National Union of Mine Workers obo Mabilikoe v Commission for Conciliation, Mediation and Arbitration and Others (JR 2169/19) [2021] ZALCJHB 464 (15 February 2021)

THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

Reportable

Case no: JR 2169/19

In the matter between:

NATIONAL UNION OF MINEWORKERS

OBO SEMAPO MABILIKOE

Applicant

and

THE CCMA

First Respondent

HAWYES M N.O. Second Respondent

SIBANYE GOLD LTD

T/A SIBANYE STILL WATER. Third Respondent

Heard: 09 February 2021

Delivered: 15 February 2021 (This judgment was handed down electronically by emailing a copy to the parties. The 15th February 2021 is deemed to be the date of delivery of this judgment).

Summary: Due to Covid-19 lockdown, this application was determined by hearing oral submissions over zoom application and the applicant agreed to the arrangement. Application to review a jurisdictional ruling – The commissioner was correct that the Commission lacked jurisdiction. Held: (1) The application is dismissed. (2) There is no order as to costs.

JUDGMENT

MOSHOANA, J

Introduction

[1] The applicant seeks to review and set aside a jurisdictional ruling. The commissioner found that the Commission for Conciliation, Mediation and Arbitration (CCMA) lacked jurisdiction to determine a dispute where Sempao Mabilikoe (Mabilikoe) was seeking that the employer must accept him for a Voluntary Severance Package (VSP). The application stood unopposed.

Background facts

[2] This matter fulcrums on a very crisp and narrow question of law. Thus, it is unnecessary to, in this judgment, punctiliously provide a rendition of the entire facts of the dispute. Suffice to mention that the respondent underwent a retrenchment exercise in 2017. One of the measures adopted to minimise the risk of forced dismissal was to make an offer for taking a VSP for a certain category of employees. Mabilikoe applied but was not accepted. Aggrieved thereby, the applicant referred a dispute alleging an unfair labour practice in relation to the provisions of benefits. On the day of the arbitration, the commissioner mero motu raised the question whether the CCMA had jurisdiction over the dispute, since the request for VSP may not be a benefit within the

contemplation of the Labour Relations Act[1] (LRA). After hearing submissions from the parties, the commissioner issued a ruling declining jurisdiction over the matter. Aggrieved

thereby, Mabilikoe, assisted by his trade union, launched the present application.

The applicant’s contentions

[3] Central to this matter is the question whether a VSP amounts to a benefit within the contemplation of section 186 (2) of the LRA. In coming to the conclusion that the CCMA lacked jurisdiction, the commissioner

placed reliance on the decision of the Labour Appeal Court (LAC) in Apollo Tyres SA (Pty) Ltd v CCMA and others[2]. He concluded that a VSP is not an existing advantage or privilege.

[4] In this Court, the applicant submitted written heads of argument. The applicant submitted that when Mabilikoe applied for a VSP, he was not attempting to create a new right but was applying in terms of an existing policy under the discretion of the respondent. A further submission was that the commissioner’s interpretation of the phrase “existing rights” as used in Apollo, was contrived and convoluted. During oral submissions, Mr Diamond appearing for the applicant submitted that the right to the benefit

emanated from an agreement struck during the consultation process, thus it existed at the time Mabilikoe applied for the VSP.

Evaluation

[5] This case presents an opportunity for me to reverberate my views expressed as early as 2004, in an article[3] wherein I stated the following:

“One of the thorniest issues which impacts on the issue of jurisdiction of the Commission for Conciliation, Mediation and Arbitration (CCMA), when dealing with unfair labour practice disputes, is the issue of benefits.”

[6] I continued and asked the following question:

“Is an acting allowance, claim for a higher salary, separation package or remuneration a benefit? Strictly speaking all would amount to benefits in that they fit the ordinary meaning of the term.”

[7] This Court knew little then that the issue will remain a thorn for seventeen years on. In the article I made the following proposal:

“The issue in my opinion is still vexed. The question remains whether a benefit of a monetary nature is a remuneration or benefit in terms of section 186 (2) (a). The legislature must define a benefit, as remuneration is already defined.”

[8] I take a view that Apollo did not squarely address the issue of jurisdiction of the CCMA. At the CCMA, Apollo Tyres raised the issue by stating that the early retirement package was not a benefit in respect of which the CCMA has jurisdiction. The CCMA commissioner dismissed the point and found that the CCMA had jurisdiction and predicated its conclusion on the decision of Protekon (Pty) Ltd v CCMA and others[4] and Department of Justice v CCMA and others[5]. Having had regard to the facts of these cases relied on, the issue of jurisdiction never arose. What arose in my view, was whether what the employees concerned claimed was a “benefit” or not, which in my view is more a matter of substance than jurisdictional power. Technically the issue whether one is dealing with a benefit or not may also be a jurisdictional fact.

[9] Protekon involved travel concessions regulated by a policy. The Department of Justice matter dealt with the issue of promotional right. In Apollo, the only issue considered was whether the early retirement scheme initiated by the company and for which Hoosen applied and was refused entry constituted a benefit as contemplated in section 186 (2) of the LRA. The LAC simply criticized the Labour Court for finding that the decision that the CCMA had jurisdiction fell within the band of reasonableness. It corrected the test to be whether the ruling was wrong or right as opposed to it being reasonable. Therefore, in my view Apollo is not an authority on the vexed question of jurisdiction. All it did was to clarify what the term benefit means. In that regard, it reached the following conclusion:

“[50] …In my judgment “benefit” in section 186 (2) of the Act means existing advantage or privileges to which an employee is entitled as a right or granted in terms of a policy or practice subject to the employer’s discretion.”

[10] Regard being had to the above the following are the elements of a benefit as used in section 186 (2). Those are: (a) extant advantage or privilege; (b) entitled to it (advantage and privilege) as a right, or granted in terms of a policy in the discretion of an employer. The right or entitlement must emanate from a contract or legislation, alternatively an advantage or privilege arising from a policy. Thus the sources of the benefit are; (a) a contract; (b) legislation or (c) discretionary policy. All these are issues of substance as opposed to jurisdiction per se.

[11] Having said that, the applicant’s reliance on Apollo is clearly misguided. A submission that the facts of Apollo are starkly similar to the facts of this case is without weight. In Apollo, an employer had in place a policy which existed for years dealing with the retirement of employees. In casu prior to the economic quagmire, there was no policy in place entitling employees to a VSP. The idea of offering certain employees

a VSP is a product of a consultation process. I shall later in this judgment deal with the submission by Mr Diamond that the benefit

involved herein is sourced from a contract concluded in the consultation process.

How is jurisdiction determined?

[12] By definition jurisdiction means the official power to make a legal decision or judgment. In a Court of law, jurisdiction is determined on the basis of the pleadings[6]. In other words a Court looks at the pleadings to determine jurisdiction. Recently the Constitutional Court in Baloyi v Public Protector and Others[7] had the following to say, in addition to the trite principle of determining jurisdiction on the basis of the pleadings:

“[42] Finally, it is important not to conflate the question whether a court has jurisdiction to hear a pleaded cause of action, with the prospects of success of that cause of action. When assessing whether its jurisdiction is engaged, a court might be of the view that a litigant should have pursued a different cause of action, or that she would have a better chance of success had she done so. However, these views are irrelevant to the court’s competence to hear the matter.”

[13] A different situation arises when one considers whether a tribunal has jurisdiction over a matter. At the CCMA there are no pleadings. At a general level, section 191 (5) (a) (iv) of the LRA empowers the CCMA commissioner to arbitrate the dispute that concerns an unfair labour practice. At a superficial level, once an employee alleges an unfair labour practice, the CCMA or bargaining council is empowered to arbitrate. The question whether a dismissal exists as a fact implicates the jurisdiction of the CCMA or Bargaining Council. Likewise, the question whether an unfair labour practice exists as a fact implicates jurisdiction. In Afgri Operations Ltd v MacGregor NO and others[8], this Court had the following to say:

“[9] …At a general level, the third respondent is empowered by s135 of the Act to resolve disputes through conciliation. It is apparent from the jurisdictional ruling that the first respondent adopted the general approach. However, jurisdiction sits on two pillars. Firstly, there must be jurisdictional facts. Secondly, the power itself. In Kimberly Junior School & another v Head, Northern Cape Education Department & others[9], the SCA said the following: ‘Under common law, necessary preconditions or jurisdictional facts that must exist before an

administrative power can be exercised are referred to as “jurisdictional facts”. In the absence of such preconditions or jurisdictional facts, so it is said the administrative authority effectively has no powers to act at all.’…

[11] The LAC in SACCAWU v Speciality Stores Ltd[10]… It said: ‘Generally speaking, a public authority is obliged to determine the scope of its own powers before it can act …’In determining whether the preconditions for the exercise of a power existed, it is necessary to enquire whether, objectively, a certain state of affairs existed…’

[14] The above suggests that the commissioner was well empowered to determine whether an unfair labour practice as defined does exist or not. Somehow, this question is tied to the merits of the dispute. Section 186 (2) defines an unfair labour practice to mean any unfair act or omission that arises between an employer and an employee involving – unfair conduct by the employer relating to the provisions of benefits to an employee.

[15] For an unfair labour practice to exist, for the purposes of this matter, the following must be present: (a) employer and employee relationship; (b) the provision of benefits. In other words if an employer and employee relationship never existed then there is no jurisdiction. Equally, if what is involved is not a benefit, there is no jurisdiction. The issues relating to an unfair act or omission and unfair conduct by the employer goes to the merits or substance of the dispute. Generally they may require evidence to prove them. The issue whether an employer and employee relationship existed is a jurisdictional fact that may require evidence. The issue of benefits only requires a definition as opposed to evidence. Unfortunately, the legislature did not come to our aid in this regard. That then became the duty of the Courts to attempt a definition.

[16] This Court has been struggling with that arduous task since 1997. Finally or as matters stand now, Apollo provided a definition. Therefore, if the benefit does not fit the definition in Apollo, then there is no jurisdiction. Just to recap, a benefit “is an existing advantage or privileges to which an employee is entitled as a right or granted in terms of a policy or practice subject to the employer’s discretion.”

What is a VSP?

[17] For the purposes of this judgment, it is apposite to define what a VSP is. It is nothing but a term of art. In reality, it is a mutual termination of employment. It is a financial incentive that is offered to an employee in a hope that he or she will terminate employment voluntarily. In the main it is offered at the time that will benefit the company by reducing the workforce and costs of salaries. Often times, VSP is loosely referred to as a “golden handshake”. It is in fact an alternative to a forced dismissal for operational requirements. Regard being had to the meaning of a VSP, it is fundamentally wrong to equate it to a benefit. Just because it has a financial incentive, that alone does not make it a benefit within the contemplation of section 186 (2) of

the LRA. It happens for that moment of distress and for the benefit of the company and not necessarily an employee.

[18] Generally, it is not to the benefit of an employee to be culled and to lose job security. Dismissal for operational requirements is dubbed a “no fault dismissal”. I fail to see how an employee may consider a no fault termination to be a benefit. The financial incentive attached to such terminations is not a benefit per se but a dangling carrot. In another language, the financial incentive is called a “sweetener”. Generally money as a commodity

is seen as a benefit, however the one involved herein is one that lures a loss of job security, something which is sacrosanct to

employees. An employer makes an offer to buy job security for its own comfort and not for the comfort of an employee.

[19] By way of an example, an employee aged 55 years hopes to remain in employment until age 60. In monetary terms such may translate to a five year salary inclusive of possible increment. In order to avoid paying a salary of five years, an employer may “dangle a carrot” of one year salary lump sum payment. If an employee catches the bait, an employer would have saved itself payment of four years’ salary. That being the case, how does that become a benefit to an employee? In my view it is not. It is not even a tit for tat.

[20] To buttress the point, a company that is not in financial distress cannot randomly offer employees VSPs. It does so only in an instance when it faces economical, structural changes or similar needs. When VSP is contrasted with a benefit, within the contemplation of the LRA, a benefit exists at all times. More often than not it is part of the terms and conditions of employment. A VSP does not arise from a policy. At times an employer and an employee may conclude a collective agreement and term it a “retrenchment policy or procedure”. In it, parties involved may agree that before resorting to a forced retrenchment an employer must consider offering employees VSPs. Such an agreement is in keeping with section 189 (3) (b)[11] of the LRA read with section 189 (2) (ii)[12].

[21] Therefore, the conclusion this Court reaches is that a VSP is not a “benefit” within the meaning of section 186 (2) of the LRA. The term benefit has as its dictionary meaning, something that promotes or enhances well-being; an advantage. In line with the Apollo judgment, the advantage must be something an employee is entitled to as a right. Where an advantage is to be offered through an exercise of discretion, such is not one contemplated in the section.

[22] It is indeed so that where an advantage is firstly guaranteed in a policy but only granted in the exercise of the discretion of an employer, where an employer exercises the discretion unfairly, such may amount to an unfair labour practice[13]. What sets that grammatical advantage apart from the present one is that the one is guaranteed in a policy but given at an employer’s

discretion and the other is not guaranteed and is offered at the discretion of an employer. VSP is the latter and not the former.

[23] Mr Diamond argued that in Apollo what was involved is akin to a VSP. It was an early retirement benefits offered by the CEO with a view to reduce salary costs. It may well be so, but what distinguishes Apollo from the present facts is that in Apollo, the retirement scheme was in place long before the CEO offered it to certain employees in order to reduce costs. Secondly, the benefit emanated from the policy or retirement scheme. In casu, the offer for VSP did not arise from an existing policy and or contract. VSP only emerged at the time of distress. Granted, in

Apollo, the CEO was aiming to reduce costs but he made use of an existing scheme to achieve the aim.

[24] Like any other contract, a VSP is an offer and once accepted an agreement is born. This is markedly different from where an advantage is promised in a policy or practice but an employer retains discretion as to who and when to give and not to make an offer to. The discretion to be exercised by an employer is limited to the giving of an advantage guaranteed in a practice or policy. When it comes to VSP, the discretion is not a limited one. It is one of creating a new right by way of an offer. In contract law, a person is said to make an “offer” when he or she puts forward a proposal with the intention that by its mere acceptance, without more, a contract should be formed[14]. Our courts employed the term “firm” offer en route to create a contractual right[15].

[25] On the facts of this case, the offer to pay VSP to employees in category 4 to 8 arose in a consultation process and was used as a measure to avoid forced retrenchments. Clearly, as an offspring of an agreement struck in a retrenchment consultation process, it had to take a form of an offer to affected employees within the contemplation of contract law.

Does the “benefit” (VSP) arise from a contract?

[26] Mr Diamond submitted, forcefully so, that the commissioner should have found that the VSP as a benefit was an existing advantage for Mabilikoe sourced from an existing contract. At the time Mabilikoe applied for VSP, there was already in place a contract between the trade union and the employer, it having been struck during a section 189 consultation process, so went the submission. I disagree with this submission. When Apollo referred to ex contractu it was referring to an agreement that must have been in existence before one claims the benefit. For an example an employment contract

may provide that an employee is entitled to a travelling allowance. If an employer fails to provide an employee with a travelling

allowance, such may amount to an unfair labour practice or a breach of contract.

[27] In terms of section 189 (2) a legal obligation exists on consulting parties, who at that time act as a unit, to attempt to reach consensus – general agreement or accord) on appropriate measures to (i) avoid the dismissals; (ii) minimise the number of dismissals; (iii) change the timing of the dismissals; and (iv) mitigate the adverse effects of the dismissal. When an agreement is reached under such circumstances its purpose is statutory, which is, to meet any of the appropriate measures.

[28] There is no dispute in this matter that the agreement to offer VSPs was reached as an appropriate measure. Mr Diamond informed the Court that the applicant had no qualms with the rendition of the facts by the commissioner. In his award, the commissioner recorded the following facts:

‘[8] In the consultations which ensued between the unions and the respondent the parties reached consensus on measures to avoid forced retrenchments. One of these measures was the respondent agreeing to pay VSP to employees in affected designations in the category 4 to 8 employees, Miners, Artisans and Official recognition units across its gold operations and associated services in an attempt to avoid forced retrenchments. This was subject to the respondent’s discretion…’

[29] On the facts recorded above, the company agreed to pay a certain category of employees and not all employees. So any employee not covered by the above stated agreement cannot rely on that agreement to establish a VSP agreement. In as much as the issue may belong to the substantial merits, there is no indication that Mabilikoe was covered by that agreement. In any event, in order for Mabilikoe to derive an entitlement to a payment of whatever “sweetener” the company would put, he must conclude an agreement with the company, which ordinarily takes the following shape, employment

terminates and in lieu thereof X amount will be paid. Such an agreement cannot be the ex contractu as referred to in Apollo. By the time the “benefit” is received or due to be received an employer and employee relationship – one of the jurisdictional facts – would have ended. Thus, the right to payment of VSP is created at the time of termination. Therefore, it cannot be said that the advantage or privilege existed.

[30] I agree with the commissioner when he said:

‘[9] The court [LAC in Apollo] was clear that a benefit must be pre-existing having been created by an earlier discretion of the employer. A benefit must arise during the existence of the employment relationship and prior to the termination of the employment relationship. This is a precursor for any alleged unfair labour practice. A benefit cannot arise and be extinguished in the very act of its creation. A VSP puts an end to the employment relationship by the very fact of its creation.’

[31] To add, the payment of the VSP – alleged to be a benefit – is not paid discretionarily but it is paid on condition an employee terminates employment. In other words if employment does not terminate, there is no payment of VSP. Discretion is not even involved. The conclusion this Court reaches is that the commissioner was spot on when he concluded that the CCMA lacked jurisdiction. The jurisdiction of the CCMA is limited to disputes over benefits within the contemplation of the LRA – an existing advantage or privilege to which an employee is entitled as a right guaranteed in a policy or practice. Axiomatically, the application to review the decision must fail.

[32] In the results the following order is made:

Order

1. The application is dismissed.

2. There is no order as to costs.

_______________________

G. N. Moshoana

Judge of the Labour Court of South Africa

Appearances:

For the Applicant: Advocate Ac Diamond.

Instructed by:

Mohale Incorporated, Pretoria.

[1] No. 66 of 1995, as amended.

[2] [2013] 5 BLLR 434 (LAC).

[3] G Moshoana “The vexed concept of benefits” De Rebus Vol 2004, No. 438.

[4] [2005] 7 BLLR 703 (LC).

[5] [2004] 4 BLLR 297 (LAC).

[6] Chirwa v Transnet Ltd and others 2008 (4) SA 367 (CC).

[7] 2021 (2) BCLR 101 (CC).

[8] (2013) 34 ILJ 2847 (LC). This judgment was quoted with apparent approval by the Constitutional Court in NUMSA v Lufil Packaging (Isithebe) and others (2020) 41 ILJ 1846 (CC).

[9] 2010 (1) SA 217 (SCA) para 11.

[10] (1998) 19 ILJ 557 (LAC).

[11] The alternatives that the employer considered before proposing the dismissals…

[12] To minimise the number of dismissals.

[13] See: Skinner and others v Nampak Products Ltd and others (JS197/16) [2019] ZALCJHB 189 (20 June 2019) confirmed on appeal (JA95/19) [2020] ZALAC 43 (24 November 2020).

[14] Christie’s “The Law of contract in South Africa” 6th edition.

[15] Wasmuth v Jacobs 1987 3 SA 629 (SWA) where Levy J said: “It is fundamental to the nature of any offer that it should be certain and definite in its terms. It must be firm, that is, made with the intention that when accepted it will bind the offeror.”