M.Phil. (Labour Relations) / Please refer to full text to view abstract

This article deals with the South African law relating to promotions. As promotion disputes mostly arise as alleged unfair labour practices, a short discussion on how the concept of an unfair labour practice developed in South Africa is undertaken. In this regard the common law is studied in order to see whether it makes provision for protection of employees subjected to unfair labour practices relating to promotions. Through this study one soon realises that the common law is in fact inadequate to deal with unfair labour practices relating to promotions, and thus an enquiry into various legislative provisions are undertaken. The impact of the all-important Wiehahn Commission of Enquiry, established in 1979, is also briefly discussed. In this article an attempt is made to define the term ‘promotion’. In this regard reference is made to some cases adjudicated upon by the Commission for Conciliation Mediation and Arbitration (the “CCMA”). The cases referred to seem to favour the view that when one is defining the term ‘promotion’, regard must be had to the employment relationship between the employer and the employee, as well as the nature of the employee’s current work in relation to the work applied for, in order to establish whether in fact a promotion has taken place. It is necessary to consider what unfair conduct is defined as in the context of promotions. It seems that managerial prerogative is at the center of the enquiry into unfair conduct of the employer. Further to the analysis of unfair conduct, various principles that govern both procedural and substantive unfairness are considered. These principles are dealt with separately with reference to case law. Lastly the dispute resolution mechanisms are considered and a brief discussion on remedies is undertaken. The remedies are discussed with reference to case law, as well as the provisions of the Labour Relations Act 66 of 1995 as amended by the Labour Relations Amendment Act 12 of 2002. The broad headings of this article are accordingly unfair labour practices, definition of promotions, unfair conduct of the employer, onus of proof and remedies. It is concluded with the proposition that once an employer has set policies and procedures in place in dealing with promotions, then such an employer should stick to those policies and procedures within the context of the law, as well as within the percepts of the vague and nebulous term of ‘fairness’. Should the employer fail to do so, the majority of cases indicate that such an employer will be guilty of an unfair labour practice relating to promotion.

It took 18 months of intensive negotiation at the Millennium Labour Council, NEDLAC and the Labour Portfolio Committee before the Labour Relations Amendment Act of 20021 completed its passage through Parliament, taking effect on 1 August 2002. Fifty-seven amendments to specific sections of the Labour Relations Act2 and its schedules cure some obvious anomalies in the original version. It is further apparent that the legislature has taken cognisance of the observations by judges and arbitrators, who voiced their criticism in respect of certain aspects of the original "Act". The amended "Act"3 does appear to be a genuine commitment by both business and organised labour to improve efficiency in the labour market, to promote employment creation and to protect vulnerable workers. Improved dispute resolution mechanisms, enforcement mechanisms and the resurgence of an unfettered discretion in awarding compensation go some way to improving the application of the "Act". The most dramatic amendments have taken place in the law regulating retrenchments by large employers, inclusive of the controversial introduction of a right to strike after retrenchments of this nature have been effected, and the regulation of the transfer of a business as a going concern and its impact on workers. Critics indicate that business and organised labour have subscribed to the package of amendments despite respective reservations and due to certain time constraints. The nett result is a package of amendments that could be described as failing to address, in certain respects, or intentionally overlooking, areas of the "Act" that have traditionally been shown wanting in the past. In the individual employment law sphere specifically, the failure to address the meaning of "benefits" in the definition of unfair labour practices; to allocate a precise meaning to the concept of the transfer of a going concern; or to regulate the conduct of employers when transferring employees, remain some of the areas for concern. It appears that the legislature has decided that certain issues should be resolved by the Labour Court, and ultimately the Labour Appeal Court, on a case-by-case basis rather than by legislative intervention. Whilst this approach has merit, it does present problems to those seeking to apply the provisions of the amended "Act" 5 in everyday practice. On the whole, the amendments do not, nor were they designed to, mark a major shift in the government's labour market policy. The changes clearly focus on correcting and clarifying sections of the "Act", which have resulted in unintended consequences, or lost touch with commercial reality, over the past seven years.

The recent amendments made to employment laws and in particular the rewriting of the South African Labour Relations Act has brought into focus the diverse and conflicting interests of employers and employees, which is a concern of labour law analysts. This appraisal of South African of strike law examines the statutory and judicially established labour law in regard to the phenomenon of collective industrial action by employees and the regulation of its occurrence. Historical developments in strike law are traced from the early 1900’s. A period of segregated trade unionism, led ultimately to the introduction of a more inclusive system of regulation, which has in turn been modified to bring the law into line with the new constitutional imperatives. Industrial action occurred, often unregulated and regardless of statutory limitations, and in particular that industrial action which related to mass protest action, now recognized as a specific form of strike. The now repealed Labour Relations Act 28 of 1956 is examined with regard to its strike regulating provisions, and identification of what were then new, unrecognized forms of strike action. It has allowed concepts and principles to be developed, under the unfair labour practice jurisdiction of the Industrial Court, much of which has been incorporated in the new Labour Relations Act. The legislation on strike law, which has been developed over the years, has been refined by the constitutional imperatives introduced to the national legal system. The relevant aspects of the new Constitution Act 108 of 1996 and its pervasive effect on strike law are examined. The right to strike in South African labour law, together with the protection of collective bargaining, is now constitutionally entrenched, and the right to strike is now accepted as a necessary adjunct to collective bargaining. It is necessary to give effect to the Constitution in national legislation, and the Labour Relations Act 66 of 1995 endeavours to accomplish this in chapter IV in regard to strike law, which, it could be argued, limits rather than gives expression to the right to strike. iii The Labour Relations Act of 1995 is then discussed with reference to protected and prohibited strikes, and unregulated strike action. It will be evident that the Act has endeavoured to contain unprocedural and productivity draining industrial action, by subjecting rights disputes to arbitration and Labour Court adjudication, subject to certain exceptions. The recourse to lock-out, as the employer’s prerogative and general corollary of strike action, is briefly discussed. The case law relating to strikes is discussed in respect of both the 1956 Act and the new Labour Relations Act of 1995. Among the issues explored are the strike provisions which have been developed in statute and labour related common law, such as the identification of issues in dispute, notice of strike, the issuing of ultimatums, the audi altarem partem rule and the court’s approach to protected and unprotected strikes. The intention is to determine trends resulting from amendments to the law and draw inferences regarding, in particular, the unregulated form of strikes that occur within the scope of the protections offered by the Act. It is the intention to determine whether the desired effect has been achieved by implementing legislative reforms in response to public policy considerations.

This paper seeks to bring clarity to a number of issues that arise from a process resulting from the unilateral variation of terms and conditions of employment and the conflict management and dispute resolution processes. The variation of employment terms particularly when it is driven by one party to the employment relationship can cause instability, insecurity, confusion and uncertainty to the parties involved. The nature of work is not constant and therefore changes are inevitable. This then has an effect of bringing disorder not only to the employer-employee relationship but also to the labour relations balance. In many instances and depending on whether it is the employer or employee who propagates the changes, the reasons to alter the conditions are different. Employers usually cite operational or economic reasons that are meant for the survival of the business as the need to make the changes. From the employees’ side the changes are necessitated by reasons aimed at a move from protecting the favourable employment conditions already acquired to improving them or attaining more. In the event that the parties to the employment relationship do not agree to the changes proposed and implemented, a dispute usually arises. This results from the failure of a consultation process, negotiations, persuasion or collective bargaining in general. In essence such a dispute arises from absence of consent to the changes. The failure of a bargaining system requires the process to assume a new nature. The dispute resolution systems and the conflict management systems follow as both the appropriate and necessary steps. The bargaining power together with the intervention of the third party is at the centre of this phase. The parties, depending on the nature of the dispute, the conditions that iv are changed and who are affected by the changes, have choices on what dispute resolution mechanisms to employ. The choice made has a huge impact on both the outcome required in the form of recourse, how the dispute will be resolved or how the conflict will be managed. There is legislative intervention with regards to the resolution of the conflictual scenarios that arise from disputes on unilateral variation of terms and conditions of employment. There are also non-statutory measures available to the parties. The choices are vast as to when can the variation take place, the reasons for the changes, the parties involved, the possible dispute resolution mechanisms, what can be varied and whether the unilateral implementation can be viewed as fair.

The lock-out is accepted as a necessary element of collective bargaining. The law relating to lock-out is considered as a legitimate instrument of industrial action. There are a number of procedural requirements for a legal lock-out. The dispute should be referred to a bargaining council (or where there is no bargaining council with jurisdiction, to a statutory council) or, failing which, the Commission for Conciliation, Mediation and Arbitration. If the bargaining/statutory council or the commission fails to resolve the dispute, it is no longer required that a ballet should be brought out in favour of the contemplated lock-out before the lock-out could be legal: all that is required is that the period of notice of the intended lock-out is given. The lock-out may either be protected or unprotected. It is protected if it is not prohibited absolutely and the various procedural requirements have been complied with. The protected lock-out is immuned from civil liability. On the other hand a lockout will be unprotected if it does not comply with sections 64 and 65 of the Labour Relations Act, 1995. In the circumstances the Labour Court has exclusive jurisdiction to grant an interdict or order to restrain any person from participating in unprotected industrial action and to order the payment of just and equitable compensation for any loss attributable to the lock-out. Lock-outs are prohibited in specific instances and allowed with some qualifications in others. For example, employers engaged in the provision of essential or maintenance services are prohibited from locking their employees out in order compel them to comply with their demand. Such essential services are Parliamentary services, the South African Police Service and a service the interruption of which endangers the life, personal safety or health of the whole. A distinction is also drawn between offensive and defensive lock-outs. Defensive lock-outs involve the closure of an employer’s premises or the shutting down of its operations during industrial action initiated by workers. The offensive lock-outs, also known as “pre-emptive lock-outs”, amount to an employer initiated form of industrial iv action where the premises are locked and workers are excluded and prevented from working. The law relating to lock-out in South Africa is clearly put in its proper perspective by the interim Constitution of the Republic of South Africa 200 of 1993, final Constitution of the Republic of South Africa 108 of 1996, Labour Relations Act 66 of 1995 and in Ex Parte Chairperson of the Constitutional Assembly: In re Certification of the Constitution of the Republic of South Africa.1 However the situation is unsatisfactory to employers. The interim Constitution guaranteed the “right to strike” and “recourse to the lock-out”. Under the final Constitution lock-outs enjoy no direct protection. The Constitutional Court’s certification judgement rejects the view that it is necessary in order to maintain equality to entrench the right to lock-out once the right to strike has been included. The Constitutional Court concluded that the right to strike and the right to lock-out are not always and necessarily equivalent. However the purpose of the lock-out is to settle collective dispute of the ways permitted by the Labour Relations Act, 1995. The purpose is not to terminate the relationship between the employer and the employee. The employer may not, for example, dismiss employees finally at the end of an unsuccessful lock-out in order to avoid the consequences of impending strike action by the employees.

Labour law in South Africa has evolved over the past century at an ever increasing pace. The establishment of a democratic government in 1995 has been the trigger for a large number of labour law statutes being promulgated, particularly with reference to the laws governing the employment relationship and dismissal. From very humble and employer biased dispute resolution application under the common law of contract, labour law in this country has evolved through the various acts culminating in a labour law system which is highly regulated and codified. Dismissal for medical incapacity in this treatise is reviewed with regard to the applicable statutes and the various codes of good practice as the law has evolved and developed from the period covered by the common law through that covered by the 1995 LRA up to and including the current period. Particular attention is paid to both substantive and procedural requirements as well as the remedies applicable under the different legal regimes and the pertinent tribunals and courts. Regard is also given to the duration and causes of incapacity and the effect this may have on the applicable remedy applied by these tribunals. It will become apparant that the medically incapacitated employee occupied a relatively weak and vulnerable position under the common law as opposed to the current position under the 1995 LRA. The influence of the remedies applied by the tribunals under the 1956 LRA are clearly evident in the current regulations and codes under the 1995 LRA which contain specific statutory provisions for employees not to be unfairly dismissed. Distinctions are drawn between permissible and impermissible dismissals, with medical incapacity falling under the former. v Furthermore, a distinction is drawn statutorily between permanent and temporary illhealth/ injury incapacity with detailed guidelines for substantive and procedural fairness requirements to be met by employers. The powers of the specialist tribunals (CCMA, Bargaining Councils and Labour Courts) are regulated by statutory provisions and deal with appropriate remedies (reinstatement and/or compensation) a wardable in appropriate circumstances. Certain specific areas nonetheless still remain problematic for these tribunals and hence questions that require clear direction from the drafters of our law are: 1. How to distinguish misconduct in alcohol and drug abuse cases? 2. What degree of intermittent absenteeism is required before dismissal would be warranted? In certain other areas the tribunals have been fairly consistent and prescriptive in their approach and remedies awarded. Included here would be permanent incapacity, HIV cases and misconduct. It will emerge, however, that under the 1995 LRA the position of employees and the protections afforded them have been greatly increased.

The history of constructive dismissals in South Africa imitated from the English law in 1986, when an employee successfully challenged the employer on this particular concept after an incident relating a forced resignation. From the literature it is clear that constructive dismissal, as we know it today, originated from our English counterparts. Being a relatively new concept, the South African labour laws caught on at a rapid pace. The leading case on which the South African authors leaned towards was the English case of Woods v WM Car Services (Peterborough). In South Africa constructive dismissals were given statutory force in unfair dismissal law and is defined as the coerced or forced termination of a contract of employment resultant in from the conduct of the employer. There are many forms in which constructive dismissals would postulate that could justify an employee to lay claim to constructive dismissal. Examples thereof are the amendment of the contract of employment, rude language and sexual harassment. It is eminent that certain elements should be present before an employee would have reasonable prospects of succeeding with such a claim. Constructive dismissal comes into the equation when an employer behaves in such a manner that eventually and ultimately leads to the employee, being the receiving party, in the employment relationship, to terminate the employment contract. This termination must be the direct result of the conduct of the employer that irreparably frustrated the relationship and made it impossible for the employee to remain in the service of the employer in question. It appears that the courts have taken a firm stance on coerced or forced resignation, in its various forms tantamount to breach of contact, that any sufficiently unreasonable conduct by an employer may justify that the employee to terminate services and lay claim to the fact that he had been constructively dismissed. It needs to be mentioned that the fact that the mere fact that the employer acted in an unreasonable manner would not suffice and it is up to the employee to prove how the conduct of the employer justified the employee to leave and claim that the employer’s conduct resulted in a material or fundamental beach of the employment contract. In dealing with the contingency of the concept of constructive dismissals it has been expressly provided for in numerous systems of labour law. As is seen herein, a constructive dismissal consists in the termination of the employment contract by reason of the employee’s rather than the employer’s own immediate act. The act of the employee is precipitated by earlier conduct on the part of the employer, which conduct may or may not be justified. Various authors and academics endeavoured to defined constructive dismissal and all had the same or at least some of the elements present, to justify constructive dismissal. The most glaring element being the termination of employment as a result of the any conduct that is tantamount to a breach going to the root of the relationship by the employer, that frustrated the relationship between the employer and the employee and rendered it irreparable. The employee resigns or repudiates the employment contract as a result of the employer normally not leaving the employee any other option but to resign. This can also be termed as coerced or forced resignations and are commonly better known as “constructive dismissal”. The employee is deemed to have been dismissed, even though it is the employee who terminated the employment contract. The most important element to mention is the employee terminated the employment contract, ie resigned yet this is regarded as a dismissal, it is however for the employee to first lay a claim at the proper authority and the employee must prove his / her allegation before it can be a constructive dismissal. As will become clear, that the onus of proof is on the employee to show that the termination of employment resulted from the conduct of the employer. Equally true as in all cases of constructive dismissal, including cases of sexual harassment, being a ground for constructive dismissal, the employee must prove that to remain in service would have been unbearable and intolerable. Sexual harassment is one of the most difficult forms of constructive dismissals, in many cases there are no witnesses and the employee either “suffers in silence or opt to place her dignity at stake to prove her case. It seems as though the test is to determine if the employer’s conduct evinced a deliberate and oppressive intention to have the employment terminated and left the employee with only one option that of resignation to protect her interests. Employees have a right to seek statutory relief and needs to be protected. If a coerced or forced resignation had taken place irrespective whether the employee resigned or not. It is against this back drop that constructive dismissals was given legality and are now recognized as one of the four forms of dismissals in terms of the Act.

The burden that South African labour law has to bear in relation to the economy is very heavy by international standards. In most industrially developed countries, the economy is strong enough either to provide jobs for most work-seekers or, failing that, an adequate social security system for households without breadwinners in place. In most developing countries with high unemployment rates, the labour law system makes only perfunctory effort to reach out to those facing economic marginalisation. South Africa, essentially a developing country, is not like that. The legal system is strong, works off a firm human rights base, and sets out to grapple with the issues. That is how it should be, but it comes at a price – an oftengraphic exposure of the limits of the law in a stressed society. Businesses operate for profit and survival according to the unsentimental ways of the market, and employees back in a bid to save jobs, lifestyles and livelihoods. The stakeholders use power when they have it, and make claims on the law when they don’t. The legislation and the case law reflect, add to and, to a degree, shape the complexities of these contests, and no more so than in the area of business restructuring.1 The new South Africa has quickly become the destination for foreign investment. The weakness of the rand against the dollar, pound, euro and with the “cost to sell and produce” being so low against these currencies, players on the corporate stage constantly change their make-up and composition. The larger engulfs the smaller, one company buys shares in another, or buys it out entirely, or all or part of its assets, and others are liquidated. In all these situations, employees in South Africa may find themselves with new bosses on the morning after. Under common law employees in this situation were deemed to have been discharged by the former employer, whether or not they have been offered positions in the transformed structure. If they did not want to work under it, they could not be forced to do so. That was because an employment contract was deemed in law to be one of a personal nature that could not be transferred from one employer to another without the employees consent. This research is conducted at an interesting time, when the amendments to the Labour Relations Act 66 of 1995 in respect of the transfer of a business, and in particular section 197, dealing with such matters comes into effect. It is also interesting in the sense that most judgements of the Commission for Conciliation, Mediation and Arbitration (CCMA) and judgements of the Labour Court were moving more or less to a common approach or interpretation of section 197 of the Labour Relations Act 66 of 1995 (hereinafter “the LRA”). Section 197 of the LRA sought to regulate the transfer of a business as a going concern and altered the common law regarding the transfer of a business in two situations – firstly when there is no insolvency, factual or legal, concerned, and secondly in the instance where the transferor is insolvent. The first extreme was when an employer is declared insolvent and the contracts of employment terminated automatically. The second extreme was from the first whereby the employer has to terminate the services of his employees and be liable to pay severance pay in terms of section 1893 of the LRA, which has also been amended along with section 197 of the LRA. It is as if this section was introduced to remedy these extremes. These extremes will be dealt with in detail in this paper. The transfer of goodwill and assets from the seller to the buyer occurs when a business is sold as a going concern. At common law the employees of a business cannot be transferred in the same manner. The Labour Relations Act 66 of 1995 altered this position. By enacting this section the legislature wanted to protect the interest of the employees in such transactions. Whether the legislature has succeeded or not is a matter that will be dealt with in this paper. It is all dependent on the interpretation of this section by the commissioners and judges. By including section 197 in the LRA, the legislature’s intention was to resolve the common law problem where employment contract terminated upon the sale of a business, and this section was intended to be an effective tool for protecting the employment of employees. In order to understand the labour law consequences of the transfer of a business, it is important to understand the provisions of sections 197 and 197A of the Labour Relations Amendment Act 2002. This will be dealt with and each section will be discussed in detail using relevant case law and literature. In considering investing in a South African based company by way of purchasing a share of the company and giving it your own flavour, one has to carefully consider the effects of this transaction. Companies wishing to restructure, outsource, merge or transfer some of its operations will need to understand what the implications of the labour legislation will have on their commercial rationale. Section 197 regulates the employment consequences when a transfer of a business takes place. This is defined to mean the transfer of a business by one employer (the old employer) to another employer (the new employer) as a going concern. Business is defined to include the whole or part of the business, trade undertaking or service. Like the current provision, the new provision referrers to the transfer of a business. It is therefore a wider concept than the sale of a business.4 No attempt is made to define what constitutes a going concern and the controversial issue of whether an outsourcing exercise can constitute a going concern transfer is also not explicitly dealt with. The fact that a business is defined to include a service may be an indication that it was intended to typify outsourcing as a going concern transfer, but this is not necessarily the case.5 The amendments to the Act6 came into effect on 1 August 2002. Sections 197 and 197(A) of the Act consequently seeks to regulate the transfer of a business. These regulations will be dealt with individually and in a format that would make each of the sections in sections 197 and 197(A), easy to understand and interpret. It will also become clear as to what the implications of each of the subsections will have on that commercial rationale. The issues highlighted above will be dealt with detail in this paper giving an overview of the Common Law, the Labour Relations Act 66 of 1995 and the new Labour Relations Amendment Act 2002.

The traditional employer-employee relationship came under an increased threat the past two decades with employers finding the option of utilising the services of Labour Brokers more attractive. Various reasons existed for this tendency amongst employers to opt for the use of Labour Brokers, some of these reasons being valid but mostly some reasons being born out of fear for the unknown labour law duties and obligations that were proposed to be placed on employers post 1994. In the absence of an action plan between the role players in the labour fraternity pathing the way traditional employer-employee relationships could be salvage, employers resorted to the appointment of Labour Brokers and Government on their part retaliated by considering either the total ban of Labour Brokers or the regulation of the profession to such an extent that same became largely unattractive and problematic. The non-addressing of problems and fears faced with by employers post 1994 resulted in an opportunity waisted to narrow the gap between employers and employees with the fight over work force power being the more important factor taken into consideration. This treatise will explore the options that faced the roll players post 1994 in the labour market, the reason for choices made and the effect same has had since on the labour market. The problematic amendments made to Section 198 of the Labour Relations Act in an attempt to iron out the wrinkles poor choices made by the stake holders over the regulations of Labour Brokers, will be discussed. The ripple effect the amendments to Section 198 of the Labour Relations Act had on other pieces of South African legislation will be considered and the uncertainty and confusion it has created discussed. Specific attention needs to be drawn to the intention of the legislature as to which party, the Labour Broker or employer, will be responsible for the ramifications of the wrong doings of an employee. Also, which party will be responsible to the employee to fulfil its labour rights as granted in the Constitution of South Africa. Unleashing reaction to the regulations of Temporary Employment Services does not seem to be a problem, the problem arises where the regulations proposed did not unleashed the desired reaction and roll players finding themselves frustrated and with having no alternative as to turn the Courts to solve the largely self-inflicted conundrum. The courts are left with the task of clarifying the legislature’s true intension in amending section 198 of the Labour Relations Act, which impact the writer with all due respect do not think the legislature even appreciated when the amendments were drafted. Currently, there is dividing views on the future of Labour Brokers per se in South Africa and the interpretation concerning Section 198 of the Labour Relations Act, as amended. The focus of this treatise is to highlight the different interpretations given to these amendments this far and highlight that if it is in fact the wish of stake holders in the Labour fraternity that Labour Brokers should continue to exist, clarification is needed by our Constitution Court on certain vital issues and as discussed in this treatise.