Apollo Tyres South Africa (Pty) Limited v CCMA & Others (DA1/11 ) [2013] ZALAC (21 February 2013)


The term 'benefit' in s 186(2) of the LRA must be interpreted to include a right or entitlement to which the employee is entitled by contract or law, as well as an advantage or privilege which has been offered or granted to an employee in terms of a policy or practice subject to the employer's discretion.


The employer, needing to cut staffing levels, initiated an early retirement scheme for some of its employees. The CEO addressed various groups of its employees and informed them about the early retirement scheme that the employer intended to initiate. He requested all interested employees to approach their immediate seniors. Subsequent to these meetings, a notice relating to the scheme was placed on the notice board at the employer's premises. The said notice stated that the early retirement scheme only applied to monthly paid staff between the ages of 46 and 59. It also stipulated that a successful applicant would receive two months additional pay and an ex-gratia payment computed on a sliding scale depending on the age of the applicant.

An employee, Hoosen, applied but was refused entry into the scheme. She was not told that, despite the notice, an applicant had to be between 55 years and 59 years in order to qualify. She resigned and whilst serving notice she referred an unfair labour practice dispute to the CCMA. The commissioner ruled in her favour. A preliminary point raised at the CCMA was that the early retirement package was not a benefit in respect of which the CCMA has jurisdiction and in any event that it was not unfair not to grant Hoosen the early retirement package. The CCMA ruled it has jurisdiction to arbitrate the dispute. On the issue of fairness, he found that it was unfair to deny Hoosen entry into the scheme. He ordered the appellant to pay Hoosen R123 637.22 which represents what she would have received had she been granted the early retirement benefit viz two month's salary (R43 637.22) plus the amount of the ex gratia payment based on her age (R80 000.00).

The employer unsuccessfully took that decision on review to the Labour Court. A subsequent application for leave to appeal was refused. Leave to appeal was however granted by the LAC. The employer stated categorically that it did not seek to challenge in any material respect the factual findings of the CCMA but that the principal issues on which it sought leave to appeal is whether the early retirement scheme and for which Hoosen applied and was refused entry, constituted a benefit as contemplated in Section 186 (2) of the LRA.

The LAC, finding that the retirement scheme was a benefit and so within the ambit of s 186(2) of the LRA, found in favour of the employee.

Extract from the judgment:

[24]   These decisions were influenced by policy considerations in order to keep the distinction between disputes over rights and conflicts of interests pure and in separate compartments. This consideration is important because such a categorization and separation purport to give meaning to Section 65(1) (c) which proscribes industrial action over disputes that the parties can refer to arbitration or the Labour Court i.e. disputes over rights. A wide definition of benefits would, so it is said, undermine the right to strike which is constitutionally entrenched....

[25]   The distinction that the Courts sought to draw between salaries or wages as remuneration and benefits is not laudable but artificial and unsustainable. The definition of remuneration in the Act is wide enough to include wages, salaries and most, if not all extras or benefits. Remuneration is defined as:-

'Remuneration means any payment in money or in kind made or owing to any person in return for that person working for any other person, including the State, and remunerate has a corresponding meaning.'

[26]   Many benefits that are payment in kind form part of the essentialia of practically all contemporary employment contracts. Many extras are given to employees as a quid pro quo for services rendered just as much as a wage is given as a quid pro quo for services rendered. The cost to employer package has become, for many employees and employers, a standard contract of employment. PAK Le Roux points out that extras are often important issues during the negotiation of contracts of employment and the link between salaries or wages and benefits or extras is illustrated by the fact that contributions to medical aid schemes and pensions and provident schemes are often agreed to on the basis of a 'salary sacrifice' because this is a tax effective way of structuring an employment package.

[27]   PAK Le Roux further points out that it appears to be illogical to prevent employees and employers from embarking on a strike or lock-out on the issue of a pension scheme or medical aid scheme (which could have considerable value for an employee and substantial costs for an employer) and compelling them to submit such disputes to arbitration, while allowing them to strike over a commission which could form a relatively small part of the total "package" or a car allowance.

[28]   In Protekon (Pty) Ltd v CCMA and Others, it was correctly, in my view, stated that the concern that a wide definition of 'benefit' might curtail the right to strike needs not persist. According to the learned Judge, one must look at the nature of the benefit dispute in order to decide whether it is a dispute that must be settled by way of industrial action or adjudication. This is so because disputes over the provision of benefits may fall into two categories: firstly where the dispute concerns a demand by employees that a benefit be granted or reinstated irrespective of whether the employer's conduct in not agreeing to grant or in removing the benefit is considered to be unfair. This kind of dispute can be settled by way of industrial action. Secondly, the dispute may concern the fairness of the employer's conduct. This kind of dispute may be settled by way of adjudication...

[29]   Having decided that employees in disputes over benefits may choose to engage the employer in the collective bargaining arena rather than try to demonstrate unfairness in the sense contemplated in the unfair labour practice definition, the learned Judge stated that the Act does not appear to preclude employees from doing both at the same time. This might be true but it is clearly contrary to what was said in Maritime Industries that:

'However, if a dispute about a unilateral change of conditions of employment can properly fall within the provisions of item 2 (1) (b) of Schedule 7, it will nevertheless be arbitrable. "Strikeable" and arbitrable disputes do not necessarily divide into watertight compartments. Although in relation to dispute resolution the Act contemplates the separation of disputes into those that are resolved through arbitration, those that are resolved through adjudication and those that are resolved through power-play, there are disputes in respect of which the Act provides a choice between power-play on the one hand, and arbitration on the other as a means for their resolution.'

[30]   In Monyela and Others v Bruce Jacobs t/a LV Construction, Zondo J (as he then was) pointed out that a dispute about a unilateral change of an employee's terms and conditions of employment is a right dispute in respect of which a strike would be permissible under the LRA because it is not hit by the provisions of section 65 (1)(c) of the LRA. So, although the Act seems not to preclude employees from engaging the employer in the collective bargaining/ industrial action arena and the arbitration/adjudication forum, it is clear that the whole scheme of the Act as stated in Maritime Industries is to give employees an election. Having employees involved in strike action and resorting to arbitration or adjudication at the same time over the same dispute would throw the whole system in disarray and create unnecessary confusion and uncertainty.

[31]   Mr Pretorius argued that an employee may not rely on the provisions of section 186(2)(a) to create a right that does not exist and that the section is intended to give an employee recourse in cases of unfair conduct in respect of an existing right. According to him, fairness and clarity dictate that unfair conduct should be impeachable only in relation to existing rights. His submission was that Hospersa provides clarity, it respects the rights/interest divide which permeates the Act, it avoids a situation where new rights may be created by recourse to the unfair labour practice jurisdiction and it successfully avoids a duplication of remedies.

[32]   Mr Purdon, on the other hand, argued that section 186(2)(a) was meant to come to the rescue of employees such as Hoosen who have no other remedy in the LRA or the common law. According to him, if the term benefit is construed wider than mere contractual entitlements it will be in sync with the purpose and effect of the residual unfair labour practice jurisdiction. He argued that Hospersa was wrongly decided.


[34]   Hospersa has been followed in numerous judgments of this Court and the Labour Court. It has been criticised by this Court. It was not followed by the Labour Court in at least two judgments....

[35]   Hospersa was cited with approval in Gauteng Provinsiale Administrasie v Scheepers and Others. This matter was decided based on the provisions of the Public Service Act 103 of 1994 and the Public Service Labour Relations Act 105 of 1994 (PSLRA) which did not provide for the right which Scheepers wanted to enforce. The court rejected the argument that an unfair labour practice included a broad general "right" not to be unfairly treated because all practices which were unfair would, under the PSLRA, have qualified as "unfair labour practices". The court found that the PSLRA makes it clear that for an unfair labour practice to be justiciable, it had to involve a dispute of right. Importantly, however, the Court said:

'Moreover, unfair labour practice, as traditionally understood, involved the infringement of a right, that the right (one thinks for example of the entitlement of an employee to be heard before dismissal for misconduct) was judicially created pursuant to the powers given to the Industrial Court by statute, and not by contract or legislation did not make it less of a right.'

The Court clearly recognised that the unfair labour practice dispensation does create rights. This is a significant shift from the notion espoused in Hospersa that the right to a benefit must be derived from statute, contract or a collective agreement.


[41]   Mr Pretorius argued that the majority was guilty of circular reasoning. I disagree. It is also clear from the reasoning in the majority and minority judgment and the judgment of Scheepers that the unfair labour practice dispensation creates rights and that an employee has an ex lege right created by section 186 (2)(a) not to be treated unfairly in relation to promotion, demotion, training and the provision of benefits.

[42]   Section 23(1) of the Constitution provides that: 'everyone has the right to fair labour practices'. It has been said that our Constitution is unique in constitutionalising the right to fair labour practices and that the concept is incapable of precise definition. It was further stated that:

'The concept of fair labour practice must be given content by the legislature and thereafter left to garner meaning, in the first instance, from the decisions of the specialist tribunals including the Labour Appeal Court and the Labour Court. These courts and tribunals are responsible for overseeing the interpretation and application of the LRA, a statute which was enacted to give effect to section 23(1).'

This is exactly what was done in Department of Justice v CCMA. The majority judgment did not overrule the assertion in Hospersa that the source of a benefit must be found to exist ex contractu or ex lege. Mr Pretorius argued, correctly in my view, that the Department of Justice matter still begs the question as to whether a benefit is confined to a contractual benefit or not.

[43]   The minority judgment broke ranks with Hospersa and found its assertion that the entitlement to a benefit must be grounded in contract or legislation to be wrong. Goldstein AJA, in his minority judgment in Department of Justice v CCMA, said the following:

'Whatever the position it seems to me, respectfully that the view expressed in paragraph [9] that item 2 (1) (b) provided only for rights which arose ex contractu or ex lege, is clearly wrong. If that were so, the provision would have been redundant since such rights would have been enforceable in the absence of item 2 (1) (b). It is significant that item 3 (4) (b) expressly provided for a dispute referred to, inter alia, in item 2 (1) (b) to be resolved through arbitration. It is significant too that the introductory words in item 2 (1) and the cardinal words in item 2 (1) (b) concerned on unfair labour practise and unfair conduct. Just as the LRA provides for disputes arising from unfair dismissals in respect of which there are no contractual remedies or remedies at common law, to be resolved by arbitration, so was item 2 (1) (b) designed for situations where neither the contract of employment nor the common law provided an employee with a remedy.'

[44]   This issue, whether the benefit must be an entitlement which arises ex contractu or ex lege was considered by the Labour Court in Protekon (Pty) Ltd v CCMA and Others. The Labour Court correctly stated that Hospersa is authority for the view that the unfair labour practice jurisdiction cannot be used to assert an entitlement to new benefits, to new forms of remuneration or to new policies not previously provided for by the employer. The Labour Court then stated that it does not follow from this that an employee may have recourse to the CCMA's unfair labour practice jurisdiction only in circumstances in which he/she has a cause of action in contract law.

[45]   The Labour Court pointed out that there are many employer and employee rights and obligations that exist in many employee benefit schemes. In many instances employers enjoy a range of discretionary powers in terms of their policies and rules. The Labour Court further pointed out that section 186 (2) (a) is the legislature's way of regulating employer conduct by super imposing a duty of fairness irrespective whether that duty exists expressly or implicitly in the contractual provisions that establishes the benefit. The court continued and stated that the existence of an employer's discretion does not by itself deprive the CCMA of jurisdiction to scrutinize employer conduct in terms of the provisions of the section. It concluded that the provision was introduced primarily to permit scrutiny of employer discretion in the context of employee benefits. I agree with this conclusion.

[46]   I also agree, with qualification, with the Labour Court's conclusion that there are at least two instances of employer conduct relating to the provision of benefits that may be subjected to scrutiny by the CCMA under its unfair labour practice jurisdiction. The first is where the employer fails to comply with a contractual obligation that it has towards an employee. The second is where the employer exercises a discretion that it enjoys under the contractual terms of the scheme conferring the benefit.

[47]   The first instance is in sync with the Hospersa approach. The second instance calls for qualification. Mr. Pretorius argued that the effect of the judgment is that there must be contractual terms even in instances where the employer exercises a discretion. If that is indeed what the Labour Court meant, then I cannot agree with it. I am of the view that the Labour Court used the words "contractual terms" loosely. It did not mean that the source of the discretion must be found in a contract. It is in my view clear that if one has regard to the context of the whole judgment and the Labour Court's conclusion that it actually meant when the employer exercises a discretion under the terms of the scheme conferring the benefit. Therefore even where the employer enjoys a discretion in terms of a policy or practice relating to the provision of benefits such conduct will be subject to scrutiny, by the CCMA, in terms of section 186 (2) (a).

[48]   The facts of this matter clearly illustrate that the Hospersa approach, that the benefit must be an entitlement that is rooted in contract or legislation, is untenable. Hoosen had, in terms of her employment contract, a right to retirement benefits. The contract did not make provision for a right to voluntary early retirement benefits. She would therefore, on the Hospersa approach, be able to challenge, by way of arbitration, any unfairness relating to the ordinary retirement benefits. When the appellant decided to accelerate the existing contractual benefits and retained a discretion to grant the accelerated benefits, the benefits would strangely morph into something less than benefits because according to the Hospersa approach she does not have a contractual right to the accelerated retirement benefits. The employer would then have a license to act with impunity. She would thus not have recourse in the civil courts, because no contract came into being, nor would she have a remedy in terms of section 186 (2) (a) of the Act to challenge the patent unfairness because there is no underlying contractual right to the benefits. Being a single employee she would in accordance with Schoeman v Samsung not have the right to strike. Clearly the notion that the benefit must be based on an ex contractu or ex lege entitlement would, in a case like this, render the unfair labour practice jurisdiction sterile.

[49]   In South Africa Post Office Ltd v CCMA and Others, the Labour Court found the reasoning in IMATU persuasive but considered itself bound by the authority of the Labour Appeal Court with reference to Hospersa, Scheepers and GS4 Security Services.

[50]   In IMATU obo Venter v Umhlathuze Municipality, the Labour Court followed the Protekon approach. It then concluded that:

'The more plausible interpretation is that the term "benefits" was intended to refer to advantages conferred on employees which did not originate from contractual or statutory entitlements, but which have been granted at the employer's discretion.'

It seems to me that the court in IMATU was concerned that if benefits include a statutory or contractual right or entitlement, the right to strike may be curtailed. As pointed out above employees will have an election to strike or go the arbitration/adjudication route in respect of many rights disputes. In my view, the better approach would be to interpret the term benefit to include a right or entitlement to which the employee is entitled (ex contractu or ex lege including rights judicially created) as well as an advantage or privilege which has been offered or granted to an employee in terms of a policy or practice subject to the employer's discretion. In my judgment "benefit" in section 186 (2)(a) of the Act means existing advantages or privileges to which an employee is entitled as a right or granted in terms of a policy or practice subject to the employer's discretion. In as far as Hospersa, GS4 Security and Scheepers postulate a different approach they are, with respect, wrong.

[51]   This approach will also put paid to the anomaly created by Hospersa. An employee who wants to use the unfair labour practice jurisdiction in section 186 (2) (a) relating to promotion or training does not have to show that he or she has a right to promotion or training in order to have a remedy when the fairness of the employer's conduct relating to such promotion (or non-promotion) or training is challenged. On the other hand where an employee wants to use the same remedy in relation to the provision of benefits such an employee has to show that he or she has a right or entitlement sourced in contract or statute to such benefit.

[52]   The early retirement benefit in casu was initiated by the employer and offered to all monthly paid employers between the ages of 46 and 59. It is not in dispute that Hoosen was 49 years old and was paid a monthly wage. It is common cause that she did not have a contractual entitlement to the early retirement benefits and that the benefits were to be granted at the employer's discretion. The issue that remains to be considered is whether that discretion was exercised unfairly.

[53]   It has been said that unfairness implies a failure to meet an objective standard and may be taken to include arbitrary, capricious or inconsistent conduct, whether negligent or intended.

[54]   When the CEO addressed the employees, only two criteria viz: age and being a monthly paid employee were mentioned as criteria for eligibility subject to management's discretion. The notice was also to the same effect.

[55]   When Hoosen enquired from and applied via Ramphal he did not know of any other criteria except the two mentioned in the preceding paragraph. When Hoosen spoke to Mittal and later to Coller neither of them told her about any disqualifying factor that made her ineligible.

[56]   It is only when Ramphal escalated her application to Van der Walt that the first disqualifying factor, i.e. that she had to be between 55 years and 59 years old to qualify, was mentioned. When she enquired why two employees who werse below 55 were allowed to go on early retirement she was told that in order for an employee under 55 to qualify that employee must also suffer from ill-health.

[57]   When she approached Van der Walt he told her that her application was refused because she will have to be replaced. This was clearly not true because Ramphal told him that her duties and responsibilities will be distributed amongst other employees. It is common cause that this was indeed done. It is also common cause that she was not replaced.

[58]   Mr Pretorius argued that her post was not redundant because Cindy Narismulu had to do most of her work after she resigned. That is beside the point. The question is whether her position was retained in the same form and shape with the same duties and responsibilities. The answer to this question is clearly in the negative. When Narismulu took over Hoosen's position it had far less duties and responsibilities because the other duties and responsibilities were distributed amongst other employees. Her post, as it was when she was in the applicant's employ, was no more. Her post was clearly redundant and she was not replaced. This translated into a saving for the appellant.

[59]   It is clear that the appellant kept on shifting the goal posts. This was in all probability done in order to make sure that she is given an "acceptable" reason why she does not qualify for the scheme. It is clear that there is no acceptable, fair or rational reason why she was not allowed to participate in the scheme. The employer did not exercise its discretion fairly. It is significant that another seemingly healthy employee who was under 55 also applied. Whether he was allowed entry into the scheme is irrelevant. The fact is he too did not know about the further requirements that he had to suffer from ill-health if he is under 55 and that there must be no need to replace him if he wants to be admitted into the scheme.

[60]   In my view, Hoosen qualified to participate in the scheme and was unfairly disallowed to participate therein. In my judgment the appellant committed an unfair labour practice by not allowing her to go on early retirement.

[61]   The quantum of the award of the second respondent is not in dispute. The only issue that remains to be considered is costs.

[62]   The appellant acted in a deplorable manner towards Hoosen. When she approached Van der Walt and asked him whether she could get a legal opinion on the issue of managerial discretion he threatened her, no he in fact intimidated her. When the referral documents were served on the appellant, she was told to leave with immediate effect. So despicable was its conduct that a farewell party that was arranged for her was cancelled. That is not the way to treat an employee who has, by all accounts, given more than 24 years of dedicated and excellent service. The appellant ought to be mulcted in costs.

[63]   I accordingly make the following order:

(a)   The appeal is dismissed.
(b)   The appellant is ordered to pay the costs of the appeal.