Case  CCT49/20
[2021] ZACC 47

Hearing Date: 04 May 2021

Judgement Date: 10 December 2021

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 Friday, 10 December 2021 at 12h00, the Constitutional Court handed down judgment in an application for leave to appeal against the judgment and order of the Labour Appeal Court which found that the respondent employers fell within the scope and registration of the Motor Industry Bargaining Council (MIBCO).

This matter arose from a demarcation dispute in terms of section 62 of the Labour Relations Act (LRA). In terms of a demarcation determination made in 1962, the respondent employers had been determined to fall within the scope and registration of the Metal and Engineering Industries Bargaining Council (MEIBC). However, because of changes in the automotive industry over the years, the respondent employers considered the MEIBC an unsuitable collective bargaining forum for the issues that concerned them. The employers referred a dispute to the CCMA, contending that they should be demarcated as falling within the scope of the MIBCO. The CCMA disagreed, on the basis that the 1962 determination was binding.

The respondent employers appealed to the Labour Court asking that it review and set aside and/or correct the CCMA’s decision.

The Labour Court held that in considering the 1962 determination to have a binding effect, the Commissioner committed a material error of law and had reached a decision which was unreasonable. The fact that the 1962 determination had regulated the industry for over 60 years, did not in itself mean it was definitive. The Labour Court relied on uncontested evidence put forward by the respondent employers about how the component manufacturing industry had changed over time. Finally, the Labour Court found that having regard to the plain language of the registered scopes of the MIBCO and MEIBC respectively, the Labour Court pointed out that the definitions were more concerned with the outcomes in terms of products than with the manufacturing process. The Labour Court held, as such, that the employers were “an integral link in the chain or value system between the conception and delivery of a motor vehicle” and should fall within the scope of the MIBCO. For all these reasons, the Commissioner’s decision was held to be unreasonable.

NUMSA appealed the Labour Court’s decision. In dismissing NUMSA’s appeal, the Labour Appeal Court endorsed the reasoning and approach that was adopted in the Labour Court and concluded that the employers did fall within the scope and registration of the MIBCO. The Labour Appeal Court reasoned that firstly, on a literal interpretation of the registered scope of the two bargaining councils, the respondent employers fell within the scope of the MIBCO. The Labour Appeal Court reasoned further that the work process approach is inappropriate because it disregards the registered scope of the bargaining councils. Noting that the definition of motor industry relates to the end-product as opposed to the manufacturing process, the Labour Appeal Court endorsed the value chain approach, which it found to be consonant with the registered scope of the two bargaining councils.

NUMSA appealed the Labour Appeal Court’s decision. NUMSA argued that, an error of law or fact alone is not sufficient to warrant the setting aside of a CCMA award and the award should only have been set aside if the error rendered the decision unreasonable. NUMSA submitted that the award was capable of a reasonable justification and that the reliance on the end product as opposed to material and process does not find support in case law. As regards whether or not the Labour Court was correct to substitute the award of the CCMA, NUMSA submitted that the process envisaged by section 62 of the LRA is not suited to the substitution of the Commissioner’s decision by the Labour Court, because the decision involves facts, law and policy and as such is a process best dealt with by specialist tribunals and not judges.

The respondents contended that NUMSA’s emphasis on the material and process approach is untenable as it ignores the wording in the MEIBC’s registered scope, which is a relevant and material factor. The respondents further submitted that a historical connection to a bargaining council should not be given any significance and that the failure by the Commissioner to take into account other compelling factors had rendered his decision unreasonable. As regards whether or not the Labour Court was correct to substitute the award of the CCMA, the respondents submitted that section 145 (4)(a) of the LRA gives the Labour Court the power to determine a dispute in any manner that it considers appropriate, including the power to substitute a decision.

The first judgment penned by Tlaletsi AJ (Khampepe ADCJ, Madlanga J, Majiedt J, Mhlantla J, Pillay AJ, Theron J and Tshiqi J concurring) decided two discrete issues. Firstly, whether the Labour Court had the authority to determine the demarcation dispute and secondly, whether the matter should be remitted back to the CCMA or whether the Labour Court was correct to substitute its decision for that of the Commissioner. On the first issue, the first judgment found that the provisions of section 62 of the LRA are couched in peremptory terms, and disputes about demarcation between sectors and areas must first go through arbitration under the auspices of the CCMA. However, section 158(1)(g) of the LRA gives the Labour Court the power to review demarcation awards. This power is not limited and, in terms of section 145(4)(a) of the LRA, the Labour Court is entitled to determine a dispute in any manner it considers appropriate. Therefore, according to the first judgment, the Labour Court has wide powers that include the power to substitute a decision or award made by a CCMA Commissioner. Noting that remittal is the default position, and that substitution is exceptional, the first judgment held that in light of the facts and circumstances of this particular case, substitution is the appropriate remedy.

The second judgment, penned by Jafta J, agreed with the first judgment’s order to grant leave to appeal but held that the appeal ought to have succeeded. It disagreed that the Labour Court competently exercised the power of substitution and found that the matter should have been remitted to the CCMA for determination.

The second judgment held that the requirement in section 62 of the LRA which obliges a commissioner to adjourn proceedings and refer the matter to the director of the CCMA when the issue of demarcation is raised, is an indication that not even commissioners of the CCMA are automatically empowered to determine issues of demarcation. The commissioner may only deal with the demarcation dispute if they were so appointed by the director. The appointment by the director is a jurisdictional fact for the exercise of the power to determine a demarcation issue and is left to the discretion of the director. Similarly, when a demarcation issue is raised in proceedings before the Labour Court, section 62(3) of the LRA obliges the Labour Court to adjourn its proceedings and refer the issue on demarcation to the CCMA. This makes clear that the Labour Court does not have authority to determine a demarcation dispute. The language of section 62 indicates that such authority was exclusively conferred on the commissioners of the CCMA. It is trite that where the language of the empowering statute suggests that Parliament had deliberately chosen a particular functionary to exercise power, a court may not substitute the decision of that functionary with its own. To do so would mean that the common law trumps statute contrary to the well-established principle that if a statute is inconsistent with the common law, the statute takes precedence.

The second judgment held that the first judgment’s reliance on Trencon Construction (Pty) Ltd v Industrial Development Corporation [2015] ZACC 22 is misplaced because that case did not address the question on whether a court may substitute the decision of an administrative functionary with its own, despite an indication in the empowering provision that Parliament wanted that functionary alone to exercise that power.

In respect to remedy, the second judgment held that the Labour Court and Labour Appeal Court applied the wrong test in determining whether substitution was appropriate. In addition, the Labour Appeal Court incorrectly dealt with the matter as if it was called upon to determine the correctness of a judicial decision of the Labour Court, rather than a review of the decision that the Labour Court took on behalf of a commissioner. The correct standard which those courts ought to have applied in respect of the question of substitution is that the court will ordinarily remit the matter to the functionary entrusted to exercise power and only depart from that course under certain defined circumstances. These include whether the end result is a foregone conclusion and whether the commissioner was biased or incompetent. In dismissing the appeal, the first judgment does not address the missteps and serious errors by the Labour Court and Labour Appeal Court and instead endorses them.

In conclusion the second judgment held that the defined circumstances warranting a departure from remittal did not exist. The end result was not a foregone conclusion nor did the commissioner exhibit bias or incompetence. Consequently, the second judgment would have upheld the appeal and remitted the matter back to the CCMA for a fresh determination by another commissioner..

The Full judgment  here