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Worklaw subscribers receive a monthly newsletter containing commentary on the latest labour law cases and trends. This newsletter contains an article on "The New HIV / AIDS Code: what are the changes?". We also look at three new cases: the first deals with settlement agreements. The second deals with the consequences of not providing an interpreter during arbitration. The third deals with whether employees who have resigned from a trade union are bound by a collective agreement signed by that trade union.

This public newsletter is a free edited version of the subscriber newsletter.


Increase of the maximum income threshold: UIF Act

The Minister of Labour has amended the 2007 UIF scale of benefits. The maximum amount off which UIF is calculated, will increase to R 178 464 pa / R 14 872 per month or R 3 432 per week with effect from 01 October 2012.


Check the settlement agreement!

In Rank Sharp SA (Pty) Ltd v Kleinman (LC143/2012 Judgment 24 May 2012) the respondent was an employee, director and shareholder of the company. He was dismissed for operational requirements. He referred an unfair dismissal dispute to the CCMA. He also claimed severance pay. At conciliation the parties signed an agreement of settlement. Both the company and the employee were represented by attorneys. But after signing the agreement these two attorneys offered conflicting versions as to whether a further, oral, side agreement had been reached at the same time.

In terms of the agreement, the company / employer had to pay an amount of R180 000 to the employee. It did not do so. Instead, it argued that it had set off that amount against an amount of R505 946, 88 owing to it by the employee arising from a loan account he had with the company. As a result of this non-payment, the employee obtained a writ of execution. The company then sought to have that writ of execution stayed or set aside. It argued that the debt it owed to the employee was discharged by way of set-off against his loan account.

One of the arguments raised by the employee was that the settlement fell within the definition of 'remuneration' in terms of the BCEA. As such deductions could not be made without agreement in terms of s 34, and no agreement was given in the settlement agreement. The Labour Court did not agree. It said that severance pay, even if it is calculated with reference to remuneration, is over and above the amount payable for services rendered. A consequence of this is that set-off of the severance pay against an amount due by the employee cannot be equated to a prohibited deduction in terms of s 34 of the BCEA.

The court outlined under which conditions set-off could occur. In this case it could not take place because the terms of the alleged loan account agreement and when it became due and payable were uncertain. This was a fortunate outcome for the employee because in terms of the settlement agreement he was expecting the severance pay. If set off was a key issue for the company, its lawyer should have insisted on it being part of the agreement.

The lesson is clear: to avoid on-going disputes, let the settlement agreement be a thoughtful, carefully worded deal which captures all the interests involved.

Interpreter needed!

Two employees in the Department of Local Government and Housing were responsible for the transfer and registration of property. They were both charged with fraud relating to the illegal transfer and registration of a property, and dismissed. At arbitration, their dismissal was found to be fair.

One of the employees brought a review application to challenge the arbitration award on the basis that she was not provided with the assistance of an interpreter, although she had requested this assistance. She submitted that she could not follow the proceedings.

The court in Mabitsela v Department of Local Government & Housing and Others (LC JR 1006/11 7 February 2012) held that there is an obligation on those conducting arbitration proceedings to inform litigants of their rights and entitlement to interpretation, when proceedings are conducted in a language other than their own and when they would not be in a position to understand the proceedings. The duty is less onerous when a litigant is represented by someone else during the proceedings. In that instance the arbitrator can reasonably assume (unless the representative raises the issue of the need for an interpreter) that interpretation is not necessary.

The court overturned the arbitrator's award and referred the matter back to be heard by another arbitrator. The principle established by this case is that failure to ensure that a party in an arbitration hearing enjoys the right to be assisted in participating and understanding the proceedings, is a denial to a fair hearing which renders those proceedings reviewable.

Who is bound by a collective agreement? For how long?

After the conclusion of a collective agreement some members of the union resigned from that union and believed that they were not bound by the collective agreement. That being the case, they believed that their refusal to do night work in compliance with the collective agreement did not constitute a strike. They referred the dispute to arbitration but persisted in their refusal to work..

The employer launched an urgent application for an order restraining and interdicting the respondents from proceeding with their unprotected strike pending the outcome of the arbitration they had referred to the SARPBC. The order was granted because the respondents' collective refusal to do night work constituted strike action.

The Labour Court in Mega Express (Pty) Ltd v Employees Listed in Annexure (LC J56/12 14 March 2012) held that the strike was unprotected because the dispute was based on issues governed by a collective agreement which had a dispute resolution clause. After the certificate of the non-resolution of the dispute at the conciliation stage was issued, the strikers should have referred their dispute to arbitration and awaited the arbitration award. Strike action over a dispute which has to be referred to arbitration in terms of the LRA is unprotected in terms of section 65 of the LRA.

The court based its decision on s 23 of the LRA and found that a collective agreement remains binding for its duration on members of a registered trade union which is a party to it, even after those members have resigned from the trade union, if they remain employees of the employer party to the collective agreement.


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Bruce Robertson
August 2012
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