RECENT CASE LAW

 

Extension of collective agreements in terms of section 23 (1) (d) of the LRA and the "knock on effect" on the right to strike: AMCU v Chamber of Mines of South Africa CCT87/16 [2017]

 

 

1 lntroduction

The Labour Relations Act (Act 66 of 1995) (LRA) aims inter alia to promote orderly collective bargaining, collective bargaining at sectoral level and to advance the democratization of the workplace (section 1 of the LRA). This is in keeping with the right of trade unions, employers and employers' organisations to bargain collectively enshrined in section 23(5) of the Constitution of South Africa, 1996. The end product of collective bargaining is a collective agreement as defined in section 213 of the LRA. Collective agreements are an effective tool to regulate terms and conditions of service and other matters of mutual interest (Du Toit (ed) et al Labour relations Law (6th ed) (LexisNexis 2015) 309). These collective agreements are capable of being extended to other parties who are not signatories thereto. Two possibilities of extension are envisaged in section 23(1)(d) and section 32 of the LRA. Section 23(1)(d) provides that a collective agreement binds employees who are not members of the trade union or trade unions party to the agreement provided that three conditions are met, viz the employees are identified in the agreement; the agreement expressly binds the employees; and the trade union or trade unions concluding the agreement enjoy majority membership of employees employed in that workplace (See Fakude & others v Kwikot (Pty) Ltd [2012] ZALCJHB 169 par 34). The extension envisaged in section 32 relates to collective agreements concluded at a bargaining council and which require the endorsement of the Minister for them to be extended to an entire sector. The Constitutional Court in AMCU v Chamber of Mines of South Africa CCT87/16 [2017] was faced with a contended section 23(1)(d) extension applicable at workplace level.

A difficulty arises where an extended collective agreement limits certain rights enshrined in the Constitution. In the AMCU case, the extended collective agreement limited the non-party trade union and non-party employee's right to strike for matters relating to wages and conditions of employment. The right to strike is a very important bargaining tool for workers and trade unions and is protected by section 23(2)(c) of the Constitution and section 64(1) of the LRA. This limitation is triggered in terms of section 65(1)(b) of the LRA which proscribes any person to partake in a strike if that person is bound by a collective agreement that prohibits a strike in respect of a particular dispute. This difficulty is compounded by situations where the business of the employer operates at different geographical locations (Chamber of Mines v AMCU & others (J 99/14) [2014] ZALCJHB 13 par 36). The question that arises is whether the different sites constitute separate workplaces or remain a single workplace. The LRA defines a workplace as the place or places where the employees of an employer work. If an employer carries on or conducts two or more operations that are independent of one another by reason of their size, function or organisation, the place or places where employees work in connection with each independent operation, constitutes the workplace for that operation (section 213 of the LRA). The Constitutional Court in AMCU was faced with this question coupled with a constitutional challenge to the principle of majoritarianism embedded in the scheme of the LRA. This note provides a conspectus of the facts and the decision of the court. Moreover, it discusses the rationale for a provision such as section 23(1)(d), the meaning of a "workplace" as defined in the LRA and explicated by the court. International and foreign law comparators are drawn to make the point that the practice of extending collective agreements to non-parties is not peculiar and lastly some remarks on the limitation of the right to strike are made.

 

2 Factual matrix of the case

In 2013 the Chamber of Mines of South Africa engaged in negotiations on wages and conditions of service on behalf of its members in the gold mining sector. The mining companies represented by the Chamber of Mines were Harmony Gold, AngloGold Ashanti and Sibanye Gold. The chamber of mines entered into these negotiations with the National Union of Metalworkers (NUM), Solidarity and the United Association of South Africa (UASA) as they represented the majority of workers in the sector. The applicant, Association of Mineworkers and Construction Union (AMCU), was also invited to these negotiations as it represented a minority of workers sector-wide but had a majority membership in certain individual mines. These negotiations culminated in a collective agreement that was accepted and endorsed by all the parties except AMCU. This agreement dealt with wages and other conditions of employment. Moreover, the agreement explicitly stated that it was an agreement as contemplated in section 23(1)(d) of the LRA. Among other provisions, it stated that no party bound by the agreement could call for a strike or lockout in respect of issues dealt with in the agreement for as long as it subsisted. Although the collective agreement expressly made itself applicable to all employees working for the represented mining companies, AMCU maintained that its members were not bound by the agreement since it was not a party thereto. Perhaps it serves justice to mention that the issues raised by AMCU were legitimate and related to the very dignity and livelihood of mineworkers. The union was demanding a R12 500 basic salary for its members (Mapenzauswa and Shabalala "AMCU accepts Sibanye Gold new wage offer" 10 April 2016 Moneyweb accessed at https://www.moneyweb.co.za/news/companies-and-deals/amcu-accepts-sibanye-gold-new-wage-offer/ (accessed on 2018-06-08)).

In 2014 AMCU served the three mining companies with a notice to strike over the same issues dealt with in the agreement. The Chamber of Mines approached the Labour Court for an urgent interdict proscribing the strike. The urgent interdict was granted and on the return day, the Court confirmed the order. AMCU then lodged an appeal against this interdict to the Labour Appeal Court and that appeal was dismissed. The matter was then brought to the Constitutional Court as there was evidently a challenge on the constitutionality of s23(1)(d)(iii) read with s65(3) of the Labour Relations Act. Apart from the issue of jurisdiction, the Constitutional Court had to make a determination on the meaning of a "workplace" for purposes of s23(1)(d). Furthermore, the Court had to decide on the constitutionality of limiting the right to strike, the right to collective bargaining and the right to freedom of association in terms s23(1)(d) read with s65(3) of the LRA.

AMCU argued that each individual mine and operation was a separate "workplace" for purposes of s23(1)(d) and that the collective agreement did not extend to those workplaces where it had a majority and thus it was entitled to strike in those mines or operations. It argued that the forum in which the agreement was concluded operates as a bargaining council although not recognized or registered as such, therefore an extension of the agreement, if any, had to take place in terms of section 32 of the LRA. Section 32 provides that the Minister of Labour may extend a collective agreement concluded in a bargaining council provided that the majority unions and majority employers involved vote in favour of such an extension. AMCU therefore contends that what the Chamber is doing is in fact sidestepping of the requirements of section 32. In the alternative, AMCU challenges the Constitutionality of section 23(1)(d) in that it unjustifiably limits the right to strike, to bargain collectively and to freedom of association. Lastly, the union argued that the section 23 extension offends the rule of law in that it constitutes exercise of public power with no oversight or remedy in cases of abuse of such power and the private actors who exercise such power are not bound by the duties of public administration and public interest in section 195 of the constitution. This note limits the analysis to the two former issues and does not deal with the rule of law argument, which the court responded to adequately.

 

3 Decision of the Court

With regards to the meaning of a "workplace", the court considered arguments that discourage any notion that the term as used in section 23(1)(d) may mean a single place where a worker works as the word may be used in common parlance (par 26). It was pointed out that a workplace is not the place where every single employee works, such as that individual employee's desk or office. Rather, it is where employees collectively work. This construction is more line with the promotion of orderly collective bargaining as the object of the Act. Moreover, the court pointed that functional organisation is more important than location. The definition envisages a place or places where employees work denoting the possibility of multiple locations where work is being carried out. An important consideration is whether an operation is independent and not where it is located (par 27). What is more important is whether the operation at separate locations are independent of each other. The term "workplace" therefore does not have its ordinary meaning for purposes of the LRA (par 29). The question whether the different mines at which AMCU enjoyed majority constituted separate workplaces therefore becomes a factual one bearing in mind the statutory definition of a workplace (pars 30-31). Factual evidence relating to organizational methodology, processes and procedures was led in the Labour Court and the Labour Appeal Court and both courts could only conclude that the individual mines did not constitute workplaces or independent operations. Some of the evidence produced by the mining companies showed that the mining licenses were held by the mining companies and not by the individual mines they operated (Association of Mineworkers & Construction Union v Chamber of mines of SA acting in its own name & obo Harmony Gold Mining Co (Pty) Ltd [2016] ZALAC 11 pars 55-57). All the mines owned by the mining companies are controlled from one central head office where all production and financial planning take place (ibid). Financial management; human resources; IT systems and procurement are all centralised (id). The mining companies were the employers and not each individual mine (id). The court agreed with AMCU that the exercise it had to engage in was both interpretational and factual (pars 34-36). Considering these factors, the court concluded that there is no reason to regard each AMCU-majority mine as a separate workplace and deviate from the statutory definition (pars 38-39). It was held that the extension of the agreement to AMCU members at the AMCU-majority mines was valid (par 40).

The court then turned to deal with the constitutional attack on section 23(1)(d). It extrapolated the gist of AMCU's challenge against the application of the principle of majoritarianism recurrent in the LRA (pars 42-43). AMCU contended that the tenets of section 23(1)(d) infringed upon the right to strike and the right to freedom of association. Using the words of Zondo JP, as he then was, in Kem-Lin Fashions CC v Brunton [2000] ZALAC 25, Cameron J made the point that the legislature made a policy choice and that choice was that the will of the majority must prevail and that the LRA had numerous provisions illustrating this policy standpoint (par 43). This was done to promote orderly and productive collective bargaining. Section 23(1)(d) enhances the power of the majority union within the workplace (par 44). Granted, the codification of the principle of majoritarianism in section 23(1)(d) limits the right to strike. However, such a limitation is reasonable and justifiable given the purpose of the limitation; the fact that the limitation only subsists for the duration of the agreement and that it limits the rights for specific issues viz wages and conditions of service (pars 50 & 58). The court further pointed out that the principle of majoritarianism has been recognized by the court in TAWUSA v PUTCO Ltd [201 6] ZACC 7 (CC) where Khampepe J said that majoritarianism in the context of section 32 only finds application after a collective agreement has been concluded and the majority seeks to extend it (par 57). The same applies with regards to a section 23(1)(d) extension. AMCU's contention that the extension offends the rule of law was also rejected by the court (pars 82-87).

 

4 Discussion

4 1 The rationale for section 23(1)(d)

Section 23(1)(d) is a minuscule provision with serious ramifications. Before the introduction of the LRA, there existed a legal lacunae and uncertainty with regards to the binding effect of collective agreement (Du Toit (ed) et al 311-312). Only collective agreement concluded at the industrial councils had a binding effect and were in fact regarded as subordinate legislation (Vauthier "Collective agreements: A comparative study between Belgium and South Africa" (1998) Unpublished LLM dissertation (University of South Africa) 82). The labour courts, however, have always expressed that the will of the majority, provided that it is in the interests of both the majority union and majority of the affected workers, should prevail over that of an individual (Ramolesane & another v Andres Mentis another (1991) 12 ILJ 329 (LAC) par 335H, See also Du Toit "An ill contractual wind blowing collective good? Collective representation in non-statutory bargaining and the limits of union authority (1994) 15 ILJ 39). The courts were therefore supporting the position that collective agreements negotiated by majority unions and in the interests of the majority workers bound the parties thereto and bound the minority irrespective of the forum they were negotiated (ibid).

Section 23 of the LRA removed this uncertainty and gave all collective agreements, as defined in section 213 of the Act, a statutory binding effect (section 23(1)(a) of the LRA). Section 23(1)(d) confirms the legislative policy of governance by majority as it allows the majority to extend a collective agreement and bind minority union members and non-unionised employees. The Labour Appeal Court has stated that a trade union that enjoys majority in a workplace may conclude a collective agreement with an employer and extend that agreement to bind all employees of that employer. This includes those employees who are not members of the union, those who may have been its members and resigned and those that the employer is still to employ in the future (Mzeku and others v Volkswagen SA (Pty) Ltd and others [2001] 8 BLLR 857 (LAC) pars 55 and 67).

Section 23(1)(d) is amongst numerous sections in the LRA which encapsulate the legislative policy choice of majoritarianism. That choice is based on the legislature's assumption that it would best serve the primary objects of the LRA of labour peace and orderly collective bargaining (Aunde South Africa (Pty) Ltd v NUMSA [2011] 10 BLLR 945 (LAC) par 32; see Cohen "Limiting organisational rights of minority unions: POPCRU v Ledwaba 2013 11 BLLR 1137 (LC)" (2014) 17.5 PER 2211. See also Du toit (ed) et al Labour Relations Law (6th ed) (LexisNexis 2015) 283-284).

The Labour Court remarked that if the minority employees represented at the workplace by AMCU were to succeed and have a new wage agreement to come about and to supplant the existing collective agreement, the minorities would be governing the majority in the workplace and that would be an undesirable outcome (Chamber of Mines v AMCU & others (J 99/14) [2014] ZALCJHB 13 par 44). Section 23(1)(d) also serves to discourage the proliferation of minority unions in one workplace which is in keeping with the majoritarian preference in the Act. Although the Act provides for the recognition and endorsement of minority unions, a reading of provisions such as section 21((8)(a) which encourages commissioners faced with a dispute regarding the representativeness of a union to seek a solution that minimizes proliferation of unions in a single workplace. This also helps minimise the financial and administrative burden of having to provide stop-order facilities and office space to many unions in one workplace (SA Commercial Catering & Allied Workers Union v The Hub (1999) 20 ILJ 479 (CCMA) 481).

The Labour Appeal Court alluded to the Constitutional importance of section 23(1)(d) (AMCU v Chamber of Mines acting in its own name & obo Harmony Gold Mining [2016] ZALAC 11). To really appreciate the importance of this provision, one has compare it with its equivalent in section 31. Section 31 deals with the binding nature of collective agreements concluded in a bargaining council (ibid par 42). The provisions of section 31(a)-(c) are similar to those in section 23(1)(a)-(c) (ibid). Collective agreements concluded in bargaining councils are capable of extension in terms of the mechanism in section 32. Section 23(1)(d) serves to extend agreements concluded outside a bargaining council (ibid). This provision therefore ensures that the absence of a bargaining council does not preclude the exercise of the right to collective bargaining enshrined in the Constitution (ibid par 47).

What happens in a situation where a minority union has concluded a collective agreement that in conflict with a collective agreement extended in terms section 23(1)(d)? Du Toit opines that the extended collective agreement must prevail as it sanctioned statutorily (Du toit (ed) et al 313). It is submitted that even if the trade union had its way and concluded a separate agreement in conflict with the majority, a proper application of the law will see the will of the majority prevail. This is called workplace democracy (Cohen 2210 &2218). This also shows the consistency in the majoritarianism characterizing the whole LRA and the role section 23(1)(d plays towards this (Kruger & Tshoose "The impact of the Labour Relations Act on minority trade unions: A South African perspective" 2013 (16) 4 PER 288-289).

4 2 "Workplace" envisaged in section 23(1)(d)

The statutory definition of a "workplace" was supplied in the introductory remarks above. This definition is exclusively applicable to the private sector. Whether a site constitutes a "workplace" is a question of fact. The meaning of the term is incontrovertible in a situation where all employees work in one place. That is their workplace. However, in situations such as the one in this case, where there is locational multiplicity, the separate locations may be separate workplaces but they are also capable of constituting a single workplace (Chamber of Mines v AMCU & others supra par 32, Thompson in Cheadle et al Current Labour Law 1997 (Juta Cape Town 1994) 3). Deciding whether two or more locations are separate workplaces entails an examination of the extent to which they operate independently of each other, which in turn entails a consideration of the size, function and organisation of each (Brassey Commentary on the Labour Relations Act (Revision Service 2) (Juta Cape Town 2006) A9-35-A9-36). The correct procedure to determine if a site constitutes a workplace, requires on to look at the facts of a particular case with the definition in mind (SA Commercial Catering & Allied Workers Union v The Hub (supra), AMCU v Chamber of Mines of South Africa supra par 30-31)

In terms of the definition in section 213, the criterion to determine if two or more places of work owned by the same employer constitute separate workplaces, requires on to consider their size, function or organisation. The meaning given to a word in terms of this section applies throughout the entire Act unless the context in which it is used indicates otherwise ( AMCU v Chamber of Mines acting in its own name & obo Harmony Gold Mining supra par 49-51). A determination that the statutory definition is applicable to the term "workplace" means that the extension of collective agreements in terms of section 23(1)(d) encompasses the entire workforce irrespective of the geographic location. As the Constitutional Court held, the "workplace" envisaged in section 23(1)(d) is the same as the one contemplated in section 213.

4 3 Limitation on the right to strike

The Constitutional Court has recognised the historical and contemporary importance of the right to strike in safeguarding the dignity of workers and to enable them to assert their bargaining power in labour relations (NUMSA & others v Bader Bop & another [2003] 2 BLLR 103 (CC) par 13). This right is an important component of a successful collective bargaining system (ibid). Therefore, this right is not an end to itself but a means to an end. The end product is effective collective bargaining that enables the workers to influence the terms and conditions of employment (Chamber of Mines v AMCU & others (J 99/14) [2014] ZALCJHB 13 par 50).

Provisions such as section 65(1)(a) imposes a limitation on this right by prohibiting employees bound by a collective agreement that proscribes a strike in respect of the issue in dispute. As noted by the court, the limitation fashioned by the section 23(1)(d) extension on the right to strike is merely a "knock on effect" as the provision is not meant to limit the right but to extend collective agreements (AMCU v Chamber of Mines of South Africa CC par 44, See also Chamber of Mines v AMCU & others (J 99/14) [2014] ZALCJHB 13 par (54). Section 65(1)(a) of the LRA prohibits employees from embarking on a strike if the issue in dispute is regulated by a collective agreement.

Section 23 of the LRA deliberately limits the right to strike in order to attain orderly collective bargaining and fair and expeditious resolution of disputes. The limitation may be generally unfair, however, depending on the circumstances of a particular case it may be justifiable (National Union of Metalworkers South Africa obo members' v South African Airways Soc Limited & Another [2017] ZALAC 32 par 34). To check the justifiability of the limitation, we have to hold it against the section 36 scrutiny. Section 36 of the Constitution provides that the limitation should be reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom. Factors such as (a) the nature of the right; (b) the importance of the purpose of the limitation; (c) the nature and extent of the limitation; (d) the relation between the limitation and its purpose; and (e) less restrictive alternatives means to limit the right while achieving the same purpose, should be taken into account.

Although the court did not deal with these factors one by one, the judgment shows that they were considered. The limitation imposed by the provision does not abrogate the right categorically and the extension does not preclude the minority from joining or participating in the collective bargaining process (Cheadle "Collective bargaining and the LRA" 2005 (9) 2 Law, Democracy & Development 153). It only means that when there is disagreements about the issues regulated by the collective agreement, there will be no strike. This is referred to as a peace clause inserted in favour of the employer (Rautenbach "The constitutionality of statutory authorization to conclude collective agreements that bind nonparties not to strike" 2017 (4) TSAR 863). Pienaar and Badenhorst posit that in this particular case there is no less restrictive means of achieving the purposes of orderly collective bargaining (Pienaar & Badenhorst "Minority trade unions are bound by extended collective agreements" Employment Alert May 2015 available at https://www.cliffedekkerhofmeyr.com/export/sites/cdh/en/news/publications/2015/employment/downloads/Employment-Alert-18-May-2015.pdf (accessed on 2018-0601). Rautenbach argues that adding a requirement of administrative approval by an executive or administrative organ similar to the section 32 procedure would be a less intrusive way to limit this right (Rautenbach 864-865). This author asserts that administrative control, even if the scope is very limited, serves as a procedural safeguard because the exercise of such discretion must comply with rules of admistrative law and may not violate the right to just administrative action (ibid). The court had an opportunity to justify why the legislative policy of majoritarianism could not be subjected to judicial review because it was now part of legislation and was clearly limiting rights. The court should have dealt with this aspect instead of just mentioning that the policy choice justified the limitation of the right to strike.

4 4 Foreign and international comparators

The Constitutional Court agreed with the National Union of Mineworkers' (NUM) submission that majoritarianism is internationally recognised as a tool to enhance collective bargaining (par 56). Among the instruments considered was article 5(1) of ILO Collective Agreements Recommendation, 1951 (No 91) (Collective Agreements Recommendation) which states that measures should be taken, where appropriate, to extend the application of all or certain clauses of a collective agreement to all employers and workers within a certain industrial and territorial scope of the agreement (See ILO policy brief by Visser, Hayter and Gammarano "trends in collective bargaining coverage: stability, erosion or decline?" accessed at http://www.ilo.org/wcmsp5/groups/public/-ed_protect/-protrav/-travail/documents/publication/wcms_409422.pdf (accessed on 2018-06-08). The report of the ILO Committee of Experts' General Survey on the Fundamental Conventions concerning Rights at Work in Light of the ILO Declaration on Social Justice for a Fair Globalisation 2008 (Report III (Part 1B) ILO Conference 102st Session 2012) expresses a view that the extension of collective agreements to non-parties is not contrary to the principle of voluntary collective bargaining and does not violate Convention 98 of the ILO. The court noted that, in fact, international instruments require a mere sufficient representation to extend agreement to bind non-parties and not majority. Article 5(2) of the Collective Agreements Recommendation provides that national legislation may make collective agreements extendable to non-parties subject to inter alia the condition that the collective agreement already covers sufficiently representative employers and workers. Lastly, the court considered the Freedom of Association: Digest of Decisions and Principles of the Freedom of Association Committee of the Governing Body of the ILO (5 ed, 2006). This instrument stipulates in pars 356 and 1052 that the extension of a collective agreement to cover non-parties does not in principle contradict the principles of freedom of association since under the law, the most representative organisation negotiates on behalf of all workers (ibid fn 55 and 56).

The Organisation for Economic Co-operation and Development (OECD) countries (the OECD is made up of the following member countries: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States) have two legal mechanisms in which they extend collective agreements to non-parties (Traxler "Collective bargaining: levels and coverage" in OECD Employment Outlook (1994) 178-179). The first is to extend a collective agreement to bind everyone within a particular sector or region generally (ibid). This extension is usually sanctioned by the Labour Ministry of the country provided that certain preconditions are met. For example, in Germany the bargaining parties concluding the agreement must represent at least 50 per cent of employees within that sector (ibid). The second mechanism is commonly referred to as an enlargement. This type of extension binds employers and employees in a sector or geographical area outside the domain of the collective agreement if they are economically similar to those covered in the agreement (ibid). Member countries such as Austria, Belgium, France and Portugal have a significant number of collective agreements that are regularly extended (ibid). Provisions for extending collective agreements are made in the Japanese labour legislation although these are seldom used. Norway and Sweden have highly centralised bargaining systems but do not have extension mechanisms (ibid). Collective agreements relating to welfare issues such as pension and training are extended by the state based on the principle of erga omnes (towards all or towards everyone) in Denmark, France, Germany and the Netherlands (Trampusch "Industrial Relations as a Source of Solidarity in Times of Welfare State Retrenchment" (2007) 36(2) Journal of Social Policy 206-210).

Out of the 27 European Union (UE) member states, 21 have legal provisions to extend collective agreements to non-parties (Kerckhofs "Extension of collective bargaining agreements in the EU: Background paper" 2011 Eurofound 1 available at http://www.bollettinoadapt.it/old/files/document/15105EF_collectivebar.pdf (accessed on 2018-06-06). Extension of an agreement in the UE is normally done by means of an administrative decision by the labour ministry, a publication in an official journal, or both. Usually, there's a precondition relating to the threshold levels of the bargaining parties.

 

5 Conclusion

The decision of the court in AMCU demonstrated that the impugned section 23(1)(d) of the LRA can withstand constitutional scrutiny, especially when considered in conjunction with the policy of majoritarianism embedded in the LRA. A challenge to the provision is also a challenge to the legislative policy chosen by the legislature and this has a far-reaching effect as it involves the whole scheme of the Act and not just section 23(1)(d). In any case, the union that sought to attack the principle wanted to rely on its majority representation in some mines of the employer. This is therefore a self-defeating exercise. The judgment has also highlighted the constitutional importance of this provision. It has shown that section 23(1)(d) ensures that employees whose trade union operates outside a bargaining council can still exercise their right to collective bargaining effectively. The note has considered the significance of the right to strike but that it is not absolute and the limitation imposed upon it is merely collateral and justifiable in an open and democratic society. Lastly, consideration of international and foreign jurisprudence demonstrates the international recognition and acceptance of the practice. Furthermore, it vindicates the importance of section 23(1)(d) with its specificity because in most EU countries, agreements are extendable to entire sectors through some administrative action. Section 23(1)(d) creates the possibility to extend within one employer but encompasses all the workers.

Bongani Khumalo

Thabo Mbeke Institute (TMALI), University of South Africa