National Union of Metalworkers of South Africa v Arcelormittal South Africa Limited and Others (JR1051/20) [2021] ZALCJHB 333 (30 September 2021)

IN THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

Not Reportable

Case no: JR 1051/20

In the matter between:

NATIONAL UNION OF METALWORKERS

OF SOUTH AFRICA Applicant

and

ARCELORMITTAL SOUTH AFRICA LIMITED First

Respondent

REAL TREE TRADING 1 (PTY) LTD Second

Respondent

VANDERBIJLPARK ESTATE COMPANY Third

respondent

METAL AND ENGINEERING INDUSTRIAL

BARGAINING COUNCIL Fourth

Respondent

COMMISSIONER TSATSIMPE N.O. Fifth

Respondent

Heard: 01 September 2021 (Virtually)

Delivered: In view of the measures implemented as a result of the Covid-19 outbreak, this judgment was handed down electronically by circulation

to the parties' representatives through email. The date for hand-down is deemed to be 30 September 2021.

JUDGMENT

MAHOSI, J

Introduction

[1] This is an application brought in terms of section 158(1)(g) of the Labour Relations Act (LRA) for an order to review and set aside the jurisdictional ruling issued by the fifth respondent (the arbitrator) under case number MEGA 54688, dated 24 July 2020.

[2] The key question is whether the arbitrator’s jurisdictional ruling was objectively wrong.

Background

[3] The applicant, National Union of Metalworkers of South Africa (NUMSA), the first respondent, Arcelormittal South Africa Limited (AMSA) and the third respondent, Real Tree Trading 1 (Pty) Ltd (Real Tree) are parties of the fourth respondent, Metal and Engineering Industrial Bargaining Council (MEIBC).

[4] The third respondent, Vanderbijlpark Estate Company (VESCO) is a group of companies established by the predecessor of AMSA, the Iron Steel Corporation Limited and Real Tree is a subsidiary of VESCO.

[5] Real Tree’s business falls within the scope of the MEIBC Main Agreement (the Main Agreement). However, AMSA is excluded from the scope of the Main Agreement because it produces iron and/or steel and/or fero-alloys.

[6] AMSA, therefore, concluded a separate “Collective Labour Agreement to Amend Wages and Conditions of Employment for the period 2018/2019/2020” (the plant level agreement) with NUMSA.

At the MEIBC

[7] On 27 June 2019, NUMSA referred a dispute, on behalf of its members who are employed by Real Tree, to the MEIBC for conciliation. In its referral form, NUMSA described the dispute as being one related to the interpretation and application of the collective agreement. The annexure to the referral forms described the nature of the dispute as follows:

‘1. Whether the plant level collective agreement between AMSA and NUMSA governs the terms and conditions of employment of the affected members;

2. Whether AMSA and Real Tree at the joint employers of the affected members because the intent or effect of their business is, directly or indirectly, to defeat the purposes of the LRA;

3. Whether the relationship between Real tree and AMSA is that of Temporary Service Provider and client, as contemplated in section 198(1) of the LRA.’

[8] NUMSA described the outcome that it sought as follows:

‘A settlement agreement (or arbitration award) that:

(a) the substantive collective agreement concluded during August 2018, between AMSA and NUMSA Gavin's the terms and conditions of employment of the affected members.

(b) AMSA and Real Tree are joined employers of the affected members in accordance with section 200B of the LRA,

(c) In the alternative to paras (a) and (b), that the relationship between Real Tree and AMSA is that of a temporary service provider and client, as contemplated in section 198(1) of the LRA’

[9] On 23 August 2019, NUMSA referred the dispute for arbitration as the 30-day period after referral to conciliation had elapsed. Apparently, unaware of the request for arbitration, the MEIBC issued a certificate of outcome indicating that the dispute remained unresolved on 09 September 2019.

[10] On 8 November 2019, AMSA’s attorneys filed an application challenging the jurisdiction of the MEIBC to arbitrate the dispute. The nature of AMSA’s dispute appears in its supporting affidavit as follows:

‘9. The purpose of this application is to seek a ruling declaring that the MEIBC lacks the requisite jurisdiction to arbitrate the dispute, in respect of AMSA, in that AMSA is not the employer of the individual respondents by virtue of section 198(1) or section 200B of the Labour Relations Act, 66 of 1995 (the LRA). Thus, no employment relationship exists between the individual respondents and AMSA. As such, the terms and conditions contained in the planned level collective agreement is not applicable to the individual respondents.

10. Furthermore, the applicant seeks a ruling that the MEIBC lacks the requisite jurisdiction to deal with section 200B of the LRA in particular since firstly, this dispute was never referred to by the third to further respondents neither was it conciliated and secondly the individual respondents and AMSA are bound by the collective agreement which does not make provision for disputes referred to in terms of section 200B of the LRA.

11. In addition, what the referral seems to be doing is simply seeking a opinion from the MEIBC about a legal relationship in the absence of any justifiable or justiciable dispute under any section of the LRA.’

[11] NUMSA opposed AMSA’s jurisdictional point on the ground that its dispute falls under section 33A of the LRA as it relates to the application and enforcement of AMSA plant level agreement. NUMSA further submitted that the reason it classified its dispute as the “interpretation and application” was because it is closest in nature to a section 33A dispute.

[12] NUMSA argued that Real Tree is not AMSA’s service provider but a sham in that it “employs” its employees to protect ASMA from legislated provisions, which would have a detrimental effect on AMSA’s bottom-line. Alternatively, NUMSA argued that Real Tree is a TES in that its employees perform work that is not of temporary duration for AMSA. It is for that reason that NUMSA seeks an award in terms of which AMSA would be deemed to be dual employer of Real Tree’s employees for the purposes of liability under the LRA.

[13] On 28 July 2020, the arbitrator issued an award in terms of which she found that the dispute before her related to section 33A. The arbitrator further found that section 33A only empowers the MEIBC to enforce collective agreements which are concluded at the bargaining council. This is evident from the part of the award which reads:

‘A good understanding of section 33A(1) of the LRA is that the BC has the power to enforce collective agreements entered into/agreed at it. Section 33A of the LRA could not be applied in a collective agreement not least at the BC. This dispute (section 33A of the LRA), which the applicant says it is its dispute, should have been referred to the MEIBC Compliance Division is it is this division which is specifically creators to enforce its agreements.’ [1]

[14] The arbitrator then made a determination to what she referred to as “NUMSA’s concerns about the AMSA plant level agreement”. In this regard, the arbitrator stated that based on her own research she did on AMSA and Real Tree, she was “not convinced that they were one company pretending to be two different companies trying (both of them or one of them) to defeat the LRA.” The commissioner further states that:

‘…It is however here based on their website that they are separately and independently owned and out of the relationship is that of an outsource-client basis and this confirms Patel’s assertions that their relationship is based on an outsource contract.’

[15] The arbitrator further relied on her own research to make a finding that Real Tree is not a labour broker and that there is no evidence to that effect. Furthermore, the arbitrator found that section 200B did not apply in this instance. It is this ruling that is the subject of this application.

In this Court

[16] NUMSA challenged the ruling on basis that the arbitrator failed to consider the plain meaning of section 33A(1). Further that the arbitrator ignored that is was common cause that AMSA was a party to MEIBC. Furthermore, NUMSA submitted that the arbitrator dealt with the merits of the dispute whilst it was not before her.

[17] NUMSA submitted that should the Court find that the MEIBC had no jurisdiction to arbitrate the dispute in terms of section 33A, then it should find that it has jurisdiction in terms of section 24 of the LRA.

[18] In opposition, AMSA submits that to an extent that NUMSA is seeking to obtain, through means of an arbitration, an extension of the AMSA plant level collective agreement (concluded between AMSA and its employees), to employees employed by a different entity (Real Tree) who are covered by MEIBC Main Agreement, the MEIBC has no jurisdiction. To support its submission, AMSA makes the point that NUMSA has not applied for the setting aside of the MEIBC Main Collective Agreement which covers Real Tree employees, nor has it applied for the setting aside of the exclusion of AMSA from that agreement.

[19] AMSA further submits that its plant level agreement can only be extended in terms of section 23(1)(d) to non-parties and a sectoral level collective agreement can only be extended in terms of section 32 by the Minister. It is for this reason that AMSA argued that NUMSA’s dispute is not one capable of being arbitrated under the category, interpretation or application of the collective agreement, alternatively the monitoring and enforcement of the collective agreement.

Applicable law and analysis

[20] The test for review based on jurisdictional error is well established and has been stated in numerous cases of this Court and the Labour Appeal Court (LAC) as, that of correctness. In SA Rugby Players’ Association v SA Rugby (Pty) Ltd and Others; SA Rugby (Pty) Ltd v SARPU,[2] the LAC held as follows:

‘…The issue was simply whether, objectively speaking, the facts which would give the CCMA jurisdiction to entertain the dispute existed. If such facts did not exist, the CCMA had no jurisdiction irrespective of its finding to the contrary.’

[21] The applicant has to establish that the arbitrator’s decision was objectively wrong. In Fidelity Guards Holdings (Pty) Ltd v Epstein NO and Others,[3] the Court held as follows:

‘In my view where the power to be exercised is statutory, the answer to the question of what the jurisdictional fact(s) is (are) which must exist before such power can be exercised lies within the four corners of the statute providing for such power. Accordingly the provisions of such statute require to be considered carefully to determine what the necessary jurisdictional fact(s) is (are). In the light of this I consider it necessary to have regard to the provisions of the Act to determine what the necessary jurisdictional fact(s) is (are) which must exist in a case such as this one before it can be arbitrated or adjudicated in terms of the Act.’

[22] The jurisdictional matter which this review raises is whether the bargaining council has jurisdiction to adjudicate a dispute on the interpretation and enforcement of the plant level agreement that was entered into between AMSA and NUMSA in terms of section 33A. Section 33A makes provision for the bargaining council to monitor and enforce the collective agreements in terms of this section or concluded by the parties to it and it reads:

‘(1) Despite any other provision in this Act, a bargaining council may monitor and enforce compliance with its collective agreements in terms of this section or a collective agreement concluded by the parties to the council.

(2) For the purposes of this section, a collective agreement is deemed to include-

(a) any basic condition of employment which in terms of section 49(1) of the Basic Conditions of Employment Act constitutes a term of employment of any employee covered by the collective agreement; and

(b) the rules of any fund or scheme established by the bargaining council.

(3) A collective agreement in terms of this section may authorise a designated agent appointed in terms of section 33 to issue a compliance order requiring any person bound by that collective agreement to comply with the collective agreement within a specified period.

(4) (a) The council may refer any unresolved dispute concerning compliance with any provision of a collective agreement to arbitration by an arbitrator appointed by the council.

(b) If a party to an arbitration in terms of this section, that is not a party to the council, objects to the appointment of an arbitrator in terms of paragraph (a), the Commission, on request by the council, must appoint an arbitrator.

(c) If an arbitrator is appointed in terms of subparagraph (b) -

(i) the Council remains liable for the payment of the arbitrator's fee; and

(ii) the arbitration is not conducted under the auspices of the Commission.

(5) An arbitrator conducting an arbitration in terms of this section has the powers of a commissioner in terms of section 142, read with the changes required by the context.

(6) Section 138, read with the changes required by the context, applies to any arbitration conducted in terms of this section.

(7) An arbitrator acting in terms of this section may determine any dispute concerning the interpretation or application of a collective agreement.

(8) An arbitrator conducting an arbitration in terms of this section may make an appropriate award, including-

(a) ordering any person to pay any amount owing in terms of a collective agreement;

(b) imposing a fine for a failure to comply with a collective agreement in accordance with subsection (13);

(c) charging a party an arbitration fee;

(d) ordering a party to pay the costs of the arbitration;

(e) confirming, varying or setting aside a compliance order issued by a designated agent in accordance with subsection (4);

(f) any award contemplated in section 138(9).

(9) Interest on any amount that a person is obliged to pay in terms of a collective agreement accrues from the date on which the amount was due and payable at the rate prescribed in terms of section 1 of the Prescribed Rate of Interest Act, 1975 (Act No. 55 of 1975), unless the arbitration award provides otherwise.

(10) An award in an arbitration conducted in terms of this section is final and binding and may be enforced in terms of section 143.’

[23] It is common cause that although AMSA is a member of the MEIBC, it does not fall within the scope of the MEIBC Main Agreement. As such, it entered into the plant level agreement with NUMSA to regulate its workforce. It is further common cause that the plant level agreement was entered into between AMSA and NUMSA and not between Real Tree and NUMSA.

[24] As aforesaid, MEIBC Main Agreement governs the relationship between Real Tree and NUMSA. However, the parties are at loggerheads over the applicability and/or enforceability of the plant level agreement, that was entered into between NUMSA and AMSA, on members of NUMSA who are employed by Real Tree.

[25] The true nature of the dispute, even on NUMSA’s own version, relates to enforcement of the collective agreement in terms of section 33A. Thus, the arbitrator, at paragraphs 33 and 34 of her award, correctly deals with the procedure applicable to collective agreements subject to section 33A of the LRA. On paragraph 39 of her award, the arbitrator states the following:

‘This dispute (section 33A of the LRA), which the applicant says it is the true dispute should be referred to the MEIBC Compliance Division which is specifically created to enforce its collective agreement.’

[26] The arbitrator’s approach finds its support in the judgment of National Entitled Workers Union v Metal and Engineering Industries Bargaining Council Centre for Dispute Resolution and Others[4], where the Court stated as follows:

‘A reading of the dispute procedure as a whole indicates that there is a clear purpose to establishing discreet procedures for different

categories of disputes. It is not for parties bound by the procedure to decide, for whatever reasons (and none were forthcoming in the present instance) to frame a dispute so as to avoid one or the other. Just as mutton cannot (and should not) be dressed up as lamb, parties to disputes that are to be resolved in terms of particular procedures under the auspices of the MEIBC ought not to be permitted to dress up a dispute so as to gain access to a preferred procedure, or avoid a procedure that would ordinarily apply.’

[27] NUMSA contends that to an extent that AMSA, who in trying to defeat the purposes of the LRA, ‘outsourced’ its services to Real Tree, the plant level agreement is applicable between Real Tree and NUMSA. In fact, NUMSA argues that AMSA and Real Tree are one entity. Alternatively, NUMSA contends that, according to section 200A of the LRA, AMSA and Real Tree are the co-employers of the employees of Real Tree. In determining whether the arbitrator came to the correct decision, it has to be established whether Real Tree is either AMSA in disguise or a TES currently providing a temporary employment service.

[28] In Masoga and Another v Pick n Pay Retailers (Pty) Ltd and Others[5], the Labour Appeal Court (LAC) stated that:

‘[47] The effect of section 200B, while crucial, is merely to fix or extend the liability that would ordinarily be that of the employer, as per the traditional tests, to another or others, who carry on as an associated or related activity or business by or through an employer. They are regarded as employers for the purposes of liability. But it is only if they are in an associated or related business with the employer which is intended to defeat, or has the effect of defeating, the purposes of the LRA or any other employment law, either directly or indirectly, that they would be treated as the employer.

[48] The rationale for section 200B is set out in the memorandum of objects that accompanied the 2014 LRA Amendment Bill. The purpose of the section is said to be: “to prevent simulated arrangements or corporate structures that are intended to defeat the purposes of the LRA or any other employment law, and to provide for joint and several liability on the part of persons found to be employers under this section for any failures to comply with an employer’s obligations under the LRA or any employment law. This is particularly important in the context of subcontracting and outsourcing arrangements if these arrangements are subterfuges to disguise the identity of the true owner.’

[29] The LAC further stated that:

‘…The fact that AB carried on business in PnP’s premises and that PnP supplied AB with equipment and tools was entirely consistent with the workings of a genuine empowerment scheme. Further, a “close association” between the nurtured business (AB) and PnP is clearly not sinister when viewed in the proper context, and as a necessary attribute of an empowerment scheme.’[6]

[30] In AMCU and Others v Chamber of Mines of SA and Others[7], the Constitutional Court found that a workplace is not based on location but operations. In light of the above authorities, a close working relationship and the fact that a company might be owned or are working closely together, or at the same workplace, does not in itself mean that the relationship is of a sinister nature and therefore an attempt at circumventing the provisions of the LRA.

[31] The arbitrator approached this matter correctly. The first enquiry was whether AMSA and Real Tree were in fact one employer and therefore bound to the collective agreement. However, to an extent that there was no sufficient evidence led to assist the arbitrator to arrive at the conclusion, she ought to have directed the parties to come to her assistance. Although, in conducting her own research, the arbitrator clearly exceeded her powers, nothing in the evidence before her pointed to a sinister arrangement between AMSA and Real Tree with an intention to circumvent the LRA. More evidence was needed besides the fact that AMSA was connected to Real Tree through VESCO.

[32] There is merit to AMSAs submission that its plant level agreement can only be extended in terms of section 23(1)(d) to non-parties and that a sectoral level collective

agreement can only be extended in terms of section 32 by the Minister It is trite law that parties to a collective agreement are bound thereby.[8] Section 23 of the LRA reads:

‘(1) A collective agreement binds –

(a) the parties to the agreement;

(b) each party to the collective agreement and the members of every other party to the collective agreement, in so far as the provisions are applicable between them;

(c) the members of a registered trade union and the employers are members of a registered employers’ organisation that are party the collective agreement if the collective agreement regulates –

(i) terms and conditions of employment; or

(ii) the conduct of the employers in relation to their employees or conduct of the employees in relation to their employers;

(d) employees who are not members of the registered trade union or trade unions party to the agreement if –

(i) the employees are identified in the agreement;

(ii) the agreement expressly binds the employees; and

(iii) that trade union or those trade unions have as their members the majority of employees employed by the employer in the workplace.’

[33] In AMCU v Chamber of Mines acting in its own name and obo Harmony Gold Mining[9] the Court found that section 23(1)(d) entails the mechanism for the extension of collective agreements that are not concluded in the bargaining council.

[34] In addition, section 32 only applies to collective agreements that are “concluded in the bargaining council” and may be extended to non-parties that are within its “registered scope”. Neither of these pre-requisites are present herein. Since the agreement in question was not concluded in the bargaining council, AMSA was correct in stating that it could not be extended in terms of section 32 of the LRA.

[35] Thus, collective agreement can only be extended within the workplace and within the same employer or with members of an employer’s organization with the union. To an extent that Real Tree and AMSA are two different employers, it is only logical to conclude there is no legal basis for an agreement at one entity with its own workforce cannot be extended to another employer with another workforce.

[36] In light of the above, the arbitrator, on the objective facts, came to the correct decision when she concluded that AMSA and Real Tree are not the co-employers of the workforce. Therefore, there is no agreement between Real Tree and NUMSA that requires interpretation and enforcement. In the end, the arbitrator was correct in finding that section 33A applies, the MEIBC will not have jurisdiction to arbitrate the dispute as the plant level agreement does not fall within the scope of the MEIBC’s jurisdiction and that NUMSA must refer its dispute to MEIBC Compliance Division. As such, the review application falls to be dismissed.

Costs

[37] I have had regard to the issue of costs and I find that taking into account the requirements of law and equity, there should be no order as to costs.

[38] Accordingly, the following order is made:

Order

1. The application is dismissed.

2. There is no order as to costs.

D Mahosi

Judge of the Labour Court of South Africa

Appearances

For the applicant: Mr R. Daniels, of Cheadle Thompson and Haysom Attorneys

For the respondent: Advocate F. A. Boda

Instructed by: Cliffe Dekker Hofmeyr Incorporated attorneys

[1] Arbitration award, para 39

[2] [2008] ZALAC 3; [2008] 9 BLLR 845 (LAC) at para 41.

[3] [2000] 12 BLLR 1389 (LAC) at para 7.

[4] (JR2814/04) [2007] ZALC 114 (6 December 2007)

[5] (2019) 40 ILJ 2707 (LAC) at para 47 and 48.

[6] Id fn (3) at para 53

[7] (CCT87/16) [2017] ZACC 3 (21 February 2017)

[8] See section 31 of the LRA.

[9] [2016] ZALAC 11.