Collective agreement: Settlement with all employees

Ausa v SAA Soc Ltd (J1506/15) [2015] ZALCJHB 258 (17 August 2015) per Myburgh AJ.

The Labour Court refused to interdict a mass dismissal. Some trade unions applied under s 189A(13) of the LRA for relief, alleging procedural unfairness. The employer concluded a collective agreement with unions representing the majority of employees and extended the agreement in terms of s 23(1)(d) of the LRA. It was held that the extension was valid and binding on non-union members and minority union members and settled any dispute covered by the agreement relating to alleged procedural unfairness.

Extracts with footnotes omitted:

[1] The companies need little introduction – SAA is the national carrier, and SAAT (a subsidiary of SAA) provides it with technical services. SAA’s financial woes are a matter of public record. In the 2013/14 financial year, it made a loss of R2.6 billion. The retrenchment exercise that this application relates to involves an attempt by SAA to save R350 million per annum in the cost of employment, which may involve the cutting of a vast number of jobs.

[2] Union membership figures at the companies are as follows. SAA employs 4265 employees, of whom just short of 80% belong to either NTM, SACCA or UASA (these being the three unions recognised by SAA). The only other union that has membership at SAA is NUMSA, but it only has 78 members (less than 2%) and is unrecognised. Turning to SAAT, it employs 2485 employees, of whom some 77% belong to the two recognised unions – AUSA and SATAWU. The other unions that have membership at SAAT, but who are unrecognised, are NTM, NUMSA and Solidarity.

. . . . .

[37] As mentioned above, the applicants also contend that the retrenchment agreement ought not to be upheld beyond the parties thereto, because the companies consulted in bad faith in: not disclosing information; breaching the agreement reached with the CEO; entering into the retrenchment agreement while the disclosure application was pending; and concluding the retrenchment agreement in a “cavalier” fashion. In my view, the short answer to all of this is that the retrenchment agreement, and its extension to non-party employees, constitutes, in effect, a settlement of any and all such complaints (which have thus been extinguished).

[38] Another answer lies in the acknowledgement of the fact that consultations over large-scale retrenchment, which may culminate in strike action in terms of section 189A, overlap with a process of collective bargaining. Where that process produces a collective agreement (which is then extended to non-party employees), provided the agreement is lawful, this court will not intervene to scrutinise the bargaining conduct of the parties or the terms of the agreement, any more than it would intervene in the case of a protected strike to pass judgment on the merits of a demand. [See Vanachem Vanadium Products (Pty) Ltd v National Union of Metalworkers of SA & others (2014) 35 ILJ 3241 (LC) at para 19]

3 Comments

GilesFiles on August 28, 2015 at 3:42 pm

Extract from Prof Darcy du Toit’s latest Weekly Comment on IR Network published online by LexisNexis [subscription required]: Majoritarianism in the context of retrenchments.

NUMSA took issue especially with the extension of the collective agreement to its own members, thus putting an end to the consultation process. It argued that “[w]here an all-comers consultation model had been agreed to, an employer cannot change tack when it suits it to a majoritarian model”, that the extension deprived minority unions of their right to consultation in terms of section 189 and that section 189A did not contemplate “the conclusion of a retrenchment agreement with the majority and extension of it to the minority” (para 20).

The court disagreed with all these submissions. First, it found that section 23(1)(d) clearly permits the extension of all collective agreements without exception, not excluding “retrenchment agreements”. Nor could it find any reason for reading such an exclusion into section 23(1)(d). Section 189(1) in the first place calls for consultation with “any person [such as a majority trade union] whom the employer is required to consult in terms of a collective agreement” and, in that case, does not require consultation with minority unions. The logical implication is that any collective agreement reached with the majority union will dispose of the need for further consultation, also as far as minority unions are concerned.

To that extent, the court noted, the extension of collective agreements may well result in curtailing the rights that minority unions or individual employees may have had to negotiate those same issues. But this is not accidental; “section 23(1)(d) is amongst numerous sections in the LRA which encapsulate the legislative policy choice of majoritarianism” (para 30). By entering into a joint consultation process at both companies, neither the employers nor the unions waived their right to sign collective agreements at either company. Consultation, in other words, does not presuppose agreement and can at best inform an agreement, but cannot trump a collective agreement or, much less, prevent one from being reached.

GilesFiles on September 1, 2015 at 10:31 am

Extract from PAK le Roux’s discussion of this judgment in (2015) Contemporary Labour Law 25:01 p 8 [subscription required] – Who becomes bound by collective agreements ?

The employer then commenced the retrenchment process as agreed. This resulted in various unions, who were not party to the agreements, seeking orders preventing the employer from acting in terms of the collective agreements. Various arguments were raised and discussed in this regard but of interest here was the argument that section 23(1)(d) could not be utilised in these circumstances. The Court rejected this argument. It accepted that the two collective agreements had the effect of settling the various issues raised during the facilitation process and that this bound the applicant unions.

GilesFiles on January 21, 2016 at 4:08 pm

Reported
(2015) ILJ 3030 (LC)

You must be logged in to post a comment.

Collective agreement: Settlement with all employees

Extracts with footnotes omitted:

3 Comments

Leave a reply