Numsa v Johnson Matthey (Pty) Ltd [2015] JOL 33231; (2015) 36 ILJ 2713 (MIBC) per Darcy du Toit.
The bargaining council arbiter resolved two issues in favour of the employer: #1 the interpretation of a clause in the main collective agreement, and #2 an alleged ‘unfair labour practice’.
A collective agreement required interpretation and it was decided that the relevant clause only dealt with annual wage adjustments for employees earning under a specified threshold and did not apply to the applicants who were ‘non-scheduled employees’. The employer gave effect to the Labour Relations Act 66 of 1995 and public policy. The employer’s change in policy of not extending wage adjustments to the ‘non-scheduled employees’ was also not unfair as it was not arbitrary and was based on justifiable business objectives.
Excerpts with footnotes omitted
Interpretation of clause 2(1) in accordance with the purposes of the LRA
[22] It is not in dispute that the purposes of the LRA are, amongst others, to provide a framework within which trade unions, employers and employers’ organisations can “collectively bargain to determine wages, terms and conditions of employment and other matters of mutual interest” and to promote “orderly collective bargaining” and “collective bargaining at sectoral level” (section 1).
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[26] I accept that a collective agreement concluded in terms of the LRA should be interpreted in accordance with the purposes of the LRA. Purposive interpretation, however, is a broad concept which requires specific application in specific contexts. As a rule it does not justify disregarding the plain wording of a text. The Constitutional Court has held that “a purposive argument that takes one beyond the express language of the Act” amounted to “an extended purpose” which was “both unnecessary and misplaced”.
[27] Applying this approach to clause 2(1), it is not in contention that it distinguishes between two categories of employees by creating a threshold. The question is why it does so. According to its “express language”, the reason is to entitle employees earning below that threshold to the stated wage increases as of right. Is it both possible and necessary, given the purposes of the LRA, to infer that employees earning above the threshold are entitled to same increases as those below it?
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[30] The emphasis placed on the process of collective bargaining in both the Bill of Rights and section 1 of the LRA underlines the importance that is attached to the autonomy of the parties to arrive at binding agreements which courts or tribunals will not easily interfere with. In the present case, should the applicants’ interpretation be upheld, any reason for creating a threshold would be negated. Indeed, if the parties had intended that all employees should be entitled to the same increases, I find it inconceivable that they would have agreed to clause 2(1). The applicants have not established any other purpose they might have had for creating a threshold.
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Interpretation of clause 2(1) in accordance with public policy
[34] The applicants argue that the interpretation that non-scheduled employees are ineligible for the negotiated increase applicable to scheduled employees is “contrary to the principle of equality” in that they would “[not] be treated the same as other employees employed in the sector”. Secondly, it is argued that this will “undermine the stabilising effect that can be achieved through orderly collective bargaining” which, it is submitted, “cannot be reconciled with the values underlying our constitutional dispensation” (heads of argument, at paragraph 16).
[35] The applicants are undoubtedly correct in arguing that a collective agreement will be unenforceable to the extent that it offends against public policy as encapsulated in the Bill of Rights. Thus, a clause in a collective agreement which manifestly authorises unfair discrimination on grounds such as age or gender against employees will be invalid for this reason.
[36] The applicants state that clause 2(1) is in conflict with the “principle” of equality. Given that equality is not only a principle informing the interpretation of other rights but a fundamental right in itself, it is unclear whether the argument is that clause 2(1) is inconsistent only with the “principle” but not inconsistent with the “right” to equality. Such an argument would be difficult to entertain in the absence of argument to explain it. However, the specific complaint that the individual applicants are not treated “the same as other employees employed in the sector” suggests that the right to equality is intended.
[37] The basic right to which the LRA gives effect in the present context is the right to “engage in” collective bargaining. There can be no question that the applicant union to which the individual applicants belong engaged in the collective bargaining process that resulted in clause 2(1) and that the individual applicants were represented in the same way as all other employees falling within its constituency. There has been no allegation of any conduct by the union which violated their right to be represented equally by the agent of their choice. I therefore cannot find that the individual applicants were treated unequally in the context of the right to engage in collective bargaining.
[38] What rather appears to be the case is that the applicants are dissatisfied with the outcome of the process – that is, the provision in clause 2(1) that deprives non-scheduled employees of the automatic right to a salary increase as defined. This is reflected in the submission that non-scheduled employees “do not benefit in the same way as other employees from the collective bargaining process” (at paragraph [23] above, emphasis added). Given the union’s unfettered right to engage in the bargaining process, such a complaint might more logically have been levelled against the union than against the Company, which was not a direct party to the process. But this is not the dispute which the individual applicants have chosen to refer.
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[41] To the extent that the applicants may rely on a broader “principle” of equality in the sense of not being treated “in the same way as other employees” – in this case, scheduled employees – it implies that differentiation between different categories of employees in a collective agreement is prima facie suspect. In fact, the principle of substantive equality implies differential treatment of employees who are differently situated.
[42] Differentiation between more highly paid and less highly paid employees, in particular, has acquired a certain currency in our law. To challenge the validity of the differentiation in the present matter, and the reasons proffered therefor by the Company (alluded to under The second claim, below), it would be necessary to show in what way it exceeds the limits of the collective bargaining agenda contemplated by section 23 of the Constitution of the Republic of South Africa, 1996 (“the Constitution”) and the LRA. The applicants’ terse submissions do not justify such a conclusion.
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Did consultation take place?
[49] Legally, non-scheduled employees were not entitled to any increase in terms of their individual contracts nor, it has been found, in terms of clause 2(1) as it stands. The Company was therefore under no duty to pay the individual applicants the increase which they claim or any increase at all and was at liberty to implement an increase even in the absence of agreement. This is so because a party to a contract who over-performs is deemed to have met its contractual obligations. Fairness, therefore, is the only issue and I accept that, in the absence of a legal duty necessitating agreement, consultation would constitute a fair procedure for deciding on a change to the method of calculating salary increases. This much appears to be common cause.
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[77] In my view, the process as a whole amounted to more than a briefing in the narrow sense of the word. As a consultative exercise it is open to criticism in that it could have been done more effectively, amongst others by providing employees or shop stewards with more information in advance. However, this in itself does not justify a finding of unfairness. As the CCMA ruled in PSA obo Badenhorst v Department of Justice, the fact that better communication by the employer about a rationalisation process “may have prevented the perception that the process had been unfair . . . does not make the process actually unfair”. Similarly, in the present case the question is not whether, in the opinion of the arbitrator, the employer went about the process in the best possible way but whether in the circumstances the employer’s conduct was actually unfair.
[78] To answer this question in its entirety it is necessary to address the further substantive issue raised by the applicants: that the departure from the previous practice was arbitrary and not based on “a justifiable objective standard” (amended statement of case, at paragraph 22; heads of argument, at paragraph 27).
Was the decision “arbitrary”?
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[82] Evidence was led as to the Company’s substantive reasons for embarking on the policy change (at paragraphs 58.2–58.3 above; see also paragraph 45 of first respondent’s heads of argument). The objective was to secure financial sustainability in an adverse economic situation. These reasons and this objective were not challenged and the Company was not put to the proof thereof. They cannot be described as capricious, insubstantial or based on a wrong principle. Nor was there evidence of bias. The applicants’ attack on the consultative process or lack of it must be considered in the context outlined above and does not establish a fundamental lack of due process. Measured against the jurisprudential benchmark I cannot find that the Company’s conduct was arbitrary and/or not based on a justifiable objective.
[83] In addressing alleged unfairness, it is necessary also to look at the remedy that is called for and weigh up its implications. The remedy claimed by the applicants is reinstatement of the policy which, according to the Company, is unsustainable. The evidence of Mr Rawana on this score was not challenged in cross-examination. This being so, the only conclusion I can draw is that granting the remedy would have been likely to make a bad situation worse and might have consequences for all employees more serious than the disadvantage experienced by non-scheduled employees receiving a smaller salary increase than they might previously have received.
Conclusion
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[87] But I am not satisfied that the applicants have clearly established a lack of consultation. When all is said and done, the Company did organise meetings at which employees were free not only to ask questions but to speak their minds on the issues raised. Evidence was led that the Compensation and Benefit committee of the Company considered the suggestions that were raised but did not find them practical. This amounts to consultation in a rudimentary form and is not the same as a decision being imposed without inviting response. Had the decision been arbitrary or irrational this may have justified the remedy sought. As it is, any shortcomings in the consultative process cannot be seen as unfairness justifying the striking down of a decision which, on the evidence, was objectively justifiable.
[88] It remains to be noted that the cause of the individual applicants’ grievance could be addressed by negotiating an appropriate amendment to the Main Agreement at the first opportunity. In that way they would more fully enjoy the benefit of sectoral bargaining.