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SEPTEMBER 2016 SUBSCRIBER NEWSLETTER


Worklaw subscribers receive a monthly newsletter containing commentary on the latest labour law cases and trends. This newsletter contains an article which looks at 'The Strike Ultimatum' in the light of a recent Constitutional Court judgment dealing with this issue.'

We also look at three new cases: In the first case the Constitutional Court had to decide whether an agreement not to use the CCMA or the courts is valid. The second case looks at whether a Labour Court writ is necessary before a CCMA award can be enforced. The third case discussed is a recent Constitutional Court decision on garnishee orders. But first an update on legislative developments.

LEGISLATION

Extending UIF benefits faces problems

Providing unemployment cover for people who resign and those who work in the informal sector - as recommended by the Nedlac - is fraught with problems, says a Business Day report. The Unemployment Insurance Fund (UIF) has an accumulated surplus of about R120bn and benefits have been extended to make use of this surplus. A Bill before the National Council of Provinces aims to extend unemployment benefits to 12 months from 8 months, provide cover for scholars undergoing training and public servants, and increase maternity benefits.

Labour Department chief director of labour market policy, Thembinkosi Mkalipi said including the informal sector and the self-employed would place strain on the fund and raises the problem of defining when a person in the informal sector became unemployed. Providing for paternity leave - another Nedlac proposal - would be affordable if the informal sector was not included within the ambit of the fund, he said. Covering those who resigned would have cost implications, and there was the possibility that benefit payments would exceed income if this was introduced. The income replacement rate might have to be lowered if this proposal were adopted, Mkalipi said. The Department was reluctant to create an incentive for people to leave their jobs to access benefits.

RECENT CASES

Is an agreement not to use the CCMA or courts valid?

A senior human resources executive signed a separation agreement with his employer. In the agreement, the employee unconditionally waived his right to approach the CCMA or any court for any relief against the employer in any dispute arising from his employment or from the separation agreement. This, however, did not stop him and he took the matter to the Labour Court and Labour Appeal Court without success. The Labour Court held that the bar to judicial redress amounted to nothing more than a means of giving effect to a final settlement agreement. The Labour Appeal Court in Gbenga-Oluwatoye v Reckitt Benkiser South Africa (Pty) Limited and Another (JA 95/2014) [2016] ZALAC 2 (3 February 2016) found that the bar to judicial redress was permissible, considering the relationship between the contracting parties. Not satisfied with the LAC judgment, the employee referred the matter to the Constitutional Court.

The Constitutional Court in Gbenga-Oluwatoye v Reckitt Benckiser South Africa (Pty) Limited and Another (CCT41/16) [2016] ZACC 33 (15 September 2016) held that when parties settle an existing dispute in full and final settlement, no one should be lightly released from an undertaking seriously and willingly embraced. This is particularly so if the agreement was, as here, for the benefit of the party seeking to escape the consequences of his own conduct (in this case the separation agreement followed allegations of misconduct). Even if the clause excluding access to courts were on its own invalid and unenforceable, the Constitutional Court said the applicant must still fail. This is because he concluded an enforceable agreement that finally settled his dispute with his employer.

The principle emerging from this case is that a clause excluding access to the CCMA or courts in a settlement agreement reached 'in full and final settlement' of a particular dispute is valid and not contrary to public policy. But it is important to note that the Constitutional Court indicated that the outcome of this case may have been different if a settlement agreement attempts to prevent access to courts for any future disputes between parties.

Is a Labour Court writ necessary before a CCMA award can be enforced?

Where an employee is successful in the CCMA but the employer refuses to pay the compensation or back-pay ordered by the Commissioner, what can the employee do?

From the time the LRA was enacted in 1995 the settled practice was that a writ of execution in respect of arbitration awards made by the CCMA had to be issued by the Registrar of the Labour Court prior to execution by the sheriff. This procedure was complex and ineffective because a party armed with an arbitration award in his/her favour still had to go to the Labour Court for the Registrar to issue a writ.

The Labour Relations Amendment Act 2014 which came into effect on 1 January 2015 amended Section 143 to provide a new simplified approach. The amended Section 143 reads:

1. An arbitration award issued by a commissioner is final and binding and it may be enforced as if it were an order of the Labour Court, unless it is an advisory arbitration award.......

3. An arbitration award may only be enforced in terms of subsection (1) if the director has certified that the arbitration award is an award contemplated in subsection (1).

The recent LAC judgment in CCMA v MBS Transport CC and Others, CCMA v Bheka Management Services (Pty) Ltd and Others (J1807/15, J1706/15, JA94/2015) [2016] ZALAC 34 (28 June 2016) has now clarified the procedure. This was a consolidated judgment on two CCMA cases in which neither employee was paid what was ordered by the arbitrator. Both awards were certified by the Director of the CCMA and enforcement awards were issued.

The respective employers, on being made aware of the enforcement awards, had applied on an urgent basis to the Labour Court to stay the respective enforcement awards. When the unopposed stay applications came before the Labour Court, it raised the point whether it could grant an order staying writs issued by the CCMA. The court was of the view that the Labour Court had no such power.

Although the CCMA was cited as a respondent in both applications, it did not oppose the applications. It was also not forewarned that the point would be raised by the Labour Court. When the judgment of the court became available, the CCMA approached it with an application for leave to appeal, because of the far reaching implications of the judgment. The Director of the CCMA filed an affidavit in support of the application for leave to appeal, and leave to appeal was granted.

The LAC held that the CCMA does not issue writs in the conventional way. The certified award is the equivalent of a Labour Court order in respect of which a writ has been issued. The certified award is therefore not only assumed to be an order of the Labour Court but it must also be assumed that a writ was issued in respect of that order. The certified award is therefore the writ. The LAC found that the conclusion by the Labour Court that there is no reason why writs issued by the CCMA should be stayed pending review in circumstances where they are a nullity for lack of jurisdiction, is therefore incorrect.

The practical effect of the amended section 143(1) and 143(3) of the LRA is that a certified arbitration award may be enforced without the need for a writ to be issued by any court or the CCMA. This makes it easier for a successful applicant to enforce the CCMA award.

The Constitutional Court considers garnishee orders

The individual applicants in this case were a group of low income earners living in Stellenbosch, supporting themselves and their families on salaries of between R1 200 and R8 000 per month. The group included farmworkers, cleaners and security guards. They work in low paid and vulnerable occupations and their wages are invariably their only asset and means of survival. All of them had emoluments attachment orders (EAO's - commonly referred to as 'garnishee orders') granted, authorising the attachment of the debtor's earnings, and requiring his or her employer (the garnishee) to pay out of these earnings specific instalments to the judgment creditor or attorney.

A landmark High Court judgment given on 8 July 2015 declared 15 salary attachment orders issued by a loans company to workers to be invalid and unlawful. The High Court in University of Stellenbosch Legal Aid Clinic and Others v Minister of Justice And Correctional Services and Others (16703/14) [2015] ZAWCHC 99 (8 July 2015) noted that there is no statutory limit on the amount which may be deducted from the earnings of a debtor in terms of an EAO. Nor is there a limit on the number of EAOs which may be granted against a particular debtor. Section 65A of the Magistrates' Court Act (MCA) provides that following an enquiry by a magistrate into a debtor's financial position, the Court may make such order as it deems "just and equitable". However, in respect of these applicants, the clerk of the court issued EAOs attaching their earnings without any evaluation of their ability to afford the deductions to be made from their salaries and without deciding whether or not the issuing of an EAO itself would be just and equitable. The whole process of obtaining the EAOs was driven by the creditors without any judicial oversight whatsoever.

The High Court saw that the practice of debt collection had constitutional implications. The court declared s 65J(2)(b)(i) and s 65J(2)(b)(ii) of the MCA to be constitutionally invalid to the extent that they allow for EAOs to be issued by a clerk of the court without judicial oversight.

On appeal in the Constitutional Court (University of Stellenbosch Legal Aid Clinic and Others v Minister of Justice and Correctional Services and Others; (CCT127/15) [2016] ZACC 32 (13 September 2016)), in a complicated judgment, the CC ordered the reading-in, and severance of, certain words in section 65J(2)(a) and (b) of the Magistrates' Court Act 32 of 1994 to remedy the constitutional defect. The CC did not confirm the order of constitutional invalidity made by the High Court. The effect of the CC order is that, with immediate effect, no emoluments attachment order (EAO) may be issued unless a court has authorised it, after being satisfied that it is just and equitable and that the amount is appropriate.

ARTICLE: The Strike Ultimatum

By Prof Alan Rycroft

Even when a strike is unprotected, the design of the LRA is to provide checks and balances before dismissal. Item 6 of the Code of Good Practice: Dismissal provides as follows -

1. Participation in a strike that does not comply with the provisions of chapter IV is misconduct. However, like any other act of misconduct, it does not always deserve dismissal. The substantive fairness of dismissal in these circumstances must be determined in the light of the facts of the case, including -


• the seriousness of the contravention of this Act;
• attempts made to comply with this Act; and
• whether or not the strike was in response to unjustified conduct by the employer.


2. Prior to dismissal the employer should, at the earliest opportunity, contact a trade union official to discuss the course of action it intends to adopt. The employer should issue an ultimatum in clear and unambiguous terms that should state what is required of the employees and what sanction will be imposed if they do not comply with the ultimatum. The employees should be allowed sufficient time to reflect on the ultimatum and respond to it, either by complying with it or rejecting it. If the employer cannot reasonably be expected to extend these steps to the employees in question, the employer may dispense with them.

Whilst the Code of Good Practice is drafted in fairly simple terms, the dismissal of unprotected strikers has been the cause of much debate in the courts. Most of the debate centres on the procedural steps required before dismissal, in the context of unprotected strike action, is deemed to be fair. The ultimatum is seen as a key part of this process - but what form must it take? Let's consider what the cases have had to say on the topic.

The ultimatum when issued must not be vague. One must avoid phrases such as "if you don't return to work you will be disciplined". This is insufficient to warn employees that their jobs are on the line, as found in Nelspruit Dry Cleaners (Pty) Ltd v SA Commercial Catering & Allied Workers Union & Others [1994] 15 ILJ 283 (LAC).

Striking employees must have reasonable time to respond to an ultimatum. What constitutes reasonable time will depend on the circumstances of each case, as confirmed in Black Allied Workers Union & Others v Edward Hotel [1989] 10 ILJ 357 (IC). It stands to reason that sufficient time must be given to enable strikers to assess their situation and if necessary take advice. In short there should be enough time for striking employees to cool down and consider their position.

If the strikers are not members of a union, the employer has additional responsibilities to make sure the strikers have received and understood the ultimatum. In Mvelatrans (Pty) t/a Bojanala Bus Services v Jackson and Others (JA72/13) [2014] ZALAC 68 (23 October 2014) it was held that where employees are not represented by a union and where there is no strike committee or discernible communication channels between the employees, there must be some indication that the employees were aware of an ultimatum. The employer must prove that the employees were aware of the ultimatum or that they would reasonably or in all likelihood have been aware thereof and that they did not comply with it. Knowledge of the ultimatum is important for a finding that there was no compliance therewith.

A recent Constitutional Court case

A strike in 2010 ended with the dismissal of the strikers. The ensuing dispute has now eventually been finalised 6 years later by the Constitutional Court in Transport and Allied Workers Union of South Africa obo MW Ngedle and 93 Others v Unitrans Fuel and Chemical (Pty) Limited [2016] ZACC 28). The dispute before the CC was whether the dismissal of the union's members by their employer on 2 November 2010 following a strike, was fair and whether they should be reinstated. Both the Labour Court and the Labour Appeal Court had held that the dismissal was fair because the strike had been unprotected. A divided Constitutional Court, however, held that their strike was protected and that their dismissal was accordingly automatically unfair. It ordered their reinstatement with backpay.

The facts of this case are important. After prior litigation about whether employees could strike on a list of demands, on 26 October 2010 TAWUSA issued a strike notice and emphasised that the collective refusal to work would be in pursuit of the demands permitted by the LAC, being wage discrepancies and wage cuts. Further meetings were held but no resolution could be reached. This led to Unitrans launching a further urgent application to interdict the strike. The LC granted an interdict against TAWUSA. Despite this, on 28 October 2010, the strike commenced. It endured for six days during which several meetings were held between the parties. During this period, Unitrans issued four ultimatums in which it stated that the demands made by the workers differed from those determined by the LAC and that the demands were for increases in wages and would be a cost to the company. This, it said, rendered the strike unlawful. It demanded that the workers resume their duties. In the final ultimatum, which was issued on 1 November 2010 14h05, Unitrans capitulated to the demand on wage cuts. It issued an ultimatum required the striking workers to resume their duties by 06h00 on 2 November 2010, failing which they would be dismissed. On 2 November 2010, the workers did not return to work, and as a result, Unitrans summarily dismissed the workers.

TAWUSA and the dismissed workers challenged the dismissals in the Labour Court which held that the strike was unprotected and that the dismissals were fair. Their appeal to the LAC was also dismissed. Davis JA concluded that the strike was unprotected and dismissed the appeal. He did so without considering the second leg of the inquiry, that is, notwithstanding the fact that the strike was unprotected, whether the dismissals were unfair under the circumstances.

TAWUSA appealed against the second LAC judgment to the Constitutional Court. In the CC, the judges were divided, with 5 judges finding that the dismissals were substantively fair (because the strike was unprotected after the employer capitulated) but procedurally unfair because of the short period given in the ultimatum. Six judges held that the strike was protected throughout, and the dismissals were therefore automatically unfair. For the purposes of this article, we have highlighted the learnings that can be drawn about what constitutes a fair ultimatum.

What is required when issuing an ultimatum?

What is useful in the complex TAWUSA CC judgment are some clear principles on what constitutes a fair ultimatum. Here is a summary of the central points emerging from the judgment:

1. The question is whether the ultimatum was fair; and, if so, whether the dismissals effected pursuant to the ultimatum were fair. If the ultimatum was unfair, the second question does not arise.
2. When assessing the fairness of an ultimatum, the factors to be considered are the background facts giving rise to the ultimatum, the terms thereof and the time allowed for compliance.
3. An employer must first establish, in accordance with item 6(1), that the workers' conduct is deserving of dismissal. Only after an employer has done so, may it turn to item 6(2), which prescribes how the dismissal is to be effected in a procedurally fair manner. The contention that an employer can presume eventual non-compliance with item 6(1) and seek to bolster its compliance with item 6(2) by issuing an ultimatum during protected strike action is unsustainable.
4. An ultimatum tendered during protected strike action is not legally binding on striking workers, as their dismissal at that point would amount to a serious contravention of the LRA.
5. It has been held to be unreasonable to expect strikers to resume work in too short a time. A reasonable time ultimately will depend on the circumstances, but an ultimatum should afford the strikers "a proper opportunity for obtaining advice and taking a rational decision as to what course of action to follow".
6. In Allround Tooling v Numsa[1998] 8 BLLR 847 (LAC) the court found the dismissal of 117 workers pursuant to two ultimatums, served on the same day, to be procedurally unfair as too short a period of time was given. The employer's ultimatum should have expired "after the striking employees had had a weekend to cool down and to calmly reflect on the consequences of their conduct and having obtained the advice of the local union leadership, the probabilities are that they would have returned to work".
7. In NUMSA & others v Pro Roof Cape (Pty) Ltd (2005) 26 ILJ 1705 (LC) the Labour Court found the dismissal of 22 workers who had been given just over two hours' notice to adhere to an ultimatum to be procedurally unfair. It held that "more time should have been allowed to reflect on the ultimatums once an undertaking had been given. . . . The [dismissals] could have been avoided by the provision of more time and information by the employer".
8. In Plaschem (Pty) Ltd v CWIU (1993) 14 ILJ 1000 (LAC) the LAC found the dismissal of 42 workers, pursuant to a series of oral and written ultimatums, provided between 12h15 and 14h45 during the course of a working day, to be procedurally unfair.
9. In light of these decisions, it is apparent that the period of time conferred by the ultimatum must be viewed in light of the conditions prevailing at the time it was issued. The time period conferred by an ultimatum must be viewed in the context of whether the ultimatum provided an adequate opportunity for the workers involved to engage with its contents and respond accordingly.
10. The importance of conferring an adequate period of time for both parties to the dispute to "cool-off" must be emphasised. An adequate cooling-off period ensures that an employer does not act in anger or with undue haste and that in turn the striking workers act rationally, having been given the opportunity to reflect.

Conclusion

Drawing from past judgments, it is clear that many of the problems arising from employer ultimatums are caused by too short a time period being given to employees within which to comply with them. Employers, after extensive negotiations have failed to resolve the primary dispute giving rise to the strike, then fall into the trap of acting hastily in giving an ultimatum, followed shortly thereafter by collective dismissals.

In this case, the workers effectively had three working hours to consider the ultimatum, reflect on the situation and respond. The CC held that the time provided by the employer was insufficient to enable them to do that. The ultimatum failed to afford the workers an adequate period of time to consider its contents and respond accordingly, which the audi alteram partem principle demands. The judgment concluded that "Given the complexity of this matter, the fact that the strike action had been protected, and that the employer only capitulated in respect of the .... workers' demand in this same ultimatum, a period of just under 16 hours (effectively three working hours) cannot be regarded as sufficient to justify Unitrans' actions in dismissing the workers".

The strike context - particularly an unprotected strike - is a difficult and tense time. It is tempting to act rashly, even punitively, to deal with strikers. This case study points to the importance of slowing down, being clear, and to ensure you are being fair and complying with legal requirements when issuing an ultimatum.

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Copyright: Worklaw
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September 2016