Optimistic era dawns: Labour relations decision

Posted by GilesFiles | Feb 24, 2016 | 2016, AE - Leon Louw, Bargaining councils, Collective Bargaining (LRL 5), Courts, High Court, John Murphy, Judges, Labour Relations, Legislation, LRA 1995, Organisations (LRL 4), PAJA 2000, Parties, Reforms required, Statutes (LRL 2)-work, Thought Leaders, Topics, Words & phrases | 2

To the astonishment of all present, presiding judge John Murphy opened the proceedings by saying that the court’s provisional view was that there was no need for the amendment because there was an even better remedy. Its view was, he said, that bargaining council agreements and extensions are “administrative action”, which must comply with the Promotion of Administrative Justice Act (which gives effect to section 33 of the Constitution). They must, therefore, be fair and reasonable, and not discriminate against nonparties.

The implications of a judgment to that effect would be so astounding that the FMF, and the people of SA, would get far more than was asked. It would mean that bargaining councils would have to promote general interests, as opposed to narrow selfish interests, and that agreements and extensions would be fully reviewable.

The judge’s comments suggest that the court has a simple choice: either “must” should be “may”, or bargaining council agreements are administrative action. Either way, as advocate Martin Brassey SC put it, the FMF would be “snatching victory from the jaws of victory” and would “celebrate with French Champagne”.

Read Leon Louw’s full column: A hugely important victory for South African labour appearing today on BDlive published by Business Day.

Further excerpts

IT MIGHT have been the most expensive day in South African high court history. It might have been the most important day in South African labour history. It might have heralded a lifeline for SA’s 8-million destitute job-seekers, 1-million small businesses, thousands of big businesses and their workers seeking labour relations liberty, and an unknown number of potential unions representing nonunionised workers.

Above all, it might have been pivotal for all beleaguered South Africans whose stagnating economy has the world’s highest, enduring unemployment rates.

It was David versus Goliath, a small team of lawyers for the Free Market Foundation (FMF) against a phalanx of extravagant lawyers representing 50 opponents. It was, provisionally at least, a resounding victory for the FMF.

Or so it seemed. In truth, the FMF has no interest in the outcome. Unlike other parties, the FMF derives nothing from victory. On the contrary, it is the only party which, regardless of the outcome, incurs only costs. The real victor was SA.

. . . . .

No one knows how many people are unemployed and how many businesses leave or never enter a sector because of the mindless extension of selfish labour agreements. Opposition counsel argued that the right to seek exemptions protects victims of bargaining council agreements, which is obvious nonsense because it callously disregards destitute people in shanties and would-be entrepreneurs who either leave or never enter regulated sectors.

This case seems set to herald a new optimistic era in labour relations.

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GilesFiles on February 24, 2016 at 5:14 pm

Article featured on the website of Free Market Foundation today.

Judge makes astounding intervention in FMF’s labour law challenge in High Court

This landmark case ended early after Mr Brassey gave a forcible response saying the court had made a judgment that either PAJA applied in full or that the court would find for the FMF’s amendment. The decision has to go one way or the other with no room for doubt. He also said that although the FMF accepted the bench’s perspective, it would not abandon its original relief sought in its founding papers.

Full article

The FMF is surprised but delighted by the extraordinary developments that took place in the Pretoria High Court on Monday 22 February when the FMF’s constitutional challenge was heard before a full bench of three judges and a packed court. FMF counsel Martin Brassey SC faced an array of South Africa’s top legal minds hired by the Minister of Labour, Confederation of South African Trade Unions (Cosatu), South African Clothing and Textiles Workers Union (Sactwu) and 23 bargaining councils when he put forward very powerful arguments that should succeed on appeal whatever the outcome of the High Court hearing.

Early in proceedings Judge John Murphy threw the court into confusion when he said that the bench’s prima facie view was that an extension to a bargaining council agreement by a minister was an administrative act that was subject to Promotion of Administrative Justice Act (PAJA) and Section 33 of the constitution. It therefore had to be fair and reasonable, and subject to Audi (to be heard) by non-parties which includes unemployed citizens and others.

He went further to say that it may be that all bargaining council agreements can be subject to PAJA and hence reviewable and that the bargaining council’s request to the minister to extend the agreement to non-parties may also be reviewable under PAJA, thus providing three points of review.

What this means is that even before a bargaining council can approach the minister for an extension, the agreement must go through a full judicial review process to prove that all necessary consultation and thought given to the wider socioeconomic circumstances has taken place.

This argument, like the FMF’s request for an amendment, has the power to fundamentally change the face of bargaining council negotiations and resulting agreements for the good of South Africa’s labour relations and for the plight of the unemployed and the small businesses that seek to hire them.

FMF executive director Leon Louw said, “The alternative argument put forward by the bench took all parties by surprise but would certainly be acceptable to us as we would get more than we asked. Either way, we win. The effect is the same in that extensions to bargaining council agreements must be subject to proper scrutiny, considered thought and due process. No longer can private parties in the bargaining councils compel the minister to extend the agreement without applying her mind. We still believe that the simplest way of achieving this is to change one word from ‘must’ to ‘may’. However, if the court finds that all agreements and the request to extend and the ministerial action or even one of these three actions is subject to judicial review then we have achieved our objective. The 8.3 million unemployed South Africans on whose behalf we brought this case will have won, not just the FMF.”

All of the opposing counsel appeared to accept Judge Murphy’s alternative argument and struggled to put forward convincing cases after the early bombshell. Subsequent efforts to raise technicalities were not persuasive.
Judge Murphy also made the point that extension of bargaining council agreements may be a violation of the rule of law requirement of Section 1 of the Constitution because they are law made by private people instead of legislators.

The FMF has never sought to undermine collective bargaining or remove extensions entirely. This notion was propagated by unions and bargaining councils in an attempt to derail the FMF’s principal point and the premise of the case which is to give the minister of labour discretion in extending agreements and the power to apply her mind.

Counsel for the FMF made the point that prior to the 1995 Act, this discretion existed. The LRA then removed a minister’s right to think for his or herself by inserting the word “must”.

This landmark case ended early after Mr Brassey gave a forcible response saying the court had made a judgment that either PAJA applied in full or that the court would find for the FMF’s amendment. The decision has to go one way or the other with no room for doubt. He also said that although the FMF accepted the bench’s perspective, it would not abandon its original relief sought in its founding papers.
GilesFiles on March 2, 2016 at 6:01 pm

The extension of bargaining council agreements at stake: Social versus administrative justice
In his latest Editorial in IR Network published by LexisNexis [subscription required] Prof Darcy du Toit comments on the possible outcomes of the case. There appears to be a false assumption that the FMF was somehow represented at NEDLAC during the negotiations for the drafting of the LRA. The FMF has repeatedly pointed out that it does not represent ‘big business’ and has alleged that it is ‘big business’ that colludes with trade unions.
See Extending agreements: Collusion must fall

Excerpt

But, more importantly in the present context, the FMF regards section 32 as falling into this very error. Section 32, it says, is also unconstitutional because
“it gives a bargaining council, which comprises mere private actors, a power … to secure, by means of a collective agreement contemplated by s 32, the imposition of binding obligations on employers and employees who are not members of parties to the council;
“and/or …
“it operates in the absence of a substantive discretion, exercisable by the Minister or other repository of state power in the interests of the public or a sector of the public, to decline a request by a bargaining council to make a collective agreement contemplated by s 32 binding on employers and employees who are not members of parties to the council”.
This defect, in the view of the FMF, can be cured if the Minister’s discretion whether or not to extend a collective agreement which complies with the statutory requirements – which had existed prior to 1996 – were to be reinstated.
An argument very similar to that of the FMF was raised in Chamber of Mines of South Africa and others v AMCU and others [2014] 9 BLLR 895 (LC). In that case the constitutionality of section 23(1)(d) of the LRA, which provides for the extension of collective agreements concluded by majority trade unions outside bargaining councils, was under attack. 5 This provision, AMCU claimed, gives
“private actors the right to impose terms and conditions of employment on unwilling parties” without government intervention, thus violating the rule of law (see para 41 of judgment). In his judgment Van Niekerk J dealt with this argument as follows:

“Central to AMCU’s rule of law attack is the assertion that the parties to a collective agreement that is extended in terms of section 23(1)(d) are effectively exercising public power. It is clear from the terms of section 23 and the regulation of the binding effect of collective agreements generally that in circumstances such as the present, correctly understood, this is an instance of legislation (adopted by parliament in the exercise of its public power) that creates legal rights obligations flowing from the conduct of private parties. It does not follow that simply because an organ of State exercising public power is constrained by the principle of legality to exercise no power beyond that conferred on it by law, that the conduct of private parties may not have legal consequences for third parties. Section 23(1)(d) is not concerned with the exercise of public power. It is simply an instance of national legislation creating legal consequences that flow from specific facts. …. There is nothing inimical to the rule of law for legislation to provide for legal consequences to flow from the conduct of private parties. Legislation does so frequently, in a range of contexts, and without requiring the consent of all affected parties” (para 47).

Again, it remains to be seen whether the same reasoning will be found applicable in respect of section 32.

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Optimistic era dawns: Labour relations decision

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