The arbiter found that the trade union failed to prove that the employer fell  within the jurisdiction of the Bargaining Council for Civil Engineering Industry (BCCEI).  On review the LC decided that the fact that the trade union had ‘organised’ the employer without resistance could not turn the company’s factual activities into activities that fell within the jurisdiction of the BCCEI.  Neither could the fact that there was no other bargaining council contending that the employer’s activities fell within its jurisdiction.

Num v Sylco Plant Hire Association (C390/2016) [2017] ZALCCT 13 ; (2017) ILJ 2346 (25 April 2017) per A Steenkamp J.


[1]   The applicant is the National Union of Mineworkers. It seeks to have an arbitration award set aside in a demarcation dispute.  The arbitrator, Mr D I K Wilson (the fourth respondent), found that the first respondent, Sylco Plant Hire (Pty) Ltd, does not fall within the jurisdiction of the Bargaining Council for the Civil Engineering Industry (the second applicant).

[2]   Sylco opposes the application. It agrees with the arbitrator’s finding.  The Bargaining Council and the Contractors Plant Hire Association (the second respondent) – both of which are legally represented – abide the Court’s decision, although the Council had supported the application until a day before the hearing.

Background facts

[3]   NUM has members who work for Sylco. The union referred a dispute to the CCMA (the third respondent) in terms of s 62(1) of the LRA[1] contending that the activities of Sylco fall within the jurisdiction of the BCCEI and that it is obliged to comply with the collective agreements concluded in that Bargaining Council.  The Council supported the union’s contention.  Sylco and the Contractors Plant Hire Association dispute it.

Arbitration award

[4]   The Commissioner heard the evidence of three witnesses for NUM, one for the CPA and on for Sylco. He concluded that Sylco’s activities do not fall within the jurisdiction of the BCCEI.  He ordered NUM to pay Sylco’s costs in the amount of R10 000.  NEDLAC approved the award.

[5]   The Commissioner noted that NUM had limited its case to only the plant hire operators employed by Sylco and hired out with equipment to the civil engineering industry.

. . . . .

[11]   Much of the arbitrator’s finding relied on the case in Richards Rentals.[1] In that case, the company hired out tipper trucks and drivers to the construction and mining industries. The National Bargaining Council for the Road Freight Industry claimed that its business fell within that industry’s definition, comprising “the transportation of goods for hire or reward by means of motor transport in the Republic of South Africa”.  The “transportation of goods” was further defined, somewhat circuitously, as follows:

“For the purposes hereof the ‘transportation of goods’ means the undertaking in which employers and their employees are associated for carrying out one or more of the following activities for hire or reward:

(1) The transportation of goods by means of motor transport;”.

[12]   The arbitrator in Richards Rentals compared the company’s activities to the industry definition and found that it did not fall within that definition. Its main business was plant hire, not the transportation of goods.

[13]   On review, the Labour Court upheld the demarcation award.  It found that the commissioner had not applied an unduly restrictive approach in interpreting the industry definition.  And that judgment was upheld on appeal

. . . . .

Grounds of review

[16]   Both the NUM and the BCCEI challenged the award on review. The BCCEI withdrew shortly before the hearing of this application but after all the pleadings had closed.

. . . . .

[18]   In its supplementary heads of argument delivered a week before the hearing, the union’s attorneys further submitted that the arbitrator committed a gross error of law by applying the incorrect legal test to determine whether Sylco’s business falls within the sector and area of the Bargaining Council.


[19]   Before dealing with the specific review grounds, I will briefly consider the legal framework.

[20]   The legal principles regarding demarcation awards have largely been crystallised in the LRA and in case law. The starting point is s 62 of the LRA: . . .

. . . . .

[21]   In this case, the award was sent to NEDLAC in terms of s 62(9) and NEDLAC approved it.

[22]   In NBCRFI v Marcus NO[1] it was held that due deference ought to be paid to a commissioner making a demarcation award.  In demarcation disputes there will be, more often than not, no single correct judgment and a wide range of approaches and outcomes is inevitable.  A reviewing court should therefore interfere only in cases where the boundary of reasonableness is crossed.  Furthermore, a demarcation is provisional since section 62(9) of the LRA requires a commissioner to consult with NEDLAC before making an award.  The case for judicial deference is all the more compelling in these circumstances.[2]

[23]   And in Coin Security (Pty) Ltd v CCMA[3] it was noted that the character of an industry (or sector) is determined not by the occupation of the employees engaged in the employer’s business but by the nature of the enterprise in which the employer and employees are engaged.  Once the character of the industry is determined, all employees are deemed to be engaged in that industry.  However, it is possible for the same employer to be engaged in two or more industries at the same time.

[24]   The dicta in these cases were endorsed by the LAC in SAMWU v Syntell (Pty) Ltd[4].

[25]   It is against those legal principles that the grounds of review must be considered, as well as the test for review in Sidumo[5] and Herholdt[6].

 Commissioner limited applicants’ case

[26]   NUM complains that the Commissioner limited its case to the 17 operators working on the plant and equipment that Sylco hires out, instead of all Sylco’s employees.

[27]   But that limitation was not unreasonable. The Commissioner explains it in some detail: . . .

[28]   The Council also limited its allegation that employees fell within his jurisdiction to plant operators. In an email to Sylco on 29 May 2015, its General Secretary summarised its position as follows: . . .

. . . . .

[32]   It was not unreasonable of the Commissioner to hold the union to that ruling. As Mr Leslie (for Sylco) pointed out in his argument, the decision of this court in Solomon v CCMA[1] is on point.  In that matter, the Commissioner conducted an exercise at the commencement of the arbitration hearing in order to clarify and narrow the issues in dispute between the parties.  On review, the Labour court held that the Commissioner should have confined himself to those issues:[2]

“I am not satisfied that the process of reasoning adopted by the arbitrator is rationally justifiable or that, having so narrowed the issues, he stuck to the issues as limited, either in regard to the evidence which he allowed or in regard to the issues on which he pronounced.”

[33]   The arbitrator also acted reasonably by finding that the ruling is akin to the minute of a pre-arbitration conference and is binding on the parties. In Fila-Matrix (Pty) Ltd v Freudenberg[3] the company sought to resile from a limitation of issues reached at a pre-trial conference.  Harms JA rejected it:

“To allow a party, without special circumstances, to resile from an agreement deliberately reached at a pre-trial conference would be to negate the object of rule 37 which is to limit issues and to curtail the scope of the litigation.  If a party elects to limit the ambit of his case, the election is usually binding.  No reason exists why the principal should not apply in this case.”

[34]   Although a demarcation hearing should not be equated to a hearing in the High Court, it was not unreasonable of the arbitrator to hold that similar principles apply in this case. There were no special circumstances to find that the union should not be held to its own limitation of its case.

. . . . .

Civil engineering confined to public works?

[37]   The Commissioner noted that it was common cause that some of the activities performed by the plant operators, while working for clients in the civil engineering industry, fall within the definition of the industry. But he did not accept the argument that excavation, earthworks et cetera carried out on farms or where ever else also comprised work of a civil engineering nature.  It is in that context that he commented that “work of a civil engineering character” is not defined in industry definition, but is “limited to public works”, referring to the definition of “civil engineer” in the Collins English Dictionary as “a person qualified to design, construct and maintain public works, such as roads, bridges, harbours etc.”

[38]   I agree with the union that it may well be that civil engineering cannot be confined to public works, but occurs in respect of both private and public works. Does that make the award reviewable?  I think not.

[39]   The award must be viewed holistically. The finding that Sylco and its employees could not be said to be “associated for the purposes of carrying out work of a civil engineering character”, is not unreasonable, given the evidence before the Commissioner.  The overriding nature of its plant hire business is to provide a rental service to clients across a range of industries.  And only a small part of that business falls within the civil engineering industry when the operators do that type of work for a client to whom Sylco had rented its equipment.

Definition relating to construction

[40]   The Commissioner rejected the union’s contention that Sylco’s activities were included in the industry definition of “housing or supports for plant, machinery or equipment”. On review, the union argues that that was unreasonable.

[41]   In his evaluation of that argument, the Commissioner found that, on a proper reading of section (a) of the definition, it related to the construction of housing or supports etc. Sylco is not involved in construction activities.  That does not appear to me to be an unreasonable reading of the definition.  Sylco and its employees are not engaged in “work of civil engineering character normally associated with the civil engineering sector”.

Is paragraph (f) of definition applicable?

[42]   The industry definition defines it as “the civil engineering industry in which employers… and employees are associated for the purposes of carrying out work of civil engineering character normally associated with the civil engineering sector and includes such work in connection with any one or more of the following activities: “and then set out various examples in paragraphs (a) – (d). It further includes, in paragraph (f):

“The making, repairing, checking or overhauling of tools, vehicles, plant, machinery or equipment in workshops which are conducted by employers engaged in any of the activities referred to in subclauses (a) to (f) inclusive.”

[43]   The activities in clause (f) must therefore take place within the civil engineering industry. The union argued that Sylco has two workshops on its premises and that it derived most of its income from the sale of used equipment.  It argued that, because equipment is repaired and maintained in its workshops before it could be hired or sold, it fell within the definition in clause (f).

[44]   The Commissioner reasonably argued that, having found that Sylco is not involved in civil engineering activities as defined in subclauses (a) to (f), it would be nonsensical to consider clause (f) on its own and it was not applicable. That finding is not so unreasonable that no other arbitrator could have come to a similar finding.

Richards Rentals on point?

[45]   The bulk of the arbitrator’s award was based on Richards Rentals[1], which he considered to be on point. The union argues on review that it constitutes a material error of fact and law.

[46]   I disagree. In that case, the company hired out tipper trucks and drivers to clients in the mining and construction industry:[2]

“The trucks are hired out, with a qualified driver, at a flat rate, for an agreed period, with the cost of the driver included in the flat rate charged.… The [company’s) employees, the drivers, transport the goods, on the instructions of the client.

“… It was the clients who engaged in the activity of transporting the material, making use of the truck and driver supplied by [ Richards Rentals].  The fact that [the company] supplied a driver was not relevant – it was an arrangement derived solely from the requirement that the tipper trucks had necessarily to be driven by specially trained drivers with special permits and certification.”

[47]   In this case, Sylco also hires out specialist equipment (along with an operator) for hire at a flat rate. The fact that the operator is supplied by Sylco is purely incidental to its primary business, i.e.  hiring art plant and machinery.  Sylco and its employees are not associated for the purpose of the civil engineering industry.  The correct enquiry in a demarcation dispute focuses on the purpose of the association between the employer and employees in question, and not the alleged association between the employer’s employees and the employer’s clients.  It was entirely reasonable of the Commissioner to consider himself bound to the authority of the LAC in Richards Rentals in this regard.  He was satisfied that Sylco and its plant operators “are not associated for the purpose of conducting work of a civil engineering character, but rather for the purpose of hiring art plant and equipment to a variety of clients.”

In doing so, he applied the correct test as set out by the LAC in Richards Rentals[3]:

“The court a quo correctly found that the appellant, by arguing that it was sufficient if the third respondent’s employees were merely associated with the activities of transportation, was attempting to incorporate the third respondent into the jurisdiction of the Council by focusing on the association between the employees and the clients of the third respondent instead of correctly looking at the third respondent and its employees and thus whether it’s employees were associated with the transportation of goods.  The court a quo correctly found that since the activity of hiring art plant and vehicles for rental is not contemplated by the industry definition, the third respondent’s business activities fell outside the ambit of that definition.”

[48]   The Commissioner’s conclusion in this regard is entirely reasonable. This was not a case where the employer and its employees are involved in more than one industry, such as was the case in KWV[4] or Golden Arrow.[5]

Policy considerations

[49]   The Commissioner had regard to the reasoning in Coin Security[6] that additional considerations need to be borne in mind by the person making a demarcation award in light of the socio economic objectives of the LRA and its objectives in establishing and promoting a centralised system of orderly collective bargaining at sectoral level. That requires the arbitrator to extend the enquiry, where appropriate, beyond mechanistic comparison of jobs and industry activities to a second phase involving a consideration of collective bargaining practices and structures and socio-economic considerations.  In this case he was satisfied that Sylco does not fall under the jurisdiction of the BCCEI and considered that there was no purpose in taking the investigation further.

[50]   That approach does not appear to me to be unreasonable. Having found that, on the facts, Sylco’s activities do not fall under the jurisdiction of the council, it would serve little purpose to consider the social economic factors implicated if it had.  Those factors could not, on the facts of this case, play a decisive role like it would in a case where it might sway the decision maker one way or the other.

Sylco’s activities covered by industry definition?

[51]   The Commissioner’s finding that the balance of Sylco’s business activities did not fall within the jurisdiction of the Bargaining Council cannot be said to be unreasonable.

[52]   The evidence was that the majority of its transport activities involve transporting aggregate (sand, stone and ration dust) from quarries to concrete batching plants for one customer, Megamix. This comprises 90% of Sylco’s transport income.  Those truck drivers are in no way engaged in the civil engineering industry.  The only truck driver called testified by the union confirmed that he never carried loads to a civil engineering site.

[53]   The balance of Sylco’s transport work involves moving plant and shipping containers to and from clients across a range of industries. This comprises about 3% of its total income.  On the fact, it was not unreasonable to hold that its transport activities do not fall within the Council’s registered scope.

[54]   The sale of second-hand plant and equipment had become Sylco’s primary source of income (43% of its total income) and its core business. That is self-evidently not with in the civil engineering industry.

[55]   It also hires out shipping containers used as storage and for offices as well as spaza shops. There is no evidence to suggest that this falls within the civil engineering industry.

[56]   On the evidence as a whole, Sylco and its employees could not be said to be “associated for the purposes of carrying out work of civil engineering character” as required by the industry definition. In fact they are associated for the purpose of carrying out a service, namely, a hiring or rental service to clients across a range of industries.  The conclusion reached by the Commissioner is not is not so unreasonable that no other Commissioner could have come to the same conclusion.  And in demarcation disputes this court should defer to the decision maker, more so than in other reviews.

Other relevant considerations

[57]   The union finally argued that, “although not decisive”, the fact that other companies engaged in plant hire voluntarily registered with the BCCEI ought to have been taken into account. But the Commissioner reasonably found that there was no evidence as to the business activities of those businesses and that he could not draw any inference from the registration of those businesses.

[58]   The fact that the NUM had organised that Sylco without resistance could similarly not turn the company’s factual activities into activities that fell within the jurisdiction of the Council. Neither could the fact that there was no other bargaining council contending that Sylco’s activities fell within its jurisdiction.