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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 which looks at 'Changing terms and conditions of employment'. We also discuss three new cases: The first case looks at the right of an unrecognised minority union to be consulted in pre-retrenchment consultations. The second case considers the second decision of the Constitutional Court concerning compensation for an unprocedural retrenchment. The third case concerns whether a grading dispute is a dispute concerning a promotion.

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Is there an obligation to consult with a minority union before retrenchment?

Section 189(1) of the LRA sets out who must be consulted in a pre-retrenchment consultation. The Act stipulates different categories including "any person whom the employer is required to consult in terms of a collective agreement" and "any registered trade union whose members are likely to be affected by the proposed dismissals". Do these categories include a minority union not?

These questions arose in the case of Numsa v Anglo Gold Ashanti & another [2018] 11 BLLR 1128 (LC) in the context of a recruitment drive by NUMSA at AngloGold in 2015 and 2016. Despite its recruitment efforts, NUMSA had not secured recognition for the purpose of collective bargaining nor had it secured organisational rights, apart from stop-order facilities. During 2017 AngloGold sold the whole or part of its Kopanong mine to Village Main Reef Limited and the Moab Khutsong mine to Harmony Gold Mining Company. AngloGold issued an internal brief that the sale of these mines fell within the ambit of section 197 of the LRA (a business transfer as a 'going concern').

In a letter to NUMSA, AngloGold stated that during January 2018 NUMSA had 625 members, but following the sales of Kopanong and Moab Khutsong mines, NUMSA only had 40 members at Off-Mine Regional Services. AngloGold had concluded with each of the recognised trade unions (NUM, Solidarity, UASA and AMCU) an identical Labour Relations Recognition and Procedural Framework Agreement (Framework Agreement). Following a retrenchment consultation process, AngloGold dismissed several employees including members of NUM, Solidarity, AMCU, UASA and NUMSA. The retrenchment consultation was conducted with NUM, Solidarity, AMCU and UASA, but NUMSA was not invited to the consultation process. AngloGold's section 189(3) notice inviting consultation, was not sent to NUMSA.

NUMSA disputed that the Framework Agreements were collective agreements as envisaged by section 189(1)(a) of the LRA, and accordingly AngloGold was required in terms of section 198(1)(c) to consult with it as it is the registered trade union whose members are likely to be affected by the proposed dismissals. The employer's position was that several collective agreements contemplated by section 189(1)(a) had been concluded with each of the recognized trade unions (NUM, Solidarity, UASA and AMCU), and disputed that it had not complied with a fair procedure as it was not obliged in terms section 189(1)(c) to consult with NUMSA.

NUMSA approached the Labour Court for an order compelling AngloGold to permit NUMSA to participate fully in the consultation process. The Labour Court refused the application, holding that where an employer consults with the recognized representative trade union(s) in terms of a collective agreement over the agreed retrenchment procedure, the employer is not obliged to consult with any other union or any individual employee over the retrenchment.

This judgment is in line with the general recognition that collective agreements are the major way that obligations are created to regulate the workplace. Section 198(1) creates a hierarchy of rights - the obligation to consult any registered union whose members are likely to be affected in terms of s198(1)(c) only kicks in if there is no collective agreement or workplace forum in place. The judgment reinforces the principle that usually it is only the majority or recognised trade union(s) with whom an employer is obliged to consult.

The end of a long saga: Compensation for unprocedural retrenchment

What follows is a complicated case which moved up to the Constitutional Court on two occasions before the matter could be resolved.

Edcon fell on hard times and in 2013 it began a process of operational restructuring. Approximately 3 000 employees, including the 1 818 applicants in this case, were retrenched between 2013 and 2015. The process began with Edcon issuing written notices in terms of the LRA. However, Edcon then issued dismissal notices prior to the lapse of prescribed time periods provided for in the LRA. Because of this procedural error, s 189A(13) was relevant. The section reads as follows:
If an employer does not comply with a fair procedure, a consulting party may approach the Labour Court by way of an application for an order-
  1. compelling the employer to comply with a fair procedure;
  2. interdicting or restraining the employer from dismissing an employee prior to complying with a fair procedure;
  3. directing the employer to reinstate an employee until it has complied with a fair procedure;
  4. make an award of compensation, if an order in terms of paragraphs (a) to (c) is not appropriate.

Despite the availability of this statutory remedy in terms of section 189A(13) to approach the Labour Court to compel Edcon to comply with a fair procedure or to interdict or restrain it from dismissing them before having complied with a fair procedure, the applicants elected not to do so. They also elected neither to resort to a retaliatory strike action in terms of section 189A(8)(b)(ii)(aa) of the LRA, nor did they elect to refer a dispute about their unfair dismissals to the CCMA in terms of section 191(1)(a) of the LRA. The applicants therefore placed no reliance on a claim for unfair dismissal in terms of the LRA on the basis of procedural and substantive unfairness.

Instead, the applicants elected to refer a dispute for an order of reinstatement challenging the validity of their dismissals on the narrow basis of Edcon's non-compliance with the statutory notice periods under section 189A(2)(a) and (8) of the LRA. They relied on two earlier judgments of the LAC in De Beers and Revan where the contention was upheld that a dismissal on a short notice as prescribed in terms section 189A, is invalid and of no force and effect. The LAC, sitting as a court of first instance, reconsidered what colloquially became known as the "De Beers principle" and concluded that the two earlier decisions in De Beers and Revan were "obviously wrong" and that the dismissals were not invalid.

Dissatisfied with the decision of the LAC, the applicants sought leave to appeal to the Constitutional Court (in Steenkamp I). They challenged the LAC's decision, restating their reliance on the De Beers principle that the failure to comply with prescribed procedures in section 189A(8) rendered the dismissals invalid and of no force and effect.

The Constitutional Court in a majority judgment in Steenkamp I agreed with the LAC and held that dismissals pursuant to the non-compliance with the time periods prescribed in section 189A(8) of the LRA were not invalid. The Court, however, recognised that its judgment did not necessarily mean that this was the end of the road for the applicants:
"Until the decision of this Court, the employees acted on the strength of decisions of the Labour Court and Labour Appeal Court whose effect was that in this type of case it was open to them not to use the dispute resolution mechanisms of the LRA and not to seek remedies provided for in section 189A, but instead to simply seek orders declaring their dismissals invalid. It is arguably open to them to seek condonation and pursue remedies under the LRA. Obviously, Edcon would be entitled to oppose that."
Following their setback and within 30 days of the judgment in Steenkamp I, the applicants reinvented their case. They launched an application in the Labour Court in terms of section 189A(13) of the LRA, now claiming 12 months' compensation in terms of paragraph (d) on the basis that Edcon did not comply with the peremptory provisions of section 189A which resulted in their procedurally unfair dismissals. The Labour Court granted condonation and held that, should the applicants be successful in their procedural unfairness claim, they would at least be entitled to relief under section 189A(13)(d), if relief in terms of paragraphs (a)?(c) was not appropriate.

Aggrieved by this outcome, Edcon approached the LAC. The issue for consideration was whether the Labour Court correctly granted condonation after the expiry of the prescribed 30-day period in terms of section 189A(13). The LAC upheld the appeal, stating that the application by the applicants was "fatally flawed", principally on the basis that the Labour Court misconceived the purpose and functioning of section 189A(13) of the LRA.

In overturning the Labour Court's decision on condonation, the LAC further expressed the view that a "failed legal strategy is doom" and cannot form the basis of a condonation application where an application in terms of section 189A(13) was filed years out of time.

The pertinent issues before the Constitutional Court are: first, whether the LAC was correct in overturning the decision of the Labour Court granting condonation to the applicants, in circumstances where they launched their procedurally unfair dismissal claim years outside of the 30-day statutorily prescribed time period and where the cause of action initially relied upon was found to be inappropriate and a 'failed legal strategy' in Steenkamp I; and second, whether compensation for procedural unfairness can be claimed as a self-standing remedy in the context of large-scale retrenchments in terms of section 189A(13)(d) of the LRA. The Constitutional Court in Steenkamp and Others v Edcon Limited (CCT29/18) [2019] ZACC 17 (30 April 2019) held:
  1. The primary purpose of section 189A(13) is to allow for early corrective action to get the retrenchment process back on track.
  2. The compensation remedy cannot be divorced from the remainder of this section and given self-standing meaning. Section 189A(13) does not contemplate a procedure claiming compensation at some future remote time.
  3. The mere fact that the applicants' application in terms of section 189A(13) was delayed as a result of their pursuit of a futile remedy, did not entitle the Labour Court to ignore the purpose of the process provided for in section 189A(13).
  4. The Labour Court did not exercise its discretion judicially and that justified the interference by the LAC.

The applicants' appeal to the Constitutional Court was accordingly dismissed.

Is a grading dispute a promotion dispute?

The way we frame a dispute can have serious implications. Is a dispute about grading a dispute over 'mutual interests' which can only be resolved by industrial action? Or is a grading dispute closer to a promotion dispute which falls within the arbitral jurisdiction of the CCMA as an unfair labour practice? These issues surfaced in a recent case.

The five employees were warehouse personnel employed by Eskom at its Koeberg nuclear power station. Eskom undertook a 'transformation and migration process' in terms of which it sought to harmonise grading structures across its divisions and regions. The employees were aggrieved that Eskom failed to upgrade them as part of the process, and appealed to a body established to deal with such disputes. The body agreed with the employees, but management declined to alter the employees' grades.

Their union referred an unfair labour practice dispute to the CCMA on their behalf in terms of s 186(2)(a) of the LRA. Eskom argued that the CCMA lacked jurisdiction because the dispute related to the interpretation and application of the transformation and migration process, a collective agreement. The commissioner rejected that argument; he was satisfied that the dispute over regrading was one about benefits and could be categorised as an unfair labour practice dispute in terms of s 186(2)(a). The commissioner found that Eskom had committed an unfair labour practice and ordered it to upgrade the employees.

On review to the Labour Court in Eskom Holdings SOC Ltd v National Union of Mineworkers on behalf of Coetzee & others (2018) 39 ILJ 828 (LC), Eskom once again raised the jurisdiction point and also contended that the award was unreasonable. The Court noted that jurisdiction is determined on the basis of the pleadings and that, in this matter, it was clear from the pleadings that the union had referred an unfair labour practice dispute relating to promotion to the CCMA - its case was that its members had been upgraded and were entitled to be promoted to the higher grades and be paid accordingly. The court rejected the argument that a grading dispute was a matter of mutual interest which could only be resolved by industrial action. The employees were not attempting to create fresh rights, they were relying on an existing right to be properly graded. The Court was therefore satisfied that the CCMA had jurisdiction to arbitrate the dispute.

The Court then considered whether the arbitration award was sustainable on the merits. It noted that the commissioner had accepted that, according to the minutes of the hearing of the complaints body, local management and human resources had agreed that the employees were carrying out the duties of higher graded jobs. However, the commissioner had ignored the evidence of Eskom that that body did not have final authority. It could only make a recommendation, and the final authority to make any decision rested with senior management at national level. The commissioner had also ignored evidence that the employees' job grades had remained unchanged, and that the migration principles in the policy were not applicable to them. Furthermore, the commissioner's finding that the employees had been treated differently to another group of employees who were upgraded was not supported by evidence.

The court accordingly found that the commissioner had come to a conclusion that was disconnected from the evidence before him and the outcome was unreasonable. The court declined to remit the matter for fresh arbitration and found that Eskom had not committed an unfair labour practice.

While this case turned ultimately on the errors of the CCMA commissioner, it nevertheless confirms that the CCMA will have jurisdiction to hear a grading matter referred as a promotion dispute, particularly where the employees were not attempting to create fresh rights but were relying on an existing right to be properly graded.

ARTICLE: Changing terms and conditions of employment

By Prof Alan Rycroft

In this article Prof Rycroft discusses how changes in working conditions can be made, and answers questions such as -
  • Does an employer have to negotiate when it wants to change terms and conditions of employment?
  • If the employer does have to negotiate and the union or employees refuse to agree, what can the employer do?

Read more (note - only available to Worklaw subscribers)


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Bruce Robertson
June 2019
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