Vanchem/Vanachem Vanadium Products (Pty) Ltd v Numsa (JA33/16) [2016] ZALAC 62 ; (2017) ILJ 926 (8 December 2016) per Tlaletsi DJP (Coppin and Landman JJA concurring)

The LAC allowed the employer’s appeal and set aside the Labour Court (per Nkutha-Nkontwana AJ) judgment.  The dispute concerned the binding effect of a main collective agreement relating to lay-off and short-time.  Strictly speaking the employer was excluded from the main collective agreement.  But the evidence proved that the parties by their conduct assumed that the employer was bound by the main collective agreement.

Excerpts without footnotes

[1]   The crisp issue to be decided in this appeal is whether the respondent’s members employed by the appellant (“the employees”) are bound to the terms of the Main Agreement concluded between the parties to the Metal and Engineering Industries Bargaining Council (“the MEIBC”). The consequences of a finding that they are bound by the terms of the said Main Agreement are that the appellant has acquired the right to implement the lay-offs and short-time provided for in the Main Agreement.  A finding to the contrary would mean that the appellant could not rely on the Main Agreement for the implementation of the lay-offs and short-time.

. . . . .

[7]   Mapochs Mine was willing to reduce the price of “lumpy” ore by 50%. According to the appellant, if the employees agreed to a reduction of their total cost to company of 30%, the appellant would be able to carry on production, although still at a loss.  As at September 2015, the appellant was incurring monthly losses of R49 million.  The appellant’s salaried staff, non-unionised employees and the trade union Solidarity agreed to the proposed wage reduction pursuant to consultation meetings held on 1 and 8 September 2015.  However, the respondent did not respond to the proposal.  This move left the appellant with no option but to implement the lay-off.  The appellant also invoked a consultation process provided by section 189A of the Labour Relations Act 66 of 1995 (Act).

[8]   The Main Agreement expressly limits the duration of a lay-off to a period of eight weeks. However, in this case the appellant could not resume production since the appellant remained without ore.  As the plant remained dormant for several weeks, the appellant implemented short-time purporting to act as provided for in the Main Agreement.  The short-time was implemented solely for the maintenance of the plant.  The intention was that maintenance be done without the appellant incurring its full wage liability since it was unable to produce.

[9]   The appellant’s worsening financial situation forced it into business rescue.

[10]   In the Labour Court and in this Court, the appellant had two main contentions made by Mr GC Pretorius SC. The first was that the question, relating to whether it was bound by the Main Agreement as a whole, is res judicata because of an arbitration award issued by Commissioner Walele relating to a dispute between the parties which was referred to the Bargaining council, and because of a judgment of the Labour Court in a dispute between the same parties.

The second main contention was, that all the terms of the Main Agreement were incorporated into the employment relationship between the appellant and the respondent’s members as a result of a collective agreement concluded by them during January 2011 (“the January 2011 collective agreement’) .

. . . . .

[18]     There are objective factors that show that the parties are bound by the terms of the Main Agreement by incorporation in the 7 January 2011 collective agreement.

  • The subsequent agreements concluded in 2012 and 2014, referred to above, evince a clear linkage with the Main Agreement. Clause 1.1 of the 2012 agreement provides that the parties have agreed that “variation of all conditions of employment contained in Annexure A shall be determined and be based on the terms and conditions of the signed MEIBC Main Settlement Agreement”.  Clause 4 of the Supplementary Conditions of Employment Agreement records that the agreement “must be read with the provisions of the Strike Settlement Agreement of 5 December 2012 which indicates that the Employees’ conditions of employment must be linked to the Main Agreement of the MEIB”.
  • The appellant deducts monthly contributions of its employees and pays them over to the metal industry’s benefit funds, including the Engineering Industries Pension Fund and Metal Industries Provident Fund.
  • The respondent’s members have repeatedly referred disputes to the MEIBC and have relied on the provisions of the Main Agreement in support of their disputes.
  • The appellant has been issued with a Certificate of Registration dated 23 July 2015 which declares that the appellant has complied with the registration requirements of MEIBC. It is lamentable that the respondent’s answer to the certificate is that the person who signed the certificate did so in a month in which he was serving a notice of termination of his services with the MEIBC thereby suggesting some irregularity without providing any sound basis for doing so.
  • In 2011, the MEIBC’s GRO Committee, a committee which deals with exemption applications, accepted that the appellant was bound by the Main Agreement and accordingly exempted the appellant from the wage increase for the year 2011/2012.