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United National Breweries (SA) Limited v Khanyeza and Others (DA4/04) [2005] ZALAC 6 (30 September 2005)

.RTF of original document

IN THE LABOUR APPEAL COURT OF SOUTH AFRICA
(HELD AT JOHANNESBURG)
Case No. DA4/04
In the matter between:

UNITED NATIONAL BREWERIES (SA)LIMITED    Appellant

And
PIUS KHANYEZA                                        First respondent
URMILLA PATEL NO                                             Second respondent
COMMISSION FOR CONCILIATION
MEDIATION AND ARBITRATION                 Third respondent

JUDGMENT

ZONDO JP
INTRODUCTION

[1]      This appeal concerns the interpretation of sec 189(1)(a) of the Labour Relations Act, 1995 (Act 66 of 1995 (“the Act”) with regard to when an employer who contemplates the dismissal of an employee who is a member of a registered trade union for operational requirements is entitled not to consult with such employee’s union before he can dismiss such employee. In the view I take of this matter, it is not necessary to set out the full background to the matter. It will suffice to set out only those facts that are strictly necessary for a proper understanding of the issues in this judgment. I do so in the next two paragraphs.
         The facts.
[2]      The first respondent was employed by the appellant at its Khangela plant in Durban as a sales representative of its product. He was a member of the Food and Allied Workers Union (“the union”) with which the appellant had a collective agreement which the two parties had concluded in 1993. At that time the Labour Relations Act, 1956 (Act 28 of 1956) (“the old Act”) was in operation. Indeed, clause 1.1 of the collective agreement provided that “Act” in the agreement would “mean the Labour Relations Act No 28 of 1956 and any promulgated amendments thereto.”

[3]      The first respondent was dismissed from the appellant’s employment on or about the 3rd March 2001 for operational requirements as defined in sec 213 of the Act. The appellant had purported to consult the first respondent before dismissing him but had not consulted the union despite the fact that the first respondent was a member of the union. Subsequent to the first respondent’s dismissal, a dispute arose between, on the one hand, the appellant and, on the other, the first respondent and his union on whether such dismissal was procedurally fair in the light of the fact that the appellant had not consulted the union before it could dismiss the first respondent. It was common cause that the dismissal was for a fair reason.

         Arbitration

[4]      The dispute was referred to conciliation. Conciliation failed to produce a resolution of the dispute. Although ordinarily a dispute such as this one would have had to be referred to the Labour Court for adjudication in terms of sec 191 of the Act, the parties referred it by mutual consent to arbitration which was to be conducted under the auspices of the Commission for Conciliation, Mediation and Arbitration (“the CCMA”). That is permissible in terms of sec 141(1) of the Act. In due course the second respondent, a commissioner of the CCMA, arbitrated the dispute. She found that the appellant had been under an obligation to consult with the union before it could dismiss the first respondent. She found that, as the appellant had failed to consult with the union, the dismissal was procedurally unfair. She awarded the first respondent compensation equivalent to the remuneration that he would have been paid for the period from the date of dismissal to the last day of the arbitration hearing - which she gave as the 7th May 2002. She calculated such compensation to be a sum of R 45 390,77. Apparently the first respondent’s monthly salary at the time of his dismissal was R 3 200,00.

         Review proceedings

[5]      The appellant was aggrieved by the second respondent’s award. Accordingly, it brought an application in terms of sec 145 of the Act in the Labour Court for an order reviewing and setting aside the second respondent’s award. The first respondent opposed the review application. In due course it came before Ndlovu AJ who, after hearing argument, dismissed it. He made no order as to costs. He subsequently granted the appellant leave to appeal to this Court. This then is the appeal against Ndlovu AJ’s judgment and order.

         The appeal

[6]      According to the second respondent’s award the basis upon which the appellant sought to justify its failure to consult with the union before it could dismiss the first respondent was that the first respondent “did not belong to the bargaining unit as in terms of their recognition agreement, sales representatives were not covered by the recognition agreement.” That was the second respondent’s stance as taken in the founding affidavit of the review application as well. The union insisted that, as the first respondent was one of its members, he was entitled to be represented and assisted by the union in the consultation process when his dismissal for operational requirements was contemplated.

[7]      The second respondent held that in terms of sec 189(1)(c) of the Act the appellant was required to consult with any registered trade union whose members were likely to be affected by the proposed dismissals if there was no workplace forum in the workplace in which the employees likely to be affected by the proposed dismissals were employed. She expressed the view that an examination of the recognition agreement “shows no reference at all to bargaining units nor does it identify or define any section/s of employees as the bargaining units”. She went on to observe that “(t)he recognition agreement makes mention only of ‘members’ of the union who will be paid up members of the union.” A little later she said: “(t)he recognition agreement (clause 1.11 …) indicates that ‘union members shall mean and include all employees who are paid up members of the Union as defined and that ‘employee’ shall mean all permanent employees engaged in Production, Distribution, Packaging and Engineering and shall exclude management”.

[8]      The second respondent stated that she understood clause 1.11 of the collective agreement to mean that “the only employees excluded from the scope of this agreement were those involved in management and there is no indication that the sales representatives were part of management.” She also said: “Furthermore, with regard to the retrenchment procedure of the recognition agreement (pages 44-46 of applicant’s bundle states (sic) that the [appellant] will give the union written notification of the possibility of retrenchment, including the reasons, the number of employees likely to be affected and the date of the envisaged retrenchment, the procedure relating to consultation with the union is then fully outlined.” The second respondent found that “both section 189(1)(a) and (c) and the recognition agreement made it doubly mandatory upon the [appellant] to consult with the union as the [respondent] was a paid up member of a registered union and his union membership was never disputed by the appellant.” The second respondent also relied on the decision of the Labour Court in FAWU & Another v National Sorglum Breweries [1997] 11 BLLR 1410 (LC). She said that in that case the Labour Court had found that the current appellant had acted unfairly in retrenching employees without informing the union in that case (which is the same union involved in this case,) of consultation meetings.

[9]      In the founding affidavit which initiated the review proceedings in the Labour Court the appellant attacked the second respondent’s finding that the appellant was obliged to have consulted with the union and that, therefore, the first respondent’s dismissal had been procedurally unfair. It contended that the second respondent committed a gross irregularity and misconduct in making this finding. It also contended that the second respondent’s findings were not rational or justifiable in the light of the evidence presented to her. The appellant contended that the second respondent misinterpreted sec 189(1)(c) of the Act as well as provisions of the collective agreement in coming to the conclusion that the first respondent was not excluded from the scope of the collective agreement or in finding that the appellant was obliged to consult with the union.

[10]     In considering this appeal, it is, I consider, necessary to quote the provisions of sec 189(1) in their entirety. Sec 189(1) reads thus:

                  “189 Dismissals based on operational requirements
(1)     
When an employer contemplates dismissing one or more employees for reasons based on the employer’s operational requirements, the employer must consult –
(a)     
any person whom the employer is required to consult in terms of a collective agreement;
(b)     
if there is no collective agreement that requires consultation –
(i)     
a workplace forum, if the employees likely to be affected by the proposed dismissals are employed in a workplace in respect of which there is a workplace forum; and
(ii)    
any registered trade union whose members are likely to be affected by the proposed dismissals;
(c)     
if there is no workplace forum in the workplace in which the employees likely to be affected by the proposed dismissals are employed, any registered trade union whose members are likely to be affected by the proposed dismissals; or
(d)     
if there is no such trade union, the employees likely to be affected by the proposed dismissals or their representatives nominated for that purpose.”

[11]     In interpreting the relevant provisions of the Act, it is necessary to bear in mind both the constitutional and statutory interpretive framework within which such interpretation must occur. Sec 39(1) of the Constitution provides:

“When interpreting the Bill of Rights, a court, tribunal or forum –
(a)      must promote the values that underlie an open and democratic society based on human dignity, equality and freedom;
         (b)      must consider international law; and
         (c)      may consider foreign law.”

[12]     It is also necessary to have regard to the purpose of the Act. The purpose of the Act is “to advance economic development, social justice, labour peace and the democratisation of the workplace by fulfilling the primary objects” of the Act. The primary objects of the Act are set out in paras (a) to (d) of sec 1. They are:-
        
“(a)      to give effect to and regulate the fundamental rights conferred by section 27 of the Constitution;
(b)     
to give effect to obligations incurred by the Republic as a member state of the International Labour Organisation;
(c)      to provide a framework within which employees and their trade unions, employers and employers’ organisations can –
(i)     
collectively bargain to determine wages, terms and conditions of employment and other matters of mutual interests; and
(ii)    
formulate industrial policy; and
(d)      to promote –
(i)     
orderly collective bargaining;
(ii)    
collective bargaining at sectoral level
(iii)   
employee participation in decision-making in the workplace; and
(iv)    
the effective resolution of labour disputes.”
Of particular importance among these primary objects, within the context of this case, seem to me to be paras (a), (b), (d) (iii) and (iv). Furthermore sec 3 of the Act requires “(a)ny person applying this Act to interprete its provisions-
(a)     
to give effect to its primary objects;
(b)     
in compliance with the Constitution; and
(c)     
in compliance with the public international law obligations of the Republic.”

[13]     There was no workplace forum in the workplace where the first respondent was based. I have already said earlier that the appellant and the union had a collective agreement which was applicable in the workplace where the first respondent was employed. That there was a collective agreement in such workplace is significant because that may be important in determining whom the appellant was required to consult in terms of sec 189(1) of the Act before it could dismiss the first respondent. In the arbitration proceedings the appellant’s contention was that it was not obliged to consult the union because the first respondent fell outside the bargaining unit which the union represented. In support of this proposition reliance was placed upon sec 189(1)(a) of the Act which is quoted above. It needs to be pointed out that the Act makes no reference to bargaining units in sec 189.

[14]     As will have been seen above, sec 189(1)(a) of the Act provides that “(w)hen an employer contemplates dismissing one or more employees for reasons based on the employer’s operational requirements, the employer must consult-
(a)      any person whom the employer is required to consult in terms of a collective agreement;”
What sec 189(1)(a) means in effect is that, when an employer contemplates the dismissal for operational requirements of any employee who is based in a workplace where there is a collective agreement which requires the employer to consult with a particular person or body before such employee can be dismissed for such reasons, the employer must consult with such person or body before it can dismiss such employee. Once the employer has consulted with such person or body, it has discharged its obligation to consult provided for in sec 189(1). If the employer fails to consult with such person or body, the employer has not discharged is obligation to consult provided for in sec 189(1) of the Act. If, of course, there is a collective agreement but it does not have such a consultation requirement, then sec 189(1)(a) is of no application.

[15]     Sec 189(1)(a) does not and cannot mean that, as long as there is a collective agreement applicable in a workplace that has a provision requiring consultation, sec 189(1)(a) applies irrespective of whether or not the consultation required by the collective agreement relates to the contemplation of the dismissal of the employee sought to be dismissed. What I mean by this may be better illustrated by way of an example. If in a workplace there is only one union that has members but such union represents a minority of the employees in the workplace, for example 10% of the workforce, and, for some or other reason, such union has a collective agreement with the employer which requires consultation when dismissals for operational requirements are contemplated, and the employer contemplates the dismissal of employees who are not members of such union, sec 189(1)(a) does not mean and cannot mean that the employer must consult with such union.

[16]     Another example would be where there are two registered trade unions, one representing 30% of the workforce and the other 70%. If the minority union had a collective agreement with a provision that required consultation but the majority union did not have a collective agreement but was recognised by the employer as the representative of the majority of the employees, sec 189(1)(a) does not mean and cannot mean that, if the employer contemplated the dismissal of employees who are members of the majority union (which does not have a collective agreement with such a requirement), the employer would be obliged to consult with the minority union and not the majority union simply because the collective agreement of the minority union has a provision requiring consultation. Accordingly, it seems to me that, if I am right with regard to the examples I have given above, sec 189(1)(a) must be purposively construed. Purposively construed, it means that the collective agreement envisaged therein is a collective agreement that requires the employer to consult with a particular person or union or body when it contemplates the dismissal of the employees in question for operational requirements.

[17]     Once it has been established that there is a collective agreement in a particular workplace which requires consultation, the next question that must be answered before it can be said that sec 189(1)(a) applies is: does the collective agreement require the employer to consult with a particular person or body when it contemplates the dismissal of the employee or employees in question? If it does, then sec 189(1)(a) applies and the employer must consult with such person or body. If it does not, then sec 189(1)(a) does not apply. The next question for consideration is whether in this case the collective agreement required the appellant to consult with any particular person or body when contemplating the dismissal of the first respondent for operational requirements.

[18]     In clause 2.1 to 2.3.4 of the collective agreement, provision is made for a consultation procedure and steps that the parties had bound themselves to take in dealing with dismissals for operational requirements. It is provided that the appellant is required to consult the union “should it be necessary to retrench members of the union.” Accordingly, the collective agreement appoints the union as the body that the appellant is required to consult when it seeks to dismiss “members of the union” for operational requirements. The word “members” in the phrase “members of the union” in clause 2 of the retrenchment procedure is not defined but what is defined is “union member”. In the collective agreement this phrase is defined thus: “Union member shall mean and include all employees who are paid up members of the union as defined.” The words “as defined” at the end of this definition cannot refer to “paid up members” because in the collective agreement there is no definition for the term “paid up members”. The words “as defined” qualify the word “employees” in that definition because there is a definition of the word “employee” in the definition clause of the collective agreement. The word “employee” is defined thus: “Employee shall mean all permanent employees engaged in Production, Distribution, Packaging and Engineering and shall exclude management”. In the light of this it seems to me to be crystal clear that the word “member” in clause 2 of the retrenchment procedure means the same as the expression “union member” as defined in the definition clause.

[19]     If I am right, as I think I am, in saying the reference to “member” in clause 2 of the retrenchment procedure – which is part of the collective agreement – is a reference to a “union member” as defined, then it can safely be concluded that the collective agreement requires the appellant to consult with the union when it contemplates the dismissal for operational requirements of a union member (as defined) employed by it. That would mean that the collective agreement does not require the appellant to consult with the union when it contemplates the dismissal of an employee who is a member of the union but who falls outside the definition of “union member” in the collective agreement. Employees of the appellant who are not “permanent employees engaged in Production, Distribution, Packaging and Engineering” fall outside the definition of the word “employee” in the definition clause. Indeed, employees of the appellant who fall within the designation of “management” are also excluded. Accordingly, the provisions of the collective agreement which require the appellant to consult with the union when it contemplates the dismissal for operational requirements of members of the union refers to members of the union who fall within the definition of “union member” in the collective agreement and not those who fall outside such definition. That means that it refers to members of the union who are permanent employees of the appellant engaged in Production, Distribution, Packaging and Engineering and not to any others who fall outside that category of employees.

[20]     It is common cause that the first respondent was a sales representative. Accordingly, he was not engaged in “Production, Distribution, Packaging and Engineering.” This means that he fell outside the definition of “employee” in the collective agreement. As “employee” is part of the definition of “union member” and he was not an employee as therein defined, he was also not a “union member” within the meaning of that phrase in the collective agreement. In those circumstances I am of the view that the respondent fell outside the definition of “union member”.

[21]     Going back to the appellant’s reliance upon sec 189(1)(a), the question that needs to be asked is: did the collective agreement specify the person whom or the body which the appellant was required to consult when it contemplated the dismissal of an employee who fell outside the definition of “union member” as read with the definition of the word “employee” in the collective agreement? In this regard it must be borne in mind that the collective agreement could do so either expressly or by necessary implication. The collective agreement in this case does not do so expressly. However, counsel for the appellant submitted that, by necessary implication, it did. He submitted that it required the appellant to consult with the employees whose dismissal for operational requirements is contemplated and not the union. He submitted that by agreeing to limit the employees with regard to whose retrenchment the appellant was required to consult the union to only its members employed by the appellant in the departments specified in the definition of the word “employee” in the collective agreement, the union effectively waived its right to be consulted when the appellant contemplated the dismissal for operational requirements of its members falling outside the definition of employee in the collective agreement.

[22]     The answer to this contention is this: in so far as the contention is that the collective agreement provides in effect that the appellant should not or need not consult the union when it contemplates the dismissal for operational requirements of the union’s members falling outside the specified departments, it misses the point of sec 189(1)(a). What is required in order for sec 189(1)(a) to apply is not for the collective agreement to specify who should not be consulted but to specify who should be consulted.

[23]     I am of the opinion that the effect of the collective agreement is to say to the appellant in this regard: the appellant is not required in terms of this agreement to consult the union in respect of a contemplated dismissal for operational requirements of union members who fall outside the specified departments. It does not say to the appellant that it does not have to consult the union in terms of the Act. Accordingly, on this approach, in so far as the collective agreement may not have contemplated that the appellant should consult the union when contemplating the dismissal for operational requirements of union members who are not permanent employees in the specified departments, that does not affect the rights or conferred upon such employees by the Act and the obligations imposed upon the appellant by the Act. In this regard it is important to bear in mind paragraph 34 of the judgment of the Constitutional Court in NUMSA & others v Bader Bop (Pty)Ltd & Another (2003) 24 ILJ 305 (CC). There, the Court, after referring to the Freedom of Association and Protection of the Right to Organise Convention 1948 (NO 87) and the Right to Organise and Collective Bargaining Convention 1949 (No 98), had this to say:

“Of importance to this case in the ILO jurisprudence described is firstly the principle that freedom of association is ordinarily interpreted to afford unions the right to recruit members and to represent those members at least in individual workplace grievances; and secondly, the principle that unions should have the right to strike to enforce collective bargaining demands. The first principle is closely related to the principle of freedom of association entrenched in s 18 of our Constitution, which is given specific content in the right to form and join a trade union entrenched in s 23(2)(a), and the right to trade unions to organize in s 23(4)(b). These rights will be impaired where workers are not permitted to have their union represent them in workplace disciplinary and grievance matters, but are required to be represented by a rival union that they have chosen not to join.” (Underlining supplied).

The matter in respect of which consultation was required in this case had nothing to do with discipline nor was it a grievance. However, in my view, what is said towards the end of this passage applies with equal force to union representation in sec 189 consultations.

[24]     On this approach employees who are members of the union who fall outside the definition of the word “employee” are not entitled to union representation in terms of the collective agreement when the appellant contemplates their dismissal for operational requirements but they are still entitled to such representation