The LAC allowed the appeal against the judgment of Rabkin-Naicker J in the LC and reviewed and set aside the arbitral award and sent the matter back to the bargaining council for a fresh arbitration on due notice.  The arbiter acted irregularly by failing to insist that the liquidator of the former employer be notified and by joining another employer to the proceedings without notice.

G-Ways CMT Manufacturing (Pty) Ltd v NBCCMI (WC Sub-Chamber) (CA11/2015) [2016] ZALAC 49 (8 November 2016) per AA Landman JA (Waglay JP and Savage AJA concurring)

Excerpts without footnotes

Background

[3]        Fifty-eight members of the third respondent and other employees were employed by Greenways CMT Manufacturers CC until they were retrenched on the basis that Greenways had been finally liquidated.  When one of the retrenched employees returned to Greenways’ premises, it was found that another entity styled G-Ways CMT Manufacturing (Pty) Ltd (hereafter G-Ways) was conducting the same business on the premises and that some of their co-workers were employed by this entity.

. . . . .

[5]        The dispute was arbitrated on 8 July 2013 before the second respondent.  Greenways was not represented at the arbitration.  Greenways had been provisionally liquidated on 29 May 2013 and finally liquidated on 26 June 2013.  It may be accepted that the liquidator of Greenways was not notified of the date of the hearing.  G-Ways was not cited in the referral, nor was G-Ways given notice of the conciliation hearing or the arbitration proceedings.

[6]        In his award, the second respondent mero motu joined G-ways, in its absence, as a respondent and without giving notice of his intention to do so.  Having found that the dismissal of the trade union members was procedurally and substantively unfair, the second respondent ordered Greenways and G-ways, jointly (but not severally) to pay the members the equivalent of six months wages as compensation by 15 August 2013.

. . . . .

[10]      G-Ways was dissatisfied with the ruling and launched an application in the Labour Court for an order reviewing and setting aside the award, alternatively rescinding the ruling, in the further alternative, remitting the matter to the Council.  The grounds for review are essentially the same grounds on which the application for rescission was made.  The union did not oppose the review application.

. . . . .

[12]      In my view, this appeal must be decided on a procedural basis.  The majority judgment of the Constitutional Court in National Union of Metalworkers of South Africa v Intervalve (Pty) Ltd and Others  [2015] 3 BLLR 205 (CC) held that:

‘[46] … The purpose of section 191 is to ensure that, before parties to a dismissal or unfair labour practice dispute resort to legal action, a prompt attempt is made to bring them together and resolve the issues between them.  Resolving the issues early has benefits not only for the parties, who avoid conflict and cost, but also for the broader public, which is served by the productive outputs of peaceable employment relationships.’

and

‘[47] … The general purpose of section 191 provides the background against which the specific purpose of section 191(3) must be understood.   The subsection ensures that the employer party to a dismissal or unfair labour practice dispute is informed of the referral.   The obvious objective is to enable the employer to participate in the conciliation proceedings, and, if they fail, to gird itself for the conflict that may follow.’

and

‘[53]…The fact that the uncited employer has informal notice of the referral cannot make a difference.  The objectives of service are both substantial and formal.   Formal service puts the recipient on notice that it is liable to the consequences of enmeshment in the ensuing legal process.  This demands the directness of an arrow.  One cannot receive notice of liability to legal process through oblique or informal acquaintance with it.’

[13]      The Court cautioned that had the corporate forms been fake the decision would have been different.  But, there was no suggestion that the separate identity of the three companies was a sham.

[14]      There is at least one exception to the requirement that an employer should have been given notice of a conciliation hearing before being joined as a party in proceedings concerning another employer.  Waglay JP expressed it this way in Temba Big Save CC v Mlamli Kunyuza and Others (JA40/2015) [2016] ZALAC 36 (28 June 2016):

‘[29] Having said that a referral for conciliation is indispensable and a precondition to Commissioner’s or the Labour Court’s jurisdiction over unfair dismissal disputes means that if a party is not part of the conciliation proceedings it cannot be joined at a later stage.  The question that arises however is whether the general principle is applicable in a case a where a dismissed employee, having referred his/her employer to conciliation for an unfair dismissal dispute, later discovers that his/her employer has changed because the business in which they were employed has changed hands.   

[30] In answering this question, the LAC in Intervalve held [at para 16] that: 

 

“In Mokoena, the Labour Court allowed the joinder of one of the parties.  The party joined was a party that the Labour Court held had taken over the respondent’s business in circumstances that invoked s197 of the LRA.  In terms of this section where a business is transferred as a going concern the transferee takes over the employment responsibilities of the transferor.  The joinder was thus granted not on the basis of any exercise of a discretion of joining a party not taken to conciliation but because s 197(9) of the LRA placed the new employer in the shoes of the old employer.  In the circumstances, there was no need to refer both the new and the old employer to conciliation any one would suffice as judgment against one was effective against the other.”

[31] This quote illustrates that, in the event of a party invoking the provision of section 197 of the LRA, there is no need to refer the old and the new employer to conciliation.  Any one of the parties will suffice because in terms of the section, the new employer takes the place of the old employer in all material respects, including but not limited to contracts of employment and any pending litigation.  Hence, where the old employer was taken to conciliation there is no need to also take the new employer because one is not dealing with two employers but only one.  Clearly, the appellant wrongly interpreted the Intervalve judgments. 

[32] In this matter, the employees allege that the appellant has taken over the business of the former employer and for that reason they sought to join the appellant.  Since the appellant is alleged to have stepped into the shoes of the old employer it may be joined to the proceedings.  I therefore agree with the court a quo’s conclusion that in the context of an alleged s197 transfer, a successful applicant would have to hold the transferee accountable because not only has that transferee an interest in the outcome of the dispute, it may be held liable to satisfy the relief, if any, that is granted against the old employer.’

[1]

[2] (JA40/2015) [2016] ZALAC 36 (28 June 2016).