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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 'Participation by employees in protests and demonstrations'. We also discuss three new cases: The first case deals with the way an employer can recover overpayments in remuneration to employees. The second case considers an employer's obligation to properly consider alternatives to retrenchment before going ahead. The third case looks at the consequences of the termination of a collective agreement, particularly the refusal to do work covered in that agreement.

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Recovering overpaid remuneration

Section 34 of the BCEA regulates deductions by the employer from an employee's remuneration. It exists for good reason. If there was no check, the employer could for example decide unilaterally any damage caused by an employee and deduct accordingly. The employer could deduct so much in one month that the employee has no money to live on. The employer could run a scam by paying wages, but requiring repayment of part of the wages. And so on.

The main constraint on unilateral deductions is in s34(1), which says that an employer may not make any deduction from an employee's remuneration unless -

  • the employee in writing agrees to the deduction in respect of a debt specified in the agreement; or
  • the deduction is required or permitted in terms of a law, collective agreement, court order or arbitration agreement.

Regarding an employer's ability to recover overpaid remuneration, s34(5) says that an employer may not require or permit an employee to repay any remuneration except for overpayments previously made by the employer resulting from an error in calculating the employee's remuneration.

Is s 34(5) subject to s 34(1)? In other words, is an agreement in writing required before an employer can deduct overpayments? The recent case of Sekhute and Others v Ekhuruleni Housing Company Soc (J1862/17) [2017] ZALCJHB 318 (5 September 2017) dealt with this.

Consider the facts of this case: On 1 July 2017, several employees (the applicants in this case) received letters indicating that an overpayment had occurred in February 2017 due to an error in the payroll processing. The amount of the alleged errors was substantial and the applicants were requested to complete a salary deduction form in terms of which they agreed to repay the amount over a period of seven months. The applicants refused to sign these. They contended that there was no error in the February payments and argued that the payments received were a result of giving effect to the new salary scale implemented on their revised job grading.

Although they failed to sign the forms, the employer proceeded to commence deductions when it paid salaries on 26 July 2017. On 28 July, the employees' attorney wrote demanding the reversal of the deduction and a cessation of future deductions on the basis that no salary calculation error had been made. This led to an urgent interdict to prevent further salary deductions.

In dealing with this matter, the Labour Court was satisfied on the evidence that the employees had not established that they were entitled to the full amounts paid to them as part of their salary since February 2017. The judge was satisfied that a genuine overpayment error had occurred. The court said the employer was not obliged to perpetuate the overpayment error going forward. Section 34(5) of the BCEA was interpreted to mean that an employer can deduct the overpaid monies without the written consent of the employees.

This principle has now been confirmed in several cases: Repayment of overpaid remuneration is a separate category of money lawfully recoverable by an employer from an employee, and s34(5) provides a way of recovering undue remuneration without the employee's consent. S34(5) is accordingly not subject to s34(1).

The obligation to consider alternatives to retrenchment

In the process of achieving greater efficiency and costs-savings, how much space is there for restructuring when it impacts on employees' remuneration and terms and conditions of employment? How do we assess the fairness of institutional re-organisation against the effects it may have on employees?

Consider this case study: Until 2002, Woolworths employed its employees on a full-time basis. These employees ("the full-timers") worked fixed hours totalling 45 hours per week. In 2002, Woolworths decided that in future it would only employ workers on a flexible working hour basis. These workers (flexi-timers) would work 40 hours per week. By 2012, Woolworths's workforce consisted of 16 400 flexi-timers and 590 full-timers. Full-timers earned superior wage rates and benefits. The remuneration package of some full-timers exceeded the wages and benefits applicable to flexi-timers by 50%, even though full-time workers and flexi-timers do the same work.

Woolworths decided that in order to cater for the current market, it needed to operate with an entire workforce consisting of flexi-timers. It decided to convert the full-timers to flexi-timers on the terms and conditions of employment applicable to flexi-timers. In order to do this, Woolworths first invited full timers to voluntarily convert to flexi-timers. It did not invite the union to participate in this phase. Certain inducements were offered to the full-timers for the conversion. All of the full-timers save for 144 employees opted for early retirement, voluntary severance or agreed to convert to flexi-timers.

During the course of consultation some of the full-timers accepted the voluntary option, leaving 92 full-timers who opposed conversion and did not accept any of the voluntary options. Later SACCAWU and 44 members appreciated the need to work flexi-time and accepted that full-timers should be converted to flexi-timers. SACCAWU initially suggested that the full-timers retain their existing full time wages and benefits, but towards the end of the consultation process, SACCAWU varied its stance. It proposed that the workers would work flexi-time for 40 hours and be paid only for those hours and at lower rates. Woolworths however did not understand this to be a different proposal (a factor later found by the LAC to be pivotal to the outcome of this case), and rejected it.

Woolworths gave notice to terminate contracts of employment and retrenched 92 full-timers. SACCAWU, on behalf of 44 of these full-timers, launched an application in the Labour Court terms of s189A(13) of the LRA to challenge the fairness of the retrenchment procedure adopted by Woolworths. It also launched another application under s191(11), challenging whether there was a fair reason for retrenchment. These applications were later consolidated into one case.

The LC in SACCAWU and Others v Woolworths (Pty) Ltd (J3159/12, JS1177/12) [2016] ZALCJHB 126 (5 March 2016) was faced with the employer's argument that the restructuring was necessary so that all employees were to be treated the same. The Court held that employers ought to deal with pay inequity issues in accordance with chapter III of the EEA, rather than through dismissals for operational requirements for employees who refuse to agree changes to terms and conditions of employment that are designed to achieve equal pay. The LC found the retrenchments to be substantively and procedurally unfair, and ordered that the employees be reinstated.

On appeal at the LAC in Woolworths (Pty) Ltd v SACCAWU obo Moeng and Others (JA56/2016) [2017] ZALAC 54 (19 September 2017), the decision turned rather on whether the retrenchments were substantively fair. The decisive factor was the LAC's view that the employer had failed to show that it properly considered the alternatives to retrenchment, given that it had misconstrued that the union's last proposal was no different to its previous one. Had Woolworths properly understood the union's last proposal, the LAC believed it would have realised that the retrenchment of at least some of the employees could have been avoided.

But the Court did not agree with the LC's remedy that the employees be reinstated, given that the full time posts were redundant, and awarded each employee 12 months' remuneration as compensation.

The consequences of the termination of a collective agreement

An indefinite collective agreement can be terminated by any party by giving reasonable notice in writing to the other parties, in terms of s23(4) of the LRA. What happens in this situation? Do things revert to what they were before the collective agreement was signed? This issue arose in the recent case of Imperial Cargo Solutions v SATAWU and Others (JA63/2016) [2017] ZALAC 47 (1 August 2017).

The appellant, Imperial Cargo, is a logistic company with a large fleet of trucks. It transports freight cargo, consumable goods and other goods on behalf of various clients throughout the country. Imperial employs drivers, many of whom are members of SATAWU. The transport of freight cargo by truck requires safety measures to prevent goods falling off the truck. In the past, Imperial employed drivers' assistants whose duties were to assist the driver to load and offload the cargo, and also to perform the "tarping" duties. In 2007, Imperial abolished the position of drivers' assistants. A decision then had to be taken as to who would perform the duties previously done by the drivers' assistants.

Imperial and SATAWU concluded a collective agreement in 2007 known as the "Guard Fee Agreement" (the collective agreement). In terms of this collective agreement, it was left to the drivers to either perform the ancillary duties themselves or appoint assistants to undertake those ancillary duties. An agreed amount of money was in addition to their normal salaries paid in lieu of the ancillary duties. The drivers could keep the money for themselves if they personally performed the ancillary duties or pay assistants they employed specifically for such duties. The agreed amount was subject to an annual increase.

In 2015, SATAWU wanted to negotiate an increased guard fee above the agreed annual increase rate. When Imperial refused to meet the demand, SATAWU informed it that it was cancelling the collective agreement on one month's notice. SATAWU also informed Imperial that as from 01 February 2015, the drivers would no longer perform the ancillary duties as provided in the collective agreement. Imperial was advised to make the necessary arrangements to ensure that the ancillary duties be carried out by persons other than the drivers.

Imperial viewed the cancellation of the collective agreement and refusal to perform ancillary duties as unprotected strike action, being a 'partial refusal to work'. Imperial obtained urgent interim relief directing the drivers to perform all ancillary duties on the basis that their refusal to do the work amounted to unprotected strike action.

At the Labour Court the dispute was whether the drivers' refusal to perform the ancillary function amounted to a strike action. The court concluded that refusal to perform the ancillary duties would not constitute strike action as the collective agreement in terms of which it was performed was cancelled, and the duty to perform those duties accordingly fell away. Further, that there was no general refusal to work but only a refusal to work in accordance with the terms of the cancelled collective agreement.

On appeal at the LAC, the LC's judgment was upheld. The LAC held that in the absence of any other agreement creating an obligation on the employees to perform the ancillary duties, and since they were entitled to cancel the collective agreement on notice, the obligation fell away upon cancellation of the agreement. Similarly, the obligation of the employer to pay the employees in lieu of ancillary functions in terms of the collective agreement also fell away.

This judgment raises interesting questions about what happens when a long established collective agreement is terminated - what fills that void? Consider the facts of this case: for 8 years necessary functions (we think the word 'ancillary' used in the judgment is misleading) were done by drivers or their assistants. These were core functions, paid for in addition to basic remuneration, that were then withdrawn. Whilst the LAC concluded that these actions did not constitute a strike as a result of the cancellation of the collective agreement, we note that the definition of a strike under s213 of the LRA even includes the withdrawal of voluntary overtime.


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Bruce Robertson
October 2017
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