Category: Case Law and Commentary

BCHC: Can an employee hold a reasonable expectation of renewal and permanency at the same time?

An employee can refer an unfair dismissal dispute to the CCMA or bargaining council in terms of section 186(1)(b) of the Labour Relations Act, 66 of 1995 (LRA) if the employee was employed on a fixed term contract and reasonably expected that the employer would –

  • Renew the contract on the same or similar terms but the employer offered to renew it on less favourable terms, or did not renew it; or
  • Retain the employee on an indefinite basis on the same or similar terms as the fixed term contract, but the employer offered to retain the employee on less favourable terms, or did not offer to retain the employee.

Employers occasionally face cases where employees claim that they held both a reasonable expectation of renewal and a reasonable expectation of permanency.

Commissioners then have to figure out what the employee’s actual expectation was. If this clarity is not sought or cannot be obtained, they often conclude that the employee held both an expectation of renewal and an expectation of permanency which results in the award being susceptible to review by the Labour Court.

Such a review application was heard in the Cape Town Labour Court on 31 May 2017 by Judge Anton Steenkamp in City of Cape Town v IMATU obo Searle & Others under case number C494/2016.

In that case the City argued that an employee who was employed on a fixed term contract, could not have held both expectations at the same time. This was based on the fact that the previous version of section 186(1)(b) of the LRA only referred to a reasonable expectation of renewal which meant that there was no basis for an expectation of permanency. This section was, however, amended in 2015 to include a reasonable expectation of permanency as a new and alternative remedy to a reasonable expectation of renewal. The mutual exclusivity of these remedies are evident from the use of the word “or” as opposed to “and” in the amended section.

The Court in the Searle case agreed with the City’s interpretation of the section and inter alia concluded that the award should be reviewed and set aside for the following reasons:

  1. The commissioner committed an error of law by ignoring the use of the word “or” in the amended section of the LRA.
  2. The employee could not have held both expectations at the same time as the two are mutually exclusive.
  3. Any reasonable expectation of renewal cannot include a reasonable expectation of permanency.

Employers should therefore insist that employees clarify the exact basis of their disputes before proceeding with their cases. If commissioners are reluctant to accept the above interpretation of section 186(1)(b), the above judgment can be referred to.

BCHC: An employer’s guide to occupational health and safety in light of the cannabis judgment

By Danny Hodgson edited by Prof Darcy du Toit

On 18 September 2018 the Constitutional Court handed down judgment in the consolidated matter of Minister of Justice and Constitutional Development and Others v Prince; National Director of Public Prosecutions and Others v Rubin; National Director of Public Prosecutions and Others v Acton and Others [2018] ZACC 30. The Court held that certain provisions of the Drugs and Drug Trafficking Act 140 of 1992 (Drugs Act) and Medicines and Related Substances Control Act 101 of 1965 are unconstitutional in that they infringe on the right to privacy. The effect of this judgment is that adult persons are permitted to use or possess cannabis in private for purposes of personal consumption and are permitted to cultivate cannabis in a private place for personal consumption. Cannabis can therefore no longer be described as an illegal substance and employers will have to reconsider their policies that deal with substance use in light of this change. This article aims to provide some insight into how employers should regulate cannabis in their policies and how these policies should be implemented.


The Occupational Health and Safety Act 85 of 1993

The relevant provisions of this Act are:

  • Section 8(1) states that, ‘every employer shall provide and maintain, as far as is reasonably practicable, a working environment that is safe and without risk to the health of his employees.’
  • Item 2A of the Act’s General Safety Regulations states –
    • ‘(1) Subject to the provisions of sub-regulation (3), an employer or a user, as the case may be, shall not permit any person who is or who appears to be under the influence of intoxicating liquor or drugs, to enter or remain at a workplace.
    • (2) Subject to the provisions of sub-regulation (3), no person at a workplace shall be under the influence of or have in his or her possession or partake of or offer any other person intoxicating liquor or drugs.
    • (3) An employer or a user, as the case may be, shall, in the case where a person is taking medicines, only allow such person to perform duties at the workplace if the side effects of such medicine do not constitute a threat to the health or safety of the person concerned or other persons at such workplace.’

An employer that fails to comply with its duties in terms the Act shall be guilty of an offence in terms of section 38(1) of the Act and shall be liable on conviction to a fine not exceeding R50 000 or imprisonment for a period not exceeding one year, or both. Furthermore, any person who fails to comply with the Regulations shall be guilty of an offence and liable, on conviction to a fine or imprisonment for a period not exceeding six months. In order to comply with these provisions and Regulations employers are obliged to implement policies and put measures in place to limit any potential risk of harm in the workplace. Such measures include identifying intoxicated employees through observation and drug testing and excluding them from the workplace. Failure to create and implement these policies will amount to a criminal offence.


Intoxicating effects of cannabis

The intoxicating effects of alcohol are well known and, for that reason, most employers have a zero tolerance policy against intoxication at work. The intoxicating effects of cannabis, on the other hand, are not as well-known and although it may not impair a person to the same extent as alcohol, it is a psychoactive drug that has been found to have the following effects:

  • Dizziness, drowsiness, feeling faint or lightheaded;
  • Impaired memory and disturbances in attention, concentration and ability to think and make decisions;
  • Suspiciousness, nervousness, episodes of anxiety, paranoia, and
  • Impairment of motor skills and perception.

From these effects one can see that it is undesirable to have employees intoxicated by cannabis at work as their cognitive abilities are impaired and they could potentially pose a risk to themselves and others when it comes to operating machinery, driving a vehicle or performing other dangerous work. It is therefore suggested that cannabis be regulated in the same manner as alcohol and a zero tolerance policy should be applied.


How should cannabis be regulated?

Employees using cannabis at the workplace

As stated above, adult persons are only permitted to use cannabis in private. The Court did not confine “private” to a home or dwelling, as the Western Cape High Court had done, and did not provide any test to determine what it means.  It did, however, state that the right to privacy confers a very high level of protection on an individual’s intimate personal sphere but, as soon as that person enters into relationships outside the intimate sphere, the individual’s activities acquire a social dimension. Employees are in constant contact with one another, they deal with clients and other members of the public and are generally in a social environment. The workplace therefore falls outside an individual’s intimate personal sphere and will not be considered private. This being so, the use of cannabis at the workplace will constitute an offence in terms of section 4(b) of the Drugs Act. Employers should therefore have a provision in their disciplinary policy stating that any employee found using cannabis in the workplace shall be reported to the South African Police Service for criminal investigation.

Dealing with cannabis use at the workplace

In order for an employer to meet its above-mentioned statutory obligations, it needs to implement measures to identify employees intoxicated by cannabis and exclude them from the workplace.  The first step should be identifying intoxicated employees through observation. Line managers and supervisors should be given a checklist to fill in noting observable signs of intoxication. Some indicators to look out for include: red, glossy or swollen eyes, dry mouth, muscle tremors, impaired speech, abnormal behaviour and an odour of cannabis smoke. Once the manager has made a finding based on observable factors, they should inform the employee that he or she is regarded as being under the influence and, should they wish to disprove this finding, they are entitled to take a drug test.

With alcohol it is easy to prove intoxication as the employee can take a breathalyser test which will immediately reflect their blood/alcohol concentration. With cannabis it is a lot more difficult as the substance stays in the body much longer even after the intoxicating effects have worn off and there is no reliable test to determine the current state of intoxication. Most studies reveal that the acute effects of cannabis generally only last between 2 to 6 hours after use. However, a urine test on an occasional user can test positive for up to 4 days after the last use of cannabis and a frequent user can test positive for over a month after the last use of cannabis. The purpose of these tests is therefore not to determine intoxication but rather whether the person is a user of cannabis.

There are, however, saliva tests that have been held to be the most advanced type of test for signalling recent use. This is because saliva tests can only detect cannabis use for up to 24 hours after use. There are some saliva tests with higher cut-off levels that claim to detect cannabis for up to 6 hours after the last use of cannabis. These tests are therefore far better suited for determining whether an employee is still intoxicated and should be the preferred method.

Disciplining cannabis-intoxicated employees

Once an employee is found to be intoxicated at the workplace an investigation should be initiated with regard to possible disciplinary action. Employees who are found to have been intoxicated at the workplace may be dismissed for misconduct for contravening the employer’s policy and the Act after following a fair procedure. There may be instances when the employer may have to treat the intoxication as an incapacity issue and assist the employee with counselling or rehabilitation. The employer will only have a duty to treat it as an incapacity issue if the employee has tendered medical evidence to prove the incapacity or has utilised the employer’s policy to assist them with a substance abuse problem, as was held in Superstore Mining (Pty) Ltd v CCMA and Others [2013] ZALCCT.

Pre-employment testing

The object of pre-employment testing is to determine whether the applicant is a user of an illegal substance and not whether they are intoxicated. As cannabis can no longer be regarded as an illegal substance, an employer may not be entitled to refuse to appoint an employee on the basis that the employee tested positive for cannabis. There would have to be a strong operational justification for a prohibition on any use of cannabis, failing which the refusal may constitute unfair discrimination on an arbitrary ground under section 6(1) of the Employment Equity Act, 55 of 1998.

Possession at the workplace

Adult persons are permitted to legally possess cannabis on their person or in their possession, such as their bag or car even when they are not in private as long as the cannabis is not used and not exposed to the public. The General Safety Regulations referred to above however state that no person at the workplace shall have in their possession any intoxicating liquor or drugs. Possession of cannabis should therefore be regulated in the employer’s policy in the same manner as provided for in the Regulations.


Conclusion

In light of the Constitutional Court judgment, cannabis use is likely to increase due to its new legal status and a corresponding change in societal norms. It is therefore important for employers to review their policies to ensure that they can adequately deal with intoxicated employees and comply with their obligations under the Act and Regulations. One of the biggest changes with regard to enforcing substance use policies will be with regard to testing. In the past the focus was on determining whether an employee is a user of cannabis and therefore urine, blood and hair follicle testing was appropriate. Now the focus is on whether the employee is intoxicated by cannabis at the workplace and therefore observational checklists need to be utilised as well as saliva tests in order to signal recent use.

BCHC: “A right to right a wrong?”

by Venolan Naidoo Senior Associate at BCHC and edited by Prof Darcy du Toit


Should an employer be liable to compensate an employee after it has attempted to remedy a wrong that was due to a mistake on the employer’s part?


From time to time, employers make mistakes (as opposed to deliberate acts) which infringe an employee’s rights under the Labour Relations Act of 1995 (the LRA) or other laws. But, if the employer is willing to remedy its mistake, will it remain liable to compensate the employee?

The question has arisen particularly in unfair dismissal disputes where employees refuse to accept the employer’s offer of remedial action but prefer to persist with their claims for compensation based on the employer’s mistake. The answers given by the courts in a number of leading cases are discussed below.


Johnson & Johnson (Pty) Ltd v Chemical Workers Industrial Union (CWIU).

The employer in this matter had dismissed 20 women workers due to operational requirements in terms of section 189 of the LRA. This was done after consultation with the workers’ union. However, the employer did not engage the union about selection criteria for the employees to be dismissed. Instead, only women were targeted because the employer assumed that they could not be offered alternative “male-type” jobs. The union then referred an unfair dismissal dispute on the basis there had been inadequate consultation.

However, four days after the decision to dismiss the employer realised its mistake and offered to re-employ the workers in alternative “male-type” jobs if they were willing and able to do them. The union did not respond and, although the offer was repeated at conciliation, there was again no response. Instead, the union referred the dispute to the Labour Court, which found that the dismissals had been procedurally unfair and ordered the employer to pay compensation.

On appeal, the Labour Appeal Court noted that the LRA does not require a mechanical “check-list” approach to determine whether section 189 had been complied with. The proper approach is to ascertain whether the purpose of the section – that is, a joint consensus-seeking process – has been achieved. Although the dismissals were procedurally unfair, the unfairness had lasted for only four days. To award compensation in such a case, the court held, “would be to reward the union and the employees for their unreasonable obstinacy, echoing their earlier refusal to discuss anything except the need to retrench”. The order of compensation was therefore set aside.


Mkhonto v B L Ford N.O & Others.

Again, the employee’s dismissal in this case was procedurally unfair. The employer then realised its mistake and offered the employee “unconditional reinstatement”. However, the employee refused the offer and referred an unfair dismissal dispute to the CCMA, where he obtained an order of compensation.

On review, this order was reversed. The Labour Court, noting that the employee was offered reinstatement (although she tried to deny it), found that her claim for compensation was insupportable. The employee then went on appeal. However, the LAC confirmed that her refusal to accept the offer of reinstatement was grossly unreasonable and upheld the judgment of the Labour Court. The court added:

“The appellant’s conduct in the litigation leaves much to be desired. Not only did she fail to proffer any reason for having refused the offer of reinstatement, but her evidence concerning the reinstatement offer, the only factual issue in the case, was patently false. I thus see no reason for interfering with the order of the court a quo that the appellant should pay the [employer’s] costs” (at para 12).


Kemp t/a Centralmed v Rawlins.

Once again, the employer had dismissed an employee for operational reasons without following procedure. The employee referred an unfair dismissal dispute to the CCMA. At conciliation, the employer offered to reinstate her or, alternatively, to pay a substantial amount in settlement. The employee rejected the offer, also when it was repeated a few days later, and instead referred an automatically unfair dismissal to the Labour Court. Again the employer repeated the offer of reinstatement, but to no avail.

The Labour Court found that her dismissal was both substantively and procedurally unfair and awarded her compensation equal to 12 months’ salary. The employer appealed. In its judgment, the Labour Appeal Court pointed out that, although every employee has the right not to be unfairly dismissed, the infringement of that right does not automatically entitle the employee to a remedy. On the question of compensation, the court explained the position as follows:

  • The LRA aims at striking a balance between the interests of employers and employees.
  • Once a finding is made that a dismissal is unfair, section 193(1) of the LRA states that an arbitrator or the Labour Court “may” order the employer to pay compensation.
  • This confirms that the arbitrator or court must exercise a discretion whether or not to order compensation.
  • This discretion must be exercised after considering all relevant factors (the court listed eight factors as important examples but emphasised that the list was not exhaustive). In contrast, section 194(1) of the LRA merely stipulates the maximum amount that may be ordered if compensation is awarded.

Applying this test, the Labour Appeal Court took into account all relevant factors, including the employer’s repeated offers of unconditional reinstatement and the employee’s rejection thereof. The rejection, it found, was based on the employee’s subjective belief that the employment relationship had broken down, but there was no evidence to support this belief. The court went on to hold that:

  • The employer had treated the employee unfairly in the manner of her dismissal but had a right to seek to correct the unfairness.
  • By refusing the employer’s offer of reinstatement, the employee undermined one of the primary objects of the LRA, namely the effective resolution of disputes.
  • If an employee fails to accept a genuine and reasonable offer of reinstatement for no valid reason, the employer has a strong case in support of an order denying the employee compensation.

The Labour Appeal Court therefore reversed the Labour Court’s decision and awarded the employee no compensation notwithstanding her unfair dismissal.


However….

It follows from what has been said that the employer’s offer must be “reasonable”; that is, it must offer substantial redress in relation to the wrong which the employee may have suffered. It must therefore not be arbitrary and should also not be conditional or “without prejudice”, unless conditionality can be objectively justified.

For example, an employee will be entitled to refuse an “ex gratia” payment in full and final settlement of an unfair dismissal claim if the court considers the offer to be inadequate.

The focus is on the reasonableness of the employee’s refusal of the employer’s offer. This means that the adequacy of the employer’s offer, given the unfairness of its conduct, will also come under scrutiny.


Conclusion

  • If an employee challenges a dismissal, the employer should not dig in its heels and prepare to fight it out. Rather, it should look carefully at its own actions in light of the requirements of the LRA – especially at the reason for dismissal and the procedure that was followed.
  • If it is reasonably possible that an arbitrator or court may find some substance in the employee’s complaint, it may be wise (if necessary after seeking legal advice) to offer to the employee to rectify the shortcoming as far as possible along the lines indicated in the cases discussed above.
  • The employer’s offer should be unconditional and reasonable in all the circumstances.
  • If the employee accepts reinstatement, the employer could at most be required to repeat the dismissal process in accordance with the LRA.
  • If the employee does not accept a reasonable offer, he/she will most probably forfeit the right to compensation.

Further case law

Other cases where employees had unreasonably refused employers’ offers to “right a wrong” include:

  • Burger v Alert Engine Parts (Pty) Ltd [1999] 1 BLLR 18 (LC) para 30
  • Fletcher v Elna Sewing Machine Centres Pty Ltd [2000] 3 BLLR 280 (LC) at para 43
  • La Vita v Boymans Clothiers (Pty) Ltd [2000] 10 BLLR 1179 (LC) at para 38
  • Maloba v Minaco Stone Germiston (Pty) Ltd [2000] 10 BLLR 1191 (LC) at para 42
  • Fourie v Iscor Ltd [2000] 11 BLLR 1269 (LC) para 10.7
  • Scholtz v Sacred Heart College [2001] 3 BLLR 368 (LC) paras 19-20
  • Technikon SA v Mojela & others [2003] 10 BLLR 1075 (LC) paras 22-24

Cases where it was found that employees had reasonably refused the employer’s offer include:

  • Scribante v Avgold Ltd (Hartebeesfontein Division) [2000] 11 BLLR 1342 (LC)
  • HM Liebowitz (Pty) Ltd t/a Auto Industrial Centre Group of Companies v Fernandes [2002] 4 BLLR 291 (LAC)

A victory of common sense over legalism – 20 September 2013

Note on the judgment of the Supreme Court of Appeal in CCMA v Law Society, Northern Provinces
(005/13) [2013] ZASCA 118 (20 September 2013)

 At the end of October 2012 the Gauteng North High Court handed down a judgment that caused some sensation in labour law circles: CCMA rule 25(1)(c), restricting the right to legal representation in arbitration hearings dealing with unfair dismissal based on conduct or capacity, was declared unconstitutional.

In the first place, Judge Tuchten found, the rule was “irrational” and “arbitrary” in singling out these two categories of dispute. Furthermore, it was found to be in conflict with section 3(3)(a) of the Promotion of Administrative Justice Act (PAJA), which states that an “administrator” [1] should have discretion to allow legal representation in “serious or complex” administrative proceedings.

Rule 25(1)(c)

What does rule 25(1)(c) say? First, it excludes legal representation in misconduct or incapacity cases. However, it gives a commissioner discretion to allow legal representations in two situations:

  • If the commissioner and all other parties consent; or
  • the commissioner concludes that it is unreasonable to expect a party to deal with the dispute without legal representation, after considering —

o   the nature of the questions of law raised by the dispute;

o   the complexity of the dispute;

o   the public interest; and

o   the comparative ability of the opposing parties or their representatives to deal with the dispute.

By providing only for the “complexity” of the dispute as a criterion, Judge Tuchten decided, Rule 25(1)(c) falls short of the standard set by section 3(3)(a) of PAJA, which states that the “seriousness” of the proceedings must also be a criterion; and is dismissal not always a “serious” matter for the employee?

Reasons for rule 25(1)(c)

In reaching his decision the judge was not impressed by the evidence of the Director of the CCMA, Nerine Kahn, explaining the reasons for rule 25(1)(c): in essence, the fact that some 80% of the CCMA’s caseload consists of misconduct and incapacity disputes, that these disputes normally turn on simple factual questions (e.g., did the employee do it or not?) rather than technical legal issues, and that part of the idea behind the CCMA was to give dismissed employees a quick and accessible way of challenging their dismissal if they believe it was unfair.

Nor was he impressed by the explanation provided in the Explanatory Memorandum that came with the first draft of the LRA in 1995:

“Lawyers make the process legalistic and expensive. They are also often responsible for delaying the proceedings due to their unavailability and the approach they adopt. Allowing legal representation places individual employees and small businesses at a disadvantage because of the cost. [2]

The appeal

Even though Judge Tuchten suspended the order of invalidity for 36 months to enable the parties to consider and promulgate a new sub rule, the implications were fairly obvious. Commissioners, knowing that sub rule 25(1)(c) had in principle been found invalid, would be less inclined to apply it and more inclined to allow applications for legal representation. This meant that the already overstretched resources of the CCMA would come under additional pressure as more and more dismissal and incapacity cases were argued by lawyers – at least, on behalf of employers and trade unions who can afford it.

So seriously did the CCMA view the situation that – apparently for the first time in its 17-year history – it took the matter on appeal to the Supreme Court of Appeal – where, in a unanimous judgment handed down on 20 September 2013, the order made by Judge Tuchten was set aside with costs.

The question of rationality

The SCA analysed all the issues that had been argued in the High Court and found, in essence, that the High Court had been incorrect in dismissing the rationale behind rule 25(1)(c). Far from being irrational and arbitrary, the SCA considered it to be well-founded and unassailable:

“The history of the subrule and the nature of the historical compromise reached show that the bulk of cases referred to the CCMA involve unfair dismissals for incapacity and misconduct. The legislature identified these matters as the appropriate category where the policy considerations underlying the need to exclude legal representation should find application. The courts cannot interfere with rational decisions that have been made lawfully on the ground that they consider a different decision preferable. [3]

Lawyers’ right to practise their profession

The SCA also dealt with the Law Society’s reliance on section 22 of the Constitution, which guarantees every citizen “the right to choose their trade, occupation or profession freely”. It noted that the Law Society’s attack on rule 25(1)(c) was not motivated by any alleged benefit that litigants (for whose protection legal representation is intended) would gain from an unlimited right to legal representation in dismissal matters. Indeed, it was found,

“there is not the slightest suggestion in its papers that the restriction on the right to legal representation causes hardship to or has operated to the prejudice of those affected by it. Nor is there any suggestion that the major parties concerned with labour disputes – employers’ organisations and trade unions – support the application of the Law Society. The sole concern of the Law Society in bringing this litigation is that the subrule denies work to its members. [4]

Because the sub-rule in no way restricts the right of entry to the legal profession, but merely limits the right of appearance in a particular forum (for good reason), this argument was dismissed.

Does PAJA apply to CCMA proceedings?

Perhaps most importantly, the SCA found that the application of section 3(3)(a) of PAJA to CCMA proceedings was misplaced. Even though CCMA proceedings might be classified as “administrative action”, it was pointed out, it does not follow that administrative action is regulated solely by PAJA. Other statutes, such as the LRA, may also provide for the conduct of specialised administrative proceedings within their area of application. Noting that the Constitutional Court had found that PAJA did not apply to review applications in terms of the LRA, since the LRA has created a “self-contained regime for reviews of arbitration awards”, [5] the SCA found that the LRA had equally created a “separate regime… for the fair conduct of arbitrations by the CCMA”.  [6]   PAJA can therefore not overrule the provisions of the LRA, including rule 25(1)(c), in this regard.

To this it could be added that section 210 of the LRA provides, in cases of conflict between the LRA and other legislation “relating to the matters dealt with in this Act”, that the provisions of the LRA must prevail. It can be argued that on this basis the rules drawn up by the CCMA in terms of the LRA should trump competing provisions in other legislation.

Conclusion

The judgment of the SCA may be seen as a victory for common sense and the idea of a fair and user-friendly labour law dispensation which the LRA set out to implement. It is painfully obvious that this ideal has by no means been achieved yet and that there are many shortcomings in the framework as well as the application of the LRA (some of which are addressed by the Labour Relations Amendment Bill of 2012, currently before the National Chamber of Provinces). [7]  But a judgment such as this is an encouraging sign that the second-highest court in the land is well aware of the special nature and challenges of labour dispute resolution which will hopefully send a message to all lower courts and tribunals to avoid excessive legalism when dealing with employment disputes.

[1] I.e., a commissioner. The Constitutional Court has decided that, since the CCMA is not a court of law, decisions of CCMA commissioners amount to “administrative action”: Sidumo v Rustenburg Platinum Mines Ltd [2007] 12 BLLR 1097 (CC).

[2] Published in (1995) 16 Industrial Law Journal at p 319.

[3] Paragraph 22 of the judgment.

[4] Paragraph 3 of the judgment.

[5] Sidumo & another v Rustenburg Platinum Mines Ltd & others 2008 (2) SA 24 (CC).

[6] Paragraph 20 of the judgment.

[7] Interestingly, the Bill reinforces section 115(2A)(k) of the LRA, in terms of which rule 25(1)(c) was drafted, by expressly authorising the CCMA to make rules for “the regulation or limitation of the right to be represented” in arbitration proceedings.

Rethinking the meaning of ‘benefit’ – what does it mean?

Note on Apollo Tyres South Africa (Pty) Ltd v CCMA and others [2013] 5 BLLR 434 (LAC); (2013) 34 ILJ 1120 (LAC)

“Lawyers make the process legalistic and expensive. They are also often responsible for delaying the proceedings due to their unavailability and the approach they adopt. Allowing legal representation places individual employees and small businesses at a disadvantage because of the cost.

The background

In 2008, faced with a drop in business, Apollo Tyres (“the employer”) announced a scheme to reduce staff: monthly-paid staff between the ages of 46 and 59 could apply for early retirement. It meant that successful applicants would get  two months’ pay in addition to normal retirement benefits plus an ex gratia payment depending on their age. However, entry into the scheme was subject to management’s discretion.

Mrs Hoosen (“the employee”), who was 49 years of age and had been with the company for 24 years, applied for the package. Her application was rejected. She wanted to know the reasons. After being referred back and forth from one manager to another she was informed, amongst other things, that employees had to be 55 years of age to qualify for the scheme.

By this time the employee had already handed in her notice.  An attempt to appeal against the employer’s decision had failed. She then referred an unfair labour practice to the CCMA, alleging unfair conduct by the employer relating to benefits. In his judgment Acting Justice of Appeal Musi sums up what happened next:

“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” (para 62 of judgment).


The central issue

The case raised a number of legal issues. The central issue, however, turned out to be that of jurisdiction. At the arbitration the employer argued that the early retirement package was not a “benefit” and, therefore, the CCMA did not have jurisdiction. The Commissioner rejected that argument and ruled in favour of the employee. The employer then took the award on review, but the Labour Court upheld the award. Undeterred, the employer appealed to the Labour Appeal Court on the issue “whether the early retirement scheme… for which Hoosen applied and was refused entry, constituted a benefit as contemplated in s 186(2) of the Labour Relations Act” (para 18 of judgment).

The employer had strong authority to support its argument. In the leading case of HOSPERSA & another v Northern Cape Provincial Administration (2000) 21 ILJ 1066 (LAC) the Labour Appeal Court had ruled that the term “benefit” was limited to benefits to which an employee is entitled as of right, either in terms of a contract of employment or a collective agreement or in terms of legislation. The provision in section 186(2)(a) was therefore limited to unfair conduct by an employer in the way that such rights were implemented.

On this approach Mrs Hoosen’s claim would have to fail because she had no contractual right to early retirement benefits.  For the same reason she could bring no civil claim. It meant that the employer could do more or less what it pleased without regard to “fairness”.

Importantly, the court in HOSPERSA and most other cases also accepted that “benefit” is something different from “remuneration”. This means that claims relating to remuneration are by definition excluded from section 186(2)(a), even though the distinction between “remuneration” and “benefit” was not always easy to explain.

However, there was also authority suggesting something different. In Department of Justice v CCMA & others (2004) 25 ILJ 248 (LAC) it was held that the unfair labour practice provision places a duty on an employer not to act unfairly towards an employee in relation to the listed matters, including the provision of benefits.  In other words, the employer is not required to act fairly only in relation to rights which the employee already has.  But, since the matter dealt with promotion, the court was not called upon to consider the distinction between “remuneration” and “benefit”.

After carefully considering the issue, Acting Justice Musi on behalf of a unanimous court found that HOSPERSA (and judgments that followed it) had been wrongly decided and that the notion of “benefit” was broad enough to cover legal entitlements as well as benefits to which an employee is not entitled as of right; for example, discretionary benefits. This confirmed the approach adopted in Department of Justice v CCMA (above).

However, the court went on to reconsider the distinction between “remuneration” and “benefit”, and did so in a way which has important practical implications.


A ‘contractual’ remedy in the CCMA?

It has generally been assumed that the CCMA has no jurisdiction to arbitrate claims based on breach of the employment contract. This is so partly because the Labour Court is expressly given jurisdiction to do so and the CCMA is not.  But it is also bound up with protection of the right to strike: since the right to strike is excluded over disputes which can be referred to arbitration, and since the CCMA has jurisdiction to arbitrate disputes about “benefits”, it was assumed that “remuneration” had to be kept separate from “benefits” in order not to limit the right to strike over claims regarding “remuneration”(i.e., wage claims).

The Labour Appeal Court in Apollo seems to have turned both these propositions on their head.  Acting Justice Musi described the distinction between remuneration and benefits as “artificial and unsustainable”.  “Remuneration”, he noted, is defined in the LRA as “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 this definition, the court concluded, “is wide enough to include wages, salaries and most, if not all extras or benefits” (at para 25 of the judgment).

This has critical implications.  If wages and salaries are “benefits”, then any “unfair conduct” by the employer relating to the “provision” of wages and salaries can be challenged in the CCMA in terms of section 186(2)(a). This could include situations such as the following:

  • Failure by the employer to give a wage increase that is contractually due (i.e., breach of contract);
  • Failure by the employer to give a wage increase that is reasonably expected;
  • Unfairly making deductions from wages, even where employees have consented to those deductions – for example, where one employee is exempted and another is not;
  • A unilateral pay cut by the employer (also breach of contract); or
  • “Underpayment”, e.g. by requiring an employee to perform duties beyond her job description and not paying her for it (again breach of contract).

It remains to be seen how cases of this nature, if and when they reach the CCMA, will be dealt with. What is clear, however, is that the existence of a contractual remedy does not exclude the operation of section 186(2)(a). In fact, there is much to be said for enabling employees to refer disputes such as those mentioned to the CCMA even if the “unfair” conduct amounts to breach of contract. This is so because very few employees could afford to pursue a claim in the High Court, the Labour Court or even the Magistrate’s Court to claim contractual damages. Leaving them with only a contractual remedy may amount to leaving them with no remedy at all.

Referring such a claim to the CCMA, moreover, would not only be affordable; the LRA also provides scope for a much more flexible remedy based on the facts of the case, including compensation that is “just and equitable in all the circumstances, but not more than the equivalent of 12 months remuneration” (section 194(4)).


What about the right to strike?

The Labour Appeal Court also considered the argument that a broader definition of “benefit” would limit the right to strike and showed that it is groundless. This is so because disputes can in many cases legitimately (as opposed to artificially) be categorised in different ways. Acting Justice Musi referred with approval to the reasoning of the Labour Court in an earlier decision:

“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” (paragraph 28 of the judgment).

Thus, the mere fact that a dispute relating (say) to a wage cut could bereferred as an unfair labour practice dispute does not mean that it may only be referred as such and, therefore, that the right to strike is excluded. It will be open to a trade union to decide whether to refer it as a straightforward dispute of mutual interest which, if conciliation fails, would entitle the union to issue a strike notice and embark on industrial action. Alternatively, the trade union may refer it as an unfair labour practice dispute on the basis that the employer acted unfairly with regard to benefits (by unfairly reducing remuneration).  If conciliation fails, the union’s claim would be arbitrated on its merits.

(Similarly, in disputes about organisational rights, unions have a choice between industrial action and the arbitration route.)

This also does not take away the right of the affected employees to sue the employer for breach of contract, though in practice this is unlikely.

As for the Apollo matter, the court found not only that the CCMA had jurisdiction to arbitrate the dispute but that Mrs Hoosen had been treated unfairly and was entitled to the benefit of the early retirement scheme. The employer was accordingly order to pay her two months’ salary plus the ex gratia payment in an amount of R123,637.22.

Darcy du Toit