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IN THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

Not Reportable

Case No: J 1172/20

In the matter between:

ARCELORMITTAL SOUTH AFRICA LIMITED                             Applicant

and

NATIONAL UNION OF METALWORKERS

OF SOUTH AFRICA                                                                      First Respondent

SOLIDARITY                                                                                 Second Respondent

INDIVIDUALS LISTED IN ANNEXURE “A” TO THE

NOTICE OF MOTION                                                     Third to Further Respondents

Heard:                       27 & 29 October 2020

Delivered:         This judgment was handed down electronically by circulation to the parties' legal representatives by email and publication on the Labour Court’s website. The date and time for hand-down is deemed to be on 18 November 2020 at 14h00

JUDGMENT

TLHOTLHALEMAJE, J

[1]           The applicant approached this Court for an interim order inter alia declaring the intended strike action by the third to further respondents to be  unprotected and unlawful. The application was initially enrolled for 27 October 2020 and on that date, the first respondent (NUMSA), had filed an answering affidavit. This had necessitated that the matter be postponed to 29 October 2020 in order to afford the applicant an opportunity to file its replying affidavit. The second respondent (Solidarity) has not opposed the application. In view of the complete set of pleadings, the matter will be disposed of on a final basis.

[2]           The dispute emanates from demands made by NUMSA for the parties to conclude a long-term collective agreement guaranteeing a retrenchment package for the dismissal of its members on account of the applicant’s operational requirements. These demands came amidst an ongoing retrenchment process undertaken by the applicant since 18 June 2020, and after a notice in terms of section 189(3) of the LRA was issued.

[3]           NUMSA further contends that these demands were unrelated to the on-going consultation process, and that they were solely in respect of the retrenchment process that took place in 2019, that had ended with a deadlock. These demands are;

·         7% to be included in the severance package;

·         ex gratia payment of R150 000.00;

·         medical payment to be made for the next 24 months after termination;

·         payment of R65 000 for the purposes of furthering studies; and

·         housing allowance to be paid for the next 36 months after termination.

[4]           The background to this application is fairly uncontested. With the advent of the Covid-19 pandemic and subsequent declaration of the National State of Disaster, the applicant has since 20 March 2020, convened and held a series  of meetings with NUMSA and Solidarity (‘The Unions’), with a view to discuss the implications of the pandemic on the business and the resultant reduced demand on its output. Measures taken arising from these various meetings included ceasing all operations pending the national lockdown; the implementation of inter alia pay-reduction and short time.

[5]           The Unions and NUMSA in particular have always been averse to such measures, contending that the employees were not responsible for the shutdown of operations due to lockdown, and that those measures were unfair, and constituted a unilateral change in the terms and conditions of the employees’ contracts of employment and other benefits.

[6]           On 27 May 2020, NUMSA sent correspondence to the applicant, again registering its protest at the proposed reduction of salaries and introduction of short time. NUMSA further took issue with the applicant having had discussions with the employees individually, contending that it would not engage in any discussions in respect of voluntary severance agreements outside the processes contemplated in terms of section 189 of the LRA. It proposed other measures related to the salary reductions that were already implemented.

[7]           Following a series of further meetings, the applicant had on 18 June 2020, issued the section 189(3) of the LRA notice. Flowing from that notice and the request for facilitation by the CCMA, a number of consultation meetings were held. Further meetings between the parties on their own also took place, where various alternatives were explored including further implementation of short time and salary cuts in July and August 2020. At the time, the applicant contends that it had been operating at 21% of normal production levels (between April and June 2020), and salaries had been reduced by between 45% and 40% for the package category and bargaining unit.

[8]           In the light of there being no consensus on the issue of short-time, the applicant sought to implement a clause in the prevailing Collective Agreement[1] related to short time, which implied that employees would only be paid for hours worked. The Collective Agreement is part of the Recognition Agreement concluded between the applicant and NUMSA in 2009, and includes various annexures related to dispute resolution procedure, strikes, lock-outs, picketing, and retrenchment policy/procedures. The Unions objected to these measures.

[9]           The applicant however in its correspondence of 15 July 2020 to the Unions insisted that it would proceed with the implementation of short time on a pay for actual work done. NUMSA again on 18 July 2020 objected to the applicant’s intentions to implement the proposals without consultation with it, and again requested the applicant not to interfere with the employees’ terms and conditions of employment.

[10]        At consultations meetings held on 27 July 2020, the Unions demanded that the section 189(3) notice be withdrawn, and that the applicant desist from discussing the amendments to the bargaining unit’s terms and conditions of employment as envisaged in the Collective Agreement. Those demands were rejected in the applicant’s response on 30 July 2020.

[11]        On 17 August 2020, NUMSA had referred a dispute to the Metal and Engineering Industries Bargaining Council (MEIBC) related to matters of mutual interest. NUMSA’s demands as already mentioned in paragraph 3 of this judgment related to the conclusion of a collective agreement guaranteeing the package for all future dismissals for operational requirements.

[12]        On 7 September 2020, the parties attended a conciliation meeting where they had agreed to meet and attempt to resolve the dispute. The Conciliating Commissioner had also noted that where no agreement was reached, the parties would submit picketing rules and if there was no agreement in that regard, the rules would be imposed on the parties.

[13]        On 21 September 2020, a certificate of non-resolution was issued. The parties however continued to have facilitated consultations between 14 September 2020 and 12 October 2020.

[14]        On 5 October 2020, NUMSA sent a Memorandum with a variety of demands, including the implementation of the wage agreement and implementation of increases, and essentially rejecting attempts to retrench employees. On 21 October 2020, NUMSA issued a strike notice, advising that the strike would commence on 29 October 2020 in support of the demands.

The submissions:

[15]        The applicant contends that the strike action which NUMSA seeks to embark upon is unprotected on three main grounds viz;

a)    That the demands related to the intended strike action (inclusive of the improved severance package, which NUMSA had contended was only applicable to non-bargaining unit employees), formed part of the on-going retrenchment process, and since none of the employees had been issued with notices of termination of their employment in accordance with the provisions of section 189A(7) of the LRA, they could not embark on a strike.

b)    The second and third grounds relate to NUMSA and its members being bound by the provisions of the Collective Agreement, which makes provision under ‘Annexure E’ for a retrenchment policy, including issues such as selection criteria, and the quantum of severance that was fixed. Accordingly, it was submitted that the parties had in accordance with the collective agreement, settled what is payable to retrenched employees on retrenchment, and that the strike was prohibited under section 65 of the LRA.

c)    Further reference was made to ‘Annexure C’ of the Collective Agreement which makes provision for dispute resolution procedures, and in particular clause 10.7 thereof, which required parties to engage in discussions surrounding substantive issues before referring the dispute to the MEIBC for conciliation. The applicant contends that NUMSA has not complied with these internal dispute resolution procedures as it was first required to engage with the applicant in order to find a resolution, and where the parties were still deadlocked, to have agreed for the dispute to referred to the MEIBC. In this instance however, it was submitted that the referral was premature, as no negotiations were held.

Is the intended strike action protected?

[16]        At the core of the applicant’s contentions is that the provisions of section 65 of the LRA[2] prohibits the strike, on account of NUMSA and its members being bound by the provisions of a collective agreement in respect of the issues in dispute. It has been held that the limitations imposed by section 65 (1) (a) on the exercise of a right to strike arise in circumstances where a trade union, on behalf of its members, contracts out of that right by entering into a collective agreement that prohibits a strike in respect of the issue in dispute, and that similarly, section 65 (3) (a) (i) has its roots in contracting out, in the sense that it prohibits strikes in circumstances where a binding collective agreement regulates the issue in dispute[3].

[17]        The starting point is to reiterate the obvious legal principles. Section 23(2)(c) of the Constitution entrenches every worker’s right to strike, and that right is given effect to under the provisions of section 64 of the LRA^[4], provided that certain procedural and statutory requirements are met. It has been stated that the provisions of section 64 of the LRA ought to be interpreted to advance the objectives of the LRA, one of which is to ensure orderly collective bargaining^[5].

[18]        Given the constitutional protection accorded to the right to strike, it was correctly pointed out on behalf of NUMSA that the Court must not unduly limit that right by reading in implied terms, and that the limitation provisions must be interpreted in a manner least intrusive of the right[6].

[19]        Section 23 (1)(d) of the LRA[7] in particular, regulates the legal and binding effect of collective agreements. In expressing this point further, it was held in Cusa v Tao Ying that;

“[55] The right of every trade union and every employers’ organisation and employer to engage in collective bargaining is entrenched in section 23(5) of the Constitution. The concomitant of the right to engage in collective bargaining is the right to insist on compliance with the provisions of the collective agreement which is the product of the collective bargaining process.

[56]  Compliance with a collective bargaining agreement is crucial not only to the right to bargain collectively through the forum constituted by the bargaining council, but it is also crucial to the sanctity of collective bargaining agreement. The right to engage in collective bargaining and to enforce the provisions of the collective agreement is an especially important right for the workers who are powerless to bargain individually over wages and conditions of employment. The enforcement of collective agreements is vital to industrial peace and it is indeed crucial to the achievement of fair labour practices which is constitutionally entrenched. The enforcement of these agreements is indeed crucial to a society which, like ours, is founded on the rule of law.”[8]

[20]        Applying the above principles to the facts of this case, to the extent that it was argued on behalf of the applicant that the intended strike is prohibited by inter alia the provisions of the existing collective agreement, a determination needs to be made as to whether the issues in dispute upon which the intended strike is predicated, are indeed regulated by that Collective Agreement as submitted on behalf of the applicant.

[21]        In establishing the true nature of the dispute, this Court must look at the substance of the dispute and not the form in which it is presented, as the characterization of a dispute by a party is not necessarily conclusive[9]. Furthermore, the Court must examine the conduct of the parties leading to the dispute; the nature of the referral and the outcome sought; the contents of the strike notice, the demands made by the union, and the pleadings[10].

[22]        In this case, it is apparent that indeed the substance and nature of the demands and issues in dispute between the parties are matters that are ordinarily dealt with under the provisions of section 189 of the LRA. The fact that these demands arise within the context of an on-going consultation process point to NUMSA’s quest not only to obtain favourable retrenchment benefits for all other employees but also those that are potentially going to be affected by the current on-going consultation process. In the end, the outcome sought by NUMSA is in respect of those employees to be affected as a result of the on-going process and those who might be affected by future processes. To this end, it is apparent that the demands in respect of the current consultation process, cannot be separate and severable from those that form the subject matter of the long term collective agreement sought to be achieved.

[23]        It needs to be pointed out that the demands made by NUMSA on behalf of its members are issues that are not specifically covered in the prevailing Collective Agreement. To be precise, Annexure E1, which relates to the retrenchments, only specifically deals with severance payment, which is agreed at two weeks for every year of service completed. This therefore implies that where additional retrenchment benefits in accordance with that agreement are sought and disputes arise therefrom, this would ordinarily require resolution in accordance with the dispute resolution provisions contained in that Agreement.

[24]        In the end, having had regard to the nature and substance of the demands, I am nonetheless hard-pressed to find where the Court can draw a line between the parallel process propagated by NUMSA, and its attempts to draw a distinction between its demands emanating from the 2019 consultation process, and the demands in relation to the current consultation process. These demands are intertwined with the sole objective being to improve the employees retrenchment severance package.

[25]        I therefore agree with the submissions made on behalf of the applicant that the inescapable conclusion to be reached is that the subject and substance of the demands for the long term agreement are matters governed by the parties’ Collective Agreement. These issues are the subject of the on-going consultation process as facilitated under the CCMA, thus making the strike impermissible under the provisions of section 65(1)(a) of the LRA. In the end, the employees have not acquired a right to strike in the absence of a notice having been issued under the provisions of section 189A(7)(a) of the LRA.

[26]        Even if NUMSA insisted that its demands in respect of the long term Agreement were not aligned to the on-going consultation process, a further issue arising is whether the dispute resolution provisions of Collective Agreement were complied with.

[27]        The first issue to be disposed of pertains to the demands in respect of severance pay. NUMSA contends that this only related to its members who do not fall under the bargaining unit. The applicant’s contention was that by virtue of the definition of ‘employee’ in the Collective Agreement, employees in the non-bargaining unit were equally covered by the provisions of the retrenchment Policy as annexed to the Collective Agreement.

[28]        It is correct as stated by the applicant that ‘employee’ in the Recognition Agreement is defined in clause 3.6 as ‘..any person employed as a permanent employee of  the Company’. Annexure E1 of the Agreement which is the retrenchment policy specifically refers to ‘Company Policy: Retrenchment Bargaining Unit’, and under its clause 2, it is specifically stated that ‘This policy is applicable to all permanent employees in the bargaining Unit in the Company’

[29]        To the extent that the policy only appears to be in reference to employees in the bargaining unit, whilst the definition of ‘employee’ is extended to all permanent employees without distinction, it was submitted on behalf of the applicant that in that case, an issue surrounding the interpretation of the collective agreement arises, which requires the dispute in that regard to be referred for resolution. It was however submitted on behalf of NUMSA that there was no dispute requiring interpretation in the light of the specific wording of the policy.

[30]        Whether the retrenchment policy is applicable to all employees as submitted on behalf of the applicant also needs to be considered within the context of clause 9 of the Recognition Agreement, in terms of which the parties agreed to the retrenchment policy (including selection criteria) as stipulated in annexures E1 and E2. In the light of these provisions, I agree with the submissions made on behalf of NUMSA that an issue of interpretation cannot arise in view of the specific wording of the policy, even Annexure E1 had to be read in conjunction with the whole agreement.

[31]        The mere fact that the non-bargaining unit employees may not be covered in the retrenchment policy however does not imply that NUMSA is entitled to go on strike in respect of the issue of severance pay in the light of the conclusions reached somewhere in this judgment related to the intertwined nature of these demands with the on-going consultation process, and further in the light of the conclusions to be reached below.

[32]        In instances where the dispute between the parties is one that may result in a strike or lock-out, clause 5 of Annexure C2 of the Collective Agreement, provides that where deadlock is reached at the negotiations, or at a dispute meeting, the parties can agree to refer the dispute to private arbitration or the MEIBC for conciliation. Where the conciliator fails to resolve the dispute, it may then be referred to in terms of the provisions of the LRA.

[33]        It will be recalled that the basis of the demands in respect of the long term retrenchment agreement emanates from the previous 2019 extensive consultation process, which according to NUMSA ended in a deadlock. It is not clear from the papers as to what led to that process being resuscitated in the midst of another consultation process, even though the employees affected by that process have since been retrenched. It is however common cause that to the extent that NUMSA contends that the processes are unrelated, it had referred a dispute for conciliation prior to any engagements with the applicant at internal level.

[34]        In response to the applicant’s contentions that NUMSA did not comply with the provisions of the dispute resolution as contained in the Collective Agreement, NUMSA submitted that those provisions did not always require a dispute meeting and that the parties need only agree on a process where a dispute was to be referred to private mediation, and that to this end, it had substantially complied[11] with the applicable procedures. In the alternative, it was submitted that the applicant had waived its rights under the provisions, in that it had attended to the dispute at the MEIBC, and that the parties had subsequently at the recommendations of the conciliating Commissioner, held negotiations on 10 September 2020, which did not yield a result.

[35]        The starting point is that under clause 2.1 of Annexure D (Strike and Lock-Out Rules), the parties agreed that they will resort to Strike or Lock-Out after the relevant provisions of the dispute Resolution Procedure and the Act (LRA) have been exhausted. Bearing in mind the principles related to the purpose and objectives of collective agreements, the question that arises is whether a strict interpretation of these dispute resolution provisions would unduly limit or be intrusive of the employees’ right to strike.

[36]        Flowing from the provisions of clause 5 of Annexure C (Dispute Resolution Procedure), it is apparent from clause 5.1 that the parties can agree to refer a dispute to private mediation or the MEIBC for conciliation, and that the process to be followed may either be agreed if deadlock is reached at the negotiations or at a dispute meeting. Under clause 5.3, if the parties are unable to resolve the dispute at a dispute meeting, they will agree in writing on the process to be followed.

[37]        Under clause 1 (Preamble) of Annexure D, the parties confirmed their commitment to sound employee relations and as such, to resolve to resort to any form of industrial action only in exceptional circumstances to be utilised in accordance with the dispute resolution rules and the provisions of the LRA.

[38]        In the light of the agreed dispute resolution provisions not having been followed in the manner prescribed, (i.e., absence of a dispute meeting held or an agreement in writing on what process was to be followed prior to the referral), it cannot be correct as submitted on behalf of NUMSA, that these provisions were substantially complied with. Any comparisons made with the decision in Phopho in regards to whether there was substantial compliance with the dispute resolution provisions ought to be looked at within the context of the facts of that case. Unlike in this case, the issue in Phopho was whether there was compliance with the provisions of Section 36(2)(c) of the South African Police Service Act[12]. Thus, even if collective agreements are a form of subordinate legislation[13], given their self-regulatory nature and purpose, it is doubted that substantial compliance with such agreements can be placed on par with such compliance when it comes to statutory provisions.

[39]        As was stated in Cusa v Tao Ying, the concomitant of the right to engage in collective bargaining is the right to insist on compliance with the provisions of the collective agreement which is the product of the collective bargaining process, whilst the enforcement of collective agreements is vital to industrial peace.

[40]        In the light of the objectives and reasoning behind these internal dispute resolution processes agreed to, it is my view that to insist that NUMSA ought to have strictly complied with those provisions, cannot be said to result in an intrusion on its members’ right to strike, nor can it be viewed as additional limitations to those contained in section 65 of the LRA. The procedures agreed upon are the parties’ self-imposed limitations which they deemed necessary for the effective regulation of their relationship, inclusive of the right to strike. To this end, it is not even necessary to determine whether the applicant had waived its rights to a dispute meeting before a referral to the MEIBC when it attended the conciliation meeting at the MEIBC on 7 September 2020.

[41]        In the light of the above conclusions, it follows that the applicant’s application for interdictory relief should be successful. I have further had regard to the requirements of law and fairness in relation to an award of costs, and in the light of the on-going relationship between the parties, I am of the view that an award of costs is not warranted.

[42]        Accordingly, the following order is made;

Order:

1.            The applicant’s non-compliance with the forms and service provided for in the Labour Court Rules is condoned and this matter is dealt with as one of urgency in terms of Rule 8.

2.            The intended strike action by the Third to Further Respondents is declared to be an unprotected and unlawful strike.

3.            The Third to Further Respondents are interdicted and restrained from participating and embarking on any unprotected and unlawful strike or any intended conduct in furtherance, or in contemplation of such strike.

4.            The First Respondent is directed to urge and advise the Third to Further Respondents not to embark on the unprotected and unlawful strike, and to take all reasonable steps within its power to persuade them not to pursue such action and to comply with their contracts and any other conditions of employment.

5.            The First Respondent is ordered to communicate the terms of this Court Order to all its members and to deliver an affidavit within 14 days of the date of this Order or its receipt, stipulating that it has communicated the terms of this Court Order to its members and to indicate how the Order was communicated.

6.            There is no order as to costs.

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Edwin Tlhotlhalemaje

Judge of the Labour Court of South Africa

Appearances:

For the Applicant:     F.A Boda SC, instructed by Cliffe Dekker Hofmeyr Incorporated

For the 1^st & 3^rd - Further Respondents:    R. Daniels of Cheadle Thompson & Haysom Attorneys

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