Chemical, Energy, Paper, Printing, Wood And Allied Workers Union v Lion Match Products (Pty) Ltd (J2212/14) [2014] ZALCJHB 406 (13 October 2014)

REPUBLIC OF SOUTH AFRICA

THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

NOT REPORTABLE

CASE NO J 2212/14

In the matter between:

CHEMICAL, ENERGY, PAPER, PRINTING,

WOOD AND ALLIED WOIRKERS UNION

APPLICANT

and

LION MATCH PRODUCTS (PTY) LTD

1ST RESPONDENT

Application heard: 7 October 2014

Judgment delivered: 13 October 2014

JUDGMENT

VAN NIEKERK J

Introduction

[1] This is an urgent application to interdict the respondent from continuing a lock out and any conduct in furtherance of a lockout

that the applicant instituted against the applicant’s members. The existence of the lock out is not in dispute, nor is its purpose – the respondent has locked out the applicant’s members to compel them to accept its wage offer. What is at issue is whether the lock out is protected.

[2] The applicant contends that at least two of the limitations of the right to lock out apply in the present instance – first, the issue in dispute has not been referred for conciliation nor has a certificate been issued as required by s 64 (1) (a) and secondly,

that the respondent is bound by a collective agreement that regulates the issue in dispute (see s 65 (3)). A third contention to the effect that the respondent had failed to give the 48 hours’ notice of the commencement of the lock out as required by s 64 (1) (b) was not pursued at the hearing.

Preliminary issues

[3] I am satisfied that the application is urgent. Although notice of the lock-out that is the subject of these proceedings was given on 8 August 2014 and the threat of urgent proceeding first surfaced on 13 August 2014, there were further developments that rendered it reasonable for the applicant not to proceed to court immediately. In any event, given the nature of the matter, it is not one that ought appropriately to be determined in the ordinary course.

[4] To the extent that the applicant contends that the true dispute between the parties is one that concerns the interpretation and application of a collective agreement and that the matter is one that falls to be arbitrated in terms of s 24 of the LRA, this is simply not the case. As will appear more fully hereunder, the crisp issue raised in these proceedings is whether the respondent is and remains bound by a collective agreement to which the employers’ organisation of which it is or was a member is a party and if so, whether the lockout that the respondent has initiated is unprotected because one of the substantive limitations on the right to lockout applies. Those are questions of law which have little if anything to do with either the interpretation of the collective agreement or its application.

Factual background

[5] The material facts are not in dispute. The respondent's business falls within the registered scope of the national bargaining council for the wood and paper sector (the bargaining council). The applicant is a member of the bargaining council and the respondent a member of the employers’ association for the sawmilling industry of South Africa, a registered employers’ organisation and also a member of the bargaining council. Collective bargaining in the sector takes place in various chambers established within the bargaining council. Earlier this year, the parties to the council engaged in negotiations concerning wages and other terms and conditions of employment for 2014/2015. They were unable to reach agreement and on 6 June 2014, the applicant referred a dispute for conciliation. The dispute remained unresolved and in August 2014 employees in the sawmilling industry embarked on a protected strike.

[6] On 6 August 2014 the parties concluded an agreement in the sawmilling chamber in terms of which employees’ wages would be increased by 8.5% with effect from 1 July 2014, and a further 0.5% in January 2015. The settlement agreement provided further that "the main agreement confirming all other details will be signed within 48 hours by relevant bodies." As matters transpired, the agreement was not signed within 48 hours but a substantive agreement on wages and other terms and conditions of employment for the period 1 July 2014 to 30 June 2015 was signed by all of the parties on 21 August 2014.

[7] On 7 August 2014, the union addressed a telefax to the applicant stating that it had withdrawn from the bargaining council and invited the union to a meeting to discuss further an offer of 6% wage increase tabled by the respondent. The telefax stated further that if agreement could not be reached by close of business on the same day, the respondent would institute a lockout. The union responded on the same day by stating that the respondent had participated in a collective bargaining process under the auspices of the bargaining council and that it was required to implement the wage increase agreed-upon. On the same date, the respondent addressed a letter to the union which recorded that in its view, it was not bound by the agreement on the wage increase and that it had decided to adopt an ‘independent position’. It is common cause that on 6 August 2014 the respondent had walked out of the negotiations and that its position remained that of an offer of a 6% wage increase across the board. In the answering affidavit, there is some light shed on the respondent's position – the deponent avers that it never mandated the employers’ organisation to offer the wage increase which it did.

[8] On 8 August 2014 the respondent addressed a letter to the union headed ‘Lockout notice and ancillary matters’. The letter recorded that it served as a notice of lockout to all union members employed by the respondent and that the lockout would be effective within 48 hours after the transmission of the letter.

[9] The procedure for the negotiation of collective agreements in the bargaining council is set out in the council’s constitution.

Clause 15 of the constitution provides for matters to be negotiated at chamber level and plant level respectively. In terms of schedule 3 to the constitution, wages are a matter for negotiation at chamber level.

The issue

[10] In essence, as I have indicated, the union submits that the provisions of the constitution of the bargaining council reserve the issue of wage increases for collective bargaining at chamber level, that agreement has been reached on wages at that level and that the respondent is and remains bound by that agreement. The respondent contends that having withdrawn from the bargaining process, it is not bound by the agreement concluded under the auspices of the bargaining council, and that it is entitled to adopt what it terms an ‘independent position’ and to institute a lockout to compel the union's members to accept its offer of 6%.

The applicable legal principles and analysis.

[11] Section 65 (3) of the LRA provides that subject to a collective agreement, no person may take part in a strike or lockout or any conduct in contemplation furtherance of a strike or lockout if that person is bound by any collective agreement that regulates the issue in dispute. In the present instance, the dispute that forms the subject of lockout is one that concerns wages. On its own version, the respondent seeks to exercise economic power to secure agreement to a 6% wage increase as opposed to the more generous increase recorded in the settlement agreement. The settlement agreement reached under the auspices of the bargaining council on 6 August 2014 is reduced to writing and signed on behalf the employers’ association and the union. Even if the agreement was preliminary in the sense that the parties specifically agreed to conclude a main agreement containing ‘all other details’ at a later stage, the agreement constitutes a collective agreement for the purposes of the definition of ‘collective agreement’ in s 213 of the LRA. As at 6 August 2014, there was therefore a collective agreement between the employers’ association and the union regulating the issue that gives rise to the lockout.

[12] What matters for present purposes, of course, is whether the respondent is bound by the collective agreement or, put another way, whether its withdrawal from the negotiations conducted under the auspices of the bargaining council on 6 August 2014 has the

consequence that it is not so bound.

[13] On the late afternoon of 6 August 2014, the respondent's human resource and legal manager addressed an e-mail to the chairperson of the employers association. The relevant portion of that e-mail reads as follows:

‘I wish to reconfirm the position of LMC:

1. LMC wishes to be allowed to leave the association, subject to payment of any outstanding membership fees and will not serve any notice. This is to ensure that we do not encounter enforcement proceedings by CEPPWAWU in terms of section 23 of the LRA and/or

2. Should the above be not acceptable to the association, we request that the association acknowledged prior to signing the wage agreement, in writing, to all trade unions represented in the chamber, that any agreement that is to be concluded will not be binding on LMC as per clause 9.6 and 9.7 of the constitution of the Employers Association and\or

3. That any agreement to be concluded with Labour in terms of the current chamber collective bargaining dispute must specifically provide that LMC will not be bound by the provisions of the said wage agreement.

LMC does not agree with the position adopted by the Association and therefore refuses to participate further nor abide by any agreement thus concluded.

(As an aside, the substantive agreement that included conditions in addition to wages signed ultimately on 21 August makes no reservation

in respect of the respondent, nor does it provide for its exclusion.)

[14] Section 23 (1) of the LRA provides that a collective agreement binds the parties to the agreement (in this case, the employers’

association and the union) and in terms of subsection (1) (c), it binds the members of a registered trade union and employers who are members of the registered employers’ organisation that are party to the collective agreement if the collective agreement

regulates, amongst other things, terms and conditions of employment. Section 23 (2) of the LRA provides that a collective agreement binds for the whole period of the agreement every person bound in terms of subsection (1) (c) who was a member of the relevant organisation at the time the agreement became binding, whether or not that party continues to be a member for the duration of the collective agreement.

[15] At the time that the settlement agreement was concluded, the respondent was a member of the employers’ organisation that was party to it. The respondent is accordingly bound by the agreement.

[16] To extent that the respondent relies in these proceedings on a resignation from the employers’ association as a basis on which to assert that it is not bound by the settlement agreement, the terms of the e-mail referred to above fall far short of an unequivocal resignation from the association. The terms of the e-mail are tentative, to say the least. Further, the constitution on the employers’ association requires three months’ notice of termination of membership. It is not open to the respondent

unilaterally to waive the notice period, nor is there any evidence of any agreement by the association not to enforce the notice period.

[17] To the extent that the respondent relies on its withdrawal from the bargaining process as a basis on which it contends it is not bound by the settlement agreement, it is clear from the terms of s 23 that a withdrawal from a negotiation process does not necessarily have the consequence that the withdrawing party is not bound by the agreement. In any event, the respondent was not directly a party to the negotiation – the employers’ interests were being advanced by the employers’ association, which in terms of well-established principles does not act as the agent of its members rather than in a representative capacity. One of the consequences of this relationship is that an employers’ association (and a trade union, for that matter) does not require a mandate to conclude a collective agreement, nor does the absence of a mandate in itself affect the validity of the agreement.

[18] In short: it was not open to the respondent to seek to continue the negotiation process as between itself and the union. The dispute that forms the basis of the lockout instituted by the respondent is the subject of a collective agreement that binds the respondent by virtue of it having been a member of the employers’ organisation that is a party to the agreement, and the respondent remains so bound at least for the duration of the agreement.

[19] For these reasons, the application should succeed. In these circumstances, it is not necessary for me to consider the alternative

argument advanced by Adv. van der Riet.

[20] Finally, in relation to costs, the court has a broad discretion in terms of s 162 to make orders for costs according to the requirements of law and fairness. This court traditionally does not make costs orders with is a collective-bargaining relationship between parties and where a costs order might serve to prejudice that relationship. This case falls into that category.

I make the following order:

1. The lock out instituted by the respondent is declared to be unprotected.

2. The respondent is interdicted and restrained from continuing the lock out and from engaging in any conduct in furtherance of the lock out

3. There is no order as to costs.

ANDRÉ VAN NIEKERK

JUDGE OF THE LABOUR COURT

REPRESENTATION

For the applicant: Adv. JG van der Riet SC, instructed by Cheadle Thompson and Haysom

For the respondent: Adv. H Gerber, instructed by Nothnagel Attorneys