CCMAil
Revolutionising Workplace Relations
APRIL 2012
TABLE OF CONTENTS
CCMA ARBITRATION AWARDS………………………………………………................................................2
FS3963 -11 Ramotsabi v Qwa Qwa United Taxi Association: - Independent Contractor
GAEK5577-10 Daniel v Hewlett Packard SA (Pty) Ltd – Payment and benefits
GAJB3050 -11 Mott v First Road Emergency Services (Pty) Ltd – Refusal to accept demotion
GAEK4992 -11Solidarity obo Mohammed v Air Traffic and Navigation Services Ltd - Double Jeopardy
LC AND LABOUR APPEAL COURT JUDGMENTS .................................................................................4
P529/2009 Department of Correctional Servises v General Public Service Sectoral Bargaining Council - Absenteeism
CW 3/2003 Gios t/a Shakespear's Pub v van Zyl & Others - Rescission
JA71/2011 BMW SA (Pty) Ltd v National Union of Metal Workers of South Africa obo Members - Strike provisions
JA38/2010 University of Pretoria v CCMA & Others - Non-renewal of fixed term contract
DECISIONS: OTHER DISPUTE RESOLUTION FORUMS ........................................................................9
A237/2010 Nxoko v The State - Theft conviction and sentence
231/2009 Herselman v Geleba - Unfair discrimination
CCT08/11 Aviation Union of South Africa & Another v South African Airways (Pty) Ltd & Others - Transfer of business
289/10 Confederation of South African Workers Union v NEDLAC & Others - Application for NEDLAC membership
AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION (AIRC) ........................................................13
C2012/2265 Endeavour Coal Pty Ltd v ASPESMA (Collieries’ Staff Division) - Appeal against decision to make bargaining
order
U2011/12936) Wojcik v Metropolitan Express Transport Service Pty Ltd - Application for unfair dismissal remedy
(B2012/641) Construction, FMEU v Brookfield Multiplex Constructions (Pty) Ltd – Application for protected action ballot
order
(U2011/13024) Leevan Harvey v UES (Int’l) Pty Ltd – Termination of employment – Employee job redundant
LABOUR WATCH .................................................................................................................................17
New amendments on the Labour Relations Act and Basic Conditions of Employment Act
Does inlflation rate influence determination of increase in the labour market?
Collective bargaining and disputes resolution in Southern Africa Develpment Countries
INTERNATIONAL LABOUR MARKET...............................................................................................
China: from an active employment promotion law. Coping with economic restructuring labour market and adjustment
LABOUR RELATIONS IN AFRICA .......................................................................................................31
Effects of utility price increase on a macro and micro level
EDITORIAL TEAM
Alucia Mdaka
Boitumelo Rakau
Keleabetswe Morobane
Nersan Govender
Samuel Denga
April 2012 – Page 1
The CCMAil is distributed quarterly. If you would like to make a contribution, subscribe or have any comments, e-mail HO@CCMA.org.za
CCMA ARBITRATION AWARDS
CASE ALERTS
By Alucia Mdaka
FS3963-11 Ramotsabi v Qwa Qwa United Taxi Association:
Commissioner van Aarde
Applicant claimed unfair dismissal – Working relationships ––
Not employee of taxi owner or taxi association – Independent
contractor.
After working for 16 years as a Rank Marshal for the
respondent and another Taxi Association with which the
respondent had merged, the applicant referred a dispute to the
CCMA, wherein he claimed he that had been “verbally
dismissed”. He claimed to have been dismissed by the
respondent upon his return from leave after attending his
grandfather’s funeral. He indicated that the respondent told him
that there was no longer a job for him.
The respondent raised a point in limine arguing that it had no
employment relationship with the applicant. Therefore, it had
not in any event dismissed the applicant. The respondent
claimed that the applicant acted independently; by calling
passengers to the various taxis, he was paid by the drivers a
daily fee, neither by the owners of the taxis nor by the Taxi
Association. Furthermore, he appeared nowhere on its
records/payroll.
Noted: That the referring party had to prove that:


There exists an employer/employee relationship, and
The existence of the dismissal.
Also noted: That the applicant had conceded that he did not
report to anyone nor signed any attendance register when he
report for his duty. When he arrived at the rank he just called
passengers to the taxis. He also conceded being paid a daily
fee by the drivers. Furthermore, he did not know any of the
officials who attended the proceedings on behalf of the
respondent nor did the applicant appear on the employment
records/payroll of the said Taxi Association.
Held: That there was no evidence that indicated that the
applicant was employed or dismissed by the respondent. The
applicant acted as an independent contractor within the context
of s 213 of the Labour Relations Act 66 of 1995 (LRA).
Therefore, the application was dismissed.
GAEK5577-10 Daniel v Hewlett Packard SA (Pty) Ltd –
Commissioner Mac Gregor
Grievance (residual) unfair labour practice – Payment and
benefits – Applicant signed contract and later claimed reduction
of retirement age constituted unfair labour practice – Did not
sign under duress – No unilateral change of conditions of
employment – Applicant not entitled to claim new benefit.
Practice and procedure – Terms of reference/jurisdiction –
Applicant CCMA sought to vary contract – Can only be
achieved through negotiation and application of bargaining
power - CCMA lacked jurisdiction – Case dismissed.
After being transferred to the respondent in terms of s 197 of
the LRA, the applicant signed a contract of employment which
provided that his retirement age would be 60, as opposed to the
retirement age of 65 that had been set by his previous
employer. The applicant contended that the lowering of his
retirement age had constituted an unfair labour practice relating
to the provision of a benefit because the respondent had
withheld critical information from him regarding the implications
of the contract, and had also not lowered the retirement age of
some of his colleagues. The respondent contended that the
CCMA lacked jurisdiction to entertain the dispute because the
applicant was bound by the contract he had signed.
Noted: That although employees are subject to a transfer of
business as a going concern to the new employer on the same
terms and conditions of employment, in this case the
respondent had altered the retirement age of transferred
employees after extensive consultation. Since the applicant had
signed the contract without duress, it could not be said that the
change constituted a unilateral change to terms and conditions
of employment.
Held: That an unfair labour practice claims could not be used
by employees seeking to obtain new benefits. Since the
applicant had agreed to the lower retirement age, he sought to
obtain a new benefit to which he was not entitled to.
Also held: That the CCMA lacked jurisdiction to entertain the
matter. The application was dismissed.
Case reference
Protekon (Pty) Ltd v CCMA & Others (2005) 7 BLLR 703 (LC)
April 2012 – Page 2
The CCMAil is distributed quarterly. If you would like to make a contribution, subscribe or have any comments, e-mail HO@CCMA.org.za
GAJB3050-11 Mott v First Road Emergency Services (Pty)
Ltd – Commissioner Boyce
Procedural fairness in dismissal – Dismissal or resignation –
Applicant employee refused to accept demotion after breaching
company rules – Told to resign or face dismissal – Did not
constitute dismissal in terms of s186(1)(a) of LRA – Failed to
prove respondent terminated contract of employment –
Application dismissed.
GAEK4992-11 Solidarity obo Mohammed v Air Traffic and
Navigation Services Ltd: Commissioner Mac Gregor
Procedural fairness in dismissal – Double jeopardy – Applicant
issued with final written warning and made to repay loss
resulted from banking error – Double jeopardy rule not
applicable – Repayment did not constitute a sanction –
Applicant grossly negligent – No unfair labour practice Application dismissed.
The applicant, employed as a “guardian angel” to offer roadside
assistance to the respondent’s clients, was instructed just
before knock off time to fetch a director’s keys from his home.
The applicant’s wife accompanied him on the trip, from which
they returned after midnight. The following day, the applicant
was accused of breaching company rules by conveying a
passenger. He was then instructed to assume duties as a tow
truck driver. When he refused to accept the transfer, the
applicant was told by the logistics manager that if he did not do
so he must resign or face dismissal. The applicant contacted
his legal assistance, who advised him to ask the respondent for
a letter of dismissal. Without having received such a letter, the
applicant had referred an unfair dismissal dispute to the CCMA.
The applicant employee, a senior financial manager, was
issued with a final written warning after erroneously transferring
R4m of pension fund money into an incorrect account. He was
also made to repay the R7 000 in interest that had been lost as
a result of the error. He claimed that he had been subjected to
double jeopardy and that the sanction was inconsistent
because the Chief Financial Officer (CFO) had not been
disciplined. He claimed that his disciplinary hearing was unfair
because the CFO had acted as both the initiator and a witness.
He sought to have the sanctions imposed upon him revoked.
The respondent denied that the applicant had been dismissed.
It contended that it had a received a call from the applicant
requesting a dismissal letter as he wanted to claim
Unemployment Insurance Fund. The applicant was then
informed to report for work, but he had not done so.
Held: That there was no evidence to prove that the logistics
manager was authorised to dismiss the respondent’s
employees. To tell an employee that he must resign or face a
disciplinary hearing did not constitute the termination of a
contract of employment with or without notice. The logistic
manager had testified that all he had told the applicant was that
he would drive a tow truck until a disciplinary hearing could be
finalised. The commissioner held that the applicant had failed to
prove that he had been dismissed.
The respondent argued that the applicant’s disciplinary hearing
had been chaired according to the company’s disciplinary code
and that he had been afforded an opportunity to state his case.
It contended that the applicant had acknowledged the penalty
imposed to him and agreed to pay this money back in terms of
the prescripts of the Public Finance Management Act 1 of 1999.
Held: That the commissioner found that the employee had
been grossly negligent and that a final warning was a
reasonable penalty in the circumstances. The inconsistency
argument was rejected because the CFO had, on discovering
the error, taken immediate steps to correct it. Furthermore, the
reclaiming of the money was not part of the disciplinary
process, and did not constitute a sanction. Therefore, the
double jeopardy principle did not apply. In any event, the
applicant had agreed without protest to sign an
acknowledgement of debt. The application was dismissed.
April 2012 – Page 3
LABOUR COURT AND LABOUR
APPEAL COURT JUDGMENTS
By Boitumelo Rakau
Labour Court P 529/2009
Department of Correctional Services v General Public
Service Sectoral Bargaining Council (GPSSBC) & Others
Acting Judge Shai
Respondent absent for more than 30 consecutive days Without notifying applicant - Clause 9.1 of Resolution 1 of 2006
- Deemed dismissal - Clause in resolution not applicable.
The applicant sought to review and set aside the arbitration
award issued by the respondent’s representative, the GPSSBC,
as it considered it both procedurally and substantively unfair.
The respondent employee was employed as a Correctional
Officer when he was dismissed ex lege in accordance with
clause 9.1 of Resolution 1 of 2006, which applied to the
Correctional Services. The clause makes it explicit that it should
come into effect should a respondent employee be absent from
work for 30 consecutive days without permission or without
advising the applicant. The respondent employee challenged
the fairness of his dismissal after his appeal against the
dismissal had been dismissed. Therefore, it ordered that he be
reinstated with back pay. The applicant contended that the
award issued by the respondent’s representative did not
account for the fact that the respondent’s dismissal was ex lege
and not in terms of the Labour Relations Act 66 of 1995 (LRA).
In his defence the respondent employee submitted that he had
been absent from work due to an illness and had submitted sick
leave application forms to the applicant, which the applicant had
not processed. He also contended that the applicant had known
of his whereabouts, as officials came to his house on 31 August
2007 to discuss contents of his sick leave application forms.
Noted: That in order to determine if the arbitrator had
committed a gross irregularity by not applying his mind to the
matter, the Court made reference to the test for review of the
arbitration award. The Court then considered whether
Resolution 1 provided for the termination ex lege or not and
whether in this circumstance the respondent had triggered the
operation of the termination ex lege. The Court made reference
to an authority within which similar provision was considered in
the Employment of Educators Act 76 of 1998 (Employment of
Educators Act) and concluded that Resolution 1 did not concern
a dismissal within the meaning of the LRA, but it was instead a
termination by the operation of law. The court attested that this
measure should not be resorted to lightly as it was only a
measure reserved for distinct cases. However, the Court drew
attention to a difference between the two statutory provisions;
the Employment of Educators Act considers the factors that
trigger a termination ex lege as an employee’s absence from
work for a period exceeding 14 consecutive days without the
permission of the employer. The Resolution 1 considers that the
absence from work should be for 30 consecutive days without
permission or without notifying the applicant. That the
respondent employee had notified the applicant of his absence,
both through submitting medical certificates and sick leave
application forms for temporary incapacity. The respondent
employee’s witness testified that the respondent employee’s
absence had been recorded as a leave of temporary incapacity
on the department's system. Thus, the arbitrator’s ruling was
substantively fair.
Held: That the above constituted sufficient “notice” in the
context of Resolution 1. Thus, the resolution did not apply to the
circumstances of the respondent employee and the arbitrator
did have the jurisdiction to determine the matter within which the
procedural elements were satisfied.
Also held: That after other grounds of review had been
considered it was found that the arbitrator had reached a
conclusion that a reasonable decision maker would have
reached. The matter was dismissed.
Case references
Director-General: Office of the Premier of the Western Cape &
Another v SA Medical Association obo Broens & Others (2011)
32 ILJ 1077 (LC)
Ellis v Morgan & Desai 1909 TS 576
Free State Provincial Government (Department of Agriculture) v
Maeke NO & Others (2006) 27 ILJ 1845 (LC)
Goldfields Investment Ltd & Another v City Council of
Johannesburg & Another 1938 TPD 551
HOSPERSA & Another v MEC for Health (2003) 24 ILJ 2320
(LC)
Maidi v MEC for Department of Education & Others (2003) 24
ILJ 1552 (LC)
MEC for Education & Culture v Mabika & Others (2005) 26 ILJ
2368 (LC)
Melane v Santam Insurance Co Ltd 1962 (4) SA 531 (A)
April 2012 – Page 4
Minister van Onderwys & Kultuur & Andere v Louw 1995 (4) SA
383 (A)
Phenithi v Minister of Education & Others 2008 (1) SA 420
(SCA)
Public Servants Association of SA obo Van der Walt v Minister
of Public Enterprises & Another (2010) 31 ILJ 420 (LC)
Republican Press (Pty) Ltd v Chemical Energy Paper Printing
Wood & Allied Workers Union & Others 2008 (1) SA 404 (SCA)
Sidumo & Another v Rustenburg Platinum Mines Ltd & Others
2008 (2) SA 24 (CC)
Southern Sun Hotel Interests (Pty) Ltd v Commission for
Conciliation, Mediation & Arbitration & Others (2010) 31 ILJ 452
(LC)
Labour Court CW 3/2003
Gois T/A Shakespeare's Pub v Van Zyl & Others: Judge
Waglay
Arbitration award by commissioner - Rescission - Jurisdiction –
LRA.
The applicant sought an order from the LC under the following
terms:
(a) That the decision of the second respondent (CCMA
Arbitrator), in terms of which he determined that the third
respondent (CCMA) had no jurisdiction to hear the rescission
application, be reviewed, set aside and corrected.
(b) That the first (Former employee), second and third
respondents be ordered to pay the costs on a punitive scale,
jointly and severally.
The first respondent was dismissed, following which he referred
a case to the third respondent and subsequently obtained an
award in his favour. The first respondent then applied to have
the award certified in terms of s 143(3) of the LRA. The award
was certified and pursuant thereto a writ of execution was
issued by this court on 31 March 2003. The applicant alleged
that it was totally unaware of all of the above mentioned
proceedings and only became aware on 13 June 2003 when the
fourth respondent (the Sheriff) served it with the writ of
execution. The applicant also contended that it had not had
physical possession of the original arbitration award. Thus, in
order to attend to the urgent matter, the applicant filed an
application for the rescission of the award. On 12 August 2003,
the applicant was advised that according to the third
respondent, it lacked jurisdiction to over applications for
rescission of awards certified in terms of s 143(3) of the LRA.
On 14 August 2003, the applicant through his attorneys sent a
detailed letter to the third respondent explaining why it thought
the third respondent’s decision was erroneous. The second
respondent, the Convening Senior Commissioner, responded
telephonically to the applicant's representation by stating that he
was bound to the view that the third respondent could not
arbitrate such cases. On the same day, the first respondent
indicated to the applicant's attorneys that he intended to
proceed with the immediate execution of the award, despite
being advised that his actions would necessitate an application
to this Court and may carry cost consequences.
The second respondent provided written reasons for his ruling
to the effect that the third respondent did not have jurisdiction
over the matter, these were summarised as follows:
(a) The applicant had failed to file his application for the
rescission of the award within the period prescribed within the
CCMA’s rules and had failed to make an application for
condonation.
(b) The award was certified in terms of s143 (3) of the LRA.
Thus, the certification of the award had the effect that the award
became an order of the LC and the third respondent could not
consider the application for rescission of the award.
(c) The third respondent would not consider the application
for rescission unless and until the applicant successfully applied
to the LC to have the certification of the award and the writ of
execution set aside.
The question of whether or not the third respondent has
jurisdiction to hear the rescission application is entirely one of
statutory interpretation. Section 144 of the LRA, as stated
earlier, provides that the Commissioner appointed by the
Director of the third respondent, for that purpose, may “mero
motu” or on application by any affected party, rescind the
award. Here the second respondent ruled that the award is not
an award within the meaning of s 144. Prior to the Labour
Relations Amendment Act 12 of 2002 (the Amendment Act), an
arbitration award, although final and binding on the parties, was
not capable of being executed upon in the event of noncompliance therewith. However, s32 of the Amendment Act has
now added a procedure by which the third respondent's
arbitration awards may be enforced. A party seeking to execute
an award does not have to apply to this Court to make the
award an order of court, but may apply to have the award
certified by the director of the third respondent under s143(3) of
the LRA. Once the award is certified, the award can be enforced
'as if it were' an order of the LC. The second respondent's
ruling on jurisdiction was premised on the supposition that the
reference to an 'arbitration award' in s144 of the Act did not
include an award that has been certified in terms of s 143(3) of
the LRA. However, there was no basis for this conclusion to be
found anywhere within the provisions of the LRA. The third
respondent's reliance on s143 (1) of the LRA, which provides
that arbitration awards “may be enforced as if it were an order of
the LC” is misconceived and incredulous. If the third respondent
had considered the reasons for the amendments to the LRA, it
would have realized that the purpose of the amended s 143 of
the LRA was to simplify the process of executing CCMA
awards. There is simply no basis for second respondent's
finding that the certification of an award must be set aside by
this Court before a s144 application will be considered by the
third respondent.
Noted: That the second respondent's ruling was based on a
fundamental error in reasoning, which is a failure to appreciate
that the manner in which an award is enforced is legally distinct
from the process by which the underlying cause is determined
and/or challenged.
April 2012 – Page 5
Upon considering the issue of condonation, the second
respondent also ruled that the application for rescission could
not be decided over since it was filed late and the applicant had
not filed an application for condonation. The second respondent
further held that the third respondent would not be in a position
to hear the rescission application in the absence of an order
from this court compelling it to allow applicant to file an
application for condonation.
Also noted: That the applicant was not given an opportunity to
state his case regarding the alleged lateness of the rescission
application or the need to apply for condonation prior to the
ruling being made. Furthermore, according to the applicant's
papers, it was clear that the he considered that his application
for rescission was filed timeously.
Further noted: That the second respondent's opinion that the
rescission application was filed late or not cannot in itself
constitute a hindrance to hearing of the matter by the third
respondent. Thus, the issue of lateness and/or condonation
should have been resolved at the outset of the hearing of a
rescission application.
When considering the applicant’s plight for costs, the Court
considered s162 of the LRA, which regulates the circumstances
in which this Court will award costs to a litigant. The Court may
order costs within which regard must have been considered for
the fact that;
"costs are awarded to a successful party in order to indemnify
him for the expense to which he has been put through having
been unjustly compelled either to initiate or defend litigation as
the case may be" . . . then it is clear that the unjust conduct of a
party compelling the other party to initiate proceeding is most
certainly a factor which may be penalized with an appropriate
cost order” (Director General of the Cape Provincial
Administration v National Education Health & Allied Workers
Union and Others (1995) 16 ILJ 233 (IC))
Held: That after considering all the above recorded reasons the
decision/ruling handed down by the second respondent is liable
to be reviewed and set aside. The first, second and third
respondents were ordered to pay the applicant's costs.
Case references
Call guard Security Services (Pty) Ltd v Transport & General
Workers Union (1997) 18 ILJ 380 (LC)
Director General of the Cape Provincial Administration v
National Education Health and Allied Workers Union and Others
(1995) 16 ILJ 233 (IC)
Erasmus v Sentraalwes Koöperasie Bpk (1997) 4 All SA 303
(O)
Le Roux v Yskor Landgoed (Edms) Bpk en Andere 1984 (4) SA
252 (T)
Road Accident Fund v Strydom2001 (1) SA 292 (C)
Strime v Strime1983 (4) SA 850 (C)
Labour Appeal Court JA71/2011
BMW SA (Pty) Ltd v National Union of Metalworkers of SA
Obo members: Judges Waglay, Jappie & Landman
Collective agreement – Transport allowance – Strike provisions
– Facilitation failed – Certificate of outcome – Application
dismissed.
The parties entered into a collective agreement which
prescribed the wages and conditions of employment of all
hourly remunerated employees within the Automobile
Manufacturing Industry. In clause A.8.3 of the agreement, the
parties undertook not to make any further demands for the
duration of the agreement, “in respect of substantive wage
and/or benefit on-cost items”. However, provision was made for
the parties to raise proposals on substantive and/or benefit
items which could result in further costs not previously covered
within the agreement; provided such interactions took place “in
a collaborative manner and without coercion”. In July 2011 the
respondent submitted a demand regarding an additional
payment of R3, 500.00 per month towards transport allowance
for all hourly paid employees. According to the applicant, this
was impermissible in terms of the collective agreement and the
request was rejected. That was when the respondent referred a
matter to the CCMA prior to strike action. However, the
applicant contended that the CCMA lacked jurisdiction to hear
the matter. That was when the respondent clarified that it in fact
did have jurisdiction since the request for the allocation of
transport for hourly remunerated employees was similar to one
that could have been lodged for monthly salaried employees.
The parties then agreed on 16 September 2011 to extend the
30-day period for the CCMA to issue a certificate of outcome on
the basis that the parties would engage in a facilitation process
in accordance with clause 8.3 of the collective agreement.
On 30 September 2011, the respondent proposed possible
facilitators for the process, but the applicant did not respond to
the tabled suggestions. The respondent subsequently applied
for a certificate of non-resolution from the CCMA and gave
notice of its intention to embark on a strike. That led the
applicant to the LC where it sought an interim interdict in order
to prevent the respondent from instigating a strike. The LC
found that the true nature of the dispute as clarified did not fall
foul of s 65 of the LRA, nor was it in conflict with clause 8.3 of
the collective agreement. Thus, the application was dismissed.
Noted: That although the collective agreement did not regulate
transport allowances for specifically hourly paid employees, it
was silent on the matter.
Judge Landman noted the substantial difference between the
respondent’s original demand and its current demand. He was
satisfied that the clarified demand was not regulated by the
opening paragraph of clause 8.3. He then considered whether if
the parties had failed to comply with the procedures laid down in
clause 8.3, which would defeat the respondent’s right to strike
should it have complied with the procedure prescribed by s 64
of the LRA. Following the decision of the Labour Appeal Court
in County Fair Foods (Pty) Ltd v Food & Allied Workers Union &
others(2001) 22 ILJ 1103 (LAC) the judge found that the
April 2012 – Page 6
legislature had given the parties a choice of either following a
pre-strike procedure contained in a collective agreement or
following the statutory procedure in s 64(1). Therefore, Judge
Landman proposed that the appeal be dismissed as the
respondent would be entitled to strike should the parties be
unable to reach an agreement. The applicant had failed to make
out a prima facie case and was not entitled to an interim
interdict.
Also noted: That where parties had concluded an agreement
which did not deny any of the parties the rights and obligations
provided in the LRA there was no reason why that agreement
could not be enforced. The LRA sought to promote collective
bargaining, particularly at the sectoral level and gave primacy to
collective agreements. Considering this matter, the parties had
agreed at the CCMA to give effect to clause 8.3, which sought
to compel negotiations and consultation in good faith.
Further noted: That the applicant showed no genuine desire to
engage with the respondent, or be party to the agreed
facilitation process, the lack of progress was due entirely to the
applicant’s failure to comply.
Held: That after considering the wording of clause 8.3 the
majority of the Court agreed with the proposed order of Judge
Landman, but found that the union was obliged to follow the
procedures in clause 8.3 and was not entitled to strike so long
as it did so in compliance with the provisions of the LRA. Thus,
the appeal was dismissed with costs.
Case references
Bombardier Transportation (Pty) Ltd v Mtiya NO & Others
(2010) 31 ILJ 2065 (LC)
Coin Security Group (Pty) Ltd v Adams & Others (2000) 21 ILJ
924 (LAC)
County Fair Foods (Pty) Ltd v Food & Allied Workers Union &
Others (2001) 22 ILJ 1103 (LAC)
Gillet Exhaust Technology (Pty) Ltd t/a Tennaco v National
Union of Metalworkers of SA obo Members & Another (2010) 31
ILJ 2552 (LAC)
Labour Appeal Court JA38/2010
University of Pretoria v Commission for Conciliation,
Mediation and Arbitration & Others: Judges Davis, Ndlovu
& Mocumie.
Fixed-term contract of employment – Failure to renew –
Reasonable expectation of permanent employment – Not
envisaged by s 186(1) (b) of LRA – Dismissal.
The third respondent was employed in terms of seven
successive fixed-term contracts. She then applied for one of
several permanent positions, but was unsuccessful. Instead she
was offered a further fixed-term contract, which she rejected as
she had a reasonable expectation to be appointed on a
permanent basis. When the latter did not formalise, she referred
a case to the CCMA under s186 (1) (b) of the LRA. The
applicant appealed and sought an order declaring that the third
respondent had not been dismissed and that the CCMA had no
jurisdiction to hear the matter.
The second respondents, the CCMA commissioner and the LC,
accepted the third respondent’s contention that she had indeed
been dismissed. On appeal the LAC noted that the facts were
essentially common cause and that the critical question raised
was whether a reasonable expectation of indefinite employment
met the requirements of s186(1)(b). The applicant’s
representative submitted that s186 (1)(b) indicated that there
could only be a dismissal if the employee “reasonably expected
the employer to renew the fixed term contract on the same or
similar terms”. The following transcript was submitted, within
which an offer for a further fixed-term contract on improved
conditions. This was confirmed by third respondent.
“Kommisaris: Ek wil net weet die pos wat aangebied
was, was dit inderdaad op dieselfde terme ...
Mej J Geldenhuys: Dit was...
Kommisaris : ... as wat u voorheen gehad het?
Mej J Geldenhuys : ... baie skielik op beter terme
Kommisaris : Sê weer?
Mej J Geldenhuys: Dit was baie skielik op beter terme.
Ja, um, my kontrak was...
Kommisaris : Jy sê skielik?
Mej J Geldenhuys: Ja, my kontrak was 7 keer hernu
op dieselfde...
Kommisaris: Ja.
Mej J Geldenhuys... terme en toe die 8ste keer was dit
op beter terme um, heeltemal...
Kommisaris: Was dit inderdaad beter terme?
Mej J Geldenhuy: Ja, heeltemal beter terme wat buite
die...
Kommissaris: Was hierdie laaste keer wat hulle...
Mej J Geldenhuys: …buite die beeld van die
universiteit.”
In S v Zuma & Others 1995 (2) SA 642 (CC) the Constitutional
Court warned that courts cannot interpret legislation so that it
means “whatever we might wish it to mean”. In other words, the
language chosen by the legislature must be respected. This
conclusion should not be read to deny the inherent ambiguity in
the use of language but it emphasises that a court is obliged to
engage carefully with the words that have been used in the Act
and to develop an interpretation which can be plausibly justified
on the basis of the words chosen by the legislature. This is also
applicable within the following case SA Airways (Pty) Ltd v
Aviation Union of SA & others (2011) 32 ILJ 87 (SCA).
Noted: That the words employed in s186 envisage two
requirements that must be met in order for an employer's action
to constitute a dismissal. Firstly, there must be a reasonable
expectation on the part of the employee that the fixed-term
contract will be renewed on the same or similar terms and
secondly, the employer must fail to renew the contract on the
same or similar terms, or fail to renew it at all.
Also noted: That the above citation did not carry the meaning
urged by the respondent employee. Thus, had there been a
April 2012 – Page 7
reasonable expectation for full time employment, the third
respondent would not have applied for a vacancy which offered
this security as opposed to her fixed term employment.
Held: That the second respondents had erred in concluding that
there could be a dismissal and the applicant was entitled to the
declaratory order sought. The appeal was upheld.
S v Zuma & Others 1995 (2) SA 642 (CC)
SA Airways (Pty) Ltd v Aviation Union of SA & Others (2011) 32
ILJ 87 (SCA)
SA Rugby (Pty) Ltd v Commission for Conciliation, Mediation &
Arbitration & Others (2006) 27 ILJ 1041 (LC)
Case references
Dierks v University of South Africa (1999) 20 ILJ 1227 (LC)
Mc Innes v Technikon Natal (2000) 21 ILJ 1138 (LC)
National Union of Metalworkers of SA & Others v Bader Bop
(Pty) Ltd & Another 2003 (3) SA 513 (CC)
April 2012 – Page 8
DECISIONS: OTHER DISPUTE
RESOLUTION FORUMS
By Keleabetswe Morobane
High Court: A237/2010
Nxoko v The State: Acting Judge Chesiwe
Theft conviction and sentence – Appellant pleaded not guilty
– State failed to prove case beyond reasonable doubt –
Employer relied on hearsay during investigation – Appeal
successful.
The appellant was employed by Parys Sekuriteit and was
arrested on 30 October 2008 for theft of the control panel,
switch board and the alarm system set. He was charged with
theft by the Parys District court where he pleaded not guilty.
The Court convicted and sentenced him to five months’
imprisonment or a fine of R10, 000. The appeal was against
the appellant’s conviction and sentence. The ground of
appeal was that the state did not prove its case beyond
reasonable doubt.
The appellant’s representative, Advocate Reyneke, argued
that there was no true evidence that the appellant stole the
reported items. He further submitted that the employer based
his blame on hearsay. The employer had heard from other
people that the appellant had the items. Therefore, the Court
was not at liberty to convict the appellant, unless it was
satisfied beyond any reasonable doubt that the appellant’s
argument that he did not steal was false. He further argued
that the Court must scrutinise the probabilities of the case to
determine whether the appellant’s version was reasonably
true.
Noted: That in terms of the law the State must prove beyond
reasonable doubt that the appellant’s conduct had met the
conditions that define theft.
Held: That the appeal in respect of both the conviction and
sentence was granted, the conviction and sentence imposed
by the Trial Court was set aside.
Case reference
S v V 2000 (1) SASV 453 (SCA) at 455
High Court: 231/2009
Herselman v Geleba: Judge Dawood
Unfair discrimination – Respondent allegedly referred to as
“baboon” – Appeal against equality Court judgment – Court
jurisdiction – Appeal dismissed.
This was an appeal against the decisions of the Magistrate
presiding in the Equality Court, whereby the respondent
instituted proceedings against the appellant in terms of s 20
of the Promotion of Equality and Prevention of Unfair
Discrimination Act no 4 of 2000, Regulation 6 (1) (the Act).
The respondent alleged that on the 16th of January 2007 the
appellant uttered the following: "look what this baboon is
doing, it is scratching the door”, which the appellant repeated
3 times. According to the respondent he was shouting when
he was uttering these words.
The appellant in his response denied that he called the
respondent a baboon, that he repeated it 3 times and that he
screamed at the respondent. According to the appellant he
told the respondent that he must not be like a baboon, "nie
soos 'n Bobbejaan moet wees nie". He further pleaded that
the respondent's claim did not satisfy the requirements of the
Act and in particular did not fall under the prohibited grounds
provisions as defined by s 1 of the Act; and does not comply
with s 9 and 10 of the Act.
The matter was argued in the court a quo firstly, on
jurisdiction as the point in limine, whether or not the conduct
complained of fell within the ambit of the Act. The Magistrate
indicated that jurisdiction held that the word “baboon” on the
face of it can be hurtful or harmful. The Magistrate illustrated
further that the word “baboon” can incite harm, promote or
propagate hatred. Therefore, the Magistrate ruled that the
words in question so uttered are on one or more of the
prohibited grounds and the Court accordingly had jurisdiction
to hear the matter and thus proceeded with the trial.
Noted: That appellant’s use of the word was not only abusive
and insulting, but it was also racist. The appellant testified
that it this was the first time he heard that African people do
not like to be referred to as a baboon.
Also noted: That the appellant had failed to establish that
the Magistrate was wrong on either his findings on the point
in limine or on the merits on any and all the grounds
advanced by him.
April 2012 – Page 9
Held: That the appeal was dismissed, there was no order to
costs.
Case references
Afriforum and Another v Malema 2010 (5) SAGPHC
Lebowa Platinum Mines Ltd v Hill (1998) 7 BLLR 666 (LAC)
Mangope v Asmal and Another 1997 (4) SAHC 277 (7)
Manong v Department of Roads and Transport (2009) 6 SCA
574
Minister of Finance and Another v Van Heerden 2004 (11)
BCLR 1125 CC
Strydom v Chiloane 2008 (2) SAGPHC
Constitutional Court: CCT08/11
Aviation Union Of South Africa & Another v South
African Airways (Pty) Ltd & Others: Judges Ngcobo,
Moseneke, Cameron, Freoneman, Jafta, Khampepe,
Mogoeng, Nkabinde, Van Der Westhuizen (JB), Mthiyane
(AJ)
Transfer of business as going concern – Section 197(1)(b) of
LRA 1995 – Second generation contracting – Whether there
has been transfer of business as going concern by old
employer to new employer – Substance of initial transaction
remains significant during subsequent transfers – Party not to
wait until transfer taken place before approaching Court –
Interpretation of word 'by' definition of 'transfer' –
Constitutional Court finding that Supreme Court of Appeal
erred in interpretation of section.
In 2000 the respondent, SAA, and several trade unions,
including the first applicant, AUSA, entered into a collective
agreement in terms of which all employees in the
infrastructure and support services department were
transferred to a service company, LGM South Africa Facility
Managers and Engineers (Pty) Ltd, herein referred to as
LGM. SAA had outsourced its services to LGM for a period of
10 years, but contained a provision entitling SAA to cancel
the contract if the controlling ownership of LGM changed. In
2007 there was a change of ownership of LGM whereby SAA
notified LGM that it would cancel the contract. It also denoted
that it would not accept responsibility for the employees
transferred to LGM.
AUSA on behalf of its members who had been transferred to
LGM approached the LC for urgent interim relief, primarily
seeking an order declaring the termination of the outsourcing
agreement to constitute a transfer under s 197 of the LRA
1995. The Court was of the view that s 197 only
contemplated first generation outsourcing and not second
generation transfers, thus it was not applicable in this case.
The Court dismissed the application with costs. On appeal,
the LAC found that if a business was transferred as a going
concern in a second generation outsourcing agreement, such
a transfer would fall within the ambit of s 197. It found that a
literal interpretation of the word 'by' in s 197 was subversive
of the very purpose of the section and found that a purposive
construction of the section was warranted.
SAA appealed to the SCA, where the majority found that the
LAC had erred in its interpretation of s 197, which was at
odds with its ordinary meaning. By interpreting the word 'by'
to mean 'from' the LAC had impermissibly distorted the
meaning of the word. The Court found further that there was
no evidence that there had been a transfer of a business as a
going concern. AUSA, joined by SATAWU whose members
were also employed by LGM before the termination of the
agreement, applied to the Constitutional Court for leave to
appeal against the judgment of the SCA. The Court was
satisfied that the matter raised a constitutional issue and that
it was in the interests of justice to grant leave to appeal.
The minority court found that the SCA had not followed the
correct approach to the interpretation of s 197 by singling out
the word 'by' in the definition of 'transfer'. The section, read
as a whole in the context of where it is located in the LRA
and paying sufficient attention to its purpose and the objects
of the LRA, clearly applies to any transaction that transfers a
business as a going concern. It followed that the majority in
the SCA had erred in holding that s 197 does not apply to
second generation outsourcing agreements. The majority
Court noted that the main area of dispute was not so much
what was being transferred, but by whom and observed that
the place to begin was with the concepts of 'old employer'
and 'new employer' as contained in s 197, which concepts
were not static. The Court observed further that it would be
misleading to focus solely on the 'generation' of the transfer
as it does not, in principle, matter what the 'generation' of the
outsourcing is or whether the transaction is concerned with
contracting out at all. The true enquiry was whether there had
been a transfer of a business as a going concern by the old
employer to the new employer. The Court observed finally
that, in determining whether contracting out amounts to the
transfer of a business as a going concern, the substance of
the initial transaction remains significant during subsequent
transfers.
Noted: That the Court agreed with the approach adopted by
the LAC that the word 'by' has multiple meanings and that a
permissible meaning covers the situation that would arise on
the cancellation of the contract that LGM would be obliged to
transfer the business either to SAA or to another service
provider. In either event the transfer would be one by the old
employer to the new one.
Also noted: That the Court found further that it was
necessary to examine the agreement in issue to determine
whether the rights and obligations it created provided for the
transfer of a business as a going concern by a transferor, the
old employer, to a transferee, the new employer. The Court
disagreed with the minority judgment that a transfer must
already have taken place before any court proceedings can
be instituted. To await the implementation of the agreement
would result in the perpetuation of the very mischief that the
legislature sought to avoid in enacting the section. Section
197 contemplates a seamless transfer from the old employer
to the new one and this becomes possible only if when there
April 2012 – Page 10
is a dispute about whether the workers are to be
automatically transferred in terms of the transaction
concerned, that dispute is determined before the
implementation of the agreement.
Further noted: That the Court proceeded to examine the
cancellation clause in the agreement between SAA and LGM
and concluded that the cancellation clause contemplated the
transfer of the business as a going concern. Therefore the
only debate was whether the business was to be transferred
to SAA or to an interim service provider and the identity of
that entity or person was of no material significance as long
as there was a transferor, LGM.
Held: That leave to appeal was granted and the appeal was
upheld. The orders of the SCA, the LAC and the LC were set
aside and replaced with the following: the cancellation of the
agreement between SAA (Pty) Ltd and LGM SA Facility
Managers & Engineers (Pty) Ltd entered into in March 2000
obliged LGM SA Facility Managers & Engineers (Pty) Ltd to
transfer a business as a going concern within the meaning of
s 197(1) and 197(2) of the LRA. SAA was ordered to pay the
costs incurred by AUSA, including the costs of two counsels
for the period in which they were employed in the LC, the
LAC, SCA and CC.
Case reference
Aviation Union of South Africa and Others v South African
Airways (Pty) Ltd and Others 2010 (4) SA 604 (LAC)
Supreme Court of Appeal 289/10
Confederation of South African Workers Union v
NEDLAC & Others: Acting Judges: Streicher, Nugent,
Snyders, Bosielo, Majiedt
Application for NEDLAC membership – Section 4(b) and 4
(d) of NEDLAC Act 35 of 1994 – Whether criteria for
admission to membership of labour constituency to be
determined by NEDLAC or labour constituency – Validity of
clause 9 of NEDLAC constitution – Labour constituency
exercising original power when determining criteria for
membership of its constituency –
Refusal to admit federation not complying with criteria
upheld.
The applicant’s had applied to be an employee member of
NEDLAC, when its application was declined. After its
application had been declined, it then applied to the High
Court for relief which was dismissed and as a result, it
appealed to the Supreme Court of Appeal. The SCA first
dealt with the establishment, composition and functions of
NEDLAC, especially the creation and adoption of a
constitution by its founding members. Clause 9 of the
NEDLAC constitution provides for entry to membership of
NEDLAC and clause 9.4-9.5 stipulates that an application
must be referred to the constituency concerned, i.e.
business, labour or the state, for that constituency to
determine. In compliance with clause 9, CONSAWU's
application for membership was referred to the convener of
the labour constituency. The founding federations to the
labour constituency, COSATU, NACTU and FEDUSA, had
informally set as a criterion for membership the requirement
that a federation had to represent at least 300,000 employed
workers. It was then established that CONSAWU
represented only 226,148 employed workers when its
application for membership was declined.
CONSAWU’s argument at the SCA was that ss 4(b) and 4(d)
of the NEDLAC Act 35 of 1994 prohibited each constituency
from being its own gate-keeper for entry to NEDLAC and
claimed an order declaring clause 9 of the NEDLAC
constitution to be in conflict with s 4. Section 4 requires the
constitution to provide for '(b) the manner in which organised
labour may nominate persons for appointment as members
and the manner in which members may be removed' and '(d)
the criteria by which and manner in which organised labour
shall admit federations of trade unions'. CONSAWU's
argument was that NEDLAC had to state in the constitution
itself what the criteria were for admission of a federation to
'organized labour' so as to comply with s 4(d). It could not
permit those criteria to be set by the constituency itself, as it
purported to do in clause 9.5 of the constitution, because that
would be an unlawful delegation of its power.
The majority of the court (per Nugent JA and Majiedt JA;
Snyders JA and Bosielo JA concurring) was of the view that
it was clear from the nature of NEDLAC, namely that it was a
forum for attempting to reach tripartite consensus on national
economic and labour policy and that the only interest that
one constituency had in the composition of the other was to
ensure that it properly represented the most influential voice
chosen by that constituency, that the arguments advanced by
CONSAWU could not be correct.
Noted: That the majority of the Court was of the view that it
was clear from the nature of NEDLAC, namely that it was a
forum for attempting to reach tripartite consensus on national
economic and labour policy and that the only interest that
one constituency had in the composition of the other was to
ensure that it properly represented the most influential voice
chosen by that constituency, that the arguments advanced by
CONSAWU could not be correct.
Also noted: That CONSAWU, applied to be an employee
member of NEDLAC, which application was declined. Its
application to the High Court for relief was dismissed and it
appealed to the Supreme Court of Appeal. Whether the
criteria were found in the constitution itself or in the minute
book of the labour constituency was a question of where they
were located and not whether they had been provided for.
The court found that this submission rested on the
assumption that s 4(d) conferred power on NEDLAC to
determine the criteria for admission to organized labour, and
that was not correct. The section did not confer any powers
on NEDLAC at all, it did no more than require that the
constitution (to be adopted) had to make provision for the
relevant criteria. So far as clause 9.5 empowered the labour
constituency to set those criteria, the labour constituency was
April 2012 – Page 11
not exercising delegated power when it did so. It was
exercising original powers that emanated from the
constitution.
Held: That the criteria had been provided for, and that was
precisely why CONSAWU had been stopped at the gate.
Furthermore, the court was of the view that the inclusion of
clause 9.5 placed beyond dispute that the process for
admission to membership incorporated the requirements of
both s 4(b) and s 4(d).
Also held: That the NEDLAC itself had to exercise the power
to determine the procedure and criteria for membership and
that the granting of such power to the labour constituency
amounted to an unlawful delegation of power. The court
accordingly dismissed the appeal with costs.
April 2012 – Page 12
AUSTRALIAN INDUSTRIAL
RELATIONS COMMISSION
(AIRC)
By Alucia Mdaka & Keleabetswe Morobane
(C2012/2265) Endeavour Coal Pty Ltd v Association of
Professional Engineers, Scientists and Managers,
Australia (Collieries’ Staff Division): Commissioner
Deegan
Appeal against decision to make bargaining order Permission to appeal - Consideration of legislative scheme
for making bargaining orders - Whether good faith bargaining
requirements met - Role of Fair Work Australia (FWA) to
facilitate bargaining - Obligation on parties to make
reasonable efforts to make agreement.
This was an appeal under s 604 of the Fair Work Act 2009
(the Fair Work Act), for which permission was required, by
the applicant against the decision and order made by
commissioner Roberts on 4 January 2012. The
commissioner decided that the applicant was not bargaining
with the respondent in good faith and made orders as to
actions which the applicant should take in relation to the
bargaining process.
In its grounds of appeal and submissions, the applicant
contended that the commissioner had erred in finding that it
had breached the good faith bargaining requirements and in
concluding that the prerequisites in the Fair Work Act for
making a bargaining order were satisfied. In particular, it was
submitted that the commissioner had erred in taking the view
that good faith bargaining means that parties must bargain in
a manner intended to conclude an agreement and in finding
that it did not wish to conclude an agreement with the
respondent and had no real intention to do so. It was also
submitted that the orders made by the commissioner were
made without jurisdiction. It argued that the orders were
much more prescriptive than other bargaining orders which
had been made by FWA.
The applicant maintained that it had engaged fairly in the
bargaining process even though it had not put forward a
counter proposal for an agreement. It took the view that it
was entitled, having regard to the express provisions of s
228(2) of the Fair Work Act, to avoid making any
concessions or reaching an agreement on terms to be
included in an agreement. It submitted that some of the
information specified in the order was the same information
which was earlier ruled by another commissioner to be
commercially sensitive.
Noted: That an appeal under s 604 of the Fair Work Act may
only be pursued with the permission of FWA. This would
normally require the appellant to demonstrate an arguable
case of appealable error and refer to other considerations
which would justify the granting of permission to appeal.
Subsection 604(2) requires FWA to grant permission to
appeal if it is satisfied that it is in the public interest to do so.
Where permission to appeal is granted, the appeal proceeds
by way of rehearing, with the powers of the Full Bench being
exercisable only if there is error on the part of the primary
decision-maker.
Also noted: That under the good faith bargaining
requirements the parties must;



“Give genuine consideration to proposals s 228(1)(d) of
the Fair Work Act,
Refrain from capricious or unfair conduct that
undermines freedom of association or collective
bargaining s 228(1)(e) of the Fair Work Act and
Recognise and bargain with the other bargaining
representatives s 228(1)(f) of the Fair Work Act”.
Further noted: That on appeal proceedings, the FWA relied
on the evidence that was before the commissioner regarding
the history of the negotiations between the parties. Much of
the evidence in relation to the bargaining meetings and
positions taken by the parties was not substantially in
dispute. In general, the respondent had put forward a
proposed draft agreement and other proposals and the
company had responded by making comments and raising
concerns about the proposals. There was discussion in the
meetings about the concerns raised and the respondent on
several occasions provided revised proposals for
consideration by the company. In the April 2011 meeting, the
applicant provided a written response to the respondent’s
revised draft agreement setting out its objections and
reasons for the objections. In the May 2011 meeting the
objections were discussed, but the respondent did not
April 2012 – Page 13
provide any updated draft or revised proposal in the light of
the concerns raised by the company. In the August 2011
meeting it became clear that there was an impasse between
the parties, there being a number of significant matters in
relation to which the parties were unable to agree. These
included dispute resolution procedures, the individual
flexibility provision proposed by the respondent and the
provision in the proposed agreement of mandatory terms for
inclusion in contracts of employment.
Held: That part of the bargaining order sought by the
respondent was for the disclosure of information relating to
the salary structure and pay bands by the applicant to the
respondent. The order made by the commissioner required
that such information be disclosed in a manner which does
not identify the actual pay of any individual. It was also held
that that the commissioner in making the order, did not
include reference to some information sought by the
respondent. The disclosure of such information could assist
in progressing negotiations and could appropriately be the
subject of a bargaining order.
Also held: That the Commissioner did not make any
findings in relation to the making of the bargaining order that
the information to be provided was not confidential or
commercially sensitive within the meaning of the exception in
s 228(1)(b) of the Fair Work Act. Therefore, there was a
question as to whether all necessary matters were taken into
account in making the order. There might also be questions
as to whether the order was necessary, as it would seem
that such information, or at least parts of it, might be
obtained by the respondent directly from its members. In
these circumstances, it was decided that the order made by
the commissioner should be set aside.
Case reference
Coal & Allied Operations (Pty) Ltd v Australian Industrial
Relations Commission 2000 (203) CLR 194
(U2011/12936) Wojcik v Metropolitan Express Transport
Service Pty Ltd – Deputy President Smith
Application for unfair dismissal remedy - Finding harsh,
unjust and unreasonable - compensation awarded.
The respondent is a transport service provider. In the context
of this case, it is a service provider to the Australian
Reinforcing Company (ARC). The applicant was located at
the offices of ARC and carried out her duties at that site.
The applicant, who had be in the employ of respondent since
November 2010, alleged that her employment was unfairly
terminated on 14 October 2011. When the matter was
brought forward for hearing it was changed into a
conference. The conference canvassed all the matters and
possible areas of agreement, but regrettably a solution was
not reached and it was considered that a hearing would be
the most effective and efficient way to resolve the matter.
The applicant claimed that ARC had advised him that the
respondent had indicated that there was a need to reduce
costs by 10% and develop alternative innovative options to
achieve an even better outcome. On Friday, 14 October the
State Manager, Mr Peter Thomas, visited the ARC where
she was advised that her new contract was being negotiated
with ARC and that her position was redundant.
In her allegations, the applicant mentioned the following:
a) That there had been no other redundancies,
b) That her work was still being carried out and
c) That the respondent continued to employ a casual
employee on extended hours because her work was not able
to be easily undertaken.
According to the applicant, the manner in which the
respondent had dismissed her was without any warning or
consultation regarding her possible redundancy. However,
the respondent claimed that it sought to consult with the
applicant, but due to her reaction it failed to do so.The
applicant submitted that the respondent had not complied
with the clause 18 of the “Metropolitan Express Transport
Services Enterprise Agreement 2010—2014 (AE884907)
(the Enterprise Agreement) Agreement”. The Enterprise
agreement deals with the consultation regarding major
workplace change.
Noted: That the applicant was protected from unfair
dismissal as she had a period of employment in excess of
six months with the respondent and was covered by an
enterprise instrument.
Also noted: That in terms of the Enterprise Agreement:
“(a) The employer must discuss with the employees affected
and their representative, if any, the introduction of the
changes referred to in clause 18.1, effects the changes are
likely to have on employees and measures to avert or
mitigate the adverse effects of such changes on employees.
Employers must also give prompt consideration to matters
raised by the employees and/or their representatives in
relation to the changes.
(b) The discussions must commence as early as practicable
after a definite decision has been made by the employer to
make the changes referred to in clause 18.1.
(c) For the purposes of such discussion, the employer must
provide in writing to the employees concerned and their
representatives, if any, all relevant information about the
changes including the nature of the changes proposed, the
expected effects of the changes on employees and any
other matters likely to affect employees provided that no
employer is required to disclose confidential information the
disclosure of which would be contrary to the employer’s
interests”.
Held: That the respondent had failed to consult, or seek
consultation with the applicant in accordance with the
Agreement. Therefore, the termination of her employment
could not be regarded as a genuine redundancy.
Also held: That the dismissal of the applicant was harsh,
unjust and unreasonable. It was held that the applicant
sought reinstatement as a relief, however, since she secured
another job, the respondent was ordered to compensate her
with 10 weeks’ salary.
April 2012 – Page 14
(B2012/641) Construction, Forestry, Mining and Energy
Union v Brookfield Multiplex Constructions (Pty) Ltd –
Senior Deputy President Richards
Application for protected action ballot order – Question to be
put unclear in sufficiently disclose nature of industrial action
– Allegation employer not responding to claims following
successive meetings – Union claimed genuinely tried to
reach agreement – Claims not articulated until third meeting
– Interactions suggestive of preparatory or preliminary
discussions before actual efforts to reach agreement.
This decision concerns two applications lodged in Fair Work
Australia (FWA) by the Construction, Forestry, Mining and
Energy Union (CFMEU) for a protected action ballot order
under s 437 of the Fair Work Act 2009 (the Fair Work Act).
The first application (B2012/641) was lodged on 28 March
2012 at 4:35 pm. The second application (B2012/648) was
lodged on 30 March 2012 at 2:36 pm. The first application
was subject to a hearing on Friday, 30 March 2012 at 1:30
pm. That application was objected to on grounds of
jurisdiction. In that application, the CFMEU indicated the
respondent employer as Brookfield Multiplex Constructions
Pty Ltd (BMC), which contended that it was not a corporate
entity that employed the employees who were intended to be
subject to the proposed enterprise agreement and for whom
the CFMEU is the bargaining representative. It appeared
from the unchallenged commentary that BMC ceased to be
the employing authority in mid-2011. This was because the
Brookfield Multiplex group underwent a rebranding and
restructuring. All the relevant employees who were then
engaged under the BMC and CFMEU Queensland Union
Collective Agreement 2009 – 2011 (the 2009 Agreement) at
that time appeared to have voluntarily agreed to transfer to a
company within the Brookfield Multiplex Group called
Brookfield Multiplex Australasia (Pty) Ltd (BMAPL).
Because of this corporate development, BMC argued that
amongst other things the CFMEU had not complied with the
requirements of s 440 of the Fair Work Act, which reads as
follows: within 24 hours after making an application for a
protected action ballot order, the applicant must give a copy
of the application to the employer of the employees who are
to be balloted and if the application specifies a person that
the applicant wishes to be the protected action ballot agent.
BMC contended that the CFMEU had not given a copy of the
application to the employer whose employees are to be
balloted, but rather provided that copy to another entity
which is no longer the employer of the relevant employees.
The CFMEU, confronted by such circumstances, sought to
amend its application to identify the new employer such that
it could proceed with the application. BMC objections to this
course were that the application made on 28 March 2012
indicated that the employees who were to be balloted were
BMC employees.
In the second application, the CFMEU indicated that the
relevant employer was BMAPL. In respect of the second
application all the statutory requirements of the Act were met
other than in respect of s 437(3) (b) of the Fair Work Act and
s 443(3) (d) and s 443 of the Act of the Act.
Section 437(3) (b) and s 443(3) (d) of the Act require that the
application and the order that might emanate include the
questions to be put to the employees who are to be balloted,
including the nature of the proposed industrial action. This
question was deemed to be obscure. It lacked definition for
the purposes of readily understanding its scope. That is, it
was uncertain as to what precise range of communications
would be anticipated and which of those communications
would be permissible within an assumed definition of
‘industrial action. As a consequence the question may be
confusing for employees to determine the range of conduct
in which they might participate that would be immune to civil
liability. Further, the question did not sufficiently disclose the
nature of the proposed industrial action.
Noted: That the corporate entity identified as BMC does not
employ any of the employees who are capable of being
subject to the proposed agreement. The CFMEU raised no
challenge to this claim. In circumstances such as this it is
prudent to pay close attention to the mandatory
preconditions to establishing jurisdiction conveyed by the
language of the relevant sections. Ultimately, this approach
may be of assistance to both parties, though recognise the
inconvenience caused in the short term to the Applicant.
Also noted: Section 443(2) of the Fair Work Act does not
allow FWA to make a protected action ballot order in relation
to a proposed enterprise agreement except where it is
satisfied, for the purposes of s 431(1)(b) of the Fair Work
Act, that the Applicant has been, and is, genuinely trying to
reach an agreement with the employer of the employees
who are to be balloted.
Held: That the application for a protected action ballot order
was dismissed.
Also held: That the second application under s 437 of the
Act was dismissed.
(U2011/13024) Leevan Harvey v UES (Int’l) Pty Ltd –
Commissioner Ryan
Termination of employment – employee job redundant –
Unfair dismissal – Reinstatement not sought –
Compensation sought and granted.
This was an application under s 394 of the Fair Work Act for
a remedy in relation to the applicant’s alleged unfair
dismissal. The applicant was originally employed as a
storeman by Goliath Hinging System Pty Ltd (Goliath) from
15 August 2007 until 1 July 2011 (3 year and 11 months).
On 1 July 2011 the respondent purchased Goliath where it
took only 3 workers, including the applicant, who were
employed by Goliath and accepted their continuity of service.
Upon the transfer of business, the Goliath warehouse in the
suburb of Hallam was closed and the three employees that
were transferred over to UES, were relocated to the UES
branch in Dandenong South. The Applicant took five week
annual leave and was dismissed upon his return to work (17
October 2011) on the basis that his job was redundant. The
applicant did not seek reinstatement, but he sought
April 2012 – Page 15
compensation equal to the amount of $27,869.24 which was
greater than the statutory limit of $19,347.00 which would
apply to the applicant. The main purpose for the application
was for the Tribunal to determine whether the applicant’s
dismissal sanction was harsh, unjust or unreasonable under
s 387 of the Fair Work Act and if so what remedy, if any, was
appropriate.
The respondent made several concessions in relation to
jurisdictional aspects of this matter. It conceded that: the
applicant was protected from unfair dismissal, it did not
comply with the Small Business Fair Dismissal Code and the
applicant’s dismissal was not a case of a genuine
redundancy. Therefore the respondent did not challenge the
application. However, the respondent’s representative, Mr.
Stevenson, testified that there was a significant decline in
business which necessitated a reduction in labour costs in
the warehouse where the applicant was employed with other
employees from Goliath storeroom. On 6 October 2011 Mr
Stevenson convened a meeting with the warehouse
employees, while the applicant was still on annual leave,
where he advised the 3 staff in attendance that due to a
downturn in sales redundancies were being looked at. They
looked at probable opportunities such as reduced working
hours, extended annual leave being taken and job sharing.
Mr Stevenson also testified that he reviewed “job picking
cards” for the 3 store keepers and formed the view that the
applicant was not as efficient as the other 2 store keepers
and that his expertise in Goliath products was no longer
deemed to be a critical aspect in the stores department.
Therefore, on 11 October 2011, he recommended to the HR
Manager and to the National Sales Manager that Mr Harvey
be made redundant. As a result, on 4 October 2011 the
National Sales Manager authorised the termination of a role
in stores.
Noted: That the respondent’s job was declared redundant
due to his performance and efficiency as a result of a fall in
sales.
Held: That the dismissal was unfair, unjust or unreasonable.
A remedy of monetary compensation in line with s 392 of the
Act was ordered. The respondent was advised to take the
period that the applicant worked at Goliath, i.e., 4 years and
3 ½ months, before his contract was transferred into
consideration. The total amount of compensation determined
in accordance with s 392(2)(b) to (g) inclusive, s 392(3) and
s 392(4) is $7198.28. This amount is less than the
compensation cap of $19347.00 and thus could be ordered.
April 2012 – Page 16
LABOUR WATCH
NEW AMENDMENTS ON THE LABOUR RELATIONS ACT AND THE BASIC CONDITIONS OF EMPLOYMENT ACT
By Boitumelo Rakau
The amendment bills for the Labour Relations Act 66 of 1995
(LRA) and the Basic Conditions of Employment Act 75 of
1997 (BCEA) were submitted to the Cabinet Committee by
the Minister of Labour on Wednesday the 14th of March
2012. These amendments were then approved by Cabinet
on the 20th of March 2012 and were subsequently forwarded
to Parliament before being submitted to the National
Assembly and the National Council of Provinces for
adoption.
The first versions of these amended Bills were published for
public comment on 17 December 2010, wherein most
commentary was focused on the issue of labour brokers.
Negotiations ensued between government and its social
partners in the National Economic Development and Labour
Advisory Council (NEDLAC), whereby it was agreed that the
summation of issues identified be addressed at Parliament.
The 2009 Election policy of the ruling party gave urgency to
the introduction of amendments by making the following
assertion, “In order to avoid exploitation of workers and
ensure decent work for all workers as well as to protect the
employment relationship, introduce laws to regulate contract
work, subcontracting and out- sourcing, address the problem
of labour broking and prohibit certain abusive practices.
Provisions will be introduced to facilitate unionisation of
workers and conclusion of sectoral collective agreements to
cover vulnerable workers in these different legal
relationships and ensure the right to permanent employment
for affected workers.”
Thus, amendments to the LRA and the BCEA were
instigated in order to achieve the following;


A correlation with the current labour law developments,
and
An improvement of the Commission for Conciliation
Mediation and Arbitration’s (CCMA) functioning.
The major areas of amendment
1.
Labour Relations Amendment Bill of 2012
1.1. Labour brokers
The Labour Relations Amendment Bill retains s 198 and it
will continue to apply to all employees. Temporary
employment is limited to genuine temporary work that does
not exceed a period of six months. A definition of a
temporary employment service entails an employer of
individuals whom are paid to work for a client. Therefore, the
temporary employment service and its client are jointly and
severally liable for specified contraventions of employment
laws. Additional protection is extended to individuals,
employed in temporary work, who earn below an earnings
threshold set within the BCEA as R172, 000.00 per annum.
Unequal treatment of those employed in temporary work and
earn below this threshold is prohibited.
1.2. Regulation of contract work
The amendments introduced a regulation of fixed term
contracts for individuals earning below the threshold. An
individual may be employed on a fixed term contract for
longer than six months only if the required operations are of
limited duration or the employer can justify the fixed duration
of the contract. Thus, the employee will be deemed to have
been employed for an indefinite period and must be treated
no less favourable than a permanent employee performing
the same function. However, these provisions do not apply
employers who employ less than 10 employees nor does it
apply to employers who employ less than 50 employees and
whose business has been in operation for less than two
years.
1.3. Commission for Conciliation Mediation and Arbitration
(CCMA)
The amendments herein detail that high-income earners are
excluded from referring unfair dismissal claims to the CCMA.
1.4. Strikes and Lock-outs
Amendments to chapter four of the LRA regarding the
procedural requirements for protected industrial action.
These adaptations are intended to curb unacceptable levels
of unprotected industrial action and any unlawful acts in
support of industrial action, such as violence and
intimidation.
1.5. Essential Services
The amendments made to this section of the LRA aim at
eradicating problems identified with the current system
utilised for dealing with matters of essential services. These
problems include the scope of essential service
determinations, the small number of minimum service
determinations ratified by the Essential Service Committee
(ESC) and the high level of unlawful strike action in essential
services.
1.6. Organisational rights and Collective Bargaining
April 2012 – Page 17
A few amendments have been introduced in order to change
the circumstances under which the CCMA commissioner
may grant organisational rights to matters referred by trade
unions. It should also be considered that the composition of
the workforce should include employees engaged in nonstandard working arrangements. This provision is aimed at
promoting the organisation of those in atypical work
situations including being placed in employment through
temporary employment services.
Amendments to provisions dealing with Collective Bargaining
aim to improve the effectiveness of exemption procedures
from collective agreements extended to non-parties.
Bargaining councils will now have 30 days within which to
decide on exemption applications. Appeals against
exemption decisions will also have to be dealt with by an
independent body within 30 days.
2.5. Penalties
The maximum term of imprisonment for an offence involving
child labour or forced labour has increased from three to six
years. A new clause also prohibits employers from
requesting or accepting any payment from employees in the
hope of securing their employment or the allocation of work.
This clause also prohibits an employer from requesting an
employee to purchase any goods or services from the
employer. The maximum penalties that may be imposed for
a breach of the BCEA, not involving underpayment, are
increased for the first time since the Act came into effect in
1998.
The Department will be conducting briefing sessions in the
major centres of each province over the next few weeks. The
aim of these sessions will be to inform the public of the
proposed amendments to the LRA and the BCEA.
2. Basic Conditions of Employment Amendment Bill, 2012
2.1. Changes to the power of the Minister
Amendments are proposed to give the Minister the power to
prescribe thresholds of a trade union’s representativeness
that enable it to have organisational rights of access to an
employer’s premises. This is intended to apply to situations
where unionisation is difficult, but where a more flexible
threshold may facilitate unionisation within a sector or area.
Further amendments in this regard propose that the Minister
could set increases to actual wages instead of minimum
wages for vulnerable workers in sectoral determinations
The Minister will also have the power to determine the
conditions of labour tenants.
2.2. Sectoral Determinations
The amendments aimed at facilitating the regulation of
temporary employment by extending the protection of
vulnerable workers and facilitating their right to freedom of
association.
2.3. Child labour
The provisions in the BCEA regarding the prohibition and
regulation of child labour are to be extended to cover all
work by children and not only work by children as
employees. These amendments will align the BCEA with
South Africa’s international law obligations in terms of the
International Labour Organisation Convention (No. 182) on
the Worst Forms of Child Labour.
2.4. Strengthening the power of the inspectorate
Although the framework that necessitates compliance with
the BCEA is maintained, amendments were proposed to s
68 and s 73 in order to remove bottle-necks and delays in
the enforcement process.
Effects of the amendments on employment
According to Henk Duys, the President of the Steel and
Engineering Industries' Federation of South Africa (SEIFSA),
labour law amendments will complicate employment. This
will have a detrimental effect on manufacturers as they need
flexibility in order to be able to respond to market fluctuations
and cannot retain large masses of staff when the market is
risky. He had the following to say, “Employers are expected
to create jobs, retain jobs, train more and offer opportunities
for a better life for the people of our country. At the same
time the draft legislation forces us to employ people on a
permanent basis with very little employment flexibility
required to capitalise on business opportunities under the
prevailing economic climate. Employment is not created
through making it more and more difficult to be in business.
Manufacturers need flexibility. Their markets fluctuate for
seasonal reasons, for currency fluctuation reasons and for
competitive reasons. Contracts are won and lost. Business
has to adapt to the market place, employment needs to rise
and fall in line with the order book, the market place and the
general economy. Forcing businesses to employ only
permanent staff will stifle growth. It will lead to a reduction in
how many people are employed and an increase in our fixed
costs, which in turn, makes us uncompetitive and, will
ultimately lead to our demise".
Although the SEIFSA acknowledged the decision by Cabinet
to ban labour broking in South Africa, it remained seriously
concerned that many of the amendments contained in the
Basic Conditions of Employment and Labour Relations
Amendment Bills, are punitive and place unnecessary
additional restrictions on legitimate business operations. The
concern is that the amendments will raise the cost of doing
business in South Africa and that will resultantly lead to
further job losses in the country.
SEIFSA shares the disappointment expressed by Business
Unity SA (BUSA) that Cabinet has decided to approve the
Bills without conducting a further Regulatory Impact
Assessment (RIA) on the impact of these Bills on business,
employment and job creation. SEIFSA continues to believe
April 2012 – Page 18
that the Bills, once implemented, will have a negative impact
on business, will reduce the number of existing jobs and will
hamper the creation of new employment opportunities in the
industry.
Contrary to most assumptions, the Congress of South
African Trade Unions (COSATU) is not denouncing
government's amended labour legislation, but its rather
against labour brokers and employers who are intent on
resisting regulation. A COSATU representative asserted that
their call for a ban on labour broking should not be seen as a
challenge to the Department of Labour (DoL) and the
proposed new labour legislation.
References
All accessed on 17 April 2012 from:
Amendments of the Labour Relations Act and the Basic
Conditions of Employment Act
http://www.labourguide.co.za
SEIFSA comment on proposed labour law amendments
http://www.politicsweb.co.za/politicsweb/view/politicsweb/en/
page71656?oid=288924&sn=Detail&pid=71656
Vavi-struggle-is-against-labour-brokers-not-bills
http://mg.co.za/article/2010-12-22-vavi-struggle-is-againstlabour-brokers-not-bills
April 2012 – Page 19
LABOUR WATCH
HOW DOES INFLATION RATE INFLUENCE WORKERS’ DEMAND FOR WAGE INCREASE IN THE LABOUR
MARKET?
By Keleabetswe Morobane
Introduction
The labour market consists of firms, labourers and factors of
production that could be combined with labour to produce
valuable goods and services. The latter entails capital,
machinery as well as technology. In the labour market the
labourers, herein referred to as workers, provide their
services to firms. The firms, in return, remunerate them for
their services with wages or salary. Firms, as a result,
demand labour or the services of the workers to produce the
products that they trade in the market. When the firms
decide on the workers’ remuneration including annual
increase, herein referred to as wages, they take into
consideration factors like skills or capacity levels and their
work experiences to the workers possess, as well the firms’
annual profit margins. However, this is not an exhaustive list
of characteristics that determine wage increase. Inflation rate
stands out as a critical factor that influences firms and
workers’ conduct in terms of wage increase. Inflation can be
defined as a rise in the general levels of prices of goods and
services in an economy over a period of time
(www.inflationdata.com/articles). As a result, firms cannot
overlook inflation when determining the workers’ wage
increase.The inflation target in South Africa is between three
and six percentage on a continuous basis on the Consumer
Price Index (SARB, 2011). This as a result becomes a
motive for workers to demand wage increases that are
above the inflation rate. If inflation is not incorporated when
determining wages, workers’ nominal wages erode their
purchasing power. Therefore, the workers, especially the
poor, become less able to substitute consumption away from
the products experiencing high inflation towards cheaper or
poorer quality products or they will not be able to buy at all.
This article explores how inflation rate can influence wage
increase negotiations and what impacts it has in the labour
market, should it not be regarded during the wage
bargaining.
Inflation as a critical instrument when considering wage
increase
In determining an appropriate wage change or increase,
management considers inflation forecasts, labour market
surveys and projections of sales and product prices.
Management uses this information to adjust wages so that
workers are neither overpaid nor underpaid (Nunziata,
Bowdler, 2005). Furthermore, management uses this
information in order for workers’ wages to retain the
purchasing power as they experience a general increase in
the prices of goods and services. As a guide to achieving
this goal, many firms try to keep their wage changes in line
with those of other firms. However, inflation can negatively
skew the outcome of employers’ careful wage deliberations
and undermine efforts to achieve parity in wages across
firms. This can be witnessed in situations where the inflation
rate is higher such that other firms are unable to attain
average wage increase or adjustment. Thus, the higher the
inflation level, the greater the uncertainty about future rates
(Riley, 2006). High and fluctuating inflation can also increase
wage dispersion by compelling firms in unequal economic
circumstances to make substantial salary adjustments, while
some firms will be able to keep their salaries competitive.
However, firms facing financial or other constraints may be
temporarily unable to adapt.
Inflation allows firms to respond flexibly to changes in the
market wage for different occupations. It does so by enabling
firms to overcome downward wage rigidity, i.e. a societal
standard of fairness that essentially bars employers from
cutting good workers’ salaries. As a result, inflation enables
employers to adjust wages rapidly in response to ongoing
changes in the supply of or demand for different groups of
workers. The proponents of inflation argue that inflation is a
possible cause of higher unemployment in the medium term
if one country experiences a much higher rate of inflation
than another. In most countries, reducing inflation has been
a key objective. Governments view inflation as a force that
inhibits economic growth as it discourages long term
investment, distortes the tax structure and undermines the
financial plans of firms and households. This perception of
inflation is predominant in policy circles. Moreover, inflation
affects labour market efficiency by influencing firms’ wage
setting practices and compensation schemes. In economies
with competitive labour, capital and product markets,
comparable workers at equivalent jobs will tend to be
compensated similarly. If an employer sets wages too low, it
will lose its employees; as a result, the resulting turnover will
lead to lower profits (Groshen, 1997). However, if an
employer remunerates above expectations, it will run it
business at loss. Therefore, it will be forced to lay off its
employees because it will be unable to price products
competitively. Thus, any factor that interferes with the firms’
accurate wage setting can raise unemployment, worker
turnover, or company failures. Since labour is typically a
large component of companies’ costs, such widespread
interference in this market can impair the efficiency of the
economy.
There is much greater potential for error in forecasting
inflation, which increases the potential of actual from
expected real wages. This might have the effect of reducing
April 2012 – Page 20
employment, whereby employer may resort to retrenching
workers due to financial constraints. Thus, inflation
uncertainty has a potential to increase the complexity of
wage negotiations because of the probability of the
increased loss to both the employer and the employee from
incorrectly choosing the nominal wage adjustment
mechanism (Nunziata & Bowdker, 2005). This, as a result,
could result in a deadlock between the firms and workers
during wage negotiations. The following case is evidence
unsuccessful wage negotiations reinforced by inflation
uncertainty can lead to industrial action. In SABC Ltd v CWU
& Others (2009) 18 LC, the applicant sought an interdict to
prohibit the respondent from participating in an industrial
action. During 2008 financial year, the applicant concluded a
“multi-term” salary agreement in terms of which in April 2009
the employees would be granted an across-the-board
increase equivalent to the CPI index of the preceding 12
months, plus one percent subject to the proviso that if the
CPI-X increased by below 4% or above 9%, any party was
entitled to resume negotiations. Just before the increase was
due to be effected, the applicant proposed re-opening salary
negotiations due to the financial state of the corporation.
Pressed by organised labour for its revised offer, the
applicant informed the union that it wished to re-open
negotiations because the CPI-X had risen by more than
11%. The first respondent union referred a dispute to the
CCMA, requesting the Commission to order the applicant to
implement the agreed salary increase. Meanwhile the
applicant offered a staggered increase of 10%. The unions
rejected that offer and the second respondent union referred
a dispute to the CCMA, classifying it as a “mutual interest”
dispute. A few days later, another union (BEMAWU), not
party to the application, referred a dispute concerning the
interpretation and application of a collective agreement. At a
consolidated conciliation meeting, the commissioner ruled
that the CCMA had jurisdiction to conciliate the matter and
issued certificates classifying the dispute between the two
applicant unions as a “matter of mutual interest” and that
between BEMAWU and the applicant as a dispute
concerning the application/interpretation of a collective
agreement. The respondent unions then issued notices of
intention to commence a strike. At the LC, the applicant’s
application for the interdict was dismissed with costs.
Employer and trade union wage bargaining
It is common practice that trade unions represent their
members during the negotiations for wage increase. The
extent to which unions coordinate their actions during the
wage bargaining process is a potential determinant of the
responsiveness of inflation to supply and demand side
pressures. In highly coordinated labour markets, wage
negotiations occur close together in time and the level of
communication between unions representing different
groups of workers is high. This means that unions are more
likely to be aware of the macroeconomic consequences of
their decisions such as unemployment. If the union objective
function depends on inflation, as well as unemployment and
the real wage, unions will have an incentive to moderate
wage demands in order to limit the increase in inflation
associated with macroeconomic imbalances below the
natural rate. This incentive will make a huge impact in
coordinated labour markets in which unions are better able
to make the connection between wage demands and
subsequent price increases. In contrast, when coordination
is limited, unions may act assuming that their decisions do
not affect macroeconomic outcomes, in which case wage
moderation will be limited and the upturn in inflation will be
high. The percentage of workers that are members of a trade
union may also affect inflation adjustment. If higher
unionisation rates are associated with increased monopoly
power in the labour market, workers may be able to extract
greater compensation following cost or price shocks that
raise the cost of living, or demand shocks that lead to labour
shortages. Consequently the upturn in inflation associated
with these shocks will be larger.
A relatively high unionisation rate increases the response of
inflation to indirect tax movements. This may be interpreted
as the effect of monopoly power in labour supply which
causes wage negotiators to demand greater compensation
following increases in the cost of living. The South African
labour market is deemed to be characterised by the wagepull inflation with a powerful and highly centralised union
movement, highly unequal distributions of income, wealth
and widespread poverty even among full-time workers in a
number of sectors. Hence, trade unions and employers are
continuously at stalemate during wage negotiations as each
party is attempting to address such problems. It is evident
that when unions represent their members at the wage
bargaining, they strive to confront an unequal wage
structures perpetrate by the firms, by seeking workers’ wage
adjustments, especially for workers that are occupying the
same level or positions. The following cases provide a wage
increase bargain scenarios:
NUMSA v Bridgestone SA (BSA) (Pty) Ltd (1999) 8 CCMA
After lengthy negotiations in the Bargaining Council for the
New Tyre Industry, which led to an extended strike in the
sector, the union and the New Tyre Manufacturing
Employers’ Association (NTMIEA) signed a three-year wage
agreement on behalf of its five members, including the
employer. The agreement provided, inter alia, that workers
would receive an increase across the board equal to
Consumer Price Index (CPI) or 4,5%, 7,5% and 7,5%,
respectively, in each year and that employees earning above
wage rates set by the Council (“red circled” employees)
would receive a percentage of the minimum rate or CPI in
each successive year. The arbitrator found that the
agreement indicated that BSA had accepted the across the
board increase for all red circled employees and that
NUMSA had declined to accept BSA’s proposal regarding
those employees. Nothing suggested that BSA’s acceptance
of the across the board increases was conditional on
NUMSA’s acceptance of the across the board proposals for
the red circled employees. The net result of the negotiations
in the BC was that a collective agreement was signed which
in all respects met the requirements of the definition of that
term in the LRA. According to the Act, a collective
agreement concluded in a BC binds the parties - to the
collective agreement. It was held that BSA was not obliged
to grant its red-circled employees any increase until NUMSA
and BSA agree to a retardation formula.
April 2012 – Page 21
NEHAWU & Lifecare Health Services (Pty) Ltd (2011) 10
BALR 1096 (P)
This award arose out of a dispute between the company and
the union, with respect to wages for the financial year
1998/1999. Since the employees were in an essential
industry, as determined by the LRA, they were not able to
resort to strike action. In the case of a failure to reach an
agreement during negotiations, they were compelled to refer
the dispute to the CCMA for mediation and for mandatory
wage arbitration if their dispute was not resolved at
mediation proceedings. A certificate showing that mediation
had failed to resolve the dispute was issued on 28 August
1998; thereafter the matter was referred for arbitration on 6
and 7 October 1998.At the negotiations for wage increase all
arguments can be conveniently categorised by five broad
headings. These are affordability, comparability, productivity,
cost of living and public policy. The public policy, including
labour market policies do not condone worker exploitation in
relation to remuneration.
Affordability relates to the employer's ability to conform to the
worker wage increase demands. If the employer fails to
comply with the increase claimed, then it is unlikely to meet
the demand of the workers. Thus in a wage arbitration, it
would be incorrect for the arbitrator to make an award which
went beyond the employer's ability to pay, for this would
place the enterprise and the jobs in jeopardy. However,
affordability carries with it the inescapable consequence of
information disclosure. If the employer is not prepared to
make relevant disclosures to its bargaining partner that the
claims of inability to pay are true, then the union is unlikely to
accept it. This arguably also clears the arbitrator from any
further contemplation of this point should the company
persist in its refusal to disclose.
However, an important distinction must be made between
ability to pay and willingness to pay. There are few
employers who would be willing to meet a union's demands
in full, but this unwillingness does not automatically translate
into an inability. Inability to pay is capable of a more precise
financial examination, although this may still raise vexing
questions for the arbitrator as to the relative priority of the
allocation of funds. Unwillingness to pay is therefore not a
justification for failure to approve wage demand. Another
component of wage bargaining is covered by the fact that in
times of inflation, real wages as determined by the
purchasing power of the pay packet are eroded, and that in
the absence of any adjustment, workers may find
themselves progressively worse off year after year. In this
case, the employer claimed that it is unable to meet the
demands of the workers, but failed to The matter was
referred back to the parties, with the ruling that should they
fail to resolve the issue between themselves by no later than
1 February 1999, then it should be immediately referred to a
process of con/arb under the CCMA.
Conclusion
Workers demand for wage increase is inspired by the
changing nature of the labour market. The labour market is
very sensitive to uncertainties and changes in the inflation
rate. Thus when inflation rate changes, it also affects the
prices of goods and services produced by the workers.
Should the rate of inflation affect prices generally, the firms’
profit margins are also affected. The profit margins, as a
result, determine the level at which workers can be
remunerated. Therefore, when the firms realise low profit
margins due to high inflation rate, the workers’ wages are
negatively affected. However, if the firms realise high profit
margins due to a low level of inflation, workers’ actual wages
are negatively affected. As a result, when trade unions table
their wage increase proposals with the employers, they
negotiate for real wage rather than nominal wage. With firms
looking at their profit margins, those that are performing well
will always seek to meet the workers demands as opposed
to those that are operating below profit margins.
References
Groshen, E, L, 1997. Inflation Goals: Guidance from the
Labour Market. Current Issues in Economics and Finance.
Volume 3, Number 15.
Holland, S, 1984. The impact of inflation uncertainty on the
labour market.
http://ideas.repec.org/a/fip/fedlrv/y1984iaugp2128nv.66no.7.html. Accessed 26/04/2012.
Nunziata, L & Bowdler, C, 2005. Inflation Adjustment and
Labour Market Structure: Evidence from a Multi Country
Study. Discussion Paper Series. www.escalatorcapital.co.za.
Accessed 02/04/2012.
South African Reserve Bank. www.sarb.co.za. Accessed
02/04/2012.
Riley, G & College, E, 2006. The effects of Inflation on Wage
Adjustments in Firm Level Data.
Accessed
01/04/2012.www.inflationdata.com/articles
Case references
NEHAWU and Life Care Health Services (Pty) Ltd (1999) 8
CCMA
NUMSA v Bridgestone SA (Pty) Ltd (2011) 10 BALR 1096
(P)
SABC Ltd v CWU & Others (2009) 18 LC
April 2012 – Page 22
LABOUR WATCH
COLLECTIVE BARGAINING AND LABOUR DISPUTES RESOLUTION IN SOUTHERN AFRICAN DEVELOPMENT
COMMUNITY (SADC)
By Alucia Mdaka
Introduction
Promoting and fighting poverty is one of the major
challenges that the SADC countries are facing. Employment
helps to eradicate poverty as majority of people rely mainly
on the use of labour power to earn their livelihood.
Therefore, policymakers are enjoyed to recognise that the
employment and promotion of enterprises that creates jobs
is the most effective route to eradicate poverty. In order to
achieve this, there is a need to incorporate employment
targets and decent work strategies in national development
plans. Thus the International Labour Organisation (ILO) has
identified the promotion and protection of collective
bargaining as one of the tools through which the conditions
of decent work can be realised.
Another challenge faced by SADC countries both at a
regional and at the national level is the creation of an
environment that is conducive to the sustenance of collective
bargaining and the promotion of effective labour dispute
resolution machineries consistent with the ILO instrument
and international laws. This article would focus on exploring
the steps the sub-regional countries have taken towards the
promotion and protection of collective bargaining and
ensuring the effective resolution of labour disputes.
What is collective bargaining?
Collective bargaining is a means of regulating relationships
between employers and employees and for settling disputes
between the parties through negotiation processes leading
to collective agreements that are mutually beneficial. In the
process, different conflicts are reconciled. According to van
Niekerk, Christianson, MacGregor, Smit and van Eck
(2008:341), it allows workers to have a more balanced
relationship with their employer. It also provides a
mechanism for negotiating a fair share of the results of their
work for the financial position of the enterprise or public
service in which they are employed. In relation to employers,
collective bargaining enables them to ensure that
competition is constructive, fair and based on a collaborative
effort to raise productivity and conditions of employment.
Collective bargaining has also been referred to as a
constantly mutating institution as it is necessarily responsive
to economic demands and circumstances. The role of
collective bargaining as an effective tool for industrial
democracy and social justice has been recognised for many
years. It forms one of the most important gradients of the
ILO strategic objective on promoting and strengthening
social dialogue.
The duty to bargain
Collective bargaining can function effectively if it is
conducted genuinely by all the parties within the bargaining
process. This can be achieved by implementing regulatory
rules to the process as some parties undermine the
negotiation process by resorting to such tactics as distortion,
misinterpretation, bluff, deceit, power play and emotionalism.
Countries such as Lesotho and Mozambique have included
on their statutory frameworks the concept of the duty to
bargain through which employers are compelled to bargain
with recognised trade unions. This is one of the measures
aimed at strengthening collective bargaining. Lesotho has
even gone further to legislate on the quality of the bargaining
process by introducing the duty to bargain in good faith.
April 2012 – Page 23
Thus, bad faith bargaining constitutes an unfair labour
practice under its Labour Code.
Traditionally, collective bargaining is a voluntary process,
however, that depends on the maturity of a trade union in a
particular country. For example, trade unions in Lesotho are
generally weak, hence the provision to compel employers to
bargain. There are some employers who are still hostile to
trade unions. Therefore, a legally enforceable duty to
bargain enables unions to approach the courts to secure
bargaining rights where it has not been possible to do so
through persuasion.
In Swaziland, the statutory framework does not impose the
duty to bargain with trade unions. In practice, parties find
themselves bound to engage in collective bargaining once
recognition has been given to a trade union. Likewise in
South Africa, the Labour Relations Act 66 of 1995 (LRA)
does not provide for the duty to bargain. Trade unions in
South Africa are matured unlike some of the SADC
countries; thus the LRA only facilitates collective bargaining
and leaves everything to the parties to decide how their
bargaining relationships are to be structured. Despite the
absence of the duty to bargain in South Africa, the LRA
imposes the duty on the employer to disclose to a
representative union all the relevant information that will
enable the union to engage effectively in collective
bargaining. Consequently, the duty to bargain has indirectly
found its way into the South African industrial relations arena
since the LRA imposes employers the duty to disclose.
In South Africa, the since the LRA does not impose an
express duty on either an employer or a trade union to
bargain with the other, a refusal to bargain will not constitute
an unfair labour practice. As the LC pointed out in
ECCAWUSA & Others v Southern Sun Hotel Interests (Pty)
Ltd (2000) 9 LC 1.1.7. Although the concept of the duty to
bargain in good faith was recognised in relation to the unfair
labour practice jurisdiction of the 1956 LRA, this is not the
approach adopted in the current Act. Accordingly, the duty
which existed under the 1956 Act, under the unfair labour
practice jurisdiction, has not been incorporated into the
current Act. There is no legal duty implied by the LRA, or any
other law, to the effect that there is a to bargain in good faith.
However, Item 2 of Schedule 1 of the Basic Conditions of
Employment Act 75 of 1997 imposes a duty to bargain n
respect of the reduction of maximum working hours.
Meanwhile the LRA provides that a refusal to bargain may
be met with a strike. In section 64(2) of the LRA a refusal to
bargain is defined as being —
a)
“A refusal to recognise a trade union as a collective
bargaining agent,
b) A refusal to agree to the establishment of a bargaining
council,
c) A withdrawal of recognition of a collective bargaining
agent,
d) A resignation of a party from a bargaining council, or
e) A dispute about appropriate bargain units, appropriate
bargaining levels or bargaining subjects”.
In the instances where there is a refusal to bargain, the LRA
requires an advisory arbitration award (a type of conciliation)
in terms of s 135 before the union may proceed with a strike
or the employer proceed with a lock-out.
Dispute resolution
In most SADAC countries, the public sector is the largest
formal employer. Therefore, the approach towards the
regulation of the public sector differs emerges amongst
these countries with some having the same legal framework
same legal framework regulating both the private and public
sector. Other countries have adopted a separate framework
that regulates both sectors. In South Africa, the public sector
is regulated by the Public Service Act 103 of 1994 (PSA) and
the LRA. The conditions of employment and regulations
pertaining to the public sector are negotiated at a central
level through the Public Sector Bargaining Councils, which
comprises of the Education Labour Relations Council, Public
Health and Welfare Bargaining Council, Safety and Security
Sectoral Bargaining Council, Public service Co-ordinating
Bargaining Council and South African National Defence
Force. Disputes in Private Sector are either dealt by the
Commission for Conciliation, Mediation and Arbitration or by
the relevant Bargaining Council where the industry has a
registered scope.
Public servants in Botswana have gained access to the right
to bargain collectively for the first time upon the amendments
of the Trade Unions and Employer’s Organisation Act, 2003
where public officers have been included in the definition of
an employee. In Lesotho, public officers are duly organised
by the Lesotho Public Service Staff Association (LEPSSA).
However, collective bargaining in this sector is not effective
as LEPSSA was below the 50% plus threshold. As in
Swaziland and Zimbabwe, public officers are prohibited from
joining trade unions and may only join staff associations. In
Mozambique, even the establishment of staff associations is
prohibited. As a result, wages and conditions of employment
are unilaterally determined by their government. This leads
one to doubt the commitment of these governments in
promoting collective bargaining and in genuine settlement of
disputes in the public sector.
In South Africa, Lesotho and Mozambique, both public and
private sectors are regulated by two separate legal regimes.
The Lesotho Public Service Act 2005 removes public officers
from Labour Code, whereas in Mozambique, the rights of
public officers to join trade unions are limited under Labour
Law No.8 of 1998. Thus the limitations prohibit the public
sector employee from participating in strike actions and this
effectively places the resolution of labour disputes in this
sector under the employer’s control. Although the ILO said
that the right to strike is not absolute, it has however, given
three exceptions where the right may be restricted. These
include the police officers, armed forces, public officers
exercising authority in the name of the state and employees
engaged in essential services. Therefore, the blanket
exclusion of all public officers from enjoying the right to strike
regardless of their level of seniority is in breach of the ILO
standards.
April 2012 – Page 24
The fact that the public officers in Lesotho are excluded from
the purview of its Labour Code also implies that they are not
subject to dispute resolution machineries established under
the Code, including the LC. Therefore, their disputes and
grievances are regulated by the Public Service Act, 2005.
Hence, the appeals decisions of heads of departments lie
with Public Service Tribunal. Disputes of interest are
conciliated by a Conciliation Board.
Levels of collective bargaining: Enterprise level
collective bargaining vs. Sectoral (centralised) collective
bargaining
It is arguable that the level of bargaining determines the
success of the bargaining process. Disparities in wages and
other conditions of work in the same sector have the
potential to create disputes and disturbing industrial peace.
The centralised bargaining brings uniform application of
employment standards in the same sector, thus, it promotes
fair treatment of all workers in that sector. This, as a result
saves time costs as there is no need for the union to
negotiate with each individual employer. It is interesting to
note that centralised bargaining is stronger in the context of
SADC sub-region as most employers in the region are
negative towards trade unions. Consequently, the general
trend in the sub-region is towards enterprise level
bargaining.
However, South Africa and Zimbabwe seem to differ from
other countries, collective bargaining happens at both levels
of collective bargaining. In Zimbabwe, sectoral bargaining
occurs through the National Employment Council whereas in
South Africa it is effected through a number of bargaining
councils and the CCMA. In enterprise level, some SADC
jurisdictions have established a system of works council,
notably, South Africa, Swaziland and Zimbabwe. These are
in-house institutions which operate within a particular
company or division while trade unions draw their
membership from a number of employers. In South Africa,
they are called workplace forums. In establishing these
systems of works, Swaziland has adopted this concept
under the Industrial Relations Act, 2000 first after being
introduced under the Labour Relations Act of 1996. This Act
provides that where an employer employs more than 25
employees and there is no recognised trade union or staff
association, the employer is compelled to establish a works
council. However, in instances where works councils exist
parallel to trade unions, there had been a criticism from ILO,
where it argued that this could lead to abuses on part of
employers who do not want to deal with representative trade
unions.
In justifying the establishment of works councils, the drafters
of the LRA, in South Africa have pointed out that they are not
meant to be used as an alternative to trade unions. They are
rather intended to be vehicles for promoting participative
management through information sharing, consultation and
joint decision-making.
Challenges in promoting collective bargaining
The challenges that SADC countries are faced with relates to
firstly, keeping abreast with the modern trends in labour
market regulation. Therefore, in order to keep the
momentum, labour laws in the region are constantly being
reviewed. The advent of globalisation has also brought
tremendous pressure on SADC countries since globalisation
is characterised trade liberasation which brings with it
heightened competition as a result of lowered trade barriers.
Thus in order to attract trade links with other countries,
SADC countries need to maintain a clean track record in
terms of respect of fundamental rights. Pressure is also
mounting from ILO and from the international community at
large forcing states to make efforts to guarantee democracy
and uphold fundamental human rights. In order to overcome
this challenge, policies such as Africa Growth and
Opportunity Act (AGOA), the Generalised System of
Preference, and United Nation Global Compact has been
implemented. It is interesting to note that all SADC countries,
with exception of Zimbabwe have been declared AGOA
eligible. In order to qualify for these benefits, developing
countries are encouraged to formulate policies geared
towards poverty eradication and protection of human rights,
including workers rights as this is a key to the realisation of
the Millennium Development Goals.
Secondly, there is a minimal use of collective bargaining as
a vehicle for general regulation of the labour market in the
sub-region. It was observed in Botswana that few industries,
notably, the mining and banking sector participate actively in
collective bargaining for employment regulation. This seems
to be an indication of a general lack of appreciation of what
trade unions and collective bargaining are all about. It was
pointed out that by the Labour Department in Lesotho that
no effort is being made by trade unions to educate their
members about their rights at work. Therefore, unions are
encouraged to invest in training as in South Africa and
Zimbabwe where office bearers are trained. It is an ideal that
collective bargaining agreements are reviewed from time to
time in order to accommodate changes in the workplace and
labour market trends. For example, Swaziland is making
strides in this regards, in that collective bargaining
agreements may only in force for a period not exceeding 24
months and must be registered with the Industrial Court.
The ILO mandates and accords the protection of workers as
set out in the ILO Declaration on Fundamental Principles
and Rights at Work and the Decent Work Agenda. It is
regrettable to note that many employees are still excluded
from the mantle of freedom of association and collective
representation, and this is cause for concern by the ILO,
hence its adoption of Employment Relationship
Recommendation, 2006 (No. 198). Most employees are
being excluded from the protection due to difficulty in
identifying whether they are in an employment relationship or
not. In general, the workers that suffer from the exclusion by
most statues are domestic workers, agricultural, migrant
worker and workers in the informal sectors as they are
excluded from the definition of an employee.
April 2012 – Page 25
The third challenge is the formation of trade unions that has
been identified in SADC countries. For example, Lesotho,
with a small working population that is mostly absorbed by
public service has thirty registered trade unions, three
federations and four employer organisations which are often
competitive. Namibia also faces the similar problem, as
observed by the Ministry of Labour in 1999 as they also lack
a minimum membership requirement for registration of trade
unions.
The quality of collective agreements is important for
meaningful protection of employee rights. However, in
Lesotho there is no obligation on the part of the unions or
employer organisation to register collective agreements
meanwhile Malawi, Swaziland and Zimbabwe an obligation
do exists and this serve as a quality control.
Conclusion
The need for the promotion of collective bargaining and
effective mechanism for the resolution of labour dispute as
tools for the maintenance of harmonious relations between
employees and employers cannot be overemphasised. While
the importance of sustained economic growth is being
acknowledged, it has to go hand in hand with decent wages,
improved quality of life and respect for human dignity which
is a basic right.
It is evident from this article that there is a good intention on
the part of SADC countries to comply with the international
labour standards. This is evident by the prevailing legal
frameworks in the respective countries, however, there seem
to be manpower and financial constraints which limits their
capacity to make good on statutory obligation. Although the
legal frameworks are facilitated enough for collective
bargaining, in majority of the SADC countries, trade unions
do not engage in collective bargaining and still rely on state
intervention because of a critical need for capacity building.
Therefore, this calls for active participation by all social
partners in efforts aimed at the promotion of collective
bargaining.
References
Khabo, F.M, Collective Bargaining and Labour Disputes
Resolution-Is SADC Meeting the Challenge? 2008. ILO SubRegion office for South Africa, Harare, Zimbabwe,
www.ilo.org. Accessed 29 March 2012.
Van Niekerk. A, Christianson. M, McGregor .M, Smit .N and
van Eck BPS. Law@Work. 2008. 1st Ed, LexisNesis: Durban.
April 2012 – Page 26
INTERNATIONAL LABOUR
MARKET
CHINA: FROM AN ACTIVE EMPLOYMENT POLICY TO EMPLOYMENT PROMOTION LAW. COPING WITH ECONOMIC
RESTRUCTURING AND LABOUR MARKET ADJUSTMENTS
By Keleabetswe Morobane
Introduction
China, the second largest economy in the world, has
witnessed a spectacularly high economic growth over a
prolonged period of nearly three decades. This high and
sustained growth has been closely associated with
massive economic, social and institutional reforms as well
as with China’s vision of its own “socialist market
economy”. Such changes and reforms took place at a time
when globalisation was intensifying through the rapid
flourishing of international trade, international financial
markets, capital flows and technology transfer. The
structural adjustment was not only changing the industrial
structure, but also the employment structure.
This report looks at the path followed by the Chinese
government to design, test and adapt its active
employment policies. It shows how these policies were
gradually improved, scaled up and finally upgraded to
legislation. The active employment policies in China are
systematic and comprehensive. Their design assimilates
good practices of the international experience in
formulating employment policies while adapting them to
national circumstances. Great achievements have been
made and the adoption of the Employment Promotion Law
(EPL) in 2008 received a wide applause from the
international community as well as the International Labour
Organisation (ILO). The Chinese experience is a good
example of a successful policy development process
spanning many years, addressing huge challenges and
devoting the necessary resources.
During the 1990s, China introduced a series of economic
reforms that were designed towards modernisation and
economic restructuring through the infusion of higher
technology, greater efficiency and competitiveness. The
reform policies that had a great impact on the labour
market covered the following areas: implementing an
employment contract system to reform the recruitment
system, carrying out a re-employment scheme in order to
support structural adjustment and state owned enterprises
(SOE) reforms, implementing a migration programme to
address the employment of the migrating rural labour force
and implementing active employment policies to address
the transition from a planned to a market economy system.
The reform of SOEs was a critical component of China’s
economic reform programme. It aimed at setting up a
modern and competitive enterprise system. A serious
constraint was that the enterprises were saddled with
redundant employees. With deepening reform of the
enterprises, technological innovation and economic
restructuring, it was unavoidable that workers would be laid
off. A key consideration at the time was maintaining social
stability, which would rely on how the re-employment of the
laid-off workers will be determined. Therefore, the
employment issue of the laid-off and unemployed workers
from the SOEs through a re-employment project was
extremely significant. The reform of SOEs and economic
restructuring in general also meant changing the rules of
markets and the government with regard to the
establishment of a new social security system, including
old age insurance, unemployment insurance and medical
insurance.
Implementation of a re-employment scheme to
facilitate the structural adjustment and reform of SOEs.
The re-employment scheme was a specific measure taken
to moderate labour market adjustments at a time when the
social security system in China was insufficient. The aim of
the project was to mobilise the entire society to solve the
re-employment of redundant workers from the SOEs
through the strengthening of job placement, unemployment
insurance, skills development and promoting the
development of employment service agencies. The SOEs
had, thus far, taken on several functions of social services
for the government and the workers for a long time.
Moreover, while the reforms meant that the enterprises
could no longer retain redundant workers unconditionally,
these enterprises were under obligation to protect their
basic livelihood over a transition period. For example,
internal arrangements were made through labour
reallocation and the adoption of flexible employment. There
were mainly three types of arrangement; enterprises
changed their job structures to promote internal movement,
April 2012 – Page 27
enterprises set up a sales company internally to place
some redundant workers and enterprises supported
market-oriented service companies to be set up to employ
workers. Many enterprises helped such service companies
until they could run by themselves and take full
responsibility for their own profits and losses. The
implementation of a re-employment scheme brought about
not only the reform of the labour and social security
system, but also set the basis for the labour market
formation in China.


The origin and development of the re-employment
scheme
The re-employment scheme was a measure taken by the
Chinese government when the social security system and
labour market mechanism were not in perfect order to
protect the rights and benefits of workers. The government
resorted to “social mobilisation” and urged all stakeholders
to extend support to this special group in terms of finding
jobs. The inherent aim was to allow the market play fully
the role of absorbing the labour force, facilitating the reform
of SOEs and enhancing the employment system, as
warranted in a socialist market economy. The central
government also sought to guarantee a basic living
standard for the laid-off workers from SOEs, together with
efforts to promote their re-employment. Therefore it was
planning to set up a social security system and an
employment mechanism which would accommodate the
requirements of a socialist market economy, within a period
of five years.



The laid-off workers: A profile
The rapid restructuring of the SOEs inevitably led to
massive lay-offs and labour displacements. Since the
SOEs were shedding labour in their bid to gain efficiency
and international competitiveness, there emerged
significant imbalances in labour supply and demand,
especially in the secondary, manufacturing sector. This
was a huge challenge for the Chinese authorities on how to
address the imminent issue of re-employing the laid-off
workers. It was difficult for the laid-off workers to become
re-employed, not only because their number was so great,
but also because their skills were either low or very
specific. Some of the characteristics of these workers were:

The majority of laid-off workers were women and
older people with a lower education level.
Statistics in 1999 showed that there were 2.65
million laid-off female workers, i.e. nearly 44.6%
of the total number of redundant workers. In
1999, 42.3% of laid-off workers were between
36–46 years old, 21.7% were more than 46 years
old, i.e., 64% of laid-off workers were more than
35 years old. Among the laid-off workers, 50%
had low levels of education.


The majority of laid-off workers came from SOEs
and had worked in the production line, especially
in the manufacturing industry. 82.9% of the laidoff workers were employed in the manufacturing
industry, 4.3% worked in the wholesale, retail,
trade, repair and catering industries, 3.6%
worked in the transportation, storage, post,
communication industries and 2,5% were in the
construction industry.
The income level of the laid-off workers’ families
was relatively low. Thus, the laid-off workers
generally belonged to relatively poor income
groups.
46.8% of the laid-off workers became reemployed. The mode of their employment could
be classified as of three types: 67,2% of them
were arranged by the service agencies, 31,3% of
them found jobs on their own and 1,5% of them
were engaged in self-employment.
Gender differences in re-employment were
marked. The re-employment rate for males was
57,6%, which was higher than that of the
females at 38,8%.
The young workers had some advantage in
getting a job in an enterprise while the older ones
were inclined towards creating their own
business. The re-employment rate for those
under the age of 35 was 48,2%, while for those
who were older than 45 years it was 44,7%. The
main reason for this concerned the workers’
health and social insurance as the older workers
were likely to incur health care costs more
frequently.
The re-employment rate of the laid-off workers
varied with different education levels. The laid-off
workers with an education level above junior
college had the highest re-employment rate,
recorded at 56,3%.
Most of the workers appeared to be re-employed
in the private sector tertiary enterprises. A large
proportion of workers were re-employed by
individual or private enterprises, 28,7% and
32,9% respectively. In addition, 19,7% of laid-off
workers were re-employed in SOEs.
The laid-off workers were predominantly in the tertiary
sector industries, accounting for nearly 73% of the reemployment. The secondary and manufacturing sector
could only absorb 27%.
The main contents of re-employment Scheme
The re-employment project was effectively a social
programme aimed at rehabilitating the unemployed in a
short time and helping the enterprises to arrange their
redundant workers through making use of policy support
and various employment services. It involved a
April 2012 – Page 28
combination of measures such as: jobs placement by
enterprises, self-employment by individual workers and
assistance by the government and society. There were
several aspects of the re-employment scheme, some of
which are as follows:
 Participation in transition training.
 Incentives to enterprises for setting aside jobs for
the unemployed.
 Encouraging employers to hire the unemployed
and redundant workers.
 Supporting workers to find jobs by themselves or
create their own business.
 Encouraging the enterprises to coordinate and
adjust vacancies amongst themselves regarding
re-employment and to provide the necessary
services such as employment guidance.
 Jobs information and consultation.
 Encouraging employers to hire redundant workers
on a probation period of three to six months.
 Incentives to set up dedicated labour-service
enterprises or agencies.
Flexible employment policy
Flexible employment was an important instrument of the
Active Employment Policy (AEP) to help re-employ
redundant workers and the unemployed. In China, flexible
employment refers to the economic activities involving
those who work in unstable workplaces, with unstable
employers, with no steady income and without a stable
work time in exchange for remuneration. Flexible
employment in China exists in the following forms: parttime employment; dispatched employment and
employment in micro enterprises. With intensifying reforms
of the Chinese economy and continuous adjustment of
industry structures, an increasing number of employees
were resorting to flexible employment such as part-time
jobs, temporary and other forms of flexible work. These
flexible employees, faced serious health insurance
problems. The former Ministry of Labour and Social
Security issued guidance on basic health insurance for
flexible workers as follows:


The flexible workers were to be covered by a basic
health insurance system.
The flexible workers were encouraged to participate in
social insurance through labour and social security
representation agencies at the local or community
level.
The AEP, implementation and monitoring of the reemployment policy
and directives to all regions and departments to enforce the
various policies and programmes. Further, the regions and
the departments were all required to establish monitoring
mechanisms, including daily inspections based on ad hoc
sampling, in order to overcome errors and constraints. The
monitoring process was strengthened through labour
inspection by the labour and security departments, as well
as by the use of publicity and raising awareness by the
mass media.
The monitoring and implementation of the AEP’s reemployment programme were not only strictly enforced, but
were also reviewed at the highest levels of government.
These reviews not only placed high priority on the AEP and
the re-employment issues, but also on the changing labour
market developments and the reality of the labour market.
The major targets of this monitoring campaign included,
inter alia; implementation of the outcomes of the National
Employment Meeting, progress on new job creation, reemployment of laid-off and unemployed workers, reemployment of relatively senior groups and the control of
the registered unemployment rate in urban areas,
implementation of all support policies such as the reduction
and waiving of charges, favourable tax policy, small-scale
credit, business registration, arrangement of business
venues, social insurance subsidy, job subsidy and the
separation of mainstream business from subsidiary
business, allocation and use of the re-employment fund,
implementation of intensifying public employment services,
progress on transition from basic living allowances for laidoff workers to unemployment insurance and
implementation of the so-called “three guarantees” policy
and various other policies related to re-employment.
The impact of growth and AEP on China labour market
Since 2002, with the rapid and continued economic growth
of the economy, together with the implementation of the
AEP, employment in China grew significantly and the
composition of employment gradually followed the usual
trends. Major achievements were obtained in terms of the
re-employment of laid off and unemployed workers in the
SOEs. At the same time, the labour market also
experienced huge changes with jobs in individual private
sectors growing rapidly and those in SOEs declining
significantly. Since the early 1980s, economic restructuring
and reforms boosted economic growth, which helped to
create conditions for job creation. Thus, in 2007, the total
number of employed people in urban and rural areas
reached 786 million, of which 293 million were in urban
areas and 476 million in rural areas. Between 2001 and
2007, there were 56.2 million new jobs created, with an
average of 9.36 million jobs per annum.
In view of the immediate goal of the AEP, i.e. the reemployment of the laid-off workers and the urban
unemployed, the Chinese government issued instructions
April 2012 – Page 29
China is fully committed to achieve full employment based
on the following characteristics: achieving a basic balance
between labour supply and demand; ascertaining workers’
skills and their quality is relatively fully developed so as to
influence their employment and stability in the labour
market relationships. It may be noted that China is among
the very few developing countries that are pursuing the
goal of full employment with full vigor. It has not only
developed a comprehensive policy and programme
framework, but it now has a detailed legal framework in the
form of an EPL.
The private sector was rapidly developing in China during
its reform process and was emerging as a main force for
national economic growth. Although state-owned and
collective enterprises were still the dominant source of total
jobs, the non-state or private sector had become a key
source of new job opportunities. From 2001 to 2007,
people engaged in private sectors in urban areas increased
from 36 million to 78 million, a net increase of 42 million.
People engaged in SOEs declined from 76 million to 64
million in the same period. People engaged in collective
enterprises also decreased from 12 million to 7 million.
Conclusion
The target of “full employment” in China
China’s employment and labour market policies have been
formulated and continuously reviewed in the light of
achieving a socialist market economy and building a
harmonious society. Hence, the target of full employment
has been a constant pursuit in China’s attempts to grow
within a people-oriented development strategy. As a result,
China is fully committed to achieve full employment that is
characterised by these three critical characteristics;
achieving a basic balance between labour supply and
demand, ascertain workers’ skills and their quality is
relatively fully developed so as to influence their
employment and stability in the labour market relationships.
The Chinese government has developed the blueprint for
the pursuit of full employment which rests on ensuring that:
 All the workers who are able and willing to work
can find an employment opportunity.
 Developing
a
mature,
market-oriented
employment and labour-market mechanism
whereby workers are free to choose jobs or set
up businesses.
 Fully developing and utilising labour resources in
the urban and rural areas.
 Ensuring the stability of job, and enhancing
workers’ earnings through improving the quality
of employment.
References
All accessed on 20 April 2012:
China Statistical Yearbook. China Labour
Transition: Economic Survey 2010. www.bca.com
Market
Ministry of Human Resources and Security, People’s
Republic of China, 2011. China: From Active Employment
Policy to Employment Promotion Law: Coping with
Economic Restructuring and Labour Market Adjustments.
www.ilo.org. International Labour Office. Geneva
April 2012 – Page 30
LABOUR RELATIONS IN
AFRICA
EFFECTS OF UTILITY PRICE INCREASES ON A MACRO AND MICRO LEVEL
By Boitumelo Rakau
Introduction
The recent fuel and electricity price increases along with the
planned levy on petrol and diesel, may force many business
owners to revisit their operational efficiencies, says Kobus
Engelbrecht, a Marketing Head of Sanlam Business Market.
The impact of these price upsurges will in evidently have dire
consequences on the livelihood of many consumers and the
sustenance of many business operations.
Macro level effects: Operating in an uncertain
environment
While the Eskom tariff increase was not necessarily as high
as originally expected, it is never possible for business
owners to steadily predict fuel and electricity increases, as
these are linked to economic and political factors beyond
their control. Thus, this leaves many business owners
uncertain about the adequate turnaround time that is
required per task performed by its labour force. As a result
many operations usually run at a loss when such price
increases become operational hindrances.
Electricity tariffs increased by 16% on April 2012. Last
month, the National Energy Regulator of South Africa
decided to reduce Eskom's average price increase to 16%
for the period until March 31 2013. Eskom initially wanted to
increase tariffs by 25.7%. The University of the
Witwatersrand School of Economic and Business Sciences
is of the opinion that the price increases will result in
businesses being less profitable and may lead to their
foreclosures or the adoption of less energy intensive
processes.
Professor Neil Rankin of the institution said while consumers
must expect higher prices, what they should also expect is a
decrease in job opportunities as price increases generally
lead to lower economic growth. The Manpower Employment
Outlook Survey indicated that job-seekers will struggle to get
jobs between April 2012 and June 2012. The report shows
that 9% of employers are expecting to grow their staff levels,
another 9% predict a decrease in employment while 81% are
forecasting no change in staffing levels. People looking for
jobs in KwaZulu-Natal and Eastern Cape will struggle as
their employment outlook is weakest at 7% and 2%
respectively.
According to the Adcorp Employment Index, in January
80,000 jobs were created. However, that figure shrank to
24,000 in February. Andy Bryant of Chester Finance said,
“South Africa has seen significant cost increases for the two
primary sources of energy - electricity and fossil fuel. In
addition, businesses are also facing the introduction of road
tolls, which will all have serious implications for the running
costs of businesses, and particularly smaller businesses."
Increases in the price of petrol and electricity typically mean
that employers will be more reluctant to expand on its labour
force or make any provisions for monetary incentives. The
petrol price hike of 71 cents per litre inland and 66 cents per
litre in coastal areas is considered the largest increase since
July 2008. Thus, petrol will cost an employee as well as an
employer R11.94 a litre inland and R11.59 at the coast.
April 2012 – Page 31
The CCMAil is distributed quarterly. If you would like to make a contribution, subscribe or have any comments, e-mail HO@CCMA.org.za
However, it is evident that business owners will persistently
be faced with the reality of unexpected price increases, since
a majority of their operations are reliant on the turbulent
economic market.
Micro level effects: Congress of South African Trade
Unions (COSATU)’s response
Revised Costs
The option entails passing on fuel and electricity increases to
the business’s clients. This should always be reviewed
against what the business believes its clients are prepared to
pay for their product or service. However, businesses need
to consider that by increasing the product/service prices,
their clients will automatically re-evaluate the value of the
product/service that is being offered. Therefore, the value or
stand needs to increase as prices increase, unless there is a
dismal need for the product/service.
For businesses, particularly those that offer transportation or
delivery services, they should avoid raising their prices due
to higher fuel prices. Instead such businesses should charge
their clientele a separate fuel surcharge. The advantage of
such a fee is that it makes it clear to customers that the fuel
prices are responsible for their having to pay more and not
the business’s need for higher profit margins Only the
business owner who thoroughly knows his or her clients will
be able to judge whether such a tactic will work or not.
Engelbrecht suggests that business operations have a
thorough understanding of their operational costs at all
times, either through financial projections or through other
fiscal management projections. Furthermore, it may be of aid
if most business aimed at reducing costs rather than opting
for new equipment, personnel and structures within such
unstable economic climates.
There are other strategies that can be employed in order to
curb the influx of operational issues that are prevalent in
such economic conditions. These can include; improved
route planning by both the employers and the employees,
making cost-effective changes to a vehicle fleet or carefully
considering the costs of utilizing postal services or courier
services on certain delivery routes. In some extreme
instances, business relocation may even be an option to
reduce costs and build greater efficiency into operations.
25% of households within most of South Africa’s
communities are still without electricity and 53% of these
households make use of firewood for cooking purposes,
whilst the remainder makes use of other unrecorded means.
According to Patrick Craven, a spokesman from COSATU,
“COSATU has over and over again acknowledged and
celebrated the tremendous strides made by the ANC
government...but the current rates of unemployment, poverty
and inequalities, and the unequal levels of service delivery,
in particular as they affect women and youth, are a ticking
time bomb”. It is inevitable that the households belonging to
lower Living Standards of Measurements (LSMs) are
expected to be the least organised in such economic
turbulence and often, the worst resourced. In spite of their
marginalised lifestyles, they represent a large proportion of
the votes towards the ANC and yet they bear a
disproportionate burden.
Craven asserted that individuals were already struggling to
afford their electricity payments and had challenges with the
load shedding schedule as well as the latest expectancy that
they should be able to sustain their households when prices
increase.
While energy prices are continuously exerting pressure on
consumers, Isaac Matshego, an Economist at Nedbank,
believes that there is little room for the South African
Reserve Bank to cut interest rates. "Clearly, when you are
looking at the numbers, there could be a strong argument to
cut interest rates, but on the basis that inflation is becoming
a problem, the Reserve Bank has decided not to cut. In this
environment a cut could just push inflationary pressures
further. In a slowing economy, inflation is under pressure
and retailers are not making as many sales as they would
perhaps want."
However, Matshego affirmed that “the Reserve Bank is
expecting to see Europe stabilising, which would help the
world economy to pick up and boost domestic growth”.
Therefore, the influx of growth would positively affect the
inflation rate resulting in its decrease towards the end of
2012. The current rate of inflation is 6.1% with the South
African Reserve Bank aiming to keep it 3% and 6%.
Conclusion
The decrease on inflation rates, may adversely affect the
country’s savings portfolios, especially those belonging to
pensioners, who depend on the large interest gained on their
pension funds.
April 2012 – Page 32
The CCMAil is distributed quarterly. If you would like to make a contribution, subscribe or have any comments, e-mail HO@CCMA.org.za
References
All accessed on 2 April 2012:
Fuel
Increases
Affect
SMEs
http://www.entrepreneurmag.co.za/entrepreneur-today/fuelincreases-affect-smes/
Electricity, petrol price hikes a harsh blow for the poor:
Cosatuhttp://www.timeslive.co.za/local/2012/04/02/electricity
-petrol-price-hikes-a-harsh-blow-for-the-poor-cosatu
Price
hikes
anguishhttp://www.sowetanlive.co.za/news/business/2012/0
4/04/price-hikes-anguish
Pressure
mounts
for
consumers
http://www.sowetanlive.co.za/news/business/2012/04/04/pre
ssure-mounts-on-consumers
April 2012 – Page 33
The CCMAil is distributed quarterly. If you would like to make a contribution, subscribe or have any comments, e-mail HO@CCMA.org.za