National Union of Metalworkers of South Africa and Others v Macsteel (Pty) Ltd. (432/90) [1992] ZASCA 75; 1992 (3) SA 809 (AD); (1992) 13 ILJ 826 (A) (21 May 1992)

CASE NO 432/90

IN THE SUPREME COURT OF SOUTH AFRICA (APPELLATE DIVISION)

In the matter between

NATIONAL UNION OF METALWORKERS OF

SOUTH AFRICA 1st Appellant

17 OTHERS 2nd-7th Appellants

9th-16th Appellants 18th-20th Appellants

and

MACSTEEL (PTY) LIMITED Respondent

CORAM: VAN HEERDEN, SMALBERGER, F H GROSSKOPF, GOLDSTONE JJA et NICHOLAS AJA

Date Heard: 8 May 1992 Date Delivered: 21 May 1992

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JUDGMENT

GOLDSTONE JA:

The question in this appeal is whether in the circumstances of this case a concerted refusal by employees to work voluntary overtime constituted an unfair labour practice in terms of the Labour Relations Act 28 of 1956 ("the Act")

The respondent is the employer. It is Macsteel (Pty) Ltd, a substantial steel merchant and distributor. I shall refer to it as "Macsteel". The first appellant is a trade union duly registered in terms of the provisions of the Act. It is the National Union

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of Metal Workers of South Africa to which I shall refer as "NUMSA". There are 17 other appellants. They were all employees of Macsteel at various of its four plants which are situate at Germiston and Wadeville.

Macsteel purchases large quantities of steel of from steel producers. In turn, it sells that steel in various sizes to customers in the engineering and construction industries. For some years the majority of the approximately 1000 employees of Macsteel have regularly worked overtime. That is necessary from the point of view of Macsteel because of the fluctuating demand for steel from its customers. For their part, the employees welcomed the opportunity of supplementing their wages. The working of overtime became the normal practice.

The 1988 wage negotiations between Macsteel and NUMSA began on 5 August. A number of meetings were held. No agreement was reached. On 18 August 1988 a

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further meeting was held. NUMSA rejected the proposalwhich was tabled by Macsteel. On the same afternoon the

shop stewards addressed the employees at a report-back

meeting. It was attended by an organiser in the employ

of NUMSA. From that evening the majority of the

employees of Macsteel stopped working overtime. In

consequence thereof Macsteel could not adhere to its

production and delivery schedules and it sustained

substantial pecuniary damage.

On 24 August 1988, Macsteel sent a telex to

NUMSA. It referred to:

"a unilateral, illegal and unfair overtime ban

introduced without prior warning orconsultation."

Reference was made to prejudice caused thereby to

Macsteel. NUMSA was requested to advise Macsteel

whether it supported this "illegal strike" and in the

event that it did not, it was called upon to disassociate

itself from the strike.

5 On the same day NUMSA replied, also by telex,

as follows:

"We are not aware of any such action taking place at any of your plants but will endeavour to investigate the allegations.

The Union also disassociates itself from any form of illegal industrial action, but we must point out that a joint or collective refusal decided individually not to work overtime does not necessarily constitute illegal industrial action."

A further detailed complaint from Macstee1 to NUMSA met with no response satisfactory to Macsteel. NUMSA maintained the attitude set out in its telex of 24 August 1988.

On 16 September 1988 Macsteel obtained an urgent interim order from the Industrial Court in which the individual employees of Macsteel were called upon to show cause why an order should not be granted, inter alia:

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"declaring the overtime ban imposed by [them] ... to constitute unfair industrial action."

After service of the order on them most of the employees resumed working overtime. However, on 29 September 1988, the return day of the interim order, the Industrial Court suspended its order. The judgments delivered by the President and Deputy President of the Court are reported in (1989) 10 ILJ 285. On the following day the majority of the employees again refused to work overtime.

On 14 October 1988 agreement was reached on wages. From 17 October 1988, the following Monday, the employees again worked overtime as requested by Macsteel. The dispute as to whether the refusal to work overtime constituted an unfair labour practice was at the instance of Macsteel referred by the Industrial Council to the Industrial Court for determination in terms of s 46(9) of the Act. Originally Macsteel applied for relief against

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NUMSA and 257 individual employees. Later it gave notice that it would seek relief only against twenty of its employees. The Industrial Court ruled against Macsteel. The determination was in the following terms:

"1. The dispute under consideration is not an academic dispute and falls for determination by the Court;

2. The imposition of a collective ban by employees and/or their Union on the performance of voluntary, non-contractual work during wage negotiations is a legitimate industrial relations pressure tactic which employees may exercise without any notice to the employer, in order to enhance their collective bargaining power; 3. The imposition of such a collective overtime ban by the Applicant's employees during August/September 1988 (with the knowledge and/or concurrence of their Union) was neither unlawful nor was it an unfair labour practice in the circumstances and within the meaning of paragraph (o), subparagraphs (ii), (iii)

8 and (iv) of the definition of an 'unfair labour practice' in the Act; 4. The Applicant was aware at the time that the overtime ban was related to the wage dispute."

No order for costs was made.

Macsteel appealed to the Labour Appeal Court. The appeal was upheld and the following order was made:

"Paragraphs 2, 3 and 4 of the determination ofthe Industrial Court are set aside and

substituted with the following:

(2) It is declared that the Union's conduct to introduce, instigate and persist in an overtime ban in the circumstances of this case was an unfair labour practice; (3) It is declared that the failure by the second to the seventh respondents, the ninth to the sixteenth respondents and the eighteenth to the twentieth respondents, to work normal overtime, in furtherance of a collective

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intention to persuade the applicant to accede to their wage demands, constituted a collective overtime ban, which was an unfair labour practice in the circumstances of the case.'"

NUMSA was ordered to pay the costs of the appeal

including the costs of two counsel. With the leave of

the Court a quo NUMSA now appeals to this Court in

terms of s 17C of the Act. In terms of s 17C (l)(a)

such an appeal does not lie against "a decision on a

question of fact". In the present case, however, the

relevant facts were agreed or are not in dispute. In a

list of admissions which was placed before the Industrial

Court it was agreed, inter alia, that:

"22. The overtime practice which the applicant operates is voluntary in nature in that when overtime is actually worked it is done so in terms of an ad hoc agreement reached with the individuals concerned on

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each such occasion. 23. The normal overtime practice upon which the applicant relies was one the effect of which was that certain employees worked overtime in excess of the statutory maxima laid down by the Basic Conditions of Employment Act [3 of 1983]."

The relationship between Macsteel and NUMSA is

regulated by a recognition agreement. It makesprovision for negotiating procedures which culminate in

the declaration of a dispute if agreement cannot be

reached. In that event:

"each party shall be free to act independently and take such lawful action as it may decide."

NUMSA is obliged, in terms of the agreement, to use its best endeavours to terminate any "illegal industrial action" taken by its members. It also undertakes not to strike or support a strike, inter alia, over a matter which is still the subject of negotiations in terms of

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the aforementioned negotiating procedures, or while the matter is still being dealt with in terms of the procedures for the resolution of disputes laid down by the Act.

In this Court counsel for the appellants correctly accepted that:

1. The refusal by the majority of the employees to work overtime was concerted action taken by them in order to place pressure on Macsteel in the wage negotiations;

2. NUMSA was a party to and encouraged such refusal by its members, and a decision in relation thereto was taken at the meeting held on 18 August 1988; 3. The refusal by the employees to work overtime constituted a "labour practice" for the purposes of the definition of "unfair labour practice" in s 1 of the Act. (It was clearly a "device, scheme or action taken in the labour field": Marievale Consolidated Mines Ltd v President of the Industrial

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Court and Others 1986(2) SA 485(T) at 498 A-B).

Counsel for the appellants submitted, however,

that there was no evidence to suggest that the refusal towork overtime was other than the individual decision of

each of the employees of Macsteel who in fact so

refused, ie that NUMSA did not make it obligatory for all

of the employees to refuse to work overtime. For the

purposes of this judgment I shall accept that to be

correct.

That part of the definition of "unfair labour

practice" now relevant reads as follows:

"'unfair labour practice' means any act or

omission which in an unfair manner infringes or

impairs the labour relations between an employer and an employee, and shall include the following:

(1) any strike, lock-out or stoppage of work,

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if the employer is not directly involved in the dispute which gives rise to the strike, lock-out or stoppage of work;

(n) any strike, lock-out or stoppage of work in contravention of section 65; (o) any other labour practice or change in any labour practice which has or may have the effect that -

(ii) the business of any employer or class of employer is or may be unfairly affected or disrupted thereby;

(iii) labour unrest is or may be created or promoted thereby;

(iv) the relationship between employer and employee is or may be detrimentally affected."

It was submitted on behalf of the appellants that where employees fall within the scope of the Basic Conditions of Employment Act, 3 of 1983 ("the Employment Act") a refusal by them to work overtime, even where it

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constitutes a "labour practice", cannot as a matter of

law, constitute an "unfair labour practice". S 8(1)

thereof provides that:

"No employer shall require or permit an employee to work overtime otherwise than in terms of an agreement concluded by him with the employee and provided such overtime does not exceed three hours on any day or 10 hours in any week..." The scope and applicability of the Employment Act are

regulated by s 1(3):

"The Mines and Works Act, 1956 (Act No 27 of 1956), the Labour Relations Act, 1956 (Act No 28 of 1956), the Wage Act, 1957 (Act No 5 of 1957), and the Manpower Training Act, 1981 (Act No 56 of 1981), or any matter regulated thereunder in respect of an employee, shall not be affected by this Act, but this Act shall apply in respect of any such employee in so far as a provision thereof provides for any matter which is not regulated by or under any of the said Acts in respect of such employee."

In other words, the provisions of the Employment Act

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apply in all cases where the named statutes or regulations thereunder confer no protection or advantage in favour of employees in respect of the matters covered by the terms of the Employment Act: cf R v Beerman 1948(1) SA 954(A) at 958.

In the present case no other relevant statute or regulation dealt with overtime work by the employees of Macsteel. It was thus common cause between the parties that the provisions of the Employment Act applied in respect thereof. In particular the provisions of s 8(1) were of application. It follows that Macsteel was prohibited from requiring or permitting any of its employees to work overtime otherwise than in terms of an agreement or in excess of the maximum hours laid down in s 8(1).

The effect of the order granted by the Court a quo, so submitted counsel for the appellants, was to compel the employees of Macsteel to work overtime in the

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future and that it would be contrary to the provisions of, s 8(1) of the Employment Act because there was no agreement by those employees so to work.

I do not agree. S 8(1) of the Employment Act did not confer any new rights upon employees to whom its terms applied. At common law an employer cannot require an employee to work overtime otherwise than with his agreement, express or tacit. What s 8(1) did was to create a criminal sanction applicable to employers who might by some means coerce employees to work overtime without their agreement to do so.

Any employee was thus always free to refuse to work voluntary overtime. That freedom was not infringed by the terms of the order of the Court a quo. That order does no more than declare that an "overtime ban" introduced, instigated and persisted in by NUMSA in the circumstances which prevailed in August/September 1988 constituted an unfair labour practice. It did not

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entitle Macsteel at any time thereafter to require or permit an employee to work

overtime otherwise than in terms of an agreement concluded by it with the employee. Where an employee prior to the order could refuse to work overtime so could he refuse to do so after the order was made. What he could not fairly do was to become a party to concerted action with other employees to withdraw voluntary overtime usually worked in the circumstances in which that occurred in August/September 1988, ie inter alia, without notice to Macsteel and in order to bring pressure to bear on it in the context of current wage negotiations. The right of each individual employee to refuse to work overtime was no different after the order than it was prior thereto. By the same token, if an employer's withdrawal of overtime work in order to put pressure on a trade union in the context of wage negotiations is declared to be an unfair labour practice

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that would not constitute, directly or indirectly, an order compelling the employer to offer overtime work to its employees. In both cases it would be the ulterior motive for the withdrawal of overtime which justifies the categorisation of the action or conduct as an unfair labour practice. It follows that the order made by the Court a quo was not inconsistent with the provisions of s 8(1) of the Employment Act.

In passing it should be mentioned that it does not appear from the judgment of the Court a quo what was encompassed by the words "overtime ban". Those words could be used to describe a total ban imposed by a union on all its members. They could also describe the position which probably occurred in the present case where a trade union encourages its members to withdraw overtime without making it obligatory for them to do so. Both cases would constitute a labour practice. In this case, as already mentioned above, I have assumed that the

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overtime ban was of the last-mentioned kind.

It was also submitted on behalf of the appellants that because under Macsteel's overtime regime employees worked overtime in excess of the statutory maxima laid down in s 8(1) of the Employment Act, the refusal to continue to do so, could not in law be categorised as an unfair labour practice. Counsel's argument was that Macsteel's requests to its employees to work overtime in respect of some or all of those employees were tainted with illegality and there was no obligation on such employees to consider such requests. Counsel conceded that in the present case the refusal to work overtime was unrelated to the illegality of the request. It was submitted, however, that motive was irrelevant for this purpose. It was a matter of public policy - such a request should not be allowed to found a cause of action in the Industrial Court. Again, I do not agree.

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It is not disputed that Macsteel was unaware that it was requesting its employees to work overtime in excess of the statutory maxima. When this came to its knowledge it successfully applied for appropriate exemptions in terms of s 8(2) of the Employment Act. Any of the employees could have agreed to work overtime for periods within the statutory maxima. They, too, apparently were unaware of the statutory prohibition. That was never an issue. The only reason for refusing to work overtime was related to the overtime ban. In no way would the order sought from and granted by the Court a quo have compelled any employee of Macsteel to work in excess of the statutory maxima. I cannot find that any reason of public policy prevented the Court a quo from categorising the concerted action of the appellants as an unfair labour practice.

Counsel for the appellants submitted further that, apart from the provisions of the Employment Act, it

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could never be unfair for employees to refuse to workovertime, regardless of the motive for such refusal, when

they are under no contractual obligation to do so. In

support of this submission counsel referred to the

statement in SA Breweries Ltd v Food and Allied Workers

Union and Others 1990(1) SA 92 (A) at 97 G-H that:

"... an employee, provided he acts individually and independently of others, is always free to refuse to work voluntary overtime, for whatever reason,"

That freedom cannot be lost, he contended, merely because some other individual simultaneously and concurrently exercises it.

This argument begs the question. The conduct now relevant was the concerted exercise of the freedom to refuse to work overtime which constituted a labour practice. Whether it was unfair or not did not depend only upon the legal rights of the employees. Indeed, if

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one reviews the successes of workers and their unions inour own courts, and in those of many foreign

jurisdictions, one will find that many of them were

achieved because employers were held unfairly to have

sought to exercise their rights or freedoms. Their

motives for so doing made their actions unfair labour

practices. The boot is now on the other foot. I

cannot find any good reason for holding that a concerted

refusal to work overtime cannot constitute an unfair

labour practice.

The final submission related to the findings

made by the Court a quo that

"... any action aimed at creating an advantage for the one party over the other, disturbs the equality which the Act tries to establish, and is therefore unfair, if taken at a time when in terms of the Act, the parties are still to negotiate."

"... it will be an unfair labour practice to resort to an overtime ban before the

23 declaration of a deadlock."

It was submitted on behalf of the appellantsthat collective bargaining in no way shields employersfrom industrial action. Reliance was placed upon theprovisions of s 65 of the Act which permits strike actionwhere the matter in dispute has been considered by anindustrial council and a period of 30 days has expiredafter such reference, or where deadlock is reported bythe industrial council to the Minister of Manpower.Impasse is not a condition precedent for a lawfulstrike. Therefore, so the submission ends, impassecannot be a condition precedent for other forms ofindustrial action which fall short of a strike.

This is a non sequitur. The fact that a strike is lawful under the Act does not necessarily mean that it is fair. It could be an unfair labour practice inter alia in terms of paragraphs (1), (m) or (o)(ii) of the

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the definition in s 1 of the Act of "unfair labour practice". This submission again incorrectly confuses rights or freedoms on the one hand with unfair labour practices on the other. In the unfair labour practice field, legal rights will frequently be a relevant consideration but they cannot, without more, be decisive of fairness or unfairness.

It follows further, in my opinion, that in the passages cited above, the Court a quo stated the position too widely. The fact that industrial action is embarked upon prior to exhausting the statutory dispute resolution mechanisms or before an impasse, also does not ipso facto have the consequence that such action is an unfair labour practice. Whether a labour practice is unfair must depend upon all the facts and circumstances of each case. It is unnecessary in this case to consider the circumstances in which industrial action prior to impasse might not be unfair and I refrain from doing so.

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In relation to the fairness or unfairness of the overtime ban now in issue, the following factors appear to me to be relevant:

1. It was instituted during the course of wage

negotiations.2 There was no suggestion that Macsteel was not

bargaining in good faith.

3. An overtime regime had been in place for some years for the mutual advantage of both Macsteel and those of its employees who agreed to work overtime. 4. To the knowledge of NUMSA and the employees an overtime ban would seriously disrupt the business of Macsteel, prevent it from complying with its contractual obligations with some of its customers and cause it substantial pecuniary loss.

26 5. It was instituted without the declaration of a deadlock in the negotiations. 6. It was instituted without any notice to Macsteel and so disabled Macsteel from making timeous arrangements for alternative labour or for alternative delivery arrangements with its customers. 7. NUMSA disingenuously denied any knowledge of the overtime ban.

In these circumstances I am of the view that there were ample grounds for the Court a quo to hold that the overtime ban was an unfair labour practice. It follows that there is no reason to interfere with the order made by it.

That brings me to the question of costs. The correct approach to costs in labour matters which are initiated in the industrial court and in appeals therefrom in the Labour Appeal Court or in this Court was

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considered recently in National Union of Mineworkers v East Rand Gold and Uranium Co Ltd 1992(1) SA 700(A) at 738E-739G. Having regard to that approach, the following considerations appear to be relevant in the present case:

1. Macsteel is the successful party. 2. Macsteel does not seek a costs order against the individual employees who are appellants in this Court. 3. NUMSA, as mentioned above, in one respect acted disingenously if not dishonestly. 4. With regard to the questions of law raised by the appellants there were bona fide disputes between the parties.

5. The law in relation to overtime bans in thefield of the unfair labour practice is ofimportance to many employers and many, if not

28 all, trade unions in South Africa; 6. There has been no consistency with regard to the approach to these matters in the industrial court. 7. Macsteel initiated these proceedings at a time when the wage negotiations had been successfully concluded and the overtime ban had come to an end. In other words it sought a declaration on a matter of principle. 8. There is an on-going relationship between Macsteel and NUMSA.

9. No leave was sought from or granted by theCourt a quo with regard to the order it madefor the costs of the appeal to be paid byNUMSA. That order was made in terms of asubmission by counsel for both Macsteel andNUMSA that the successful party was entitled toits costs. There can therefore be no

29 suggestion that the Court a quo failed properly to exercise its discretion with regard to costs. It follows also that this Court is precluded from interfering with the costs order made by the Court a quo.

In the light these considerations no ordershould be made in this Court as to costs. The case isone where the parties and the labour and industrialcommunity would seek to have clarity on the law. Theconduct of NUMSA which I have criticised was not directlyrelevant to the disputes between the parties and, in myopinion, should not materially effect the incidence ofcosts. Furthermore, NUMSA will be obliged to pay thecosts of the proceedings before the Labour Appeal Courtin circumstances where it probably would not have been soobliged had the judgment of this Court in the NationalUnion of Mineworkers case (supra) been decided prior tothat appeal.

30 The appeal is dismissed.

R J GOLDSTONE

JUDGE OF APPEAL

VAN HEERDEN JA) SMALBERGER JA)GROSSKOPF F H JA) CONCURNICHOLAS AJA)