In May 2010 a local authority introduced a Motor Vehicle Allowance Scheme. It is not a condition of employment nor part of the Main Collective Agreement with the trade union. The municipal manager decides when employees qualify for participation in the scheme. Some of the considerations include affordability, reasonableness, and whether an employee is required to travel regularly at an average of 1,000 kilometres per month. Some employees alleged that the refusal or failure to allow them to participate in the scheme was ‘discriminatory’ but they were held to have proved ‘unfairness’ and an award was made in their favour.
In Ehlanzeni District Municipality v South African Local Government Bargaining Council and Others (JR1163/10)  ZALCJHB 368 (30 September 2014) the Labour Court reviewed and upheld an arbitral award of a bargaining council. In the award it was held that the employees who were denied participation in the Scheme had discharged the onus of proving that management’s conduct was unfair and amounted to an unfair labour practice with regard to the provision of benefits.
It seems that initially the employees contended that they had been unfairly discriminated against but the arbiter dealt with the matter under s 186(2) of the LRA instead. Assuming it had been dealt with under the EEA then, having alleged that they had been discriminated against on arbitrary grounds, the employees would have been required to prove that the municipal manager’s conduct was irrational, discriminatory and unfair.
In other words apart from proving unfairness the employees would also have been required to prove the two additional requirements, and that may not have been easy.
See the earlier post Differentiation based on inherent dance requirements where the EEA is discussed.
Extracts from the judgment with footnotes omitted and hyperlinks added
 The Applicant seeks an order that the arbitration award issued by the First Respondent (the Arbitrator) on 29 March 2010 under case number MPD100907 be reviewed and set aside. In the award, the Arbitrator found that the Respondents (herein referred to as employees) being N Nkosi, NC Maluka and LP Malambe were entitled to participate in the Motor Vehicle Allowance Scheme with effect from 1 May 2010.
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Background to the review application:
 The Applicant has a Motor Vehicle Allowance Scheme, which does not form part of the terms and conditions of employment. It is further not part of the Main Collective Agreement between SAMWU and the Applicant. In terms of this Scheme, the Municipal Manager determines and has discretion over which employees qualify for participation in the scheme. Considerations for participation in the Scheme include affordability, reasonableness, and whether an employee performs duties, which require travelling on a regular basis at an average of 1000 kilometres per month.
 Other considerations to be taken into account include that when an employee travels in a pool car, he/she would indicate travelling mileage on a regular basis when the pool car is used. Where an employee uses his/her personal vehicle, it will also be required that the mileage covered in a month be indicated. Once an employee has compiled travelling mileage, which is supported by logbook, then an application can be submitted to participate in the scheme. The Municipal Manager having exercised his discretion and where the application is approved, the relevant committee will then decide and give final approval.
 The employees had all applied to participate in the Scheme in May 2009. Their applications were turned down and they subsequently referred a dispute pertaining to “Discrimination” to the SALGBC. Conciliation having failed, a certificate of outcome was issued on 8 December 2009, reflecting the dispute to be arbitrated as pertaining to an alleged unfair labour practice. The employees then referred the dispute for arbitration, which matter came before the arbitrator.
The arbitration proceedings:
 The evidence led at arbitration was to the effect that Nkosi’s application was declined as she was informed that she did not travel 850 km per month on official trips. She conceded during the arbitration proceedings that she travelled less than 1000 km per month.
 Maluka is employed as Performance Management System Coordinator. He also submitted an application to participate in the Scheme in the May 2009. Despite his contentions that he was required to travel to various municipalities in the district for official visits, he travelled in his supervisor’s vehicle for official trips. He further conceded that he had not submitted proof that showed that he was required to travel more than 860 km per month for official purposes, and that he was not aware of the requirements of the Scheme. Marietta Diedericks, the Deputy Manager – Performance Management, and Maluka’s supervisor, confirmed that indeed Maluka travelled with her for official purposes. She did not support Maluka’s application, as he could not perform independently.
 Malambe is employed as an Assets Clerk. Her application was declined on the basis that she did not travel more than 850 km per month on official trips. She confirmed that she travelled less than 850 km per month. She also conceded that she was not aware of the requirements of the Scheme.
 Phindani Khumalo, a supervisor in the Supply Chain Unit denied that Nkosi travelled 1000 km per month. He further testified that Malambe did not qualify for the Scheme because she did not need to travel as some of her functions had been outsourced to a service provider. His testimony was that the Scheme was not an entitlement, he did however confirm that there were two other Assets Clerks in the Unit who were allowed to participate in the scheme even though they did not travel more than 1000 km per month.
The arbitration award:
 The arbitrator had identified the issue to be decided as pertaining to whether or not the Applicant’s decision not to approve the employees’ applications to participate in the Scheme constituted an unfair labour practice in terms of section 186 (2) of the LRA. His starting point was to determine whether the employees met the requirements of the Scheme. In regards to Nkosi, he took into account her concession that she did not travel more than 1000 kilometres per month. In regards to Malambe, the arbitrator dismissed Diedericks’ evidence that he was not ready to perform independently and regarded this evidence as mainly pertaining to performance management issues, which did not have any relevance to the dispute before him.
 The arbitrator concluded that it was not clear which policy had informed the committee’s decision to decline the employees’ applications. He had regard to the provisions of the Council resolution and acknowledged that it required an employee to travel 1000 kilometres per month. He however took regard of Nkosi and Malambe’s testimony that they were informed that their applications were declined as they travelled 850 kilometres per month, whilst Maluka was informed that he had to submit proof that he travelled more than 860 kilometres per month on official trips. The arbitrator lamented the fact that the Applicant had not called any witness to explain the ‘discrepancy’ or defend its decision.
 The Arbitrator also took into account that other employees’ applications were approved even though they did not travel 1000 kilometres per month, and the Applicant had not called any witness to explain the ‘discrepancy’. He concluded that the scheme was not consistently applied, and found in favour of the employees.
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The grounds of review and evaluation:
 The Applicant’s main contention was that participation in the Scheme was not a benefit, but a managerial discretionary matter. It was further contended that the dispute before the Arbitrator was an interest issue outside the scope of the unfair labour practice definition, which could not be arbitrated. To this end, it was submitted that the SALGBC could not assume jurisdiction and arbitrate the dispute as referred, and on that basis alone, the award should be set aside.
 Whether participation in the Scheme is a benefit has to be looked at within the context of the provisions of section 186 (2) of the LRA, which defines an unfair labour practice to mean; ‘any unfair act or omission that arises between an employer and employee involving-
(a) unfair conduct by the employer relating to the promotion, demotion, probation (excluding disputes about dismissals for a reason relating to probation) or training of an employee or relating to the provision of benefits to an employee.’
 The Labour Appeal Court had in Apollo Tyres SA (Pty) Ltd v Commission for Conciliation, Mediation & Arbitration in agreement with Protekon (Pty) Ltd v CCMA and Others, interpreted the term ‘benefit’ in the above provision to include a right or entitlement to which an employee is entitled (ex contractu or ex lege including rights judicially created) as well as an advantage or privilege which has been offered or granted to the employee in terms of a policy or practice subject to the employer’s discretion. Thus the LAC recognised that many employee benefits schemes confer rights and create obligations and confer discretion on employers, and that one of the objects of s 186(2)(a) of the LRA is to provide a remedy when such discretion is exercised unfairly.
 It therefore follows from Apollo Tyres (Pty) Ltd that in this case, the enquiry should be whether in declining the employees’ application to participate in the Scheme, the Applicant had exercised its discretion fairly. The concept of unfairness denotes a failure to meet an objective standard and may be taken to include arbitrary, capricious or inconsistent conduct, whether negligent or intended. Linked to the concept of fairness in my view is whether the discretion was exercised in good faith. There is therefore no substance to the Applicant’s submissions to the effect that the facts in casu are different from those in Apollo Tyres (Pty) Ltd, as the principles enunciated therein are equally applicable in this case, and further since participation in the Scheme was a discretionary matter.
 Amongst the grounds of review as submitted on behalf of the Applicant was that;
31.1 By ordering that that the employees should participate in the Scheme, the Arbitrator did so without any rational objective basis, and substituted his own standards for those of the employer.
31.2 The Arbitrator exceeded his powers in allowing the employees to participate in the Scheme on the basis of inconsistency in the application of the Scheme, and in so doing, created rights when none existed.
31.3 The Arbitrator committed gross irregularity in that he failed to appreciate the nature and process which give rise to the approval of the application to participate in the Scheme, and in this regard, failed to appreciate that participation in the Scheme was at the discretion of the Municipal Manager, and further that employees had to build up evidence to support their applications.
31.4 The Arbitrator committed gross irregularity as he failed to apply his mind to the facts and failed to appreciate the nature of the facts before him in that he purported to draw a negative inference against the Applicant for not calling any of the committee members to explain the discrepancy over and above the Applicant’s witnesses, and furthermore, failed to place sufficient value or have regard to the evidence of the Applicant’s witnesses in relation to the disapproved application for participation in the Scheme
 The employees’ main contention was that the Applicant did not exercise its discretion fairly, as other employees who were not travelling the requisite number of kilometres had received the benefit whilst they did not. The employees acknowledged that the Municipal Manager may have applied the process envisaged in item 3.6 of the Municipal Resolution taken on 27 November 2007. They however held the view that other employees who received the benefit who were performing the same job descriptions as them never went through that process and received the benefit on their job descriptions.
 Three considerations were crucial in exercising the Municipal Manager’s discretion. These were affordability, reasonableness and a requirement that an employee must travel on a regular basis at an average of 1000 kilometres per month. It is trite that the onus in establishing the existence of an unfair labour practice is on the employees. It would therefore be for the employees to show that the Applicant had exercised its discretion unfairly in excluding them from participation from the Scheme.
 It was common cause that the employees in this case did not meet the 1000 kilometres per month travel requirement. The Arbitrator’s remark in the award that Malambe had testified that she travelled more than the required kilometres is clearly not correct as this was not her evidence as summarised under ‘Survey of evidence and arguments’. To the extent that the Applicant’s Municipal Manager was influenced by this consideration in exercising his discretion, it cannot be said that he had acted arbitrarily or capriciously, as this would have been in accordance with the requirements as set out in Resolution of the Council.
 The basis of declining Maluka’s application was that she used to travel in his supervisor’s vehicle and was not entitled to participate in the Scheme. During argument however, it was submitted that Maluka has since been placed on the Scheme, as his job profile met the requirements.
 In the award, the Arbitrator relied on two factors in coming to the conclusion that the Applicant had acted inconsistently. The first was that even though the requirement was 1000 kilometres travel per month, Nkosi and Malambe were told that they travelled less than 850 kilometres per month for official purposes, whilst Maluka was informed that he should submit proof that he travelled more than 860 kilometres per month. The Arbitrator had in this regard pointed out that no evidence was led on behalf of the Applicant in regard to this ‘discrepancy’. In my view, it would be pedantic to find fault with the Arbitrator’s use of the term ‘discrepancy’ when it is apparent that what was meant was that if the requirement was 1000 km per month, it was inconsistent on the part of the Applicant to decline the applications unless Nkosi and Malambe produced proof that they travelled more than 860 kilometres per month.
 The other basis for inconsistency allegation pertained to the fact that other employees had received the benefit when they had not provided proof of their travel, or had travelled less than the required 1000 kilometres per month. The onus is indeed on the Applicant to prove fairness in the differentiation between the various employees.
 As summarised by the Arbitrator, Khumalo testified that Nkosi (A Supply Chain Management Officer) and Malambe (Assets Clerk) fell under his supervision in the Supply Chain Unit. There were two other Supply Chain Management Officers who participated in the Scheme as they travelled the required 1000 kilometres per month. His only contention in regards to the reason that Nkosi did not participate was that the Scheme was not an entitlement.
 In respect of Malambe, it was further Khumalo’s testimony that there were three other Asset Clerks under his supervision. Two of these participated in the Scheme even though they did not travel the required 1000 kilometres per month. The rationale for excluding Malambe according to Khumalo, was that she used to travel the required 1000 km per month before and participated in the Scheme until some of her functions were outsourced.
 The Applicant’s contention that the Arbitrator’s reasoning in allowing Nkosi and Malambe to participate in the Scheme created rights for them that did not exist has no merit in that the issue is not whether any new rights were created, but whether the Applicant had consistently applied the Scheme or fairly exercised its discretion in that regard. Since the onus was on the Applicant to justify the differentiation, the Arbitrator was correct in lamenting the fact that no evidence was led to justify the differentiation, albeit the Arbitrator had used the phrase ‘discrepancy’ in that regard.
 In the absence of justifiable grounds to differentiate between the employees, the discretion exercised in declining the employees participation in the Scheme cannot be said to have been fair, rational, consistent or reasonable. Thus if the Scheme was not regarded as an entitlement for other employees, it could not in fairness have been regarded as such in respect of other employees that did not meet the requirements.
 There is further no merit in the contention that the Arbitrator committed gross irregularity in that he failed to appreciate the nature and process which gave rise to the approval of the application to participate in the Scheme. The Arbitrator had taken regard of the Council Resolution and requirements to participate in the Scheme and pointed out the ‘discrepancies’ in its application insofar as different requirements were set for Nkosi and Malambe.
 In the light of the above conclusions, I am satisfied that there is no basis for a conclusion to be reached that the Arbitrator misconstrued the nature of the enquiry or arrived at an unreasonable result in the light of the material before him.
 In regards to the Applicant’s contention that the employees had referred a dispute pertaining to ‘discrimination’, and yet the Arbitrator had dealt with the matter as an unfair labour practice on the basis of the certificate issued, this cannot also be a ground to review and set aside the award. This conclusion is premised on the fact that it is trite that a consideration of a dispute referred cannot solely be on the basis of the referral or the labelling of the dispute in the certificate of outcome. In terms of the provisions of section 138 (1) of the LRA, the arbitrator is required to deal with the substantial merits of the dispute between the parties with the minimum of legal formalities and do so expeditiously and fairly. It is further required of the arbitrator to determine the real dispute between the parties irrespective of how the dispute has been labelled. In this case, I am satisfied that the Arbitrator dealt with the substantial merits of the dispute before him, and properly identified the dispute he was required to arbitrate. The arbitrator had considered the principal issue before him, evaluated the facts presented at the hearing and came to a conclusion that is reasonable. There is therefore no basis for a finding to be made that the decision the Arbitrator reached is one that a reasonable decision-maker could not have reached on the material placed before him. Further having had regard to considerations of law and fairness, it is deemed appropriate not make any cost order in respect of the review application.
- The Respondent’s Rule 11 application is dismissed.
- The Applicant is ordered to pay the costs of the Rule 11 application.
- The application to review and set aside the award issued by the Second Respondent under case number MPD 100907 is dismissed.
- There is no order as to costs in respect of the review application.
Acting Judge of the Labour Court of South Africa