Amalungelo Workers' Union and Others v Philip Morris South Africa (Pty) Limited and Another (CCT20/18) [2019] ZACC 45 (26 November 2019)
Determining disputes or adjudicating legal claims arising from the Basic Conditions Act is the function of the Labour Court. This right cannot be exercised by a labour inspector who may be impartial but not independent.
Facts:
Employees alleged that the employer had, in contravention of s 34 of the BCEA, deducted tax from their salaries in respect of company cars. They instituted proceedings in the Labour Court for an order compelling the employer to refund them for the deducted amounts and an interdict restraining the employer from continuing to make the deductions in future.
This case concerns whether the Labour Court's jurisdiction under the BCEA is deferred until a matter has been dealt with by a labour inspector, appointed in terms of s 63 of the BCEA.
The Labour Court concluded that it had no jurisdiction to deal with the claim. It ruled that it lacks the competence to directly enforce provisions of the BCEA unless those provisions form part of contractual terms envisaged in s 77(3) of the Act.
Unhappy with this outcome, the employees sought leave to appeal but their application was also dismissed. And their petition to the Labour Appeal Court suffered the same fate for the reason that there were no prospects of success. The employees then approached the Constitutional Court for leave to appeal.
The Constitutional Court noted that the BCEA establishes a mechanism in terms of which compliance with the Act is monitored and enforced. That mechanism is administrative in nature and the labour inspectors are pivotal to its functioning. The question is whether they have the power to resolve disputes where they have arisen or to determine legal claims.
The functions of labour inspectors are listed in section 64(1). The Constitutional Court said that none of these functions cover dispute resolution and it does not appear to be competent to refer a dispute to a labour inspector. Although a labour inspector is authorised to issue a compliance order, these orders could be issued for a singular purpose of securing compliance with employment law. If compliance was secured by means of an undertaking from an employer, the need for a compliance order does not arise.
The ConCourt's conclusion was this: Determining disputes or adjudicating legal claims arising from the BCEA is the function of the Labour Court. This right cannot be exercised by a labour inspector who may be impartial but not independent.
Our comment is that the significance of this case goes beyond the BCEA to the EEA and other labour legislation which also requires the use of labour inspectors. Because the justification used by the Court is that none of the functions of inspectors in s 64 of the BCEA covered 'dispute resolution', the Court has chosen a conception of 'dispute resolution' which goes beyond the 'compliance undertaking-compliance order-Labour Court' enforcement system envisaged in most labour legislation.
An irregular deduction in terms of s 34 would, in the past, be referred to a labour inspector who would seek compliance, then make an order, which could be made an order of the Labour Court. Now the ConCourt suggests that system is not 'dispute resolution', and so parties must have the right to approach the court directly. Whilst this may be a more effective and quicker way of stopping an irregular deduction, it is more expensive and by-passes the possibility of a free, consensual outcome brokered by an inspector.
A number of cases decided in recent years may now be suspect as a result of this CC judgment. For example in Dudley v The City of Cape Town [2008] 12 BLLR 1155 (LAC) it was held that it is not competent to institute Labour Court proceedings for a breach of Chapter III of the EEA, prior to exhausting the enforcement procedures in Chapter V. In Thekiso v IBM South Africa (Pty) Ltd (Labour Court Case number: JS415/05; judgment delivered October 2006) it was held that the EEA does not entitle employees to legally challenge that the employer has breached the Act`s affirmative action sections. In PSA obo Members v Minister of Health and Others (J3106/18) [2018] ZALCJHB 345 (12 October 2018) it was held that the Labour Court has no jurisdiction as a court of first instance in enforcing obligations under OHSA.
It is too soon to predict the full implications of this judgment. Access to the Labour Court has obvious cost implications and this factor alone may well limit the impact of this judgment and encourage the continued use of labour inspectors to resolve disputes.
Extract from the judgment:
Jafta J:
Meaning of section 77
[19] Section 77 provides:
"(1) Subject to the Constitution and the jurisdiction of the Labour Appeal Court, and except where this Act provides otherwise, the Labour Court has exclusive jurisdiction in respect of all matters in terms of this Act.[20] As the heading to this provision suggests, the subject-matter of section 77 is the jurisdiction of the Labour Court. The section tells us in unambiguous terms that the Labour Court has exclusive jurisdiction over matters arising from the Basic Conditions Act. The only exception is in respect of where the Act itself provides otherwise. For example, section 77(3) stipulates that the Labour Court enjoys concurrent jurisdiction with civil courts in matters concerning contracts of employment.
(1A) The Labour Court has exclusive jurisdiction to grant civil relief arising from a breach of sections 33A, 43, 44, 46, 48, 90 and 92.
(2) The Labour Court may review the performance or purported performance of any function provided for in this Act or any act or omission of any person in terms of this Act on any grounds that are permissible in law.
(3) The Labour Court has concurrent jurisdiction with the civil courts to hear and determine any matter concerning a contract of employment, irrespective of whether any basic condition of employment constitutes a term of that contract.
(4) Subsection (1) does not prevent any person relying upon a provision of this Act to establish that a basic condition of employment constitutes a term of a contract of employment in any proceedings in a civil court or an arbitration held in terms of an agreement.
(5) If proceedings concerning any matter contemplated in terms of subsection (1) are instituted in a court that does not have jurisdiction in respect of that matter, that court may at any stage during proceedings refer that matter to the Labour Court."
[21] On a proper interpretation of section 77(1), the Labour Court has jurisdiction in respect of all matters arising from the Act. And barring the exception, that jurisdiction is exclusive to the Labour Court. However, that exclusivity is subject to the Constitution and the jurisdiction of the Labour Appeal Court. This means two things. First, where the Basic Conditions Act is in conflict with the Constitution, the Constitution takes precedence. This requires that the section be read through the lens of the Constitution.
[22] Second, the section acknowledges the appellate role played by the Labour Appeal Court in relation to decisions of the Labour Court. Therefore, the exclusive jurisdiction of the Labour Court as envisaged in the section does not operate against the Labour Appeal Court. Nor does it operate against the jurisdiction of this Court which derives directly from the Constitution.
[23] But what is important is the point that section 77(1) confers jurisdiction on the Labour Court in the widest of terms. It declares that the Labour Court has jurisdiction "in respect of all matters" arising from the Basic Conditions Act. Section 77(3) expands the Labour Court's jurisdiction to cover disputes arising from contracts of employment even if they are not regulated by the Act. But in that event, the jurisdiction is not exclusive. It is shared with the civil courts.
[24] What locates a matter within the jurisdiction of the Labour Court is the application of the Basic Conditions Act to it. All claims to which this Act applies fall within the exclusive jurisdiction of the Labour Court. In addition, section 77(1A) grants the Labour Court exclusive jurisdiction to award civil relief arising from a breach of certain provisions of the Act. And if a matter that falls within the exclusive jurisdiction of the Labour Court is brought before another court, section 77(5) mandates the transfer of that matter to the Labour Court, regardless of the stage at which the transfer is effected.
[25] The scheme that emerges from the reading of section 77 as a whole is that the Labour Court, subject to few specified exceptions, enjoys exclusive jurisdiction over all disputes and claims arising from the provisions of the Basic Conditions Act. This means that on a proper reading of section 77, as soon as a dispute is ripe for litigation, the claimant is entitled to refer it to the Labour Court.
[26] As noted in the statement quoted in paragraph 6, the Labour Court here relied on two of its decisions for the proposition that disputes must first be referred to a labour inspector and that they should reach the Labour Court only in the form of an appeal. While it is true that when Fourie and Ephraim were decided, the Basic Conditions Act authorised appeals against decisions of labour inspectors to the Labour Court, at the time that Court adjudicated the current matter the law had changed materially. The provisions that facilitated appeals had been repealed as from September 2014.
[27] But apart from the appeal process which the Labour Court relied on for its interpretation, the real issue is whether at the relevant time the Basic Conditions Act obliged litigants to submit their disputes to labour inspectors before they could approach the Labour Court. There was simply no provision in the Basic Conditions Act which expressly required that disputes be submitted first to labour inspectors before the Labour Court could entertain them.
[28] In Fourie and Ephraim,apart from the appeal structure, the Labour Court also relied on the fact that Chapter 10 of the Basic Conditions Act establishes a mechanism in terms of which compliance with the Act is monitored and enforced. That mechanism is administrative in nature and the labour inspectors are pivotal to its functioning. The question is whether they had the power to resolve disputes where they have arisen or to determine legal claims.
[29] The functions of labour inspectors are listed in section 64(1) which at the time the present claim arose read:
-
"A labour inspector appointed under section 63(1) may promote, monitor and enforce compliance with an employment law by-
- advising employees and employers of their rights and obligations in terms of an employment law;
- conducting inspections in terms of this Chapter;
- investigating complaints made to a labour inspector;
- endeavouring to secure compliance with an employment law by securing undertakings or issuing compliance orders; and
- performing any other prescribed function."
[31] The proposition that the Labour Court may not determine a dispute about compliance with the Basic Conditions Act is not accurate. Take for example, the case where a complaint is submitted to an inspector for investigation but the latter fails to conduct an investigation. Surely the complainant in that case is entitled to approach the Labour Court for an order directing the labour inspector to perform his statutory function and investigate the complaint. In adjudicating that claim, the Labour Court would be enforcing the Basic Conditions Act if it grants the mandamus requested.
[32] To hold otherwise would effectively frustrate the objects of the Act. If the Labour Court were to have no jurisdiction, no court would be available to enforce the Act. This is because section 77(1) confers exclusive jurisdiction upon the Labour Court in relation to all matters which arise from the Act. What that Court may not do is to perform the specific functions of a labour inspector. The Court may not advise employers and employees of their rights and obligations; conduct inspections; investigate complaints made to an inspector or endeavour to secure compliance with the law by securing undertakings from employers or issuing compliance orders.
[33] Determining disputes or adjudicating legal claims arising from the Basic Conditions Act is the function of the Labour Court. This interpretation is consistent with the applicants' right to have their dispute resolved by the application of law in a fair manner before a court and this is guaranteed by the Bill of Rights. This right cannot be exercised before a labour inspector who may be impartial but not independent.
[34] Unlike the Labour Relations Act (LRA) which creates special non-litigation dispute resolution mechanisms, the Basic Conditions Act at the relevant time did not establish such mechanisms. Furthermore, the Basic Conditions Act did not have a provision equivalent to section 191 of the LRA which obliges parties to refer disputes on dismissals to the CCMA before submitting them to the Labour Court.
[35] It follows that the Labour Court erred in concluding that it did not have jurisdiction to entertain claim one and dismissing the claim for that reason alone.
Order
[36] In the result the following order is made:
- Leave to appeal against the order pertaining to claim one is granted.
- The order of the Labour Court is set aside to the extent that it refers to claim one.
- The matter is remitted to the Labour Court.