South African Home Textile Manufacturers Employers Organisation v South Africa Clothing And Textile Workers Union and Others (D800/21) [2024] ZALCD 28 (16 August 2024)

IN THE LABOUR COURT OF SOUTH AFRICA, DURBAN

Not Reportable

Case No: D800/21

In the matter between:

SA HOME TEXTILE MANUFACTURER’S EMPLOYERS’ ORGANISATION (HOMETEX) Applicant and SA CLOTHING AND TEXTILE WORKERS UNION (SACTWU) First Respondent LISA WILLIAMS DE BEER N.O. Second Respondent THE NATIONAL TEXTILE BARGAINING COUNCIL Third Respondent

Heard: 2 July 2024

Delivered: 16 August 2024

JUDGMENT

NAIDOO, AJ

Introduction and background

[1] This is an application to review and set aside an arbitration issued by the Second Respondent under case number TCR 01432 dated 23 November 2021.

[2] The application is brought in terms of section 145 of the Labour Relations Act[1] (LRA), read with section 51(8), alternatively section 33(1) of the Arbitration Act[2].

[3] The arbitration proceedings concerned the interpretation and application of a collective agreement on wages and conditions of employment concluded by the parties at the National Textile Bargaining Council.

The nature of the arbitration proceedings and the award

[4] The Applicant submitted that it is not clear whether the arbitration proceedings were conducted under the auspices of the Third Respondent or whether the process was conducted as a private arbitration. The Applicant submitted that nothing material or significant turns on this issue. No issue was taken on this point by the First Respondent.

[5] It is common cause that a dispute was declared by the First Respondent to the Third Respondent over the interpretation and application of the 2021/2022. It is furthermore common cause that the parties agreed to the process being conducted as an arbitration by an arbitrator appointed by Tokiso Dispute Settlement (Pty) Ltd. An arbitration award was issued by the appointed arbitrator reflecting that the process was conducted under the auspices of the Third Respondent. The arbitration award is thus subject to the review provisions of section 145 read with section 51(8) of the LRA.

[6] The Second Respondent issued the following award:

‘6.1 The correct interpretation of the 2021/2022 wage agreement increase for grade 1 employees is that they are to be awarded a 5.9% increase on the wage that they were earning at the time that the wage agreement was concluded.

6.2 Where grade 1 employees received an NMWA increase (to R21.69 per hour), the 5.9% increase applies to this adjusted hourly rate.

6.3 Any employees who have not been paid the increase correctly as per clause 6.2 above should be back paid the short fall for the period July to November 2021, within 30 days of receipt of this award.’[3]

[7] It is common cause that the dispute arises from the interpretation and application of a “National Textile Bargaining Council memorandum of agreement on wages and conditions of employment for 2021/2022”.[4]

[8] The Applicant’s position at the arbitration proceedings was that the collective agreement provided for a 5.9% increase on the then current industry minimum rates as set out in the previous collective agreement[5]. The collective agreement is distinct from anything to do with the National Minimum Wage Act[6].

[9] On the other hand, the First Respondent’s position at arbitration was that the rand value of the increase from the old industry minimum wage to the new industry minimum wage of R1.23 had to be implemented on top of Grade 1 employee’s existing wage.

[10] As the national minimum wage had increased prior to the date of the implementation of the collective agreement, this meant, according to the First Respondent, that grade 1 employees earning the minimum wage had to be paid an additional R1.23 above the increases implemented to comply with the then, national minimum wage rate.

[11] The Applicant’s response at arbitration was that they must pay the national minimum wage as prescribed, but since the industry minimum wage is marginally above the national minimum rate, they must pay the industry minimum rate and not increase the amount by R1.23 above the national minimum wage rate as contended for by the First Respondent.[7]

Grounds of review

[12] The grounds of review are the following:

12.1 The Second Respondent misconceived the nature of the enquiry that she had to undertake. The Applicant submitted that:

12.1.1 The Second Respondent understood her task to decide whether the 5.9% increase set out in the collective agreement applied to the current industry minimum rate or the national minimum wage rate[8]. This was not the dispute before her at all. What she was required to decide was whether the R1.23 amount (being the rand value increase to the current industry minimum wage, applying the 5.9% to that industry minimum rate) had to be applied to existing wages and in particular to the existing wages of employees earning the national minimum wage rate that had just been increased and whether this was the correct interpretation of the collective agreement.

12.1.2 The dispute that was referred was the alleged failure to implement the wage agreement by four employers who are members of the Applicant. The Second Respondent in her award saw her function as determining “the correct interpretation” of the agreement as well as resolving “in particular, a dispute about the interpretation of the grade 1 wage increase”. This went beyond the scope of the dispute which was referred and a further indication of misconceiving the nature of the enquiry before her.

[13] The interpretation of the collective agreement as set out below is an interpretation that no reasonable decision maker could arrive at based on the material before her:

6.3 Any employees who have not been paid the increase correctly as per clause 6.2 above should be back paid the short fall for the period July to November 2021, within 30 days of receipt of this award.’

[14] The Second Respondent based her award on factual findings that she stated as common cause which were not common cause thereby committing a gross irregularity in the proceedings.

Analysis

[15] The First Respondent submitted that it contended at the arbitration, and still does, that all grade 1 employee hourly wage rates, should have been increased by R1.23 per hour and that the increase must be applied or added to what workers were earning on 30 June 2021. The crux of the review application is whether the increase of R1.23 should be applied to what workers earned at the time (30 June 2021) or to what they earned before the implementation of the new national minimum wage.

[16] The First Respondent submitted that the increase should be applied to what workers earned at the time and should not include an increase workers received through legislation.

[17] It is common cause that some employers implemented increases in this way whilst others did not. Those employers that did not implement the increase in this way contended that because they had increased grade 1 workers’ hourly wages by R0.93 per hour on the industry minimum wage of R20.76 per hour to the national minimum wage of R21.69 per hour from 1 March 2021, they should only have to increase grade 1 employees hourly wage by R0.30 to the new industry minimum wage of R21.99 per hour.

[18] The Applicant contends that the First Respondent’s position amounts to “double dipping” because, according to them, employees earning the industry minimum wage should have already received an increase of R0.93 per hour from 1 March 2021 and could not now obtain an increase of R1.23 per hour as that would amount to a total increase of R2.16 or 10.4%.

[19] I am required to determine whether the arbitration award should be reviewed and set aside based on the grounds of review summarised hereinabove.

[20] It is trite that the test review application set out by the Constitutional Court in Sidumo and Another v Rustenburg Platinum Mines Ltd and Others[9] is to test whether “the decision reached by the Commissioner is one that a reasonable decision-maker could reach?”

[21] In Heroldt vs Nedbank Ltd (Congress of South African Trade Unions as amicus curiae), the court stated the following:

‘A defect in the conduct of the proceedings to amount to a gross irregularity as contemplated by section 145(2)(a)(ii), the Arbitrator must have misconceived the nature of the inquiry or arrived at an unreasonable result. A result will only be unreasonable if it is one that a reasonable arbitrator could not reach on all the material that was before the Arbitrator.’[10]

[22] It is common cause that when the collective agreement was concluded on 27 July 2021, the parties were aware that the historical industry minimum hourly wage being increased by 5.9% was lower than the then current national minimum wage and was de facto being paid to some grade 1 employees after the increase in the national minimum wage in March 2021.

[23] Clause 2.1 of the collective agreement provides for a 5.9% increase in the current industry minimum hourly rates of pay and it quantifies the rand value of the increase applicable to grade 1 employees as R1.23 per hour.

[24] I have considered the material placed before the Second Respondent. It is express that the agreement only deals with the industry minimum hourly rate which increased from R1.23 per hour (to R21.99 per hour). There is a clear distinction drawn between the industry minimum hourly rate and the prescribed national minimum wage.

[25] The collective agreement itself does not deal with its application in respect of employees in grade 1 who were earning more than the industry minimum on 1 July 2021, at all.

[26] Based on the above, it is evident that the Second Respondent rendered an award based on considerations that were not common cause or established on the material before her.

[27] The following reflects a material misdirection by the Second Respondent in grasping the essence of the dispute that she was tasked to determine:

‘I’m clear then, Mr Simmons. They applied for 5.9% to whatever they were already paying regardless of what the industry minimum was.’

[28] That was not the dispute that the second respondent was required to determine.

[29] It is plain from the collective agreement that it only dealt with wage increases to the industry minimum wage rates that applied at the time. It was common cause that the collective agreement was negotiated and concluded after the implementation of national minimum wage increases. Furthermore, clause 4 of the collective agreement provides the following:

‘National minimum wage

When any of the prescribed wage rates are less than the national minimum wage, the NMW shall be applied. The employer must ensure that they are not in contravention of the NMW.’

[30] To interpret the collective agreement in the manner that the Second Respondent did, based on the material before her, is not an interpretation that a reasonable decision-maker could reach.

[31] The First Respondent submitted that if the court is inclined to correct the award, it should do so by substituting the Arbitrator’s award with the following:

‘6.1 The correct interpretation of the 2021/2022 wage agreement increase for grade 1 employees is that they are to be awarded an increase of R1.23 per hour on the wage that they were earning at the time the wage agreement was concluded.

6.2 Where grade 1 employees received the NMWA increase (to R21.69 per hour) the R1.23 increase applies to this adjusted hourly rate.

6.3 Any employees who have not been paid their increase correctly as per clause 6.2 above should be back paid the shortfall for the period July to November 2021 within 30 days of receipt of this award.’

[32] The First Respondent submitted that the relief sought above is not an admission that the arbitration award of the Commissioner is not one that a reasonable Commissioner would arrive at, but merely uses a rand value of R1.23 instead of 5.9% for clarity’s sake.

[33] In my view the above is a partial concession that the Second Respondent misconceived the nature of the enquiry and reached an interpretation that no reasonable decision maker could have reached. By making this submission the First Respondent shifts from referring to a percentage increase to rather a rand value amount. The First Respondent however does not deal with the reality of the position that if its interpretation is to apply, then the industry minimum wage rate would not be R21.99 as agreed in the collective agreement but rather R22.92 which effectively is a 10.4% increase to the previous industry minimum wage rate.

[34] Based on the terms of the collective agreement, I concur with the Applicant’s submissions that there is no room for such an interpretation that the R1.23 increase is to apply to wages that were being earned at the time. The collective agreement expressly deals only with increases to industry minimum wages, the specific rand value applicable to grade 1 industry minimum wages is R1.23, that is, an increase to R21.99 per hour. The increase would be an “all inclusive” of any increase implemented prior to 30 June to comply with the provisions of the Minimum Wage Act.

[35] The First Respondent did not contend for a 5.9% increase on the national minimum wage for grade 1 employees, but rather for all grade 1 employees to be paid an increase of the rand amount in the agreement applicable to them, i.e. R1.23 per hour, on top of whatever they were earning as grade 1 employees immediately prior to 1 July 2021.

[36] The error in the Second Respondent’s understanding of the First Respondent’s case (i.e. that the Rand value rather than the percentage was sought) is apparent from the third paragraph under the heading “Preliminary Issues” on page 2 of the award where she states the union position to be that a 5.9% increase should be applied to the March rate, but in the same sentence states that this would bring the wage rate to R22.92. The arithmetic reveals that the Second Respondent misunderstood what was being advanced.

[37] The First Respondent’s position is set out clearly under the heading in the award, “The Union’s Reply” in the arbitration award where it is stated to be that the rand increase in the amount of the minimum applicable grade 1 employees, namely R1.23 per hour should be added to the national minimum wage the grade 1 employees were earning prior to 1 July 2021, namely that their increase should not be to the agreed industry minimum wage of R21.99, but rather to R22.92.

[38] The First Respondent did not contend for a 5.9% increase on R21.76 as the award states under the heading, “The Union’s Case” (which would be R22.97 per hour – a figure that was not used by anyone at the hearing). Mr Simons expressly submitted that the 5.9% was an increase to the current industry minimum and the rand component was based on the industry minimum. The Second Respondent

then said to Mr Simons for the First Respondent when he was explaining that companies who were paying above the national minimum

wage had increased their grade 1 employees’ wages by R1.23 (which arithmetically has to be less than 5.9% for that employee)

that the employers applied 5.9% to whatever they were already paying regardless of what the industry minimum was (an incorrect restatement of what Mr Simons had said to her) and he responded in the affirmative. He went on to expand however that what he was saying was that they agreed on 5.9% as set out in the agreement, i.e. to industry minimum wage amount. From Mr Tshabalala’s submissions clarified that the First Respondent was seeking a R1.23 per hour increase and not 5.9% on whatever the employee was earning.

[39] This error had a direct impact on the result of the award in which the Second Respondent found that there was an agreement to increase the wage by 5.9% on the national minimum wage that was being paid. That was not what was sought. There was no evidence to support such a finding, and the result is one that no reasonable decision maker could have reached.

[40] Furthermore, the collective agreement itself does not deal with its application in respect of employees in grade 1 who were earning more than the industry minimum on 1 July 2021. To interpret the agreement to apply to that class of employees and to entitle them to more than the agreed industry minimum on a reading of the agreement is an interpretation that no reasonable decision maker could have reached based on the material before her.

[41] Accordingly, the arbitration award falls to be reviewed and set aside.

[42] The Applicant did not pursue an order for costs; accordingly, it was not necessary to determine whether any costs order should be made. In any event, based on the ongoing relationship between the parties it would not have been appropriate to grant any cost order.

[43] Accordingly, the following order is made:

Order

1. The arbitration award issued by the Second Respondent dated 23 November 2021 is reviewed and set aside.

2. No order is made as to costs.

M Naidoo

Acting Judge of the Labour Court of South Africa

Appearances

Applicant: Advocate Morris Pillemer SC Instructed by: Shepstone & Wylie First Respondent: Mr David Mbuyisa of Haffegee Roskan Savage Attorneys

[1] Act 66 of 1995, as amended

[2] Act 42 of 1965

[3] Indexed pleadings, pages 31 and 32.

[4] Pleadings, pages 34 to 35.

[5] Record, page 14, last line to page 15, line 4.

[6] Act 9 of 2018.

[7] Record, page 12, lines 10 to 16 and lines 23 to 26; page 13, line 10.

[8] Record, page 12, lines 10 to 16 and lines 23 to 26; page 13, line 10

[9] [2007] 28 ILJ 2405 (CC); [2007] ZACC 22 at para 110

[10] [2013] 11 BLLR 1074 (SCA); (2013) 34 ILJ 2795 (LAC) at para 25