Public Newsletter
Worklaw is a subscription based labour law service developed by leading South African labour lawyers and arbitrators. Worklaw gives you all you need to manage labour law at the workplace. Go to www.worklaw.co.za
Worklaw subscribers receive a monthly newsletter containing commentary on the latest labour law cases and trends. This newsletter contains an article which deals with "What happens when a fixed-term contract overruns the end date?" We also discuss three new cases: the first case, a judgment of the Constitutional Court, clarifies that unions are limited by their own constitutions. The second case deals with fairness in a re-grading process. The third case sets out the consequences where there is an offer of alternative employment in a retrenchment process.
This public newsletter is a free edited version of the subscriber newsletter.
COVID-19
Worklaw has distributed 3 newsflashes within the last 2 weeks dealing with the impact of the coronavirus on the workplace. These and other important links can be accessed from a new Covid-19 specific section appearing on Worklaw's homepage - see www.worklaw.co.za
As such, this newsletter does not deal with Covid-19 related issues, and focuses on changes in legislation and important judgments that our subscribers will have to think about when back at work. But we did think it would be useful in these unprecedented times to refer to "7 Leadership Principles for Managing in the Time of Coronavirus" (7C's) by Professor John Quelch of the Harvard Business School, summarized as follows:
- Calm your families, employees, customers, suppliers, and project calm leadership through these difficult and uncertain times.
- Project confidence that you're going to be able to see this through and manage the hurt to your organisation, its employees and all stakeholders.
- Communicate, communicate, communicate with employees and all stakeholders, to avoid rumours developing that muddy the waters.
- Collaborate with team members inside and outside the organisation, even competitors, to find solutions. You are not going to know all the answers.
- Community. All of us live in communities. Set an example and model behaviors that are community friendly and supportive.
- Be compassionate towards your families, employees, customers and suppliers - recognise the difficulties and fears they face, and assist if you can.
- Cash is king in a time of crisis. Manage cash flow in a manner that ensures the organisation's viability, both short term and long term.
A new Uniform Rule of the High Court came into operation on 9 March 2020 (GG N 43000 of 7 February 2020), which introduces mediation in the High Court. This is relevant to employment cases - recently we have profiled cases where employment disputes were referred to the High Court as well as the Labour Court.
The requirements are simple: In every new action or application, the applicant must serve on the other party a notice asking whether they agree to mediation, and that party has to reply by notice, indicating whether they agree to this. A judge may at any stage before judgment also direct the parties to consider referring a dispute to mediation. Notice that participation in mediation is voluntary and there are no explicit consequences of refusing to participate - such as an adverse costs order. The Rules are silent about how the parties decide who should be the mediator and do not give a deadlock breaking mechanism on this choice.
We welcome any opportunity to encourage mediation to avoid unnecessary litigation. This rule at least requires the parties to apply their minds to the possibility of mediation. We regret that the new rule is silent on the choice of mediator and consequences of not participating where one party is willing.
Enforcing existing legislation: New hotline for minimum wage complaints
The Department of Employment & Labour has allocated R20m towards marketing the 'Impimpa Hotline' created to help enforce compliance by employers of the R20.76 an hour national minimum wage. Briefing the media in Pretoria, chief director for labour relations Thembinkosi Mkalipi, said the Department was partnering with cellular provider Vodacom to enable anonymous lodging of complaints via any cell phone without visiting the labour centres. Mkalipi's comments come as Employment and Labour Minister Thulas Nxesi assured workers that they would be protected when they anonymously report employers who do not comply with payment of the R20.76 per hour national minimum wage.
http://www.labour.gov.za/employment-and-labour-minister-t-w-nxesi-tomorrow-launches-an-anonymous-reporting-hotline-for-non-compliance-with-the-nmw
RECENT CASES
Unions are limited by their own constitutions
The Constitutional Court has recently, with a unanimous judgment, decided whether a trade union can be active in workplaces that fall outside the scope defined by its constitution.
During January 2015, NUMSA approached Lufil Packaging requesting that it deduct union fees for its members who are employed by it. The employer refused the request on the basis that its operations, being in the paper and packaging industry, did not fall within the permitted scope of the NUMSA's constitution. NUMSA then referred a dispute to the CCMA.
In the arbitration award by the CCMA, NUMSA was granted certain organisational rights, including the deduction of union fees. Lufil Packaging filed an application in the Labour Court to review and set aside this award. The Labour Court dismissed the application and upheld the CCMA's ruling. It stated that the relationship between a union and its members is a private matter and it is not for a third party (in this case the employer) to raise a challenge about whether the union is complying with its own constitution. The Court went on to specify that the only conditions that need to be met if a union wants to exercise organisational rights is that the union must be registered and it must be sufficiently representative.
Lufil Packaging appealed this decision to the Labour Appeal Court, which upheld the appeal and set aside the CCMA's arbitration award in Lufil Packaging (Isithebe) (A division of Bidvest Paperplus (Pty) Ltd) v Commission for Conciliation, Mediation and Arbitration and Others (DA8/2018) [2019] ZALAC 39 (13 June 2019). The Labour Appeal Court stated that unions only have those powers that are conferred on them by their constitutions and they cannot create a class of members outside of the provisions of their constitution. Such a decision is ultra vires and invalid and can be challenged by an employer from whom organisational rights are sought.
On appeal by NUMSA to the Constitutional Court in National Union of Metal Workers of South Africa v Lufil Packaging (Isithebe) and Others (CCT 172/19) [2020] ZACC 7 (26 March 2020), NUMSA argued that the matter concerned the constitutional right to fair labour practices, the right to freedom of association, and raised the question of how the LRA should be interpreted to advance these rights.
In a unanimous judgment the Constitutional Court held that the eligibility requirement to join a trade union was defined in NUMSA's constitution and that at common law and based on the LRA, NUMSA's constitution precludes membership outside of the metal and related industries listed in its constitution. Any admission of members outside the terms of its constitution is ultra vires and invalid. The judgment upheld the LAC's decision and held that when NUMSA wished to admit Lufil's employees as members, it ought to have amended its constitution as provided for by the LRA. On that basis, the ConCourt held that it would not be in the interests of justice to grant leave to appeal. The application for leave to appeal was accordingly dismissed.
This case is a reminder that the LRA requires a union to determine in its constitution which employees are eligible to join it, and it will be precluded from claiming representivity based on employees who are not eligible to be members. Unions only have those powers that are conferred on them by their constitutions and they cannot create a class of members outside of the provisions of their constitution.
Fairness in a re-grading process
Prior to a restructuring exercise, Eskom changed from the Patterson to the TASK grading system and drew up a written policy to govern the migration of employees from the old to the new structures.
After the migration, warehouse supervisors in the Koeberg power station claimed that they had been incorrectly graded according to TASK. A further grading exercise was conducted and resulted in the production of a new organogram, in which various positions were located, all on higher grades than the employees had been allocated. The employees claimed that they should have been placed in the higher grades.
When the employees appealed internally, it was confirmed that they were all working at TASK grade levels higher than those in which they had been placed. The appeal committee recommended that the employees be upgraded, but management declined to approve the upgrading.
The employees referred an unfair labour dispute to the CCMA, claiming that they had been treated inconsistently and unfairly. The arbitrator accepted that, although the dispute had been referred as one relating to promotion, it concerned the provision of benefits as the employees were seeking to have their positions upgraded. The Commissioner found that Eskom's decision was arbitrary and ordered the company to upgrade the employees.
On review, the Labour Court in Eskom Holdings SOC Ltd v National Union of Mineworkers on behalf of Coetzee & others (2018) 39 ILJ 828 (LC) found that the Commissioner had ignored evidence and had made a number of incorrect factual assumptions, especially by mistakenly holding that two groups of employees performed the same work. The LC set aside the award and ruled that Eskom had not committed an unfair labour practice.
On appeal to the Labour Appeal Court in National Union of Mineworkers obo Coetzee and Others v Eskom Holdings SOC Ltc and Others (CA4/2018) [2019] ZALAC 62; [2020] 2 BLLR 125 (LAC); (2020) 41 ILJ 391 (LAC) (4 October 2019), it was held that the Labour Court's finding that that policy did not apply because the employees' job profiles had not changed was incorrect. The LC had wrongly assumed that there was no evidence to show that the employees performed work in the higher grades. Eskom had not challenged the employees' claims that they were performing such work, and had failed to call a witness to prove the contrary. The employees had not been placed in positions in the new organogram which reflected the work they performed, and they had been assured by the appeals committee that their positions would be rectified.
The LAC held further that Eskom's reliance on its interpretation of the migration policy did not address the employee's case, which was simply that Eskom had acted unfairly by not placing employees on the correct and recommended grades - which was the issue the Commissioner was required to decide. The LAC found that the Commissioner's reasoning was entirely rational and the order he made was reasonable. The LAC held that the dispute clearly related to the provision of benefits, because being upgraded, although not entailing promotion, involves improvements in salaries and related benefits. The employees' appeal was accordingly upheld.
What do we learn from this judgment:
- In a re-grading exercise, an employer's failure to place employees on the correct and recommended grades is unfair.
- Any re-grade of a job to coincide with the actual work done does not change the job contents and does not promote an employee into a new position - it merely recognises the correct value to be attached to what the employee is already doing.
- A promotion gives an employee a different or revised task.
- A dispute about an unfair incorrect grading is not about promotion but is an unfair labour practice dispute relating to the provision of benefits, over which the CCMA will normally have jurisdiction.
S189 of the LRA requires an employer to consult on appropriate measures to avoid dismissals. If in this process the employer offers and the employee accepts alternative employment, is there still a need to continue with the Section 189 process?
This was the issue in a recent case. During August 2019, the employer commenced a s189 process. A facilitation process commenced under s189A but this was later withdrawn. The employee was offered and accepted an alternative position since his position had became redundant according to the retrenchment notice. Despite this acceptance, an application was launched to compel the employer to consult in terms of s189.
The employer, through its attorneys, addressed a letter to the union advising against the application since the employee had not been dismissed. A demand was made to have the application withdrawn. This demand was ignored and the application was persisted with.
The Labour Court in National Association of South African Workers (NASA-Workers) and Another v Uniliver South Africa (Pty) Ltd (J142/20) [2020] ZALCJHB 42 (14 February 2020) was scathing about hopeless applications being brought to the court. In this case it was common cause that the employee was not dismissed, and the fact that the employee's old position was redundant was irrelevant. The LC commented that if the employee thought he had been demoted by being offered a new position, he could invoke the unfair labour practice process.
The LC confirmed that one of the obligations provided for in s189 is for an employer to disclose the alternatives considered before proposing dismissal. Thus the employer was obligated to offer the employee an alternative before it could dismiss. Having made an offer, which was accepted, the employer reached consensus on appropriate measures to avoid the dismissal. Having reached consensus, the obligation to consult ended. An application to compel a purposeless consultation was nothing but an abuse of a court process, the LC said. The trade union was ordered to pay the costs of the application.
The lesson of this case is this: In a retrenchment process where the employer reaches consensus with an employee on an alternative position, the obligation to consult ends.
ARTICLE: What happens when a fixed-term contract overruns the end date?
By Prof Alan Rycroft
One of the main reasons why fixed-term contracts are popular is because the end date is certain. When that date is reached, the contract terminates and - this is important - this is not a dismissal. The law says the contact has "expired by effluxion of time". So a challenge based on unfair dismissal is excluded.But there are often circumstances where work continues after the end date, due to the work not being completed by then. Or the employer overlooks the end date and the employee is allowed to keep on working.
Two recent cases had to deal with the consequences of fixed-term contracts which ran past the end date.
Read more (note - only available to Worklaw subscribers)
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Bruce Robertson
April 2020
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