Bravo Group Manufacturing (PTY) Ltd t/a Gommagoma v SACTWU and Other Persons (D407/21) [2021] ZALCD 84 (7 July 2021)

THE LABOUR COURT OF SOUTH AFRICA, DURBAN

Not Reportable

Case no: D407/21

In the matter between:

BRAVO GROUP MANUFACTURING (PTY)

LTD t/a GOMMAGOMMA

Applicant

and

SACTWU AND OTHER PERSONS

Respondents

Heard: 2 July 2021 (via videoconferencing)

Delivered: 2 July 2021 (order handed down)

Reasons: 07 July 2021

Summary: Interdict of a strike action. The strike action not in breach of the Labour Relations Act, 1995 and is protectable. What section 64 requires is a referral of the dispute as opposed to conciliation of the dispute in order for a strike to be protected. The demand of the trade union is for termination of a commercial contract and has no impact on the terms and conditions of employment – Assign Services (Pty) Ltd v NUMSA and others[1] explained. An employer must only understand the demand and not interpret it to suit its narrow interests. Held: (1) The application is dismissed. Held: (2) There is no order as to costs.

REASONS FOR THE ORDER

MOSHOANA, J

Introduction

[1] This application came before the urgent Court on 2 July 2021. After hearing the parties the following order was issued:

“1. The application is dismissed.

2. There is no order as to costs.”

[2] The practice in this Court and the constitutional imperative is to give reasons for any order made by this Court. What follows hereunder are the reasons for the above made order.

Background facts

[3] The applicant, Bravo Group Manufacturing (Pty) Ltd (Gommagomma) is a company that employs approximately 920 employees. 120 of these employees are employed on a permanent basis. The remaining 800 employees are provided to Gommagomma by a temporary employment service (TES) known as Workforce Group (Pty) Ltd (Workforce). The relationship between these 800 employees and Workforce is governed by fixed term contracts.

[4] On the facts of this case, it appears to be common cause that the continued employment of some of the 800 employees is in breach of section 198B of the Labour Relations Act[2] (LRA). For completeness sake section 198B (3) and (5) of the LRA respectively provides that an employer may employ an employee on a fixed term contracts longer than three months of employment if certain conditions listed in subsection (3) (a) and (b) are present

and that an employment in terms of a fixed term contract concluded or renewed in contravention of subsection (3) is deemed to be of an indefinite duration.

[5] In place is a collective agreement known as an Organizational Rights Agreement (ORA). In terms of ORA, SACTWU is recognised as a collective bargaining agent for employees in the relevant bargaining unit. Those employees who are deemed permanent employees do fall under the regulation of the ORA. The applicant takes a view, which view is considered to be wrong by SACTWU, that the contemplated strike action which is to take place on Monday, 5 July 2021, contravenes the provisions of clause 7 of the collective agreement concluded at the back of the ORA. The clause reads thus:

“… (SACTWU) …may not call a strike…or attempt in any way to seek to induce or to compel negotiations on any substantive issues of wages and conditions of employment for the duration of this agreement. Substantive issues are defined as all issues involving cost and affecting the wage packets of employees.”

[6] The collective agreement is to bind the parties for three years. During negotiations, SACTWU placed a number of demands for the consideration by Gommagomma. The one demand relevant to this application was couched in the following terms:

“Terminate the contractual relationship with Workforce in all respects.”

[7] It bears mentioning at this stage that the contractual relationship between Gommagomma and Workforce is a typical one of provisions of labour or as it is colloquially known a labour brokerage. Gommagomma refused to accede to this demand. That prompted SACTWU to refer a dispute of mutual interest to the Commission for Conciliation, Mediation and Arbitration (CCMA). On 19 September 2019, Commissioner Dhlomo issued a written ruling to the effect that the CCMA lacked jurisdiction to entertain the dispute for reasons that the demand made by SACTWU would lead to Gommagomma

amending the terms and conditions of the deemed employees’ employment in contravention of the extant collective agreement and ultimately in contravention of the provisions of section 65 (1) (a) of the LRA. This ruling was not challenged by way of judicial review[3].

[8] Instead, SACTWU re-referred[4] the dispute to the CCMA. This time around, the referral was welcome by the cousin of functus officio, the honourable res judicata. On 13 May 2021 in a written ruling, Commissioner Hlophe legitimized the presence of the honourable res judicata and refused to entertain the referred dispute. In the meanwhile, SACTWU applied in terms of section 69 for the picketing rules. Commissioner Jenkin adjourned the application pending the outcome of the present application.

[9] SACTWU issued a 48 hours strike notice, which strike was to commence on Monday, 5 July 2021. The application to interdict the intended strike action was launched and was duly opposed by SACTWU.

Evaluation

[10] In terms of section 64 of the LRA, every employee has the right to strike if (a) the issue in dispute has been referred to a council or to the Commission as required by the LRA and (i) a certificate stating that the dispute remains unresolved has been issued; or (ii) a period of 30 days, or any extension of that period agreed to between the parties to the dispute, has elapsed since the referral was received by the council or Commission.

[11] Gommagomma contends that the intended strike action falters on three reasons; namely (a) strike over the issue is prohibited by section 65 (1) (a) of the LRA; (b) the issue in dispute is regulated by a collective agreement and striking over it offends section 65 (3) (a) (i) of the LRA; and (c) the ruling of Commissioner of Dhlomo precludes the strike action. All of the above contentions are without merit as it shall be demonstrated hereunder. For convenience the Court shall commence with the last contention.

The ruling of Commissioner Hlophe.

[12] Baring the comments delivered in passing earlier in this judgment, I take a view that what section 64(1) requires is a referral of the dispute. Actual conciliation of the dispute is not a requirement. In casu, it is common cause that SACTWU has referred a dispute of mutual interest and the legislated 30 day period has since lapsed since the referral. Mr Whyte argued so passionately that because Commissioner Hlophe and by extension Dhlomo declined jurisdiction, the referral is defective. Since the referral is defective, it is as good as there being no referral. The legal consequences of which is that the provisions of section 64 (1) are offended. Such renders the intended strike action unprotected. With considerable regret, I disagree. Rule 10 of the CCMA rules deals with how to refer a dispute to the Commission for conciliation. It requires delivery of a completed and signed LRA form 7.11. The signature is that of the referring party or a representative of that party. Once that happens, a proper referral serves before the Commission. As indicated in the comment in passing, section 135 (1) obliges the CCMA to appoint a commissioner, whose solitary statutory duty is to attempt to resolve the dispute through conciliation. Rule 14 of the CCMA rules provides that a referring party may be required to prove that the Commission has jurisdiction to conciliate.

[13] The true jurisdictional issue that could be entertained at that stage was whether the CCMA has jurisdictional powers to conciliate a dispute of mutual interest. Section 134 of the LRA provides the answer. Issues relating to the legality of the strike action are issues reserved for the exclusive jurisdiction of the Labour Court[5]. To the extent that Dhlomo enquired into the legality or otherwise of the intended strike action, he was impermissibly encroaching into the exclusive territory of the Labour Court. It is settled law that a decision issued without the necessary power offends the rule of law and is a brutum fulmen. A party faced with a brutum fulmen may decide to ignore it since it is a nullity and raise the nullity if another party seeks to enforce or rely on it[6].

[14] The above legal position obtains even if a party does not apply for review of a brutum fulmen. The application of the Oudekraal principle was explained in Magnificent Mile Trading 30 (Pty) Ltd v Charmaine Celliers N.O and Others[7]. In simple terms the decision only exists with legal consequences until set aside by a competent Court on judicial review but does not by mere existence assume legality. In Magnificent, Madlanga J aptly and succinctly put it thus:

“[60] Lastly, apropos a statement in Kirkland that says “invalid administrative action may not simply be ignored, but may be valid and effectual” the concurring judgment says this defies logic. Although Kirkland does say this, when viewed in the context of the judgment as a whole, Kirkland says no more than that the invalid administrative act must be treated as valid by the decision-maker and affected parties until it is reviewed in appropriate court proceedings. Treating the invalid act as valid does not invest it with legal validity.”

[15] Justice Jafta in a separate but concurring judgment in Magnificent explained the principle as follows:

“[89] The inaccuracy in Kirkland’s statement is to the effect that an invalid administrative action “may be valid and effectual”. To say an invalid action may have legal consequences does not mean that the action itself has suddenly become valid. It remains invalid but since it continues to exist at the level of fact, the invalid action may give rise to legal consequences in circumstances like those identified in Oudekraal. In that event it is the consequences that become legal and valid not the administrative action which is the source of the consequences. Indeed to say an invalid action remains valid defies logic.”

[16] Over and above the fact that what is stated by the Constitutional Court judges is binding on me, I plentifully agree with the statements. The argument presented by Mr Whyte before me is directed on the decision (ruling) itself and not its legal consequences. It is difficult to observe any legal consequences of that may arise from the ruling of Commissioner Hlophe. In my view, it is bereft of any legal consequences. As indicated earlier for the protection of a strike action only a referral and not the actual conciliation of the dispute is required. Even if it can be accepted that the legal consequence is that conciliation of the dispute did not happen, such a consequence does not affect the protection of the intended strike action.

[17] Therefore the conclusion this Court reaches is that the referral is not defective and the provisions of section 64 (1) of the LRA have not been offended in this regard. I am in plentiful agreement with Van Niekerk J in City of Johannesburg Metropolitan Municipality and another v SAMWU and Others[8]. Accordingly, this basis must fail.

Prohibition by section 65 (1) (a) of the LRA

[18] Regrettably, Gommagomma is misguided by a proverbial mile in this contention. Section 65 (1) (a) provides that no person may take part in a strike if that person is bound by a collective agreement that prohibits a strike in respect of the issue in dispute. Section 213 of the LRA defines an issue in dispute in relation to a strike to mean a demand, the grievance, or the dispute that forms the subject matter of the strike. There is no dispute in this matter that the issue in dispute is the demand to terminate the contractual relationship with Workforce. I scoured through the collective agreement and failed to find any provision that prohibits

a strike over this particular demand.

[19] Of course the scouring was an exercise in futility because Gommagomma chose to place its own interpretation on the demand. Its rather weird interpretation emerges with the so-called collapse of the triangle (Gommagomma, Workforce and the deemed employees) which will have an effect on the conditions of service of the deemed employees and by extension in breach clause 7 of the collective agreement. Regrettably, this circuitous and longwinded contention is without merit. It seeks to rely, wrongfully so in my view, with what the Constitutional Court decision in Assign Services (Pty) Ltd v NUMSA and others[9] said, which decision I shall in due course explain in this judgment.

[20] It is important to state that with regard to a demand, what is required is for the employer to understand it in a sense that it must be clear and unambiguous[10]. Once the demand is clear, as this demand involved herein is, the employer must consider whether it can comply with it or not. It is not within the province of the employer to interpret the demand with a sole view to achieve its narrow interests – to locate it against the law. Over and above the perspicuous nature of the demand, the demand must be lawful.[11]

[21] The demand involved herein is crystal clear and does not require any further edification. The demand is for Gommagomma to end its contractual relationship with Workforce. So in order to avert the strike action, Gommagomma must simply terminate its commercial relationship with Workforce. The demand is not unlawful at all. Cancellation of a commercial agreement does not involve a breach of the law in the sense that it is illegal to do so. Most of the commercial agreements contain lex commissoria clauses. It may be so that Workforce as an aggrieved party may elect not to accept the cancellation and seek a discretionary specific performance

remedy. This cannot serve as something that may legally taint the lawfulness of the demand. The one that taints the demand is one where the employer will be forced to breach the law in order to comply with it. The issue of Labour brokerage has been a thorn in this country for the longest of time until 2014, when the legislature intervened[12]. Trade unions legitimately complained bitterly and still are complaining that the labour brokerage system stifled or continue to stifle collective bargaining.

[22] In an attempt to justify the circuitous argument alluded to earlier, Gommagomma placed huge store on paragraph 75 of the Assign Services judgment. I do not agree with the interpretation that Mr Whyte sought to place on the penultimate sentence of the paragraph. The Court said:

“[75] This also makes it difficult to accept Assign’s argument that the sole employer interpretation forces employees into a new employment relationship, without their consent, on terms of employment to which they had not agreed. Section 198 (2) give rise to a statutory contract of employment between the TES and the placed worker, which is altered in the event that section 198A (3) (b) is triggered. This is not a transfer to a new employment relationship but rather a change in the statutory attribution of responsibility as employer within the same triangular employment relationship. The triangular relationship then continues for as long as the commercial contract between the TES and the client remains in force and requires the TES to remunerate the workers.”

[23] The argument of Mr Whyte is predicated on the statement that “the triangular relationship then continues for as long as the commercial contract…remains in force.” In order to understand this statement, it is of critical importance to establish what the Court meant by a ´triangular employment relationship or triangular relationship’. That understanding can only be gained by considering the Court’s reasoning as located in the previous paragraphs. At first blush and only in confining ones attention to the penultimate paragraph, a view may emerge that the terms and conditions of employment of the workers is dependent on the continuation of the commercial contract being in place. It is for that reason that Mr Whyte so passionately argued that the removal of the commercial contract untangles the triangular employment relationship to a point that new terms for the deemed employees must be negotiated as it were. This view is wrong and I shall in due course revert to it.

[24] Back to explaining the phrase coined by the Court, namely triangular relationship. At paragraph 74, the Court remarked that in truth, the TES can operate without concluding contracts of employment with the workers. In the absence of those employment contract remains only a triangular relationship and not a triangular employment relationship exists in my view. In due course, I shall expatiate on this view. At paragraph 73, the Court explained the triangular relationship to mean the TES/client/placed employee. Having done that, it concluded that that relationship exists to split the functions of the employer between the TES and the client for a fee. It went further to say, however, the functions for which the TES is responsible for seldom relate to the actual work of the employee, this in approval of the view expressed by Botes.[13] Most importantly, it explained that the primary responsibilities of the TES are (a) to pay and; (b) manage the human resources component of employment. The client, being the employer deals with (a) the day-to-day management of the employees; (b) work allocations and

performance assessment; (c) working conditions of the employees because they are placed in the employer’s premises; and (d) it retains the power to discontinue the employee’s service.

[25] With the above obtaining the essence of the TES in that triangular relationship is that of a third party that delivers the employee to the client.

[26] In my view the statement that the triangular relationship continues must be understood in that context. The Court coined the triangular employment relation simply because of the provisions of section 198 (2) of the LRA, which provides that only for the purposes of the LRA, a person, whose services has been procured for or provided to a client by TES is the employee of that TES and the TES is the employer of that person. Section 198 (2) is primarily there to protect the rights of the employees of the TES and serve as a fort for as long as section 198A (5) had not kicked in. Until section 198A (5) kicks in there will be a triangular employment relationship in the sense that the employee shall practically have two employers. The TES and the client. The TES is a statutory employer (de jure) when the client is a notional employer (de facto).

[27] However, in my view, once section 198A (5) kicks in the arrangement above morphs into a triangular relationship. The one between the employee and the client becomes an employer and employee relationship and the one between the client and the TES becomes a commercial relationship held together by the commercial contract. If there is still perhaps the employment relationship contemplated in section 198 (2) then that relationship will continue. However in my view it is more a ceremonial statutory relationship. Such of course practically creates the two employers situation. However, the Court in Assign Services was alive to this conundrum and it favoured the interpretation of having a sole employer as opposed to two employers.

[28] In paragraph 71, the Court in Assign Service, inadvertently in my view, makes reference to section 198A (3) (b). It must have been referencing section 198A (5) because subsection (3) (b) does not contain deeming provisions. Subsection (5) does contain deeming provisions.

[29] Therefore in stating what it stated, the Court was, in my view giving content and meaning to subsection (5) of the section. The question it was addressing was couched in the following terms, “what happens to the contract between TES and the placed employees if they are no longer the employer?” Assign was particularly concerned with two issues, namely (a) their common law rights which arise from a fixed term contract it may still have with the employees after the three month period, and (b) residual legislative functions. This question somewhat mirrors the concerns of Gommagomma in this instance but nuancedly couched and asked as what happens if the commercial contract is removed. Unfortunately it gives itself an answer that is not suitable to the situation.

[30] In my view, once the provisions of section 198A (5) kicks in the remnants are (a) the common law contractual relationship between the TES employee and the TES, if it is not governed by a fixed term contract that had expired, (b) the residual legislative obligations contemplated in section 198 (4C) of the LRA, and (c) the commercial contract between the TES and its client. I take a view that section 198A (5) does not countenance the continuation of the employment arrangement contemplated in section 198 (2) because such would create a two employer situation, which was found to be undesirable in Assign Services. Although the Court in Assign Services did not expressly say so, in reaching a sole employer decision that it reached it must have interpreted section 198 (2) in accordance with section 39 (2) of the Constitution of the Republic of South Africa, 1996, which exalts every Court whenever interpreting any legislation to promote the spirit, purport and objects of the Bill of Right. In my view, section 198 (2) requires an amendment in order to address the two employers situation dealt with in Assign Services.

[31] Therefore, I reach a conclusion that the removal of the commercial contract does not have any effect that leads to a change of the terms and conditions of the employment of deemed employees. In fact it bears emphasizing that once section 198A (5) kicks in the permanent employment status allows the deemed employees to access the same terms and conditions of employment as that of other permanent employees without the need to re-negotiate or restructure the employment terms. Section 198B (8) specifically provides that those employees must not be treated less favourably than an employee employed on a permanent basis performing the same or similar work unless there is a justifiable reason for different treatment. Those justifiable reasons are legislated in section 198D

(2). Accordingly, there is no breach of section 65 (1) (a) in the offing. It was common cause that all the fixed term employees became deemed employees in August 2019. Such simply implies that they are automatically covered by the collective agreement in place without any need to renegotiate the terms.

Prohibition by section 65 (3) (a) (i) of the LRA

[32] This section provides that subject to a collective agreement, no person may take part in a strike if that person is bound by a collective agreement that regulates the issue in dispute. I have already found that the specific demand is not regulated by a collective agreement. That finding instantaneously buries the argument that the strike action shall be prohibited by this section. The natural irresistible conclusion to reach is that this section does not prohibit the strike.

The issue of costs

[33] The Constitutional Court has again restated that the principle of costs following the results finds no application in the Labour Court in its recent decision of NUM obo Masha v Samancor Ltd (Eastern Chrome Mines) and Others[14]. The Constitutional Court stated that without mentioning those instances where such principle will apply. Regard being had to the

AMCU and others v Ngululu Bulk Carriers (Pty) Ltd (In Liquidation) and Others[15] Justice Jafta referred to an ongoing relationship as the basis to oust the application of the principle. However, in terms of section 162 of the LRA, this Court retains a wide discretion with regard to costs. In my view, owing to the collective bargaining relationship between the parties an appropriate order to make is that of no order as to costs.

Conclusions

[34] It was for all the above reasons that this Court made the order set out above.

GN Moshoana

Judge of the Labour Court of South Africa

Appearances:

For the Applicant:

Mr J Whyte of Norton Rose Fulbright SA Inc, Durban.

For the Respondents:

Mr. P Schuman.

Instructed by:

Purdon & Munsamy Attorneys, Durban.

[1] 2018 (11) BCLR 1309 (CC).

[2] No. 66 of 1995, as amended

[3] Owing to the submissions by Mr Whyte who appeared for the applicant, it is behoveful on my part to in passing deliver this comment. Although disputes of mutual interest are resolved through power play if not resolved through mediation, it does not naturally follow that they may end up in power play even when successfully conciliated. Thus the legality of power play is a wrong question to consider at conciliation stage for the purposes of determining the jurisdiction to conciliate. The jurisdictional power of the CCMA is regulated by section 134 of the LRA in instances of disputes about matters of mutual interest. Such disputes are to be referred to the Commission. Section 135 (1) of the LRA obligates the Commission when a dispute has been referred to appoint a commissioner whose only duty is to attempt to resolve the dispute through conciliation. The question whether a demand is lawful or not are issues reserved for the Labour Court when it exercises its exclusive jurisdiction

under section 68 (1) (a) of the LRA. In short, Commissioner Dhlomo was wrong in my view to conclude that the CCMA lacked jurisdiction and by even

entertaining the ebullient view of Gommagomma that the demand contravened section 65 of the LRA. By doing so he acted ultra vires. As a consequence, his ruling is a brutum fulmen, even if it factually exists as an administrative action.

[3] Owing to the submissions by Mr Whyte who appeared for the applicant, it is behoveful on my part to in passing deliver this comment. Although disputes of mutual interest are resolved through power play if not resolved through mediation, it does not naturally follow that they may end up in power play even when successfully conciliated. Thus the legality of power play is a wrong question to consider at conciliation stage for the purposes of determining the jurisdiction to conciliate. The jurisdictional power of the CCMA is regulated by section 134 of the LRA in instances of disputes about matters of mutual interest. Such disputes are to be referred to the Commission. Section 135 (1) of the LRA obligates the Commission when a dispute has been referred to appoint a commissioner whose only duty is to attempt to resolve the dispute through conciliation. The question whether a demand is lawful or not are issues reserved for the Labour Court when it exercises its exclusive jurisdiction

under section 68

(1) (a) of the LRA. In short, Commissioner Dhlomo was wrong in my view to conclude that the CCMA lacked jurisdiction and by even

entertaining the ebullient view of Gommagomma that the demand contravened section 65 of the LRA. By doing so he acted ultra vires. As a consequence, his ruling is a brutum fulmen, even if it factually exists as an administrative action.

[4] 4 For reasons expressed above, this re-referral was not necessary for the purposes of legitimising the strike action. In due course I shall expatiate on this aspect later in this judgment.

[5] See: Cape Gate (Pty) Ltd v Numsa and others (2007) 28 ILJ 871 (LC).

[6] See Botha v Department of Education (Limpopo Province) and others (2008) 29 ILJ 624 (LC) and the authorities cited therein.

[7] [2019] ZACC 36 (7 March 2019)

[8] (2011) 32 ILJ 1909 (LC). See also Department of Home Affairs and Another v PSA and others (2017) 38 ILJ 155 (CC) as well as SAMWU obo Manetza v Ngwathe Local Municipality and others (2015) 36 ILJ 2581 (LAC). All of these judgments reverberates the views so aptly expressed by Van Niekerk J.

[9] 2018 (11) BCLR 1309 (CC).

[10] See: SATAWU and others v Moloto NO and another 2012 (11) BCLR 1177 (CC) where the Court dealt with the purpose of a strike notice.

[11] See: TSI Holdings (Pty) Ltd and others v NUMSA and others [2006] 7 BLLR 631 (LAC).

[12] See: Lad Brokers (Pty) Ltd v Mandla 2002 (6) SA 42 (LAC) where the LAC correctly concluded that the common law does not necessarily regard the TES as the employer of the placed employee. This view was endorsed in Assign Services, when the Court remarked, “In truth, a TES can operate without concluding contracts of employment with the workers it places.”

[13] [2014] SA Merc LJ 110.

[14] [2021] ZACC 16 (22 June 2021)

[15] (2020) 41 ILJ 1837 (CC).