Scarce skills allowance: Validity of agreement?

GilesFiles summary of Case on Scarce Skills Allowance

• Issue: Entitlement of respondents (employees of University of Cape Town & Stellenbosch University working at provincial hospitals) to a scarce skills allowance under the Scarce Skills Agreement in the public health sector.

• Background:

  • Teaching hospital agreements (1967) allowed UCT and Stellenbosch University medical students to train at Groote Schuur and Tygerberg Hospitals, respectively.
  • Respondents worked as principal and chief specialists at these hospitals.
  • The Scarce Skills Agreement (2004) provided allowances to health professionals in public health sector hospitals.

• Legal Proceedings:

  1. Dispute Referral (2006): Respondents filed a dispute over non-payment of the allowance with PH&WSBC, which was dismissed due to jurisdiction issues (respondents seen as university, not Dept. of Health, employees).
  2. Labour Court (2013): Labour Court found in favor of respondents, stating they were entitled to the allowance.
  3. LAC Appeal (2015): LAC ruled Labour Court lacked jurisdiction and directed that jurisdiction must be established first.
  4. Review and CCMA Ruling: Labour Court sent matter to CCMA, which found respondents were in public service and entitled to the allowance.
  5. Labour Court Review (2017): Labour Court upheld CCMA decision; leave to appeal refused but granted later by LAC.
  6. LAC Decision (2019): LAC affirmed respondents as public service employees due to their posts and duties, thus eligible for allowance.

• Constitutional Court Appeal (2019):

  • Applicant’s Argument: Respondents are not public service employees since they are university-appointed and do not hold posts under the Public Service Act.
  • Respondents’ Argument: Scarce Skills Agreement is applicable based on job functions and hospital agreements; applicant is unfairly changing the argument before the Constitutional Court.

• Core Question: Whether respondents, based on their roles in public hospitals and the Scarce Skills Agreement, are considered public service employees and thus entitled to the allowance.

Explanatory note:

“The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.

On Thursday, 14 November 2019 at 10h00 the Constitutional Court will hear an application for leave to appeal against the judgment of the Labour Appeal Court (LAC) (3 May 2019) which dismissed an appeal against a judgment of the Labour Court (12 July 2016). The LAC found that the first to fiftieth respondents were employees in the public service and were entitled to receive a scarce skills allowance in terms of the Scare Skills Agreement, a collective agreement concluded within the Public Health and Welfare Sector Bargaining Council (PH&WSBC).

In 1967 the University of Cape Town and Stellenbosch University each concluded teaching hospital agreements with the erstwhile Provincial Administration of the Cape of Good Hope. In terms of these agreements, Groote Schuur Provincial Hospital would be used by the University of Cape Town, and Tygerberg Hospital by Stellenbosch University, as teaching hospitals for the training of their medical students. The respondents were employed by the University of Cape Town and Stellenbosch University, and also worked at the provincial hospitals as principal and chief specialists in terms of the teaching hospital agreements. On 28 January 2004 the PH&WSBC and the state concluded the Scarce Skills Agreement, a collective agreement that sought to provide a scarce skills allowance to designated health professionals working in public health sector hospitals or institutions as managed by the state as the health employer.

On 13 June 2006 the respondents referred a dispute to the PH&WSBC regarding the failure by the Provincial Department of Health (applicant) to pay them the scarce skills allowance. At the conciliation proceedings, the dispute was dismissed on the grounds that the PH&WSBC did not have jurisdiction to hear the matter as the respondents were said to be employed by the universities and not by the Department of Health.

The respondents then instituted a claim for the payment of the scarce skills allowance in the Labour Court. The Labour Court (20 March 2013) found that the respondents were entitled to the scarce skills allowance.

Aggrieved by the outcome, the applicant appealed to the LAC. The LAC upheld the appeal (24 August 2015) and held that the Labour Court did not have jurisdiction to hear the matter and that the issue had to be decided by the forum which had the requisite jurisdiction.

The respondents thereafter brought a review application in terms of section 158(1)(g) of the Labour Relations Act. The Labour Court set aside the initial ruling of the PH&WSBC and remitted the matter for arbitration. Accordingly, the respondents referred the matter to the Commission for Conciliation, Mediation and Arbitration (CCMA). The CCMA held that the respondents were employees within the public service and fell within the jurisdiction of the PH&WSBC. Consequently, the respondents were entitled to the scare skills allowance.

The applicant then applied to the Labour Court to review the CCMA’s award. This application was dismissed. Leave to Appeal was refused by the Labour Court (30 November 2017) and only granted on petition by the LAC.

On appeal, the LAC found (3 May 2019) that the respondents were entitled to the benefit of the Scarce Skills Agreement. The Court held that the respondents, by virtue of the posts they held as principal and chief specialists at the provincial hospitals, are part of the fixed establishment as defined in the Public Service Act and are therefore part of the public service. Accordingly, the respondents were entitled to the scarce skills allowance.

Before the Constitutional Court, the applicant contends that the respondents fall outside the registered scope of the PH&WSBC because they are not employees in the public service. This is because the respondents are appointed by the universities and are not appointed to, nor do they occupy, posts on the fixed establishment in accordance with the Public Service Act. They are, for that reason, not entitled to the benefits of the Scarce Skills Agreement.

The respondents contend that by seeking to challenge the validity of the Scarce Skills Agreement, insofar as it applies to the respondents, the applicant seeks to unfairly argue before the Constitutional Court a different case to the one which served before the Labour Court. The respondents argue that in any event, the Scarce Skills Agreement was clearly intended to apply to them, and that it is not disputed that it was written and made for their benefit. They argue that the express wording of the Scarce Skills Agreement is clear as it says it applies to “medical specialists employed in the Public Health Sector”. The context of the teaching hospital agreements, the posts that the respondents held in the provincial hospitals and the evidence presented, prove that the respondents fall within this express wording.”

Note: Footnotes omitted and emphasis added