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IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT JOHANNESBURG
CASE NO: J1168/97
BEFORE Landman J
In the matter between
AUSTIN LETLAPA KADIAKA Applicant
and
AMALGAMATED BEVERAGE INDUSTRIES Respondent
________________________________________________________________
JUDGMENT
The pursuit of equality prohibits ruthlessness in the strong, protects the weak from wanton injury and defines certain areas of equality which may not be transgressed.
Kenneth Kaunda A Letter to my Children (1973) 62-63.
The battlefield
A battle in the global warfare between Coca-Cola and Pepsi-Cola, styled the “Cola War”, has also been fought on South African soil through two surrogates. The local battle took place between Amalgamated Beverage Incorporated (“ABI”), bottling Coca-Cola products, and New Age Beverage (“New Age”), a black empowerment company, bottling Pepsi-Cola products, from 1994 to 1997. Pepsi-Cola lost out to Coke and New Age ceased production in 1997, was provisionally liquidated and later taken over by ABI.
The applicant, Mr Austin Kadiaka, was a sales representative employed by New Age to sell Pepsi-Cola products. When his job was lost he was ready to transfer his allegiance to Coke and applied for employment in a similar capacity at ABI. ABI would have nothing of it. They rejected his application saying that he had not been successful:
Because of the manner in which New Age Beverages and its employees acted towards Coca-Cola and ABI, the trust required for the employment relationship will not be present between ABI and any ex-NAB employee.
Mr Parker, the Human Resources Director, stated that this policy was to endure for a limited period. His instructions to his staff bears this out.
This was followed by a second letter to the applicant dated 6 August 1997 stating that his application has been unsuccessful and that, inter alia:
The reason is that you unfortunately do not meet the requirements in terms of the job criteria at this time.
It is something of a mystery why this letter was sent. It was signed off by a Ms Swart. She was not called as a witness.
The complaint
The applicant was aggrieved and complains in this court that ABI committed an unfair labour practice as envisaged by item 2(1)(a) read with item 2(2) of the 7th Schedule to the Labour Relations Act 66 of 1995.
ABI denies that it committed an unfair labour practice vis-a-vis the applicant. ABI gave an account of the relationship between itself and New Age. ABI had resisted New Age’s war on their market share in what they believed was an ethical and above board manner. New Age on the other hand had resorted to unethical street fighting. New Age had sought to disrupt ABI by enticing away key personnel and had partially succeeded. It had obtained access to new plans and strategies and customer lists. New Age bought ABI bottles from outlets thereby creating a shortage on the trippage of the bottles which placed enormous pressure on ABI. Coca-Cola signage was removed and replaced with Pepsi signs. Coca-Cola coolers were moved out of the better placement positions in outlets and replaced by Pepsi coolers. New Age introduced a different size bottle onto the market compelling Coke to do the same. This caused some dislocation. All this was admitted by the applicant at a pre-trial conference.
The applicant, however, stated in his evidence that he was unaware of the “Cola War” and that he had not been party to the planning strategy. He did not commit any of the acts ascribed to New Age. This case does not turn on credibility but I must say something about my impression of the witnesses. Mr Parker gave lengthy testimony. He was at pains to present the facts objectively. Ms Barnes, who was the personnel officer at ABI Midrand was a satisfactory witness. She erred on one point which is not material to this case. The applicant was an unsatisfactory witness and I found him to be evasive. I hesitate to rely on anything he said. His representative conceded that his evidence had been unsatisfactory in several respects.
After the liquidation of New Age, ABI took a decision at board level, not to employ any ex-New Age employees. This decision was motivated by the need to maintain the morale of those ABI employees who had remained loyal to ABI and who had not succumbed to lucrative offers by New Age to entice them away. Secondly, ex-New Age employees would not have the “passion for the Coca-Cola brand” which was integral to the success of ABI in winning the battle and in making it what it was. Thirdly, ABI staff and the liquidators had inspected the books of New Age and were shocked at the extent of fraud and theft which permeated the organisation from the highest to the lowest ranks. ABI did not feel that it could distinguish between honest and dishonest employees. For these reasons ABI felt that it could not trust ex-New Age employees. There was also a reluctance to make use of the services of an employee of “a poor performing competitor”.
The law on discrimination
The Labour Relations Act of 1995 was enacted to give effect to the values laid down in the interim constitution and (as it has been left unamended) it stands to give effect to the present Constitution of the Republic of South Africa of 1996. The Constitution clearly and specifically outlaws unfair discrimination.
The Constitution
This court applies a law which is subject to the supreme law i.e. the Constitution. The Labour Relations Act of 1995 must be interpreted:
(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.
(See s 3 of the Act)
Two constitutional values are involved in this case: The right to equality including the right not to be unfairly discriminated against, and the right to fair labour practices. It is therefore imperative to consider how the Constitutional Court has dealt with alleged unfair discrimination. It must of course be borne in mind that there is a difference between testing a law for constitutionality and considering whether the practice of an employer constitutes an unfair labour practice for being unfairly discriminatory.
Larbi-Odam v MEC for Education (North-West Province) 1998 (1) SA 745 (CC), which enjoys the distinction of being a single judgment of the Constitutional Court in which the other judges concurred and which dealt with an employment related issue, serves as the appropriate point of reference.
Justice Mokgoro was concerned in that case with an appeal regarding the constitutionality of a government regulation that no person shall be appointed permanently as an educator in a State school unless that person is a South African citizen. The court’s point of departure was s 8 of the Interim Constitution (see now s 9 of the Constitution). Section 8 read as follows:
8. Equality - (1) ...
(2) No person shall be unfairly discriminated against, directly or indirectly, and, without derogating from the generality of this provision, on one or more of the following grounds in particular: race, gender, sex, ethnic or social origin, colour, sexual orientation, age, disability, religion, conscience, belief, culture or language.
(3) ...
(4) ...
In the Constitution the right to equality is enshrined in section 9:
9. Equality - (1) ....
(2) ...
(3) The state may not unfairly discriminate directly or indirectly against anyone on one or more grounds, including race, gender, sex, pregnancy, marital status, ethnic or social origin, colour, sexual orientation, age, disability, religion, conscience, belief, culture, language and birth.
(4) No person may unfairly discriminate directly or indirectly against anyone on one or more grounds in terms of subsection (3). National legislation must be enacted to prevent or prohibit unfair discrimination.
(5) ...
It should be noted that s 8 of the Interim Constitution (s 9 of the Constitution) distinguishes between specified or listed grounds of discrimination and unspecified or unlisted grounds. Item 2 of Schedule 7 emulates this pattern.
The Court noted the reason for prohibiting unfair discrimination and quoted the following passage from President of the Republic of South Africa and another v Hugo 1997 (4) SA 1 (CC) at para 41:
At the heart of the prohibition of unfair discrimination lies a recognition that the purpose of our new constitutional and democratic order is the establishment of a society in which all human beings will be accorded equal dignity and respect regardless of their membership of particular groups.
The court went on to cite from Harksen v Lane NO 1998 (1) SA 300 (CC) at para 46 et seq, that:
The determination as to whether differentiation amounts to unfair discrimination under s8(2) requires a two stage analysis. Firstly, the question arises whether the discrimination amounts to ‘discrimination’ and, if it does, whether, secondly, it amounts to ‘unfair discrimination’. It is as well to keep these two stages of the enquiry separate. That there can be instances of discrimination which do not amount to unfair discrimination is evident from the fact that even in cases of discrimination on the grounds specified in s8(2), which by virtue of s8(4) are presumed to constitute unfair discrimination, it is possible to rebut the presumption and establish that the discrimination is not unfair.
The court accepted that the impairment of dignity lies at the heart of discrimination, also on unspecified grounds. The following passage was quoted from the Harksen case (at para 51):
The prohibition on unfair discrimination in the Constitution provides a bulwark against invasions which impair human dignity or which affect people adversely in a comparably serious manner.
See the criticism expressed on this score by Anton Fagan “Dignity and Unfair Discrimination: A value Misplaced and A Right Misunderstood” 1998 South African Journal on Human Rights, p.220 and Cathi Albertyn and Beth Goldblatt “Facing the Challenge of transformation: Difficulties in the Development of an Indigenous Jurisprudence of Equality” 1998 South African Journal on Human Rights, p.248.
Once discrimination has been established the next inquiry is whether that discrimination is unfair (See Larbi-Odam at para 17). This is concerned with the impact of discrimination on the complainants.
The final concern of the court was whether the discrimination was justified in terms of s 33 (1) of the Interim Constitution (s 36 of the Constitution).
Mokgoro J concluded
The problem of the oversupply of teachers may be relevant to immigration policy and to decisions to be taken where the competition for a post is between a citizen and a temporary resident. But where the competing parties are citizens and permanent residents, an exclusion of permanent residents on the grounds that they do not hold citizenship is, in my view, purely discriminatory and has no valid justification.
(Larbi-Odam at para 35)
ILO Standards
The Labour Relations Act, 66 of 1995 is directed at South Africa’s international commitments. South Africa has not, as far as I have been able to ascertain, adopted the International Labour Organisation’s Convention 111 of 1958 which is instructive. Article 2 provides:
Each Member for which this Convention is in force undertakes to declare and pursue a national policy designed to promote, by methods appropriate to national conditions and practice, equality of opportunity and treatment in respect of employment and occupation, with a view to eliminating any discrimination in respect thereof.
Discrimination is defined in article 1 as:
(a) any distinction, exclusion or preference made on the basis of race, colour, sex, religion, political opinion, national extraction or social origin, which has the effect of nullifying or impairing equality of opportunity in treatment in employment or occupation;
(b) such other distinction, exclusion or preference which has the effect of nullifying or impairing equality of opportunity or treatment in employment or occupation as may be determined by the Member concerned after consultation with representative employers’ and workers’ organisations, where such exist, and with other appropriate bodies.
Article 1(2), however, provides that:
Any distinction, exclusion or preference in respect of a particular job based on the inherent requirements thereof shall not be deemed to be discrimination.
The concept of an unfair labour practice (Act 28 of 1956)
One last background consideration must be referred to. The Labour Relations Act 28 of 1956 and the jurisprudence developed by the Industrial Court, the Labour Appeal Court and the Appellate Division (later the Supreme Court of Appeal) was built on the concept of an unfair labour practice. This concept lives on in item 2 of the 7th Schedule to the Labour Relations Act of 1995. It is impossible to summarise that jurisprudence but mention must made of the leading cases on the nature of the concept and the process of deciding such matters.
It was stressed in National Union of Metal Workers of SA v Vetsak Co-operative Ltd and Others 1996 (4) SA 577 (A) that the underlying concept of the definition of an unfair labour practice is fairness (per Smalberger JA at 588D). The following was said at 593 G-H by Nienaber JA:
The fairness required in the determination of an unfair labour practice must be fairness towards both employer and employee. Fairness to both means the absence of bias in favour of either. In the eyes of the LRA of 1956, contrary to what counsel for the appellant suggested, there are no underdogs.
In determining whether an unfair labour practice has been committed, a moral or value judgment is required (See Media Workers Association of South Africa and Others v Press Corporation of South Africa Ltd (`Perskor’) 1992 (4) SA 791 (A) at 798I and 802A).
A residual unfair labour practice
This case is about whether the refusal by ABI to employ ex-New Age employees constitutes a residual unfair labour practice. Generally an employer is at liberty to employ any person that it may wish to. This flows from its managerial prerogative. This prerogative has been limited as regards selection for employment (See EML Strydom “Employer Prerogative from a Labour law Perspective”, unpublished LLD thesis, Unisa, 1997, at 293). The employer’s prerogative has been limited, in the case of our society, to undo the injustice of the past and to provide equal opportunities for all persons without distinction, particularly but not exclusively as regards immutable characteristics such as race and gender. Provision has been made, for the interim, to address unfair discrimination through the residual unfair labour practice contained in item 2 of Schedule 7 to the Act.
It is necessary before proceeding further to appreciate the structure of the unfair labour practice concept and the goals it is intended to achieve. Item 2(1)(a) read with item (2)(a) sets out the requirements of a residual unfair labour practice. The items consist of the following elements. An unfair labour practice is any:
unfair act of omission;
that arises between an employer and an applicant for employment;
involving the unfair discrimination;
either directly or indirectly;
against an applicant for employment;
on any arbitrary ground;
including, but not limited to race, gender, sex, ethnic or social origin, colour, sexual orientation, age, disability, religion, conscience, belief, political opinion, culture, language, marital status or family responsibility.
But any discrimination based on an inherent requirement of the particular job does not constitute unfair discrimination (See item 2(2)(c). See also the comments in M Naidu “The ‘Inherent Job Requirement’ Defence - Lessons from Abroad” 1998 SA Mercantile Law Journal at 173 -182).
Most of these elements need to be explored before I turn to the application of the definition to the facts at hand.
Applicant for a job
An employer discriminates unfairly on arbitrary grounds or specific grounds vis-a-vis an “applicant for employment” when the employer refuses employment on the objectionable grounds but only if a post is available. I do not think that an employer acts unfairly as contemplated by the definition of an unfair labour practice if the employer declines to consider the approach of a job seeker where there is no vacant position, even if the reasons for rejecting the approach are morally indefensible. Until there is a vacancy an interested party who approaches an employer is not “an applicant for a job”.
I need not, however, decide this, for in this case it is common cause that ABI had a vacancy for an “account manager” at the time the applicant applied for a position. An account manager is similar to the position of a sales representative but ABI has enhanced the job and requires certain specified skills and qualifications. The applicant, I should add, does not meet these requirements.
Direct and indirect discrimination
An unfair labour practice may be founded on direct or indirect discrimination. C Bourne and J Whitmore Race and Sex Discrimination (1993), at para 2.45 suggest the following four tests for determining indirect discrimination:
1. Has a requirement or condition been applied equally to both sexes or all racial groups?
2. Is that requirement or condition one with which a considerably small number of women (or men) or persons of the racial group in question can comply than those of the opposite sex or persons not of that racial group?
3. Is the requirement or condition justifiable irrespective of the sex, colour, race, nationality, ethnic or national origins of the person in question?
4. Has the imposition of the requirement or condition operated to the detriment of a person who could not comply with it?
See also André van Niekerk “Discrimination in selection and recruitment - An applicant’s right to equality of treatment” 1995 Contemporary Labour Law vol 4 no 10, 105 at 107.
Discrimination against a group of persons
Discrimination affects the individual but it does so against the backdrop of the individual being a member, or supposedly a member, of a group. As Justice O’Regan has put it in a constitutional setting in President of the Republic of South Africa v Hugo, supra, at para 112:
There are at least two factors relevant to the determination of unfairness; it is necessary to look at the group or groups which have suffered discrimination in the particular case and at the effect of the discrimination on the interests of those concerned.
Burden of proof
The burden of proof (certainly in an evidentiary sense) rests on an employer, once it is shown that there has been discrimination, to show that it is unfair (See Leonard Dingler Employee Representative Council v Leonard Dingler (Pty) Ltd and others (1998) 19 ILJ 285 (LC) and Ashley Martin Abbott v The Bargaining Council for the Motor Industry (Western Cape) (an unreported decision of the Labour Court, Case No: C23/97)).
The purpose
The Act seeks, in my view, to ensure that employers provide equal opportunities for employment to all job seekers. This it does by striking down practices which constitute an unfair labour practice. The object is to establish fair labour practices founded on the absence of unfair discrimination. In order for there to be equal opportunities, the Act prohibits unfair discrimination on the basis of the listed grounds or on arbitrary grounds.
General and specific grounds
The listed grounds (race, gender, sex, ethnic or social origin, colour, sexual orientation, age, disability, religion, conscience, belief, political opinion, culture, language, marital status or family responsibility) arise partly from historical experience in South Africa. Discrimination in employment on the grounds of race, sex and gender was, as we know, widespread (See the observations on discrimination in employment in F S Barker The South African Labour Market - Critical Issues for Transition (1992) 154-173). Other grounds included in the list reflect experience gained in combatting discrimination world-wide (See ILO Equality in Employment and Occupation 1988, paras 30-75). Still not satisfied that all bases were covered, our legislature preceded the list with a prohibition on discrimination on arbitrary grounds.
The listed grounds do not include the labour practice employed by ABI and therefore attention must be paid to the general or primary ground. Why does the Act prohibit discrimination on (unfair) arbitrary grounds? Mr Brassey SC, who appeared for ABI, has submitted that the legislature intends outlawing pejorative discrimination. This is why the phrase ‘unfair discrimination’ is used in paragraph (a) of the definition. Certainly that seems to be the intention. The legislature is not intending to regulate comprehensively hiring practices. The Act does not restrain employers from relying on such criteria as suitability, compatibility, honesty and the like. It was bent on eliminating hiring practices which discriminate against an applicant for a job on arbitrary grounds and the specific grounds listed in paragraph (a) of item 2(1).
The specific examples give an idea of what the legislature was concerned about. However, it must be stressed that the primary unfair discrimination which the legislature outlaws is unfair discrimination which is based “on any arbitratry ground”. What are arbitrary grounds? Mr Brassey submits that the eiusdem generis rule applies and that the specific instances must inform the primary concept of primary grounds. I think that some clarity is to be derived from this process, but the common denominator of the specific instances may not, for the legislature says this clearly, delimit the primary grounds i.e. arbitrary grounds.
Unfairness and justification
Fairness pervades the concept of an unfair labour practice. In Association of Professional Teachers and Others v Minister of Education and Others (1995) 15 ILJ 1048 (IC), the court dealt with discrimination as an unfair labour practice under the Labour Relations Act 28 of 1956. It said, at 1089G-H, that:
In terms of the unfair labour practice jurisdiction of this court the consideration of justification is considered together with the question of fairness and does not usually require a separate investigation.
Item 2(c) might be viewed as a justification of unfair discrimination. Any discrimination based on an inherent requirement for the particular job does not constitute unfair discrimination. It does not seem to me that this is the sole justification for discrimination. There may be other circumstances which may legitimately be taken into account. The Act does not incorporate article 4 of ILO Convention 111 of 1958 which allows that “any measures affecting an individual who is justifiably suspected of, or engaged in, activities prejudicial to the security of the State shall not be deemed to be discrimination”, but holds that there must be a right of appeal. Closer to home, Mokgoro J has held in Larbi-Odam, at para 31:
Unless posts require citizenship for some reason, for example due to the particular political sensitivity of such posts, employment should be available without discrimination between citizens and permanent residents.
Arbitrary grounds
Does the refusal of ABI to consider the applicant for a position because he is a former New Age employee constitute discrimination in the sense of a differentiation? Undoubtedly it does, because it does not treat all applicants for a job, who are suitably qualified, on an equal footing. See M Banton Discrimination Open University Press 1994, p.1, who says that discrimination is “the deferential treatment of persons supposed to belong to a particular class of persons”. Mr Parker’s forthright statement that ABI did not have anything against the applicant personally demonstrates that he was treated as belonging to a class and not on his merits. The first letter precludes consideration of the applicant on his merits. This is not cured by the second letter. The lack of qualifications may have other relevance.
This discrimination was not done on any of the specified grounds and so the primary ground, i.e. arbitrary grounds, must engage our attention. What then are arbitrary grounds? An arbitrary ground is a ground which is capricious or proceeding merely from will and not based on reason or principle (See L Baxter Administrative Law 521-522 relying on Beckingham v Boksburg Licensing Court 1931 TPD 280 at 282).
In my view, without attempting to be exhaustive, unfair discrimination on an arbitrary ground takes place where the discrimination is for no reason or is purposeless. But even if there is a reason, the discrimination may be arbitrary if the reason is not a commercial reason of sufficient magnitude that it outweighs the rights of the job seeker and is not morally offensive. The discrimination must be balanced against societal values, particularly (as emphasised repeatedly by the Constitutional Court) the dignity of the complainant and a society based on equality and the absence of discrimination. I leave affirmative action aside. See the comments on this in George v Liberty Life Africa Ltd (1996) 17 ILJ 571 (IC).
I think I can safely say, on the facts of this case, that ABI makes out a case that the refusal to hire ex-New Age employees makes commercial sense. This is so because the ban is not vindicative. It is done to preserve the moral of ABI’s workforce, to discourage turncoats, to reward loyalty, to ensure commitment to the brand, to assure customers that ABI employees believe in Coke and all that it stands for and to avoid the taint of corruption. It is also for a limited period.
Now it might be said that former enemies can work together. However, that is not the issue. The issue is whether ABI have committed an unfair labour practice by refusing to consider (for the time being) an application for employment by the applicant on the grounds of his having worked for New Age.
Unfortunately I do not know how many persons comprise the group to which the applicant belongs. I do not know how many former Pepsi employees are concerned. Mr Moshaona submitted that there were 2400. I do not know whether this is the case. There were about 240 employees affected by the liquidation who might have wanted to rely on s 197 of the Act and be regarded as ABI’s employees. It was incumbent on the applicant to place these facts before me. It makes my task more difficult than it already is not knowing the size of the group in question. I do not know the composition of the New Age workforce. For instance, how many sales representatives are there?
It was not clear that the war had ended on 15 July 1995. Mr Parker attested that until February 1998 there was speculation that New Age would be revived by a Middle East consortium or that the Pepsi-Cola company would itself enter the market. It cannot be said that ABI was unfair at this stage in placing the bar on employing ex-New Age employees. The real possibility existed that their incorporation could damage morale, and doubly so if Pepsi was revived.
The interest of the applicant, being a member of the group, must be factored into the consideration whether an unfair labour practice has been committed. The applicant enjoys very little bargaining power. He is unemployed. He is denied access to one of the largest bottlers of soft drinks. He has other skills than those of a sales representative. He has had a career in public relations; although peripheral this may not be ignored. He is prejudiced to a degree by the decision not to consider him even though without the ban he did not measure up to ABI’s criteria for the job. I do not think that this ban constitutes an unfair labour practice especially where there are other opportunities for sales representatives, although I am mindful of the biting effect of the current economic climate.
I am of the view that the refusal by ABI (Coke) to employ former New Age (Pepsi) employees for a limited duration does not constitute an unfair labour practice as contemplated by item 2(1)(a) of the Act. It is not an arbitrary refusal, for there is a bona fide commercial or operational reason for it being put in place. It does not perpetuate any of the historical grounds of discrimination which cry out for a remedy. I do not regard it as unfair or inamicable to the values of our society as expressed in the Constitution. It does not infringe the dignity of the applicant to be told that his services are not required on account of his being an active member of a former rival, a rival which, I might add, had not been decisively vanquished at the stage the ban was imposed. The labour practice, although contrary to the interest of the applicant, is not grossly unfair towards him; he is a casualty of the commercial war. It is fair to the employer. It is not unfair to society at large.
Discrimination on the grounds of race
So much for the case on direct discrimination. I turn to the case made out for indirect discrimination. The pleadings in this case alleged that the discrimination was done directly alternatively indirectly. No particulars were stated to show that ABI had discriminated against the applicant indirectly. The particulars and the pre-trial minute point to circumstances intended to show direct discrimination. Nevertheless I allowed Mr Moshoana, who appeared for the applicant, to explore indirect discrimination, as it had been formally pleaded and not abandoned. Mr Moshoana sought to establish a case that as the majority of employees of New Age were black persons in the broad sense of the word ABI was discriminating indirectly against black persons by refusing to employ ex-New Age employees i.e. it had a disparate impact. There are two answers to this. The first is that the applicant did not say that this was his case even when probed under re-examination. The second is that the racial composition of ABI was, to all intents and purposes, the same as that of New Age (consisting of about 80% black employees). This negates a suggestion that what ABI did had the effect of targeting persons on the grounds of race.
Finally, it was submitted in closing that the existence of the qualification for appointment to the position of an account manager (matric plus two year tertiary education and two years experience) was a barrier having a disparate effect. The qualification was put in place and has the effect of excluding persons, black persons who generally would have a lower standard of education than whites. This was not canvassed in the pleadings and no attempt was made to deal with this in the evidence of the applicant. It was not put to ABI’s witnesses. I have no material on which to consider this submission. It must therefore be dismissed.
In the premises the application must be dismissed. There is no reason why costs should not follow the result. The application is dismissed with costs.
A A Landman
Judge of the Labour Court
SIGNED AND DATED AT JOHANNESBURG THIS 28th DAY OF OCTOBER 1998.
Date of hearing: 19, 20, 21, 22 October 1998
Date of judgment: 28 October 1998
For the applicant: Adv MSM Brassey SC, instructed by Rooth and Wessels
For the respondent: Mr Moshoana of Mohlaba and Moshoana Inc
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