Public Newsletter
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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 on 'Mediation in the strike context'.
We also look at three new cases: The first deals with what constitutes a matter of 'mutual interest'. The second deals with whether it is possible for an arbitrator to find the dismissal was unfair yet award neither reinstatement nor compensation. The third deals, deals with what an employer must show before a court is willing to enforce a restraint of trade agreement. But first a legislative update.
This public newsletter is a free edited version of the subscriber newsletter.
THRESHOLD EARNINGS
The Minister of Labour recently announced that, with effect from 1 July 2013, the earnings threshold in the BCEA, which operates to exclude employees earning above the threshold from certain BCEA entitlements and protections, increased from the current R183,008 per annum to R193,805 per annum, an increase of approximately 5.9%. Employees earning above this threshold are excluded from working time protections such as maximum ordinary working hours, meal intervals, limits on how much overtime they are permitted to work, enhanced rates of pay for overtime work and work on Sundays, minimum rest intervals, and access to transport for night work, etc.
RECENT CASES
When is a dispute a 'matter of mutual interest'?
When an employer is making a decision about an appropriate accounting software package to be used, or which marketing agency to engage in marketing the employer's products, or which email service provider to use or how its executive committee would function, such decisions are seen as being well within 'managerial prerogative' - the right of an employer to take managerial decisions about the running of the enterprise. Each of the decisions mentioned above affect employees - but in an indirect way.
What about a managerial decision to make the workplace safer, in accordance with the employer's legal obligations in terms of health and safety legislation? If this directly affects employees, does it become a matter of 'mutual interest' and therefore a matter on which a strike can occur? This was the crux of the matter in the recent case of Pikitup (Soc) Ltd v SAMWU obo Members and Others (J164/13) [2013] ZALCJHB 192 (13 August 2013).
The employer introduced two new systems in the workplace. The first was in respect of alcohol / substance abuse and involved the mandatory testing of truck drivers and the random testing of employees other than truck drivers. According to the employer there had been a number of fatal and other serious accidents as a result of its truck drivers driving whilst under the influence of alcohol. In order to counter this, the employer, in the exercise of its managerial prerogative and in pursuance of its obligations under the Occupational Health and Safety Act, decided to introduce breathalyser tests. In the case of the drivers, this would happen before they got into the vehicle each day.
The second system related to access control / time keeping. The access control system was a biometric, fingerprint analysis system which regulates access as well as checking in and out of work. The complaint by the workers was that the implementation of the system meant that workers working off site were obliged to return to the depot to check out, whereas the current practice was to be able to knock off from where they were working. This had time and cost implications.
The introduction of these two new systems gave rise to unhappiness amongst the employees, and the union referred a dispute to the CCMA, demanding the cessation of both new systems. The matter was conciliated, but without agreement, and so the Commissioner issued a certificate stating that the dispute remained unresolved.
The union indicated that it intended to strike. An interim interdict against the strike was obtained and the union filed an affidavit opposing the interdict being made final. The union explained that there were concerns as to the reliability and hygiene of the breathalyser system which had the capacity to lead to disciplinary action and was also considered "degrading" to the workers because, so they contended, it suggested a distrust of them.
The employer challenged the proposed strike on the following bases: (a) The demands were not in respect of matters of mutual interest; and (b) the demands were unlawful and therefore any strike action based upon such demands would be dysfunctional.
The Labour Court held that the implementation of the new breathalyser system was a matter of mutual interest and therefore workers could strike on that issue. The court defined a matter of mutual interest as one in respect of which both employer and employee, in their capacities as such, have an interest. Whether an employer and employee have such an interest in a given case is a matter of fact to be determined with reference to all the evidence. Regarding the second issue, because the employer had tendered to use a mobile access control device at off-site venues, and this had been accepted by the union, the court said that the right to strike on this issue had fallen away.
What is the significance of this case? The employer, acting to ensure it complied with its legal obligations, and relying on the concept of managerial prerogative, introduced new systems of work. The legal position has been that where it is a change to a work practice or work systems (eg a change in shift pattern) - as opposed to a change to a term and condition of employment - an employer may implement the new system after proper consultation, whether or not employees have agreed to this. On the other hand, a change to a term and condition of employment cannot be implemented without agreement.
Even though management may legally be able to implement a new work practice after consultation and without necessarily acquiring agreement from employees before doing so, this does not then prevent employees from declaring a mutual interest dispute and striking over the issue. It is interesting to consider how management's actions would be judged if it was for example taking disciplinary steps to enforce a new work practice - eg failure / refusal to follow a reasonable instruction - at a time when an employee dispute over that issue was being processed, even to the stage of a legal strike. The possibility exists that management's actions may be found to be unfair and provocative under those circumstances. But what if the employees' actions are not successful, and they effectively abandon their demands at some stage either with or without having resorted to strike action? In that case, it would then seem appropriate for management to take steps to enforce the required new work practice.
Unfair dismissal - but no reinstatement or compensation?
When the LRA was being drafted in 1994/5 a big trade-off was agreed: If reinstatement is entrenched as the normative and usual remedy for unfair dismissal, then compensation can be capped at 12 months - because it is a secondary remedy. It was understood that there would be circumstances when reinstatement was not appropriate. In such cases, compensation would be the remedy. But can an arbitrator find the dismissal is unfair and order neither reinstatement nor compensation?
In a recent case an employee was dismissed and the arbitrator found that his dismissal was substantively unfair; yet ordered no relief. On review, the Labour Court in NUMSA and Another v GFD Motors (Pty) Ltd and Others (C 358/07) [2013] ZALCCT 25 (24 July 2013) had to consider whether this was reasonable. The employee was dismissed following a disciplinary hearing where he faced allegations of gross insubordination and serious disrespect towards a superior, and the failure to carry out a reasonable instruction. The alleged misconduct arose from an incident where the employee became aggressive towards his superior, left the work premises (a service station) and refused to return to work.
The arbitrator found that the employee fabricated large parts of his evidence. She rejected his version. The arbitrator further found that the employee was disrespectful and rude towards his manager; that he refused to obey a reasonable instruction to return to her office; that he embarrassed the manager in front of staff and customers; and that he made a deliberate and defiant challenge to the manager's authority by walking away from her when she was talking to him in the office and by leaving the premises without permission or authority.
The arbitrator found that the employee did commit misconduct, ie insubordination, disrespect, and failing to carry out a reasonable instruction. However, she found that the insubordination was not gross. Taking into account the Code of Good Practice: Dismissal, the arbitrator concluded that the sanction of dismissal was too harsh and unfair, in circumstances where it was based on a single incident and the employer having offered reinstatement following conciliation.
With regard to the appropriate remedy, however, the Commissioner made the following finding:
"As to the appropriate remedy I believe that neither reinstatement nor compensation is appropriate in the circumstances of this matter. Attitudes have hardened over time on both sides. In addition the employee's unfounded allegations of racism and other utterances ..... go to his honesty. On a balance of probabilities these utterances make a future relationship untenable."The arbitrator thus found that the dismissal was substantively unfair but awarded no relief. The Labour Court held this was not unreasonable. It is worth noting that s 193(1) provides that an arbitrator (or Labour Court) may order reinstatement or re-employment or compensation. It does not say the arbitrator must order one of them. Section 193(2) deals specifically with reinstatement and provides four situations in which the normative remedy, reinstatement, need not be ordered.
The effect of this unusual award is that an employee found to have been unfairly dismissed received no remedy from the CCMA. While this seems punitive, the employee was found to have committed serious misconduct and the Labour Court found there was clear evidence that a continued employment relationship would be intolerable. We are however left with the nagging question that if the employee's behaviour was considered bad enough to warrant no relief, whether it was not sufficient to have justified dismissal in the first place. Be that as it may, this decision opens the door to no remedy being awarded by arbitrators in other similar cases, for example when an arbitrator believes the employee has behaved badly at arbitration.
Justifying a restraint of trade
Restraint of trade agreements are, in some workplaces, a standard part of the contract of employment. While our law says that such agreements are enforceable, they must be reasonable. The recent case of Jonsson Workerwear (Pty) Ltd v Williamson and Another (D 426/2013) [2013] ZALCD 24 (12 August 2013) showed the basis on which a court decides to make an order restraining an ex-employee from acting in violation of a restraint of trade agreement. It provides very useful indicators of what needs to be established before the court will grant an interdict. It's worth analysing the parties' cases in some detail, because they provide an excellent illustration of how a court will investigate the factual situation justifying a restraint of trade agreement. We summarise below the facts and allegations contained in the parties' affidavits.
The business of the employer (the applicant) was the manufacturing of about 850 different work garments and corporate uniforms for corporate customers. An ex-employee (the first respondent) was initially employed as a "sample set manager". At the time of termination of employment he held the position of head of garment technology, being a position he held for about a month. His contract of employment contained a restraint of trade, prohibiting him from being employed and having any interest in any competing business throughout South Africa for 12 months from termination of employment.
The ex-employee stated that prior to commencing employment, he obtained a diploma in clothing production management. He held several clothing production positions at a number of clothing manufacturers in the period between 1990 and 2008, when he joined the employer. During this time, he accumulated substantial experience in working in a clothing production environment. He had all the technical ability, skills and experience in the clothing industry in place when he joined the employer and brought these skills and experience with him. He acquired no special skills or experience from the employer. There was nothing confidential and unique about the manufacturing of clothes in the employer's business: it used the same manufacturing processes used by all clothing manufacturers.
The ex-employee was also not responsible for clothing design, nor did he deal with customers or have any customer relationships. When he resigned from his employment he disclosed that he would take up employment with the new employer, a direct competitor of the applicant. His role with the new employer is that of quality control. The new employer does not conduct its own manufacturing of garments, and this function is outsourced to a third party. As such, the ex-employee would not have to become involved in the manufacturing process, and any knowledge that he may have about the applicant's manufacturing processes and methods were of no interest at all to the new employer. The ex-employee stated that the clothing industry in South Africa has diminished substantially, with most clothing production now being done overseas and job opportunities are limited. He submitted that the clothing industry is all he knows, making a nation-wide restraint unreasonable.
In trying to enforce the restraint of trade agreement, the applicant submitted that the ex-employee "knows everything there is to know" about its business products, and contended that the ex-employee's employment with the new employer as a direct competitor, was a breach of its protectable interest. The applicant's statements were not substantiated with specifics and were bald and general in nature. The applicant seemed to realise its affidavit lacked detailed, credible evidence to persuade the court and made application to lead oral evidence (which is allowed in special circumstances). The court refused. It held that the ex-employee's replying affidavits established that the restraint agreement was unreasonable. Incidentally, the court accepted that an ex-employee bore the onus of establishing the restraint is unreasonable, but acknowledged a number of decisions which have said that this is unconstitutional.
This case highlights the following:
- A party seeking to enforce or oppose a restraint of trade agreement in motion proceedings, must provide sufficient, credible proof in its supporting affidavits to substantiate its version of events.
- Where the assertions or denials in a party's version are bald, implausible or far-fetched, the court is justified in rejecting that version.
- The Labour Court has a discretion to decide whether to refer motion proceedings to oral evidence, when disputes of fact need to be resolved. In exercising this discretion, a litigant applying for a matter to be referred to oral evidence should at least advance reasonable grounds at the beginning of the litigation to support this discretion being exercised.
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Bruce Robertson
September 2013
Copyright: Worklaw
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