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