ZACC 01
Hearing Date: 30 May 2019
Judgement Date: 23 January 2020
Post Judgment Media Summary
The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.
On Thursday, 23 January 2020 at 10h00 the Constitutional Court handed down judgment in an application for leave to appeal against the judgment and order of the Labour Appeal Court (LAC). The application concerned the constitutionality of sections 23(1)(d) and 189(1) of the Labour Relations Act 66 of 1995 (LRA).
The applicants, the Association of Mineworkers and Construction Union (AMCU) together with some of its members, sought the reinstatement of 103 of its members who were retrenched by the respondent mining company, Royal Bafokeng Platinum Limited (Royal Bafokeng), on 18 September 2015.
The AMCU members were retrenched following a retrenchment agreement that was concluded by Royal Bafokeng and two other unions at the mine, the National Union of Mines (NUM) and United Association of South Africa (UASA). The retrenchment agreement was itself the result of a collective agreement entered into between NUM, UASA and Royal Bafokeng on 9 March 2015. This came about through Royal Bafokeng recognising NUM as the majority union within the company. Both AMCU and UASA were minority unions. The result was that NUM, along with UASA, were granted organisational and bargaining rights by Royal Bafokeng. However AMCU, unlike UASA, was not recognised for bargaining purposes.
The retrenchment agreement was decided to the exclusion of AMCU. The agreement was then, in accordance with section 23(1)(d) of the LRA, extended to the retrenched employees who were AMCU members. The agreement contained a full and final settlement clause which provided that all those who were bound by it, including the AMCU members, had agreed to waive all claims and rights against Royal Bafokeng. The AMCU members maintained that they knew nothing of the agreement until 30 September 2015, when they were issued with a notice of retrenchment dated 18 September 2015 and barred from entering the workplace.
Subsequently, AMCU challenged its members’ dismissals in the Commission for Conciliation Mediation and Arbitration (CCMA), the Labour Court (LC) and the LAC. The CCMA refused to conciliate the matter for lack of jurisdiction. AMCU subsequently argued in the LC and LAC that the collective agreement was constitutionally objectionable, as it allowed for a majority union to conclude a collective agreement concerning a retrenchment process to the exclusion of minority unions in the workplace. It also argued that the extension of such an agreement, as was the case in this matter, was equally constitutionally objectionable.
The LC and LAC rejected these arguments. The LAC held that the principle of majoritarianism, is not without purpose. It was a deliberate policy choice taken by the Legislature in order to facilitate orderly collective bargaining, minimise the proliferation of unions and democratise the workplace. A clear policy decision had been made by the Legislature, that the will of the minority cannot trump that of the majority. The alternative would require that an employer negotiate with each and every union in the work place, no matter how small, and result in intolerable disruption and economic harm. The LAC found no merit in the applicants’ contention that majoritarianism found no place in the retrenchment process. It further found that procedural fairness was not a requirement of a rational decision per se and that “there was no general duty on a decision-maker to consult interested parties in order for a decision to be rational under the rule of law”.
In the Constitutional Court the applicants argued that, by allowing for the exclusion of minority unions and non-unionised employees in the consultation process, section 189(1) limits their right to fair labour practices. As dismissal affects an employee individually, so too are the benefits of majoritarianism realised in the retrenchment process. They further argued that there could therefore be no justifiable reason for excluding non-majority represented employees from consultation. The applicants submitted that the section should be interpreted to allow for inclusive consultation or be struck down accordingly. As for section 23(1)(d), it was argued that a constitutionally compliant interpretation would not allow for a retrenchment agreement to be extended to parties who were not party to its conclusion.
Royal Bafokeng, joined by the Minister of Labour, argued that section 189(1) was constitutionally compliant. They argued that it creates a cascading hierarchy of consulting parties that duly expresses the Legislature’s policy choice in favour of majoritarianism. It was submitted that the interpretation called for by the applicants is unsustainable, and even if it were not, it would be unworkable. They argued that there can be no rights limitation because, as retrenchment is a collective process, the rights are collectively held. It was further argued that the minority benefits from the majority negotiating the terms of the retrenchment agreement, to strike a deal that would otherwise escape them.
The first judgment, penned by Ledwaba AJ, and concurred in by Mogoeng CJ, Jafta J and Madlanga J, held that section 189(1) was unconstitutional. It held that the section unjustifiably limited the right to fair labour practices guaranteed in section 23(1) of the Constitution. This is because section 189(1) was a codification of the fair procedure for retrenchment dismissals. The first judgment held that the legislative decision of privileging majority unions in the consultation process is unreasonable. Such a policy failed to meet the statutory purpose of consultation, being, amongst others, to avoid dismissal, minimise dismissals or lessen the negative effects of dismissals. Majoritarianism was also not implicated, but rather preserved, on the basis of the Court’s previous finding that section 23(1)(d) was a constitutionally compliant limitation of the right to strike. This judgment held that the same reasoning must apply to any limitation in this case. The judgment further held that whilst an employer is bound to consult inclusively, they can still lawfully conclude and extend a retrenchment agreement with the majority union, binding all employees in the workplace. This appropriately balances the rights of individual employees and those of the employer.
A second judgment (majority), penned by Froneman J and concurred in by Cameron J, Khampepe J, Mhlantla J and Theron J, agreed with the first judgment, in so far as the conclusion that the constitutional challenge to section 23(1)(d) should be dismissed, but disagreed that section 189(1) is constitutionally invalid. The judgment held that section 189(1) did not limit the right to fair labour practices. This is because the right to fair labour practices does not expressly, or by implication, guarantee a right to individual consultation in retrenchment processes. It further held that the right not to be unfairly dismissed is sourced in the LRA and not the Constitution. The second judgment held that the LRA itself distinguishes between what is fair for dismissals based on misconduct and incapacity, with what is fair for “no-fault” dismissals relating to operational requirements. The second judgment held that a further distinction is made, where the former class of dismissals require individual enquiry, whilst the latter is suited to objective factors. It held that because the decision to retrench is not based on individual conduct, there can be no need for individual consultation. The judgment found that this has been consistently affirmed by the Labour Courts for the past 20 years. The judgment further held that even if section 189(1) did limit the right to fair labour practices, such limitation would be justifiable. Accordingly, the majority granted leave to appeal but dismissed the appeal.
A third judgment, penned by Jafta J, concurred with the first judgment. It held that a number of other rights were implicated by section 189(1). These included the right to equality and the right to freedom of association. The third judgment held that section 189(1) limits the right to equality because it denies an employee, who belongs to a minority union, equal protection under the law. The judgment further held that the limitation to the right of freedom of association arises because section 189(1) inhibits employees from joining the union of their choice. That is for the reason that such a union might be incapable of advocating for their interests during retrenchment. The third judgment held that the principle of majoritarianism found no application in the operation of section 189(1). That is because the section does not prescribe that a collective agreement can only be concluded by a majority union, but with any union. It found that this, notionally, allows for the extension of exclusive consultation rights to a minority union. The third judgment held that whilst a number of rights are implicated, no purpose is served for their limitation.
A fourth judgment, penned by Theron J, agreed with the second judgment’s reasoning and order. From a separation of powers perspective, the fourth judgment held that it would be appropriate to test section 189(1) of the LRA against a standard of rationality rather than one of reasonableness, and emphasised the importance of the proper interpretation of the Bill of Rights in this regard. It concluded that, on a proper interpretation, section 23(1) does not include a right for an employee to be individually consulted in the context of a retrenchment dismissal. The fourth judgment supplemented the explanation given in the second judgment as to why the Court should refrain from adjudicating the alleged limitations of the rights in sections 9(1) and 18 of the Constitution and held that it would be inappropriate for the Court to adjudicate on these issues as the applicants did not put up any facts or make any submissions in this regard.
In the result, leave to appeal was granted but the appeal was dismissed.
The Full judgment here