Fawu v TSB Sugar RSA Ltd (JA 57/2011) [2013] ZALAC 15; [2013] 10 BLLR 973 (LAC) (13 June 2013) per Tlaletsi JA (Waglay DJP and Davis JA concurring)
The Labour Appeal Court had no hesitation in disallowing an appeal by a trade union. Justice Bhoola granted an order in the Labour Court declaring strike action to be unprotected and interdicted and restrained the trade union and its members from participating in any strike.
Incentive scheme
In terms of a scheme there were certain production targets to be met and the union’s members believed they had reached the targets. The failure of the employer to pay the promised bonuses is a classic dispute of ‘right’ and any strike in terms of section 65(1)(c) of the Labour Relations Act, 1995 (LRA) will not be protected.
Funeral benefits
The demand was to replace the current scheme. But the current funeral scheme was regulated by a collective agreement. Being a demand related to an issue regulated by a collective agreement it cannot form the subject of a protected strike.
Extracts from the LAC judgment
[1] This appeal is against the judgment and order of the Labour Court (Bhoola J) confirming a rule nisi and interim interdict on 27 June 2011 in an application brought by the first respondent. The effect of the order was to declare the strike action by the appellant as well as second and third respondent, which commenced at 07h00 on 16 June 2011 and of which notice was given to the first respondent on 13 June 2011 to be an unprotected strike as contemplated in section 68 of the Labour Relations Act, 66 of 1995 (“the LRA”) as well as interdicting and restraining the appellant and further respondents who were employees listed in annexure “X” from participating in the strike. The appellant was ordered to pay the costs of the application. The appeal is with leave of the court a
Factual background
[2] It is common cause that the strike action pertained to disputes concerning two demands namely, an incentive scheme and funeral benefit.
[3] The first respondent runs sugar farms, three mills and two refineries in three areas, namely Malelane, Komatipoort and Pongola. However, no dispute was declared in respect of Pongola operations for the purposes of this matter. There is a Bargaining Council in existence with jurisdiction over the sugar manufacturing and refining industry. The appellant and the first respondent have concluded collective bargaining agreements which entrench certain provisions of the collective agreements concluded at that Council and which themselves deal with certain conditions of employment.
[4] It is not disputed that during February 2010 first respondent resolved to apply an incentive scheme for the financial year commencing 01 April 2010 and terminating on 31 March 2011. The incentive scheme and the rules applicable to it are encapsulated in a document headed “Staff Incentive Scheme for TSB Sugar (RSA)”.
[5] The amount of remuneration for the various divisions differed. It depended on the earnings generated by the division and the manner in which each division achieved other drivers (goals), such as its safety record and other agreed drivers which support the profitability of the relevant division.
[6] The practice of the incentive scheme commenced during 2007. It was introduced then to obtain the buy-in of and incentivise the first respondent’s employees in respect of the earning targets by management, after approval by the first respondent’s shareholders. The incentive scheme was in previous financial years successfully implemented and employees obtained variable bonus payments per division.
[7] It is not disputed that certain targets were set for the first respondent for the 2010/2011 financial year in terms of a document attached as Annexure “A”. This meant that should those targets be met the first respondent’s employees qualified for an incentive bonus payment after the end of the 2010/2011 financial year.
[8] According to the appellant, their members were in the past made to understand that once each division had achieved 70% of the targets set by management, that division would become eligible for payment of a pro rata bonus. Each month bar graphs were placed on the notice board of each division including, with dotted lines, the actual targets achieved in that division each month. The appellant avers further that based on the graphs that have been placed on the notice boards during the second half of 2010; the employees were expecting to receive bonuses paid during May 2011 since each division had achieved at least 70% of each target set. Their expectation, they contend, was reinforced when braais were held and each employee received a chicken and a T-shirt because targets had been achieved.
[9] It is common cause that during November 2010 the first respondent’s Chief Executive Officer (“CEO”) during a “road show” showed the employees a bar chart that depicted a significant drop in turn over from the previous year against the budget. According to the first respondent a letter dated 27 January 2011 annexed to the affidavit was distributed to the employees. The letter advised inter alia, that the criteria for the payment of the incentive bonus would probably not be achieved. The appellant denies that the said letter was distributed to the employees or sent to it. In my view, nothing turns on this denial because it is common cause that first appellant’s view then was that the targets that would entitle payment of the incentive bonus were not met for that financial year.
[10] It is further common cause that on 05 April 2011 management of the first respondent received a memorandum from the unions including the appellant, indicating, inter alia, that the employees at Malelane looked forward to an increased incentive based on the fact that the intended target had been reached according to management and that “management itself is very proud of us” (sic). The memorandum concluded that action would be taken should they not “see the bonus on 24.05.2011. We are going to take action against that”.
[11] On 19 April 2011, the appellant sent a letter to first respondent in which they stated that ‘we would like to remind your company to pay the incentive bonus for Komati Mill employees on the pay day of Thursday 21st April 2011’.
[12] During May 2011, first respondent’s CEO undertook another “roadshow” to explain, inter alia, the results for the financial year to 31 March 2011. He also displayed a document (Annexure “F”) that showed that profit was merely 74% of that budgeted for.
[13] It is common cause that the incentive bonus payment that would have been paid in May was not paid because according to the first respondent, targets were not met. On 19 May 2011, the appellant referred a dispute about the incentive bonus payment to the Bargaining Council. In the referral document, on the summary of the facts of the dispute, they wrote:
‘[F]ailure of the Company to pay incentive bonus to its Komati and Malelane Sugar Mills employees whilst the required production target have been met.’
[14] The dispute concerning the application of the incentive scheme was conciliated on 02 June 2011. During the conciliation, the first respondent’s approach was that this was not a dispute of interest but one about the payment, or non-payment of remuneration to which the appellant and its members were, or were not entitled. First respondent contended, further, that this dispute could properly be resolved by the Labour Court and that resolution by power play was inappropriate. A certificate of non-resolution indicating that the dispute may be resolved by strike was issued by the Bargaining Council.
[15] I now proceed to discuss the background facts relating to the second issue which is the subject of the dispute. It is common cause that all employees of first respondent are obliged as a condition of employment, to join either of the TSB Retirement Fund or the TSB Provident Fund. In terms of both Funds, the first respondent funds funeral policy benefits for its employees.
. . . .
[20] It is common cause that the bargaining relationship between first respondent and the appellant is dealt with in two collective agreements namely; one of 30 November 1999 and another of 03 November 2005. There has been no amendment to the agreements subsequent to 03 November 2005.
[21] On 13 June 2011, appellant gave notice that they intended embarking on a strike in respect of the two disputes. The notice stated inter alia that:
‘This serve to formally notify the company that our members and members of other two unions will embark on a protected strike, emanating from the two unresolved dispute heard by the council. The above is a compliance of section 64 of the Labour Relations Act 66 of 1995.
The 48 hours notice shall calculate from 7 hours am on Tuesday to 7 hours am on the Thursday when the strike shall be starting.
Please note that the doors of the Union are still open to further the negotiations to settle the dispute.
Hope to hear from you.’ (sic)quo.
. . .
[24] Section 23(2)(c) of the Constitution guarantees the right to strike for every worker. The LRA in giving effect to the constitutional right to strike regulates the right to strike in sections 64-77.
[25] The LRA gives statutory protection to the constitutionally entrenched right to strike while at the same time sets out procedural and substantive limits to the exercise of the right. The two permissible limits relevant to this appeal are found in section 65(1) of the Act which provides that:
‘65(1) No person may take part in a strike or a lock-out or in any conduct in contemplation or furtherance of a strike or a lock-out if-
(a) that person is bound by a collective agreement that prohibits a strike or lock-out in respect of the issue in dispute;
(b that person is bound by an agreement that requires the issue in dispute to be referred to arbitration;
(c) the issue in dispute is one that a party has the right to refer to arbitration or to the Labour Court in terms of this Act;
(d) …’
[26] The contentions on behalf of the appellant in this Court, which are essentially its grounds of appeal and the same submissions made in the court a quo may be summarised as hereunder.
. . .
[28] In my view, everything points to the fact that the appellant was not mistaken about its demand. In the dispute referral the appellant clearly indicated that it understood and described the issue in dispute as “failure of the company to pay the incentive bonus whilst the required production targets have been met”.
As a special feature or additional information in the referral form the appellant stated that ‘The Company Have Promised To Pay The Employees THE Incentive Bonus If They Reach The Targets’. The matter does not end there. In the answering affidavit, the deponent stated categorically that:
‘[W]e accept that different divisions will be remunerated differently. We only require this differentiation to be calculated according to fixed and defined criteria based on the pro rata achievement of targets, as has been the case since 2007.’
[29] It is illogical, in my view, to contend that the demand relating to payment of the bonus is not a right issue. The correspondence from the appellant’s referred to above refer to payment of the bonus as per the criteria set out and applicable at first respondent. Had the first respondent complied with the strike notice and paid the bonuses as per the targets, there would not have been any reason for the dispute because the appellants would have received what they demanded.
[30] With regard to the second demand, the dispute referred to conciliation is the introduction of a new policy to be paid by the first respondent. Accordingly, appellants wish to introduce a new condition of employment. The collective agreement, the contents of which are common cause, determines that the employees retain their current condition of employment and benefits. The appellant’s demand, be it replacement of the supplementary voluntary funeral scheme or the compulsory provident and retirement fund funeral scheme is regulated by the collective agreement.
[31] It is not open to the appellants to introduce a new demand in the answering affidavit under the guise of clarifying the strike notice. The notice was clear as to what the appellant intended pursuing through strike action and what was required of the first respondent to meet the appellant’s demands. There was no need for the first respondent to go beyond what was clear and request clarification as suggested.
[32] In my view, the Labour Court committed no misdirection and was correct in its findings. As regards the order for costs, it was conceded that the first respondent did not abandon its prayer for costs in the court a quo. It would, in my view, be improper to interfere with the discretion exercised by the court a quo in awarding the first respondent costs. It is also in accordance with the requirements of the law and fairness that the first respondent be awarded its costs on appeal.
[33] In the result, the following order is made:
1. The appeal is dismissed with costs.