Identification

The first question to be asked, when seeking to resolve any labour law problem, is whether the parties are indeed "employees" and "employers" within the meaning of the applicable statute or the common law.

This has long been a difficult task in South Africa, as it is not always immediately apparent whether the parties have entered into the locatio conductio operarum (contract of employment) or merely the locatio conductio operis (contract of work).

Distinguishing between these two kinds of contracts is critically important, as different legal consequences flow from the various forms of contract. Most important is that South African labour legislation applies only in respect of employees, who are entitled to social security benefits and have access to the statutory mechanisms if they wish to seek remedies for violations of their employment rights. Similarly, only employers are bound by the labour statutes, and are vicariously liable for the delicts of their employees.

The Labour Relations Act, has through the S200A and the Code of Good Practice: Who is an employee, provided guidelines on the determination if a party is an employee. S200A sets out several requirements which if met makes the presumption if the person is an employee or not.

Common law

The first source to be examined, when seeking to determine whether parties to a work relationship are employers and employees, is the contract into which they have entered.

A contract of employment comes into existence when the parties conclude an agreement that conforms to the requirements of the locatio conductio operarum. The contract of employment is traditionally defined as "a contract between two persons, the master (employer) and the servant (employee), for the letting and hiring of the latter's services for reward, the master being able to supervise and control the servant's work."

This, however, raises the question of how much supervision or control is required to distinguish between employees and independent contractors.

Reported judgments have indicated that the task of distinguishing employees and employers from parties to other contractual relationships entailing the provision of work, or the rendering of services, is not a matter of definition; classification of such contracts is a "matter of substance, not merely of form."

The true nature of the contract, therefore, is determined from the relationship between the parties, not merely the label the parties have given their contract.

Statutes

Statutory definitions do not resolve the problem. "Employee" is defined

• in section 213 of the Labour Relations Act 1995 as
  • "any person excluding an independent contractor, who works for another person or for the State, and who receives, or is entitled to receive, any remuneration; and
  • "any other person who in any manner assists in carrying on or conducting the business of an employer;"
• in section 1 of the Basic Conditions of Employment Act in exactly the same words; but
• in section 1 of the EEA as "any person other than an independent contractor who
  • "works for another person or for the State and who receives, or is entitled to receive, any remuneration; and
  • "in any manner assists in carrying on or conducting the business of an employer."

The difference between the Labour Relations Act 1995 and the EEA is that the Labour Relations Act 1995 excludes independent contractors only in section 213(a), while the EEA excludes independent contractors in both subsections. It is safe, however, to assume that even from the second part of the definition of an "employee," as it appears in the Labour Relations Act 1995 or the Basic Conditions of Employment Act, independent contractors are implicitly excluded.

At the core of subsection (a) of both definitions lies a reference to the contract of employment: one person working for another in exchange for some form of remuneration.

The basic idea behind subsection (b) of both definitions is that employees are those people who place their capacity to work at the disposal of others. This is the essence of employment.

The case of Liberty Life Association of Africa v Niselow reiterates the law set out above and the interpretation of the definition of "employee."

Courts

Labour legislation does not define "contract of service" or the concept of "work" at all.

This means that it is necessary to look outside the legislation to determine the meaning of these terms, in order to distinguish between an employee and an independent contractor.

The courts have formulated a number of tests for drawing the distinction.

Essentials

The common-law concept of employment sets the scene for the interpretation of the Labour Relations Act 1995.

The contract of employment is the foundation of the relationship between an employee and his employer. It links the two parties in an employment relationship, irrespective of the form the contract takes.

The existence of an employment relationship is the starting point for the application of all labour law rules. Without an employment relationship between the parties, the rules of labour law do not apply.

The origin of South Africa's modern contract of employment lie in Roman law, where a distinction was made between the two types of contracts discussed above: locatio conductio operis and locatio conductio operarum.

In terms of the common law, one does not have to have a written contract; therefore, not having the contract in written form is not a fatal flaw, as the contract can be verbal. There are, however, a number of statutes which require specific contracts of employment to be in writing. Section 29 of the Basic Conditions of Employment Act, for example, states that the employer must supply the employee with certain written particulars concerning specific things, like hours worked and remuneration.

Like any contract, the locatio conductio operarum commences when the parties have agreed to its essential terms, unless both parties have agreed to suspend its operation for a particular period. If the contract's operation is suspended, the employer is obliged to allow the employee to commence work on the specified date. Failure to do so, without good cause, constitutes a breach of contract at common law and a dismissal under the Labour Relations Act 1995. It is important, therefore, to determine what the essentials of the contract of employment are.

Stripped to its essence, the contract of employment today may be defined as an agreement between two parties, in terms of which one party (the employee) works for another (the employer) in exchange for remuneration. Although this definition appears to be simple, it contains a number of important principles, aspects and implications. When they are taken into account below, the definition of the employment contract may be expanded as follows:

The contract of employment is a voluntary agreement between two legal personae (the parties) in terms of which one party (the employee) places his or her personal services or labour potential at the disposal of the other party (the employer) for an indefinite or determined period in exchange for some form of fixed or ascertainable remuneration, which may include money and/or payments in kind. This entitles the employer to define the employee's duties and to control the manner in which the employee discharges them.

Duties

An employment relationship commences only when the parties conclude a contract of service. Prior to this, neither party has any rights against the other; they are merely a prospective employee and a prospective employer.

There are, however, two statutory exceptions to the principle that employers have no obligations to applicants for employment:

1. The EEA prohibits direct or indirect unfair discrimination against an employee or applicant for employment on the basis of race, colour, gender, sex, religion, political opinion, ethnic or social origin, sexual orientation, age, disability, religion, conscience, belief, culture, language, family responsibility, marital status or any other arbitrary ground.
2. The Labour Relations Act 1995 and the Basic Conditions of Employment Act protect both employees and persons seeking employment against discrimination for exercising rights conferred by the Acts.^[10][11]

Remedies

The employer may only dismiss the employee summarily for misconduct, incapacity or operational requirements. If damages are incurred as a result of a breach of one of these duties, the employer may claim compensation.

Overtime

Overtime is permitted on the basis of a voluntary agreement.

Overtime is restricted to 10 hours per week or 3 hours on a day.

Payment for overtime is 1½ times the normal wage, or the equivalent paid time off.

Sundays

Payment for working on a Sunday is twice the normal wage if the employee is not expected in terms of his/her contract to work on Sundays, however if the employee is expected to work on Sundays in terms of his or her contract, the employee shall receive 1.5 times the normal wage.^[13]

Public holiday

A worker is entitled to double pay only if it is stipulated in the employee's contract that he/ she is expected to work on public holidays.

In accordance with the Public Holiday Act, an employee can exchange the day worked on a Public Holiday for another day.

Meal intervals

An employee is entitled to one hour off after 5 consecutive hours of work.^[13]

An employee's meal interval can be reduced to 30 minutes by mutual consent.

Weekly rest periods

An employee is entitled to 36 consecutive hours off. Issues such as night work, holidays and public holidays are also covered.

Sick leave

An employee is entitled to 6 weeks off over a three-year period.

During the first 6 months of employment, an employee is entitled to 1 paid sick leave day for every 26 days worked.

Sick leave can only be utilised where the employee is unable to work due to illness or injury.

Maternity leave

An employee is entitled to four months off in total, the leave must start at least 4 weeks prior to the expected birth date, and end at least 6 weeks after the expected date of birth. It does not, however, stipulate that this is paid leave. In terms of the Unemployment Insurance Fund, when a woman is on maternity leave, she is entitled to Unemployment Insurance Fund benefits for half the time spent away. Usually the employer will pay the other half, but this is not required in the Basic Conditions of Employment Act.

Family-responsibility leave

If the employee has been working for more than four months, he is entitled to 3 days family-responsibility leave, as in the case where there has been a death in his/her immediate family. Furthermore, in case where the employees child is ill.

Remuneration

Employers must keep records of the hours worked and remuneration awarded for each employee for at least three years.

Employees are to be paid in South African currency at the place of work (unless this is altered in the contract).

Employers may not deduct money from employees unless prior consent in writing is obtained.

Regarding severance pay, in cases of retrenchments or dismissals for operational reasons, employees are entitled to one week's pay for every year worked.

Variations

The Basic Conditions of Employment Act is the very minimum standard required by employers. Employers may award more, but never less, than what is stipulated.

If an employer gives more than the minimum, he may be locked into always giving more, as he must then abide by the required annual increases, which are based on a percentage of the current pay.

An employer may vary the provisions in the contract by

• individual agreement; or
• collective agreement on an industry-wide basis.

Basic principles

Many cases have been referred to the Commission for Conciliation, Mediation and Arbitration and the courts in this regard. From these cases, three main issues arise:

1. the meaning of "promotion" and "demotion;"
2. the unfairness of the employer's conduct; and
3. remedies.

Meaning

Employers commonly use one of two systems to promote employees:

1. level progression, whereby employees are evaluated on a regular basis and progress to a higher level within the parameters of the job in question; and
2. the application-for-vacancies system, whereby vacancies are advertised, and both current employees and external applicants are invited to apply for posts.

The second system is problematic. The Commission for Conciliation, Mediation and Arbitration and the courts have held that it is not promotion at all, as the employee is nothing other than a job applicant.

Firstly, in order to constitute a dispute concerning promotion or demotion, the aggrieved individual must be an employee of the employer to which he wishes to take action.

Secondly, one must compare the current job held by the employee with the job applied for.

Factors which are taken into account include any difference in remuneration levels, fringe benefits, status, levels of responsibility or authority or power, and the level of job security.

In Mashegoane v University of the North, the dispute was whether the university's refusal to appoint a lecturer to the position of Dean of a faculty involved a promotion. The legislation governing the university provided that Deans were appointed by the Senate acting on the recommendation of the Faculty Board. The university argued

• that the position of the Dean was not applied for; and
• that it was not a promotion; but
• that it was a nomination.

Once the court established that the applicant was a current employee, it found that his salary would have remained the same, but that he would have received a Dean's allowance and would have had a car at his disposal; these were the only benefits. His status would have been considerably elevated. He would have had more responsibilities, authority and powers. In light of this, the appointment amounted to a promotion.

In Nawa v Department of Trade and Industry, however, the court held that there was no promotion because there was no intention to change the existing terms and conditions of employment, even though there was an intention to change the way in which work was done.

Generally the Commission for Conciliation, Mediation and Arbitration and other institutions are quick to assume that there was indeed a promotion or demotion.

Disputes concerning Promotion and Demotion generally involve employees being denied a higher-level post within the structure of the employer's organization or being stripped of status or benefits.

Remedies

The relief must be determined on terms deemed reasonable by the Commissioner.

Relief may be in the form of a declaratory order, protective promotion, remitting the matter back to the employer for reconsideration, and reinstatement to a previous position (in the case of demotion).

Probation

Guidelines may be gathered from the rules which govern the obligations of the employer before a fair decision to dismiss on the grounds of poor performance is reached, and also from the Code of Good Practice: Dismissals.

In this context, unfair conduct may include the failure to inform the employee properly about required performance standards, and the failure by an employer to afford the employee reasonable guidance, evaluation, training, counselling and instruction.

Provision of benefits

An employer may commit an unfair labour practice through unfair conduct relating to the provision of benefits.

This provision, contained in section 186(2)(a) of the Labour Relations Act 1995, does not appear to be problematic, but it has been beset by considerable uncertainties regarding the interpretation of "benefits."

Early decisions of the Commission for Conciliation, Mediation and Arbitration attached a wide meaning to the term "benefits."

The problem is complicated by section 65(1)(c) of the Labour Relations Act 1995, which provides that employees may not strike over issues that may be referred to arbitration in terms of the Labour Relations Act 1995. A dispute over "benefits" may be referred to arbitration. If "benefits" is given a wide meaning, and is taken to include remuneration, this would mean that employees may not strike over wages and salaries.

There are two approaches to resolving the problem of interpretation:

1. focus on the meaning of the word "benefit," and try define it; or
2. focus on the nature of the dispute itself, bearing in mind the distinction between disputes over rights and disputes over interests.^[16]

Generally the courts take a narrow approach to interpretation. They apply a combination of the two approaches above. It has been held that the term "benefits" in the definition of an unfair labour practice includes only benefits ex contractu and ex lege: benefits that already exist in terms of a contract or law.

There is growing support for the notion that unfair labour practices should include not only disputes of right, but also disputes where there is an expectation of a right.

Training

This prohibition has had little effect in practice. In view, however, of the obligations placed on employers in terms of the EEA and Skills Development Act, it may become more important in the future.

Generally employees may challenge the denial of training where such training is a prerequisite for advancement in the workplace.

Unfair suspensions

There are two types of suspension:

• preventative suspension, where disciplinary charges are being investigated against an employee, and the employer wants to suspend the employee pending the outcome of the disciplinary enquiry; and
• punitive suspension, where suspension is imposed as a disciplinary measure short of dismissal after the disciplinary hearing has been held.

In the context of section 186(2)(b), one must consider whether both types of suspension are covered, and what the requirements for a fair suspension are.

Initially the view was taken that only punitive suspensions fell within the scope of the "unfair labour practice," but this view was rejected by the Labour Court.

The Commission for Conciliation, Mediation and Arbitration follows the Labour Court's view and assumes jurisdiction over both punitive and preventative suspensions.

The practice of preventative suspension is not in itself unfair so long as there is substantive and procedural fairness when the employer takes this decision.

Substantive fairness in this context refers to the reason for the suspension. The employer must have a reason for believing that the suspension is necessary. This could be, for example, where the seriousness of the misconduct creates rumours and suspicion, necessitating a suspension of the employee in order for work to carry on smoothly, or where the employer has reason to fear that the employee in question may interfere with the investigation or the witnesses. It may also be that the employer fears another recurrence of the misconduct, or that the seniority and authority of the employee in question has a bearing on the matter.

Procedural fairness does not necessarily mean that the employee must be given a hearing before the suspension. At least, though, that the employer must inform him of the suspension, the reasons for it, and the conditions of the suspension.

As a general rule, the employer must continue remunerating the employee during the course of the suspension. If he were to cease remuneration, this would constitute a breach of contract.

Suspension without pay is generally only possible if the employee consents, or if this is provided by legislation or the contract of employment itself.

If the suspension is grossly unfair, the employee may seek reinstatement as a remedy.

Where the unfairness is less serious, the employee may seek an alteration of the conditions of the suspension or require that the employer hold a disciplinary hearing within a specified time.

Other disciplinary action short of dismissal

Other disciplinary actions, like warnings, suspensions with or without pay, demotions and transfers, must also meet the requirement of fairness. The employer must be able to show that the warning, demotion or other disciplinary action was fair and appropriate in the circumstances.

Failure or refusal to reinstate

Section 186(2)(c) of the Labour Relations Act 1995 protects employees against a "failure or refusal of an employer to reinstate or re-employ a former employee in terms of any agreement."

The wording is almost exactly the same as that in section 186(d), which deals with dismissal. Unlike section 186(2)(d), however, section 186(2)(c) does not deal with termination of employment; nor does it state that there must be an offer of re-employment to some employees and no offer in respect of others. Furthermore, section 186(2)(d) does not refer to an agreement; section 186(2)(c) does.

Protected disclosures

Any occupational detriment an employee may suffer due to the making of a protected disclosure is an unfair labour practice.

"Occupational detriment" and "protected disclosure" are defined in the Protected Disclosures Act.

"Occupational detriment" includes, inter alia, being subjected to disciplinary action; dismissed, suspended, demoted, harassed or intimidated; transferred against one's will, refused transfer or promotion, etc.

Once it is established that the employee has suffered an "occupational detriment," it must be proved that the detriment was due to a protected disclosure. This means that there must be a protected disclosure, and that there must be causality between the disclosure and the detriment.

As far as causality is concerned, the Labour Relations Act 1995 requires that the detriment must be "on account of" the protected disclosure.

"Disclosure" is defined as "any disclosure of information regarding any conduct of an employer, or an employee of that employer, made by any employee who has reason to believe that the information concerned shows or tends to show one or more of the following:

• "that a criminal offence has been committed, is being committed or is likely to be committed;
• "that a person has failed, is failing or is likely to fail to comply with any legal obligation to which that person is subject;
• "that a miscarriage of justice has occurred, is occurring or is likely to occur;
• "that the health or safety of an individual has been, is being or is likely to be endangered;
• "that the environment has been, is being or is likely to be damaged;
• "unfair discrimination as contemplated in the Promotion of Equality and Prevention of Unfair Discrimination Act [...]; or
• "that any matter referred to [above] has been, is being or is likely to be deliberately concealed."

Generally, such disclosures become protected when they are made to certain persons and offices under certain conditions:

• it was made in good faith;
• the employee reasonably believes that it is substantially true; and
• it was not made for personal gain.

Furthermore, the employee must have reason to believe

• that, if disclosure is made to the employer, he will suffer an occupational detriment;
• that the information was previously disclosed, and no action was taken by the employer; or
• that the matter is exceptionally serious.

Not every disclosure made by an employee will be protected. Only gradually are the courts beginning to consider the nature of a protected disclosure and the protection to be afforded to employees.

In Grieve v Denel, the employee was busy preparing a report for the employer's board of directors relating to allegations of wrongdoing by a manager. The employee found himself charged with misconduct, suspended and told to attend a disciplinary enquiry. He approached the Labour Court for an interdict to stop the employer's taking disciplinary action. The court held that the disclosures the employee intended to make were in good faith, and that, if the allegations were true, they could indicate possible criminal conduct. The disclosures were held to fall within the ambit of protection. The employer was ordered not to proceed with the pending disciplinary action.

In CWU v Mobile Telephone Networks, the Labour Court held that an employee's accusation of fraud by management did not constitute a protected disclosure; it was merely the employee's opinion and was not supported by any facts.

Resolution of disputes

The procedure for resolving unfair-labour-practice disputes is similar to the dispute resolution for unfair dismissals.

First, the dispute must be referred to a bargaining council (or the Commission for Conciliation, Mediation and Arbitration if there is no bargaining council) for conciliation.

If conciliation does not succeed, the matter may be referred to arbitration.

Unlike unfair dismissal disputes, unfair-labour-practice disputes are required, by section 191 of the Labour Relations Act 1995, to be referred within ninety days of the relevant act or omission, or ninety days from the date on which the employee became aware of the act or occurrence.

In terms of section 193(4) of the Labour Relations Act 1995, an arbitrator has the power to determine any unfair labour practice dispute on "reasonable terms," which may include ordering reinstatement, re-employment or compensation (of up to twelve months' pay).

The onus is on the employee to prove all the elements of the alleged unfair labour practice in question.

Sexual harassment

The Code of Good Practice on Handling of Sexual Harassment Cases lists three types of conduct which could constitute sexual harassment:

1. physical conduct ranging from touching to sexual assault and rape, and including a strip-search by or in the presence of the opposite sex;
2. verbal conduct, including innuendoes, suggestions and hints, sexual advances, comments with sexual overtones, sex-related jokes or insults, graphic comments about a person's body (made to that person or in her presence), enquiries about a person's sex life, and even whistling at a person or a group of persons; and
3. non-verbal conduct, including gestures, indecent exposure or the display of sexually explicit pictures or objects.

Another way to define sexual harassment is to consider the effect of the harassment. Three types of harassment may be so identified:

1. quid pro quo harassment, which occurs when a person is forced into surrendering to sexual advances against her will, for fear of losing a job-related benefit;
2. sexual favouritism, which occurs where a person in authority rewards only those who respond to his sexual advances; and
3. hostile work environment harassment, which occurs when an abusive working environment is created.

The questions remain: From whose perspective does one analyse the conduct to see if it amounts to sexual harassment? What test does one apply? Does one look to the way in which the victim experienced the situation (a subjective test), or does one try to be more objective?

• A subjective test would rely exclusively on the perceptions of the victim. An obvious criticism of such a test is that some victims may be over-sensitive, and therefore cast the net too wide.
• A purely objective test, on the other hand, may be too narrow. The "reasonable man" test (which is, in terms of the common law, the generally applied "objective" test) implies reliance on male-dominated values.
• The "reasonable victim" test seeks to establish a compromise. It takes into account the experiences of the victim, the surrounding circumstances, and the question of fault on the part of the perpetrator.

Decided cases are inconsistent on which test should be used.

The Code of Good Practice states that sexual harassment is "unwanted conduct of a sexual nature." This implies a subjective test. It goes on to say, however, that sexual attention will only become sexual harassment

• if the behaviour is persistent;
• if the recipient has makes it clear that the conduct is considered offensive; or
• if the perpetrator should know that the behaviour is regarded as unacceptable.^[21]

The Code thus adopts a mixture of the subjective and the objective test.

Medical testing

The EEA prohibits medical testing of an employee, unless

• legislation requires or permits such testing; or
• the testing is justifiable.^[24]

Testing may be justifiable in the light of

• the medical facts;
• the employment conditions;
• social policy;
• the fair distribution of employee benefits; or
• the inherent requirements of a job.

Job applicants are also protected from medical testing.^[17]

The EEA prohibits "psychological and other similar assessments" of employees, unless such an assessment

• has been scientifically shown to be valid and reliable;
• is applied fairly to all employees; and
• is not biased against any employee or group of employees.^[25]

Disputes about discrimination

A dispute about unfair discrimination must be referred to the Commission for Conciliation, Mediation and Arbitration for conciliation within six months of the alleged discriminatory act or omission.

Disputes of this nature may not be referred to a bargaining council.

In referring the dispute to the Commission for Conciliation, Mediation and Arbitration, the referring party must indicate that it has made a reasonable attempt to resolve the dispute, depending on the circumstances.

If conciliation fails, the matter may be referred to the Labour Court, unless the parties consent to the jurisdiction of the Commission for Conciliation, Mediation and Arbitration for arbitration.

The Labour Court may make any appropriate order that is "just and equitable" in the circumstances, including compensation, damages, and orders directing the employer to take preventative steps.

Again, once the employee proves that there was discrimination, the onus shifts to the employer to prove that the discrimination was fair.

Affirmative Action

Alongside the prohibition against unfair discrimination, affirmative action is the second cornerstone of the EEA.

According to section 2(b) of the EEA, the goal of affirmative action is to ensure the equitable representation of certain groups in all occupational categories and levels in the workplace.

"Equitable representation" is not defined in the EEA, but section 42 states that it may be determined by a consideration of

• the demographic profile of the economically active population, nationally and regionally;
• the pool of suitably qualified people in the designated groups from which the employer may reasonably be expected to promote or appoint employees; and
• the economic and financial factors relevant to the sector in which the employer operates.

Affirmative action is, by its very nature, a temporary measure. Once the goal of equality in the workplace has been achieved, the reason for the measure will fall away.

A potential beneficiary of affirmative action must meet two requirements:

1. He must be "suitably qualified."
2. He must be from a designated group.^[29]

There are, in this regard, four key definitions in the EEA:

1. "Designated groups" are black people, women and people with disabilities.
2. "Black people" include Africans, Colored people and Indians.
3. "People with disabilities" are those who have a long-term physical or mental impairment which substantially limits their prospects of entry into (or advancement in) employment.
4. A "suitably qualified person" is one who may be qualified for a job as a result of any of his formal qualifications, prior learning, relevant experience, or his capacity to acquire, within a reasonable time, the ability to do the job.

Employees from one of the designated groups may approach the Labour Court, citing unfair discrimination, to enforce a lack of affirmative action. The Labour Court has held, however, that there is no individual right to affirmative action, which is collective in nature.

Unfair dismissal

Not only employees have the right not to be unfairly dismissed; non-employees enjoy such protection. The Labour Relations Act's approach to unfair dismissal may be summarised in the following three questions:

1. Is the worker an employee? (Only employees may be dismissed, and only employees enjoy the protection of the Labour Relations Act.)
2. Has there been a dismissal? (To answer this question, one must look to section 186(1) of the Labour Relations Act.)
3. Is the dismissal substantively or procedurally unfair? (In this regard, the reason for the dismissal will be a decisive factor.)

The employee has the onus to establish that there has in fact been a dismissal.^[40] If this is discharged, the onus shifts to the employer, who prove the fairness of the dismissal.^[41]

"Dismissal" is the termination of the employment relationship by the employer, with or without notice.^[42] It can also entail

• that the employee reasonably expected the employer to renew a fixed-term contract of employment on the same or similar terms, but the employer offered to renew it on less favourable terms, or did not renew it at all;^[43] or
• that the employer refused to allow the employee to resume work after she took maternity leave in terms of any law or collective agreement, or in terms of her contract of employment.^[44]

An employer who has dismissed a number of employees for the same or similar reasons, but who now offers to re-employ one or more of them, while refusing to re-employ another, will have dismissed the latter.^[45]

The statutory definition also recognises as constituting dismissal certain circumstances in which the employee terminates the employment relationship. This is known as constructive dismissal.^[46]

Where, for example, an employee terminates a contract of employment, with or without notice, because the employer has made continued employment intolerable for him, he will have been constructively dismissed.^[47]

An employee may also be regarded as having been constructively dismissed if he terminates a contract of employment, with or without notice, because his new employer, after a transfer of the business as a going concern,^[48] provided him with conditions or circumstances at work which are substantially less favourable than those provided by his former employer.^[49]

Section 187 of the LRA

Section 187 of the LRA lists the reasons for which an employee may not be dismissed under any circumstances. Such dismissals are "automatically unfair." Once it is proved that the employee has been dismissed for any of these reasons, the employer may not raise any defence save those provided for in the Act. Victims of automatically unfair dismissals will invariably be reinstated unless they choose compensation instead.

Section 187(1)(d) is of particular importance. It designates as automatically unfair dismissals in response to the employee's taking action, or indicating an intention to take any action, against the employer by exercising any right conferred by the LRA, or by participating in any proceedings in terms of the LRA. Dismissal for any conduct regarding membership of a trade union, or for exercising the rights conferred by the labour legislation, is automatically unfair.

The rights referred to are found in section 5 of the LRA. They include lawful trade-union participation, non-compliance with an unlawful order and disclosure of information.^[64]

In CEPPWAWU & another v Glass & Aluminium,^[65] hostility from the employer in the workplace led to a constructive dismissal. The hostility was very closely related to the employee's work as shop steward. The court held that the employer had made the employee's life unbearable due to the fact that he was a shop steward; the dismissal was therefore automatically unfair. The court noted that victims of automatically unfair dismissal will invariably be reinstated unless they choose compensation instead.

What constitutes an automatically unfair dismissal?

This is a factual dispute. Whether the facts give rise to an automatically unfair dismissal, or merely an unfair dismissal, depends on the circumstances of each case.

Dismissals contrary to Section 5

Section 5 confers on employees a right to freedom of association and the right to belong to workplace forums. No employee may be dismissed for exercising these freedoms in any way: for example,

• by participating in the formation of a union;
• by joining a union;
• by participating in a union's lawful activities or in the election of its officials; or
• by standing for election for such a position.

Section 5 further prohibits prejudicing employees for failing or refusing to do anything that an employer may not lawfully require of him.

No dismissal is permitted for the disclosure of information which the employee is lawfully entitled or required to communicate to other persons, or for exercising any right or participating in any proceedings in terms of the LRA. The mere fact that employees are exercising a right under the LRA does not mean, however, that they are immunised against disciplinary action for misconduct committed outside the scope of their duties.

Strike dismissals

The LRA distinguishes between protected and unprotected strikes. The dismissal of an employee for participating in a protected strike is automatically unfair. Participants in protected strikes, however, may be dismissed for misconduct (assault, for example, or intimidation) during the course of the strike.

In cases where it is difficult to distinguish between a dismissal for striking and a dismissal for (by way of example) misconduct, the "true" and "proximate" cause of the dismissal must be identified.

Section 65(5) provides that participation in a strike which does not comply with the provisions of the LRA is misconduct. It "may constitute a fair reason for dismissal," but there are specific procedures to follow.

Dismissal to compel employee to accept demand in mutual-interest dispute

In terms of section 187(1)(c), employers may not threaten employees with disciplinary action if they do not comply with a demand: a salary decrease, for example. The Labour Court has considered situations in which employees are threatened with dismissal for refusing to accept unilateral amendments of their terms and conditions of employment by their employers. In this regard,

• the first issue is whether or not an employer has a right to dismiss employees who are not prepared to agree to changes to their terms and conditions of employment; and, if so,
• the second issue is the nature of the relationship between that right and the employees' right not to be dismissed for the purpose of being compelled to agree to a demand in respect of a matter of mutual interest.

Employers may lock out employees (provided that they follow the proper procedure) as a bargaining strategy. A lock-out does not constitute dismissal, as the employees are still employed by the employer.

The difficulty is that an employer may argue that he has the right to dismiss, for operational reasons, those employees who do not accept such a demand. It can be factually difficult in such cases to determine what was the true reason for the dismissal.

Section 187(1)(c) does not prevent employers from dismissing employees who refuse to accept a demand if the effect of that dismissal is to save other workers from retrenchment. Nor does this form of automatically unfair dismissal preclude an employer from dismissing a grossly insubordinate employee.

In Afrox Limited v SACWU & Others,^[66] the company had a distribution system that resulted in its drivers working in excess of the overtime permitted by law. It decided to introduce a system of staggered shifts to overcome the problem. The employees, refusing to work under the new system, went on strike. They were subsequently dismissed for "operational reasons", as the deliveries from the branch that had been striking were outsourced. The employees contended that the real reason why they were fired was because they were on strike. The court held that, although the strike accelerated the dismissal, the workers did not comply with the Basic Conditions of Employment Act when they went on strike; therefore, regardless of the strike, the dismissal on operational reasons was upheld as fair.

In Fry's Metal v NUMSA,^[67] the court held that the dismissal of employees who refuse to accept a demand does not infringe section 187(c) if the employer intends to get rid of the workers permanently. In this case, the dismissal was not in an attempt to force compliance; it had gone so far as to constitute operational reasons.

In CWIU v Algorax (Pty) Ltd,^[68] Algorax had not formally declared a lock-out. The court held, therefore, that the employer had infringed section 187(1)(c), because it offered to reinstate the employees after dismissing them. Had Algorax formally declared the lock-out, it would seem that it could have kept the employees out for as long as it did without having to compensate them for unfair dismissal.

Insubordination

In retrenchment cases, it is difficult to decide when an employer is entitled to dismiss for insubordination when employees refuse to comply with instructions. One must distinguish between refusal to work and refusal to do work in the specific way required by the employer. A computer technician refusing to fix computers is refusing to work, but an employee refusing to use a particular computer programme is refusing to do work in a specific way.

If the employees are contractually obliged to perform the work demanded of them, and the employer's instructions are reasonable, the employees' refusal amounts to insubordination. It is not unfair to dismiss employees for refusing to comply with their employers' instructions to perform the work required by their contracts.

What if the employee refuses to carry out an order not in accordance with the contract, but with how the employer runs his business? This will depend on the facts: If the instructions are reasonable, such refusal could amount to insubordination.

In Kroukam v SA Airlink,^[69] Kroukam was an airline pilot who doubled as a shop steward. He was dismissed after deposing to an affidavit for the purposes of an urgent application by his union to have the company's senior manager committed for contempt of court. He was charged with a number of offences, including gross insubordination. The company claimed that he had divulged the content of an off-the-record discussion in his affidavit, and also that he had refused to submit to a health test required of pilots. The Labour Court ruled that this was not an automatically unfair dismissal. On appeal, however, the court held unanimously that the main or dominant reason for Kroukam's dismissal was his involvement in litigation against the company. The court held, accordingly, that such a dismissal was indeed automatically unfair.

Pregnancy dismissals

Section 187(1)(e) is one of a number of statutory provisions aimed at protecting women in employment. Prior to these types of provisions, a woman who left work to have a baby was largely at the mercy of her employer. Under the common law, her absence could be treated as a reason for termination of the contract.

Now, according to the EEA and the LRA, dismissal is unlawful if it is for any reason regarding pregnancy or discrimination on the ground of pregnancy. The employee has no duty to inform her employer that she is pregnant; the employer has no right to ask and demand an answer. Accordingly, a woman may not now be dismissed in any circumstances merely because she is pregnant.

Section 187(1)(e) also renders impermissible the dismissal of a woman on maternity leave (now up to four months under the new Basic Conditions of Employment Act).

Nothing precludes an employer from dismissing a pregnant employee for operational requirements, provided that the court can be persuaded that there was indeed a valid economic or related reason.

In Whitehead v Woolworths, the court held that an employer may have regard to economic considerations, including the woman's availability to perform her services, when considering whether to employ a pregnant applicant.

Section 187(1)(e) embraces any reason "related to her pregnancy." It therefore includes reasonable absences for medical attention and changes in the woman's physical configuration, which may dispose certain employers to fire employees engaged in certain types of work.

If the main reason for the dismissal is the employee's pregnancy, the employer may not rely on an ancillary reason like the employee's alleged deceit in not disclosing her condition. Conversely, a pregnant woman may not rely on her pregnancy as a defence against conduct that constitutes a disciplinary offence.

Mashava, in Mashava v Cuzen & Woods Attorneys,^[70] was admitted as a candidate attorney at the firm. At the time of her employment, she was pregnant. She did not disclose this. The firm accordingly dismissed her, but the court held that this was automatically unfair. The employer could not rely on her deceit regarding her condition as a reason for dismissal.

Origin of employer's right to discipline

Generally, the employer has the right to maintain and enforce discipline in the workplace. This right has its origin in common law as an implied term in the contract of employment. It is also inextricably linked to the employee's duty to obey all lawful and reasonable instructions, and is linked to the employer's right to give instructions. Today the employer's right to discipline is regulated to a certain degree by the LRA and the Code of Good Practice: Dismissal, annexed to the LRA as Schedule 8 (the Code).

Discipline and common law

Under the common law, the employer may summarily dismiss the employee if the latter's misconduct is serious, or dismiss the employee merely by giving the required notice. Occasionally, the employer may prefer to impose a less severe penalty, but the employer's action in imposing a penalty may not amount to a breach of contract. Suspension without pay or demotion, or ordering forfeiture of an agreed bonus or part of the wages, would constitute a breach of contract. The employer may, however, suspend the employee on full pay and give warnings.

The effectiveness of these penalties was questionable. Suspension on full pay, for example, was found to have little deterrent effect. In practice, the employer's superior bargaining power, and his right to dismiss merely by giving notice, meant that the employer could "convince" the employee to agree to a penalty which would otherwise have amounted to a breach of contract.

The Code and employer's right to discipline

The Code of Good Practice recognizes the employer's common-law right to discipline employees by requiring, in item 3(1), that "all employers should adopt disciplinary rules which establish the standard of conduct required of employees."

If an agreed disciplinary code exists in the workplace, item 1(2) of the Code stipulates that disciplinary action against employees must comply with the disciplinary code and procedure.

If, however, the disciplinary code was unilaterally introduced by the employer, or if no such code exists, regard must be had to the Code's provisions. The employer's own code must be measured against the provisions of the Code; in the absence of an employer code, the Code will constitute the minimum guidelines for discipline.

Form and content of disciplinary codes of conduct

Corrective or progressive discipline

In terms of the common law, the employer may either condone the misconduct or elect to act against the employee. If the misconduct is of a sufficiently serious nature, the employer may decide to cancel the contract of employment and dismiss the employee.

Dismissal is only one of a number of penalties that the employer may impose against the guilty employee. Examples of other penalties are

• suspension without pay;
• verbal and written warnings;
• demotion; and
• transfer.

The Code emphasizes the concept of corrective or progressive discipline. Item 3(2) requires that the employer try to correct employees’ behavior through a system of graduated disciplinary measures such as counselling and warnings. Formal disciplinary procedures do not have to be invoked every time a rule is broken. Informal advice and correction is the best way to deal with minor violations of work discipline.

Warnings may be graded according to degrees of severity, as with a verbal warning for a first offence, then a first written warning, then a final written warning or suspension without pay or demotion, and finally dismissal, which is reserved for repeated offences or serious misconduct. Item 3(4) gives a list of examples of serious misconduct that may result in a disciplinary enquiry and possible dismissal for a first occurrence. The list includes

• gross dishonesty;
• wilful damage to company property;
• wilful endangering of the safety of others;
• physical assault on the employer, a fellow employee, client or customer; and
• gross insubordination.

Substantive fairness of dismissal for misconduct

As stated before, section 188(1) of the LRA requires that, if misconduct is the reason for dismissal, it must be with fair reason. Item 7 of the Code provides some guidelines as to when misconduct will constitute a fair reason for dismissal. The following must be considered:

• whether or not the employee contravened a rule or standard regulating conduct in, or of relevance to, the work-place; and,
• if a rule or standard was contravened, whether or not
  • the rule was a valid or reasonable rule or standard;
  • the employee was aware, or could reasonably be expected to have been aware, of the rule or standard;
  • the rule or standard has been consistently applied by the employer; and
  • dismissal was an appropriate sanction for the contravention of the rule or standard.

The guidelines in item 7 for a substantively fair dismissal are not hard and fast rules. The employer's non-compliance with a particular guideline will not necessarily make the dismissal unfair. The question of whether or not non-compliance with a particular guideline is permissible depends on the circumstances.

Contravention of rule by employee

There are two issues to be considered under this heading. In the first instance, it must be determined whether or not the rule existed; in the second, if the rule existed, it must be determined whether or not the employee contravened it.

Dismissal as Appropriate Sanction

Whether or not dismissal will be an appropriate sanction is a factual question. Item 3(5)-(6) of the Code lists factors to be taken into consideration. The employer should consider, in addition to the gravity of the misconduct, such factors as the employee's circumstances (including length of service, previous disciplinary record and personal circumstances), the nature of the job and the circumstances of the infringement itself. The employer should apply the penalty of dismissal consistently with the way in which it has been applied to the same and other employees in the past, and consistently as between two or more employees who participate in the misconduct under consideration. All these factors must be considered and weighed up together to decide whether dismissal is justified or whether a less severe sanction would be more appropriate.

It has been submitted that, even if the commissioner does not consider dismissal to be the appropriate sanction after considering all these factors, the penalty of dismissal will stand if the commissioner or judge is satisfied that a reasonable employer could also have decided to dismiss under the circumstances.

In the case of Sidumo and Another v Rustenburg Platinum Mines Ltd and Others [2007] 12 BLLR 1097 (CC), however, a security guard at a mine was not abiding by the search procedures he was obliged to employ for the workers at the mine. There was video footage available as proof that he was not adequately searching the workers. The security guard was dismissed on the suspicion that he could be fraternising with the workers in order to steal from the mines. The CCMA having held that this sanction was too harsh, the case was appealed to the Labour Court and then to Labour Appeal Court. When the case reached the SCA, the court held that employers have a discretion to dismiss. If the employer acts reasonably, his decision must be upheld.

On appeal to the Constitutional Court, it was held that the commissioner who hears the appeal must decide afresh if the decision was fair or unfair; therefore, it is not appropriate to look to the reasonable employer. The SCA approach, therefore, was found to be wrong. The test is what the reasonable commissioner would have done in those circumstances. The court, then, is not bound by the choice made by the reasonable employer. The "reasonable employer" test is no longer used.

Procedural fairness of dismissal for misconduct

Section 188(1)(b) of the LRA requires that a dismissal for misconduct must be effected in accordance with a fair procedure, which entails a fair disciplinary enquiry. The LRA does not regulate a fair disciplinary enquiry. The employer's disciplinary code and procedure usually prescribes the procedure to be followed and the manner in which the hearing should be conducted. The Code provides a number of guidelines for a fair enquiry in item 4: This is not a substitute for a disciplinary procedure but merely a template by which the fairness of a dismissal must be judged.

Normally, the employer should conduct an investigation to determine whether there are grounds for dismissal. This does not need to be a formal enquiry. The employer should notify the employee of the allegations, using a form and language that the employee can reasonably understand. The employee should be allowed the opportunity to state a case in response to the allegations. The employee should also be entitled to a reasonable amount of time to prepare the response, and to the assistance of a trade union representative or fellow employee. After the enquiry, the employer should communicate the decision taken, and preferably furnish the employee with written notification of that decision.

Discipline against a trade union representative, or against an employee who is an office-bearer or official of a trade union, should not be instituted without first informing and consulting the trade union. If the employee is dismissed, the employee should be given the reason for dismissal and reminded of any rights to refer the matter to a council with jurisdiction or to the commission, or to any dispute resolution procedures established in terms of a collective agreement.

In exceptional circumstances, if the employer cannot reasonably be expected to comply with these guidelines, the employer may dispense with pre-dismissal procedures.

Poor work performance

A dismissal for poor work performance implies that there must be an objective standard of performance against which the employee can be measured, before the employee may be dismissed for failing to meet that standard. It is generally accepted that the setting of performance standards is within the employer's prerogative.

There are various ways in which an employer may establish performance standards and appraise an employee's ability to do the job to the satisfaction of the employer. At the outset of the relationship the employer may decide to put the employee on a period of probation. The Code distinguishes between employees who are dismissed during the probationary period and those who are dismissed after probation.

Item 9 of the Code provides, as guidelines in cases of dismissal arising from poor work performance, that any person, in determining whether or not a dismissal for poor work performance is unfair, should consider

• whether or not the employee failed to meet a performance standard; and,
• if the employee did not meet a required performance standard, whether or not
  • the employee was aware, or could reasonably be expected to have been aware, of the required performance standard;
  • the employee was given a fair opportunity to meet the required performance standard; and
  • dismissal was an appropriate sanction for the contravention of the rule or standard.

Employees on probation

Item 8(1) of the Code sets out the basic principles in respect of probationary employees:

• An employer may require a newly hired employee to serve a period of probation before the appointment of the employee is confirmed.
• The purpose of probation is to give the employer an opportunity to evaluate the employee's performance before confirming the appointment.
• Probation should not be used for purposes not contemplated by this Code to deprive employees of the status of permanent employment. The practice of dismissing employees who complete their probation periods, and replacing them with newly hired employees, is not consistent with the purpose of probation and constitutes an unfair labour practice.
• The period of probation should be determined in advance. It should be of reasonable duration. The length of the probationary period should be determined with reference to the nature of the job and the time it takes to determine the employee's suitability for continued employment.
• During the probationary period, the employee's performance should be assessed. An employer should give an employee reasonable evaluation, instruction, training, guidance or counselling in order to allow the employee to render a satisfactory service.
• If the employer determines that the employee's performance is below standard, the employer should advise the employee of any aspects in which the employer considers the employee to be failing to meet the required performance standards. If the employer believes that the employee is incompetent, the employer should advise the employee of the respects in which the employee is not competent. The employer may either extend the probationary period or dismiss the employee after complying with subitems (g) or (h), as the case may be.
• The period of probation may only be extended for a reason that relates to the purpose of probation. The period of extension should not be disproportionate to the legitimate purpose that the employer seeks to achieve.
• An employer may only decide to dismiss an employee or extend the probationary period after the employer has invited the employee to make representations and has considered any representations so made. A trade union representative or fellow employee may make the representations on behalf of the employee.
• If the employer decides to dismiss the employee, or to extend the probationary period, the employer should advise the employee of his or her rights to refer the matter to a council having jurisdiction, or to the commission.
• Any person making a decision about the fairness of a dismissal of an employee for poor work performance during, or on expiry of the probationary period, ought to accept reasons for dismissal that may be less compelling than would be the case in dismissals effected after the completion of the probationary period.

Different jobs may take different lengths of time to determine suitability. The requirement in terms of the length of probation is that of reasonableness. It is a common misconception in practice, that all employees must work a 3-month probation period, which is not the case.

If the probationary employee is not performing adequately, the evaluation, instruction, training, guidance or counselling referred to in the Code should focus on making it possible for the probationary employee to perform to the satisfaction of the employer. If the performance is not up to standard, the probationary employee should be given an opportunity to improve to the requisite standard.

In sub items (f) to (i) the word "should" is used, so the duty on the employer is less onerous than if the employee had already been confirmed in a permanent position. Item 8(1)(g)-(h) makes it clear that there is a difference between a dismissal during probation and after probation.

The amended Item 8(1) emphasizes that an employee is protected against an unfair dismissal even while serving a probation. The justification for these amendments is to make the dismissal of probationary employees easier in order to encourage job creation and to relieve employers of the onerous procedures they had to comply with before this item was amended.

Poor-work-performance dismissals after probation

After the probationary period has expired, most employees will have tenure or permanent status. The procedures that an employer must follow to justify a dismissal for poor work performance after probation are to be found in Item 8(2)-(4), which provides that, after probation, an employee should not be dismissed for unsatisfactory performance unless the employer has

• given the employee appropriate evaluation, instruction, training, guidance or counselling; and,
• after a reasonable period of time for improvement, the employee continues to perform unsatisfactorily.

The procedure leading to dismissal should include an investigation to establish the reasons for the unsatisfactory performance. The employer should consider other ways, short of dismissal, to remedy the matter.

In the process, the employee should have the right to be heard and to be assisted by a trade union representative or a fellow employee.

Incapacity dismissals are made difficult, then, by the fact that there is considerable overlap between substantive and procedural fairness. They are not always clearly distinguishable.

Setting standards and assessment

An employer is entitled to set the standards that it requires the employee to meet. The employer has the prerogative to decide whether or not those standards have been met.

In A-B v SA Brewaries, an employee engaged as a planning and administrative manager was charged with poor work performance on six occasions and demoted to the position of project controller. The arbitrator held that an employer is entitled to set the standards that it requires the employee to meet. Generally speaking, the court should not intervene unless the standards so set are "grossly unreasonable."

The commissioner held that the employee had been given a fair opportunity to meet the standards set by the employer and that the demotion was not procedurally unfair. The employer's performance appraisal and review process had identified the problem areas. The employee had been given an opportunity to improve before the demotion.

The commissioner stressed that, in most cases, senior managers have a duty to appraise their own performance and to rectify poor performance themselves.

Senior managers

The status of the employee may play a role in the performance standards that the employee is expected to reach, and the extent to which the employee will be given an opportunity to improve his performance. The size of the organisation will also be a factor to consider when deciding the degree of the employer's responsibility towards employees whose performance is sub-standard.

Senior managers may indeed have a duty to assess their own performance standards. The courts have long accepted that senior employees are not always entitled to an opportunity to improve. They have been held to have the ability and duty to monitor their own work performance.

Failure to meet the standards required by regulatory body

A dismissal for incapacity may be justified if the employee does not have the requisite qualifications or has not been accredited by a professional or statutory body.

Assessment and evaluation by employer

The courts have stressed the need for a proper evaluation and assessment of an employee before any action is taken. There must be careful assessment and consultation, and an opportunity to improve.

The Commission for Constellation, Meditation and Aggregation has accepted that less strict standards should be applied to small businesses tasked with evaluating an employee for poor work performance.

Consultation process

It is emphasised that it is through fair process that fair decisions are generally reached. If the dismissal was procedurally unfair, the courts have often been reluctant to reinstate the employee, choosing rather to award the employee compensation.

Dismissal as last resort

No employee may be dismissed for poor work performance without first being made aware of the standards required and then being given an opportunity to improve. The employer is expected to make a reasonable accommodation for an employee and offer the employee alternative employment in some circumstances.

Incompatibility

There was great debate regarding whether or not an employee's incompatibility (his inability to work harmoniously with other employees or to fit in with the corporate culture of the undertaking or organisation) constituted incapacity or a ground for an operational-requirements dismissal.

Considering the way the LRA is now structured, this distinction has become vital. Different pre-dismissal procedures must be followed by the employer; disputes about an allegedly unfair dismissal would follow different procedures.

Commission for Conciliation, Mediation and Arbitration commissioners now generally take the view that incompatibility constitutes incapacity and not operational requirements, but the debate continues.

There must still be a fair reason and fair procedure for such a dismissal. The employer is obliged to assist an employee who is causing disruptions in workplace relationship before dismissing him. If the employee is a genuine "misfit," appropriate warnings and counselling would be required.

It may happen that a call is made for the dismissal of an employee by a third party or co-workers. If this happens, the demand made must be "good and sufficient," and must be backed by a real and serious threat: for example, that the employees making the demand will go on strike if the employee in question is not dismissed. The employer must investigate alternatives and consult the employee in question.

The requirement that there must be no possible alternative is particularly true when racial or ethnic tension is the cause of the incompatibility. The test in such cases is that of necessity.

Ill health or injury

The second type of incapacity dealt with in the Code is ill health or injury. It is addressed in Item 10 and Item 11.

The assessments referred to in Item 11 must be done in order to determine whether a dismissal would be appropriate in the circumstances. Item 11 of the Code provides that any person determining whether a dismissal arising from ill health or injury is unfair should consider

• whether or not the employee is capable of performing the work; and,
• if the employee is incapable
  • the extent to which the employee is able to perform the work;
  • the extent to which the employee's work circumstances might be adapted to accommodate disability, or, where this is not possible, the extent to which the employee's duties might be adapted; and
  • the availability of any suitable alternative work.

Once again the dismissal must be both substantively and procedurally fair.

Context

An employer may find itself facing financial ruin (due to unsound strategy, large clients or contracts having been lost, or factors in the economy at large). Under pressure, the employer may be forced into considering reducing its wage bill by restructuring the organisation, which may mean dismissing some employees. In this scenario, the word "retrenchment" is often used.

Section 188 of the LRA recognizes that an employer also has operational requirements and needs, and that, in certain cases, these may also be a fair and valid reason for dismissal.

According to section 213 of the LRA, "operational requirements" are requirements based on the economic, technological, structural or similar needs of an employer.

There are four categories of operational requirements. From these categories it is clear that the reason for the dismissal does not relate to the employee; it is due to the needs of the employer, and therefore reason for the dismissal is the employer's.

An employer's economic needs, for example, include those needs and requirements relating to the economic well-being of the enterprise. One of the most common economic reasons for dismissal is financial difficulties (due to, for example, a downturn in the economy or a decrease in the demand for certain products).

"Technological needs" refers to the introduction of new technology, such as more advanced machinery, mechanization or computerization, leading to the redundancy of employees.

Structural needs as a reason for dismissal describes posts becoming redundant following a restructuring of the enterprise. This often follows a merger or amalgamation.

Employer's similar needs

This is a very broad category and must be determined with reference to the circumstances of the case. There is no clear and absolute dividing line between an employer's "economic" needs and "similar" needs, as there are often considerable overlaps.

Changes to employee's terms and conditions of employment

A business may have to be restructured or amalgamated with another enterprise, or its mode of operation may have to be altered in order to ensure its survival or to make it more competitive.

These changes may lead to an employee's becoming redundant, but changes of this nature may also lead to the employee's being offered a new position, with changes to the terms and conditions of employment.

If the employee unreasonably refuses to accept the changes to the terms and conditions of employment, the employee may be dismissed for operational requirements.

In WL Ochse Webb & Pretorius v Vermeulen, the employee was a tomato salesman for WL Ochse (the employer) and was paid a basic salary and commission. He earned more than the other employees, as the sale of tomatoes attracted a higher commission than the sale of the vegetables sold by the other employees. This caused dissatisfaction among the other workers, which the employer tried to address by proposing a new remuneration system. The salesman was given three alternatives:

1. He could accept the new system.
2. He could present an alternative system.
3. He could resign.

He proposed that the old system be retained. When this proposal was rejected by the employer, he resigned.

The court held that the employer had not acted unfairly, as a successful business requires contented employees. Unhappiness can lead to several problems, such as labour unrest and a drop in productivity. A commercial rationale for the changes was thus established by the employer.

Dismissal to compel an employee to accept changes to terms and conditions of employment is branded as automatically unfair by section 187(1)(c) of the LRA. The primary motive for dismissal must be a commercial rationale or operational reason in order for the dismissal to be fair.

The fundamental difference between an operational requirement dismissal and an automatically unfair dismissal is the employer's reason for the dismissal. If an employer dismisses employees because the terms and conditions of employment must be altered for the business to continue being viable, the employees may be fairly dismissed, as they no longer serve the employer's operational requirements.

In Fry's Metals v National Union of Metalworkers, the court discussed the difference between an operational-requirement dismissal and an automatically unfair dismissal:

• In the case of a dismissal due to operational requirements, the purpose is to get rid of employees who do not meet the business requirements of the employer, so that new employees who will meet the business requirements can be employed.
• In the case of an automatically unfair dismissal, the employer wants his existing employees to agree to a change of their terms and conditions of employment, and has the attitude that, if the employees do not agree to the changes, he will dismiss them.

A change in the terms and conditions of employment need not always be the result of changes regarding the business. The circumstances or attitude of the employee could change. This could have such serious economic repercussions for the employer that the latter deems it vital to change the employee's conditions of employment.

The nature of a business may be such that special demands are made on the employees. It may be essential for the economic success of the business, for example, that the employees are able and willing to work overtime. The employee's inability or refusal to do so could jeopardise the well-being of the business; therefore a dismissal would be fair.

Incompatibility and related reasons

The courts have accepted than an employee whose actions negatively affect the operation of a business may be dismissed. This may occur where certain actions of the employee create disharmony among his co-workers, as when, for example, he antagonises co-workers by continually making racist or sexist remarks.

In Erasmus v BB Bread, employees called for the dismissal of a manager because of his problematic attitude towards them, and his having made derogatory remarks, particularly aimed at black employees. The Industrial Court (in terms of the old LRA) held that his dismissal was for a valid and fair reason, as the employer is entitled to insist on reasonably harmonious interpersonal relationships between employees. If sound relationships appear to be impossible, the employer may be entitled to remove the employee from the scene.

In East Rand Proprietary Mines v UPUSA, the issue was the fairness of the dismissal of a number of Zulu-speaking workers after violent clashes between them and workers belonging to other ethnic groups. Although the court found that the dismissal had been unfair in the circumstances, it did acknowledge that a dismissal which had its roots in an arbitrary ground, such as ethnic origin, could be fair if the employer could prove that dismissal was the only option left to ensure the safety of the targeted employees and the continued well-being of the business. The court held that an employer may dismiss employees because it cannot guarantee their safety in light of the ethnic hostilities, but the employer must be able to show that it truly had no other alternative.

Breakdown in the trust relationship

The relationship between the employer and employee is one of trust. It entails the confidence that the employee is adhering to the common-law duty to act in good faith towards and in the best interests of the business.

If the facts show that this duty is breached, the employee is guilty of misconduct and, if sufficiently serious, may be dismissed.

If the employer is unable to prove such a breach on a balance of probabilities, the employee may not be dismissed for misconduct, but may be dismissed for operational reasons, as such mistrust is counter-productive to the operation of the business.

In Food & Allied Workers Union v Amalgamated Beverage Industries, the Industrial Court accepted that the dismissal of a number of employees on suspicion of assault had an operational rationale to it.

Substantive issues

Large-scale Dismissals

Section 189A of the LRA distinguishes between the size of employers and also the size of dismissals when regulating substantive and procedural fairness of dismissal.

Section 189A(1) distinguishes between a small employer (less than fifty employees) and a big employer (more than fifty employees).

In terms of s189A(1)(a) a large-scale dismissal would entail the employer's dismissing

• ten employees, if the employer employs between fifty and 200 employees;
• twenty employees, if the employer employs between 200 and 300 employees;
• thirty employees, if the employer employs between 300 and 400 employees;
• forty employees, if the employer employs between 400 and 500 employees; and
• fifty employees, if the employer employs more than 500.

In terms of s189A(1)(b), a dismissal by a big employer of fewer than the prescribed minimum listed above still constitutes a large-scale dismissal if the number of employees to be dismissed, together with the number of employees that have been dismissed for operational reasons in the twelve months previously, exceeds the number specified above.

This is a so-called "rolling twelve-month period" and must always be calculated backwards, starting from the date on which the employer gives notice in terms of section 189(3) of the latest proposed dismissal for operational reasons.

The purpose of the twelve-month rolling period is to ensure that employers do not manipulate the number of employees to be dismissed so that the dismissal always falls outside the ambit of section 189A.

Section 189A(19) of the LRA provides that, in any dispute referred to the Labour Court concerning the dismissal of the number of employees in terms of subsection (1), the court must find that the employee was dismissed for a fair reason if

• the dismissal was to give effect to requirements based on the employer's economic, technological, structural or similar needs;
• the dismissal was operationally justifiable on rational grounds;
• there was a proper consideration of alternatives; and
• selection criteria were fair and objective.

Courts' changing views

In the past, the courts took the view that the function of the court is not to second-guess the employer's decision. It is not up to the court to ask whether it was the "best" decision under those circumstances; it needed only to consider whether it was a rational, commercial or operational decision.

Now the courts take a closer view of the employer's business decisions.

In BMD Knitting Mills v SA Clothing & Textile Workers Union, the court departed from its deferential approach and focused on the fairness of the reason to both parties:

The starting point is whether there is a commercial rationale for the decision. But rather than take such justification at face value, a court is entitled to examine whether the particular decision has been taken in a manner which is also fair to the affected party, namely the employees to be retrenched. To this extent the court is entitled to enquire as whether a reasonable basis exists on which the decision, including the proposed manner, to dismiss for operational requirements is predicated. Viewed accordingly, the test becomes less deferential and the court is entitled to examine the content of the reasons given by the employer, albeit that the enquiry is not directed to whether the reason offered is the one which would have been chosen by the court. Fairness, not correctness is the mandated test.

In Chemical Workers Industrial Union v Algorax, the court considered itself to be entitled to scrutinize the employer's business reasoning and decision-making in considerable detail. The reasoning given is that the court should not hesitate to deal with an issue which requires no special expertise, skills or knowledge that it does not have, but simply requires common sense or logic.

The most important implication of this approach is that the employer will need to convince the court not only that it has considered alternatives, but that it has chosen the option that makes the best business sense.

Procedural aspects

There is no clear dividing line between substantive and procedural fairness in dismissals for operational reasons; the issues overlap considerably.

Consultation process

The consultation process is at the heart of procedural fairness in the case of dismissal for operational requirements.

Section 189(1) of the LRA provides that, when an employer contemplates dismissing one or more employees for reasons based on the employer's operational requirements, the employer must consult

• any person whom the employer is required to consult in terms of a collective agreement;
• if there is no such collective agreement,
  • a workplace forum, if such exists; and
  • any registered trade union whose members are likely to be affected;
• if there is no workplace forum, any registered trade union whose members are likely to be affected; or
• if there is no such trade union, the employees likely to be affected by the proposed dismissals or their representatives nominated for that purpose.

In United National Breweries v Khanyeza, the court held that, where a union is recognized as a consulting party in a collective agreement, it is entitled to consult on behalf of all employees, even those falling outside the bargaining unit for which the union is recognised.

Note that consultation must take place when the employer "contemplates dismissal"—when the possibility of dismissal is foreseen, but the final decision to dismiss has not been reached. At most, therefore, the employer must have an intention to retrench.

Item 3 of the Code further entrenches the idea that consultation must take place when dismissal is "contemplated."

This ensures that the employees are afforded the opportunity to influence the employer in its final decision to dismiss or not to dismiss.

Section 189 does not prescribe the period over which consultation should extend, but Item 5 of the Code states that the circumstances of each case are relevant to the determination of a reasonable period.

Item 6 further states that the more urgent the need of the employer to respond to the factors giving rise to contemplated dismissals, the shorter the consultation process will be.

Consultation entails that the parties must engage in a meaningful joint consensus-seeking process and attempt to reach consensus. This means that the parties must embark on a joint problem-solving exercise, striving for consensus.

For the process to be meaningful, the employer must consult in good faith and not simply "go through the motions." This means the employer cannot have made up his mind to dismiss prior to consultation, and must be prepared to keep an open mind with regard to the representations made.

The employees must engage properly, make representations and ensure that their representations are well founded and substantiated, and not merely prolong consultations.

Should the parties fail to reach consensus, the final decision remains that of the employer.

In NEHAWU v University of Pretoria, the Labour Appeal court held that, after restructuring had been exhaustively discussed by a steering committee, on which all stakeholders were represented, the university was not required to consult again on all those issues after formally giving notice in terms of section 189 of the LRA.

Measures to avoid dismissals

There must be proper consideration of alternatives. The employer must apply its mind to the proposals and, if applicable, give defendable reasons for dismissing these alternatives and coming to the conclusion that dismissal was the only solution.

Possible alternatives include the following:

• granting paid or unpaid leave;
• reducing or eliminating overtime or work on Sundays;
• transferring employees to other departments; and
• training or retraining employees to enable them to take up other positions in the organisation.

The parties may consider spreading the dismissals out over a period of time to allow a natural attrition of numbers through retirements or resignations.

Measures to minimize the number of dismissals

Once dismissals have been agreed as the only solution, the number of dismissals must be kept to a minimum. This may mean

• transferring employees to other sections or departments;
• asking for volunteers by means of offering a voluntary severance package;
• allowing natural attrition of numbers; or
• training or retraining.

Written Disclosure of Information

The employer must disclose all relevant information in writing. Verbal assurances, explanations and information by the employer will not suffice; the other party may demand that the employer put everything down in writing or provide documentation such as financial reports.

According to section 189(3) of the LRA, all "relevant information" must be disclosed. This may include, inter alia,

• the reasons for the proposed dismissals;
• alternatives considered and the reasons for rejection thereof;
• the number of employees likely to be affected;
• the proposed method for selecting which employees to dismiss;
• the time when the dismissals are likely to take effect;
• severance pay proposed;
• any assistance the employer proposes to offer;
• the possibility of the future re-employment of the employees who are dismissed;
• the number of employees employed by the employer; and
• the number of employees the employer has dismissed for operational requirements in the preceding twelve months.

Relevance is a question of fact and entails all information that will allow effective consultation.

The onus is on the employer to prove that any information that it has refused to disclose is not relevant for the purposes for which it is sought.

Privileged information, information that may cause harm if disclosed and private personal information relating to an employee is not required to be disclosed, even if it is relevant.

Representations and consideration of representations

Section 189(5) of the LRA provides that the employer must allow the other party an opportunity to make representations on any matter on which the parties are consulting. Representations on issues regarding the reasons for dismissal, alternatives to dismissal, measures to minimise the number of dismissals, the timetable for dismissal, assistance offered, severance pay, etc., are therefore allowed.

Representations about the disclosure of information and about "any other matter relating to the proposed dismissals" are also allowed: for example, the socio-economic effect that a mass dismissal would have on the local community.

The employer must engage with those representations and consider and respond to them.

Efficiency, ability, skills, capacity, experience, attitude to work and productivity

These criteria are generally favored by employers. They are regarded as objective, provided they do not depend solely upon the opinion of the person making the selection, but can be objectively tested.

Furthermore, they may only be used if the employee knew that the employer considered them important.

Large-scale dismissal by big employer

Section 189A introduces additional requirements for a procedurally fair dismissal in the case of a large-scale dismissal.

Firstly section 189A affords either party the right to ask the Commission for Conciliation, Mediation and Arbitration to appoint a facilitator to assist the parties during the consultations; secondly, section 189A introduces a moratorium of sixty days, during which the employer may not dismiss.

Facilitation option

Only the Commission for Conciliation, Mediation and Arbitration may be approached to appoint a facilitator.

The employer must make this request when it gives notice in terms of section 189(3) to the employee party that it is contemplating a large-scale dismissal.

The employee party (the union, for example) representing the majority of the employees may also ask for a facilitator. The employee party must notify the Commission for Conciliation, Mediation and Arbitration within fifteen days of the employer's notice of contemplated dismissal.

If neither party asks for a facilitator within the above timeframes, they may agree to ask for one to be appointed during the consultation process.

If a facilitator is appointed, the facilitation must be conducted in terms of the regulations made by the Minister of Labour for the conduct of such facilitation.

These regulations relate to the time period and variation of such time periods for facilitation, the powers and duties of facilitators, the circumstances in which the Commission for Conciliation, Mediation and Arbitration may charge a fee for appointing the facilitator, and the amount of the fee.

An employer may not dismiss before sixty days have elapsed from the date on which notice in terms of s189A(3) is given.

Non-facilitation option

If none of the parties request a facilitator, section 189A stipulates that a minimum period of thirty days, from when notice in terms of section 189A(3) was given, must have lapsed before a dispute may be referred to the CCMA or other council.

Resolution of disputes

Disputes regarding the procedural and substantive fairness of dismissals by a small employer, and small-scale dismissal by a big employer, are referred to the Labour Court.

In large-scale dismissals, disputes about procedural fairness must be referred to the Labour Court within thirty days after notice of dismissal has been given to employees.

In large-scale dismissals, where there are disputes about substantive fairness, there are two choices:

1. strike action, in which case 48 hours' notice must be given; and
2. the Labour Court, to which the employee party may elect to refer the dispute.

In the case of dismissal for operational reasons of a single employee, the employee may refer a dispute about substantive or procedural fairness either to arbitration or to the Labour Court.

Dismissal of strikers

In terms of section 67(5), employees engaged in a protected strike may be dismissed if

• they are guilty of misconduct during the strike; or
• operational requirements require such.

Common law

In terms of the common law, the position of the employees was that no employee could be forced to continue his contract of employment with the new employer; conversely, the new employer had no obligation to continue to employ the employee.

Transfer of a business could therefore mean the termination of existing employment contracts.

LRA

Exceptions

The general rule that the employees of the old employer become the employers of the new employee, with the same terms and conditions of employment, and with continuity of employment, is subject to a number of exceptions.

Section 197(3) provides that the new employer may provide terms and conditions of employment that "are on the whole not less favorable."

Furthermore, the consequences of a transfer, as envisaged in section 197(2), are expressly subject to an agreement in terms of section 197(6). Although employees may insist on their contracts being transferred, the right to be afforded the same contractual rights must be agreed upon.

Regarding the identity if the parties, section 197(6)(a) states that the agreement must be with the same bodies or persons with whom an employer has to consult about retrenchments. As far as the employer is concerned, either the old or the new employer may be the other party to the agreement.

Any agreement which interferes with the employees' existing terms and conditions has to involve the employees in order to be valid.

In cases of retrenchment prior to transfer, the retrenchment will only be substantively fair if the retrenchment is based on the operational requirements of the old employer and not those of the new employer.

An employee of the old employer who refuses "adequate alternative" employment with the new employer when faced with retrenchment by the old employer is not entitled to severance pay.

Only those rights which actually did accrue contractually to employees prior to the transfer are transferred. Only the rights of the employees existing at the time of transfer become the obligations of the new employer.

Employees cannot use section 197 as a form of statutory bargaining to insist on better terms and conditions of employment.

Not all benefits (especially pension benefits) are provided by employers. Only existing rights may be transferred.

Section 197 of the LRA allows the transfer of employees from one pension fund to another as a result of a transfer of a business if the criteria in section 14 of the Pension Funds Act are met.

Insolvency

The term "sequestration" refers to the insolvency of an individual. The terms "liquidation" and "winding-up" refer to the insolvency of a company, close corporation or other legal entity.

In the past, the approach has been that all contracts of employment between the insolvent employer and its employees terminate automatically. This meant that the employees lost their jobs. In respect of unpaid wages, they became creditors of the insolvent estate of the employer. It also meant that an employer could manipulate the process of insolvency by applying for a provisional liquidation to get rid of employees, and then come to some kind of arrangement with a prospective buyer, or with the creditors, to ensure the survival or continuation of the operations. The employer could thus ensure the automatic termination of the employment contracts without actually going out of business.

Section 197A of the LRA addresses this situation.

This section also only applies to a "transfer" of a "business." These terms have the same meaning as under section 197.

Section 197A applies only if the old employer is insolvent, or if a scheme of arrangement or compromise with creditors is entered into in order to avoid winding-up or sequestration.

As a general principle, the effect of section 197A is that all employees of the old employer become employees of the new employer; continuity of employment is preserved.

These consequences are also subject to agreement (between the employees and the new or old employer, or both) to the contrary.

Other similarities between ordinary transfers and transfers in case of insolvency are:

• The new employer complies with its obligations if it takes over the employees as long as the terms and conditions of employment are, on the whole, not less favourable.
• Subject to agreement, the new employer is bound by pre-existing arbitration awards and collective agreements.
• Provision is made for the transfer of employees from one pension fund to another as a consequence of the transfer of the business.
• Resignation of an employee, faced with substantially less favourable conditions and circumstances, will be regarded as automatically unfair.

In transfers in the normal course of business, however,

• the rights and obligations of the old employer and the employees at the time of the transfer remain; and
• the new employer does not inherit the "sins" of the old employer.

Subsections 197(7) to (9), regarding the valuation and provision of accrued benefits, do not apply to transfers in cases of insolvency.

Industrial Conciliation Act (1924)

Between 1911 and 1918, a succession of laws was promulgated in South Africa which dealt with various industrial sectors, and with labour in general. Only in the aftermath of large-scale industrial unrest on the Witwatersrand in 1922, however, was any comprehensive attempt undertaken to regulate relations between management and organised labour. The tumult on the Rand led directly to the first comprehensive piece of labour legislation, the Industrial Conciliation Act 1924, which was also the first legislation to regulate strikes in the country. It also recognised and regulated lock-outs. The Act provided for the registration of white trade unions and employers’ organisations, "self-evidently also white,"^[76] and established a framework for collective bargaining through industrial councils or conciliation boards, as well as a dispute settlement system. Although the Act was "largely voluntarist,"^[76] compliance with its provisions and with collective agreements was enforced by criminal sanction. The 1924 Act resulted in greater wage disparity between different racial groups. The Industrial Conciliation Act dealt only with collective labour rights; individual rights were dealt with in a Wage Act in 1925.

Industrial Conciliation Act (1937)

Problems of enforcement led to a major revision of South African labour law, with the introduction of the Industrial Conciliation Act 1937. The 1937 Act tried to introduce more councils, in a greater geographical spread, so that more collective engagements could be facilitated. There was a proliferation of unregistered trades union for black people, who were legislatively excluded. Specifically, pass-bearing black workers were excluded, although certain black women could unionise.

Botha Commission

1948 was a watershed year. The Nationalist Party won the election, albeit by small margin (which grew in later years), on the promise of apartheid. The Botha Commission was established to determine how to regulate labour relations in such a way as to protect the interests of white people. The commission's comprehensive review led to legislation that had a far-reaching effect on the labour structure. Trade unions were racially divided, job reservation was introduced and blacks were precluded from joining registered trade unions. The commission recommended that black trade unions should be dealt with in separate legislation, but the government went a step further and created an entirely separate legislative framework for black workers in general. Trade unions in the 1950s among black workers were therefore not part of the formal collective bargaining framework.

By 1952, black women were also excluded from trade-union membership, while in 1953 the Black Labour Relations Regulation Act made provision for, inter alia, the creation of a Central Black Labour Council and regional committees, black labour officials and black workers’ committees. 1956 saw the prohibition of the creation of mixed-race trade unions, necessitating different unions for different race groups. This was part of the State's attempt to isolate and fragment the workforce. It fuelled unrest, however, rather than quelling it.

In the 1970s, the power of the black trade unions became especially notable, in a period marked by political unrest and industrial action. In 1973, provision was made for the creation of liaison and coordinating committees, and a restricted right to strike was accorded black workers. This attempt to accommodate black interests, without recognizing their parity with white interests, did not have the desired effect.

Wiehahn Commission

This dualistic system of labour relations—one for blacks and the other for whites, "coloureds" and Indians (although the latter groups were also discriminated against)—lasted until the beginning of the 1980s. In 1977, the government appointed the Commission of Enquiry into Labour Legislation, commonly known as the Wiehahn Commission that made significant recommendations for change, which changed the face of collective bargaining in South Africa.^[77]: 488 It was tasked to examine the current legislation and make recommendations to maintain the peace in the labour system.^[77]: 488 The Commission produced a six-part report, the primary recommendations of which were:

• that full trade union rights be accorded black workers;
• that job reservation be scrapped;
• that a Manpower Commission be established; and
• that the Industrial Court replace the existing Industrial Tribunal and be given extended powers.

In an attempt to give effect to these recommendations, significant amendments were made to the Industrial Conciliation Act (renamed the Labour Relations Act 28 of 1956), which with further amendments formed the legislative structure for regulating collective labour relations for the next 15 years.

The country's labour laws were thus largely "deracialised." All African workers who were not migrant workers could now join trade unions. The National Manpower Commission, a statutory body comprising representatives from employers organisations, trades and the State, which would meet to discuss economic and industrial policy, was duly established.

In recognition of the fact dispute-resolution mechanisms, thitherto inadequate, needed to be bolstered, the Industrial Court (predecessor of the present-day Labour Court) was duly established, too. The Industrial Court was largely hands-off in respect of collective bargaining, in which it did not think it had any place involving itself here.

The last change to be implemented as a result of the commission's findings was the removal of race-based job reservation, which was seen as having contributed to the unrest. These changes led to a tremendous growth in the trade union movement, which proved instrumental, especially in the 1980s, in the struggle against apartheid.

Labour Relations Act (1995)

The system in place up to the advent of democracy, "when South Africa was shaken to the roots by the transformation of the apartheid regime into a fully democratic constitutional order,"^[78] was very fragmented. There were numerous definitional problems, too. Given the prominent role played by trade unions in bringing down apartheid, and given "the rapid and large-scale movement of former union leaders and cadres into party politics and government, it is hardly surprising that much attention was given to labour rights m the new dispensation."^[78]

The right to fair labour practices, the right to bargain collectively and the right to strike were entrenched with a number of other fundamental rights in a new interim Constitution that came into force in 1993. Those rights remained entrenched in the final Constitution, adopted by the new democratic parliament on 8 May 1996. At that point, although all parties agreed that these fundamental labour rights should be given constitutional status (although there was some dispute about the extent of an employer's right to lock out), there was room for disagreement on the scope and content of those rights. The final Constitution provided that "national legislation may be enacted to regulate collective bargaining."

"From this cue," writes John Grogan, "the government set about preparing legislation to give flesh to the bones of the constitutional guarantees."^[78] The first step was to appoint a commission, under the chairmanship of Professor Halton Cheadle, to produce a draft Labour Relations Amendment Bill. This was accomplished six months later. The draft formed the basis of the new Labour Relations Act 66 of 1995, which appeared in its current form after "intensive debate"^[78] in the National Economic Development & Labour Council (NEDLAC), a body consisting of representatives of government, organised labour, and employers, including the Manpower Commission and the National Economic Forum. They started thrashing out a new framework, to deal comprehensively with both individual and collective labour law. Given the adversarial nature of the relationship between organised labour and employers up to that point,

this was a revolutionary development. Under the watchful eye of government representatives, and with their participation, management and labour were entrusted with the task of developing the draft bill into a uniquely South African product that at once satisfied the aspirations of labour and the reservations of management, and yet conformed to the letter and spirit of the Constitution and the requirements of the International Labour Organization (ILO), of which South Africa was now a member.^[79]

This produced the current LRA, "yet another turning point."^[80] One of the hopes of the drafters was to change the adversarial stance which tended to be adopted by unions and management under the old dispensation to a more co-operative one. The LRA created new institutions for encouraging union-management cooperation, and revamped old ones, "in the hope this would help transform and mature attitudes and bargaining styles."^[80]

Common law

The common law of South Africa, "an amalgam of principles drawn from Roman, Roman-Dutch, English and other jurisdictions, which were accepted and applied by the courts in colonial times and during the period that followed British rule after Union in 1910,"^[81] plays virtually no role in collective labour law. Initially, in fact, employment law, or "the law of master and servant," was regarded as a branch of the law of lease. As such, the common law did not concern itself directly with collective bargaining; its focus instead was on the rights and duties of individual employees and employers, as reflected in the contract on which their relationship was based. The law did not recognize claims by employees which had not been conferred by agreement. Although the role of the common law is minimal, therefore, the common-law contractual relationship between employer and employee underpins collective labour law in general and collective bargaining in particular.

Constitution

Legislation therefore is pivotal. The Constitution, however, is more pivotal still. Section 23 enshrines the right to "fair labour practices," while section 18 provides that "everyone has the right to freedom of association." The right to strike, furthermore, has been explicitly constitutionalized.^[82] The Constitution also provides not only for the right of every worker "to form and join a trade union,"^[83] but also for the right of every trade union "to form and join a federation,"^[84] like COSATU. Similar rights are granted to employers and employers’ associations as well.^[85] The right to collective bargaining is constitutionalized, with a mandate for national legislation to regulate it.^[86] More controversially, the Constitution also provides that "national legislation may recognize union security arrangements contained in collective agreements."^[86]

Labour Relations Act

Collective bargaining is one of the ways in which the LRA gives effect to section 23 of the Constitution. It is also an important part of freedom of association. Among the first of the LRA's aspirations, listed in the Preamble, is "to regulate the organisational rights of trade unions." A trade union without organisational rights is not much of a trade union. Organisational rights allow the trade union to access the workplace, etc.

The Preamble also describes as a purpose of the LRA the promotion of collective bargaining, and the regulation of the rights to strike and to lock out. It seeks also to advance "the democratization of the workplace" by involving employees in decision-making through workplace forums, although these have not proliferated.^[87]

The LRA defines as an "employee" any person (excluding an independent contractor) who

• works for another person or the State;
• is entitled to receive remuneration for such work; and
• assists in conduct of the business.

"Trade union" is defined in the LRA as an association strictly of employees,^[88] whose principal purpose is to regulate relations between employees and employers. The trade union must act in the interests of its members. Trade unions also support individual members with individual disputes. A trade union must have an address in South Africa, and its name must not be so similar to that of another union "that it is likely to mislead or cause confusion."^[89] Other requirements are set out in section 95.

Excluded from the application of the LRA are the members of

• the National Defense Force;^[90]
• the National Intelligence Agency;^[90] and
• the South African Secret Service.^[90]

Freedom not to associate and freedom to dissociate

Freedom of association is generally regarded as a positive right; it protects the rights of employees and employers actively to form collective entities and to join them. In the case of trade unions, this positive right is protected by prohibiting both the State and employers from infringing it.

Freedom of association also has a negative aspect, however. This does not refer to any disadvantages or drawbacks it may have; it refers to the right not to associate. In the context of labour relations, the principle of freedom of non-association means that no person may force an employee to belong to a union in the first place, or to belong to a union other than the union of the employee's choice.

Where the limits of freedom of non-association lie is the subject of considerable controversy.

Closed-shop agreements exist where an employer and a trade union conclude a collective agreement in terms of which the employer undertakes to employ or retain in its services only those employees who have joined the union. The closed-shop agreement forces employees to join a certain union if they are to keep their jobs. A closed-shop agreement could be seen as an infringement of the employees’ right not to associate.

Sometimes mention is made of the freedom of dissociation. This refers to the situation where employees who have decided to associate with each other also decide to prevent other employees from associating with them: for example, where the union's constitution stipulates that only employees in a certain industry may join.

In practice, this freedom of dissociation is not so controversial. More controversial is that the constitutions of some unions state that the union has the right to refuse to admit a person as a member of that union even if that person is eligible for membership. A constitution may also provide for the expulsion of members. This becomes vitally important if there is a closed-shop agreement, because the refusal of membership of the union may mean the loss of a job.

Dispute resolution

If a person alleges that one of the rights relating to freedom of association has been infringed, the dispute-resolution procedure contained in section 9 of the LRA applies. Disputes about the interpretation or application of the right to freedom of association should be referred for conciliation to a bargaining council, a statutory council^[110] or (if no council exists) the Commission for Conciliation, Mediation and Arbitration. If the dispute remains unresolved, it should be referred to the Labour Court for adjudication, unless the parties agree to arbitration.

Union security arrangements

The Constitution allows for "union security arrangements contained in collective agreements."^[111] There is no firm definition of the term "union-security arrangements," but it is generally viewed as a generic term for a collective agreement between an employer or employers’ organisation and a trade union or trade unions, in terms of which union membership, or alternatively the payment of trade union subscriptions, is a condition of employment for all employees. Clearly this infringes upon an employee's right to freedom of association. Union security arrangements therefore require compulsory union membership, or compulsory payment of a union subscription.

In the South African context, the term "union-security arrangements" refers to the so-called "closed-shop" and "agency-shop" agreements. The only limits set in the Constitution are that such agreements must

• be contained in a collective agreement; and
• comply with the general limitations clause of the Constitution.^[112]

The two types of union security arrangements are illustrated by way of the following example:

K employs 100 employees. 60 of them belong to trade union T. These members pay a monthly membership fee of R20. From the other 40 employees 10 belong to union R and 30 are non-unionised. Every year with wage negotiations, T negotiates with K and the increase agreed on is applied across the board. T feels that it does all the hard work which both union and non-union members benefit from. If T concludes an agency-shop agreement with K, it will mean that K will deduct an agency fee of R20 from the salaries of all the other 40 employees and pay it over to T. The other 40 employees do not have to become members of T [... but] the members of R will pay their own membership fee for R as well as the R20 agency fee.

If K and T conclude a closed-shop agreement, it will mean that all other 40 employees of K must become members of T. R will no longer be allowed to operate in the workplace. All 100 employees will have to pay the R20 membership fee to T.^[113]

Purpose

The LRA does not impose a legal obligation on employers to bargain collectively with unions. The law encourages collective bargaining; it does not compel it. One of the ways it seeks to do this is by enabling trade unions to acquire organisational rights in certain circumstances. The granting of organisational rights to a trade union is seen as a way of enabling that trade union to establish a collective-bargaining relationship with an employer or employer's organisation.

The trade union is the essential instrument for engaging in collective bargaining. The LRA sets certain minimum rights for trade unions (which may be expanded upon by agreement) in their engagement with employers. These organisational rights are granted to unions by the LRA to enable them to function more effectively, to build support at the workplace, and thereby to lay the foundations of a collective-bargaining relationship with the employer.

If the union, through the acquisition of organisational rights, gains sufficient membership and a significant presence in the workplace or industry, an employer or employers’ organisation may be persuaded to "recognize" the union for the purpose of collective bargaining.

Registration

Different levels of representativeness by unions for different rights

Whether a trade union is entitled to organisational rights depends on the level of representativeness of the trade union in the workplace, which can be either majority representation or "sufficient" representation. If a union represents the majority of workers, it will have access to all organisational rights. If the union is sufficiently representative, it will have access only to certain organisational rights: the rights of access, leave and stop-order facilities. The rights to elect shop stewards and to disclosure of information, on the other hand, are reserved for unions that have as members the majority of the employees in the workplace.

Usually, only a single union will be seeking organisational rights, but two or more unions may also act together to do so.

Acquisition of organisational rights

Trade unions may acquire organisational rights in the following ways:

• through collective agreement;
• through membership of a bargaining council;
• through strike action; or
• through the section-21 procedure.

Through strike action

The LRA would prohibit a strike in support of a demand that the employer grant all or some organisational rights to a union, because such a dispute may be referred to arbitration in terms of section 21. Section 65(2)(a) specifically permits a union which would otherwise have the right to refer a dispute about organisational rights to arbitration in terms of section 21 to embark on strike action in an attempt to force employer to grant these rights.

A trade union, including a minority union, may therefore strike in support of a demand for organisational rights even if it does not meet the statutory threshold for acquiring such rights. Except for the right to information, in fact, organisational rights are the only rights conferred by the LRA over which strikes are permitted.

This is the consequence of NUMSA v Bader Bop,^[128] where NUMSA, although not a majority union, sought to acquire the right to elect shop stewards by striking. The lower courts were divided. A divided Labour Appeal Court held that minority unions could not do strike for such a right because,

1. once the union conceded that it lacked a majority, there would be no dispute over which to strike; and
2. such a strike would be hit by section 65(1)(c), which prohibits strikes over disputes that either party may refer to arbitration.

This judgment was overturned by the Constitutional Court, however, which held that the minority unions may strike in support of demands for organisational rights to which they are not entitled under the LRA.

The Constitutional Court found that nothing in section 20 of the LRA precludes a collective agreement granting collective-bargaining rights, even if the qualification for representativity is not met. The court's interpretation of this was that, if a minority union asks for, but does not succeed in acquiring, the organisational rights in question, and if conciliation subsequently fails, the dispute-resolution mechanism is to strike for it.

This judgment has been severely criticized.

If the union uses the strike remedy, but is unsuccessful in forcing employer to grant the rights, the union loses the right to use the section-21 procedure for one year from date on which notice was given of the intention to go on strike.

Dispute resolution for organisational rights

If there is a dispute about the interpretation of organisational rights, any party may refer the dispute in writing to the Commission for Conciliation, Mediation and Arbitration for conciliation and, if conciliation fails, for arbitration.^[129]

Disputes about disclosure of information follow the same route. In determining the dispute, the Commissioner must strike a balance between the employer's right to privacy and the interests of sound collective bargaining. The Commissioner has a fairly wide discretion to make a suitable award to achieve this.

Bargaining fora

The LRA makes provision for the establishment of two institutions within which collective bargaining may take place:

1. bargaining councils; and
2. statutory councils.

The establishment, composition and function of bargaining councils and statutory councils are regulated in some detail by the LRA. Employers and trade unions remain free, however, to agree to their own collective-bargaining fora and procedures. The Act, however, does not regulate this "non-statutory collective bargaining" in any detail; it is left to the employer and the trade union to reach agreement on issues such as

• where the collective bargaining will take place (at industry, enterprise or plant level);
• when the collective bargaining will take place;
• on what topics collective-bargaining will occur;
• who will represent the parties during the collective-bargaining process;
• which employees will be covered by the collective-bargaining process; and
• the precise procedures to be followed.

The only facet of this type of bargaining regulated by the LRA is the legal effect and binding nature of collective agreements entered into.

Duty to bargain

It could be argued that the constitutional right to bargain collectively (s 23(5)) includes both a legally enforceable right to bargain collectively, as well as a corresponding duty to bargain collectively on the other party to the relationship. Since the LRA does not create a duty to bargain, this may give rise to the argument that the Act does not go far enough in protecting and giving content to the constitutional right. This debate may have to be solved by the courts in the future. For now, however, there is no general duty to bargain on employers and trade unions in terms of the LRA. An employer may refuse to engage with a trade union; in turn, the trade union may take strike action.

The question of whether the constitutional right to bargain collectively includes a duty on the other party has arisen in connection with one group of persons not covered by the Act: members of the South African National Defence Force (SANDF). In three separate disputes, the High Court had to consider whether the South African National Defense Force Union (SANDU) may rely on the provisions of section 23 in order to obtain a court order to require the State to bargain collectively with it. These decisions, and their arguments, were contradictory.

The SCA, on appeal, held that the constitutional provision does not impose a judicially enforceable duty to bargain on employers or employees. On further appeal, however, the Constitutional court left the question open. It did point out, however, that the contrary approach could create difficulties. It came close, then, to agreeing with the SCA that no duty to bargain collectively exists in South African labour law.

Although the LRA does not compel parties to bargain with each other, it encourages collective bargaining through the granting of organisational rights, the right to establish bargaining institutions and closed-shop and agency-shop agreements. Should an employer refuse to bargain, the Act allows for strike action by employees to convince the employer to bargain. A refusal to bargain includes:

• the employer's refusal to recognise a trade union as a bargaining agent;
• the employer's refusal to establish a bargaining council;
• the employer's withdrawal of recognition of a collective bargaining agent;
• the employer's resignation as a party to a bargaining council; and
• the employer disputing appropriate bargaining units, levels and topics.^[131]

Disputes regarding refusal to bargain must first be referred to the Commission for Conciliation, Mediation and Arbitration for an advisory award. An advisory award provides guidance only; it is not binding on the parties.^[132]

Bargaining agents

Collective bargaining is performed by bargaining agents, namely trade unions and employers’ organisations. The LRA sets requirements for unions and organisations relating to registration. A trade union is defined as an association of employees whose principal purpose is to regulate the relations between employers or employers’ organisations and employees.^[133] Only employees may be members of a trade union. Job seekers and ex-employees may not be members of a trade union.^[134]

To qualify as a trade union, an association of employees need not be registered. Registration is beneficial, however, since only a registered trade union is entitled to rights, such as the right to

• conclude a collective agreement enforceable under the LRA;
• acquire organisational rights;
• be a member of a bargaining council, statutory council and workplace forum; and
• conclude closed-shop and agency-shop agreements.

The powers and functions of a bargaining council are outlined in section 28 of the LRA.^[135] A bargaining council has three main functions:

1. to conclude collective agreements;
2. to enforce those collective agreements; and
3. to prevent and resolve labour disputes.

Levels of bargaining

Collective bargaining can take place at plant level,^[136] sector level^[137] or industry level.^[138] The LRA encourages collective bargaining at sector or industry level. Provision is made for the establishment of bargaining councils for a particular sector. It is at this level that bargaining will take place in bargaining councils.^[35] Moreover, bargaining councils may be established in the private as well as the public sector. The private sector is the economic sector in which the State is not the employer; in the public sector, the State is the employer.^[139]

Disputes requiring bargaining council to resolve

• Disputes about freedom of association: A bargaining council only can conciliate these disputes, failing which they should be referred to the Labour Court for adjudication.
• Disputes of interest in an essential service: A bargaining council can conciliate and arbitrate these disputes.
• Disputes about severance pay: A bargaining council can conciliate and arbitrate these disputes.
• Disputes about unfair labour practices: A bargaining council can conciliate unfair-labour-practice disputes provided that they do not relate to discrimination. Discrimination disputes must be referred to the Commission for Conciliation, Mediation and Arbitration for conciliation, failing which they must go to the Labour Court for adjudication.
• Disputes that may lead to a strike or lock-out: A bargaining council only can conciliate these disputes.
• Dismissal disputes, if the reason for dismissal is based on operational requirements, for participating in an unprotected strike, for reasons connected to a closed-shop agreement, or automatically unfair: A bargaining council only can conciliate these

disputes.

• Disputes based on misconduct

and incapacity: A bargaining council may conciliate and arbitrate these disputes by way of the con-arb procedure.

Collective agreements

The main goal of collective bargaining between an employer and a trade union is to reach consensus about certain matters and formalise their relationship by means of a collective agreement. A collective agreement regulates the rights and duties of parties, as well as the terms and conditions of the employment of workers.

In terms of section 213 of the LRA, a collective agreement is a written agreement concerning terms and conditions of employment or any other matter of mutual interest concluded by one or more registered trade unions, on the one hand and, on the other

• one or more employees;
• one or more registered employers’ organisations; or
• one or more employers and one or more registered employers’ organisations.^[133]

The parties, therefore, are

• a registered trade union; and
• the employer/s and/or registered employers' organisation/s.

Consultation

Consultation entails that the employer

• allows the forum to make representations and to advance alternative proposals; and
• considers and responds to these. If the employer disagrees with them, it must state the reasons for disagreeing.

Consultation must take place before the employer implements any proposal.^[141]

Joint decision making

Joint decision making requires the employer to consult and reach consensus with a forum.

Matters for consultation

Matters for consultation include (unless they are regulated by a collective agreement) proposals relating to

• restructuring the workplace (for example, the introduction of new technology and new work methods);
• changes in the organisation of work;
• total or partial plant closure;
• mergers and transfers of ownership in so far as they affect the employees;
• the retrenchment of employees;
• exemption from any collective agreement or law;
• job grading;
• criteria for merit increases or the payment of discretionary bonuses;
• education and training;
• product development plans; and
• export promotion.^[141]

A bargaining council or a representative union and an employer may conclude a collective agreement granting a forum the right to be consulted about additional matters that fall within the council's registered scope.^[142]

Matters for joint decision making

Matters for joint decision making cannot be regulated by a collective agreement. Matters for joint decision making relate to

• disciplinary codes and procedures;
• the proper regulation of the workplace (except for work-related performance);
• measures designed to protect and advance persons disadvantaged by unfair discrimination; and
• changes by employer-representatives on boards of employer-controlled schemes with regard to social benefits.^[143]

A representative union and the employer may also enter into a collective agreement conferring on the forum joint decision making in respect of additional matters or removing other matters.^[141][144]

In fulfilling its duties to consult and to have joint decision making, an employer is required to disclose all relevant information that will allow the forum to participate effectively in consultation and joint decision making. The employer is not obliged to disclose information, however,

• that is legally privileged;
• that the employer may not disclose without contravening a law or court order,
• that is confidential and, if disclosed, may cause substantial harm to the employee or the employer; and
• private personal information relating to an employee (unless the employee has consented to the disclosure).^[145]

Disputes about disclosure of information must be referred to the Commission for Conciliation, Mediation and Arbitration. If parties fail to resolve the dispute through conciliation, any party to the dispute may request arbitration.

The Commissioner will not compel the employer to disclose "irrelevant" information.

Despite the potentially important influence that a forum may have on a workplace, few such forums are found in practice. This is due to employers' viewing fora as an inroad to managerial prerogative, and the concern of unions that fora will undermine collective bargaining structures.^[146]

Hurdles in the way of protected industrial action

No right is unlimited. Rights may be limited in the interests of society or by the rights of others. Section 36(1) of the Constitution provides for the limitation of rights in terms of law of general application. The LRA is such a law. It limits the right to strike.

Strikes and lock-outs are not automatically protected, as there are some hurdles that employees and employers have to cross before their actions will be protected:

1. To cross the first hurdle, the parties should ensure that their action complies with the definition of a strike or a lock-out. They must therefore avoid the inherent limitations in the definitions of both strikes and lock-outs.
2. To cross the second hurdle, the parties should comply with the procedure prescribed by the LRA in section 64. In certain limited circumstances, employers and employees will be exempted from complying with these procedures.^[153]
3. To cross the third hurdle, the parties should ensure that none of the prohibitions against industrial action, as contained in section 65 of the LRA, are applicable to their issue in dispute. The parties will be able to continue with collective action only if the nature of the particular dispute between the parties allows it. For example, employees may go on strike only if the dispute is one of "interest," meaning a dispute about a change to an existing right or about creating a new right. Employees may not strike about a dispute of "right," which would be a dispute about the application and interpretation of an existing right, since these must be referred to arbitration. They are better suited to resolution by third-party determination than by industrial action.

Procedural requirements for protection of strikes and lock-outs in terms of section 64

The second hurdle to be crossed in order for a strike or lock-out to be regarded as protected is that certain procedural requirements must be complied with. This hurdle stands on the three legs prescribed by section 64(1):

1. the issue in dispute must be referred to the CCMA (Commission for Conciliation, Mediation and Arbitration) for conciliation;^[164]
2. the CCMA must have issued a certificate to verify that the dispute has not yet been resolved.^[13]
3. A written notice must be handed to the employer, employees or trade union at least 48 business hours prior to the commencement of the strike or lock-out.^[13]

The issue in dispute

The LRA defines an "issue in dispute" as "the demand, the grievance, or the dispute that forms the subject matter of the strike or lock-out."^[133] The issue in dispute must fall within the definition of a strike (or lock-out). In other words, the demand, grievance or dispute about which the employees strike (or the employer locks out) must relate to a matter of mutual interest.

The LRA requires that parties must try to resolve the issue. It requires that the parties first refer the dispute to a bargaining council (if there is one for that sector). If no bargaining council exists, the dispute must be referred to the Commission for Conciliation, Mediation and Arbitration for conciliation.

Certificate of outcome

The bargaining council or the Commission for Conciliation, Mediation and Arbitration must attempt to resolve the dispute through conciliation within thirty days of the referral. If the parties to the dispute reach an agreement, the dispute is resolved. If no agreement is reached, the conciliator must issue a certificate to indicate that the matter has not been resolved. After this (or after thirty days have gone by since referral of the dispute for conciliation), the parties can give notice of the proposed strike (or lock-out).^[165]

Prescribed notice

If conciliation fails, or thirty days have passed since the referral of the dispute,^[166] at least 48 hours’ written notice must be given of the commencement of the strike or lock-out. If the State is the employer, at least seven days’ notice must be given. If the employer is a member of an employers’ organisation, notice must be given to the employers’ organisation.

In case of a proposed lock-out, the employer must give notice to the union involved in the dispute, or to the employees directly if there is no union.

The LRA does not prescribe what details the notice must contain; it only regulates that it must be in writing and must be issued 48 hours before commencement of the industrial action.^[167]

There are some exceptions, according to which, the parties do not need to follow the procedures prescribed by the LRA:

• if the parties to the dispute are members of a bargaining council and the dispute followed the procedure set by that council's constitution;^[168]
• if the parties concluded a collective agreement with prescribed procedures to be followed before they strike or lock-out, and they have complied with that agreement,^{[169][170][171]}
• if an employer implements an unprotected lock-out and the employees strike in response to that (and the same would apply if the employer locked-out the employees in response to an unprotected strike);^[172]
• if a strike takes place after the employer has unilaterally changed the terms and conditions of employment, and the employer fails to rectify this despite prior warning;^[173] and
• if an employer refuses to bargain with a union, in which case the dispute must first be referred for conciliation and then for advisory arbitration before notice of a strike can be given.