Transvaal Clothing Manufacturers Association and Others v Minister of Employment and Labour and Others (C216/2020) [2021] ZALCCT 7; (2021) 42 ILJ 1529 (LC) (10 May 2021)

IN THE LABOUR COURT OF SOUTH AFRICA, CAPE TOWN

Reportable

Case no: C216/2020

In the matter between:

TRANSVAAL CLOTHING MANUFACTURERS ASSOCIATION

(“TCMA”)

First Applicant

EASTERN PROVINCE CLOTHING MANUFACTURERS

ASSOCIATION (“EPCMA”) Second Applicant

SOUTH AFICAN CLOTHING MANUFACTURERS

ASSOCIATION (“SACMA”) Third Applicant

RAWA TRADING CC Fourth Applicant

and

MINISTER OF EMPLOYMENT AND LABOUR First Respondent

NATIONAL BARGAINING COUNCIL FOR THE

CLOTHING MANAUFACTURING INDUSTRY

Second Respondent

APPAREL AND TEXTILE ASSOCIATION OF SA Third Respondent

SOUTH AFRICAN APPAREL ASSOCIATION

Fourth Respondent

SOUTH AFRICAN CLOTHING AND TEXTILE

WORKERS UNION (“SACTWU”) Fifth Respondent

Date heard: 10 March 2021 by means of virtual hearing

Delivered: 10 May 2021 by means of email

Summary: Review of decision by Minister of Labour to extend a collective agreement in terms of section 32 of the LRA; no vote taking place in meeting of the Bargaining Council regarding the extension; jurisdictional pre-requisites for extension not present for exercise of Minister’s power in terms of section 32(2); distinction between legal nature of conclusion of a collective agreement and that of extension of a collective agreement to non-parties underlined; decision by Minister reviewed and set aside and Government Notice R594 published in Government Gazette No 43354 on 26 May 2020 declared invalid.

JUDGMENT

RABKIN-NAICKER J

[1] The Applicants have applied for the following relief in terms of section 158(1)(g) of the LRA read with the review grounds set out in section 6 of the PAJA and seek:

“1. Insofar as may be necessary, condoning any non-compliance with the ordinary rules and time-frames of this court, and permitting this matter to be dealt with on an urgent or expedited basis with the meaning of clause 12.14 of the Practice Manual;

2. Reviewing and setting aside the decision of the first respondent,

contained in Government Notice R594 published in Government Gazette No 43354 on 26 May 2020, to extend the collective agreement with appeared in the schedule thereto, to non-party employers and employees in the clothing manufacturing industry from 26 May 2020 until 10 May 2022.

3. Declaring Government Notice R594 published in Government Gazette No

43354 on 26 May 2020 to be invalid and of no force and effect

4. Insofar as may be necessary, striking down section 32(2), read with

section 32(3), of the Labour Relations Act 66 of 1995 as unconstitutional;

5. Directing any party who opposes this application to pay the costs

thereof, jointly and severally the one paying the other(s) to be absolved, including the costs of two counsel where employed;

6. Granting the applicants further and/or alternative relief.”

Background

[2] The first to third applicants are members of the second respondent (the Council). The fourth and fifth applicants are registered with the Council but not parties to it. On the 26 March 2020, the first respondent (the Minister) issued a set of directives headed the “Covid-19 Temporary Employer/Employee Relief Scheme” (the TERS Directives). This was as a result of the National Lockdown that started on the 26 March 2020. The purpose of the TERS Directives was to provide for the payment of emergency relief benefits from the Unemployment Insurance Fund (the UIF) to employees

who were temporarily laid off by their employers. Under the Scheme, in the ordinary course, employers could apply directly to the UIF for relief payments on behalf of their employees. However, this would not apply if employers were entitled to receive the benefits through a bargaining council.

[3] In order for the indirect route of receiving the TERS benefits to apply, a bargaining council had to conclude:

3.1 a collective agreement providing for the disbursement of TERS benefits to employees (which had been extended by the Minister to non-parties in the sector under section 32 of the LRA) and;

2.3 a memorandum of agreement (MOA) with the UIF to disburse TERS benefits on behalf of the UIF to employees.

[4] This application deals with the extension of a second collective agreement[1], the “UIF II Agreement”, which the Council applied to the Minister to extend in terms of section 32 of the LRA on the 12 May 2020. Between the 25 and 26 May 2020, the Minister cancelled his earlier extension of the first UIF Agreement to non-parties and extended the terms of the UIF II Agreement to non-parties.

[5] It is pertinent to point out the UIF II Agreement provides that employers in the sector must pay an extra two weeks’ wages to employees over and above the obligations under TERS. It was signed by ATASA and SAAA, whose members employ the majority of employees of those employers’ organizations affiliated to the Council, and by SACTWU whose members constitute the majority of the members of the trade union that is party to the Council.

Grounds for review of the extension of the UIF 11 Agreement

[6] The applicants have set out a number of grounds of review of the impugned decision to extend the UIF II Agreement as follows:

6.1. The UIF II Agreement is not a collective agreement concluded in the council, within the meaning of section 32(1) of the LRA;

6.2. The UIF II Agreement does not contain an effective (or any lawful) exemption procedure, as required by section 32(dA);

0cm; line-height: 200%"> 6.3. The Minister could not have been satisfied, on reasonable grounds, that the requirements of section 32(3)(f) were met;

6.4. The registrar never issued a determination under section 49(4A)(a) of the LRA - which was a necessary pre-condition for the exercise of the Minister’s power under section 32(3);

6.5. The Minister’s decision was procedurally unfair and in breach of his obligations under sections 3 and 4 of PAJA;

6.6. Alternatively, only in the event that the court determines that the LRA precludes the Minister from following a fair procedure prior to making an extension decision, then the offending portions of sections 32(2) and (3) fall to be struck down as unconstitutional;

6.7. The UIF II Agreement discriminates against non-parties, in breach of section 32(3)(g) of the LRA;

6.8. The UIF II Agreement purports to apply to persons beyond the council’s registered scope, in breach of section 32(3)(d) of the LRA;

6.9. The dispute resolution provisions of the UIF II Agreement are ultra vires the LRA and the council’s constitution, and have been declared invalid; and

6.10. The terms of the Memorandum of Agreement entered into between the council and Unemployment Insurance Fund materially contradict the terms of the UIF II Agreement.

Evaluation

[7] Section 32(1) of the LRA provides as follows:

“ 32 Extension of collective agreement concluded in bargaining council

(1) A bargaining council may ask the Minister in writing to extend a collective agreement concluded in the bargaining council to any non-parties to the collective agreement that are within its registered scope and are identified in the request, if at a meeting of the bargaining council-

(a) one or more registered trade unions whose members constitute the majority of the members of the trade unions that are party to the bargaining council vote in favour of the extension; and

(b) one or more registered employers' organisations, whose members employ the majority of the employees employed by the members of the employers' organisations that are party to the bargaining council,

vote in favour of the extension.”

The UIF II Agreement is not a collective agreement concluded in the council, within the meaning of section 32(1) of the LRA

[8] It is the applicants’ contention that the constitution of the Council does not provide for the manner in which a collective agreement is to be extended in terms of section 32(1) of the LRA which section 30 of the LRA requires[2].

[9] Clause 13 of the Council’s constitution governs meetings of the Council. Clause 13.11 deals with how general decisions are made at council meetings. It provides that:

“13.11 Except as otherwise decided by the Council, all matters forming the subject matter of proposals excluding those referred to in clauses 14.4, 14.5 and 14.6 shall be decided by the vote of a 75% majority of votes cast by the Trade Union representatives and a 75% majority of the votes cast by the employer representatives and a 75% majority of the votes cast by the employer representatives who are present in person or by proxy and who are entitled to vote, on the basis that the votes allocated to the employer party are apportioned in terms of clause 13.2. Voting shall be by a show of hands.”

[10] Clauses 14.5 and 14.6 of the Council’s constitution provide for the conclusion of collective agreements in the Council, and for their extension. These Clauses read:

“14.5 The provisions of clause 13.11 in relation to a vote by a 75% majority shall not be applicable to the conclusion of collective agreements or the extension thereof, which shall be regulated in terms of the Act.

14.6 The Council shall, subject to any qualification agreed to by the parties, seek extension of the collective agreement to non-party employers and employees in terms of the Act.” (emphasis mine)

[11] The applicants submit that the Act does not regulate how collective agreements should be extended and thus the constitution of the Council contains a lacuna and is materially defective as a result.

[12] Section 32(1) of the Act, as referred to above, does set the jurisdictional preconditions for the extension of a collective agreement to take

place, which are a meeting of the bargaining council where:

(a) one or more registered trade unions whose members constitute the majority of the members of the trade unions that are party to the bargaining council vote in favour of the extension; and

[13] It is submitted by the Council in its answering papers, that Clause 14.5 and 14.6 of its constitution, read with the relevant provisions of the LRA, make it clear that the conclusion of collective agreements in Council and their extension do not require a vote. The following process, it is averred is applicable to the conclusion, and extension of collective agreements:

‘13.1 The proposed collective agreement must be presented to a properly convened, and quorate, meeting of the Council,

13.2 The collective agreement must be agreed upon by at least one trade union party to the Council and at least one employer organization party to the Council,

13.3 There need be no vote on whether to conclude, or extend, the collective agreement, (emphasis mine)

13.4 The collective agreement must be in writing and signed by the parties to the agreement,

13.5 The Council must request the Minister to extend the collective agreement, subject to any other position adopted by the parties to the agreement, if the trade union/s and employer organizations meet the thresholds in section 32 of the LRA.’

[14] Thus it is contended, the phrase in Clause 14.5 ‘in relation to a vote by a 75% majority shall not be applicable to the conclusion of collective agreements or the extension thereof’, must be read to mean that a vote per se is not applicable to the conclusion of collective agreements or their extension.

[15] The Council’s interpretation of Clause 14.5 differs from that of the Minister, who according to his papers, read it to mean that in concluding the collective agreement before him and seeking its extension, only a simple majority of support was necessary, and not a 75% majority.

[16] A challenge to the Council’s stated position is the second phrase in the relevant clauses in its constitution, i.e. that the conclusion of a collective agreement ‘shall be regulated in terms of the Act’ and that its extension should be ‘sought in terms of the Act’.

[17] Section 32(1) (a) and (b) of the LRA require a “vote in favour of the extension”. The Council appears to be of the view that although

they rely on the provisions of the Act in seeking extension of their collective agreements, the word vote in Section 32 (1) is superfluous.

[18] The ‘Resolution for the Proposal for the Adoption of a new Covid-19 Lockdown II Collective Agreement’, which was before the Minister, reflects that the said Collective Agreement was adopted by the majority of the Parties to the Council and it was resolved that it be submitted to the Minister for extension in terms of section 32 (2) of the LRA.

[19] The Submission of the Director General of Labour to the Minister regarding the extension of the UIF II Collective Agreement, contained in the Record of the impugned decision does state in terms, the following:

“3.9 According to section 32(1)(a) and (b), the Minister must satisfy himself that the request for extension of the Agreement has been properly voted on by the Council at a meeting of the bargaining council….” (my emphasis)

[20] The Submission goes on to state that the ‘requisite majorities voted in favour.at the meeting at the Special Meeting held on 11 May 2020 via teleconference’. This is patently incorrect. The Minutes simply reflect verbal statements of support by the majority parties and non-support by the first to third applicants regarding the conclusion of the UIF 11 Collective Agreement.

[21] No mention is made in the Minutes about its extension to non-members in the sector. It seems to the Court, that it is practice for the Council, once a collective agreement is adopted, to then request its extension automatically, without any notion of a vote.

[22] What the above considerations mean, is that even were I to accept that the constitution of the Council does not contain a lacuna, and can be read to provide for an extension application to be ‘sought in terms of the Act’, the extension of the collective agreement was not sought in terms of the Act in casu, because no vote took place.

[23] It is apparent from a number of decisions of this Court that the issue of requisite voting for an extension of a collective agreement to non-parties is critical to the Minister’s decision in terms of section 32 of the LRA. Decisions to extend agreements have fallen foul of improperly constituted meetings of a bargaining council as well as failure of parties to take part in a vote or be properly represented by a proxy.[3]

[24] In the application before me, the Council’s approach suggests that the process of concluding a collective agreement and that of extending it are undifferentiated. However, in Free Market Foundation v Minister of Labour & others[4],Murphy J writing for a full bench, had this to say:

“[73] In Calibre Clinical Consultants (Pty) Ltd and Another v National Bargaining Council for the Road Freight Industry and Another the Supreme Court of Appeal held that a bargaining council, when managing its wellness fund and procuring services for that purpose, performs a domestic function, and its decision in that regard was not subject to review under PAJA. The bargaining council was not exercising a public power or performing a public function in that instance. The court recognised that such might not be the case when a bargaining council performs other functions. There can be little doubt that when a bargaining council requests the Minister to extend a collective agreement to non-parties that it does so either as an organ of state or as a juristic person exercising a public power or performing a public function under legislation or an empowering provision.

[74] Applying the definition of administrative action to the process of collective bargaining undertaken by a bargaining council, it seems clear that the negotiation and conclusion of the collective agreement will not constitute administrative action. The decision is not of an administrative nature, being inherently contractual; and the only decision involved is that by the bargaining agents to conclude the agreement, which at that stage would have no external legal effect outside the council.

[75] However, the request made under s 32(1) of the LRA can be viewed differently. In order to extend its collective agreement to non-parties, the bargaining council must meet and pass a resolution. The resolution must in turn generate a written request to the Minister identifying the non-parties to the agreement, who fall within the registered scope of the council, and to whom it seeks to extend the collective agreement. The resolution must obtain the votes of the majorities as stipulated in s 32(1)(a) and (b) of the LRA….”

[25] Although the Court in Free Market Foundation did not definitively characterize the legal nature of a Bargaining Council’s decision to extend a collective agreement, it did hold that there was a possibility that bargaining council decisions might constitute administrative action and therefore be reviewable on grounds of reasonableness (at least rationality), legality and due process. However, even if they could not be classified as such, they would still, as exercises of public power, be subject to a legality review under the rule of law provision in s 1 of the Constitution, which would at least include the requirements of rationality, legality and a duty not to act arbitrarily, capriciously or with ulterior purpose.[5]

[26] The Council’s position that no vote is necessary when seeking the extension of a collective agreement is unsustainable. This is because the LRA requires such a vote to take place in a meeting of the Council. In contrast, Section 31 of the LRA provides:

“31 Binding nature of collective agreement concluded in bargaining council

Subject to the provisions of section 32 and the constitution of the bargaining council, a collective agreement concluded in a bargaining council binds-

(a) the parties to the bargaining council who are also parties to the collective 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 thereof apply to the relationship between such a party and the members of such other party; and

(c) the members of a registered trade union that is a party to the collective agreement and the employers who are members of a registered employers' organisation that is such a party, if the collective agreement regulates-

(i) terms and conditions of employment; or

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

[27] In other words section 31 concerns the ambit, and binding reach of a collective agreement between parties to a bargaining council. Although it contains the phrase, “Subject to the provisions of section 32 and the constitution of the bargaining council’, it should be borne in mind that:

“[19] The expression 'subject to' has no a priori meaning. While it is often used in a statutory context to establish what is dominant and what is subservient, its meaning in a statutory context is not confined thereto and it frequently means no more than that a qualification or limitation is introduced so that it can be read as meaning 'except as curtailed by'.”[6]

[28] It is clear on a reading of section 31 and 32 of the LRA that the words ‘subject to’ in section 31 mean no more than ‘except as curtailed by’. The conclusion of the collective agreement in a bargaining council and the extension thereof to non-parties, are governed by two distinct provisions of the LRA. The Council has blurred this distinction by not recognizing the need for a vote to take place in terms of section 32 of the LRA. How it cures the practice it has developed in this respect is not for the Court to decide.

[29] In the above circumstances, it is not necessary for the Court to traverse the list of grounds for review of the impugned decision by the Minister or the Constitutional challenge. Section 32(3) of the LRA provides that a collective agreement may not be extended by the Minister in terms of subsection 2 unless inter alia the Minister is satisfied that:

“(a) the decision by the bargaining council to request the extension of the collective agreement complies with the provisions of subsection (1)”.

[30] The Minister extended the collective agreement to non-parties when the jurisdictional facts set out in section 32(1) (a) and (b) were absent. It appears he accepted the submissions of his Director General that the requisite voting in a Meeting of Council had taken place on face value, without further ado. As the Court in Free Market Foundation stated in respect of the Minister’s power in terms of Section 32 of the LRA:

“…The determination of the jurisdictional facts and the action following upon it cannot be isolated from each other. Should the functionary

refuse to exercise the power even though the jurisdictional facts are present (or exercise the power when a jurisdictional fact is not present), the administrative action would not only be unlawful, but also unreasonable or irrational.”[7]

[31] The review application must therefore succeed. I am loathe to make a costs order given that this matter involves collective bargaining partners. I make the following order:

Order

1. The decision of the first respondent, contained in Government Notice R594 published in Government Gazette No 43354 on 26 May 2020, to extend the collective agreement which appeared in the schedule thereto, to non-party employers and employees in the clothing manufacturing industry from 26 May 2020 until 10 May 2022 is reviewed and set aside.

2. The Government Notice R594 published in Government Gazette No 43354 on 26 May 2020 is declared to be invalid and of no force and effect.

3. There is no order as to costs.

______________

H. Rabkin-Naicker

Judge of the Labour Court of South Africa

Appearances

Applicants: G.A. Leslie S.C. with M. Bishop instructed by Anton Bakker Attorneys

First Respondent: Brenton Joseph SC with Cecily-Ann Daniels instructed by State Attorney

Second Respondent: Heads drafted by Riaz Itzkin; Appearance by C. Orr instructed by CTH INC

[1] The first UIF agreement is the subject of another application under case number C165/2020 in which the parties have reached an agreement by consent still to be made an order of Court.

[2] Section 30 (d) prescribes that a bargaining council constitution must have rules for the convening and conducting of meetings of representatives, including the quorum required for, and that are minutes to be kept of those meetings; Section 30(e) prescribes that the constitution must set out the manner in which decisions are to be made.

[3] Plastic Converters Association of SA (PCASA) & Others v MEIBC (2017) 38 ILJ 2081 at paras 32-34; NEASA & Others v Minister of Labour & Others 2017 38 ILJ 2034 at para 69

[4] (2016) 37 ILJ 1638 (GP)

[5] At paragraph 81

[6] Steve Tshwete Local Municipality v Fedbond Participation Mortgage Bond Managers (Pty) Ltd 2013 (3) SA 611 (SCA)

[7] Free Market Foundation supra at para 105