedings in the Labour Court, seeking an order that their resignations amounted to 'automatically unfair dismissals' based on racial discrimination.

The Labour Court found in their favour and said they had been constructively dismissed based on their race. The Labour Court also ordered the company to pay the employees 24 months' remuneration, the maximum permitted by the LRA.

The employer then appealed to the Labour Appeal Court, which held that the Labour Court did not have jurisdiction to adjudicate a dismissal dispute if that dispute had not been referred to conciliation.

The Constitutional Court found the Labour Appeal Court had erred. By relying only on the referral form and the certificate of outcome, the Labour Appeal Court essentially had held that no evidence from the conciliation proceedings may be led as evidence in subsequent proceedings.

In a lone dissenting judgment, DCJ Zondo said the Labour Appeal Court's decision was correct and in accordance with established precedent. He said the Labour Court had no jurisdiction to adjudicate a constructive dismissal dispute even if that dispute was referred to conciliation because 157(5) of the LRA provides that the Labour Court has no jurisdiction to adjudicate a dispute which in terms of the LRA is required to be arbitrated.

Extract from the judgment:

Theron J:

Factual background

[3]   The applicants commenced employment with the respondent during the course of August 2009. They were employed as general workers and were required to perform various duties, primarily technical and mechanical, on mining related projects throughout Africa.

[4]   The applicants resigned on 13 September 2011. They alleged this was as a result of the respondent making their working conditions intolerable. On this day, they sent a text message to Mr Cronje, the respondent's founder, informing him that they could no longer tolerate the working conditions to which they were subjected. They alleged that they were subjected to racial discrimination which manifested in physical, verbal and mental abuse.

Litigation History

CCMA

[5]   The applicants lodged two referral forms with the CCMA. The first was in respect of an alleged unfair labour practice and the Skills Development Act. The second was in respect of alleged unfair discrimination in terms of the Employment Equity Act.

[6]   In form 7.11 (referral form) the dispute was described as "[u]nfair discrimination section 10 of the Employment Equity Act". Under item 6, in respect of the results of conciliation, the applicants described their desired outcome as "[e]mployer to stop discriminating us". The dispute was set down for conciliation on 10 October 2011. The respondent was a member of Ad Finem Employers' Organisation and Mr Andrew Lewis, an official of that employer organisation who has since passed away, represented the respondent. The conciliation hearing was attended by the applicants and Mr Lewis. According to the applicants, it became apparent during the conciliation hearing that the dispute was primarily one of constructive dismissal. They also submit that this was canvassed to some extent during the proceedings.

[7]   On 1 November 2011, the commissioner issued a certificate of outcome, certifying that a dispute of "unfair discrimination" remained unresolved and indicating that the matter could be referred to the Labour Court.

Labour Court

[8]   On 12 January 2012, the applicants instituted proceedings in the Labour Court, in terms of sections 187 and 191 of the Labour Relations Act, by way of a statement of claim. They sought an order that their resignations amounted to automatically unfair dismissals based on racial discrimination and compensation.

[9]   The statement of material facts filed by the applicants in the Labour Court set out in detail the incidents of abuse suffered at the hands of their employer. They were the only black employees of the respondent. The applicants alleged they were addressed and referred to as "coloureds", "kaffir[s]", "koffeestokkies", "kittare", "tang", "kettings", "warm knope", "Hottentote" and "Bushies". Mr Cronje would also read from a cult book and publicly make statements such as "Blacks are animals which have the foot print of a human".

[10]   The applicants spent prolonged periods away from home working on mining sites. They were often provided with accommodation inferior to that of their white counterparts. On an assignment in September 2009, in Komatiepoort, no accommodation was arranged for the applicants and they were forced to sleep in a toilet. In September 2011, at the Khumani Mine in the Northern Cape, the accommodation quarters of the white employees had separate bathrooms, a kitchen and contained appliances such as flat-screen televisions, fridges and kettles. The applicants slept in a washroom without separate toilet facilities.

[11]   When early morning travel was necessary, the applicants, unlike the white employees, were required to sleep at Mr Cronje's residence. The room allocated to the applicants was stacked with tools and car parts and had an open toilet attached to it. The room was usually used to house Mr Cronje's dogs. The applicants were always obliged, when being transported to and from work, to sit at the back of the vehicle. If they attempted to sit in the front, they were asked if they were "becoming white" and were told that "a dog should know its place".

[12]   At various times during their employment, the applicants were subjected to physical abuse by Mr Cronje. In Mali, during July 2010, the first applicant was slapped on the face whilst the second applicant had a hard-hat thrown at him. In November 2010, in Chingola, Zambia, Mr Cronje hit the third applicant on the back. The applicants were also denied training opportunities, which were available to white employees.

[13]   The respondent opposed the claim alleging that the applicants had absconded from their employment and that the Labour Court did not have jurisdiction to adjudicate the dispute. The respondent failed to oppose the claim in accordance with the rules and practices of the Labour Court. As a result, the Labour Court deemed the matter to be unopposed. On 12 February 2013, the Labour Court granted default judgment in favour of the applicants.

[14]   The Labour Court held that it was "satisfied that the applicants were constructively dismissed" as they were forced "to work under intolerable working conditions which entailed racial abuse and racially discriminatory treatment". The Labour Court further held that the dismissal was "based on their race" and was automatically unfair in terms of section 187(1)(f) of the Labour Relations Act. The respondent was ordered to pay the maximum compensation permitted by the Labour Relations Act, namely 24 months remuneration, calculated to be R240 000 for the first and second applicants and R192 000 for the third applicant.

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Labour Appeal Court

[19]   In the Labour Appeal Court the respondent again argued that the Labour Court had no jurisdiction as the dispute had not been referred to conciliation and relied on section 165 of the Labour Relations Act, alternatively, rule 16A for requesting the rescission of the order and judgment of the Labour Court. The main issue before the Labour Appeal Court was whether "constructive dismissal based on unfair discrimination had been conciliated before the referral to the Labour Court".

[20]   The Labour Appeal Court had regard to Driveline and reasoned:

"The upshot of Driveline is, therefore, two-fold. First, that where the real issue was conciliated, the employee's statement of case can be amended to broaden the issue's characterisation. However, where the issue was never referred to conciliation at all, the Labour Court does not have jurisdiction to determine the dispute. In short, it is now settled that referral for conciliation is a precondition to Labour Court jurisdiction. Obviously, where a dispute arises as to whether the real dispute was conciliated, that is a factual enquiry which must be determined with reference to the facts of a particular case. Such an enquiry, however, falls within a very narrow compass, in my view. It can only be determined with reference to two aspects, namely, the characterisation of the dispute on the referral form and the contents of the certificate of outcome. The contents of the certificate of outcome are especially important in this regard, for they mirror the nature of the real dispute identified in the conciliation."

[21]   The Labour Appeal Court then considered whether the dispute of unfair dismissal was actually conciliated. It noted that the dispute that the applicants had referred for conciliation was one of unfair discrimination. It added:

"It is common cause that the dispute which the respondents had referred for conciliation was for unfair discrimination. The referral form makes no mention of unfair dismissal, even though that is one of the options available on the form. Part 'B' of the referral form, which is to be completed for dismissal disputes only, was not only left uncompleted, but it was crossed out with the words 'cancelled' in between two lines. The nature of the dispute was stated to be an unfair discrimination in terms of section 10 of the Employment Equity Act."

[22]   The Labour Appeal Court held that the Labour Court erred as the evidence supported the conclusion that the referral was for unfair discrimination, not dismissal based on unfair discrimination and that the applicants did not consider themselves to have been dismissed. Consequently, the Labour Appeal Court held that it was not clear whether the applicants were dismissed.

[23]   In addition, the Labour Appeal Court held that the Labour Court erred in concluding that an unfair dismissal dispute had been conciliated. The Labour Appeal Court held that the evidence of what "supposedly" transpired during the conciliation proceedings was in admissible in the subsequent Labour Court proceedings. The Labour Appeal Court held that the Labour Court's conclusion that the unfair dismissal was conciliated was "not supported by any admissible evidence". The Labour Court should have held that it did not have jurisdiction to hear the dispute as it was "not entitled to venture beyond the referral form and the certificate of outcome" in an endeavour to determine what dispute was conciliated.

In this Court

Submissions of the parties

[24]   The applicants maintain that the Labour Appeal Court's interpretation of rule 16 does not promote the spirit, purport and objects of the Bill of Rights as required by section 39(2) of the Constitution. They further submit that it is wrong to adopt the Labour Appeal Court's approach which limits the role and function of the commissioner to determine the nature of the dispute with reference only to the description of the dispute given by the referring party.

[25]   Whilst the respondent accepts that the Labour Relations Act is a subsidiary constitutional enactment, it maintains that this application does not fall within the realm of matters that warrant the attention of this Court. The respondent contends that this matter does not raise a fresh issue pertaining to the interpretation, protection or enforcement of the Constitution in relation to privilege and the law of evidence. It further contends that the application does not raise an arguable point of law of general public importance which ought to be considered by this Court, as it concerns the application of rule 16 prior to its amendment during March 2015.

[26]   In regard to the merits, the respondent is of the view that the applicants' claim is premised on false allegations of racial discrimination and abuse. The respondent contends that there is no constitutional imperative to interpret the pre-amended rule 16 so as to allow disclosure of communications in conciliation proceedings. According to the respondent, this is unambiguously prohibited by the rule. The respondent maintains that evidence on how the dispute in question was identified by the commissioner in conciliation is limited to the contents of the certificate of outcome. The respondent further submits that parties to conciliation proceedings are vested with rights to absolute privacy pertaining to conciliation proceedings under the pre?amended rule 16.

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Discussion

Functions of commissioners

[36]   Section 135 of the Labour Relations Act sets out the powers of the commissioner to resolve a dispute through conciliation. Section 135(3) provides that the commissioner must determine a process to resolve the dispute, which may include (a) mediating the dispute; (b) conducting a fact-finding exercise; and (c) making a recommendation to the parties, which may be in the form of an advisory award. Where conciliation has failed, or at the end of the 30-day period, the commissioner must issue a certificate stating whether or not the dispute has been resolved.

[37]   It is evident from section 135(3) that commissioners have three primary functions. The first is to attempt the resolution of disputes. Many disputes under the Labour Relations Act are resolved through conciliation, which, according to section 135(3)(a), may take the form of mediation. In conciliation, the commissioner in essence assumes the role of a neutral mediator facilitating a resolution of the dispute by agreement between the parties.

[38]   The second function of commissioners is to identify the nature of the dispute. Rule 15 of the CCMA Rules provides:

"A certificate issued in terms of section 135(5) that the dispute has or has not been resolved, must identify the nature of the dispute and the parties as described in the referral document or as identified by the commissioner during the conciliation proceedings."

[39]   The third function is to make a recommendation to the parties, which may be in the form of an advisory arbitration award. In this way, commissioners perform a filtering function in the dispute resolution machinery of the Labour Relations Act. Commissioners must certify, for instance, whether a dispute is referred to strike action, arbitration or the Labour Court. These functions are not merely clerical and inevitably call for application of the mind, discretion and some adjudication.

[40]   The Labour Appeal Court based its decision on two grounds. First, with regard to the jurisdiction of the Labour Court, it held that the factual enquiry as to whether a dispute was conciliated can only be determined "with reference to two aspects, namely, the characterisation of the dispute on the referral form and the contents of the certificate of outcome".

[41]   Secondly, the Labour Appeal Court held that the Labour Court misdirected itself by relying on in admissible evidence relating to what had transpired during conciliation. No authority was cited for this conclusion. However, it can be assumed that the Labour Appeal Court had rule 16 in mind. I will revert to rule 16 later in this judgment.

[42]   The approach to be followed by a commissioner in arbitration proceedings under section 138(1) of the Labour Relations Act has been explained in CUSA:

"A commissioner must, as the Labour Relations Act requires, 'deal with the substantial merits of the dispute'. This can only be done by ascertaining the real dispute between the parties. In deciding what the real dispute between the parties is, a commissioner is not necessarily bound by what the legal representatives say the dispute is. The labels that parties attach to a dispute cannot change its underlying nature." (Footnote omitted.)

[43]   In my view, the commissioner is not bound by a party's categorisation of the nature of the dispute. Rule 15 clearly intended the commissioner to have the right and power to investigate and identify the true nature of the dispute. The majority judgment in Driveline categorically held that the parties are not bound by the commissioner's description of the dispute in the certificate of outcome.

[44]   The Labour Appeal Court adopted an overly formalistic approach as it held that to answer the question whether the real dispute had been conciliated necessitates a very narrow factual enquiry which entails only looking at two aspects, namely, "the characterisation on the referral form and the contents of the certificate of outcome". The Labour Appeal Court failed to take into account the purpose and context of the Labour Relations Act and the dispute resolution mechanisms for which it provides. By relying only on the referral form and the certificate of outcome the Labour Appeal Court essentially held that no evidence from the conciliation proceedings may be led as evidence in subsequent proceedings.

[45]   The approach of the Labour Appeal Court is inconsistent with the jurisprudence of this Court in that it has "cautioned against a narrowly textual and legalistic approach". The Labour Relations Act provides that it must be interpreted "in compliance with the Constitution" and in such a way as "to give effect to its primary objects" which include giving effect to and regulating "the fundamental rights conferred by section 23 of the Constitution" and "to promote the effective resolution of labour disputes". By employing a narrowly textual or legalistic approach the Labour Appeal Court cannot be considered to have achieved these objects, especially as such an approach would not have led to the promotion of the effective resolution of the true labour dispute in this case.

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[51]   The danger of adopting a formalistic approach is evident in this matter. This case involves allegations of racism and unfair labour practices. It involves applicants who were unable to receive legal advice and who did not know the law. They trusted the procedures of the CCMA and its officials. The applicants allege that the true dispute, automatically unfair constructive dismissal, was brought to their attention during the conciliation proceedings and that it was thoroughly canvassed.

[52]   It would therefore be wrong to adopt the Labour Appeal Court's approach, which essentially precludes the courts from referring to evidence outside of the certificate of outcome and referral form, to determine the nature of the dispute conciliated. The general rule is that the referral form and certificate of outcome constitute prima facie evidence of the nature of the dispute conciliated. However, if it is alleged that the nature of the dispute is in fact different from that reflected on such documents, the parties may adduce evidence as to the nature of the dispute.

[53]   The concept of constructive dismissal is legalese and is generally foreign to non-lawyers. It would be expecting too much of a non-lawyer who has her- or himself left employment without a pronouncement by the employer that she or he was being dismissed to know that she or he had, in fact, been dismissed. Flowing from this, to slavishly expect a non-lawyer to know - in this context - what part of the form to fill in with what information is to disregard reality. To be more direct, that the applicants did not fill in that part of the form headed "unfair dismissal" is quite understandable. As non-lawyers who had no legal assistance at the time, the applicants simply did not know themselves to have been dismissed, whether constructively or otherwise.

[54]   Of importance, on a subject as technical as constructive dismissal, it is clamant that where - during the conciliation process - it appears to a commissioner that the true dispute may well involve this subject, she or he must actively satisfy her- or himself that it does or does not relate to this subject. If it does indeed relate to this subject, the commissioner's certificate must reflect the true position. Even if the certificate does not, it would be formalism of the highest order for courts to ignore substance. Ultimately, the question is whether - during the conciliation process - the substance of the dispute sought to be conciliated became apparent. On the facts before us, I say it did.

[55]   The question that needs to be addressed on this aspect of the case is whether there was compliance with section 191 of the Labour Relations Act, before the matter was referred to the Labour Court. The question may be determined with reference to the purpose of a referral of a dispute to conciliation. In Intervalve this Court declared:

"The purpose of section 191 is to ensure that, before parties to a dismissal or unfair labour practice dispute resort to legal action, a prompt attempt is made to bring them together and resolve the issues between them. Resolving the issues early has benefits not only for the parties, who avoid conflict and cost, but also for the broader public, which is served by the productive outputs of peaceable employment relationships."

[56]   While it is true that the certificate of non-resolution here describes the dispute that was conciliated as "unfair discrimination", the uncontroverted evidence on record establishes that the commissioner who convened the conciliation meeting drew the parties' attention to the fact that the real dispute between them was a constructive dismissal. It is this dispute which the parties attempted to resolve but resolution eluded them. Consequently, the purpose of section 191 was achieved through the parties attempt to resolve the constructive dismissal dispute during conciliation.

[57]   The attainment of the provision's purpose in turn establishes compliance with the Labour Relations Act. Intervalve outlines the test for compliance in these terms:

"This enquiry postulates an application of the injunction to the facts and a resultant comparison between what the position is and what, according to the requirements of the injunction, it ought to be. It is quite conceivable that a Court might hold that, even though the position as it is is not identical with what it ought to be, the injunction has nevertheless been complied with. In deciding whether there has been a compliance with the injunction the object sought to be achieved by the injunction and the question of whether this object has been achieved is of importance."

[58]   What remains for consideration is whether it is permissible to show compliance with section 191 by reference to evidence on what occurred during conciliation. Although section 157(4)(b) stipulates that a certificate of non-resolution issued by a commissioner constitutes sufficient proof that an attempt has been made to resolve the dispute, the Labour Relations Act does not exclude other means, including evidence on what happened at conciliation. In opposing consideration of such evidence in the enquiry for determining whether a constructive dismissal dispute was discussed during conciliation, the respondent laid much store on rule 16 of the CCMA rules.

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[64]   The purpose of rule 16, both pre- and post-amendment, is to create a safe harbour for parties who are attempting to resolve a dispute. Hence it prohibits disclosure of offers, counter-offers and discussions. The purpose of conciliation is to achieve the speedy resolution of disputes. In order to achieve this, rule 16 prohibits the disclosure of "anything said at conciliation proceedings" as to allow parties to be able to speak openly and honestly without concern of something they have said being used against them at a later stage.

[65]   There is thus a general requirement of non-disclosure. This interpretation is in line with and supported by the text and context of the rule. Furthermore, it gives effect to its purpose which is to facilitate the settlement of labour disputes at the earliest available opportunity, without having to resort to expensive and time?consuming litigation. It does so by providing for without prejudice discussions to take place during conciliation, and to expressly record that these discussions are privileged in any further proceedings, thus encouraging parties to speak freely, without apprehension that concessions or offers made would be used against them in subsequent proceedings if the matter did not settle.

[66]   The rationale behind providing privilege for statements made "without prejudice" is very similar, if not the same, which is that-

"public policy demands the parties to the disputes should be encouraged to avoid litigation and all the expenses, delays, hostility and inconvenience that it usually entails, by resolving their differences amicably in full and frank discussion without fear that, if the negotiations fail, any admissions made by them during these discussions will be used against them in ensuing litigation". (Footnote omitted.)

[67]   Evidence as to the nature of the dispute is, to my mind, not privileged. This evidence does not relate to the substance of the proceedings and is merely descriptive. There is nothing in the majority judgments in either Driveline or Intervalve which precludes approaching the question of what dispute was conciliated and what was referred to the Labour Court for adjudication as a question of substance that requires substantive adjudication. In order to determine whether a matter referred to the Labour Court for adjudication had first been referred to the CCMA for conciliation, the first point of reference is the referral documents. However, if there is a dispute as to the nature of the dispute referred to the CCMA then regard may be had to evidence outside of these documents.

[68]   In Premier Foods the applicant had applied to the Labour Court to review and set aside an arbitration award made by the commissioner on the basis of misconduct by the latter in the conduct of conciliation/arbitration proceedings in the CCMA. During the course of the proceedings, the commissioner had expressed a strong adverse view of the merits to one of the parties. This had formed the basis of a recusal application when the proceedings commenced before the commissioner. The commissioner refused to hear the recusal application and proceeded to arbitrate the dispute. On review, the Labour Court correctly considered the evidence of what had transpired at conciliation, and held that the conduct of the commissioner constituted a material irregularity in the conduct of the proceedings. The conduct of the commissioner in Premier Foods, as in the matter under consideration, had nothing to do with the rightful purpose of rule 16 which is to create a safe harbour for parties who are attempting to settle a dispute.

[69]   The concepts of negotiation privilege, settlement privilege or privilege attached to statements made without prejudice are well established in our law. Settlement privilege provides:

"Statements are made expressly or impliedly without prejudice in the course of bona fide negotiations for the settlement of a dispute may not be disclosed in evidence without the consent of both parties."

Statements or admissions made during the course of settlement negotiations, that are unconnected to or irrelevant to the settlement are not covered by the rule.

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[78]   On the application papers, the Labour Court correctly held that what was conciliated involved an allegation that the applicants had been dismissed. The evidence to support a finding as to the nature of the dispute conciliated was not inadmissible. The respondent had not made out a case for rescission. For these reasons, I am of the view that default judgment was properly granted.

Order

[79]   The following order is made:
  1. Leave to appeal is granted.
  2. The appeal is upheld.
  3. The order of the Labour Appeal Court is set aside and substituted with:
  4. "The appeal is dismissed".
  5. There is no order as to costs.