Contents

ACRONYMS XI
ABOUT THE AUTHORS XIV
ACKNOWLEDGEMENTS XVI

CHAPTER 1:
THE EMPLOYMENT RELATIONSHIP –
A BRIEF INTRODUCTION 1
CHAPTER OUTLINE 1
OVERVIEW 3
UNDERSTANDING THE CONCEPT 4
THE RELATIONSHIP FROM A HISTORICAL PERSPECTIVE 5
ANALYSIS OF THE RELATIONSHIP 8
THE PARTIES TO THE RELATIONSHIP 10
FACTORS IMPACTING ON INTERACTIONS BETWEEN THE PARTIES 13
REFERENT AND REWARD POWER AS PREFERRED MODES OF POWER 17
INTRINSIC FACTORS REGULATING THE RELATIONSHIP 18
EXTERNAL INFLUENCES ON THE LABOUR RELATIONSHIP 21
TRADITIONAL APPROACHES TO THE EMPLOYMENT RELATIONSHIP 24
CONCLUSION 26
SUGGESTED QUESTIONS/TASKS 26
SOURCES 26

CHAPTER 2:
THE LABOUR RELATIONS SYSTEM 28
CHAPTER OUTLINE 28
OVERVIEW 30
PART ONE: THE LABOUR RELATIONS SYSTEMS AS A SOCIETAL STRUCTURE 32
THE COMPOSITION OF A LABOUR/EMPLOYMENT RELATIONS SYSTEM 32
 IDEOLOGICAL BASIS  34
CONFLICTING ECONOMIC IDEOLOGIES  35
THE ROLE OF THE STATE  39
PART TWO: THE SOUTH AFRICAN SYSTEM 47
BACKGROUND TO DEVELOPMENTS  47
INDUSTRIALISATION – 1880 TO 1924  48
THE GROWTH OF THE MANUFACTURING AND SERVICE INDUSTRIES (1925–1948) 51
THE ASCENT TO POWER OF THE NATIONALIST GOVERNMENT (1948–1970)  54
CHANGES IN LABOUR RELATIONS (1970–1990)  59
THE 1973 BLACK LABOUR RELATIONS REGULATION ACT  60
DEVELOPMENTS POST-1990 66
ECONOMIC AND SOCIAL REALITIES IN THE NEW MILLENNIUM 73
CONCLUSION 78
SUGGESTED QUESTIONS/TASKS 79
SOURCES 79

CHAPTER 3:
LABOUR LEGISLATION 81
CHAPTER OUTLINE  81
OVERVIEW 83
RATIONALE OF THE LEGISLATIVE FRAMEWORK  85
INTERNATIONAL LABOUR STANDARDS  85
THE CONSTITUTIONAL FRAMEWORK  88
GOVERNMENT POLICY ON LABOUR AFFAIRS  89
THE NATIONAL ECONOMIC DEVELOPMENT AND LABOUR COUNCIL (NEDLAC) 91
LEGAL AND STATUTORY REGULATION OF THE EMPLOYMENT RELATIONSHIP  92
THE EMPLOYMENT CONTRACT  95
SUBSTANTIVE ACTS  115
THE LABOUR RELATIONS ACT (ACT 66 OF 1995)  117
THE LABOUR RELATIONS AMENDMENT ACT OF 2015  119
THE LABOUR RELATIONS AMENDMENT ACT OF 2018  119
THE EMPLOYMENT EQUITY ACT (ACT 55 OF 1998)  132
CONCLUSION  140
SUGGESTED QUESTIONS/TASKS  140
SOURCES  141

CHAPTER 4:
EMPLOYER AND EMPLOYEE REPRESENTATION 143
CHAPTER OUTLINE 143
OVERVIEW 145

iv Labour Relations: A southern African perspective

 PART ONE: THEORETICAL BASIS 147
TRADE UNIONS AS COLLECTIVE ORGANISATIONS  147
TRADE UNION CLASSIFICATION  148
TRADE UNION OBJECTIVES  151
METHODS BY WHICH UNIONS ATTEMPT TO ACHIEVE THEIR OBJECTIVES  152
THE ORGANISATION AND MANAGEMENT OF TRADE UNIONS  153
THE SHOP STEWARD  155
TRADE UNIONISM IN THE 21ST CENTURY  157
EMPLOYERS AND EMPLOYER ORGANISATIONS  158
PART TWO: EMPLOYEE AND EMPLOYER REPRESENTATION IN SOUTH AFRICA 162
THE LEGAL POSITION  162
THE SOUTH AFRICAN TRADE UNION MOVEMENT: A HISTORICAL PERSPECTIVE 165
UNION DEVELOPMENTS POST 1990  169
FUTURE DEVELOPMENTS  180
EMPLOYERS’ ORGANISATIONS  181
THE STATE AS THE THIRD PARTY IN THE RELATIONSHIP  183
CONCLUSION  186
SUGGESTED QUESTIONS/TASKS  186
SOURCES  187

CHAPTER 5:
COLLECTIVE BARGAINING 189
CHAPTER OUTLINE  189
OVERVIEW 191
PART ONE: COLLECTIVE BARGAINING – THEORETICAL PRINCIPLES 192
COLLECTIVE BARGAINING IN THE LABOUR RELATIONSHIP 192
COMMONALITY AS A BASIS FOR BARGAINING 193
CONFLICT AND COLLECTIVE BARGAINING 193
FORCE AND COUNTERFORCE IN THE BARGAINING RELATIONSHIP 195
CHARACTERISTICS OF A BARGAINING RELATIONSHIP 198
ESTABLISHMENT OF THE RELATIONSHIP 198
THE SCOPE AND CONTENT OF COLLECTIVE BARGAINING 199
BARGAINING STYLES 201
BARGAINING STRUCTURE 201
PLURALISM AND COLLECTIVE BARGAINING 207
PART TWO: COLLECTIVE BARGAINING IN SOUTH AFRICA 209
THE RIGHT TO FREE COLLECTIVE BARGAINING 209
FREEDOM OF ASSOCIATION AND FREEDOM FROM VICTIMISATION 209
ORGANISATIONAL RIGHTS 212
ENFORCEABILITY OF AGREEMENTS 230

Contents v
 CENTRALISED BARGAINING STRUCTURES 230
BARGAINING COUNCIL AGREEMENTS 232
BARGAINING COUNCILS IN THE PUBLIC SERVICE 236
STATUTORY COUNCILS 236
WORKPLACE RIGHTS OF UNIONS PARTY TO BARGAINING COUNCILS 237
DECENTRALISED BARGAINING STRUCTURES 237
THE ONGOING DEBATE ABOUT BARGAINING STRUCTURES 239
THE DUTY TO BARGAIN: LEGAL PRECEPTS 240
WORKPLACE FORUMS 245
CONCLUSION 245
SUGGESTED QUESTIONS/TASKS 246
SOURCES 247

CHAPTER 6:
EMPLOYEE GRIEVANCES, DISCIPLINE, DISMISSAL
AND UNFAIR LABOUR PRACTICES 248
CHAPTER OUTLINE 248
OVERVIEW 250
THE NEED FOR PROCEDURES 252
THE GRIEVANCE PROCESS 253
THE DISCIPLINARY PROCESS 258
THE DISCIPLINARY HEARING  269
DISCIPLINARY CHECKLIST 287
TERMINATION OF EMPLOYMENT: GENERAL PRINCIPLES 288
DISMISSAL OF EMPLOYEES ON FIXED-TERM CONTRACTS 297
AUTOMATIC TERMINATION CLAUSES IN CONTRACTS 301
AUTOMATICALLY UNFAIR DISMISSALS 304
THE PROTECTED DISCLOSURES ACT (ACT 26 OF 2000)  308
DISMISSAL FOR POOR WORK PERFORMANCE 319
DISPUTES ARISING FROM UNFAIR DISMISSALS 320
UNFAIR LABOUR PRACTICES 320
CONCLUSION 322
SUGGESTED QUESTIONS/TASKS 322
SOURCES 323

CHAPTER 7:
NO-FAULT TERMINATIONS: INCAPACITY, OPERATIONAL
REQUIREMENTS, MERGERS AND TRANSFERS 325
CHAPTER OUTLINE 325
OVERVIEW 326

vi Labour Relations: A southern African perspective

 THE CONCEPT OF NO-FAULT TERMINATIONS 327
DISMISSAL DUE TO ILL HEALTH OR INJURY 327
RETRENCHMENT AND REDUNDANCY 336
MERGERS, TRANSFERS AND OUTSOURCING 375
CONCLUSION 388
SUGGESTED QUESTIONS/TASKS 388
SOURCES 389

CHAPTER 8:
EMPLOYMENT EQUITY 390
CHAPTER OUTLINE 390
OVERVIEW 392
RATIONALE 393
DISCRIMINATION 393
PRE-EMPLOYMENT TESTING 395
HARASSMENT 396
THE INHERENT REQUIREMENTS OF THE JOB 398
FAIR VERSUS UNFAIR DISCRIMINATION 399
THE CONCEPT OF EQUAL CONDITIONS FOR EQUAL WORK
OR WORK OF EQUAL VALUE 412
IMPLICATIONS OF NON-DISCRIMINATION LEGISLATION FOR
POLICIES, PROCEDURES AND PRACTICES IN GENERAL  416
AFFIRMATIVE ACTION 417
CONCLUSION 446
SUGGESTED QUESTIONS/TASKS 446
SOURCES 447

CHAPTER 9:
LABOUR ECONOMICS: THEORIES AND APPLICATION 448
CHAPTER OUTLINE 448
OVERVIEW 449
THE IMPORTANCE OF LABOUR ECONOMICS 450
CLASSICAL AND NEO-CLASSICAL LABOUR MARKET THEORY 450
LABOUR MARKET MODELS 452
OTHER LABOUR MARKET THEORIES 465
THE EFFECT OF COLLECTIVE BARGAINING ON WAGE AND EMPLOYMENT LEVELS 466
THE EFFECT OF WAGE DETERMINATIONS ON EMPLOYMENT LEVELS 467
LABOUR MARKETS IN THE TWENTY-FIRST CENTURY 467
CONCLUSION 468
SUGGESTED QUESTIONS/TASKS 468
SOURCES 468

Contents vii
CHAPTER 10:
THE SOUTH AFRICAN LABOUR MARKET 470
CHAPTER OUTLINE 470
OVERVIEW 472
LABOUR MARKET PRINCIPLES OF DEMAND AND SUPPLY 473
UNEMPLOYMENT 473
BALANCING DEMAND AND SUPPLY 474
THE GOVERNMENT AND THE LABOUR MARKET 478
THE SOUTH AFRICAN LABOUR MARKET 479
INITIATIVES POST-1995 479
ECONOMIC RECESSION 482
VARIABLES IMPACTING ON EMPLOYMENT LEVELS 482
EMPLOYMENT INITIATIVES POST-2008 485
THE REALITY ON THE GROUND 488
PLANNING FOR THE FUTURE 489
CONCLUSION 490
SUGGESTED QUESTIONS/TASKS 491
SOURCES 491

CHAPTER 11:
TRADITIONAL NEGOTIATION 493
CHAPTER OUTLINE 493
OVERVIEW 495
PART ONE: CONTEXTUAL BACKGROUND 496
DEFINING THE CONCEPT 496
ISSUES WHICH TRIGGER NEGOTIATION 496
ENVIRONMENTAL FACTORS IMPACTING ON NEGOTIATIONS 497
EFFECTS OF COLLECTIVE NEGOTIATIONS ON THE ENVIRONMENT 502
CONFLICT AND POWER IN THE NEGOTIATION PROCESS 502
PART TWO: THE NEGOTIATION PROCESS 508
FACTORS CONTRIBUTING TO THE SUCCESS OR OTHERWISE OF THE PROCESS 508
PREPARING FOR NEGOTIATION 510
DETAILED PREPARATION AROUND SPECIFIC ISSUES 517
CONDUCTING NEGOTIATIONS 524
NEGOTIATION MANOEUVRES  530
PROFILE OF A SUCCESSFUL NEGOTIATOR 532
COLLABORATIVE NEGOTIATIONS 533
AGREEMENTS: THE OUTCOMES OF SUCCESSFUL NEGOTIATION 535
DISPUTES AND COERCIVE ACTION 537

viii Labour Relations: A southern African perspective

 CONCLUSION 537
SUGGESTED QUESTIONS/TASKS 539
SOURCES 539


540
CHAPTER OUTLINE 540
OVERVIEW 542
THE NATURE AND SCOPE OF LABOUR DISPUTES 544
TYPES OF LABOUR DISPUTE 544
DISPUTE SETTLEMENT METHODS 545
DISPUTE SETTLEMENT IN TERMS OF THE LABOUR RELATIONS ACT 552
DISPUTE SETTLEMENT BODIES 552
CONCLUSION 573
SUGGESTED QUESTIONS/TASKS 573
SOURCES 574

CHAPTER 13:
COERCIVE ACTION 575
CHAPTER OUTLINE 575
OVERVIEW 576
STRIKE ACTION 577
OTHER EMPLOYEE ACTIONS 582
LOCKOUTS BY THE EMPLOYER 583
STRIKES AND LOCKOUTS IN SOUTH AFRICA 584
HANDLING STRIKE ACTION 602
CONCLUSION 606
SUGGESTED QUESTIONS/TASKS 606
SOURCES 606

CHAPTER 14:
INTERGROUP CONFLICT: ANALYSIS AND FACILITATION 608
CHAPTER OUTLINE 608
OVERVIEW 609
THE CONFLICT PHENOMENON 610
VARIABLES DETERMINING CONFLICT LEVELS 612
SIGNS OF CONFLICT ESCALATION 616
STANDARD APPROACHES TO CONFLICT RESOLUTION 616
THIRD PARTY FACILITATION 617

Contents ix
 CONCLUSION624
SUGGESTED QUESTIONS/TASKS 624
SOURCES625

CHAPTER 15:
WORKPLACE DEMOCRACY AND
WORKERS’ PARTICIPATION 626
CHAPTER OUTLINE 626
OVERVIEW628
THE LABOUR RELATIONSHIP AS A SOCIAL PARTNERSHIP 630
PRINCIPLES AND PRACTICE OF WORKPLACE DEMOCRACY 630
PRINCIPLES OF WORKERS’ PARTICIPATION 631
TRADE UNION REPRESENTATION VERSUS WORKERS’ PARTICIPATION 631
LEVELS OF PARTICIPATION 632
FORMS OF WORKERS’ PARTICIPATION 632
REASONS FOR INTRODUCING AND SUPPORTING PARTICIPATION 637
DISADVANTAGES OF PARTICIPATION 638
IMPLEMENTING A PARTICIPATION SCHEME 639
WORKERS’ PARTICIPATION IN SOUTH AFRICA 640
CONCLUSION648
SUGGESTED QUESTIONS/TASKS 649
SOURCES649

CHAPTER 16:
ORGANISATIONAL DEVELOPMENT
IN THE NEW MILLENIUM 650
CHAPTER OUTLINE 650
OVERVIEW651
THE NEED FOR CHANGE 652
IMPLEMENTING A CHANGE PROCESS 654
CONCLUSION658
SOURCES658

INDEX659

x Labour Relations: A southern African perspective

 Acronyms

ACAS �������������������������� Arbitration Conciliation Advisory Service

AFCWU ���������������������� African Food & Canning Workers’ Union
AFL-CIO ��������������������� American Federation of Labour-Congress of Industrial
Organisations
AHI ����������������������������� Afrikaanse Handelsinstituut
ANC ���������������������������� African National Congress
ASGISA ���������������������� Accelerated Shared Growth Initiative for South Africa
ASSOCOM ������������������ Associated Chambers of Commerce
AWUSA ���������������������� Amalgamated Workers’ Union of South Africa
AZACTU ��������������������� Azanian Congress of Trade Unions
AZAPO ����������������������� Azanian People’s Organisation
BAWU ������������������������� Black Allied Workers’ Union
CCATU ������������������������ Coordinating Committee of African Trade Unions
CCAWUSA ������������������ Commercial Catering & Allied Workers’ Union of
South Africa
CCMA ������������������������� Commission for Conciliation, Mediation & Arbitration
CCOBTU ���������������������� Consultative Committee of Black Trade Unions
CDU ����������������������������� Christian Democratic Union
CEC ����������������������������� Central Executive Committee (COSATU)
CIUWW ���������������������� Council of Industrial Unions of the Witwatersrand
CLOWU ����������������������� Clothing Workers’ Union
CNETU ������������������������ Council of Non European Trade Unions
COSATU ���������������������� Congress of South African Trade Unions
CSU ����������������������������� Christian Socialist Union
CTMWA ���������������������� Cape Town Municipal Workers’ Association
CUSA �������������������������� Council of Unions of South Africa
DGB ���������������������������� Deutsche Gewerkschaftsbund
EEC ����������������������������� European Economic Community
FCI ������������������������������� Federated Chamber of Industries
FCWU ������������������������� Food & Canning Workers’ Union
FEDSAL ���������������������� Federation of South African Labour
FEDUSA ���������������������� Federation of Unions of South Africa
FITU ���������������������������� Federation of Independent Trade Unions
FNETU ������������������������ Federation of Non European Trade Unions
FOFATUSA ����������������� Federation of Free African Trade Unions of South Africa
FOSATU ���������������������� Federation of South African Trade Unions
FPD ����������������������������� Free Democratic Party
GAWU ������������������������� General & Allied Workers’ Union
GEAR �������������������������� Growth Employment and Redistribution Strategy
GFWBF ����������������������� General Factory Workers’ Benefit Fund
GWU ��������������������������� General Workers’ Union
GWUSA ���������������������� General Workers’ Union of South Africa
HRDS �������������������������� Human Resource Development Strategy
IAS ������������������������������ Industrial Aid Society
ICWU �������������������������� Industrial & Commercial Workers’ Union
ILO ������������������������������ International Labour Organisation
IWA ����������������������������� Industrial Workers of Africa
JCATU ������������������������� Joint Committee of African Trade Unions
JIPSA �������������������������� Joint Initiative for Priority Skills Acquisition
LIFO ���������������������������� Last in, first out
MACWUSA ���������������� Motor Assembly & Component Workers’ Union of
South Africa
MICWU ����������������������� Motor Industry Combined Workers’ Union
MMD ��������������������������� Movement for Multiparty Democracy
MWASA ���������������������� Media Workers’ Association of South Africa
MWU �������������������������� Mineworkers’ Union
NAAWU ���������������������� National Automobile & Allied Workers’ Union
NACTU ������������������������ National Council of Trade Unions
NAFCOC ��������������������� National African Federation of Chambers of Commerce
NASRAIEU ����������������� National Sugar Refining & Allied Industries
Employees’ Union
NEDLAC ��������������������� National Economic Development & Labour Council
NF ������������������������������� National Forum
NFW ���������������������������� National Federation of Workers
NMC ���������������������������� National Manpower Commission
NUDAW ���������������������� National Union of Distributive & Allied Workers
NUM ��������������������������� National Union of Mineworkers
NUMARWOSA ����������� National Union of Motor & Rubber Workers of
South Africa
NUMSA ���������������������� National Union of Metalworkers of South Africa
OECD �������������������������� Organisation for Economic Cooperation and Development
PAC ����������������������������� Pan African Congress
PEBCO ������������������������ Port Elizabeth Black Civic Organisation
RAWU ������������������������� Retail & Allied Workers’ Union
RDP ����������������������������� Reconstruction & Development Programme

xii Labour Relations: A southern African perspective

SAAWU ���������������������� South African Allied Workers’ Union
SABS ��������������������������� South African Boilermakers’ Society
SACCOLA ������������������� South African Coordinating Committee on Labour Affairs
SACLA ������������������������ South African Confederation of Labour Associations
SACOB ������������������������ South African Chamber of Business
SACP ��������������������������� South African Communist Party
SACTU ������������������������ South African Congress of Trade Unions
SACTWU �������������������� South African Clothing & Textile Workers’ Union
SACWU ����������������������� South African Chemical Workers’ Union
SAFTU ������������������������ South African Federation of Trade Unions
SALDRU ��������������������� South African Labour Development & Research Unit
SANCO ������������������������ South African National Civic Organisation
SARHWU �������������������� South African Railway & Harbour Workers’ Union
SASBO ������������������������ South African Society of Bank Officials
SATUC ������������������������ South African Trade Union Council
SEAWU ����������������������� Steel, Engineering & Allied Workers’ Union
SETA ��������������������������� Sector Education and Training Authority
SEIFSA ����������������������� Steel and Engineering Industries Federation of South Africa
SPD ����������������������������� Social Democratic Party
TLC ������������������������������ Trades & Labour Council
TUACC ������������������������ Trade Union Advisory & Coordinating Council
TUC ����������������������������� Trades Union Congress (Britain)
TUCSA ������������������������ Trade Union Council of South Africa
UDF ����������������������������� United Democratic Front
UNIP ��������������������������� United National Independence Party
UNISA ������������������������� University of South Africa
UTP ����������������������������� Urban Training Project
UWUSA ���������������������� United Workers’ Union of South Africa
WPGWU ��������������������� Western Province General Workers’ Union
WPWAB ���������������������� Western Province Workers’ Advice Bureau
ZCTU ��������������������������� Zambian Congress of Trade Unions

Acronyms xiii
 About the Authors

Sonia Bendix spent 22 years in tertiary education after serving as manpower manager at the
then Cape Chamber of Industries. Her time at the Cape Peninsula University of Technology
was spent first as senior lecturer and then as head of the Department of Human Resource
Management. She was a member of the National Standards Body for Human and Social
Sciences, the Standards Generating Body for Human Resource Management and Practice, and
the Board for Personnel Practice Task Team coordinating qualifications. In these capacities
she helped to draft many of the Unit Standards. She has trained and consulted widely in
industry and the public service and therefore has extensive knowledge of industrial relations
and human resource practices. Previous texts by Sonia Bendix include Industrial Relations
in South Africa; The Basics of Labour Relations; Industrial Relations and Organizational
Dynamics and Labour Relations in Practice: An outcomes-based approach.
Atang Ntisa is a lecturer in Labour Relations Management at the Vaal University of
Technology. He spent time as a senior Labour Relations Practitioner at the Department of
Labour in Bloemfontein, dealing with disciplinary processes and education in labour-related
matters. He has a BTech and a Master’s degree in Labour Relations Management, and a
BTech degree in Human Resource Management. He has published a number of scholarly
articles on labour relations issues with special emphasis on contracts of employment. Atang
Ntisa is registered as a chartered HR Practitioner with the South African Board for People
Practice (SABPP). He is also a member of the Universities of Technology forum for Human
Resource Management and Human Resource Development where he sits for re-curriculation
of the syllabi.
Jenni Gobind lectures in the Department of Industrial Psychology and People Management at
the University of Johannesburg. She has eight years of lecturing and consulting experience,
which includes her time as lecturer at the Durban University of Technology. She holds a
PhD in Employment Relations, a Master’s degree in HIV/AIDS Management and diplomas
in Employment Relations Management and Industrial Relations Management. Her areas of
research include Employment Relations, Programme Monitoring and Evaluation, and HIV/
AIDS in the workplace. She has written extensively on Employment Relations and HIV/
AIDS workplace-related issues.
Paul Smit is a full-time senior lecturer for Labour Relations in the Department of Human
Resource Management at the University of Pretoria. He is also involved in a three-year
research project on Transnational Labour Relations in SADC. He has almost 20 years’
experience in the private sector where he consulted with employers and trade unions on a
wide variety of labour relations and labour law issues. He has argued cases in the Labour Court
and has appeared at the CCMA for both conciliation and arbitration on numerous occasions.
He is a member of SASLAW and ILERA and is a registered HR Professional in the category
Employee Relations with the SABPP. He holds a PhD in Labour Relations Management
and postgraduate diplomas and certificates in Labour Relations and Human Resource
Management. He has presented various papers at national and international conferences
and published numerous articles in academic journals, both locally and internationally. Paul
Smit has been visiting researcher and research fellow at the Vrije Universiteit Amsterdam
(Netherlands), KU Leuven (Belgium) and Goethe-Universität (Frankfurt, Germany).

About the Authors xv

 Acknowledgements

My appreciation goes out to Jenni Gobind at the University of Johannesburg (UJ), Paul
Smit at the University of Pretoria (UP) and Atang Ntisa at Vaal University of Technology
(VUT) for their contributions to chapters 7 and 8, chapters 4 and 13 and chapters 9 and 10
respectively.
 1

The Employment Relationship –

A Brief Introduction

Chapter Outline
OVERVIEW
UNDERSTANDING THE CONCEPT
Emphasis on the Relationship • Ambits of the Relationship
THE RELATIONSHIP FROM A HISTORICAL PERSPECTIVE
The Industrial Revolution | Revolution as Change Agent | Pre-industrial Society | The Factory System and
the Emergence of the Working Class | Effects on the Relationship • The ‘Second’ Industrial Revolution
• The ‘Third’ and ‘Fourth’ Industrial Revolutions
ANALYSIS OF THE RELATIONSHIP
The Employment Relationship as a Human Relationship • Uniqueness of the Relationship • Economic
Basis of the Relationship • Negative Attitudes in the Relationship • Impersonal Nature of the
Relationship • Complexity of the Labour Relationship
THE PARTIES TO THE RELATIONSHIP
Employer and Employee Roles • The State as Party to the Relationship • The Union as Party to the
Relationship • A Layered Perspective
FACTORS IMPACTING ON INTERACTIONS BETWEEN THE PARTIES
Common Interests and Interdependence • Conflict and Collective Bargaining | Potential for Conflict |
Functional and Dysfunctional Conflict • The Power Dynamic | Shifting Nature of Power | Predominance
of Coercive Power
REFERENT AND REWARD POWER AS PREFERRED MODES OF POWER
The Freedom of the Individual versus Allegiance to the Collective • The Interaction Continuum
INTRINSIC FACTORS REGULATING THE RELATIONSHIP
Custom and Tradition • Legislation • Mutual Agreement • Ethical Considerations: Trust, Integrity and
Fairness | The Need for an Ethical Framework | The Concept of Fairness
EXTERNAL INFLUENCES ON THE LABOUR RELATIONSHIP
The Sociopolitical System • Societal Influences • The Economic Dispensation • The Influence of Trade
Unions • Additional Influences
TRADITIONAL APPROACHES TO THE EMPLOYMENT RELATIONSHIP
The Unitary Approach • The Radical Approach • Pluralism
CONCLUSION
SUGGESTED QUESTIONS/TASKS
SOURCES

2 Labour Relations: a southern African perspective

 Overview
Employment Relations cannot be studied before some background to the subject
has been obtained and some basis for analysis and interpretation established. It is
necessary, firstly, to analyse the concept and to identify the main elements. After
that the logical step is to analyse the relationship itself and to see what sets it apart
from other relationships.
The employment relationship is one in which one or more persons are employed
by a private owner or work provider, by a large corporation, or in the public service.
Historically, the employment relationship was marked by certain negative attitudes,
a great degree of depersonalisation and feelings of powerlessness among employees.
These feelings arose mainly from the type of work as well as traditional attitudes to
work and the work situation which evolved from the Industrial Revolution.
Attitudes to work and the work relationship did not change much with the advent
of the second industrial revolution which saw the introduction of the assembly line
and continued mass production. This situation began to change in the second half
of the twentieth century with the escalating use of digital technology. Since then
the rate of change has been exponential, with continuing scientific discoveries and
predictions of radical changes in the way business is done.
After analysing the basic characteristics of the traditional relationship, it is
necessary to identify the parties and the roles adopted by each, to discover how they
interact and why they interact in that manner. Commonality and conflict are the two
poles in the relationship. The parties can either cooperate and engage in participative
processes or rely on the use of power and collective bargaining. However, these
processes are not mutually exclusive. Parties may move continually between the two
poles established by commonality and conflict. Attention may also shift between the
individual and the collective.
The way in which the parties interact will depend largely on the interaction
between custom and tradition, legal determination and mutual agreement. Integrity,
trust and concepts of fairness play an important role.
In addition, there are numerous external factors which influence the manner
in which the parties behave towards each other. These include sociopolitical
and economic factors and the role of trade unions, as well as demographic and
technological developments. The nature of the work being performed will also
influence the interaction. This means that the relationship as we know it will change
in an increasingly digitalised world.
Finally, we identify the three classical approaches to the relationship – namely,
unitarism, radicalism and pluralism – although none of these may be practised in
their purest form and approaches may change with changing circumstances.

Chapter 1: The Employment Relationship – A Brief Introduction 3

Understanding the Concept

Emphasis on the Relationship

The relationship which is the focus of this text has been variously referred to as industrial
relations, labour relations and employment relations.
Labour or work relationships have existed since the first individual approached another
to perform a task against the promise of payment.
However, the employment relationship as a specific area of study is comparatively
new. It had its origins in the Industrial Revolution and in subsequent attempts to regulate
the interactions between the new breed of employer and employee which evolved in
industrialised society. This new work relationship was based on mass employment and mass
production, and was marked by a growing division between those who owned and those
who laboured. The result was a greater potential for conflict. Because workers were overall
poorly treated, trade unions were formed to represent their interests and to counter the
power of employers. In order to contain the conflict, bargaining processes were instituted
and, eventually, governments began to pass laws to regulate the relationship. Thus, the field
then known as Industrial Relations was born.
Industrial Relations as a concept placed emphasis on the institutionalisation of conflict by
way of collective representation, collective bargaining, joint regulation and laws intended
to regulate the relationship. This emphasis can be seen in most traditional definitions of
the term ‘industrial relations’. Thus the British Commission on Industrial Relations defined
the term as including ‘… any policy action, pay condition or agreement within a given
concern which enables the workforce to continue in a cooperative way’, while Clegg (1972)
saw it as encompassing ‘… the rules governing employment, together with the ways these
rules are made and changed and their interpretation and administration’. Flanders (1970),
too, emphasised the institutionalised aspects of the relationship when he stated that an ‘…
industrial relations system is a system of rules … in other words, the subject deals with
certain regulated, institutionalised relationships, in industry’.
These definitions did point to the need for the regulation of the relationship and the fact
that interactions are predominantly collective, but they are too narrow for present purposes.
We live in what is known as a post-industrial society based on sophisticated economic
activity, usually counterbalanced by an accountable public service as well as welfare
systems and programmes. Our interest, therefore, lies with all relationships arising from
work which contribute to, support or promote the economy, or which provide a service for
or within society. Consequently, the term labour/work relations, or, better still, ‘employment
relations’, is preferred.

Ambits of the Relationship

From previous discussions we see that, in our study of labour/employment relations, we are
dealing with relationships between people within a work situation; that these relationships

4 Labour Relations: a southern African perspective

may be of an individual or collective nature; that they may differ from one society to
another; and that they give rise to actions, reactions, processes, rules, institutions and
regulations which, in turn, will affect the relationship itself. On the basis of this analysis,
labour/employment relations as a discipline may be described as encompassing a study of:
■■ relationships
■■ the work situation and working man
■■ the problems and issues of modern industrial and post-industrial society
■■ certain processes, structures, institutions and regulations unique to this relationship.

All of these are placed or occur within a specific social, political, economic and historical
context, and none can or should be studied in isolation.

The Relationship From a Historical Perspective

History plays an important role in shaping individual attitudes, societal norms and
institutions. Therefore the employment relationship should be placed in the context of one
of the most important occurrences in economic history, the Industrial Revolution.

The Industrial Revolution

Revolution as Change Agent
The Industrial Revolution was a social and economic convulsion which commenced in
the fourteenth century, or even earlier. The most important changes at this stage were the
introduction of the printing press, the invention of the steam engine and the establishment of
factories, most notably in the textile industry. Because the Industrial Revolution changed the
economic order, it had an immense effect on existing social structures, on the perceptions of
individuals and society at large, and on working life. Together with the French Revolution,
it played a major role in shaping the type of society we know today.

Pre-industrial Society
In pre-industrial society, work was traditionally determined. A marked division existed
between wealthy landowners and peasants. Working people – with the exception of
merchants and those in service – were engaged either in agriculture or in an established
craft. Small communities were formed, in which labour was seen not as employment,
but rather as fulfilling a particular function in society. The idea of earning a living was
secondary to the fulfilment of this traditional or functional role.
Until the eighteenth century the striving for gain or excess profit, as we know it, was
generally regarded as highly immoral. Heilbroner (1980) quotes the example of a sermon
delivered in a Boston church in the year 1644. The minister, referring to a certain Keayne,
charged with the crime of making more than sixpence profit in a shilling, goes on to expand
on the following ‘false’ principles of trade:

Chapter 1: The Employment Relationship – A Brief Introduction 5

■■ that a man buys low and sells high
■■ that a man raises prices to make up for losses suffered
■■ that a man sells expensively because he bought expensively.

This does not mean that wealth did not exist. It did, in the form of private wealth, but there
was little or no attempt to put it to aggressive use – that is, to risk it in order to accumulate
more capital.

The Factory System and the Emergence of the Working Class

By the middle of the eighteenth century the old feudal order was already on the decline and
the industrial era was born. This was partly due to the use of new energy sources such as
steam and the invention of new machines which could do the work previously done by hand
or handheld tools at a much more efficient rate.
Moreover, society now began to accept that man was necessarily greedy for gain, that
gain was the centre of commercial activity and that no law should exist against gain. The
owners of capital established factories in which masses of workers performed relatively
humdrum tasks. With the exception of a few who had special skills, workers were selling not
their own products or know-how but their labour. It stands to reason that work lost much
of its meaning and that working man had to search for a new identity. This he later found
in the working class and through membership of trade unions.

Effects on the Relationship

New relationship patterns had to be established. Particularly during the early years of
industrialisation, workers suffered great hardships. Many saw capitalist activities as based
on the principle of keeping the poor poor. The idea took root that the capitalists, through
their control of economic activity, had forced the ordinary man into a situation where he
had to abandon his traditional role in society and sell his labour for a wage which was
often below subsistence level, all to the benefit of the employer. This is a perception which,
sometimes unjustifiably so, is still held by many employees today. It contributes greatly to
the negative attitude many workers hold towards their employment and to the basic conflict
between employer and employee.
Much has been said of the negative effects of the Industrial Revolution and little of the
positive results, such as greater progress and development in all spheres and, later, a general
improvement in the standard of living of all people. Our concern is mainly with the fact that
the Industrial Revolution gave rise to a new type of society, centred on economic activity,
and thus to economic man. Employment Relations, as a human science, concentrates on
the latter – namely, economic man. The most important consequences of the Industrial
Revolution were, therefore:
■■ the removal of economic activity from the individual’s personal and social life
■■ the depersonalisation of work and, consequently, of the employment relationship

6 Labour Relations: a southern African perspective

■■ the polarisation between the mass of the employed, on the one hand, and the owners,
or managers, on the other
■■ the rise of a working-class consciousness
■■ the growth of trade unionism
■■ the negative attitudes engendered by the new dispensation
■■ the central role now played by economic activity, causing it to become the main aspect
of man’s life and one which impacts greatly on his personal, social and political life
■■ the predominance of capitalism, being the ownership by one or more persons of the
‘tools’ of production
■■ the consequential concept of ‘selling labour’
■■ the disempowerment of the producers of such labour.

The ‘Second’ Industrial Revolution

By the middle of the nineteenth century the Second Industrial Revolution had already
begun. This phase was marked by more and more scientific discoveries, more sophisticated
technology , increased automation, the use of petroleum and electricity and the introduction
of the assembly line, most notably in the production of motor cars in the late nineteenth/
early twentieth century.
Even though trade unions had gained in strength and influence and there was greater
socialisation of the economy, the major problems caused by industrialisation were still
prevalent in the work situation. No significant reconciliation occurred between man’s
working life and his personal or social life. Work and the employment relationship were
still by and large of a depersonalised nature. Polarisation, although perhaps not as great as
before, continued to exist and the role of trade unions remained antagonistic.

The ’Third’ and ‘Fourth’ Industrial Revolutions

The latter part of the twentieth century saw an exponential increase in scientific discovery,
resulting in the advent of digitalisation worldwide and introducing what has been dubbed the
‘third’ industrial revolution. Positive changes took place: improved education and training,
as well as the growing tendency to flatten and decentralise organisational structures, began
to blur the distinctions between different groups of employees, and between employers or
managers on the one hand and ‘workers’ on the other. Gigantic projects emphasised the
need for a team approach. It was thought that new meaning could be achieved by greater
personal ownership of work and by the recognition of individual and collective value,
while equalisation and team activity would improve identification and social interaction,
resulting in a completely new attitude to work.
Yet, as Thompson (1986) stated, it had to be acknowledged that ‘Behind the glossy
advertisements showing futuristic electronic equipment lies the reality of more routine
tasks and fewer skilled jobs’. Escalating automation made the individual and his labour
increasingly dispensable. Global mergers and downsizing became the order of the day.

Chapter 1: The Employment Relationship – A Brief Introduction 7

The new millennium has seen the onset of the so-called ‘fourth’ industrial revolution. In
essence it is a carry-on from digitalisation but is characterised by almost mind-boggling
scientific advances such as robotics, self-driven cars, cloning, nanotechnology and prospects
of advanced exploration of the universe.
In many ways it has seen Thompson’s predictions coming true. This is substantiated by
Jeremy Rifkin who in 2012 predicted that manufacturing would no longer be at the centre of
economic activity and that labour costs would become less and less important. Unemployment
has been increasing worldwide since the last century while productivity has decreased
significantly. Work is increasingly outsourced to independent experts/contractors. Experts like
Rifkins and Klaus Schwab of the World Economic Forum are warning that organisations and
governments need to change the way in which business is done. It seems that the world needs
to move away from capitalism and large organisations to what is called a ‘shared economy’.
Ultimately, the question to be asked is whether work, in the form of salaried labour, will
not eventually disappear. This would point to an entirely new social and economic order;
one of which most of us cannot as yet conceive.
While we have to be aware of possible future developments, we still need to concentrate
on the work situation as it exists today and to direct our efforts at improving and possibly
changing the nature of the relationship and the nature of work.

Analysis of the Relationship

While it has similarities with other relationships, the employment relationship differs from
other relationships in that it has an economic base, is often impersonal, and is marked by
negative attitudes on both sides. As a result it may be more complex than other relationships.

The Employment Relationship as a Human Relationship

Labour/employment Relations is concerned with people who, because of their mutual
involvement in the work situation, have been placed in a specific relationship with one
another. The relationship formed is a human one and, as such, will contain elements
common to all other relationships – friendship, marriage, business partnerships and social,
religious and political liaisons. What makes those relationships work should also promote a
sound employment relationship.
Consequently, like all other relationships, the labour/employment relationship will be
improved by:
■■ mutual interests
■■ mutual support
■■ understanding trust
■■ meaningful communication
■■ shared goals and shared values.

8 Labour Relations: a southern African perspective

Also, as in the case of all other relationships, the employment relationship is multilayered
and dynamic. It changes as the status, needs, attitudes and perceptions of the parties change
and as society itself evolves.

Uniqueness of the Relationship

The major distinguishing feature of this relationship is the fact that it arises from the need
for economic activity in society and from man’s need to work and to earn a living, but its
uniqueness is to be found in:
■■ the societal and individual importance of the relationship
■■ the often-negative attitude of the parties involved
■■ the depersonalised and mostly collective nature of the relationship itself.

Economic Basis of the Relationship

Modern society is economically based. The greater part of our activities and institutions centre
on the economy. As a result man’s identity is most often derived from the type of economic
activity in which he is engaged. Who you are depends on what you do. Considering that
at least one half of our waking hours is devoted to work, then work and the relationships
established in the work situation are among the most important aspects of modern human life.

Negative Attitudes in the Relationship

Despite the importance attached to work, attitudes to the employment relationship are not
always positive. This originally arose from traditional attitudes to work and to workers,
and from the problems which came with industrialisation and mass production. Even today
these negative attitudes may persist, due mainly to the problems discussed below.

Impersonal Nature of the Relationship

The parties to the employment relationship do not usually display that sense of partnership,
closeness and mutual commitment found in most other relationships. This stems from the
almost involuntary and impersonal nature of the relationship.
An employee does not seek work with a particular employer because he likes that
employer or because he is in any way committed to the undertaking, (although this may
later occur). Essentially, he takes a job and enters the relationship merely to fulfil other,
more personal, needs.
Equally, the employer or the manager who represents him has no personal interest in
the relationship or, for that matter, in the employee. The employer is not interested in the
individuality of the worker or in his unique characteristics as a human being different from
all other human beings, but merely in his ability to perform the work required. At worst,
the employer sees the worker as just another factor of production and, at best, as another,
replaceable, member of the labour force.

Chapter 1: The Employment Relationship – A Brief Introduction 9

Furthermore, the employment relationship is usually described in collective terms – not
as a relationship between an employer and employee but as one between employers and
employees. Both parties, and particularly the employee, are placed in a group context,
leading to further depersonalisation. This perception of collectivism is made worse by
societal divisions between those who work for others and those who own or manage. It is
these divisions which led to the concept of a working class, where the word ‘work’ connoted
not an action in itself, but the act of working for others.
The negativity often found in the relationship is aggravated by the fact that employees
may feel forced, because of circumstances, lack of education or personal limitations, to
work or to do a certain type of work, while they might prefer to be engaged in other, more
attractive, pastimes or occupations.
Negativity would also increase if there is:
■■ a markedly uneven distribution of wealth
■■ if employees cannot see themselves as being advantaged by the increased profitability
of the undertaking
■■ if too much power rests with some of the participants
■■ if, in the extreme, employees regard the situation as an ‘unfair’ deal brought about by
an ‘unfair’ system.

Complexity of the Labour Relationship

From the above, it becomes apparent that the employment relationship is both complex
and paradoxical by nature. The relationship itself and the manner in which it is conducted
are of immense importance to the individual and to society, yet both parties approach the
relationship and each other with a certain amount of negativity and indifference. It is also
a relationship in which perceptions of collectivity, from both sides, play an important role.
The result is that personal identities are lost in the anonymity of the collective. Nevertheless,
only the assertion of, and respect for, individuality can lead to personal satisfaction and
meaningful relationships. It is these paradoxes which the Labour/Employment Relations
student and practitioner will be required to resolve.

The Parties to the Relationship

The labour/employment relationship is traditionally described as a tripartite relationship
between employers, employees and the State. However, as the term indicates, the employment
relationship is, at its core, a relationship between the employer and employee(s). This is
known as the primary relationship, while the relationship with the State forms the secondary
relationship. Also, the traditional description does not take into account the role of trade
unions and employer organisations as representatives of the parties. In certain circumstance
these bodies may exert as much influence over the relationship and the system built around
it as does the State; thus, the labour/employment relationship is best described as:

10 Labour Relations: a southern African perspective

 a relationship between an employer and employee/employees as the main
partners, with the State, to a greater or lesser extent, playing a regulatory and
protectionist role, and with unions and employers’ organisations wielding, at
times, substantial influence as the collective representatives of the core parties.

Employer and Employee Roles

As in many other relationships, the roles and status of the parties to the employment
relationship are, to a large extent, assigned by custom and tradition. Traditionally, the
employer, owner or entrepreneur plans, decides, directs and controls, while the employee
executes the orders of the owner, takes no part in decision-making or planning, and is not
concerned with the results of his actions. These roles are still accepted and upheld by most
participants in the employment relationship, resulting in a more or less willing acceptance
of what may loosely be termed ‘employer prerogative’. It could be said that the challenge
to employer prerogative has lately gained impetus, but the mere fact that it needs to be
challenged proves its existence. Despite changes in societal values and systems, individual
beliefs and goals and organisational and ownership structures, the roles adopted by the
employer and employee remain, in essence, the same as those held at the beginning of the
twentieth century. Managers of large corporations, who are themselves employees, but who
view themselves as representatives of the employer, have unquestioningly accepted both the
traditional role of the employer, and the employer prerogative.
Without a doubt, technological advancement, working from home and increased
outsourcing will lead to changes in the role definition of the participants, and the erosion (or
redefinition) of employer (or management) prerogative. The right of employers or managers
unilaterally to plan, decide, direct and control will be increasingly challenged or become
redundant. This does not signify that no coordination will be required, but rather that the
word ‘management’ will take on an entirely different meaning.

The State as Party to the Relationship

In most societies, the State will, at the very least, provide minimum legal protection to the
parties in the relationship and, if necessary, establish a framework for the peaceful conduct
of the relationship. The degree to which the State interferes (or is allowed to interfere) in the
relationship varies from one country to the next, and will depend not only on the nature
of the relationship itself but also on the predominant ideological and political beliefs of the
society in which the relationship is conducted (see Chapter 2).
There is one instance in which the State becomes a full partner in the employment relationship.
Because it administers a vast public sector, the State is also an employer, a role which may
conflict with its other roles of legislator, conciliator and regulator. Traditionally, the State is
regarded as a different type of employer from the private-sector employer. The argument goes
that the State is a non-profit organisation and that it gains its income from society, including
its own employees. In the past this has led to the adoption of different employment relations
legislation in the public sector, and often to limitations being placed on collective bargaining
and the freedom to strike in this sector; but, as all else, this is also changing.

Chapter 1: The Employment Relationship – A Brief Introduction 11

 primary relationship
Employers Employees

secondary relationship
State

figure 1.1: the parties to the labour relationship

The Union as Party to the Relationship

The employment relationship is also, at times, described as a management-union
relationship or, less frequently, as a relationship between an employer organisation and a
union or unions. This, however, does not take into account a relationship where no union
or employer body exists.
The term ‘union’ is an abstraction for a collectivity of employees. Strictly speaking, a
union does not have an existence independent of the totality of its members. As a social
structure, it does gain a seemingly separate existence and can wield significant power, both
in the relationship and in society. However, if its grassroots support falls away, the union
will no longer exist. Thus, although unions have played, and continue to play, an important
role in traditional labour/employment relations, they may not always be essential to the
employment relationship.
As it is, unions continue to play a significant role in the South African system, as
representative of employee interests and rights, both at the bargaining table and in social
and political structures (see Chapters 2 and 4).

A Layered Perspective
In the preceding discussion, the employer and employee were placed at the centre of the
relationship, with the degree of State interference varying from system to system. Unions,
too, could play a dominant or merely a peripheral role in the relationship. The situation is
further complicated by the fact that the State acts as an employer and thus has to regulate
itself.

12 Labour Relations: a southern African perspective

 Dominant Political Party

State as Regulator

public sector
employer (state) private sector

Unions Employers’
Organisations
employees

figure 1.2: a multifaceted perspective of the relationship

As explained in Chapter 2, the role adopted by the State depends on a number of interrelated
factors, two of which are the sociopolitical and economic principles of the dominant
political party and the strength or acceptance of trade unions in the system. Trade unions
may in their turn wield extensive influence in the sociopolitical system. All of the above can
be factored into a more multifaceted view of the relationship, as illustrated in Figure 1.2.

Factors Impacting on Interactions between the Parties

Numerous factors will affect the labour relationship. The most important of these are:
■■ the extent to which the parties acknowledge that they have common interests and agree
to cooperate with one another
■■ the level of conflict in the relationship and the emphasis placed on collective bargaining
■■ the distribution of power between the parties and the type of power applied
■■ the degree to which participants, and union members in particular, are free to make their
own decisions versus their allegiance to the collective.

From the above, an interaction model can be developed. See Figure 1.3 on page 19.

Common Interests and Interdependence

In any relationship there is a certain commonality of interest. In the labour/employment
relationship, commonality is found in the fact that both the employer and the employee –
and the State, for that matter – have a vested interest in the continued profitable existence
of the undertaking. The employer, in order to produce certain goods or services and to

Chapter 1: The Employment Relationship – A Brief Introduction 13

reap the intended profits, creates work for the employee who, in turn, accepts the work
in order to gain remuneration, status and/or personal satisfaction. Consequently, both are
interdependent, and both should be interested in advancing the work process to the highest
possible level of efficiency as both will (or should) reap the benefits of continued profitability.
Where common interests exist, a certain measure of cooperation becomes essential. In
the employment relationship, each party needs the other to achieve his own ends. Therefore,
whether he wants to or not, he cooperates in order to achieve his own goals. Although many
people do not think so, cooperation still forms the basis of the relationship. If this were not
the case, very little economic activity would occur. Rationally, therefore, we could assume
that the relationship should be conducted in a spirit of harmony and mutual support.
Unfortunately, this is not always the case, mainly for the following reasons:
■■ First, employees in particular do not see themselves as having anything in common with
the employer or manager, this view is the result of their traditionally assigned roles and
behaviour within these roles, the negativity in the relationship, the polarisation between
the parties and the perception of unequal reward.
■■ Secondly, commonality of interest is often overshadowed by conflict in personal and
group goals, values, interests and ideologies, and the situation is made worse by social
and political conflicts which intrude on the work situation.
■■ Thirdly, the employer does not see himself as dependent on a particular employee,
but on the employee’s labour – which, from the employer’s perspective, he buys and
relinquishes at will.
■■ Finally, and most importantly, not enough emphasis is placed on processes and
structures which promote cooperation in the workplace. Instead, the emphasis has fallen
on the institutionalisation of conflict. This is true of both traditional theory and its
implementation in practice.

Fortunately, new insights into the relationship have made practitioners realise that merely
containing conflict does not develop the relationship. If development is what they want, they
will have to focus on the commonality in the relationship and, therefore, on cooperative or
participative processes. In South Africa, there have been attempts to balance conflict and the
process of collective bargaining with cooperation and greater worker participation (see Chapter 15).

Conflict and Collective Bargaining

Potential for Conflict
The potential for conflict in the employment relationship is infinite. At its most basic level,
conflict can be seen in disagreements about the division of profits and benefits. Employees
will want as much as possible in the form of wages, benefits and leisure, while the employer
wants to maximise profits for payouts to shareholders, expansion and reinvestment. On a
more sophisticated level, conflict centres on matters such as:
■■ role and status definition
■■ decision-making powers

14 Labour Relations: a southern African perspective

■■ accountability structures
■■ flexibility and control
■■ a conflict of personal values and goals, beliefs and ideologies.

(See Chapter 14.)

Functional and Dysfunctional Conflict

Studies in conflict prove that conflict in itself is not always bad; in effect, a certain level of
conflict is functional. It prevents stagnation. Conflict in a relationship is not at issue. Such
conflict will become dysfunctional only if it reaches destructive proportions, is not balanced
by cooperation and is not handled in the proper manner.
In the employment relationship, it has long been accepted that conflict is endemic; consequently,
processes have been devised to handle and contain conflict. This has led to the acceptance of
collective bargaining as a predominant process in the relationship. Collective bargaining prevents
one party to the relationship from pursuing his own interest at all costs, and thus prevents conflict
from reaching unmanageable proportions. However, it can be argued that too much emphasis is
placed on collective bargaining as the most preferred method of resolving conflict.
Collective bargaining, particularly distributive bargaining, results in compromise
solutions and very often in a win–lose or lose–lose result (see Chapter 5). By contrast,
it is generally accepted that integrative problem-solving, relying on a large measure of
cooperation, is a far superior method of resolving conflict, since it usually results in a win–
win solution, which is more universally acceptable (see Chapter 14).

The Power Dynamic

Shifting Nature of Power
Because it is most often based on win–lose outcomes, the process of collective bargaining,
as practised in contemporary labour/employment relations, relies greatly on the use of
power. In fact, collective bargaining commences only when one side sees the other as
holding power and the process involves continual attempts to balance or equalise power.
The amount of power wielded by either party at any particular time is dependent on certain
power variables. Of these, the most important are:
■■ dependence
■■ importance
■■ scarcity
■■ non-substitutability.

The more dependent an employer is on an employee, the more power that employee will wield
over him. The more important an employee or group of employees is to an organisation,
the more power will be wielded by those employees. When jobs are scarce, employers wield
more power. When an employee cannot be replaced, he finds himself in a position of power.

Chapter 1: The Employment Relationship – A Brief Introduction 15

Power is never constant or held by only one party; it is continuously shifting from one party
to another. In the past it was believed that the more balanced the power, the better would
be the outcome. Magenau and Pruitt (1979), for example, maintained that, when power is
balanced, there is usually an easy agreement of high value. Unfortunately, a balance of
power is often unachievable. As soon as one party sees that the other has equal power, the
former will try to gain greater power. This results in continuing power competition. It is
important to note this phenomenon. Most traditional employment relations and collective
bargaining theories rest on the assumption of a power balance between the parties. This
may, in many instances not be possible .
The State also holds power over the work relationship. Depending on its ideological
orientation, the State may decide to interfere in the relationship and may thereby equalise
power between the parties or tip the scales in favour of either the employer or employees.
Thus it can be said that, despite the lesser role assigned to it, the State, if it chooses to
interfere to a high degree, may have overarching power in the employment relationship.

Predominance of Coercive Power

Much depends on the one party’s perception of the other’s power. Power, if it exists, must be
seen to exist. Therefore, it is sometimes necessary for one of the parties to engage in an open
display of power in order to persuade the other party to engage in meaningful bargaining
with him.
In the employment relationship, the power displayed on both sides is, unfortunately,
usually coercive. Employers start from a basis of power over the employee. Organisational
structures, systems and processes are designed so that the employer can continue to exercise
coercive power or, at best, to use negative rewards. Managers gain their legitimacy from
their ability to punish or reward employees, and most work processes are established within
these parameters. The most extreme form of coercive power used by management comes
from the ability to withhold the opportunity to work – and, therefore, to earn a living – from
the employee. This is seen in dismissals, retrenchments and lockouts (see Chapter 6).
The individual employee’s power rests mainly on his value to the employer. If he is
easily replaceable, he will, in situations where he has no legal or agreed right, not have
sufficient power to counter the power held by the employer or manager. It is for this reason
that laws are introduced to protect employees and that employees, particularly semi-skilled
and unskilled workers, rely on the power of the collective. This is usually gained by union
membership. Only if they jointly withhold their labour can they hope to match the power
of the employer. Some observers believe that this is merely an illusion of power – that the
very nature of organisational design ensures that managers/employers retain their power.
Nevertheless the threat by either side that it may use extreme coercive power, in the form of
lockouts or strikes, forms the basis for the collective bargaining process.

16 Labour Relations: a southern African perspective

Referent and Reward Power as Preferred Modes
of Power
French and Raven (1959) identified five forms of power:
■■ coercive power – for example, the threat of punishment or harm
■■ reward power – the ability to bestow favours on the other person
■■ legitimate power – obtained by being in a position of authority over another
■■ expert power – resting on knowledge and experience
■■ referent power – obtained when others identify with the person or his value system and
look up to him.

Of the five, coercive power is said to be the least desirable and the most primitive. Reward
power is closely related to coercive power. The threat of not bestowing a reward becomes
coercive. Legitimate power relies heavily on the use of punishment and reward. This leaves
expert power, and referent power. To gain truly legitimate power, managers should rely
not only on the authority of their positions, but also on power gained from their expertise.
At the same time, each employee should gain power through his expertise. Furthermore,
both parties should be striving to substitute the overuse of one-sided coercive power with
‘interactive’ referent power, resting on shared goals, values and beliefs. In short, they should
be substituting ‘power over …’ with ‘power to …’, because only if each individual is empowered
will the organisation itself become powerful. This again points to the establishment of joint
structures and processes, not necessarily to the exclusion of those designed for collective
bargaining, but alongside them.

The Freedom of the Individual versus Allegiance to the Collective

Nowadays, most work is performed on a collective basis. Consequently, enterprises are
structured as collectives. In organisations there are departments, sections, management
boards, production workers and administrative staff. People are viewed not as individuals
but as members of a particular group. On the employee side, this collectivity is further
emphasised by the need to identify with fellow-employees in order to match the power
of the employer. In these circumstances it is extremely difficult for the employee to assert
his individuality. Tension is created between the employee’s need for personal recognition,
advancement and satisfaction, and his need to form part of the collective. Equally, tension
exists between employers and unions. In spite of their own collective emphasis, employers
at times want to treat employees on a differentiated basis as individuals, while unions, being
the representatives of the collective, do not want individuals to be singled out.
This tension between the individual and the collective raises a number of questions:
■■ Can an employer award differentiated increases on the basis of merit, or in any way treat
one employee differently from another?
■■ Has the employer the right to demand that an employee takes an individual decision
contrary to that of the union?

Chapter 1: The Employment Relationship – A Brief Introduction 17

■■ Can the employer establish direct representation by employees even where collective
representation by a union is the norm?
■■ Does the union have the right to demand that all employees abide by a majority decision
and that no differentiation be made by employers?
■■ Can the union insist that all employees become union members and that the employer
communicate only through a representative body?

The solution is probably to achieve a balance between the interests of the collective and those
of the individual, with due respect for the allegiance owed by the individual to a particular
collective. If the matter is handled with sensitivity and acknowledgement of both individual
and collective rights, due recognition can be given to both the collective and individual
interests of employees. However, the employee may owe allegiance to two collectives, namely,
the company and the union. Therefore, one should take care that demands from the one do
not clash with the interests of the other or erode his allegiance to a third party.

The Interaction Continuum

From the preceding discussions it has becomes evident that, in the employment relationship,
we move (or can move) on a continuum between conflict and cooperation, each dynamic being
underscored by its own power relations and processes (see Figure 1.3). Also, there is continued
tension between the needs and demands of the organisation, the individual and the collective.

Intrinsic Factors Regulating the Relationship

Custom and Tradition

The manner in which the parties to a relationship behave towards each other, as well as their
status and roles in the relationship, is often determined by custom and tradition. This is the
case with the employment relationship, where custom has not only determined the roles of the
parties but has also accorded certain rights and duties to each party. Thus, as stated earlier,
managers assumed a traditional prerogative and employees traditionally obeyed without
question. The influence of custom and tradition in societal structures is strong, and any
attempt to change traditional perspectives or hierarchies is vehemently resisted. Yet custom
and tradition are not always correct or rational, particularly in the light of ever-changing
realities. Too much reliance on custom results in stagnation and in a relationship that is out of
touch with the world in which it exists. The need to question the customary way of handling
work relationships, organisational design and the manner in which work is done, will in the
next decades become more and more important as the millennium progresses (see The ‘Third’
and ‘Fourth’ Industrial Revolutions).

18 Labour Relations: a southern African perspective

 NEGATIVE POLE POSITIVE POLE

diverging interests, goals, common interest in

values, needs continuation of the enterprise

CONFLICT CO-OPERATION
No or little Increasing
trust trust

power over power to

(Coercive power, (Expert power, referent power)
reward power) power sharing

Task-related
decisions

institutionalisation co-decision making

of conflict

participation
(Joint problem solving)
collective individual individual and
collective

figure 1.3: the interaction continuum

Legislation
Because we cannot rely solely on custom and tradition to regulate the employment relationship,
because the relationship itself is often unequal and because the parties might engage in
destructive practices to the detriment of society, it is usually regarded as necessary to establish
a legal framework within which the labour relationship can be conducted. Consequently,
the law may establish machinery for the peaceful resolution of conflict between the parties,
delimit the rights of both parties and even attempt to correct perceived power imbalances.
Yet in a free society the State, as legislator, can never presume to control all aspects of the
employment relationship. Experience has shown that, the law notwithstanding, the parties
will eventually regulate the relationship in the way they deem fit. This notwithstanding, if
unemployment worldwide continues to escalate and technology makes more and more jobs
redundant, it may well happen that the State will have to take a greater part in the way
technological advancement and economic activity are handled. In the final analysis the State
may even be obliged to interfere in the division of the profits emanating from such activity.

Mutual Agreement
Since custom and tradition and the imposition of legislation may be deficient, the parties to
the employment relationship also resort to mutually agreed rules and regulations as a basis

Chapter 1: The Employment Relationship – A Brief Introduction 19

for their interactions. Agreement is achieved either by the process of collective bargaining
or, in more sophisticated systems, by joint structures established for this purpose. The more
the parties to a relationship can agree on rules, processes and substantive issues, the less
they will have to rely on the assistance or jurisdiction of external instances.

Ethical Considerations: Trust, Integrity and Fairness

The Need for an Ethical Framework
Usually too little attention is paid to a system of ethics as regulator of the employment
relationship. There has been a gradual realisation by business of the need to conduct
business along more ethical lines, but little is said regarding an ethical framework for the
conduct of the employment relationship.
The lack of an ethical code to which both parties subscribe is best evidenced by the
lack of trust which often permeates the labour relationship. Like any other relationship, a
labour relationship not founded on trust will inevitably experience difficulties. Despite the
conflict which admittedly exists, and the continued battles of will between the parties, some
measure of trust has to be established. This can be achieved if there is:
■■ respect for the other party
■■ faith in the integrity of the other party
■■ due recognition of the value, power, ability and legitimacy of the other party
■■ the assurance that neither party will abuse his position
■■ agreement that both will view situations from a balanced perspective, will not attempt
any form of subversion, will keep their word and will act consistently in the light of their
own beliefs and values.

This may seem a tall order, but it is achievable if both parties operate within a mutual ethical
framework and share a common work ethic.

The Concept of Fairness

The fact that the parties often do not ensure that they are behaving fairly is further proof
that ethical considerations do not predominate in the employment relationship. As a result
the State may find it necessary to legislate fair labour practices. Admittedly, concepts of
fairness do differ from person to person, and perceptions of fairness need to be placed in the
context of particular circumstances. Yet certain neutral and universally accepted standards
of fairness can be postulated. The most commonly used is the test of the ‘reasonable man’,
although this may require a common definition of the word ‘reasonable’. The question to
be asked is whether others in the relationship, or an impartial judge, would regard the
interaction as reasonable, and whether the party committing the action would deem it
reasonable if it was committed against him (see Chapter 6 – Dismissals and unfair labour
practices).

20 Labour Relations: a southern African perspective

Further criteria for fairness as suggested by Salamon, are the following:
■■ there should be reciprocity and balance between the parties concerned
■■ one party should not obtain all the benefits to the detriment of the other
■■ there should be equitable exchange of both substance and behaviours
■■ both parties should receive equal treatment and equal consideration
■■ the same criteria and judgements should apply to each
■■ the treatment of persons should, as a whole, be consistent.

South Africa’s own Labour Court has repeatedly indicated that the parties should be
‘perceived to be acting fairly’; in other words, that ‘fair’ is not ‘fair’ unless others see this
fairness in action. This means that parties should explain their behaviours and decisions or,
ideally, actually involve those concerned when decisions are being made.
The complex question of ethics, and particularly of fairness, is the subject of much
debate, but it is extremely important to the conduct of the employment relationship.

External Influences on the Labour Relationship

The Sociopolitical System

No relationship functions in a vacuum. It is a product of time and place, and will be subject
to influences from the wider society in which it exists. Conversely, the type of employment
relationship established in a particular society will impact on that society. This interaction
is demonstrated by the fact that the political system, based on a particular ideology, will
largely determine the type of labour/employment relations system and influence the power
balance between the parties. On the other hand, individual employers and employees, as
voters in the political system, are able to influence the policies of government and will have
a say in the type of employment relations system established.
Specific public policy, not necessarily connected to the employment relationship, will
impact on the relationship. For example, in South Africa, the policy of apartheid greatly
influenced employment relations. It led to unequal bargaining power and the immobility
of labour, as well as divisions in, and the politicisation of, the trade union movement (see
Chapters 2 and 4).
The advent of the new political dispensation in the last decade of the twentieth century
has seen increased legislation by government, some of which was intended to right past
injustices and to grant more protection to vulnerable employees.

Societal Influences
In the social sphere, there is continual interaction between social relationships and
employment relations. Employees bring to the workplace perceptions established in their

Chapter 1: The Employment Relationship – A Brief Introduction 21

sub-societies. If, for example, there are large divides of class and race in society, these will
be reflected in the workplace. Similarly, tensions arising in the workplace will be carried out
to the wider society, either by individuals or by organised groups such as trade unions and
employers’ organisations. If goodwill and cooperation predominate in the workplace, this
may spread to society at large. At the micro level, problems experienced by the employee
in his community – such as lack of housing, inadequate facilities, lack of transport and
defective education – impact on the employment relationship or become issues in collective
bargaining.

The Economic Dispensation

Most obviously, the economic dispensation, on both a macro and a micro level, will directly
influence the conduct of employment relations. The predominant economic philosophy of a
particular society – that is, whether it favours free enterprise or a planned economy – will
largely determine the type of employment relationship and the role of collective bargaining
in the system. Other factors, such as fiscal policy, economic growth and unemployment, also
exercise a strong influence, particularly in collective bargaining.

The Influence of Trade Unions

Trade unions are the direct result of worker dissatisfaction with capitalist enterprise.
Although they arise from this system, they are essentially antagonistic to it. Initially, owner-
managers and the governments of the time tried to subvert these organisations. Nevertheless
labour unions grew in strength during the nineteenth and early twentieth centuries (see
Chapter 4). Many established their own political parties or affiliations, extending their
power to society at large. As such, they served to curb the previously unfettered prerogative
of the entrepreneur or owner, and influenced governmental regulation of the employment
relationship.
Attitudes to and behaviour within the relationship have been and continue to be greatly
affected by trade unions. A particular employer may in theory favour a certain style and
approach to the relationship, but the style he adopts will to a large extent be circumscribed
by the amount of influence a trade union has in the enterprise. Equally, a government may
tend to favour the employer party and the capitalist economic system, but, in a democratic
system, it cannot enact legislation without due reference to a strong trade union movement.
This, eventually, will also impact on the relationship at enterprise level (see Figure 1.4).

22 Labour Relations: a southern African perspective

 S PO
RE LI
TU PU TICA
TR UC BLI L P
IALS C P AR
OL TIES
S OC ICI
ES
INDUSTRIAL RELATIONS SYSTEM

GOVERNMENT REGULATION

TR
S
AL

AD
OR

ITI
LABOUR RELATIONSHIP

ON
M

IDEOLOGY IDEOLOGY
PARTICIPATION
GO

GO
S

S
CO-OPERATION
DE

DE
AL

AL
ITU

ITU
ROLES ROLES
S

S
T

T
AT

AT
EMPLOYERS, COMMON EMPLOYEES,
EMPLOYERS’ GOAL UNIONS
ASSOCIATIONS
CONFLICT
S

S
ST

ST
VA

VA
RE

RE
LU

LU
COLLECTIVE
TE

TE
ES

ES
IN

IN
SOCIOPOLITICAL BARGAINING SOCIOPOLITICAL
BELIEFS BELIEFS

COMPROMISE/AGREEMENT

OM
ET
HI

ST
CS

DE
EC
O
,
GY GE
S CU
VE NOM O LO HAN
LO
PM IC HN C C
EN TEC APHI
TS R
OG
DEM

figure 1.4: schematic representation of the labour relationship

Additional Influences
A number of other interactive factors, such as technological development, business structure,
industry concentration and labour demography, influence developments in employment
relations, and particularly the collective bargaining process, but the subject matter of this
chapter does not justify a more detailed discussion of these factors. It is important merely
to note that the relationship and the processes emanating from it cannot be studied in
isolation, once again illustrating the necessity of adopting an interdisciplinary approach.

Chapter 1: The Employment Relationship – A Brief Introduction 23

Traditional Approaches to the Employment
Relationship
Traditional theory identifies three approaches to the employment relationship. Two of these
can be traced to particular ideologies, while the third constitutes an attempt to achieve a
compromise between different ideological positions.

The Unitary Approach

This approach has its origins in classical liberalism, laissez-faire capitalism and the Smithian
tenet of the ‘common good’. It is individualist in that it does not recognise the necessity for
collectives. Employees are regarded as individuals who have contracted their labour to the
employer in order to gain an assured income.
This approach holds that:
■■ the income of employees is assured only if the enterprise remains profitable
■■ all parties should strive towards a common objective
■■ employers and employees share the same values
■■ both support free enterprise, respect authority and perform their allotted tasks diligently
and with loyalty
■■ since the system aims at the common good, there should be no questioning of the
individual’s place in this constellation
■■ employers or their managers are there to manage, and employees to work
■■ the employer cares for his employees
■■ those who do well will be rewarded, just as those that do wrong will be punished
■■ there is no real conflict of interest between employers and employees
■■ conflicts which do occur are the result of interpersonal friction or caused by troublemakers
■■ unions are unnecessary and cause friction as they compete with the employer for the
loyalty of employees
■■ collective bargaining should not be encouraged.

With the rise of trade unionism at the beginning of the twentieth century, the Unitary Approach
was gradually eroded. However, the last decade of the twentieth century saw a resurgence of
the liberal ideology in the form of neo-liberalism. This was accompanied by globalisation, an
increased emphasis on the individual, and a worldwide decrease in trade union numbers and
influence, with the result that the Neo-unitarist Approach gained popularity. This approach
recognises collectives, but focuses on the individual, engages in consultation and once again
stresses the need to cooperate rather than to adopt positions as adversaries.

24 Labour Relations: a southern African perspective

The Radical Approach
The Radical Approach is based on Karl Marx’s theories regarding the ills of private ownership
of the means of production and the position of the worker in the capitalist system (see
Chapter 2). This approach holds that:
■■ the capitalist economic system establishes political and legal structures which favour
the employer
■■ in this system the power of the employer is always greater than that of the employee
■■ the employee is continually exploited
■■ conflict is inherent to the socio-economic system and not only to the employment
relationship
■■ consequently, the structures established in the system will not resolve or ameliorate the
conflict, but merely perpetuate it
■■ trade unionism may be necessary to conscientise the working class, but cannot achieve
equality while operating within the system
■■ at best, trade unions, through collective bargaining, can provide continual challenges to
employers while working on the political front towards the overthrow of the capitalist
system
■■ a victory over capitalism is the only means to achieve an equitable dispensation.

The Radical Approach, though perhaps not in its extreme form, is often promoted by
unionists. Radical Marxism may be out of fashion, but a socialist dispensation remains the
stated objective of most major employee bodies.

Pluralism
With the rise of trade unionism and the liberal democratic ideology, the Pluralist Approach
was proposed as the best means of accommodating the interests of the working class in
a capitalist system. Pluralism has its philosophical roots in the Hobbesian view of man
as a selfish being who will utilise any opportunity to dominate his fellows. It rests on the
conflict model of society, which proposes that, in order to prevent dominant groups from
gaining absolute control and to contain conflict within manageable limits, power should
be more widely distributed. It proposes ‘multiple centres of power and the give and take of
bargaining between competing centres of power’.
Unlike the Radical Approach, Pluralism does not seek to abolish capitalism, but rather to
reform or manage it.
Pluralism, when applied to the labour relationship, accepts that:
■■ there will always be conflict between employers and employees
■■ the power of the employer inherent in the relationship can be balanced by the
countervailing power of the collective
■■ conflict can be contained by ‘orderly’ collective bargaining

Chapter 1: The Employment Relationship – A Brief Introduction 25

■■ because a common interest underlies the relationship, some form of compromise will
always be reached
■■ in the process, each party may apply power tactics to persuade the other of its point of view.

It is evident that, at the extremes of the Pluralist mode, the parties are essentially positional
and view each other as adversaries, that power underlies the relationship, that continual
conflict is accepted as the norm and that its concentration is on the collective.
The Pluralist Approach, albeit in varying forms, was adopted in most industrialised
countries. It has also been the dominant approach in the South African system. However,
both locally and internationally there is a marked tendency towards social market economies
and a more mixed approach to the employment relationship.

Conclusion
To explain the intricacies of any relationship in a single chapter is a daunting undertaking.
This is more so in the case of the employment relationship, with its unique and often
paradoxical characteristics and its extremely dynamic nature. The intention is merely to
introduce the reader to the vast panorama of actions, interactions and processes which
constitutes the employment relationship. Specific aspects will be discussed in greater detail
in later chapters.

Suggested Questions/Tasks
•• Which aspects would you emphasise if you wanted to bring about a change in the
relationship towards a more cooperative one and how would you go about doing
this?
•• Do some reading on the Third and Fourth Industrial Revolutions. Outline a future
work scenario and argue for considerable changes in the way we handle the work
situation.
•• Create a paper trail of the new and revised legislation the government has
introduced since 1995 and analyse the reasons for such legislation.

Sources
Biesheuwel, S. 1984. Work Motivation and Compensation. McGraw-Hill.
Clegg, H. 1972. The System of Industrial Relations in Great Britain. Blackwell.
Flanders, A. 1970. Management and Unions. Faber.
French, WL & Raven, S. 1959. ‘The Basis of Social Power’ in Cartwright, D (Ed). Studies in Social Power,
Michigan.
Heilbroner, R. 1980. The Worldly Philosophers. Penguin.
Hyman, R & Borough, I. 1975. Social Values and Industrial Relations. Blackwell.

26 Labour Relations: a southern African perspective

Magenau, JM & Pruitt, D G. 1979. ‘The Social Psychology of Bargaining’ in Stephenson, GM &
CJ Brotherton (Eds). Industrial Relations: A Social Psychological Approach, John Wiley & Sons.
Salamon, M. 1987. Industrial Relations Theory and Practice. Prentice Hall.
Thompson, P. 1986. The Nature of Work. Macmillan Education Limited.
www.businessinsider.com/jeremy-rifkin-interview-2017-6?IR=T. Interview with Elena Hobodny,
July 16, 2017. (Accessed 18 January 2018.)
www.weforum.org/about/the-fourth-industrial-revolution-by-klaus-schwab. (Accessed 17August 2018.)

Chapter 1: The Employment Relationship – A Brief Introduction 27

 2

The Labour Relations System

Chapter Outline
OVERVIEW
PART ONE: THE LABOUR RELATIONS SYSTEM AS A SOCIETAL STRUCTURE
THE COMPOSITION OF A LABOUR /EMPLOYMENT RELATIONS SYSTEM
Major Components • Variations in the Composition of Different Systems | The Parties to the
Relationship | Processes and Procedures | The Legal Framework
IDEOLOGICAL BASIS
Definition • Individualism versus Communitarianism | Two Ideological Poles
CONFLICTING ECONOMIC IDEOLOGIES
Adam Smith and the Free Market | The Rise of Classical Liberalism | Support for the Market Mechanism
| Wages as a Product of Demand and Supply | The Ideal Market • The Rise of Socialism and the Writings
of Karl Marx | Reaction to Capitalist Enterprise | Scientific Socialism and Dialectical Materialism | Marx’s
Theory of Surplus Value | Towards a New Order • The Fabian Socialists • The Institutional/Radical
Economists • The ‘Forward Thinkers’ • Towards Convergence
THE ROLE OF THE STATE
Government and the State • Voluntarism and Mandatorism • Forms of State Interference | Market
Individualism | Institutionalised Voluntarism | Pro-Capital Interventionism | Corporatism | Pro-Labour
Interventionism | Pro-Labour Mandatorism | Pro-Capital Mandatorism • Variables Moderating
Government Intervention • Roles Adopted by the State | The State as Legislator | The State as
Conciliator | The State as Regulator | The State as Adviser | The State as Controller of Income Distribution|
The Role of the Judiciary | The Role of the Police * The Future Role of the State in Labour Relations |
Effect of the labour/employment relations system on society
PART TWO: THE SOUTH AFRICAN SYSTEM
BACKGROUND TO DEVELOPMENTS
Racial, Economic and Ideological Divides • ‘Dichotomous’ Ideological Approach • The ‘New’
Dispensation
INDUSTRIALISATION – 1880 TO 1924
Discovery of Gold and Diamonds • Immigration and Unionisation • Industrial Action and Government
Reaction • The Rand Rebellion • The ‘Black/Disenfranchised’ Trade Union Movement • The Industrial
Conciliation Act of 1924• The Civilised Labour Policy • Analysis of Developments
THE GROWTH OF THE MANUFACTURING AND SERVICE INDUSTRIES (1925–1948)
The White and Multiracial Trade Union Movements • The Influence of Afrikaner Nationalism • The
Independent Black Trade Unions • Analysis of Developments
THE ASCENT TO POWER OF THE NATIONALIST GOVERNMENT (1948–1970)
The Botha Commission • The Bantu Labour (Settlement of Disputes) Act of 1953 • The Industrial
Conciliation Act of 1956 • The Multiracial Trade Union Movement • The All-White Labour Movement
• The Independent Black Movement • Analysis of Developments
CHANGES IN LABOUR RELATIONS (1970–1990)
The Start of a New Era • The Revival of Black Employee Interests • The 1972–1973 Strike Wave •
New Unions Emerge
THE 1973 BLACK LABOUR RELATIONS REGULATION ACT
Consolidation of ‘New’ Union Power • The Wiehahn Commission • The Industrial Conciliation Act of
1979 • The Reaction of the Newer Trade Unions • New Federations Established• White Opposition
• TUCSA Disintegrates • Government Reaction • Analysis of Developments | Collective Power as an
Instrument for Change | Initial Acquiescence with Capitalism | Acceptance of Pluralism
DEVELOPMENTS POST-1990
The New Dispensation • Initiatives to Kickstart the Economy • Labour Relations Policy and
Legislation • The Labour Relations Act of 1995 • Labour Action• The Trade Union Movement|
Tensions in the Alliance | Expectations and Actions Post-Polokwane • Collective Industrial Relations
Processes | Collective Bargaining | Workplace Forums • New Legislation • Analysis of Developments |
Socioeconomic Policies | Labour Legislation | The Union Movement
ECONOMIC AND SOCIAL REALITIES IN THE NEW MILLENNIUM
The Economy • Unemployment • Inequality • Civil Unrest • Government Initiatives | New Growth
Path Framework and National Infrastructure Development Plan | The National Development Plan | Radical
Economic Transformation • Union Developments | State of the Unions | New Unions Emerge • Analysis
of Developments | Socio-economic Problems and Proposed Solutions | Union Developments | Labour
Unrest and Collective Bargaining Arrangements | Approach to the Relationship
CONCLUSION
SUGGESTED QUESTIONS/TASKS
SOURCES

Chapter 2: The Labour Relations System 29

 Overview
In order to understand the South African labour relations system, it is necessary
first to understand how different systems come about. Labour relations systems are
societal structures. This means that they are shaped by the societies in which they
occur. A system consists of the various participants, the processes adopted in the
relationship and the legislative framework.
The most important variable shaping a society – and therefore, its labour/
employment relations system – is the dominant ideology. In this respect, we
differentiate between two ideological poles – individualism and communitarianism.
These are also the foundation for different economic ideologies, resting originally on
the ideas expounded by Adam Smith (2000) at the one extreme, and Karl Marx at
the other. However, in modern society there is a tendency to convergence between
these extremes. Nowadays very few societies, or their labour/employment relations
systems, reflect extreme ideological stances.
The government of the day will, in its formulation of policy be guided largely
(but not exclusively) by the dominant ideology. Other factors influencing the type
and extent of government interference include the economic situation, trade union
strength and the government’s labour–capital bias. In any society all the variables
interact in a complex manner to produce a system unique to that society.
In South Africa industrialisation commenced with the discovery of gold and
diamonds in 1886 and 1887. At the time the dominant ideology was individualistic,
but because of the belief in white supremacy, other race groups were denied freedom
of choice and controls were introduced to protect the position of white employees in
the labour relations system. As the economy developed the government was obliged
to legislate a framework for the conduct of the relationship, but from the beginning
the emphasis was on the exclusion of black African workers. This was reflected in the
Industrial Conciliation Act of 1924, which excluded ‘pass-bearing natives’ from the
definition of employee, and, later, by the Industrial Conciliation Act of 1956 which
prevented black trade unions from achieving registered status and therefore from
engaging in legal actions.
Societal forces were, however, at work and during the first half of the twentieth
century there were numerous actions by workers from different race groups. Growing
dissatisfaction among black workers eventually resulted in the Natal strikes of 1973,
which proved that these workers could make their voices heard and which forced
the government to take heed of this section of the workforce. In the years which
followed new trade unions were established, leading to the formation of FOSATU
in 1979 and CUSA in 1980. The new unions did not join the centralised bargaining
bodies which had been established by the white and ‘multiracial’ unions. Instead,
they concentrated on strong shop-floor representation, eventually gaining ground
over the ‘multiracial’ Trade Union Council of South Africa (TUCSA).

30 Labour Relations: A southern African perspective

During the 1970s, economic and political pressure from inside and outside the
country increased. In response to this, and in the face of growing union militancy, the
government passed the Industrial Conciliation Amendment Act of 1979 (subsequently
renamed as the Labour Relations Act of 1979) which gave all employees and their
unions equal rights in the labour/employment relations system. This equalisation in
the labour relations system served as precursor to political democracy.
In 1985 different union streams joined forces to form COSATU, and, shortly
thereafter, NACTU. Their new-found legitimacy in the system and their participation in
central bargaining bodies greatly increased the power of unions in these federations.
The government of the time legislated the framework for interactions between
the parties for fair labour practices and for minimum conditions of service. The
idea was to allow the parties as far as possible to regulate the relationship among
themselves. After the ANC came to power in 1995 it was, however, obliged by historic
inequities to interfere to a greater degree in the conduct of the relationship. This
more mandatory approach was best exemplified by the Employment Equity Act of
1998 and the Skills Development Act of 1999 as well as later amendments to the
Labour Relations Act and the Basic Conditions of Employment Act. At the same time,
the new government established the National Economic Development and Labour
Council. This proved that it was inclined to adopt a more corporatist approach.
Despite its alliance with COSATU and the South African Communist Party, the
ANC government did not adopt a socialist approach and did not engage in pro-
labour mandatorism. On the economic front it chose instead to broadly support a
free-market economy but to ameliorate this with welfare initiatives. At the time of
writing (2018) the government’s new emphasis on ‘radical economic transformation’
may be signalling a tendency towards far greater government intervention in the
economy and also the relationship, although this may merely be a result of current
political turmoil.
As regards labour/employment relations, the State has hovered between
institutionalised voluntarism and some strong mandatory elements – both under the
umbrella of limited corporatism.
In recent years stress lines have increasingly appeared in both the economic and
employment and now also in the political sphere. General dissatisfaction with service
delivery has resulted in multiple demonstrations. On the labour relations front, strike
action did not abate. Particularly significant was the dissatisfaction of employees
with the unions representing them at centralised level, as evidenced in the mining
industry, and the deployment of the police to quell demonstrations. In the mining
industry, government was highly criticised for deploying the police in the upheavals
but went on to play a role in bringing about an accord, which, however, did not last
long. In general, more and more voices are calling for a more cooperative system and
an emphasis on workplace democracy.

Chapter 2: The Labour Relations System 31

Part One:
The Labour Relations System as a Societal Structure
The labour relations system operating in a particular society is a product of, and is structured
by, that society. It follows that a country’s labour relations system will be shaped by all the
different forces in that society. Because all societies are unique, labour relations systems are
not all alike. Furthermore, as a society changes, so will its labour relations system.
In this section we find out:
■■ how systems vary because of different roles adopted by the parties, different processes
and procedures and differences in the legal framework
■■ the effect of ideology on a system
■■ the theories of Karl Marx and Adam Smith
■■ the roles which the State could adopt and different forms of state interference in the
relationship.

The Composition of a Labour/Employment

Relations System

Major Components
The main components of a labour relations system are:
■■ the parties to the relationship
■■ the processes, such as collective bargaining and workers’ participation favoured by the
parties
■■ the legal system governing the relationship.

These components are found in all systems, but, depending on the interaction of a number
of societal variables, they are present to different degrees in different systems.

Variations in the Composition of Different Systems

The Parties to the Relationship
Employers, employees and the State are, in all labour relations systems, the major
participants in the relationship. However, one system will differ from the other in terms of
the importance, and the role of each participant. In certain systems the State dominates the
relationship, while in others it adopts the role of junior partner. Similarly, some societies
will emphasise the interests of the employer, while in others the employee may be the most
important participant. The power relationship between employer and employee – and the
amount of influence each has – will greatly depend on the society in which they function.

32 Labour Relations: A southern African perspective

Usually, the two parties in the primary relationship, and particularly the employee party, will
act through representative bodies. These organisations will differ from country to country.
In one society the functioning of trade unions may be facilitated, while in another efforts
at organising are hampered by legislation and social circumstances. Trade union members
may be an integral part of one society, while in another they may be relegated to second-
class citizenship. Consequently, trade union actions and goals will vary from one system
to another.

Processes and Procedures

The predominant processes in labour relations systems are collective bargaining and the
practice of workers’ participation. Varying emphasis will be placed on these processes. In
some systems, the use or implementation of one or both of these is compulsory, whereas
in others it is completely voluntary. Equally, collective bargaining may be conducted at
a highly centralised or a highly decentralised level and may take place in an orderly or a
random fashion.
There are other processes which flow from the two main processes. These include:
■■ dispute settlement procedures
■■ communication structures
■■ systems for the conclusion of agreements
■■ in-plant disciplinary and grievance procedures.

The kind of procedure and the relative emphasis placed on them will also differ in line with
societal constraints.

The Legal Framework

Most obviously, the legislation governing, the establishment and conduct of the employment
relationship will vary from country to country. Yet there are definite similarities in labour
legislation, particularly in societies which have the same ideological base. Differences in the
legal framework are to be found in:
■■ varying degrees of compulsion
■■ different forms of protection granted to employers and employees
■■ differences in the application of the freedom of association and the right to bargain
collectively
■■ differing concepts of fairness and differences in legislation pertaining to this concept.

Finally, certain societies may establish other laws which do not apply directly to the
employment relationship, but nevertheless have an effect on the system.

Chapter 2: The Labour Relations System 33

Ideological Basis

Definition
All societies rest on an ideological base. The dominant ideology of a society will largely
determine the type of labour relations system in that society. Equally, a system will change
in line with changes in ideology.
Hunt and Sherman (1978) define ideology as ‘… a set of beliefs that tend to justify
morally a society’s social and economic relationships’. It may also be described as a set of
common feelings or values about how relationships in society should be conducted.

Individualism versus Communitarianism

Two Ideological Poles
The greatest difference in ideology is to be found between the belief in individual freedom
on the one hand, and communitarianism on the other.
Individualism, in its absolute sense, holds that:
■■ individual persons or groups in society are free to make their own choices and pursue
their own goals
■■ they have little or no responsibility towards society
■■ society has little or no obligation towards them
■■ society is secondary to the individual
■■ society is shaped by, and composed of, individual beings
■■ government by the majority may be necessary for a democracy, but minority interests
should be accommodated
■■ conflict is unavoidable and government should establish systems to accommodate it.

By contrast, communitarianists maintain that:

■■ individuals are shaped by society
■■ the choice and self-interest of the individual should not predominate
■■ the individual’s first duty is towards the society from which he emanates
■■ individual interests should always be secondary to those of society
■■ it is the duty of government to shape and control society
■■ bigger government is essential
■■ minority interests are subservient to the majority
■■ conflict should be avoided in favour of cooperative effort.

34 Labour Relations: A southern African perspective

Conflicting Economic Ideologies
As mentioned in the previous chapter, the roots of modern industrial society, centring on
economic activity, are to be found in the Industrial Revolution. Because a new pattern of
relationships was established, it also became necessary to develop new philosophies, to
explain or direct the new relationships in society. These philosophies were expounded by a
new breed of economic thinkers. Their pronouncements related to the ownership of working
capital by individuals and to the consequences, whether beneficial or otherwise, of such
private ownership of capital and the labour process. The most influential thinkers were
Adam Smith and Karl Marx and, later, the Fabian Socialists who preceded the Institutional
Economists.

Adam Smith and the Free Market

The Rise of Classical Liberalism
Classical liberalists, among whom were such eminent thinkers as Thomas Hobbes, John
Locke and Bernard Mandeville, regarded human nature as essentially selfish in its striving
for pleasure and avoidance of pain. The individual was seen as the fundamental component
of society. Consequently, he needed to be free to pursue his own interests – which, in terms
of the liberal ideology, would eventually benefit society as a whole.
This life view was adopted and applied to economic activity by Adam Smith, who in 1776
published his famous work, The Wealth of Nations. This text came to be regarded as the
basis of and justification for a capitalist system.

Support for the Market Mechanism

In Smith’s view, the developments which he saw around him – where an entrepreneur
brought workers together and divided their labour in order to produce more efficiently and
more competitively – would eventually benefit society as a whole. As long as the market
operated freely, the desire of individual entrepreneurs to accumulate profits would result in
healthy competition. This, together with the rationalism of the consumer, would lead to a
regulation of profits and prices. Too much profit-taking, resulting in increased prices, would
result in undercutting by competitors, or to consumer resistance. This would either push the
profit-taker out of the market or oblige him to lower prices.
In his Law of Accumulation, Smith supported the amassing of profits within limits dictated
by the market. He saw it as leading to investment in new ventures, new job opportunities
and the development of society as a whole (see Chapter 9).

Wages as a Product of Demand and Supply

Smith believed that wages could also be regulated by the law of supply and demand. Thus
he advised the removal of all restraints and all forms of interference in order to give free
rein to price, wage and labour-market competition. Smith believed that, in a perfectly

Chapter 2: The Labour Relations System 35

competitive labour and consumer market, all wage rates would tend towards an average
rate. However Smith did admit that factors such as skill (or a scarcity of skills), the amount
of training needed for a certain job, the degree of responsibility involved and the seasonal
or unpleasant nature of certain jobs might result in higher wages for some employees, and
that wages could be affected by government interference in the labour market.

The Ideal Market

Smith promoted economic individualism in its most extreme form. He was opposed to any
form of government interference in the free play of the market forces. Nevertheless he did
warn against the establishment of monopolies and the effects of mass production on the
creativity and morale of employees. Moreover, he maintained that no society could flourish
if the majority of its citizens were poor and miserable: the total wealth of nations was equal
to the sum of individual wealth. His was essentially a Utopian system. It presupposed a
perfect market, operating in an allowed legal and moral code, one in which the economy
responded to market demands, where there was universal and fully effective competition, as
well as a complete absence of any form of political interference.

The Rise of Socialism and the Writings of Karl Marx

Reaction to Capitalist Enterprise
The capitalist system evoked reaction and criticism not only from workers, but also from
eminent thinkers. Among the first of these was Robert Owen, himself a capitalist owner, who
nevertheless criticised the class divisions and oppression resulting from private ownership
of capital. Owen suggested that private ownership should be abolished in favour of a system
of cooperation and joint ownership. Most early socialists, such as Gracchus Babeuf, Henri
de Saint-Simon, Charles Fourier and Pierre-Joseph Proudhon, rejected private ownership of
the means of production and espoused a philosophy of universal equality.

Scientific Socialism and Dialectical Materialism

Most of the early socialist theorists were labelled ‘Utopian Socialists’ by Karl Marx since,
according to him, they relied too much on rationality and morality as the basis for change.
Marx commenced by analysing the ills of the capitalist system. He maintained that this
system was essentially self-destructive. Its superstructure, which entrenched private property
and private control of the means of production, was, according to Marx, incompatible with
its economic base, namely, industrial production. The latter, he explained, is an interrelated
and interdependent process which demands social planning, not generally favoured by the
supporters of private ownership. The result, he said, was plan less production, leading to a
constant disorganisation of economic activity. Because of this disruption capitalism would
unwittingly breed its own successor, namely, a rationally planned economy. This, in Marx’s
view, could be achieved only in a system in which the individual did not operate freely, but
was subject to planning for the entire society.

36 Labour Relations: A southern African perspective

Marx’s Theory of Surplus Value
Marx’s main criticism of the capitalist system was that it reduced workers to the level of
automatons who could not develop their full potential and who were measured only in
terms of the exchange value of their labour. He saw labour as the most important instrument
in the welfare of society, since it was the only factor creating value. In the capitalist society,
man was alienated from his labour and was obliged to produce surplus value, in the form
of profits for the employer. Marx argued that employees provided value in excess of the
amount needed to maintain themselves but were paid only the bare minimum needed to
maintain themselves while the surplus value created was pocketed by the employer. Also,
the capitalist system ensured a supply of labour always in excess of the market demand,
thus guaranteeing continued low wage levels.

Towards a New Order

For Marx the solution lay in a system of common ownership, which would lead to a more
equitable distribution of surplus value or profits or, at the least, would allow the employee
to work only long enough to supply his basic needs.
Marx emphasised the dichotomy between employer and employee in the employment
relationship. He did not believe that the conflict arising from the dichotomy could be confined
purely to the work situation or that a compromise could be found in the development of
trade unionism and collective bargaining. He supported unionism only as necessary to
conscientise the working class and lead the way to a new order. In short, Marx emphasised
the necessity to change society and the system of government to a communitarian base
rather than to attempt containing employer−employee conflict in the capitalist or private
property system.

The Fabian Socialists

During the latter half of the nineteenth century workers made political gains through parties
formed to represent their interests. They also experienced an increase in real wages. This
resulted in less revolutionary thinking. It was hoped that peaceful change could be achieved
by using the government as an instrument of social reform. The leading thinkers were not
so concerned with the fact that capitalists owned the means of production. Their emphasis
fell on the unequal distribution of wealth because of the unequal division of the fruits of
production.
Among the most prominent of these so-called Fabian socialists were the British
researchers Beatrice and Sidney Webb. As socialists, the Webbs agreed with Marx that
there was a basic conflict of interest centring on control of the mode of production and,
therefore, an ongoing conflict between the ‘haves’ and the ‘have-nots’. However, in their
view, this conflict could be solved through a process of gradual accommodation rather than
a complete and immediate change of the existing order. Society needed legal safeguards to
protect the freedom and rights of all parties and special strategies to increase the negotiating
or bargaining power of the ‘have nots’.

Chapter 2: The Labour Relations System 37

For the Webbs, the solution was initially to be found in combination: the development of
trade unions as an economic and political force, and in a system of collective bargaining – a
term which was, in fact, coined by them. The Webbs also rejected the idea that, in a socialist
society, workers might democratically manage their own industries. Instead they proposed
the appointment of professional managers, accountable to the general population.

The Institutional/Reformist Economists

The Fabian socialists preceded the institutional/reformist economists. Within a rapidly
changing world the concerns of these economists relate mainly to decreasing productivity
and increasing global unemployment. The Reformists advocate gradual change through
institutions and changing relationships between the government, business and financial
institutions. Governments need to help markets work by increasing their efficiency, enforcing
contracts and assisting firms in accessing the grid and technology. Legislation governing
work should, in their opinion, become simpler and more flexible. For example, amongst other
things, they proposed that firms should be allowed to keep 20 per cent of employees on fixed-
term contracts. In short, governments should assist firms in becoming commercially viable.

The ‘Forward Thinkers’

As mentioned in Chapter 1, the new millennium has seen ever-increasing technological
advancement, particularly in the area of automation. This has raised concerns about the
nature of work in the future and theories about the changing arena of work and business. Two
of the foremost thinkers in this area are Jeremy Rifkin (1995) and Klaus Schwab (2016). Rifkin,
who is particularly concerned about the continued decline of employment and profitability
worldwide, predicted the establishment of ‘post-market economies’. Rifkin points out that,
as the century progresses, there will be less work available and those who have work may
have to share their jobs with those who are not employed. This could be achieved by, for
example, legislating for a 30-hour week. Persons who then have more free time could help the
government by doing voluntary work in non-profit organisations. A great deal of the more
advanced work required by organisations will be outsourced to independent contractors whom
governments will have to support by ensuring access to and advancement of technological
resources. Although private ownership of businesses may continue, this might be on a reduced
scale and with lower profits, since inputs and outcomes will be shared with experts who
provide the know-how and their services. It is envisaged that governments will play a more
active role by promoting and facilitating business while at the same time promoting the
interests of all sections of society. This is a view shared by Schwab who is actively engaged in
assisting governments to change their approach to business and the economy.

Towards Convergence
The tempering of extreme ideological stances on both sides of the spectrum and the
pronouncements of the ‘forward thinkers’ supports the belief that the direction for the future
lies in a convergence of individualism and communitarianism and the establishment of a

38 Labour Relations: A southern African perspective

new ideological framework in developed societies. However, the early years of the twenty-
first century have not seen much momentum in the convergence of ideologies and the
establishment of more economically ‘balanced’ societies. Instead, globalisation has brought
with it a renewed emphasis on the operation of market forces and greater concentration of
resources and capital. This has been supported by what some have termed neo-liberalism,
but which is best described as ‘libertarianism’. Unlike classical liberalism, it places all the
emphasis on freedom and none, or very little, on responsibility. Whether this aggressive,
acquisitive capital accumulation in the economic sphere can be reconciled with a more
communitarian orientation in the socio-political arena remains debatable. This applies
equally in the South African context (see also Chapter 10).

The Role of the State

Government and the State

The State may be described as the abstraction of all the individuals in a society. It represents
society at large. However, it is very difficult to picture or conceptualise the State in
such abstract terms. Thus, the State is commonly seen as being embodied in systems of
government. This causes the words ‘State’ and ‘government’ to be used interchangeably. In
democratic systems, governments are elected by the people, but, because democracy is based
on the principle of majority rule, governments so elected are not necessarily representative
of all those who constitute the State. The prospect of democracy also diminishes if, as in
South Africa, representatives in Parliament are not elected directly by their constituents but
by the relevant political party.
A particular government, as representative of the majority in society, will adhere to a
greater or lesser degree to a communitarian or individualist ideology. In practice, the State
(in the form of its main instrument, the government) will have a political bias, which, in a
modern, economically based society, is revealed in a pro-capital or pro-labour orientation.
This bias is of importance in labour/employment relations since it will, with other factors,
determine the degree of State interference in the work relationship.

Voluntarism and Mandatorism

The extent and manner of State interference in the work relationship will, in the broadest
terms, depend on whether it supports voluntarism or mandatorism. This, in turn, depends
on its ideological base. If a government believes in voluntarism there will be minimal or no
interference in the conduct of the relationship. Conversely, the principle of mandatorism
rests on absolute or maximal government control of all aspects of the employment. This
would occur only in a society where government also exercises or attempts to exercise
control over all economic and social forces.
At present most societies, operating to a greater or lesser degree on the free-market
principle, support voluntarism as the basis of their labour relations systems. Yet, in practice,

Chapter 2: The Labour Relations System 39

absolute or pure voluntarism does not exist anywhere in the world. In all so-called voluntary
systems there are mandatory elements. This is so for the following reasons:
■■ The government, in establishing a legal framework for society, necessarily impinges on
labour/employment relations
■■ Employment relationships, if left solely to the main participants (that is, employers and
employees or unions), may be inequitable, making it necessary to restore the power
balance
■■ The conduct of labour/employment relations will impact on society and particularly on
the economy
■■ Labour relations also involves politics – the government, being a political instrument,
necessarily interests itself in developments in this sphere.

Consequently, governments will, at the very least:

provide the legal framework for the conduct of the labour relationship
give minimum protection to employees and employers
attempt to preserve labour peace
attempt to safeguard society against extreme behaviour by either party.

Forms of State Interference

The degree and type of interference in the labour relationship practised by a particular
government will depend, interactively, on:
■■ its ideological base
■■ its political objectives
■■ sociopolitical and economic circumstances
■■ the strength of the union movement.

This results in different forms of interaction between the State and the other role players in
the labour relations sphere.

Market Individualism
Where:
■■ a government supports an individualist ideology
■■ is biased towards capital
■■ adopts a laissez-faire approach to the economy
■■ the union movement is weak and
■■ where the economy is relatively healthy, the tendency will be to adopt a completely
hands-off approach to the conduct of the work relationship.

40 Labour Relations: A southern African perspective

The government will take the view that:
■■ employers and their employees are responsible for the way in which the relationship
will be conducted
■■ the contract of employment is the final regulator of the relationship
■■ market forces will sufficiently regulate employment practices.

However, the institutions and laws may favour capital and entrench property rights. Also,
nothing would be done to correct the inherent imbalance in the employer−employee
relationship and the unions themselves might not be strong enough to redress the situation.
Therefore, in most modern societies the increased power of trade unions and general
sociopolitical developments have led to the demise of market individualism.

Institutionalised Voluntarism
Where:
■■ the government is individualist-oriented
■■ is biased towards capital
■■ supports the free-market system
■■ but where trade unions are strong.

It becomes necessary for the government also to accommodate the interests of employees
and their unions. In essence, the government may still adopt a laissez-faire approach to the
relationship, but it accepts the trade unions’ right to existence and it may entrench this right
in legislation. Collective bargaining becomes an accepted, if not obligatory, practice and the
government may go so far as to establish or endorse processes for this purpose. Disputes are
accepted, as are the freedom to strike and lock out.
To safeguard employees the government may legislate minimum conditions of service
regulations, health and safety prescriptions and regulations pertaining to workmen’s
compensation and unemployment. A government which has adopted this approach may set
the framework for the conduct of collective bargaining but will not oblige participants to
engage in these practices. A governmental policy of this kind constitutes what is generally
regarded as a voluntary approach, but it is better described as a policy of ‘institutionalised
voluntarism’.

Pro-Capital Interventionism
It could happen that a trade union movement becomes so strong that it poses a political or
economic threat or causes a power imbalance between unions and employers. If this occurs,
the government may engage in greater interference, aimed at curtailing the power of unions.
This it may do by limiting their freedom to strike or restricting their activities in other
spheres. The policy of pro-capital interventionism may also be adopted where a previous,
labour-oriented government has, in the opinion of a new government, intervened too much

Chapter 2: The Labour Relations System 41

on behalf of labour – for example, by nationalising industries and allowing employees too
much power in the workplace. The new government will denationalise industries, encourage
capital accumulation and place stronger restrictions on trade union action. This happened
in Britain under the Conservative Government of Margaret Thatcher.

Corporatism
Economic or political developments may oblige a government to intervene in labour
relations. In times of reconstruction or economic recession, a government, wishing to kick-
start the economy, may request employers and employees to cooperate in its efforts to
bring about economic improvement. This is what is generally known as corporatism. If the
parties agree to a corporatist approach, it is implied that they will not engage in aggressive
collective bargaining, that unions will limit their wage demands and that employers will
limit price increases. Such a policy may be adopted with the voluntary cooperation of
unions and employers. If not, an incomes policy or other restrictions and conditions may be
imposed by the government.
Where all parties voluntarily cooperate to formulate labour relations and economic
policies they enter into a social contract, aimed at achieving maximum benefit for all. This
approach usually hovers between individualism and communitarianism, as it is meant to
curtail the individual power of both capital and labour in the interests of society as a whole.

Pro-Labour Interventionism
If labour gains dominance in the government or the changed objectives of government bring
about a bias towards labour, a government may intervene on behalf of labour. This happens
particularly where economic ideology shifts to a more communitarian approach and seeks
to incorporate social welfare principles or a social market policy. The government, by its
economic policy, engages in a redistribution of wealth. This usually makes it unnecessary
for the parties to engage in aggressive collective bargaining and strike action or lockout
action. A policy of pro-labour interventionism will lead to greater protection and promotion
of employee interests and to an extension of their rights in the workplace. Typical outflows
of such a policy are compulsory employee profit-sharing schemes, workers’ participation
schemes and regulations regarding employee or union co-determination on boards of
directors.

Pro-Labour Mandatorism
In a strictly communitarianist society pro-labour mandatorism will prevail. The government
will adopt an absolute bias towards labour, will not accept the free-market principle and will
not encourage capital accumulation. The labour/employment relationship in its totality is
under the control of the State and there is no perceived need for union action in the form of
collective bargaining or protection of employee rights. Whether the government in this case
does not itself become the employer is a question that could be debated.

42 Labour Relations: A southern African perspective

Pro-Capital Mandatorism
Absolute mandatorism could prevail where a totally individualist government favours
capital to the exclusion of labour. Since labour, which usually constitutes a majority of
the national population, will have a vote in government, this is unlikely to happen in a
democratic society. Nor will it be possible where there is a strong trade union movement.
A policy of pro-capital mandatorism will be marked by government intervention to
curtail employee rights. This would manifest itself in the non-recognition of unions, in
curtailment of the right to strike, and in laws promoting the employer.
With this policy, the circle of government intervention is closed, as the next step would
be the adoption of a policy of market individualism.

Variables Moderating Government Intervention

The compartmentalisation of levels of government intervention into seven basic types is an
oversimplification of the real situation. It has been done merely to provide a framework for
understanding different governmental policies and actions. In practice there are not only
exceptions to the rule, but also many fine differences of degree and numerous interacting
variables. So, for example, economic circumstances or a change in objectives might lead
a government to abandon one policy for another, despite its basic ideology, its capital or
labour orientation and the strength or weakness of the trade union movement. Furthermore,
labour itself may become disenchanted with a labour-oriented government and may vote
a capital-oriented government into power. This would lead to the adoption of a completely
new policy.
Figure 2.1 attempts a schematic representation of some of the factors influencing the
degree of government intervention, and tries to take into account their dynamic interaction.
The non-arrowed circles in Figure 2.1 represent changing government bias and economic
policy and, in the outer circle, the interventions which result. The arrowed circles are
dynamic forces which represent, firstly, the growth of the union movement and, secondly,
fluctuations in the economy. It will be perceived that, as trade unions grow in strength,
government is gradually obliged to adapt its policy. Likewise, as governments increase their
intervention, unions become weaker. Finally, the weaker the economy becomes, the more
will government be obliged to intervene.

Roles Adopted by the State

Salamon (1987) divides the roles adopted by the State into four categories. The State,
according to Salamon, can act as employer, legislator, conciliator and regulator. Whether
the State as employer intervenes in the labour relations system per se is debatable. This
aspect is therefore omitted, and two more methods of intervention of intervention may be
added to those of Salamon: namely the role of the State as adviser to the other two parties
and its role as distributor of state income. In addition, the role of State agencies such as the
judiciary and the police deserve consideration.

Chapter 2: The Labour Relations System 43

 CAPITAL MANDATORIS
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figure 2.1: the cycle of state interference

The State as Legislator

When it comes to the work relationship, the legislative role of the State is the most
important. The State may legislate on individual rights and on collective rights; it may
establish collective bargaining machinery and may prescribe statutory procedures to be
followed by parties to the relationship.
Generally, the type and amount of legislation will depend on a government’s overall
policy regarding intervention in the labour relationship. This is in turn dependent on the
numerous interacting factors mentioned in the previous section.

The State as Conciliator

In pursuing its objective of maintaining labour peace, a government may establish
conciliation, mediation and arbitration services. The use of such facilities may or may not
be made compulsory by the government. In certain instances, the government itself may
interfere in disputes or act as conciliator/mediator

44 Labour Relations: A southern African perspective

The State as Regulator
If the State wants to regulate the conduct of the employment relationship, it will have to
intervene more directly in the relationship and, particularly, in the conduct of collective
bargaining. The most common form of regulation is found in the establishment of an
incomes policy or a complete freeze on wages and prices, but the State also regulates
the relationship when it provides for compulsory recognition and bargaining and when it
compels workers’ participation at plant level.

The State as Adviser

The State may set itself up as watchdog and adviser in the sphere of labour relations. In
this instance the State will establish various bodies to monitor developments in labour/
employment relations, to produce guidelines on the conduct of the relationship and to
suggest innovations to the participants.

The State as Controller of Income Distribution

The State collects vast sums of money in the form of taxes and (if properly run) public
enterprises. This would allow it to affect the relative positions of capital and labour. Most
governments already make concessions in the form of lower taxes and other allowances for
low income earners. The State may also boost certain industries by loans or concessions
and may use its financial power to bring about changes in the system. Rifkin, for example,
suggests that if, in the future, workers are obliged to accept shorter hours and engage in
voluntary welfare work in their spare time, the State could compensate them by reduction
of or exemptions from taxes.

The Role of the Judiciary

Despite its theoretical independence from government, the judiciary remains an instrument
of the State. The function of the judiciary is to determine common law pertaining to the
employment relationship and also to interpret and apply the statutes passed by government
to regulate the relationship.
Problems with the normal judicial process are experienced where the judiciary is not
acquainted with the intricacies of the relationship or with the law pertaining to it. Such
problems increase when the judiciary is required to interpret concepts of fairness, pertaining
to the relationship. For this reason, certain governments see fit to introduce labour courts
dealing specifically with labour matters.

The Role of the Police

Essentially, the police have no role to play in labour/employment relations in that they are
not supposed to side with either party. However, they do have a duty to protect the public
and to prevent public disturbances. Therefore, where either of the major parties poses a

Chapter 2: The Labour Relations System 45

threat to the public or causes a public disturbance, the police, as the law-enforcement
arm of the State, may intervene. Unfortunately, it is usually employees and their unions
who are seen as causing a disturbance or infringing upon the rights of other individuals.
Consequently, the police are often viewed as siding with the employers. For this reason
and various others, police intervention should be allowed or requested only in extreme
circumstances – and then only for the purpose of public protection or to prevent individuals
from harming one another. Ultimately the police force is an instrument of the State, and the
latter should not allow it to be used to the benefit of either party or to promote the interests
of the government in power.

The Future Role of the State in Labour Relations

The State, with its instruments of government, represents a permanent institution, which
may change in nature and policy but will not change in essence. As explained throughout
this section, the role of the State will be determined largely by circumstances. Nevertheless,
where there is a shift from free-market principles to support for mixed economies or a
social market system, the State may play an increasingly interventionist role in the labour/
employment relationship.

Effect of the Labour/Employment Relations System on Society

The interaction between society and the labour relations system is not a one-way process.
Developments and events in the system will affect the wider society, particularly in societies
where progress has been retarded.
At its most basic level, this interaction is seen in the effect that strike action has on the
community and the economy. Not only do such actions impede economic activity, but they
also cause a general upheaval in society, which may have further repercussions. On the
micro level, there is the case of the employee who is poorly treated and robbed of his human
dignity. This leads to the situation where he is unable to fulfil his rightful role in society.
Equally, polarisation in the workplace will be reflected in similar societal divisions, while
collective organisation in the employment sphere leads to greater influence in the outside
world. Both trade unions and employers’ organisations play significant roles in the societies
in which they function.
Participation and cooperation in the workplace may lead to similar cooperation between
different groups in society. Training provided by the employer and the practice of social
responsibility uplifts society as a whole. In many respects, the labour/employment relations
system can take the lead and show those in power the route to follow.

46 Labour Relations: A southern African perspective

Part Two:
The South African System

Background to Developments

Racial, Economic and Ideological Divides

South Africa was for long marked by historically, politically and legally entrenched racial
divisions. This led, in the pre-1995 era, to the establishment of two distinct societal groups.
The most obvious distinctions were to be found between the group which believed in white
exclusivity and dominance and that which subscribed to a policy of black nationalism.
Positioned between these two poles there were those who supported a policy of ‘separate but
equal’ multiracialism and others who were strongly non-racist. Distinctions also existed in
economic ideology. While many South Africans were, in general, supportive of a capitalist
free-enterprise system, there were also a substantial number who saw their future as secured
in a more socialist, though not necessarily Marxist, dispensation.

‘Dichotomous’ Ideological Approach

The distinctions made are necessarily an oversimplification of the real situation. As South
African society developed, extreme ideologies on both sides became diluted, but there was
continued support for capitalism and the free-market system. However, the protectionism
required to maintain the supremacy of the white population necessarily led to the imposition
of greater restrictions on other groups, to greater planning by government, and to certain
totalitarian practices. Thus South Africa had an unusual mixture of raw capitalism and free-
market enterprise on the one hand, and of selective social legislation promoting whites and
especially Afrikaners, on the other.

The ‘New’ Dispensation

Following the first democratic elections in 1994 the African National Congress (ANC)
took over the reins of government. Its Alliance partners in the form of the SACP and
COSATU, as well as many members of government, held strong communitarian views. The
government, while broadly supporting the free-market system, promised to undertake a
programme of reconstruction and upliftment, originally encapsulated in the Reconstruction
and Development Programme (RDP). Its support of the free market combined with efforts to
change society, to assist the poor and to promote the previously disadvantaged reflected a
leaning towards a mixed economic or social market system.

Chapter 2: The Labour Relations System 47

Industrialisation – 1880 to 1924

Discovery of Gold and Diamonds

Industrialisation in South Africa commenced with the discovery of diamonds in 1867 and of
gold in 1886. Prior to these events, South Africa was mainly an agrarian society. There were,
of course, merchants and craftsmen to supply the services needed by various communities,
but there was no actual industrial activity. The only employment-related law was the Master
& Servants Act which governed the rules of work, meaning crafts or services. There were no
collective labour relations and no concerted attempts at organisation by workers, although
there were occasional strikes before 1870.

Immigration and Unionisation

With the discovery of diamonds and gold there was an influx of labour to the Witwatersrand
in particular. Industrialisation was slowly commencing in the rest of the country, but the
focus was on the diamond and gold mines and on the industries, such as the railways, the
engineering and building industries – and the service sector established around them.
Because South Africa did not have a sufficiently skilled labour force, European (mostly
British) immigrants were employed to do much of the work in this category. They brought
with them the European – and especially the British – brand of trade unionism, based at
that time on the ideal of a universal worker movement but balanced by the British sense of
individualism. The first real unions were unions for skilled workers. The services of these
workers were in high demand and they occupied a privileged position in the labour force.
Unskilled and semi-skilled work was initially performed mostly by blacks obliged by
the ‘poverty push’ to migrate to the towns. After the Anglo-Boer War they were joined
by white Afrikaners who had been left without a livelihood owing to the ‘Scorched Earth’
actions of the British Army, which had destroyed most of the farms. These employees – and
particularly unskilled blacks – were paid far less than their skilled counterparts.
With increased mechanisation, many skilled jobs could be broken down and done by
cheaper unskilled or semi-skilled labour. The deskilling of work posed a threat to the skilled
workforce. Their unions, which previously might have held universal socialist beliefs, began
to insist on guarantees of job security for skilled workers. As a result, the first regulation
instituting an industrial colour bar was introduced in 1897. It effectively prevented black
African employees from becoming engine drivers. This was followed by the 1911 Mines &
Works Act, which reserved thirty-two jobs for white mineworkers.

Industrial Action and Government Reaction

From the early 1900s onwards, strike action by white employees – and also by black
employees – had continued to increase. The situation came to a head with a large-scale
strike by white mineworkers in 1913. In the same year black mineworkers went on strike.

48 Labour Relations: A southern African perspective

These actions were followed by strikes at the railways and power stations and by a general
strike of white workers in 1914. Up to that time the government had mostly adopted a
laissez-faire approach to labour relations, and had interfered by the use of martial law and
other measures only when security was threatened. It now realised that certain controls had
to be introduced. As a result, the government passed the Act of Indemnity and the Riotous
Assemblies Act, curtailing certain industrial actions.
In 1915, the Transvaal Chamber of Mines agreed to recognise white unions. Partly as a
result of the First World War, a period of relative stability followed. In 1919, the government
called a national conference of employers and employees, at which it was resolved that
‘recognition of employees by employers of labour would alleviate industrial unrest’. Various
agreements had, in the meantime, been reached between the white unions and the Chamber
of Mines, the most significant being the Standstill Agreement, whereby employers agreed
that the ratio of whites to blacks employed would never be less than two whites for every
seventeen blacks in employment.

The Rand Rebellion

This cooperative spirit between employers and white employees was not to last. In 1920, the
price of gold began to fall. General prosperity declined and a number of strikes occurred, also
in the industrial and service sectors. Soon afterwards, it was announced by mine employers
that a new type of machine would be introduced. This posed a threat to skilled employees. The
danger of losing their jobs to less skilled workers increased when the Standstill Agreement
was dropped. At the same time white employees were informed that wages might have to be
cut, resulting in the retrenchment of about 10 per cent of the white workforce. In January
1922, 25 000 white miners went on strike. Because the miners later took up arms, this strike
became known as the Rand Rebellion. The Smuts government sent in the army and the strike
was effectively crushed. By the end of the strike, 153 miners had been killed and 500 were
wounded. Five thousand strikers had been arrested, of whom four were later hanged for
treason. Hundreds of white miners were subsequently laid off. Those who did return to work
had to be satisfied with lower wages and the deskilling of certain jobs.

The ‘Black/Disenfranchised’ Trade Union Movement

As indicated, action had also occurred among black African workers on the mines. This later
spread to allied industries and services. The first recorded strike by black mineworkers had
taken place in 1896, in reaction to a decision by mine managers to reduce wages. This was
followed by more strikes after the Anglo-Boer War and by protest actions, such as boycotts,
desertion and non-cooperation. Following the black mineworkers’ strike of 1913, a number
of improvements were introduced in the mine compounds where black African employees
lived, but protest action continued. As prices rose in comparison to wages, dissatisfaction
among black employees spread to other industries, and this led to the formation, in 1918,
of the Industrial Workers of Africa (IWA), generally believed to be the first union for black
employees. Shortly thereafter black workers decided to take action against the pass laws.
This, and the subsequent strike by mineworkers, led to some improvements. However, in

Chapter 2: The Labour Relations System 49

1920, a massive strike by black mineworkers resulted in a tightening up of the pass laws,
and in the curtailment of black mineworker resistance for some time to come.
In the meantime, the IWA had been overtaken by the Industrial & Commercial Workers’
Union of South Africa (ICWU), born from the organisation of dockworkers of all races in the
Cape, under the leadership of Clements Kadalie. The ICWU as such was established at a meeting
of various organisations held in Bloemfontein in 1920, and by 1924 its membership had risen
to 30 000 – higher than that of any other worker federation in the country. The ICWU covered
a wide range of black interests, but – perhaps because of the diversity of its membership – the
various factions influencing the movement, and, later, government antagonism, it began to
disintegrate in the late 1920s. It is still remembered as the first real black worker body, but
even more as the first mass movement among the black working class.

The Industrial Conciliation Act of 1924

The strikes by both white and black mineworkers, and those which had occurred in allied
industries and services, had one important result: the government, afraid of more unrest,
concluded that it needed to establish machinery for collective bargaining and the settlement
of disputes. The result was the drafting of the Industrial Conciliation Act of 1924. This
effort at institutionalising labour relations did not save the Smuts government. In the next
election, the white workers, who felt that the government had sided with the mine-owners,
voted Smuts’s South African Party out of power. The actual legislation was passed by the
Pact government which followed. This government had been established by a coalition of
the Labour Party and the National Party. Both parties had been brought to power by the
white worker vote. It follows that, in the years to come, there would be closer cooperation
between government and those workers who had the vote.
The primary purpose of the Industrial Conciliation Act of 1924 was to prevent labour
unrest by providing for collective bargaining and for conciliation in the event of dispute.
The Act and its subsequent amendments:
■■ provided for conciliation boards and industrial councils
■■ placed a criminal sanction on strike action which occurred without prior negotiation in
these bodies
■■ provided for mediation and arbitration.

Industrial councils became the recognised bargaining bodies, and agreements reached by
them were, if gazetted, legally enforceable.
The Act provided a very sound basis for the more orderly conduct of the employment
relationship. However, no union representing black African males could register under the
Act, since the definition of ‘employee’ specifically excluded ‘pass-bearing natives’. (Black
females were at that time not obliged to carry passes and were thus included under the
legislation, as were certain black males in the Cape.) The exclusion had the effect that black
(African) unions, not being allowed to register, were also not allowed to join industrial
councils or apply for conciliation boards, and could not institute legal strike action.

50 Labour Relations: A southern African perspective

The Civilised Labour Policy
The Pact government also introduced what is generally known as the Civilised Labour
Policy. This policy arose from the concern of the government at the fact that the living and
moral standards of ‘poor whites’ in the industrial areas had deteriorated. It led to the active
promotion of white employees, through the provision of more opportunities at higher wages.
The Civilised Labour Policy marked the beginning of an active campaign to promote the use of
white, and especially Afrikaner, employees in preference to those of other race groups.

Analysis of Developments
Because it supported capitalist endeavour, the government of the time initially engaged
in a type of market individualism, at times replaced by unashamed intervention on behalf
of capital. However, the demonstration of power by labour eventually necessitated a
shift towards institutionalised voluntarism. The pluralist approach, centred on collective
bargaining, was accepted as the best means of containing conflict in the employment
relationship.
The exclusion of black male employees from the system reflected a desire by government
to shape society in terms of its own vision. This can be equated with the social engineering
usually prevalent in a communitarian dispensation. It also provides evidence of the extent
to which sociopolitical ideology impacted on the labour relationship.

The Growth of the Manufacturing and Service

Industries (1925–1948)

The White and Multiracial Trade Union Movements

The prosperity brought about by the gold-mining industry resulted in rapid growth in the
manufacturing and service sectors. This process accelerated during subsequent decades, and
especially during the Second World War (1939 to 1945). Unionisation of employees in these
industries had already occurred during the previous decade. The unions in these sectors,
lacking the protectionism of the mining unions, often organised across colour lines. Among
the organisers were many members of the Communist Party.
Soon after the Pact government had come to power, the then Minister of Labour convened
a conference in Cape Town at which a representative body for employers and another for
trade unions was established. The idea was that the government should be able to consult
with these bodies on labour matters. The union body formed was the South African Trade
Union Congress (TUC), later to become the South African Trades & Labour Council (TLC). The
Trades & Labour Council, established in 1930, consisted of unions and federations across
the spectrum and from the various provinces. Most of the unions were registered and could
participate in the official bargaining system. They were thus more favourably placed than
the exclusively black unions. Yet the TLC was greatly influenced by more liberal elements.

Chapter 2: The Labour Relations System 51

In the years that followed many of the TLC unions continued, under the leadership of
organisers such as Solly Sachs of the Garment Workers’ Union and Ray Alexander, founder
of the Food & Canning Workers’ Union, to institute militant action on behalf of the entire
working class. By contrast, there were other unions in the TLC which wished to promote
only white interests, and some which were concerned at the influence of communists and
militants in their ranks.

The Influence of Afrikaner Nationalism

During the 1930s, further political divisions began to arise. Afrikaners had for long resented
the dominance in industry of the English-speaking sector and especially immigrant workers.
This, among other things, had led to the establishment in 1918 of the Afrikanerbond, later
known as the Broederbond. One of the aims of this body was to capture a share of the
country’s wealth for the Afrikaner nation. In 1933, Hertzog’s National Party and Smuts’s
South African Party joined to establish a new party, the South African National Party. This
caused Malan and Strijdom to leave the National Party and to establish the Purified National
Party, later supported by many white Afrikaner workers. The onset of the depression in
1929 and the escalating ‘poor white’ problem had intensified the need for greater protection
and promotion of white, and especially Afrikaner, workers. Soon after its inception the
Purified National Party began a campaign to organise white Afrikaners into trade unions,
establishing, in the process, the ‘Blankewerkersbeskermingsbond’.
The result of these developments was a greater division in labour ranks, yet most of the
unions operating in the official system still remained under the TLC. The most prominent
unions differed, particularly in their attitude to other race groups. In 1948 the South African
Iron, Steel & Allied Trades Association left the TLC to establish the Coordinating Council of
South African Iron & Steel Trade Unions. The policy of this body was to admit only all-white
unions to membership. The withdrawal of the Iron & Steel Union (Yster en Staal Unie) was
followed by that of the Mineworkers’ Union and various railway staff associations. With this
development, the ideal of a unified South African labour movement was finally abandoned.

The Independent Black Trade Unions

During this period of heightened union activity, black and other disenfranchised employees
increasingly flexed their industrial muscle. Despite the provisions of the 1924 Act, the
government was initially not unsympathetic to the interests of black employees, who were
supported by many whites in industry.
With the disintegration of the ICWU, it was realised that organisation on a sectorial
basis was more effective than general unionism, and numerous smaller union bodies were
established. In 1928, these unions amalgamated to form the Federation of Non-European
Trade Unions (FNETU). Some of the FNETU unions worked together with registered unions.
FNETU was initially quite active, but the depression of 1929 diluted union power and in
1933 the organisation disbanded. One of its leaders, Max Gordon, went on to organise no
less than 31 black unions, later coordinated under the Joint Committee of African Trade

52 Labour Relations: A southern African perspective

Unions. In 1940, Gordon was imprisoned and, because he had trained no successor, the Joint
Committee began to disintegrate.
In the meantime, a Coordinating Committee of African Trade Unions (CCATU) had been
established covering Gordon’s unions and those organised by Gana Makabeni of the Black
Clothing Workers’ Union. In addition, a fast-growing African Mineworkers’ Union had been
established. Finally, in 1942, all these unions and federations came together to form the
Council of Non-European Trade Unions (CNETU). This body was to dominate the black trade
union movement for the next decade. The outbreak of the Second World War brought many
more blacks to the industrial areas. Because they were sorely needed by employers, black
workers were now able to wield more power. Numerous strike actions were initiated, and
employers made various concessions to black employees.
By the end of the war, CNETU could boast a membership of 158 000 in its 119 affiliated unions.
However, after peace had been declared, black African workers again became dispensable and
their power declined. Government action against members of the Communist Party robbed the
organisation of much of its leadership. There was also a lack of grassroots involvement. The
result was that, by 1950, CNETU was no longer able to wield the same influence as before.
The militancy of the non-racial and multiracial unions, and of the unions representing
black African employees, had focused government attention on the problem of continuing
unrest among black workers. Realising that something had to be done to curb the frustration
of black employees, in 1930 the government amended the Industrial Conciliation Act to
provide for the extension of industrial council agreements to blacks. The 1937 Industrial
Conciliation Amendment Act added to this provision, allowing for representation of black
African employee interests on industrial councils by representatives of the Department of
Labour. It was believed that black employees were not sufficiently ‘developed’ for direct
representation in official bargaining bodies. Nevertheless, during this period there were
continued efforts to provide some form of representation for black employees, all of which
came to nought with the subsequent ascent to power of the National Party.

Analysis of Developments
The ousting of the South African Party in the aftermath of the 1922 mineworkers’ strike
was proof of the need for government to consider the interests of both capital and labour,
although, in this instance, the emphasis fell only on ‘non-black’ labour.
The approach adopted by government was one of institutionalised voluntarism, counter-
posed by the protection of white worker interests. The attitude towards black employees and
their representatives remained, at best, paternalistic.
Despite some efforts to incorporate blacks, the period reflects the growing influence of
sociopolitical tensions on the labour relations system and increasing polarisation within the
trade union movement.

Chapter 2: The Labour Relations System 53

The Ascent to Power of the Nationalist Government
(1948–1970)

The Botha Commission

The National Party came to power during the post-war slump of the late 1940s. It was a
period of general dissatisfaction among people of all races. Jobs were scarce and the influx
of black Africans to the urban areas had led to unrest in the townships. This, in turn,
had resulted in demands for stricter influx control. Polarisation between race groups, and
between English- and Afrikaans-speakers, had increased, setting the scene for the policies
which were to follow.
The new government immediately appointed a commission, generally known as the
Botha Commission, to institute an investigation into the existing labour legislation. The
Botha Commission argued that, if parity representation were granted to black employees
in industry, it would lead to equality between races. This would put white supremacy at
stake. Nevertheless, it recommended separate bargaining bodies for blacks, but emphasised
that strike action by these employees should be outlawed. The government accepted some,
but not all, of the Commission’s recommendations and in 1953 passed the Bantu Labour
(Settlement of Disputes) Act, later known as the Black Labour Relations Regulation Act.

The Bantu Labour (Settlement of Disputes) Act of 1953

The main thrust of the Bantu Labour Act was an attempt to avert trade unionism among
blacks by allowing for the establishment of workers’ committees for black employees. These
committees were to be established on the initiative of the employees themselves. Complaints
were to be taken to the regional workers’ committees, consisting of blacks appointed by
the Minister of Labour, under a white chairman. The regional committees were also to act
as watchdogs over conditions of work for black employees and had to report to the Black
Labour Board, which had an all-white membership.
The system did not prove to be very popular. Very few employees had the initiative to
form committees, and, even when they did, they lacked the necessary expertise to represent
themselves effectively. By 1973, only 24 committees had been formally registered under the
Act, although another 110 were said to exist.
Nevertheless, until 1979, the committee system, with later modifications, remained the
only legitimised form of black worker representation.

The Industrial Conciliation Act of 1956

Three years after the passage of the Black Labour Relations Regulation Act, the government
passed the Industrial Conciliation Act of 1956 (later known as the Labour Relations Act of 1956).
This Act became the new basis for labour legislation relating to collective bargaining. It
caused further polarisation in that it:

54 Labour Relations: A southern African perspective

■■ excluded all ‘Bantu’ (including black African women)
■■ prohibited the further registration of mixed unions (except with ministerial permission)
■■ placed restrictions on the registration of already mixed-race unions
■■ provided that such unions could not have mixed executives
■■ introduced a system of job reservation whereby a particular occupation could be legally
reserved for a certain race group.

Contrary to common belief, jobs were not necessarily reserved for whites, but for members
of a single race group. This notwithstanding, the Job Reservation clause became one of the
most notorious provisions in South African labour legislation.

The Multiracial Trade Union Movement

From 1950 onwards, the labour movement increasingly reflected the divisions which had
already begun to develop in the previous era. The establishment of parallel black unions caused
small craft unions to split off to form the South African Federation of Trade Unions (SAFTU).
The Suppression of Communism Act, passed in 1950, robbed many of the more militant unions
in the Trades & Labour Council of their officials and leaders, as no person listed as a communist
could hold public office. In 1954, the TLC, SAFTU and the Amalgamated Engineering Union
established a joint committee, known as the Trade Union Unity Committee its primary purpose
being to consolidate the position of the trade union movement. The new body’s efforts in this
direction resulted in the establishment of the South African Trade Union Council (SATUC),
which in 1962 changed its name to the Trade Union Council of South Africa (TUCSA). The TLC
and the Western Province Federation of Labour Unions thereafter disbanded, but the South
African Federation of Trade Unions continued to exist; SATUC decided to admit only registered
unions, but to work closely with black union bodies. (In 1962, it changed this decision and
readmitted black unions.) The decision not to admit black (African) unions immediately
caused a number of the coloured and Indian unions to leave the federation along with their
black counterparts. In later years the Trade Union Council of South Africa became, with the
conservative white unions, the major union representative on official bargaining bodies. The
organisation remained multiracial and had in its ranks a number of parallel African unions.
(The 1956 Act prohibited mixed executives, resulting in the establishment of separate coloured
and Indian unions in some cases, and the establishment of racially separate branches in others.)

Chapter 2: The Labour Relations System 55

 Industrial Workers of Dockworkers Cape
Africa (IWA) 1918 1918

Industrial and Commercial

Workers Union (ICWU)
1920

1928
Small sectional unions
Federation of
Non-European
Trade Unions (FNETU) 1928

1933
31 new unions (Gordon) Consultive Committee of
Joint Committee of African Trade Unions
African Trade Unions (CCATU)
(JCATU)

1940 Council of Non-European

Trade Unions (CNETU) 1942

1950
14 black and coloured
unions leave TUCSA

South African Congress of

Trade Unions
(SACTU) 1955-1960

figure 2.2: development of the black union movement up to 1965

Although TUCSA arose from militant union roots, its accommodation of the existent system
resulted in a new type of trade unionist. The system established by the Industrial Conciliation
Act had led to ever-increasing centralisation of bargaining structures. Registered trade
unions bargained through the machinery, the aim of which was to avoid industrial disputes.
Because agreements were legally enforceable, unionists began to spend more and more
time guarding against breaches. Benefit funds were established, and many unionists found
themselves overburdened by their administrative functions. In the process a large number
of unions lost touch with their grass roots organisation and took on the role of bureaucrats.
Added to this was an increasing acceptance of, or at least abidance by, the sociopolitical
status quo. It was this estrangement from ground level which would eventually lead to
TUCSA’s demise. Nevertheless, TUCSA did keep the worker movement alive at a stage when

56 Labour Relations: A southern African perspective

 Cape Federation National Industrial
of Labour Federation

South African
Trade Union Council (TUC)
Blankewerkers
Western Province beskermingsbond
Federation of Labour
SA Trade and Labour
Council (TLC) 1930 Mining and Railways Staff
Associations
Coordinating Council
(Iron and steel)

SA Federation of
Trade Unions

Trade Union Council of SA SA Federation of

(TUCSA) 1954 Labour (1957)
Black and coloured unions
(SACTU) 1956

Black unions
(FOFATUSA) 1959

figure 2.3: historical development of the white and multiracial movement up to 1965

Chapter 2: The Labour Relations System

SA Confederation of Labour
TUCSA 1962 Associations (SACLA) 1965

57
it was in danger of disappearing altogether, and it did help to maintain the tradition of
collective bargaining in the South African system.

The All-White Labour Movement

The all-white Coordinating Council, which had been founded in the late 1940s, continued
to grow. Soon after its inception, the Iron & Steel Union was joined by the Mineworkers
Union and several Railway Staff associations. In 1957, the Coordinating Council, together
with the South African Federation of Trade Unions and the Federal Consultative Council of
the South African Railways & Harbours Staff Associations, established the Confederation of
Labour, later known as the South African Confederation of Labour Associations (SACLA).
The Confederation continued to promote exclusively white unions and was at the time a
firm supporter of government policies.

The Independent Black Movement

The black union movement in the 1950s had its roots in the Council of Non-European Trade
Unions (CNETU), which, despite setbacks in the previous decade, had remained in existence.
In 1955, the unions remaining in CNETU and the fourteen unions which had split off from
TUCSA combined to form the South African Congress of Trade Unions (SACTU). Friedman
(1987) calls this body ‘… the first formal alliance between independent African unions and
those representing other races’. Shortly after its inception SACTU joined the Congress Alliance
and from then onwards was to play a prominent role in this body. SACTU’s policy was one
of grassroots organisation and shop-floor militancy. Initially it did make noteworthy gains
and in 1957 staged a successful stayaway to support its ‘pound a day’ campaign. However,
shortly after this stayaway, SACTU began to decline as a workplace organisation. Instead of
progressively establishing itself as a worker movement able to make shop-floor gains, SACTU
attempted to grow too fast in order to meet the political objectives of the Alliance. Friedman
sums it up by saying that: ‘Because the Congress needed a mass worker movement, SACTU
tried to become one before it was ready. It threw its meagre resources into a campaign to build
numbers, not strength’. Added to this lack of systematic organisation was the fact that SACTU
suffered from government action more than other movements before it. Numerous officials
were banned, and in some unions no organisers remained.
In 1960, the African National Congress was finally banned, and in the ensuing years more
than a hundred SACTU leaders were arrested. Of those remaining, many went underground,
and with this the black worker movement, at least in its overt form, disintegrated.

Analysis of Developments
During the period under review, the paradox of a professed approach of institutionalised
voluntarism counterposed by protectionism and increasing State intervention to control the
black African labour force was perpetuated. The anomaly was reinforced by the provision
for a unitary system of workplace consultation for African employees, this in the face of
a pluralist approach at a highly centralised level in the statutory labour relations system.

58 Labour Relations: A southern African perspective

The repression of African representation in both the sociopolitical and industrial spheres
engendered solidarity between labour representatives and political bodies representing the
disenfranchised. African unions had no alternative but to become politicised and bear the
consequences in the form of repression of their activities and harassment of their leaders.
While professing a liberal-democratic approach as regards non-black workers, the
government resorted to totalitarian measures to control black employees and black South
African citizens in general. At the same time, its professed support for free-market capitalism
was countered by constraints on the majority of the population and the advancement of
white, particularly Afrikaner, capital and labour.

Changes in Labour Relations (1970–1990)

The Start of a New Era

The relative labour peace experienced during the late 1950s and throughout the next decade
was not to last. Despite, or as a result of, the banning’s and stricter pass laws imposed by
the Nationalist government, black Africans in general, and black workers in particular,
became more conscientised to their rights. Furthermore, with the economy still growing,
the position of the black employee became more firmly entrenched. As whites moved up
in the occupational hierarchy, blacks came in to take their place. Since this section of
the population now constituted the majority of the economically active population, it was
unlikely that the position of blacks in industry and in the labour relationship, as decreed by
the 1956 Industrial Conciliation Act, could be maintained.

The Revival of Black Employee Interests

During the 1960s, the only bodies overtly representing black Africans which were prominent
on the labour scene were those working under the auspices of, or in conjunction with,
TUCSA. However, the beginning of the 1970s saw renewed attempts to organise blacks into
independent unions or, at the very least, to assist black employees to improve their working
conditions. This led to the establishment of the Urban Training Project, The Wages and
Economics Commission, the General Factory Worker’s Benefit Fund, the Western Province
Workers Advice Bureau and Black Allied Workers Union. Some of the bodies mentioned
were not really unions, but together they established the basis from which an entirely new
trade union movement, representative of mainly black African employees, would emerge.

The 1972–1973 Strike Wave

By the beginning of the 1970s, black workers were no longer prepared to accept their secondary
status in industry. In 1972, altogether 9 000 black employees engaged in strike actions, of
which the most noteworthy were the strikes by the Putco bus drivers and those at the Durban
and Cape Town docks. Yet the 1972 strikes were insignificant compared to those which
occurred in 1973, when, in Natal alone, an estimated 61 000 black employees came out on

Chapter 2: The Labour Relations System 59

strike over a very short period. The strikes had no immediate or obvious cause and the strikers
made no fixed demands, but the actions were indicative of general dissatisfaction among
black employees. More importantly, they highlighted the joint power of those employees and
the necessity to accommodate their interests within the labour relations system.
Although the strikes were all illegal, no arrests were made – perhaps because it was
impossible to imprison all strikers and no ringleaders had emerged, or because the
government was at that time being subjected to heightened criticism both from the outside
world and from opposition groups inside the country. Employers, on their part, reacted in
various ways. Some threatened dismissal, others granted increases, while a few attempted
to talk to their employees. All became aware that they did not have effective channels to
communicate with their black employees.

New Unions Emerge

The 1973 strikes added impetus to the reawakened black worker consciousness. In Natal,
several new unions were established under the auspices of the GFWBF. These unions later
founded the Trade Union Advisory & Coordinating Council (TUACC). A number of unions
also emerged from the efforts of the Urban Training Project. The new unions initially
concentrated on enlisting as many members as possible, but soon realised that they would
have to consolidate their organisation at each plant by building up strong shop-steward
representation. A notable breakthrough occurred when the National Union of Textile Workers
and the Textile Workers’ Industrial Union managed, in 1974, to conclude a recognition
agreement with the British-owned company, Smith & Nephew. It was the first agreement
of its kind since the passage of the Industrial Conciliation Act in 1924. The idea did not
immediately catch on and until1980 only four recognition agreements were concluded; yet
the Smith & Nephew agreement precipitated a new development in collective bargaining.

The 1973 Black Labour Relations Regulation Act

The government reacted rapidly to the 1973 strike wave. In the same year, it passed the
Black Labour Relations Regulation Act. This Act provided for the establishment of liaison
committees at plant level as an alternative to the already existent workers’ committees.
Liaison committees were to consist of representatives of employers and employees, elected
on a parity basis. Their main purpose was to improve communication between employers
and their black employees. Although these committees could consult on any matter of
mutual interest, the liaison committees often dealt only with matters of physical hygiene
or other unimportant issues. Yet the government saw these committees as a cure for all the
problems which had developed.
The Act gave black employees a limited freedom to strike. Disputes arising between
employers and black employees had to be channelled via the Black Labour Officer responsible
for that area, to the regional Labour Committee, from there to the Divisional Inspector, and
then to the Black Labour Board. Only once these channels had been exhausted were workers
entitled to engage in legal strike action!

60 Labour Relations: A southern African perspective

The provisions of the Act met with an enthusiastic response from employers. By contrast,
the response from the unions was negative. Black unions saw the Act as a renewed attempt
to break the power of unionism among black employees. There was, however, one loophole
that the legislators did not foresee. Although organisations such as the UTP and the WPWAB
did not support the committee system, they realised that they could use committees to gain
entry to enterprises ‘through the back door’.
The committee system for black employees was introduced in South Africa not to
supplement the process of collective bargaining, but to replace it. Its introduction can be
ascribed partly to the belief that blacks were not able to engage in ‘responsible’ collective
bargaining at official level, but more to the fear of black union power and the fear of
dominance by these bodies in the system.

Consolidation of ‘New’ Union Power

Despite its initial gains, the emerging union movement had soon run into difficulties. From
1974 onwards, the government banned many of the individuals involved in the organisation
and promotion of black trade unions. The banning’s increased after the Soweto Riots of
1976. Together with the recession which followed, they caused a decline in the momentum
of trade union development. Nevertheless, the total impetus was not lost and in 1979 a
number of bodies and unions involved established the Federation of South African Trade
Unions (FOSATU). Another federation, the Council of Unions of South Africa (CUSA), was
founded in 1980. Together these bodies, and especially FOSATU, would dominate the South
African labour scene during the next five years.

The Wiehahn Commission

By 1976, it had become obvious that the provisions of the Black Labour Relations Regulation Act
of 1973 had not solved the problem of black worker militancy. Also, South Africa’s major trading
partners had become more aware of the position of the black employee. The threat of sanctions
and disinvestment had increased, and various codes of employment practice (notably the EEC
(European Economic Community) Code, the Sullivan Code and the British Code of Employment
Practice) had been issued to multinational companies in South Africa. An improved image was
sorely needed, and it was in this climate that the government in 1977 appointed the Commission
of Inquiry into Labour Legislation, commonly known as the Wiehahn Commission.
The original brief of the Commission was to:
■■ rationalise the then existent labour legislation
■■ seek possible means of adapting the labour relations system to ‘changing needs’
■■ ‘… eliminate bottlenecks and other problems experienced in the labour sphere’.

This was the stated brief but, in retrospect, it appears highly probable that the Commission
was specifically instructed to consider a method by which black trade unions could be
controlled and incorporated into the system without creating too great a disruption.

Chapter 2: The Labour Relations System 61

The findings of the Commission were reported in six parts, the last report appearing some
time after legislation implementing previous recommendations had been passed.
By the time all the recommendations of the Commission had been implemented, the
Industrial Conciliation Act, later to become the Labour Relations Act, had undergone
significant amendments: the Black Labour Relations Regulation Act had been repealed,
all previous legislation pertaining to training and manpower development had been
consolidated into the Manpower Training Act, the Shops & Offices Act and the Factory,
Machinery & Building Works Act had been put together and divided into the Basic
Conditions of Employment Act and the Machinery & Occupational Safety Act (now known
as the Occupational Health & Safety Act).
The Wiehahn Commission’s first report was the most momentous, and the legislation
which followed would bring about the most radical changes in labour relations. The report
recommended, inter alia, that:
■■ full freedom of association be granted to all employees regardless of race, sex or creed
■■ trade unions, irrespective of their composition in terms of colour, race or sex, be allowed
to register
■■ stricter criteria be adopted for trade union registration
■■ a system of financial inspection of trade unions be introduced
■■ prohibitions on political activity by unions be extended
■■ liaison committees be renamed as works councils
■■ where no industrial council had jurisdiction, works councils and workers’ committees be
granted full collective bargaining rights
■■ statutory job reservation be phased out
■■ safeguards be introduced to protect minorities previously protected by job reservation
■■ the Industrial Tribunal be replaced by the Industrial Court
■■ fair employment practices be developed by the Industrial Court
■■ allowance for a closed shop be maintained
■■ a tripartite National Manpower Commission be established.

The first and second recommendations mentioned were, in the light of past history, the most
revolutionary. The granting of registered trade union rights to black Africans, which would
give them access to the collective bargaining machinery, had previously been avoided at
all costs. Yet the intentions of the Commission were not as progressive as they had at first
appeared to be. It was believed that the new trade union movement (at that stage relatively
small) would, by co-option into the system and by bargaining with other established unions
on industrial councils, lose much of its impact; also that it would become more ‘responsible’
and perhaps even be absorbed into the established movement.

62 Labour Relations: A southern African perspective

The Industrial Conciliation Act of 1979
The Industrial Conciliation Amendment Act (later known as the Labour Relations
Amendment Act of 1979) did introduce a new era in South African labour relations. Not all
the recommended innovations were introduced forthwith, and important amendments to
the Act were made in 1980, 1981 and 1982, but by 1983 the following major changes had
been effected:
■■ The term ‘employee’ had been redefined to include all persons working for an employer.
■■ Previous provisions for racially mixed unions to have separate branches and all-white
executives had been withdrawn.
■■ The job reservation clause (Section 77) had been repealed.
■■ The concept of an ‘unfair labour practice’ had been introduced and defined.
■■ Provision had been made for the establishment of the Industrial Court and the Manpower
Commission.
■■ The name of the basic Act had been changed to the Labour Relations Act of 1956.

The Reaction of the Newer Trade Unions

The trade unions established during the previous decade to represent black employees did
not display much enthusiasm at the fact that they were now permitted to participate in
the official system. Initially most of these unions refused to register, either as a matter of
principle and in protest at their previous exclusion or because they believed that registration
would entail greater government control. The newer unions also stayed out of the industrial
councils, in part, because they resented these bodies, and in part because their power base
would be diluted by centralised bargaining. Instead they organised a strong shop-floor
presence and demanded recognition from individual employers.
In the early stages of the new dispensation, employers offered strong resistance to demands
for plant-level bargaining. The most prevalent excuse was that they were not prepared to
deal with unregistered unions – that unions should register and join the industrial councils.
The result was a significant increase in strike actions, all of them illegal, culminating in
the strike wave on the East Rand early in 1982. By then, some employers had relented and
had concluded recognition agreements with representative unions at plant level. This trend
continued – so much so, that plant-level bargaining soon became entrenched in the South
African system.
As it became apparent that the advantages gained by registration might outweigh the
disadvantages, union resistance gradually decreased. Once they had acquired registered
status, and as their power base expanded to cover a substantial number of employees in
particular industries, some of these unions applied for admission to industrial councils and,
as their power increased, began to play a dominant role on these bodies.

Chapter 2: The Labour Relations System 63

New Federations Established
As the new union movement grew, new federations came into being. 1985 saw the launch
of COSATU, from predominantly FOSATU roots. This was followed by the formation of the
National African Council of Trade Unions (NACTU) and the United Workers Union of South
Africa (UWUSA). By 1990, total union membership, discounting the unregistered unions,
had increased by one and a half million since 1980. Almost all the additional members
came from the ranks of black African and coloured African employees, and most of them
belonged to the newer unions.
The unions emerging in the 1980s displayed the militancy to be expected of a new
movement and, particularly, of one attempting to establish itself in an entrenched system.
Working in close cooperation with shop stewards, they took up every issue affecting their
members. Many actions were hard fought, and strike frequency increased from 101 strikes
in 1979 to 1 148 in 1987 and 1 025 in 1988. Previously nearly all strikes which occurred
had been illegal. After 1985, this trend was reversed, owing to greater sophistication on
the part of the unions, a greater willingness to use the system, and more firmly established
relationships.
The newer unions also began to use the unfair labour practice legislation and the Status
Quo Order provision to bring Industrial Court actions against employers. All in all, the
newer unions tended to dominate the labour relations arena.
From the outset the newer trade unions were intensely aware of the errors which had been
committed by black trade union movements in the past. Consequently, they concentrated on
worker organisation and the achievement of gains on the shop floor, rather than on mass
mobilisation. However, trade union growth coincided with the mushrooming of protest
movements, and trade unions, as the major representatives of the black working class,
increasingly found themselves in a politically prominent position. This was to be expected
since, until 1990, the trade union movement was the only legitimate public forum for
disenfranchised employees. Even after the De Klerk reforms of that year and the unbanning
of all political parties, the trade union movement – and particularly COSATU – remained
established as a formidable political power bloc.

White Opposition
The new dispensation in labour relations was not without its opponents. Even before the
first Wiehahn report was published, white mineworkers, who had evidently been informed
of its content, went out on strike to protest the inclusion of blacks in the official system.
The strike was unsuccessful, but the opposition remained. Many white employees, fearful
for their positions, found their political home in the Conservative Party. The South
African Confederation of Labour Associations, now occupying a position to the right of
the government, still existed. By 1983, this association, having lost more than half of its
previous membership, appeared to be on the decline, but for a while grew again as white
reactionism increased.

64 Labour Relations: A southern African perspective

TUCSA Disintegrates
The Trade Union Council of South Africa was, despite its active participation in the Wiehahn
Commission, the worst hit by the new dispensation. A number of TUCSA unions did open
up their ranks, and most of the unions did try to service the new members by representation
on industrial councils, but they lacked the grass roots organisation of the newer unions and
were slower to take up issues. As the major multiracial organisation in existence before
1980, TUCSA was the first to feel the effects of the new dispensation when black and
coloured members started defecting to the newer unions. TUCSA’s attempt to adapt had
come too late and, at the end of 1986, the organisation officially disbanded. Most of its
member unions were later absorbed into a new grouping, the Federation of Unions of South
Africa (FEDUSA).

Government Reaction
The apartheid government, having set the new system in motion, appeared initially to have
been taken aback by it, but thereafter became increasingly inclined to let developments
run their course. In 1982 the Director-General of Manpower repeatedly declared that the
government believed in the principle of self-government in industry and that employers
and employees should attempt to regulate their relationship in the best possible manner.
Official sources began subtly to encourage employers to negotiate with recognised unions.
The government was letting the system sort itself out, taking the role mainly of observer and
adviser. This policy persisted until 1988, when the government – obviously pressurised by
employers and perhaps of the opinion that unions were gaining too much power – passed
controversial amendments to the Labour Relations Act. These included certain codifications
of unfair labour practices, some of which seemed to be directed against union actions.
Also, unions could now be sued for illegal strikes undertaken by their members. The 1988
Labour Relations Amendment Act was widely opposed by the union movement. Stayaways
demonstrating protest against the Act followed, and employers came under pressure to
‘contract out’ of the Labour Relations Act as a totality. Following discussions between the
South African Consultative Committee on Labour Affairs (SACCOLA) and representatives
from COSATU and NACTU, most of the controversial clauses were withdrawn by the Labour
Relations Amendment Act of 1991.

Analysis of Developments
Collective Power as an Instrument for Change
The labour action initiated by African employees to protest their circumstances and position
within the employment relationship proves that, when faced by the collective power of
employees, the government and employers are not able to exercise exclusive control over
the relationship.
The institution of action on the scale of the 1973 strikes requires either extensive and
effective organisation or the ability to rally workers around a cause. In this instance, the

Chapter 2: The Labour Relations System 65

cause was presented by the negation of African rights in both the workplace and society.
In an economically based society, where the majority of the adult population are either
employees or aspirant employees, the workplace offers an expedient base for organisation,
whether this be in pursuit of a social, a political or an economic cause.
Repression arouses reaction and provides unions who are able to mobilise reactionary
sentiment with a strong power base. Ascent to power in the labour relations sphere proved
to be a precursor to political power.

Initial Acquiescence with Capitalism

COSATU, as the dominant union federation post 1984, did not at its inaugural congress
openly challenge the capitalist, free-market system. It did not, like the British Trades Union
Congress (TUC) before it, state as an objective the public control and planning of industry.
At that stage the federation advocated a non-racial democracy in the post-apartheid state,
combined with some nationalisation of key industries. Their ‘socialist’ model was not
orthodox Marxism and tended towards the social democratic approach of the British Labour
Party. Elijah Barayi, then COSATU president, summed up the federation’s position when he
stated that: ‘COSATU is a socialist organisation and I would like to see a socialist state in
South Africa. I speak of socialism as practised by the Labour Party of England’.
From this it can be assumed that COSATU initially adopted a reformist rather than a
radical position. Unions would be prepared to operate in the existing system provided that
‘the creation of wealth was democratically controlled and fairly shared’.

Acceptance of Pluralism
With the opening up of the system, all parties embraced the pluralist approach to the
relationship. The unions emphasised the functionality of collective bargaining and the
exercise of collective power. Because employers initially refused to recognise the newer
unions (and probably because of historical realities), the approach on both sides was
essentially adversarial. The SACCOLA-COSATU-NACTU Accord could be interpreted as a
move towards corporatism, but could also have been a temporary reaction to the pressures
exerted by the unions.
Changes in the labour relations system pointed the way to political change. Once the
government had deracialised the workplace, it was self-evident that political change would
have to follow.

Developments Post-1990

The New Dispensation

With the unbanning of previously banned political organisations and the release of Nelson
Mandela, it was evident that a new sociopolitical era had begun, and that the process

66 Labour Relations: A southern African perspective

towards the institution of a democratically elected government was irreversible. The De Klerk
government and thereafter the Government of National Unity increasingly opened itself up
to the major stakeholders in the labour sphere as well as to other community interests.
This led, in 1993 and 1994, to the inclusion of agricultural and domestic employees under
the Basic Conditions of Employment Act and, in the same year, to the Agricultural Labour
Relations Act, which effectively incorporated farm workers under the Labour Relations Act.
A change of direction also occurred in the public sector, proved by the passage of the
Education Labour Relations Act of 1993 and the Public Service Labour Relations Act of
1994. For the first time, the scope of labour relations was expanding to include hitherto
unrepresented and often exploited workers and to acknowledge the role of the State as yet
another employer.
In April 1994 the ANC, supported and bolstered by COSATU and the SACP, assumed power
as the majority party in the Government of National Unity. Having come to power by the vote
of the poor and previously oppressed, and having in its ranks many former trade unionists,
the new government faced enormous expectations. Workers now expected the government to
serve mainly their interests, forgetting that it had a far wider constituency (including also the
30 per cent or more unemployed persons). Its concerns were not confined to the workplace,
but also embraced the economy in general, the need for job creation and investment, and the
dire need for mammoth improvements in training, education and health services.
The fears of other sectors of society, including some in the business sector, that a
government with ‘socialist’ partners would inevitably attempt to destroy capital and engage
in an ‘irresponsible’ programme of nationalisation and redistribution – were also not
realised. The new government continued to express its encouragement of investment and
its belief in the free-market principle as the main route to economic growth. On the other
hand it attempted, by new economic initiatives and by way of new education and training,
housing and health policies, to uplift previously disadvantaged communities and persons.
This was reflected at the micro level by the emphasis on affirmative action, black economic
empowerment (BEE) and social responsibility. It was the government’s stated intention to
unbundle the large conglomerates and to provide opportunities for black business.
The government had not only to satisfy all sectors of society but also to reconcile and
reconstruct an economically and socially devastated country. At the same time it had to
remain as democratic and inclusive as possible.

Initiatives to Kickstart the Economy

Before coming to power, the ANC and its alliance partners had developed a framework,
known as the RDP, for addressing South Africa’s economic and social problems and
redressing historical inequalities between different race groups.
The RDP had as its purpose ‘the integration of growth, development, reconstruction
and redistribution in a unified programme’. It placed emphasis on education and training,
affirmative action, job creation, programmes to address unemployment, a coordinated
public works programme and the stimulation of both rural and urban development.

Chapter 2: The Labour Relations System 67

The RDP was high on ideas but short on action and it soon faded into the background, being
overshadowed by GEAR. In 1996 the RDP offices closed their doors although some observers
believed that its principles were still being acted upon in various national departments.
The new government had also signalled its intention to create greater freedom in the
South African economy, to attract local and foreign investment, and to allow for the
interaction of market forces. The Growth Employment and Redistribution Strategy (GEAR)
was subsequently adopted as the foundation for economic and social policy. GEAR placed
emphasis on economic growth through investment and production. The need to redistribute
wealth and to alleviate poverty was not forgotten but, in terms of GEAR, this would be
achieved through economic growth, which would in turn bring about general prosperity and
enable the government to engage in social upliftment programmes.
GEAR was seen as necessary to boost economic growth and in fact the economy did grow
by 4 per cent between 2000 and 2004. However, the Alliance partners saw it as being in
conflict with the RDP. They complained that GEAR did not place sufficient emphasis on
redistribution and economic upliftment.
The improved economic situation at the beginning of the new millennium inspired
President Thabo Mbeki to introduce the Accelerated Shared Growth Path Initiative for
South Africa (ASGIsa). The stated purpose of the plan was to achieve economic growth of
at least 6 per cent. This, according to the International Monetary Foundation (IMF) could
be achieved only by trade liberalisation, improved efficiency in the labour market and
improved public enterprises. The idea was to identify the six most important economic
constraints and to link these with areas of intervention.
However, there was no document outlining in detail the initiatives to be undertaken and
no means of measuring its success or otherwise. Unfortunately, the envisaged economic
growth did not happen.

Labour Relations Policy and Legislation

After the 1994 elections, the reconstituted Department of Manpower, now renamed the
Department of Labour, commenced putting its stamp on the labour relations system. A task
team was established to draft a new Labour Relations Act, and in February 1995 the first
‘Draft Negotiation Document’ was published for comment.
1995 saw the establishment of the National Economic Development & Labour Council
(NEDLAC), intended to represent all major stakeholders and to consult on economic, labour
relations and labour market policy (see Chapter 3). The government revealed its intention to
continue adopting a corporatist approach by recognising NEDLAC in the proposed legislation
and making the final acceptance of the draft Bill subject to consensual approval from NEDLAC.
The new government also amended the Basic Conditions of Employment Act and passed the
Employment Equity Act and the Skills Development Act. These Acts were intended to provide
more general access to jobs and to further protect employees at the workplace, but were seen by
many to be placing more responsibilities on employers and hampering employment creation.

68 Labour Relations: A southern African perspective

The Labour Relations Act of 1995
The Labour Relations Act of 1995 repealed the Labour Relations Act of 1956 and subsequent
amendments, although many of the procedures and structures contained in the Labour
Relations Amendment Act of 1979 were retained. The most significant changes were:
■■ the provision for legislated organisational rights
■■ the granting of the right to strike without fear of dismissal once prescribed procedures
had been followed
■■ the limitations placed on the use of ‘scab’ labour
■■ the provision for the establishment of agency shops and closed shops
■■ the codification of unfair dismissals.

One of the additions to the Act was the provision for statutory workplace forums, intended
to promote consultation between the parties at the workplace.
While there appeared to be a genuine desire on the part of the government to balance
power, create more certainty and promote cooperation between the parties, most of the
changes favoured the unions. Also, while bargaining and the choice of bargaining structure
remained mostly voluntary, the Act unashamedly promoted centralised bargaining. This
favoured certain larger unions rather than smaller unions and employers.

Labour Action
Contrary to expectations, labour action did not decrease to any significant extent (from 904
strikes in 1990 to 804 in 1994). While the sectors with more established labour relations
negotiated relatively peaceful settlements, major actions occurred in the health services,
the police services, the municipal services and the fishing and transport industries, most of
which had been granted greater freedom to strike.
The continuation of labour unrest placed both the government and the unions supporting
it in a predicament. The government might have wished to curb labour unrest in the interests
of promoting the economy, and some unions might have wished to cooperate. However,
neither the government nor these unions could really afford to take a stand against grass
roots sentiment for fear of losing the support of their constituents to other political parties
and unions.

The Trade Union Movement

Tensions in the Alliance
COSATU’s numerical superiority, and its political prominence before and after 1994, allowed
the federation to maintain its position as the dominant union federation in South Africa.
NACTU and the Federation of Unions of South Africa (FEDUSA) did maintain substantial
membership but were able neither to match, nor to wield the same political clout as COSATU,
which relied on its alliance with the ANC and the SACP.

Chapter 2: The Labour Relations System 69

The government’s support of free-market capitalism did not always sit well with COSATU.
At the federation’s policy conference in 1997, it adopted a wide-ranging declaration
contrasting strongly with government policies. COSATU’s criticism of socioeconomic
policies led President Mandela to address the role of trade unions in the Alliance. The
President explained that the ANC was the leader of the tripartite alliance and, in so many
words, cautioned COSATU not to try to usurp political power.
After 1998, relations between COSATU and the Presidency deteriorated further, owing
mainly to disagreement on economic and social policy, the management style of President
Mbeki and his perceived sidelining of the unions as alliance partners. It can be assumed that
the trade union federation played a major role in the December 2007 ‘coup’ at Polokwane
which saw President Mbeki ousted and the ascent to power of Jacob Zuma.

Expectations and Actions Post-Polokwane

COSATU, having lobbied extensively for a change in leadership, left no doubt that it did
not intend to be sidelined and saw itself as a major player also in the sociopolitical arena.
A number of former union leaders had been given parliamentary and cabinet posts and
the federation maintained that these individuals should be accountable to it as well as the
government.
The federation admitted that the alliance had become more unified under a Zuma
presidency, but it did not hesitate to criticise government for failure to implement agreed
policies, nor did it temper the militancy of its members. On the contrary, soon after the April
2009 elections the unions warned of massive actions if demands for pay increases were not
met. Threats became actions when doctors went on strike, followed closely by municipal
workers. According to COSATU, its criticisms and strike actions did not conflict with its
position as alliance partner.

Collective Industrial Relations Processes

Collective Bargaining
The Labour Relations Act of 1995 entrenched collective bargaining as central to the conduct
of the labour relationship. This was evidenced by the granting of new organisational rights
to unions, the continued provision for centralised bargaining councils, and the establishment
of a compulsory bargaining council in the public service. COSATU strongly supported
the move towards centralised bargaining. At its congress in 2000, the federation vowed
to ‘continue to advance its objective on centralised bargaining and to wage a relentless
struggle until bargaining councils are established in all sectors of the economy’.

Workplace Forums
Chapter 5 of the Labour Relations Act of 1995 sets out detailed provisions for the
establishment of workplace forums. In terms of these provisions, forums may be established
at any workplace, and should be representative of all employee levels with the exception

70 Labour Relations: A southern African perspective

of senior management. Workplace forums were given the right to consultation on certain
matters and co-decision-making on a limited number of issues (see Chapter 5).
In the Labour Bulletin of December 2000, Godfrey and Du Toit claimed that: ‘One of
the most contentious issues during the NEDLAC negotiations over the new LRA was the
provision for workplace forums.’ No consensus could be reached, and eventually the Minister
of Labour intervened to inform that government would not consider dropping workplace
forums as they were ‘of fundamental importance to industrial relations’. Workplace forums
were important for ‘the process of enterprise restructuring, to improve productivity and
become internationally competitive’.
Employers and unions were not compelled to establish workplace forums and there was
little enthusiasm for their establishment (see Chapter 5). The Act provided that statutory
forums could be established only at the request of a majority union or unions. The latter
grouping viewed forums as a threat to collective bargaining while not granting employees
any significant share in decisions.

New Legislation
In 1997, the government passed a new version of the Basic Conditions of Employment Act.
Under the new Act, maximum working hours were decreased from 48 to 45 hours per week,
overtime pay increased from one-and-a-third to one-and-a-half times the normal wage,
compulsory annual leave was extended from two to three weeks per annum and unpaid
maternity leave from three to four months.
The Employment Equity Act of 1998 was an attempt to address historical imbalances
in employment and employment opportunities. It placed a prohibition on discriminatory
practices and promoted the employment and advancement of designated groups.
The Employment Equity Act was followed closely by the Skills Development Act and the
Skills Development Levies Act. These Acts provided for a levy of 1 per cent of the payroll on
all employers employing more than 50 people, and the establishment of Sectoral Education
and Training Authorities (SETAs) to co-ordinate training in the different sectors.
Other Acts, such as the Protected Disclosures Act, allowing for protection of whistle-
blowers, and the Promotion of Equity and Prevention of Discrimination Act, attempted to
provide further safeguards against arbitrary action and discriminatory or corrupt practices.

Analysis of Developments
Socioeconomic Policies
After the first democratic election, the South African government was faced with the
following challenges:
■■ globalisation of economies under the banner of neo-liberalism
■■ the demise of the socialist economies

Chapter 2: The Labour Relations System 71

■■ general reaction against mandatory systems
■■ World Bank/IMF directives for structural adjustment programmes in African countries.

In these circumstances, the post-1994 government had little option other than to declare
its support for the capitalist/free-market system. On the other hand, the history of
disadvantage suffered by the majority of its constituents, and its alliance with COSATU
and the SACP, obliged the government to cloak GEAR in the guise also of a distributive
mechanism, to institute welfare structures and to increase spending on services, health and
education.

Labour Legislation
The dichotomy in the government’s socioeconomic policies was mirrored in the legislation
governing the employment relationship. The Labour Relations Act, at the core of the system,
was framed mainly in the voluntarist, pluralist paradigm, with the emphasis placed on
free collective bargaining and self-regulation by employers and employee representatives.
On the other hand, there was indirect coercion towards centralised bargaining. Also, the
allowance for closed shops and agency shops ran counter to the freedom of association, and
reflected a preference for union hegemony over democracy.
In a situation of institutionalised voluntarism, it is generally accepted that there
should be legislation granting basic substantive rights and protecting employees against
injuries, accidents and unemployment. These contingencies were provided for by the Basic
Conditions of Employment Act, the Occupational Health & Safety Act, the Compensation for
Occupational Injuries & Diseases Act and the Unemployment Insurance Act.
In South Africa, the need arose for additional mandatory legislation in the form of
the Employment Equity Act, the Skills Development Act and the Skills Development
Levies Act. Although these Acts were justified by the country’s historical imbalance,
they are not compatible with a voluntarist framework and indicate a move towards
interventionism.
The South African approach to the relationship after 1994 can therefore be described
as essentially voluntarist, tempered by necessary interventions taken in the corporatist
mode.

The Union Movement

COSATU declared its support for communitarianism, a more planned economic system and
eventual worker control or pro-labour mandatorism. However, the union movement was
still ensconced in the pluralist mode. This was demonstrated by its general rejection of
workplace forums and its use of collective power against both private sector employers and
the government. Furthermore, the establishment of union investment companies indicated
that unions were quite comfortable with the capitalist, free-market system, at least for the
time being.

72 Labour Relations: A southern African perspective

Economic and Social Realities in the New Millennium

The Economy
Since 2005 the South African economy has not grown at the rate that the government might
have wished. By January 2013 the annual growth rate had dropped to below 3 per cent,
while the second quarter of the same year recorded a growth rate of only 1.9 per cent. (At
the time of writing it is hovering around the 1 per cent level and there are continued fears
of a recession.) At the same time the inflation rate rose to above 5 per cent. (This should be
placed in the context of economic slowdowns worldwide, but it remains a greater concern
for South Africa with its backlog in infrastructure, health and education.)
Some experts maintain that South Africa’s economic problems are only partly the result
of general recessionary conditions. They explain that the state of government, economic,
labour and social policies are largely to blame. The 2017–2018 Global Competitive Index
(WEF GCI) ranks South Africa at 61 out of 137 economies assessed – down from its ranking
of 45 before 2010. Particularly concerning is the fact that the country is placed low on
health provision and primary education. Even higher education is in the lower percentile. At
the same time, international ratings agencies have consistently downgraded South Africa,
making it a high risk for investment.

Unemployment
Statistics South Africa reports that the unemployment rate, which had averaged 26.46 per
cent from 2000 to 2017, rose to 27.7 per cent by March 2017. This figure does not include
those who have given up looking for work. It is calculated that, if these individuals are
included, the expanded unemployment rate rises to 36.4 per cent (see Chapter 10). Of great
concern is the fact that youth unemployment now stands at 38.6 per cent.
The country’s persistent economic and political problems leave little hope that this
situation can be remedied in the near future.

Inequality
The GINI Coefficient is an instrument used by the World Bank and other agencies to measure
the degree of inequality in different countries, with a score of 1 reflecting absolute equality and
one of 100 showing absolute inequality. From the year 2000 South Africa’s GINI Coefficient,
which was always high, decreased only marginally from 67.4 in that year to 63.1 in 2011, but
in 2017 it increased again to 64 plus. In fact, South Africa is now rated as the most unequal
country in the world with even Haiti and Namibia obtaining a slightly better score.
This has happened in spite of extensive Black Economic Empowerment and Affirmative
Action initiatives and despite the fact that, in December 2012 it was reported that blacks
by then owned 21 per cent of the top 100 listed companies on the Johannesburg
Stock Exchange (JSE).

Chapter 2: The Labour Relations System 73

As mentioned previously, there is a fairly common perception that empowerment policies
benefited only a minority. This seems to be borne out by the fact that, as the Inequality
Index reveals, the gap between the wealthiest blacks and their poorer counterparts increased
substantially.

Civil Unrest
Democratisation created expectations of a better life for all. Unfortunately these expectations
have not been met. A large proportion of South Africans still live in dire poverty and
without basic amenities. Patience with lack of delivery has run thin, and the second decade
of the century has seen an increasing number of protest actions reminiscent of the apartheid
era, with 2012 being the most protest-filled year since 1990. The situation is exacerbated by
perceptions of corruption and the obvious prosperity of individuals, including political and
business leaders of all race groups.

Government Initiatives
New Growth Path Framework and National Infrastructure
Development Plan
In 2012 the government adopted the New Growth Path Framework, originating from the
Department for Economic Development under former trade unionist Ebrahim Patel. (Detailed
information on the framework is contained in Chapter 10.)

Some of the stated objectives of the Framework are:

■■ to create five million jobs within ten years
■■ to promote a green economy
■■ to create more agricultural jobs
■■ to facilitate land transfers.

The drafters recognised the importance of a competitive economy and saw a stronger role
for a competitions policy, but also for price monitoring. Nevertheless, the Growth Path is
viewed as more socialist than the National Development Plan discussed below.
The Growth Path Framework was underpinned by the National Infrastructure Plan which
in turn resulted in the Infrastructure Development Act. The central objective of the plan
is to decentralise basic services and engage in strategic integrated projects, and thereby
to ‘transform the economic landscape’. The plan identified decentralised areas around the
country and projects to be undertaken in these areas.

The National Development Plan

The New Growth Path Framework was followed by the National Development Plan proposed
by the then Planning Minister, Trevor Manuel. The Plan, for which the target date is 2030,

74 Labour Relations: A southern African perspective

is based on the premise of a social compact between government, business and labour with
the aim of:
■■ reducing poverty and inequality
■■ raising employment levels
■■ increasing investment.

(More details regarding the plan are included in Chapter 10.)

The plan, although described as high on vision but short on detail, was generally
accepted by business. COSATU, while agreeing with some of the plan, described it as liberal-
democratic and not advancing a radical ideological shift. The federation was not in favour
of the youth wage subsidy, owing to fears that this would erode other employment. It
further criticised the plan for not putting the concept of ‘decent work’ at the centre, not
emphasising redistribution and basing employment creation on small business promotion.
For these reasons some of the COSATU unions declared themselves in favour of Patel’s
strategy rather than that of Manuel.
The government, on its part, decided that the time for debating was past, and that there
was an urgent need to proceed to actual implementation.
Despite these efforts inequality persisted, joblessness remained a problem and the
economy, after an initial spurt, did not grow at the desired rate. However, the government
continued to set its sights on 2030 and the hoped-for outcomes.

Radical Economic Transformation

At its Mangaung Conference in 2012 the ANC, evidently disappointed with the inability of
previous plans to bring about the necessary change, declared its intention to ‘radically reform’
the economy. However, it was only in 2017 that a beleaguered President Zuma publicly
announced that radical economic transformation of the economy had become a priority.
This would entail, amongst others, engaging in ‘broad-based economic empowerment’ and
‘fundamentally changing the structures, institutions and patterns of ownership, management
and control of the economy’ (see Chapter 10).
There is general agreement that the economy needs to transform, but little, if any,
consensus on how this is to be achieved, nor is it clear what is envisaged by the government
and how its objectives are to be attained.

Union Developments
State of the Unions
At the time of writing South Africa has 24 registered trade union federations. Since most
of these are smaller and newer labour representation has been dominated by COSATU,
FEDUSA and NACTU, in that order. It is obvious from the above that old divisions,
based on sociopolitical orientation, still exist. COSATU remains in the Tripartite Alliance.

Chapter 2: The Labour Relations System 75

FEDUSA continued with the more middle of the road multiracial policies of the old TUCSA
unions, most of which joined this federation. NACTU is still viewed as supporter of black
consciousness.
COSATU has traditionally occupied a privileged position, both as the largest federation and
a member of the Tripartite Alliance. However, these very political connections opened rifts
in the federation, the most obvious being that between the National Union of Mineworkers
and the National Union of Metalworkers of South Africa. NUMSA’s criticism of NUM and
of COSATU eventually led to the former’s expulsion from the federation. Strong differences
also arose between then general secretary, Zwelenzima Vavi, and the federation’s president,
Sduma Dlamini. Here too, the conflict stemmed partly from perceptions that Vavi was not
sufficiently loyal to the regime. The disillusionment of NUMSA and Vavi with COSATU can
be seen as the primary motive for the subsequent drive by these parties to form an entirely
new federation, the South African Federation of Trade Unions (SAFTU). In its relatively
short existence SAFTU had, by the beginning of 2018, managed to muster a membership of
70 000, making it second in size only to COSATU (see Chapter 4). ( In the meantime COSATU
as a body became more critical of government actions and especially of President Zuma
whom it had (against the will of Dlamini) banned from attending COSATU events).

New Unions Emerge

Another noteworthy development in the labour sphere was the prominence gained by the
Association of Mineworkers and Construction Union (AMCU). The union became a household
word after the confrontation between striking mineworkers and police at Lonmin’s Marikana
mine in August 2012 (see Chapter 13), but the history of the conflict dates much further
back to a break between certain mineworkers and the NUM.
AMCU was formed in 1999 when the executive of the NUM, under then general secretary,
Gwede Mantashe, disciplined and ousted from membership the local NUM chairman at the
Douglas Colliery, Joseph Mathunjwa. Mathunjwa had organised a 3-day sit-in by 3 000
employees, evidently without consulting the union. Soon after Mathunjwa’s sacking from the
union all 3 000 employees resigned from the NUM and formed a new union under his leadership.
The union extended its membership to various platinum and gold mines. However,
its efforts to gain recognition and related rights were initially thwarted by management,
who maintained that workers were already represented by NUM, which had agreed with
management on thresholds of representation (see Chapters 3 and 4), effectively barring
other unions from recognition.
It can be safely assumed that the evident preference afforded to NUM was one of the root
causes for the strike which followed and which had such tragic results.
AMCU continued to grow and now claims a membership of more than 200 000. However,
most recently members have been increasingly disgruntled at what they claim to be AMCU’s
lack of action to protect their interests.

76 Labour Relations: A southern African perspective

Analysis of Developments
Socio-economic Problems and Proposed Solutions
The South African government continues to straddle various divides. It acknowledges the
need to promote a competitive economy, but at the same time there are growing demands for
service delivery and the upliftment of the previously disadvantaged. Various experts have
stressed the need to free up the economy. However, some in the ranks of the ruling party and
its alliance partners believe that the solution lies in greater control by government and even
nationalisation – in particular of the mining sector. For some time the government opted
for a middle ground. This was borne out by the fact that both the National Development
Plan and the New Growth Path indicated that their objectives could be achieved only by
cooperation between the government, business and labour – in other words, by a more
intensive corporatist approach.
There might be general agreement that this approach is to be preferred, but it is doubtful
that the partnership would be an equal one. Consultation to achieve agreement takes time.
This is proved by the fact that the plans and the legislation drafted in 2010 had, by mid-
2013, not been implemented. The government, realising the urgency of the situation, has
stated that it will go ahead with the NDP and that it plans to have achieved its objectives by
2030. This would require a more dominant and interfering role for the State as would the
rather vague objective of radical economic transformation.
In the longer term the inevitable changes being brought about by the Fourth Industrial
Revolution will require serious reassessment of both economic policy and work relations.

Union Developments
The years from 2012 to 2017 may well become known as another watershed period in
South African labour relations history. The rise of AMCU and ensuing events is evidence
of dissatisfaction with the privileged position of the established unions and their perceived
distancing from grass roots interests. The mining industry has long been the precursor
of events in other industries, as seen in 1922 and in the rise of the National Union of
Mineworkers in the early 1970s (see Chapter 4). The NUM of today is no longer that upstart
union knocking at the doors of mining companies. It has been enjoying ensconced positions
at most of the major mining houses. In some cases, the salaries of its representatives are
paid by the companies and are reportedly substantial. The union is also said to enjoy a
cosy relationship with government. In general, the established unions may have become
too complacent. The unions themselves have thrived financially, many now owning vast
assets, and their office bearers drawing substantial salaries. Negotiations are conducted at
a highly centralised level in national bargaining councils, and the main role of the union
has become the monitoring of compliance to agreements. Shop-steward representation
at ground level may not carry the impact it deserves. The result, as already seen, is a
groundswell of resistance and demands either from a new, more active union body such as
SAFTU or from the employees themselves.

Chapter 2: The Labour Relations System 77

Labour Unrest and Collective Bargaining Arrangements
That government is also concerned about continuing labour unrest particularly in
the transport and mining sectors. This was confirmed by the attempt to introduce strike
ballots and by the proposal for more extensive and effective dispute resolution
procedures in essential services. As it is, more than 50 per cent of strikes over the past
ten years have been spontaneous in that the legal procedures were not followed
(Department of Labour). The president has threatened to take a stronger stance against
illegal actions, but has not indicated how this will be done, short of using force, which
could have dire consequences.
Although the government would probably wish to encourage more cooperative relations
at shop-floor level by way of workplace forums, it has not done much in this direction,
presumably for fear of reaction from the unions. Nevertheless, if the problems outlined
above are to be addressed, a more cooperative mode would be a necessity.

Approach to the Relationship

The labour relations system remains rooted mainly in the pluralist mode, tempered by
protection mainly for employees and legal provision for trade union representation. Thus
what is essentially a system based on institutionalised voluntarism has been remoulded by
pro-labour interventionism, in some instances racially based in order to advance previously
disadvantaged groups. This is similar to the approach adopted by the drafters of the 1924
Industrial Conciliation Act and their attempt to promote the interests of white workers. As it
is, there are increasing signs that the government is prepared to intervene to a greater extent
and to put its stamp on the relationship.
After the inception of NEDLAC the corporatist mode was adopted in the drafting of
policy and legislation, but it is suspected that the government and COSATU still played a
dominant role. An attempt was made also to introduce a more unitarist/corporatist mode
at the workplace by the introduction of Workplace Forums, but it did not meet with much
success. Nevertheless there is no doubt that a more cooperative mode in all spheres would
greatly contribute to solving existing problems.

Conclusion
The South African labour relations system, because of its unique societal setting, remains
divided. Despite the fact that discrimination on the basis of race, sex or creed has been
eliminated from labour and other legislation, the composition of the trade union movement
still reflects racial and political divisions, and there is, as yet, no unified federation. The
system had to adapt and develop very rapidly over the past two decades. It was and still is
beset by problems in the political sphere. Although past problems are gradually disappearing,
new ones have arisen and, new adaptations will be required of both employers and unions.
The labour relations system consequently remains dynamic and subject to rapid change
necessitated by developments in the labour, economic and sociopolitical arenas.

78 Labour Relations: A southern African perspective

Suggested Questions/Tasks
•• Find out which ways the South African government acts as legislator, conciliator,
regulator and adviser, and what role is predominantly played by the judiciary and
the police.
•• Construct a time line illustrating the development of unionism in South Africa. Do
you see any correlation between developments in the 1970s and the most recent
union developments?
•• Construct a time line showing how the labour relations system developed. How do
you see future developments and, in particular, the role of government and unions
in a world where the nature of work and the role of the employer and employee
will have changed significantly?

Sources
Benjamin, P. 2010. Regulatory Impact Assessment of Selected Provisions of the Labour Relations
Amendment Bill 2010 Basic Conditions of Employment Amendment Bill 2010 Employment Equity
Bill 2010 Employment Services Bill 2010 Report prepared for the Department of Labour and the
Presidency.
Callinicos, L. 1981. Gold and the Workers 1886–1924. Ravan Press.
Callinicos, L. 1987. Working Life 1886–1940. Ravan Press.
Department of Labour. 1995. Annual Report 1994. Pretoria: Government Printer.
Department of Manpower. 1991. Report of the Director General (for the year ended December 1990).
Pretoria: Government Printer.
Du Toit, MA. 1976. South African Trade Unions. McGraw-Hill.
Friedman, S. 1987. Building Tomorrow Today. Ravan Press.
Gray, CJA. 1976. Industrial Relations in South Africa. Juta.
Hunt, E & Sherman, HJ. 1978. Economics: An Introduction to Traditional and Radical Views. Harper &
Row.
Kaufman, BE. The Origins and Foundations of Original Institutional Economics Reconsidered in Journal
of the History of Thought. Volume 3, September 2017.
Rifkin, J. 1995. The End of Work: The Decline of the Global Labour Force and the Dawn of the Post-market
Economy. Pulman Publishing Group.
Johannesburg Stock Exchange. www.jse.co.za/news/jse-releases-third-study-on-black-ownership-on-
the-exchange. (Accessed 17 August 2018).
Labour Relations Act, 1995. Government Gazette vol. 366 no 16861, December 1995. Pretoria:
Government Printer.
Mail & Guardian, 26 April to 2 May 2002.
Maree, J (Ed). 1987. The Independent Trade Unions 1974–1984. Ravan Press.
Ncube, D. 1985. Black Trade Unions in South Africa. Skotaville.

Chapter 2: The Labour Relations System 79

Salamon, M. 1987. Industrial Relations Theory and Practice. Prentice Hall.
Schwab. Klaus. 2016. The Fourth Industrial Revolution, World Economic Forum 2016.
Smith, A. 2000. The Wealth of Nations: (A Modern Library E-Book). Random House Publishing Group.
South African Labour Bulletin, vol. 14, June 1996; vol. 12, August 1997; vol. 13, December 2002.
Umanyano Publications (South African Labour Bulletin).
Webster, E (Ed). 1978. Southern African Labour History. Ravan Press.
Useful websites
www.labour.gov.za/DOL/. (Accessed 17 August 2018).
www.businesslive.co.za/bd/. (Accessed 17 August 2018).
www.sarbac.com. (Website not available).
www.stats-sa.gov.za. (Accessed 17 August 2018).
www.anc.org.za. (Accessed 17 August 2018).
www.weforum.org. (Accessed 17 August 2018).

80 Labour Relations: A southern African perspective

 3

Labour Legislation

Chapter Outline
OVERVIEW
RATIONALE OF THE LEGISLATIVE FRAMEWORK
INTERNATIONAL LABOUR STANDARDS
The Declaration of Philadelphia • Convention No 87 Concerning the Freedom of Association and
Protection of the Right to Organise • Convention No 98 Concerning the Application of the Principles
of the Right to Organise and to Bargain Collectively
THE CONSTITUTIONAL FRAMEWORK
Government Policy on Labour Affairs • Official Labour Relations Policy • Vision and Mission of the
Department of Labour
THE NATIONAL ECONOMIC DEVELOPMENT AND LABOUR COUNCIL (NEDLAC)
LEGAL AND STATUTORY REGULATION OF THE EMPLOYMENT RELATIONSHIP
Conditions of Service • Other Substantive and Procedural Conditions • Regulation of the Collective
Employment Relationship • Elimination of Discrimination, Affirmative Action, Training and Development
THE EMPLOYMENT CONTRACT
The Common Law Contract | Existence of Contracts | Rights and Duties at Common Law | Contracts
which would, at Common Law, be Voidable | Breach of Contract | Termination of Contract • The Common
Law and the Employment Relationship • The Written Contract | Prescriptions | Additional Information
| Requirements | Omissions • Persons Designated as Employees | The Problem | Definition of Employee |
Independent Contractors | Presumption as to Who is an Employee • The Code of Good Practice: Who is
an Employee • Contract versus Reality • Persons Engaged in Illegal Activities • Recent Developments
Re Definition Of Employee • Types of Employment Contracts | Indefinite (Permanent) Contracts |
Fixed-term Contracts • Protection for Vulnerable Employees | The Argument for Protection | Part-time
Employees | Persons Employed by Labour Brokers
SUBSTANTIVE ACTS
The Basic Conditions of Employment Act (Act 75 of 1997) • The Minimum Wages Act of 2017 • The
Occupational Health & Safety Act (Act 85 of 1993) • The Compensation for Occupational Injuries
& Diseases Act (Act 130 of 1993) • The Unemployment Insurance Act (Act 63 of 2001) and the
Unemployment Insurance Contributions Act (Act 4 of 2002)
THE LABOUR RELATIONS ACT (ACT 66 OF 1995)
Historical Perspective • Purpose of the Act • Government’s Intentions • Ambit of the Act • Status
of the Act • The Labour Relations Amendment Act of 2015 • The Labour Relations Amendment Act
of 2017
MAJOR PROVISIONS OF THE LABOUR RELATIONS ACT
Chapter Two: Freedom of Association and General Protection | Freedom of Association | Freedom from
Victimisation • Chapter Three: Collective Bargaining | Part A: Organisational Rights | Part B: Collective
Agreements | Part C: Bargaining Councils | Part D: Public Service Bargaining Councils | Part E: Statutory
Councils | Part F: General Provisions Regarding Councils • Chapter Four: Strikes and Lockouts • Chapter
Five: Workplace Forums • Chapter Six: Registration of Unions and Employer Organisations • Chapter
Seven: Dispute Settlement | Part A: Commission for Conciliation, Mediation & Arbitration (CCMA) | Part
B: Accreditation and Subsidisation of Councils and Private Agencies | Part C: Dispute Settlement under
the Auspices of the Commission | Part D: The Labour Court | Part E: The Labour Appeal Court • Chapter
Eight: Unfair Dismissals and Unfair Labour Practices | Unfair Dismissals | Unfair Labour Practices |
Retrenchments and Transfer of a Business as a Going Concern | Other Matters dealt with in Chapter Eight
• Chapter Nine: General Provisions | Labour Brokers | Confidentiality | Presumption as to who is an
Employee • Defects and Irregularities | Definitions
THE EMPLOYMENT EQUITY ACT (ACT 55 OF 1998)
Objectives of the Act • Ambit of the Act • Discrimination | Fair and Unfair Discrimination | Medical
and Psychological Tests | Applicants for Positions | Contraventions • Affirmative Action | Planning
for Redress | Designated Employers | Designated Groups | Delegation of Responsibility | Consultation |
Analysis • The Employment Equity Plan | Developing an Equity plan | Submission of Equity Plans and
Reports | Assessment of Compliance | Consequences of Non-compliance | Publication of Documents
• Commission for Employment Equity • Protection from Victimisation
CONCLUSION
SUGGESTED QUESTIONS/TASKS
SOURCES

82 Labour Relations: A southern African perspective

 Overview
Labour legislation reflects the degree of State involvement in the relationship. In
a completely voluntary system, there would be no labour laws. However, no purely
voluntary system can or does exist. The market is influenced by too many sociological,
political and administrative factors to be able to operate freely. Moreover, its free
operation might lead to unfavourable employment conditions. The parties to the
labour relationship cannot be left entirely to their own devices, particularly where
power is unequally distributed.
To be acceptable, labour laws should conform to universal standards. The best
guidelines to such standards are found in the various conventions and recommendations
of the International Labour Organisation (ILO). Furthermore, any legislation passed in
South Africa cannot deviate from the principles established by the Constitution. As
far as labour legislation is concerned, the most relevant section of the Constitution is
that outlining fundamental rights, including labour relations rights.
The employment relationship is governed, in the first instance, by the contract
of employment, which is guided by common law. Parties who agree that one will
work for another and be paid a certain amount have entered into a contract. From
then onwards they will have certain rights and duties in terms of common law which
can be enforced in the civil courts and also in the Labour Court. A written contract
will influence the decision of the courts. If there is no written contract, the courts
will be guided by practice, custom and tradition. Common law does not take into
account the fairness of the contract, but merely the fact that a contract has been
concluded. Because of this situation common law may be superseded by statutes,
which, in South Africa, are developed in consultation with the National Economic
Development & Labour Council (NEDLAC). Labour law has most recently concerned
itself with employment contracts to prevent unfairness and the exploitation of
vulnerable employees,
For our purposes the major statute is the Labour Relations Act which also
provides for delegated legislation in the form of bargaining council agreements and
sectoral determinations. These may establish conditions and rules more, or even less,
favourable than those contained in contracts or in the labour statutes.
The Labour Relations Act sets the framework for the collective labour relationship
by legislation relating to organisational rights, the registration of unions and
employers’ associations and the formation of bargaining and statutory councils. In
order to encourage consultation and co-determination on certain issues between
employers and employee representatives, the Act also provides for the establishment
of workplace forums.
The legislation attempts to promote labour peace by providing a dispute-
settlement process and by not permitting a legal or protected strike or lockout
unless the prescribed procedures have been followed. The 1995 Act introduced a new

Chapter 3: Labour Legislation 83

dispute settlement body in the form of the Commission for Conciliation, Mediation &
Arbitration (CCMA) and replaced the Industrial Court with a Labour Court, which has
higher status and more extended functions. The Act also prohibits victimisation and
any interference with the freedom of association.
In all workplaces, but particularly where collective bargaining is not well
established, employees are protected by the Basic Conditions of Employment Act.
This Act provides for maximum working hours, payment for overtime and for work on
Sunday and public holidays, minimum notice periods, minimum annual leave and sick
leave, the regulation of overtime and the prohibition of certain deductions.
All employees are further protected by the Occupational Health & Safety Act,
which provides for the appointment of safety representatives and safety committees,
and which regulates safety at the workplace.
The Unemployment Insurance Act and the Compensation for Occupational Injuries
& Diseases Act are, basically, insurance schemes for employees. The first-mentioned
Act provides for the compulsory deduction of unemployment contributions from
employers and employees. This entitles employees to certain benefits in the event
of unemployment. The Workmen’s Compensation Fund relies on compulsory levies
on employers and provides for payment of compensation to employees who suffer
disability as a result of an accident or contract an illness caused by the type of work
being performed.
The Employment Equity Act prohibits discrimination and compels organisations
with more than fifty employees to produce an Employment Equity Plan and show
progress in instituting Affirmative Action measures.

84 Labour Relations: A southern African perspective

Rationale of the Legislative Framework
The purpose of labour legislation is to establish a framework for the conduct of the labour
relationship and to provide, at the very least, for minimum conditions of employment.
Where no labour legislation exists, the employment relationship is governed by the contract
of employment. A contract can be enforced at common law, but it is generally agreed that
this does not provide sufficient protection for employees. The law of contract does not deal
with concepts of fairness or equity, which are crucial in the labour relationship.
Labour law must, in the first place, protect employees. The operation of the market
principle, which is based only on the concepts of demand and supply, does not concern
itself with the possibility of exploitation. An individual may, because of his circumstances,
enter into an unfavourable contract. For this reason, it is regarded as the duty of the State
to legislate on minimum terms and conditions of employment, and to protect the health and
safety of the workforce.
In a voluntary system, labour law may also provide the framework for the conduct of the
collective labour relationship. Legislation will provide for freedom of association, freedom
from victimisation and the right to engage in labour action. To promote labour peace,
dispute-settlement procedures may also be provided. Furthermore, it may happen that each
party is protected from unfair practices by the other, and that collective bargaining is
promoted by the body of labour law.
Principles of social justice and the protection of society’s members have led to the
institution of welfare schemes in the form of legislated unemployment funds. Furthermore,
in order to promote more efficient economic activity, the State involves itself in training and
manpower planning programmes.

International Labour Standards

In establishing labour legislation, governments are guided by universally accepted
standards. These are best supplied by the various conventions and recommendations of the
International Labour Organisation (ILO), which are subsequently ratified and implemented
by member countries.
Recommendations and conventions have been passed concerning almost every aspect
of the employment relationship. For the present purpose we are concerned only with those
which establish the basic principles for the conduct of the relationship. These are:
■■ the Declaration of Philadelphia
■■ the Convention Concerning the Freedom of Association and Protection of the Right to
Organise
■■ the Convention concerning the Application of the Principles of the Right to Organise
and to Bargain Collectively.

Chapter 3: Labour Legislation 85

The Declaration of Philadelphia
The Declaration of Philadelphia reaffirms the main principles on which the ILO is based. It
is generally regarded as the founding document of the International Labour Organisation.
Part I of the Declaration makes the following statements:
■■ that ‘labour is not a commodity’
■■ that ‘freedom of expression and association are essential to sustained progress’
■■ that ‘poverty anywhere constitutes a danger to prosperity everywhere’
■■ that the war against poverty should be carried on unrelentingly by all concerned in an
atmosphere of ‘free discussion and democratic decision-making’.

Part II affirms the ideological premise of the ILO, namely that ‘all human beings, irrespective
of race, creed or sex, have the right to pursue both their material wellbeing and their spiritual
development in conditions of freedom and dignity, of economic security and equal opportunity’.
The third part is more specific in that it sets ILO the task of promoting full employment
and raising the standard of living of all people. This should be achieved by:
■■ promoting training
■■ facilitating the transfer of labour
■■ setting policies regarding wages and conditions of service
■■ recognising the right to collective bargaining
■■ promoting cooperation between management and labour to improve productive efficiency
■■ encouraging collaboration between workers and employers in deciding on social and
economic measures
■■ establishing social security measures
■■ instituting comprehensive medical care
■■ protecting the life and health of workers
■■ making provision for child welfare and maternity protection
■■ making provision for adequate cultural facilities for all employees.

Convention No 87 Concerning the Freedom of Association and

Protection of the Right to Organise
Convention No 87 enlarges on one of the founding statements of the Declaration of
Philadelphia, namely that ‘… freedom of association and expression are essential for
sustained progress’.
The most important statements contained in Convention No 87 are the following:
■■ ‘Workers and employers, without distinction whatsoever, shall have the right to establish
and, subject only to the rules of the organisations concerned, to join organisations of
their own choosing without previous authorisation.’

86 Labour Relations: A southern African perspective

■■ ‘Workers’ and employers’ organisations shall have the right to draw up their constitutions
and rules, to elect their representatives in full freedom, to organise their administration
and activities and to formulate their programmes.’
■■ ‘The public authorities shall refrain from any interference which would restrict this right
or impede the lawful exercise thereof.’
■■ ‘Workers’ and employers’ organisations shall not be liable to be dissolved or suspended
by administrative authority.’
■■ ‘In exercising the rights provided for in this Convention workers and employers and
their respective organisations, like other persons or organised collectives, shall respect
the law of the land.’
■■ ‘The law shall not be such as to impair, nor shall it be so implied as to impair, the
guarantees provided for in this Convention.’
■■ ‘Each member of the International Labour Organisation for which this Convention is in
force undertakes to take all necessary and appropriate measures to ensure that workers
and employers may exercise freely the right to organise.’

The Convention speaks for itself. Essentially, it safeguards the most basic freedom in the labour
relationship – the freedom to associate (or, for that matter, to disassociate) – on condition that
any organisation so established does not break the law, but with the understanding that the
law should not impair the freedom of association and the right to organise.

Convention No 98 Concerning the Application of the Principles of

the Right to Organise and to Bargain Collectively
Convention No 98 firstly recommends safeguards against anti-union discrimination. It
recommends protection against acts which:
■■ make an employee or prospective employee agree not to join a union or to give up union
membership
■■ allow an employer to dismiss an employee or otherwise prejudice him/her because of
union membership or because of participation in union activities
■■ promote the establishment of workers’ organisations under the domination of employers
or employers’ organisations
■■ allow employers to support workers’ organisations by financial or other means.

The Convention goes on to suggest that the State should create the machinery for the
establishment of employee and employer organisations and should provide the machinery
for collective bargaining.

Chapter 3: Labour Legislation 87

The Constitutional Framework
Chapter 3 of the Constitution of the Republic of South Africa sets out certain fundamental
rights of all persons and makes the content of that chapter binding on ‘all legislative and
executive organs of State at all levels of government’. This means that no law may contain
provisions which deprive individuals of these fundamental rights. The Constitution does
provide that rights may be limited by law but on condition that the limitation is ‘… reasonable
and justifiable in an open and democratic society based on freedom and equality’, and that
the limitation does not ‘… negate the essential content of the right in question’. No rights are
limitless, as the exercise of an individual’s rights may impinge on the rights of others. Thus
the law may limit these rights, but cannot remove them altogether.
Section 23 of Chapter 2 in the Constitution relates specifically to labour relations and
provides that:
■■ ‘Every person shall have the right to fair labour practices’
■■ Workers have the right to form and join trade unions, and employers have the right to
form and join employers’ organisations
■■ Workers and employers have the right to organise and bargain collectively

Besides the section dealing with labour relations, there are other sections in the ‘Bill of
Rights’ which will affect labour relations and labour legislation. The following are examples:
■■ Clause 9, dealing with equality, provides that ‘No person shall be unfairly discriminated
against, directly or indirectly’.
■■ Clause 10 entitles every person to ‘… respect for and protection of his or her dignity’.
■■ Clause 14, dealing with the right to privacy, spells out the right of persons not to
be subject to searches of his or her person, home or property, the seizure of private
possessions or the violation of private communication.
■■ Clause 16 details the right to freedom of speech and expression.
■■ Clause 17 grants every person the right to assemble and demonstrate with others
peacefully and unarmed, and to present petitions.

Because these rights are entrenched in the Constitution, all labour legislation and actions
and processes in labour relations should be evaluated in this context. If a law or a provision
in a law negates any of these rights, it may be challenged in the Constitutional Court.

88 Labour Relations: A southern African perspective

Government Policy on Labour Affairs

Official Labour Relations Policy

The government’s official labour relations policy has in the past been based broadly on
the principles of voluntarism and maximum self-government by employers and employee
bodies. In general, the system still functions in terms of the following principles:
The Right to Work – All workers in the Republic of South Africa have the right
to provide for themselves and their families through taking part in the productive
activities of the country. This right, however, places an obligation on everybody to
make themselves available for work, to offer their talents and skills, and to accept
such employment opportunities as are available.
The Right to Fair Remuneration and Conditions of Service – Every worker in
South Africa has a right to fair remuneration in accordance with his skills and
the effort and loyalty he devotes to his employer. This right includes a limitation
on the hours he may work in a normal day and week, and entitles him to overtime
pay, vacation and sick leave.
The Right of Access to Training and Retraining – It is the worker’s right to receive
training and retraining, so that he may increase his productivity and earning
capacity. It is his right to be fully utilised in the work for which he has been trained.
The State, employers and employees are co-partners in the national training effort.
The Right to Organise and to Belong to a Trade Union – All employees have the
right at all times to organise themselves into trade unions, to register those unions
and to utilise the bargaining and conciliation machinery created by legislation.
In this way a labour climate is created which promotes favourable relationships
between employer and employee.
The Right to Negotiate and Bargain Collectively – Collective bargaining and
negotiation, in accordance with legally recognised rules, are the golden steps to
the settlement of disputes between employers and employees. A spirit of mutual
understanding and fairness is thereby engendered, which individual or overhasty
action cannot achieve.
The Right to Protection of Safety and Health – Certain occupations hold inherent
dangers to safety and health, and it is the worker’s right to work in the safest
working environment that the employer can reasonably provide and to enjoy
reasonable facilities for personal hygiene.
The Right to Security against Unemployment and the Payment of Amounts
to Dependants of Deceased Contributors – Workers are compelled to contribute
to the Unemployment Insurance Fund and to receive compensation for loss of
earnings arising from unemployment due to termination of employment, illness
or maternity. Dependants of deceased contributors can also receive compensation.

Chapter 3: Labour Legislation 89

 The Right to Security in the Event of Injury on Duty – Workers are entitled
to compensation against loss of earnings due to accidents or industrial diseases
contracted in the course of their employment, free medical treatment and lump
sums or pensions for permanent disablement. In fatal cases, pensions and
an allowance for funeral expenses are paid to dependants. The onus rests on
employers to submit the prescribed accident and medical reports, as well as
medical accounts, to the Workmen’s Compensation Commissioner.
The Right to Job Security and Protection against Unfair Labour Practices – A
worker’s job security lies largely in his own hands, through the dedicated performance
of his duties. But he also has a right to job security, which is entrenched in our
labour legislation. Employers may not arbitrarily change labour practices, and
workers have a right to protection under the Act if their security is thus jeopardised.

Vision and Mission of the Department of Labour

The Department of Labour has declared its vision to be the support of a labour market which
promotes:
■■ investment
■■ economic growth
■■ employment creation
■■ decent work.

To achieve this, the Department’s aim has been to develop, in consultation with social
partners, programmes which will:
■■ improve economic efficiency and productivity
■■ lead to employment creation
■■ promote sound labour relations
■■ eliminate inequality in the workplace
■■ alleviate poverty in employment.

The declared mission of the Department is to:

“Regulate the South African Labour market for a sustainable economy”.
This it aims to do mainly by:
■■ putting in place the necessary legislation and regulations
■■ undertaking inspections to ensure that parties comply
■■ protecting human rights
■■ promoting equity.

It is noteworthy that the Department’s vision emphasises economic development and job
creation. There are numerous critics who argue that the very laws which the department

90 Labour Relations: A southern African perspective

administers may be partly responsible for the country’s poor economic growth. This is borne
out in the 2017–2018 World Competitive Report which ranks South Africa at 61 out of 137
countries – 14 places lower than in the previous survey. Restrictive labour legislation is seen
as one of the reasons why South Africa has become less competitive with a concomitant
inability to improve employment levels (see also Chapter 9).
Creating the right balance between promotion of the economy and job creation, on the
one hand, and the protection and upliftment of employees on the other, remains a major
challenge for the department and the government in power.

The National Economic Development and Labour

Council (Nedlac)
NEDLAC was formed early in 1995, from an amalgamation of the National Manpower
Commission and the National Economic Forum, established by the previous government.
Its founding document cites its purpose to be the bringing together of labour, business,
government and development actors in order to ‘ensure consensus on all matters relating to
economic policy’ and to ‘consider all proposed labour legislation’.
NEDLAC consists of four chambers: the Labour Market Chamber, the Trade & Industry
Chamber, the Public Finance & Monetary Policy Chamber and the Development Chamber.
The three major union federations – COSATU, NACTU and FEDUSA – are represented in
NEDLAC on a proportionate basis, while business is represented by Business Unity South
Africa. Other role players include government officials, politicians and community delegates
representing, for example, women, civic organisations, rural bodies and disabled persons
At the time of writing rifts are increasingly appearing in NEDLAC. There is outright
friction between the Black Business Council and Business Unity South Africa under whose
auspices the former was allowed into NEDLAC. These divisions rest mostly on ideological
orientations. As regards the union caucus, there is growing criticism that the union
federations on NEDLAC represent only a small percentage (estimated 20 per cent) of national
union membership. COSATU, previously the most influential union body on NEDLAC has
seen its position waning, while a growing new body, the South African Federation of Trade
Unions (SAFTU), has not yet been admitted even though it is now the second largest union
federation and is larger than both NACTU and FEDUSA combined (see Chapter 4).
All in all it would appear that NEDLAC might still be representing only a narrow band of
interests in both the Business and Labour caucuses.

Chapter 3: Labour Legislation 91

Legal and Statutory Regulation of the Employment
Relationship

Conditions of Service
The individual contract of employment constitutes the first step in the regulation of the
employment relationship. Rules of contract are established at common law, but the Basic
Conditions of Employment Act does prescribe the matters that should be dealt with in the
employment contract.
When the conditions set out in a contract are more favourable than those contained in a
statute or agreement, the contract takes precedence.
No contract can provide for conditions of service which are less favourable than those
contained in:
■■ a statute
■■ a statutory agreement
■■ a ministerial determination
■■ an in-house agreement covering that employee.

The most important statute governing individual conditions of employment is the Basic
Conditions of Employment Act. In addition, the Labour Relations Act provides for certain
individual rights, such as:
■■ the right not to be dismissed without a valid reason and a fair hearing
■■ the right not to be victimised for trade union membership
■■ the right not to be arbitrarily and peremptorily retrenched.

The Occupational Health & Safety Act entitles the employee to protection from health
and safety hazards, while the Unemployment Insurance Act and the Compensation
for Occupational Injuries & Diseases Act entitle him to unemployment benefits and to
compensation for injuries or diseases sustained or contracted during the course of his work.
All the above rights have to be acknowledged in the employment contract, if not explicitly,
then at least implicitly. Most importantly, no contract of employment may contain conditions less
favourable than those provided in the Basic Conditions of Employment Act unless such condition
has been negotiated by a Bargaining Council or is subject to a Ministerial Determination.
An agreement reached by a Bargaining Council will, once it has been gazetted, become
subsidiary legislation, and is enforceable under the Labour Relations Act (see Chapter 5).
A Bargaining Council Agreement assumes precedence over the Basic Conditions of Employment
Act – that is, the conditions set out in a Bargaining Council agreement may be less favourable
than all except the ‘core’ conditions of that Act. The core conditions are those relating to:
■■ maximum working hours [45]
■■ family responsibility leave

92 Labour Relations: A southern African perspective

■■ health and safety
■■ child labour
■■ sick leave
■■ maternity leave
■■ annual leave.

(However, a Bargaining Council Agreement can reduce annual leave to 14 calendar days
and a Ministerial Determination issued for industries or areas where there is no bargaining
council may vary any condition of the Basic Conditions of Employment Act).
Any conditions negotiated at plant or company level must, in terms of Section 23 of the
Labour Relations Act, immediately be written into the contracts of all employees covered
by such agreement. Conditions contained in these agreements may never be less favourable
than the Basic Conditions of Employment Act or a relevant bargaining council agreement/
statutory determination.

Other Substantive and Procedural Conditions

These relate to employee welfare and are contained in the Unemployment Insurance Act,
the Occupational Health and Safety Act and the Compensation for Occupational Injuries
and Diseases Act.

Regulation of the Collective Employment Relationship

The Labour Relations Act provides the framework for the regulation of the collective
relationship between employers and employees or their unions (see Chapter 5). Although it
focuses on the collective relationship, the Act does provide for individual substantive and
procedural rights as contained in Chapter 6 on dismissals and unfair labour practices.

Elimination of Discrimination, Affirmative Action, Training and

Development
These aspects are regulated by the provisions of the Employment Equity Act and the Skills
Development Act. A wider perspective on equity is also contained in the Prevention of Unfair
Discrimination and Promotion of Equality Act, while the Skills Development Act should be
studied in conjunction with the National Qualifications Framework Act (Act 67 of 2008).

Chapter 3: Labour Legislation 93

 94
constitution of the republic of south africa

conditions of employment discrimination training and

CA70_Labour relations_PRINT READY_JB.indb 94

employee welfare
employment relationship affirmative action development

occupational labour equity act

common law health and safety relations skills
contract act act development
act

basic conditions unemployment

of employment insurance act
nedlac

act

bargaining plant or prevention national

government labour policy

council company of unfair qualifications
agreement or agreement compensation discrimination framework act
ministerial for occupational and promotion

Labour Relations: A southern African perspective

determination injuries and of quality

figure 3.1: legal and statutory regulation of the employment relationship

diseases act act

ilo conventions and recommendations

12/12/2018 09:20
The Employment Contract

The Common Law Contract

Existence of Contracts
An employment contract comes into existence when both parties agree that the employee
will work for the employer. A contract may be written, verbal, or it may be understood. If no
written or verbal agreement has been made, it does not mean that there is no contract. The
very fact that one person is working for another means that a contract exists. Usually the
parties will agree on the kind of work required and on the wage to be paid by the employer.
Where this has not been spelt out, the parties can rely on accepted practice. For example,
an employer who hires a labourer but does not indicate how much he will pay him will be
expected to remunerate him in terms of common practice – that is, he should pay the rates
commonly paid for work of that kind. When no definite period of employment is stated, it
is taken that the employment is indefinite. This is the difference between a permanent and
a fixed-term contract.

Rights and Duties at Common Law

Once a contract of employment has been entered into, whether in writing, verbally or
tacitly, it is accepted that the parties have agreed to certain rights and duties at common
law. At common law the employer should:
■■ pay the employee
■■ provide safe and healthy working conditions
■■ provide work for the employee
■■ not make the employee do work junior to the status for which he was employed
■■ not contract the employee’s services to another employer without the employee’s consent.

The reciprocal duties of the employee are to:

■■ perform his work faithfully and diligently
■■ obey reasonable orders given in the normal course of employment
■■ not deal dishonestly with the property of the employer
■■ not compete in his private capacity with the business of the employer.

The duties of one party become the rights of the other. Thus the employee has the right:
■■ to remuneration
■■ to work
■■ not to be demoted
■■ not to be forced to work for any other employer but his own
■■ to safe and healthy working conditions.

Chapter 3: Labour Legislation 95

 (b) (ii) If less favourable terms in
basic conditions of

96
BC Agreement or Ministerial
employment act
Determination it overrules BCE
Act and stands in contract.

Step 1 Check contract

Step 2 Compare to Act
bargaining
(a) If term(s) of contract more
council
contract of favourable, it prevails.
agreement
employment (b) (i) If term(s) of contract less
favourable, check if
BC Agreement or Ministerial
Determination exists. Compare
contract.
(c) If no BC Agreement or Ministerial
Determination and term is less ministerial
favourable than BCE Act, change determination
contract.

Step 3 Compare contract to plant

Labour Relations: A southern African perspective

(b) (iii) (a) If contract is more favourable

figure 3.2: flowchart for establishing correct conditions of employment

agreement (if existent)
(a) If contract is more favourable, it than BC Agreement it stands.
stands. (b) If contract is less favourable,
(b) If contract is less favourable, change terms of contract.
change contract.

plant or
company
agreement
The employer has the right to expect that the employee:
■■ does the work to the best of his ability
■■ obeys reasonable orders
■■ is honest
■■ does not compete with the employer’s business.

In addition, it is accepted that the employer has the right to select whomever he wishes
to employ. He can say how the work should be done and he has the right to dismiss the
employee if the latter’s performance is not satisfactory. By accepting the job the employee
implies that he is competent to perform it and accepts that he has an obligation to work for
the employer for a certain period. In most cases, this period is indefinite and will be limited
only by the termination or breach of the employment contract. (See Figure 3.2. alongside.)

Contracts which would, at Common Law, be Voidable

The parties may decide to enter into a verbal or written agreement. The contract they
conclude may contain any provision agreed to by the parties, but they may not agree to
anything which is:
■■ illegal
■■ immoral
■■ contrary to public policy.

A contract would be illegal if it contained a provision which would entail a breach of a

statute or of the common law. Thus a contract in which the employee agrees to steal for an
employer is illegal. The parties may not agree on conditions of employment (including wages)
which are less favourable than those prescribed by the Basic Conditions of Employment Act,
a bargaining council agreement or a ministerial determination. An agreement to engage in
prostitution would be both illegal and immoral. Such contracts will be declared null and
void.
Contracts are also voidable where the consent of one party has been improperly obtained by:
■■ misrepresentation
■■ coercion
■■ undue influence.

For example, the contract of a person who declares in an application that he has previous
experience when he has none, can be cancelled by the employer. The contract can also be
declared void if one of the parties does not have contractual capacity – for example, is
under age.
If a contract does not contain any of the irregularities described, the civil courts will
enforce the contract as it stands. This is the case even if the position of one party to the
contract might be unfavourable in relation to that of the other. It is basic to the judicial

Chapter 3: Labour Legislation 97

process that persons above the age of consent should be free to enter into any contract they
please. As long as both parties concluded the contract of their own free will and it is not
immoral, illegal or against public policy, the court will, at common law, uphold the terms of
the contract, whether it is grossly unfair to one of the parties.

Breach of Contract
Breach of contract has always been actionable in terms of the common law. The civil courts
will consider precedent, and statutory requirements. Where there is no specific provision by
statute and no common law precedent, the court will refer to custom or established practice
to decide if breach of contract has occurred. An employer who has for five years paid his
employees on the 15th of each month and who unilaterally decides to pay them on the 25th
may be held to be in breach of contract, even if there is no specific provision for payment
on the 15th.
Section 77(3) of the Basic Conditions of Employment Act now also grants the Labour
Court the right to adjudicate on matters related to the contract of employment, including
alleged breach of contract.

Termination of Contract
At common law a contract of employment which does not contain specific conditions
relating to termination may be terminated upon:
■■ reasonable notice by either party
■■ the consent of both parties
■■ the death or incapacity of the employee
■■ the insolvency of the employer.

However, notice periods are also subject to the Basic Conditions of Employment Act, which
provides for:
■■ one week’s notice if the employee has been employed for less than six months
■■ two weeks’ notice if the employment period is longer than six months but less than one
year
■■ one month’s notice if the person has been employed for longer than a year or is a farm
worker employed for longer than six months.

Common law does not oblige an employer or an employee to supply a reason for the
dismissal or resignation. At Common law a party merely has to give reasonable notice of
the intention to dismiss or resign. By contrast the Labour Relations Act contains detailed
provisions regarding termination and reasons for dismissal, such as misconduct, incapacity,
redundancy, and retrenchment. It therefore safeguards employees from arbitrary and unfair
termination of contract by the employer (see Chapter 6).

98 Labour Relations: A southern African perspective

The Common Law and the Employment Relationship
The common law treats the contract of employment by the same measures as any other
contract. If parties to the employment relationship had recourse only to the common law,
they would have to go to the civil courts, and would be able to sue only for actual financial
losses. However, unlike other contracts (such as a lease or a hire purchase agreement),
the employment contract leads to the establishment of a special relationship. It is usually
expected that, if each party performs his duties, the employment contract will be indefinite.
It follows that, if termination of employment occurs, there should be a sound reason for this.
Furthermore, the employment relationship is more often than not an unequal relationship
in which the employer holds more power than the employee. In these circumstances an
employee might enter into a contract which will lead to his exploitation. This problem is not
addressed at common law, nor is the fact that breach of an employment contract does not
cause only material damage to the employee. An employee who is dismissed may suffer loss
of future prospects, loss of reputation or status and actual emotional damage.
These considerations have led to the establishment of labour statutes intended, in the
main, to supplement the common law and to:
■■ safeguard the employee against blatant exploitation by the employer
■■ provide for a more equal distribution of power between employer and employee
■■ guard against unreasonable behaviour by either party
■■ allow for the establishment of collective relationships.

Thus the employment relationship is governed not only by the common law contract
but also by the various labour statutes as well as collective agreements and ministerial
determinations. Where they refer to similar matters, these supersede the common law as
well as any conditions set out in the contract itself.

The Written Contract

Prescriptions
Because implied and verbal contracts create uncertainty, it has become customary for new
employees to receive a letter of appointment or to conclude a full contract of employment.
Section 29 of the Basic Conditions of Employment Act obliges employers to issue written
contracts to employees. The letter of appointment or contract must, in terms of the Basic
Conditions of Employment Act, state the following:
■■ the full name and address of the employer
■■ the name and occupation of the employee or a short description of his job
■■ the place or places where the employee is expected to work
■■ the date of commencement
■■ ordinary hours and days on which the employee is expected to work
■■ the wage or the wage rate and the method of calculation

Chapter 3: Labour Legislation 99

■■ the rate of pay for overtime
■■ any other cash payments to which the employee may be entitled
■■ any payment in kind and the value of such payment
■■ the employee’s leave entitlement (that is, annual leave, sick leave and family responsibility
leave)
■■ notice periods in the event of proposed termination
■■ in case of a fixed-term contract, date or event of termination
■■ any bargaining council or sectoral determination governing conditions of service
■■ any period of service with a previous employer that will count towards the employee’s
tenure
■■ a list of other documents relating to the contract of employment, also indicating an
accessible place where they may be viewed.
■■ The list mentioned in the last item would include relevant company policies and
procedures, such as Rules and Regulations, Disciplinary and Grievance Procedures, the
Retrenchment and Equity Policies, the relevant Acts and any agreements concluded at
company or central level.

Additional Information
In addition to the items listed above, it is advisable to add clauses relating to the following
(if applicable):
■■ pension/provident fund and medical aid contributions
■■ tax deductions in terms of directives from SARS
■■ a confidentiality clause if that is necessary.

Requirements
The contract has to be signed and dated by both parties. This confirms that both have
understood and agreed to the terms of the contract. If the employee is unable to read, the
terms of the contract must be explained to him and the employee must sign to verify that
this has been done.

Omissions
If a matter is not specifically dealt with in the contract of employment it is subject to
common law or, where applicable, to the relevant statutory provisions. Thus, if a letter of
appointment does not state the period of notice, it will be taken to be the period specified
in the bargaining council agreement governing that industry, or the period specified in the
Basic Conditions of Employment Act. If no bargaining council or other agreement exists
and there is no relevant legislation, the court will revert to custom and tradition.

100 Labour Relations: A southern African perspective

Persons Designated as Employees
The Problem
Although the contract of employment forms the basis of the employment relationship, the
absence of a written contract, or even a contract explicitly stating that an individual is
not an employee, does not mean that the individual concerned will not be regarded as an
employee and therefore not be entitled to the rights accorded to all employees.

Definition of Employee
The Labour Relations Act defines an employee as:

a) any person, excluding an independent contractor, who works for another person or
for the State and who receives, or is entitled to receive, any remuneration; and

b) any other person who in any manner assists in carrying on or conducting the
business of an employer …

The problem lies in establishing whether a person who performs work for an employer is
indeed an employee or would be classified as an independent contractor.

Independent Contractors
In addition to the persons it employs, an organisation may contract certain jobs to be
performed by outside agencies. So, for example, all tasks related to security may be outsourced
to a security company. The security company, as an independent contractor, provides the
necessary manpower and assumes responsibility for security in the organisation.
In the example above, it is easy to distinguish between the employees of the independent
contractor and those employed by the organisation. The situation becomes more complex
when the entity providing the service is an individual. In that case the person involved may
appear to be acting independently and the contract may even contain a clause to this effect,
but he may turn out to be an employee.
As indicated in the case review below, a number of different tests have in the past been
applied by the courts in order to establish whether someone is an independent contractor or
is actually an employee. (See SA Broadcasting Corporation v McKenzie below.)

Presumption as to Who is an Employee

In an effort to clarify the distinction between the two types of contract, the government
in 2002 amended the Labour Relations Act (Section 200A) and the Basic Conditions of
Employment Act (Section 83A) to specify who would be presumed to be an employee and,
therefore, be covered by the relevant Acts. A person who works for, or renders services to
any other person is presumed, until the contrary is proved, to be an employee, if any one or
more of the following factors is present:

Chapter 3: Labour Legislation 101

 a) the manner in which the person works is subject to the control or direction of
another person
b) the person’s hours of work are subject to the control or direction of another person
c) in the case of a person who works for an organisation, the person is part of that
organisation
d) the person has worked for that other person for an average of at least 40 hours per
month over the last three months
e) the person is economically dependent on the other person for whom that person
works or renders services
f) the person is provided with tools of trade or work equipment by the other person
g) the person only works or renders services to one person.

It needs to be stressed that the above applies only to persons earning below the earnings
threshold published by the Minister of Labour. At the time of writing, the threshold is
R205 433.30 per annum. It is clear that the presumption of employment was inserted to protect
more vulnerable employees. Persons who qualify in terms of the threshold can approach the
CCMA for an advisory award as to whether they are employees or independent contractors.

The Code of Good Practice: Who is an Employee

The Code of Good Practice: Who is an Employee? (Dept. of Labour 2006) expands on the
seven criteria set out above and explains what the term ‘presumption’ implies. If any one of
the factors is present, the person may claim to be an employee. This does not mean that the
claim will be automatically upheld, but rather that the onus will then fall to the employer
to prove that the claimant is not an employee. Essentially, the Code urges participants to
weigh all factors and circumstances, to use the dominant impression test and to apply the
guidelines set out in the SABC case later in this text.

Contract versus Reality

The State Information Technology Agency (SITA) v CCMA case, heard in the Labour Appeal
Court in 2008 once again illustrated that an individual may be an employee despite a
contract stating the opposite.
The person whose status was at issue had formerly been employed and later retrenched
by the South African National Defence Force. According to regulations and the terms of
the retrenchment agreement, he could not again work for the Defence Force or any of its
service providers, of which SITA was one. SITA was set on employing him and, in order
to circumvent the prohibitions, it was agreed that he would establish a close corporation
(CC) and bill SITA for his services. The arrangement worked until SITA, having lost a major
defence force contract, decided to retrench him, at which stage he laid claim to the benefits
and rights of an employee.

102 Labour Relations: A southern African perspective

The case was referred to the CCMA, where the Commissioner held that the relationship was
not one of employment. This decision was overturned by the Labour Court, which held that
an employment relationship did, in fact, exist. SITA thereupon lodged an appeal against the
decision of the Labour Court.
The Labour Appeal Court listed three main criteria to be applied when establishing
whether an employment relationship exists, namely:
■■ the principal’s right to supervise and control
■■ the extent to which the person providing a service forms an integral part of the
organisation
■■ the extent to which the service provider is economically dependent on the organisation.

The Court found that the person was under the control of the organisation and not of
the close corporation, that he was an integral part of the organisation and that the close
corporation was merely a front intended to mask the real situation. SITA had, in fact,
come to the court with dirty hands and the individual in question was an employee. The
considerations listed above have been absorbed into the dominant impression test.

Persons Engaged in Illegal Activities

At common law it is accepted that a person may not contract to perform illegal activities
and that any contract to that effect is unenforceable. However, the question arises as to
whether, despite the common law tenets, an individual engaged to perform illegal work can
lay claim to the benefits and rights accorded to employees in terms of labour legislation.
This issue was raised at the CCMA in the case brought by ‘Kylie’ v Van Zyl t/a Brigitte’s
(CCMA WE 7511-06).
The applicant, a sex worker, claimed that she had been unfairly dismissed by the owner
of the massage parlour at which she had been employed. Her representative argued that,
in terms of the Constitution, every employee has the right to fair labour practices, that sex
workers are not specifically excluded from the Labour Relations Act and that, although
prostitution is a criminal offence in terms of the Sexual Offences Act, the Labour Relations
Act must take preference over the Sexual Offences Act; further that the Labour Relations Act
can be invoked even if there is no legally enforceable contract.
The Commissioner argued that the fact that sex workers were not specifically excluded from
the Labour Relations Act did not mean that they were included. In his opinion, the LRA
cannot be used to sanction criminal activities; neither can the Constitution be invoked for
this purpose. He concluded by pointing out that the CCMA only has jurisdiction over legally
enforceable contracts and therefore could not arbitrate in the applicant’s dispute.
Various experts questioned the decision of the Commissioner on the grounds that he
should have invoked the Labour Relations Act and especially the definition of an employee
(see above). They also pointed to the Act’s emphasis on the protection of vulnerable
employees, arguing that sex workers are among the most vulnerable and exploited.

Chapter 3: Labour Legislation 103

These are valid considerations, but the counterargument would be that ignoring the common
law could allow for employment contracts to commit illegal activities, for example, between
a Mafia boss and his henchmen.
The crux of this case should not be on rejection of the common law precept but rather
whether the law regarding sex workers, who are indeed among the most vulnerable and
exploited, should not be revoked.

Case Review: The Independent Contract

SA Broadcasting Corporation v McKenzie

(Labour Appeal Court: CA 8/98)
Background
The original plaintiff, McKenzie, had been a permanent employee of the SABC from
1959 to 1968 and again from 1983 to 1986. At that stage, he resigned of his own
accord. In 1988, he was approached by the corporation to take over an afternoon
talk show. He agreed, and an oral contract to act as a freelancer, for which McKenzie
expressed preference, was concluded. This contract was later renewed on an annual
basis as was a separate contract for another programme, which was subsequently
presented by McKenzie. The contracts given to McKenzie were the standard contracts
for freelancers and differed from those concluded with permanent employees.
In 1994, McKenzie was informed that, owing to a change of policy as regards
the type of programmes being presented, there was ‘a very real possibility’ that his
contract would not be renewed, and in 1995 both programmes came to an end. In
the interim, McKenzie had also presented other programmes for the SABC. In each
case he had been issued with a separate contract and separate fees were paid for
each programme.
McKenzie disputed the termination of his contract, claiming that he was an
employee and not an independent contractor. The Labour Court upheld McKenzie’s
claim and ordered the SABC to pay him compensation of R45 000. The case was
subsequently taken on appeal by the corporation, which maintained that McKenzie
was an independent contractor.

Pronouncements
The Labour Appeal Court first explained the definition of employee as contained in
the Labour Relations Act, stating that the first part of the definition, which refers
to an individual working for another person and receiving remuneration had been
interpreted ‘to mean a person who works for another in terms of a contract of service’.
The Court noted that the second part, relating to anyone who in any manner assists

104 Labour Relations: A southern African perspective

in the carrying on of the business of an employer, had received ‘a mixed reception’,
with some experts saying that it should be interpreted literally, while others declared
that it should not.
It was further noted that, while it had been accepted that an independent
contractor was not an employee, there were still varying understandings as to when
an individual would be classified as an independent contractor.
As the Court noted, a number of different tests had, in the past, been applied to
establish whether a contract of service (employment) exists. The first of these was
the ‘supervision test’, and in this regard it was explained that a contract of service
cannot exist where ‘there is a total absence of the right of supervising and controlling
the workman under the contract, in other words, unless the master not only has the
right to prescribe to the workman what work has to be done, but also the manner in
which the work has to be done’.
The second test was the ‘organisation test’, where consideration is given to the
integration of the individual in the organisation.
The third test, namely the ‘dominant impression test’, held that no single factor
could be taken in isolation and that all conditions had to be weighed against one
another. This test had been criticised as ‘meaningless’ but was still the one most
frequently applied.
In summary, the Court identified the main differences between a contract of
employment and a contract of work. These were:
• ‘The object of a contract of service is the rendering of a personal service by the
employee to the employer’ where ‘the services are the object of the contract’,
while a contract of work is ‘the performance of certain specified work or the
production of a certain specified result’.
• The independent contractor is ‘not obliged to perform the work himself or produce
the result himself, unless otherwise agreed upon’.
• The services of an employee are ‘at the disposal of the employer’, who may, in his
own discretion, subject of course to questions of repudiation, decide whether or
not he or she wants them rendered, whereas the independent contractor has to
produce ‘a specified result’ within a fixed or reasonable period.
• The employee, as a subordinate, has to obey all lawful commands of the employer,
who has the right to supervise and contract, while the independent contractor
is ‘notionally on a footing of equality with the employer’ and is ‘his own master’.
• The employment contract terminates if the employee dies. In a contract of work,
this is not necessarily the case.
• A contract of work terminates when the result required has been produced.

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Explaining that the nature of the relationship had to be ascertained from the
realities of that relationship and not by what the parties decided to call it, the Court
proceeded to explore the reasons for the Labour Court’s decision that McKenzie was
an employee.
While the Labour Court had conceded that McKenzie was employed for fixed
periods to present specific programmes at specified times, that he was paid a fixed
fee per programme, that he had elected to operate as a freelancer and that he
represented himself to the Receiver of Revenue as such, it had found these factors to
be ‘less compelling’ than the following:
• McKenzie had an office with all amenities at the SABC.
• He was paid and received an annual increase.
• He was given paid leave or time off.
• For six years he devoted his productive capacity to his task.
• He kept similar office hours to other employees.
• McKenzie performed his functions under the direction and supervision of the
programme manager.
• He was regarded as ‘a co-employee (part of the furniture) which was not the case
with ordinary freelance contributors’.

By contrast, the Appeal Court pointed out that the SABC draws a clear distinction
between its employees and freelancers and that the contracts are widely different.
For example:
• Employees are paid a salary while freelancers receive a fee for a specific task.
• Employees contribute to group life insurance, medical aid and the pension fund.
They also receive a housing allowance.
• Employees are entitled to paid annual leave and sick leave while freelancers are
not.
• Employees receive annual negotiated increases while freelancers’ fees are
increased by about 10 per cent.
• Employees may be disciplined and freelancers not.
• Freelancers are entitled to take on other work, which is not the case with
employees.
• Employees are subject to PAYE while freelancers have a flat 25 per cent deducted
for tax.

It was further noted that McKenzie had expressed a preference for freelancing as it
gave him more freedom; that, except for a period of 6 months, he had been paid only
if he presented the programme himself; that, in his tax return, he had represented

106 Labour Relations: A southern African perspective

himself as an independent contractor and had claimed expenses against his income;
and that he used a letterhead in which he described his business. It was admitted
that in one instance McKenzie had been granted paid time off, but it appeared that
this had been a special arrangement.
• The Court concluded that ‘the fact that McKenzie assisted the SABC in carrying on
its business, did not in itself justify the finding that McKenzie was an employee of
the SABC’ and that, on the balance of probabilities, McKenzie was an independent
contractor. He had known that the SABC drew a clear distinction between
employees and freelancers. McKenzie did follow instructions from the programme
manager and the SABC exercised control over him, but the SABC had ‘the right
to exercise editorial control over the programmes it broadcasts’. There had been
no obligation on the SABC to provide facilities to McKenzie, and they had done
so merely for convenience. McKenzie had not been obliged to attend meetings.
McKenzie could not present himself to the Receiver of Revenue as independent
and then claim to be dependent. Finally, the conduct of the parties in the year
before termination was ‘inconsistent with an employer–employee relationship and
consistent with the relationship between principal and independent contractor’.
• The appeal was upheld with costs.

Discussion
At the time, the increasing popularity of outsourcing and part-time employment
rendered the issue of an independent contract extremely important. As the Labour
Appeal Court explained, the essence of the distinction between an independent
contractor and an employee is to be found in the question as to whether the individual
puts his services, that is, his labour or productive capacity, at the disposal of the
‘employer’ or whether he merely agrees to provide a product or a service, within a
fixed or reasonable period. Added to this is the question as to whether he is on an
equal footing with the employer or whether he has to obey the employer’s lawful or
reasonable commands even if these are not directly related to the job. Being on an
equal footing would not stop the ‘employer’ from determining the type and quality of
the product or service for which he has contracted. Finally, where an individual elects
to be independent for tax purposes, he is unlikely to find sympathy with the courts.

Chapter 3: Labour Legislation 107

Recent developments re definition of employee
Subsequent to the McKenzie case the Labour Appeal Court listed another four factors to be
considered when making a decision as to whether someone is an employee, namely that:
■■ The object of the contract should be that the individual renders personal services
■■ The employer chooses when and where to use these services
■■ The individual must obey the commands of the person requiring his service
■■ There is usually no date for termination of the contract, except in the case of a fixed
term contract.

It was further noted that an employee renders personal service while an independent
contractor delivers a result in the form of a completed product. He may also contract with
another individual or individuals to perform the work or part of it.
The differentiation between an employee and an independent contractor will become
increasingly important as the nature of work changes, as more and more work is outsourced
and as foreign companies employ/contract South African labour (see ‘Uber’ case below.)
It was evidently with this situation in mind that the government added a new section
200B to the Labour Relations Act to address what was termed ‘disguised employment’. This
section refers to a situation where one or more persons carry on an associated or related
business by or through an employee and where the intention, directly or indirectly, is to
deny the employee the protection to which he is entitled in terms of the Labour Relations
Act or any other Employment Act.
If more than one person is involved, the ‘employers’ are made jointly and severally liable
for any transgression of the Acts.

Case Review: Who Is The Employer, If Any?

Uber South Africa Technological Services

(Pty) Ltd versus NUPSAW SATAWU and others
(CCMA 2017)
Background
Uber is an international company with headquarters in the Netherlands. Their system,
by which persons wishing to use taxicab services can book a taxi online has taken the
world by storm, but the way in which Uber operates has at times been controversial.
Essentially, Uber sources ‘partners’/car owners in South Africa to supply the cabs.
The partners may also drive for Uber, but may in turn use other persons to drive their
car or cars. The partners, as well as the individual drivers, have contracts with Uber in
the Netherlands. Cars as well as drivers have to be approved by Uber.

108 Labour Relations: A southern African perspective

Once a driver has been accepted, he is supplied with an App by Uber South Africa
Technology Services. The App serves as the communication channel between Uber
and the drivers. Uber South Africa also provides training and sets performance
standards for the drivers. It has offices in Cape Town and drivers interact with the
Admin Manager.
A driver can choose when to work and can disconnect his App whenever he wants
to. Although there are no minimum hours too many cancellations may impact on his
performance and even lead to the App being disconnected.
Persons wishing to make use of an Uber taxi register with Uber online. They can
then log in and request a cab from one point to another. Uber contacts the taxi driver
nearest to the requested pickup point and relays the request to him. The driver need
not accept the request but mostly will because it is his way of making a living. Once
the driver has accepted, Uber will invoice the customer and collect the fare. Uber
pays over part of the fare to the driver, but only after it has deducted its own fee as
well as that of the partner (the owner of the vehicle).
If Uber is not satisfied with a particular driver it can disconnect his App, either
temporarily or permanently.
The hearing under discussion flowed from an approach to the CCMA by a number
of drivers whose Apps had been disconnected and who claimed that, by doing so,
Uber had effectively dismissed them. In response Uber claimed that the CCMA could
not adjudicate in the matter as the drivers were not employees but independent
contractors. It then became necessary for a decision from a Senior Commissioner as
to whether the drivers were in fact employees.
Uber initially maintained that the contract should be the starting point, that the
contracts of both the partners and the drivers are with their head office and not
with Uber South Africa Technology Services and that the case should be heard by
the International Chamber of Commerce for Conciliation and Mediation. Alternately
it was argued that the owner of the vehicle is the employer of the driver or that
the driver is an independent contractor who personally negotiates with the person
requesting a taxi – that Uber’s role is merely to provide access to technology for
which it charges a fee. Drivers are not obliged to drive or to use the App. They can
choose which passengers they will take.
On behalf of the drivers it was argued that their contracts are not with the owners
of the vehicles but with Uber. Drivers have to personally drive the cabs. Their conduct
is controlled by Uber which issues performance ratings and incentive schemes as well
as policies regarding cancellations. Uber controls the conditions under which work
is done as well as the pricing of fares and the deployment of drivers. Its ability to
disconnect the App gives Uber ultimate control over the driver

Chapter 3: Labour Legislation 109

Pronouncements
The Commissioner commenced by noting that, because of changes to the world of
work, the line between an employee and an independent contractor has become
blurred. In this situation she saw it as her task to decide whom to protect, taking note
of the amendments to the Labour Relations Act as well as the Code of Good Practice:
Who is an Employee?
As a start she went back to the definition of an employee (see above) noting in
particular that an employee was any person who receives payment from an employer
and who assists in carrying out the business of an employer. It seemed obvious that
the drivers did assist in carrying out Uber’s business and also received payment for
their fares, but only after a deduction of a fee by Uber. According to the Commissioner
this would not happen in the case of an independent contractor.
Pointing to the various tests used in the past to decide whether an individual
was an employee, such as the control test, the organisational test and the dominant
impression test, she concluded that none of these were decisive. To make a decision
it was necessary not only to go by the dominant impression but also to look at ‘the
reality of the relationship’ and to consider all factors. In this respect she noted the
following:
• The contracts are with Uber and not with the owners of the vehicles
• Drivers render personal services to Uber
• There is no termination date in the contracts indicating that they are indefinite
• Although they have a certain amount of independence, drivers are under the
control of Uber in that Uber sets performance standards, can deactivate a driver’s
App and even monitor an individual’s driving by the movement of the cellphone
• Uber controls the way business is done
• Drivers are an essential part of Uber’s service –the App is a tool and it is the driver
who provides the service
• Uber South Africa has to approve of the vehicles and provide assistance to drivers
• Drivers are at the mercy of Uber – they are economically dependent on Uber which
is much more powerful.

The Commissioner conceded that some factors pointed to the drivers being
independent contractors but added that factors such as economic realities and social
justice also had to be considered.
In the light of all these considerations her decision was that drivers are in fact
employees of Uber and not independent contractors and that Uber Technological
Services, and not Uber head office should be designated as the employer. (This was in
line with her previous statement that, although they might be jointly and severally

110 Labour Relations: A southern African perspective

 liable, the local subsidiary of the company should be regarded as the employer in
order to prevent the disadvantage to employees of working for foreign organisations.)

Discussion
The case above is proof of the complexity of the situation and the fine line between
an individual being regarded as an employee or an independent contractor. It also
points to the use of technology as an aid in running an enterprise. According to
the pronouncements of the Commissioner, Uber was essentially exercising control by
the use of technology and was not, as claimed, merely supplying an individual with
technology which he could use entirely for his own purposes.
This kind of situation is bound to become even more controversial as new
relationships are established and new devices are used.
For the time being the focus will probably be on vulnerable persons but this might
change as Section 200B is not confined to employees earning below the income
threshold.

Types of Employment Contracts

Indefinite/Permanent Contracts
Most contracts of employment are indefinite in that no date for termination of the contract
is given. This is so because the parties expect the relationship to be a permanent one. The
employee expects that, all other things being equal, he will continue in employ until he
decides of his own accord to leave or reaches pensionable age. The employer, by engaging in
an indefinite or permanent contract with the employee, implicitly agrees that the employee
will not be dismissed unless:
■■ he is in breach of contract or
■■ he becomes too ill or incapacitated to perform his duties
■■ the operational requirements of the employer require a reduction of the workforce.

Fixed-term Contracts
There are instances where the services of an employee may be required only for a specific
period or for a particular project. In these instances the employer will conclude a fixed-term
contract with the employee or employees in question.
Section 198B(1) of the Act now defines a fixed-term contract as one which will end on:
■■ the occurrence of a specified event
■■ the completion of a specific task or project
■■ a fixed date (but not the employee’s normal retirement date).

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Fixed-term contracts usually end on the date specified or with a specific event, such as
the completion of a project. However, it may happen that the job takes longer than first
envisaged. In that case, the contract may be extended for another specified period, but it
cannot be extended indefinitely. Furthermore, in terms of S186 of the Labour Relations Act
an employee on a fixed-term contract may claim that he was unfairly dismissed if:
■■ he expected the contract to be renewed on the same or similar basis and the employer
did not renew the contract or renewed it on less favourable terms
■■ he reasonably expected to be retained indefinitely on the same or similar terms and he
was not retained or was offered a permanent position on less favourable terms.

A fixed-term employee, like other employees, can also claim that he was unfairly dismissed if:
■■ he resigned because the employer made it impossible for him to continue
■■ his contract was transferred to another employer and the new conditions of service are
‘substantially less favourable than those with the previous employer.

Protection for Vulnerable Employees

The Argument for Protection
Unfortunately, there are employers who employ people mainly on a part-time basis or
keep some employees on fixed-term (temporary) contracts which are renewed from period
to period. This is often done to make dismissal of such employees easier and/or to impose
conditions of employment different from those of permanent employees.
While fixed-term contracts may be necessary in certain circumstances, the practice is open to
abuse, especially of more vulnerable employees.
The Labour Relations Act now offers greater protection to employees who earn below the
earnings threshold (at the time of writing R205 433.30 per annum) in instances where such
employees are given fixed-term or part-time contracts, or where their services are offered
by temporary employment services (labour brokers.)
Section 198B(3) limits fixed-term contracts for workers in this category to 3 months. It
would allow an employer to give employees a fixed-term contract of longer than 3 months
only if the work is of limited or definite duration or there is another justifiable reason for
fixing the contract.
A longer fixed-term contract can be justified only if the prospective employee:
■■ is replacing another employee who is temporarily absent from work
■■ is required because of a temporary increase in the workload (which should not last
longer than 12 months)
■■ is a student or recent graduate who is employed to gain experience before entering the
job market
■■ is working exclusively on a genuine project which will be of limited duration
■■ is a non-citizen who has been granted a work permit for a specified period

112 Labour Relations: A southern African perspective

■■ is a seasonal worker
■■ is employed in an official public works scheme or similar job creation initiative
■■ is past normal or agreed retirement age
■■ is performing work which is funded by an external agency.

The onus will be on the employer to prove that the extension of the contract was necessary.
Any contract with vulnerable employees which exceeds 3 months and does not conform
to the above conditions will be regarded as a permanent contract irrespective of the wording
in the contract.
Where a fixed-term contract has been extended to two years or more the employee must
be given retrenchment pay when the contract ends unless the employer has been able to
find him a similar position commencing immediately thereafter.
The Act further states that:
■■ all fixed-term contracts must be in writing
■■ the employer must give the reason why the contract is of extended duration.

Also, the employer must:

■■ not treat an employee whose contract exceeds 3 months less favourably than other
employees doing the same or similar work
■■ give such employee the same access to opportunities as permanent workers
■■ pay someone who has worked on a fixed-term contract for longer than 24 months,
severance pay of one week’s pay per year of service or whatever higher amount is
contained in a bargaining council agreement or sectoral determination.

The new provisions relating to contracts for vulnerable employees were criticised as too
prescriptive and stifling job creation, which in present circumstances is a necessity. On the
other hand it cannot be denied that fixed-term contracts are often abused. Moreover, there
is consideration in the amendments for those instances in which fixed-term contracts may
be justified. Also, the restrictions on fixed-term contracts do not apply to organisations
employing fewer than 10 persons or to organisations which employ fewer than 50 persons,
have been in business for fewer than two years and are genuine start-ups. Contracts which
do not conform to the restrictions above may also be permitted by statute, a bargaining
council agreement or another collective agreement.
In August 2018 the practice of ‘rolling fixed term contracts’ again came under the
spotlight when a commissioner at the CCMA ruled that Metrorail should pay R30.5 million
to 260 employees who had been on multiple fixed-term contracts for a number of years.
The compensation is for benefits not paid to them during their employment. Evidently, in
2005 the wage rates of the contract employees had been brought into line with those of
permanent employees, but, unlike permanent employees, they were not members of the
provident fund and had not received bonuses. The Commissioner also ordered that they be
made permanent with full benefits.

Chapter 3: Labour Legislation 113

The relevant section of the Act provides that employees on contract should not be treated
differently from their counterparts in permanent positions. In this case the employees had
been subjected to continued unfairness, which Metrorail attempted to justify by referring to
its dire financial problems. This was an argument which the Commissioner refused to accept,
and rightly so, as employees should not bear the brunt of mismanagement. This having been
said, it could be argued that in circumstances where there is not an urgent need for labour
or where mechanisation is an option, all, or a large number, of the workers might have had
no job at all. In South Africa with its high unemployment rate this is a distinct possibility.
The tension between the need for employment and the prevention of exploitation remains.

Part-time Employees
Section 198C defines a part-time employee as someone who is paid wholly or partly on
the basis of time worked and who works for fewer hours than comparable employees.
Comparable employees are those who are also paid, wholly or partly, according to hours
worked, but are employed on a full-time basis.
The Act prohibits the employer from treating part-time employees differently from
comparable employees unless there is a justifiable reason for doing so. Seniority, experience,
merit, the quantity and quality of work or any other similar consideration would be regarded
as justifiable reasons.
The employer must also provide the part-time employee with access to training and the
same opportunities as full-time employees.
The above does not apply to persons who work for a particular employer for less than 24
hours a month, and not during the first six months of continuous employment.
These provisions, like those for fixed-term contracts, do not apply in a workplace where
fewer than 10 people are employed, or where the business, as the only business of that
employer, has been in operation for less than two years and employs fewer than 50 persons.

Persons Employed by Labour Brokers

The Labour Relations Act defines a temporary employment service (labour brokerage) as
one where an employee is provided to a client by a labour broker. The employee performs
work for the labour broker’s client but is paid by the labour broker. The Act specifies that
the employee in question is regarded as the employee of the temporary employment service
and not of the client. However, both the temporary employment service and the client are
jointly and severally liable for any contravention of a bargaining council agreement, an
arbitration award setting out conditions of service, the Basic Conditions of Employment Act
or a wage determination.
Most importantly, a new section 198A contains specific instructions regarding employees
in temporary employment who earn below the threshold of R205 443.50 per annum. With
regard to these employees a temporary employment service is defined as one where the
employee is provided to the client for a period of no longer than three months. If the

114 Labour Relations: A southern African perspective

person so provided remains with the same employer after the initial three-month period has
elapsed, he will be regarded as permanent.
In August 2018 the Constitutional Court, in the case between the National Union of
Metalworkers (NUMSA) and Assign Services, ruled that employees who had been employed
through a labour broker and who had continued in the employ of the client after the initial
three-month period had elapsed, were permanent employees of the client (Business Day 19
July 2018).
The Court’s decision was hailed by the union movement as a victory over the practice
of labour brokering. Various other parties were highly critical of the outcome, with some
experts arguing that the judgement contradicted the section of the Act which makes the
labour broker and the client jointly responsible for any violation of the employee’s rights.
At the time of writing the judgment had not yet been published, but it appears that the
Court merely affirmed the condition contained in the Act providing for permanence where a
vulnerable contract worker continues working for longer than three months. The provision
for joint and several liability may be interpreted as applying to all persons supplied by
labour brokers and also to vulnerable employees in the first three months.

Substantive Acts

The Basic Conditions of Employment Act (Act 75 of 1997)

The Basic Conditions of Employment Act (BCE Act) is part of the Body of Statutes (Acts
passed by Parliament) which regulate the labour relationship.
The purpose of the Act is to ensure that all employees enjoy certain minimum conditions
of employment. This is why a contract may not contain conditions which are less favourable
than those contained in the BCE Act, and why a Bargaining Council Agreement may vary
only specific provisions of the Act.
The only employees not covered by the Act are those employed by the National
Intelligence Agency, the South African Secret Service, the South African National Academy
of Intelligence and the directors and staff of Communications Security (COMSEC), which
have their own statutes regulating these matters. Persons employed at sea will not be
covered by the BCE if their conditions of service are regulated by the Merchant Shipping
Act. People who work for less than 24 hours a month are regarded as casual employees, and
are excluded from nearly all the provisions of the Act. Senior management and employees
earning more than R205 433.50 per annum are excluded from certain provisions relating to
hours of work.
The Act deals with the following employment conditions:
■■ hours of work
■■ leave, including sick leave, compassionate leave, maternity and paternity leave
■■ terminations and notice periods.

Chapter 3: Labour Legislation 115

It also regulates administrative aspects such as the employment contract, payment and
remuneration, including allowable deductions, and places a prohibition on the employment
of child labour.
The Basic Conditions of Employment Amendment Act of 2014 prohibits employers from
taking money from employees or prospective employees for promising or offering work.
Also, employers may not force employees to buy goods from the company unless this is part
of a scheme from which the employee also benefits. Persons employed for shorter periods
per day must be paid for at least 4 hours even if they did not work for the full 4 hours.
The section relating to child labour has been amended to make the person who illegally
employs children, as well as the person who permits or requires such labour, liable and
subject to possible prosecution. The Act also allows the Minister to make regulations
regarding the employment of children over the age of 15 who are no longer compelled to
go to school.
In November 2017 another Basic Conditions of Employment Amendment Bill passed
through Parliament. The main thrust of the amendments was to include conditions in the
Minimum Wage Act under the definition of basic conditions of employment and to make a
transgression of minimum wages prosecutable by Labour Inspectors. Furthermore, Chapters
8 and 9 of the Act, covering Sectoral Determinations and the Employment Conditions
Commission are repealed to make way for the Minimum Wages Act.
A summary of the Act, as amended, is contained in the Annexures (available online).

The National Minimum Wage Act (Act 9 of 2018)

The purpose of this new Act is to make provision for a national minimum wage and the
establishment of a National Minimum Wage Commission to set minimum wage levels on
an annual basis as from May 2018. The Minimum wage set for that period is R20 per
hour or R3 500 per month, but exceptions are made in the case of farmworkers (R18 per
hour), domestic employees (R15 per hour) and persons employed on expanded public works
programmes (R11 per hour). Persons on learnerships should still be paid according to the
already established schedule in terms of the Skills Development Act.
Additional payments or payments in kind to employees in the form, for example, of
transport allowances, equipment, tools, food, and accommodation, cannot be counted as
part of the minimum wage.
Employers already paying more than the minimum may not revert to the minimum.
Employers who contend that they cannot afford the minimum wage may apply for exemptions.
(A summary of the Act will be made available online.)

Occupational Health & Safety Act (Act 85 of 1993)

The Occupational Health and Safety Act and the regulations established in terms of the Act
impose stringent health and safety conditions at the workplace. Employers who are found

116 Labour Relations: A southern African perspective

by inspectors to have been negligent face heavy fines or prison sentences. This conforms
to the common law principle that it is the employer’s duty to provide healthy and safe
working conditions. Although the Act attempts to ensure that all premises on which work
is conducted are as safe as possible, it is difficult to provide by law for all eventualities.
Furthermore, inspectors are not able to police every undertaking and often act only when
unsafe conditions are reported to them. Health and safety campaigns have been undertaken
by many unions. In the textile industry the high incidence of ‘brown lung’ disease among
employees was publicised by unions and serious health issues repeatedly arise in the mining
industry where safety has become a primary issue.
(For a summary of the Act, see Annexures online.)

The Compensation for Occupational Injuries & Diseases Act (Act 130
of 1993)
The Compensation for Occupational Injuries and Diseases Act allows for compensation to
be paid to an employee who, as a result of his activities in the work situation, is partially or
totally disabled or contracts an occupational disease. In the event that the employee dies as
a result of the accident, injury or disease, the compensation will be paid to his dependants.
The Act covers all employees, including casual and seasonal workers, and directors who
have a contract of employment.
(For a summary of the Act, see Annexures online.)

The Unemployment Insurance Act (Act 63 of 2001) and the

Unemployment Insurance Contributions Act (Act 4 of 2002)
These Acts provide for contributions by employers and employees to the Unemployment
Insurance Fund and for payment of unemployment benefits to persons who become
unemployed, who are ill for lengthy periods or, who give birth to, or adopt, a child. The
Fund also provides for payments to dependants of deceased employees.
The Acts cover all employees except persons employed for fewer than 24 hours per month,
certain individuals employed in national and provincial government, persons engaged in
learnerships, expatriates who will be returning to their own countries and persons already
receiving a pension. Although all employees contribute to the fund, compensation is capped
at the earnings threshold of R205 433.30 per annum. (See Annexures online.)

The Labour Relations Act (Act 66 of 1995)

Historical Perspective
Until 1995, the framework for the practice of labour relations in South Africa was provided
by the Labour Relations Act, No 28 of 1956, and numerous subsequent amendments, the

Chapter 3: Labour Legislation 117

most significant being the Labour Relations Amendment Act of 1979 (see Chapter 2). The
stated objectives of the 1956 Act were the ‘prevention and settlement of disputes between
employers and employees’ and provision for ‘the regulation of terms and conditions of
employment by agreement and arbitration’.
The 1956 Act was significantly amended by the Labour Relations Amendment Act of
1979, which was in turn replaced by the Labour Relations Act of 1995.

Purpose of the Act

The 1995 Act states that the overall purpose of the legislation is the advancement of
‘… economic development, social justice, labour peace and the democratisation of the
workplace’. Its intention is to achieve these aims by:
■■ giving effect to the fundamental rights contained in Section 27 of the Constitution
■■ giving effect to the duties of the Republic as a member state of the International Labour
Organisation
■■ providing a framework in which employees and their unions, employers and employer
associations can:
◗◗ bargain collectively to determine wages, terms and conditions of employment and
other matters of mutual interest
◗◗ formulate industry/sectoral policy
■■ promoting orderly collective bargaining
■■ encouraging collective bargaining at sectoral level
■■ providing for workers’ participation and decision-making at the workplace
■■ providing for the effective resolution of disputes.

Government’s Intentions
It is apparent that the government was attempting to give further protection to employees
and unions and yet to maintain, as far as possible, the principles of voluntarism and free
collective bargaining. (The Act contains no compulsion to bargain, but does provide that
disputes relating to a refusal to bargain should first be submitted to advisory arbitration.)
On the whole, the Act did reveal greater government interference in the relationship. This
was best exemplified by the compulsion to form workplace forums upon the request of a
majority union, the onus to engage in consultation and co-decision-making with workplace
forums on certain prescribed matters and the onus to disclose information required for the
purpose of collective bargaining.
One of the most significant new provisions in the 1995 Act was that which protects employees
engaged in a legal strike from dismissal by the employer, thus effectively granting the right
to strike. Certain new provisions regarding the employment of ‘scabs’ and the right to picket
were also included. Although controversial, the insertion of these provisions was a significant
victory for the unions, which had long been engaged in a battle to achieve these rights.

118 Labour Relations: A southern African perspective

Ambit of the Act
The Act covers most employees, the only exclusions being those in the National Defence
Force, the National Intelligence Agency, the South African Secret Service.

Status of the Act

In the event of any conflict between the provisions of the Labour Relations Act and any
other law (except the Constitution), priority will be given to the provisions of this Act.
The Labour Relations Act automatically supersedes the Basic Conditions of Employment
Act. This exclusion explains why there are bargaining council agreements which contain
conditions of employment less favourable than those provided for in the Basic Conditions
of Employment Act.

The Labour Relations Amendment Act of 2015

When changes to the Act were first proposed the explanatory memorandum grouped these
under the following themes:
■■ the increased informalisation of labour and the need to ensure that vulnerable employees
receive adequate protection and are employed under conditions of decent work
■■ compliance with international labour standards
■■ compliance with constitutional rights including the right to fair labour practices, the
right to equality (including protection from discrimination) and the right to engage in
collective bargaining
■■ enhancing the effectiveness of bodies such as the Labour Court, the CCMA, the Essential
Services Committee and the labour inspectorate
■■ the clarification of uncertainties emanating from some of the existing provisions.

The clauses relating to vulnerable employees, conditions relating to fixed-term contracts and
the clarification of issues around Temporary Employment Services were the most important
amendments in this act. These have already been discussed above. Other important proposed
amendments are dealt with in discussions on the relevant sections of the Act (see below and
discussions in relevant chapters).

The Labour Relations Amendment Act of 2018

Towards the end of 2017 another Labour Relations Amendment Bill passed through
Parliament. The amendments are mostly aimed at fine-tuning existing legislation with
regard to matters such as bargaining council agreements, picketing rules, minimum services
and the powers of labour inspectors. These are dealt with in the relevant chapters. The most
significant amendment is that allowing for the appointment of an advisory arbitration panel
in strike and lockout situations which have become dysfunctional and where it is believed
that it is in the public interest to intervene (see Chapter 13).

Chapter 3: Labour Legislation 119

Major Provisions of The Labour Relations Act
The major provisions of the Labour Relations Act of 1995 are outlined hereunder, in the
order in which they appear in the Act. Since many of the provisions are covered in chapters
in this book relating specifically to their implementation in practice, not all sections are
discussed in equal detail.

Chapter Two: Freedom of Association and General Protection

Freedom of Association
The sections contained in this chapter grant employees the right to participate in the
formation of a union or federation and to join any union subject only to the constitution
of that union.
Union members have the right to:
■■ take part in the lawful activities of that union
■■ participate in the election of office bearers, officials and shop stewards
■■ subject to the terms of a collective agreement, stand for election to any of the above
positions
■■ if elected, hold office or carry out the functions of a shop steward (trade union
representative) in terms of the Act or a collective agreement.

The same provisions apply to members of a union which forms part of a federation in
respect of the election of office bearers and officials to that federation. The right to freedom
of association is carried further by the provision that nobody may compel or threaten to
compel an employee to become or not to become a member of a union or workplace forum
or to relinquish membership of a union or workplace forum. Also, nobody may prohibit an
employee or a prospective employee from exercising any rights or from participating in any
activities to which he is entitled in terms of the Act.
Contracts which directly or indirectly interfere with the freedom of association are
automatically void, unless the Act itself allows for the establishment of such a contract.
(The latter provision is very important as it allows a loophole for the conclusion of closed-
shop agreements – see Chapter 5).

Freedom from Victimisation

Freedom from victimisation is ensured by the clause which states that no one may prejudice
an employee because of:
■■ his previous, existing or prospective membership of a union or workplace forum
■■ his participation in the establishment of a union, federation or workplace forum
■■ his refusal or failure to do anything which the employer by law may not compel or allow
the employee to do

120 Labour Relations: A southern African perspective

■■ his publicising information which he may lawfully give to another person
■■ his assertion of any rights in terms of the Act
■■ his participation in any activities allowed by the Act.

Furthermore, no one may offer or promise an employee favourable treatment on condition

that he waives any rights granted to him or desists from any activities in terms of the Act.
Where there is an allegation regarding victimisation or interference with the freedom of
association, the complainant merely has to prove that he has been compelled, threatened,
prohibited or detrimentally affected in any manner, and it is then up to the defendant (the
employer) to prove that his action did not constitute victimisation.
Disputes arising from any allegations regarding victimisation or interference with the
freedom of association may first be referred for mediation to the Commission for Conciliation,
Mediation & Arbitration (CCMA) or to a bargaining council which has jurisdiction and,
should the dispute not be resolved, to the Labour Court.
In the remainder of this chapter, employers are granted the same rights in respect of
freedom of association and freedom from victimisation.

Chapter Three: Collective Bargaining

Part A: Organisational Rights
This part grants unions which are ‘sufficiently representative’ certain rights, such as the
right:
■■ to have access to the workplace
■■ to hold meetings with employees outside working hours
■■ to conduct an election at the workplace
■■ to be granted stop-order facilities.

A majority union, or two or more unions which together represent a majority of employees
at the workplace, may:
■■ appoint shop stewards
■■ be given information necessary for the purpose of representation or collective bargaining
■■ in consultation with the employer, establish thresholds for representation (agree what
percentage representation is necessary for another union also to receive recognition).

Registered unions which are party to a bargaining council will automatically have the right
to access and to demand stop-order facilities at all workplaces within the registered scope
of the council, regardless of the union’s representation at that particular workplace. A
bargaining council may also establish thresholds of representation.
The Act sets out procedures for the exercise of these rights and for the processing of
disputes in this respect. Disputes involving organisational rights may be submitted for

Chapter 3: Labour Legislation 121

conciliation to the CCMA. If the dispute remains unresolved, the CCMA may be asked to
arbitrate.
An amendment to Section 21 now allows a union (or more than one union acting jointly)
which has already been granted access and the deduction of union dues, to be granted the
same rights as a majority union subject to the following conditions:
■■ The trade union or unions acting jointly must have significant representation
■■ No other union must have been granted the same rights
■■ All concerned parties must have been given the right to make inputs.

Where the rights granted arise from the union’s representation at a temporary employment
service, they may also be exercised at the workplace of the client in relation to the employees
concerned.
(Further details regarding organisational rights are contained in Chapters 4 and 12.)

Part B: Collective Agreements

This section
■■ deals with the enforceability of collective agreements
■■ provides for different types of agreement
■■ outlines dispute procedures in respect of agreements.

All collective agreements, whether concluded at centralised or decentralised level, are

enforceable in terms of the Act. Agreements relating to substantive issues and to conduct at
the workplace are applicable to:
■■ all members of unions
■■ the employers party to such agreements
■■ members of the bargaining unit
■■ persons identified in or connected with the agreement.

Collective agreements are binding on all parties for the duration of the agreement, regardless
of whether or not a party remains a member of the union or employers’ association. A
collective agreement automatically changes the employment contract of employees covered
by the agreement.
Collective agreements must contain procedures for settlement of disputes about the
interpretation or application of the agreement, including a settlement agreement, and must
provide for conciliation as a first resort, and thereafter, for arbitration (see Chapters 5 and 12).
The Act also provides for the establishment of agency shops and closed shops. If an
agency shop has been agreed to by the employer and the representative union, employees
who are not members of that union but who would qualify for union membership are obliged
to pay an amount equal to or less than the prescribed union dues into a fund. The fund is

122 Labour Relations: A southern African perspective

administered by the representative union and has to be used to advance the socioeconomic
interests of employees. The agency-shop agreement differs from a closed-shop agreement
in that non-members do not have to join the representative union. Arrangements for closed
shops and agency shops are outlined in the Act (see also Chapter 5 of this text). The issue
of the closed shop is extremely controversial, as it directly contradicts the freedom of
association principle contained in the Act and in the Bill of Rights.

Part C: Bargaining Councils

The Act makes extensive provision for the establishment of bargaining councils by employer
and employee bodies. Both parties have to be sufficiently representative (on a national or
regional basis) of a particular industry, sector, trade or occupation.
Once registered, bargaining councils have extensive powers, including the right to
conclude and enforce agreements, to prevent and settle labour disputes in their area of
jurisdiction and to establish pension and other funds. In addition, bargaining councils may
apply to the Minister to have their agreements extended to non-parties in the industry,
sector or area. Before granting such permission, the Minister must satisfy himself that the
parties are sufficiently representative in the registered scope of the council.
If agreements are extended to non-parties, which are often smaller enterprises, the latter
are obliged to pay levies and to institute the same conditions of service as those applicable
to the original parties. This provision has been repeatedly criticised as partly responsible for
businesses going under and for job losses (see Chapter 5). The Act does provide that non-
parties may apply for exemption from the whole or part of a bargaining council agreement,
but they are often unsuccessful.
The Labour Relations Amendment Act of 2015 contains changes to Section 32 of the Act
which would improve on the exemption process and would oblige the Minister to invite
representations before the agreement is extended (see Chapter 5).

Part D: Public Service Bargaining Councils

The State may be a party to a bargaining council if it is an employer in a sector or area in
respect of which a council is being established. In addition, Part D provides for a coordinating
public service bargaining council to set the parameters for all bargaining in this sector.
The Public Service Co-ordinating Bargaining Council instructs various sectors to establish
their own Sectoral Bargaining Councils. Where the operations of a particular sector are
widespread it may in turn establish subsidiary regional bargaining councils.

Part E: Statutory Councils

According to this section, any employers’ association or any union which represents at
least 30 per cent of the employers or employees in a sector or area may apply for the
establishment of a statutory council.

Chapter 3: Labour Legislation 123

Statutory councils may apply to have their agreements regarding training and education
schemes, pension, provident, unemployment and other funds promulgated as determinations.
This means that other parties in the sector must subscribe to these schemes. Moreover, the
Minister may levy all employers and employees within the registered scope of a statutory
council in order to cover the cost of such a council.
These provisions allow an essentially unrepresentative body to set up schemes and funds
and to engage in dispute resolution for an entire sector or area.

Part F: General Provisions Regarding Councils

Other provisions in this chapter include instructions for an annual review of representivity, a
detailed procedure for the settlement of disputes by bargaining councils and the stipulation
that bargaining councils must either become accredited as mediators and arbitrators or appoint
an accredited agency to fulfil these functions (see Chapter 12). Section 56 allows a union or
employers’ association which has been refused membership by a council to appeal to the
Labour Court, and grants the Court the power to admit such union or employers’ association
as a party to the council and, if necessary, to amend the council’s constitution accordingly.
A final section in this part of the chapter provides that, unless other instructions are
given, any dispute regarding the interpretation of organisational rights and the sections
relating to bargaining and statutory councils should be referred, firstly, to the CCMA and,
failing settlement, to the Labour Court.

Chapter Four: Strikes and Lockouts

Chapter Four of the Act provides firstly that, subject to certain procedures and time limits,
every employee has the right to strike and every employer, the right to lock out. An
employer may not dismiss employees engaged in a legal strike, but may dismiss individual
employees for reasons of misconduct or operational requirements. (For a full discussion of
these aspects, see Chapter 13.)
Statutory procedures do not have to be followed if:
■■ the strike or lockout is in reaction to an unprotected strike or lockout
■■ the employer has failed to comply with a request to reinstate terms and conditions of
employment which had been unilaterally changed by him
■■ the parties have followed a disputes procedure contained in a collective agreement or a
council constitution.

Strikes which conform with the provisions of the Act are regarded as ‘protected’ strikes, and the
protection accorded to such strikers is not extended to employees who engage in an unprotected
or spontaneous strike, although certain provisions are also outlined for such strikes.
Secondary or ‘sympathy’ strikes are allowed subject to certain conditions.
The act also sanctions picketing if the conditions and procedures set out in the Act,
including the conclusion of a picketing agreement, are followed.

124 Labour Relations: A southern African perspective

Chapter Four of the Act prohibits strike action by employees engaged in essential and
maintenance services. The conditions and procedures pertaining to such services and the
establishment of the Essential Services Committee are outlined in the Act. (In an attempt to
avert continued strike action in these services, the 2015 Amendment Act sets out detailed
procedures for the streamlining of the Committee and its functions.)
This chapter also makes allowance for protest action to protect the socioeconomic
interests of employees and sets conditions for the use of substitute (‘scab’) labour during
strike action. An employer may not employ substitute labour if the whole or part of his
service has been designated as a maintenance service; nor may he use ‘scab’ labour to
perform the work of any employee who has been locked out, unless the lockout was a
reaction to an unprotected strike.
(For more detailed information regarding strikes and lockouts, see Chapter 13.)

Chapter Five: Workplace Forums

The most innovative aspects of the Labour Relations Act of 1995 are contained in this
chapter, which provides for the establishment of workplace forums, upon the request of a
majority union or unions, in any workplace employing more than 100 persons (see Chapter
5 of this text).
In terms of the Act, a ‘workplace’ is, ‘… the place or places where the employees of an
employer work’.
Workplace forums are intended to:
■■ promote the interests of all employees at the workplace
■■ increase the efficiency of the workplace
■■ engage in consultation on certain matters stipulated in the Act
■■ engage in joint decision-making on issues, such as:
◗◗ disciplinary codes and procedures
◗◗ rules regarding conduct and behaviour
◗◗ measures to protect individuals against discrimination
◗◗ changes to the rules applicable to social benefits.

The forums must be representative of all employees, with ‘employee’ being defined in this
chapter as ‘any person employed in a workplace’ except a ‘senior managerial employee
whose status and contract of service allow him to represent the employer in interactions
with the forum’. Workplace forums are entitled to all relevant information necessary to
perform their functions effectively. This would include matters such as:
■■ the financial and employment situation of the organisation
■■ overall achievements
■■ future plans and prospects.

Chapter 3: Labour Legislation 125

(A detailed account of the establishment and functioning of workplace forums, as well as a
discussion as to their efficacy, is provided in Chapter 15.)

Chapter Six: Registration of Unions and Employer Organisations

In this chapter the procedures for the registration of trade unions, employers’ associations
and union federations are outlined in detail.
All rights in terms of the Labour Relations Act are granted only to registered unions and
employers’ associations. A body which remains unregistered will have no status within the
statutory labour relations system (see Chapter 4 of this text).
In 2015 this part of the Act was amended to fine-tune procedures in cases where a union
or employers’ association is not functioning properly and needs to be wound up. The Act
provides that the Labour Court may, under specific conditions, order the union or federation
to be wound up. The amendments allow the Court to appoint an administrator and set out
the procedures involved.
Parts C and D of Chapter Six relate to the appointment of a Registrar by the Minister. There
is an onus on the Registrar to maintain up-to-date records relating to unions, employers’
associations and federations, and to allow the public access to such records.
Any party aggrieved by a decision of the Registrar may request a written explanation
as to the reasons for such decision and/or may, within 60 days of the decision, or of the
reasons being furnished, appeal to the Labour Court against such decision.

Chapter Seven: Dispute Settlement

Part A: Commission for Conciliation, Mediation & Arbitration (CCMA)
This part makes provision for the appointment of a Commission which is to be independent
of the State and of any political party, union, employers’ association or federation of unions
or employers’ associations, and which will have jurisdiction in all the provinces to perform
the functions outlined hereunder.
The Commission should:
■■ attempt to settle, by conciliation, any dispute referred to it in terms of the Act
■■ where conciliation has not achieved the desired agreement, conduct arbitration if the
Act requires this
■■ if any of the parties to a dispute so request, provide assistance with the establishment
of workplace forums
■■ compile and publish information and statistics regarding its activities.

Other than the above, the Commission may also:

■■ advise a party to a dispute on the procedures to be followed in terms of the Act
■■ assist a party to a dispute in obtaining legal advice and/or representation

126 Labour Relations: A southern African perspective

■■ offer to settle a dispute which was not referred to it
■■ accredit councils or private agencies
■■ subsidise accredited councils and agencies
■■ conduct, oversee or scrutinise an election by ballot for a registered union or employers’
association
■■ supervise or check such ballot if requested to do so by the union or employers’ association
■■ publish guidelines as to any matter regulated by the Labour Relations Act
■■ conduct and publish research into matters relevant to its functions.

In terms of amendments to this part of the Act the Commission is now given the right to
provide administrative assistance to employees who are lodging a dispute and who earn
below the earnings threshold. It also has the right to determine whether a particular party
may represent parties during proceedings at the CCMA and to set out the consequences for
persons who do not attend proceedings.
(Detailed information regarding the appointment, composition and functioning of the
Commission is provided in Chapter 12.)

Part B: Accreditation and Subsidisation of Councils and Private

Agencies
This part empowers the Commission to accredit and subsidise bargaining councils and
private agencies as mediators and arbitrators, and sets out the conditions and procedures
for such accreditation (see Chapter 12).

Part C: Dispute Settlement under the Auspices of the Commission

Procedures for mediation and arbitration of different types of dispute have been outlined in
this part of the Act. It describes the power of Commissioners in arbitration proceedings and the
effect of arbitration awards, and allows for review of an arbitration award by the Labour Court.
In an attempt to improve the functioning of the Commission and the rate at which
disputes are resolved, the Labour Relations Amendment Act of 2015 contained a number of
amendments to this section of the Act. Amendments to Sections 143, 144 and 145 of the Act
are intended to streamline the execution of arbitration awards and to avoid situations where
arbitrations by the Commission are unnecessarily delayed by appeals to the Labour Court.
The amended Section 147 would oblige the CCMA to arbitrate a dispute which has been
referred to private arbitration but where it is established that the employee or employees
concerned earn less than the earnings threshold and would have to pay all or part of
the costs of the private arbitration. The same would apply if it is found that the private
arbitrator is not independent of the employer.

Chapter 3: Labour Legislation 127

Part D: The Labour Court
The Act makes provision for a Labour Court to be constituted as a court of law and a court of
record. As regards matters within its jurisdiction, the Labour Court has the same powers and
status as a provincial division of the Supreme Court. (The 2015 amendments correct this to read
‘High Court’.)
The Labour Court is presided over by a Judge President, a Deputy Judge President and
as many judges as the President, on the advice of NEDLAC and in consultation with the
Minister of Justice and the Judge President, may decide.
The Labour Court may make any appropriate order, including the following:
■■ the granting of urgent interim relief
■■ the granting of an interdict
■■ an order enforcing a certain action which, when executed, will correct an injustice and
give effect to the primary objectives of the Act
■■ a declaratory order
■■ a compensatory award
■■ an order for damages relating to any circumstance covered by the Act
■■ an order as to costs.

(Further details regarding the rules, constitution and functioning of the Labour Court are
provided in Chapter 12.)

Part E: The Labour Appeal Court

The Act makes provision for appeals to the Labour Appeal Court. This Court is constituted
as a court of law and equity. It, too, is a court of record and, in relation to matters within
its jurisdiction, has the same status as the Supreme Court of Appeal.
(For further details regarding the constitution and function of the Labour Appeal Court,
see Chapter 12.)

Chapter Eight: Unfair Dismissals and Unfair Labour Practices

Unfair Dismissals
This chapter commences by indicating that a dismissal not only occurs when an employer
dismisses an employee, with or without notice. Failure to re-employ a person on a fixed-
term contract on the same or similar conditions when the employee reasonably expected
this, could also be regarded as a dismissal, as could the refusal to allow an employee to
return to work after maternity leave.
Dismissals are unfair if the employer fails to prove, firstly, that there is a fair reason
for the dismissal related either to the employee’s conduct, capacity or competence, or to
the operational requirements of the employer, and, secondly, that the dismissal took place

128 Labour Relations: A southern African perspective

in terms of a fair procedure. The Act also lists certain dismissals which are regarded as
automatically unfair (see Chapter 6).
Any agency charged with deciding whether a dismissal was fair will be required to take
into account the Code of Good Practice appended in the Schedules. This Code contains
detailed guidelines for the different types of dismissal (see Schedules below).

Unfair Labour Practices

Chapter 8 of the Act also prohibits employers from engaging in unfair labour practices.
Section 186(2) describes these as including the following:
■■ any unfair action relating to promotion, demotion, probation, training or the benefits
afforded to an employee
■■ the unfair suspension of an employee or any other disciplinary action short of dismissal
■■ the failure or refusal on the part of the employer to re-employ a former employee where
an agreement to that effect exists
■■ any occupational detriment, short of dismissal, suffered by an employee who has made
a disclosure in terms of the Protected Disclosures Act (Act 26 of 2000).

Retrenchments and Transfer of a Business as a Going Concern

The procedures to be followed in the event of retrenchments are set out in detail, as are
the prescriptions for situations where the business of an employer or part of that business
is transferred to another employer as a going concern. In such cases the contracts of all
employers are automatically transferred to the new employer and the rights and duties of
the old employer become those of the new employer (see Chapter 7).

Other Matters dealt with in Chapter Eight

Chapter Eight goes on to deal with procedures in unfair dismissal and unfair labour practice
disputes, legal remedies and retrenchment pay (see also Chapters 6, 7 and 12).

Chapter Nine: General Provisions

The most important provisions in this chapter of the Labour Relations Act are those
pertaining to the following:

Labour Brokers
The position regarding labour brokers has been discussed earlier in this chapter. It is necessary
only to add that two or more bargaining councils can agree that a labour broker, someone in the
service of a labour broker and the client of such labour broker will be covered by an agreement
concluded by one of the bargaining councils or falling in the combined registered scope of such
bargaining councils, provided that the agreement has been extended to non-parties.

Chapter 3: Labour Legislation 129

Confidentiality
Any person who makes public any information regarding the financial and business affairs of
any other person is guilty of an offence, and subject to a maximum fine of R1 000, or a sentence
to be determined by the Court, where such information has been obtained in any capacity by
or on behalf of a council, an independent body intended to grant exemptions from collective
agreements, the Registrar, the Commission or any accredited agent. This provision is not
applicable where the information was made public in order to enable the person who received the
information to perform his or her duties or act in a capacity as determined by the Act.

Presumption as to Who is an Employee

This section has been discussed earlier in this chapter.

Defects and Irregularities

Defects and irregularities – such as an omission in the constitution of a registered body, a
vacancy in the membership of a council, any irregularity in the appointment of a representative,
a substitute or a chairman of a council, or in the appointment of a director or Commissioner
– will not render invalid the constitution of a registered body, a collective agreement, an
arbitration award, any action of the council or any action of a director or Commissioner.

Definitions
The following definitions are of importance:
Employee – any person (except an independent contractor) working for another person or
the State and who receives or is entitled to receive remuneration; or any person who in any
manner assists in carrying on or conducting the business of an employer.
Essential service – a service the interruption of which will endanger the life, personal
safety or health of the entire population or part thereof (Parliament and the Police would be
regarded as essential services).
Issue in dispute – in relation to a strike or lockout, the demand, grievance or dispute which
forms the subject matter of the strike or lockout.
Legal practitioner – any person who is admitted to practise as an advocate or attorney
within the Republic.
Lockout – the exclusion by an employer of employees from the workplace of the employer
for the purpose of compelling the employees to accept a demand in respect of any matter of
mutual interest between employer and employees, irrespective of whether or not in the course or
purpose of such exclusion the employer breaches the contracts of employment of its employees.
Operational requirements – requirements based on the economic, technological, structural
or similar needs of the employer.
Protest action – the partial or complete concerted refusal to work, or the retardation or

130 Labour Relations: A southern African perspective

obstruction of work for the purpose (other than for the purpose referred to in the definition
of a ‘strike’) of promoting or defending the socioeconomic interests of workers.
Remuneration – any payment, in money or in kind or both, owed to a person in exchange
for which that person works for another person, including the State.
Strike – the concerted refusal to work, whether or not the refusal is partial or complete, or the
retardation or obstruction of work by persons who are or have been employed by the same
employer or by different employers, for the purpose of remedying a grievance or resolving a
dispute in respect of any matter of mutual interest between employer and employee (‘work’, in
this definition, includes overtime work, whether voluntary or compulsory).

See Table 3.1 for the major provision of the Labour Relations Act.

table 3.1: the major provisions of the labour relations act

Subject Reference

Freedom of association Chapter 2 and Chapter 7 (Disputes)

Freedom from victimisation

Trade unions Chapter 6

Employers’ associations

Federations of trade unions or employers’

associations

Collective rights Chapter 3

Collective agreements Schedule 1

Bargaining structures Schedules 9 and 10

Consultation Chapter 5

Co-decision-making Schedule 2

Workplace forums

Strikes Chapter 4

Lockouts Definitions

Dispute settlement Chapter 7

Schedule 4

Unfair dismissals Chapter 8

Unfair labour practices Schedule 8

Chapter 7 (Disputes)

Chapter 3: Labour Legislation 131

The Employment Equity Act (Act 55 of 1998)

Objectives of the Act

The Employment Equity Act has two main objectives – namely, the elimination of discrimination
and the promotion of affirmative action at the workplace. A number of important changes to
the Act were instituted by the Employment Equity Amendment Act of 2014.
The Act gives effect to Section 9(3) of the Constitution of the Republic of South Africa,
which provides that: ‘National Legislation must be enacted to prevent and prohibit unfair
discrimination’, as well as to Convention 111 of the International Labour Organisation.
Both Section 9 (the Equality Clause) of the Constitution and Convention 111 exclude from
the concept of discrimination any differentiation designed to promote, protect or advance
persons previously disadvantaged by unfair discrimination. Thus differentiation for the
purpose of affirmative action would be regarded as ‘fair’ discrimination.

Ambit of the Act

The Act applies to all employees and employers. However the National Defence Force, the
National Intelligence Agency and the South African Secret Service are excluded from the
term ‘designated employers’, as are employers who employ fewer than 50 people and whose
turnover is less than the turnover threshold for that type of business. Turnover thresholds
are published by the Department and modified from time to time (see below). Local spheres
of government are no longer exempted from application of the Act. Exempt employers do
not have to submit equity reports (see later).

Discrimination
Fair and Unfair Discrimination
Section 5(1) of the Act enjoins all employers to promote equal opportunity by eliminating
discrimination in all employment policies and practices. It further prohibits discrimination
on the basis of race, gender, sex, pregnancy, marital status, family responsibility, ethnic or
social origin, colour, sexual orientation, age, disability, religion, HIV status, conscience,
belief, political opinion, culture, language, birth or any other arbitrary ground. Harassment
can also be classified as unfair discrimination. The Employment Equity Amendment Act
extends this section by stating that differentiation between persons performing the same job
or work of equal value could be regarded as unfair discrimination.
In line with the Bill of Rights in the Constitution, the Act provides that measures to
promote previously disadvantaged groups will not be regarded as constituting unfair
discrimination; neither will differentiation based on the requirements of a particular job.

132 Labour Relations: A southern African perspective

Medical and Psychological Tests
The Act forbids medical testing of employees unless this is permitted or required by legislation
or is justifiable in the light of medical facts, employment conditions, social policy, the fair
distribution of employee benefits or the inherent requirements of the job. HIV testing is
specifically prohibited unless declared justifiable by the Labour Court. Psychological tests
and other similar forms of assessment must be scientifically proven to be both valid and
reliable, to have been fairly applied and should not be biased against any person or group.
Furthermore all tests will in future have to be certified by the Health Professions Council of
South Africa or any other body authorised by law to do so.

Applicants for Positions

Where discrimination is concerned, applicants for a position are also regarded as employees.
This happens nowhere else in labour law except in those sections of the Labour Relations
Act dealing with the freedom of association and the freedom from victimisation. The
significance is that any person applying for a position may question both the shortlisting of
candidates and the actual selection of a candidate.
Those engaged in recruitment and selection have to prove that the shortlisting and
eventual selection were conducted in terms of provable assessment criteria and that no
person was unfairly advantaged or disadvantaged during the process.

Contraventions
The existing Section 10 of the Act provides that a party who believes that he has been
discriminated against by the employer can, within a period of six months, refer the alleged
offence to the CCMA for conciliation. If no settlement is reached, the dispute may be
referred to the Labour Court for adjudication or to arbitration if so agreed by the parties.
This excludes a situation where the employee has been dismissed, in which case the dispute
is submitted to a bargaining council or the CCMA for conciliation, and then to the Labour
Court as stipulated in Sections 187 and 191 of the Labour Relations Act.
The Employment Equity Amendment Act of 2014 allows an employee who earns below
the earnings threshold to submit any dispute centring on unfair discrimination straightaway
to the CCMA for arbitration and any employee alleging sexual harassment to do the same.
Complaints can also be brought to the CCMA instead of the Labour Court if all parties agree.
Persons dissatisfied with the decision of the CCMA may appeal to the Labour Court within
a period of 14 days. The amendments are evidently intended to obviate the need for these
employees to go through drawn-out processes and ultimately to go to the Labour Court,
which might prove expensive.
Section 11 of the Act further states that, whenever an allegation of unfair discrimination
is brought by an employee, the onus is on the employer to prove that the actions were fair.
In terms of Section 60, any contravention of the Act by an employee must immediately
be brought to the attention of the employer. The onus is on the employer to consult with

Chapter 3: Labour Legislation 133

the relevant parties and to take steps to eliminate the alleged conduct (for instance, unfair
discrimination or harassment). The Act holds the employer liable, should he or she fail to
institute the necessary actions, unless it can be proved that the employer ‘did all that was
reasonably practicable to ensure that the employee did not act in contravention of this Act’.
Section 11 of the Act, dealing with the burden of proof, has been amended to provide that,
if unfair discrimination is alleged, the employer must prove, on the balance of probabilities:
■■ that the discrimination did not take place
■■ that, if it did take place, the discrimination was not unfair
■■ that it was otherwise justifiable.

The Act places the onus on employees who allege discrimination on ‘any other arbitrary
ground’ to prove, on the balance of probabilities:
■■ that the conduct complained of was not rational
■■ that it amounts to discrimination
■■ that the discrimination is unfair.

Affirmative Action
Planning for Redress
In order to ensure that positive steps are taken to address demographic imbalances, Chapter
3 of the Act compels all ‘designated employers’ to:
■■ consult with employees regarding the equity process
■■ conduct an analysis of the workforce
■■ prepare an Employment Equity Plan
■■ submit an equity report to the Director-General within the periods specified in the Act
■■ submit a statement on income differentials to the Employment Conditions Commission.

Designated Employers
Designated employers are defined as:
■■ those who employ 50 or more employees
■■ employers who have been designated in terms of a binding bargaining council agreement
■■ employers who employ fewer than 50 persons but whose annual turnover is above that
stipulated in Schedule 4 of the Act (see below)
■■ organs of state with the exception of the National Defence Force, the National Intelligence
Agency, and the South African Secret Service.

134 Labour Relations: A southern African perspective

Designated Groups
The thrust of the Employment Equity Analysis and Plan is to identify and correct the under-
representation of designated groups. Designated groups are defined to include:
■■ black people
■■ women
■■ persons with disabilities.

‘Black’ is described as a generic term that includes Africans, persons of mixed race and Indians,
although reporting forms issued by the Department of Labour require differentiated reporting on
these groups. Furthermore, the amended Act excludes from the designated groups persons who
are not South African citizens by birth or descent. This exclusion would not apply to persons
who were naturalised before 27 April 1994 or those who became naturalised citizens only after
that date because they were previously prevented from doing so by Apartheid policies.
‘People with disabilities’ is defined as referring to ‘people who have long-term or recurring
physical or mental impairment which substantially limits their prospects of entry into or
advancement in employment’.

table 3.2: turnover threshold

Turnover Thresholds
(Above which employers, even if employing fewer than 50 people, have to submit an Employment Equity Plan)

Sector Total annual turnover

Agricultural R6.00 million
Mining and Quarrying R22.50 million
Manufacturing R30.00 million
Electricity, Gas and Water R30.00 million
Construction R15.00 million
Retail and Motor Trade and Repair Services R45.00 million
Catering, Accommodation R15.00 million
Finance and Business Services R30.00 million
Community, Social and Personal Services R75.00 million
Wholesale Trade, Commercial Agents and Allied Services R75.00 million
Catering, Accommodation and other trades R15.00 million
Transport, Storage and Communications R30.00 million

Delegation of Responsibility
The Act provides that the employer must designate a member of senior management to take
responsibility for the equity process.

Chapter 3: Labour Legislation 135

Consultation
Consultation with a representative employee body is a further imperative. The Act stipulates
that the employer has to consult on:
■■ the demographic analysis of the workforce
■■ the preparation and implementation of the Equity Plan
■■ the Equity Report.

Such consultation must be conducted with:

■■ a representative trade union
■■ the workplace forum
■■ jointly with a workplace forum and the trade union, if both exist
■■ if no trade union or workplace forum exists, with representatives elected by employees.

The body with which the employer consults must reflect the interests of all employees from
all occupational levels (categories are now excluded), as well as employees from both the
designated and the non-designated groups. The trade union, forum or elected body has to
ensure that it complies with these requirements, or additional representatives have to be
elected by those groups not represented by the union or forum.
The body established to represent employees has the right to disclosure of all information
necessary to bring about effective consultation.

Analysis
The employer needs to collect information and conduct an analysis of all employment
practices and procedures, as well as the work environment, so as to identify barriers to the
employment or continued employment of designated groups. Part of the equity plan will be
directed at the elimination of such barriers.
The employer must establish a demographic profile of the workforce in each occupational
level in order to determine the degree of under-representation of designated groups. His
concern should not be only with representation as Section 27 also obliges him to produce a
statement reflecting incomes at the various levels and categories and, where ‘disproportionate
and discriminatory’ income differentials exist, to take steps to remedy the situation.

The Employment Equity Plan

Developing an Equity Plan
The employment equity plan must include: Affirmative Action Targets and, where under-
representation has been identified, the numerical goals to ‘achieve the equitable representation of
suitably qualified persons from designated groups within each occupational level in the workforce’.
The term ‘suitably qualified’ is described in Sections 20(3) and (4) as dependent on:
■■ the person’s formal qualifications

136 Labour Relations: A southern African perspective

■■ prior learning
■■ relevant experience or capacity to acquire, within a reasonable time, the ability to do the job
■■ a combination of the above.

Section 20(5), prohibits discrimination against any person solely on the grounds of his/her
lack of the relevant experience.

employment equity act

unfair
affirmative action
discrimination

NO:
• Medical
testing unless
under specific
circumstances
• HIV testing unless
permitted by
Labour Court
• Psychological Positive measures to
testing unless increase
tests are valid and No discrimination on representivity of
culture-free the basis of: previously under-
• race represented groups
• gender
• sex
• pregnancy Supported by
• marital status skills
• family development
responsibility ACT
• ethnic or social
origin
• colour
• sexual orientation
• age Removal of
• disability barriers to Support of
• religion employment diversity
• HIV status and mobility
• conscience
• belief
• political opinion
• culture, language
or birth

EMPLOYMENT EQUITY PLAN

figure 3.3: employment equity

Chapter 3: Labour Legislation 137

In addition, the plan must contain:
■■ measures to identify and eliminate employment barriers, including unfair discrimination
which adversely affects persons from designated groups
■■ measures designated to promote diversity based on ‘equal dignity and respect for all
people’
■■ measures to accommodate persons from designated groups to ensure that they enjoy equal
opportunity and are equitably represented in all occupational categories and groups (This
includes preferential treatment but does not include quotas, nor does it, in terms of Section
15(4), require ‘a designated employer to take any action concerning an employment
policy or practice that would establish an absolute barrier to the prospective or continued
employment or advancement of people who are not from the designated groups’.)
■■ measures to retain and develop people from designated groups and to implement
appropriate training measures, including measures in terms of the Skills Development Act
■■ the objectives for each year of the plan
■■ a timetable for each year showing how objectives other than numerical goals are to be
achieved
■■ the duration of the plan (not shorter than one year and not longer than five years)
■■ procedures for implementation and monitoring of the plan and the persons, including
senior managers responsible
■■ internal disputes procedures relating to discrimination and affirmative action
■■ any other prescribed matter.

Submission of Equity Plans and Reports

Once an Equity Plan has been formulated, it must be submitted for approval and a report on
progress has to be made on an annual basis.
The prescriptions for submission have been amended. All reports now have to be
submitted within 6 to 18 months after inception, and thereafter by October of each year or
whatever date is prescribed by law. The Director–General can ask the Labour court to impose
a fine on organisations which do not submit reports.

Assessment of Compliance
The employer’s Equity Plan and efforts towards achieving equity will be judged in terms of
prescribed criteria. The clause listing these criteria has been significantly modified by the
Amendment Act and the criteria are now limited to the following:
■■ the extent to which the workforce reflects the demographic profile of the national and
regional economically active population
■■ steps taken to eliminate barriers adversely affecting the employment of designated groups
■■ reasonable steps taken by the employer to train suitably qualified people from the
designated groups

138 Labour Relations: A southern African perspective

■■ reasonable steps taken by an employer to appoint and promote suitably qualified people
from the designated groups
■■ steps taken by the employer to implement the equity plan.

In addition the Minister will be allowed to issue regulations setting additional criteria for
particular employers. These ‘regulations’ may include reference to regional and national
demographics which were previously listed as criteria. The latter amendment sidesteps this
very controversial issue (see case reviews in Chapter 6) and leaves the discretion in the
hands of the Minister.
It is also noteworthy that criteria relating to circumstances such as financial position,
which might hamper the employer’s efforts, have been removed and the emphasis has been
placed on what he has done or is doing.

Consequences of Non-compliance
Besides the provision that any trade union, workplace forum or employee may report an
alleged contravention by an employer, the Act also provides that labour inspectors may
enter an employer’s premises and question him or her to ascertain compliance with the
Act. The Inspector my first order the employer to make an undertaking to comply within
a specific time frame. Where the inspector finds that the employer is not complying, he or
she may issue a compliance order which may, upon the request of the Director-General, be
made an Order of the Labour Court.
A number of amended clauses provide labour inspectors and the Director General with
extended powers where it is found that the employer has not prepared or submitted a proper
equity plan or complied with other provisions. Some of the amendments are aimed at
clarifying procedures, while Clause 46 allows the Director-General the right to apply direct
to the Labour Court to impose fines on transgressors. All Fines in terms of the Act have been
increased threefold, with the maximum fine now standing at R2.7 million.

Publication of Documents
Once a report has been submitted it becomes a public document. Designated employers
that are public companies must include a summary in their annual financial reports, while
reports from organs of state have to be tabled in Parliament.
Employers are obliged to display information on the Act in a place where it can be read
by employees. In addition, they must place the most recent report, copies of a compliance
order, an arbitration award or Labour Court decision relating to the Act in a prominent place
accessible to all employees. Copies of the plan have to be made available to employees for
consultation and discussion.

Chapter 3: Labour Legislation 139

Commission for Employment Equity
The Act provides for the establishment of an Equity Commission consisting of a chairperson
and eight other members appointed by the Minister. These must include two persons
nominated by organised labour in NEDLAC, two nominated by organised business in
NEDLAC, two nominated by representatives of the State in NEDLAC and two nominated by
community and development interests in NEDLAC.
The functions of the Commission are:
■■ to offer advice on codes of good practice, regulations and policy issues
■■ to make awards recognising achievements
■■ to conduct research and report to the Minister on any matter related to the Act.

Protection from Victimisation

Section 51 of the Act protects employees from victimisation resulting from the exercise of
any rights conferred by the Act.
(For more detail on Equity see Chapter 8.)

Conclusion
South Africa has established a fairly comprehensive body of labour law to meet the
prescriptions of the Constitution and the International Labour Organisation. The proposed
amendments to some of the existent statutes and the Employment Services Bill are, in the
main, reactions to the continuing high unemployment rate and South Africa’s low rating
on the competitive index. It remains to be seen whether the amendments will assist in
alleviating these conditions or whether they will, in fact, aggravate the situation.

Suggested Questions/Tasks
•• Do you believe that the South African government, in its role as regulator of
the labour relations system, adheres to the precepts of the ILO Conventions, the
relevant sections of the Constitution and its own policy and Mission Statement?
Prove your case.
•• What factors would you have to take into account to ensure that the contract you
offer an employee suits your purposes and is not illegal?
•• How would you determine that the wages and conditions of employment of a
certain category of employees are the correct ones for their situation?
•• Approach a person who is in employment. Find out as much as you can about his
job and the organisation and draw up a valid contract for that employee.
•• Try to imagine a scenario where your organisation has to outsource a particular
job. How would you structure the job and word the contract to ensure that he is an
independent contractor and not an employee.

140 Labour Relations: A southern African perspective

 •• Research the situation at the Marikana mine before the disastrous events of 2012
and present an argument to show that the situation could have been avoided, or at
least ameliorated, had the proposed amendments regarding organisational rights
and thresholds of representativeness been in place.

Sources
Basic Conditions of Employment Amendment Act 2013. Available: www.labour.gov.za/DOL/downloads/
legislation/acts/basic-conditions-of-employment/bcea_dec2013.pdf. (Accessed 20 August 2018).
Basic Conditions of Employment Amendment Bill. 1993. Pretoria: Government Printer.
Bill of Rights. Available: www.westerncape.gov.za/legislation/bill-rights-chapter-2-constitution-
republic-south-africa. (Accessed 17 August 2018).
Brassey, M, Cameron, E, Cheadle, H & Olivier, M. 1987. The New Labour Law. Juta.
Constitution of the Republic of South Africa. (Online) Available: www.ru.ac.za/media/rhodesuniversity/
content/humanresources/documents/employmentequity/Constitution%20of%20the%20
Republic%20of%20South%20Africa%201.pdf. (Accessed 20 August 2018).
Declaration of Philadelphia. www.ilo.org/dyn/normlez/en/f?p=1000:62:0:: NO:62:P62_LIST_ENTRIE_
ID:2453907:NO#declaration (Accessed 6 November 2014).
Department of Labour Annual Report 1994. Pretoria: Government Printer, 1995.
Department of Labour. www.gov.za. Code of Good Practice: Who is an Employee?
Employment Equity Amendment Act 2013. Available: www.labour.gov.za/DOL/downloads/legislation/
acts/employment-equity/eea_amend2014.pdf (Accessed 20 August 2018).
Employment Services Act 2014. Available: www.labour.gov.za/DOL/downloads/legislation/acts/public-
employment-services/employservact2014.pdf . (Accessed 20 August 2018).
‘Fighting the fight for the nation’s jobless’, Sunday Times Business Times, 9 July 2000.
Gladstone, A. 1986. The Manager’s Guide to International Labour Standards. Geneva, ILO.
Hickman, CR & Silva, MA. 1989. The Future 500. Unwin Hyman Limited.
Industrial Law Journal, vol 19, Part 2, 1998. Juta.
Industrial Law Journal, vol 20, March 1999. Juta.
Industrial Law Journal, vol 20, December 1999. Juta.
Labour Relations Act (66 of 1995), Government Gazette vol 366 no 16861. Pretoria: Government
Printer, December 1995.
Labour Relations Amendment Bill 2013. Available: www.labour.gov.za/DOL/downloads/legislation/bills/
proposed-amendment-bills/lraamendmentbill2013.pdf/view. (Accessed 20 August 2018).
Labour Relations Amendment Act 2015. Available: www.labour.gov.za/DOL/legislation/acts/labour-
relations/read-online/amended-labour-relations-act. (Accessed 20 August 2018).
Labour Relations Amendment Bill 2017. Available: www.labour.gov.za/DOL/downloads/legislation/bills/
proposed-amendment-bills/lrabill_nov2017.pdf. (Accessed 20 August 2018).
Ringrose, H G. 1983. The Law and Practice of Employment. Juta.

Chapter 3: Labour Legislation 141

Thompson, C & Benjamin, P (Eds). 1991. De Kock’s Industrial Laws of South Africa. Juta.
Thompson, C & Benjamin, P. South African Labour Law. Juta Revision Service 33, June 1995.
Uber South Africa Technological Services vs NUPSAW, SATAWU and others. July 2016. Available: www.
saflii.org/za/cases/ZALCCT/2018/1.html (Accessed 20 August 2018).
Useful website
www.lexology.com/library/detail.aspx?g=dd1a94c4-ae1b-4af8-87e5-46db058170fd. (Accessed 20
August 2018).

142 Labour Relations: A southern African perspective

 4

Employer and Employee

Representation

Chapter Outline
OVERVIEW
PART ONE: THEORETICAL BASIS
TRADE UNIONS AS COLLECTIVE ORGANISATIONS
Definitions • Origins
TRADE UNION CLASSIFICATION
Occupational Unions | Craft Unions | Promotion Unions | Unskilled and Semi-skilled Unions |
White-collar and Professional Unions • General Unions • Industrial or Sectoral Unions | Rationale |
Advantages
TRADE UNION OBJECTIVES
Major Goals • Economic Concerns • Job Security • Sociopolitical Involvement
METHODS BY WHICH UNIONS ATTEMPT TO ACHIEVE THEIR OBJECTIVES
Different Strategies • The ‘Power’ Objective
THE ORGANISATION AND MANAGEMENT OF TRADE UNIONS
Trade Union Structure • Trade Union Management | Management by the People | Officials and
Organisers | Problems with Trade Union Democracy • Other Organisational Issues | ‘Responsible’
Leadership | Trade Union Discipline
THE SHOP STEWARD
The Role of the Shop Steward • Qualities of a Good Shop Steward • Shop Steward Duties • Shop
Steward Rights • Full-time Shop Stewards
TRADE UNIONISM IN THE TWENTY-FIRST CENTURY
EMPLOYERS AND EMPLOYER ORGANISATIONS
Management as Representative of Employers • Employer Goals • Attitude towards Unions •
Collective Employer Bodies • Labour Relations Bodies | Employers’ Organisations | Reasons for
Forming/Joining Employers’ Organisations | Functions of Employers’ Organisations | Organisation and
Management of Employers’ Organisations | The Future Role of Employers’ Organisations
PART TWO: EMPLOYER AND EMPLOYEE REPRESENTATION IN SOUTH AFRICA
THE LEGAL POSITION
Voluntarism as Regards Registration • The Registration Process • Obligations • Union and Shop
Steward Rights • Exercising Organisational Rights
THE SOUTH AFRICAN TRADE UNION MOVEMENT: A HISTORICAL PERSPECTIVE
The Position by 1980 • CUSA and FOSATU • The Community-based Unions • The Black Consciousness
Unions • Unionisation on the Mines • Unity Moves and the Formation of COSATU • Trade Unionism
under Inkatha • The National African Council of Trade Unions (NACTU) • The Demise of TUCSA • The
Federation of Unions of South Africa (FEDUSA) • Sociopolitical Orientations
UNION DEVELOPMENTS POST-1990
Dominant Constellations • COSATU | Aims and Objectives |Organisational Structure | The Union
Dilemma | Positions and Stances within the Changed Political Dispensation | The Argument for
Independence | Problems within the New Dispensation | National Congress, 1994 | Continued Pressure
on the Tripartite Alliance | The Alliance Summit of April 2002 | Impetus for Change | Lobbying for New
Policy Directions | Post-Polokwane Realities | Developments Post 2010 | The Mining Industry | The Zuma
Regime • The Federation of Unions of South Africa (FEDUSA) • National Council of Trade Unions
(NACTU) | Founding Policies | Affiliations and Divisions | NACTU in the New Dispensation • The South
African Federation of Trade Unions (SAFTU)
FUTURE DEVELOPMENTS
EMPLOYERS’ ORGANISATIONS
Collective Bargaining Organisations • Non-Registered Bodies • Other Employer Bodies | Business
Chambers | Business Unity and the Black Business Council
THE STATE AS THE THIRD PARTY IN THE RELATIONSHIP
The Corporatist Approach • The Need to Reassess
CONCLUSION
SUGGESTED QUESTIONS/TASKS
SOURCES

144 Labour Relations: A southern African perspective

 Overview
In a pluralist labour relations system we deal mostly with collectives. Consequently,
the two main participants in the relationship – employees and employers – should
be described in their collective forms.
The collective with the highest profile is the union. Unions are both the reactive
and the proactive participants in the relationship. They often initiate the action to
which the employers or employers’ associations, and sometimes also the State, react.
Any attempt to understand labour processes requires an understanding of unions, of
what they are, what they try to achieve, what methods and strategies they use and
of how they are organised.
Unions initially arose because employees needed to counter the power of employers,
particularly on the economic front; but nowadays unions have far wider objectives and
use a diversity of strategies. Also, although unions may be democratically founded and
structured, the very real danger exists that they may eventually be dominated by a few
individuals. Equally, shop stewards, as representative of the union at the place of work,
may at times assert their independence from the union.
Unions do not act alone. The other party, namely the employers, may not need
to form collectives to deal with the union. However, they may, for various reasons,
prefer to do so. Employers’ associations may not hold as high a profile as unions, but
they do play an important role in labour relations, both in the sphere of collective
bargaining and as a mouthpiece for employers in an industry or sector.
The legal position of unions is based on the principle of voluntarism. There is no
legal obligation on unions to register, but unions who are not registered do not enjoy
the privileges and rights granted by the Labour Relations Act. Unions also negotiate
with employers for additional rights. One of these is the appointment of full-time
shop stewards who have a particular role to play in organisations.
In South Africa trade unionism dates back to the late 1800s/early 1900s, but for
a long-time unions representing black (as opposed to coloured, Indian and white)
employees had no legal status. The so-called ‘new’ union movement arose after the
Natal Strikes of 1973. This upsurge in union militancy eventually led to the formation
of COSATU and NACTU. Since then these federations, together with FEDUSA, have
been on the forefront of union activity. At present COSATU remains the dominant
federation but its position is bound to be challenged by the South African Federation
of Trade Unions (SAFTU) formed after Vavi, the previous COSATU general-secretary,
and the National Union of Metalworkers of South Africa, were ousted from COSATU.
Like unions, employers may register employers’ organisations. The main purpose
of these organisations is to engage in centralised collective bargaining with unions.
However, there are other organisations such as Business Unity South Africa and the
Black Business Council which represent business in a wider framework.

Chapter 4: Employer and Employee Representation 145

 Finally mention has to be made of the State as the third party in the relationship and
the influence it has on the other parties. The State has so far attempted, through
NEDLAC, to involve all parties in the formulation of labour and economic policy and
legislation, but may now be reconsidering the effectiveness of this approach.

146 Labour Relations: A southern African perspective

Part One:
Theoretical Basis

Trade Unions as Collective Organisations

Definitions
One of the first definitions of a trade union was that of Sidney and Beatrice Webb, who
described a union as ‘… a continuous association of wage earners for the purpose of
maintaining or improving their working lives’. In South Africa, the Labour Relations Act of
1995 defines a union as ‘an association of employees whose primary purpose is to regulate
relations between employees and employers including any employers’ organisation’.
The following definition of a union given by Salamon is still relevant today:
… any organisation, whose membership consists of employees, which seeks to
organise and represent their interests both in the workplace and society, and,
in particular, seeks to regulate their employment relationship through the direct
process of collective bargaining with management.

Salamon’s definition highlights two other aspects of unionism. First, trade unionism
requires organisation. A union does not merely happen. It may be established by a few
employees or interested persons, but thereafter it has to actively recruit members so as to
strengthen its power base. In order to do so a union may employ full-time organisers, who
need not necessarily come from the ranks of the employees themselves. Secondly, a union
seeks to improve the position of its members in society at large. This may be done by the
improvement of their general economic position but may mean that the union also has to
play a social and political role.

Origins
The beginnings of trade unionism in Britain are to be found in the so-called Friendly Societies
of the late eighteenth century. These were established by craftsmen, who contributed a small
amount each week and were then entitled to receive benefits in case of sickness, retirement,
unemployment or death. The Friendly Societies were very localised, and, after the passage
of the Combination Act, which prohibited employees from forming collective bodies, these
societies had to operate in secret. In essence they did not have enough power to make an
impression on employers.
In 1824, the British Government repealed the Combination Act and a new Act, passed
shortly afterwards, allowed workers to combine to protect their interests and even, within
limits, to strike. At this stage, the State took its first steps towards instituting some form
of protection for workers. It placed certain prohibitions on the use of child labour, later

Chapter 4: Employer and Employee Representation 147

extending these to the employment of women on the mines. Subsequently a number of
unions were established, mostly by skilled workers. Many of the unions formed did not
last long, firstly because of poor organisation, and, secondly, because unionism was still
generally resisted by the State and by employers. It was only after 1850 that the first real
trade unions were established, and these organised mainly among craftsmen.
This was the picture at the beginning of the twentieth century. Trade unions of various
kinds had established themselves as a permanent feature. The next 20 years, marked by
accelerated industrialisation, saw trade unions proliferate in most economically advanced
societies.

Trade Union Classification

Trade unions historically organised themselves according to the type of interest they
represented; that is, unions were established to represent employees in certain occupations,
or to represent employees who did not resort under a specific occupation or, later still,
employees who worked in a particular industry. Unions are still broadly classified into:
■■ occupational unions
■■ general unions
■■ industrial unions.

Occupational Unions
Occupational unions are so called because their membership derives from employees in a
certain occupation. They can be broadly classified into the categories below.

Craft Unions
The first occupational unions established were the craft unions. The main characteristic of
these unions is their concern for and protection of the skilled status of their membership.
Craft unions found their power in the skill of their members and in their ability to restrict
entrance to the craft which they represented. Their strength lay not in numbers, but in the
fact that their members occupied strategic positions in an undertaking and were not easily
replaceable.
The dilution of skills by the introduction of technology has had the result that very few
craft unions still exist, but some have managed to survive. An example of a craft union is
the South African Typographical Union, which also happens to be the oldest union in this
country.

Promotion Unions
A variation of the craft union is the promotion union. This type of union also recruits
among workers with a particular skill, but the skill is one that is achieved by on-the-job

148 Labour Relations: A southern African perspective

training and promotion rather than by an apprenticeship. An example of a promotion union
was the Footplate Workers’ Association on the railways. The power base of promotion
unions is the same as that of a craft union, namely, the strategic importance and skill of the
workers they represent. In recent years many promotion unions, like the craft unions, have
been absorbed into industrial or sectoral unions.

Unskilled and Semi-skilled Unions

To fill the void left by craft and promotion unions, unions were established to represent
unskilled and semi-skilled workers in certain industries. These unions restricted their
membership to so-called ‘lower level employees’, who then represented a specific
occupational interest. This happened particularly in South Africa, where skill and race were
historically coincidental and where the interests of African workers were not represented
by craft and promotion or even industrial unions. Unions representing semi-skilled and
unskilled workers do not have the strategic power of craft and promotion unions. Their
power lies in mass organisation and in preventing the use of replacement labour. As union
organisation and the fragmentation of skills increased, many of these unions amalgamated
with craft and promotion unions to form larger industrial unions.

White-collar and Professional Unions

The last type of occupational union is one which is established to represent the interests of
professional and white-collar workers. Traditionally there has always been a difference in
interests between these and so-called blue-collar workers. Non-manual workers have also
been slower to organise. This may be ascribed to the fact that white-collar workers often
perceive themselves as being closer to management. With the shift to service industries in the
economies of many developed countries, there has been a marked increase in white-collar
unionism. Most of these unions will organise only workers in a particular industry or sector
but some, especially those representing certain professions, may organise across industries/
sectors. Of all the occupational unions, these are the ones which have managed to maintain
a significant presence, as, for example, the Insurance and Banking Staff Association (IBSA).

General Unions
General unions aim to organise all employees, irrespective of sector, skill or occupation.
They originated both from the politically inspired ideal of organising the entire working
class into one body and from the need to represent non-skilled workers without reference
to industries/sectors, or to form amalgamations of unions operating in different industries/
sectors. In theory their membership is open to any employee. However, many general unions
have tended to adopt a particular industrial or sectoral pattern, as proved by a name such
as Transport & General Workers’ Union.
The ideal of one union to represent all workers has proved over the years to be a Utopian
dream. This idea has been replaced by a policy of establishing a federation of like-minded
unions. Consequently, and owing also to the establishment of industrial unions, the concept

Chapter 4: Employer and Employee Representation 149

of a general union has become less popular. This can also be attributed to the fact that
general unions often find their manpower thinly spread, have a relatively low power base
and, in certain countries, encounter difficulties in acquiring registered status. Yet, in South
Africa, the newly formed South African Federation of Trade Unions (SAFTU) appears to
have reverted to a form of general unionism seeking to embrace all workers into its fold
instead of organising per industry or occupation (see later in this chapter). This may signify
a reaction not only to South African circumstances, but also to worldwide changes in the
nature of work.

Industrial or Sectoral Unions

Rationale
The purpose of an industrial/sectoral union is to represent all the workers in a certain industry
or sector or, at least, as many workers as possible in that industry. They arose mainly out of the
need of unskilled and semi-skilled workers to also have representation, but later encompassed
all workers in a particular industry with the rallying call ‘one shop one union’.
Industrial unions arose as a direct result of the dilution and fragmentation of crafts and
skills, but they may also have a sociopolitical purpose. According to Salamon:
… the original concept of industrial unionism was … seen as a means, together
with a general strike, whereby the working classes could take control of both their
workplace and society.

Advantages
Industrial/sectoral unionism has definite advantages in that it:
■■ leads to stronger unions
■■ helps to eliminate inter-union competition
■■ reduces the number of unions with which employers have to bargain
■■ brings correspondence between union organisation and employer organisation
■■ facilitates centralised bargaining
■■ leads to improved industrial/sectoral planning.

For the union, it has the added advantages that officials can gain expertise in the workings
of a particular industry/sector and that the union’s power base, through its ability to strike
an entire industry or sector, is greatly enhanced.
In South Africa the Congress of South African Trade Unions (COSATU) adopted the
concept of one union per industry as a definite objective, for both organisational and
sociopolitical reasons.
The classification of unions is not absolute. As circumstances change, new constellations
may evolve.

150 Labour Relations: A southern African perspective

Trade Union Objectives

Major Goals
The basic goals of trade unions all over the world generally fall into the following categories
which fall broadly under the banner of ‘decent work’ for their members:
■■ higher and equitable wages
■■ job security
■■ job regulation
■■ protection from arbitrary and discriminatory action
■■ training and development of members/employees
■■ access to sustainable pension/ provident funds
■■ a safe and healthy work environment and access to health care
■■ reasonable working hours that contribute towards a work-life balance
■■ equality in the workplace with regard to gender, parental and other rights.

Economic Concerns
Maintaining and improving the economic status of their members remains one of the major
functions of trade unions. A union which does not obtain economic gains may soon lose
its members.
However, unions, and particularly large industrial or sectoral unions, which attempt
to improve the economic position of their members at all costs could, in the long term,
bring about a decline in general economic conditions which would adversely affect their
members. For this reason, unions may sometimes temper their demands or even cooperate
with government and other agencies by temporarily freezing wage demands, for the purpose
of improving the general economy. Also, a union which demands ever-increasing wages
may do so at the cost of staff reductions. In essence, a union cannot pursue its economic
objectives without reference to the total situation.

Job Security
Keeping their members in jobs is as important to unions as the achievement of economic
benefits. For this reason, a union may exchange increased economic benefits for some of its
members so that all members may keep their jobs. The concern of unions with job security is
also displayed by their involvement with dismissals and retrenchments and their attempts to
prevent these from occurring. In respect of employment, unions see themselves as having a
further function, namely the promotion of full employment throughout a particular society.
This may lead to disgruntlement with the economic and other policies of government,
particularly in a capitalist system where the free-market principle of demand and supply
still predominates and where a certain level of unemployment is accepted as inevitable.

Chapter 4: Employer and Employee Representation 151

Sociopolitical Involvement
Finally, it is important to remember that trade union members have a stake in the social
and political systems in which they function. Trade unions necessarily have to represent
the interests of their members in these spheres. Thus, to say that trade unions should not
be ‘political’ would be unrealistic. Trade unions constitute a very potent political force, and
most trade unions do engage in political action of some kind or another. The evolutionary
role of trade unions within existing sociopolitical structures was best demonstrated in those
countries where grass roots opposition to governments in power became so strong that trade
union leaders were obliged to become political campaigners. This happened in Poland and
in Zambia and Zimbabwe. However, once they entered the political arena, these leaders,
although still relying on trade union support, could no longer be classified as trade unionists.

Methods by which Unions Attempt to Achieve their

Objectives

Different Strategies
The means by which unions seek to achieve their objectives are as diverse as the objectives
themselves. The method used will often depend on the objective which is being pursued.
Methods of achieving objectives include:
■■ collective bargaining with employers
■■ collective action
■■ representation and involvement in the undertaking
■■ affiliations with other bodies by, for example, forming federations or alliances
■■ collective bargaining with government (by the threat of a general strike, union federations
can force government to listen to them)
■■ representation on local, national and international bodies
■■ representation on legislative and policy-making bodies
■■ political involvement (governments listen to unions which can bring in votes)
■■ representation on benefit funds such as pension and medical aid.

The ‘Power’ Objective

For the union achieving power is both an objective and a means by which it can achieve
other objectives. The union’s power will depend on:
■■ the solidarity of its membership (their willingness to engage in collective action)
■■ the depth and extent of its organisation (the larger and the better organised a union is,
the more power will it wield)
■■ the skill and expertise of the negotiators

152 Labour Relations: A southern African perspective

■■ the sympathy it gets from other bodies in both the labour relations and sociopolitical
spheres
■■ its ability to influence government, business or even international agencies.

The Organisation and Management of Trade Unions

Trade Union Structure

There is, in most unions, a hierarchical structure similar to that found in business undertakings.
Looking from the bottom upward, the following structure pertains:
■■ the general membership – members at the different organisations form the broad base
of the union
■■ shop stewards – elected by members in each undertaking to represent their interests
with management
■■ shop steward committees – elected in individual undertakings or by members from
different undertakings in the same area
■■ local branches – sitting at the centre of trade union organisation, their functions are to:
◗◗ coordinate union activity in the area
◗◗ recruit new members
◗◗ act as intermediary between members and the upper levels of the hierarchy
■■ regional committee (not always necessary) – consists of representatives from the
branches, coordinates activities of branches and acts as intermediary between branches
and the National Committee
■■ National Committee headed by National Executive and National Chairman/President
– establishes policy and strategy and generally directs activities; members are either
elected by National Congress or come from regional or branch committees
■■ National Congress – consists of representatives elected by grass roots membership via
branches – is supposed to be the ultimate policy and decision-making body in the union;
Congress usually meets on an annual or bi-annual basis, but special meetings may be
called if circumstances so warrant.

Trade Union Management

Management by the People
The management of a trade union rests with the various executives at branch, regional and
national level. Since the persons serving on these committees are normally elected by trade
union members it can be said that the members manage the union.
A typical union constitution will state that changes in union policy and fundamental
decisions may be made only by a general congress of trade union members, or (in the case

Chapter 4: Employer and Employee Representation 153

of larger unions) a general congress of representatives from each region. The purpose is to
ensure that the highest decision-making authority remains vested in the members themselves.

Officials and Organisers

In keeping with the above policy, unions may not grant officials, such as general secretaries,
or organisers appointed from outside, a vote in committee or executive decisions. These
officials are, in effect, employees of the union. They may advise elected office-bearers and
union members but may make no determinations.

Problems with Trade Union Democracy

The principle of member management and control is an ideal which may not always be
achieved in practice. This is so firstly because unions may be dominated by certain factions
or office-bearers who pursue their own interests and not those of the general membership.
Secondly, officials and organisers will influence – and even control – union members.
They have greater expertise and knowledge and spend all their time on union business.
Thirdly, there are many day-to-day decisions which have to be taken by individuals,
committees or executives without the opportunity of first obtaining the approval of the
general membership.
Fourthly, and most importantly, trade union members are sometimes apathetic. They do
not actively participate or take an interest in union affairs, except when a crisis arises.
Finally, individuals appointed to important positions in the union hierarchy will hold
substantial power. They are able to influence a vast number of people and, because of their
positions, may become public figures. This may result in a ‘power complex’, where the
individual perceives himself as more important than the union or its members – at the cost,
very often, of democracy and the welfare of the general membership.
Numerous theorists have stated that unions move in a continual cycle, from democracy
to oligarchy and back to democracy. A union or union federation which was originally
established on a democratic basis may eventually be dominated by a few skilled or powerful
individuals. This phase will continue until members become dissatisfied with the situation,
whereupon there will again be an initiative towards democratisation. Unfortunately, and
almost inevitably, certain individuals will again achieve dominance and so the cycle continues.
Despite the problems mentioned, trade unions do attempt to conduct their affairs along
democratic lines. The most effective safeguard against undemocratic action is to be found
in the greatest possible involvement of members at all levels of the organisation. For this
reason, unions which take democracy seriously will:
■■ attempt to involve shop stewards in negotiations
■■ report back as often as possible
■■ ensure that office-bearers on the national executive are drawn from as wide a base as
possible.

154 Labour Relations: A southern African perspective

Other Organisational Issues
‘Responsible’ Leadership
The principle of union democracy may prove a problem to employers who insist on rapid
decision-making, and that union leaders ‘control’ their members. A union which insists on
continual report-back may not be able to give an immediate decision; and a leader who
represents the interests of the members and abides by the majority decision cannot ‘control’
the members.
Thus, the management call for union leaders to act ‘responsibly’ may contradict the
democratic principle on which unions are based.

Trade Union Discipline

A union is a collective which the individual joins of his own accord. Having once joined, he
is subject to the rules and decisions of that collective. Should the individual disagree, he is
free to withdraw his membership, but he may not act in an individual capacity or distance
himself from union decisions at will. This applies particularly to office-bearers of the union.
Union management is a complex and difficult task, and the manner in which it is tackled
will vary from union to union.

The Shop Steward

The Role of the Shop Steward

Most unions insist that members at every plant elect shop stewards from among their own
ranks and that management recognises such shop stewards as the legitimate representatives
of the union members in their employ.
The shop steward plays a pivotal role in union organisation. He performs union duties
in the course of his employment and is the one office-bearer who can directly represent
workers’ interests towards both management and the union.
Figure 4.1 illustrates the pivotal role played by the shop steward in the communications
network.

Chapter 4: Employer and Employee Representation 155

 union
management
members

shop
steward

Communication from
Union members
Communication from
the Union
Communication from union
Management branch

figure 4.1: the role of the shop steward

Qualities of a Good Shop Steward

It is clear that a shop steward plays a very important role in the employment relationship,
especially in the workplace where he is functioning. For this very reason a shop steward
must have certain qualities that will enable him/her to operate effectively. He should:
■■ have the respect and trust of the union, fellow-employees and management
■■ be an effective communicator
■■ be able to make independent, objective judgements and to reach rapid decisions
■■ be committed, diligent and fair-minded
■■ be knowledgeable in union, employee and even management affairs.

Shop Steward Duties

The duties of a shop steward will include:
■■ recruiting new members
■■ assisting and representing members in grievance and disciplinary procedures
■■ consulting and negotiating with management on plant-level matters
■■ obtaining mandates from members before and during these negotiations
■■ assisting with the organisation of ballots such as strike ballots
■■ ensuring that management adheres to wage and other agreements

156 Labour Relations: A southern African perspective

■■ organising and attending union meetings at plant level and branch level
■■ participating in workplace forums or committees
■■ participating in health and safety committees
■■ advising fellow-employees
■■ keeping employees informed of union policies and plans
■■ keeping the union informed of the situation in the organisation
■■ collecting trade union dues
■■ working at branch level.

Shop Steward Rights

Shop stewards perform their union duties in their free time but will be called on to perform
certain functions during normal working hours. Their job at the workplace may have to
be interrupted to bring an urgent matter to the attention of management, to negotiate
with management or to represent fellow-members during the conduct of grievance and
disciplinary procedures. Thus, shop stewards are allowed greater flexibility than other
employees and will be permitted to leave their posts at short notice if a workplace-related
matter requires their attention. As employees, they need to ask permission to leave their place
of work, but permission should not be unreasonably withheld. Also, a law or agreement may
provide for shop stewards to be given time off for training or to attend to union business.

Full-time Shop Stewards

In some countries the law or agreements may provide for the appointment of full-time shop
stewards. The number of full-time shop stewards will usually depend on the size of the
organisation. Suitable persons are nominated by the union, which makes recommendations
to management. The shop stewards are appointed for a specific period, and they usually
continue to be paid the wages that they were receiving in their previous positions. Once
the agreed period has expired, the incumbent may be reappointed. If not, he returns to his
previous job.
The appointment of full-time shop stewards can contribute significantly to stabilising
relationships at the workplace. The only problem for management is that the shop steward’s
normal job will have to be filled on a temporary basis, but this obstacle is not insurmountable.

Trade Unionism in the 21st Century

Trade unions arose out of the necessity to protect employees from exploitation in societies
where employers held absolute power and where governments were not overly concerned
with the general welfare of the population. Their role was essentially antagonistic in that
they had to battle, often against great odds, for every concession. The second half of
the twentieth century saw a gradual breaking down of class structures, a more general
spread of ownership (also to employees), the introduction of laws protecting workers from

Chapter 4: Employer and Employee Representation 157

exploitation and even, in some countries, laws mandating a degree of joint decision-making
by employers and employees.
Consequently, trade unions were faced with the dilemma of balancing antagonism
with cooperation. In certain instances, trade unions managed to achieve some balance
by separating their bargaining function from their cooperative and co-decision-making
function.
Since the last years of the twentieth century, the issue of globalisation has gained
prominence. Globalisation gives capital, and thereby business, greater mobility. Investments
can be easily withdrawn and businesses can be moved elsewhere. Technology poses a
threat to traditional jobs (see Chapters 1 and 2), and trade unions may see their traditional
membership base reduced, divided, individualised and dispersed.
By 2010 the worldwide economic crisis of 2008 had obliged a rethink on globalisation
and global capital. It highlighted the problem of escalating unemployment, the growing
divide between rich and poor and the dangers of allowing international finance free rein.
Add to this the effects of digitalisation and outsourcing of jobs, all of which may lead
governments to consider greater interference in the economy and, indirectly, in the labour
relationship.
Concern on the part of governments may give unions greater prominence as lobbyists
and increase their leverage both in the workplace and in society at large. Conversely,
governments may regulate to such an extent that unions lose much of their relevance.
What is clear is that governments will expect greater cooperation from unions in regulating
the work situation. Union demands for decent wages could be directly linked to rising
job losses, but it is unlikely that unions will trim their demands as the poor continue to
get poorer. It is equally unlikely that businesses will continue to absorb high labour costs
and not reciprocate by way of outsourcing and greater use of technology. The problem is
far from straightforward and will require a more sophisticated approach than the existent
labour market and labour relations theory.

Employers and Employer Organisations

Management as Representative of Employers

Labour relations theory uses the term ‘employer’ or ‘employer representative’ as against
‘employee’ and ‘employee representative’. The use of the word ‘employer’ is misleading.
Nowadays, very few business undertakings are owned and managed by a single employer/
owner. Generally, they are either private or public companies owned by shareholders,
headed by a board of directors and run by a management team. The shareholders are the
actual employers, but they take no active part in the day-to-day running of the company’s
affairs. Therefore, they are rarely seen as the employers. Instead, the word ‘management’ is
now used synonymously with ‘employer’.

158 Labour Relations: A southern African perspective

Employer Goals
Employers and members of management are bound by the common goals of maximising
the profit potential of the undertaking, ensuring the future of the enterprise, expanding the
market, satisfying customers, utilising resources efficiently and looking after employees.
The primary goal remains that of maximising profit potential. It is this which usually brings
management into conflict with employees and unions.
Employers or managements will also insist on their right to manage. Yet most employers are
nowadays aware that the profit motive cannot be pursued to the detriment of employees and
that managerial prerogative is not absolute. The issue now is one of degree rather than principle.

Attitude towards Unions

There is little doubt that the majority of employers would, if they could, have no unions
in their organisation. They would prefer to run their businesses as they see fit, to gain the
commitment (if possible) of their employees and even to engage in some form of joint
decision-making with the employees themselves, provided that this is at the employer’s
initiative. However, since unions are endemic to the pluralist system, employers have had
to accept them as such and have learnt to live with them, if not in absolute harmony, then
at least as peacefully as possible.

Collective Employer Bodies

Because employers have interests other than the regulation of the employer−employee
relationship, employers may belong to various organisations, some of which play no role
in labour relations.
One form of employer organisation is the chamber of commerce or industry, which will
have as members the majority of employers from a geographic area. The purpose of a chamber
of commerce or industry is to serve as a forum, and to represent the interests and opinions of
business towards government and other sections of the community. A chamber will attempt
to cover all facets of business and will, consequently, also deal with manpower matters and
labour relations issues. The chambers serve as useful representational, liaison and advisory
bodies and may succeed in promoting healthier relations, but they do not actively intervene
in the employer−employee relationship and do not engage in collective bargaining. The only
employer bodies dealing with the relationship are those specifically designed to do so.

Labour Relations Bodies

Employers’ Organisations
In contrast to the employee, an employer may not need to combine with other employers
in order to hold power in the labour relationship. The employer’s power is derived from his
ability to hire and fire, from the fact that he determines wages and increases and from the
authority vested in him.

Chapter 4: Employer and Employee Representation 159

Employers will focus on ‘collective’ labour relations only in reaction to unionism. However,
dealing with a union or unions individually is not only time-consuming but may also place
the employer at a disadvantage, particularly if he is not skilled in negotiation. Consequently,
employers have established bodies to deal with labour relations issues and to engage in
collective bargaining with unions. These are known as employers’ organisations.

Reasons for Forming/Joining Employers’ Organisations

The most common reasons for forming or joining employer’s organisations are to:
■■ balance the collective power of the union/unions
■■ standardise conditions of service in an industry
■■ put wages out of competition (prevent unions from using agreements with one employer
as a basis for better agreements with another)
■■ have negotiations conducted by persons with expertise
■■ have their interests represented at a macro-level.

Functions of Employers’ Organisations

The most common functions of employers’ organisations are to:
■■ provide a forum for the development of a coordinated strategy in dealing with organised
labour
■■ negotiate with unions for the purpose of standardising minimum wages and conditions
of service and procedures in an industry or sector
■■ assist members by providing them with information on issues such as procedures,
legislative changes, handling of labour action and the administration of collective
agreements
■■ provide a coordinated system of employee benefits such as pension funds and medical
aid schemes
■■ coordinate training in the industry
■■ lobby government to pass legislation which serves the interests of employers
■■ liaise with trade union federations at centralised level over issues of national interest
■■ engage the media as a means of promoting support for the policies and position of
the employers’ organisation on various issues and also counteract any unfavourable
publicity.

Organisation and Management of Employers’ Organisations

The organisational structure and management of employers’ organisations resembles that of
a union, although they do not have to engage in the same efforts to recruit new members as
unions do. Their aims and methods of achieving their aims may also be more limited than
those of a union.

160 Labour Relations: A southern African perspective

Employers’ organisations are made up of the various employers in an industry, or sector,
who may come together on an area, regional or national basis. Membership of an employers’
organisation is voluntary.
A national or regional organisation may have sub-organisations at various levels. The
ultimate authority and decision-making power of an employers’ organisation is vested in
the general meeting. Here, general policy is established, general directions are given, and
mandates are granted. A problem encountered in employers’ organisations is that large
companies tend to dominate these bodies. This happens particularly where votes in the
general meeting are granted in proportion to the size of an employer’s business.

The Future Role of Employers’ Organisations

In countries where there is an increased incidence of plant-level bargaining in preference
to centralised negotiations, employers’ associations as bargaining bodies are becoming less
relevant. Yet they are likely to remain in one shape or another, if only to represent the joint
voice of employers vis-à-vis the unions and government, to advise members, and to provide
continued benefits.

Chapter 4: Employer and Employee Representation 161

Part Two:
Employee and Employer Representation in South Africa

The Legal Position

Voluntarism as Regards Registration

In keeping with the principle of voluntarism, trade unions and employers’ organisations in
South Africa have not been subject to control in that they were not, and still are not, obliged
to register in terms of the Labour Relations Act. However, all rights accorded to parties in
terms of the Act (such as the rights to access, to hold meetings on the employer’s premises
and to elect shop stewards) are accorded only to registered bodies. This most certainly
encourages all active unions, as well as employers’ associations, to register. By implication,
an unregistered union, although it may enter into an agreement with an employer, has no
statutory rights.

The Registration Process

The prescriptions for the registration of trade unions and employer organisations (which are
essentially the same) are contained in sections 95 to 106 of the Labour Relations Act of 1995.
A trade union may apply for registration on the prescribed form provided that it:
■■ selects a name which cannot be confused with the name or shortened name of another
registered union
■■ has adopted a constitution with the required provisions
■■ has a physical address in the Republic
■■ is independent. (A trade union will be regarded as independent if it is not under the direct
or indirect control of any employer or employers’ organisation and if it is free from any
type of influence or interference from an employer or employers’ organisation.)

An application for registration must be made on the prescribed form and be accompanied
by a copy of the union’s constitution and any other information which may be of use to
the Registrar. In terms of Section 96(5), the constitution of a union must contain provisions
relating to the following:
■■ a statement that the union is an association not for gain
■■ qualifications for membership
■■ conditions under which membership will be denied
■■ membership fees, and the method by which these fees will be determined
■■ termination of membership
■■ cancellation of membership

162 Labour Relations: A southern African perspective

■■ appeals against withdrawals of membership rights, procedures for such appeals and the
naming of a body to hear appeals
■■ the calling of meetings, including the quorum required and the taking of minutes
■■ the method by which decisions will be taken
■■ the position of secretary and the duties involved in that position
■■ other office-bearers, officials and shop stewards and their respective duties
■■ the procedure by which office-bearers and shop stewards will be nominated
■■ the procedure for the nomination, election and appointment of officials
■■ the removal of office-bearers, officials and shop stewards, procedures for appeals against
such removal and the designation of a body by which appeals can be heard
■■ the circumstances in which a vote by ballot should be held
■■ the holding of a vote by ballot before a strike is called
■■ a prohibition on the disciplining of a member or the cancellation of membership when
the member refuses to take part in a strike which has not been subjected to a ballot, or
where a majority of persons involved did not vote in favour of a strike
■■ the deposit and investment of funds
■■ the application of funds
■■ the date on which the financial year will end
■■ procedures for amendments to the constitution
■■ procedures whereby the union can, by resolution, be liquidated.

All the above provisions, except those relating to shop stewards, apply also to the
constitutions of employers’ organisations.
Once he is convinced that the applicant conforms to the requirements, the Industrial
Registrar will register the union (or employer organisation as the case may be).
Registration gives the union/employer organisation the status of a juristic person and
protects members from obligations and liabilities incurred by the union. This means that a
member, office-bearer, official or shop steward cannot be held personally responsible for
losses suffered by anybody as a result of the actions undertaken by a member, office-bearer,
official or shop steward on behalf of the union.
Registered unions can apply for entry to a bargaining council and are more easily granted
recognition by employers.

Obligations
Every registered trade union or employers’ organisation is obliged to:
■■ keep a register of members, listing names and membership fees paid
■■ keep proper books of account and records in respect of its income and expenditure,
assets and liabilities

Chapter 4: Employer and Employee Representation 163

■■ within six months of the financial year end, prepare annual statements of income and
expenditure and an end-of-year balance sheet
■■ submit its books of account, records and financial statements to an annual audit
■■ obtain a written report from the auditor, in which the auditor indicates whether the
union has adhered to its constitution as regards financial matters
■■ table the financial statements and the auditor’s report for inspection by members, and
present these documents to a meeting of members or their representatives
■■ keep all books of account, substantiating documents, records of membership fees or
levies paid by members, income and expenditure statements, balance sheets and auditor’s
reports, in original or reproduced form, for a period of at least three years
■■ keep a register of members
■■ keep minutes of meetings for a period of three years
■■ retain ballot forms for at least three years from the date on which the ballot was
conducted by 31 March each year, supply the Registrar with a certified membership list
■■ supply the Registrar, within 30 days of its receipt, with a certified copy of the auditor’s
report and the financial statements
■■ within 30 days of the election of national office-bearers, supply the Registrar with the
names and work addresses of these office-bearers
■■ inform the Registrar within 30 days of any change of address.

Union and Shop Steward Rights

The sections of the Labour Relations Act which deal with organisational rights provide not
only for the election of shop stewards (union representatives) by a majority union or unions
(see chapter 5), but also spell out the rights of shop stewards and union office-bearers at
the place of work.
In terms of subsections 14(4) and (5), shop stewards of majority unions are entitled, to:
■■ assist employees during disciplinary and grievance procedures
■■ monitor the employer’s adherence to the Act
■■ check on implementation of binding collective agreements
■■ report any transgression of the Act or an agreement to the employer, the union and/or
a responsible authority
■■ perform any other function agreed upon between the union and the employer
■■ take reasonable time off to fulfil their functions or to receive training.

Sections 11 to 22 of the Labour Relations Act provide majority unions with wide-ranging
rights, including access to the workplace, the right to hold meetings on the premises, the
right to stop-order facilities and the right to time off for office-bearers. Some, but not all
of these rights also apply to unions which have sufficient representation. (For a detailed
discussion on organisational rights see chapter 5.)

164 Labour Relations: A southern African perspective

Exercising Organisational Rights
If a registered trade union wants to exercise any of the organisational rights granted by the
Act, the union should:
■■ notify the employer in writing that it wants to exercise one or more of the organisational
rights at the workplace
■■ specify which rights it wishes to exercise
■■ identify the workplace in which it wants to exercise these rights
■■ provide proof of its representativeness.

The employer and the union should meet within 30 days to try and conclude a collective
agreement which will stipulate the manner in which the union will exercise its organisational
rights.
Normally the employer will firstly ask the trade union for proof of registration and
the union will have to submit a certified copy of its registration certificate. The next step
will be a membership verification exercise to determine how many employees the trade
union actually represents in the workplace. Should it be established that the union is either
sufficiently representative or a majority trade union, the parties will then draw up the
agreement and spell out the specifics with regard to organisational rights and the manner
in which the union will be able to exercise these rights.
Any dispute regarding organisational rights should be referred to the CCMA, which will
try to settle the dispute first through conciliation and, should conciliation fail, through
arbitration.

The South African Trade Union Movement: A Historical

Perspective

The Position by 1980

The development of the various streams of the South African trade union movement since
the beginning of the twentieth century is outlined in chapter 2. As described in that chapter,
the all-white and multiracial movement, as embodied by the South African Confederation of
Labour Associations (SACLA) and the Trade Union Council of South Africa (TUCSA) had been
established in the 1950s. The non-racial movement, representing mainly black employees,
which had been established in the same period under the banner of the South African Congress
of Trade Unions (SACTU), had by 1960 disintegrated (or gone underground), and it was only
at the beginning of the 1970s that the black and non-racial trade union movement re-emerged
under the auspices of the various worker aid societies established in Natal, the then Transvaal
and the Western Cape. By 1980 these unions had already made their mark on the South African
labour relations scene. They had introduced a new dimension into South African labour
relations by concentrating on strong shop-floor representation and recognition at plant level.

Chapter 4: Employer and Employee Representation 165

CUSA and FOSATU
In April 1979, the majority of the newer unions had joined forces to establish the Federation
of South African Trade Unions (FOSATU), the first non-racial trade union federation
representing mainly black workers since the demise of SACTU. Soon afterwards, in 1980,
some of the remaining unions established the Council of Unions of South Africa (CUSA).
At the beginning of the eighties there were in addition to these two bodies also individual
unions which played an important part in bringing about change. Among these the most
prominent were the non-racial Cape Town Municipal Workers’ Association, the Western
Province General Workers’ Union (which shortly afterwards became the General Workers’
Union) and the Food & Canning Workers’ Union/African Food & Canning Workers’ Union.
Furthermore, the Black Allied Workers’ Union, founded by black consciousness activist
Drake Koka, had split into the Black Allied Workers’ Union, still maintaining the black
consciousness ideology, and the South African Allied Workers’ Union, espousing non-
racialism and finding its base mainly in the highly politicised East London area.
With the emergence of the ‘new’ unions, South Africa had once again a union movement
reflective of the entire spectrum of South African society and of the various political
orientations within that society.

The Community–based Unions

Among the unions established in the eighties were those which found their power not only
in shop-floor organisations, but also in gaining the support of the community. The South
African Allied Workers’ Union was the forerunner of this movement. Very soon efforts to
organise the same workers led to rivalry between the community-based unions and the
older emergent unions, which were concentrating on shop-floor issues.
The community-based unions did not emphasise worker leadership to the same extent
as the ‘older’ unions such as the GWU and the FOSATU affiliates. They were to some extent
dominated by certain full-time officials.
It was these differences in organisational methods and attitude which, in the early years
of the new decade, hampered efforts towards unity among the newer unions. The position
became even more difficult after the establishment of the United Democratic Front in
August 1983. This body immediately concentrated on gaining worker support. In the union
movement, divisions arose over the question of affiliation to bodies such as the UDF. While
SAAWU, MACWUSA and even CUSA immediately affiliated to the UDF, FOSATU and the
GWU remained resolutely independent of any sectoral political affiliation, even if they
vigorously supported the objectives of a national resistance movement.

The Black Consciousness Unions

The Black Consciousness wing of the trade union movement had already been established
in the 1970s by the Black Allied Workers’ Union, but this body remained weak. This led
the Azanian People’s Organisation (AZAPO), established in 1977, to seek the support of

166 Labour Relations: A southern African perspective

the Consultative Committee of Black Trade Unions (CCOBATU). In May 1984, these bodies
launched the Azanian Confederation of Trade Unions (AZACTU). AZACTU disclaimed formal
links with AZAPO, but it was clearly the trade union branch of this movement.

Unionisation on the Mines

The unionisation of black workers was not as immediate and rapid in the mining industry as
in the manufacturing sector. By 1982, mine employers, overtaken by events in other sectors,
had started granting limited access to unions representing black and coloured mineworkers. In
late 1982, the Council of Unions of South Africa, which had been approached by individuals
organising black mineworkers, decided to launch a union in the mining industry. The result
was the formation of the National Union of Mineworkers (NUM), with Cyril Ramaphosa
as general secretary. Under his leadership the NUM grew rapidly to become, by 1985, the
largest union representing black workers.

Unity Moves and the Formation of COSATU

In August 1981 and April 1982, representatives of the then emergent unions came together in
Cape Town to discuss trade union unity. Not much was achieved because of differences on the
question of registration. While many of the FOSATU unions were willing to register, unions such
as the GWU, regarded registration as a route to co-option by employers and the government,
In July 1982, another round of unity talks were held. The talks ended in deadlock.
Nevertheless, in April 1983 a steering committee was formed to establish the principles
for a new federation, but new differences arose on the issue of industrial versus general
unionism. The community-based unions and CUSA, which favoured general unionism, did
not provide the information necessary for demarcation plans, in line with the other unions’
idea of establishing strong national industrial unions.
In the meantime, certain CUSA unionists had become concerned at the fact that those
involved in the unity initiative had not emphasised black leadership. Also, the unions affiliated
to the UDF formed an interest group separate to the core unity unions, such as the FOSATU
unions and the GWU. The AZACTU unions had, for the first time, been invited to join in the
unity movement, but differences regarding the question of non-racialism came to the fore,
and AZACTU did not attend subsequent meetings. Shortly afterwards CUSA also withdrew
from the unity initiative, stating that it had reservations about ‘… participating in talks which
do not enforce the principle of black leadership’. CUSA’s withdrawal resulted in the NUM’s
disaffiliation from this body, as it wished to be part of the new federation. The remaining
bodies found common ground in the principle of non-racialism. Furthermore, agreement was
finally reached on the principle of industrial unions, with various unions declaring themselves
willing to amalgamate in order to establish single-industry unions. Other principles accepted
were worker control, representation on the basis of paid-up membership and cooperation on
a national level. The new federation, the Congress of South African Trade Unions (COSATU),
was eventually launched on 30 November 1985. It consisted originally of 449 279 paid-up
members in 33 unions, including nine ex-UDF affiliates.

Chapter 4: Employer and Employee Representation 167

Trade Unionism under Inkatha
The Inkatha movement, established in what was then Natal, had always been eager to garner
trade union support. With the formation of Inkatha, Chief Buthelezi had invited newly formed
unions to join the movement, but the trade unions had by then gained in strength and they
evidently saw no reason to forge closer ties with this movement, although many of their
members also belonged to Inkatha. In June 1984, Chief Minister Buthelezi stated that ‘because
Inkatha has a membership dominated with peasants and workers, we have for a long time
felt the urgent need to make its power available to workers’. By then, discernible rifts had
emerged between Inkatha and the unions operating in Natal, one of the reasons being Chief
Buthelezi’s opposition to FOSATU’s disinvestment stand. In spite of this lack of support
Buthelezi persevered and May Day 1986 saw the inauguration of the United Workers Union of
South Africa (UWUSA) This body had its origins with a group of dissatisfied FOSATU members
in the Richards Bay−Empangeni area. It was established with a view to increasing Inkatha’s
involvement in the worker movement and in opposition to the COSATU unions.
At its inauguration, UWUSA claimed to have a membership of 85 000, but it had not
at that stage organised at any specific plants. The federation gained limited recognition in
Natal, but UWUSA never made a real impact on South African labour relations.

The National African Council of Trade Unions (NACTU)

After the withdrawal of the Azanian Confederation of Trade Unions and the Council of Unions
of South Africa from the unity initiative, it was evident that a new black consciousness alliance
was in the making. In October 1986, CUSA and AZACTU merged to form CUSA/AZACTU, later to
be known as the National Council of Trade Unions (NACTU). The alliance was in many senses an
unlikely one, as CUSA was not as extreme in its black exclusivity stand as the AZACTU unions.

The Demise of TUCSA

The gradual demise of The Trade Union Council of South Africa has already been described
in chapter 2. Despite efforts by individual TUCSA unions to accommodate the black African
workforce, the organisation eventually proved itself unable to adapt completely to changing
circumstances. As time passed, numerous unions which had opened up their ranks to black
employees found their membership of TUCSA to be a hindrance rather than an asset.
The unions which remained formed two groupings: those representing white-collar and
supervisory workers, and those representing mainly skilled workers in the textile, leather
and garment industries. In 1986, some textile and leather unions left TUCSA, and at the end
of that year the Council was dissolved.

The Federation of Unions of South Africa (FEDUSA)

In 1985 the Federation of South African Labour (FEDSAL) was revived. It represented mainly
non-manual white workers but had a substantial black membership. FEDSAL formed the
basis for the establishment, in April 1997, of the Federation of Unions of South Africa

168 Labour Relations: A southern African perspective

(FEDUSA). Formed from an amalgamation of FEDSAL and the Federation of Organisations
Representing Government Employees (FORGE), FEDUSA also absorbed the unions belonging
to the Federation of Independent Unions (FITU), a loose federation of ex-TUCSA unions.

Sociopolitical Orientations
It is impossible to speak of the South African trade union movement without reference to
parallels in the sociopolitical sphere. In South Africa, with its history of incisive political
and social divisions, it would be totally unrealistic to expect unions to operate regardless of
political considerations. Until the 1990s, the union movement had been the only legitimate
voice of the disenfranchised section of the population. It was to be expected that this section
would use its industrial muscle also to raise political demands and grievances, and that
emerging political organisations would woo the worker movement because of the powerful
base from which it operated. Thus, by 1990, the South African trade union movement, despite
all protestations to the contrary, still reflected the divisions within the sociopolitical spectrum.

Union Developments Post 1990

Dominant Constellations
According to statistics supplied by the Department of Labour there were, by mid-2016, 138
registered unions and 22 federations in South Africa. However most of the larger unions
were affiliated to one of the dominant federations, namely:
■■ the Congress of South African Trade Unions (COSATU)
■■ the Federation of Unions of South Africa (FEDUSA)
■■ the National Council of Trade Unions (NACTU).

Together these three federations represented more than three million employees with
COSATU membership standing at approximately two thirds of the total. These are also the
three union bodies which still represent organised labour at NEDLAC.
Another body which should be mentioned is the Confederation of South African Workers’
Union (CONSAWU), established in 2003. The Confederation, which recruits workers from
all race groups, has set as its main goals the eradication of poverty, exploitation and
discrimination and urges all workers to join trade unions. However, some see it as the
successor of the all-white South African Confederation of Labour Associations (see Chapter
2), especially since Solidarity, which, originally represented mainly white worker interests,
became one of its affiliates. It is inevitable that certain union bodies may still be tainted by
their previous affiliations but a great deal of levelling has taken place in the last 20 plus
years and workers of all colours are in the same position. As it is, by 2016 CONSAWU’s
membership reached a not inconsiderable figure of 290 000. Most recently it has challenged
NEDLAC on its refusal to allow CONSAWU representation on that body.
Probably the most significant recent development in this context has been the formation
of the South African Federation of Trade Unions (SAFTU), (see later in this chapter).

Chapter 4: Employer and Employee Representation 169

COSATU
Aims and Objectives
Cyril Ramaphosa of the NUM opened COSATU’s inaugural congress by stating that ‘workers’
political strength depends upon building strong militant organisations at the workplace’ and
that ‘it is also important to draw people into a programme for the restructuring of society in
order to make sure that the wealth of our society is democratically controlled and shared by
its people’. In discussing COSATU’s role in the South African situation, Ramaphosa stated that:
… we have also recognised that industrial issues are political ... [but] When we do
plunge into political activity, we must make sure that the unions under COSATU
have a strong shop floor base not only to take on employers, but the State as well.

Thus, from the outset, COSATU set itself a dual economic and political role.
The aims and objectives of COSATU, as spelled out at the inaugural congress, were as follows:
■■ to secure social and economic justice for all workers
■■ to strive for the building of a united working-class movement regardless of ‘race’, colour,
sex or creed
■■ to encourage all workers to join trade unions and to develop a spirit of solidarity among
all workers
■■ to understand how the economy of the country affects workers and to formulate clear
policies as to how the economy would be restructured in the interests of the working
class
■■ to work for a restructuring of the economy which will allow the creation of wealth to be
democratically controlled and fairly shared
■■ to strive for just standards of living, social security and fair conditions of work for all
■■ to facilitate and coordinate education and training of all workers, so as to further the
interests of the working class.

Organisational Structure
COSATU emphasised the principle of trade union democracy, resting on maximum
participation by union members, equality of membership and decision-making from the
bottom upwards. It is COSATU’s stated policy that workers should be represented on all
committees. Full-time paid officials should have no vote, and negotiations are supposed to
be conducted by shop stewards with the assistance of union officials – although very often
this does not happen in practice.
COSATU itself was structured on the same principles as the individual unions (see figure
4.2). Each committee should have a worker majority, and organisation would be based on
local and regional committees. The unions within COSATU were to be autonomous, and
only on major issues, such as a collective bargaining campaign, would they be ruled by
general COSATU policy.

170 Labour Relations: A southern African perspective

 National
Congress

Central
Executive Manages affairs between
Executive
Committee meetings of National Congress
Committee

figure 4.2: cosatu structure

Administers regions between
Regional Regional meetings of Regional Congress
Executive Executive – 2 from each union with less
Committee Committee than 8000 members, and 4
from each union with more.
Congress carries out decisions
Regional Regional of the National Congress and
Congress Congress Central Executive Committee.
Unions elect delegates: 5 for
first 1000 members, and 1 for
every 250 thereafter.
Area Local Area Local Area Local Area Local All members of shop steward
committees meet in Area Local
to co-ordinate strategies.

Shop Shop Shop Shop Shop Shop Shop Shop

Stewards Stewards Stewards Stewards Stewards Stewards Stewards Stewards

Chapter 4: Employer and Employee Representation

Textiles Mines Metal Food Paper Construction Chemical Transport Commercial & Catering Domestic Public Sector Services

171
Affiliated unions and members

(source: cosatu news, march 1987)

The Union Dilemma
Many of the trade unions established during the 1970s had deliberately avoided overt involvement
with political bodies – first, because it might elicit reaction from some members; secondly, because
it would detract from their shop-floor organisation; and, thirdly, for fear that, like the SACTU
unions, over-involvement would eventually lead to their disintegration as a union movement.
These unions saw their battle as centring on the economic upliftment of workers, which,
they believed, could later lead to sociopolitical upliftment. They also placed emphasis
on democratic structures. According to Friedman, the union leaders were of the opinion
that they would not win economic equality if ‘… the white élite was simply replaced by a
black one and the political movements were usually led by members of a small black élite’.
However, with the formation of COSATU, it was accepted that this body would have to play
both an economic and a political role. As Maree stated, COSATU was not a political party,
but it realised that it had a political responsibility.
As was later proved, COSATU did play a major role in bringing about a new political
dispensation. The issue which followed and which is still relevant was whether COSATU, as
a supporter of the majority party in government, should put the interests of the government
and society at large above the interests of its members or whether, regardless of the effects,
it should promote only the wellbeing of its members – who, after all, constitute a relatively
small portion of South African society.

Positions and Stances within the Changed Political Dispensation

With the unbanning of various political parties in February 1990, it was surmised that the
new legitimacy granted to the SACP and the ANC would take the pressure off COSATU in the
political sphere. However, COSATU was by that time a very potent political force, unlikely to
surrender its position on the political stage. Secondly, COSATU had throughout committed
itself to improving the position of its members, not only at the workplace but also in
society at large. Consequently, and despite its previous commitment to non-affiliation,
COSATU formed a broad alliance with the ANC and the SACP with a view to influencing
the negotiation process around a new political dispensation. Cyril Ramaphosa, one of the
most prominent COSATU officials, was appointed as chief negotiator for the ANC and soon
assumed a leadership position in the party.
Its role in the Tripartite Alliance initially strengthened COSATU’s position. However, much
debate at that time centred on the political implications. Some union leaders objected to what
they perceived as COSATU’s ‘junior status’ in the alliance and the ANC’s failure to consult
COSATU before making certain policy decisions. Others feared that a close alliance with the
ANC and SACP would endanger COSATU’s independence and, in a future dispensation, make
it beholden to a political party; the question was whether COSATU should:
■■ entrench its position as the labour wing of the ANC or SACP, requiring any future
government to obtain a mandate from the trade union movement before instituting
legislation affecting workers

172 Labour Relations: A southern African perspective

■■ form its own political party
■■ remain independent and concentrate on restructuring industries and the economy by
extended centralised and national bargaining.

The Argument for Independence

Some trade union leaders believed that any form of political allegiance endangered the
independence of the trade union movement. In an article on the subject John Copelyn, the
then general secretary of SACTWU, had the following to say:
Will we say that, now the workers’ interests are protected by the people’s
government, unions should not make the tasks of that government more diffıcult
by pressurising and threatening mass action? Will we support the government
in saying that workers must recognise the broader goal and not pursue sectional
interests? Will we explain to the members that, no matter what happens, they
must not rock the boat because the government is doing its best? … Or will we
remain an independent force?

Problems within the New Dispensation

Having made a pact with the ANC, the federation put all its energies into ensuring an ANC
victory in the 1994 elections. More than twenty leading figures in COSATU were released to
stand for Parliament, while numerous others later left of their own accord in order to take
up new positions which were being offered by the government and in business. This ‘brain
drain’ continued as reforms took place in the civil service and society at large.
Of the remaining union leaders, some were dissatisfied with the fact that top union officials
had been released without ensuring their accountability to the union movement. It was subject
to speculation whether these ex-unionists would continue to promote a labour agenda.
In the immediate post-election period, unions were faced with heightened expectations
and militancy at grass roots level and, on the other hand, with a government which expected
them to curb this militancy in the interests of the country as a whole.
Another freely admitted problem was the growing rift between leaders and members.
The most effective local officials had moved up in the ranks, and leaders and organisers
had neglected to service their members. This led one member to accuse the union office of
operating ‘by remote control’, while another admonished that ‘leaders and officials make
decisions in their heads, but workers’ families feel them in their stomachs’. It was argued
in the federation that the COSATU unions were ‘losing sight of the practices of democracy,
accountability and worker control which have been our key pillars’. Even shop stewards
were accused of being less democratic and of following the example of some political
leaders who ‘do not show much concern for democracy’.
The problems and tensions faced by COSATU led to continued questioning of the
federation’s relationship with the ANC and its position within the tripartite alliance, so
much so that, in 1994, the National Union of Metalworkers of South Africa, one of the

Chapter 4: Employer and Employee Representation 173

oldest affiliates, proposed that COSATU should withdraw from the alliance. The proposal
was not accepted by the majority.

National Congress, 1994

At its national congress in 1994, COSATU delegates again dwelt on the accusation that
they constituted a labour élite. Congress devoted considerable time to the question of
independence as well as to the Reconstruction and Development Programme (RDP). Unions
said they would be prepared to sacrifice, as long as the RDP also promoted worker interests.
It was eventually decided that COSATU would remain in the tripartite alliance and even try
to strengthen it, but that there should be ‘total independence of parties and government in
matters of policy and action’. There was general agreement that it was not in the interest
of workers to withdraw from the alliance at that stage, although the federation’s affiliation
should be reviewed from time to time.

Continued Pressure on the Tripartite Alliance

After the first democratic elections the new government’s continued attempts to create an
investor-friendly economic climate led to a discernible policy rift between it and the union
movement, which was still intent on giving priority to the Reconstruction and Development
Programme.
Reporting on the COSATU Policy Conference in May 1997, the South African Labour
Bulletin commented that ‘Organised labour and its allies know that they are treading a fine
line between loyal opposition to the ANC-in-government and action that could threaten the
very existence of the Tripartite Alliance’.
In his report to the 50th National ANC Conference in 1997, President Mandela addressed
the role of trade unionism within the alliance. He acknowledged the part played by trade
unions in the liberation struggle but stressed the eventual role of the ANC as the leader of
this movement. According to Mandela, some trade union leaders had ‘never been able to
find a home within political organisations of national democratic movements. Effectively,
they have therefore treated the trade union movement as an alternative political formation
through which they would pursue both their trade union and political aspirations.’ Trade
unions were representatives of the material interest of workers who, he indicated, were in a
relatively privileged position, while the SACP represented the working class in general. By
contrast, the government represented ‘the people as a whole’. President Mandela concluded
that a need existed to ‘deal with the complex question of the interconnection between the
role of the progressive unions as representative of the interests of their members and the
role of these unions as an important part of the progressive movement for the fundamental
and sound transformation of our society’.
The major points of contention between the government and the union movement at
the time were the former’s adoption of GEAR, its perceived neglect of the RDP and the
privatisation of public enterprises (see Chapter 2).

174 Labour Relations: A southern African perspective

The Alliance Summit of April 2002
COSATU’s anti-government position on economic policy, AIDS and privatisation resulted
in widespread speculation on the possible disintegration of the Tripartite Alliance. A
measure of reconciliation between the parties was evident during the alliance summit held
in April 2002. The summit affirmed that the working class was the ‘major motivating force’
and emphasised the need to adopt a more inward-looking economic policy. Despite the
pronouncements at the summit, it became increasingly clear that COSATU was not happy
with President Mbeki’s government and that, if no change occurred, the Tripartite Alliance
might fail.

Impetus for Change

As already mentioned, the first years of the twenty-first century saw a marked deterioration
of the relationship between COSATU and the government, as led by President Thabo Mbeki.
The main points of contention between the parties were the perceived neo-liberal leanings
of the government, Mbeki’s stance on HIV/AIDS and the treatment meted out to Jacob
Zuma. As a consequence, COSATU started moving closer to the SACP and openly supported
Zuma, who was facing prosecution for alleged corruption.
In July 2007, Mbeki, addressing the ANC Policy Conference, warned the SACP, and
indirectly COSATU, not to attempt to tell government what it should and should not do.
Noting that the ANC was not a socialist party and had never sought to prescribe to the
SACP as regards the latter’s policies, Mbeki in so many words told the SACP to toe the line
or to carve out its own path. The possibility of the SACP fielding its own candidates for
the 2009 elections had been discussed, both within the SACP and COSATU. In 2005, then
COSATU president, Willie Madisha, highlighted the reason for continued partnership with
the alliance. He pointed out that the affiliation allowed COSATU to exercise influence on
legislation and it prevented them from operating in isolation as a trade union.
In the end, both COSATU and the SACP decided to continue what some termed their
‘parasitic’ relationship with the ANC and to work for change from the inside.
An opportunity for change was presented by the ANC’s 52nd National Conference, held
at Polokwane in December 2007. Before the conference, both COSATU and the SACP lobbied
vigorously to oust Thabo Mbeki and to elect Jacob Zuma as president of the ANC. Not
all in the federation were in agreement with the support lent to Jacob Zuma. Divisions
arose between pro-Mbeki and pro-Zuma factions. The National Union of Metalworkers had
already criticised COSATU’s attacks on President Mbeki in 2006. The union suggested that
the federation should instead concentrate on dismantling white monopoly capital.

Lobbying for New Policy Directions

In the run-up to the Polokwane conference, COSATU General Secretary Zwelinzima Vavi
spoke critically of the ANC’s draft policy documents. According to Vavi, the documents
implied ‘that there was nothing wrong with market-driven capitalism so long as capitalists

Chapter 4: Employer and Employee Representation 175

are encouraged to behave ethically and not seek “selfish advantages” ’. Vavi was concerned
that the documents:
■■ minimised the class struggle
■■ did not place sufficient emphasis on the contribution made by workers to economic
wellbeing
■■ gave the ANC itself no ‘proactive role’ in strategy and policy development
■■ elevated the government’s role in the labour relationship to that of referee between
capital and labour.

These criticisms indicated that COSATU would prefer a more interventionist form of government.
After the victory of the Zuma faction at Polokwane, COSATU set about formulating its
economic vision for the future. The federation proposed, amongst others, that, ‘decent work,
greater equity and the eradication of poverty’ be set as primary objectives, that the economy
be diversified and that it moves away from reliance on resource exports.
In what was described by Draper, Disenyana and Freytag as ‘a backward leap to command
economics’. COSATU went on to suggest that:
■■ trade protection measures be put in place
■■ the State support certain sectors of the economy
■■ the rand be devalued in order to achieve trade balance
■■ more state-owned firms be established
■■ the Reserve Bank lower interest rates and move away from inflation targeting
■■ a radically expanded public works programme be undertaken.

Post-Polokwane Realities
It soon became clear that the unions expected government to deliver on its pre-election
promises; furthermore, that unions in the federation would continue to engage in hard
bargaining and labour action, also against the State, as evidenced by the doctors’ strike
and the sometimes-violent strike by municipal workers shortly after the elections. In fact,
COSATU warned the government and employers that they were sitting on a powder keg and
that conflict would increase if workers’ demands were not met.
COSATU’s aggressive stance surprised both observers and the government. The latter
indicated that it expected its alliance partner to engage in talks rather than take to the
streets, while analysts wondered how COSATU could claim to be close to government and
yet take such drastic action. COSATU’s response was that its position in the alliance did
not mean that it should not take action and be critical of government actions, and that its
primary duty was to its members and the poor.

176 Labour Relations: A southern African perspective

Developments Post 2010
The formation and history of COSATU have been dealt with in some detail because, as the
major federation and one that is on close terms with government, its policies and actions do
have important implications in both the political and economic spheres.
With the passage of time COSATU’s attitude towards the government softened although
some officials still openly criticised government actions and policies. The most outspoken
of these critics was the General Secretary, Zwelenzima Vavi. It was also reported that Vavi
did not see eye to eye with Dlamini, the president of the federation and evidently a staunch
supporter of President Zuma. In September 2013, Vavi was placed on special leave and later
suspended following an alleged incident involving a female employee of the federation. The
move was viewed by many in the federation as a vendetta against persons not absolutely
‘loyal’ to the Presidency. NUMSA, supported by eight other COSATU unions, subsequently
lodged an appeal against Vavi’s suspension. In the interim the general secretary of NUMSA,
by then the largest union in COSATU, publicly stated that there were two camps in COSATU,
namely, a capitalist camp and a socialist camp, and that the divisions were stopping
economic development. The union threatened to withdraw from COSATU. Shortly before
the 2014 elections, the courts ordered that Vavi be reinstated. There were fears that this
would lead to further disruptions, but an intervention by Cyril Ramaphosa, then occupying
the position of Deputy President of the Republic, managed to achieve an uneasy accord.
However, NUMSA still signalled that it might consider forming its own political party.
As it is, both Vavi and NUMSA were later expelled from COSATU (see below).

The Mining Industry

To add to COSATU’s problems the position of what had previously been its biggest union,
the National Union of Mineworkers, was increasingly threatened by the Association of
Mining and Construction Unions (AMCU). AMCU’s gaining of majority representation
at Lonmin, where the Marikana strikes erupted (see also Chapters 2 and 13), resulted in
the company cancelling its recognition agreement with the NUM. The perception of some
observers was that NUM held a favoured position with government which attempted to
negotiate an accord in the industry.
Despite attempts to neutralise it, AMCU extended its efforts to capture the mining
industry and has since become an important player in that arena. AMCU has not confined
itself to negotiating with the mine owners. Of late it has increasingly brought the plight of
all the people in that area to the forefront. While originally remaining independent, it has
now joined NACTU in which it is bound to play an important role.

The Zuma Regime

While initially supportive of the new government, certain unions, and later COSATU itself,
became increasingly critical of the government. In the run-up to the ANC’s 2017 Electoral
Conference, COSATU, together with the South African Communist Party, periodically

Chapter 4: Employer and Employee Representation 177

threatened to challenge the ANC in the 2019 General Elections. In the meantime the
federation declared its support for and openly canvassed for Cyril Ramaphosa as the new
president of the ANC. With the establishment of a new regime the Federation’s relationship
with government may therefore change.
It also remains to be seen whether COSATU will remain the dominant union force. As it
is, the federation’s membership has not grown. Since 2015 membership has in fact declined
by 324 835 from a previous high of 1 868 193. Although this is still substantially higher than
that of the other federations, the latter, and especially the newly formed SAFTU (see below)
seem to be growing, or at least not getting smaller. Moreover, except for the National Union
of Mineworkers, most of the bigger unions in COSATU are public service unions. The question
is whether this type of union organisation will become more or less relevant in the future.

The Federation of Unions of South Africa (FEDUSA)

With a membership of 556 000 the Federation of Unions of South Africa has until recently
been the second-largest trade union federation. As such, it was, together with COSATU,
accorded a place on NEDLAC as spokespersons for the union movement. (NACTU later
applied to join and was allowed on only because COSATU and NACTU allowed it.) Now
FEDUSA’s ranking as the second largest federation may soon be challenged by SAFTU (see
SAFTU below).
FEDUSA’s principles are broadly the same as those of other federations and it steadfastly
declares its intention to remain politically independent at all times. FEDUSA describes itself
as a multiracial organisation representing the ‘moderate voice in the labour movement’ and
one which is always in search of alternative solutions. A large number of its affiliates have
been active in the labour sphere for many years and most believe in negotiation rather than
mass action. The federation does not support the principle of one union per industry, as it
believes that too much power might then be concentrated in too few hands.
FEDUSA does support a democratic system that protects individual freedom and is
particularly vociferous on the issue of taxation and wastage by the authorities. It strongly
supports job creation and investment to counter the ‘unbelievable rate of unemployment’.
Most recently, the federation’s emphasis has been on issues such as social justice, decent
work, education and training and the practice of labour brokering

National Council of Trade Unions (NACTU)

Founding Policies
Upon its inauguration the policy of the National Council of Trade Unions was declared to
be ‘… be focused exclusively on the broad democratic aspirations of the most oppressed and
exploited’. The federation emphasised its belief in ‘worker unity based on the material conditions
workers are exposed to’ and in ‘… worker control based on anti-racism and non-racialism to
build a non-exploitative democratic society based on the leadership of the working class’.

178 Labour Relations: A southern African perspective

Although the alliance declared its belief in non-racialism, the federation remained black
consciousness and Africanist in orientation by its emphasis on black exclusivity at the one
extreme and black worker leadership at the other. Like many other federations, NACTU
adopted the principles of worker control, non-affiliation to political organisations, financial
accountability within unions and the autonomy of unions within the framework of the
federation. As guidelines for its future policy, NACTU also declared its support of ‘anti-
capitalism, anti-imperialism, anti-racism and anti-sexism’.

Affiliations and Divisions

Despite strong political leanings within NACTU, the federation in 1990 again took a
resolution of non-alignment to any political party, stating that, subject to its policies, it
would cooperate with all political organisations. At the same time, NACTU reaffirmed its
commitment to the liberation struggle. It was believed that NACTU’s refusal to align itself
with any of the major political groupings was partly responsible for the fact that NACTU
and COSATU did not take any definite steps towards unity.

NACTU in the New Dispensation

After its inauguration the federation for some years experienced a number of problems, one of
the main obstacles being the divisions between the Africanist and black consciousness factions.
This greatly impeded the organisation. Also, there was initially considerable duplication of
unions in the federation resulting mainly from the fact that different factions had established
unions in the same industries. Having committed itself to the principle of one union per
industry, the federation set about the task of unification, ending up with 19 industrial unions.
Following a period in which membership declined, NACTU showed quite significant
growth, with membership figures eventually reaching close to 400 000. (This figure may
not include the Association of Mining and Construction Unions which recently joined and
which would certainly have boosted the membership of NACTU.)
The federation remains unaligned to any political party. Most recently NACTU has stated
that its main objective is to assist member unions in establishing strong workplace units as
a means of promoting industrial democracy. Therefore, contrary to COSATU, the federation
believes that continued and close involvement at the workplace, and not
centralised bargaining, will best promote the interests of workers.

The South African Federation of Trade Unions (SAFTU)

The most interesting union development to date was the launch of the newly formed South
African Federation of Trade Unions in May 2017. This body, founded mainly by the efforts
of ex-COSATU General Secretary Zwelinzima Vavi and the National Union of Metalworkers
of South Africa (NUMSA), has adopted an approach quite different from the usual union
strategy of organising either per industry or per work category. Arguing that traditional
unions have neglected 76 per cent of the workforce, many of whom are in services or casual

Chapter 4: Employer and Employee Representation 179

employment, SAFTU has set itself the task of promoting a form of general unionism, so
much so that NUMSA has taken general workers into its fold, most recently representing
cleaning workers at UNISA in their dispute with management. According to SAFTU it
already has 24 unions in its fold, divided into 8 overlapping categories.
Under the banner ‘Organise or Starve,’ SAFTU, which already boasts 550 000 members,
has set itself the goal of 1 million members in the very near future. The new body has
vowed to defend ‘even with our lives’ the independence of the ‘revolutionary and socialist’
formation. It aims to unite all workers under one banner and to protect the
proletariat against government and companies.
It has harsh words against union investment companies and the entrenched position of
union officials in existent unions. COSATU is branded as a sell-out union and Ramaphosa
as a ‘union basher’.
While SAFTU espouses political diversity and rejects affiliation to any existent political
party, it has indicated that it might contest the 2019 elections. In the meantime, it will
continue to monitor political developments and to speak out against corruption.
SAFTU has correctly identified two general problems worldwide, namely the increasing
inability of traditional industrial/business unions to achieve real gains for their members
and the plight of workers not in the formal industrial/business setup. That there is a need
for a wider perspective is proved by the rapid growth of SAFTU over the period of a year.
However, the task of organising and achieving gains on so wide and varied a scale is
formidable. The militant stance espoused by SAFTU and the numerous slogans give the
impression of a social movement rather than a union per se, but this could, in a changing
world, be what is required.

Future Developments
In South Africa, the union movement was in the past obliged to adopt a radical stance
towards both business and the pre-1995 government. Even after the advent of the new
dispensation the conditions in South Africa were such that trade unions still had a significant
role to play in the upliftment of the working class. However, they represent only a section of
the population. The government, for its part, should be concerned with the upliftment and
prosperity of the entire nation and particularly with the poorest of the poor. Business, on
the other hand, sees its role as delivering the necessary jobs by becoming more competitive
and attracting additional investments.
Sadly, the poorest section of the South African population has not received sufficient
upliftment, leading to growing dissatisfaction. Neither has the economy grown as expected,
and investment has slowed rather than increased, particularly over the last two years of the
Zuma regime (see also Chapters 2 and 10). Within this scenario, the union movement did
make gains for its members, so much so that they were at times accused of representing a
worker élite. Also, as bargaining became more centralised and sophisticated, the perception
among lower ranks that unionists were not representing their interests seems to have grown.

180 Labour Relations: A southern African perspective

If we add to this the cosy relationships that some unions and unionists are perceived to have
with employers and the government, we have in the aforegoing all the ingredients needed
for the disastrous strike at Marikana (see Chapters 2 and 13), continued action in the mining
industry and the growing strength of SAFTU.
The position of established unions is increasingly threatened by grass roots organisations,
both in the labour relations and social spheres. The gains in wage levels which have already
been made are evidently not sufficient or have not benefited those who need it most. The
result is that the ‘older’ unions, in order to maintain their legitimacy, are almost obliged
to engage in more militant action, to demand what were sometimes labelled as exorbitant
increases and to back these demands with mass action. From 2009 to 2012 the number
of strikes almost doubled (from 51 strikes to 99) and 2013 ended as the most strife-torn
year since 1994. There was no improvement in the situation in 2014, with the protracted
platinum strike and the union’s demand for a R12 500 per month minimum wage making
world headlines. In 2017 strikes occurred in the taxi and security industries, the health
services and others, while COSATU launched a nationwide strike to protest State Capture.
It is significant that more and more strikes are occurring in the service industries and that
unions are also using strikes for sociopolitical protest actions.
Perception of South Africa’s economic position is at an all-time low, the most recent
blow being the country’s demotion to junk status. Previously much of the of the blame for
this was placed on what may be termed ‘dysfunctional labour relations’ and in 2015 the
World Economic Forum report placed South Africa last in terms of its labour relations. Since
then, government actions and decisions, rather than union action, has led to loss of faith in
the South African economy.
The situation is more complex than many observers would admit and the blame for the
existing situation cannot be placed entirely on the labour movement. Unemployment levels
remain unacceptably high. 50 per cent of the population live below the poverty line. The
legislated minimum wages are a drop in the ocean; yet there are some protagonists who see
a completely free labour market as the only solution.
There are encouraging signs that the economic situation will improve, but that requires
time. There will be an increasing call from grass roots for a better dispensation. Furthermore,
the growing impact of digitalisation and outsourcing will require a new approach to the work
relationship. Arguing whether unions should operate at national or local level, whether they
should represent all workers or only those in certain categories may be an exercise in futility.
Instead there is an urgent need for all parties to put their heads together, to take into account
both present and predicted future circumstances and to work together towards that future.

Employers’ Organisations

Collective Bargaining Organisations

The Labour Relations Act provides for the formation and registration of employers’
organisations for the purpose of centralised collective bargaining with a union or unions

Chapter 4: Employer and Employee Representation 181

in bargaining councils (see Chapter 5). The process for the registration of employers’
organisations is essentially the same as that relating to trade unions (described previously).
According to the Department of Labour, there were 260 registered employers’ organisations
in existence at the end of 1999. By 2013 this figure had declined to 165, which could be
an indication of waning employer interest in centralised bargaining, but it could also be
due to greater centralisation and unification of bodies. In line with the unions’ strategy
of promoting strong national industrial or sectoral unions, and the fact that bargaining
councils are structured in the same way, employers’ organisations are usually also registered
as representative of particular industries, sectors or trades.
As the employer party in bargaining councils where agreements which may be applicable
to an entire industry are negotiated, these bodies occupy an important place in the labour
relations and national arena. In addition to their bargaining function they also serve to:
■■ coordinate employer initiatives in the industry
■■ represent the interests of employers in the industry to government and other bodies
■■ provide advice to members.

In the larger industries, there may be separate employers’ organisations in the various
regions or sub-groups and these will in turn be affiliated to federations which will coordinate
initiatives in the industry and have an even stronger voice with government. An example
of such a body is the Steel and Engineering Industries Federation of South Africa (SEIFSA).

Non-Registered Bodies
Another body that is important in the collective bargaining sphere is the South African
Chamber of Mines. The Chamber is not registered as an employers’ organisation, and has
other functions than that of collective bargaining, but it has traditionally bargained with
mining unions on behalf of employers in the mining industry. There are large mines which
have recognised unions in their operations and who may negotiate on certain issues direct
with these unions, but bargaining on wages and conditions of service has generally been
coordinated by the Chamber.

Other Employer Bodies

Business Chambers
Other employer bodies which involve themselves in labour relations (although they do not
engage in bargaining per se) include chambers of business, commerce and industry.
The South African business community is not large in comparison to that of European
countries, but it too displays the divisions prevalent in South African society. Despite some
efforts at unification, the following bodies still exist:
■■ regional chambers of business which were established from the amalgamation of the
historically dominant chambers of commerce and chambers of industry in various parts

182 Labour Relations: A southern African perspective

 of the country; these now resort under the South African Chamber of Commerce and
Industry (SACCI)
■■ regional, ‘sakekamers’, under the Afrikaanse Handelsinstituut (AHI)
■■ regional associations for black businesspeople, coordinated by the National African
Federation of Chambers of Commerce (NAFCOC)
■■ the Foundation for African Business and Consumer Services (FABCOS)
■■ the National Small Business Chamber
■■ the Minara Chamber of Commerce which represents Muslim businessmen and
entrepreneurs.

Business chambers traditionally have a voice with government as regards labour affairs
and, through their national bodies, submit comments or make representations relating to
developments in this sphere.

Business Unity and the Black Business Council

The need for an organisation to represent business in general on bodies such as NEDLAC,
resulted in the formation of two new bodies – namely
■■ Business South Africa (BSA) with SACCI and the AHI as major members
■■ The Black Business Council (BBC), which had as members both NAFCOC and FABCOS.

In 2003 these two bodies amalgamated to form Business Unity South Africa (BUSA).
Both BUSA and the BBC profess to be non-racial and BUSA has as one of its objectives
the promotion of broad-based black economic empowerment. However, while BUSA stresses
the promotion of business interests in general, the BBC places its major emphasis on the
unification and promotion of black business. This body also aims to establish links with the
labour movement and NGOs.
In spite of their differences, the formation of these bodies has given business a strong
voice when dealing with government and labour.

The State as the Third Party in the Relationship

The Corporatist Approach

With the advent of a new political dispensation in 1995 the trade union movement demanded
the broadest possible consultation. As early as 1991, the Laboria Minute – recording an
agreement between COSATU, NACTU and the government – noted that ‘the working party
had agreed that legislation on labour relations cannot work unless there has been extensive
consultation on the legislative framework for the regulation of labour relations.’
Shortly afterwards the National Economic Forum was established with a view to gaining
the input of business and labour regarding proposed economic reforms. At the beginning

Chapter 4: Employer and Employee Representation 183

of 1995 this body was replaced by the National Economic Development & Labour Council
(NEDLAC).
In establishing NEDLAC the government signalled its intention to adopt a more corporatist
approach.
Karl von Holdt (1995) describes corporatism as ‘an institutional framework which
incorporates the labour movement in the economic and social decision-making of society’.
He goes on to state that ‘Generally corporatism tends to introduce a more co-operative
relation between the three parties (capital, labour and the State) as well as the capacity to
negotiate common goals.’
‘Corporatist policies are introduced by governments which have the support of labour,
but which deem it necessary to promote economic activity by way of free enterprise and
which therefore need to take into account also the interests of business’.
According to Webster (1995), NEDLAC was an attempt to ‘go beyond parliament to
build a broad social consensus by incorporating the key institutions of civil society in the
reconstruction of society’. Its success in doing so depended on the willingness of the parties
to cast aside factional interests and pursue common goals.
Corporatism, with its concomitants of cooperation and consensus, appeared to be the
most sensible strategy within the context of reconstruction and development. However,
there were numerous factors that militated against its successful implementation. The still-
existent racial divisions between capital and labour made it difficult to create a climate
of mutual acceptance and trust between the parties, and even between business and
government. Also, the obvious alliance between the ruling political party and the major
trade union federation created suspicions of favouritism.
At grass roots there was the unrealistic expectation that the government should endorse
all of COSATU’s demands. This compounded the problem for the federation’s negotiators at
NEDLAC. Added to this was the fact that many COSATU unions and members still saw mass
action as the means to their ends.
From the beginning it was evident that COSATU had not shifted paradigms into the
cooperative and consensual mode, and that representatives saw themselves as obtaining
what they wanted by the use of their mass power base. In an article appearing in The Shop
Steward Campaign Bulletin in February 1995, the COSATU central executive stated that it
regarded NEDLAC as a base to build the power of workers, to redistribute wealth, to rebuild
and ensure job security and job creation and to entrench democracy. The federation also
foresaw that it would have to ‘mobilise workers behind the demands we put to NEDLAC’.
(The use of the word ‘demands’ in this context reveals COSATU’s approach.)
The government itself was walking a tightrope. In a corporatist relationship, government
would, as Webster states, expect union leaders to encourage restraint, as well as greater
productivity, from their members. Government would expect to be the leading and guiding
party. At the same time the government was aware of the trade union movement’s capacity
for mass mobilisation and of the expectation of delivery from those masses which brought it

184 Labour Relations: A southern African perspective

into power. It did not want to be seen as being on the opposing side to the labour movement,
although it now had a far wider constituency and far more complex problems to consider.
Within the labour caucus itself there was not always agreement. The smaller federations
had interests which differed from those of COSATU. NACTU, in particular, regarded some of
COSATU’s proposals as undemocratic.
Business, as the third important party in NEDLAC, may also not have comprehended fully
the nature of corporatism. Business representatives tended to see themselves as being in a
defensive position and ‘saving as much as possible’ against the ‘onslaught’ of the labour
movement and government.
Following these initial hiccups, participants in NEDLAC began gradually to engage with
one another on a more constructive basis, although conflicts still erupted from time to time
and the various parties are still overly protective of their own interests.

The Need to Reassess

The existing economic and social problems in South Africa continue to be a cause for
concern. The reasons for this situation are many and do not apply only to South Africa.
However, other countries in a similar position have managed to weather the economic storms
far more successfully than South Africa. Internally the reasons are varied and range from
ineffective or indecisive government policies to rampant corruption, defective planning in
the areas of education and health provision, and continuing inequality.
Yet it cannot be denied that labour relations and the role of unions in a society have
a significant impact on the economy and on the perceptions of potential investors. It is
therefore not surprising that before 2015 the International Monetary Fund, noting that
South Africa’s growth had been lower than that of other emerging markets, had already
called on the government to:
■■ rein in the unions
■■ curb wage demands
■■ move forward with the National Development Plan, especially with infrastructure
development
■■ create a more flexible labour market
■■ support labour brokers as these create employment
■■ engage in social bargaining.

While the above recommendations might not all be advisable in the South African context,
they point to the need for serious attempts to put South Africa back on the map while, at
the same time engaging in social upliftment. At the time the government indicated that it
had already considered most of the points raised by the IMF. It had indeed put forward a
number of plans to address the situation, but so far the progress has not been significant.
The question has also been raised as to whether NEDLAC is serving its purpose. If
NEDLAC has, indeed, run its course, then other means of attaining industrial peace and

Chapter 4: Employer and Employee Representation 185

joint planning by all parties will have to be found. This could happen either through more
effective social dialogue or from a firmer, even interventionist approach by the government
and the enforcement of cooperation at various levels.

Conclusion
The participants in the labour relationship are at a point where important decisions have
to be made. The outcome of those decisions will determine whether the path thereafter is
upward or downward.

Suggested Questions/Tasks
•• You and others working in the same industry have decided to form a union to
protect your interests. Describe the steps you would follow and draw up the
documents required towards eventual registration of your union.
•• Form different groups to debate the following propositions:
oo COSATU has/has not lived up to its founding principles.
oo The ‘marriage of convenience’ in the form of the tripartite alliance is/is not to
the benefit of any of the parties and a divorce would/would not be the best
solution.
oo Corporatism will/will not work in the South African context.
oo The best solution for South Africa’s problems is to free up the labour relations
system completely/for the government to exert greater control over employees
and trade unions.
oo The next 10 years will/will not see the demise of COSATU.
oo Research the composition of unions in the newly formed SAFTU. Then compare
these unions and their strategies to those of the COSATU unions. Which of these
two will be more relevant in the future? Give reasons for your answer.
oo Progressive Automatum decides that it will no longer manufacture certain
small parts, and will enter into a contract with Small Automatum (Pty) Ltd to
manufacture and supply these parts. However, since Small Automatum does
not have the necessary employees, Progressive Automatum will ‘lend’ it some
of its better people. Although they will be paid by Small Automatum, these
persons will be guided by the factory manager at Progressive Automatum, who
reserves the right to inspect their work from time to time. At Small Automatum
employees are also expected to work on Saturdays which is not the case at
Progressive Automatum. All seems to go well until Small Automatum decides
that it can save money by reducing the number of workers. What do you think
will happen next and what will be the outcome?
oo Progressive Automatum also decides that it can no longer sustain its Advertising
Department and offers the two persons in the department the option to freelance

186 Labour Relations: A southern African perspective

 for the company. Progressive agrees to give them all their advertising business,
but because it is such a competitive field, it wants the ex-employees to agree
that they will work only for Progressive. The Sales Manager at Progressive will
pop in from time to time to check on progress. Comment.

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South African Labour Bulletin, vol 29, No 5.
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188 Labour Relations: A southern African perspective

 5

Collective Bargaining

Chapter Outline
OVERVIEW
PART ONE: COLLECTIVE BARGAINING – THEORETICAL PRINCIPLES
COLLECTIVE BARGAINING IN THE LABOUR RELATIONSHIP
COMMONALITY AS A BASIS FOR BARGAINING
CONFLICT AND COLLECTIVE BARGAINING
Conflict as a Feature of the Relationship • Sources of Conflict | Scarcity of Resources | Different
Needs, Goals and Interests | Differing Attitudes to Work | Different Values and Perceptions | Role
Conflict, Poor Communication and Inadequate Structures
FORCE AND COUNTERFORCE IN THE BARGAINING RELATIONSHIP
Power as Regulator of the Bargaining Process • Employer versus Employee Power • Coercive Power
and the Bargaining Process • Other Sources of Power • The Effect of Power on Bargaining Outcomes
CHARACTERISTICS OF A BARGAINING RELATIONSHIP
The Bargaining Relationship as a Formal Relationship • The Bargaining Relationship as an Employer–
Union Relationship
ESTABLISHMENT OF THE RELATIONSHIP
THE SCOPE AND CONTENT OF COLLECTIVE BARGAINING
BARGAINING STYLES
Distributive Bargaining • Integrative Bargaining
BARGAINING STRUCTURE
Bargaining Units and Bargaining Levels • Importance of the Bargaining Structure • Types of
Bargaining Structure | Narrow Decentralised Units | Broad Decentralised Units | Narrow Centralised
Units | Broad Centralised Units • Evaluation of Bargaining Structures • Towards Greater Flexibility •
Variables Determining Bargaining Structures
PLURALISM AND COLLECTIVE BARGAINING
PART TWO: COLLECTIVE BARGAINING IN SOUTH AFRICA
THE RIGHT TO FREE COLLECTIVE BARGAINING
FREEDOM OF ASSOCIATION AND FREEDOM FROM VICTIMISATION
ORGANISATIONAL RIGHTS
Exercising Organisational Rights • Representative versus Majority Unions • Rights of Majority Trade
Unions • Rights Granted to Representative Unions • New Rights for Non-majority Unions • Right to
establish Thresholds of Representativeness • The Right to appoint Shop Stewards | Election of Shop
Stewards | Shop Steward Rights • The Right to Disclosure of Information • The Right to negotiate for
Agency Shops and Closed Shops | The Problem | Agency Shops | Closed Shops |Evaluation
ENFORCEABILITY OF AGREEMENTS
CENTRALISED BARGAINING STRUCTURES
Legislation for Bargaining Councils • Establishing a Bargaining Council | Voluntary Agreement by
Parties | Constitution of a Bargaining Council | Registration of Bargaining Councils • Functions of
Bargaining Councils
BARGAINING COUNCIL AGREEMENTS
Contents of Agreements • Status of Bargaining Council Agreements • Extension of Agreements
• Arguments For and Against Extension • Exemptions from Agreements • Duration of Agreement
• Administration and Policing of Agreements
BARGAINING COUNCILS IN THE PUBLIC SERVICE
STATUTORY COUNCILS
WORKPLACE RIGHTS OF UNIONS PARTY TO BARGAINING COUNCILS
DECENTRALISED BARGAINING STRUCTURES
The Right to Recognition | The Nature of Recognition | The Recognition Agreement • Substantive
Agreements at Plant Level • Other Procedural Agreements
THE ONGOING DEBATE ABOUT BARGAINING STRUCTURES
THE DUTY TO BARGAIN: LEGAL PRECEPTS
Voluntary Nature of Bargaining • Indirect Compulsion to Bargain • Good Faith Bargaining •
Bargaining Levels and Bargaining Partners
WORKPLACE FORUMS
CONCLUSION
SUGGESTED QUESTIONS/TASKS
SOURCES

190 Labour Relations: A southern African perspective

 Overview
Collective bargaining is, in most systems, the central process in the conduct of
the traditional labour relationship. Once they have been unionised, employees will
demand that the employer establish a bargaining relationship with them so that
together they may attempt to resolve their conflicts and regulate their relationship.
This relationship will be established because there is a common interest between the
two parties. The purpose of the relationship is to prevent either party from using its
coercive power to achieve its own ends. Nevertheless, the threat that a particular
party may apply coercive power is always present in the bargaining relationship. It
serves to pressure both sides into agreement.
The bargaining process will cover a wide range of items, some of them
substantive and others procedural in nature. These may be dealt with by either
distributive or integrative bargaining. Also, bargaining may be conducted in different
types of bargaining units, and with employers at various levels. Bargaining units and
bargaining levels determine bargaining structures, of which there are many forms.
The type of bargaining structure established in a particular labour relations
system will define the relationships and interactions in that system. The structure
is, in turn, dependent on a number of factors, most of them related to union or
employer organisation and strategy. The State, too, may play an important role in
determining bargaining structures and the bargaining relationship.
South African labour legislation has, since the beginning, protected the right to
free collective bargaining. This is supported by the right to freedom of association
and freedom from victimisation. The Labour Relations Act of 1995 re-established
these rights and granted unions a number of additional organisational rights, as well
as the right to establish closed shops and agency shops. Closed shops could oblige
non-union members in an organisation to join the majority union or, in the case
of an agency shop, to pay amounts equal to union dues into a union-administered
fund. The argument can be made that the closed shop in particular contravenes the
freedom of association provision.
The legislation does not enforce collective bargaining but it does actively encourage
it and it indirectly promotes the establishment of centralised bargaining bodies, in the
form of bargaining councils, whose agreements may be extended to non-parties. Some
bargaining councils have become so big, so entrenched and so formalised that unions
in these councils may have lost touch with their grass roots membership (see Chapters
2 and 4). Therefore, it may become necessary to balance centralised negotiation with
stronger representation at plant level, and even to establish more cooperative bodies in
the form, for example, of workers’ councils, but not those subject to the majority union
as now provided for in the Labour Relations Act.
Finally, all parties need to continually bear in mind that we are on the brink of
significant changes in the way business is done and therefore also in employment
relations and should begin to gear their relationships towards these changes.

Chapter 5: Collective Bargaining 191

Part One:
Collective Bargaining – Theoretical Principles
In this section we look at:
■■ the important role played by collective bargaining in the labour relationship
■■ conflict as the trigger to collective bargaining
■■ the use of power in the bargaining process
■■ distributive bargaining versus integrative bargaining
■■ centralised and decentralised bargaining units and bargaining levels.

Collective Bargaining in the Labour Relationship

Beatrice and Sidney Webb (2014) described collective bargaining as ‘… one method
whereby trade unions could maintain and improve their members’ terms and conditions of
employment’. The description given by the Webbs fails to highlight:
■■ the interactive nature of the process
■■ its paradoxical basis
■■ its central position in the labour relationship.

The collective bargaining process, although it may be union-initiated, is a two-way process

in which there is pressure and counterpressure from both sides. Just as the union might wish
to gain concessions from management, so, too, might management wish to gain concessions
from the union. To these ends, they bargain and eventually reach a compromise.
Furthermore, the collective bargaining process is, to some extent, a co-operative process.
It might arise from a conflict of interests and goals, but it can take place only because there
are common interests. Its purpose is to contain conflict and even to promote co-operation.
Collective bargaining has hitherto been the principal method by which employers and
their employees as a collective establish and continue a relationship which might otherwise
prove difficult to maintain. Collective bargaining is a way for the two sides to get together,
to talk about their problems, needs and goals, and try to settle their differences.
The definition given by the Webbs also does not describe:
■■ the dynamic nature of the collective bargaining process
■■ its reliance on power
■■ its susceptibility to outside influences.

Collective bargaining should not be an isolated process. Where there is an established

relationship, it could be a continual process of give and take. How much a particular party
gives will usually depend on the power of the other, but power is not static. The fulcrum of
power continually shifts between the two parties. Also, collective bargaining is subject to

192 Labour Relations: A southern African perspective

external influences in the shape of economic and sociopolitical developments, technological
innovation and demographic changes. These affect the power balance between the parties
and lead to issues over which there might be disagreement.
Thus, the collective bargaining process may be more comprehensively described as a
process which:
■■ is necessitated by a conflict of needs, interests, goals, values, perceptions and ideologies
■■ relies on a basic interdependency and commonality of interest
■■ involves the application of continual pressure and counterpressure by the employee
collective and the employer collective
■■ is aimed at achieving some balance between the needs, goals and interests of
management and those of employees – the extent to which either party achieves its
objectives depending on:
◗◗ the nature of the relationship
◗◗ each party’s source and use of power
◗◗ the power balance between them
◗◗ the organisational and strategic effectiveness of each party
◗◗ the type of bargaining structure
◗◗ the prevalent economic, sociopolitical and other conditions.

Commonality as a Basis for Bargaining

Bargaining would not take place if there were no point of common interest between employer
and employee. There would be no bargaining if it were not necessary for the parties to work
together to produce goods or services and, in the long term, to ensure the future of the
undertaking and the economy as a whole. Because both parties will benefit from the enterprise
and because one needs the other to achieve his own goals, bargaining does take place. Thus,
commonality of interest and interdependence form the basis of the bargaining relationship.
Both parties have to acknowledge its existence before bargaining can commence.
However, although common interests are at the basis of the labour relationship, the
emphasis has usually been placed on conflict and the need to bargain about the parties’
diverging interests.

Conflict and Collective Bargaining

Conflict as a Feature of the Relationship

Just as the parties to the labour relationship would not agree to bargain if there were no
common interest, so would there be no necessity for bargaining if no conflict of interest
existed. Since each party will pursue his own goals, in the light of his own interest and

Chapter 5: Collective Bargaining 193

values and possibly at the cost of the other party, conflict arises. If conflict is allowed to
continue, it could reach destructive proportions, which would negatively affect both parties.
Where both hold sufficient power, the parties will usually realise that they cannot pursue
their own goals at all costs and need to contain the conflict in as functional a manner as
possible. As a result, they agree to engage in a bargaining relationship, to establish procedures
to regulate their relationship and to negotiate on issues where disagreement exists.
The agreement to bargain does not mean that conflict is eliminated. Moreover, conflict as
such is not necessarily dysfunctional. A certain amount of conflict may stimulate growth,
innovation and change.

Sources of Conflict
Scarcity of Resources
The most common source of conflict between employers and employees or unions is found
in arguments concerning the application of scarce resources, the scarcest of these being
money. Employers do not have a responsibility only to employees. They also need to
consider the shareholders, to expand and develop the business and to satisfy customers.
Consequently, they will apply resources as they see fit. Management may decide to grant a
higher dividend to shareholders, to expand operations, to acquire new machinery or to offer
a vast sum for the expertise of a particular individual.
Employees and unions may not like this. They might believe that a higher percentage
of available money should have been allocated to wage increases. A case in point is
the argument by many South African unions that the profit margins of South African
organisations are too high and that companies could afford to pay higher wages by cutting
profits and decreasing executive salaries or dividends to shareholders.

Different Needs, Goals and Interests

Employers and employees also come into conflict because they have different needs, goals
and interests. For example:
■■ An employer’s primary goal is to raise profit margins and to develop the organisation.
The objective of employees is to earn as much as possible for the work that they perform.
■■ In order to manage the business effectively, an employer needs to be flexible. To achieve
flexibility, he might demand the right to dismiss inefficient workers, to work short time
when necessary and to retrench workers in a downward economic cycle. Employees, on
the other hand, insist on job and income security.
■■ Traditionally, employers have believed that they possess the right to exercise full control
over employees and that decision-making is a management prerogative. This assumption
is challenged by employees and unions and even by government legislation.
■■ On their part, employees may believe that they have the right to raise demands for
equity, shorter working hours, longer leave, sick leave, training programmes and time

194 Labour Relations: A southern African perspective

 off on public holidays. These demands will conflict with the employer need to utilise
machinery as effectively as possible or to serve the interests of customers at all times.

Differing Attitudes to Work

Employers and employees may have different attitudes to work. For example, employers may
expect commitment, loyalty and hard work from employees. Employees may not like to work,
may not consider it their duty to produce more effectively and may regard it as their right to
change jobs at their pleasure. An employer could regard competitive basic wages and bonuses
for higher productivity as just rewards for an employee’s efforts. The employee himself may
also want improved status, job satisfaction or the fulfilment of his social and educational needs.

Different Values and Perceptions

Perceptions and values that individuals acquire in their societies may also result in conflict.
Employees may view themselves as a disadvantaged class, may not have the same work
ethic as the employer or may expect the employer to practise social responsibility according
to their perception of this concept. Employers and employees may also hold different
ideological and political views.

Role Conflict, Poor Communication and Inadequate Structures

The potential for conflict increases because of the very fact that employers and employees
have to work together, and that the employee is obliged to support and obey instructions
from the employer or manager. Conflict increases if:
■■ the employee is not certain of the role he has to perform
■■ he is not given sufficient authority to perform this role
■■ the organisational structure and management style promote conflict
■■ communication structures are ineffective.

Besides causing its own conflict, ineffective communication will exaggerate conflict arising
from other sources. In this respect, bargaining is in itself a means towards more effective
communication.

Force and Counterforce in the Bargaining Relationship

Power as Regulator of the Bargaining Process

While commonality of interest may be the basis of the bargaining relationship and conflict
the reason for bargaining, power could be described as the driving force. Despite their
common interest and the need to control conflict, the parties would probably not agree to
bargain if they did not believe that the other party held some form of power. Where one
party holds all or most of the power, it will usually pursue its own interests to the detriment

Chapter 5: Collective Bargaining 195

of the other party. Each party’s pursuit of its own interests will be limited only by the power,
or counterforce, which the other party can apply.

Employer versus Employee Power

Power can take various forms, but the basis of the employer’s power is the fact that he
provides the employee with the opportunity to work and earn a living. The employee holds
power because of his ability to withhold his work from the employer.
In the individual employer−employee relationship it is easier for the employer to withhold
work opportunity from the employee than it is for the employee to withhold his labour
from the employer. The employer may not be dependent on the work of one employee and
probably could replace him with another worker or with machinery. The employee depends
on the employer for his own livelihood and that of his family. The employee will hold power
only if he is irreplaceable or difficult to replace or if he can easily find another job.
In order to increase their power base, employees have to establish combinations, either
informally or in the form of trade unions. A trade union, having behind it the power of the
collective employee body and its collective threat of jointly withholding labour, can more
easily counter the power of the employer. This places employees on a more equal footing
with the employer. It is often only a display of joint employee/union power, sometimes in
the form of threatened strike action, that obliges the employer to bargain with employees
or their representatives.

Coercive Power and the Bargaining Process

The purpose of establishing a bargaining relationship is to prevent the use of coercive power
by either side. Yet the ability of each side to apply coercive power continues to influence the
bargaining process. In establishing a bargaining relationship, the parties agree that they will
attempt to settle their differences by negotiation, but that, if negotiation does not succeed,
each may use his coercive power against the other. Consequently, the freedom to engage in
a strike or lockout is integral to the normal collective bargaining process.

Other Sources of Power

Once they have established a bargaining relationship, the parties will bring whatever force
they can to the relationship. Besides their basic coercive power, employers and trade unions
will attempt to gain power from other sources. For example:
■■ An individual employer may combine with other employers. And, as a body, they may
lobby the government to extend their power.
■■ The employer may use economic and other circumstances against the union.
■■ Unions may attempt to gain the sympathy of other employees or employers, other
institutions or the community.
■■ Unions or employers may attempt to gain political influence or even political power.

196 Labour Relations: A southern African perspective

The Effect of Power on Bargaining Outcomes
At any stage during the bargaining process, the overall power of each party and its
willingness to engage in a demonstration of coercive power will greatly influence the
conduct and outcome of the negotiation. If, at a particular time, a union wields more overall
power, and if it is willing to engage in strike action, it is more likely to gain concessions
from the employer. Thus, traditional collective bargaining relies mainly on a continual
power play between the parties. It is an ongoing, dynamic process in which even the rules
of the game may change from time to time.
Figure 5.1 illustrates the interplay between commonality, conflict and power in the
establishment of the bargaining relationship. (For further discussion on conflict and power,
see Chapters 11 and 14.)

procedural and substantive agreements

Economic developments
Technological
negotiation
Public policy developments
Demographic
Social issues changes
The media
Political issues

agreement to bargain

power

Needs Needs
Goals Goals
Interests Interests

Values conflict Values

Perceptions Perceptions

Ideology Ideology
Labour Relationship
employees employers

interdependence
common interest

The continued profitability

of the enterprise

figure 5.1: establishment of the collective bargaining relationship

Chapter 5: Collective Bargaining 197

In certain circumstances a party which actually has greater power may not engage in hard
bargaining or try to impose its own conditions at any cost. This may happen when:
■■ socio-economic concerns militate against a forceful approach
■■ continued conflict threatens the relationship and may even completely destroy it
■■ the conflict will have wider implications
■■ legislation obliges interaction
■■ moral principles dictate the approach to the relationship.

If this happens, the relationship may become more cooperative than antagonistic, and
bargaining is aimed at promotion of the common good rather than at the settlement of
opposing interests. Cooperation is, however, more likely where there is equal power and
where employees have some share in the decision-making process (see also Chapter 15).

Characteristics of a Bargaining Relationship

The Bargaining Relationship as a Formal Relationship

The bargaining relationship is established when the employer agrees to enter into negotiations
with his employees or their representative union with a view to mutual regulation of their
relationship. In agreeing to bargain, the employer acknowledges the power of his employees
and their standing as equal negotiating partners. Implicitly, he accepts that there is a conflict of
interests, and he accepts the necessity of containing this conflict through the bargaining process.
In a voluntary system, agreement to a bargaining relationship also implies acceptance
of the employees’ freedom to strike and the employer’s freedom to lock out employees. The
parties agree that they will interact within the framework of mutually agreed rules and
procedures. As Hawkins has stated, ‘The rules embodied in collective bargaining procedures
represent a voluntary undertaking by employers and trade unions alike to act in accordance
with accepted norms of behaviour.’

The Bargaining Relationship as an Employer–Union Relationship

The bargaining relationship differs from the normal employer−employee relationship in that an
outside party, in the form of the union, usually represents the interests of employees. Equally an
employer may be represented by an employers’ organisation. Thus the bargaining relationship
is often described as an employer−union relationship or a relationship between an employers’
organisation and a union. The entry of a third party greatly formalises the relationship. Such
formalisation is necessary, but it may, at times, adversely affect the relationship.

Establishment of the Relationship

Where a union has managed to enrol a large number of employees at a particular enterprise, it
will demand recognition of the union as representative of employees in the organisation and as

198 Labour Relations: A southern African perspective

an equal bargaining partner. If the employer agrees to enter into the relationship the next step
will be for the parties to draw up a recognition agreement. (See Annexures as provided online.)
At this stage, the parties have merely formalised the relationship and have not yet begun
to negotiate on the real issues, but they will already have engaged in collective bargaining.
The recognition agreement establishes the parameters for further negotiation. It sets the
stage for consultation, negotiation and even cooperation in respect of those matters which
are of mutual interest to the parties concerned. Furthermore, where a union or a number
of unions acting jointly have managed to recruit a substantial number of employees in a
particular industry or sector, they will demand that the employers concerned recognise these
unions for collective bargaining at a more centralised level in what may be known as a
bargaining council.

The Scope and Content of Collective Bargaining

The scope of collective bargaining varies from one bargaining relationship to another
and from system to system. Bargaining initially hinges around procedural issues and any
bargaining arrangement will, at the least, cover procedures for meetings, arrangements for
negotiations and procedures for the settlement of disputes between the parties. Provision
will also be made for the winding up of the relationship, should either party so desire.
The issues mentioned will be contained in the bargaining council constitution or in the
recognition agreement.
After that the main focus is usually on remuneration and the work situation. The
parties agree that they will, at regular intervals or when circumstances require, bargain on
substantive issues such as wages and conditions of service. In some cases, bargaining scope
extends only to this point. Employers may not want to negotiate on the procedures used in
the undertaking. Unions, on the other hand, may demand a say in grievance, disciplinary
and retrenchment procedures and in the procedures adopted to safeguard the health and
safety of employees. They may, furthermore, demand to be consulted before new technology
is introduced and to have some say in decisions which will directly or indirectly affect
employees.
Management, on its part, will raise issues of its own. These may include matters such as
productivity, training, salary and wage structures, worker commitment and even a possible
decrease in wages in times of financial difficulty.
The scope of collective bargaining can, in effect, be extended to include all areas of
conflict or of mutual concern in the relationship. Thus, there is a direct link between the
sources of conflict described in a previous section and the issues raised in the bargaining
arena. Table 5.1 serves to illustrate this point.

Chapter 5: Collective Bargaining 199

table 5.1: collective bargaining issues and problems

Source of conflict

Employer Orientation Employee Orientation Issues Type of issue

Higher profits Higher income Wages Substantive

Development of Hours of work Substantive
business Holidays Substantive
Sick leave Substantive
Benefits Substantive
Allowances Substantive
Bonuses Substantive
Productivity Substantive

Flexibility Security Dismissals Procedural and substantive

Discipline Procedural
Short time Procedural and substantive
Retrenchment Procedural and substantive
Technology Procedural
Pensions Substantive
Seniority rights Procedural and substantive

Control Shared decision-making Grievance handling Procedural

Discipline Procedural
Consultation Procedural
Worker participation Procedural
Shop-steward rights Procedural
Union rights Procedural
Committees Procedural

Worker commitment Unconcern Premiums Substantive

Productivity Leisure Working hours Substantive
Leave Substantive
Absenteeism Procedural and substantive
Productivity Procedural and substantive

Profitability Ensured health and Health and safety Procedural

safety procedures
Health and safety Procedural
committees

Competitive salaries Development Training Procedural

Job satisfaction Productivity bonuses Procedural and substantive
Social needs Organisation of work Procedural
Status Wage structure Procedural and substantive
Organisational Procedural
structure
Job descriptions Procedural

Concentration on Concentration on social Housing Substantive

business matters problems Education Procedural and substantive
Rehabilitation of Procedural
alcoholics
Bursaries Substantive
Social responsibility Procedural and substantive
Equal opportunity Procedural
Environment Procedural and substantive

200 Labour Relations: A southern African perspective

Bargaining Styles

Distributive Bargaining
This is the most common type of bargaining that usually occurs in the labour relations
situation. Distributive bargaining takes place when management and the union are in
opposing positions and when a gain for one party represents a loss for the other.
Distributive bargaining items are described as issues. The most prevalent issues between
management and the union are economic.
Distributive bargaining involves the use of power tactics and every other possible strategy
by both sides. Each party strives towards an outcome favourable to itself, and will carefully
assess the position, strengths and weaknesses of its own side and of the other party. Each
party wants to gauge just how far it can press its own demands without the other side using
coercive power in the form of a strike or a lockout or other action. In the extreme, each will
consider the possibility of allowing the other to apply coercive power and will assess its own
ability to withstand it. (see also chapter 11)

Integrative Bargaining
Integrative bargaining occurs when both parties have the same preference for a successful
outcome or are equally concerned to solve a problem. In distributive bargaining there is
a clear distinction between losses and gains, resulting in a win−lose situation. Integrative
bargaining strives for a win−win solution. In practice, it may happen that either party loses
a little, but neither suffers a total loss. Overall, both parties gain. It is a case of granting
concessions and gaining concessions, so that both parties move from the status quo to a
better position (see Chapter 11).
Items subjected to integrative bargaining are described as problems. These include job
security, procedures, promotion, benefits and institutional security. Retrenchment and
promotion could be regarded as problems rather than issues.
Important objectives could be achieved by integrative bargaining. Supplementing
distributive with integrative bargaining may contribute to a better overall bargaining
climate. Instead of the parties being in continual opposition, there should be times when
they work together and engage in what is essentially integrative problem-solving.

Bargaining Structure

Bargaining Units and Bargaining Levels

The term ‘bargaining structure’ encompasses ‘bargaining units’ and ‘bargaining levels’.
A bargaining unit is composed of the employees who will be covered by an agreement.
Expressed simply, the composition of a bargaining unit will determine on behalf of whom,

Chapter 5: Collective Bargaining 201

and with whom, bargaining will take place; also, whether bargaining will be conducted
with one union only or with a number of unions and with one employer or a number of
employers. Thus, an agreement can apply to:
■■ a single group of employees at one plant
■■ all employees or most of the employees at that plant
■■ a certain type of employee working at various plants but for the same company
■■ all or most of the employees of that company
■■ certain types of workers in an industry or area
■■ all or most of the employees in an industry or sector
■■ craftsmen or other specialists across industries.

The bargaining unit will determine whether negotiations will be conducted with:
■■ plant-level management
■■ the head office of a company
■■ a number of employers in an industry, sector or area
■■ employers from different industries.

This leads to the establishment of bargaining levels – that is, whether bargaining will take
place at a decentralised level or at a more centralised level, or at different levels where
different issues are concerned.

Importance of the Bargaining Structure

There are many types of bargaining structure and the kind of structure established will vary
from company to company, from industry to industry and from one labour relations system
to another.
The type of bargaining structure and the bargaining level established will determine:
■■ which employees will be covered by an agreement
■■ who will receive protection from an agreement (especially if it is enforceable by law)
■■ how much influence the union will have in a company or industry
■■ how much power a union and employers can exercise during negotiations (sometimes
a union is able to wield more influence if it bargains at plant level, and at other times
it is more powerful if it engages in collective bargaining at company or industry level)
■■ at what level union members will be able to participate in decision-making (the more
centralised bargaining becomes, the less will unions be able to receive a direct input
from their membership).

202 Labour Relations: A southern African perspective

Types of Bargaining Structure
Kochan (1980) identified four types of bargaining units or bargaining levels. These are
discussed below.

Narrow Decentralised Units

This type of bargaining unit is established when a union represents the interests of one
group of workers at a particular plant or where various unions, each constituting a different
bargaining unit, represent the interests of different groups of workers at that plant.
As far as the union is concerned, a narrow-decentralised unit will:
■■ minimise conflict between union members
■■ maximise commonality of interest
■■ increase worker participation at plant level
■■ carry the risk of:
◗◗ strengthening management power
◗◗ encouraging union rivalry
◗◗ allowing the employer to apply the ‘divide and rule’ principle
◗◗ minimising the effect of strike action, as production may be able continue without the
members of one of the unions
◗◗ not reaching the real locus of power as top management may be at a centralised level.

For the employer:

■■ the danger of multiple strikes increases
■■ negotiations become time-consuming if he has to deal separately with more than one
union at the plant
■■ the danger of whipsawing exists
■■ the highest negotiated wage may have to be paid to all employees.

Broad Decentralised Units

In this instance, all or a number of unions at a particular plant combine to form one
bargaining unit. They may bargain as a team or engage in coalition bargaining, whereby
each union will retain its independence and may negotiate special conditions for its members
or withdraw from an agreement, if it so wishes. Broad decentralised units could:
■■ advance the special interests of workers at that plant
■■ allow for maximum employee participation
■■ deprive management of the power it would wield against a single union representing a
particular group
■■ lead to a total loss of production as strike action is likely to be instituted by all or most
of the employees at that plant

Chapter 5: Collective Bargaining 203

■■ if there is inter-union rivalry, allow management to apply the ‘divide and rule’ principle
■■ involve prolonged intra-organisational bargaining so as to accommodate different interests
■■ still not allow unions to reach the real locus of power in the organisation.

Narrow Centralised Units

This type of structure is established when one union or a number of unions representing
a particular type or level of employee at a company, or industry, or in different industries,
bargain centrally with the company head office, with a number of employers from the same
industry, or with employers from different industries.
With narrow centralised units, unions might:
■■ retain uniformity of interests but not to the same extent as with narrow decentralised units
■■ have less employee participation at plant level or member participation in actual
negotiations
■■ run the risk of agreements reached at centralised level being undermined by managements
at particular plants
■■ be able to negotiate with the real decision-makers in management
■■ not be able to wield so much power with strike action
■■ achieve increased prominence in the organisation(s) concerned.

Employers, on the other hand, may be faced with:

■■ the risk of different unions whipsawing from agreement to agreement
■■ the problem of having to deal with a number of unions in different bargaining units
■■ union rivalry, which may complicate bargaining or lead to multiple strikes.

In general, bargaining in these units may have the effect that:

■■ there is less direct conflict between individual management and employees
■■ the impact of strike action is minimised (unless the strikers occupy strategic positions)
■■ strikes are more widespread, but less frequent
■■ the bargaining process is depersonalised
■■ where all employers in an industry are involved, the wages of that group of workers are
taken out of competition.

Broad Centralised Units

A broad centralised unit is established when one union or a number of unions representing
diverse interests bargain with a number of employers at industry or sectoral level. This is a
very complex structure, but it holds a number of advantages for both employers and unions.
For example:
■■ Wage levels and benefits apply to all employers and employees.

204 Labour Relations: A southern African perspective

■■ Employers need not be concerned that wage increases granted will increase their costs
and prices in relation to their competitors.
■■ Unions are not faced with an employer who, because of this concern, attempts to keep
wages at the lowest possible level.
■■ The centralised body can establish benefit structures and training programmes which
individual employers would not have been able to provide.
■■ Negotiations are conducted on a more depersonalised basis, and on a more professional
level.
■■ The danger of spontaneous strike action decreases, although strike action, when it does
occur, is on a much larger scale.

Evaluation of Bargaining Structures

Whether employer or union power increases or decreases with greater centralisation depends
greatly on the circumstances. A strong union may actually lose strategic power by engaging
in centralised negotiations, but it may do so for the sake of other advantages such as wider
influence and control in an industry. Likewise, it may be more advantageous for a strong
employer to bargain individually with a union. Weaker or smaller employers and unions
may gain from the support of others, but they may equally find that wages and conditions
negotiated are not favourable to their particular circumstances or, in the case of unions, do
not meet the demands of their members.
Broad centralised agreements are usually concluded at the cost of worker participation
in decision-making at plant level and membership participation in the bargaining process,
unless separate provisions are made for plant-level participation and the union or employers’
association adopts alternative strategies to allow for maximum member participation in
negotiations. Also, there is the increased possibility of inter-union and inter-employer
conflict and a greater need for intra-organisational bargaining. As a result, negotiations
may be lengthy and cumbersome. This might eventually negate the cost reduction achieved
by joint negotiation. (See recent events in the metal industry later in this chapter.)

Towards Greater Flexibility

The question as to whether centralised bargaining is preferable to decentralised bargaining
has been widely debated. Both have advantages and disadvantages. Alternatively, an
advantage for one party may prove a disadvantage to the other. Employers and unions
may opt for a two-tier system, where, for example, minimum conditions and benefits are
negotiated at central level and more particular or improved conditions and procedures
are established by plant-level negotiations. Alternatively, strong centralised arrangements
may be balanced by allowance for employee participation in decision-making at plant or
organisational level.

Chapter 5: Collective Bargaining 205

table 5.2: advantages and disadvantages of centralised and decentralised bargaining

CENTRALISED BARGAINING DECENTRALISED BARGAINING

Advantages Disadvantages Advantages Disadvantages

Wages out of Wages differentiated Danger of whipsawing

competition (pro for according to particular (con for employers)
unions and employers) organisation
Employers afraid to
become uncompetitive
(con for unions)

Better benefits at less Benefits tailormade for Fewer benefits provided

cost individual needs

Larger-scale training Programmes tailormade Less likelihood of

programmes for specific needs large-scale training
programmes

Fewer strike actions Labour action on a Likelihood of

wider scale spontaneous strikes
increases

Does not diffuse Diffuses workplace

workplace tensions tensions

Limits power of Increases power of Workplace

workplace organisation workplace organisation representatives
(management and may become too
employees) independent of union

Possibility of democratic Greater opportunity for

decision-making in democratic decision-
unions and employer making
organisations decreases

Diverse interests Caters for specific needs

represented

Greater intra- Intra-organisational

organisational conflict conflict minimised

More inflexible More flexible

Bargainers usually more Bargainers may not be

professional sufficiently experienced

Long-term objectives Objectives may be short

term

Provides overall, May lead to employer

uniform standards and playoffs and wage
minimum safeguards inflation

206 Labour Relations: A southern African perspective

Variables Determining Bargaining Structures
The type of bargaining structure established will depend interactively on the following:
■■ Union organisation policy and strategy
■■ employer organisation and strategy
■■ type of bargaining issue
■■ government policy and legislation
■■ economic factors.

Both parties will want to bargain at the level where they can wield the most power. Where
unions and employers are organised at a highly centralised level, they will opt for centralised
units. Union strategy in particular will be influenced by the extent of their organisation. If
this is local, they would prefer to bargain at decentralised level, but will continually strive
for wider influence. However, if there is strong inter-union competition, some unions may
not want to co-operate in centralised units. Equally, smaller employers may not want to be
part of highly centralised bodies where larger employers predominate.
Certain issues, such as organisational procedures, may be better dealt with at decentralised
level, while government policy and legislation may enforce or encourage the use of particular
bargaining units,
Finally, the state of the economy might oblige individual employers to move away from
centralised units, but unions might prefer to remain at this level in order to take wages out
of competition.

Pluralism and Collective Bargaining

The emphasis on collective bargaining relies on the pluralist approach to the labour
relationship. This approach rests on the presumption that:
■■ with different groups representing competing interests, power will be widely and fairly
distributed
■■ employees, by joining unions, will equal the power of management
■■ the free exercise of power by one group will be constrained by the countervailing power
of the other
■■ the State will act as neutral watchdog
■■ the parties will engage in mutually beneficial collective bargaining
■■ both parties will moderate their demands for the common good
■■ conflict will be contained at manageable levels.

Unfortunately, such ideal interactions are difficult to achieve. In the first place, the employer
holds the initial power and the union has to continually challenge this power. Thus,
theorists such as Fox believe that no real distribution of power takes place. Secondly, even

Chapter 5: Collective Bargaining 207

when unions hold, on the face of it, equal power, the position never remains equitable. As
Mastenbroek (1987) states, ‘[If] parties are of approximately equal power, there is an impulse
towards gradually increasing competition’. This, he says, can ‘… start with innocent haggling
over positions, tasks and authority, and end in win/lose struggles aimed at eliminating the
opposing party’.
The tendency towards increased competition should be balanced by the recognition of
interdependence and a focus on common goals. However, the parties often do not recognise
or admit that they are dependent on each other, nor do employees see employer goals as
being in alignment with their own goals and interests.
In these circumstances, the importance of collective bargaining may be questioned
and could be replaced by a search for more co-operative or less confrontational processes
(see chapter 15).

208 Labour Relations: A southern African perspective

Part Two:
Collective Bargaining in South Africa
In looking at collective bargaining in South Africa, it is necessary to pay particular
attention to:
■■ the need for freedom of association and freedom from victimisation to be guaranteed in
a free collective bargaining system
■■ various organisational rights granted to unions in terms of South African legislation
■■ the controversial issue of closed shops and agency shops
■■ bargaining councils which have hitherto been central institutions in the South African
system
■■ the advantages and disadvantages of centralised bargaining
■■ the concept of good faith.

The Right to Free Collective Bargaining

South Africa, in its official labour relations policy, supports, the following principles:
■■ voluntarism
■■ free collective bargaining
■■ freedom of association.

Until 1979, these principles were not equally applicable to all sections of the working
population. This situation changed in 1979. Since then, all employees have had the officially
sanctioned right to freedom of association and free collective bargaining. With the drafting
of the new labour relations legislation in 1995, no radical shift occurred.
Collective bargaining is, in principal, voluntary in that there is no mandatory duty to
bargain. However, the Labour Relations Act of 1995 conferred rights at the workplace
on unions which have majority representation, and even those who have ‘sufficient’
representation (see below). By doing so it facilitates and, it could be said, even enforces,
a bargaining relationship with employers. The Act also promotes (but does not enforce)
centralised bargaining in national, regional or sectoral bargaining councils.

Freedom of Association and Freedom from

Victimisation
In order to engage in effective collective bargaining, employees in particular, but also
employers in some instances, will join collective organisations.
If power is to be balanced and free collective bargaining is to take place, it is essential that:
■■ individuals should have the freedom to join the organisations of their choice

Chapter 5: Collective Bargaining 209

■■ no manipulation of membership should occur
■■ the collective organisations themselves should have free choice and be free from influence
■■ members of such organisations or their office bearers should not fear victimisation.

For these reasons any free collective bargaining system is based on the joint principles of
freedom of association and freedom from victimisation.
The Labour Relations Act of 1995 stresses the importance of these precepts by providing
for protection of these rights in sections 1 to 10 of the Act.
(The contents of these sections are discussed in detail in Chapter 3.)

Case Review: Freedom of Association

SA National Defence Union v Minister of Defence & Another

(Constitutional Court: CCT27/98)
Background
The South African National Defence Force, the National Intelligence Agency, the
South African Secret Service are excluded from the ambit of the Labour Relations
Act. However, Section 23(2) of the Constitution of the Republic of South Africa grants
every worker the right to form and join trade unions, to participate in the activities
of the trade union and to strike. This is a basic right but can be limited ‘in terms of a
law of general application provided that the limitation is reasonable and justifiable
in an open and democratic society’ (Section 36 of the Constitution).

Argument
The South African National Defence Union (SANDU) resorted to the Constitution to
allege that the Defence Force Regulations were unconstitutional in that they prohibited
members of the force from joining a trade union or participating in trade union activities.
Counsel for the Defence Force argued that members of the permanent force
were not workers as referred to in Section 23 of the Constitution, and, even if they
were, the limitation of their rights could be justified in terms of Section 36 of the
Constitution. They also relied on Section 200(1) of the Constitution, which provides
that ‘the defence force must be structured and managed as a disciplined military
force’. Allowing members to join unions might prove a threat to discipline. If the trade
union was allowed to strike, this would undermine the disciplined nature of the force.
In reply, the Union argued that it could adequately represent its members without
necessarily engaging in strike action.

210 Labour Relations: A southern African perspective

Pronouncements
The Court noted that ‘these rights were important to workers’ and that ‘black
workers were denied these rights for many years.’ It then went on to establish
whether members of the Defence Force could be classified as workers. The Court
conceded that permanent force members do not enter into a contract of employment
as generally understood; instead they ‘enrolled’ in the permanent force. However,
like other workers, they receive a salary and benefits and their membership may be
terminated if they are guilty of misconduct or when they reach pensionable age. The
Court further referred to Article (2) of the ILO Convention No 87 of 1948 (the Freedom
of Association and the Right to Organise) which provides that ‘workers and employees,
without distinction whatsoever, shall have the right to establish and, subject only to
the rules of the organisation concerned, to join organisations of their own choosing
without previous authorisation’. Article (9) of the same Convention does state that
‘national laws and regulations may determine to what extent the guarantees provided
for in this Convention should apply to the armed forces’. The Court concluded that, in
terms of the ILO Convention, members of the Defence Force should be classified as
workers, but that a government could limit the rights of such workers.
It was noted that in the United Kingdom, the United States of America and France,
no trade unions are permitted in the Defence Force, but that in other countries such as
the Netherlands, Germany and Sweden, trade unions are permitted although they may
act more in a consultative and representative role, rather than in a negotiating capacity.
The Court conceded that different conditions might have to apply to unions
operating in the permanent force but said it still did not agree with the argument
that allowing members to join unions would undermine discipline. Instead the Court
suggested that ‘… it may well be that in permitting members to join trade unions
and in establishing proper channels for grievances and complaints, discipline may be
enhanced rather than diminished’.
The Court’s decision was that the Section of the Regulations prohibiting trade
union membership be declared invalid, but that the order of invalidity be suspended
for a period of three months so that management would have time to put the
necessary policies and regulations in place.

Discussion
The judgment underscores the need to respect the rights granted to all citizens in terms
of the Constitution, but also points to the fact that such rights are never absolute. Thus,
while soldiers may join a union, an agreement might state that they or their union may
not be politically affiliated, and they may not engage in strike action.
The issue of military unionism again came to the fore in August 2009, when
soldiers marched on the Union Buildings and violence ensued. The soldiers’ actions

Chapter 5: Collective Bargaining 211

 led the Minister of Defence, Lindiwe Sisulu, and various other politicians, to insist
that soldiers should not be allowed to unionise, and Sisulu indirectly threatened
legislation to this effect.
Although the action by the soldiers might be condemned, it speaks of desperation
on their part, and evidently sprang from numerous problems which had not been
addressed. In these circumstances, denying soldiers the right to join unions may not
solve the problem.

Organisational Rights
Part A of Chapter 3 of the Labour Relations Act of 1995 grants unions a number of
organisational rights. These rights pave the way for a union’s entry to the workplace and
set the preconditions for recruitment of members and for subsequent collective bargaining
at both plant and industry level.

Exercising Organisational Rights

The Act also sets out the procedure to be followed if a union wishes to exercise these rights.
According to Section 21 of the Act, a registered union wishing to exercise any of the
rights provided for in the Act should inform the employer in writing of its intention to do
so. Such notice should:
■■ be accompanied by a certified copy of the union’s registration certificate
■■ specify the workplace where the union wants to exercise these rights
■■ provide proof of the union’s representativeness
■■ list the rights which the union wishes to exercise.

The employer is obliged to meet with the union within 30 days of receiving such notice,
whereafter the parties should attempt to reach agreement on the manner in which these
rights will be exercised. If no agreement can be reached, either party may refer the dispute
to the Commission for Conciliation Mediation and Arbitration (CCMA) which will attempt
conciliation. If conciliation fails, either party may request that the matter be taken to arbitration.

Representative versus Majority Unions

The Act distinguishes between rights granted to ‘representative’ unions and those accorded
to ‘majority’ unions.
Section 14 of the Act describes a majority trade union as one which (either singly or acting
jointly with another union) has as members the majority of persons employed in a workplace.
The term ‘representative union’ refers to a union (or two or more unions acting jointly)
which has ‘sufficient’ representation of employees employed in a workplace.

212 Labour Relations: A southern African perspective

The lack of clarity in the definition as to the meaning of ‘sufficient’ resulted in a number
of disputes. This is further complicated by the unclear definition of a workplace in the Act.
A workplace is defined as:
■■ ‘the place or places where the employees of an employer work’.

The Act goes on to state that workplaces under the same employer will be regarded as
separate only if they are ‘independent by virtue of their “size, organisation or function”.
It is the interpretation of the latter phrase that raises problems. In practice unions may be
regarded as representative if they represent 30 per cent plus of employees in the bargaining unit.

Rights of Majority Trade Unions

Majority unions are entitled to:
■■ enter the employer’s premises
■■ hold meetings on the employer’s premises outside working hours
■■ conduct ballots
■■ request stop-order facilities
■■ request time off for office bearers
■■ elect shop stewards/union representatives
■■ demand disclosure of relevant information
■■ establish, with the employer, thresholds of representativeness (see later)
■■ negotiate an agency shop or a closed shop agreement.

Rights Granted to Representative Unions

In terms of Sections 12, 13 and 15 of the Labour Relations Act of 1995 representative unions
are entitled to:
■■ gain access to the employer’s premises for the purpose of recruiting members
■■ communicate with members or otherwise serve their interests
■■ hold meetings with employees on the premises of the employer outside working hours
■■ conduct ballots among employees
■■ arrange for stop-order facilities (for the payment of union dues)
■■ get time off for union office bearers to perform their functions.

The rights granted to unions are not absolute. They are subject to reasonable arrangements
with the employer regarding time and place, insofar as this is necessary for security purposes,
and to avoid disruption.
Once the right to stop-orders has been granted, employees must apply in writing for
union dues to be deducted from their wages. The employer must pay over these amounts

Chapter 5: Collective Bargaining 213

to the representative union by the 15th day of the following month. The employee may
withdraw his permission for the deductions by giving the employer one month’s written
notice (three months in the case of a public service employee). With each month’s payment
the employer must furnish the union with copies of any notices of withdrawal, a statement
containing the names of every employee from whose wage’s deductions have been made
and the necessary details about the amounts deducted.

New Rights for Non-majority Unions

In 2014 Section 21 of the Labour Relations Act was amended by the insertion of sub-clauses
(8A) and (8B) relating to a situation where a non-majority union (or two or more unions
acting jointly) has requested the CCMA to adjudicate on a matter related to organisational
rights. In terms of the amendments a Commissioner may grant the union(s) the right to
appoint shop stewards and to disclosure of information on condition that
■■ the union already qualifies for the rights of a representative union
■■ no other union has been accorded those rights.

Where organisational rights have been granted to a union representing employees of a

temporary employment service, the rights granted will also apply to the client or clients of
the temporary employment service.
It is obvious from these amendments and those discussed it the section hereunder that the
government intends to provide increasing protection to employees not represented by a big
union and to those not in a traditional employment relationship. The amendment to some
extent erodes the distinction between majority and representative unions. It also indicates
that the legislators are increasingly adapting legislation to the changing nature of work.

Right to Establish Thresholds of Representativeness

A majority union or unions at a workplace or in a bargaining council may conclude an
agreement with the employer(s) in which thresholds of representativeness are specified. This
means that these parties can decide that a union which does not meet the threshold will not
be regarded as a sufficiently representative union at the workplace and will therefore not be
given the rights in terms of the Act.
An agreement which sets high thresholds could ensure the presence of one or two unions,
and make it impossible for any other union, even if it has sufficient representation, to
operate at that workplace or in a bargaining council. This type of arrangement could be both
advantageous and disadvantageous to the employer. On the one hand it discourages multi-
unionism, but on the other it may prevent effective representation of all employee interests.
(See events in the mining industry – where certain mining companies and the National
Union of Mineworkers (NUM) had established thresholds which effectively prevented
the Association of Mining and Construction Workers (AMCU) from gaining recognition
(Chapters 2, 4 and 13).

214 Labour Relations: A southern African perspective

Probably because of the use of thresholds to exclude other unions, the Labour Relations
Amendment Act of 2014 brought in a new Section 21(8C). This section refers to a union
(or two or more unions acting jointly) which does not meet a threshold of representation
established by the other parties. The amendment allows a Commissioner, in arbitrating
a dispute about organisational rights, to grant the union(s) the rights of a representative
union, on condition that they represent a ‘significant interest’ and that the parties who set
the threshold (namely the employer and the majority union) have had the opportunity to
participate in the arbitration proceedings.
As in all other disputes about organisational rights, the commissioner, when making a
decision, must take the following into account.
■■ the nature of the workplace
■■ the nature of the sector in which it operates
■■ the organisational history of the workplace or any other workplace of the employer.

The Commissioner should also try to minimise:

■■ the proliferation of trade unions at the workplace
■■ the additional financial and administrative burden placed on the employer.

These restrictions indicate that the unions concerned might not easily be granted the rights
in question, but it does give a union which may represent neglected or other interests a foot
in the door. The term ‘significant’ has not been defined. It will be up to the Commissioner
to make a decision according to the particular circumstances.

Case Review: Application for Representative Rights

IMATU versus CCMA, Joseph Williams MATUSA,

SAMWU AND SALGA
(Labour Court November 18, 2016)
Background
The case involves an appeal by the Independent Municipal and Allied Workers. Union
(IMATU), against a decision made by a CCMA appointed arbitrator to grant the rights
contained in Sections 12, 13 and 15 of the Labour Relations Act to the Municipal
and Allied Trade Union of South Africa (MATUSA), The latter union had claimed these
rights in terms of the new section 21(8C)of the Act (see above).
The history between MATUSA and IMATU had, at the time when MATUSA made
the request, already been antagonistic as IMATU had tried to prevent the other union
from registering.

Chapter 5: Collective Bargaining 215

MATUSA believed that it had sufficient membership at the Stellenbosch Municipality to
be granted representational rights at the workplace (being the Stellenbosch Municipality)
where it claimed to have 15% representation against the 25% of the South African
Municipal Workers Union (SAMWU)and the 29% representation of IMATU
However, the majority unions nationally are SAMWU and IMATU. Together with
the South African Local Government Association they had negotiated a national
agreement that representation rights would be granted only to unions which,
nationally, have at least 15% representation. (Significantly, this agreement was made
after MATUSA had applied for organisational rights.)

Argument

At Arbitration
According to the arbitrator the matter required a more holistic approach as the
intention of the new Section 21(8C) was clearly to extend the right of representation
to minority unions. This reflected a renewed emphasis on the freedom of
association principle.
The arbitrator further took into account the question as to whether the
municipality could be regarded as a separate workplace. He found that he municipality
functioned as an independent unit and decisions regarding its activities were taken
there. Moreover, the municipality already engaged in collective bargaining with
IMATU and SAMWU. In the light of these considerations he declared it to be a
separate workplace.
The arbitrator then looked at the representivity of the other unions at the workplace
and the fact that the municipality already engaged in bargaining with these unions
which did not have substantially more representation than MATUSA,
Based on the above considerations, the decision of the arbitrator was that MATUSA
should be accorded the rights of a representative union at Stellenbosch Municipality.
Consequently he directed the union to sign up its members and the municipality to
commence collecting dues for the union.

At the Labour Court

The Labour Court judge was quite scathing of the arbitrator’s decision, maintaining
that the most important question was whether MATUSA met the national threshold,
being 15 % of all employees in this sector. If it did not, it could not be granted
organisational rights.
In the judge’s opinion Section 21(8C) is subordinate to Section 18 (which would
mean that once a threshold had been set, a union which did not meet the threshold
would have no rights in terms of 21(8C).

216 Labour Relations: A southern African perspective

The judge strongly criticised the arbitrator for not taking into account other factors
such as the economic implications, the effect on the collective bargaining regime
and the need to avoid a proliferation of unions. In short, the arbitrator had not asked
enough questions.
Without exploring these questions himself, the judge seemed to think that the
mere fact that the arbitrator had not applied his mind to these factors was sufficient
reason for overturning the arbitrator’s decision.
The decision of the Labour Court was that the arbitrator had committed ‘an error
of law’ and that the case should revert to the CCMA but under a different arbitrator.

Discussion
The arbitrator and the judge viewed the case from diametrically opposite angles,
The arbitrator saw the municipality as a separate workplace and the request for
rights to relate only to that workplace. He referred specifically to the audit of union
representation at the municipality, expressing the opinion that a 15% representation
was quite sufficient, especially as the other unions did not individually have a majority.
For the arbitrator a central consideration was the right to freedom of association,
an aspect which did not seem important to the Labour Court.
The arbitrator did not view it as necessary to explore the wider context (for example,
the effect granting the rights would have on orderly collective bargaining. That he
did not see the necessity to do so may have arisen from the fact that MATUSA was
demanding only the right to represent its members at the workplace, to appoint shop
stewards and to have union dues deducted and not the right to bargain collectively.
For him the situation was straightforward. Taken that his circumscription of the
workplace was correct, the union had sufficient representation in relation to the
other unions and should therefore at least be accorded representative rights
The Labour Court judge, in reaching his decision, viewed the entire situation in the
framework of Section 18 of the Act and the agreement on thresholds reached at a
central level. His opinion that Section 21(8C) of the Act is subordinate to Section 18
is problematic as Section 21(8C) (in terms of which the application was brought) is
specifically geared to allowing for exclusions to Section 18 agreements.
The judge’s other criticism of the arbitrator’s approach was the fact that the
arbitrator had not considered the precautions relating to proliferation of unions,
orderly collective bargaining, etc. (‘he did not ask enough questions’), but an argument
could be made that this reflects an emphasis on form rather than content.
Surprisingly, neither the arbitrator nor the judge referred to Section 22 of the Act,
which could be directly related to the dispute (see next case review).

Chapter 5: Collective Bargaining 217

 Case Review: Representation Thresholds

South African Correctional Service Workers Union

(SACOSWU) v Police and Civil Rights Union (POPCRU)
and Others
Labour Appeal Court Johannesburg 31 May 2017
Background
The Department of Correctional Services is party to the Public Sector Co-ordinating
Bargaining Council and the General Public Service Bargaining Council, but also has
its own lower level bargaining forum in the form of the Departmental Bargaining
Chamber. Two unions, namely POPCRU and DENOSA (the Democratic Nursing
Association of South Africa) are party to this Chamber. These parties negotiated an
agreement whereby management would only engage in negotiation with a union
which represents 9 000 plus (or 4 500 in the case of two union operating jointly) of
the Department’s employees.
In 2009 SACOSWA, a newly registered union, with a membership of 1 500,
approached management requesting the right to appoint shop stewards to represent
their members, as well as the deduction of dues on behalf of the union (the latter only
temporarily until payment arrangements had been made with the National Treasury).
When this demand was initially refused SACOSWA turned firstly to the International
Labour Organisation and then to the President of the Republic and in 2010 the then
National Commissioner gave the green light for negotiations with SACOSWA.
POPCRU thereupon declared a dispute alleging that by negotiating with SACOSWA
the department was contravening the threshold agreement. When conciliation failed,
the matter was submitted to arbitration.

Pronouncements

At Arbitrations
The arbitrator found that there was nothing to prevent management from negotiating
with a union which did not meet the threshold for representation. In making this
decision the arbitrator relied heavily on the Bader Bop case where the company
had sought an interdict against NUMSA (the National Union of Metal Workers of
South Africa) which had threatened a strike in reaction to management’s refusal
to give the union the organisational rights of a representative union even though
the union represented only 26% of employees. The matter had eventually reached
the Constitutional Court which, after lengthy arguments and certain caveats, had

218 Labour Relations: A southern African perspective

decided that nothing in the Act prevented the union from exercising its right to
freedom of association and, with it, the right to strike in pursuance of its demand.

At the Labour Court

The Labour Court emphasised the fact that majoritarianism permeates the labour
relations system. Moreover, the agreement with SACOSWU was completely incompa-
tible with the POCRU agreement re thresholds of representation and was therefore
unlawful.

At the Labour Appeal Court

The Labour Appeal Court to a large extent echoed the sentiments expressed by the
Constitutional Court in the in the Bader Bop case. It agreed that the system was largely
based on majoritarianism but, in the Court’s opinion, this did not necessarily conflict
with the freedom of association. There was no reason why, in a majoritarian system, a
minority union should not be allowed to represent the interests of its members.

At the Constitutional Court

The Constitutional Court commenced by referring to the Bader Bop case and
thereafter highlighting the guidelines on freedom of association and the right to
strike as set out by the International Labour Organisation and Section 23 of the South
African Constitution. The latter gives employees the right to freedom of association
and the right to strike in pursuit of their objectives. According to the Court any
regulation which infringes on the freedom of association or the right to strike is
unconstitutional. This, the court was at pains to say, does not negate the objectives
of the Labour Relations Act and the need for the orderly conduct of the relationship.
Any questioning of the Act should only be for special purposes.
The Court admitted that generally a proliferation of unions might not be desirable,
but at the same time the concept of a monopoly did not fit with the principal of
freedom of association. The most representative union should not deprive others of
the right to at least speak on behalf of their members. In fact, in the Court’s opinion,
a majoritarian system can survive only if the minority is allowed to coexist.
Most importantly, the Court went on to clarify the seemingly contradictory
contents of Sections 18 and 20 of the Act. Section 18 allows a union or two or
more unions acting jointly to set thresholds of representation. To a large extent
this has been interpreted as allowing the majority parties to keep out unions which
did not meet the threshold. This interpretation ignored Section 20 in the same
chapter, which states that nothing in this part of the Act prevents the conclusion
of an agreement regarding organisational rights. As the Court interpreted it, Section
18 merely means that, once a threshold has been set, any union which meets the
thresholds will have an automatic right to representation. At the same time Section

Chapter 5: Collective Bargaining 219

 18 does not prohibit management from engaging in negotiations with unions which
are not representative in terms of the Act or do not meet the threshold and also
from granting them representational (not majority) rights. The purpose of inserting
Section 20 is, the Court said, surely to give minority unions a foot in the door and
to emphasise the fact that the principle of freedom of association takes precedence
over agreements which might be read to curtail that freedom.
In essence: while majoritarianism permeates the system and it may be wise to curb
the proliferation of unions, the right of a union to speak on behalf of its members
cannot be denied.

Discussion
The thrust of the Labour Relations Act has in the past most certainly been towards
majoritarianism. While perhaps organisationally useful, it has led to the situation
where only a fraction of the working population is represented in official bargaining
arrangements and where majority unions have used thresholds to keep out even
those parties which have significant representation. It has also put majority unions in
entrenched positions on bargaining councils and contributed to union representatives
becoming more and more distanced from their constituents. That the legislators have
become aware of the problem is proved by the amendments referred to earlier in this
text. However, those amendments are minor in comparison to the more definitive
statement by the Constitutional Court that, in terms of Section 20, any union has the
right to approach the employer with a request for representation and that any regulation
or arrangement which infringes on the freedom of association is unconstitutional.

Majoritarianism does not always ensure equal protection for all and for this reason
safeguards need to be put in place. The need for a move away from majoritarianism
may be precipitated by concern for vulnerable employees, but should also be seen in
the light of present and future changes in the nature of work - in situations where
employees may be widely and thinly spread and where existing representational and
bargaining arrangements do not offer sufficient guidelines and protection.

The Right to Appoint Shop Stewards

Election of Shop Stewards
In terms of Section 14 of the Act, a majority union, or two or more unions which together
represent the majority of employees at a workplace, (and now also a union which has been
granted S14 rights by a Commissioner – see above) have the right to elect shop stewards
(union representatives). The number of shop stewards allowed is as follows:
■■ in any workplace where 10 union members are employed, one shop steward
■■ with 10 to 50 union members, two shop stewards

220 Labour Relations: A southern African perspective

■■ with 51 to 300 members, one additional shop steward for every 50 members, to a
maximum of seven
■■ with 301 to 600 members, seven shop stewards for the first 300 members and one for
every additional 100 members, to a maximum of 10
■■ for a membership of between 601 and 1 000, one shop steward for every 200 members
in excess of 600, to a maximum of 12
■■ with more than 1 000 union members, one shop steward for every 500 additional
members, to a maximum of 20.

The nomination, election, terms of office and removal of a shop steward are determined by
the union’s constitution.

Shop Steward Rights

Sections 14(4) and (5) and Section 15 of the Act spell out the rights of shop stewards and
union office bearers at the workplace. These include the right to:
■■ represent co-employees
■■ monitor the employer’s implementation of the Act
■■ report any transgression of the Act
■■ take reasonable paid time off during working hours to perform the duties of a shop
steward or to receive training.

The Right to Disclosure of Information

Section 16 of the Act provides that a majority union and the shop stewards of that union
are entitled to demand all relevant information, including copies of documents, which they
require to carry out their functions at the workplace.
If an employer is engaged in negotiation with the union concerned, he is obliged to furnish
the union with all relevant information required by the union for effective representation,
consultation, co-decision-making or collective bargaining. Where the information requested
is confidential, the employer must inform the union in writing to this effect. A union cannot
demand information which:
■■ is legally privileged
■■ cannot be furnished without disobeying a court order
■■ could cause the employer substantial damage if it becomes public
■■ is private to a person (unless such person grants permission).

Disputes regarding disclosure may be referred to the Commission for Conciliation, Mediation
& Arbitration (CCMA), which will attempt to mediate and, failing an agreement, resort to
arbitration.
The Commissioner hearing the dispute must first decide whether the information requested

Chapter 5: Collective Bargaining 221

is relevant or not. If he finds it to be relevant, he needs to consider the disadvantage which
either side may suffer if the information is disclosed (or not disclosed). If the Commissioner
decides that the information ought to be disclosed, he may set conditions aimed at limiting the
damage. The Commissioner is also charged with considering whether breach of confidentiality
had previously occurred in the relationship. Where previous breaches have occurred, the
Commissioner may withdraw the right to information at that workplace for a specified period.

Case Review: Demand for Disclosure

SA Commercial Catering & Allied Workers Union &

Koppel Bacher & Co (Pty) Ltd t/a GS Vickers & Co.
(CCMA: KNDB 5989-07)
Background
The union in question, which was at the time engaged in wage negotiations with
the company, had demanded disclosure of the organisation’s financial statements
for the years 2005 and 2006, as well as the management accounts for 2007. It had
based its demand on Section 16 of the Labour Relations Act, maintaining that it
needed the information to engage in meaningful negotiation. The employer on his
part maintained that the information sought was not relevant and consequently
refused to disclose it, whereupon the union requested that the CCMA make a ruling
on the issue.

Argument
At the CCMA, the union explained that the information sought was not unique,
was not confidential and would not be disclosed by the union to the company’s
competitors. It needed the information to back up its wage claims and to challenge
management on increases granted to non-union members, including directors. The
union argued further that their members had to be able to compare the performance
of the company with their wage demands.
The company argued that the information was not relevant because the
organisation had not based its offer on affordability but on inflation and market-
related increases. The information was confidential, and a breach of confidentiality
could cause considerable harm.

Pronouncements
The Commissioner noted that the onus was on the union to prove, on the balance of
probabilities, that the information sought was relevant. This would, to a large extent,
depend on the purpose for which it was required. If the information was required

222 Labour Relations: A southern African perspective

for collective bargaining purposes, only information which would allow the union to
engage in effective consultation and bargaining needed to be disclosed.
Referring to the judgment in SACCAWU v Pep Stores (1998), the Commissioner set
out the purpose of disclosure as follows:
• to facilitate the consultative process
• to enable the union to engage in meaningful attempts to reach consensus
• to provide an understanding of the problem
• to enable the union to contribute to a solution
• to bring knowledge and reason to a situation
• to introduce rationality into the participative process.

According to the Commissioner, the employer is not obliged to respond to a

‘generalised’ demand for information. On the other hand, it was not up to the
employer to decide whether information was relevant or not. The decision should
be based on the purpose of disclosure and on whether the information would add to
the union’s ability to engage in meaningful consultation and negotiation – in other
words, whether it would be ‘effective’.
The Commissioner concluded that the information sought by the union was not
relevant. The ambit in which the union was bargaining was fairly narrow, while
the information it sought was quite wide and encompassed the entire business of
the employer. The Commissioner advised the union to establish a link between the
information and the purpose for which it was required. He suggested that, in the
existing context, a demand for specific information on unit labour costs, gross sales
figures and net income before tax would have been more appropriate.

Discussion
As noted during this hearing, there is a shortage of case law on the disclosure of
information in the collective bargaining context. Most of the cases on disclosure have
related to that demanded during a retrenchment exercise, which involves consultation
and problem-solving, and not collective bargaining. Those cases, too, have pointed to
fitness for purpose and the context in which disclosure is demanded. If, for example,
the employer in the case above had argued that it could not afford increases, more
comprehensive disclosure of its financial situation may have been justified.
There are commentators who argue that as much information as possible should
be disclosed, but others, such as the Commissioner in this case, argue that this would
result in unions going on a ‘shopping expedition’. What is obvious is that there are
no clear guidelines as to the type and extent of information to be disclosed, and that
each case will be judged in terms of its particular circumstances.

Chapter 5: Collective Bargaining 223

The Right to negotiate for Agency Shops or Closed Shops
The problem
Unions generally have a problem with so-called ‘free riders’. These are employees who do
not belong to the union and do not pay union dues, but who fall within the bargaining unit.
This means that when improved wages and conditions of service are negotiated, they too
are beneficiaries. Trade union members argue that these employees are riding on the backs
of those who pay the dues. The solution, as found in many labour relations systems, is the
establishment of Agency Shops or Closed Shops.

Agency Shops
Section 25 of the Labour Relations Act of 1995 provides for the establishment of agency
shops, subject to agreement between an employer and a majority union. An agency-shop
agreement does not oblige employees to become union members, but it may oblige non-
members who are eligible for union membership to pay a subscription. The amount of
the subscription should not exceed the amount payable in dues by union members. These
subscriptions are paid into a separate fund, administered by the majority union. The fund
should be used to advance the ‘socio-economic welfare’ of all employees. Thus, the union
could apply the funds to support its bargaining initiatives, but also for more general
purposes, such as the establishment of a crèche or recreation facilities at the workplace.

Closed Shops
Section 26 of the Act contains provision for closed-shop agreements between a majority
union or unions and an employer or with an employers’ association in a bargaining council.
A closed-shop agreement obliges all eligible employees to become members of the majority
union. However, the legislation does provide that persons already in employ at the time that
the agreement is concluded, or persons who are conscientious objectors, cannot be obliged
to join the union. The conditions of an agency shop may then be applied to them.
A closed-shop agreement may be concluded only if two-thirds of the employees to be
covered have voted in favour of such agreement.
The agreement must stipulate that no portion of the subscriptions should be used to pay
for affiliation to a political party or as a contribution to a political party or candidate; nor
may the funds be applied for any other purpose than the promotion and protection of the
socioeconomic welfare of employees. Closed-shop agreements have to be subjected to a
vote every three years, or when one third of the employees covered by the agreement so
request. Also, a union which is not party to such agreement, but which has a significant
interest in or representation among the employees concerned, can apply to be admitted to
the agreement. If its application is refused, the dispute may be referred to the CCMA.

224 Labour Relations: A southern African perspective

Evaluation
A union party to a closed-shop agreement may, in terms of its constitution, withhold
membership from an employee or may terminate his membership for ‘fair’ reasons, including
(but not limited to) behaviour which hampers ‘the collective exercise of trade union rights’.
Section 26(6) states that it is not unfair for an employer to dismiss an employee who refuses
to join a closed-shop union, who has been refused membership of a trade union which is
party to a closed shop, or whose membership has been terminated by the union. This could
mean that an employee or group of employees who refuse to take part in a strike could have
his/their membership terminated. The employer would then be placed in a position where
he has to dismiss such employee(s).
The situation is even more serious where a closed shop has been negotiated at centralised
level and then applied to an entire sector or industry. Non-party employees who refuse to
take part in a national strike may have to be dismissed. The Labour Court may find such
dismissal to be unfair but only if the reasons for withholding or terminating membership
are found to be unfair.
While the concept of an agency shop may still be defensible, the closed shop has long
been the subject of great controversy. The main criticism is that it negates the individual’s
right to freedom of association, guaranteed in terms of both labour legislation and the
Constitution (see the most recent case law above).
Although rights are never absolute, the rights entrenched in the Constitution may,
according to Section 36(1) of the Constitution, be limited ‘only if the limitation is reasonable
and justifiable in an open and democratic society based on human dignity, equality and
freedom, taking into account all relevant factors’. These factors include:
■■ the nature of the right
■■ the importance and purpose of the limitation
■■ the nature and extent of the limitation
■■ the relation between the limitation and its purpose
■■ the existence of less restrictive means of achieving this purpose.

It could be argued that, if the above criteria are applied, the infringement of a right as
perpetrated by the closed shop should not be allowed. The right in question, namely the
freedom of association, is one of the cornerstones of a democratic system. Consequently,
any effort to limit it must be for very sound and important reasons. The only reasons for
allowing a closed shop are either to further the interests of the majority union or to facilitate
collective bargaining. These are hardly important enough to justify limiting a right and
there is thus very little relation between the limitation and its purpose. Also, the provision
for agency shops already addresses the main problem of free riders. It does so by a less
restrictive means, and without infringing on the freedom of association.
In addition to the above, the clause relating to closed shops directly conflicts with the Act
in which it appears. The Labour Relations Act entrenches not only the right to freedom of
association, but also the right of employees not to be unfairly dismissed. An unfair dismissal

Chapter 5: Collective Bargaining 225

is one for which there is no fair reason. A fair reason would be one related to the employee’s
work, performance or behaviour in the relationship with the employer. The closed-shop
legislation allows for a dismissal unrelated to the actual employment relationship and to the
employee’s action in that relationship.
There is, moreover, a strong tendency among closed-shop unions to become entrenched in
often cosy relationships and to neglect servicing their members. It is interesting to note that
closed shops were a feature of the pre-1979 labour dispensation, when the system was not open
to all race groups and when the then dominant TUCSA unions were entrenched in bargaining
councils and closed-shop arrangements. It was these very aspects that the newly formed
COSATU and CUSA unions found unacceptable (see Chapters 2 and 4). In fact, when the system
opened up in 1979 and TUCSA started losing its foothold, it tried to maintain its position by
extending closed-shop agreements to black African employees. The Labour Relations Act of
1979 did not contain provision for a closed shop, and the concept was only introduced again
after 1995. The old adage that history teaches nothing may well apply in this context.

Case Review: Agency Shop

National Manufactured Fibre Employers’ Association &

Another v Bikwani & Others
(Labour Court: C639/98)
Background
The applicants in this case were the relevant employers’ association, SANS Fibre (Pty)
Ltd and the South African Clothing and Textile Workers’ Union (SACTWU).
SANS had recognised SACTWU as the majority union in the organisation. At the
time the issue arose, the company had already had a long-standing relationship with
this union, which was also represented on the Bargaining Council. Another union, the
South African Chemical Workers’ Union (SACWU), had for some time sought to make
inroads at SANS, but, although it did have members in the organisation, these were
not sufficient to entitle it to organisational rights.
In 1998, SANS and SACTWU concluded an agreement, one clause of which was headed
‘Agency Shop’. The agreement, which was in accordance with the Bargaining Council
Agreement, provided that non-union) members pay an Agency-Shop fee to SACTWU.
Following the agreement, SANS commenced deducting the fee from those eligible
employees who did not belong to any union at all, as well as from the SACWU members.
SACWU, whose members now had to pay double dues, declared a dispute and
the matter was arbitrated by the CCMA. The Commissioner interpreted the phrase
pertaining to ‘non-union members’ to relate only to those eligible employees who

226 Labour Relations: A southern African perspective

were not members of any union at all. He explained that the word ‘union’ had not
been written with a capital letter in the relevant sentence and consequently did not,
in his opinion, refer to all persons who were not members of the majority union,
irrespective of whether they were members of another union. The finding was that
SANS had erred by deducting the Agency-Shop fee from SACWU members and the
Company was ordered to repay all monies so deducted.
The Company and SACTWU subsequently submitted the matter for review by the
Labour Court on the grounds that the award was not justifiable in terms of the
reasons given, nor was it rationally justifiable.
SACWU, on the other hand contended that it was logical that an agency-shop
agreement should apply only to those eligible employees who were not members of
any union

Pronouncements
The Court rejected SACWU’s contention, arguing, in its turn, that it would not be
logical for the majority union to enter into an agreement excluding employees who
belonged to another union. Non-union employees would then merely join the other
union in order to avoid paying the Agency-Shop fee. They would continue to ‘free-
ride’ at the expense of the majority while enjoying benefits, such as representation,
from the other union.
Before considering the case in detail, the Court first pronounced that employees,
irrespective of their membership of the other union, remained free riders as ‘… they
make no contribution towards the collective bargaining costs of the representative
union and yet they receive the benefits of that union’s efforts in the same way as
that union’s members who foot the bill thereof.’ In order to establish whether the
Commissioner had exceeded his powers, the Court turned to Section 25(1), (2) and
(3) of the Labour Relations Act. Referring to the phrase ‘who are not members of the
trade union’, it concluded that because the only union mentioned previously in the
paragraph was the ‘representative trade union’ and because the definite article (‘the’)
had been used in the phrase mentioned, it was clear that the legislature intended
the Agency Shop to apply to all persons who were not members of the representative
(majority) union. The Court concluded that the Commissioner’s interpretation was
‘at complete variance with the very essence of the agency-shop agreement as
contemplated by S25’. The opinion expressed by the Court was that
… an agency-shop agreement as contemplated by S25 is not concerned
with whether an employee is or is not a member of a minority union but is
concerned with whether or not the employee does or does not contribute to
the collective bargaining costs of the representative union the fruit of whose
sweats he enjoys.

Chapter 5: Collective Bargaining 227

Discussion
Agency-shop agreements are bound to cause dissatisfaction among those employees
who already belong to another union, as well as those employees who do not belong
to any union at all.
While the ‘free rider’ problem of the majority union is understood, it could be
argued that these persons gain from collective bargaining by the majority union only
because it suits both management and that union to include them in the bargaining
unit. Uniformity works in favour of the majority union, and it could be regarded as
unreasonable for it still to extract a fee from non-union members. The situation
becomes even more complicated when, as in the case above, certain employees pay
dues to two unions while receiving only a half service from each: bargaining benefits
from the majority union and representation from the union of their choice. A further
problem arises when more than one union is party to the agency shop. Non-union
employees may be obliged to pay a fee equal to that of the union charging the
highest subscription. Thus, non-union employees pay a higher amount than those
belonging to the other union, which levies a lower subscription fee.
Whatever the objections to agency-shop agreements, provision is made for
them in the Act and unions will continue to demand that employers enter into such
agreements. Furthermore, as has been indicated, the courts tended to interpret
disputes arising from these agreements solely in terms of the provisions of the Act
which gives majority unions the right to bargain for closed shops and agency shops.

Case Review: Closed Shop

South African Transport and Allied Workers Union and

Northwest Star
(2008029 ILJ224(BCA))
Background
SATAWU which had originally been the dominant union at Northwest Star, had, in
terms of a previous recognition agreement, had a closed shop in the organisation. The
original recognition agreement expired in 2000 and the new recognition agreement,
stated only that the parties ‘may’ conclude an agreement allowing for a closed shop.
However, when SATAWU in 2005 requested the establishment of a closed shop,
the company refused. When no agreement could be reached, the union declared
a dispute, claiming that the employer was obliged by Section 26(1) to enter into
negotiations towards a closed shop.

228 Labour Relations: A southern African perspective

During the proceedings it emerged that union representation at the organisation
had changed significantly since another union, the Transport and Allied Workers
Union, had come on the scene in 2000. The latter union now enjoyed 40 per cent
representativeness as against SATAWU’s 60 per cent. Management argued that it
would be unfair to TAWU, with which it also had a recognition agreement, and with
which it had a good relationship, to force its members to join SATAWU. (In its original
submission, the employer party also argued that it would be unconstitutional, but the
arbitrator did not deal with this aspect as it was beyond his powers.)
The arbitrator noted that SATAWU already had an agency shop agreement which
would allow for dues to be paid to it by all employees in the bargaining unit.
At the time of the hearing, Northwest Star was under judicial management and
looking to sell off part of its operations. Management argued that granting SATAWU
a closed shop could lead to labour unrest which would deter would-be buyers.

Pronouncements
The arbitrator noted that, pre-1995 the LRA had contained a duty to bargain, but
that the Labour Relations Act of 1995 contained no such compulsion. Instead it
provided for organisational rights to facilitate the bargaining process.
On the matter of the closed shop, the arbitrator expressed the opinion that closed
shops were viable when the union in question was the only union in the organisation
or, if there was another union, it did not have significant representation. He did pose
the rhetorical question as to why, if the company could grant the union an agency
shop, it could not also grant it a closed shop. The arbitrator then answered his own
question, explaining that an agency shop merely obliged the payment of union dues,
while a closed shop forced employees to join a union not of their choice. Indirectly
it was also suggested that, in this context the only reason for wanting a closed shop
in addition to an agency shop was to force the other union out of the organisation.
In reaching his decision that SATAWU’s application should fail, the arbitrator cited
the purpose of the Labour Relations Act which is to achieve economic development,
social justice, labour peace and democratisation of the workplace. Granting a closed
shop in the organisation’s present circumstances would affect its economic prospects,
lead to labour unrest and retard democratisation in the workplace.

Commentary
SATAWU’s reasons for wanting a closed shop while it already had an Agency Shop were
indeed questionable. It is encouraging that other factors were seen as a weightier
than the letter of the law. While the agency shop may still be acceptable, the closed
shop does negate the freedom of association. At the time of these hearings the
Labour Courts were hesitant to entertain arguments relating to the constitutionality

Chapter 5: Collective Bargaining 229

 of the agency shop but now the Constitutional Court itself has declared that any
arrangement which negates the freedom of choice and the freedom of association
principles, should be judged as unlawful (see the POPCRU case above), The time has
perhaps come for a review of the relevant provisions.

Enforceability of Agreements
Centralised bargaining council agreements have always been enforceable in terms of the Labour
Relations Act. However, recognition and other plant-level agreements were regarded merely as
contracts at common law and were, therefore, enforceable only by the lengthy processes of
the civil courts. Section 23 of the Labour Relations Act of 1995 made all collective agreements
binding on the parties to the agreement, as well as on employees who are not members of a
party union, if such employees are identified or bound in the agreement and if the union is a
majority union. Agreements remain binding for their duration even on a member of a union
or employers’ association who withdraws or becomes a member during the currency of such
agreement. Collective agreements automatically change individual contracts of employment.
Where a dispute arises concerning the interpretation or implementation of a collective
agreement, and if there is no existent or operative dispute-settling agreement between the
parties, or if one party has obstructed settlement, the dispute may be submitted to the CCMA
for conciliation and, failing settlement, for arbitration (see Chapter 12).

Centralised Bargaining Structures

Legislation for Bargaining Councils

As frequently mentioned in this text, the Labour Relations Act of 1995 promotes the use of
centralised bargaining structures. In essence, it retains the previous industrial councils, now
renamed bargaining councils, and extends these also to the public service. Some aspects of
councils have been modified, and provision has been made for statutory councils in areas
where unions may not be sufficiently representative (see chapter 3).

Establishing a Bargaining Council

Voluntary Agreement by Parties
A bargaining council may be established by one (or more) employer party and one (or more)
employee party. The employee party must be one (or more) registered trade union, while
the employer party can be one (or more) registered employers’ association. The State may
also be regarded as the employer party in a sector or area in which it acts as the employer.
Bargaining councils are established when these parties voluntarily come together and
agree to bargain with each other, but the council will come into existence in the official
sense only after it has been registered by the Labour Relations Registrar.

230 Labour Relations: A southern African perspective

Constitution of a Bargaining Council
In order to register, a council needs first to have a constitution. Section 30 of the Labour
Relations Act of 1995 provides that a bargaining council constitution must:
■■ state how representatives on the council and their alternatives are to be appointed (half
the representatives have to be appointed by the employer party and half by the employee
party)
■■ provide for representation by small and medium enterprises
■■ provide rules for the appointment, removal, duties and powers of office bearers and
officials
■■ state how representatives will vacate their seats
■■ state how decisions are to be made
■■ provide procedures for the calling and conduct of meetings, including requirements for
a quorum and the keeping of minutes
■■ provide for the establishment and functioning of committees
■■ establish procedures for dealing, by way of arbitration, with disputes regarding the
interpretation and implementation of the council’s constitution
■■ establish procedures for dealing with disputes between the parties to the council
■■ set out procedures for dealing with disputes between employers and employees (unions)
covered by the council
■■ state under which circumstances additional members will be allowed to join the council
■■ state for which purposes funds will be applied
■■ state how funds will be deposited and excess funds invested
■■ provide for alteration of the constitution and the winding-up or liquidation of the council
■■ establish a procedure for granting exemptions from collective agreements (by a party
independent of the council).

Registration of Bargaining Councils

Once a constitution has been approved by all parties, it is submitted to the Registrar, together
with the prescribed application and any other information which might be of use to the
Registrar. The Registrar publishes in the Government Gazette a notice of the application
received, and allows time for objections to be lodged. The Registrar will satisfy himself that:
■■ the council has complied with all prescribed procedures
■■ the constitution contains all the prescribed provisions
■■ no other council is registered for the same scope
■■ the parties are ‘sufficiently representative’.

Once the Registrar is satisfied, he must register the council.

Chapter 5: Collective Bargaining 231

Functions of Bargaining Councils
In terms of Section 27 of the Labour Relations Act of 1995, bargaining councils may:
■■ conclude and enforce collective agreements
■■ prevent and settle disputes
■■ conduct conciliation and arbitration in terms of the Act, or provide for such conciliation
and arbitration
■■ establish a fund for the settlement of disputes
■■ establish and promote education and training schemes
■■ establish and administer pension, provident, medical aid, sick, holiday and unemployment
funds
■■ make representations to NEDLAC (or an appropriate body) regarding policy or law
affecting their industries
■■ determine, by collective agreement, issues which for the purposes of a strike or lockout
will be regarded as ‘issues in dispute’
■■ delegate additional matters for consultation to workplace forums
■■ provide industrial support services in their sector
■■ extend their functions and services to home workers and the informal sector.

A bargaining council thus has two basic functions: a collective bargaining function and
a dispute settlement function. The council is obliged by law to attempt settlement of all
disputes in the industry or sector irrespective of whether the parties to the dispute are
members of the Council or not (see Chapter 12). However, the main purpose in establishing
a bargaining council is to create a forum for collective bargaining. Through negotiations
on the bargaining council, the parties regulate the relationship between them and reach
agreement on substantive issues such as wages and working conditions.
The Labour Relations Act of 1995, by specifically granting bargaining councils powers
to establish funds and have an input into policy and law, envisaged also a broader level of
operation for these councils in the industries or sectors in which they operate, even to the
point of determining matters for consultation with workplace forums in their industries and
providing support services to all persons employed in their sector.

Bargaining Council Agreements

Contents of Agreements
Bargaining council agreements are largely substantive agreements dealing with wages and
conditions of service, but they may also contain procedural items such as job evaluation and
grading systems, retrenchment procedures and even grievance and disciplinary procedures.
Usually the substantive items in the agreements, and particularly wage rates, are renegotiated
from year to year or, where the agreement so determines, every two or three years.

232 Labour Relations: A southern African perspective

Matters dealt with in council agreements include the following:
■■ minimum rates, average minimum rates and method of calculation
■■ wage and salary scales
■■ grading systems
■■ piecework rates
■■ payment of council levies
■■ pension, insurance and sick fund contributions
■■ limitations or prohibitions on overtime
■■ payment of money in lieu of notice
■■ prohibitions on deducting from the employee’s wages monies other than those specified
in the agreement
■■ prohibitions on set-off debts
■■ regulations regarding time and manner of payment to employees
■■ regulations regarding the maximum number of employees in each section, or regarding
proportionate distribution of employees
■■ prohibitions on piecework
■■ prohibitions on the employment of persons under a specified age
■■ prohibitions on ‘payments in kind’
■■ prohibitions on contract work
■■ provision for a closed shop
■■ regulations regarding hours of work, maximum working hours per week, payment for
overtime and for work on Sundays and public holidays
■■ notice periods for different categories of employees
■■ regulations pertaining to paid public holidays, annual leave, sick leave, lay-offs, short
time and desertion.

Status of Bargaining Council Agreements

It becomes obvious from the above that these agreements deal in detail with the regulation of
substantive conditions of employment – so much so that they resemble the Basic Conditions
of Employment Act. They are, in fact, basic-condition regulations for particular industries
or sectors. Once gazetted, the agreement becomes subsidiary legislation and supersedes
similar provisions in the Basic Conditions of Employment Act (with the exception of the
core conditions in that Act (see Chapter 3).

Extension of Agreements
The parties to a bargaining council do not necessarily include all employers and employees
in that industry sector or area. Since one of the main purposes of a centralised bargaining
forum is to establish uniformity, the parties will want all employers and employees to be

Chapter 5: Collective Bargaining 233

covered by their agreement. This they may do by requesting the Minister of Labour to
extend their agreement to non-parties who fall within the registered scope of the council.
To do so they need to prove to the Minister that one or more unions whose members
constitute a majority among the unions party to the council, and one or more employers’
associations whose members supply employment to the majority of persons employed by
party employers, have voted in favour of such extension. The Minister in turn must satisfy
himself that:
■■ the unions on the council are representative of the majority of employees within the
registered scope of the council
■■ the employer parties employ the majority of employees in the council’s registered scope
■■ the non-parties mentioned in the request fall within the registered scope
■■ the agreement makes provision for an independent body to hear appeals regarding
exemptions from the agreement
■■ the agreement contains criteria to be applied by this body in hearing the appeals
■■ the agreement does not discriminate against non-parties.

Despite the requirement that parties should have majority representation, Section 32(4) of
the Labour Relations Act of 1995 allows the Minister to extend an agreement by parties
which do not have majority representation if he or she is satisfied that the council is
‘sufficiently’ representative and that failure to extend the agreement will be detrimental
to collective bargaining at sectoral level. Since the term ‘sufficiently representative’ is not
defined, this leaves the Minister with a great deal of discretion to promote centralised
bargaining arrangements.

Arguments For and Against Extension

The extension of centralised agreements to non-parties is a contentious issue. Smaller
organisations argue that this gives councils unwarranted powers of control and does not
allow for freedom of association. They argue that smaller enterprises struggle and even go
under because they have to comply with the conditions, including wage levels, set out in
the agreement, and also pay levies to the council.
The original purpose of extending agreements was to prevent the exploitation of non-
unionised employees. This presupposed that councils would set only minimum-level
wages and conditions of service. The Basic Conditions of Employment Act now establishes
relatively satisfactory employment conditions, and it is to be doubted that wage levels set
by councils (particularly those dominated by large employers) are minimum-level wages.
It could be argued that parties to councils, and the government, may have lost sight of the
actual purpose of these councils, and may be using the system merely to extend the control
and influence of the council, rather than to protect employees and to promote the industry.
A case in point can be found in recent developments in one of the oldest and largest
councils in the country, namely the Metal Industry Bargaining Council. This Council has
long been fraught with accusations that, although several employers’ organisations and

234 Labour Relations: A southern African perspective

various unions are party to the Council, it is dominated by the Steel and Engineering
Industries Federation of South Africa (SEIFSA) and the National Union of Metal Workers of
South Africa (NUMSA). The perception of some employers in the industry is that the purpose
of extending the agreement to all parties in the industry is to keep wages out of competition.
The smaller employers in the industry have repeatedly claimed that the wages established
by the council are slowly putting them out of business, although SEIFSA insists that the
majority of its members are small employers.
The 2017 wage negotiations in this industry did not go smoothly with NUMSA at one
stage threatening a strike and claims that some of the employers’ associations would not
support the proposed settlement. In August a settlement agreement was eventually reached
but questions as to its representation remain as well as concerns about the financial status
of the council which some parties claim, is almost bankrupt.

Exemptions from Agreements

An employer covered by the extension of a bargaining council agreement may apply to
the council for exemption from a part or the whole of the agreement. In the past, councils
did not easily grant exemptions. For this reason, the 1995 Act made provision for an
independent body to hear appeals in cases where a council refused to grant exemption or
withdrew an exemption. In an effort to fine-tune and speed up the appeals process, the
Labour Relations Amendment Act of 1914, amended Section 32 of the Act (dealing with
extension of agreements). The amendments include the following:
■■ The Minister, before agreeing to extend an agreement, should satisfy himself that
the bargaining council concerned has an effective procedure in place to deal with
applications for exemptions.
■■ The independent body established to deal with exemptions must do so within a period
of 30 days from the date on which the appeal was lodged.
■■ The council must ensure that the independent body adheres to the time frames.
■■ No official, office-bearer or representative of the union(s) or the employers’ association
party to the council, should be allowed to sit on the appeals body or participate in its
proceedings.
■■ Upon receiving a request for extension, the Minister must put the application out for
public comment within a time frame of 21 days.
■■ When determining the representivity of parties to the council, the Minister now has to
take into account also non-standard employees, such as those provided by temporary
employment services, persons on fixed-term contracts and part-time employees as this
might very well affect representation ratios.

These amendments arise from concerns about labour market rigidity, and should be
viewed in the context of the National Development Plan (see chapters 2 and 10).

Chapter 5: Collective Bargaining 235

Duration of Agreement
The parties themselves decide on the period for which the agreement will be binding.
Usually, an agreement is effective for between one and three years, and a new agreement is
negotiated before the previous agreement expires.

Administration and Policing of Agreements

Most bargaining councils will appoint administrative assistants, the number of assistants
depending on the size of the council. The actual policing of agreements is left to agents or
inspectors, who are appointed in terms of the Labour Relations Act and who have wide-
ranging powers. These agents visit organisations which are subject to the jurisdiction of the
council. They ensure that such organisations are registered and that there is compliance
with the terms of the bargaining council agreement. Any transgression (particularly the
underpayment of wages) is reported to the council. The council will first try to persuade the
employer to rectify the situation, and, if this fails, will institute proceedings.

Bargaining Councils in the Public Service

Sections 35 to 38 of The Labour Relations Act of 1995 make provision for specific regulations
regarding bargaining councils in this sector and for a compulsory co-ordinating bargaining
council for the public sector. This body concerns itself with norms and standards which are
applicable throughout the public service, or with matters applicable to two or more sectors.
The co-ordinating bargaining council designates an area of the public service as a sector for
which a bargaining council should be established.
A bargaining council established for a particular public service sector will have sole
jurisdiction in that sector as regards matters which are to be subject to negotiations with
the State as employer.

Statutory Councils
An entirely new section in the Labour Relations Act of 1995 made provision for a trade
union or unions, and an employers’ organisation or organisations, representing 30 per cent
of employees or employers in a sector, industry or area, to apply for the registration of a
statutory council.
The Registrar will apply more or less the same procedure as with the application for
registration of the bargaining council, except that representativeness is measured in terms
of the stated percentage. If the Registrar is satisfied that all the requirements have been met,
he will publish a notice in the Government Gazette establishing the statutory council and
inviting all registered unions and employers’ associations (or any other interested parties)
in the sector or area to a meeting, to be presided over by the CCMA. The purpose of the
meeting is to reach an agreement on representation in the statutory council. If no agreement
is reached, another attempt at a meeting will be made. Following this, the statutory council

236 Labour Relations: A southern African perspective

will be established with the applicant union or employers’ association and other parties
which may be allowed as representatives. Where there is no union or employers’ association,
the Minister will appoint representatives of employees or employers in that industry or area
as parties to the statutory council.
A statutory council may perform the same dispute-settlement functions as a bargaining
council. In addition, it may establish and promote education and training schemes, establish
various funds and perform any of the functions of a bargaining council.
A statutory council which is sufficiently representative may apply to the Minister to have
its agreements on education, training and funds gazetted as determinations, and, in making
such determinations, the Minister may impose a levy on all employers and employees in the
registered scope of the statutory council.
The provision for statutory councils opens up the possibility for hitherto unregulated
sectors, such as agriculture, to be subjected to ‘centralised’ agreements or determinations,
but these determinations are, as seen above, limited in scope.

Workplace Rights of Unions Party to Bargaining

Councils
In terms of Section 19 of the Act a union that is party to a bargaining council has the right
of access, to any workplace within the registered scope of the bargaining council. It will
further be entitled to hold meetings and to request stop order facilities at that workplace.
This applies even if the business in question is not party to the bargaining council.

Decentralised Bargaining Structures

The Right to Recognition

Where a union cannot or does not wish to operate at a centralised level it will approach
individual employers for recognition at a particular plant or undertaking, and then bargain
on behalf of employees at that plant or undertaking or in a specific bargaining unit.
Previously, union efforts at plant-level recognition were often hampered by the
employer’s refusal to grant access (or permission to hold meetings) to the union. In terms of
the organisational rights accorded to unions by the Labour Relations Act of 1995, a union
has merely to prove sufficient or majority representation in order to exercise these and other
rights in a particular undertaking.

The Nature of Recognition

Although unions have prescribed organisational rights, there is no compulsion on the
employer to bargain with a particular union. The union still has to approach the employer
to demand that it be recognised as the representative of and bargaining agent for a

Chapter 5: Collective Bargaining 237

particular group of employees. Theoretically the employer could refuse to enter into a
bargaining relationship, but this would be difficult if the union already has a presence at
the workplace, and particularly where a majority union has requested the appointment of
shop stewards. Thus, the logical step is to enter into a formal or informal agreement with
the union.

The Recognition Agreement

Where the arrangement is formal, the parties enter into a recognition agreement. The
recognition agreement (also known as a relationship agreement) confirms that the employer
accepts the union as a bargaining agent for all or a defined group of employees, known as
the bargaining unit. It will also stipulate the rules and procedures for the further conduct of
the relationship and the issues and procedures which will be subject to bargaining or joint
decision-making.
The recognition agreement resembles the constitution of a bargaining council. However,
the recognition agreement, because it entails closer involvement of the union with the
organisation, may encompass not only collective bargaining but also a certain measure of
joint decision-making.
A recognition agreement is, in essence, a collective contract between an employer and
the union representing employees. Parties are free to structure the agreement as they choose,
but most will at least contain the following clauses:
■■ Preamble – spells out the principles and objectives of the relationship.
■■ Definitions – explains certain terms in the agreement.
■■ Recognition Clause – defines the employees on behalf of whom the union will bargain.
This can be done by inserting a definition of ‘eligible employees’ or by stating that the
union may bargain for all employee classes where it is sufficiently representative.
■■ Access – stating when and under which conditions the union will be allowed on the
premises and the procedures to be followed in requesting access.
■■ Check-off Facilities – providing for union dues to be deducted from the wages of union
members subject to written consent from these employees.
■■ Shop Stewards – agreement on the number of shop stewards and their constituencies;
also on procedures for elections, powers of and rules for shop stewards when performing
their duties and time off for training or union affairs.
■■ Victimisation – an undertaking that shop stewards will not be victimised for performing
their duties.
■■ Negotiations – the procedures to be followed in initiating and conducting negotiations.
■■ Disputes Procedure – in-house and external procedures to be followed in the event that
a dispute arises during negotiations.
■■ Peace Obligation – a declaration of good faith and an undertaking not to engage in
action against the other party without following agreed processes.

238 Labour Relations: A southern African perspective

■■ Duration and Termination of the Agreement – setting out of the period for which the
agreement will be in force (usually indefinite) and the conditions under which it may
be terminated.
■■ Amendments – the procedures to be followed if the agreement is amended, suspended
or cancelled.

Substantive Agreements at Plant Level

Once a recognition agreement has been concluded, the parties will from time to time engage
in negotiations on substantive issues. The procedures and the nature of the issues will depend
on the terms agreed upon in the recognition document. Such substantive agreements will be
similar in form to bargaining council agreements but may not be quite as detailed as they
do not cater for a whole industry.

Other Procedural Agreements

Numerous other matters may be subject to negotiation between the union and management.
These would include training, discipline, grievances, retrenchment, job grading and so forth.
Each of these would require a special procedural agreement setting out the steps to be taken.

The Ongoing Debate about Bargaining Structures

Employers have not as a body shown a preference for a particular bargaining level although
it may be assumed that the larger organisations are quite comfortable with centralised
bargaining and especially with the fact that it takes wages out of competition, thus
preventing smaller employers from paying lower wages and undercutting prices.
On the other hand, there are employers who have displayed increasing unwillingness
to bargain in bargaining councils arguing that there is a greater tendency towards
decentralisation in organisations.
On the union side, COSATU, as the largest union federation, has, since it gained
dominance, been committed to industry-wide or sectoral bargaining. This was evidenced by
its demand for legislation enforcing centralised bargaining and its expressed intention that,
in the future, there should be only eight major sectors.
For COSATU the issue of bargaining levels is closely tied to its overall objective of
actively restructuring the economic system. According to COSATU, company or plant-level
bargaining allows ‘no way of controlling the wages and working conditions of unorganised
workers’ and ‘leaves employers in unorganised companies free to exploit at will’. The main
objection was that decentralised bargaining makes it difficult to build solidarity and does
not help to build a ‘consciousness of the whole industry’, nor does it allow opportunity for
restructuring the industry. It was pointed out that centralised bargaining does endanger
democracy, but that this could be countered by having large numbers of observers at
negotiations and by worker leadership in negotiations.

Chapter 5: Collective Bargaining 239

COSATU’s initial claims that centralised bargaining could be employed for a restructuring
of the economy and even society at large were somewhat grandiose. It is doubtful whether
a government would allow the bargaining partners in the form of employers and unions
to perform a task which is ultimately the responsibility of the State (keeping in mind that
the State is constituted of all its citizens and that governments are elected by the people).
Moreover, provision has been made for inputs by employers and labour in all policies
and legislation which is passed through NEDLAC. The corporatist approach was adopted
specifically to allow for joint decision-making, although there have been complaints that
NEDLAC is dominated by COSATU and the government.
Being at the centre of bargaining arrangements throughout the country gives a union
a great deal of power and this is the main reason why COSATU supports the concept of
bargaining councils. Also, it facilitates the union function of obtaining agreements, since
unions do not have to approach individual employers. This being said, the federation itself
admits that this could pose a threat to the democratic principles on which unions are
built. As mentioned previously in this text, union representatives on bargaining councils
can become ensconced in their positions and fail to service their membership. Although
unions may claim that they consult and obtain mandates from members, it is not easy to
do so continually and on a national or sectoral basis. The result may be that office bearers
and negotiators make the decisions which are then relayed to the membership. This may
also include the decision to engage in strike action. The very fact that non-strikers are
intimidated, and that violence often erupts, points to the possibility that decisions may not
be as democratic as claimed.
It could be argued that unions are adequately represented by shop stewards at plant
and organisational level. Shop stewards are important in this context, but unless they are
adequately trained, they will revert to the union for important decisions. The union’s take
on matters might not suit the employees or the employer at that organisation. The powers
of shop stewards are limited, and they would not be allowed to negotiate with management
on substantive issues, such as, for example, productivity bonuses, although this might have
the support of all parties in the organisation.
The reasoning behind the proposal for workplace forums was sound. In numerous systems,
strong centralised collective bargaining is balanced by legally enforced participation at the
workplace (see Chapter 15). The problem with the South African legislation is that, in its
quest to appease competing interests, it gives with the one hand and takes with the other.
Employees themselves and the employer are unable to establish statutory forums and union
supremacy remains.

The Duty to Bargain: Legal Precepts

Voluntary Nature of Bargaining

As stated earlier, the institution of collective bargaining in South Africa has, since its
inception, been based on the principle of voluntarism. If this is accepted, then no duty to

240 Labour Relations: A southern African perspective

bargain can by law be imposed on the employer or employee party. In these circumstances
the issues surrounding the bargaining relationship would be resolved by a power play
between the parties concerned. Where the union holds more power, it would be able to
oblige the employer to recognise it and to bargain at a particular level; but where the union
is weak, the preference of the employer would dominate. In the extreme, the employer could
refuse to bargain with a union which does not hold sufficient power.

Indirect Compulsion to Bargain

However, a system of complete voluntarism does not exist. The State, in its efforts to
maintain labour peace, will usually establish parameters for the relationship. It will attempt
to create a power balance between the parties and will protect both against exploitation and
unfair labour practices. It is within these constraints that the freedom to bargain, or not,
will have to be judged.
Although the Labour Relations Act of 1995 contains no explicit duty to bargain, the
legislation does provide that, where a dispute centres on the refusal to bargain, such dispute
must be subjected to advisory arbitration. Section 64(2) of the Act describes the refusal to
bargain as:
■■ a refusal to recognise a union as collective bargaining agent
■■ a refusal to agree to the establishment of a bargaining council
■■ a withdrawal of recognition as a bargaining agent
■■ a resignation from a bargaining council
■■ a dispute about appropriate bargaining units, bargaining levels or bargaining subjects.

In advisory arbitration, the parties do not have to accept the decision of the arbitrator. If
a settlement is not reached, either party may follow the procedures to a legal strike or
lockout (see chapter 13).

Good Faith Bargaining

The agreement to bargain implies a duty to bargain in good faith. This means that the party
concerned should:
■■ display a sincere intention to achieve a settlement
■■ make proposals and concessions indicative of good faith
■■ not unilaterally institute changes
■■ not use delaying tactics
■■ not set unreasonable preconditions for bargaining
■■ not bypass acknowledged bargaining partners
■■ supply sound arguments for adopting a particular position
■■ not suddenly change bargaining conditions

Chapter 5: Collective Bargaining 241

■■ not unnecessarily withhold information
■■ never engage in insulting behaviour
■■ disclose any information which is needed for collective bargaining purposes (employers
are compelled to do so in terms of the Labour Relations Act).

Bargaining Levels and Bargaining Partners

In the past there has been some controversy about the issue of bargaining levels and the
choice of bargaining partners. A number of cases hinged around union demands that
employers party to bargaining councils should bargain also at plant level. The courts
have been hesitant to set any definitive guidelines, but the general stance has been that
bargaining at industry level does not preclude plant-level bargaining, and vice versa. Where
the bargaining level was at issue, consideration would be given to the practical implications
and to the circumstances and practices of each party. The Labour Appeal Court has stated
that the choice of bargaining levels is a strategic question with which the law should not
readily interfere.
The subject of bargaining partners – and therefore bargaining units – has been equally
controversial. The freedom of association principle does dictate that no employee should
be denied representation by the body of his choice. Yet practicalities prevent the employer
from dealing on a permanent basis with each and everybody which claims to represent a
particular group of employees. On the other hand, the majoritarian principle is not always
democratic, particularly where various interest groups exist and where the majority gained
is negligible. In the light of this, the tendency in the past was to promote negotiations
with unions with a stable and substantial presence, or those representing special workplace
interests. The Labour Relations Act of 1995 substantiated this line of thinking by granting
organisational rights, as the precursors of bargaining, to unions which are sufficiently
representative.
On the other hand, the Act also allows a majority union and an employer or a bargaining
council to conclude an agreement establishing levels of representativeness. Effectively, the
majority union could then achieve sole bargaining rights.
As noted in a previous section, the 2014 Labour Relations Amendment Act sought to
rectify some of the problems identified by proposing that a Commissioner may grant a
sufficiently representative union the rights of a majority union. The Commissioner would
also be allowed to ignore the threshold set by the majority union and the employer and
grant representation to a union which has a significant presence in an organisation.
All in all, the issue of bargaining levels and bargaining partners remains relatively fluid.

242 Labour Relations: A southern African perspective

 Case Review: The Duty to Bargain

SA Society of Bank Officials v Standard Bank of SA Ltd

(Supreme Court of Appeal: 10 & 21 November 1997)
Background
At the time when the case was heard, SASBO had been engaged in collective
bargaining with Standard Bank on behalf of non-managerial employees for a number
of years. At the beginning of the 1990s, the union declared its intention also to
bargain on behalf of managerial employees. The managers had been members of
the union for some time and had received certain benefits from such membership.
However, the union had never bargained on their behalf, and when it demanded that
the bank include managers in the collective bargaining process, the bank repeatedly
refused.
The case had previously been brought to the then Industrial Court under the pre-
1995 definition of the Unfair Labour Practice, with the union demanding that the
bank’s refusal be declared an unfair labour practice and that the bank be ordered to
‘engage in negotiation forthwith’.
The Industrial Court found in favour of the union, whereupon the case was taken
on appeal to the Supreme Court.

Argument
Counsel for the union argued that managers resorted under the definition of employee
as contained in the Labour Relations Act, that bargaining was ‘fundamental to the
industrial relations system envisaged by the Act’ and that managers were entitled ‘as
a matter of law’ to be the beneficiaries of collective bargaining.
Counsel for Standard Bank submitted that changes in the bank’s operations
had resulted in an increase in competitiveness and an ‘outwards devolution’ of
authority, that the performance of managers was increasingly being judged by their
entrepreneurial skills and contribution to profits and that this had resulted in ‘greater
individualism amongst managers and correspondingly less commonality.’

Pronouncements
The Court noted that ‘while the Act provides for structures which contemplate collective
bargaining no express duty is imposed by the Act on employers to engage in collective
bargaining’. It explained that this was in contrast to the USA and Canada, where the
duty is imposed but where, in the case of the USA, ‘supervisors’ are excluded from the
National Labour Relations Act. (The situation is similar in Canada.)

Chapter 5: Collective Bargaining 243

In the opinion of the Court, there ‘must clearly be a limit on the employer’s obligation
to engage in collective bargaining’; furthermore, ‘The right of employees to bargain
collectively has rightly been acknowledged as fundamental to industrial relations.
But this is not to say that the right is absolute’. In support of this assertion, the Court
referred to the case of Mutual and Federal Insurance Co Ltd v Banking Insurance
Finance and Assurance Workers Union, where the approach that it would be unfair
for an employer to refuse to bargain collectively was described as being too dogmatic
and that
… in determining whether a refusal to bargain collectively amounted to an
unfair labour practice, factors other than the interests of the union or its
members, such as the interests of the employer and non-union employees
and the need for efficient management also have to be taken into account.
The Court concluded that, where higher-level employees were concerned, there was
no clear indication that an employer could or should engage in bargaining with these
employees. This was particularly so when an employee in this category was
vested with discretionary powers requiring the use of his own entrepreneurial
skills, where his remuneration is determined largely by the results he produces
rather than dutiful obedience to instructions and where the circumstances of
his employment are so individualised as to result in little or no commonality
between himself and his fellow-employees of similar or equal rank.
Consideration also needed to be given to ‘the extent to which employees may be
faced with a conflict between the interests of the union and those of the employer’.
Thus, in the circumstances, a moral or value judgement would have to be made.
In this instance, the union had not argued morality or values, but had insisted on
collective bargaining rights as a matter of law. The appeal had, therefore, to fail.

Discussion
Two issues were raised by this case, namely, the question of the duty to bargain and
the position of managerial employees as regards collective bargaining. On the first
issue, it is necessary to note that the pronouncements of the Supreme Court were
made under the Labour Relations Act of 1979 where, by virtue of the wide definition
of an Unfair Labour Practice contained in that Act, the refusal to bargain could, in
certain circumstances, be judged to be unfair. In the Labour Relations Act of 1995
the definition of an Unfair Labour Practice is more definitive, making it impossible
to declare an Unfair Labour Practice dispute on the basis of a refusal to bargain.
Furthermore, the latter Act provides in the disputes procedures that disputes centring
on the refusal to bargain may eventually be subjected to coercive action, although
there is provision for advisory arbitration before a strike or lockout is instituted. This
clearly indicates that the law views bargaining as an interest, rather than a right.

244 Labour Relations: A southern African perspective

 If there is no right to collective bargaining, it follows that the employer can exercise
discretion as to the constituents of the bargaining unit, and this particularly in
relation to managerial employees. Ultimately, such employees, if they insist on
bargaining, would have to use economic power to persuade the employer to bargain.

Workplace Forums
The provision for workplace forums was introduced specifically to:
■■ promote more harmonious relations
■■ balance highly centralised bargaining
■■ encourage greater participation by employees
■■ allow for joint decision-making on certain matters at organisational level (see Chapter 15).

Workplace forums are constituted by representatives from all occupational levels in the
organisation. However, a statutory workplace forum can be established only at the request
of the majority union in the organisation.
Majority unions already have significant rights at the workplace and would probably
be consulted on – or be bargaining with management regarding – most of the matters
dealt with by workplace forums. Majority unions may therefore see little need for also
establishing forums, particularly forums which include non-union members, where their
power base would be diluted. Consequently, relatively few workplace forums have been
established since the legislation was passed.
The reasoning behind the proposal for workplace forums was sound. In numerous systems,
strong centralised collective bargaining is balanced by legally enforced participation at the
workplace (see Chapter 15). The problem with the South African legislation is that, in its
quest to appease competing interests, it gives with the one hand and takes with the other.
Employees themselves and the employer are unable to establish statutory forums and union
supremacy remains.

Conclusion
Despite its sophisticated legislation, South Africa is rated at rock-bottom in terms of its
labour relations. The main reason is that the underlying approach is still adversarial, with
resultant labour unrest. Add to this the country’s high unemployment rate, its low score on
the competitive index (see Chapter 2), as well as the lapse in investor confidence, and it
becomes clear that something has to change.
The situation as outlined above is not the only reason for a change of approach. For
the time being existing arrangements for the interaction between employers and bodies
representing employees may suffice. However, in the longer term, as the fourth industrial
revolution gains ground, completely new ways of interacting and regulating relationships
may become necessary.

Chapter 5: Collective Bargaining 245

Suggested Questions/Tasks
•• The union you established after studying Chapter 3 seems to be
flourishing, and you now wish to approach the employer (or employers)
with a view to engaging in collective bargaining.
•• Provide some background on your union, its membership and its area
of operation.
•• What bargaining structure and level would you be looking at and why
would this be best suited to your circumstances and your purpose?
Provide support for your choice.
•• Write a letter to the employer setting out your request and providing all
the necessary information.
•• What rights could, and would you be requesting (bearing in mind your
level of representation)?
•• Produce a draft agreement for presentation to the employer.
•• Should the employer refuse to concede to your request, what would be
your next step?
•• The employer eventually recognises your union but refuses to provide
information about the amount of money spent on the training of directors.
What recourse would you have and what would your arguments be?
Provide detail to support your argument.
•• Debate the following statement: ‘The government should/should not
take complete control of the labour relations system.
•• The factors listed as reasons for a more cooperative relationship could
be equally applied to the negotiations around the exit of President Zuma
in February 2018. Then Vice-President Cyril Ramaphosa was criticised
for not taking a harder line and instead engaging in what appeared to be
endless negotiations with a very recalcitrant president Zuma. Yet, if one
looks at the factors which lead to parties engaging in a more cooperative
relationship, there may have been good reason for Ramaphosa’s strategy.
Research the conditions prevalent at the time, both economically and
sociopolitically, as well as the position of and relationships in the ANC.
Then argue a case for or against Rhamaphosa’s approach.

246 Labour Relations: A southern African perspective

Sources
Clegg, H. 1974. Trade Unionism and Collective Bargaining. Blackwell.
Copelyn, J. 1991. ‘Collective Bargaining: A Base for Transforming Industry’ in South African Labour
Bulletin, vol XV no 6, March.
Flanders, A. 1974. Collective Bargaining: Prescription for Change. Faber & Faber.
Fox, A. 1974. Beyond Contract. Faber.
Hawkins, K. 1981. The Future of Collective Bargaining in Industrial Relations journal of South Africa,
vol. 1, no.1.
Herman, E & Kuhn, A. 1981. Collective Bargaining and Labour Relations. Prentice Hall.
Industrial Law Journal, vol 19, Part 2, 1998, Juta.
Industrial Law Journal, vol 20, February 1999, Juta.
Industrial Law Journal, vol 20, April 1999, Juta.
Industrial Law Journal, vol 20, September 1999, Juta.
Industrial Law Journal, vol 20, October 1999, Juta.
Industrial Law Journal, vol 20, November 1999, Juta.
Industrial Law Journal, vol 21, June 2000, Juta.
Kochan, T A. 1980. Collective Bargaining and Industrial Relations, Richard D. Irwin.
Koopman, AD, Nasser, ME & Nel, J. 1987. The Corporate Crusaders. Lexicon.
Labour Relations Act (66 of 1995), Government Gazette vol 366 no 16861, Pretoria: Government Printer.
Labour Relations Amendment Bill of 2012, Available: www.labour.gov.za/DOL. (Accessed 17 August
2018).
Marshall, A. 1920. Principle of Economics. Macmillan.
Mastenbroek, WFG. 1987. Conflict Management and Organisational Development. Wiley.
Salamon, M. ’Individual and Collective Rights and Responsibilities in Creating Wealth’. Paper delivered
at Industrial Relations Conference, Johannesburg, March 1990.
Salamon, M. 1987. Industrial Relations Theory and Practice. Prentice Hall.
South African Labour Bulletin, vols XVI, XVII, XVIII and XIX, Johannesburg, Umanyano Publications.
‘Unions must use Industrial Councils’ in The Garment Worker, 23 August 1972.
Webb, B & S. (Online). Available: www.en.wikipedia.org/wiki/Industrial-Democracy. (Accessed 17 August
2018).
Useful websites
www.jutalaw.co.za

Chapter 5: Collective Bargaining 247

 6

Employee Grievances, Discipline,

Dismissal and Unfair Labour Practices

Chapter Outline
OVERVIEW
THE NEED FOR PROCEDURES
Grievance and Disciplinary Procedures • Establishing Procedures
THE GRIEVANCE PROCESS
Definition • Objectives of the Grievance Procedure • Requirements for Effective Functioning of the
Procedure • The Procedure in Practice • Ensuring Effectiveness • Formality of Grievance Handling
• Grievances Alleging Discrimination or Harassment
THE DISCIPLINARY PROCESS
Rationale • Objectives of the Disciplinary Code and Procedure • Ground Rules for Establishing
a Code and Procedure • Organisational Rules as a Basis for Discipline • Categorisation of
Transgressions (The Disciplinary Code) • The Disciplinary Mould |Linking Disciplinary Actions
to Transgressions | Dismissible Offences • Other Matters Dealt with in a Disciplinary Procedure
| Managerial Responsibility | Time Limits | Warnings | The Progressive Nature of Discipline |
Investigations and Inquiries | The Need for Consistency | Objections to Disciplinary Action • Matters
to Consider in Relation to Discipline | Formalisation | The Role of the HR Department | Record-
keeping | Corrective Measures | Ensuring Effectiveness
THE DISCIPLINARY HEARING
Preliminaries | Decision that a Hearing is Necessary | Informing the Employee | Preparing for the
Hearing | Suspension Pending a Disciplinary Hearing | Appointing a Neutral Chairperson
• Holding the Hearing • Decision as to Guilt • Decision as to Sanction | Mitigating and
Aggravating Circumstances | Other Factors to Consider | Justification of Decision • Alternatives to
Dismissal • Informing and Recording • Fairness in Dispensing Discipline | The Meaning of Fairness |
Substantive Fairness | Procedural Fairness • Recourse Available to Sanctioned Employees | Appeals
against the Final Decision | Pre-dismissal Arbitration/Hearing
 DISCIPLINARY CHECKLIST
TERMINATION OF EMPLOYMENT: GENERAL PRINCIPLES
Termination as a Last Resort • ILO Recommendation Concerning the Termination of Employment
• Dismissals According to the Labour Relations Act | Definition of Dismissal | The Code of Good
Practice: Dismissals | Fair Reasons for Dismissal
DISMISSAL OF EMPLOYEES ON FIXED-TERM CONTRACTS
AUTOMATIC TERMINATION CLAUSES IN CONTRACTS
AUTOMATICALLY UNFAIR DISMISSALS
THE PROTECTED DISCLOSURES ACT (ACT 26 OF 2000)
Objectives • Occupational Detriment • Information to be Disclosed • Making a Protected
Disclosure • Remedies for Occupational Detriment
DISMISSAL FOR POOR WORK PERFORMANCE
Probationary Employees • Non-Probationary Employees • Guidelines
DISPUTES ARISING FROM UNFAIR DISMISSALS
UNFAIR LABOUR PRACTICES
Possible Unfair Labour Practices • Disputes about Unfair Labour Practices
CONCLUSION
SUGGESTED QUESTIONS/TASKS
SOURCES

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 Overview
The labour relationship has its foundations at the workplace. It is also here where
problems with individuals or groups of employees arise. If these problems are to
be avoided, it is necessary for the employer to have proper procedures in place to
address problem areas. Special attention should be paid to employee grievances, to
discipline and, in particular, to processes ensuring the fairness of dismissals.
Grievance procedures provide the opportunity for serious employee grievances,
to be heard and dealt with at the lowest level possible. Grievances usually relate to
the perceived infringement of an employee’s rights and should at first be dealt with
at the lowest level possible. If not settled at that level, the procedure should provide
that the grievance be channelled upward through the organisational hierarchy till it
reaches the higher levels. If a grievance is not resolved to the employee’s satisfaction,
he may then declare an unfair labour practice dispute and take the case either to the
CCMA or, where the Labour Relations Act so prescribes, to the Labour Court.
The employment contract differs from other contracts in that the employer
cannot terminate the contract without good reason and without following a fair
procedure. The employee, on the other hand, can at any time terminate the contract
without having to supply a reason for such termination.
Termination of contract by the employer is guided by the ILO Convention on
Termination of Employment, by the Unfair Dismissal chapter in the Labour Relations
Act and by the Code of Good Practice appended to that Act. Even so, employers
are not always certain of the circumstances under which they can dismiss.
Pronouncements of the CCMA and the Labour Court provide further guidance in
cases of unfair dismissal.
The dismissal of the employee should be a last resort and should occur only if all
attempts at correction have failed, or if the employee is in such serious breach that
the continuation of the relationship becomes impossible.
A disciplinary code ensures that dismissals do not take place in an ad hoc manner,
and that the employee is made aware of actions which may lead to disciplinary
action and eventually (or immediately) result in termination. The code should be
consistently applied throughout the organisation and all employees should be
informed of its contents. The disciplinary procedure ensures that the process is fair
and that all transgressors are treated in the same way.
When there is a possibility that an employee may be dismissed, it is customary
to hold a disciplinary hearing. Such hearings should be conducted by an impartial
person and should afford the employee sufficient opportunity to present his case.

250 Labour Relations: A southern African perspective

 The decision to dismiss is not taken lightly. All relevant circumstances need to be
taken into account before a final decision as to sanction is taken.
If an employee believes that there was no good reason for the dismissal (substantive
fairness) or that the dismissal was procedurally unfair, he may declare a dispute and
submit the dispute, first to conciliation, and, if that fails, to arbitration by the CCMA/
Bargaining Council or Labour Court (depending on the reason for the dispute).
Any other disciplinary action short of dismissal may, in terms of the Unfair Labour
Practice definition, be the subject of a dispute. Thus, the suspension or demotion of
an employee, or even a final warning, may be declared to have been an unfair labour
practice. Unfair conduct related to promotion, demotion, probation and training may
also constitute unfair labour practices; so may any occupational detriment suffered
by an employee who has made a protected disclosure in terms of the relevant Act.

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 251
The Need for Procedures

Grievance and Disciplinary Procedures

The preceding chapters have dealt mainly with collective labour relations and with related
processes and legislation. However, the relationship has its roots at the workplace and in
the interactions between employers and individual employees or groups of employees. The
general maintenance of the relationship at the workplace is an ongoing task, but special
attention has to be paid to aspects which may result in disputes if they are not handled
correctly. Most of the disputes of right which eventually reach the CCMA, or the Labour
Court have their origin in unresolved employee grievances or wrongly handled discipline
and dismissals, resulting in unfair labour practice and unfair dismissal disputes.
Employee grievances need to be treated in a serious and proper manner, with the purpose
of resolving the grievance to the satisfaction of both parties. The only way to ensure that
proper attention is given to grievances is to put in place a procedure which has to be
followed in every instance where an employee lodges a formal grievance.
Equally, discipline cannot be meted out on an ad hoc basis or in terms of rules/criteria
established by individual line managers. Where the need arises to discipline particular
employees, this must be done in terms of a consistent policy and procedure, taking account
of relevant legislation.
Retrenchment is not regarded as a normal dismissal. It is generally accepted that employees
are entitled to job security. The Labour Relations Act contains detailed provisions regarding
retrenchments, and these need to be incorporated into a retrenchment procedure (see Chapter 7).
Consistency is achieved by procedures which are applied to all grievances or disciplinary
actions. This ensures equal and fair treatment of all employees and prevents over-hasty
actions or reactions by management.

Establishing Procedures
Grievance and disciplinary procedures may be negotiated with a union, be drafted by
management in consultation with a union or other employee representatives, or instituted
solely by management. Where there are employee representatives in the organisation, these
persons should be involved. In fact, the law prescribes that, where a workplace forum
exists, management is obliged to engage in co-decision-making regarding grievance and
disciplinary procedures. Unions argue that employee grievances and dismissals are in their
sphere of interest and that they should at least have a right to make an input, even if the
procedures are not directly negotiated with them.
Whether or not there is a union, workers’ committee or a workplace forum, these procedures
need to be established to protect the rights of all employees, both individually and as a
collective. Those members of line management who will be most closely involved with the
implementation of procedures should also be consulted when the procedures are drafted.

252 Labour Relations: A southern African perspective

The exact form of any of these procedures will depend on the circumstances of a particular
undertaking, its size, work process, organisational structure, management style and the
nature of employee representation. Nevertheless, there are certain general rules and
guidelines that apply to all procedures.

The Grievance Process

Definition
Employee grievances are wide-ranging. They could result from:
■■ general dissatisfaction with wages and conditions of service
■■ dissatisfaction regarding promotion or training
■■ complaints about lack of facilities or inadequate equipment
■■ perceived unfair treatment
■■ unreasonable instructions
■■ unrealistic expectations
■■ blatant discrimination.

Not all of these would justify the use of a formal grievance procedure. Common grievances
regarding wages and conditions of service are usually taken to a representative union or,
where no union exists, through a representative employee body. Individual grievances
regarding wages may be raised in personal interviews with management or may be
channelled through a workers’ body. A union or workers’ committee will raise issues
regarding facilities and equipment.
Thus, a formal grievance may be defined as:
■■ a complaint which arises when, within the day-to-day work situation, an incident has
occurred, or the employee’s position is such that he is left with a general feeling of
dissatisfaction and is of the opinion that his rights have been transgressed.

A supervisor may have consistently treated an employee or group of employees with

unjustified harshness; an employee may have been unjustifiably disciplined, discriminated
against or insulted, or he may not have been allowed time off to which he was entitled.
The grievance procedure can be invoked following an action by management which:
■■ is viewed as an infringement of the employee’s right
■■ requires the formal consideration of management
■■ could lead to an unfair labour practice dispute between the company and the employee.

It is these aspects which differentiate a formal grievance from those of a more trivial
nature. There are other serious grievances, such as those related to general wage levels and
conditions of service, which could also result in disputes, but these are dealt with by the
collective bargaining mechanisms and become demands rather than grievances.

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 253
Objectives of the Grievance Procedure
A properly formulated grievance procedure will:
■■ create the opportunity for upward communication from employees
■■ ensure that complaints are effectively dealt with by management
■■ create awareness of employee problems or of problem areas which could be subjected
to further investigation
■■ prevent disputes from arising
■■ make the disciplinary procedure more acceptable, since employees also have a means of
objecting to management performance
■■ emphasise management’s concern for the wellbeing of employees.

These objectives will be achieved only if the grievance procedure functions effectively and
is properly utilised.

Requirements for Effective Functioning of the Procedure

A grievance procedure should:
■■ allow an employee to bring his grievance, in stages, to the attention of top management
if necessary
■■ permit representation, if the employee so desires
■■ oblige management at each stage to give careful consideration to the grievance
■■ ensure that managers make genuine attempts to resolve grievances
■■ set time limits for each stage of the procedure
■■ state that a grievance will not be resolved until the employee declares himself satisfied
■■ grant the employee the right, if the grievance remains unresolved, to declare a dispute
■■ state that grievances should, wherever possible, be handled by line management, but
that other staff (in the form of the HR department) may act in an advisory capacity
■■ provide assurance that the employee will not be intimidated or victimised for raising a
grievance.

The Procedure in Practice

A grievance procedure might, depending on organisational structure and management style,
consist of the following steps (also illustrated in Figure 6.1).
Step 1: The employee verbally raises a complaint with his immediate supervisor. The
supervisor undertakes to investigate the complaint and to give his opinions and suggestions.
If the employee has difficulty in explaining the grievance, he may, at this stage, speak
through a representative, but this is not usually necessary.

254 Labour Relations: A southern African perspective

Step 2: If the employee is not satisfied with the supervisor’s suggestions, he lodges – with
or without the assistance of a representative – a formal written grievance for the attention
of the supervisor or the next level of management (for example, the section head). The
supervisor or section head, as the case may be, investigates the matter, discusses it with the
employee, records his findings and recommendations.
Step 3: If, at this stage, the employee remains dissatisfied, the written grievance, together with
the report of the supervisor or section head, is forwarded to the next level of management.
The manager concerned studies the written documents, interviews the employee and any
other persons involved and gathers all relevant information. When he is satisfied that he
has considered all aspects, the manager presents his recommendations or proposed solution
to the employee and his/her representative. The employee could either accept or reject
the recommendation. The manager is obliged to report in writing on his investigation,
recommendations and the outcome.
Step 4: A grievance which remains unresolved is then channelled to the next level of
management (for example, to the production manager), and the same procedure is repeated.
However, because the danger of a dispute now exists, the procedure may allow for a
representative body – a workers’ committee or union – to become involved in discussions
about the employee grievance. The HR manager or a senior member of the HR department
may be invited to sit in on discussions. (The HR department may already have become
involved in an advisory capacity at an earlier stage.)
Step 5: In the final stage, the grievance is brought to the attention of top management.
Discussions held will involve various management representatives, the employee and his
representative or delegates from a representative body. The meetings may now begin to take
the form of negotiations. If there is no solution at this stage, the employee may either back
down or declare a dispute. If he declares a dispute, the issue will be processed through the
plant-level dispute procedure or through the statutory dispute settlement mechanism. Either
procedure may provide for mediation, arbitration or judicial adjudication.
The grievance may be resolved at any stage during the procedure. If this occurs, the
method of settlement should be noted in writing and the employee should indicate, also in
writing, that he is satisfied with the solution.
In a smaller undertaking, or one which does not have a steep hierarchical structure,
the number of steps in the procedure decreases significantly. The procedure need not
necessarily extend to the highest level of management. It could be terminated at Step 3 or 4
if management at this level is regarded as the final authority on issues relating to employee
problems. The dispute procedure would then be implemented after this step. (For an example
of a grievance procedure, see Annexures as provided online.)

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 255
Ensuring Effectiveness
A grievance procedure must be known to all employees in the undertaking. All employees
need to be trained in the use of the procedure, either during induction or in other training
sessions. Role-plays will assist the employee in grasping the procedure. The employee
should be urged to:
■■ formulate the grievance as concisely as possible
■■ express the grievance freely and clearly
■■ consider beforehand what would be regarded as an acceptable solution.
Instruction and practice in the filling-in of grievance forms is advantageous. Also, employees
will not feel free to express their grievances unless they are assured that the steps taken
by them will not result in victimisation or intimidation. This must be clearly stated at the
beginning of the procedure. Employees should be encouraged to use the procedure, but also
warned not to abuse it with trivial grievances.
Employee representatives are bound to become involved in the operation of the grievance
procedure. They, too, need to be instructed in its use. Representatives should be trained to:
■■ listen carefully to the employee’s complaint
■■ sift the facts
■■ investigate in order to establish whether the employee has a case
■■ counsel the employee
■■ represent the employee effectively.

The grievance procedure will not be effective unless the members of management who
will be involved in the handling of grievances are thoroughly trained for the task. Line
managers, from supervisors upwards, should be completely conversant with all the steps in
the grievance procedure and should be trained to:
■■ listen carefully to the grievance
■■ clarify any uncertainties
■■ distinguish fact from opinion
■■ make sure that their understanding of the problem is correct
■■ elicit a suggested solution from the employee
■■ investigate the grievance
■■ verify the facts
■■ separate the problem from the person
■■ not let their own opinions or prejudices interfere
■■ show empathy and not be defensive or hostile
■■ state their position clearly to the employee
■■ find and promote a solution.

256 Labour Relations: A southern African perspective

 mediation, arbitration, judicial settlement, strike

plant-level disputes procedure statutory disputes procedure

disputes procedure commences

grievance procedure ends

unresolved

Top management (division manager)

step 5 investigates and discusses

unresolved

step 4 Grievance form and reports Union or

to production manager Workers’ Committee

unresolved

step 3 Grievance and reports submitted

to factory manager

HR department
unresolved

Formal written grievance

step 2 (supervisor or section head)

unresolved

Verbal complaint
step 1 to immediate supervisor
Employee representative

Employee dissatisfied

figure 6.1: grievance procedure within a large, hierarchically structured organisation

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 257
A grievance procedure will work only if there is a sincere desire on all sides to solve
problems. In this respect, the HR department has a duty to monitor the use of the grievance
procedure and to advise on possible solutions.

Formality of Grievance Handling

Organisational communication, and particularly upward communication, is generally
deficient. For this reason, it is necessary to introduce formal grievance procedures and
to ensure, by way of written reports, that the grievance actually receives attention and
could reach the decision-makers in the organisation. Nevertheless, employees should be
encouraged to voice their grievances freely, without necessarily resorting to the formal
procedure, as procedural formality can result in animosity. Employees will feel free to voice
grievances informally only if there is a climate of trust and openness, where employees
know that they will not be victimised and that they will be taken seriously. They should
also know that, if their grievance is not handled properly, they can still resort to the formal
procedure.

Grievances Alleging Discrimination or Harassment

Complaints about discrimination were previously channelled through the standard
grievance procedure. The special attention accorded to these issues by the Employment
Equity Act and the fact that, in terms of that Act, an applicant for employment can also
claim discrimination, may make it necessary to establish a separate procedure to deal with
complaints of this nature (see Chapter 8).

The Disciplinary Process

This section looks in detail at:
■■ the handling of discipline at the workplace
■■ the necessity for a set of organisational rules spelling out the expectations of and
prohibitions set by the employer
■■ the use of the rules to divide possible transgressions into categories ranging from those
leading to a verbal warning to those which might justify dismissal
■■ progression of actions against a particular employee
■■ specific matters such as the duration of warnings, investigations and inquiries and the
responsibility of management in the process
■■ the need for HR to be informed and to keep records as well as the need for corrective
measures
■■ the necessity for a set of organisational rules spelling out the expectations of and
prohibitions set by the employer
■■ the use of the rules to divide possible transgressions into categories ranging from those
leading to a verbal warning to those which might justify dismissal

258 Labour Relations: A southern African perspective

■■ progression of actions against a particular employee
■■ specific matters such as the duration of warnings, investigations and inquiries and the
responsibility of management in the process
■■ the need for HR to be informed and to keep records as well as the need for corrective
measures.

Rationale
An orderly disciplinary process is necessary to ensure that discipline is not meted out in
an ad hoc manner, that corrective action to avoid dismissals is undertaken and that, when
dismissals occur, these are affected in terms of a fair procedure. Ordinarily, this is achieved
by providing for a company-wide disciplinary code and procedure.

Objectives of the Disciplinary Code and Procedure

A disciplinary procedure is not intended merely to discipline employees. The main purpose
of a disciplinary procedure is to ensure that:
■■ all employees are treated in the same manner
■■ an employee is not disciplined or dismissed at the whim of a manager or supervisor
■■ employees are accorded the opportunity of a fair hearing before dismissal occurs
■■ transgressions of the same kind are treated in the same manner by all managers
■■ employees have certainty regarding the type of treatment they will receive
■■ managerial representatives obtain certainty about their actions and decisions.

The overall purpose of a disciplinary procedure is not only to punish, but also to correct the
employee. For this reason, a follow-up on disciplinary action is essential.

Ground Rules for Establishing a Code and Procedure

As in the case of all other procedures at organisational level, the type of disciplinary procedure
established will depend on the nature and structure of the undertaking, but there are a number
of ground rules that should be observed. A disciplinary code and procedure should:
■■ be comprehensive and complete
■■ list all types of transgression which may occur
■■ specify the disciplinary measures to be applied in each case
■■ be based on company rules which are known to all parties
■■ be clear and accessible to employees
■■ be written in simple language that all employees can understand
■■ conform to the principles of natural justice. This means that:
◗◗ the incident should be investigated
◗◗ the punishment should match the offence

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 259
 ◗◗ an employee must be fully informed of the reason for disciplinary action
◗◗ the employee must have the opportunity to present his side
◗◗ he should be allowed a representative
◗◗ the circumstances should be taken into account
◗◗ there should be conformity in disciplinary measures.

These requirements apply to all disciplinary actions, but particularly to those which may
lead to the dismissal of the employee. (See Annexures online for a full disciplinary code
and procedure.)

Organisational Rules as a Basis for Discipline

Before establishing a disciplinary code and procedure, a company will need to decide on a
set of rules applicable to all employees. The Code of Good Practice states that every employer
must adopt disciplinary rules which state how employees should behave or not behave but
there are some rules and norms which are so well known that they need not be formalised.
The rules must apply to all employees; otherwise one cannot expect uniformity of
behaviour among employees and uniformity of action among managerial representatives.
Different managers may impose their own rules, or one manager may set greater store on a
particular rule than another. Therefore, it is necessary for all managerial representatives to
be involved in formulating the rules and for the parties to agree on the relative importance
of different rules.
The rules established in a particular undertaking will depend on:
■■ the nature of its operation
■■ its organisational structure
■■ the nature of its workforce
■■ the relationship between management and employees
■■ the needs of the company.

Smaller organisations may require fewer rules, whereas larger establishments need to cater
for every eventuality. Whatever the rules established, they must be clearly formulated,
ranked in order of importance and employees must know the rules.
Usually the rules are attached to employment contracts and explained to employees
during the induction period.

Categorisation of Transgressions (The Disciplinary Code)

According to the Code of Good Practice, the Courts support a system of corrective and
progressive discipline. The disciplinary code is used to categorise the transgressions which will
be subject to disciplinary action. Transgressions are usually divided into three types, namely,
■■ less serious transgressions

260 Labour Relations: A southern African perspective

■■ serious transgressions
■■ transgressions which may result in dismissal.

The degree of seriousness attached to each transgression will depend on the type of business.
In certain companies the mere intake of alcohol, no matter what the amount, constitutes a
dismissible offence. In others only, drunkenness leading to incapacity would be regarded in
such a serious light.
Generally, all types of misconduct regarded at common law as reasons for instant
dismissal are categorised as very serious offences.

The Disciplinary Mould

Linking Disciplinary Actions to Transgressions
Once the transgressions have been classified, a disciplinary process is established for each
type of transgression. This will say which action should be taken if an employee commits
a particular transgression. A transgression which is not serious would, in all probability,
lead to a verbal warning in the case of a first-time offender, a written warning for a second
offence, a final warning and then dismissal. More serious transgressions or continued
misconduct may lead immediately to a final warning, while very serious offences may lead
to dismissal – but not before a proper hearing has been held.

Dismissible Offences
In terms of the Code of Good Practice, dismissal should be reserved for very serious
transgressions or continued misconduct where the employee has received several warnings.
The Code states that, in general, it is not acceptable to dismiss an employee for a first
offence unless the misconduct is so serious that to continue the employment relationship
would be impossible. The Code concedes that every incident has to be judged on its merits.
Nevertheless it gives the following examples of serious misconduct:
■■ gross dishonesty
■■ wilful destruction of property
■■ intentional threats to the health and safety of others
■■ a physical attack on the employer, a co-employee, a customer or a client
■■ gross insubordination.

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 261
 arbitration,
General Manager appeal CCMA or
or Independent Arbitrator
review

Appeal

hearing
Senior Management and
Disciplinary Panel dismissal

Union or
1st or 2nd Very
Shop Stewards’
Appeal/Grievance Serious Offence,
Committees
3rd Serious
Offence or 4th Possible Suspension
Offence

Very Factory Manager or hearing

and
Serious Other Equal/
final written
Offence HR Manager warning

Information/Advice
or Involvement
Appeal/Grievance 2nd Serious
Offence or Third
Offence

Serious Supervisor or written Information

warning Advice HR
Offence Production Manager
Department

Grievance Second
Offence
Representative

verbal
warning
Offence Supervisor and
counselling

First Offence

figure 6.2: disciplinary flow chart

262 Labour Relations: A southern African perspective

The following acts on the part of the employee, have usually been regarded at common law
as reason for summary dismissal (dismissal without a notice period). Although the employee
need not necessarily be summarily dismissed, most of these acts are still regarded as serious
transgressions.
Failure or refusal to work – This does not include participation in a legal or protected
strike, as the Labour Relations Act of 1995 supersedes the common law by providing that
employees who have followed the statutory procedures towards a legal strike may not be
dismissed for breach of contract. On the other hand, employees engaged in an unprotected
(illegal) strike may be dismissed, subject to certain conditions (see Chapter 13). (Note also
that the revised Section 187 in the 2014 Amendment Act now states that the dismissal of an
employee who refuses to accept changes to his employment could be automatically unfair
– see next chapter).
Deliberate and continued absenteeism – This does not refer to absenteeism for illness
or another valid reason, but rather to an employee who is continually absent and can be
proved not to have had a valid reason, or to an employee’s absenting himself on purpose
when he was expected or instructed to work.
Gross negligence – The negligence must have had severe consequences and it must be
proved that these consequences resulted from the wilful negligence of the employee. The
extent the damage does not necessarily mean that there is gross negligence. An employee
may merely have been distracted and this may have caused a great deal of damage. That
employee may not be found guilty of gross negligence. On the other hand, an employee
who deliberately neglected his duty will be guilty of gross negligence, even if the damage
was not extensive.
Serious incompetence – It is presumed that an employer will, before taking someone into
his employ, satisfy himself that the incumbent is able to perform the work he has been
employed to do. If the employer has failed to do so, the incompetence of the employee might
be condoned. On the other hand, if the employee has misled the employer into believing that
he is able to perform the work, the employer would have sufficient reason to dismiss him. A
schedule appended to the Labour Relations Act of 1995 outlines a procedure to be followed
in the case of incompetence. (See also dismissal for poor performance later in this chapter.)
Refusal to carry out orders – The orders must be reasonable and within the ambit of an
employee’s normal job. The employee is entitled to disobey an unreasonable order, or one
not related to his actual work.
Repeated late coming – The late coming must be ongoing and serious, and the employee
must be given the necessary warnings before dismissal occurs.
Incapacity of the employee – If the employee cannot perform his job because of illness or
disability, the employer will be entitled to dismiss him/her. Nowadays, such dismissal rarely
occurs without the necessary notice and lengthy consideration. A procedure to be followed
when dismissing for incapacity is also contained in a schedule to the Labour Relations Act
of 1995 (see No-fault Terminations in Chapter 7).

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 263
Dishonesty in the sphere of work – This includes stealing, failure to account for funds,
fraud, misappropriation of money or goods and the acceptance of bribes.
Dishonesty outside the sphere of employment – An employee may be dismissed if he has
been convicted of a crime which places serious doubt on his trustworthiness in or suitability
for the position occupied.
Disloyalty to the employer – This may take the form of competition with the employer’s
business, the leaking of confidential information to competitors or any other type of
assistance to a competitor. Disloyalty in the form of derisive remarks about the undertaking
is not included if this does not directly affect the employer’s business or competitiveness.
Drunkenness – Unless the nature of the business is such that no alcohol may be consumed,
drunkenness must be of such a nature that it results in negligence or incapacity to perform
the work in hand.
Assault – Any physical attack on another employee or on a member of management is
regarded as sufficient reason for dismissal.
Gross insubordination or insolence – Merely being ‘cheeky’ towards a manager or supervisor
is not sufficient reason for instant dismissal. The transgression must be such that it undermines
the authority and position of the superior.

Case Review: The Disciplinary Mould

Computicket v Marcus N.O. & Others

(Labour Court: J118/98)
Background
The employee concerned was dismissed from Computicket when she issued tickets
to a friend for a Steve Hofmeyr concert without immediately being paid for the
tickets. This was against the rules of the company. The employee had done this as a
favour to the friend and had planned to make good the shortfall when she received
her salary a few days later. She did not report the shortfall and unfortunately fell ill
before she could replace the money. The shortfall was discovered and the employee
was summoned to a disciplinary hearing for breaching the company rule and failing
to report the shortfall. She was subsequently dismissed.

Argument and Pronouncements

At the CCMA
At the CCMA hearing, the employee conceded that she had done wrong but argued
that the company had suffered no prejudice by her conduct. The Commissioner

264 Labour Relations: A southern African perspective

 agreed that, although the employee had done wrong, ‘the degree of this wrong and
the potential harm or loss to the respondent was not so great as to warrant dismissal’.
It was pointed out that an employee should not only be aware of a rule but also of
the potential consequences if the employee breaches the rule. The Commissioner was
not convinced that the employee, ‘in the absence of prior warnings and corrective
actions’ was aware of the possible consequences of her actions. In the view of the
Commissioner the fact that the employee had not reported the shortfall believing that
she could replace the money before it was noticed, was a more serious transgression
in that it was a breach of a duty of good faith towards the company, but it was still
not enough to warrant a summary dismissal. It was ruled that the employee had been
unfairly dismissed and the company was ordered to pay compensation. Computicket
subsequently submitted the ruling to review by the Labour Court.

At the Labour Court

The Court stated that it would not have reached the same conclusion as the
Commissioner. In the opinion of the Court, it was not correct:
… to put the matter, as he did, on the basis of whether the employee was
actually aware that her conduct would attract summary dismissal in the
absence of any prior warnings or corrective actions. … The proper test, as he
indicated earlier, is whether either she knew or could reasonably have known
that her conduct might attract the sanction of summary dismissal. In my
view she could reasonably have anticipated that that would be the sanction
appropriate for her misconduct.’

The Court was further of the opinion that the issuing of the tickets was a far more
serious offence than her failure to report the shortfall.
The above notwithstanding, the Court found that the Commissioner had applied
his mind to the problem. It went on to explain that: ‘The question of sanction for
misconduct is one on which reasonable people can readily differ.’ Citing the case of
Scaw Metals v Vermeulen (1993) 14 ILJ672, the Court pointed out that: ‘The employer
is entitled to determine the standard of conduct it demands from its employees and a
court could only intervene if that standard results in unfairness in a specific situation.’
It was explained that ‘An employer can, for instance, if it sees the necessity for
doing so, prescribe a set of rules that might be more exacting and visited by harsher
consequences than might be applicable in another workplace.’ However, what had
happened in this case was that the rules had been stated but no indication had been
given as to the consequences, should the rule be breached. Therefore, the actions of
the employer had to be interpreted in terms of the ‘residual rule governing fairness’.
This left the sanction open to interpretations, as reflected in the different views of
the Commissioner and the Court. In the circumstances the Court had no option other
than to dismiss the application for review by the employer.

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 265
 Discussion
What this case illustrates is that it is necessary not only to establish standards, but also
to be clear about the sanction that will be imposed should the employee breach that
rule. This is particularly so when a sanction of dismissal without previous warnings is
imposed. Whether a breach is regarded as serious will mostly depend on the nature
of the employer’s business (see ‘Decision as to Sanction’ later in this chapter). This
was the case with Computicket. From the very nature of its business, the company
could not afford any breach of the rule regarding immediate payment as this would
open up the opportunity for all employees. The company should have impressed this
on employees and provided a clear warning as to the likely consequences.
In adjudicating unfair dismissal cases, commissioners need to weigh all the
relevant factors and decide whether the decision was a fair one. The employer’s
decision will be judged on the reason given for the decision to dismiss.
In cases where an employee has been summarily dismissed for any of the above
reasons, the onus is on the employer to prove that the transgression was of such
a nature that it warranted dismissal without notice. This is often difficult. For this
reason, it is preferable not to institute summary dismissal unless there is no alternative.

Other Matters Dealt with in a Disciplinary Procedure

Managerial Responsibility
A comprehensive disciplinary procedure will specify the level of management which will
be responsible for deciding on the disciplinary action to be taken. Verbal and first written
warnings may be given by the employee’s immediate supervisor, but final written warnings
should be issued at a higher level, such as that of production manager. A hearing pending a
decision to dismiss should be conducted only by those managers vested with this authority
or by a disciplinary panel (see Figure 6.2).

Time Limits
Disciplinary action has to take place within fixed time limits. This applies both to the
period within which any action can be brought and the time allowed for an investigation,
or enquiry and appeal. Time limits should preferably be relatively short, as disciplinary
action should be almost immediate, but sufficient time should be allowed for notifying the
employee and for the necessary evidence to be collected by both sides. This is particularly
important in the case of a serious offence.

Warnings
All warnings given, including a formal verbal warning, should be acknowledged by the
employee concerned. The employee will be instructed to add his signature to the warning

266 Labour Relations: A southern African perspective

or to the formal disciplinary report. Where a formal verbal warning has been given, the
employee signs an acknowledgement that he has received the warning and understands its
contents. An employee may refuse to sign a warning, in which case the fact that he refused
should be noted and witnessed.
Warnings are not indefinite and usually expire after 6 to 12 months. Two transgressions
of a similar nature committed within a period of 15 months would both be classified as first
offences and not as a first and second offence.
Warnings that have expired cannot be taken into account in a decision about the guilt
of an employee. They cannot constitute a reason to dismiss or compound the transgression.
However, they can be taken into account when mitigating and aggravating circumstances
are considered. A large number of previous warnings of different kinds could eventually
count against the employee, since they prove generally poor conduct.

The Progressive Nature of Discipline

It is sometimes argued that different transgressions cannot be computed within the steps of
a disciplinary procedure; that an employee who has been late two weeks in a row and has
received a verbal and written warning for these transgressions cannot be given a final written
warning instead of the normal verbal warning if, in the next week, he engages in horseplay
(normally subject to a first warning). The problem with this assumption is that, within a period
of six months, a particular employee could commit the entire range of first- or second-level
transgressions and still not be subjected to a final warning. By contrast, another employee
who commits the same transgression three or four times in succession may be dismissed.
The solution lies in making the procedure progressive by grouping certain transgressions
in each category together and clearly indicating that a warning for one of the transgressions
in the group will be applicable to the other transgressions in the group. (See disciplinary
procedures in the Annexures as provided online.)
Managers still need to use their discretion in deciding whether a progression of
transgressions should eventually lead to dismissal. For example, an employee who has
been late three times and then comes late for a fourth time before the expiry of previous
warnings, would, in a system of progressive discipline, receive a final hearing pending
dismissal, but in practice this may not be feasible. Mechanisms to deal with such situations
should be built into the procedure.

Investigations and Inquiries

Any transgression allegedly committed by an employee has to be investigated, and the
employee should be given an opportunity to explain /bring his side of the story. In some
instances, this would entail merely calling the employee into an office, and establishing
the facts – as would be done, for example, if an employee arrived late for work. In the case
of more serious transgressions a detailed investigation may be necessary. Witnesses may
have to be found and statements taken. These statements cannot be presented on their own.

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 267
They serve merely as corroboration of statements made during a final hearing. If necessary,
a preliminary inquiry may be held in order to decide whether there is sufficient reason for
a disciplinary hearing. Note that the employee under suspicion is always entitled to know
that an investigation is being conducted. The employee is, in fact, the person with whom
the investigation commences.

The Need for Consistency

Some practitioners are under the impression that all employees who commit the same
transgression(s) should receive the same sanction. If this were so, it would not be possible to
take into account the circumstances of a particular case, the circumstances of the employee
and general mitigating or aggravating aspects. Consistency does not necessarily mean the
same sanction. It refers to the fact that all employees should be subjected to the same
disciplinary mould; that is, they should all receive equal treatment but, according to the
particular circumstances, different sanctions could be imposed. There should, however, be
clear reasons for imposing a particular sanction.

Objections to Disciplinary Action

Employees should be provided with the opportunity to raise objections against the manner
in which discipline was undertaken or against the sanction they received. In the case of
actions involving warnings, this can be done by way of the grievance procedure. Final
warnings and decisions to dismiss are subject to an appeal or to a pre-dismissal enquiry
(see later).

Matters to Consider in Relation to Discipline

Formalisation
The Code of Good Practice states that formal procedures are not always necessary and that
with less serious transgressions an informal meeting will often prove more effective. Even
a final hearing need not be absolutely formal and observe all the technicalities of a court
of law. Where a hearing is not so formal, the manager still has to abide by the principles of
natural justice and to keep a record of the hearing.

The Role of the HR Department

The HR department has a legitimate interest in disciplinary action and should always be
informed when such action is being considered. Final reports relating to serious and other
transgressions are submitted to the HR department in its capacity as custodian of employee
records. Members of the HR department may attend disciplinary investigations and inquiries
in a consultative capacity. Other members of management, particularly those from the same
department or section, may be invited to attend or participate in disciplinary hearings.

268 Labour Relations: A southern African perspective

Record-keeping
All disciplinary actions should be recorded on a disciplinary form and on the employee’s
disciplinary record. These records will reflect the date of the transgression, its nature and
the action taken. The reports should be witnessed and stored for later referral. Records of
interviews and hearings should also be kept. In the case of a hearing centring on a very
serious offence, the entire proceedings should be recorded, and the recordings should be
verified by the parties.

Corrective Measures
Discipline should be aimed at the correction of unacceptable behaviour. The sanction
imposed on the employee may be an incentive to change his behaviour, but this may not
be enough. The employee’s immediate superior should monitor subsequent performance
and behaviour and provide assistance where necessary. It is useful to establish review dates,
which could coincide with the expiry of a particular warning. More progressive employers
will engage in extensive counselling of employees.

Ensuring Effectiveness
A disciplinary procedure has to be made to work. Making it public is not enough. Management
representatives in particular (also employee reps) must be trained in the procedure. If they
are to conduct investigations and hearings successfully, they will have to acquire people-
handling and judgemental skills. They should learn to:
■■ remain calm and neutral
■■ weigh the relevant facts
■■ reach a reasoned decision.

A disciplinary procedure which is fairly and consistently implemented can create trust,
reliance and good faith in the labour relationship.

The Disciplinary Hearing

This section outlines the steps towards and the holding of a disciplinary hearing. These
would include:
■■ the initial investigation into the allegations against the employee and the eventual
decision that a hearing should be held
■■ the need for proper preparation
■■ the process the chairperson should follow in conducting the hearing
■■ factors to be taken into account when deciding on the guilt or otherwise of the person
■■ aspects to be weighed against each other in making the final decision as to the sanction
■■ suspension as an alternative to dismissal

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 269
■■ administrative requirements
■■ criteria to establish whether the hearing was procedurally and substantively fair
■■ processes after the final decision, such as an appeal by the employee or pre-dismissal
arbitration.

Preliminaries
Decision that a Hearing is Necessary
Where an employee commits a series of transgressions or a single very serious transgression,
the employer may have to consider dismissal. This cannot be done without holding a hearing.
A hearing is not held merely on the basis of an allegation. The allegation is followed by
an investigation to ascertain the facts and obtain evidence and statements. Only once this
has been done is a decision made that a hearing should be held.

Informing the Employee

If a hearing is to be held, the employee should be informed in good time. The notification
should be in writing, in language that the employee can understand, and should clearly
state:
■■ what the employee is alleged to have done
■■ why this constitutes a breach of discipline
■■ which disciplinary rule has been broken
■■ what the rights of the employee are before and during the hearing, namely that he is
entitled to:
◗◗ request further information
◗◗ request disclosure of information which may be necessary to plan his defence
◗◗ request a postponement if he needs more time
◗◗ be represented by a fellow-employee of his choice
◗◗ call witnesses
◗◗ cross-question management’s witnesses.

The notice should not contain allegations which have nothing to do with the matter in hand.

Preparing for the Hearing

Managers preparing to present a case at a disciplinary hearing should ensure that they have
all information and documentation at hand before the hearing starts and that they have
considered all the circumstances and the arguments related to these. The same would apply
to employees and their representatives.
If either of the parties intends to present pre-signed or sworn statements, the signatories
may have to be at hand during the hearing as the other party might want to interrogate them.

270 Labour Relations: A southern African perspective

Suspension Pending a Disciplinary Hearing
In some instances, the employer may want to suspend an employee who is under suspicion
of having committed a dismissible offence. Not all dismissible offences warrant suspension.
Suspension is justified only if there is:
■■ a threat to other employees
■■ the danger of sabotage
■■ a possibility that the employee could tamper with the evidence.

Suspension is a serious step as it could prejudice the employee or cause unnecessary

psychological stress. The fact that the employee is paid while on suspension (which has to
be the case) does not justify an unnecessary suspension.
An employee who believes that he has been unfairly suspended could declare an unfair
labour practice dispute (see Unfair Labour Practices below).
It is important to remember that employees may be suspended without pay only after a
hearing has been held and then only as an alternative to dismissal. The only other exception
could be a case where the employee is prevented, by, for example, imprisonment, from
attending a hearing and the employer does not want to engage in more drastic disciplinary
action before all the facts are known (see No-fault Terminations in Chapter 7).

Appointing a Neutral Chairperson

It is simple justice that the accuser should not also be the judge and that the person making
a decision should display no bias toward either party. For these reasons a disciplinary
hearing should preferably be chaired by a person (or persons) who has not been involved
in the matter and has no previous knowledge of the allegations. In any organisation this
is difficult as managers are bound to discuss issues among themselves. It becomes even
more difficult in smaller organisations where the manager involved may be the only person
competent to chair the hearing.
At the very least, the manager chairing the hearing should cast aside his personal
bias, treat both parties in an even-handed manner and view the case from all possible
perspectives. If the chairperson fails to do so, he may be accused of being biased and be
requested to recuse himself from the hearing.
It is essential that the chair avoids discussing the matter with any of the parties before
or during the hearing and in particular does not consult fellow-managers before reaching
a decision. However, he may seek expert advice from the Human Resources or Labour
Relations Manager if these individuals are trusted by both parties.

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 271
 Case Review: Notice of Disciplinary Hearing

Pretoria Society for the Care of the Retarded v Loots

(Labour Appeal Court: June 1997)
Background
More detailed background to this case is provided in the case review on Constructive
Dismissal (see later in this text). Of importance here is the notice of a disciplinary
hearing given to Loots. The Society presented her with the following list of alleged
transgressions:
1. unsatisfactory productivity
2. failure to respond to advice and improve attitude
3. offensive behaviour
4. sowing suspicion among senior staff
5. complaining about weekend duties
6. failure to buy kitchen equipment and unfounded allegations that management
would not allow said purchases to be made
7. making an unfounded allegation that the manager and deputy manager were too
busy with their personal matters to speak to the respondent
8. warning a candidate during an interview against Mrs Theron and Mrs Roets.

In addition, there were, attached to the charges, six factors which were described as
‘aggravating circumstances’, one of these being that the relationship had irretrievably
broken down.
Loots wrote to management requesting further particulars regarding the alleged
transgressions. Her request was refused.
Before receiving the notice of the hearing, Loots had been summarily suspended.
Without being given any reason for the instruction, she had been told to remove the
possessions she needed from her office and to bring the keys to the manager.

Argument and Pronouncements

The Court described the fact that there were so many charges as an attempt to
‘throw the book’ at Loots. It noted that most of the issues should have been dealt
with by a process of progressive discipline.
The refusal to provide Loots with any further particulars was described as ‘a
manifestly unfair way to proceed’. The Court went on to explain that: ‘In order to
properly prepare, the respondent needed to know details of the various charges before

272 Labour Relations: A southern African perspective

 the hearing as she would need to know what documents to have available and also
what other evidence she would require to prove her case. She would undoubtedly also
require the information to know what witnesses to call.’ The Court found the matter
of the suspension ‘particularly troublesome’, expressing the opinion that Loots had
‘been treated most insensitively.’ Noting that Loots had been given no hearing before
she was suspended, the Court explained that: ‘The suspension of an employee has
profound emotional, social and financial effects on him’, and that ‘suspension is a
serious matter more especially for a person in a senior position.’

Discussion
The pronouncements by the Court support the advice that allegations should
be carefully framed, and prove that ‘piling on’ allegations does not strengthen
the employer’s case; furthermore, that allegations need to be substantiated. This
employee needed, for example, to know why she was being accused of ‘offensive
behaviour’. The notice of disciplinary hearing should have been phrased as follows:
‘It is alleged that you engaged in offensive behaviour in that on … (date) … you …
(action which led to the allegation). (See example of a notification in the Annexures
online.)

Case Review: Maintaining Neutrality

Gimini Indent Agencies cc t/a S & A Marketing v

Commission for Conciliation, Mediation & Arbitration and
Others
(Labour Court: J3579/98)
Background
The employee in this case had been employed by Gimini as an accountant/bookkeeper.
Almost from the outset the relationship between the employee and his manager was
problematic. In the course of the year the employee was warned and counselled
for poor performance. He was not paid a bonus at the end of that year which only
increased his dissatisfaction.
On his part the employee raised a number of grievances, among others that he had
not been given an assistant as promised, that his office was not properly ventilated
and that the debtors clerk had taken his computer. According to the employee, the
manager was prejudiced against him, while the manager, in his turn, claimed that
the employee refused to accept that he was not performing and was attempting to
justify his non-performance by attacks on the company and the manager himself.

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 273
After four months, the manager concluded that they ‘had no alternative’ but to demote
the employee to the position of debtors’ clerk. The employee declared a dispute,
which was referred to the CCMA, but before conciliation could occur, the company
decided to reinstate him in his previous position. The employee was requested to
attend a ‘performance meeting’ and, after his ‘poor performance’ had been discussed,
was informed of the reinstatement. However, two days later the employee addressed
a letter to the manager stating that he did not believe that he had been reinstated
and that he refused to return to his previous position. Management responded by
summoning him to a disciplinary hearing for ‘refusing to obey a lawful order to return
to his previous position’.
The disciplinary hearing, chaired by the manager, found the employee guilty of
the charge, and he was once again instructed to return to his position. He refused
to do so and was again summoned to appear at a disciplinary hearing. The hearing
was again chaired by the manager and the only other person present, except the
employee, was the executive sales manager. A single question was asked, namely,
whether the employee intended going back to his previous position. The employee
replied that he would inform them of his decision and then left the hearing. At 2
p.m. the employee telephoned the manager to inform him that he was not returning
to that position. He was subsequently dismissed, but took the matter to the CCMA
where it was found that the dismissal had been substantively fair but procedurally
unfair. The employee was awarded compensation.
Not satisfied with the outcome, the company took the case on review to the Labour
Court.

Argument
Counsel for the company argued that, by leaving the hearing, the employee had
forfeited his right to a fair procedure. In this regard he cited Cameron in ‘The Right
to a Hearing before Dismissal – Problems and Puzzles’ (1988) 9ILJ 147, where it was
stated that:
An employee can by his or her conduct abandon or waive the right to a pre-
dismissal hearing ... All that should be required is that the employee should
indulge in conduct which establishes that the employer can no longer
reasonably or fairly be expected to furnish an opportunity for a pre-dismissal
hearing.

It was further argued that there was an obvious breakdown of the relationship, that
this was the fault of the employee and that any other person chairing the hearing
would have come to the same conclusion as the manager. The Court disagreed with
both arguments.

274 Labour Relations: A southern African perspective

 Argument and Pronouncements
The Court cited the Commissioner, who had stated that a hearing need not always
be formal and that the employee had to accept the major part of the blame for the
breakdown of the relationship. The Commissioner had nevertheless indicated that,
in the circumstances, a more formal hearing should have taken place. He had also
indicated that such hearing should have been chaired by an independent individual as
the manager was ‘too deeply and personally involved’ to act in an impartial manner.
The argument that the employee had forfeited his right to a procedurally fair
hearing was described as ‘unpersuasive’. It was explained that, by walking out of the
hearing, the employee may have forfeited his right to state his case and to cross-
examine witnesses, but he had not forfeited his rights to fairness as regards ‘the other
components of the hearing’. Among these was the right to an impartial chairman. The
Court expressed the view that ‘… it cannot be that if an employee decides to walk
out of a disciplinary enquiry, that can give the employer free rein to have the matter
decided by a person who may, for example, be biased; further that the manager ‘…
was essentially the main complainant and therefore in effect would have been a
judge in his own case. That is an automatic disqualification.’
As regards the argument that any other person would have come to the same
conclusion, the Court noted that this seemed
… to amount to a ‘no difference argument’ … It ignores the need to recognise
that, whatever the merits of the charge against an accused employee may
be and however probable or inevitable dismissal may be, it is important that
value be attached to the fairness of the process which leads to the result. Even
if it transpires that the result does not favour the employee, it must at least be
the product of a process which can objectively be regarded as fair.

The application for review was dismissed with costs.

Discussion
It is evident that the Court sets great store by the fairness of the procedures during a
hearing and on the neutrality of the chairman, even in the absence of the employee.
Where an employee walks out of or repeatedly refuses to attend a hearing, the
hearing may, as Cameron has stated, be held in absentia, but the person presiding
should take care that the hearing is still conducted with due consideration to all the
elements of substantive and procedural fairness.

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 275
Holding the Hearing
Hearings proceed broadly as follows:
■■ The chairperson reads the allegations to the employee. (Ideally, the chairperson should
see the allegations only at the commencement of the hearing.)
■■ He asks the employee whether he understands the allegations and whether he was
properly notified of the hearing.
■■ He informs the employee of his rights and enquires whether, so far, these rights have
been observed.
■■ He enquires whether the employee and his representative agree that he chairs the hearing.
■■ He introduces all persons present at the hearing.
■■ He obtains an agreement on the manner in which the proceedings are to be recorded.
■■ The management representative describes the events which led to the allegations.
■■ The employee or his/her representative responds. (It is not advisable to engage in too
much detail or to call witnesses at this stage, as the employee may not be denying
certain aspects of the allegations.)
■■ The parties, in turn, present argument and call witnesses.
■■ The chairperson reminds both of their right to cross-examine.
■■ The chairperson asks questions for clarification.
■■ If there is a conflict of fact, the chairperson engages in further interrogation in order to
establish which party is the more credible.
■■ The chairperson asks final questions in clarification and briefly sums up the main
aspects of the case.
■■ He retires to make a decision as to whether the employee has, on the balance of
probability, committed the transgression.

Decision as to Guilt
The first decision which the chairperson has to make is whether the employee has actually
committed the transgression. It does not have to be proved ‘beyond a reasonable doubt’, but
merely on the balance of probability that the employee is guilty. The chairperson should
weigh the factors which point to the employee having committed the transgression against
those which may make one doubt that the employee is guilty. This, in simplistic terms, is
what ‘the balance of probability’ means. Another question to ask is whether a reasonable
person, having the same evidence placed before him, would come to the same conclusion.
Reaching a decision may take anything from one hour to a couple of days or even weeks,
depending on the complexity of the case.
Once the decision has been made, the chairperson informs the employee and briefly
explains why he has reached that conclusion. (Should the chairperson find that the employee
is not guilty of the offence, the hearing will end.)

276 Labour Relations: A southern African perspective

Decision as to Sanction
Mitigating and Aggravating Circumstances
During the second part of the hearing the employee is given the opportunity to argue
that there are mitigating circumstances. The employer, on his part, may plead aggravation.
Even if the parties do not plead, it remains the duty of the chairman to elicit information
regarding mitigating or aggravating circumstances and to consider these before deciding on
the sanction to be imposed.
Mitigating circumstances could include:
■■ provocation
■■ the employee’s lack of awareness or knowledge of the rule
■■ past non-enforcement of the rule
■■ a public penalty already imposed on the employee
■■ long service
■■ a clear disciplinary record
■■ previous performance
■■ the employee’s personal circumstances
■■ management’s contribution to the transgression.

The following would serve as aggravating circumstances:

■■ poor disciplinary record
■■ betrayal of trust
■■ lack of remorse
■■ deliberate intent
■■ deliberate disregard of the disciplinary code.

Mitigating and aggravating circumstances are considered as a totality. So, for example, long
service on its own is not a strong mitigating factor, whereas long service coupled with a
clean disciplinary record strongly favours the employee. These in turn, have to be weighed
against the aggravating factors.

Other Factors to Consider

The Code of Good Practice: Dismissal advises that any person tasked with deciding whether
a decision to dismiss would be fair, should consider the following:
■■ the rule that was contravened was valid, or reasonable
■■ the employee was aware of or could reasonably be expected to know the rule
■■ the rule had been consistently applied
■■ dismissal was an appropriate sanction for contravention of the rule.

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 277
In addition, it is advisable to test the decision by asking the following questions:
■■ Is the purpose of the sanction to deter other employees and will the proposed sanction
do so? Or is it in fact necessary to do so? (Here the nature of the employer’s business has
to be taken into account. If, by the nature of the business, it is easy for other employees
to commit the same offence, then deterrence becomes an important consideration.)
■■ Is it necessary to impose the sanction to prevent a recurrence – that is, would the
consequences be serious were the same thing to happen again? (This also entails deciding
whether the employee is likely to do it again, and whether it is in character for him to
commit such an act. The employee’s previous record and performance are of importance
in this respect.)
■■ Can the employee possibly be rehabilitated without the sanction, or is a sanction
necessary to rehabilitate him?
■■ Will imposition or non-imposition of the sanction adversely affect the company, the
employee or other employees?
■■ Has the relationship broken down?
■■ Has trust been destroyed?
■■ Can the relationship be restored?

Justification for Decision

If aggravating circumstances outweigh mitigating factors and if the answers to some or most
of these questions point to the need for imposing a particular sanction, then that sanction is
in all probability well justified. Where the chairperson believes that the relationship cannot
be restored, dismissal is justifiable.

Alternatives to Dismissal
The chairperson may, on the basis of mitigating circumstances, decide that the employee
should not be dismissed, but be issued with a final warning. There are instances where the
chairperson is of the opinion that the employee should be given a second chance but where
a warning would not be an effective sanction. In these circumstances he could consider
suspension without pay or demotion of the employee for a particular period. These sanctions
should be imposed only if the employee would otherwise have been dismissed and not for
fear that a sanction may not have been justified. Suspension, demotion or any alternative
sanction may still be challenged by the employee (see Unfair Labour Practices below).

278 Labour Relations: A southern African perspective

 P allegations

H
A
S
evidence defence

E
balance of probability

O
N
E
decision as to guilt

P aggravating
circumstances
mitigating
circumstances

H
A rule broken?
provocation

S
awareness of the rule
deterrence?
previous enforcement of the rule
prevention?
clear disciplinary record
rehabilitation?

E breakdown of the relationship?

effect on company, employee and
long service
previous performance
personal circumstances
other employees?
management’s contribution to the offence

T decision as to sanction

W
O dismissal final warning
demotion
suspension

figure 6.3: decision process during a disciplinary hearing

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 279
Informing and Recording
Once the decision as to sanction has been taken, the parties should be informed and the
reasoning behind the decision briefly explained. The employee should be informed of his
right to appeal, if an appeals procedure exists, or to dispute the decision.
The chairperson should record his own findings and ensure that records of the process
are available.

Fairness in Dispensing Discipline

The Meaning of Fairness
It is generally agreed that an action or behaviour will be considered fair if:
■■ there is balance between the parties
■■ both parties receive equitable treatment
■■ there is conformity with universally accepted standards
■■ consistency is exhibited.

These are merely pointers to fairness. The concept is so laden with nuances and subjective
assessments, and its interpretation so dependent on circumstances, that it would be virtually
impossible to establish absolute standards of fairness. It is possibly for this reason that the
CCMA and the Labour Court are granted discretion in their unfair labour practice jurisdiction.

Substantive Fairness
A disciplinary action will be regarded as substantively unfair if:
■■ the employee was unaware of the rule broken by him/her (an employee cannot be
expected to behave correctly if he or she is not informed of the requirements for correct
behaviour: on the other hand there are certain practices which the employee should
know will not be tolerated)
■■ there is no clear reason for the disciplinary action (such reason may be established
in terms of the law, the contract, the disciplinary code and the expectations and
circumstances of the organisation)
■■ the treatment of the employee is inconsistent with the treatment of other employees
who committed the same or an equal offence (this points to the necessity for a generally
applicable and consistently implemented procedure)
■■ there was no consideration of the special circumstances (such as mitigating and
aggravating factors, length of service and the previous record of the employee)
■■ there was insufficient proof of misconduct (the onus is on the employer to establish,
on the balance of probability and on reasonable grounds, that the offence was, in fact,
committed – in previous cases, the Court has condoned the action of the employer upon
receipt of such proof from the employer)

280 Labour Relations: A southern African perspective

■■ the disciplinary action contravenes a law, service contract, wage determination or
bargaining council agreement.

Procedural Fairness
A disciplinary action would be regarded as procedurally unfair if:
■■ the employee was unaware of the nature of the offence (the employee must be informed
of the charge against him, in language which he understands, before any disciplinary
inquiry or action is instituted)
■■ the employee was not given sufficient warning, where this is required in terms of the
disciplinary code or where it could reasonably be expected
■■ the employee was not given the opportunity to state his case (The audi alteram
partem principle dominates procedural fairness. It is for this reason that the conduct of
a disciplinary hearing is essential in dismissal cases. Yet the Code of Good Practice also
concedes that, in certain circumstances where it cannot reasonably have been expected
of an employer to follow these guidelines, certain pre-dismissal procedures may be
waived. In cases where the employee repeatedly refuses to attend, a hearing may be
held in absentia, but this would not apply in a case where the employee was unable, for
sound reasons, to attend a hearing.)
■■ the employee has not been allowed representation (This is related to the employee’s
right to state his side of the case. It is taken that an employee may not always be
capable of presenting his own case and might need somebody to speak for him, to
ensure that he is not intimidated and that proper procedures are followed. In the same
light, the employee should be allowed the services of an interpreter and to call witnesses,
if necessary.)
■■ the employee was not fully informed of the reason for the decision given (in dismissal
cases, the decision, as well as the reason for the decision, should be given to the employee
in writing)
■■ the employee is a union office bearer or official and the union has not been notified
of the pending action (in terms of the Code of Good Practice, an office bearer or
official of a union should not be disciplined unless his union has been notified and the
opportunity for consultation has been provided).

A disciplinary action in which all the conditions described have been met would generally
be regarded as fair.

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 281
 proper
dismissal
lawful + fair = or
disciplinary
action

procedurally substantively
fair fair

figure 6.4: basis of a good i.r. decision (by courtesy of mr brian dalton)

Recourse Available to Sanctioned Employees

Appeals against the Final Decision
The Code of Good Practice does not make mention of the need for an internal appeals
procedure. This approach may be based on the perception that, when management is
prejudiced or acting unfairly, the situation is not likely to be rectified by an appeal chaired
by management and that it would be preferable to speed up the dispute by submitting it
immediately to the CCMA for conciliation or adjudication.
While it may be the case that in certain organisations the chairperson presiding over
appeal hearings merely rubber-stamps the decision taken at the hearing, the appeal process,
if correctly handled, can rectify irregularities both in procedure and substance, thus
preventing a possible dispute.
Consequently, where the hearing is internal, it is in the organisation’s interest to establish
a proper and unbiased appeals procedure and, if necessary, to appoint an outside neutral
person to preside during this stage of the procedure.
In certain instances, the employer may not be satisfied with the decision of the
chairperson and might wish to hold another hearing or change the sanction. While in the
past it was held that this was not permissible, the courts have now accepted that employers
can interfere if they do so for a good reason and follow a proper procedure.

Pre-dismissal Arbitration/Hearing
The Labour Relations Amendment Act of 2014 inserted a new Section 188A which provided
for the employer to request the CCMA, an accredited bargaining council or an accredited
agency to conduct an arbitration regarding the allegations against an employee.

282 Labour Relations: A southern African perspective

However the legislators were evidently not satisfied with the term ‘Arbitration ‘and in the
2017 amendments to the Act it was changed to ‘Pre-dismissal Enquiry.’
A Pre-dismissal Enquiry can take place only if a collective agreement allows for such or if
the employee consents in writing after being advised of the allegations. However, employees
earning above the published threshold (see Chapter 3) may agree in their contracts to pre-
dismissal arbitration.
On receipt of the application and the payment of a prescribed fee, the CCMA or
bargaining council will appoint an arbitrator, either from their own ranks or from a private
agency. At the hearing the parties may be represented by an official or office bearer of the
representative trade union or employers’ organisation. They may also be represented by a
legal practitioner, but this only if both parties agree or if the arbitrator permits it in terms
of the rules governing arbitration at the CCMA.
The arbitrator appointed in terms of this section has the same powers as a commissioner
and an award made by him is legally binding in that it has the same status as an arbitration
award made by the CCMA.
A pre-dismissal enquiry frees the employer from any allegations of unfairness and
generally precludes any further action on the matter. It is recommended in cases where
complex issues are at stake or where bias may be alleged. There are organisations where
pre-dismissal arbitration has become common practice.

Case Review: Justifiability of Sanction

Lefifi v SA Breweries
(CCMA: GA25483)
Background
This case centred on the dismissal of an employee with 13 years’ service for allegedly
stealing beer. The manager had found Lefifi and a fellow-worker in the BBT, or
sampling room, to which only certain authorised persons had entrance. Lefifi and his
companion were not authorised.
As the manager approached, he saw the employees throw an object among
the pipes and motors. When the manager asked what they were doing there, the
employees replied that they were ‘just looking around’. They then left the sampling
room, after which the manager went in search of the object which had been thrown
away. He found a plastic bag containing a two-litre bottle of ice-cold beer. (The beer
in the sampling room is kept at a temperature of minus one degree.) The manager
took the bag, and, on encountering Lefifi, told him to call his fellow-worker, a certain
JJ, as well as JJ’s supervisor.

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 283
After stopping at his own work station, the manager proceeded to the boiler room,
where Lefifi with JJ, and the latter’s supervisor, were waiting. The manager asked the
two employees whether the beer belonged to them. Both confirmed that it did. The
supervisor insisted that JJ, who worked in the boiler room, should be subjected to a
breathalyser test. The manager then suggested that both employees should be tested.
He placed the bottle in the room and everyone proceeded to the security point, where
JJ could not produce his access card. He left the security point and returned as stated
by both managers, about fifteen or twenty minutes later. This was after a security
guard, a Mr January, had been sent to look for him. Both employees tested negative,
but when the manager went to retrieve the bottle, it had disappeared.
Lefifi’s version was that he had been at his work station when the manager
approached him insisting that he had taken the bottle. He had been told to call
JJ, and the manager had informed both that it was their beer. He was upset at this
‘false accusation’ and an argument ensued. He agreed to undergo a breathalyser
test because, as an employee, he could not refuse. One of Lefifi’s witnesses was the
security sergeant who had administered the breathalyser test. He said that he had
instructed Mr January to accompany JJ and that both had left together. According to
him, JJ had returned five minutes later.
Three days later, both employees received notification of a disciplinary hearing. Lefifi
immediately lodged a grievance against the manager. The first hearing was postponed
because the employees did not have a representative. Further postponements occurred
because one or other of the employees was not present. During this period a major
strike also occurred at the plant. It was subsequently decided to hold separate hearings.
JJ’s hearing was held in absentia, and he was dismissed. Lefifi’s hearing eventually took
place several months after the event. Lefifi was dismissed, but he declared a dispute,
alleging both procedural and substantive unfairness. The contention was that, although
the disciplinary hearing was conducted in a fair manner, the delays had prejudiced the
employee; further, that Lefifi was wrongly found guilty and, failing that, that dismissal
was too harsh a sanction in the circumstances.

Argument and Pronouncements

The Commissioner was satisfied that the delays had been partly due to Lefifi’s own
actions. The employee could not, therefore, claim procedural unfairness.
As regards substantive fairness, the Commissioner was, in the first place, faced with
a conflict of fact and therefore had to decide on the credibility of the parties and their
witnesses. He found it strange that, if Lefifi was outraged at being falsely accused, he did
not communicate this to his shop steward who had been present during the breathalyser
test. He noted that the grievance against the manager had been lodged only after the
employee had been charged with theft. Lefifi had contradicted himself during both the
disciplinary hearing and the arbitration proceedings. Furthermore, the Commissioner

284 Labour Relations: A southern African perspective

 found it unlikely that the manager would have worked out such an elaborate scheme to
frame the employee. Also, why would he have ordered if he had known that Lefifi had
not drunk any beer. The Commissioner could find no good reason why the manager, who
had a good relationship with the employee, should wish to frame him.
The security sergeant’s version of the events was found to be ‘overly impressive as
there was no particular reason for him to have paid special attention to the length
of time they were absent for.’ The sergeant also could not vouch that JJ had been
accompanied all the way. As JJ and Lefifi were the only other persons who knew
about the bottle, the evidence pointed to JJ’s having removed it.
In deciding who was speaking the truth, the Commissioner concluded as follows:
On a full conspectus of all the evidence adduced in its totality, the witnesses
who testified on behalf of the employer impressed me with their honesty,
candour and willingness to make reasonable concessions. I have little doubt
about the veracity of their versions. On the other hand, the employee’s
evidence was fraught with a number of contradictions and inconsistencies.
In addition to this he was often vague and elusive in replying to questions.

In the mind of the Commissioner there was thus no doubt that the circumstantial
evidence pointed to the employee having committed the transgression as alleged.
It remained only to be decided if the transgression was sufficiently serious to
warrant dismissal. The Commissioner noted that the theft of beer was treated as a
very serious offence by the organisation, that the company had acted consistently in
dismissing persons who committed this transgression, and that easy access to beer
made it necessary to inform all employees that such offence would lead to dismissal.
The Commissioner declared himself satisfied that ‘… the rule against stealing beer
is reasonable and valid and necessary for the efficient promotion and protection of
the business’ and that ‘[I]n order to deter all would be offenders the employer has
consistently and justifiably taken a tough stance on such infringements.’
It was conceded that Lefifi’s long service and previous unblemished record were
‘weighty factors in his favour’, but set against these was the fact that, although he
initially admitted guilt, he thereafter persisted with a false version of the events; his
‘abhorrent behaviour’ in laying a false grievance against the supervisor and his lack of
remorse. In the opinion of the Commissioner, this lack of remorse did not ‘instil much
confidence in any future relationship of trust.’

Discussion
Persons conducting a hearing will often be faced with conflicts of fact, and it will
be necessary to establish which party’s version is the more credible. In this case the
Commissioner considered the following:

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 285
• the contradictions of one party’s testimony versus the consistency of the others
• the likelihood or otherwise of either set of events having occurred
• the behaviour and demeanour of both parties
• the fact that the sergeant’s testimony was evidently rehearsed
• the readiness of the employer to make concessions.

In deciding whether the reason for dismissal could be regarded a fair, the Commissioner
stressed the following:
• the nature of the employer’s business
• the need to deter others from committing the same transgression

The Commissioner conceded that the following were mitigating factors:

• the employee’s long service
• his clear record

(long service on its own is not necessarily sufficient mitigation)

However, the mitigating circumstances were weighed against
• the employee’s subsequent behaviour
• the fact that a relationship of trust had been broken and was unlikely to be re-
established

The last point was, for the Commissioner, the most important. It is sometimes argued
that an employee who steals R100 should receive a milder sanction than the one
who steals R10 000.
As argued by the Commissioner, the ‘degree’ of the transgression should not be an
argument for a lighter sentence where an employee steals R100. Nevertheless, the
consolidated loss to the business of the R10 000 theft would become an aggravating
factor in the case of that employee.

286 Labour Relations: A southern African perspective

Disciplinary Checklist
In order to decide whether a disciplinary process has been fair, the following questions may
be asked:
■■ Was there a valid reason for disciplining the employee? (eg transgression of the
disciplinary code, material breach of contract or breach of a law)
■■ Did the employee know the rule? Were the rules conveyed to the employee and was he
acquainted with the disciplinary code?
■■ Did the employee get sufficient warning? In the case of a minor offence, were previous
valid warnings given? Was he warned, through the disciplinary code, that certain acts
might result in severe sanctions?
■■ Was the existing nature of his offence explained to the employee?
■■ Was there sufficient proof of misconduct? On the balance of probability, did the employee
commit the transgression? Was the evidence valid and admissible?
■■ In the case of severe misconduct, was a proper hearing held?
◗◗ Was the employee given sufficient notice and the necessary time to prepare?
◗◗ Was he informed of the allegation?
◗◗ Was he allowed a representative and an interpreter?
◗◗ Was he allowed access to documents and records?
◗◗ Was the presiding officer impartial – did he have no direct interest in the matter?
◗◗ Was the employee given the chance to state his case?
◗◗ Was he allowed to call witnesses and to cross-question evidence?
◗◗ Was the employee informed of his right to appeal?
◗◗ Were the proceedings recorded and verified?
■■ Was the sanction consistent with those imposed on other employee guilty of the same
transgression, but with consideration of particular circumstances?
■■ Was the employee informed of the reasons for the sanction?
■■ Was the sanction justified?
◗◗ Was there a valid reason
◗◗ Were all mitigating and aggravating circumstances considered?
◗◗ Did the sanction match the offence?
◗◗ Was it aimed at deterrence, prevention or rehabilitation? Or was rehabilitation
impossible or unlikely?
◗◗ Was there no law, contract or agreement preventing the sanction?
◗◗ Was there no possibility of re-establishing the relationship?

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 287
Termination of Employment: General Principles

Termination as a Last Resort

Employees do not always conduct themselves in an appropriate manner, nor do they always
perform their tasks to the required standards. The task of the manager is to correct these
shortcomings on the part of the employee so as to keep that person in employ. If all attempts
at correction fail, or if the misbehaviour is so serious that it becomes impossible to continue
the relationship, the employer may terminate the relationship.

ILO Recommendation Concerning the Termination of Employment

All management actions leading to or resulting in termination should be measured in terms
of international standards applicable to the termination of service. These are to be found in
ILO Recommendation (No 119) concerning Termination of Employment at the Initiative of
the Employer (1963). Section (2) of this Recommendation states that:
Termination of employment should not take place unless there is a valid reason for
such termination connected with the capacity or conduct of the worker or based
on the operational requirements of the undertaking, establishment or service.

The following would not, in terms of the Recommendation, constitute valid reasons for
termination:
■■ union membership or participation in union activities
■■ seeking office, acting as or having acted as a worker representative
■■ the filing, in good faith, of a complaint against an employer for violation of a law or
regulation
■■ race, colour, gender, marital status, religion, political opinion, national extraction or
social origin.

As regards the redress available to an employee, the ILO recommends that:

A worker who feels that his employment has been unjustifiably terminated should
be entitled to appeal, within reasonable time, against the termination with the
assistance, where the worker so requests, of a person representing him, to a body
established under a collective agreement or to a neutral body, such as a court, an
arbitrator, an arbitration committee or a similar body.

The ILO further recommends that the body to which the employee appeals should be entitled
to examine:
■■ the reasons given for termination
■■ other circumstances relevant to the case
■■ the justification of the termination.

288 Labour Relations: A southern African perspective

If it finds that the dismissal was unjustified, it should be allowed to order:
■■ that the employee be reinstated, with payment of unpaid wages where appropriate
■■ that the employee be paid adequate compensation
■■ that the employee be granted such other relief as may be determined.

Dismissals According to the Labour Relations Act

Definition of Dismissal
Section 186 of the Labour Relations Act generally defines a dismissal as ‘the termination
of an employment contract (with or without notice)’ In terms of the Act; the following will
also be regarded as dismissal
■■ failure to renew a fixed-term contract where the employee reasonably expected the
contract to be renewed
■■ selective re-employment of employees who were dismissed for the same reason
■■ coercion or pressure on an employee which leaves him with no alternative but to resign
(constructive dismissal)
■■ failure to re-employ an employee who has been on maternity leave or who has been
absent because of her confinement
■■ resignation by an employee whose contract has been transferred to a new employer and
whose conditions and circumstances at work are substantially less favourable than those
under the previous employer.
■■ failure by the employer to comply with reasonable expectations of a contract employee
(see later in this section).

The inclusion of all the above under the definition of dismissal means that, if there is no
good reason for these dismissals, they may also be categorised as unfair dismissals.

The Code of Good Practice: Dismissals

The Code of Good Practice on Dismissals sets out the steps to be followed before dismissing
employees. The introduction to the code concedes that each case is unique and that
digressions from the Code may, in certain instances, be justified; also that, in terms of the
number of persons employed, a different approach may be acceptable. The most important
principle, according to the Code, is that there should be mutual respect between the parties.
The Code further places a premium on both fairness and the effective operation of a business.
It states that, although employees need to be protected from arbitrary action, employers are
entitled to expect satisfactory conduct and performance from their employees.

Fair Reasons for Dismissals

Section 188 of the Act provides that the dismissal of an employee will be regarded as fair
only if the employer can prove that the dismissal:

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 289
■■ is related to the conduct or capacity of the employee, or
■■ is related to the operational requirements of the employer, and
■■ is affected in terms of a fair procedure.

(The Code of Good Practice appended to the Act describes procedures which would be
regarded as fair.)

Case Reviews: Constructive Dismissal

Pretoria Society for the Care of the Retarded v Loots

(Labour Appeal Court: 17 & 25 June 1997)
Background
Ms Loots was employed by the Society for the Care of the Retarded on 1 April 1993
with overall responsibility for 26 housemothers. According to the Court, there were
‘early signs that the relationship was not going to be easy’. While Loots was on leave
in September 1993, her superior, Mrs Theron, carried out her duties and evidently
interrogated Loots’s colleagues as to whether they were unhappy with Loots. Loots
resented this action on the part of Theron. On 28 February 1994, Loots was summoned
to a meeting with the manager, Mr Lemner, where a few points regarding Loots’s
work and conditions of service were raised.
On 2 September she was given notice of a disciplinary hearing to be held on
5 September and was suspended with immediate effect. Loots was required to
immediately hand over the keys to her office and was forbidden to speak to people on
the premises or to enter the workplace. The ‘charge sheet’ against Loots contained no
less than eight diverse items, including that she ‘failed to respond to advice and improve
attitude’. It also mentioned ‘aggravating factors’ among which was the contention that
the relationship had irretrievably broken down as a result of Loots’s conduct.
Following the hearing, Loots was found guilty as charged. It was conceded that some
of the allegations had not been proved, but among those found to have been proved were
that there was a ‘personality clash’ between her and Mrs Theron, that Loots attempted
to prejudice a colleague against others, that she had been rude to a Mrs Roets and that
in certain instances she had not fulfilled her duties, maintaining that she had too much
work to do. On 14 September it was decided to issue Loots with a final warning.
Loots appealed against the findings, as did management, stating that it wanted
Loots dismissed. The appeal was adjourned for three months while workshops to
‘improve work relationships’ were being conducted.
On 16 September, Loots received a letter from Lemner accusing her of telling a
housemother of the result of her enquiry and of re-entering the premises while still

290 Labour Relations: A southern African perspective

 on suspension. She was warned that further actions of this sort would result in her
dismissal, that her work would be monitored daily and that any shortcomings could
lead to dismissal. Loots was denied keys to the safe and other doors and on another
occasion was belittled in front of others for not providing name tags for occupants.
She was no longer allowed to make announcements or read prayers at assembly,
as she had done before. Management published her final written warning in the
newspaper sent to all parents of the inmates yet did not provide the factual findings
or state that the issue was subject to an appeal.
At this stage, Loots developed medical complaints, diagnosed as tension and
gastritis. Her superiors would not accept her doctor’s diagnosis and obliged her to
visit another doctor. The latter diagnosed oesophagitis and gastritis, both stress-
related, and confirmed that the complaints could be cured only if the cause of the
stress was removed.
On 21 October Loots tendered her resignation.
The matter was subsequently taken before the (then) Industrial Court where it was
submitted that Loots had been constructively dismissed. The Industrial Court agreed and
awarded Loots R54 456 as compensation. The Society responded by lodging an appeal.
In the Industrial Court it was argued that the employer had ‘created such a hostile
environment that it was not possible for any normal individual to perform his/her
normal duties and that [Loots] did not have any choice but to resign in order to
prevent her health from deteriorating any further’.
At Appeal, counsel for the employer submitted that Loots had not shown that
any circumstance after 4 October justified her conclusion of constructive dismissal.

Argument and Pronouncements

In exploring the concept of constructive dismissal, the Court referred to the judgment
of Myburgh & Jooste v Transnet Ltd t/a SA Airways (1995) which stated that it had
to be established whether, in the first place, the employee had not intended that
the employment relationship should end. The onus to prove this would be on the
employee. Secondly, if there had been an agreement between the parties regarding
the dismissal, constructive dismissal could not be alleged. Only if neither of these
circumstances existed, should the Court proceed to determine whether there had
been constructive dismissal or not. Again, the onus of proof would fall to the
employee. The Court went on to explain that ‘in a conventional dismissal, it is the
employer who puts an end to the contract of employment by dismissing the employee.
In a constructive dismissal it is the employee who terminates the employment
relationship by resigning. Quoting from the Employment Appeal Tribunal in the case
Woods v WM Car Services (Peterborough) (1981), the Court pointed out that: ‘[I]t is
clearly established that there is implied in a contract of employment a term that
employers will not, without reasonable and proper cause, conduct themselves in

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 291
a manner calculated or likely to destroy or seriously damage the relationship of
confidence and trust between employer and employee’. The Court held that it was not
necessary to prove that the employer had intended to repudiate the contract, merely
that the employer’s conduct as a whole had the effect of making a continuation of
the relationship intolerable and that:
When an employee resigns or terminates the contract as a result of
constructive dismissal, such employee is in fact indicating that the situation
has become so unbearable that the employee cannot fulfil what is the
employee’s most important function, namely to work. The employee is in
effect saying that he or she would have carried on working indefinitely had
the unbearable situation not been created. She does so on the basis that she
does not believe that the employer will ever reform or abandon the pattern of
creating an unbearable work environment.

Under these circumstances the employee has, according to the Court, two choices
– that is, either to stand by the contract (by continuing to work) or to ‘accept the
repudiation and the contract comes to an end’.
The Court concluded that it was evident from the first interview between Loots
and Lemner that the employer was attempting to build up a case against her, that her
suspension was in itself unfair, that some of the allegations against her were irrelevant
or should have been dealt with in a different manner and that she was generally
treated in an unfair manner. The fact that the employer had alleged beforehand that
the relationship had been irretrievably destroyed and had brought a cross-appeal
demanding dismissal showed that it wanted the contract terminated. The Labour Appeal
Court refuted the argument that no further evidence of poor treatment was available
after 4 October, citing the letter addressed to Loots as ‘… another clear example of the
attitude of the appellant and the lengths towards which it would go to criticise the
respondent in a totally unreasonable manner.’ The view was expressed that the stress
suffered by Loots was caused by ‘the antagonistic and hostile work environment created
by the appellant.’ In the light of the above, the Court upheld the decision of the Industrial
Court that Loots had been constructively dismissed and ordered the employer to pay
costs. However, it found that the Industrial Court had erred in its calculation of the
amount of compensation due to Loots and decreased the award accordingly.

Albany Bakeries Ltd v Van Wyk & Others

(Labour Appeal Court. JAI/04, 9 November 2004; 13 May 2005)
Background
Mr van Wyk had been employed as regional manager of Albany Bakery’s Gauteng region
on 13 July 1999. In September 2002 he was asked also to pay particular attention to

292 Labour Relations: A southern African perspective

 the Pretoria branch as the position of branch manager had become vacant. This Mr
Van Wyk did in addition to his normal duties. The position of branch manager was
subsequently advertised, and a certain Mr McCabe selected for the position.
In the meantime, the company had decided to restructure and Van Wyk was informed
that the position of regional manager would cease to exist, but that he could take up
the position of branch manager at the Pretoria branch with Mr McCabe reporting to
him. Van Wyk refused the offer, insisting that the move to the new position would be a
demotion. He went on to enquire about retrenchment packages being offered during the
restructuring but was told that this would not apply to him since he had been offered
an alternative. In February 2001 Van Wyk resigned, citing, among other allegations of
unfairness, the fact that he had not been offered a retrenchment package.
Van Wyk subsequently took his case to the CCMA, alleging constructive dismissal
on the grounds that the company, by demoting him, had made it impossible for
him to continue in their employ. The Commissioner found that Van Wyk had not
been compelled by the circumstance to resign. In response, Van Wyk requested
the Labour Court to review the Commissioner’s findings. The latter Court decided
that the demotion had been a repudiation of contract, that in these circumstances
the employee was entitled to cancel the contract and that his resignation thus
constituted a dismissal in terms of Section 186(e) of the Labour Relations Act. The
case was then taken to the Labour Appeal Court.

Argument and Pronouncements

The Labour Appeal Court noted that, before the insertion of Section 186(e) in the
Labour Relations Act, the common law had usually been invoked in cases based on
allegations of constructive dismissal. In terms of the common law, the demotion, which
amounted to a repudiation of contract, would have constituted sufficient grounds for
resigning and bringing a case of constructive dismissal. However, Section 186(e) makes
no mention of repudiation of contract. It states instead that the reason for resignation
should be that the employer has made continuation of the relationship impossible. In
situations where a contract was repudiated but where the working life of the employee
did not become intolerable, no constructive dismissal could be alleged.
Referring in particular to the Loots case, the Labour Appeal Court decided that the
Labour Court had erred in using the repudiation of contract as a criterion for establishing
that Van Wyk had been constructively dismissed. The Appeal Court went on to explain
that, even where circumstances were perceived to be intolerable, resignation should
be the last resort and the employer should be given the opportunity to rectify the
situation. In this respect, the Court pointed to the fact that the company had a well-
designed grievance procedure, which had not been used by Van Wyk. Finally, according
to the Court, an allegation of constructive dismissal presupposes that, had the alleged
circumstances not arisen or had they been rectified, the employee would have remained

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 293
in his job. In Van Wyk’s case this did not appear to be so as he, Van Wyk, had indicated
that he would have accepted a retrenchment package had this been offered.
On upholding the appeal as launched by the company, the Court suggested
that, instead of alleging constructive dismissal, Van Wyk could, if he considered his
demotion to be unfair, have used the unfair labour practice legislation relating to
promotion, demotion and probation.

Discussion
As stated in the Woods case, quoted by the Court in the Loots case, ‘The circumstances
[of constructive dismissal] are so infinitely various that there can be, and is, no rule
of law saying what circumstances justify and what do not’.
Nevertheless, certain guidelines may be established from the pronouncements of
the Court and the CCMA. The most important are the following:
• There does not have to be an outright threat or literal repudiation of the contract
by the employer for constructive dismissal to exist.
• The onus of proof will always fall to the employee, who will have to show that the
situation was so intolerable that there was no alternative but to resign and that
no resignation would have occurred if the circumstances alleged did not exist.
• Repudiation on its own does not constitute sufficient grounds for alleging
constructive dismissal.
• The employee should first fully utilise the internal procedures to raise a grievance,
where this is possible.
• Where the organisation is small, and the employee’s position renders it difficult to
raise a grievance, the non-use of internal procedures may be condoned.
• Both the employer and the employee’s behaviour and attitudes will be taken into
account.
• If the employee delays the resignation, it may be concluded that the situation was
not really intolerable.
• If there are indications that the employee would have willingly left employment,
constructive dismissal did not occur.

294 Labour Relations: A southern African perspective

 Case Review: Dismissal for a Reason Related to the
Transfer of a Business as a Going Concern
Van der Velde v Business and Design Software (Pty) Ltd
& Another
(Labour Court. JS371/03, 27 January, 31 March 2006)
Background
The applicant employee, a Mr Van der Velde, had been employed as general manager
and managing director designate by Business and Design Software (BDS), which was
in the process of being acquired by the AST Group. After the owner and managing
director’s resignation in 2001, the Board indicated that Van der Velde would be
appointed in his place. However, nothing came of this and in mid-2002 a Mr Paul
Smulders was appointed as managing director.
In September 2002, Smulders indicated to Van der Velde that AST was concerned
that BDS was ‘top-heavy’ and that Van der Velde was ‘surplus to requirements’. In
January 2003 it became apparent that AST wanted to dispose of BDS, and that a
management takeover had been proposed. Both Smulders and Van der Velde put in a
bid to take over the business. The bid was won by Smulders, but the business was not
immediately transferred. Thus, for some time Smulders continued both as managing
director of BDS, under AST, and as future owner of BDS.
In February 2003 Smulders brought his brother, Marcel, into the business, a move
which would affect Van der Velde’s position. In March 2003 Marcel informed Van der
Velde that he had three options: he could resign from BDS and possibly be offered
the business systems division; he could stay and face disciplinary action; or he could
be retrenched.
On 7 March Van der Velde was offered the alternative position of administration
manager. He was informed that the letter containing the offer also served as a
warning and that if he ‘did not rectify the situation’ his position at BDF ‘would have
to be reviewed’. According to Van der Velde, he could not accept the offer as the
salary was greatly reduced, the position was a demotion and he would be reporting
to persons who had worked under him.
In the meantime, Van der Velde had written to the human resource manager, a
certain Strydom, enquiring about a voluntary retrenchment package. On 11 March he
received an email from Strydom informing that he could not be retrenched as he was
too valuable an employee to AST. (Later, during the court hearing, Smulders himself
acknowledged that Van der Velde was integral to the business, that he was the only
one who knew how all the systems worked and that, having lost other valuable
employees, it would be hard to lose Van der Velde.)

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 295
On 17 March Marcel took over Van der Velde’s office and the latter was moved to
a general work area. On 26 March Van der Velde was informed that the business
was being restructured, that the position of general manager would cease to exist
and that, if he did not accept the position of administration manager, he would be
retrenched. Van der Velde refused to accept the offer, and on 28 March was informed
that he would be retrenched effective as from 31 March.
On 3 April 2003 BDS signed an agreement with NGN (Smulders’s consortium) in
terms of which the business was sold to NGN as a going concern. Clause 16 of the
agreement stated that all persons employed by BDS immediately before the transfer
would be employed by NGN on the same terms and conditions as before. Van der
Velde’s name appeared on the list!
Van der Velde subsequently challenged his ‘retrenchment’ in the Labour Court,
citing Section 187(1)(g) of the Labour Relations Act in terms of which a dismissal
is automatically unfair if the reason for the dismissal is a transfer or is related to a
transfer.
The defendants first contended that the reason for Van der Velde’s dismissal
related to the operational requirements, not of BDS, but of the consortium which had
purchased the business. On the other hand, Smulders later stated that it had never
been their intention to retrench Van der Velde, that there was nothing in writing
about retrenchment and that Van der Velde was the author of his own misfortune
since the true reason for the dismissal was the latter’s refusal to accept the job as
administrative manager.

Argument and Pronouncements

The Court noted that an employee who alleges that his dismissal is related to the
transfer of a business as dealt with in Section 197 of the Labour Relations Act, has the
preliminary onus of bringing some credible evidence of a causal relationship between
the transfer and his dismissal. An objective preliminary enquiry is then conducted,
taking into account all the relevant facts and circumstance. For the purpose of such
enquiry the proximity of the date of dismissal to the date on which the business was
transferred is relevant but does not in itself prove that the dismissal was the result of
the transfer. Once the employee has brought evidence of a connection between the
two events, the onus reverts to the employer to prove that the dismissal was affected
for a fair reason and in terms of a fair procedure.
In this case the Court declared itself satisfied that Van der Velde had produced
enough evidence to raise the possibility that his dismissal was related to the transfer,
particularly since he was dismissed less than a week before the transfer became
effective. Turning to the evidence given by Smulders, the Court reached the conclusion
that the employer had failed to prove that there had been another, fair reason for
the dismissal. Another test applied by the Court was to ask itself whether Van der

296 Labour Relations: A southern African perspective

 Velde would have been dismissed if the transfer of the business had not taken place.
It concluded that, had there been no transfer, Van der Velde would have continued to
be employed. The conclusion was that the dismissal was related to the transfer and
that the employer had dismissed Van der Velde in order to avoid his obligations under
Section 197. As the Court pointed out, Smulders was under the grossly mistaken
impression that Van der Velde’s refusal to accept the alternative offer entitled him,
Smulders, to dismiss Van der Velde.
Van der Velde was awarded 12 months’ salary as compensation for the unfair
dismissal. Since, in terms of Section 197, the liabilities of the old employer are also
transferred to the new employer, NGN was ordered to pay the compensation, while
costs were awarded against both the old and the new employers.

Discussion
The transfer of business from one employer to another employer is a complicated
task, and any actions taken regarding employees have to be in line with the precepts
of Section 197 of the Act (see Chapter 7). Section 187(g) has been inserted to protect
employees in a transfer situation from arbitrary action such as that meted out to Van
der Velde, but this does not mean that no dismissals can occur. As the Court pointed
out, the employer must prove that the dismissals were undertaken for a fair reason.
During the course of its deliberations, the Court indicated that restructuring
and operational requirements could constitute fair reasons for dismissal, but the
prescribed procedures would have to be followed and the dismissals should not be
undertaken to avoid obligations in terms of Section 197.
(For other cases relating to the transfer of a business, see also Chapter 7.)

Dismissal of Employees on Fixed-Term Contracts

The Labour Relations Act also lists the following as resorting under dismissals:
■■ Failure to renew a fixed-term contract where the employee reasonably expected the
contract to be renewed
■■ An offer to renew a fixed-term contract at less favourable terms where the employee
reasonably expected it to be renewed on the same or similar terms
■■ Failure to offer a person on a fixed-term contract a permanent position when this was
reasonably expected or an offer of a permanent contract but on less favourable terms
than expected

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 297
 Case Reviews: Renewal of Contract

McInnes v Technikon Natal

(Labour Court: D 322/98)
Background
McInnes had been employed as a marketing manager in the Business Unit but wanted
to obtain a lecturing position. When she heard that the Marketing Department
needed a lecturer, she submitted an application and was appointed on a one-year
contract from February 1996 to January 1997.
McInnes’s letter of appointment described her position as that of a ‘locum’ for the
Head of Department who was presumably on leave. However, McInnes did not replace
the Head of Department, but occupied the position of a junior lecturer, doing work
which differed from that of the Department Head, who returned at the beginning of
January 1997, while McInnes was still employed. Unlike other locums, McInnes had
been interviewed for the position to which she was appointed.
Subsequent to her first contract, McInnes was again interviewed and appointed to
the position of ‘M410’ as junior lecturer for one year, from February 1997 to January
1998. She continued the same work she had performed during 1996 but acted as
co-ordinator for the subject Personal Selling.
Towards the end of 1997 it was decided that the position designated M410 would
become permanent. McInnes applied for the position and was shortlisted along with
two other candidates. Upon the insistence of the Vice Principal, one of the other
candidates was appointed to the position.
According to McInnes, the acting Head of Department had told her at the beginning
that there was a possibility that her contract could be renewed if she obtained her
B.Tech degree. This she completed in 1997. She was treated as a member of staff who
would continue lecturing in 1998 and had been asked to deliver a paper on behalf
of the department during 1998. In October 1998 she had been told by the Head of
Department that her position would be converted into a permanent post, that it
would be advertised, but that her application would be a mere formality.

Pronouncements
The Court had to decide what the applicant’s ‘subjective expectation’ was as regards
renewal. It disagreed with the judgment of Oosthuizen AJ in Dierks v University of South
Africa that the expectation provided for in the Labour Relations Act did not include the
expectation of a permanent position and concluded that McInnes ‘… genuinely thought
that in February 1998 she would still be doing the same work as in January, albeit

298 Labour Relations: A southern African perspective

 under a different contract, the main difference being that her appointment would
now be a permanent one.’ According to the Court, ‘If then the expectation which the
employer creates is that the renewal is to be indefinite, then the section [of the LRA]
must be held also to cover that situation.’ It was conceded that ‘In the normal course
of events when fixed-term contracts are renewed from time to time an expectation
that the contract would be renewed indefinitely or made permanent would probably
not be reasonable’. Nevertheless, the Court decided that McInnes’s expectation was
reasonable. The decision was based on the following considerations:
• The position described as ‘locum’ was actually that of a junior lecturer.
• Her appointment and the Department Head’s return overlapped.
• She had been interviewed for her position, which was not the case with locums.
• McInnes had been encouraged to improve her qualifications so as to improve her
chances of remaining at the Technikon.
• In 1997 McInnes continued with the work she had been doing in 1996.
• The Vice Principal and the Head of Department had acted as if they expected her
still to be there in 1998.
• She had been asked to present a paper in 1998.
• She had been scheduled for lecturing on the 1998 timetable.
• In January 1998 she was introduced to students as head of Personal Selling.
• She had prepared a study guide for the 1998 academic year.
• McInnes’s name appeared in the handbook as a lecturer for 1998.
• She had been told to report for work on Monday, 2 February.

In addition, the advertisement for the position was placed only two weeks before
the expiry of McInnes’s contract. According to the Court: ‘This would have further
reinforced the notion that what was taking place was merely a formality. … Perhaps
this would have then reduced the process to a charade … but this would not have
been the applicant’s charade but the respondents.
It was decided that an unfair dismissal had occurred, and the Technikon was
ordered both to reinstate McInnes and to pay her, with interest, for the two years
which had elapsed since February 1998.
A moot point during this hearing was that the section 186(1)(b) of the Act relating
to the expectations of persons on a fixed-term contract mentions the expectation that
the contract would be renewed, but not an expectation of permanent employment.
In subsequent years a number of pronouncements by the courts, most notably that
of the Labour Appeal Court in University of Pretoria v CCMA et al, supported the
literal interpretation of the law, namely that Section 186 (1)(b) of the Act referred
only to an expectation of another fixed term contract and not to any expectation of

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 299
permanence. As argued by counsel for the applicants in the University of Pretoria and
similar cases, this narrow interpretation of the law allowed for employers to exploit
employees by repeatedly employing them on fixed term contracts. Fortunately, the
Labour Relations Amendment Act of 2014 addressed this by adding a new clause 186
(1)(b)(ii) dealing specifically with the expectation of permanence (see above).

Zamisa & Another v SANS Fibres (Pty) Ltd

(CCMA: KN 16313)
Background
The employees concerned had been working for SANS on a permanent basis until the
company decided to engage in a restructuring initiative. The voluntary retrenchment
exercise which was undertaken was so successful that the company soon realised
it could not release all those who wished to be retrenched at the same time, since
it would then not be able to carry out necessary work. The company consequently
proposed that the retrenchment be undertaken in phases, but this met with resistance
from employees who were eager to receive their retrenchment packages. At this
stage the union approached management with the suggestion that it should retrench
all designated employees and re-employ those that it needed to continue on fixed-
term contracts. The six-month contract which was offered to these employees stated
clearly why the contracts were being offered, that it was ‘not envisaged that this job
will be a permanent feature in the future organisational structure’ and that ‘[F]or
this reason there should be no expectation that this contract will be renewed on the
same or different terms.’
However, in the end the work was not completed within 6 months and, owing to
an administrative error, the company failed to renew the contracts for another fixed
term immediately after the first six-month term had elapsed. When the mistake was
realised, contracted employees who were continuing with the work were requested
to sign another fixed-term contract with retrospective effect. Most employees did so
willingly, but the employees in question refused to sign and claimed that they were
now permanent.
The company maintained that it had never given the impression that there was a
possibility of permanent employment and that the union had been urged to explain
the scheme to all employees so that there would be no misunderstanding.

Pronouncements
Referring to the ‘no expectation of renewal’ clause in the contract, the Commissioner
pointed out that the Labour Court had repeatedly stressed the binding nature of
this clause on both parties and that arbitrators or adjudicators should not ‘ascribe

300 Labour Relations: A southern African perspective

 intentions to the parties that were not present at the time of the contract being
formed’. It was further noted that there had been no ‘overt representation’ to the
employees that they were now permanent. Instead, the company attempted to
remedy the administrative mistake which had occurred. The most convincing factor,
as far as the Commissioner was concerned, was that the entire scheme had been
undertaken at the suggestion of the union, that the union had to obtain mandates
and that, therefore, the employees must have been fully aware of the fact that their
employment was of a temporary nature. Under the circumstances, no expectation of
renewal could be claimed by the applicants.

Discussion
It is evident that, in order to avoid the allegation of an unfair dismissal upon the
expiry of a fixed-term contract, employers should not only include a ‘non-expectation’
clause in the contract but should also avoid engaging in any behaviour which might
lead to the expectation of renewal or permanence. In particular, persons authorised
to make recommendations regarding appointments should not make promises as
regards appointments or accept that a fixed-term appointee will continue in a
particular position.
Although, in the SANS Fibres case, the employer’s mistake was overlooked because
of the agreement of the union, employers should take care not to allow employees
to work longer than the expiry date of the fixed-term contract as they might then
claim permanence.

Automatic Termination Clauses in Contracts

Most non-permanent employment contracts are for specific periods and therefore will have
a start and end date. However, there are cases where the employer does not know exactly
when he will no longer need the services of the employee. While the Labour Relations Act
does allow for fixed-term contracts with employees working on a special project, it did
not, until quite recently, explicitly say how the end of the contract should be defined. The
question was whether employers who could not say with certainty when the contract would
end could follow the common law practice of describing the situation where they would no
longer need the employee.

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 301
 Case Review: Permissibility of Automatic Termination
Clause in Contract
Enforce Security Group v Mwelase & 46 others
Labour Appeal Court January 2015
Background
Enforce, a private security company with its headquarters in Durban, landed a
contract with Boardwalk in Richards Bay. The contract was of indefinite duration
and could at any time be terminated by Boardwalk. In order to provide the service to
Boardwalk Enforce had to take on additional employees.
In drawing up the contracts for the new employees Enforce inserted what is known
as an automatic termination clause. The contract stated that the duration of the
employees’ service depended on the duration of Enforce’s contract with Boardwalk;
further that termination would not constitute a retrenchment but a completion of
the employee’s contract.
On 30 September 2011 Enforce gave notice that the employment contracts would
end on 31 October as its contract with Boardwalk would also end on that date. In the
interim, management held talks with the two representative unions and twice offered
work in Durban to the employees. The offer was refused, with the union insisting that
the employees had been retrenched and that the company owed them retrenchment
pay in terms of the Basic Conditions of Employment Act. This led to the company finally
giving written notice that the employment contracts would end on 31 October.
The union responded by lodging an unfair dismissal dispute with the CCMA.

Argument and Pronouncements

At the CCMA
The Commissioner argued that the contracts were ‘indefinite period contracts ‘
where the actual date of termination could not be determined but which ended
with the occurrence of the specified event.’ He concluded that, when this happens,
the contract ends automatically, thereby ending the employee’s service. This did not,
according to the Commissioner, constitute a dismissal in the usual sense of the word.
As there was no dismissal, the employees had no case.

At the Labour Court

The Labour Court judge placed emphasis on the right of employees to fair labour
practices as contained in both the Constitution and the Labour Relations Act, as
well as the fact that, in terms of Section 5(2b) of the Act, nobody may prevent

302 Labour Relations: A southern African perspective

 employees from exercising those rights. In the opinion of the Court no reasonable
decision-maker could have reached the decision that the employer could end the
contract merely by giving the necessary notice. In fact, the judge concluded that the
Commissioner had failed in his obligation to ensure that employees were protected.
According to the Court, the employer had an obligation to negotiate retrenchments
with the unions and his failure to do so was an unfair labour practice.
The employer was ordered to pay each employee 6 months’ pay as compensation
for the unfair labour practice and also to negotiate with the employees on their
retrenchment pay in terms of each one’s length of service.

At the Labour Appeal Court

According to the Appeal Court the case involved the following issues:
• Whether there was a dismissal
• The status of the termination clause in relation to the Labour Relations Act
• The lawfulness of the automatic termination clause.

The Court commenced by looking at the definition of dismissal as contained in Section

186(1) of the Labour Relations Act which lists instances when a dismissal could be
said to have occurred. One such case could be the end of a fixed-term contract. Such
contracts might be for a specified period or could ‘end with a particular event’. One
such event could be the completion of a project or the end of a contract between an
employer and a third party.
The court then turned to the position at common law, which holds that the
expiration of a fixed-term contract is not a termination by either party but an
automatic termination by law.
In the Court’s opinion the Labour Relations Act does not expressly abrogate the
common law rights of the employer and the very reference to ‘fixed term’ is an
indication that the court accepts the common law precept.
The Court went on to emphasise the fact that the definition of dismissal in Section
186 repeatedly refers to the employer dismissing the employee. According to the
court this indicated that it must be the employer who terminates the contract. The
question then would be whether the employer engaged in an act which ended the
contract; alternatively, whether he caused the contract to be terminated.
In the opinion of the Labour Appeal Court, the Labour Court judge had concentrated
only on the right of employees to fair labour practices and had failed to look at the
nature of contracts in both common law and labour law. The Court did caution that
there can be no contracting out of the employees’ right to fair labour practices.
However, it was the opinion of the Court that in this case there was no unfair labour

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 303
 practice, nor was there an unfair dismissal as defined in Section 186 of the Act.
The contract was a fixed-term contract, the termination of which was defined by a
particular event, namely the completion of the contract with Boardwalk. There was
no indication that the terms of the contract constituted a device to facilitate the
dismissal of employees or to subvert obligations in terms of the Act.
The appeal against the Labour Court’s decision was therefore upheld.

Discussion
This case has been included to clarify the distinction between termination of
employee contracts which abrogate employee rights to fair labour practices and
contracts which are, by their very nature, of limited or fixed duration. An automatic
termination clause, where termination is related to an event or completion of a
task, stands as long as the employer does not engage in an act which leads to the
termination or has not made other promises to the employee. In fact, the insertion
of Sections 198B(1) in the 2014 Labour Relations Act now provides a definition of a
fixed-term contract, namely one which ends on the occurrence of a specified event,
on the completion of a specified task or project, or on a fixed date. A new Section
198B also lists the kind of circumstance where a fixed-term contract can be given
to employees. Although Section 198 deals specifically with temporary employment
services, the definition can be taken as a guideline to the drafters’ understanding of
fixed-term contracts,

Automatically Unfair Dismissals

Section 187 of the Act identifies certain circumstances in which dismissals will be regarded
as automatically unfair, that is, it will be difficult, if not impossible, to prove that they are
fair. A dismissal will be automatically unfair if` the reason for the dismissal is:
■■ that the employee engaged or intended to engage in a protected (legal) strike or
demonstration
■■ that the employee refused or expressed his intention to refuse to perform the work of
another employee engaged in a legal strike unless such work was necessary to protect
the life, personal safety or health of individuals (see Chapters 12 and 13)
■■ that the employee is dismissed because he refused to agree to a demand related to any
matter of mutual interest (see Fry’s Metal in Chapter 7)
■■ that the employee took steps or intended to take steps to enforce any right or to
participate in activities in terms of the Act
■■ that the employee is pregnant (or for any other reason related to her pregnancy)
■■ that the employer is discriminating against an employee on arbitrary grounds, including
(but not limited to) race, gender, sex, ethnic or social origin, colour, sexual orientation, age,
disability, religion, conscience, belief, political opinion, culture, language, marital status or

304 Labour Relations: A southern African perspective

 family responsibilities (such dismissal will not be unfair, however, if the reason is related to
the inherent requirements of the job or if an employee has reached pensionable age)

A dismissal will also be automatically unfair if it is related to:

■■ the transfer of a contract from an old employer to a new employer, or any reason
concerning a transfer
■■ a disclosure made by the employee in terms of the Protected Disclosures Act
■■ the refusal by employees to accept a demand by the employer regarding any matter of
mutual interest between them
■■ an employee’s union membership.

Case Review: Dismissal for Union Activities

Food and Allied Workers’ Union & Another v The Cold

Chain
(Labour Court (C324/2006): 15–17 November 2006;
8 March 2007)
Background
The employee, a Mr Martin, was employed by Cold Chain in a grade 13 position in
1995. During his tenure Martin was elected as shop steward in the bargaining unit,
which covered employees in grades 13 to 18. Martin was also the regional treasurer
of the Food and Allied Workers’ Union (FAWU).
In February 2006 the company gave the union notice that it intended to engage in
restructuring, and on 30 March Martin was one of those told that his position would
become redundant, but that he could apply for an alternative position. On 24 April,
FAWU, which was engaged with management regarding the restructuring, informed
the employer that Martin would be interested either in the position of transport clerk
or that of administration clerk.
Both the positions offered were grade 12 positions, and at a meeting on 10 April
Martin was told that, if he accepted the position of transport clerk, he would have
to resign as a shop steward. On 24 April the union accepted the position of transport
clerk on behalf of Martin. The letter of acceptance made no mention of Martin’s
position as a shop steward. On 26 April Martin received a letter to which a job
description for the position in question was attached. The letter went on to state
that, in terms of FAWU’s constitution and the agreement with the union, he was
expected to step down from his position as senior shop steward and to resign from
his position as regional treasurer for the union. Martin signed the job description but

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 305
refused to agree to the conditions attached to the offer. He nevertheless assumed his
duties as a transport clerk on 2 May, whereupon management again demanded that
he meet their conditions. Martin again refused and on that same day was informed
that he had been retrenched with effect from 1 May.
Martin subsequently declared a dispute, alleging that his dismissal was
automatically unfair since the reason for his dismissal related to his activities on
behalf of the union.

Argument
The Court was referred by counsel for the applicant to the IMATU & Others v
Rustenburg Transitional Council case and the judgment given by Brassey in that
instance. In that case, the Transitional Council had argued that certain levels of
management could not also be union office bearers, because persons at these levels
were privy to confidential information, had to initiate and conduct disciplinary
actions and might find that their union tasks infringed on their obligations at work.
Brassey had rejected this argument, stating that there was nothing wrong with a
senior manager also engaging in union activities.
Counsel for the defence argued that their case was not the same as that cited
because the Rustenberg case hinged on the validity of a policy decision by management,
whereas the case under consideration was concerned with the status of a particular
shop steward. The defendants further argued that, according to the ordinary rules
of offer and acceptance, Martin, by accepting the position, had implicitly agreed to
the conditions attached to the position. Another argument put forward was that,
in his new position, Martin would not be able to leave his workstation to perform
his duties as shop steward. Counsel for the applicant conceded that Martin’s new
position would have placed him outside the relationship (recognition) agreement and
management would have been entitled to limit his time off or to allow no time off.
Management maintained that it was practice at the organisation for shop stewards
to resign if they moved out of the bargaining unit, and that if Martin continued
as a shop steward, he would not be able to investigate incidents and engage in
disciplinary actions against fellow-employees. Martin testified that he would have
been able to do so and that union members would have accepted it. His counsel also
argued that if the union was dissatisfied with Martin it could vote him out of office.

Pronouncements
The Court declared that it did not see a difference between the case in hand and that
adjudicated by Brassey since both hinged on the rights conferred on employees by
Section 23 of the Constitution and Sections 4 and 5 of the Labour Relations Act. The
Court was convinced that the rights so conferred, namely the right to join a trade
union and to perform the duties of an office bearer or shop steward, are absolute. This

306 Labour Relations: A southern African perspective

 assumption was confirmed by the fact that Section 5 of the Act prohibits any person
or body from discriminating against an employee because of his union membership
or activities, from victimising an employee for exercising rights in terms of the Act
or advantaging an employee in exchange for his not exercising such rights, and from
requiring an employee not to become a trade union member. In this respect the Court
cited the following statement from the Brassey judgment:
The protections conferred by the organizational [sic] rights clauses give
employees, whatever their status, the absolute right to join trade unions and take
part in their activities. By so doing, they legitimize [sic] acts that might otherwise
constitute a breach of the employee’s duty to fidelity, prohibit victimization
[sic] and outlaw rules of the sort that the respondent laid down in the present
case. Beyond that they do nothing to exempt employees from their duties under
the contract. The employee must still do the work for which he is engaged and
observe the secondary duties by which he is bound under the contract. If he does
not, he can be disciplined for misconduct or laid off for incapacity.

As regards the defence’s argument that Martin had implicitly accepted the
conditions as part of his contract, the Court responded that a contract containing
those conditions would have been unlawful since it was contrary to public policy,
that Martin was entitled to refuse the conditions and that the Court had not been
persuaded that a binding contract had come into existence.
Referring to the contention in the letter from the employer that the constitution
of the union and the agreement with the union obliged Martin to resign if he was
promoted out of the bargaining unit, the Court stated that it could find no such
condition in the union constitution or the relationship agreement. There was also no
written proof that it was practice for shop stewards to resign in these circumstances.
If, in the past, particular shop stewards had resigned, this did not mean that there
was an obligation on all shop stewards to do so.
In relation to counsel for the applicant’s concession that the employer would
be entitled to limit Martin’s time off, the Court suggested that this related to the
organisational rights to leave for trade union activities as provided for in Section 15
of the Act. Regarding Martin’s ability to perform his work and to discipline fellow-
employees, the Court concluded that it would be up to the employer and the union
to regulate matters related to Martin’s conduct:
If he failed to perform his employee duties in any respect because of
attending to his union duties, he could have been disciplined by his employer.
I am in agreement with the proposition by Mr Whyte that, if Martin, after
being promoted to the more senior position, was experienced by his fellow-
employees as not attending to his union responsibilities with the same
diligence as he did before, they may have voted him out of office.

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 307
 The Court concluded that the employer had breached Martin’s rights, that it had
acted unlawfully in setting the conditions, that Martin had been discriminated
against on the grounds of his union affiliation and that his dismissal was therefore
automatically unfair in terms of Section 187(1)(f) of the Labour Relations Act.
Although Martin could have been granted up to 24 months’ compensation for
the automatically unfair dismissal, the Court granted him only nine months’ wages.
It pointed out that Martin had not requested reinstatement and had not provided
concrete reasons for not being reinstated. The Court argued that it would have
reinstated him retrospectively, which would have meant that he would have received
compensation for the nine months during which he was unemployed, but it would
not have granted additional compensation. In all fairness it could now grant only the
nine months’ wages as compensation.

Discussion
The issue of union membership and activities on the part of senior employees has
long been a bone of contention in organisations. This case makes it clear that any
attempt at preventing an employee from belonging to a union or acting on behalf of
a union is unlawful. However, the union and management could possibly enter into
an agreement that the union will withdraw a shop steward who has moved out of
the bargaining unit.
The Court gave Martin compensation only for the nine months’ pay he would have
lost if he had been reinstated after the ruling. This is in line with Section 193(2) of
the Act which states that the CCMA or Labour Court should order reinstatement as
a first option and may only make another order (eg for compensation) in specific
circumstances (see Chapter12). Applicants can be granted up to 24 months’
compensation, but they must apply, in the first instance, for reinstatement and
only if continuation of the relationship appears impossible should they apply for
compensation. In such cases they should present reasons why reinstatement would
not be acceptable or advisable. The underlying principle is that employees should not
bring actions primarily for monetary rewards, but rather to keep their jobs, if possible.

The Protected Disclosures Act (Act 26 of 2000)

Objectives
The stated intention of the Protected Disclosures Act is to facilitate the disclosure by
employees of criminal, corrupt or irregular conduct in the workplace. The Act aims to do
so by providing measures to safeguard employees who make disclosures (whistle-blowers)
from retaliation by employers. The idea is that employees who make protected disclosures
should not suffer an occupational detriment and, if they do, should have recourse to the
Courts, including the Labour Court.

308 Labour Relations: A southern African perspective

Occupational Detriment
The possible occupational detriments which the whistle-blower might suffer are listed as
follows:
■■ disciplinary action against the employee
■■ dismissal, suspension, demotion, harassment or intimidation of the employee
■■ a transfer which is undertaken without the employee’s agreement
■■ terms and conditions of employment which are detrimental to the employee
■■ the employer’s refusal to give the employee a reference
■■ being given an adverse reference
■■ being denied appointment to employment, a position or an office
■■ being threatened by the employer
■■ any other action which might adversely affect the employee.

The latest amendments to Section 188A of the Act do allow either the employer or employee
involved in a protected disclosure to request a pre-dismissal enquiry (see above) without this
being a violation of the Protected Disclosures Act.

Information to be Disclosed
Protected disclosure will apply to an employee who ‘reasonably believes’ that the information
he has ‘shows or tends to show’ that:
■■ a criminal offence has been, is being or is likely to be committed
■■ there has been a failure on the part of the employer to comply with legal obligations
■■ a miscarriage of justice has or is likely to take place
■■ health and safety at the workplace has or is likely to be compromised
■■ environmental damage has been or may be caused
■■ unfair discrimination in terms of the Promotion of Equality and the Prevention of Unfair
Discrimination Act of 2000 has or is likely to take place.

A disclosure which constitutes an offence and one made in the process of obtaining legal
advice will not be a protected disclosure.

Making a Protected Disclosure

A private sector employee who wishes to disclose information should, as a first step,
approach the employer and allow the employer an opportunity to deal with the situation.
However, the employee may make the disclosure to a legal practitioner if:
■■ the employee believes that he may suffer an occupational detriment as a result
■■ he fears that supplying the information may result in its being concealed
■■ he has previously made a disclosure and the employer did not act upon it.

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 309
A public service employee may refer the matter to a member of the provincial cabinet or, if
he has been appointed by the State, to a member of the Executive Council.
A disclosure may also be made to the Public Protector or the Auditor General if the
matter to be disclosed is within their jurisdiction.
The employee must ‘reasonably believe’ that the information needs to be disclosed and
must not disclose information for personal reasons – for example, ‘to get his own back’ at
the employer or any other person.

Remedies for Occupational Detriment

An employee who suffers an occupational detriment as a result of a protected disclosure may
approach any court for relief. The Labour Relations Act classifies occupational detriments
(excluding dismissals) which result from protected disclosures under unfair labour practices,
and dismissals resulting from disclosures, under automatically unfair dismissals.

Case Review: Occupational Detriment arising from

a Protected Disclosure
Tshishonga v Minister of Justice and Constitutional
Development & Another
(Labour Court (JS 898/04): 2 November;
26 December 2006)
Background
The applicant had been working in the Department of Justice since 1978 and in
1994 he became a deputy director. He was also managing director of the Masters
Office Business Unit. One of the tasks attached to this position was to eradicate the
corruption which was apparently rife in the administration of insolvent estates and
which centred particularly on the appointment of liquidators.

Actions arousing Suspicions of Impropriety

According to Mr Tshishonga’s testimony, he became concerned when, in 2002,
the then Minister of Justice, Penuell Maduna, telephoned him from Cape Town to
inform that he was with a friend, Mr Enver Motala, who was very knowledgeable
about liquidations and who would be contacting Tshishonga. The latter met
Motala for lunch in February of the same year. The meeting, and Motala’s flattery,
left Tshishonga uneasy as he suspected that Motala wanted to influence him as
regards the appointment of liquidators. During the same month Motala telephoned
Tshishonga to inform him that the Minister wanted him, Motala, to attend a meeting
between two merging insolvency practitioner bodies. This was irregular, and no other

310 Labour Relations: A southern African perspective

 liquidators were present, yet despite everyone’s unease, Motala stayed for the full
duration of the meeting.
Towards the middle of February, the Minister again telephoned Tshishonga to
complain about the manner in which liquidators were being appointed, and ordered
that a meeting be arranged so that he could address the staff. At the meeting, at
which Motala was again the only liquidator present, the Minister expressed his
unhappiness at the manner in which Motala was being sidelined, but the chairperson
of the appointments panel handed the Minister a report explaining why Motala was
not appointed. With that, the meeting ended.
In July 2002, while Tshishonga was on leave, he was informed that the Minister
had instructed Mr Vahed, the Master of the High Court in Pietermaritzburg, to
appoint Motala as liquidator in the Retail Apparel Group (RAG) liquidation, one of
the biggest liquidations in the country, involving claims in excess of R1 billion. The
Minister had already been cautioned by the department’s legal advisers that he was
exceeding his powers but did not agree with them. Tshishonga asked his deputy to
tell Vahed to use his discretion and to get the Minister’s instructions in writing. Upon
his return to work, he asked Vahed to prepare a report on the matter. The report
indicated that four liquidators had already been assigned to the RAG liquidation,
that Vahed saw no reason for appointing a fifth liquidator. He informed the Minister
of his reasons for not appointing Motala. However, the Minister replied that he was
setting aside Vahed’s decision and again ordered him to appoint Motala, which he
eventually did, although he was aware that the other four liquidators had applied for
an urgent interdict against Motala’s appointment. The application was successful,
and the High Court confirmed what the legal advisers had already told the Minister,
namely, that he did not have the power to instruct the Master to appoint liquidators.
The Minister’s appeal to the Supreme Court of Appeal was also dismissed.
Before the Supreme Court of Appeal could give its decision, the Minister
instructed Tshishonga to convene a meeting between themselves, the Director-
General, Vahed and a Mr Lategaan, who was the assistant-master in Pretoria and of
whom Motala had spoken approvingly during his lunch date with Tshishonga. At the
meeting the Minister indicated that he was appointing Lategaan as assistant-master
in Pietermaritzburg to oversee the appointment of liquidators in the RAG case.
Tshishonga was surprised that the Minister even knew Lategaan, and that Lategaan
had been appointed without consulting him. It was evidently highly irregular for an
assistant-master from one jurisdiction to be appointed to another jurisdiction and to
a specific case. Following his appointment, Lategaan – without a recommendation
or requisition from the company, which was contrary to procedure – appointed
Motala as a fifth and lead liquidator in the RAG case. Questions were raised about
Lategaan’s relationship with Motala, particularly after it later came to light that in
2001 Lategaan had written a testimonial in which he ‘unashamedly’ praised Motala.

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 311
At a meeting between the Director-General and Tshishonga in January of 2003, the
former indicated that he was also concerned about the relationship between the
Minister and Motala, and that the Minister became ‘agitated’ whenever Motala’s
name was raised. Shortly thereafter, on 28 January, Tshishonga received a call from the
Minister, who accused him of not helping with the RAG case and of bad-mouthing him.
He informed Tshishonga that he was removing him as head of the unit with immediate
effect and did not care where the Director-General placed him. Although the Director-
General had initially appeared sympathetic, he had no answer to Tshishonga’s question
as to how the Minister could instruct a director-general to remove an employee, and
merely stated that the Minister would not give reasons for his decision.
On 4 February Mr Enver Daniels was appointed as manager of the unit. According
to media reports, the Minister had apparently hinted that Tshishonga had an axe to
grind after being chastised for poor performance, an issue which had never been
raised with the employee.
The applicant continued reporting for work but was not given anything to do.

Reporting Improprieties
While he was still head of the unit, Tshishonga had recommended to the Director-
General that a forensic investigation into corruption be undertaken. This was done,
and the report which followed made mention of the irregularities in appointing Motala
to the RAG case ‘in total disregard of the Insolvency Act’ and in appointing Lategaan
to the Master’s office in Durban. Copies of this report and the Vahed report were
presented to the Director-General, but no action was taken, whereupon Tshishonga
discussed the complaint with Advocate van Rensburg in the Public Protector’s office,
leaving copies of the report with Van Rensburg. When, by 16 April 2003, he had heard
nothing from the Public Protector, Tshishonga lodged a complaint with the Auditor-
General, but received only an acknowledgement of receipt. In the meantime, he was
informed that a Mrs Fourie from the Public Protector’s office had been assigned to
the case, but, apart from a request for a copy of the Vahed report, little was done.
As a last resort, Tshishonga turned to Minister Pahad, who was not prepared
to get involved, but offered to assist the Director-General in setting up a meeting
with the Minister of Justice. Although Tshishonga indicated that he would welcome
such a meeting, nothing came of the offer. In October 2003 Tshishonga called
Mrs Fourie to enquire about progress, only to be told that nothing had been done
because there was no official complainant. When told that he, Tshishonga, was the
complainant, she agreed to take the matter up again. When Fourie did not come
back to him, Tshishonga issued a press statement outlining the alleged improprieties
and informing that, between July 2000 and September 2003, Motala had received
liquidations to the value of R583 million, while other liquidators received on average
R1 million or so.

312 Labour Relations: A southern African perspective

 The Aftermath
A great deal of publicity followed. The Minister responded by stating that his initial
support of Motala had been at the request of SARS and that, after the High Court had
set aside this appointment, Lategaan had appointed Motala without his intervention.
At one stage, he also allegedly said that he did not know Motala ‘from a bar of
soap’, shouted at Tshishonga that he would not get a job anywhere in the country
and called him a ‘dunderhead’ on national television. In the meantime, an internal
committee was appointed to investigate corruption in liquidations, but by the time
the case came to court nothing had been heard from the committee.
On 13 October Tshishonga was suspended pending a disciplinary hearing for
allegedly breaking protocol and making defamatory remarks about the Minister. He
successfully challenged his suspension, and in January 2004 the Labour Court ordered
his reinstatement to the position of managing director of the unit, pending a hearing
on the allegations. The department refused to reinstate him and Tshishonga remained
on suspension until 20 July 2004 when a disciplinary enquiry was conducted by
an independent chairperson. The charges against Tshishonga ranged from his not
following ‘proper procedures’ to his accusations against Maduna, his refusal to hand
over certain documents and his release of information to the press. Tshishonga was
found not guilty on all counts, but, when he subsequently contacted the Director-
General to get his job back, the latter refused to reinstate him, alleging that the trust
relationship had been broken. Negotiations followed, and the applicant’s employment
was finally terminated by agreement.
Tshishonga subsequently declared a dispute on the grounds that he had suffered
an occupational detriment as a result of making a disclosure in terms of the Protected
Disclosures Act, and took his case to the Labour Court.

Argument
Counsel for the Minister, a Mr Hulley, argued that the disclosures were not protected
as they were made to the media, which is not a body indicated for disclosures in the
Act. Also, according to Hulley, the disclosures were not made in a responsible manner
as required by the Act. He contended that the onus was on Tshishonga to prove that
his actions fell within the ambit of the Protected Disclosures Act, and to show why
the department was not justified in taking disciplinary action against him.
According to Hulley, Tshishonga did not, as the Act requires, ‘have reason to
believe’ that an impropriety was being committed and that it was more a matter of
the latter’s opinion. The Minister had intervened on behalf of SARS and was therefore
not furthering his own interests. Tshishonga had a personal grudge against the
Minister, who had sidelined him, and his actions were not truly altruistic.

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 313
Pronouncements

Provision of Evidence
Before pronouncing on the matter at hand, the Court explored the fact that, while
Tshishonga testified in person and called one witness to explain the normal practice
of appointing liquidators, no evidence had been led by the defendants and no reasons
for not doing so had been proffered.
As the Court saw it, this was very unusual. Only the Minister could explain his
relationship with Motala, why Motala had been allowed to attend meetings not open
to other liquidators, why he, the Minister, had circumvented the High Court ruling
by appointing Lategaan and why he had summarily side-lined Tshishonga. Only the
Director-General could explain other actions instituted by the department. Such
evidence would be necessary if the defendants wanted to prove that the applicant was
‘reckless, dishonest, unreasonable or in bad faith’ and that the actions against him were
lawful and justified. Where leading evidence could reasonably be expected, courts could
infer that the party or counsel that failed to offer evidence feared that giving evidence
would expose unfavourable and damaging facts harmful to their case. Moreover, the
defendants were publicly accountable and owed the public an explanation, particularly
since costs were ultimately borne by the taxpayer. In the final analysis, their failure to
testify made it impossible to exercise discretion in their favour.
The Court then turned to the credibility of the applicant, stating that it had found
him ‘measured and meticulous’ in the presentation of his evidence. Most whistle-
blowers also have a personal grievance against the employer, but this did not
necessarily discredit them. The manner in which Tshishonga initiated the disclosures
also counted in his favour. The Court was of the opinion that he really wanted a
resolution, as proved by his willingness to follow Pahad’s suggestion of a meeting
with the Minister.

Purpose of the Act

The Court noted that the Protected Disclosures Act takes its cue from the Constitution,
and affirms the ‘democratic values of human dignity, equality and freedom’, with the
concept of democracy also embracing accountability.
The necessity for whistle-blowing is, according to the court, increasingly
recognised worldwide: ‘If employees did not turn a blind eye or were not afraid
to rock the boat, and if employers did not turn a deaf ear or blame the messenger
instead of heeding the message, many catastrophes could have been avoided.’ While
whistle-blowers perform a valuable function, a survey conducted in 1999 showed
that, in the UK and the USA, 84 per cent of whistle-blowers had lost their jobs as a
consequence of making a disclosure.

314 Labour Relations: A southern African perspective

 The Court conceded that employees are obliged to act in the best interest of the
employer, to observe confidentiality, to be loyal and ultimately to preserve the good
name and reputation of the organisation. On the other hand, it stressed that such loyalty
was owed to the organisation or to the State as the employer and not to particular
individuals, whatever their position. Furthermore, the duty of confidentiality and loyalty
did not extend to protecting an employer or other employees guilty of wrongdoing.
It was explained that employees are generally vulnerable, but even more so when
disclosing improprieties, since this exposes them to retaliation. For this reason, the
primary purpose of the Protected Disclosures Act is to protect employees who have
reported wrongdoing. Another important aim of the Act is to ‘eradicate criminal
and other wrongful conduct’ in public and private enterprises. The Act assumes that
investigations will be conducted into the allegations of impropriety but does not
enforce this. Unfortunately, the Act concerns itself mainly with the employee and,
if an investigation is not conducted, all efforts at disclosure could come to nothing.

A Disclosure in Terms of the Act

The Court pointed to Section 1 of the Protected Disclosures Act, in terms of which
the word ‘disclosure’ refers to the disclosure of ‘any information about the conduct of
any employer by an employee who has reason to believe that the information shows
or tends to show certain improprieties’.
In analysing this clause, the Court noted that the type of information to be
disclosed included, but was not limited to, facts, and would include inferences and
opinion based on facts ‘which show that the suspicion is reasonable and sufficient to
warrant an investigation’. The available information needed only to ‘make it likely’ or
‘tend to show’ that an impropriety was being committed. However, ‘smelling a rat’ or
unsubstantiated rumours did not qualify as sufficient information.
The ‘improprieties’ referred to in the Act include, among others, criminal offences
which are being committed or are likely to be committed, failure to comply or the
likelihood of failure to comply with any legal obligation, and unfair discrimination
as contemplated in the Prevention of Unfair Discrimination Act. The information
disclosed must be in the public interest. Disclosure centring on disagreements about
an employer’s policy would not be a protected disclosure.

Criteria for Protected Disclosures

In order for a disclosure to qualify as a generally protected disclosure in terms
of the Act, the disclosure must be made ‘in good faith’, the employee must have
a ‘reasonable belief’ that an impropriety has been or will be committed and the
disclosure must not be made ‘for personal gain’.
Since this was the first case related to a protected disclosure, the Court devoted
quite lengthy attention to these criteria.

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 315
As regards good faith, the Court explained that the first requirement was honesty, not
only as regards the truth of the information, but also the intentions of the employee.
Disclosures should be made in order to remedy a wrong, and not with malicious
intent. As the Court conceded, most whistle-blowers do not have ‘warm feelings’
towards the employer, but this should not be confused with cases where the only
motive is retaliation against the employer and not the remedying of a wrongdoing.
In most cases there will be mixed motives, which need to be weighed against each
other in order to decide which was the dominant motive. Also, the intention of the
discloser has to be weighed against the evidence. If the information is ‘solid’, a
malicious motive should not disqualify the disclosure.
The Court argued that the requirement for a ‘reasonable belief’ does not mean that
the employee has to prove the truth of the information to be disclosed. The employee
must believe that an impropriety has been committed, or will be committed, and
such belief must be reasonable. Personal knowledge is not a prerequisite, meaning
that hearsay, if it is reliable, would be regarded as reasonable, as would reliance on
official documents. The Court concluded that even if a belief was mistaken, it could
still be reasonable, unless the information was ‘so inaccurate that the public could
have no interest in its disclosure’.
Hulley’s submission that the onus was on the applicant to prove good faith was
rejected by the Court. Instead it restated the principle that in unfair dismissal and
unfair labour practice cases the onus to prove fairness falls to the employer.
Referring to the third requirement, namely, that the disclosure should not be
for personal gain, the Court explained that the employee must not receive any
commercial or material gain for making the disclosure. An employee could benefit
incidentally from making the disclosure, but gain should not be the main reason for
disclosing the information.
The three requirements are, according to the Court, interactive and mutually reinforcing.
A doubtful motive could be balanced against a strong belief based on sound information.
Therefore, narrow interpretations of the requirements should be discouraged.

Findings
The first question the Court had to answer was whether Tshishonga reasonably
believed that the information and allegations which were disclosed were substantially
true, with ‘substantially true’, requiring information of ‘quality and quantity’ which
was close to total truth.
The Court found that Tshishonga did believe that a crime was being committed
or was likely to be committed, that the Minister was failing in his legal obligations
and had engaged in unfair discrimination. The employee’s belief was based not only
on the Vahed and Kinghorn reports prepared by responsible persons, but also on his

316 Labour Relations: A southern African perspective

 own encounters with the Minister and Motala and his personal knowledge of the
relationship between the Minister and Motala. Furthermore, Tshishonga had received
a number of negative reports about Motala, which strengthened the belief that
Motala had been unfairly favoured.
To the second question, namely, whether Tshishonga had made the disclosure for
gain, the Court conceded that the disclosure had been made with a view to obtaining
a settlement, but that was a reward to which the applicant would in any event be
entitled if the department’s actions were found to be unfair. Therefore, it could not
be said that the disclosure had been made for personal gain.
The third and fourth questions to be answered were whether Tshishonga had
reason to believe that, if he made the disclosure to the employer, he would suffer an
occupational detriment and that the impropriety would be concealed or destroyed. The
Court pointed out that the Minister was the most powerful person in the department,
that he was angry with Tshishonga, and that he had already removed the latter from
the unit. Also, the Director-General was aware of the reports, but had done nothing
about them, and tried to discourage the applicant from antagonising the Minister. This
led the Court to conclude that: ‘The probabilities were that the allegations would not
have seen the light of day if the applicant did not make the disclosure.’
The Court also had to decide whether Tshishonga had followed correct procedure
by first making disclosure to the employer or other relevant parties and whether a
reasonable period for investigation of the information had been allowed. The Court
noted that, when the Director-General failed to investigate, Tshishonga had made
disclosures to the Public Protector and the Auditor-General and had waited for a
period of seven months, during which no investigation took place, before disclosing
to the press. He had therefore complied with the prescribed procedure.
The Court next turned to the questions as to whether the impropriety was
exceptionally serious and whether it had been reasonable to make the disclosure
to the press. It decided that the allegations of corruption against a Minister were
exceptionally serious and that the applicant had been justified in making the
disclosure to the press. The relevant section of the Act was wide enough to encompass
also disclosure to the media and such disclosures were justified if disclosure was in
the public interest. Disclosure to the media would not be justified if the complaint
had already been addressed internally by a prescribed regulator. Not only was the
case exceptionally serious, but there was every indication that no action would be
taken and that the impropriety was continuing after the appointment of Lategaan.
The Minister had not followed the prescripts of Section 10(4) of the Act and had not
issued regulations to guide whistle-blowers. There had been no adequate channels to
air the allegations. The disclosures were in the public interests as they involved public
officials. Moreover, the Public Service Commission had recommended that ‘wider’
disclosures be made to the media.

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 317
One of the final questions posed was whether the disclosure had been made in good
faith. The Court was of the opinion that Tshishonga had made the disclosures simply
because ‘corruption had to be stopped’. He appeared to be an ‘honest, dedicated and
disciplined’ public servant who was legitimately aggrieved by the treatment meted
out to him. He initially had no axe to grind with the Minister or the Director-General,
and tensions had arisen only after he had resisted the attempts to appoint Motala.
One of his duties was to combat corruption and he had no choice other than to make
the disclosure. Furthermore, the manner in which he made the disclosures was proof
of good intent. He did not do so anonymously. Although he had strong suspicions, he
did not accuse the Minister of corruption and he had approached Pahad even though
this was not legally required of him.
On the basis of the above, the Court found that the disclosure was a generally
protected disclosure in terms of Section 9 of the Protected Disclosures Act and that
Tshishonga had suffered an occupational detriment amounting to an unfair labour
practice when he was suspended, charged with misconduct and later forced to negotiate
himself out of a job. The defendants were consequently ordered to pay Tshishonga the
equivalent of one year’s remuneration and to pay all costs involved in the action.

Discussion
This case has been dealt with in exceptional detail because protected disclosures are
not addressed elsewhere in this text and because, as indicated, it was the first case to
be brought to the Labour Court after the promulgation of the Protected Disclosures
Act. The events as described and the detailed exploration of concepts by the Court
illustrate the fact that protected disclosures are subject to a complex process and to
numerous criteria. This has been done to prevent employees from making trivial or
malicious disclosures and then claiming protection in terms of the Act. At the same
time the Act tries to afford maximum protection to employees who, in good faith,
make disclosures of genuine improprieties.
Employers, and particularly public bodies – are inclined to brand every disclosure
to the press as disloyalty and breach of confidentiality, the favoured phrase being
that the employee has ‘brought the institution into disrepute’. This case clearly
indicates that loyalty is not owed to individuals but to the organisation, and that
loyalty and confidentiality are not absolute prescripts. Both have to be weighed
against the seriousness of the allegations and the public interest. Public interest is
always a concern where public bodies are involved.
Making a disclosure is a daunting process for the employee, and the possibility
of an occupational detriment or dismissal is very high. Furthermore, even where he
may eventually receive vindication by having the actions against him proved to be
unfair, the employee may, as illustrated in this case, never see the improprieties being
remedied or action taken against the persons who committed them. This points to
the need for further legislation to ensure that, where a disclosure has been found to
be justified, an investigation is conducted, and the necessary actions are instituted.

318 Labour Relations: A southern African perspective

Dismissal for Poor Work Performance
The Code of Good Practice also contains specific procedures regarding the dismissal of
employees who have proved be incompetent at their jobs. These procedures are outlined below

Probationary Employees
According to the Code, a new employee may be appointed for a probationary period. The
length of the probation period depends on the nature of the job and the time which the
employer needs to find out whether the employee can perform the job satisfactorily.
Probationary employees should be evaluated at regular intervals. They need to be
informed of the criteria and standards by which they will be judged and warned beforehand
if their performance is not satisfactory. Where necessary, the employer must provide any
advice, education, training, counselling or guidance needed to enable the employee to
perform competently.
If the employer decides to dismiss the employee during the probationary period, the
employee should be afforded the opportunity to be heard and to be represented by a shop
steward or another employee, but a formal hearing need not be held.

Non-Probationary Employees
An employee who is no longer on probation, may not be dismissed for poor work performance
unless:
■■ clear performance standards have been communicated to the employee
■■ the appropriate evaluation has been conducted
■■ the employee has been given the necessary education, training, guidance and counselling
■■ a reasonable time has passed, and the employee still shows no improvement
■■ an investigation has been conducted into the reasons for the employee’s incompetence
■■ the employer has looked for alternative solutions before contemplating dismissal
■■ the employee has been granted the right to be heard and to be accompanied by a
representative.

Guidelines
In the case of both probationary and other employees accused of poor performance, the
Code specifies that the employer needs to establish whether:
■■ the employee succeeded in achieving the performance standard
■■ he was aware of the standard or could reasonably be expected to be aware of the standard
■■ the employee was granted a reasonable opportunity to conform to the required standard
■■ dismissal is a suitable sanction for his failure to achieve the required performance
standards.

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 319
Disputes Arising from Unfair Dismissals
Where an employee has been dismissed for misconduct, incompetence or incapacity and
alleges that the dismissal was unfair, he should within a period of 30 days, refer the dispute
to the Commission for Conciliation, Mediation & Arbitration or to a bargaining council
which has jurisdiction. The same applies where constructive dismissal is alleged.
Where a dispute has been referred to the CCMA or bargaining council, the commissioner
or person presiding will first attempt to conciliate the dispute. If conciliation fails, he may,
at the request of the parties, engage in arbitration. Where a dispute arises from the dismissal
of a probationary employee, the commissioner or bargaining council is obliged to engage in
arbitration immediately following the failed attempt at conciliation.
If the dismissal is one classified in the Act as automatically unfair (see above), resulting
from an illegal strike, or the employee’s refusal to join a closed-shop union (or from the
closed-shop union’s refusal to accept the employee as a member), the same initial procedure
should be followed. However, in these cases, if conciliation fails, the dispute is taken to the
Labour Court (see diagrams in Chapter 12).
Where an employee alleges that his dismissal is related to a protected disclosure in terms
of the relevant Act, the dispute may be referred by the employee to the Labour Court instead
of the CCMA.

Unfair Labour Practices

Possible Unfair Labour Practices

According to Section 186(2) of the Labour Relations Act, any one of the following could
constitute an unfair labour practice:
■■ unfair conduct by the employer relating to promotion, demotion, probation or training
of an employee or to the provision of benefits to the employer
■■ the unfair suspension of an employee or any disciplinary action short of dismissal
■■ the refusal on the part of the employer to reinstate or re-employ a former employee
despite an agreement to that effect
■■ any occupational detriment suffered by an employee because he or she made a disclosure
in terms of the Protected Disclosures (Whistleblowers) Act.

Disputes about Unfair Labour Practices

Unfair labour practice disputes are submitted to the CCMA for conciliation and, if conciliation
fails, they may be submitted to arbitration. The employee has 90 days from the date on which
the unfair labour practice was committed, or the date on which he or she became aware of
the practice, to refer the dispute. Also, as in the case with dismissals, an action involving a
contravention of the Protected Disclosures Act may be taken straight to the Labour Court.

320 Labour Relations: A southern African perspective

 Case Review: Extended Definition of Unfair Labour
Practice
Govender v Dennis Port (Pty) Ltd
(CCMA: KN8606-04, 7 April 2005)
Background
The plaintiff, Mr Govender, had been employed by Dennis Port since 1994. On 11
November 2004 he had to go to Addington Hospital for treatment, and afterwards
was ill for a week with angina. During that week a relative of his died. Govender
informed his boss of his situation, but on 15 November received a letter dated 12
November informing him that, as business was doing badly, he had been put on
short time until 17 January. Altogether three people were employed at Dennis Port.
Apparently, Mr Govender was the only one put on short time.
On 19 November Mr Govender returned to work, but was informed by Mr Port
that the letter of 12 November still stood, whereupon Govender left work. On the
same day he received a letter, delivered by Speed Services, to confirm that he had
received a previous telegram and the letter of the 12th and had accepted the content.
According to Mr Govender, there had been no meeting and he had not accepted being
placed on short time. He subsequently addressed a letter to Mr Port in which he
alleged that placing him on short time constituted an unfair labour practice, and on
3 December referred the matter to the CCMA.

Pronouncements
The Commissioner first referred to the definition of an unfair labour practice in the
Act and pointed out that short time was not specifically mentioned. In his opinion,
the fact that short time was not included did not necessarily mean that it could
not constitute an unfair labour practice. To substantiate this view he referred to
the judgment of Ngcobo J in National Health and Allied Workers Union v University
of Cape Town & Others, in which Ngcobo explained that the Labour Relations Act
was intended to give effect to the relevant principles contained in the Constitution.
The unfair labour practice definition is an attempt to concretise the right to fair
labour practices in the Constitution. However, as Ngcobo put it, the concept of fair
labour practice cannot be precisely defined, and the problem is compounded by
the tension between employer and employee interests in the labour relationship.
Ngcobo concluded that fairness depends on the circumstances of a particular case
and involves a value judgement, making it neither necessary nor desirable to define
the concept.
The Commissioner in the Govender case used these pronouncements to conclude
that the practices listed in the Act are not limiting and serve merely as examples of

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 321
 possible unfair labour practices. Returning to the case at hand, the Commissioner
noted that short time was classifiable as a labour practice and was used as alternative
to retrenchment. Although it is an acceptable practice, employers could not introduce
it without consultation and the consent of employees. Where employees did not
grant consent, its introduction constituted a unilateral change in conditions of
employment. Therefore, for short time to be fair, it had to be undertaken for a fair
reason and in terms of a fair procedure.
Mr Port had not been represented at the hearing, and, in the absence of any
argument and evidence to the contrary, the Commissioner reached the conclusion
that there had been no fair reason and the procedure followed had not been fair
to Mr Govender. The employer was consequently found guilty of an unfair labour
practice.

Discussion
The arguments raised in this case bring to mind the first definition of an unfair
labour practice as contained in the Labour Relations Amendment Act of 1979. In
that Act, an unfair labour practice was defined as any practice which the Industrial
Court decides is an unfair labour practice. At the time this phrasing was criticised as
being equivalent to stating that moonshine is when the moon shines, but the drafters
evidently adopted the same premise as Justice Ngcobo, namely that the concept of
fairness evades precise definition.
If the arguments offered are accepted, it means that the unfair labour practice
provisions are open to wider interpretation, and particularly that any unilateral
change in conditions of employment could constitute an unfair practice.

Conclusion
Most disputes of right brought to the CCMA or the Labour Court centre on alleged unfair
dismissals or unfair labour practices. This illustrates the necessity to pay meticulous
attention to this aspect of managerial performance.

Suggested Questions/Tasks
•• Describe the organisation in which you function, paying particular attention to
the organisational structure. (Organisation could include an academic institution.)
Thereafter:
oo Establish a Grievance Policy and Procedure for your organisation. (The Policy
must contain the following headings: Objectives; Policy Statements (Principles)
and Explanation of Terms, Responsibility.) Thereafter:
oo Formulate a serious grievance and do the necessary paperwork.

322 Labour Relations: A southern African perspective

 oo Form groups of nine, three to act as employee, shop steward and union
representative respectively, three to act as various levels of management and
three to act as observers.
oo Select an organisation and grievance from those previously set up by individuals
in the group.
oo Management and employee reps are to prepare in writing for the process.
oo Role play the grievance through the various steps of the procedure, keeping the
necessary records along the way.
oo Observers are to record and inform on their impressions of the process.
oo Each individual is to describe and evaluate the process in writing for submission,
together with all previous documentation.
•• Draw up a Disciplinary Code and Procedure for your organisation. Thereafter:
oo Issue a written notice of a proposed disciplinary hearing to an employee who,
it is alleged, committed a very serious transgression.
oo Form groups of six in which one will act as chairperson, one as the employee,
two as the employer and employee representatives and two as the observers.
oo Using the notification issued by one of the group members, role-play the entire
disciplinary hearing, keeping the necessary records along the way.
oo Management and employee representatives are to have prepared in writing for
the hearing.
oo Once the hearing is completed, the chairperson will in writing explain and
justify his decisions as to guilt and as to sanction.
oo The other participants record their observations and evaluate the process (in
writing).
•• Write a case study in which you provide illustration of at least two Unfair
Dismissals or Labour Practices. Thereafter analyse your case identifying the unfair
practices, explaining why they would be regarded as unfair and what recourse
could be followed by the employee.

Sources
Brassey, M, Cameron, E, Cheadle, H & Olivier, M. 1987. The New Labour Law. Juta.
COSATU. 1987. ’Forward to the Special Congress‘, COSATU News, May 1988. Separate Campaign Edition,
March 1987.
COSATU. 1987. Second National Congress Report 1987.
Industrial Law Journal, vol 18, Part 5, 1997, Juta.
Industrial Law Journal, vol 20, February 1999, Juta.
Industrial Law Journal, vol 20, March 1999, Juta.
Industrial Law Journal, vol 20, June 1999, Juta.

Chapter 6: Employee Grievances, Discipline, Dismissal and Unfair Labour Practices 323
Industrial Law Journal, vol 20, December 1999, Juta.
Industrial Law Journal, vol 21, May 2000, Juta.
Industrial Law Journal, vol 27, August 2006, Juta.
Industrial Law Journal, vol 28, January 2007, Juta.
Industrial Law Journal, vol 28, July 2007, Juta.
Industrial Law Journal, vol 28, Nov 2007, Juta.
Useful websites
www.jutalaw.co.za. (Accessed 17 August 2018).
www.labour.gov.za/DOL/downloads/legislation/bills/proposed-amendment-bills/lrabill_nov2017.pdf.
(Accessed 20 August 2018).
www.labour.gov.za/DOL/downloads/legislation/acts/labour-relations/amendments/labourrelationsact_
amended2014.pdf/view. (Accessed 20 August 2018).
www.saffli.org/ (Accessed 20 August 2018).

324 Labour Relations: A southern African perspective

 7

No-fault Terminations: Incapacity,

Operational Requirements, Mergers
and Transfers

Chapter Outline
OVERVIEW
THE CONCEPT OF NO-FAULT TERMINATIONS
DISMISSAL DUE TO ILL HEALTH OR INJURY
Temporary Incapacity • Permanent Incapacity • Alcohol or Drug Abuse • Abuse of Sick Leave
Provisions
RETRENCHMENT AND REDUNDANCY
Rationale • Retrenchment versus Redundancy • ILO Recommendations • The Legal Position
• Retrenchment Policy and Procedure • Notice of Intention to Retrench • Consultation | The
Requirement for Consultation | Consultation when Establishing Policies and Procedures | Timing
of Consultation | Parties to be Consulted | Matters for Consultation • Disclosure of Information |
Information to be Disclosed | Disclosure versus Non-disclosure • Consideration of Alternatives |
Natural Attrition | Transfers and Retraining | Cutting Back on Time Worked | Voluntary Retrenchment/
Retirement • Selection of Retrenchees | The LIFO Principle | Other Acceptable Criteria | A Multifaceted
Approach | Acceptability of Criteria| Final Selection • Retrenchment Pay and the Retrenchment
Package | The Legal Position | Disputes about Retrenchment Pay | Disqualification for Retrenchment
Pay | Employer Concerns • Final Notification of Dismissal • Aftercare • The Undertaking to Re-employ
• Organisations Employing more than 50 People | The Legal Position • Retrenchment of Employees
who Refuse to Accept Organisational Restructuring | Relevant legislation | The New Dilemma
MERGERS, TRANSFERS AND OUTSOURCING
The Current Trend • The Legal Position • Clarification of Concepts | ‘Transfer of Business as a Going
Concern’ | Conditions of Employment | Variation by Agreement | Liabilities Post Transfer • Insolvency •
Evaluation • The Role of the HR/IR Manager
CONCLUSION
SUGGESTED QUESTIONS/TASKS
SOURCES
 Overview
An employee can be dismissed for misconduct or breach of contract, but there are
instances in which the services of an employee are terminated through no fault of
his own. This happens when he becomes incapacitated through illness or an accident,
or when for some other reason he is unable to fulfil his duties. It may also happen
that, for operational reasons, his services are no longer required. In these instances,
there are special procedures to be followed. Consideration is given to the fact that
the employee is not to blame and the effect that such termination will have on him.
Retrenchments or redundancies are of great concern to unions and employees,
particularly in South Africa where there is endemic unemployment and it is difficult
for retrenchees to find new positions. Therefore, the law places special emphasis
on the implementation of correct and considered retrenchment and redundancy
procedures. The term ‘retrenchment’ is used where, due to operational requirements or
economic factors, the company does not need as many employees, while redundancy
occurs when a particular employee (or a group of employees) is no longer required.
This may be due to the job becoming obsolete or to organisational restructuring.
In recent years, the number of business transfers and mergers has increased.
Provision has to be made for the effect that such decisions have on persons employed
by organisations which are sold to new owners or which merge with other concerns.
The Labour Relations Act contains specific provisions relating to these cases, but
merely adhering to the legal provisions is not sufficient. Transfers and mergers have
important labour relations and human resource management implications, and these
deserve serious consideration.

326 Labour Relations: A southern African perspective

The Concept of No-fault Terminations
The concept of no-fault termination refers to the reasons and the procedures which are
accepted by the Labour Relations Act (LRA) as sufficient to justify the termination of the
employment contract, even though the employee has not committed any offence. Section
188 of the LRA states that a dismissal will be unfair if the employer cannot prove that it
relates to the conduct or capacity of the employee or the operational requirements of the
employer and that a fair procedure has been followed.
To guide employers as to fair procedures the Addendum to the Act contains codes of good
practice related to both terminations and retrenchment. (See Annexures online.)
Where the employee is guilty of repeated or serious misconduct, or where he, despite
repeated efforts by the employer, continues to underperform, his subsequent dismissal can
be attributed to his own behaviour and would not be classified as a no-fault termination. On
the other hand, where the employee is for some reason incapable of performing his duties
or where the employer retrenches or declares him redundant, the employee himself has
played no part in bringing about the termination. For this reason, these terminations are,
in the case of incapacity, sensitive issues and, in the case of retrenchment or redundancy,
extremely contentious.

Dismissal due to Ill Health or Injury

Employees do become ill or they sustain injuries, either while working or elsewhere. In most
cases, the illness or injury is of short duration, and is covered by the sick-leave provisions
as contained in the Basic Conditions of Employment Act (see Annexure as available online).
However, in some instances, the employee may be away from work for an unreasonably
lengthy period or may not be able to return to work at all.

Temporary Incapacity
The Code of Good Practice: Dismissals provides that in cases where the employee’s illness
or injury is of a temporary nature, the employer should consider alternatives, and should
take into account:
■■ the nature of the employee’s work
■■ the period of illness
■■ the seriousness of the injury or illness
■■ the possibility of employing a temporary replacement.

In these cases, the question of payment to the absent employee arises, since the 30/36 day
paid sick leave in a three-year cycle is normally not sufficient, even if the employee still
has the full sick leave allowance to his credit. Whether the employer will pay the employee
for the full period or most of his absence is a discretionary decision. Some employers
will consider the employee’s length of service and sick leave record. Where an employee

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 327
has frequently taken sick leave at regular intervals and for no really serious complaint,
the employer may decide that further payment is not justified. On the other hand, if an
employee has long service and has rarely or never taken sick leave, the employer may
calculate the sick leave he ‘could have’ taken during his service and pay him accordingly.
If the employee has contracted the illness or sustained the injury as a result of his
work, payment may be claimed in terms of the Compensation for Occupational Injuries and
Diseases Act. (see Annexures online).

Permanent Incapacity
Where the incapacity of the employee is more permanent, the Code of Good Practice states
that the employer must consider:
■■ providing the employee with another job which he may still be capable of performing or
■■ adapting the employee’s duties
■■ adapting his working conditions.

Where none of these possibilities exist, the employer may eventually decide that termination
is unavoidable. Such termination is undertaken with the utmost sensitivity. All possible
assistance is given to the employee – for example, to claim benefits from the Compensation
Commissioner (if the illness or injury is work-related) or to obtain early retirement benefits
(to be ‘boarded).
Terminations for incapacity may be challenged as unfair dismissals. In such cases the
following will be taken into account:
■■ whether or not the employee is able to perform the job
■■ if not, the extent to which the employee is still capable of work
■■ the extent to which the employee can be accommodated by adapting his work conditions
and/or duties
■■ the availability of suitable alternative employment.

It stands to reason that, throughout the process, the employee will be consulted and informed.

Alcohol or Drug Abuse

Addiction to alcohol or other habit-forming substances also results in incapacity. In such
cases, consideration should first be given to counselling and rehabilitation. Only if this fails
should termination be considered.

328 Labour Relations: A southern African perspective

 Case Review: Prolonged Absence as Incapacity

National Union of Mineworkers v Samancor Ltd,

Tubaste Ferrochrome & Others
(2001)32ILJ1618(SCA)
Background
Although the Code of Good Practice mentions only illness and injury as causes of
incapacity, there are other instances where an employee is unable to perform – for
example, when he is continually absent and there is no proof of serious illness (see
below) or when, for example, he has been prevented from reporting for work.
The question of incapacity in such cases came to the fore in the matter cited
above. The employee on behalf of whom the case was brought was arrested in
March 2006 on suspicion of armed robbery. Fourteen days later the charges were
withdrawn, and he was released. However, he was re-arrested in May and this time
he was held in custody for 140 days and then released on bail. Ten days after his
second arrest, Samancor dismissed him. A letter was sent to the police station where
he was being held, but he did not receive it. Upon the employee’s release a hearing
was held confirming his dismissal.
According to the company the dismissal was a ‘no-fault’ dismissal based on the
incapacity of the employee. The employee had been dismissed on the grounds that he
was unable to perform his duties. When the matter was taken to the Bargaining Council
for arbitration, the arbitrator decided that the action was not a no-fault termination,
but a disciplinary sanction based on the employee’s absence from work. The arbitrator
noted that the employee had not been in a key position which would have made it
necessary to dismiss him. Also, the employer had not considered alternatives and had
not proved that the relationship had become intolerable. The dismissal was found to be
unfair and the company was ordered to reinstate the employee.
The employer subsequently brought the matter to the Labour Court which agreed
with the decision of the arbitrator. The matter was then taken to the Labour Appeal
Court. The LAC overturned the findings of the arbitrator and the Labour Court,
stating that the arbitrator had incorrectly described the action of the employer as a
disciplinary sanction. Not satisfied with this result, the union requested the Supreme
Court of Appeal to review the decision of the LAC.

Argument and Pronouncements

The Supreme Court of Appeal conceded that the arbitrator had made a mistake in
describing the employer action, but was of the opinion that this would not greatly

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 329
have affected the outcome. The Court appeared to accept the arbitrator’s opinions
regarding the employer actions, namely that he did not consider the non-key position
of the employee, did not look at alternatives and failed to prove that the relationship
had become intolerable. Furthermore, according to the Court, the fact that the
employee was not at fault (was prevented from going to work) should have played a
role and, in view of the employee’s long service (10 years), the employer could have
considered means to accommodate him.
The Court did note the argument brought by the employer representative, namely
that the employee had been unable to fulfil his contractual duties and that this alone
would have been cause for dismissal. However, it cautioned that in the employment
relationship the employer action had to be judged in terms of the circumstances. The
employer representative then asked what one was supposed to do if there was no
certainty as to the date of the employee’s return or whether he would in fact return.
The response of the Court was that there is no universal answer – each case has to
be judged in terms of the relevant facts.
The Court concluded that there was no proof that the arbitrator’s decision had
been unreasonable. The LAC’s decision was rejected on the grounds that the LAC had
exceeded its powers.

Discussion
The Supreme Court of Appeal had been requested merely to review the LAC’s decision
and therefore could not argue the merits and demerits of the employer’s actions.
Nevertheless, from what was said by the Court it can be deduced that, in general,
any inability to perform could fall under a no-fault definition, and that, if there is a
termination, it should be affected in terms of a fair procedure. This means that:
• the particular circumstances and the position of the employee should be taken
into account
• the nature and length of the incapacity should play a role
• alternatives should be explored.

In this case the employer may have acted too hastily. It might have been wiser to
suspend the employee without pay until there was more certainty as to the course of
events. If, in the end, the employee was proved to be innocent and really not at fault,
his pay could be reinstated. On the other hand, if he was found guilty of a serious
crime, there would be no problem in dismissing him.

330 Labour Relations: A southern African perspective

 Case Review: The Need to Explore all Possibilities

General Motors (Pty) Ltd and National Union of

Metalworkers of South Africa obo Ruiters
{22 January 2015 LAC}
Background
Ruiters, the employee on behalf of whom the action was brought, had been employed
as a team leader in the General Assembly and Manufacturing Department at General
Motors. Besides his duties as team leader Ruiters also had to stand in for absent
employees – a part of his job which required physical capability.
A problem arose when Ruiters injured his left hand. This meant that it was painful
for him to perform the tasks required when standing in for an absent employee.
On 20 April 2006 Ruiters visited Struwig, the company doctor. On the latter’s
recommendation, he was moved by a certain Felix to another part of the department
where not so many stand-ins would be required, although the fact that he still had
at times to perform those tasks was problematic.
Not long afterwards Ruiters’ right hand also started swelling. In February 2007 he
again visited Struwig. The latter suggested that the relevant managers/supervisors
should investigate the possibility of placing Ruiters elsewhere. Not much came of
this suggestion and on 15 May 2007 Ruiters visited a private specialist. The latter
diagnosed Ruiters as having progressive Osteoarthritis and latent osteopenia in his
wrists. In a letter accompanying his report the specialist pleaded on Ruiters’ behalf.
He indicated that, although Ruiters could no longer perform his job as team leader,
he was not disabled and could still be of use to the company for a number of years.
Ruiters had also obtained confirmation from the specialist that he would still be able
to drive and, according to his testimony he had suggested to Felix that this could be
an alternative.
Some time later Struwig convened a meeting with the specialist and a Mr
Heynsen, evidently the head of Ruiters’ department. It was decided that HR should
be requested to assist in finding alternative employment for Ruiters.
On 24 August Mr Heynsen contacted the Senior HR Business Partner (a Ms Wilson)
indicating that they were unable to accommodate Ruiters in his present department
and requesting her assistance in finding an alternative placement. (By this time
Ruiters had taken sick leave in excess of the 30 days to which he was entitled and
had twice been warned that his sick leave was excessive.)
The matter was not acted upon by Wilson until 9 October. On that date she
circulated an email requesting assistance to six department heads, she later copied

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 331
the email to another six managers. As far as the Court could ascertain, only two of
the persons contacted responded to the email and that in the negative.
On the same day Wilson sent an email to Struwig referring to his examination of
Ruiters in May 2007. She requested that he schedule another meeting with Ruiters
and his coordinator to establish whether he was ‘fit to return to his previous job’.
The next day Wilson again sent an email to Struwig, this time stating that, if
Ruiters could not be boarded or returned to his previous job, they might have to ‘go
the incapacity route’. (This in terms of the Incapacity Procedure, which the company
had negotiated with the union a few years previously.)
On 18 October Struwig examined Ruiters for the last time and sent a report to
Wilson in which he again suggested that alternative employment should be sought,
also that the private medical practitioner should be approached in order to ascertain
whether boarding would be an option.
There is no indication as to a follow-up by Wilson and on 3 December 2007,
following the Incapacity Enquiry, Ruiters was informed that he was being dismissed
since he could no longer perform his job.

Argument and Pronouncements

At the CCMA
At the CCMA hearing the company called three witnesses, namely a Mr Fredericks,
Felix and Dr Struwig. Felix testified that, on the recommendation of Struwig, he had
moved Ruiters to another part of the department. When Ruiters could no longer
perform there, he had approached Quality Control to ascertain whether Ruiters could
be moved there as Ruiters did have some experience in that area. However, there was
no vacancy in that department.
It was put to Felix that Ruiters had indicated that he could be moved to driving.
Felix denied any knowledge of this even after it was mentioned that a Mr Naidoo, the
Body Shop Manager, had indicated at the hearing that, if Ruiters’ doctor cleared him,
he could be employed to drive. (By driving was meant getting the cars off the ramp
once the work in that section had been completed. Ruiters had also indicated that
he had previously helped out with driving.) Felix vociferously denied that driving had
been suggested, stating that Ruiters was a team leader and not a driver.
Struwig’s testimony related mainly to his appointments with Ruiters and the
recommendations made by him, while Ruiters repeated his claim that he had
suggested that he could drive.
After hearing the evidence, the Commissioner summed up as follows:
• The company had held ‘numerous’ consultations with the employee.

332 Labour Relations: A southern African perspective

 • His private surgeon had declared that Ruiters was ‘permanently incapacitated’.
• No weight could be attached to Ruiters’ testimony that he had suggested a move
to the position of driver.
• It was ‘common cause’ that the employer acted reasonably.

On the basis of the above the Commissioner declared the procedure to have been
‘procedurally and substantively fair’.

At the Labour Court

The Union appealed against the Commissioner’s finding. According to the Union the
Commissioner had committed a ’gross irregularity’ by failing to take into account
that the Company had not made any effort to place Ruiters in an alternative position,
this despite a superior saying that he could be accommodated in another work area.
The company responded that Ruiters had been dismissed because he could not
fulfil his contractual duties, that there was no evidence of a possible alternative
position and Ruiters himself had not identified such a position.
The Court indicated that the possibility of Ruiters being given another job should
definitely have had an effect on the arbitrator’s decision. In this respect it was noted
that Felix was questioned quite extensively about the position of driver. According to
the evidence the possibility of Ruiters being given the position of driver had evidently
been discussed extensively but had then been dropped.
The Court noted that, while the arbitrator was aware of this, he had failed to
evaluate the evidence and failed to ‘give consideration to a material issue’. This had
the effect of depriving the employee of a fair hearing.
As a result, the Court overturned the arbitrator’s decision and ordered that the
matter be referred back to the CCMA for arbitration by a different arbitrator.
Not satisfied with the outcome, the company lodged an appeal with the Labour
Appeal Court.

At the Labour Appeal Court

This Court commenced by stating that, in accordance with the criteria for fairness,
the task at hand was to decide whether the ruling made by the Labour Court was
one which a reasonable decision-maker would have made in the same circumstances.
It then went on to reiterate the principles and procedures contained in the Code
of Good Practice, with reference also to the Company’s own policy on dismissals
for incapacity. The Court conceded that, if it was impossible to accommodate an
employee who cannot continue in his job, a dismissal would probably be fair, provided
that a fair procedure had been followed. It was up to the employer to prove that the
dismissal had been both procedurally and substantively fair.

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 333
Turning to the case at hand, the Court asked the following question: was there
evidence at arbitration that Ruiters could possibly be accommodated?
In answer to its own question the Court quoted Felix’s testimony that he
had been requested by Dr Struwig to look for alternative placements and that a
Mr Human (supposedly a union representative) had made the same request. Felix had
informed the Labour Court of his failed attempt to place Ruiters in Quality Control
and explained that after this he had moved to another section.
The union representative at the Appeal Court then indicated to Felix that Ruiters
would claim that he could act as driver. In reply Felix again stressed that that was
not, and never had been Ruiters’ job. Alluding to the fact that Mr Naidoo had said
Ruiters could be accommodated as a driver, the Representative again asked whether
a process had been followed. Felix replied that at that stage he was no longer with
the department.
The Court also pointed to the fact that the idea of moving Ruiters had been raised
by Naidoo at an HR meeting and had been discussed at the Incapacity Enquiry. During
arbitration the Commissioner had asked Felix whether he was aware of this, to which
Felix replied that he had not been involved.
Reiterating that it was up to the company to prove that a fair procedure had been
followed, the Court summed up as follows:
• For 12 months there had been talk about driving but the proposition had not been
pursued.
• The specialist had declared Ruiters fit for driving and said that he still had many
years to give to the company.
• Mr Heynsen had written to Ms Wilson on 24 August requesting assistance with
finding a placement for Ruiters.
• Ms Wilson had waited until 9 October to respond.
• All Ms Wilson had done was to send out emails requesting assistance.
• After receiving only two responses she decided ‘in a matter of hours’ that they
‘had to move on’ and suggested the route to incapacity.
• The persons to whom the emails were sent were not given sufficient time to
consider and respond.
• It appeared that there was a ‘lack of bona fides’ on the part of management.
• The fact that the possibility of an alternative placement was raised at the enquiry
should have obliged the company to conduct an investigation into the possibility
of moving Ruiters.
• The failure to do so was a direct contravention of Sections 10 and 11 of the Code
of Good Practice.

334 Labour Relations: A southern African perspective

 The Court concluded by stating that, in ignoring the need to further investigate the
possibility of placing Ruiters, the Commissioner had acted unlawfully. His decision
was ‘not in the range of decisions that a reasonable decision maker would have
made’.
In the light of the above, the Court declared that the appeal by the company had
failed. The judge indicated that, instead of appealing the decision of the Labour Court,
the company should have allowed the matter to be reheard by another commissioner,
as ordered by that Court. The Labour Appeal Court also ruled that, because it was the
company which had chosen to appeal, it had to bear all the costs of the court action.

Discussion
What this case shows is that having a procedure is of no use if it is not followed in
practice, if managers are not trained in the process and if, in the case of incapacity,
all avenues are not explored.
There seemed to be some inkling among the managers that something should be
done, but no one took responsibility and, as the Court stated, the matter went back
and forth for 12 months without any definitive action being taken.
The Court was especially scathing in its comments about Ms Wilson’s actions. As
the Senior HR Business Partner she should have been on top of the process and been
guiding the managers involved.
In the end a great deal of time and money was wasted, and the arbitration had
to start from scratch.

Abuse of Sick Leave Provisions

It is unfortunately true that many employees abuse the provision for paid sick leave as
contained in the Basic Conditions of Employment Act. This is particularly so because the Act
allows employees to take two days’ sick leave at a time without a medical certificate and,
even when medical certificates are produced, these may be for relatively minor complaints.
The employer may not question a medical certificate or request further details from the
medical practitioner without the employee’s permission. This leaves the employer seemingly
powerless to act against what may be termed ‘delinquent absentees’.
Employees should be made aware that, if they use their sick leave indiscriminately, they
may in the longer term be at a disadvantage. Should they contract a serious illness or injury,
the employer might not readily pay them beyond the paid sick leave due to them. Yet,
despite such admonitions, employees may continue to abuse sick leave provisions.
When the employee is habitually absent for a day or more at a time, the employer may,
if the employee is absent more than twice in an eight-week period without producing a
medical certificate, demand that the employee produces a certificate for his third absence,
whether for one day or longer.

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 335
Where intermittent absence continues over a long period, the employer should first establish the
nature of the employee’s incapacity. He is therefore entitled to request that the employee disclose
information about his illness or submit to a medical examination by an appointed practitioner.
This is necessary for the employer to find out whether the illness as claimed by the employee
is permanent or temporary. This would help him to decide on the course to be followed. If the
employee accedes and the illness is confirmed, the employer will apply the incapacity principles
described above. If, however, the employee refuses or the illness is not confirmed, the employer
may inform the employee that his repeated absence makes him unable to fulfil his contract, and
that, unless there is proof of incapacity, his employment may have to be terminated.

Retrenchment and Redundancy

Rationale
Previously, it was regarded as the right of management to reduce or enlarge the workforce as
demanded by production and economic cycles and in terms of business rationale. With the
growing emphasis on employee rights, and especially the right to job security, the position
changed. Employers can no longer claim that retrenchment or redundancy is entirely a
managerial prerogative, nor can these be undertaken on an ad hoc basis. The very necessity
of retrenchments, particularly those arising from a cyclical downturn, is questioned. Unionists
claim that employers reduce employment levels as a first option in times of economic recession.
They argue that there is an obligation on the employer to keep employees in their jobs, since
it was those employees who supported him when business was booming.
On the macro level, retrenchments are seen as a direct result of the inadequate workings
of the capitalist system. As Dave Lewis, the first general secretary of the General Workers’
Union, once stated,
Retrenchments and economic crises are neither an act of God nor part of the
natural order – but a direct outcome of the capitalist system itself. Crisis is
inherent in the process of capital accumulation, which entails increasing capital
intensity, a declining rate of profit and problems of inadequate markets – although
theorists may debate the precise mechanisms and relationships.

As far as unions are concerned the reasons employers give for retrenchment – such as falling
demand, the need for more effective utilisation of manpower, etc – are not acceptable.
Nevertheless, if there is no alternative, union and worker representatives may have to
accept retrenchments, but will do so only if the retrenchments are undertaken in a fair and
equitable manner.
In South Africa, the issue of retrenchment is exacerbated by high unemployment. Thus,
retrenchment becomes not only a business issue but also a social one.
Worldwide technological advancement is already affecting traditional employment
and this trend will escalate rather than abate. As previously indicated in this text, these

336 Labour Relations: A southern African perspective

developments may require a new approach to employment and the relationship between
organisations and the providers of labour.

Retrenchment versus Redundancy

A distinction is made between retrenchment and redundancy in that the former is attributed
to cyclical downturns, market losses or other economic factors which oblige the employer to
reduce his labour force, whereas redundancy occurs when jobs are lost through restructuring
or the introduction of technology. In the case of retrenchment, the jobs may be reinstated if
economic circumstances improve, but where redundancy occurs, the loss of jobs is usually
permanent. In the past unions have claimed that more responsibility should be placed on
employers for redundancies than for retrenchments. However, they may have to change this
stance in the light of future developments in the labour market.

ILO Recommendations
The ILO Recommendation concerning Termination of Employment provides for retrenchment
procedures by stating firstly that:
Positive steps should be taken by all parties concerned to avert or minimise as far
as possible reductions of the workforce by the adoption of appropriate measures,
without prejudice to the efficient operation of the undertaking, establishment or
service.

It recommends that, when a reduction is contemplated, consultation with workers’

representatives should take place ‘… as early as possible on all appropriate questions.’
Matters suggested for consultation include:
■■ measures to avoid the reduction of the workforce
■■ restriction of overtime
■■ training and retraining
■■ transfer between departments
■■ spreading termination of employment over a certain period
■■ measures for minimising the effects of reduction on the workers concerned
■■ selection of workers to be affected.

On the question of selection of employees for retrenchment, the ILO recommends that this
should be done ‘… according to precise criteria which … should be established, wherever
possible, in advance and which should give due weight both to the interests of the
undertaking, establishment or service and to the interests of the workers.’ Criteria adopted
may include the following:
■■ the need for the efficient operation of the undertaking
■■ the ability, experience, skill and occupational qualifications of individual workers

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 337
■■ length of service
■■ age
■■ family situation.

It is recommended that:
■■ employees who have been retrenched should be given priority of re-engagement
■■ such priority of re-engagement may be limited to a specific period of time (meaning that
the offer will not be there indefinitely)
■■ the wages of employees who are re-engaged should not be adversely affected, with due
regard to the differences between the previous and new occupations
■■ national employment or other appropriate agencies should be fully utilised in attempts
to place redundant workers in alternative employment.

The Legal Position

Section 188 of the Labour Relations Act concedes that a dismissal arising from the employer’s
operational requirements is permitted as long as a fair procedure has been followed. This
having been said, employers cannot claim a fair retrenchment process without following the
requirements of the LRA, as contained in Section 189 and 189A of the Act.
Retrenchment is a ‘no fault’ dismissal and, because of its human cost, the LRA places
particular obligations on an employer, most of which are meant to ensure that all possible
alternatives to dismissal are explored and that the employees to be dismissed are treated
fairly.
Section 189 states that when an employer contemplates dismissing one or more employees
for reasons based on the employer`s operational requirements, the employer must, inter alia:
■■ consult with either the trade unions involved, a workplace forum or the employees
themselves, in that order
■■ issue a notice to employees/their representatives, setting out relevant information
■■ allow the other party the right to make representations and respond to these
■■ select persons to be retrenched according to agreed criteria or, if none are agreed upon,
criteria that are fair and objective

(Section 189A contains special procedures for organisations employing more than 50
employees: see later in this text.)

Retrenchment Policy and Procedure

Because of the importance which the legislation places on retrenchments and redundancies
it is advisable for an undertaking to have a retrenchment policy. It is preferable to have
a policy or procedure before the fact than to run around for solutions when the reality of
retrenchment has to be faced. Companies that have agreements with unions will usually

338 Labour Relations: A southern African perspective

also have agreed retrenchment policies and procedures, but even those organisations which
do not have a high-level union presence need to establish policies and procedures. Where
workplace forums exist, retrenchments are subject to consultation with the forum.

Notice of Intention to Retrench

Employers are obliged to inform the employees or their union as soon as the possibility
of retrenchment arises. Section 189(3) obliges the employer to include the following
information in the notification to employees:
■■ the reasons for the retrenchments/redundancies
■■ the alternatives considered before reaching the decision to retrench
■■ the number of employees to be affected
■■ the proposed method for selection of retrenchees
■■ proposed times and dates
■■ proposed severance pay
■■ assistance to employees
■■ the possibility of future re-employment
■■ the number of persons in employ
■■ the number of people retrenched in the previous 12 months.

Consultation
The Requirement for Consultation
Sections 189 and 189A place a high value on consultation. In fact, if the employer fails to
consult with employees on retrenchment, it will be an unfair retrenchment and the employer will
face an order for reinstatement or compensation. The purpose of consultation is to enable the
parties, in the form of a joint problem-solving exercise, to strive for consensus, if that is possible.
In order for this to be effective, the consultation process must commence as soon as possible
when a reduction of the workforce through retrenchments or redundancies, is contemplated
by the employer, so that possible alternatives can be explored. The employer should, in all
good faith, keep an open mind throughout and seriously consider alternative proposals.

Consultation when Establishing Policies and Procedures

Consultation will be necessary at various stages of the retrenchment programme. Where plant-
level representation exists, consultation (and probably also negotiation) will already occur when
general policies and procedures for retrenchment are established. This type of consultation will
probably culminate in a retrenchment agreement, which would facilitate consultation when
the need for retrenchment or redundancy actually arises. Worker representatives would want
to know under which circumstances the employer would regard retrenchment as necessary.
They should agree on some mutually acceptable standards or methods by means of which

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 339
such circumstances may be verified. Consideration will also be given to possible alternatives
to retrenchments, but the most important issue during this phase would be the negotiation of
mutually acceptable criteria for selection of people being retrenched, and agreement on the
exact steps and procedures to be followed in the event of actual retrenchment.

Timing of Consultation
Whether there is a prior retrenchment agreement or not, consultation will have to occur once
retrenchment or cutbacks become imminent. This entails notification to the union or worker
representatives that the employer may have to retrench or is actually planning retrenchment.
Opinion differs as to the length of notice or the exact timing for this type of consultation. It
will depend on the nature of the employer’s business and the reason for the reduction – that
is, whether the retrenchments are due to economic, organisational or technological changes.
Unions maintain that the employer should notify and consult as soon as he becomes aware of
the need to retrench. In the case of technological innovation, this may be a year or years in
advance, and in other instances may range from six months to two weeks.

Parties to be Consulted
Section 189(1) of the Labour Relations Act provides that, where an employer intends to
retrench, or make certain employees redundant, he has to consult with:
■■ a party determined by a collective agreement or
■■ where no agreement exists, with a workplace forum, and
■■ any registered union whose members will be affected by the proposed retrenchments, or
■■ if no union or workplace forum exists, with the affected employees.

Matters for Consultation

During consultation the parties must, in terms of the Act:
■■ reach consensus on measures to avoid dismissals
■■ consider minimising the number of dismissals
■■ debate the timing of dismissals
■■ consider measures to mitigate the adverse effects of the retrenchments
■■ agree on the criteria for selection of people being retrenched
■■ agree on the retrenchment package
■■ consider the possibility of re-employment when the business improves as well as the
time frames and criteria for such re-employment
■■ grant the other party the opportunity to make proposals on any matter related to the
proposed retrenchments
■■ consider and react to these proposals
■■ should they be rejected, furnish reasons for not agreeing.

340 Labour Relations: A southern African perspective

 Case Review: Reasons for Retrenchment and the
Need to Consult

SACCAWU, C. Moeng and others v Woolworths (Pty) Ltd

(Case no J3159/12 &JS1177/12 9June 2015)
Background
In 2012 Woolworths stopped employing full-time staff as that arrangement proved
‘too inflexible’ for its business. Instead, all new employees were appointed as flexi-
time workers.
The result was that by 2012 only 590 of the staff complement of 16 400 were still
full-time workers. In the same year the company embarked on a ‘staff career path’
project, dividing employees into five grades. A new salary scale with minimum at the
25th percentile and maximum at the 75th was also introduced. At the same time, it was
decided that the remaining full-time workers should also become flexi-time employees.
On 4 August of that year the company instituted what it called a ‘Voluntary Phase’
during which management consulted with the full-timers as individuals. Eventually,
by 20 August, these employees were given three options. They could:
• convert to flexi-time at the 75th percentile of the new wage scale and also get a
one-off payment of R70 000 (the company had originally offered R50 000, but the
employees had objected), or
• select to go on early retirement and be paid 1 to 2 weeks’ severance pay for every
year of service, or
• opt for ‘voluntary retrenchment’ with 1 to 2 weeks’ pay for every year of service

On 23 August the South African Commercial Catering and Allied Workers’ Union
(SACCAWU), which represented about 15 per cent of Woolworths’ employees,
challenged what it termed the ‘unilateral action’ by management. Woolworths
claimed that it had not been their intention to retrench during the voluntary phase
and therefore consultation with the union had not been required. In the end 413 of
the 590 full-timers accepted one of the alternatives while 177 rejected the proposals.
The ‘voluntary phase’ ended on 4 September.
The second phase of the exercise was termed the Section 189 Phase, meaning
that the company would now comply with the procedures towards retrenchment
as set out in that section of the Labour Relations Act. To these ends it sent notices
to the remaining full-time employees inviting them to consultations on this issue.
Management also informed SACCAWU of its intentions. Phase Two ended on
3 November and on 4 November all 92 employees were dismissed.

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 341
SACCAWU, acting on behalf of 44 of the dismissed employees, took the matter to the
Labour Court alleging that the dismissals had been unfair.

Argument
The Court commenced by referring to Section 189(19) of the Labour Relations Act.
According to this section an adjudicator must find a retrenchment to be fair if:
• it was necessitated by economic, technical, structural or similar circumstances
• the retrenchment was operationally justifiable on ‘rational’ grounds
• management had engaged in proper consultation with employees
• the selection criteria were fair and objective.

(This section has since been repealed, but the principles are still good guidelines.)
Referring to the pronouncements of the Court in the matter between SACTWU
and BMD knitting Mills, the Court explained that it not only had to decide whether
there was a fair reason, but also whether it was fair to the employee and whether
there was a reasonable basis for the retrenchment. ‘Fairness, not correctness’, was
the test to be applied.
Referring to the matter between SATAWU and Old Mutual Life Insurance, the
Court explained that part of the test was whether the decision to retrench was a
‘legitimate exercise of management prerogative, based on a commercially acceptable
objective’ and whether there was a ‘rational connection’ between the employer’s
scheme and the objective; also, was the least harmful option considered?
The Court then turned to the retrenchments in the case before it, posing the
following questions:
• Was there a fair reason, ‘operationally justifiable on reasonable grounds’? (In this
respect the Court noted that the employees had declared their willingness to work
flexi-time although not under the new conditions)
• Was the decision to downgrade benefits justifiable, taking into account the
experience, length of service and the age of the affected employees?
• Was there a financial necessity to reduce wages and benefits to that extent?
• Could the operational requirements have been met by other means, for example,
placing the employees on flexi-time on similar conditions as before, or by natural
attrition?
• In short: ‘Were the dismissals operationally justifiable’?

The Court again noted that the employees had been willing to change to flexi-time
if they kept their salary and benefits and again asked whether this would not have
met the operational requirements. In this respect it referred to the testimony of the
Employee Relations Manager who had claimed that the process was informed by

342 Labour Relations: A southern African perspective

 three requirements, namely flexibility, cost efficiency and ‘equality’. As regards the
last requirement she had maintained that it would not be fair to have one group with
better benefits than the others. She also ‘explained’ that realignment of benefits by
downgrading employees had been necessitated by overpayment in the past. As an
example, she cited the case of one employee whose wage rate had been 54 per cent
higher than that of colleagues in a similar position. That employee’s hourly rate had
since been reduced from R44.77 to R22.62. The manager concluded her statement
by stating terms and conditions of employment were constantly changing and that
‘nothing is guaranteed’.
Counsel for Woolworths maintained that equalisation had been necessary in
view of the fact that the proposed 2015 Labour Relations Amendment Act would
prohibit the payment of different wages to persons doing the same work. If they had
not equalised the wage rates, Woolworths would, according to Counsel, have been
‘slapped with equal pay claims’. As regards cost-efficiency, it was reported that, in
making the changes, the company had saved R24 million, equal to 3,7 per cent of
the total wage bill.
The union responded that the question of equity should have been dealt with
during collective bargaining. Moreover, they knew of cases in other organisations
where flexibility had been introduced but where the full-timers had been retained
under their existing conditions. Woolworths’ timing for changing the contracts of
full-timers was also suspect since the company had already stopped employing
full-timers in 2012. In short, there was no compelling financial reason to make the
changes regarding full-timers at that stage.
Regarding the reasons for the changes as presented in Court, the union pointed
out that, in its original notice in terms of Section 189 (3) (in which it informed of the
possibility of retrenchments) management had given only one reason for such action,
namely the need to have employees work flexi-time. It was now adding two completely
new reasons, namely cost efficiency and equity. By citing these reasons management
was, according to the union, merely trying to get out of its ‘self-created predicament’.
At this stage the Court indicated that, before adjudicating on the case, it wished
to look at the question of equal pay in the light of Woolworths’ claim that part of the
reason for its actions was the need for equality as proposed in the amendments to
the LRA. The Court noted that these issues were not new and had already been dealt
with in various Court actions as, for example, Mangana & Others v Fila South Africa
(Pty} Ltd, as well as in Louw v Golden Arrow Bus Services (Pty) Ltd (Labour Court)
(2000) where Landman had pronounced that it was not unfair to pay different wages
for work of equal value. It was unfair only if the reason for the differentiation was
direct or indirect discrimination.
From there the Court looked at the proposed amendment to the LRA as referred
to by Woolworths. It noted that, although it was stated in the proposed amendments

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 343
that employees doing the same work should be treated equally, there was also a
caveat in the clause allowing for different treatment if there is a ‘justifiable reason’.
As the LRA does not explain the term ‘justifiable reason’ the Court turned to the
Employment Act for clarification. It noted, firstly, that the section in this Act making
it unlawful to discriminate refers only to the listed or similar grounds. Moreover,
Section 6 (2)(b) of that Act specifically states that it is not discriminatory to ‘prefer
any person on the basis of the inherent requirements of the job’.
The Court found further clarity in the Employment Equity Regulations (even
though these were repealed in August 2014). Part of this regulation stated that, if
employees perform work of equal value, a differentiation in terms and conditions of
service is not unfair as long as the discrimination is:
• fair and rational with reference to seniority and length of service
• the result of the employee being demoted owing to organisational restructuring
or any other legal reason and the employee’s salary then being fixed at that level
until ‘the remuneration of employees in the same job category reached that level’.

Pronouncements
Turning to the case at hand, the Court noted the following:
• All full-timers had longer service than the flexi-time employees
• The disparity in wages was the result of operational changes effected in 2012
• Those full-timers who had agreed to the new arrangements had lost some of
their benefits, for example, maternity, family responsibility and study benefits,
as well as the allowance to work only five hours on Saturday and not to work
on Sunday
• The Court doubted that Woolworths use of equity was justified since it was
anticipating consequences of the legislation which, as it happened, never
materialised
• Woolworths could have justified the differentiation in terms of Section 7(1)(a) and
Section 7(1)(d) of the Code of Good Practice previously referred to. In fact, Section
7(1)(d) was a ‘perfect fit’ for the situation the employees found themselves in.
• Even if the differentiation was not justifiable, Woolworths could have dealt with
it in terms of Section 27 of the Employment Equity Act, which sets out procedures
to follow in cases of Income Differentiation. (Section 27(2) allows management
to ‘progressively reduce income Differentiation’.)
• It is not sufficient merely to cite structural, economic and technical changes as
reason for requiring employees to agree to changes
• As stated in National Union of Mineworkers and Another v Black Mountain Mining
(Pty) Ltd, dismissal is the proverbial ‘Death Sentence’ and can only be justified if:

344 Labour Relations: A southern African perspective

 -- ‘it is a measure of last resort
-- is undertaken on rational grounds
-- is linked to an end goal for rational reasons
-- it takes into account the personal circumstances of and effect on the employee
compared to the benefits gained by the employer’.

The Court, like the union, noted that Woolworths had originally cited only the
need for flexibility as the reason for its actions and had added equality and cost
effectiveness ‘as an afterthought’. In this respect it was inclined to agree with the
union that adding the other reasons was ‘mischievous’. In any event the company had
not provided enough information to judge whether these were believable reasons.
It seemed to be the opinion of the Court that cost-effectiveness was not a sound
argument as it was ‘inextricably linked’ to a drastic reduction of full-timers pay and
changed conditions of employment’.
It was noted that that Woolworths had not explored the alternatives to dismissal.
Although, as the Court stated, it was not its duty to decide which was the best
option, the Court did mention that, in view of the employees’ length of service and
age, natural attrition would probably have been the best option.
It was the opinion of the Court that the company had failed to engage in
meaningful consultation from the start and had failed to consider alternatives. It had
failed to prove that the dismissals were ‘operationally justifiable’. The dismissals were,
therefore, substantively unfair.
The Court then turned to the question of procedural fairness. In this respect it asked
the following questions:
• Did the company fail to start consultation when it first became aware of the
possibility of retrenchments?
• Were the eventual consultations meaningful or did management merely ‘push
through’ the process in the minimum time as prescribed by the Act?
• Did they provide cogent reasons for rejecting representations?
• Did they fail to disclose relevant information, for example, regarding pay scales,
medical aid and other conditions of service?
• Did they consider the possibility of natural attrition?

The Court noted that, when the union had questioned management’s actions in the
‘voluntary stage’, management had not engaged with the union and had merely
responded that it was not contemplating retrenchments. Woolworths should
have foreseen this possibility much earlier and engaged with the union instead of
conducting ‘consultations’ only with individuals. The very nature of the three options
already offered at the initial stage showed that, if the offer was not accepted, the

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 345
alternative would be dismissals, indicating that, at this stage, there was already an
intention to retrench workers who did not agree.
The Court went on to note that, in the second phase, Woolworths ‘refused to
budge’ even when reasonable alternatives were suggested. Instead, it urged the
union to convince its members that accepting the changes would be ‘more beneficial
than severance pay’.
It was indicated that, before a scheduled meeting on 3 November, Woolworths
had already decided to dismiss the employees who had not accepted the offer. This
was proved by the fact that Woolworths had already sent a termination letter to one
employee (later claimed as a mistake) and had considered the date of termination to
be 4 November.
On the basis of the above, the Court decided that Woolworths had failed to consult
meaningfully and that its actions were also procedurally unfair.
Woolworths was ordered to reinstate all the applicants as from the date of
dismissal without loss of pay. The Company was also ordered to pay all costs.

Discussion
Instead of following the retrenchment process as set out in the LRA Woolworths decided
to institute its own version of the process to be followed and, when forced to follow
the prescribed route, it merely went through the paces without any concession to the
arguments of and for the other party. In fact, the company’s actions from the beginning
might be seen as unlawful and as an attempt to coerce employees into agreement.
There is a very good reason why Section 189(1) (d) of the LRA indicates that
employees should be involved in initial consultation only if there is no registered
union or workplace forum. The company not only ignored the union, but also
consulted with employees on an individual basis. From the beginning Woolworths
adopted an ‘accept or suffer the consequences’ approach.
Those employees who initially accepted the offer may have been intimidated into
doing so for fear of having no job at all. This, in the present South African context,
is a frightening prospect.
The Employee Relations Manager argued that the changes had to be effected to
deal with overpayments in the past. She seems to have found it quite acceptable
that employees should now suffer loss of income because of managerial mistakes.
The manager also seemed completely oblivious to the effect the downgrading would
have on the employee and the legality or otherwise of the company’s actions. In light
of the eventual judgment, it could be argued that the company was already then
engaging in unfair labour practices.
The reasons which Woolworths added to that of operational requirements to
justify its actions were not only ‘mischievous’, as alleged, but also unconvincing

346 Labour Relations: A southern African perspective

 and constituted a strange approach to the concepts themselves. For example, the
argument that equality is achieved by bringing all employees down to the same
level is the very opposite of the usual understanding of equalisation, as confirmed
by the relevant provisions in the Employment Equity Act. Also, the then proposed
amendments to the Labour Relations Act, as referred to by the company, were mainly
intended to safeguard vulnerable employees against discriminatory practices and not
to assist management in downgrading the existing benefits of other employees.
Finally, to boast of a saving which, as the Court indicated, was achieved by
persuading employees to forgo their rights, has the appearance of insensitivity on
the part of the managers concerned.
All in all this case is a good lesson in how changes should not be made.

Case Review: Individual Retrenchments –

Consultation and Selection Criteria
Robinson & Others v PricewaterhouseCoopers
(Labour Court: (D202/2002), 6 June; 1 December 2005)
Background
In 2001, it was decided to restructure the accounting/tax division at the
Pietermaritzburg office of PricewaterhouseCoopers. The reason given for this was
that the division in question was not generating enough revenue.
On 18 September 2001, a meeting was held with all employees in the affected
department. Employees were informed that the accounting/tax department was to be
restructured and that some employees might become redundant. In support of its plans
the company, presented a capacity and fee analysis, which showed that salaries paid were
not ‘commensurate with fees brought in’.
On the same day, the manager of the department and two of the accountants were
among the four employees called to individual meetings. Each was given a similar letter
informing them of the decision to restructure, the reasons for this, the positions which
would become redundant and the selection criteria proposed. The letter was read out to
each by a Mr Thomas.
Although the letter commenced with the statement that the restructuring ‘could
potentially effect (sic) your position which could become redundant’, it went on to state
the following:
The proposed timing of the above will be effected as at 30 September 2001
with 31 October being the one-month notice period.

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 347
 Included in your severance pay schedule is an additional one month’s salary
being notice pay which is to compensate you for your proposed last working
day being 28 September 2001.
The attachment will detail your severance pay, E pay, provident fund per the
firm’s national policy.
The firm will apply for tax directives from SARS on your behalf. The first
R30 000 of all severance packages could be exempt from PAYE in the hands of
the employee. As a big employer you may approach us for future employment
if there are openings. Any references for purposes of further employment may
be obtained from the HR partner or myself.
It is with regret that we have taken this course of action. We now await your
contra-proposals in writing, which must be lodged within five working days …

Three of the employees took this letter to mean that their dismissal had already been
decided upon. Subsequently, they each addressed an identical letter to the employer,
stating that their understanding was that they had been dismissed and that their last
working day had been confirmed as 28 September. The letter went further to state
that, under the circumstances, any suggestions on their part would serve no purpose
and would merely constitute window dressing.
On the afternoon of 18 September, another meeting was held with employees
in the department. The three employees did not attend. On 27 September, the
employees concerned were given letters stating that, owing to their refusal to
participate in consultation, the employer had no option but to dismiss them with
immediate effect.

Argument and Pronouncements

Before pronouncing on the dismissals, the Court suggested that the letters from
both sides seemed to have emanated from ‘the computers of labour consultants
and attorneys for the needs of their clients as they arise’. According to the Court it
happens far too often that standard letters are issued without consideration of the
circumstances of a particular case. Letters about retrenchment could cause alarm
and should be carefully worded.
The Court noted that, although the letter from the employer contained the words
‘possible’ and ‘potentially’, the facts presented a completely different picture. The
employees had been pre-selected. The letters had been drafted even before the
first meeting took place and a few hours after that the employees concerned, who
happened to be the highest earners, were handed letters which dealt mostly with
what would happen if they could not be accommodated. As the Court put it, the
offer to explore alternatives ‘had a hollow ring to it’, especially since the decision to
restructure had been taken about three months before the meeting. At no time were

348 Labour Relations: A southern African perspective

 the employees concerned informed that they could negotiate on the need to retrench
them, on alternatives to retrenchment, severance pay and selection criteria.
As regards selection criteria, the letter to the employees had stated the following:
‘The proposed method used to select the employees to be dismissed or placed
elsewhere within the firm, is the preservation of skills, or the identified required
skills, cost of employment and LIFO, last in first out’. The company had, they said, also
considered its national employment equity plan.
The employees argued, and the Court agreed, that the only criterion applied had
been the cost of employment. The employer’s argument that the retrenchment of one
of the employees, a Mr Thorn, would benefit the organisation’s affirmative action
initiatives was rejected by the Court, which went on to state that affirmative action
‘is not, and has never been, legitimate ground for retrenchment’. It was, furthermore,
pointed out that one of the people being retrenched was an Indian woman, making
nonsense of the affirmative action plea.
The Court expressed the opinion that the absence of a retrenchment process
impacted also on the substantive fairness of the dismissal. If a proper process had
been followed, the decision to dismiss might have been avoided. In this case the
employees were preselected in contravention not only of the Labour Relations Act,
but also of the organisation’s own policy. In the circumstances, the selection criteria
appeared to be unfair and limited to cost saving. If fair criteria had been applied, the
employees might still have been in their jobs.
The applicants were reinstated with retrospective payment for a period of 18 months.

Discussion
The company tried to conflate all the steps and requirements of the retrenchment
process into one letter and one meeting, with disastrous results.
Every step of the process, as well as the documents generated, needs to be
approached carefully and in good faith. As was seen, attempting to bulldoze
employees into compliance and engaging in sham consultation does not pay off. Nor
should there be reliance on standard letters.
Had the employers followed the proper process and engaged the employees in
meaningful consultation, they might very well have persuaded them of the need
for restructuring and cutting costs and might, as the Court did indicate, have
reached agreement to ‘bump’ the long-serving senior employees to lower positions
and to dismiss more junior employees and trainees. As also indicated by the Court,
affirmative action cannot be a reason for retrenching a particular employee. On the
other hand, a proper process and agreement might have provided for the retention
of a number of persons from the designated groups. The provision would then have
been weighed against the criteria and the prevailing conditions.

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 349
Disclosure of Information
Information to be Disclosed
In supplying the reasons for the proposed dismissals, the employer may be asked for
further disclosure to substantiate the reasons given. This may amount to proof that the
retrenchments are in fact necessary, and may involve the disclosure of financial statements
or an independent audit. In terms of the Act, the provisions regarding disclosure that are
applicable to unions engaged in collective bargaining also apply to proposed retrenchments
or redundancies (see Chapter 5). In the context of retrenchments it means that the employer
is obliged to disclose any information the union may need in order to engage in effective
consultation.

Disclosure versus Non-disclosure

Where disclosure is refused, the onus will be on the employer to prove that the information
sought is not relevant to the purpose for which it is being sought or cannot be disclosed
because it is:
■■ legally privileged
■■ cannot be disclosed because a law or court order does not allow it
■■ could cause serious harm to the employer or an employee
■■ is private personal information relating to an employee.

If the employer is acting in good faith, disclosure of some kind may prove to be the best
method of convincing representatives that retrenchments really are necessary. However,
disclosure of financial information will depend to a large extent on:
■■ the trust relationship between the parties
■■ the relevance of such information
■■ the degree of sophistication of employee representatives
■■ the union’s behaviour with previous disclosures.

350 Labour Relations: A southern African perspective

 Case Review: Disclosure of Information

National Union of Metal Workers of South Africa & Others

v Comark Holdings (Pty) Ltd
(Labour Court: 26 March & 3 April 1997)
Background
The union in question had been engaged in a collective bargaining relationship with
Comark Holdings for a number of years. At the end of 1996, the company began
giving indications that it was experiencing financial difficulties, an issue which had
not before been raised with the union. At a meeting of all stakeholders called at
the time, management stated that the three-year business plan, which had been
presented at the meeting, had to be supported by the employees in order to avoid
possible retrenchments.
In January of the following year, the executive chairman addressed a letter to all
employees informing them of the company’s financial position and mentioning that
efforts were being made to improve the situation. Subsequent to this, a number of
meetings were held with the union at which the financial position was discussed but
where no mention was made of possible retrenchments.
On 17 February the company sent another letter to employees indicating that the
position the company was in obliged it to consider downsizing. The letter included an
invitation to employees and their representative unions to ‘consult and communicate’
on the issue.
NUMSA responded with a number of letters to the company. At a meeting held
later that month the union requested an adjournment in order to be able to discuss
the matter with their constituency. A meeting between the union and its members
was arranged for 3 March.
On 4 March the company issued a letter to employees and unions indicating that
it had finally decided that ‘for reasons already discussed’, it had no alternative but
to engage in retrenchments with immediate effect. A letter confirming this decision,
and inviting all interested parties to a consultation meeting, was issued on 5 March.
NUMSA responded to these announcements by pointing out that the invitation
to consult had come after the final decision had been made. Nevertheless the union
requested information in order to engage in meaningful consultation. The company’s
attitude was that it had consulted properly and had already made adequate disclosure.
It was of the opinion that the union’s demand for disclosure was merely a delaying
tactic. (This was also the argument submitted in Court.)

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 351
On 11 March, individual employees were notified that they would be retrenched on
31 March. In return the union addressed a letter to management requesting that the
retrenchments should be held over pending the resolution of a Section 16 (Disclosure)
dispute, which had been referred to the CCMA on 17 March. The company did not
accede to the request, nor did it supply the information required by the union.
The union responded by applying for an urgent interdict to prevent the company
from continuing with the proposed retrenchments.

Pronouncements
The Court quoted the full text of Section 189 and cited a number of previous cases
when it had been pronounced, inter alia, that ‘An employer is not entitled to take
the final decision to retrench without prior consultation with its employees or their
trade union’. According to the Court the duty to consult on the decision meant that
‘an employer, who senses that it might have to retrench employees in order to meet
operational requirements, must consult with the employees likely to be affected (or
their representatives) at the earliest opportunity’, and that, as stated by the Appellate
Division, ‘sufficient information must be disclosed to make the process of consultation
meaningful.’
Although the Appellate Division had pointed out that there was no need to disclose
information that was not relevant to the issue under discussion, the Court in this
instance was of the opinion that the employer ‘should not only disclose information
which it deems relevant’ but ‘all information requested by the consulting party subject
to the limitations already enunciated’. The Court went on to explain that:
To enable employee representatives to participate through meaningful and
effective consultation it is necessary to give them an opportunity to consider
not only the information which, in the employer’s view, supports the view that
no alternatives to retrenchment exist, but also other information which the
employer has not considered to be relevant, but which might be.

The Court concluded that the company had not consulted sufficiently before the
final decision, nor had it supplied sufficient information. The interdict was therefore
granted.

352 Labour Relations: A southern African perspective

 Case Review: Disclosure of Information

United People’s Union of South Africa v Grinaker Duraset

(Labour Court: 1−5, 8−11 & 19 December 1997)
Background
During 1996, the company, which manufactures poles for Eskom, suffered drastic
cutbacks in orders. As a result, management met with shop stewards, explaining
to them that this would necessitate a cutback in production. Management then
addressed a letter to the union explaining the situation and warning that, if the
situation did not improve, the company would have to consider retrenching about
80 employees. At the first meeting between management and the union, in October
of that year, various alternatives were considered. In the ensuing two months,
some of these alternatives were attempted. In the meantime, management tried to
gain agreement with the union on a retrenchment procedure, but its efforts were
thwarted by the frequent non-attendance of the union official. The year ended with
management agreeing to defer the decision regarding retrenchments to the New
Year. January came and once again management encountered problems in getting
the union official to a meeting.
A meeting was eventually held on 20 January. At the meeting, management stated
its belief that retrenchments were necessary and requested that a deadline be set for
a decision on the procedure to be followed. The union responded by demanding that
short time be implemented, that the retrenchment procedure be finalised as soon as
possible and that the company ‘open its books’ to a financial expert from the union.
Management replied that it was happy to finalise the procedure as soon as possible.
In subsequent discussions it emerged that the union wanted all employees over the
age of 58 to be discharged. Union representatives explained that their reason for
supporting the FIFO (first in first out) principle was that ‘the older employees have
got good pension funds and provident funds’, that the younger ones could not ‘survive
without their jobs’ and that most of their members would be retrenched if LIFO were
applied. To this management responded by explaining that selection on the basis of age
was discriminatory and by insisting on the implementation of the LIFO principle.
In a later response to the union’s demand for disclosure, the company assured
the union that it was not in danger of closing down and again explained that the
retrenchments had not been considered because of general financial difficulties.
The union official replied that he had been ‘instructed not to accept retrenchment
without seeing the financial report’.
On 27 January the union referred the dispute regarding disclosure to the CCMA.

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 353
The company continued in its efforts to finalise a retrenchment procedure but, finally,
on 5 February, informed the union that it was of the opinion that it had exhausted
the process and had complied with statutory requirements, and that it intended to
go ahead with retrenchments. After some further correspondence and an attempt to
hold another meeting, the individual employees were eventually issued with notices
of termination on 12 and 13 February 1997.
The union immediately applied for an interdict to prevent the retrenchments,
alleging, inter alia, that there was no reason to retrench, and that the company had
failed to provide information as requested by the union.

Pronouncements
The Court declared itself satisfied that the company had ‘an adequate economic
reason’ for retrenching.
On the matter of information, it was explained that ‘an employer is not obliged
to comply with a generalised demand for ‘information’ unless the party making
such demand lays some foundation for its relevance’. It pointed out that in this case
the company had not held that it was in financial difficulties. When asked why he
had raised a general demand for the ‘books’, the union organiser had replied that
retrenchment would not be fair if the company had reserves of ‘millions’. To this
the Court replied that, where the company had not pleaded poverty, the question of
reserves was not applicable.

Discussion
The somewhat divergent opinions expressed in the two cases under discussion
illustrate the different interpretations of the concept of disclosure and, in particular,
the difficulty in determining whether information required by the union is relevant
and necessary for the union to engage in meaningful consultation. In the first case,
the Court seemed to contradict itself by stating that relevance alone should not
determine whether information should be disclosed, at the same time stating that
disclosure should be subject to the limitations listed in the Act, which include the
question of relevance. The second judgment clearly relates relevance to the reason
provided by the employer. It can be inferred from this that, where the employer ‘pleads
poverty’, he will probably be expected to ‘open his books’, but where retrenchments
are due to restructuring or a commercially rational reason, there will be no such need.
The conclusion reached by the Court was underscored by Henry Ngcebo and Nikki
Howard in an article published in the Labour Bulletin. In the article, they refer to
the pronouncement in the case of SACCAWU and Others v Pep Stores where Judge
Landman explained that ‘relevance … is directly related to the purpose of disclosure.
The purpose for which the disclosure of the information is required will determine
whether or not certain information is relevant or irrelevant.’ The authors go on

354 Labour Relations: A southern African perspective

 to explain that relevant information would include that which the employer has
considered in putting forward his proposals and that which the union would need
to develop its own alternatives. They caution unions to ensure that, on the balance
of probabilities, ‘the information they want will be relevant to the issue they are
negotiating or consulting on’. This means that they should ‘identify what they want to
achieve in performing their functions in a given situation’, whether, for example, they
want to present alternatives or ascertain that the organisation is actually making a
loss. Thus unions should motivate in clear terms why they require the information.
As a final caution, the authors refer to the Hendry v Adcock Ingram case where
it was found that ‘If the respondent can show that, by cutting operational costs and
excluding some of its business areas, it can make better profits instead of losses, I
do not see the need for furnishing other written information relating to the financial
justification, for example, financial reports and the like.’
(see case review for this case on page 356)

Consideration of Alternatives
Before a final decision on retrenchment can be made, alternative measures must be
considered and implemented. The first and most obvious of these is natural attrition.

Natural Attrition
An organisation with a high labour turnover should, if it is considering retrenchment, first
try to reduce staff by not replacing employees who leave. It should also place a ban on the
employment of casual and contract labour.

Transfers and Retraining

Once provision has been made for natural attrition and the organisation has stopped the
recruitment of new employees and temporary labour, it should consider transferring and
retraining some of the existing employees, particularly where a particular job has or may
become redundant. Unions insist that this alternative be considered, not only within the
company itself, but also among other companies belonging to the same group. Employers
are expected to do everything in their power to find other positions for employees whose
positions will become redundant. The law does state that an employee who has unreasonably
refused the offer of a transfer or another position will not be entitled to retrenchment pay.

Cutting Back on Time Worked

Other alternatives to retrenchment will involve the employees themselves. These fall under
the general heading of a cutback in time worked. They include a ban on overtime, short
time, temporary lay-offs, cycled unpaid leave or shared time. These alternatives cannot be
unilaterally instituted and need to be negotiated with employees or their representatives.

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 355
Short time, lay-offs and unpaid leave may precede, but may not completely obviate the
need for final retrenchment. Also, a total ban on overtime, which appears to be an easy
alternative, may sometimes not be feasible because of the nature of the company’s operations.
The operations of the undertaking should be carefully considered before agreeing to ban
overtime completely.

Voluntary Retrenchment/Retirement
The final alternative is to be found in voluntary retrenchment or early retirement of older
employees. This can be offered only if the pension and retrenchment package is such that it
makes it viable for the employee concerned. In South Africa, early retirement may be a viable
option for higher-level employees and for employees of all types who are close to retirement
age, but it is not a solution for many unskilled workers. Also, to be considered is the fact
that, unless the pension fund is strong enough to bear additional payments, it will be up to
management to make the retirement package more attractive, and this may prove quite costly.
Voluntary retrenchment has its own problems. If the package is attractive enough, the best
employees may leave. Employers are advised to reserve the right to retain key employees.

Case Review: Consideration of Alternatives

Hendry v Adcock Ingram

(Labour Court: Johannesburg 21 November 1997)
Background
The employee concerned was appointed from overseas in the position of international
marketing manager. She had accepted the appointment with the purpose of furthering
her career in this field. At the time of her appointment, the company’s chief executive
had informed her that a merger with another company was being considered, but,
according to her, they had given her the assurance that her position would not be
affected if this occurred. (The company maintained that the chief executive, who had,
in the meantime, also been retrenched, had had no authority to give that assurance.)
The merger did take place, and, barely six months after her appointment and
relocation, Hendry was retrenched along with 300 other employees. The reason
provided for her redundancy was that the company had narrowed its international
initiatives and was concentrating on marketing in Africa. This job would now be
undertaken by the new chief executive, in addition to his other duties. (During the
hearing, the company was able to prove that the international marketing division,
which had previously run at a loss, was now making a profit.)
Prior to Hendry’s retrenchment, there were quite extensive consultations with the
employee. The latter indicated that the only option for her might be to relocate to

356 Labour Relations: A southern African perspective

 the United Kingdom, as there were no similar positions available in South Africa. She
suggested that the company should create an international planning and licensing
position for her. The company responded that as the duties involved in the proposed
position were already being performed by the new chief executive, creating the
position which she had suggested would result in duplication. The company, on its
part, suggested that she should consider becoming an international agent for the
organisation. To this she replied that she wanted secure employment and was not
interested in becoming an agent.
Upon the termination of her services Hendry was given an ex gratia payment of
R20 000, severance pay of R7 240.80 and accrued leave pay. Repayment of a loan
made to her by the company was also waived.
Hendry remained unconvinced that the decision to retrench her had been fair, and
subsequently declared a dispute claiming compensation to the value of two years’
salary and relocation costs, to the value of R456 493.

Pronouncements
The Court noted that the activities of the international division had ‘changed
drastically’ since the merger and declared itself satisfied that the decision to retrench
Hendry soon after it had gone to such trouble to recruit her was not illogical. The
Court agreed with the pronouncement in the Atlantic Diesel case (1993) that the
pertinent question was ‘whether termination of employment is the only reasonable
option in the circumstances’. It nevertheless pointed out that this did not mean ‘that
an employer must keep a position, particularly a very exclusive one, if, in accordance
with legitimate and sound business decisions, it is no longer required’. The Court went
on to explain that an employee does not have a right ‘to indefinite and permanent
employment by a particular employer’ and that retrenchment does not occur only
when the employer ‘can show financial ruin’. The employer is entitled to retrench if
he can show that a good profit is to be made in accordance with sound economic
rationale and that he has followed a fair procedure. Courts should be ‘cautious not to
interfere in the legitimate business decisions taken by employers who are entitled to
make a profit and who, in doing so, are entitled to restructure their business.’
Noting that it was ‘indeed a difficult task to find alternative employment where
an employee was interested in a particular type of employment situation’, the Court
declared itself satisfied that alternatives had been considered. The fact that one
alternative had been preferred by the employer and the other by the employee did not
indicate that no attempt at consensus had been made. The company had responded
in writing to Hendry’s suggestion, giving clear reasons why it could not be considered.
Since the Court could not establish any unfairness on the part of the employer,
the case was dismissed, but because, as the Court put it, the circumstances of her
retrenchment had been hard on Hendry, no costs were awarded.

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 357
 Case Review: Lifo and ‘Bumping’

Amalgamated Workers’ Union of South Africa v Fedics

Food Services
(Labour Court: P179/98)
Background
The 17 workers on behalf of whom the union lodged the dispute were employed
by Leisure Homes at Kennersley Park when Fedics took over the catering services
of Leisure Homes. The contracts of the employees concerned were transferred to
Fedics. In April 1998, Leisure Homes terminated its contract with Fedics, which then
held a number of meetings with the union representing the employees. On 15 April,
letters of termination, outlining the terms of their retrenchment, were issued to the
employees. They refused to accept the letters and the union subsequently accused
the company of failing to consult. Another meeting was held, but no agreement was
reached and the union took the matter to the CCMA, which declared in advisory
arbitration that the retrenchment had been fair. The union then referred the case to
the Labour Court.

Argument
The union alleged, inter alia, that Fedics had acted unfairly by applying the LIFO
principle to one operation. It argued that the company should have ‘bumped’ shorter-
service employees from Fedics’ other operations and replaced these with longer-
serving employees from Kennersley.
The company, in its turn, submitted that bumping was not ‘a practical option’
as each of its business units operated independently and management at each unit
worked closely with the Fedics employees at that unit. Catering was different for the
different units and different skills were needed. If bumping was implemented, all
workplaces would be disrupted.

Pronouncements
The Court confirmed that:
In attempting to avoid retrenchments and, failing this, to comply with fair
selection criteria, the employer may be obliged to consider whether other
employees should be ‘bumped’ to make way for employees who would
otherwise be retrenched. If it is fair to do so, in regard to those employees,
to the employer and to the other employees concerned, then the employer is
under an obligation to consider taking such action. The onus would be on the
employer to discount this course of action if it was properly raised.

358 Labour Relations: A southern African perspective

 Further reference was made to the opinion expressed in Retrenchment: The New
Guidelines (1985) that LIFO, ‘if not qualified by agreement’ should ‘apply throughout
the establishment’. Bumping could be affected ‘sideways or downwards’. As regards
the case at hand, the Court confirmed the CCMA’s finding that it was not practice
in the industry to bump, but stated that, nevertheless ‘… there was an obligation on
the employer to consider whether it should do so. If it was able to ‘bump’ in a fair
manner which would not harm the organisation and other employees, then it should
have looked at this possibility
This having been said, the Court agreed with the company that there were
substantial reasons for not bumping. If ‘bumping’ were introduced, clients would be
dissatisfied, the business would be ‘dislocated’, different levels of skills and different
pay levels between contracts would make transfers difficult. Fedics would have to
retrain employees for new positions. Changes would be made very frequently and it
would be difficult to determine where to draw the line.
The application was consequently dismissed with costs.

Discussion
It is clear that the provision relating to the consideration of alternatives places a
strong onus on management to give serious consideration to alternatives suggested
by employees or their representatives. Such alternatives may include short time,
temporary lay-offs, shared jobs, reducing benefits and, even when retrenchment is
unavoidable, the practice of ‘bumping’.
In the case of Vermeulen v Cablelec Electrical & Mechanical Supplies (Pty) Ltd &
Another (1999) the Court had the following to say about ‘bumping’:
The extent to which the employer should go in transferring employees from
one group company to another, and to ‘bump’ employees with lesser service
in an associate company in order to prefer the longer serving employees in
the first subsidiary so as to avoid retrenching them, is a complex issue. It must
take into account inter alia the connection between subsidiary companies,
the extent to which they are managed as a single entity, etc.

In that case the Court decided against the employees being bumped, despite the ‘close
connection’ between the various operations, because the shorter-service employees
were doing different jobs requiring skills other than those possessed by the potential
people being retrenched.
In short, it can be concluded that bumping has to be considered, but whether it
will be feasible or not will depend on the circumstances in each case.

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 359
Selection of Retrenchees
The LIFO Principle
The question as to the criteria to be adopted in selecting people to be retrenched is often
one of the most contentious in the retrenchment argument. Unions favour the adoption
of the LIFO principle. They argue that it rewards length of service and that it is the most
easily applicable and objective criterion; also that it prevents any type of favouritism
or discrimination against union members. Yet it could be argued that the LIFO principle
does not always favour unions, whose members are often found to be among the younger
employees. Employers, on the other hand, contend that there is no reason that they should
not be allowed to retrench less competent employees. To this, union spokesmen reply that
retrenchment should not be used for disciplinary purposes.

Other Acceptable Criteria

Unions will agree that the employer may reserve his right to retain workers with shorter
service than others but with special skills necessary for the continued functioning of the
organisation, provided that there is no employee with longer service who would be able to
do that job or who could be trained for that purpose. Worker representatives may also insist
that, besides the LIFO principle, employers should also consider special circumstances such
as the fact that an employee is the sole breadwinner or has a disability, as this would make
it difficult for him to find new employment.

A Multifaceted Approach
In the past, criteria for selection of people to be retrenched were generally set by the union
rather than negotiated with the employer. A one-factor approach, consisting of the primary
adoption of the LIFO principle with reference merely to special circumstances raised by the
union, was generally demanded. Employers have gradually persuaded worker representatives
that a multifaceted approach should be introduced, that the employer also wishes special
circumstances to be considered and that an appropriate formula encompassing various
criteria, perhaps with different weightings, should be worked out. In South Africa, the
adoption of various criteria is supported by the Labour Court judgments, which have not
insisted on LIFO as the only criterion but have merely advised that:
■■ criteria should be agreed upon
■■ criteria should be objective
■■ the selection should be fairly made in accordance with the agreed criteria.

Acceptability of Criteria
The Labour Relations Act of 1995 does not stipulate the criteria to be applied. It provides
merely for consultation on such criteria and for the implementation of agreed or fair criteria.
This implies that, where no agreement on the criteria can be achieved, the employer may

360 Labour Relations: A southern African perspective

(after reacting appropriately to the other party’s proposals) implement his own criteria,
provided that these are fair, provable and consistently applied.
Selection criteria that are generally accepted to be fair include length of service, skills
and qualifications. Generally, the test for fair and objective criteria will be satisfied by
the use of the LIFO principle. There may be instances where the LIFO principle or other
criteria need to be adapted. The LIFO principle, for example, should not operate so as to
undermine an agreed affirmative action programme. Although affirmative action will not
automatically protect employees from retrenchment, it may be necessary to agree on specific
criteria relating to under-represented groups. At the same time, care should be exercised
that criteria do not indirectly discriminate against certain individuals. Exceptions may also
include the retention of employees who are fundamental to the successful operation of the
business. These exceptions should, however, be treated with caution.
Employee representatives refuse to accept that a worker who has been transferred to
another department will have his previous service disregarded and that he would be the first
out if retrenchments occur in that department. A policy of this nature becomes even more
difficult to justify if the work done in the new department requires little or no training.
This leads naturally to the question as to whether, if one department becomes redundant,
retrenchments should occur vertically in that department alone or horizontally across
departments. It is accepted that, particularly where the LIFO principle is applied, the selection
of people to be retrenched should be conducted throughout the company – or even within a
group of companies – unless circumstances dictate otherwise (see case review above).

Final Selection
After criteria have been agreed upon, it is management’s job to draw up the list of persons
to be retrenched. It is good practice to present this to the union or workers’ representatives
for scrutiny and for representation as regards exceptional cases.

Retrenchment Pay and the Retrenchment Package

The Legal Position
The Labour Relations Act provides that consultation on the amount of retrenchment pay
must take place between the employer and the body representing employees. Section 196
of the Basic Conditions of Employment Act provides that employees dismissed for reasons
based on the employer’s operational requirements are entitled to severance pay of at least
one week’s pay for each completed year of continuous service with the employer, unless
the employer is exempted from the provisions of Section 196. This minimum requirement
does not prevent unions from attempting to improve on retrenchment payments. The right
of the trade union, through collective bargaining, to seek an improvement on the statutory
minimum severance pay is not limited or reduced in any way.
An employer or group of employers may apply for exemption from this minimum
payment by utilising the exemption procedure of the Basic Conditions of Employment

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 361
Act. The Minister may at any time (but subject to consultation with NEDLAC and the Co-
ordinating Bargaining Council for the Public Service) revise the minimum by publishing a
new minimum rate in the Government Gazette.

Disputes about Retrenchment Pay

A dispute concerning the amount of retrenchment pay may be submitted first for conciliation
by the CCMA or a bargaining council, and thereafter to arbitration. In dealing with a dispute
about retrenchment pay, the Court may investigate the circumstances and determine the
amount of retrenchment pay for which the employer will be liable.

Disqualification for Retrenchment Pay

As indicated in Vemisani Security Services, an employee who has unreasonably refused
transfer or the offer of another job is not entitled to retrenchment pay. Reasonableness is
determined by a consideration of the reasonableness of the offer of alternative employment
and the reasonableness of the employee’s refusal. In the first case, objective factors such
as remuneration, status and job security are relevant. In the second case, the employee’s
personal circumstances, such as location and family responsibilities, play a greater role.

Employer Concerns
One concern of employers is that management may agree to substantial retrenchment packages
and that the employee might soon afterwards be re-employed by the same or another employer.
The first, namely re-employment at the same company, would speak of poor planning since,
if it is envisaged that reduction will be of a temporary nature, provision should be made for
temporary lay-offs with limited or no benefits but with the guarantee of re-employment by
a specific date. Employees are given a choice between permanent retrenchment with the
necessary severance pay, and temporary lay-offs with a guarantee of re-employment.

Final Notification of Dismissal

The period of notice to employees, once the retrenchments have been agreed upon and the
people being retrenched selected, is often the most contested part of the process. Employers,
to avoid a drop-in morale and productivity, usually delay notification to the employees
selected for retrenchment to the last moment. Their reasons for doing so may be sound, yet
unions insist that sufficient notice of retrenchment be given to the employees concerned.
One of the reasons for this is the very strong psychological effect that summary notice
may have on employees. To be out of a job from one day to the next is a severe blow. In
response, there is the counterargument that rapid severance of a relationship is preferable
to a drawn-out or gradual parting. Other reasons for sufficient notice cited by employee
representatives are the need to allow the retrenched employees an opportunity to find
alternative employment and the time required to identify cases where particular hardship
may result.

362 Labour Relations: A southern African perspective

The British code on retrenchment advises that as much warning as is ‘practicable’ should
be given to the employees concerned. In South Africa the requirement is that ‘reasonable
notice’ should be given. This allows for a great deal of discretion on the part of the decision-
taker, but in the past the Courts have indicated that they will order employers who, in their
opinion, have given insufficient notice, to pay compensation in lieu of notice.
A compromise could be found in allowing for an additional paid notice period, over and
above the normal notice period. This means that the employee is told of his retrenchment
shortly before he is due to leave but that he is paid as though he were employed until the
end of the month, whereafter his notice period comes into effect. In granting the payment,
a clear distinction should be made between ‘pay in lieu of notice’ and ‘retrenchment pay’.

Aftercare
Once retrenchments or redundancies have been affected, assistance should be given to
employees in claiming UIF and other benefits. Even if the paperwork has been done before
the actual retrenchments, there will invariably be queries and problems. Also, employers
should fulfil their promise of assistance in the search for alternative employment. For
these reasons it may be necessary, in the case of both partial retrenchment and a complete
shutdown, and especially in the case of large-scale retrenchments, to set up a temporary
aftercare centre, either as part of the personnel department or – and perhaps preferably –
completely separated from the employer’s other operations.

The Undertaking to Re-employ

Unions may demand that, for a specified period, retrenched employees be given priority
should vacancies arise in the future. The procedure requested is that unions concerned be
advised of vacancies and that they be given sufficient opportunity to contact people who
have been retrenched who could possibly fill such vacancies. The demand for an offer to
re-employ is a reasonable one but should be carefully considered, and there should be strict
compliance with the offer once it has been made.
The Unfair Labour Practices provisions in the Labour Relations Act include as unfair the
failure to re-employ where an agreement to this effect has been concluded. This means that
an employer may be faced with an unfair labour practice allegation for employing completely
new workers in preference to previously retrenched employees. This could happen if the
employer did not foresee the possibility that he might be obliged to create positions which
the retrenched workers could not fill. It is essential to phrase the undertaking to re-employ
in such terms that the employer will still be able to take on completely new workers with
special skills not held by the people who where retrenched. Where the employer is obliged
to offer a job to a retrenched employees a limit needs to be set on the time allowed to the
union to fill the vacancy as tracing retrenched employees may take too long.

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 363
stage iii:
Aftercare EMPLOYEES LEAVE
notification to
employees –
retrenchment occurs
Counselling and
Prepare forms and pay
assistance

Notify management concerned Notify employees

stage ii:
consultation with
representatives and
Final list
information to
management
Representations on list

Brief all management List of proposed retrenchees Union or employee

of proposed list representative

Apply agreed or fair criteria

to select retrenchees

Agreement reached/not reached

Consider proposals of representatives.

React and give reasons.

Consult on all aspects – criteria,

retrenchment pay, aftercare, etc.

Proof of necessity for retrenchment

Consult in terms of agreement, or

Notify managers of
with workplace forum, unions or
departments concerned
employees

stage i:
prior retrenchment Need for retrenchment arises
policy or agreement

Retrenchment policy
• Circumstances which would lead to retrenchment
• Alternatives to be considered
• Criteria
• Notification (when and who)

Consult with all Consult with

key members of Decision that retrenchment workplace forum,
management policy is necessary union or employees

figure 7.1: retrenchment programme

364 Labour Relations: A southern African perspective

Organisations Employing more than 50 People
The Legal Position
Section 189A of the Act contains special provisions which have to be adhered to by
organisations employing more than 50 people in the event that they want to retrench 10 per
cent or more of their workforce or have retrenched employees during the preceding 12 months,
which, added to the new retrenchments, would reach or exceed 10 per cent of the workforce.
(There is one exception: where an organisation employs between 50 and 200 employees, this
section of the Act also applies should they intend to retrench 10 or more employees).
In terms of Section 189A, the employer has to give written notice as provided for in
Section 189(3). He must provide information, not only of the number of employees to be
retrenched but also of the number retrenched during the previous 12 months.
The duty to consult remains. In fact, the Labour Relations Amendment Act of 2014 added
a new sub-clause (d) to Section 189A(2) stating that, if one of the parties requests extension
of the 60-day period in the hope of reaching a workable agreement, the other party may not
unreasonably refuse the request.
The CCMA must appoint a facilitator to assist with the retrenchment process if the
employer or a union representing the majority of employees to be retrenched so requests. The
request must be made within a period of 15 days following the notification of retrenchment.
The purpose of facilitation is to help the parties reach consensus. If a facilitator has been
appointed and 60 days have elapsed since the union/employees received notice of the
proposed retrenchment, the employer may give notice that he intends to terminate the
contracts of the affected employees. Upon receipt of such notice, the union may give notice
of a strike action or refer the matter to the Labour Court on the basis that there is no fair
reason for the dismissal. (The Labour Relations Amendment Act of 2014 added a new sub-
clause (d) to Section 189A(2) stating that, if one of the parties requests extension of the
60-day period in the hope of reaching a workable agreement, the other party may not
unreasonably refuse the request.)
Because a facilitator has been appointed, the union is not obliged to follow normal strike
or unfair dismissal procedures by first referring the dispute to the CCMA or a bargaining
council for conciliation.
Where no facilitator has been requested, the parties can refer the dispute to the CCMA or
bargaining council, provided that 30 days have elapsed since notice of retrenchment was
given. After a further period of thirty days as prescribed in Section 65, the employer may
give notice of termination. On receipt of such notice, the union/employees may give notice
of the intention to strike or to refer the matter to the Labour Court on the grounds that there
is no fair reason for the dismissals.
The union/employees may immediately give notice of a strike if the employer gives
notice of termination before the specified periods have elapsed. Where notice of a strike has
been given, the employees may not refer the matter to the Labour Court. Equally, where the
matter has been referred to the Labour Court, no strike action may be undertaken.

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 365
If the union/employee grievance differs from the reason for the strike, and is based on the
fact that the employer did not follow a fair procedure, the union/employees may at any
time request the Labour Court to issue an order compelling the employer to follow a fair
procedure, interdicting or restraining the employer from dismissal before a fair procedure
has been followed or obliging the employer to reinstate a dismissed employee. Where none
of these remedies is appropriate, the applicants may ask for compensation.
The detailed procedure related to retrenchments in this category reflects concern on the
part of the State about the effect that large-scale retrenchments might have on the economy
and also on the employees in a situation where unemployment levels are already high.
Unfortunately, with increased mechanisation/digitalisation, the situation is not likely to
improve. Employers will increasingly, and usually rightly so, argue that they have to employ
the latest technology or to outsource in order to remain competitive and cost-efficient,
What is required is probably not more complex legal provisions, but for all parties to put
their heads together to find new solutions to new problems.

Case Review: Retrenchment – Employer Employing

more than 50 Persons
Leoni Wiring Systems (East London) (Pty) Ltd v National
Union of Metalworkers of South Africa & Others
(Labour Court: P413/2006)
Background
On 5 July 2006, Leoni Wiring, realising that it was not going to secure sufficient
contracts for 2007 and that a shutdown was inevitable, issued a notice of intention
to retrench in terms of Section 189A(2) of the Labour Relations Act. No application
for a facilitator was made by any of the parties.
At the first consultation meeting, which took place on 12 July, the employer
explained that some employees would be retrenched at the end of September 2006
and the rest at the end of February 2007. The meeting ended with the understanding
that the union would come back to management and provide feedback on the
proposals made by management. When the union did not comply, management set
up another consultative meeting, with a specific agenda point being feedback from
NUMSA regarding alternatives to retrenchment. The union again failed to provide
feedback, whereupon management requested yet another meeting. Instead of
agreeing to the meeting, the union on 14 August addressed a fax to the company
in which it stated that both parties should try everything in their power to save the
company. The fax informed that in this respect the union had already approached
DaimlerChrysler (ostensibly to procure orders) and that it expected management to
make the same effort.

366 Labour Relations: A southern African perspective

 The fax concluded by stating that, if the parties did not find a solution, the union
would propose a ‘separation’ package comprising, amongst others, four weeks’ pay
for every year of service, leave to be paid in full, two months’ pay in lieu of notice,
a full bonus, a R30 000 gratuity, a R5 million fund for the training of retrenched
workers and the setting-up of a cooperative for employees. The union also demanded
disclosure of the company’s order book, its financial statements for the previous
three years and other related financial information.
On 15 August, the company responded by stating that the reason for the
retrenchment did not lie with short-term financial problems (evidently more with
long-term viability), but, if the union could show why the information being sought
was relevant, the company might reconsider its stance. At another meeting, held on
24 August, the discussion related primarily to the company’s financial position, but the
question of the severance package was also raised. Management indicated that they
were willing to consult on the issue but would need a motivation from the union as to
why the package should differ from that agreed to in the Motor Industry Bargaining
Council. The union argued that the council agreement was not binding in terms of
severance pay. At the end of the meeting, the understanding was that NUMSA would
come back to management with proposals and advice on further consultation.
On 31 August, the company received a letter from NUMSA with reference to the
consultations on 15 August. The letter indicated that, since the company refused
to move on the retrenchment package and had clearly stated that an ‘analysis of
financials’ would not help, any further consultation would serve no purpose. It
would not change the fact that the company was closing down. Although the union
representatives did not agree with the closure, they believed that it would be better
for the members to ‘know their fate’ and commence making arrangements. The letter
went on to state the following: ‘In the circumstances we confirm that all workers will
be dismissed on 28 February 2007. Unless the company indicates otherwise within
seven days, it will also be accepted that no workers will be dismissed on an earlier
date (as was stated in the s189 notice). If the company disagrees you must state who
will be dismissed earlier and exactly when.’
The company responded that its export business would close on 30 September.
A list of employees affected by this closure was attached to this correspondence.
According to management, this list had been agreed upon with NUMSA shop
stewards. When there was no response from the union, another meeting with
the shop stewards was arranged. Management indicated that the shop stewards,
after agreeing to the list, had requested that it be forwarded to NUMSA. It was
further agreed that, if no response was received from the union by 15 September,
the individuals concerned would be given notice of termination. Management duly
addressed another fax to NUMSA with a final list of employees to be retrenched on
30 September. When no response was received, the company, on 18 September, gave
notice of retrenchment with effect from 30 September.

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 367
On 27 September, NUMSA addressed a fax to the company in which the union alleged
that the employees had been selected without discussions with the union and that the
selection of permanent employees and the retention of contract employees was unfair.
According to the fax, ‘many issues regarding consultation have not been dealt with’. The
union blamed this on ‘management’s intransigence’ and their refusal to consider improved
severance pay and social security’ for people being retrenched. The next day, 28 September,
the company received notification that the union intended calling its members out on
strike in accordance with the provisions of Section 189A of the Labour Relations Act.
The company immediately applied for an urgent interdict restraining the union
from engaging in strike action. In response the union brought a counter-application
requesting a declaratory order that employees were allowed to engage in strike
action, despite the fact that the issue had not been subjected to conciliation, because
the company had not complied with its statutory obligations in terms of Section
189A(2) of the Act.; alternatively, the union would apply for an order stating that the
individual notices of dismissal were invalid and that the employees concerned should
be reinstated. The employer, in return, applied for the interdict against the union to
be granted as a matter of urgency. The Court agreed.

Pronouncements
In explaining its decision, the Court indicated that it had to answer three questions,
namely:
• Could the union engage in strike action without first referring the issue in dispute
to conciliation in compliance with Section 65(1)(a) of the Labour Relations Act?
• Was the employer obliged to refer the matter to conciliation before giving the
employees notice of dismissal?
• Were there circumstances in which the union would be entitled to call a strike
without first referring the dispute to conciliation?

To answer these questions, the Court engaged in detailed interrogation of Sections

189A(7), (8) and (9). It reached the conclusion that Section 189A(7) is quite clear.
This section states that the employer may give notice of termination and the union
may respond with notice of strike action in instances where a facilitator has been
appointed and 60 days have elapsed since notice of retrenchment. It was noted that
no specific reference is made in this section to a dispute. This led to the logical
conclusion that, even if there is an issue in dispute, the parties do not need to submit
the matter to conciliation before engaging in the actions outlined in this section. In
the Court’s opinion, ‘the involvement of a facilitator appointed by the commission
has had the effect of the matter already having been referred to the commission’.
Section 189A(8), relating to a situation where no facilitator has been requested,
is, by the Court’s own admission, not quite as clear. Sub-clause (a) of this section

368 Labour Relations: A southern African perspective

 states that a dispute may not be referred to a council or the commission unless a
period of 30 days has elapsed since the notice of retrenchment was issued. As noted
by the Court, this section does not expressly state that, if there is no facilitator,
a dispute must be referred to conciliation. For greater clarity, the Court turned
to Section 189A(11), which sets out conditions for any strike action in terms of
Section 189A. Sub-section (11) provides for certain sections of Chapter 4 of the Act
(covering strikes and lockouts) to apply to any strike action undertaken with regard
to retrenchments. One of these sections is Section 64(1)(a), which prohibits strike or
lockout action unless the dispute has been referred to conciliation. However, at the
same time, sub-section (11) of Section 189A states that retrenchment disputes where
a facilitator has been appointed are exempt from this obligation. From the above,
the Court deduced that, if there is no facilitator and a dispute arises regarding the
reason for a proposed retrenchment, the parties must wait 30 days from the date on
which notice was issued and refer the dispute to the bargaining council or CCMA
for conciliation. Section 189(8)(b) goes on to state that, ‘once the periods in Section
64(1)(a) have elapsed, the employer may give notice of termination and, upon receipt
of the notice, the union may give notice of a strike’. Section 64(1)(a) states that the
parties may not engage in any action before a period of 30 days from the date of
referral has elapsed. This led the Court to conclude that, in total, parties who have
not requested a facilitator must wait 60 days before any action can be undertaken.
The Court then turned to the question as to whether, where no facilitator has been
appointed, the employer can give notice of termination without first referring the
matter to a council or the Commission. After lengthy deliberation, it concluded that
the time periods were applicable only in cases where a dispute existed. Assertions
that the employer is obliged to refer the matter, even if there is no dispute, were
rejected as absurd. Instead, the Court concluded that Section 189A(8) becomes
operative only if ‘prior to the employer giving notice of termination, there is a dispute
which has arisen between the parties about some or other procedural or substantive
aspect of the proposed retrenchments’. The Court went on to proclaim that, whether
a facilitator has been appointed or not, the employer may, if the parties have reached
consensus, give notice of termination irrespective of the time periods stipulated in
Section 189A.
Regarding the question as to whether, where there is no facilitator, union/
employees can engage in strike action without first referring the dispute to
conciliation, the Court referred to Section 189A(9) of the Act, which allows for strike
action without referral if the employer does not adhere to the time limits stipulated
in sub-sections (7) and (8). The Court reiterated its conviction that employers may
give notice at any time if consensus has been reached. It is only if there is a dispute
that the time periods come into play. The employer may not give notice if there is
a dispute and, where there is a facilitator, the 60-day period has not elapsed, or,
where there is no facilitator, the dispute has not been referred for conciliation and

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 369
 the precepts of Section 65 have not been followed. If the employer does so, the
union may give notice of a strike without adhering to any further time periods or
prescriptions.
The Court was at pains to advise parties that they should be very specific as
to whether a dispute exists or not. The dispute must be clearly identified, and the
solution required ‘unambiguously stated’. The fact that one party is unhappy does
not mean that a formal dispute exists. With regard to the case at hand, the Court
indicated that the most that could be said from NUMSA’s correspondence was that
the union was unhappy. Mere unhappiness did not constitute a dispute. At no stage
did the union expressly state that it was in dispute. In fact, in its letter of 28 February,
the union confirmed that all the workers would be dismissed. This signified that it
had accepted the situation.
The Court declared itself satisfied that the employer had understandably been
under the impression that no dispute existed and had therefore been justified in
issuing the notice without referring the matter to conciliation. In the light of this, the
proposed action by NUMSA was not lawful and stood to be interdicted.

Discussion
Section 189A was inserted in terms of the Labour Relations Amendment Act of 2002.
As such, it was, at the time, a relatively new and untested piece of legislation. As the
Court indicated, no precedents could be found in South African law. What the case
demonstrates is the complexity and, it might be said, the obtuseness, of this section.
Parties engaged in larger-scale retrenchments should be warned to tread carefully
and to check on every step taken. In fact, it might be advisable in all cases to request
a facilitator, as the process appears to be simpler if one is appointed.

Retrenchment of Employees who Refuse to Agree to Organisational

Restructuring
Relevant Legislation
From the information provided in this chapter it is clear that the Labour Relations Act, and
also, the Basic Conditions of Employment Act, accept the right of the employer to retrench
employees who have become redundant and who, after a fair procedure and consideration
of all alternatives, can no longer be accommodated in the organisation.
Until 2014 Section 189(A)(19) stated that, if all the criteria listed in the relevant sections
of the Act had been met, the Labour Court was obliged to rule that a dismissal for operational
reasons had been fair if:
■■ it was based on a requirement related to the employer’s economic, technological,
structural or similar needs
■■ it was operationally justifiable on rational grounds

370 Labour Relations: A southern African perspective

■■ proper consideration had been given to possible alternatives
■■ the selection criteria were fair and objective.

As mentioned earlier in this chapter, this Section has now been repealed, perhaps because
the instruction to the Court might be too limiting, but the criteria still serve as sound
guidelines and indicate that the law accepts the employer’s right to dismiss for operational
reasons.
However, in apparent direct contrast to the right of the employer to dismiss an employee
who refuses to accept changed conditions of employment, Section 188(1)(c) of the Act
declared the dismissal of an employee in order to force him to accept a demand involving a
matter of mutual interest, to be an automatically unfair labour practice.
This resulted in argument, especially by trade unions, that employers were prohibited
from dismissing employees who refused to accept changed conditions of employment. The
question which then arose was whether employers were obliged to retain these employees,
even if there was a dire and well proven need for implementing the suggested changes.
In 2002 the matter was seemingly clarified in the landmark judgment by Justice Zondo in
the Fry’s Metal case (see below). Justice Zondo went to great lengths to demonstrate that the
right of employers to retrench was reflected in numerous sections of the Labour Relations
Act as well as certain sections of the Employment Equity Act and the Basic Conditions of
Employment Act. Most significantly, he clarified the intentions of a lockout as compared
to those in an actual dismissal on operational grounds. Furthermore, he made a reasoned
distinction between Section 188(1)(c) and the sections relating to retrenchment.
The result was that the dismissal of an employee who could no longer be accommodated
was generally taken as justified, on condition that there was a clear reason for doing so, that
a fair procedure had been followed and that there was no indication that the employer was
trying to force the employee to accept. However, the matter did not end there.
See ‘The New Dilemma’ below.

Case Review: The New Dilemma

Fry’s Metals (Pty) Ltd v National Union of Metalworkers

of South Africa and Others
(JA01)(2002)ZALAC25 (6 December 2002)
Background
In May 2000 Fry’s Metals employed the services of a firm of consultants with a view
to increasing productivity as they regarded this as essential to the continued viability
of the company. Following the advice of the consultants, the company in June 2000

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 371
held meetings with the shop stewards to explain the situation that the company was
in and the measures the company was proposing in order to ‘ensure the continued
viability of the organisation and continued employment’.
In essence the proposed solution entailed a change to the conditions of
employment for employees in certain departments. The main remedy put forward
was a change in these areas from a three-shift system of 8 hours per shift to a
two-shift system of 12 hours per shift. According to the company this was essential
because in some cases in the existing system there was no handover, which led to
7 hours’ lost time per week, significantly affecting productivity levels. Management
also wanted to withdraw the transport subsidy.
The employees were given until 6 September to respond. At the meeting held on
that date they rejected some of the proposals and requested more time to decide
on the others. At the same time they ‘emphatically rejected’ the idea of a two-shift
system.
At a further meeting on 15 September workers did accept some of the proposals,
but evidently not the crucial ones on restructuring.
Another meeting was held on 22 September, but workers responded only to
proposals about the disciplinary process. The Managing Director then addressed the
meeting, reiterating the company’s commitment to keeping people in employment.
Noting that the changes would affect 55 employees, he read out a letter of the same
date in which it was noted that the employees were clearly not prepared to accept
the changes. The letter went on to state that, as this was the case, they were being
given 21 days’ notice of retrenchment. The letter did indicate that there was still time
to consider the ‘reasonable alternatives’ offered by management. However, if the
employees concerned did not notify management of a change of mind by 18 October,
the retrenchments would take place. Moreover, as they had refused to accept
the alternative offered, they would not be entitled to a retrenchment package.

On 3 October a letter was sent to the union and the affected employees giving
notice of their retrenchment on 20 October. At the same time management almost
pleaded with employees to accept the new structure and offered them another
opportunity to accept before 13 October. If they failed to accept, the retrenchment
would come into effect.
The union immediately approached the Labour Court requesting an urgent interdict
ordering the company to refrain from dismissing the employees for ‘failure to comply
with a demand concerning a matter of mutual interest’ and from introducing the new
shift system. The union also demanded that the retrenchment letters be withdrawn
and that the issue be declared by the Court to be a matter of mutual interest.
The Labour Court agreed with the union and interdicted the employer, who then
appealed against the decision of the Labour Court.

372 Labour Relations: A southern African perspective

 Argument and Findings
The Labour Appeal Court under Justice Zondo noted that the union had not based its
case on a failure by the employer to adhere to the provisions of Section 188 of the
Act, dealing with the retrenchment process, but instead had chosen to allege that
the dismissals constituted a contravention in terms of Section 187(1)(c) (indicating
that the matter had to be adjudicated with reference to this section}. According to
Section 187(1)(c) a dismissal intended to force an employee to accept a demand
is automatically unfair (meaning that it will be difficult, if not impossible, for the
employer to prove that it was fair).
The company had denied that the dismissals had been intended to force the
employees into accepting the changes. Instead, the employer continued to claim
that the dismissals were for operational reasons. As the Court noted, Section 188(1)
(a)(ii) of the LRA states that a dismissal will be unfair only if the employer cannot
prove that it was undertaken for disciplinary or operational requirements. The Court
also referred to international guidelines according to which operational requirements
could constitute a legitimate reason for dismissal.
Continuing with this argument, the Court noted that even sub-section 5 of
Section 67 of the Act, dealing with dismissals for strike action, allows for dismissals
necessitated by operational requirements.
Coming back to the main argument by the union, namely that the dismissals
were automatically unfair in terms of Section 187(1)(c), the Court concluded that
the pertinent question was whether an employer was dismissing the employees for
operational reasons or whether he was dismissing in order to compel them to accept
a demand.
To further explain the difference between the two the Court referred to the
definition of a lockout dismissal in the pre-1995 Labour Relations Act, as well as
relevant case law. From these it was evident that a lockout is not final and irrevocable
and is there for the purpose of obliging employees to accept the demands of the
employer. Significantly, the wording in the aforementioned Act was also similar to
that of the Section 187(1)(c) in the existing Act.
Comparing the lockout to an actual dismissal, the Court came to the following
conclusion: ‘A dismissal that is final cannot be for the same purpose’. The employer
cannot be demanding anything of the employees if he has actually dismissed them.
He can demand only if he wants to continue with the relationship. According to the
Court, the people whose agreement would matter to the employer are those who will
continue in his employ.
In support of this line of thought the Court pointed out that operational
requirements are treated as legitimate reasons for management’s actions in Sections

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 373
 67, 188 and 189 of the Act and are even defined in Section 213 as those relating to
economic, technological, structural or similar needs of the employer. Moreover, case
law indicates that employers may dismiss for these reasons even during a protected
strike.
Turning to the case at hand, the Court maintained that the purpose of the dismissal
was to make it possible to employ persons who would be willing to work the shifts;
furthermore that in the letter of 24 September the employer had specifically stated
that the dismissals were for operational reasons and had even offered the employees
concerned time off and assistance in finding new employment. All in all, this was not
the language of someone who wants to force employees to comply.
It was conceded that not all dismissals/retrenchments for operational reasons
would be judged in the same light. As an example, the Court differentiated between
the employer’s actions in this case and that of an employer who waits until the
matter is about to go to court before dismissing, evidently keeping the threat of
dismissal only to persuade employees to accept changes. By contrast the employer
under discussion had from the beginning not varied the date of dismissal. Even when
offering employees, a chance to change their minds, management had indicated that
this did not guarantee that they would be employed.
The appeal by the employer was upheld by the Court.
The matter did not end there as the union then requested leave to appeal against
the decision of the Labour Appeal Court. In 2005 this application was finally denied.

The New Dilemma

The relative certainty provided by the pronouncements in the Fry’s Metal Case was shattered
when, in the Labour Relations Amendment Act of 2014, the lawmakers saw fit to reword
Section 188(1)(c) to read that a dismissal would be automatically unfair if it resulted from
the refusal of an employee to accept a demand related to a matter of mutual interest.
The revised clause shifted the emphasis from the employer compelling to the employee
refusing. It seems that this change, which is really an exercise in semantics, was aimed at
nullifying Justice Zondo’s assertion that an employer who finally retrenched an employee
was, unlike one who locked out employees, not doing so to compel an employee to change his
mind, but rather to make way for employing someone who would accept the new conditions.
With the shift to the employee refusing it would seem that Judge Zondo’s argument
could no longer apply and that, if an employee refuses to accept a demand by the employer,
including a demand that he agrees to a change in working conditions, he cannot be
dismissed.
This is an untenable situation as it literally ties the employer’s hands. It ignores not
only the nationally and internationally recognised right of the employer to reorganise and
restructure, but also the necessity of doing so in existent and future economic conditions or

374 Labour Relations: A southern African perspective

organisational changes. Moreover, it ignores Justice Zondo’s very clear distinction between
Section 188, meant to deal with blatantly unfair dismissals and Sections 189 and 189A
relating to retrenchments which, if conducted fairly, are sanctioned by the Act.
The only logical reason for the change in wording would be to cover grey areas where
it might seem that the employer is acting fairly but his intention is to get the employee(s)
to accept. However, this could still have been dealt with under the original wording, as was
indicated by Justice Zondo when he explained that an employer who waits until the very
last minute before dismissing might well have been trying to force the employees to change
their minds by keeping the threat of dismissal hanging over their heads.
In essence, all the changed wording has done is to further confuse and complicate the
issue, the result being another spate of cases until clarification is eventually achieved.

Mergers, Transfers and Outsourcing

The Current Trend

Globalisation and the need for ever-increasing efficiency, has forced organisations to revert
to their core functions, to consolidate these functions and to cast off peripheral functions.
The result has been a spate of mergers, acquisitions and the outsourcing of certain functions.
This may involve transfers and takeovers of entire non-core functions or business units of
an organisation. It may also involve long-term contracts of agreed services at agreed service
levels for agreed remuneration, and may further involve automatic transfer of a business/
undertaking to the supplier.
In negotiating these ‘deals’, executives tend to concentrate on the financial, legal and
operational requirements and to ignore the significant human resources implications of
such transactions. It is left to human resource management to deal with these issues after
the event, that is, after the transactions have been finalised. This is not a desirable state
of affairs. The implications, not only as regards the people in the organisation, but also as
regards benefits, policies, practices and culture, are so important that the human resource
practitioner needs to be involved in the negotiations from the outset and to ensure that HR
aspects, and particularly the position of existing employees, are accorded due consideration
when agreements are concluded.

The Legal Position

Section 197 of Act 66 of 1995 attempts to deal with the issue of transfer.
Where a business or part of a business is transferred as a going concern, the following
precepts apply:
■■ the contracts of all employees are automatically transferred to the new employer
■■ all the rights and obligations between the old employer and his employees are also
transferred to the new employer

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 375
■■ any action or default committed by the old employer immediately before the transfer (eg
unfair dismissals) is regarded as an action of the new employer
■■ the service of all transferred employees is regarded as continuous (their length of service
is calculated from the date they were first employed by the old employer)
■■ the conditions and benefits with the new employer do not have to be exactly the same
but must be equal to or similar in value and content.

Section 197(A) provides that, in the case of insolvency, sequestration, schemes of arrangement
or compromise, the contracts of employment are automatically transferred to the new employer.
However, an agreement concluded by both the old and new employers with a trade
union, a workplace forum or the employees (Section 189(1)), may provide for rights and
obligations different from those under the old employer.

Clarification of Concepts
‘Transfer of Business as a Going Concern’
Sub-section (1) of Section 197 of the LRA states that ‘business’ includes the whole or part
of any business, trade, undertaking or service, and the term ‘transfer’ refers to the transfer
of a business as a going concern by one employer, to be known as ‘the old employer’ to
another employer, ‘the new employer’. It was obviously the intention that, besides mergers
and takeovers, outsourcing, ‘corporatisation’ and privatisation could also be regarded as
transfers of a going concern.
In the event of a transfer from one employer to another, the transferred entity must be
the whole or part of a business (here, the test is whether there is an economic entity capable
of being transferred), and the business must be transferred as a going concern (here, the test
is whether the economic entity that is transferred retained its identity after the transfer.) The
phrase ‘going concern’ is not defined in the LRA. What is transferred must be a business
in operation ‘so that the business remains the same but in different hands’. Whether that
has occurred is a matter of fact which must be determined objectively in the light of the
circumstances of each transaction.
In deciding whether a business has been transferred as a going concern, regard must be
had to the substance and not the form of the transaction. A number of factors will be relevant
to the question whether a transfer of a business as a going concern has taken place, namely:
■■ whether there was a transfer or otherwise of assets, both tangible and intangible and
■■ whether customers are transferred and
■■ whether the same business is being carried on by the new employer.

What must be stressed is that this list of factors is not exhaustive and none of them is
decisive individually. They must all be considered in the overall assessment, and therefore
should not be considered in isolation. (see NEHAWU v University of Cape Town & Others
(2003) 24 ILJ 95 (CC))

376 Labour Relations: A southern African perspective

 Case Review: Transfer of Business as a
Going Concern

Aviation Union of South Africa on behalf of Barnes &

Others v South African Airways (Pty) ltd & Others
(2010 (4)SA604(LAC))
Background
Section 197, and particularly the definition of ‘transfer’ in Section 197(1)(b), were
subject to interpretation in the case involving AUSA & SAA, which was first heard in
the Labour Court).
In March 2000, SAA concluded a collective agreement with AUSA and two other trade
unions (SATAWU & Solidarity). In terms of the agreement SAA could sell its infrastructure
and support services departments as going concerns to LGM SA Facility (LGM).
Shortly after its agreement with the unions SAA concluded an agreement with LGM
(for the outsourcing of the infrastructure and support services). The agreement was set
to expire in 2010. However, SAA retained its option to renew the agreement with LGM
after the expiry date.
The agreement recorded that Section 197 of the LRA applied to it, and that the
employees who were involved in the performance of the services being outsourced
at SAA were to be transferred to LGM, together with their contracts of employment.
It was further agreed that, when the outsourcing agreement terminated, SAA would
retain the right to transfer the services and/or functions of all LGA and SAA employees
back to itself or to a third party and to obtain the transfer or assignment of all third
party contracts. It is this provision in the outsourcing agreement that was of critical
importance to the dispute which followed.
During 2007 there was a change of ownership of LGM. Since change of ownership
was specifically stated as a ground for termination SAA decided that it was entitled to
terminate the outsourcing agreement. In June 2007, SAA, having given LGM notice of
termination, put out advertisements calling for tenders for the various services that had
been performed by LGM under the outsourcing agreement.
SAA adopted the stance that it had no obligation towards the staff of LGM who
had been engaged in rendering the services provided in terms of the outsourcing
agreement. These were the staff members whose contracts of employment had, during
2000, been transferred from SAA (the old employer) to LGM (the new employer) under
Section 197 of the LRA.
AUSA wanted to ensure that the termination of the outsourcing agreement did not
result in job losses for members. The union had hoped that SAA and LGM would apply

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 377
Section 197 of the LRA if SAA transferred back to itself the business that it had
initially sold and transferred to LGM. However, AUSA could not obtain the necessary
assurance as both SAA and LGM took the view that Section 197 did not apply in
respect of the transfer under consideration.
SAA’s viewpoint was that there was nothing in the outsourcing agreement that
obliged it, on termination of the agreement, to transfer the affected employees back
to itself or to transfer the services back to SAA. Neither did SAA think that, if they gave
the business to another contractor, they would also have to transfer the employees to
that contractor.
LGM had, on its part, decided that, owing to the loss or termination of the
outsourcing agreement, it would have to commence with the exercise in terms of
Section 189 of the LRA in order to ultimately retrench the affected employees for
operational reasons.
AUSA felt that it needed to act swiftly in order to protect the interests of its
members and declared a dispute with both parties.
The case was referred to the Labour Court which pronounced in favour of SAA,
indicating that the relevant section of the LRA dealt only with ‘first generation
transfers’ and that the transfer back to the SAA did not give the employees concerned
any rights in terms of the Act.
The union responded by taking the case to the Labour Appeal Court,

Argument
SAA and LGM agreed that Section 197 of the LRA applied in respect of the transfer
of the business from SAA to LGM in 2000. However, SAA disputed the fact that when
the outsourcing agreement came to an end (by way of termination in June 2007)
and SAA decided not to contract the services out to another contractor but rather to
perform the services itself by using its own existing employees, it was still required
to comply with Section 197.
SAA based its argument on the literal (narrow) interpretation of the definition
of ‘transfer’ in Section 197, pointing out that Section 197 requires that the transfer
of the business must be effected ‘by’ the ‘old employer’ (SAA) to the ‘new employer’
(LGM), which requirement was met in respect of the original outsourcing agreement.
However, according to SAA, Section 197 does not apply in reverse: that is, to the
transaction where LGM must transfer the business back to SAA, as this latter
transaction is not a sale of a business by LGM to SAA. In their opinion, the transaction
was simply the consequence of triggering a term of the outsourcing agreement.
AUSA argued for the application of the purposive (wide) interpretation of Section
197. Its argument was based on the fact that the Constitution of the country protects
labour rights and this protection, read together with the purpose of the LRA and

378 Labour Relations: A southern African perspective

 international best practice, ultimately obliges the Court hearing the case to promote
the spirit, purpose and objects of the Bill of Rights.

Pronouncements

At the Labour Appeal Court

The Labour Appeal Court held that Section 3 of the LRA obliges it, in applying the
provisions of that Act, to give effect to its primary objectives, in compliance with
the Constitution and international best practice: further that it is clear that it is
required of the Court to interpret the LRA purposively (widely). The Court held that
the core objectives of the LRA, as highlighted by the Constitutional Court in the
case of NEHAWU v University of Cape Town (2003), are two-fold: to ensure security/
continuation of employment of the employees who are affected by the transfer of the
business; and to facilitate transfers of business.
If these core objectives are pursued, the new employer will not have to look for
workers who would do the work or have to train new recruits for work that they have
not done before. The new employer would have at its disposal employees who have
been doing the work and have experience in the work. None of the two objectives above
would be achieved if Section 197 were to be interpreted to entail job losses for the
employees who were transferred with the business when the first outsourcing occurred.
The Court rejected the legal arguments advanced by SAA. In the Court’s opinion
the literal (narrow) interpretation is destructive of the objective in Section 197. The
Court then sketched a scenario illustrating what would happen if the section was
interpreted in the way argued by SAA. ‘An employer who wanted to get rid of its
employees in a certain part of the business or who wanted to sell its business without
the workers would merely transfer its business by way of outsourcing to an outsourcer
in which case the contracts of employment of the employees would automatically be
transferred to the other employer. This would be for a certain period, for example six
months or a year or more. At the end of that period the outsourcer could transfer the
business back to itself, but without the re-transfer of its former employees – this on
the basis of the argument that such transfer is not made ‘by’ the old employer and
therefore, Section 197 would not apply. If all that the employer wanted to do was
to get rid of those specific employees so that it could employ new ones, it would
then be free to do so. The workers would no longer be its concern. They would be
the concern of the organisation to which the business had been outsourced. If the
employer wanted to sell the business free of the ‘burden of the workers’, it would be
free now to sell the business without the workers.
The LAC, on the other hand, echoed the view adopted by the European Court
of Justice (international best practice) in similar cases, which provides that ‘if the
business moves, the workers move with it’.

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 379
In emphasising the real purpose of Section 197, the LAC stated the following:
It is difficult for me to see what purpose sec 197 can be said to aim to achieve
if the protection which it gives to workers against job losses is as limited as it
has to be conceded would be the case if the word ‘by’ in the section was read
to mean what it normally means. … The situation in which the workers need
protection the most is where they are dealing with the employers who are
trying to get rid of them. That is where sec 197 counts.

The LAC concluded that Section 197 applies not only in instances where employer
A outsources part of its business as a going concern to employer B, but that it also
applies in reverse – that is, where it happens later on during the outsourcing process
that for one reason or another, employer A has to take back from employer B, the
entire part of the business that was initially outsourced to employer B, then he also
has to take back the employees involved. .
The LAC was firm in holding that business transfer transactions on their own do
not matter at all if the workers who are employed in the part of the business being
transferred to and fro are lost [whether intentionally or inadvertently] somewhere in
the system. These workers require protection and they must at all times be moved
with the business. This is, according to the Court, the underlying purpose of Section
197 of the LRA.

At the Supreme Court of Appeal

The matter did not end there. SAA was not satisfied with the LAC’s findings and
decided to refer the decision to the Supreme Court of Appeal. This Court declared
that the LAC had erred in giving the word ‘by’ another meaning than intended and
ruled against the Labour Appeal Court’s findings, whereupon AWUSA, now joined by
the South African Transport and Allied Workers Union, applied to the Constitutional
Court for leave to appeal against the SCA’s decision.

At the Constitutional Court

The majority decision in the Constitutional Court noted that ‘the main area of dispute
was not so much what was being transferred but really by whom’. The real starting
point was the concepts of old and new employer. These concepts evolve. They are not
static. The Court did not believe that the focus should be on the generation of the
transfer or on whether the business was outsourced or not ... [‘the] true enquiry is
whether there had been or would be a transfer of a business as a going concern by the
old employer to the new employer’. The Court declared itself in agreement with the LAC
as to the interpretation of the word ‘by’ in that whoever was the transferring entity
would be the old employer and the entity to whom the business was transferred would
be the new employer. This conclusion was supported by the fact that the clause in the
original agreement provided for the ‘transfer’ back to the SAA.

380 Labour Relations: A southern African perspective

 In the opinion of the Court the union would have a good chance of success if it
appealed and a declarator was therefore granted.

Discussion
This case highlights the complexity of these situations. The Act cannot possibly deal
with every situation which might arise. Therefore, a particular situation cannot be
judged by the letter of the law. Much of the eventual decision as to right or wrong
will relate to the intention of the parties and the effect on the employees concerned.

Conditions of Employment
Sub-section (3) provides some leeway to the new employer by explaining that the terms and
conditions of the transferred employees should not, ‘on the whole’, be less favourable than
those enjoyed under the old employer. The law thus recognises that it may not always be
feasible to provide exactly the same conditions as those enjoyed previously. The legislators
would apparently be satisfied as long as, on average, the employees are not worse off.
However, where a collective agreement with a recognised union or a bargaining council
agreement is in force, the same conditions must be provided. This also applies to any
arbitration award made in terms of the Act, the common law or any other law.
Employees may be transferred to pension, provident or retirement funds that are different
from the ones they belonged to with the old employer. The only condition is that the
requirements of the Pension Funds Act should be met. Section 14 of the latter Act requires
that the Registrar must be satisfied that the transfer is reasonable and equitable, that it
recognises the rights and reasonable expectations of employees in terms of the fund rules,
as well as the additional benefits which have become established practice.

Variation by Agreement
Section 197(6) allows the old or new employer, or the old and new employer acting jointly,
to conclude an agreement with a representative union or a workplace forum, or, where
none of these bodies exist, with the elected representatives of the affected employees. This
agreement may bypass sub-section (2). As indicated, this section provides for the automatic
transfer of contracts as well as the rights and responsibilities of the old employer towards
employees. It can be inferred from sub-section (6) that the employer(s) and the representative
body could agree that employees will not be transferred, but retrenched, at which stage the
provisions of Section 189 will apply. The employer must disclose all relevant information
to the representatives.
In Douglas & Others v Gauteng MEC for Health the Court stated that:
To meet the requirements of section 197(6), an agreement must comply with the
terms of that section in relation to both the identity of the parties as well as the
process that is prescribed by which any variation to the consequences of section

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 381
 197 should be sought. First, the agreement must be concluded between the old
employer, the new employer (or the two employers acting jointly) on the one hand,
and on the other hand, the appropriate person or consulting party identified
after reference to section 189(1). In brief that section contemplates a hierarchy
of representative parties who are entitled to conclude agreements that ‘contract
out’ of section 197.

The fact that the transfer agreement does not meet the requirements of Section 197(6) does
not mean that, if employees question its legality the agreement is necessarily voidable; nor
is the agreement necessarily invalid for that reason.

Liabilities Post Transfer

In terms of sub-sections (7) to (10), the old and new employer must agree to a valuation
of the leave pay, severance pay or any other payments which would have accrued or been
payable to transferred employees as on the date of transfer and thereafter conclude a written
agreement stating which employer will be liable for these payments or for which proportion
each employer will be liable. The agreement must also indicate what arrangements have been
made for the payment of these amounts should an employee become entitled to payment.
The terms of this agreement have to be made known to each transferred employee. If an
employee, during the 12 months after transfer, becomes entitled to payment arising from a
retrenchment or from the new employer’s liquidation/sequestration, both the old and new
employer will be jointly and severally liable unless the old employer can prove that he has
complied with all the provisions of Section 197. This notwithstanding, the old and new
employer will remain jointly and severally liable for any claim concerning a condition of
employment that arose prior to the transfer.
The purpose of these clauses is to ensure that there are sufficient safeguards against
situations where employees leave or are retrenched immediately after the transfer and the
issue of payment is then tossed between the old and the new employer. If no agreement has
been reached, the employers can be sued either jointly or individually.

Insolvency
Section 197A applies specifically to the transfer of a business where the old employer is
insolvent (bankrupt) or where a scheme of arrangement or compromise is entered into in
order to avoid winding up or sequestration for reasons of insolvency. If a transfer of a
business takes place in these circumstances and no agreement has been entered into with
the employees involved or their representatives (see above), the following principles apply:
■■ The new employer is automatically substituted in the place of the old employer in all
contracts of employment in existence immediately before the old employer’s provisional
winding-up or sequestration.
■■ All the rights and obligations between the old employer and each employee at the time of
the transfer remain rights and obligations between the old employer and each employee.

382 Labour Relations: A southern African perspective

■■ Anything done before the transfer by the old employer in respect of each employee is
considered to have been done by the old employer.
■■ The transfer does not interrupt the employee’s continuity of employment and the
employee’s contract of employment continues with the new employer as if with the old
employer.
■■ The rights and obligations of the old employer in respect of collective agreements and
arbitration awards also become the rights and obligations of the new employer.

Contrary to other transfers, this section does not hold the old employer liable after the
transfer and does not oblige arrangements between the two employers for future pay-
outs to employees. However, Section 197B obliges an employer facing financial difficulties,
which may result in winding up or sequestration, to advise a representative union and
workplace forum or, in their absence, the elected representatives of employees, of this fact.
Where application for sequestration or winding-up is received, the consulting party must be
provided with a copy of the application within two days of its receipt or, if the application
is urgent, within 12 hours.

Evaluation
It is evident from the above that the transfer of business is regarded as a serious employment
issue, and that the main concern of the legislators is the protection of affected employees.
This is further proved by the inclusion under automatically unfair dismissals of a dismissal
for a reason related to the transfer of a business.

Case Review: Transfer of Contract Following

a Merger
Mwamweda v University of KwaZulu-Natal
(CCMA: KNDB8712040, 18 March 2006)
Background
Mwamweda was appointed to the position of Professor and Dean of Education at
the then University of Natal in January 2002. His appointment was for a fixed period
of five years. Subsequent to his appointment, the University of Natal merged with
the University of Durban-Westville to become the University of KwaZulu-Natal, the
effective date being 1 January 2004.
According to Mwamweda, he was first told that his contract would be transferred
to the new institution and that there would be no change to his contract conditions.
However, in November, a circular indicated that certain jobs, Mwamweda’s included,
were going to be advertised and incumbents had to apply for positions. Mwamweda
questioned the need to apply for his own position, and when no information was

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 383
forthcoming, wrote a letter to the Head of Human Resources, a Ms Scheepers,
enquiring what was happening to his contract since his post was being advertised.
Scheepers responded that nobody had a position at the new institution. Before this,
Mwamweda had also spoken to Professor Mazibuko, at the time the Executive Dean
of Humanities, who had informed him that his contract was with the University of
Natal, and that he had no contract with the University of KwaZulu-Natal. Because
of this uncertainty, Mwamweda decided to reapply for his position. Apparently, he
and the Head of Education at the then University of Durban-Westville were the only
applicants.
Mwamweda later testified that, having wide experience of interviews for senior
positions, he had found his interview ‘very strange’. He ascribed most of the irregularities
to the fact that there was acrimony between himself and the Vice Chancellor, Professor
Makgoba. This had started when he wrote a letter to the Sunday Times suggesting that
Makgoba should come clean on the question as to whether or not he had embellished
his CV. He did not agree with Makgoba’s view of democracy. Evidently the latter had
indicated to him that his job was in jeopardy and had complained that Mwamweda
was mispronouncing certain South African names. Mwamweda felt that Makgoba was
hostile throughout the interview. The matter of his age was also raised by the panel.
Following the interview, the other candidate was appointed to the position of Dean
of Education at the new institution. Mwamweda stated that he could not understand
how the other candidate could have been appointed in his stead since, although she
met the minimum requirements, she could not match him in experience. According to
Mwamweda, he did not have a definite position after the merger, a situation he found
devastating. To occupy himself, he had taken to teaching some classes.

Argument
In bringing his case to the CCMA, Mwamweda alleged that he had been unfairly
demoted. Although he was being paid the same salary as before, he had lost the
status of Dean. He had been appointed as a Dean and not as a person receiving a
certain salary package. The position of Dean included a number of functions, and
the fact that he was no longer performing these functions amounted to a demotion.
Mwamweda also claimed that there had been no consultation with him regarding
his changed position.
The Senior Manager Employee Relations, a Mr Finden, argued that, although
the contracts of all employees were transferred to the new institution, there was a
difference between contracts and posts and the latter were not transferred. With the
merger, overlaps occurred, and it became necessary to deploy certain persons and
advertise positions such as the deanships. Finden also indicated that Mwamweda’s
age was a problem, that he should never have applied, as, in Finden’s words, ‘a 59- or
58-year-old applicant for deanship would not be around for too long to provide the
required leadership’. He could not explain why the advertisement had not indicated

384 Labour Relations: A southern African perspective

 that age would be a consideration. Although he conceded that removal of status on
its own could constitute a demotion, he was of the opinion that this did not apply to
Mwamweda’s case as ‘the position of Dean ceased to exist’. According to Finden, after
the merger and before the interview, Mwamweda did not occupy any post; in fact,
nobody occupied a post, but employees had not been told this as it might have caused
consternation. After the merger had taken place, Mwamweda was ‘merely performing
the functions of a Dean’, but ‘actually he was not a Dean’. The day after the merger,
the position of Dean of Education at the University of Natal no longer existed. With
the merger, the university councils of the respective institutions had dissolved, and it
would be no use transferring persons with posts, as this would amount to ‘transferring
them into a void’.
Mazibuko indicated that she had discussed Mwamweda’s position with him, an
assertion denied by the latter. Her understanding of the situation was that he was an
external candidate, as he had a fixed-term contract. She had sought advice and been
told that contracts had to be honoured in the new structure. However, the structure
would be such that there would be only eight, instead of sixteen, Deans. Therefore,
all Deans had to apply for the eight positions and those not successful would be
redeployed. According to Mazibuko, Mwamweda was Dean until the new structure
was put in place. When asked of which institution he was Dean, she replied that he
was ‘Dean full-stop’. She could not understand why Finden had said that the posts had
fallen away.

Pronouncements
In his analysis of argument, the Commissioner pointed to the relevant provisions of
Section 197 of the Labour Relations Act and Section 23 of the Higher Education Act,
as well as Mwamweda’s contract of employment. Both Acts make provision for the
automatic transfer of contracts and for the rights and obligations of the old employer
to be transferred to the new employer. As the Commissioner put it, the rights outlined
in the Higher Education Act were placed there ‘to assure all staff of employment in
terms of their existing contracts. It informs them that their existing conditions of
service, their benefits and salaries, will remain intact’.
It was noted that, while the university maintained that it had honoured
Mwamweda’s contract in every way and was paying him the same salary as before,
the latter’s case rested on the fact that he was no longer the Dean of Education. In
the Commissioner’s words,
the removal or the stripping of the applicant of deanship by virtue of the
merger of the institution does not sit comfortably with the provisions of
Section 197, as well as those of Section 23, read together with the applicant’s
contract of appointment. It seems to me that it is unequivocally the case
that the applicant was stripped of his deanship which was awarded to him in

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 385
 terms of his contract of employment … The obligation to honour that contract
passed on to the new employer.

The Commissioner went on to point out that the provisions of Section 197 of the
Act are automatic unless otherwise agreed in a collective agreement. Therefore, the
new institution was obliged to retain Mwamweda in the position of Dean on terms
no worse than those in his contract. The Commissioner concluded that the removal
of Mwamweda’s deanship amounted to a demotion, explaining, with reference to
Ndleda v SA Stevedores, that a demotion occurs ‘where a change is effected to the
employee’s terms and conditions of employment such that, the change results in a
material reduction in the employee’s remuneration, responsibilities or status’.
The university was ordered to reinstate Mwamweda in the position of Dean
of Education, with retrospective effect as from 8 December 2004, and to pay the
applicant’s costs.

Discussion
This case illustrates the results of entering into a merger without following proper
processes as regards the transfer of staff to the new institution.
As the Commissioner noted, there were avenues available in the face of restructuring
problems. Section 197(6) allows for exemptions from the imperative of automatic
transfers by way of a collective agreement with a workplace forum and recognised
union, or, if none exist, with any union representing employees or with representatives
of employees. Instead of engaging in meaningful consultation and planning, the
university in this case, by its own admission, kept employees in the dark for fear that
information on its perspective of their position would ‘cause consternation’. To justify
their stance with regard to Mwamweda, the person responsible for employee relations
engaged in a semantic exercise asserting a difference between contracts and posts. As
the Commissioner rightly noted, this distinction is ‘illusory rather than real’. In fact, it
is absurd. An employee’s contract is for a specific post. If his contract is transferred, it
is assumed that it will be for the same post. The fact that there may not be sufficient
posts available in the new structure is a completely different matter. Equally absurd
was Mazibuko’s response that the applicant had no contract with the University of
KwaZulu-Natal, when she knew full well that all contracts had to be transferred. This
absurdity is topped only by her assertion that Mwamweda was an ‘external’ candidate.
Mergers do bring about problems of duplication, particularly in the higher echelons
of institutions and organisations, where it is not easy to find similar positions for
redundant persons. This is why it is necessary to be proactive and transparent,
to discuss the problems which are foreseen with the incumbents and to consider
alternatives, including the option of retrenchment, either before or after a merger.
Keeping employees on a string, and then placing them where management sees fit, is
not a recommended procedure.

386 Labour Relations: A southern African perspective

The Role of the HR/IR Manager
As indicated at the beginning of this section, the human resources or labour relations
practitioner needs to become involved from the outset in any plans for mergers, acquisitions,
alliances and disposals. Not only are there numerous employee-related aspects which have
to be considered during the negotiation of these events, but consideration has to be given to
the fact that employees have eventually to be informed and to the effect that news of these
events will have on the morale of the workforce. Initial negotiations will involve mainly
senior management and small project teams, which should, preferably, include a human
resources practitioner. At this stage, consideration needs to be given to the following:
■■ whether all contracts will be transferred, or whether there will have to be rationalisation,
and, if so, how this process will be undertaken
■■ if contracts are to be transferred, whether terms and conditions of service will be the same
or similar (this will include the employer’s contribution to pension and medical aid funds)
■■ where two organisations are to merge, how differing terms and conditions and differing
policies can be brought together
■■ how a unified culture between two vastly different organisations is to be achieved
■■ whether salary bands and job evaluation systems can be integrated
■■ whether there are existing arrangements and agreements with unions and how these will
be transferred or amalgamated (the organisations may each have recognised a different
union)
■■ promises made to, or obligations towards, existing employees, and how these are to be
fulfilled or met
■■ the possibility of varying job content for, particularly, senior employees, and how this
and other questions of promotion are to be handled
■■ the cost of relocations where these become necessary
■■ the provision of physical accommodation and facilities to transferred employees
■■ the continuation of affirmative action initiatives
■■ the possibility of outsourcing certain functions and the contractual implications as
dictated by Section 197
■■ where transfers are transnational, the differing labour legislation from one country to
another and the effect of this on the objective of achieving unified terms and conditions
of employment
■■ the possibility of transnational support among unions and union federations and the
implications of this for the organisation
■■ the cost of possible redundancies, changes in conditions of service, possible changes
in systems and monies to be paid to employees that need to be calculated before
transactions are finalised.

Once the negotiations have been completed and the transfer becomes imminent, employees
and their representatives need to be informed. A change of such dimensions causes a great deal

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 387
of uncertainty, with a concomitant effect on employee morale. Therefore, communications
need to be handled with great sensitivity. Employees need to be given detailed information,
preferably in small groups where questions can be fielded, and uncertainties cleared up.
Where a union or other representative body exists, these have to be involved, particularly
if redundancies are being considered. In terms of Section 197, any changed terms and
conditions of employment will have to be negotiated with a representative union. In this
regard, the need for disclosure of relevant information has to be taken into account.
The need for communication is ongoing. Information cannot be supplied in a ‘one-off’
process. Communication will have to continue, and feedback should be obtained, even after
the transfers have been effected. The process is so complex that problems are bound to
occur, and these have to be dealt with as they arise.

Conclusion
Dealing with no-fault terminations is the most difficult task of the human resources practitioner.
It is evident from the contents of this chapter that such terminations cannot be undertaken
in haste. They require careful planning, consultation with all relevant parties, consideration
of all possible problems and alternatives, and sensitivity to the fears and uncertainties of all
employees as well as the hardships to be suffered by those who lose their jobs.

Suggested Questions/Tasks
•• Draw up a detailed retrenchment policy and procedure for your organisation. Divide
into three groups, namely management, the union and the Court. Management
and the union role play their interactions and negotiations until the eventual
dismissal of certain employees. At the end they produce a file containing all relevant
correspondence as well as minutes of meetings. The matter is then taken to the
Labour Court by the union. The union must set out grounds for the referral while the
company must respond in writing. Both parties then present their case and engage in
argument. The Court does the necessary questioning and finally produces a reasoned
and substantiated verdict which is relayed verbally and in writing to the other parties.
•• You employ 250 persons. It is now May 2014. In September you retrenched 20
employees and now want to make 10 more redundant. What process would you
follow and how could the union respond?
•• Indicate whether the following would qualify as ‘the transfer of a business as
a going concern’. Supply reasons for your answer and outline the process to be
followed in each case:
oo M and M are closing down their clothing factory. The factory has been bought
by J and J, which intends to manufacture cardboard boxes.
oo EXPO Consultants have decided to outsource their window cleaning operation.
The company to which the operation has been outsourced specialises in the
cleaning of windows and already has a large full-time staff.

388 Labour Relations: A southern African perspective

 oo The Getyou Bank has decided to acquire the Dontcare Insurance Company.
oo Cantlast, a large funeral service, has declared itself insolvent. Nobody is
interested in buying this business.
•• You are the HR Manager in an organisation which is about to take over another
business as a going concern. The directors are worried that they may not be able
to employ the other party’s employees.
oo Could they possibly avoid taking over the employees? Explain. Also indicate
what the other party would have to do.
oo What advice would you give them if avoidance proves impossible?
oo What would have to be done if, six months down the line, they would want to
retrench some of the transferred employees?

Sources
Brassey, M, Cameron, E, Cheadle, H & Olivier, M. 1987. The New Labour Law. Juta.
Douglas & Others v Gauteng MEC for Health (2008) 5 BLLR 401 (LC), Butterworths Labour Law Reports,
February 2008. Butterworths.
Hogg, PW. Professor Emeritus, Osgoode Hall Law School, York University. Available: https://www.
osgoode.yorku.ca/faculty-and-staff/hogg-peter-w/. (Accessed 28 August 2018).
Industrial Law Journal, vol 20, September 1999. Juta.
Industrial Law Journal, vol 21, March 2000. Juta.
Industrial Law Journal, vol 27, October 2005. Juta.
Industrial Law Journal, vol 28, September 2007. Juta.
Insolvency Act, 1936 (24 of 1936), Government Gazette, vol 366 no 16861. Pretoria: Government
Printer.
Labour Relations Act (66 of 1995), Government Gazette, vol 366 no 16861. Pretoria: Government Printer.
NEHAWU v University of Cape Town (2003), NEHAWU v University of Cape Town & Others (2003)
Industrial Law Journal, vol 95. Juta.
Oosthuizen v Telkom SA Ltd 2007, 11 BLLR 1013 (LAC), Butterworths Labour Law Reports, November
2007. Butterworths.
Useful websites
juta.co.za/law/. (Accessed 17 August 2018).
www.justice.gov.za. (Accessed 17 August 2018).
www.saflii.org/. (Accessed 17 August 2018).

Chapter 7: No-fault Terminations: Incapacity, Operational Requirements, Mergers and Transfers 389
 8

Employment Equity

Chapter Outline
OVERVIEW
RATIONALE
DISCRIMINATION
The Labour Relations Act of 1995 • Discrimination in Terms of The Employment Equity Act
• Disputes centring on Alleged Discrimination
PRE-EMPLOYMENT TESTING
Medical Tests • HIV Testing • Psychological Testing and Other Similar Assessments
HARASSMENT
Definition • Employer Liability • Policy and Procedure
THE INHERENT REQUIREMENTS OF THE JOB
FAIR VERSUS UNFAIR DISCRIMINATION
THE CONCEPT OF EQUAL CONDITIONS FOR EQUAL WORK OR WORK
OF EQUAL VALUE
IMPLICATIONS OF NON-DISCRIMINATION LEGISLATION FOR POLICIES, PROCEDURES
AND PRACTICES IN GENERAL
AFFIRMATIVE ACTION
The Legal Position | Definition of Affirmative Action | Designated Groups | Designated Employers
• The Nature of Affirmative Action • Duties of Designated Employers • Problems with Affirmative
Action | Implementation for the Wrong Reasons | Targets versus Quotas | Window Dressing | Shortage
of Suitably Qualified Candidates | Too Little Emphasis on Training and Development | Perceptions of
Reverse Discrimination | Definition of ‘black people’ | Regional versus National Demographics
• Implementing an Affirmative Action Programme | Nomination of Responsible Manager | The
Consultative Body | Agreement on Basic Principles and Processes | Involvement of All Employees |
Review of Existing Policies, Practices and Procedures | Identification of Barriers | Establishing
a Workplace Profile • The Equity Plan | Numerical Goals and Time Frames | Other Affirmative
Action Measures | Retention, Training and Development | Process for Implementation |
Monitoring and Evaluation | Grievance and Dispute Procedures | Communication and Reporting
| The Need for Periodic Reviews
• Implementing the Affirmative Action Plan | Selection and Appointment of New Incumbents
| Using Weighted Criteria for Selection | Advertising Vacancies | Interviews and Assessments
| Targeting All Levels of the Organisation | Integrating Employees into the Organisation |
Monitoring and Performance Appraisal | Career Planning and Career Development | Further
Strategies • Problems when Implementing the Affirmative Action Plan | Ensuring Fairness |
‘Suitably Qualified’ | Internal Recruitment | Candidates-in-waiting and Contract Employees |
Retrenchment and the LIFO Principle | Employing the Disabled
CONCLUSION
SUGGESTED QUESTIONS/TASKS
SOURCES

Chapter 8: Employment Equity 391

 Overview
The effective elimination of discrimination and the implementation of measures to
ensure equitable representation of all races and both genders are absolutely necessary
in the conduct of labour relations in South Africa. These measures have also become
essential strategic considerations as they may prove to be a means of diversifying and
improving the quality of the workforce.
The Employment Equity Act of 1998 prohibited discrimination on a large number
of listed grounds and any other arbitrary ground while the Amendment Act of 2013
states that different pay and conditions of employment between persons doing equal
work or work of the same value may also be judged to constitute discrimination.
The Act obliges designated employers to produce and implement appropriate
equity plans designed, in the main, to promote equal employment opportunity and
equitable representation for the designated groups, namely black people, women
and people with disabilities.
The implementation of the equity plan requires consultation with representatives
of all employees, an analysis of the workforce profile, the establishment of numerical
goals and concomitant strategies to achieve a more representative workforce.
It also requires the employer to work towards eliminating barriers to the
employment of the targeted groups, to institute measures to promote diversity and
to provide reasonable accommodation for previously disadvantaged employees.
Equity plans have to be submitted to the Director-General. The Director-General
may apply to the Labour Court to impose a fine in accordance with Schedule 1, if a
designated employer fails to prepare or implement an employment equity plan.
The process of affirmative action, like any change process, is fraught with
numerous problems and pitfalls. Perceptions as to the means of achieving equity
differ, and in some instances the process is merely cosmetic. As in other change
processes, the sincere commitment of all those involved is required if affirmative
action is to work.
The National Defence Force, National Intelligence Service and the South African
Secret Service are excluded from the provisions of the Act.

392 Labour Relations: A southern African perspective

Rationale
Since the inclusion of the Unfair Labour Practice definition in the Labour Relations Act
of 1979, the concept of equity or fairness in employment practices has gained increasing
importance. Despite this provision, and because of the history of discrimination in South
Africa, a vast number of people were still not regarded as equals in the workplace, nor were
they granted equal opportunity to employment and advancement. This was demonstrated
by the fact that, in the early 1990s, white males, who constituted just over six per cent of
the total population, occupied more than 96 per cent of top positions in organisations, while
the lower levels of organisational hierarchies were predominantly black.
In the light of past history and the ingrained nature of prejudice and privilege in the
workplace, the legislators decided to intervene actively in order to not only prevent further
discrimination, but to purposefully promote the employment and advancement of persons
disadvantaged by previous policies. They believed that mere equality of opportunity
(allowing free competition) would not be enough as many contestants would commence
with a handicap: in short, that true equality and equity would be achieved only by strong
measures against discrimination and by the purposeful, planned placement and development
of persons who had been denied equal opportunities in the past.

Discrimination

The Labour Relations Act of 1995

The first legal intervention towards greater equity came in the form of a rewording of the
definition of an Unfair Labour Practice to focus specifically on discrimination. Section 2(1)
(a) of Schedule 7 of the Labour Relations Act of 1995 (since deleted) defined an Unfair
Labour Practice, inter alia, as one involving ‘the unfair discrimination, either directly or
indirectly, against an employee on any arbitrary ground, including, but not limited to:
■■ race
■■ gender
■■ sex
■■ ethnic or social origin
■■ colour
■■ sexual orientation
■■ age
■■ disability
■■ religion
■■ conscience
■■ belief
■■ political opinion

Chapter 8: Employment Equity 393

■■ culture
■■ language
■■ marital status
■■ family responsibility.

Discrimination in terms of the Employment Equity Act

The issue of discrimination was taken up in greater detail with the passing of the Employment
Equity Act (Act 55 of 1998), which has both an anti-discrimination leg and an affirmative
action leg. (see also chapter 3 of this text)
Chapter 2 of the Act commences by placing the onus on all employers to promote
equal opportunity by eliminating discrimination in all employment practices and policies.
Significantly, the sections dealing with discrimination, medical testing and psychological
assessment also apply to persons applying for a position.
Section 6 of the Act prohibits discrimination on all the grounds listed above and adds
another three grounds namely, pregnancy, HIV status and birth, while the Employment Equity
Amendment Act of 2013 added the words ‘or any other arbitrary grounds’ to Section 6(1)
According to Section 6(3) harassment is also a form of discrimination and is prohibited
on any of the listed grounds.
The Employment Equity Amendment Act of 2013 contained a new Section 6(4) which
states that different conditions of service for persons doing the same work, substantially
the same work, or work of equal value, may be discriminatory if based on one of the listed
grounds.
Sections 7 and 8 of the Act provide guidelines as regards medical testing and psychological,
assessment. These sections, as well as Section 6, also apply to applicants for employment.

Disputes centring on alleged discrimination

Dismissals where discrimination is alleged are automatically unfair and must be processed
according to the relative provisions in the Labour Relations Act. Any other dispute related to
discrimination, harassment or testing may be processed through the CCMA for conciliation
and, if this fails, be submitted to the Labour Court for arbitration. In all these cases, except
one where the employee alleges discrimination on an arbitrary ground, the employer will
have to prove that the alleged actions/policies were not discriminatory. If the employee
alleges discrimination on an arbitrary ground, the onus of proof lies with him.
A new section 4(6)(b) contained in the Employment Equity Amendment Act of 2013
allows an employee who alleges sexual harassment and employees who earn less than the
earnings threshold prescribed by the Minister (at present R205 433.30 per annum) to take
their dispute straight to the Labour Court for arbitration. The Amendment Act also proposes
that, if all parties agree, the CCMA may arbitrate on any disputes in this category. Persons
who are not satisfied with the CCMA’s decision may appeal to the Labour Court.

394 Labour Relations: A southern African perspective

Pre-employment Testing

Medical Tests
Medical testing of candidates is permitted, but only under certain conditions. It will be
allowed only if it is permitted or required by law, and is justifiable in the light of:
■■ medical facts
■■ employment conditions
■■ social policy
■■ the fair distribution of employee benefits
■■ the inherent requirements of the job.

HIV Testing
HIV testing is prohibited unless declared to be justifiable by the Labour Court.
The special mention given to medical, and especially HIV, testing indicates that any
discrimination based purely on an employee’s medical condition has to be justified by the
inherent requirements of the job.
Hoffman v South African Airways (2000) 12 BLLR 1365 (CC) remains the leading
judgment on the issue of inherent requirements of the job and their relevance or otherwise
to HIV status and HIV testing. The Constitutional Court held that the refusal of South
African Airways (SAA) to employ Hoffman as a cabin attendant because of his HIV status
constituted unfair discrimination. SAA was not able to discharge its onus of proving that
being HIV negative is an inherent requirement for the job of a cabin attendant.
In IMATU v City of Cape Town, the respondent refused to employ a Mr Murdoch to
the position of firefighter after he had passed the physical fitness test with flying colours.
The refusal was based on the fact that he was an insulin dependent diabetic. The City’s
employment policy and practice was that they do not appoint insulin dependent diabetics
as firefighters. The union argued that the City’s failure to appoint Murdoch constituted,
inter alia, unfair discrimination on the grounds of disability. The City’s defence was that
its blanket ban on employment of diabetics is fair and justified on the basis of the inherent
requirements for the job of a firefighter. The Labour Court (LC) conceded that the risks
inherent in hypoglycaemia were real, but ruled that this did not support the imposition of a
blanket ban. The risk will vary from person to person. The LC, therefore, held that the City
had unfairly discriminated against Murdoch and had, accordingly, failed to discharge its
onus of proving the fairness of the discrimination.
While the first and third conditions listed above are relatively concrete, the second leaves
room for interpretation. ‘The fair distribution of employee benefits’ has been taken to mean
that, if an employee has to belong to a medical aid or pension fund, testing might be
justified, but the circumstances in which this would be so are not quite clear.

Chapter 8: Employment Equity 395

Psychological Testing and Other Similar Assessments
These forms of assessment are allowed only if they have been scientifically shown to be valid and
reliable can be applied fairly to all employees and are not biased against any person or group.
The purpose of this clause was to prevent the use of invalidated or culturally and
linguistically biased tests, often administered by unqualified practitioners. It was not the
intention to ban all forms of psychological or other similar assessments, but rather to
caution test users to ensure that:
■■ the test is both reliable and valid (that it tests what it is presumed to test)
■■ as far as possible, cultural bias has been eliminated
■■ it does not rely for success on a privileged educational or social background
■■ the language used can be understood by all test subjects.

The Employment Equity Amendment Act amended Section 8 of the Act to allow for
psychometric testing and other similar forms of assessment only if the tests have been
certified by the Health Professions Council or any other body authorised to do so.
The inclusion of ‘other similar assessments’ could be interpreted to include polygraph
examinations, as there is some controversy surrounding these.

Harassment

Definition
The Green Paper on Employment Equity defined harassment as any special attention to, or
treatment of, an individual on the grounds of his or her physical attributes. Under this it
also included hate speech.
The most common form of harassment in organisations is of a sexual nature, but policies
and procedures relating to this aspect should not exclude racial harassment and harassment
of, for example, the disabled. Essentially, harassment is:
■■ any form of behaviour, whether verbal, physical or by gesture, to which a person on
reasonable grounds might object.

It is particularly serious if the harasser is in a position of power. The Amended Code of Good
Practice on the Handling of Sexual Harassment in the Workplace elaborates on actions which
could constitute harassment and provides guidelines on handling complaints of harassment.

Employer Liability
Section 60 of the Employment Equity Act provides that an employer who is made aware of
a transgression of any provision of the Act and fails to act upon it will be deemed to have
committed that transgression. This applies also to cases of harassment.

396 Labour Relations: A southern African perspective

In Mokoena & Another v Garden Art Ltd & Another [2008] 5 BLLR 428 (LC), it was explained
that an employer becomes liable in terms of Section 60 of the EEA only if the alleged harassment
had been brought to his attention and if the employer failed to take proper steps to prevent
further harassment of the employee concerned. In that case the Court found that the employer
had reacted to the employee’s report of sexual harassment by issuing a written warning and
no further incidents had occurred. The employer was not liable in damages to the employees.

Policy and Procedure

A harassment policy and procedure should be put in place in order to ensure that all
complaints are effectively and fairly handled. Such a policy creates awareness of the issue
and gives those who are subjected to harassment the reassurance that their complaints will
be dealt with in a serious and sensitive manner.
Harassment is a sensitive issue. Complainants need to be assured of confidentiality
and are often afraid to lodge a complaint. Therefore harassment should preferably not be
dealt with by way of the disciplinary procedure. A separate committee of respected, trusted
persons should deal with this issue. Counselling of both parties is usually the first step.
Nevertheless, when harassment is invidious or continuous, the matter is handled in terms of
the disciplinary process and dismissal becomes a possibility.

Case Review: Sexual Harassment

Mokone v Sahara Computers (Pty) Ltd

(2010 31 ILJ2827 (GNP))
Background
In 2006 Mokone was employed in one of the company’s departments. Virtually from
the beginning, a male employee from another department, stating that all new persons
‘had to pass through’ him, made sexual overtures to her on a regular basis, at one time
touching her and at another pouring water over her. She eventually confided in a male
colleague whom she knew and could trust, but he advised her to drop the matter as the
person in question was ‘well connected’. The advances continued and, upon the advice of
another colleague, Mokone reported the harassment to the manager in her department.
The latter also referred to the fact that the accused was well connected. He promised
to protect her in the department, but advised her not to take the matter further as she
would probably be the one to be dismissed. However, the man continued to visit the
department when the manager was not there. On one occasion, when he noticed that
the manager was there, he addressed her in Tswana, threatening to have relations with
her and stating that sexual harassment was for whites, and not for him. Mokone did not
report the incident as her manager had previously said nothing could be done.

Chapter 8: Employment Equity 397

 At the end of 2007 Mokone did not attend the Christmas party for fear that the
person would also be there. When, a while later, the man tried to touch her buttock,
she reported him to the Human Resource Department. A disciplinary hearing was
held and the culprit was given a written warning. Mokone later stated that she had
been dissatisfied with the outcome and had wanted to appeal, but had received no
response from HR. The harassment did, however, stop.
In May 2009 Mokone resigned, citing personal reasons and that the company
had failed to protect her. She subsequently visited a counselling psychologist, who
later testified in court that he had found Mokone to be severely traumatised and
depressed, and that the events at Sahara Computers had impacted on her social,
academic, occupational and interpersonal life.
Mokone eventually took the company to court, claiming that it had failed to
provide a safe working environment and that its failure to take reasonable steps to do
so had been both negligent and unlawful. She claimed R150 000 for mental anguish,
psychological trauma and impairment to dignity and R50 000 for counselling costs.

Pronouncements
The North Gauteng High Court found that the second complaint (to HR) had been
handled immediately, that the employee had been sanctioned and that the harassment
had stopped. In that instance the company had acted appropriately. Nevertheless
the court went on to state that, if the first complaint (to the manager) had been
handled properly, the harassment would have stopped much sooner. The manager
should have reported the matter to HR. The fact that he did not do so proved that the
company’s disciplinary structures and processes were insufficient. The company had
acted unreasonably by failing to ensure that proper reporting of such incidents would
take place. The company was found guilty of negligence and ordered to pay Mokone
R60 000 as well as her costs in bringing the case.

The Inherent Requirements of the Job

Section 6(2) of the EE Act provides that discrimination based on the inherent requirements
of a job may be regarded as fair discrimination. The International Labour Organisation (ILO)
also considers the inherent requirements to be an acceptable reason for discrimination.
Article 1(2) of the ILO Discrimination (Employment and Occupation) Convention No 111
of 1958 affirms what is in the Employment Equity Act by providing that ‘any distinction,
exclusion or preference in respect of a particular job based on the inherent requirements
thereof shall not be deemed to be discrimination.’
As can be seen from the case review below, there are different interpretations of the
phrase, ‘inherent requirements of the job’. Where requirements such as physical fitness are
essential for a particular task, the use of these as criteria for selection is not problematic.
Nevertheless, it is important not to equate these requirements with stereotypes, for example,

398 Labour Relations: A southern African perspective

that only men would have the necessary strength to become lumberjacks or that women
have greater manual dexterity than men. Candidates, whatever their sex, race or age, should
be assessed for the requirements and not excluded on the basis of preconceived attributes.
Requirements which are not inherent in a job are more difficult to justify. However, the courts
have repeatedly stated that they will not interfere with standards set by the employer unless
these are grossly unfair, and as long as the standards can be justified. Selectors need to take
great care in listing competencies, requirements and criteria, and ensure that they are justified.

Fair versus Unfair Discrimination

The Employment Equity Act itself makes provision for fair discrimination, or, to avoid the
negative connotations that this word has achieved, differentiation, based on justifiable or
non-arbitrary grounds.
The question is: Would discrimination be fair only if it is based on one of the grounds
mentioned in the Act, namely, affirmative action or the inherent requirements of the job, or
will the fairness of the discrimination be judged in a wider context? The differentiation between
fair and unfair discrimination is complex. Fairness of differentiation cannot be judged only in
terms of the Act but should be judged within the wider concept of fairness. This would include:
■■ all the circumstances
■■ the position of and balance between the various parties
■■ the interests of all parties
■■ the norms and interests of the organisation and society at large.

Case Review: Arbitrary Grounds or Inherent

Requirements of the Job?

Whitehead v Woolworths (Pty) Ltd

(Labour Court: C122/98)
Woolworths (Pty) Ltd v Whitehead
(Labour Appeal Court: CA6/99)
Background
In 1997, Woolworths advertised a position for a Human Resources: Information and
Technology Generalist, to be based in Cape Town.
Ms Whitehead was interviewed and, offered the job. She turned down the offer for
reasons which are not quite clear, but which seemed to relate either to disagreement
about pay or to the fact that her husband was, at that time, based in Gauteng.

Chapter 8: Employment Equity 399

Later in the same year, the job was again advertised. The new applicants included a
Dr Young who, being in possession of two Honours degrees, an MBA and a doctorate in
which he specialised in IT, and with 17 years’ experience in HR and IT, was regarded as
a ‘star candidate’. By comparison, Ms Whitehead had a Bachelor’s degree in Industrial
Psychology and had far less experience. Nevertheless, Mr Inskip, for Woolworths,
decided to contact Ms Whitehead to find out whether her circumstances had changed.
As it happened, her husband had obtained a position in Cape Town, and it was agreed
that she would be interviewed while on holiday in that city. In the meantime, a
Mr Dickson had spoken to Dr Young, but he had not been interviewed by Mr Inskip.
At the interview, Ms Whitehead revealed the fact that she was pregnant. According
to Ms Whitehead, Mr Inskip declared that this would not be a problem. This was
denied by Mr Inskip, but what is clear is that he did not, at that stage, indicate
that her pregnancy might be a problem. Ms Whitehead testified that, following the
interview, she felt very confident. However, she did later admit that Mr Inskip had
made it quite clear that he still had to interview other candidates and that the
position could go to any one of them.
Two days later, Mr Inskip, according to Ms Whitehead, left a message for her saying
he wanted to ‘finalise the paperwork’. This was denied by Mr Inskip. He admitted that
he did later indicate to her that his superior found her pregnancy to be an obstacle
to her being placed in a permanent position and instead offered her a fixed-term
contract for five months (up to the time of her confinement). When questioned about
this, Mr Inskip explained that he had wanted to ‘keep his options open’ and had
considered the possibility of later changing the fixed-term contract to a permanent
one if another suitable candidate could not be found.
As it happened, Dr Young was subsequently interviewed, found suitable and
appointed to the position. Ms Whitehead declared a dispute and took the matter to the
Labour Court, which ruled in her favour and ordered Woolworths to pay her R200 000
in compensation. The order was subsequently overturned by the Labour Appeal Court.

Argument
Ms Whitehead claimed that she had been unfairly dismissed, alternatively that she
had been unfairly discriminated against, on the basis of her pregnancy.
In response, counsel for Woolworths admitted that Ms Whitehead’s pregnancy had
played a part in the decision not to appoint her, but submitted that job continuity
was a requirement for the position and that this requirement applied equally to all
applicants, and, secondly, that the requirement for job continuity was ‘rationally and
commercially justifiable’.

Pronouncements
The case elicited four different judgments, one in the Labour Court and three in the
Labour Appeal Court.

400 Labour Relations: A southern African perspective

Labour Court (Whitehead v Woolworths)
To counter the allegation of discrimination, Woolworths had stated that any person
who could not guarantee that they would be able to work for the next 12 months
would have been unacceptable. The Labour Court proceeded to explain why it did not
accept Woolworths’ assertion. The Court explained that Woolworths would have to
show that the candidate whom they appointed could be ‘guaranteed’ to continue in
employment for an uninterrupted period of 12 months. Since, according to the Court,
no such guarantee could ever be given, the discrimination was not justifiable.
The Court then turned to the submission that the requirement for job continuity
was justifiable in terms of commercial rationale. It concluded that ‘the fairness or
unfairness of discrimination cannot be measured against the profitability or for that
matter efficiency of the business enterprise.’
In summation, the Court concluded that:
To suggest that the requirement as in this case of uninterrupted job continuity
is an inherent requirement is to distort the very concept. If the job can be
performed without the requirement, as it can in this case, then it cannot be
said that the requirement is inherent and therefore prohibited under item
2(2)© of Schedule 7 to the Act.

(In this case, ‘Act’ refers to the Labour Relations Act.)

The Labour Appeal Court

Justice Zondo AJP

Justice Zondo noted, firstly, that when Ms Whitehead was interviewed for the
second time, she had been informed that there were other candidates who had to
be interviewed before the decision was made. When asked whether he would have
offered Ms Whitehead a permanent position if he had not found another suitable
candidate, Mr Inskip had replied that he probably would have. From this Justice
Zondo deduced that Ms Whitehead’s pregnancy did not put her ‘outside the category
of persons who could be offered the job’. However, if it was Ms Whitehead’s case that,
but for her pregnancy, she would have been appointed despite there being a better
candidate, then her case was based on ‘little more than a suspicion which is not
supported by any evidence’. Even if Mr Inskip had thought Ms Whitehead a suitable
candidate when he interviewed her, there was no reason why, after interviewing
Dr Young, he should not change his mind about ‘who was the most suitable for
the job’.
In the light of the above, Justice Zondo found that there was ‘no causal connection
between her not being appointed and her pregnancy’.

Chapter 8: Employment Equity 401

Justice Conradie JA
Justice Conradie dealt in detail with the continuity requirement and the fact that
Mr Inskip had not reacted to Ms Whitehead’s announcement that she was pregnant,
that he had not informed her that continuity might be a problem and had, in fact,
sent Ms Whitehead to consult the human resources personnel on a number of
matters, including maternity leave.
He then went on to question whether the job did require the uninterrupted presence
of an incumbent. He decided that it was not essential and that Ms Whitehead could,
as she had offered, have attended to the business during her maternity leave. There
had been a failure to prove that Ms Whitehead’s presence during the three months of
maternity leave was ‘crucial’ to the effective functioning of the unit.
Justice Conradie concluded by proposing that the Labour Court’s decision should
be upheld, but that the amount of compensation be reduced to R140 000.

Justice Willis JA
Justice Willis also focused on Woolworths’ contention that the position required
uninterrupted continuity of employment for a period of ‘between 12 to 18 months’
and that, because Ms Whitehead could not fulfil this obligation, the decision not to
employ her was ‘a rational and commercially justifiable one’. This led to the question
as to whether uninterrupted job continuity, a condition which Ms Whitehead, owing
to her pregnancy, could not fulfil, was indeed a primary requirement. If it was not,
then the only other plausible reason for not appointing her, was that she was ‘quite
simply, not the best candidate.’
Justice Willis then turned to the argument raised by counsel for Ms Whitehead
that, Section 2(2)(c) of Schedule 7 of the Labour Relations Act should be interpreted
to read that, unless discrimination was based on the inherent requirement of a
particular job, it would be unfair. In Justice Willis’ opinion this was not so as it
was ‘… not difficult to imagine situations outside of the inherent requirements of a
particular job where discrimination would not be unfair.’ In support of this assertion,
he referred to the following factors which needed to be taken into account in
establishing whether discrimination was fair or unfair:
i. the impact of the discrimination on the complainant
ii. the position of the complainant in society
iii. the nature and extent of the discrimination
iv. whether discrimination has a legitimate purpose and to what extent it achieves
that purpose
v. whether there are less disadvantageous means to achieve that purpose
vi. whether and to what extent the respondent has taken reasonable steps to address
the disadvantage caused by the discrimination, or to accommodate diversity.

402 Labour Relations: A southern African perspective

On the question of fairness, Justice Willis had the following to say:
Fairness is an elastic and organic concept. It is impossible to define with exact
precision. It has to take into account the norms and values of our society as
well as its realities. Fairness, particularly in the context of the LRA, requires
an evaluation that is multidimensional. One must look at it not only from the
perspective of prospective employees, but also employers and the interests of
society as a whole. Policy considerations play a role. There may be features
in the nature of the issue which call for restraint by a court in coming to a
conclusion that a particular act of discrimination is fair.

The judge disagreed with the Labour Court pronouncement that, because no guarantee
of continuity is absolute, pregnancy could not be taken into account. According
to Justice Willis, ‘Employers must base their commercial decisions on reasonable
probabilities. Risk-taking is intrinsic to enterprise. Risk is discounted, inter alia, by an
evaluation of probabilities’. In his opinion, the employer ‘took into account perfectly
rational and commercially understandable considerations. These considerations were,
in the circumstances, neither trivial nor insubstantial’.
Turning to the matter of profitability raised by the Labour Court, Justice Willis
agreed that ‘profitability is not to dictate whether or not discrimination is fair or unfair’.
Nevertheless, it was relevant. In conclusion, Justice Willis made it quite clear that ‘… as a
general rule, this court views with disfavour discrimination on the grounds of pregnancy,
even when it concerns applications for employment’. However, he was of the opinion
that ‘… in respect of this issue, as with so many others, the solution does not lie with
this court presenting society with unrealistic rules of law – however attractive they may
otherwise seem to be. Fairness refracts when passed through the prism of reality.’
The decision of the Labour Court was overruled and costs awarded against
Ms Whitehead.

Discussion
On the most simplistic level, the ‘Whitehead/Woolworths’ case points to the need
for interviewing and selection to be conducted by persons knowledgeable and skilled
in all aspects, individuals who will know that no indication of approval is given to a
candidate before the final decision has been made; that one does not hedge one’s
bets by offering alternative contracts a priori and that no comments irrelevant to
the selection criteria should be made or entertained. Furthermore, it points to the
necessity to establish competencies and criteria beforehand and to structure both
the interview and the final assessment of candidates around these. The entire issue
could have been avoided had these guidelines been followed.
If it is true that Dr Young was the best candidate, then a structured interview,
agreed and measurable criteria and the resultant assessment would have revealed

Chapter 8: Employment Equity 403

that, and there would have been no need even to mention Ms Whitehead’s
pregnancy. Alternatively, if it is true that uninterrupted job continuity was an inherent
requirement, this should have been spelled out beforehand and included in the criteria.
Ms Whitehead would then have been informed of this aspect immediately when she
announced her pregnancy. As it is, the case speaks of an ad hoc and disconnected
approach to the entire recruitment and selection process.
Five main issues of principle arise from the judgments, namely:
1) the interpretation of the term ‘inherent requirements’
2) the question as to when discrimination on one of the grounds prohibited by law
would be regarded as fair
3) the general application of the principle of fairness
4) the acceptance or otherwise of commercial rationale as justification for a
particular decision
5) the purpose of the anti-discrimination provisions.

The interpretation of fairness as closely related to societal norms raises the issue of
commercial rationale as a justification for a particular decision. Numerous previous
court decisions have accepted commercial rationale as a measure, yet the Labour
Court was most dismissive of this argument, without, however, providing any in-
depth reason for its stand, other than a passing reference to the Bill of Rights. Justice
Willis, on the other hand, accepted commercial rationale as a basis for his decision
and went to great lengths to explain why the courts should be careful not to impose
decisions that nullified this consideration.

Case Review: Age Discrimination

Evans v Japanese School of Johannesburg

(Labour Court: JS387/05, 12 and 14 June;
18 September 2006)
Background
The applicant, a Ms Evans, was employed by the Japanese School as an English
teacher in 1988. She had no written contract and nothing was said about how long
she would be working for the school. At that stage there was no written retirement
policy at the school. The practice appeared to be that employees retired at the age of
65, although previously some employees had worked till the age of 70.

404 Labour Relations: A southern African perspective

Evidently, Evans’s employers were quite satisfied with her performance and had told
her on numerous occasions that they wanted her to stay. In 2002, during a meeting
with one of the school committee members (at which her attorney was present),
Evans indicated that she would work to the age of 65. This was evidently recorded
in the minutes of the meeting. The committee members changed on a regular basis,
and on another occasion Evans told the then head of the committee that she would
stay until she was 65. He smiled and nodded. Towards the end of 2003 Evans was
reminded by the principal that her decision to work until 65 was on record. He added
that she should not make a fuss at the CCMA, evidently referring to a medical aid
issue she had taken to the Commission.
On 18 February 2004, Evans and other employees received letters stating that 60
would now be the retirement age of all employees. On receipt of the letter, Evans had
a meeting with one of the main members of the school committee, during which she
asked whether they still wanted her to work at the school. She received no response.
Suspecting that the policy had been implemented to get rid of her, Evans addressed
a letter to the committee member enquiring whether her contract would expire at
the end of the school year, which was 12 March 2004. Again, she received no reply.
On 8 March, in an attempt to clarify her position, Evans wrote to the principal,
stating that she was concerned that the new members of the school committee had
no knowledge of previous agreements and arrangements, such as the agreement that
she would retire at the age of 65 like other South African teachers. There was no
response to her letter, but on 8 March the school’s attorney sent her attorney a letter
requesting that they meet to discuss the matter. Nothing came of this; from March
to September 2004, nothing more was said to her. Evans, who had continued to go
to work every day, eventually addressed another letter requesting a meeting. At the
meeting, which took place in September 2004, Evans told the committee that she
wanted to resolve the matter and felt that she was perfectly fit to go on teaching
until she reached the age of 65. The head of the committee did not respond. On
16 November, Evans received a letter telling her that she had reached the ‘normal’
retirement age. At the time she was 61. There was no consultation with her. After
her attorney had responded, she received another letter stating that she had until
close of business on 30 November to make representations. This her attorney did on
her behalf. On 17 December, Evans received a letter from the principal stating that
her last working day would be 21 December. As noted by the Court, after 17 years
of service she was given three days’ notice to vacate her post. Other employees who
were also over the age of 60 continued to work at the school.
Evans subsequently filed three claims related to her dismissal. In the first claim, she
requested 24 months’ compensation for an automatically unfair dismissal in terms
of Section 187(1)(f) of the Labour Relations Act. In the second claim, she sought
damages in terms of the Employment Equity Act to the amount of R359 823.75 for
loss of income between January 2005 and September 2008. Her third claim related to
notice pay and allowances due to her at the time of her dismissal.

Chapter 8: Employment Equity 405

Pronouncements
With regard to the allegation of an automatically unfair dismissal, the Court noted
that the written employment contract eventually offered to Evans was silent on
the question of retirement and that the school had no written retirement policy.
The first intimation of any policy had been the letter addressed to employees on
18 February 2004. This letter proposed new conditions of service. The employer
could not unilaterally change Evans’s conditions of employment. The Court noted
that, although sub-section (f) of Section 187(1) declares a dismissal based on any
form of discrimination, including age, to be unfair, the same section provides that a
dismissal based on age will be fair if the employee has reached the normal or agreed
pensionable age. In Evans’s case, there was no indication that a pensionable age
of 60 had been agreed upon. In the light of this, the Court found her allegation of
an automatically unfair dismissal to be warranted and awarded her the maximum
allowable compensation of 24 months’ pay, amounting, in total, to R177 144.
The Court then turned to Evans’s claim for compensation in terms of Section 6, read
with Section 50, of the Employment Equity Act. The former section prohibits unfair
discrimination, while the latter allows the Labour Court to award compensation to
victims of unfair discrimination. It was noted that, although the Labour Relations Act
and the Employment Equity Act are similar in that they both prohibit a dismissal based
on unfair discrimination, the former Act places a limit on the amount of compensation
to be awarded. The Employment Equity Act contains no such limitations. The Court took
into account that other employees over the age of 60 were still employed by the school
and the fact that she had been dismissed on the grounds of her age. The Court found
the sum claimed by Evans to be justified. If she had not been dismissed, she would have
been employed until 20 December 2008. Since Evans had already been awarded the
sum mentioned above, the Court awarded her an additional R200 000 on the second
claim as well as R29 524 for the three months’ notice pay in terms of her contract.

Discussion
What is interesting about this case is, firstly, that it dealt with age discrimination,
and, secondly, that claims were lodged in terms of both the Labour Relations and the
Employment Equity Acts. The relevant sections in both Acts allow employees to allege
discrimination on the part of the employer, the only difference being that the Employment
Equity act does not place a limit on the compensation to be awarded by the Courts.
It is strange that other employees were allowed to continue after they turned
60, indicating that there was no blanket discriminatory policy. In fact, Evans was
probably being victimised for bringing a case to the CCMA, and could equally have
brought her case in terms of Sections 5(1) and 87(1)(d) of the Labour Relations Act.
These Sections forbid the employer from engaging in practices which prevent an
employee from exercising his rights.

406 Labour Relations: A southern African perspective

Section 187(2)(b) of the Act states that it is not unfair to dismiss an employee
who has reached ‘the agreed’ pensionable age. This clause is the only clause in the
legislation which allows a dismissal on one of the generally forbidden grounds. It
merits further debate as to why persons should leave employment merely because
they have reached a certain age and not because they have become less capable
of performing their jobs. Countering this is the social benefit argument, namely,
that older employees have to leave in order to provide opportunities for new
incumbents. Whether this sufficiently justifies discrimination and an incursion on
the constitutional rights of individuals remains questionable. Evans had evidently not
been provided with benefits and was surviving on an income from erratic part-time
teaching, averaging R2 000 a month. Even if there had been an agreed policy, the
question still remains whether dismissing a capable person and relegating her to a
subsistence income, merely on the grounds of her age, can be regarded as fair? This
question remains unanswered.

Case Review: Age Discrimination

Constitutional Court of South Africa: Dalu Xolo Nicholas

Sali v National Commissioner South African Police Services,
Provincial Commissioner South African Police Services,
Minister of Safety and Security Case
CCT/164/13(19 March 2014)
Background
In 2006 Sali joined SAPS as a police reservist. According to the information provided
by Brigadier Govender (evidently the accountable manager) reservists are volunteers
who perform the same functions as police officers, are given the same powers and
also carry weapons. They do undergo training, but are not employees and are not paid
for their services.
Reservists can apply for permanent positions. However, Regulation 11(1) states
that to apply for a position as member/employee of SAPS applicants have to be
between 18 and 30 years old. This regulation also covers reservists who want to apply
for a permanent position. Reservists were not happy with this limitation as many of
them were already older than 30. As a result a number of protest marches were held,
obliging management to meet with the disgruntled reservists. After several meetings
the reservists were informed that the limit for them to apply had been extended to
age 40. However those who applied needed to have served as reservists for at least
three years.

Chapter 8: Employment Equity 407

In 2009 Sali, who by then had three years’ experience as a reservist, applied for two
posts, one of which stipulated that the incumbent had to be between the ages of 41
and 45. At that stage Sali’s age was 41 years and 10 months. The applicants had to take
tests and undergo a medical examination, all of which Sali passed. After his interview
a senior officer informed Sali that he would get the contract for the position with the
40 to 45 year limit and would be appointed as from January. However, in December
Sali was informed that both his applications had been unsuccessful. When Sali asked
for a reason he was told that he did not qualify in terms of the age limitations.
Sali’s Station Commissioner then wrote to the Provincial Commissioner requesting
that, in this case, the age limitation be waived.
There was no response from the Commissioner whereupon Sali approached the
CCMA and thereafter the Labour Court. Sali claimed that his non-appointment
resulted directly from the age restrictions imposed by SAPS. In his founding affidavit
he demanded that he be appointed in the post for which he had applied and also
that he be awarded R500 000 as compensation for the two years’ loss in salary. He
further wanted the court to rule that SAPS should remove age discrimination from
their policies.
SAPS argued that service as a reservist did not necessarily qualify Sali to be
appointed and that the age limit of 40 was, in his case, the barrier. Moreover, SAPS
claimed that the case could not be adjudicated in terms of the Employment Equity
Act as the age limits were based on legislation. Because the restriction was contained
in a Regulation it was not, according to SAPS, an ‘employment policy or practice’ (the
term used in the Employment Equity Act)
The Labour Court agreed that the case was premised on a Regulation and that the
Employment Equity Act did not apply. As a result it was, according to the Court, not
necessary for it to rule on the matter. The case was dismissed and leave to appeal
was denied.
Sali then bypassed the Labour Appeal Court and took his case direct to the
Constitutional Court, claiming that the alleged discrimination could also constitute
a contravention of the relevant clauses in the Constitution. He requested the Court
to decide whether:
• leave to appeal should be granted
• Regulation 11(1) should be declared invalid in terms of the Constitution
• the decision not to appoint was based on the Regulation
• the Regulation fell outside the scope of the Employment Equity Act
• if the discrimination was not based on the Regulation, whether SAPS had proved
that the discrimination was fair.

408 Labour Relations: A southern African perspective

Argument and Pronouncements
Noting that the onus to prove that the policy was fair rested with SAPS and not with the
claimant, the Court listed the questions to be asked regarding the limitation, namely:
• Does it differentiate between people or categories of people?
• If so, is there a rational connection related to a legitimate government purpose?
• If, not, does it constitute a violation of the employee’s rights?
• Even if rational, could it still constitute discrimination?
• Does it amount to unfair discrimination?
• Is it for a specific goal?
• If not for a specific goal, will it fit in with fundamental human rights or adversely
affect these?

As regards the matter at hand, the Court expressed the opinion that it was basically a
Constitutional issue, but Sali had not originally raised it as such, nor was this aspect
supported in the papers before the Court. Nevertheless, the Court indicated that the
constitutional aspects could still be considered and that the pertinent question was
whether it was in the interests of justice to grant leave to appeal.
The Court then turned to the argument brought by SAPS that the criteria
pertaining to recruits was a Regulation intended to provide for entrance and was
not an employment policy or practice, as envisaged by the Employment Equity Act.
It was admitted that, at first glance, the phrase ‘any other employment practice’
seems quite narrow; however, as the Court indicated, the definition of this term lists
a wide number of practices among them recruitment procedures, advertising and
selection. Nevertheless the Court seemed to concede that legislation and therefore
also a governmental regulation, could not be challenged in terms of the Act.
This having been said, the Court went on to point out that Section 9(c) of the Bill
of Rights precludes the State from discriminating on a number of grounds, including
age. Any contravention of this section would then become a Constitutional matter.
From there the Court proceeded to interrogate the new conditions pertaining to
recruits and the argument made by SAPS that these were contained in legislation. It
was noted that the changes had been made following a protest march by reservists,
This resulted in an agreement that the age limit of 30 would, in the case of the
reservists, no longer apply.
The Court went on to explain that the National Commissioner does have
wide-ranging powers to waive some aspects of a particular Regulation in certain
circumstances, but he does not have the power to amend the actual Regulation. This
power rests only with the Minister. In this case all the National Commissioner had
done was to exempt recruits from the 30-year age limit. The question following on to

Chapter 8: Employment Equity 409

this was whether SAPS was correct in maintaining that Sali did not qualify in terms
of the new age limit of 40. As the Court saw it, that limit could not be imposed since
there was no Regulation limiting the age requirement for recruits to 40. Although a
limit of 40 had been mentioned, all that had happened was that the age limit of 30
was waived. If 40 was to be another barrier, this should have been contained in a
Regulation. The waiver could not have set that limit.
From the above the Court concluded that SAPS and the Labour Court had been
wrong in maintaining that management had acted in terms of the Regulation. In as
far as it concerned applicants who were not reservists the original Regulation still
stood. The waiver of the Regulation as it applied to recruits was, in fact, policy and
practice and should be judged in this light.
Having clarified this issue and accepted that the limits were an employment
practice in terms of the Equity Act, the Court’s next question was whether the
practice was fair. It noted that the age restriction had proved a barrier to many
reservists, that the applicant had been treated differently from other reservists and
had not been appointed because of his age. On this basis the Court concluded that
the decision must be presumed to be unfair and that it would be up to SAPS to prove
that it had been fair.
After establishing grounds for alleging discrimination, the next step was to establish
whether the discrimination was fair or was instituted on rational grounds. In this
regard the Court described as ‘rubbish’ the earlier testimony by Brigadier Govender
that the age limit of 30 had originally been set because during training it had been
shown that older persons did not do as well as their younger counterparts. The Court
pointed out that, if this had been a true reason, raising the age limit to 40 went against
those findings and made no sense. Moreover, in the case at hand age apparently had
no impact on academic and physical performance, yet the decision not to allow the
person entry was based on the fact that he was over the age of 40 – even though the
age requirement for one of the positions was that the incumbent be aged 41 to 45.
The conclusion reached by the Court was, firstly, that SAPS had failed to prove
that the refusal to appoint Sali had been fair. Moreover, a Constitutional right had
been violated.
The ruling by the Labour Court was set aside and the case was returned to that
Court which, the Constitutional Court said, should be asked to use its ‘wide ranging
powers’ to grant the appropriate relief. It was further indicated that the pleadings
should include the allegation that a constitutional right had been violated.

Discussion
The ruling was subject to a dissenting judgement, but, for present purposes, its
content is not relevant. Our concern is not so much with the legal niceties as with the
attitudes and actions of the parties and the principles emerging from the judgment.

410 Labour Relations: A southern African perspective

This case was selected because it again demonstrates that, so often, rules or
regulations are instituted without any real understanding of what they mean and
without questioning the validity or their purpose, In the first place, it should not have
been left to the Court to explain the difference between amending a Regulation, on
the one hand, and a waiver of certain conditions in a rule or regulation, on the other.
Even if management at station level did not understand the legal implications, the
Regional Commissioner should have been able to clarify the situation. Not only did
he fail to do so, but he did not even respond to the request for a waiver from the
Station Commander.
Secondly, the entire situation did not seem to strike SAPS management as
questionable. Even though a new so-called limit had been set, did it not seem
untoward that someone should not be appointed because he was now one year and
ten months over the ‘limit‘ of 40; this notwithstanding the fact that he was within
the age range required for the post?
There is a good reason why one of the requirements for judging an action or rule is
that it should be rational, meaning that it must be shown that there is an acceptable/
valid reason. As it is, Brigadier Govender could not supply a rational explanation for
the age restrictions and admitted that he had based his explanation on ‘hearsay’.
One also wonders why applicants for one of the posts had to be between the ages
41 and 45. What makes a person in that age bracket more qualified to fill post than
anyone else?
As indicated in the judgment, the setting of age limits is common to many
sections of the public service. This is a matter of great concern since, if this case is
an example, the reasons behind these limitations may, in most cases, not be rational
or acceptable. In terms of both the Constitution and the Employment Equity Act
discrimination of any kind is unlawful unless it can be proved that it is rational. No
distinction is made between different kinds of discrimination. Discrimination based
on religion or family responsibility has the same status as discrimination on the basis
of colour or sexual orientation. The only difference is that, in the former case, it might
be justified on rational grounds, whereas difference based on innate characteristics
are generally unjustifiable.
As the Court seemed to indicate and if it is correct that Regulations cannot be
questioned in terms of the Act, it may have become necessary to raise these issues
in terms of the Constitution.

Chapter 8: Employment Equity 411

The Concept of Equal Conditions for Equal Work or
Work of Equal Value
As indicated earlier in this chapter, a new Section 6(4) in the Employment Equity Amendment
Act of 2013 now also prohibits discrimination in conditions of service between persons doing
the same work, substantially the same work or work of equal value. However it would have
to be shown that the alleged differentiation is on one of the grounds listed in Section 6(1).
While discrimination between persons doing the same work might not be difficult to
prove, this is not so easy as regards the other two criteria and especially that relating to
work of the same value.
The legislators evidently foresaw the problem and the Minister was tasked to establish
regulations to provide guidance in assessing whether, in these cases, there are grounds for
alleging discrimination.
Regulation 7 of the Employment Equity Act states that jobs are the same if they are
identical or interchangeable (meaning that persons can easily move from one to the other).
Even if not identical, jobs may still be the same if workers can reasonably be considered to
be doing the same job. ( In such cases they would probably be classified as substantially the
same.) When it comes to ‘jobs of equal value’, the regulation states that two jobs may be of
equal value if they are equal in respect of:
■■ responsibility for people, finances or material
■■ skills or qualifications
■■ physical, mental or emotional factors.
■■ relevant conditions such as physical and psychological conditions and conditions
relating to time and place
■■ any other factors relevant to particular jobs.

At the same time the Regulation allows that differentiation may be justified on the following
grounds:
■■ respective seniority
■■ length of service
■■ performance
■■ quality and quantity of work
■■ structural changes which may allow a demoted employee to remain at a previous salary
until others catch up (see Woolworths case)
■■ temporary employment for persons to gain experience
■■ a shortage of relevant skills
■■ any other relevant factors.

The Regulation reminds employers that Section 27 of the Act obliges them to produce an
Income Differential Statement for each level in the organisation and to indicate which
measures are being taken to reduce differences.

412 Labour Relations: A southern African perspective

The Code of Good Practice: Work of Equal Value also lists the grounds for differentiation
and emphasises that proving that these are legitimate starts with proper job evaluation
based on provable criteria.

Case Review: Discrimination: Employees Doing the

Same Work

Pioneer Foods (Pty) Ltd v Workers against Regression

(WAR), CCMA, Commissioner Johnson N.O.
Background
This case hinged on a complaint by newer employees at Pioneer that they were being
paid 20 per cent less than other employees doing the same work. The employees in
question regarded this as especially unfair as some of them had already worked at
Pioneer for set periods as persons supplied by a labour brokerage.
From Pioneer’s side it was indicated that the employment of people in a permanent
capacity had been part of an agreement with the representative union. Evidently the
union wanted Pioneer to gradually become less reliant on contract labour and to rather
employ people on a permanent basis. However, the long-serving employees had been
concerned that they would be earning the same as new employees. Consequently an
agreement was reached that the salaries of new appointees would be set at 80 per cent
of the going rate for the first two years of employment whereafter their wage rate would
be the same as that of the older employees. These conditions would apply to all new
employees and not only those who had previously been employed via a labour broker.
At the CCMA it was argued by the union, on behalf of the seven applicants in the
case, that the difference amounted to discrimination between union and non-union
employees, that van assistants were earning more than drivers and that the policy
contravened the dictum of equal pay for equal work.
The Commissioner concluded that the differentiation was indeed discriminatory,
was not rational and had been based on arbitrary grounds. Pioneer was ordered to
equalise the wage rates and to pay damages to the applicants.
Pioneer then took the matter to the Labour Court.

Argument and Pronouncements

At the outset the Labour Court pointed out that the employees, as represented by the
union, had not alleged discrimination on any of the listed grounds and that, if they
were to allege that the differentiation was on an arbitrary ground, they would have
to prove that it was not rational and was unfair. A party alleging pay discrimination

Chapter 8: Employment Equity 413

had to show that the employees were providing equal work or work of equal value.
Also, they had to identify the arbitrary ground and could not just make a blanket
accusation. Where differentiation was alleged the adjudicator had to question
whether the practice amounted to discrimination. If it was on a listed ground and
had been proved to exist, it would be automatically unfair. If the allegation was
brought on an arbitrary ground, then the arbitrator would have to decide whether it
had ‘the potential to impair the dignity of persons as human beings or to affect them
adversely in a comparably serious manner’.
From there the Court reviewed the reasons for the differentiation as presented by
management, concluding emphatically that nothing in the Act prevents an employer
from adopting and implementing a rule that newer employees should be employed
at a lower rate. As the Court pointed out, there is different treatment everywhere in
society. Differentiation only becomes actionable if not rational and is based on one
of the listed grounds.
The Court then looked at the manner in which the case had been presented, noting
that there was a lack of clarity as to the grounds for the allegation of discrimination.
It was not sufficient merely to state that there was discrimination. The allegation had
to be linked to one of the listed grounds. That the applicants were new employees
was not a listed ground, nor was the practice irrational or one which impaired the
human dignity of the applicants: furthermore both Section 198(D)(2)(a) of the LRA
and the Code of Good Practice accept that length of service and seniority could be
legitimate grounds for different conditions of employment.
Having dealt with the matter at hand, the Court referred to the opinion expressed
by the Constitutional Court that for Courts to adjudicate all differences ‘in every
classification of rights, benefits and advantages’, would be an impossible task.
Persons alleging discrimination must prove that the practice has ‘crossed the
border of constitutional impermissibility and is unequal in the Constitutional sense’.
According to the Court, it is accepted that a modern country cannot be regulated
without differentiation, but differentiation is not necessarily discrimination.
In support of its conclusions the Court referred to ILO Convention number 111
which also states that, if the allegation of discrimination is on an unlisted ground, the
complainant will have to show that it does have the effect of ‘nullifying or impairing
the equality of opportunity in treatment or occupation or fundamental human dignity’.
Returning to the case at hand, the Court once again emphasised that length of
service was an accepted reason for differentiation. Moreover, in the case of Pioneer,
there had been an underlying reason, namely to create more permanent jobs. Also,
incumbents were told at the outset that they would be paid at 80 per cent of the
rate and had the choice beforehand to accept or not accept. Admittedly, the fact that
the policy had been negotiated with the representative union cannot in itself be a
justification. Whether it is good would, according to the Court, depend on its purpose.

414 Labour Relations: A southern African perspective

The final pronouncement of the Court was that the differentiation was not irrational
and that the Commissioner should have dismissed the application by the employees.
As the parties would have to continue to build their relationship, no costs were
awarded.

Discussion
This was the first case to be brought in terms of the provision which includes unequal
conditions of employment as a possible ground for alleging discrimination. When the
Act was amended, the sub-clause was widely labelled as the ‘Equal Pay for Equal Work’
clause. The implication was that in all cases where work was equal, pay had to be equal.
What this judgment, as well as the detailed Code of Good Practice shows, is that
the matter is not so simple. In the first place, the relevant section relates to all
conditions of service and not only wages. Most importantly, and as emphasised by
the Court, any allegation of inequality has to be based on one of the named reasons
in Section 6(1) or on any other arbitrary reason. If the differentiation is proved to be
on one of the named reasons, it will automatically be accepted as unfair. However, if
the case is brought on another (arbitrary) ground, the onus will be on the applicant
to prove that, not only does it discriminate, but the differentiation:
• is unequal discrimination in terms of the Constitution
• has the ’potential to impair the dignity of persons as human beings’
• can ‘affect them adversely in a comparably serious manner’
• has the effect of ‘nullifying or impairing equality of opportunity in treatment or
occupation’.

In simple terms, the differentiation has to have a serious and noticeable effect on
the employee/s.
As was so clearly stated by the Court, differentiation is common to modern society
and is most often there for good reason. Differentiation does not necessarily equal
discrimination. Employees need to be sure that they can prove unacceptable grounds
for alleging discrimination and should not jump too readily on the bandwagon of
equal pay for equal work.

Chapter 8: Employment Equity 415

Implications of Non-discrimination legislation for
Policies, Procedures and Practices in General
The strict prohibition on discrimination places an obligation on employers to review all
policies, procedures and practices in order to ensure that they do not contain or involve any
form of discrimination or unjustifiable differentiation. This could be regarded as the first
step of the equity process.
In many instances, what used to be accepted practice may on closer examination be
found to be discriminatory, pointing to the imperative to interrogate all existing practices.
Before the Labour Relations Act of 1995 was promulgated, applicants for positions, and
even persons applying for promotion posts in an organisation, had no or little recourse
if they suspected that their failure to be appointed to a particular position was due to
unfair discrimination. This left recruiters and selectors free from accountability for their
decisions. In these circumstances the possibility of undesirable practices, such as nepotism,
discrimination and victimisation, is self-evident.
The inclusion of applicants under discrimination provisions, and also as regards
affirmative action initiatives, has greatly changed this situation. The Employment Equity
Act is silent on the issue of recruitment, but the Green Paper on Employment Equity dealt
in some detail with this aspect. It warned that recruitment efforts should reach all possible
candidates and that word-of-mouth recruiting should be discouraged except when it is
aimed at headhunting for affirmative action candidates. In 2005, the government published
the Code of Good Practice on the Integration of Employment Equity into Human Resource
Policies and Practices. The Code contains, among other things, detailed guidelines relating
to recruitment and selection of employees.
To guard against discrimination in selection, the shortlisting, interviewing and assessment
procedures of organisations require careful review. These processes should not be left to one
person. This is supported by the Code, which recommends that decisions be taken by a
representative panel.
The Code further emphasises that relevant criteria should be applied in assessing
candidates. The criteria can be established only if the key performance areas and the
competencies required for the position have been identified. The criteria themselves should
not be discriminatory. This happens when criteria such as qualifications not truly necessary
to ensure competence are added as a means of excluding certain groups. Once criteria have
been agreed upon, shortlisting can be completed. This is done by first ruling out applicants
who do not meet the minimum requirements and, thereafter, those whose CVs do not reflect
competence in the key performance areas.
The interviews and other forms of assessment should be structured in terms of the criteria
by which the candidates will be evaluated and should be the same for all persons being
assessed. Questions which are irrelevant and might lead to suspicions of bias should be
avoided.

416 Labour Relations: A southern African perspective

Applicants have become increasingly aware of their right to question selections. It is,
therefore, essential that records of interviews be kept, and that final selections are well
motivated, so that any queries which arise may be answered in full.

Affirmative Action

The Legal Position

Definition of Affirmative Action
Section 15 of the Employment Equity Act describes affirmative action measures as
‘measures designed to ensure that suitably qualified people from designated groups have
equal employment opportunities and are equitably represented in all occupational levels of
the workforce of a designated employer’.

Designated Groups
Designated groups are defined to include ‘black people, women and people with disabilities’,
with ‘black people’ being defined as a generic term to include all persons not described as
white. The problem with this definition is that, while it may be grammatically correct, it
does not serve any purpose when it comes to affirmative action practices since employers
still have to report in terms of the different race groups (see case review below).
The Employment Equity Amendment Act of 2013 further amended the definition
of ‘blacks’ by limiting it to persons who are South African citizens by birth or descent,
or became citizens by naturalisation before 27 April 1994, or who became citizens by
naturalisation after 27 April 1994 because they were previously entitled to citizenship but
were prevented from claiming this right because of apartheid policies.

Designated Employers
The rest of Chapter 3 of the Act sets out the obligations of designated employers as regards
affirmative action. Designated employers in the private sector are those who employ more
than 50 people and those employing fewer than 50 people but whose turnover exceeds the
thresholds established in terms of the Act (for further details see Chapter 3).

The Nature of Affirmative Action

The term ‘affirmative action’ refers to the purposeful and planned placement or development
of competent or potentially competent persons in or to positions from which they may have
been debarred in the past. The rationale is to redress past disadvantages and to make the
workforce at all levels more representative of the population, on local and national level.
Affirmative action has numerous facets. It entails:
■■ the search for persons with known competencies or potential to fill positions worthy of
their ability

Chapter 8: Employment Equity 417

■■ the training and development of previously disadvantaged persons so that they may in
future possess greater mobility
■■ continuous monitoring and adaptation of the demographic spread at all levels of the
organisation.

Duties of Designated Employers

Chapter 3 of the Employment Equity Act obliges every designated employer to put measures
in place to promote affirmative action. These measures include:
■■ the elimination of barriers
■■ the furthering of diversity
■■ making reasonable accommodation for persons from designated groups
■■ training
■■ the establishment of numerical targets.

The Act states that these measures do not include the establishment of ‘an absolute barrier to
the prospective or continued employment of persons who are not from designated groups’.
This indicates that targets are not absolute and should be guidelines rather than quotas.
All designated employers are required to produce an Equity Plan, to review progress on
an annual basis and to report in October of each year on progress made in implementing
the plan and bringing about greater equity.
In producing the plan employers need to:
■■ consult with employees
■■ conduct an analysis of the workforce
■■ develop strategies and set targets to redress demographic imbalances
■■ report to the Director-General annually on progress made towards the achievement of
equity
■■ report on reasonable steps taken to train, appoint and promote suitably qualified persons
from the designated groups
■■ report to the Commission for Employment Equity on income differentials in the various
occupational levels and categories.

Non-compliance with the provisions of the Act may be subject to fines ranging from R1,5
million for first offenders to R2,7 million or 10 per cent of turnover for employers who have
committed four or more offences (see Chapter 3). In assessing compliance, the factors that
will be taken into account could include:
■■ the national and regional demographics
■■ reasonable steps to appoint and promote persons from the designated groups
■■ reasonable steps to train persons from the designated groups
■■ efforts made by the employer to bring about equity and eliminate barriers.

418 Labour Relations: A southern African perspective

The courts have repeatedly stated that they would hesitate to interfere where the employer
has a rational equity plan established in consultation with employee representatives. This,
together with the ‘reasonable steps’ criterion above, points to the necessity of developing a
proper plan in the prescribed manner.

Problems with Affirmative Action

Implementation for the Wrong Reasons
Initially, most of the controversies and problems surrounding affirmative action arose
not from the principle as such, but from the manner in which affirmative action was
implemented. Wrong implementation occurs because organisations see affirmative action
as a political imperative with which they have to comply, and not as a business objective
which needs to be sustainable within the framework of the organisational objectives
in total – one of which would be to have as effective and competent a workforce
as possible.

Targets versus Quotas

As indicated above, employers will be judged by the extent to which they have taken
‘reasonable steps’ to accommodate persons form the previously disadvantaged groups and
are encouraged to set ‘targets’. Moreover, Section 15 of the Act, which deals with affirmative
action measures, specifically states in Sections 15(3) and (4) that the measures taken should
include numerical goals but not quotas and that nothing in a policy or practice should be
an absolute barrier to the employment or advancement of persons from the non-designated
groups. As seen from the case below, the distinction between targets and quotas is very
subtle and has become quite controversial.

Window dressing
Persons may be appointed to positions mainly to window dress, usually without due
consideration of their suitability for the position or the possibility of support and
development. Chapter 3 of the Employment Equity Act encourages diversity in the
workplace based on equal dignity and respect of all people. Arbitrary appointments leave
other employees dissatisfied and are unfair to the appointees themselves, since they are
either in meaningless positions or cannot handle their specified tasks. This perpetuates the
myth that affirmative action appointees are ‘no good’. Unless affirmative action is tied to
valid selection procedures that test relevant competencies or potential and are accompanied,
where necessary, by a developmental programme, the myth becomes a reality.

Shortage of Suitably Qualified Candidates

Another problem with affirmative action was that at the beginning the available pool
of previously disadvantaged persons able to fulfil the requirements was too small. For
example, in organisations where a need had been identified for greater representation of

Chapter 8: Employment Equity 419

blacks at managerial level, and where one of the requirements was a tertiary qualification,
the selectors may have encountered problems. Statistics show that the percentage of black
graduates initially remained small in relation to the total population. The result was that
there developed a small, highly sought-after group of people who often hopped from one
opportunity to another. In recent years the situation has greatly improved.

Too Little Emphasis on Training and Development

When the Employment Equity Act was first put into practice one of the problems was that
employers tended to look for ‘ready-made products’ with the possibility of emphasis being
placed on quotas and paper qualifications instead of competencies, experience levels and
potential. This pointed to education and training, both inside and outside the organisation
as the cornerstone of affirmative action programmes. One part of affirmative action should
concentrate on career planning, training and development or support for external education
and training programmes. This is why there is a definite link between affirmative action and
skills development.

Perceptions of Reverse Discrimination

The most prevalent accusation directed at affirmative action initiatives was that they
constitute reverse discrimination. Employees who had given long service and were expecting
promotion were dissatisfied when an affirmative action appointee, usually from outside,
was given a position which they believed they deserved.
Affirmative action becomes unfair and discriminatory only if a previously disadvantaged
person is appointed ‘at all costs’ and without granting other persons the opportunity to
compete. Discrimination occurs only when one party is intentionally disadvantaged. This
would happen if an applicant or employee who is competent to do the job but does not meet
the affirmative action requirements, is deliberately disregarded.
Section 15(4) of the Act states that the requirement for affirmative action measures does
not oblige a designated employer to institute an employment policy or practice that would
be an absolute barrier to persons who are not from the designated group. All candidates
should be granted the opportunity to compete and to be assessed in terms of pre-established
criteria; but an additional weighting, which should not be disproportionate to the other
criteria, can be placed on affirmative action aspects. This means that the affirmative action
candidate is given an edge over the other candidates. It ensures relative fairness and also
satisfies the employer’s need to appoint competent persons.
If the process above is to operate effectively, the use of appropriate selection techniques
and suitable test or assessment material becomes imperative.

Definition of ‘black people’

As indicated previously in this chapter, the Act states that the term ‘black people’ is generic
and includes coloured people and Indians. However, when reporting on Employment Equity,

420 Labour Relations: A southern African perspective

these are all separate categories. The differentiation is regarded as necessary from the point
of view that Africans are assumed to have been the most disadvantaged under previous
policies. The Act requires that workplaces should eventually reflect the demographic profile
of the population.

Regional versus National Demographics

If the organisation is to become more representative of the population, then ideally all
previously disadvantaged groups should be targeted for affirmative action. For this, planners
need to be acquainted with the demographic spread of the economically active or potentially
economically active population, and to compare this to their internal demographics – both
in the organisation as a whole and in different job categories.
The Act refers to both national and regional demographics. It would seem most logical
to base representation on the area from which the organisation draws its workforce and
custom and to ensure that applying a particular demographic profile does not result in gross
unfairness. In the case of Munsamy v Minister of Safety and Security and Another (D253/03)
[2013] ZALCD 5; [2013] 7 BLLR 695 (LC) (3 April 2013), the South African Police Service
granted the KwaZulu-Natal division 195 promotional posts, bringing the total managerial
level posts to 479. They were subsequently given a directive that the agreed ratio was 70
per cent black representation and 30 per cent white. The directive was based on the national
demographics applicable at that stage. It emerged that, in order to achieve these numerical
goals, Africans had to be awarded 192 posts.
As there were only 195 promotion posts available, this target meant that almost 100 per
cent of the proposed posts were to be given to these applicants. Munsamy, who had already
been recommended for one of the posts, was informed that an African applicant would
be appointed since Indians were already, in terms of the national demographics, over-
represented in KwaZulu-Natal.
In this case the court agreed that the affirmative action measure taken against Munsamy
constituted unfair discrimination. The Act specifically states that there should be no absolute
barrier to the appointment of any group. The use of national demographics without any
further considerations, without a proper equity plan and without taking into account the
demographic profile in KwaZulu-Natal was judged to be inappropriate.
The Employment Equity Amendment Act of 2013 provided that the Minister, in
consultation with NEDLAC, could specify the circumstances in which national as against
regional demographics should predominate, and vice versa. Shortly after the pronouncements
in the case below the following guidelines were published:
■■ Organisations with 150 or more employees should use national demographics as guide
when selecting applicants for appointment in top management and senior management,
as well as positions requiring professionally qualified persons, An average between
national and regional demographics can be applied for lower levels.
■■ Organisations employing fewer than 150 persons can use national demographics in
appointing top and senior management and regional demographics for the rest.

Chapter 8: Employment Equity 421

It should be remembered that these are only guidelines and are not cast in stone. As the Case
below shows, when it comes to representation, everything is relative.
The question of relative representativeness is one of the central themes of affirmative
action. Unfortunately, numerous organisations implement affirmative action policies that
favour only a narrow grouping of the total spread of previously disadvantaged persons. This
is bound to cause dissatisfaction. Also, demographics should provide only a guideline, since
effectiveness and fairness remain important criteria for selection.

Case Review: National and Regional Demographics

and Quotas

Constitutional Court of South Africa: Solidarity o.b.o. Davis

and 9 others v Department of Correctional Services, Minister
of Correctional Services, National Commissioner Services,
Minister of Labour, Police Prisons and Civil Rights Union
(15 July 2016).
Background
In 2010 the Department of Correctional Services finalised its third Employment
Equity Plan. According to the Court, the plan had evidently been agreed to by
most of the recognised unions. Solidarity was not a recognised union. The plan set
numerical targets for the next five years, based on the national demographics for
the economically active population at that time. The targets set were as follows:
9,3 per cent white males and females, 79,3 per cent African males and females, 8,8
per cent coloured males and females, and 2,5 per cent Indians. The plan did allow
for deviations from its prescriptions especially where scarce skills or operational
requirements were involved, but only the National Commissioner has the power to
allow deviations. He also has the power to directly appoint someone to a post.
In 2011 a number of posts in the Western Cape became vacant. The litigants
who, with one exception, were coloured, had all applied for a post. Following their
interviews, nine of the applicants were recommended. However, only one coloured
female was eventually appointed. The rest were told that, in terms of the targets set
in the plan, coloured people and whites were already over-represented at the levels in
question, in fact, the strategy for the higher levels was to appoint women and ‘blacks’.
The applicants were not satisfied with the decision and took the case to the CCMA.
From there they approached the Labour Court where they alleged that:
• the failure to consider them for appointment amounted to unfair discrimination
and constituted an Unfair Labour Practice

422 Labour Relations: A southern African perspective

• the 2010 Plan was invalid as it did not comply with the Employment Equity Act
• the plan was discriminatory as applied to the litigants.

At the Labour Court

The Labour Court agreed that the plan did not conform to the provisions of the Act.
The Act referred to all black persons, but in this case no consideration had been
given to the demography of the Western Cape. This amounted to discrimination not
protected by the Act. The Act also allows for proportionality, balance and fairness,
requiring that both national and regional demographics be taken into account.
The Labour Court made no ruling as regards the applicants but did order the
Department to immediately take steps in order to ensure that both national and
regional demographics be taken into account.
The Department then took the case to the Labour Appeal Court.

At the Labour Appeal Court

The Labour Appeal Court indicated that, in conducting an inquiry into the Plan, the
following questions had to be answered, namely:
• Does it target persons disadvantaged by discrimination?
• Is it designed to protect and advance persons from the designated groups?
• Does it promote the achievement of equality?

The Court then turned to the allegation by the litigants that the plan entailed quotas,
which, they said, was proved by the fact that at certain levels whites were preferred
while at other levels no whites were appointed.
In response to this the Court indicated that the allowance for deviation from
the plan made the numerical targets flexible, proved by the fact that from 2010 to
2012 there were 13 appointments in the Western Cape which did not conform to the
targets. Furthermore, the suitably qualified criterion was applied for selection. There
was also consideration for the retention of special skills and for regional as well as
national demographics.
The Labour Court concluded that, although there was a weight given to certain
aspects, this did not amount to quotas and there was no blanket obstacle to non-
designated groups.
According to this Court, the plan passed the test and the appeal was therefore
dismissed.
Solidarity then took the case to the Constitutional Court.

Chapter 8: Employment Equity 423

At the Constitutional Court
This Court commenced by noting that both the Labour Court and the Labour Appeal
Court had declared the Equity Plan to be invalid.
From there the Court turned to the allegation that the plan in question was
based on quotas, admitting that, if it rested on quotas, the plan would not have
complied with the Act and the decision not to appoint the plaintiffs would be wrong.
As explained by the Court, quotas are rigid while numerical targets are flexible. The
complainants had argued that, although the plan made provision for deviation, this
was limited, since only the Commissioner could grant exemptions, non-compliant
managers were sanctioned and there was no provision for grievances.
To this the Court responded that the plan had to be looked at holistically. The
fact that deviations were allowed would indicate that the requirements were not
quotas. It went on to point out that the Commissioner had wide-ranging powers,
numerous deviations had been allowed, also in the Western Cape, where deviations
had been more than the 14 mentioned previously. The Court disagreed with the
opinion expressed in a second judgment that the plan provided for quotas (see
below). According to the Court the fact that the plan provided for deviations proved
that it was flexible and that the goals were targets and not quotas. Quotas, as the
Court interpreted them, are rigid while targets are flexible, It was also pointed out
that even the litigants’ ‘expert‘ witness had agreed that the targets were flexible.
The Court then addressed the allegation that the failure to appoint the litigants
amounted to unfair discrimination and an Unfair Labour Practice, as well as their
demand that the plan be declared invalid. Having summarised the duties of the
employer in ensuring equitable representation, the Court singled out the duty to set
numerical goals. These however, needed to take account of both the national and
regional demographics. In this case the Department had used only the national profile.
In failing to use also the demography of the region, the Department had breached a
rule and had acted unlawfully. The rule to also consider the regional demographics
could not be disregarded., According to the Court, by not appointing the qualifying
coloured applicants, the Department had engaged in ‘acts of discrimination’.
The Department was ordered to reinstate all applicants except one who had not
qualified, one who had been appointed in the meantime and the white applicant. The
orders were retrospective to the date when they should have been appointed. Where
the positions for which they had applied had not yet been filled, they were to be
appointed to those posts and be compensated for the period which had elapsed in
between. Where the posts had already been filled, the applicants would remain in their
present posts but be remunerated at the level of the post for which they had applied
and also be compensated as if they had been in the post from the original date.

424 Labour Relations: A southern African perspective

Minority Judgment
The minority judgment agreed with the sanction imposed but was of the opinion that
the final decision was based on very narrow grounds. This aside, the main point of
disagreement was the conclusion by the Court that the Equity Plan of the Department
had set flexible targets and not quotas.
According to this judgment one of the fundamental questions was whether
the imperative to ensure full and equal enjoyment of all rights and freedoms for
previously disadvantaged groups also meant that a person in this group had a right
to a particular job. In this respect it was pointed out that the purpose of affirmative
action is to ‘promote’ equality, that, in terms of the Act, this could happen by
giving preference to previously disadvantaged persons, at the same time taking into
consideration the promotion of economic development and efficiency. The manner in
which numerical targets had been established and implemented was not compliant
to the precepts of the Act and had not taken note of all the duties of the employer
as set out in the Act.
The judgment went on to explain that, although the Courts had accepted that, in
pursuing equality, some persons may experience more harm than others, it should not
unduly invade the human dignity of individuals. The pursuit of equity was intended to
eventually produce a non-racial, non-sexist and socially inclusive society.
Referring to the numerous instances where the Constitutional Court had cautioned
that implementing equity should be undertaken in a nuanced, balanced manner,
the judgment indicated that one would have expected a ‘thoughtful, empathetic and
textured’ plan but there was no sign of this in the Department’s plan. Instead, there were
only numbers, based on two ratios only, namely racial groups and a male/female category.
It was also established that the figures on which the numerical goals had been
based were incorrect. In the first place it was claimed that they were based on
the 2005 statistics and as such were in line with the 2006 census, but there had
been no census in 2006. Furthermore, they were based on the entire South African
population and not only the economically active population as required by the Act.
This was followed by ’arithmetic tables’ allocating numbers to match the ratios and
accompanied by instructions to the responsible officials to ‘fill the gaps’.
The judgment reflects the instructions given at all levels of which the following
are a few examples:
• Level 3: Only whites and Indians
• Level 5: Only African females and whites
• Level 4: 9 African males and 1 African female and 1 coloured male
• Level 7: 684 African males, 331 African Females and 10 Indian females
• Levels 11 and 12: 109 African females

Chapter 8: Employment Equity 425

• Levels 13 -16: Too many African males (none to be appointed), 24 African females.
and 1 Indian female
• Level 14: 3 African females and 1 white female
• Level 15: 2 African females and 1 white female.

These are described as hallmarks which must apply throughout. As the judgment
recorded, any form of non-compliance would be classified as a transgression and be
punishable as per the guidelines of the Department of Labour which was termed the
‘watchdog’ over these ‘transgressions’.
These, according to the judgment, were not numerical targets, but quotas. They had
‘the look, characteristics and flavour of quotas’. It was noted that, according to the
dictionary definition of a quota, it is ‘an allocation which is in some sense due’. If one
looked at the plan, there was allocation of persons in terms of numbers, which had to
be implemented, meaning the allocations were due. Therefore, they were quotas.
As for the argument that there was allowance in the plan for deviations, the judgment
pointed out that these related only to persons with special skills such as nurses, doctors
and social workers, and to operational requirements. These were special cases. The
concern should be for the general application of the plan, not these special cases.
As maintained in this judgment, when the National Commissioner allowed deviation
from the plan, he was not acting in terms of the plan but treating the deviations as
exceptions to the plan. One had to ask not about the special cases but whether there
was flexibility in general, this was not the case. In fact, the plan could not be more rigid.
One could not tell people without special skills that the plan was flexible.
The so called numerical goals were, according to this judgement, not guidelines
at all. Once the ‘target’ had been achieved there were ‘rigid barriers’. All that would
be taken into account were the numbers, this even though the Act leaves room for
discretion, as suggested by the Employment Equity guidelines. There were absolute
barriers to the employment of certain groups at various levels. This, according to the
judgment was the same as the Apartheid policy of job reservation.
The judgment conceded that the targets could not just be discarded, that mostly
they would act as guidelines, but it nevertheless indicated that they should never
constitute an absolute barrier to other groups.
In conclusion, the judgment touched on the subject of national and regional
demographics. It agreed that the demographic profile of organisations should reflect
all the characteristics of the population. However, the policies should be rational and
should not be based on only one characteristic.
The purpose of Employment Equity was to bring about representation and equitable
access to employment opportunities. Such opportunities were mostly available
where people lived. The demographic profile of the population contains numerous

426 Labour Relations: A southern African perspective

 anomalies related to the spread of people across the various provinces. These need
to be taken into account, for example the Western Cape has a population of 48,8
per cent coloured people, yet the plan restricts it to 8,8 per cent representation. The
Department had no explanation for this anomaly, which, according to the judgment,
is not rational and not normal.

Discussion
These two judgments reflect the complexity of the Affirmative Action legislation and
emphasise the fact that no single factor can be applied without consideration of all
the others.
There is a very fine line between Affirmative Action and Social Engineering. This is
hinted at in the second judgment when it emphasises that the purpose of the Equity
legislation is to eventually bring about a non-racial, non-sexist and all-inclusive
society. This implies that it should not be dominated by a certain race group, as
happened during the Apartheid era. Concentrating only on numbers could well result
in a return to the latter.
As for the issues involved in the case, it seems that some progress was made as
regards regional versus national demographics, although the Regulations later issued
by the Minister in this regard (see earlier in this chapter) could still be contentious.
As regards targets versus quotas, disagreement remains.

Implementing an Affirmative Action Programme

Nomination of Responsible Manager
The Act stipulates that each designated employer shall appoint a senior manager to take
responsibility for affirmative action. This task is not delegated to the HR department since it is
not a staff function imposed on line management, but the responsibility of all line managers.
The human resource or labour relations practitioner provides advice where necessary.
The designated manager takes responsibility for:
■■ getting the process started
■■ reporting to the Department of Labour
■■ monitoring the programme
■■ ensuring its success.

The Consultative Body

The Labour Relations Act determines that affirmative action is subject to joint decision-
making by management and the workplace forum. The affirmative action strategy is a
change strategy, and, as such, is developed like any other change policy in collaboration
with all stakeholders in the organisation.

Chapter 8: Employment Equity 427

In terms of the Employment Equity Act, a representative consultative committee which
includes the union and representatives of every employee category and level and all
employee groups, including the non-designated group, are brought together to establish
affirmative action objectives and policies and to plan the necessary strategies.

Agreement on Basic Principles and Processes

Agreement is reached regarding:
■■ principles which will form the basis of their affirmative action programme
■■ a common understanding of affirmative action
■■ the meaning of the term ‘representative’
■■ whether or when regional or national demographics or both will be considered
■■ the affirmative action objectives of the organisation
■■ broad time frames for achieving various objectives
■■ recruitment and selection of suitably qualified person
■■ interpretation of the term ‘suitably qualified’
■■ the manner in which candidates for positions are to be canvassed and selected
■■ the possibility of developing persons within the organisation (education and training)
■■ monitoring and performance appraisal systems applicable to all employees
■■ support systems for persons whose performance does not meet requirements
■■ support to be given to training and education initiatives inside and outside the organisation
■■ sensitisation of other employees to affirmative action initiatives
■■ programmes to change attitudes.

Involvement of All Employees

Once a policy and strategy have been agreed upon, these are shared with all employees in
the organisation – possibly via the different stakeholders on the committee. Affirmative
action initiatives which are implemented without proper consultation cause distrust and
fear, leading either to disregard of the initiative or, at worst, to constant sabotage.

Review of Existing Policies, Practices and Procedures

The consultative committee interrogates all existing policies, practices and procedures for
indications of discrimination, and addresses discrimination where it does exist. A review of
recruitment and selection processes is usually the first step.

Identification of Barriers
Barriers are those aspects of the work environment which would prevent or discourage persons
from designated groups from employment or limit their opportunity for advancement. These
may include, in the case of women, the working hours and the lack of childcare facilities.

428 Labour Relations: A southern African perspective

Establishing a Workforce Profile
One of the first steps is an analysis of the workforce at all levels and in all job categories in
terms of race and gender, in order to identify areas in which persons from the designated
groups are under-represented. Representativeness is assessed by comparing the workforce
profile to the regional or national demographics, or a combination of the two, depending on
the location of the business and the policy adopted by the organisation.
Once the workforce profile has been established, the organisation is ready to develop its
equity plan.

The Equity Plan

Numerical Goals and Time Frames
The workplace profile will have identified areas of under- and over-representation of different
groups at different levels of the organisation. The plan is aimed at establishing measures to
address under- and over-representation and sets time frames as well as strategies to address
these problems, taking into account the threats and opportunities involved. For example:
■■ the labour turnover and retirement rate in the organisation
■■ the available labour pool of qualified persons
■■ present and planned vacancies
■■ the financial position of the organisation
■■ future plans
■■ conditions in the external environment
■■ the regional and national demographics
■■ opportunities presented by the skills development initiatives.

Once a realistic picture emerges, planners return to the identified areas of under-
representation and agree on numerical goals and time frames, bearing in mind obstacles to
the achievement of goals. The plan indicates how the goals will be achieved, and how the
obstacles and barriers will be overcome.

Other Affirmative Action Measures

The Employment Equity Act specifies that, in addition to the numerical goals, the equity
plan should also reveal the following:
■■ measures to eliminate barriers – the identified barriers are listed and strategies and time
frames to eliminate these are recorded
■■ measures to further diversity – this calls for creative initiatives to promote and encourage
diversity in the workplace
■■ measures to provide reasonable accommodation for previously disadvantaged persons.

Chapter 8: Employment Equity 429

Although some of these measures may have been instituted under the elimination of barriers,
it is necessary to go further and to consider strategies such as mentorship and flexi-time.

Retention, Training and Development

It has unfortunately been the case that so-called ‘prime’ affirmative action candidates engage
in perennial job-hopping. Alternatively, candidates leave because of a hostile climate,
because they find themselves in dead-end jobs or are not provided with the necessary
training or career development. The issue of retention may have been addressed under other
measures, but it is necessary to provide specifics, not only of the training and development
to be provided for targeted affirmative action candidates, but also for the total workforce.
(The format of the skills development plan demands that training by race and gender be
reflected in that plan.)

Process for Implementation

The equity plan outlines the implementation process and specifies the persons responsible.
Once the plan is finalised and all parties agree, the plan is made public in the organisation.

Monitoring and Evaluation

Regular monitoring and evaluation, which may be based on specific benchmarks, should be
undertaken by the persons responsible for the various aspects, as well as the consultative
committee or coordinating structure and the senior manager who is ultimately accountable.
■■ The consultative forum(s) will continue to meet on a regular basis, to review progress
reports.
■■ Developments are recorded and communicated to employees at meetings which should
take place at reasonable intervals.
■■ If needs be, the plan is reviewed and revised, through consultation (Section 9 Code of
Good Practice).

Grievance and Dispute Procedures

Not only applicants for positions, but also persons already employed may raise complaints
regarding discrimination or a particular aspect of the affirmative action process. These are
dealt with through special structures established under the auspices of the affirmative action
committee.
Internal procedures for resolving any dispute about the interpretation and implementation
of the plan are agreed upon and specified. The use of existing dispute resolution procedures
is encouraged provided that they are appropriate and, if necessary, adapted to the needs
of employment equity. Alternatively, a mechanism with appropriate representation from
employer and employees may be established in order to address and resolve such disputes
(Section 8.8 Code of Good Practice).

430 Labour Relations: A southern African perspective

Communication and Reporting
By law, the plan must be communicated to all participants and be open to scrutiny at all
times.
It is the function of the responsible senior manager to report to the Labour Department
on equity initiatives on an annual basis and to complete the prescribed forms. The report on
income differentials needs to be submitted at the same time.

The Need for Periodic Reviews

It can be safely assumed that most existing organisations have complied with the legislation,
have equity programmes in place and are reporting on a regular basis. However, creating
equity is a continuous process, not only to monitor progress, but also to bring about
changes. A stage may in fact be reached where all requirements have been met and where
the crunching of numbers is no longer necessary or even where disadvantage is suffered
by persons from the non-designated group. The process of organisational development is
ongoing and will take different forms at different stages.

Case Review: Compliance with Equity Provisions

Director-General Department of Labour v Win-Cool

Industrial Enterprise (Pty) Ltd
(Labour Court (D731/05): 6 February; 16 April 2007)
Background
Win-Cool is a cut-make-and-trim factory employing 132 people. In 2003, the
factory was visited by bargaining council agents, who advised the employer as to the
legislative requirements. Because the owner, a Mr Liu, is a foreigner, he approached
the Federated Employers’ Organisation (FEOSA) to act as consultants in respect of his
legislative obligations. In November of 2003, his factory was visited by an agent from
the Department of Labour, who reported that Win-Cool was not complying with any
of the provisions of the Employment Equity Act. She obtained an undertaking from
the employer that he would conform with Sections 20 (equity plan), 21(1) (submission
of equity report), 25(1) (information to employees on provisions of the Act), 25(2)
(displaying of all notices related to equity) and 25(3) (copy of the plan to employees).
On 31 March 2004, the agent issued Win-Cool with a compliance order directing
him to execute the requirements of the Act, such as, among others, consulting with
employees, conducting an analysis, preparing and implementing an employment equity
plan, and submitting and publishing a report. Win-Cool did not object to the order,
which it was legally entitled to do, but still failed to comply. Finally, in October 2005,

Chapter 8: Employment Equity 431

an application was made to have the compliance order made an order of the court. A
similar application had been made in October 2004 but had been withdrawn.
Evidently, Win-Cool had first asked FEOSA to deal with its compliance, and on
29 October 2004 the consultants delivered an equity report to the department. (At
the time of the hearing, this report could not be found.) In January 2005, Mr Liu
had ‘consulted’ with the employees, advising them of the Employment Equity Act
and its consequences. He later submitted a letter from the employees in which they
expressed ‘anger and unhappiness’ at the ‘case of the Employment Equity Act plan’
and also feared that they would lose their jobs. Win-Cool argued that the company
had always sought to comply with the order and had even used consultants to assist
the company. Its workforce was made up as follows: one coloured senior official
or manager, nine African and two coloured technicians, all male, and 120 African
females in ‘elementary’ positions.

Pronouncements
According to the Court ‘Mechanical compliance with the prescribed processes is not
genuine compliance with the letter and spirit of the EEA. Compliance is not an end
in itself. The employer must systematically develop the workforce out of a life of
disadvantage’.
The Court noted that the company had not voluntarily complied with the
Employment Equity Act and that it was only after the first application was launched
that any attempt was made at submitting a plan. The plan itself had not followed
upon interaction with the employees and contained nothing more than a workforce
profile and numerical goals. The employer should have consulted with the workforce
before submitting the plan and report. He should not have relied on consultants but
‘assigned a manager’ to take responsibility for employment equity.
The Court concluded that Mr Liu had abdicated his responsibility to consultants
who were not as knowledgeable as they should have been, that he only made an effort
when litigation was imminent, that he appeared ‘manifestly reluctant’ to transform the
workplace and had held only one consultation with employees. There was not enough
information for the Court to consider all factors but what the Court did consider
seriously were the concerns of the workforce. With this in mind it imposed a relatively
light fine of R300 000, of which R200 000 was suspended on condition that Win-Cool
fulfilled its obligations in terms of the compliance order. No costs were ordered.

Discussion
The application of the strict terms of the Employment Equity Act to an organisation
such as Win-Cool appears equal to demanding silver service at a McDonald’s. Taking
into account the so-called ‘letter’ from the employees, it is to be questioned whether
consultation with the workforce would lead to any better plan than that already

432 Labour Relations: A southern African perspective

 presented by Win-Cool. Equally, the nature of the organisation and the work performed
may not lend itself to much in the way of development or to ‘quality jobs’. As it is, except
for the absence of whites, the workforce appears to have been quite representative
particularly of the most previously disadvantaged, namely black women.
Taking such formal steps in situations such as this corroborates criticisms that
South African labour law is too restrictive and counters employment creation. South
Africa’s unemployment rate is of great concern, yet some legislation, and particularly
the manner in which it is implemented, does not protect employees but instead
threatens their livelihoods. What, after all, prevents Mr Liu from taking his business
elsewhere? This is not to say that employers should be left to do as they please. What
it means is that those empowered to monitor the implementation of the law should
be made aware that nothing, including a law, is absolute. There are always grey
areas and there are times when they should use their discretion instead of doggedly
following the letter of the law.
In Mr Liu’s case, informal advice and assistance or the introduction of union
representation might have accomplished more than a compliance order and a fine of
R100 000, which could have gone as a bonus to employees.
Admittedly, Mr Liu may not have been treating employees as well as he should. This
having been said, employment equity should not be used to remedy other problems. If
Mr Liu was running a sweatshop and not treating his employees properly, this could
have been dealt with via the Basic Conditions of Employment or Labour Relations Acts.
Changing the demographics of the workforce would not have solved the problem.

Implementing the Affirmative Action Plan

Selection and Appointment of New Incumbents
The starting point for implementation of the equity plan is the existing and future manpower
plan of the organisation. If a position becomes vacant, the equity plan is consulted and the
demography in that job category is studied, in conjunction with the demography of the
organisation as a whole. It may then be decided to advertise that preference will be given to
a person from a previously disadvantaged group or even to headhunt for such person with
the aim of encouraging him to apply. However, this can never be an absolute imperative,
since someone from that group with the necessary competencies and experience may not be
available to fill the position.
The inherent requirements of the job are central to the selection procedure, and
capable candidates cannot be excluded simply because they are not from the preferred
group. Because certain groups were disadvantaged as regards education, and also because
educational qualifications are not necessarily indicative of competence, these should not, in
the case of non-academic or non-professional jobs, constitute the primary criteria. Selectors
have to identify the competency requirements of the job and to establish methods whereby
such competencies can be tested or assessed. Here the HR department plays an important

Chapter 8: Employment Equity 433

role. A common understanding of the term ‘suitably qualified’ is required, noting that this
can be based on:
■■ formal qualifications
■■ experience
■■ the potential to perform the job within a reasonable time.

Using Weighted Criteria for Selection

Once criteria have been established and assessment techniques developed, a weighting is
attached to each criterion. This is where affirmative action candidates can be given an edge
by adding membership of a previously disadvantaged group as a criterion and applying a
special, proportionate weighting to this. If the demographics have proved that particular
groups are less represented in the organisation or job category, the weighting given, for
example, to black females could be heavier than that assigned to white females.

Advertising Vacancies
Advertisements should list the competencies and experience levels required and should
reach as wide an audience as possible. Selectors may actively canvass persons whom they
may regard as possible incumbents, but it is not advisable to engage in ‘poaching’ from
other organisations. This merely sustains the elitism of the already employed. It is preferable
to approach persons who may not yet be filling a position at a particular level but who
display the potential to grow into the job. These persons should know that they will be
competing with others for the position.

Interviews and Assessments

All interviews should follow the same pattern, with due regard to (but not overcompensating
for) differences in personal experience, culture, language, etc. The total ‘scores’ obtained
by candidates in tests, assessments and interviews serve as guidelines to identify the best
candidates. Once this has been done, the selection panel discusses the merits and demerits
of each case, bearing in mind the affirmative action objectives. An affirmative action
candidate who may score slightly less than another candidate, but who has displayed the
potential to develop into the position, will then in all probability be appointed over the
other candidate who may, at this stage, be slightly better, but not that much better. It should
not happen that a mediocre or poor affirmative action candidate is appointed in preference
to an outstanding person who was not previously disadvantaged or was previously ‘less
disadvantaged’. This is detrimental both to the organisation and to the appointee, who may
not be able to prove himself worthy of the position.

Targeting All Levels of the Organisation

The focal point of affirmative action need not necessarily be the higher-level jobs in the
organisation. This does not mean that concerted efforts should not be made to change the

434 Labour Relations: A southern African perspective

demographics at these levels, nor that a supposed lack of candidates should be used as
an excuse, but organisations should not concentrate merely on such appointments. Their
efforts should be equally directed at future manpower requirements and to developing
persons from both inside and outside the organisation so that they may eventually fill
positions which are bound to be vacated or created.
The developmental aspect of affirmative action is complex. Manpower needs have to
be established, and persons with potential identified or appointed. Thereafter a suitable
programme is developed for these persons. Various problems may arise: for example, persons
identified may eventually prove unsuitable, or other employees may be unhappy at not
being granted the same opportunity. To avoid dissatisfaction, developmental programmes
are instituted for as wide a group of employees as possible, and not only for new appointees.
It is made clear that eventual promotion will depend on competencies achieved.

Integrating Employees into the Organisation

All new incumbents, and not only affirmative action appointees, should be properly integrated
by way of an effective induction programme. However, in the case of affirmative action
candidates, there may be circumstances which dictate that their integration be monitored.
This is done in a sensitive and careful manner, as the purpose is not to treat these candidates
differently or specially, but, at the same time to ensure that unnecessary obstacles to their
integration are removed. If affirmative action candidates have been properly selected, they
will more than likely accomplish their own integration.

Monitoring and Performance Appraisal

All new employees, whether appointed in terms of an affirmative action policy or not, may
be placed on probation and their performance monitored on an ongoing basis. The Labour
Relations Act outlines a procedure for this, as explained in Chapter 6. All employees need to be
informed of the standards required and given regular feedback as regards their performance.
If they do not meet expectations, they should be given the necessary assistance and training.
Any employee who still does not perform satisfactorily may eventually be dismissed.

Career Planning and Career Development

In all organisations, one facet of manpower planning is succession planning and career
development. If this is properly done, it offers an ideal route for developing previously
disadvantaged persons from both inside and outside the organisation to fill more important
positions. Initiatives in terms of the Skills Development Act support this development.
Selecting one or two people and grooming them for future positions may prove
unsatisfactory. The training provided should be both general and specific, so that candidates
who are not eventually selected for the targeted positions may apply for other positions.
This is a long-term strategy but, if the country is to develop a pool of trained manpower, it
becomes one of the most important aspects of affirmative action.

Chapter 8: Employment Equity 435

One of the criteria by which an employer’s progress is judged is the extent to which there is
support for training and development of existing employees and also persons on learnerships.

Further Strategies
Where it has been found that few vacancies may occur, it may be necessary to offer
voluntary retrenchment to certain persons, but taking care that necessary skills are retained.

Problems when Implementing the Affirmative Action Plan

Ensuring fairness
Some employers may believe that they fulfil equity requirements if they appoint mainly
black males or, on the other hand, mainly black and white females. This does not reflect
the true spirit of the equity legislation. A balance should be sought between racial and
gender representation and the appointment of other disadvantaged persons. Also, the non-
designated group cannot be automatically excluded.
The Henn and Willemse cases are interesting examples of how our courts view this balance.
In Henn v SA Technical (Pty) Ltd (2006) 27 ILJ 2617 (LC), the applicant for a job, a white
female, was rejected because of employment equity demographics. The respondent conceded
that it had discriminated against her on the basis of her race but argued that it was obliged
to apply affirmative action measures; therefore, she was not unfairly discriminated against.
The Labour Court was satisfied that the respondent’s conduct was not contrary to its policy,
and that it was justified in giving preference to African females who were suitably qualified.
According to this Court, the respondent was entitled to discriminate on the basis of race as it
was complying with affirmative action as provided for in Section 6(2)(a) of the EEA.
However, in the case of Willemse v Patelia (GPSSBC) (LC) the acting director general had
rejected the recommended applicant because he did not fit into the required demographic
profile. The Labour Court regarded the following factors as relevant:
■■ the targets as regards gender and race had already been met
■■ the criterion was the level of the post, not the department as a whole
■■ the applicant’s disability had been disregarded.

Acting Judge Deon Nel found that the applicant, Dr Willemse, a white male, had been
unfairly discriminated against when the Department of Environmental Affairs and Tourism
(DEAT) refused to promote him on grounds of gender and race. The court held that the
applicant be appointed in that post and also that he be paid the salary and benefits he would
have received had he been appointed earlier.

‘Suitably Qualified’
As indicated previously, Section 15(1) of the EEA describes Affirmative action measures as
measures designed to ensure that suitably qualified persons from designated groups have

436 Labour Relations: A southern African perspective

equal employment opportunities and are equitably represented in all occupational categories
and levels in the workforce of a designated employer. A candidate will be regarded as
suitably qualified if he has one of the following attributes:
■■ formal qualifications
■■ relevant experience
■■ the potential to perform the job within a reasonable time.

The problem is firstly how to assess potential and, secondly how to interpret the phrase ‘a
reasonable time’. Reasonable time was discussed in the case Public Servants Association
(PSA) obo Karriem v South African Police Service (SAPS) & Another (2007) 28 ILJ 177 (LC).
The PSA alleged that SAPS had failed to comply with its obligations in terms of Section
20(4) of the EEA. In deciding on the appointment it did not review all the factors for
consideration as set out in Section 20(3) of the Act, namely,
■■ formal qualifications
■■ prior learning
■■ relevant experience
■■ the capacity to learn how to do the job , within a reasonable time.

The PSA alleged that the SAPS had breached its obligation to implement affirmative action
measures in terms of Chapter 3 of the Act and, in terms of its own Employment Equity Plan,
in that it had failed to appoint Ms Karriem, notwithstanding the fact that she was suitably
qualified and a coloured woman. The respondent had promoted a white policewoman over a
coloured policewoman. Ms Karriem alleged that she had been unfairly discriminated against
on the basis of race and the capacity to acquire, within reasonable time, the ability to do
the job.
The Court noted that there had been objective justification for the appointment of the
white female based on consideration of all the relevant factors. The Court therefore held that
the applicant had not suffered unfair discrimination. This again proves that the mere fact
that an individual is competent or can become competent and belongs to a certain group
does not guarantee candidacy. The qualifications and demography of other individuals also
have to be considered and each weighed against the other.
The measurement of potential is made more difficult in terms of the care which has to be
exercised in using psychological testing or similar forms of assessment. What is necessary
is to decide beforehand on the indicators of potential, to use a proven instrument directed
at assessing that potential and to be clear as to the time required to develop such potential.
When immediate performance at a particular level is required, it would hardly be feasible to
consider the aspect of potential. On the other hand, when the opportunity to develop exists,
consideration of potential becomes important. The interpretation of ‘a reasonable time’
therefore depends on the position and the needs of the organisation.

Chapter 8: Employment Equity 437

Internal Recruitment
Internal recruitment is appropriate when adequate training and development initiatives
have been undertaken over time and resulted in strong internal capacity. This may happen
when the company is in a growth phase and a fair number of jobs are being created or where
internal resources meet most or all requirements of the vacancies and the organisation
has clear policies and procedures regarding promotions, transfers and internal movements.
Internal recruitment will be acceptable if existing employees from the designated groups
are able to fill promotion posts and where it results in the rectification of demographic
imbalances. Where an organisation does not have enough potential candidates from the
designated groups in its own ranks, an internal recruitment policy cannot be used as an
excuse for perpetuating imbalances.

Candidates-in-waiting and Contract Employees

Persons already employed may have had their career paths mapped out for them, preventing
the appointment of new candidates for future posts. Equally, employees in contract posts
may have the expectation that they will receive preference should a permanent position
become available. This may stand in the way of appointing affirmative action candidates.
The 2014 amendments to the Labour Relations Act (see Chapter 3) impact on this situation.
In terms of the amendments, an employer must provide an employee on a fixed-term contract
with the same access to opportunities to apply for vacancies as it would provide to an employee
employed on an indefinite employment contract. Where an expectation of renewal or of a
permanent position has been created, the dismissal of these employees could be regarded as
unfair. These changes also need to be borne in mind when implementing equity.

Retrenchment and the LIFO Principle

Because in many organisations affirmative action initiatives have been recent in nature,
these appointees may be the first to be nominated when people to be retrenched are
selected in terms of the LIFO principle. This could upset the equity initiative. It is therefore
necessary to ascertain whether the proposed retrenchments will create further demographic
imbalances. If this is the case, a certain quota of designated employees may need to be
excluded from the retrenchment exercise.

Employing the Disabled

Often, the nature of the work required is such that it cannot be undertaken by disabled persons,
nor can the work or workplace be modified to cater for such persons. In these instances, the
organisation could consider whether it can outsource certain tasks to institutions for the
disabled where the work can be performed in more conducive surroundings.
The problems mentioned are not exhaustive. The achievement of equity is bound to
involve numerous questions, some of a more general nature and others related to particular
organisations.

438 Labour Relations: A southern African perspective

 Case Reviews: Affirmative Appointments

Public Servants Association of SA & Others v

Minister of Justice and Others
(Transvaal Provincial Division: 4 March 1997)
Background
The case arose from the existence of 30 vacant positions in the offices of the State
Attorney.
Prior to the placement of the advertisements for the positions, a meeting had been
held between the Minister, an employee from the State Attorney’s office, and various
others. The purpose of the meeting was to discuss the staffing of the vacant posts.
During the meeting it was proposed that a number of posts be reserved for affirmative
action candidates. The employee concerned objected to such senior posts as State
Attorney being reserved and suggested that existing employees should be promoted on
merit. This would create vacancies at the Assistant State Attorney level, which could
then, where possible, be filled with affirmative action candidates. His suggestion was
rejected, but he was told that existing employees could also apply for the senior posts.
Immediately following the meeting, the employee asked one of the management
team whether it would be worthwhile for white males to apply. The reply was that
they would be wasting their time.
The eagerness to appoint affirmative action candidates evidently arose from the
injunction in the then Interim Constitution that a broadly representative public
service should be established and from the fact that, in December 1994, the Public
Service Staff Code as contained in the Public Service Act had been amended to
provide for affirmative action initiatives. However, in terms of the Code, this should
be undertaken only after rationalisation of a particular department and upon
presentation of an approved management plan. There was a further injunction to
give effect to the affirmative action initiative in a ‘balanced’ manner and adopting a
‘comprehensive, well-planned and structured approach’.
The Department had not yet engaged in rationalisation, nor had it developed a
manpower plan. Instead it chose to gain the approval of the Minister of Public Affairs (the
second respondent in the case) to go ahead with affirmative action initiatives as a matter
of urgency. In the process it did not consult with the union representing employees.
A large number of the union’s members, all white males, applied for the vacant
positions. One of the applicants occupied the position of Deputy State Attorney
while all the others joined in the dispute were Senior State Attorneys or Senior

Chapter 8: Employment Equity 439

Assistant State Attorneys. Experience ranged from 15 to 26 years, and some had
been recommended for extraordinary promotion.
As the Court later noted, none of these were invited to an interview, and, their
applications were considered only for the purpose of rejection on the basis of their
race and gender. Instead, three women were interviewed, one of whom had qualified
five years before and had only a year’s experience in the office of the State Attorney,
although she had spent four years in private practice.
The Public Servants Association had written to management during the process to
question the implementation of a non-negotiated initiative but had been told that
it was not a matter of mutual interest. The union thereupon sought an interdict or
declaratory order to prevent the Department from continuing with the process.

Pronouncements
The Court dealt in detail with the credentials of the applicants, Section 212(2) of the
Interim Constitution and the relevant sections of the Public Service Act. It also took
into account the argument of the union that there had been no explanation of the
selection process, that there was no evidence of targeted recruitment at entry level,
that there was no provision for existing employees affected by the process as had
been agreed upon, and that affirmative action could not be used as the sole criterion.
The judgment commenced by questioning firstly whether there had been
discrimination.
The Court referred to Hogg to explain that, for an act to be regarded as
discriminatory, it has to be on grounds of immutable personal characteristics. General
disadvantage is not required, but particular disadvantage has to be shown – ‘the
individual must show that he or she has suffered a disadvantage by reason of his or
her possession of certain characteristics’.
This led the Court to express the opinion that ‘… the facts fully justify the conclusion
that the white, male applicants for the state attorney posts have been discriminated
against on those very bases. They are white and male’. The next question was whether
such discrimination had been unfair.
The Court noted that the Constitution had deliberately singled out affirmative
action initiatives as not necessarily being unfair. Nevertheless, the Court underlined
the fact that these initiatives are subject to limitations. Having indicated that the
onus was on the Department to prove that the measures had not been unfair it went
on to explain that the term ‘adequate protection and advancement’ meant that:
• objectives as well as the means of achieving these were reviewable
• measures should not go ‘beyond the adequate’
• merely labelling certain measures as affirmative action measures would ‘not suffice’.

440 Labour Relations: A southern African perspective

Having noted that the question of affirmative action was not in dispute but rather
the department’s way of implementing it, the Court returned to the argument that
the ‘… process of promoting a representative public service is in any event permitted
and required by S 212(2)(b) which demands a public administration broadly
representative of the South African community’. In the opinion of the Court this was
‘not an automatic licence to discriminate against others.’ In order to disprove the
allegation of unfair discrimination, the following were necessary:
• Measures must have been designed – this was the opposite of a ‘haphazard or
random action’.
• The measures had to be designed to achieve something – there had to be a causal
connection between measures and objectives.
• The measures had to provide for the adequate protection and advancement of
previously disadvantaged groups – with ‘adequate’ meaning ‘equal in magnitude
and extent’, ‘commensurate in fitness, sufficient, suitable’.

The adequate protection and advancement should be aimed at enabling groups or

persons to equally enjoy rights and freedoms – with the word ‘equal’ connoting that
‘interests of targeted persons or groups are not taken into consideration in vacuo, but
also with regard to the rights of others, and the interests of the community and the
possible disadvantages that the non-targeted persons or groups may suffer’.
Measures had to be evaluated ‘in the light of the professions’ – they needed to
take into account the career-oriented nature of the public service and the necessity
to function in terms of fair and equitable principles.
While a broadly representative public service was being promoted, an efficient
service also had to be achieved, with the word ‘promote’ not meaning ‘to achieve
overnight’. In the Court’s opinion ‘… a broadly representative public administration can,
in terms of S212, not be promoted at the expense of an efficient administration’, to
which the public and the taxpayer, including targeted persons or groups, are entitled.
The Court could envisage circumstances in which both objectives could be
achieved, when, for example, candidates from the targeted and non-targeted groups
had ‘broadly’ the same qualifications and merit, and the former was then preferred.
In enquiring whether the requirements mentioned had been met, the Court came to
the following conclusions:
The measures were not designed – they were ‘haphazard, at random and overhasty’.
At this point the Court digressed to question the basis on which it had been decided
to earmark the posts. Evidently the Department had decided that representativeness
must ‘… as soon as possible be instituted at all levels of the civil service’ and this had
resulted in ‘… the earmarking of posts, in some cases, at or near the very top of the
pyramid in a professional department like the State Attorney’s office’. The Court was

Chapter 8: Employment Equity 441

of the opinion that this was ‘not expressly called for by the Constitution’ and that it
would be unsuitable for targeted persons, other persons such as those in the position
of the applicants, and of society at large’ if posts were earmarked for certain groups
without considerations of efficiency.
The Court concluded that affirmative action had been implemented ‘… without
any discernible rationale, which in fact amounted to the exclusion of all the other
applicants on the basis of their race and gender.’

Discussion
In the first place, this case highlights the necessity for an agreed policy and plan before
any affirmative action initiatives are undertaken. Secondly, it rejects the common
practice of excluding certain categories of applicants from the outset. As happened in
this case, such practice may lead to allegations, and proof, of discrimination. For this
reason, positions should not be advertised as affirmative action positions although it
can be stated that, in selection, cognisance will be taken of the organisation’s equity
targets, but that these will be weighed with other criteria.
Overall, the judgment reveals that affirmative action initiatives, like all strategic
initiatives, should be placed in context, that consideration should be given to the
efficient functioning of the organisation, the effect on other employees, to the
pool of labour available and the effect that a wrong placement may have on the
affirmative action candidate.

Du Preez v Minister of Justice & Constitutional

Development & Others
(South Eastern Cape Local Division sitting in its capacity
as an Equity Court (368/2004): 8 December 2005;
13 April 2006)
Background
During May 2002, the Magistrates Commission advertised vacant positions for
court magistrates in various districts, including Port Elizabeth, where two posts
were available. The Commission advises the Minister on the appointment of judicial
officers and is supposed to ensure that judicial officers are appointed ‘without favour
or prejudice’. Du Preez, a white male with 19 years’ experience as a magistrate and
holder of a BJuris, LLB and Master’s degree in Public Administration, was one of the
applicants for a position. He did not make the shortlist. Two black female candidates
with lesser qualifications and experience were nominated by the Commission.

442 Labour Relations: A southern African perspective

In terms of the Magistrates Act, magistrates are judicial officers who are independent
of the public service and are not employees as defined by the Employment Equity Act.
Consequently, Du Preez brought an action in terms of the Promotion of Equality and
the Prevention of Unfair Discrimination Act (Act 4 of 2000), which is very similar to
the Employment Equity Act but also applies to the wider public. Du Preez claimed
that he had been discriminated against on the basis of race and because of the
‘irrational, unreasonable and unconstitutional criteria’ applied by the committee
responsible for short-listing the applicants for the vacant positions.
From the affidavits presented to the court, it emerged that, despite the fact that
the profile of each candidate had been presented to the committee, applicants were
scored on only three criteria – namely, qualifications, race and gender. According to the
commission, these criteria were being applied in all areas in view of its commitment to
achieve a more representative judicial service. However, in Port Elizabeth the criteria
were weighted in such a way that, as Du Preez put it, it was ‘impossible for a white
male to compete against a black woman’. Both scored one point under qualifications.
For his 19 years’ experience he was allocated three points, while the black female
with two years’ experience received one point. On race and gender, he scored a nil
while she scored three points for race and three points for gender, giving her a total
of eight points against his four. Du Preez contended that this made him a victim of
unfair discrimination and sought an order setting aside the criteria used to shortlist
candidates as well as an order directing the commission to re-advertise the positions
and to use criteria which are ‘constitutionally sound and which criteria do not constitute
an absolute barrier to any prospective candidate as a result of race and/or gender’.

Pronouncements
The Court noted that two candidates, both with less than two years’ district court
bench experience, had been recommended for the vacancies in Port Elizabeth and
that both these candidates were black females. It was also pointed out that the
candidates were shortlisted solely on the results on the score sheets. The Court then
went on to compare the relevant clauses relating to discrimination in the Constitution,
the Employment Equity Act and the Promotion of Equality and Prevention of Unfair
Discrimination Act, concluding that they were in essence the same. Of relevance
was the fact that, even though affirmative action measures might not necessarily
disadvantage others, there would be instances where they do have that effect. The
Court was of the opinion that the ‘affirmative action’ clauses could not be viewed as
permitting discrimination in all circumstances where equality was being pursued. If
this were the case, then persons disadvantaged by affirmative action measures would
have ‘no protection under the equality rights guaranteed by the Constitution’.
The Court then turned to Section 13 of the Promotion of Equality Act, which
stipulates that, if the applicant has presented a prima facie case of discrimination,
the onus then falls on the employer to prove that the actions undertaken were fair.

Chapter 8: Employment Equity 443

In terms of Sections 14(2) and (3) of the same Act, the following criteria must be
applied by persons tasked to determine whether the action was fair:
• the context in which the discrimination occurred
• whether the discrimination reasonably and justifiably differentiates between
persons according to objectively determinable criteria intrinsic to the activity
concerned
• whether the discrimination impairs, or is likely to impair, human dignity
• the impact, or the likely impact, of the discrimination on the complainant
• the position of the complainant in society: whether he or she suffers from
patterns of disadvantage or belongs to a group that suffers from such patterns of
disadvantage
• the nature and extent of the discrimination
• whether the discrimination is systemic in nature
• whether the discrimination has a legitimate purpose
• whether and to what extent the discrimination achieves its purpose
• whether there are less restrictive and less disadvantageous means to achieve the
purpose
• whether and to what extent the respondent has taken reasonable steps to address
the disadvantage which arises from, or is related to, one or more of the prohibited
grounds, or to accommodate diversity.

In analysing the case at hand, the Court, as a first step, had to decide whether Du
Preez had made a prima facie case for discrimination. The Court concluded that there
had been discrimination, which would be regarded as unfair unless the respondent
could prove otherwise.
As a second step, the Court turned to the question as to whether the discrimination
had a legitimate purpose. It noted that, according to the evidence presented, there
was indeed a real need to bring about greater equity in the bench of the Port Elizabeth
regional court, where, of the 13 posts already filled, nine were held by white males,
one by a white female and one by an African male. The Court also looked at the
commission’s policy as regards the achievement of equity and its implementation of
the policy. It concluded that the commission’s policy was not ‘haphazard or random’
and that the discrimination had a legitimate purpose.
The Court nevertheless went on to explain that it must ‘ask itself whether the
discrimination reasonably and justifiably differentiates between persons according to
objectively determinable criteria, intrinsic to the activity concerned’. In the opinion of
the Court, the main criterion in this case would have been experience; this because
sitting on the bench demands insight and maturity, and there is ‘no substitute for
experience’. As the Court put it: ‘The regional court bench has an important position

444 Labour Relations: A southern African perspective

in the administration of justice. It is of cardinal importance that public confidence
in the criminal justice system be fostered and maintained by appointment to the
regional courts of suitably qualified and sufficiently experienced persons. The Court
pointed out that, because of the scoring system, Du Preez’s lengthy experience
actually ‘counted for nought’. The other applicants were said to meet the minimum
requirements only because experience other than that of magistrate was taken into
account. The committee’s failure to have sufficient regard to experience was not
the only shortcoming in the shortlisting process. The committee had failed to take
the profile and CV of each candidate into account. Furthermore, they should have
had regard to the other criteria by which candidates would be judged in the final
selection. These include, among others, legal knowledge, leadership and management
skills, language proficiency and communication. All in all, the Court concluded that:
‘There is a patent disproportionality in a selection policy based on race and gender
to the absolute exclusion of all other qualities required for a position as responsible
and important as that of regional magistrate. Such policy is irrational within its own
terms and objectives’.
The final point to be deliberated was the applicant’s contention that the criteria
adopted constituted an absolute barrier to his being considered on merit for the
position. In this respect the Court referred to Section 15(4) of the Employment Equity
Act, which provides that nothing in the section relating to affirmative action requires
an employer to place an absolute barrier on the prospective or continued employment
or advancement of persons from the non-designated group (white males). The Court
concluded that: ‘The inflexible modus operandi of the committee comes four-
square within the situation of absolute inclusion of designated group members to
the absolute exclusion of non-designated group members’. The formula effectively
frustrated the applicant’s ambition for advancement and denied him benefits
concomitant with such promotion. Because the formula was part of departmental
policy, the discrimination was judged to be endemic.
The final verdict was that the department had failed to prove that the
discrimination was fair. The Court set aside the criteria which had been utilised and
ordered the commission to re-advertise the vacancies for the position of regional
magistrate. Costs were awarded against the department.

Discussion
The case addresses one of the most important issues arising from the equity legislation,
namely, the question as to whether, if apparently justified by an employment equity
plan, positions can be reserved outright for members of a previously disadvantaged
group to the exclusion of all others. From the case review above, it is clear that,
while nothing in the equity legislation prohibits this, such action may be challenged
in terms of the unfair discrimination clause; further, that rights obtained by equity
legislation are always subordinate to those contained in the Constitution, in which

Chapter 8: Employment Equity 445

 the right to equality and the right not to be discriminated against are primary rights.
The Court once again confirmed that fairness is a complex concept, that no rights are
absolute and that each action will be judged in terms of its particular circumstances
and the totality of precepts applicable to the situation.

Conclusion
Affirmative action is a dynamic, organic process. Policies, strategies and progress should
be constantly reviewed and, if necessary, adapted in terms of changing circumstances and
demands.
Moreover, it should be remembered that, while equality should be pursued, no societal
structure can be a perfect mirror of its population.
Most recently it was reported that the Minister of Labour had informed Parliament that,
according to the Human Rights Commission, the Employment Equity Act is unconstitutional.
No further details have been provided, but as the Human Rights Commission has to approve
all legislations, it may be that the Act will have to be revised.

Suggested Questions/Tasks
•• Source another case dealing with targets as against quotas and compare its findings
with the two judgments in the Correctional Services case.
•• Draw up an Equity Policy and Procedure for your organisation under the following
headings:
oo Policy Objectives – what you aim to achieve with this policy
oo Definition of Terms – define all the important concepts
oo Policy Statements – the principles which constitute the basis of the policy
oo Possible Obstacles (to the achievement of equity)
oo Processes – those that need to be instituted in order to overcome the obstacles,
achieve the objectives and put the principles into practice
oo Procedures – a step-by-step outline of the exact procedure for each process
– for instance, checking of existent policies and practices, appointment of a
committee, etc
oo Allocation of Responsibilities.
•• Approach an organisation and request their equity plan (which should be open to
scrutiny). Write a report on the plan, setting out the reasons why it conforms/does
not conform to best practice.

446 Labour Relations: A southern African perspective

Sources
Employment Equity Act (55 of 1998). Pretoria: Government Printer.
Employment Equity Amendment Act (of 2013). Pretoria: Government Printer
Government Gazette, February 14 2016
Geneva, ILO Discrimination (Employment & Occupation) Convention No 111 of 1958.
Industrial Law Journal, vol 18, August 1997. Juta.
Industrial Law Journal, vol 20, September 1999. Juta.
Industrial Law Journal, vol 21, March 2000. Juta.
Industrial Law Journal, vol 27, December 2006. Juta
Industrial Law Journal, vol 28, February 2007. Juta.
Industrial Law Journal, vol 28, August 2007. Juta.
Useful websites
https://businesstech.co.za/news/.
www.jutalaw.co.za.
www.labour.gov.za.
www.saffli.org.za.

Chapter 8: Employment Equity 447

 9

Labour Economics: Theories and

Application

Chapter Outline
OVERVIEW
THE IMPORTANCE OF LABOUR ECONOMICS
CLASSICAL AND NEO-CLASSICAL LABOUR MARKET THEORY
Classical Theory • Characteristics of the Labour Market • The Neo-Classicists
LABOUR MARKET MODELS
The Law of Demand and Supply • Market Equilibrium • Shifts in Demand • Shifts in Supply
• Movement to Equilibrium • Reasons for Shifts in Demand and Supply | Demand | Supply | Elasticity
of Demand and Supply | Elastic and Inelastic Demand | Effect on Employment Levels | Elasticity of
Supply | Cause and Effect • The Law of Diminishing Returns | Premises | The Marginal Productivity/
Utility of Labour | Implications
OTHER LABOUR MARKET THEORIES
The Institutional Economists • Dual Labour Market Theories • Radical Theories
THE EFFECT OF COLLECTIVE BARGAINING ON WAGE AND EMPLOYMENT LEVELS
THE EFFECT OF WAGE DETERMINATIONS ON EMPLOYMENT LEVELS
LABOUR MARKETS IN THE TWENTY-FIRST CENTURY
CONCLUSION
SUGGESTED QUESTIONS/TASKS
SOURCES
 Overview
Labour economics is, in itself, an independent field and cannot be covered in depth
in this chapter. However, it is important for the labour relations practitioner to be
acquainted with the most important labour market theories since these not only affect
attitudes regarding wage levels, but also explain the dynamics of unemployment.
In terms of classical labour market theory, the labour market is assumed to
function in the same manner as other markets. According to this theory, wage and
employment levels are determined by the law of supply and demand, as usually
happens in product markets where scarcity leads to higher prices (read wages) and
oversupply to lower prices.
The neo-classical theorists adopted and adapted the classical models, placing
emphasis on the maximising behaviour of employers and working man and proposing
the principle of aggregate production and aggregate demand for labour as a better
basis for analysing the labour market and explaining unemployment. At the same
time, the institutionalists were questioning the use of theoretical models to explain
the realities of the labour market and instead conducted empirical studies which,
they claimed, showed that internal markets in organisations/institutions operated
independently of the external labour market. Modern labour economists have built
on these theories. Many emphasise the socio-economic and labour relations factors
which impact on labour markets and point to the existence of various types of
labour markets.
The remedies suggested to solve the problem of unemployment will be influenced
by the labour market theory to which the proponents subscribe. Thus, proponents of
the free flexible market will suggest that government and union interference in the
labour market (labour market rigidities) are mainly responsible for high levels of
unemployment. On the other hand, those adopting a more radical stance will place
the blame on capitalism and the free-market system. This is of relevance in Chapter
10, which deals with the problem of unemployment in South Africa.
Labour relations practitioners are also concerned with the effect of collective
bargaining and wage determinations on wage levels as well as the effects of
discriminatory labour practices and labour mobility, or the lack of it, on the overall
composition of the labour market and the wage levels which are established for
different groups.
In the new millennium the increased prevalence of automation and digitalisation,
bringing with it radical changes in the nature of work and thereby in the demand
for certain types of labour, has obliged experts to rethink traditional theory and
particularly the traditional approaches to the problem of unemployment. Although
the basic principles of demand and supply will remain, those in power will, in future,
have to find more innovative solutions.

Chapter 9: Labour Economics: Theories and Application 449

The Importance of Labour Economics
The importance of labour economics in modern day life is aptly described by McConnell
et al. (1986), when they state that, ‘… many of the most compelling socio-economic issues
of the day centre upon the labour sector of the economy’. Newspaper headlines regularly
cover labour-related issues such as strikes, productivity levels, rising unemployment, wage–
price inflation and greater mechanisation. All of these are the concern of labour economists.
The major part of national income is distributed in the form of wages. Since wage earners
constitute the core of economic activity, it is important to understand how wage levels are
established and the effect of these on the economy in general. This necessitates a study of the
wage and labour markets, which display their own particular characteristics, different from
those of product and capital markets.
Another important concern, particularly in the South African context, is the level of
unemployment. Traditionally, high unemployment is attributed to flaws in or interference
with the labour market, but other theorists ascribe unemployment to economic factors and
to misplaced economic policies.

Classical and Neo-Classical Labour Market Theory

Classical Theory
Classical labour market theory has its origins in the writings of Adam Smith, who used
the market principles of demand and supply to demonstrate that the wage rate would be
determined by the interaction between the demand for and the supply of labour (see diagrams
below). Smith maintained that, if the market functioned freely, it would always adjust itself
to a point where demand matched supply. The classical economists therefore believed that,
in a perfectly functioning market, there should be no unemployment. If unemployment did
occur, it was temporary. The market would rapidly readjust itself and return to equilibrium.
As Reynolds, Masters and Moser (1986) confirm, the following assumptions are made in
classical labour market theory – namely, that:
■■ the wage rate, and nothing else, determines the attractiveness of a particular position
■■ all vacancies are filled through the market, and not by internal promotion
■■ all workers are the same if they are able to do the same job
■■ there is full knowledge among potential employees of job opportunities, wage rates and
job characteristics
■■ employers, likewise, have full knowledge of potential employees
■■ the economic motive overrides all others
■■ the market is competitive; there is no restriction or collusion
■■ everything else in the economy remains constant.

450 Labour Relations: A southern African perspective

Characteristics of the Labour Market
Although the labour market is, in classical labour market theory, equated to other markets
such as capital and product markets, it has its own particular characteristics. Reynolds et al.
(1986) lists the following as unique characteristics of the labour market:
Multiplicity of Markets – reference is usually made to the labour market, but this market
is comprised of many different markets, such as those for various skill levels, occupations,
age groups, sexes, industries and geographical regions. The various markets are to some
extent interchangeable, yet barriers to mobility do exist. It is these barriers which nowadays
constitute a central concern in labour economics.
No Central Clearing-house Exists – goods may be processed through a central exchange,
but there is no such clearing-house for employees, who cannot be centrally collected and
then apportioned on demand. Thus, when we speak of a certain market in a particular area,
the concept is largely theoretical.
Workers are not Standardised – while various applicants might offer themselves for the
same position, they will vary in ability, intelligence, motivation, physical characteristics,
social behaviour and specific skills. Hence, they are not all equally suited for the position.
A special concern of labour economics is the development of human capital as a means of
broadening the potential labour market.
Temporary Nature of the Employment Relationship – once a purchaser buys goods for
consumption, they become the property of the buyer. This is not so with the employment
relationship. Either the employer or employee may decide to terminate the relationship. This
leads to greater fluidity and unpredictability in the labour market.
Complexity of the Employment Package – The price paid for labour and the value received
may be far higher than the actual wage rate. Employees receive tangible and intangible
benefits in the form of pensions, housing, work satisfaction and personal growth. In applying
the law of supply and demand to the labour market, these benefits are not taken into account.

The Neo-Classicists
By the end of the nineteenth century, labour market theorists had begun to realise that the
concept of the perfect labour market was unrealistic and that ‘existing theory inadequately
represented the complexity of observed phenomenon’. This was the premise adopted by
the neo-classicists, who claimed to have injected realism into classical theory. Although
they used the classical models of demand and supply, they believed that output and
employment were determined by ‘real’ forces, of which the most important were aggregate
demand and aggregate production. Aggregate demand in the economy was based on
business expectations of future profitability. According to the neo-classicists, who were also
supporters of the free market, neither monetary theory nor fiscal policy could counter the
problem of unemployment. This could only be done by increasing aggregate demand in the
economy and by education and on-the-job training. Thus, the emphasis was on economic
growth and on the allocation of a given set of resources.

Chapter 9: Labour Economics: Theories and Application 451

The marginal utility theory was used to explain the maximising behaviour of the participants
in the labour market. The employer maximises profit and productivity, while the employee
maximises income and leisure. This, in turn, affects both demand for and supply of labour.
Like the classical theorists, the neo-classicists supported the concept of a freely functioning
market and believed that the market would eventually return to equilibrium, but that this
would take longer than proposed by the classical school. They decried any interference with
the market and particularly, the undesirable effects of government legislation and union
interference. They may therefore be described as proponents of what are nowadays termed
flexible labour markets.
The neo-classical school was not without its critics, some of whose ideas were later
incorporated into neo-classical theory. Thus, the ambit of neo-classical theory, while
retaining its basic principles, was widened to include models of imperfect competition and
concepts such as a fair wage and an efficiency wage (a wage higher than the market rate to
encourage loyalty and productivity).
Although, in modern times, thinking on the labour market is also approached from
psychological, sociological and historical premises, and incorporates ideas from other
labour market theories, the classical and neo-classical approaches still form the basis of
labour market analysis.

Labour Market Models

The Law of Demand and Supply

The theory of labour demand and supply is based on the same principles as price theory.
The basic assumption of the latter theory is, firstly, that there is a direct, inverse relationship
between price and demand – that as the price increases, the quantity demanded will decrease.
In the context of the labour market, this means that, as the price of labour (wages)
increases, so the quantity of labour demanded will decrease. The Demand Schedule obtained
from this premise is illustrated in Figure 9.1.
The demand curve slopes upward to the left. According to Figure 9.1, 50 units of labour
would be demanded at a wage rate (price) of R3.00 per hour, but, should the wage rate rise
to R6.00 per hour, the quantity demanded would decline to 20 units. The consequences of
this on the level of employment are, in theory, self-evident.
The second principle of price theory is that supply stands in a direct, straightforward
relationship to price. The lower the price, the smaller will be the quantity of goods or
services offered to the market. In terms of labour supply, this means that the number of
people prepared to do a certain job will decrease in direct relation to a decrease in the wage
level. As a result, the Supply Function illustrated in Figure 9.2 is obtained.
In terms of Figure 9.2, 70 workers would offer themselves at a wage of R7.00 per hour
while, at a rate of R3.00 per hour the supply of labour would drop to 30.

452 Labour Relations: A southern African perspective

 Wage rate

10

8
D0
7

6 W2

4
W1
3

2
D0
1
Number of labour units
0
10 20 30 40 50 60 70 80 90 100

figure 9.1: labour demand schedule

Wage rate

10

9
S0
8

7 W1

3 W2

2 S0
1
Number of labour units
0
10 20 30 40 50 60 70 80 90 100

figure 9.2: the supply function of labour

Chapter 9: Labour Economics: Theories and Application 453

Market Equilibrium
In the perfectly competitive market, equilibrium is achieved at the point where the supply
curve intersects the demand curve. Equilibrium price and equilibrium quantity of labour
demanded and labour supplied are determined by the interaction of market demand and
market supply. This is illustrated in Figure 9.3, where equilibrium would be achieved
if there was a demand for 40 people at a rate of R4.00 per hour and 40 people offered
themselves for employment at this wage rate. This situation arises under conditions of
perfect competition, which are rarely achieved in practice. Free-market economists believe
that there is, nevertheless, always a tendency towards a restoration of equilibrium.

Wage rate

10

9
D0
8

7 S0

1 D0
S0
Number of labour units
0
10 20 30 40 50 60 70 80 90 100

figure 9.3: equilibrium supply and demand

Shifts in Demand
Demand for and supply of labour are not related only to wage levels. Total demand is a derived
demand. It depends, inter alia, on the demand for goods or services in the product market.
Thus, an increase in, for example, the demand for particular goods and services will lead to
an increase in the quantity of labour demanded. This occasion a shift in the demand curve to
the right of its original position (illustrated by a shift from D0 to D1 in Figure 9.4). If the supply
curve remains constant, the consumers of labour (employers) will have to pay more to obtain
further quantities of labour. This could entail overtime pay or the offer of higher wages, in order
to draw more suppliers (labour units) to the market. Thus, a new wage rate (W2) is established.

454 Labour Relations: A southern African perspective

On the other hand, if the demand for goods and services suddenly decreases, total demand
for labour will decrease. The demand curve shifts to the left of its original position (illustrated by
the shift from D0 to D2 in Figure 9.4). If the supply of labour remains constant, this means that
the consumers of labour will be able to pay less for smaller quantities of labour. A new wage
rate (W3) is established. This happens because there is greater rivalry among workers, some of
whom will be prepared to accept lower wages. It also means that unemployment in that labour
market will increase, or that people will leave that market to find employment in other areas.

Wage rate

10

9
D1
8 S1
D0
7

6 W2
D2
5

4 W1
D1
3 W3

2
S1
1
D2 D0 Number of labour units
0
10 20 30 40 50 60 70 80 90 100

figure 9.4: shifts in the demand curve

Shifts in Supply
Shifts may also occur in the supply curve, for example with emigration or migration. A shift of
the supply curve to the left (S1 in Figure 9.5) is occasioned by a general decrease in the supply of
labour. Where demand remains constant, this results in a higher wage rate (W2) being established
for smaller quantities of labour (an argument similar to that of an increase in demand). An
increase in the supply of labour relative to demand causes a shift in the supply curve to the right
(S2) and a lower wage rate (W3) for higher quantities of labour (see Decrease in Demand).

Movement to Equilibrium
According to free-market theorists, if all other things remain equal, the wage rate established
by shifting demand and supply will be of a temporary nature since, as indicated earlier, there
is always a tendency towards a restoration of equilibrium. Thus, if too many employees offer
themselves for a particular job and the supply curve shifts to the right, competition or rivalry

Chapter 9: Labour Economics: Theories and Application 455

will occur among the suppliers of labour. As a result, certain workers will be prepared to accept
lower wages, leading to a decrease in the average price of labour (wages). Because workers are
now prepared to accept lower wages, employers are prepared to take on more labour. Therefore,
there is a gradual move along the demand curve to a new equilibrium situation, where the price
(wage) is lower than in the perfect equilibrium situation, but higher than it would have been
at the first level of supply – that is, when a situation of oversupply arose, and the quantity
demanded was greater than the original demand but lower than the actual supply. Similarly, in
a situation of excess demand, the employer may look for alternative means of production. If
this is not possible, he may offer a higher wage to attract extra labour units. As a result, more
persons will offer themselves for that occupation and, with increased competition, the price of
labour drops and a new equilibrium is achieved, where the price is higher than in the perfect
equilibrium situation but lower than it would have been at the first level of demand – that is,
when the shift in the demand curve arose. This is reflected in Figure 9.6. If the general demand
for labour increases, occasioning a shift in the demand curve to the right (D0 to D1), employers
are demanding more quantities of labour at the same wage rate, (a) on the diagram. Since the
additional quantity of labour demanded cannot be obtained at the equilibrium wage (W1), the
rate is increased to W2 (illustrated by (b) in Figure 9.6). This attracts more labour to the market,
occasioning a movement (c) along the supply curve. Since more employees are prepared to offer
their services, there is increased competition, and the wage rate will decrease from its previous
high at point (b). A new equilibrium is established, resulting in a new wage (W3), which is
higher than the perfect equilibrium wage, but lower than the wage necessitated by the original
increased demand. Similarly, the quantity of labour demanded and supplied (Q3) is higher than
the perfect equilibrium quantity (Q1), but lower than the quantity demanded when the original
shortage arose (Q2). (See Figure 9.4, and Figure 9.5 below and Figure 9.6 on the following page.)

Wage rate

10

8
S1
7 D0
S0
6

5 W2 S2

4 W1

3 W3
S1
2
S0
1 D0
S2 Number of labour units
0
10 20 30 40 50 60 70 80 90 100

figure 9.5: shifts in the supply curve

456 Labour Relations: A southern African perspective

 Wage rate

10

8 D1

7
S1
(b)
6 W2
D0
5 W (d)
3
(c)
(a)
4 W1

2 S1
D1
1 D0
Number of labour units
0
Q1 Q3 Q2
10 20 30 40 50 60 70 80 90 100

figure 9.6: establishment of equilibrium

Reasons for Shifts in Demand and Supply

Fick and Hugh list the following as factors causing shifts in the demand curve:

Demand
An increase in the number of employers – it may happen in a particular industry that
a number of new employers enter the market. The demand for labour of a particular
type increases. This will cause a shift of the demand curve to the right, leading to the
establishment of a higher wage rate for labour.
An increase in the income of employers – if the business of employers suddenly becomes
particularly lucrative, resulting in higher profits, or if the employer is subsidised when he
employs more people, the cost of labour would, in relative terms, become cheaper to the
employer. This might result in a shift of the demand curve to the right.
Preference for a certain type of employee – there are occasions when, for various reasons,
employers decide that a particular kind of employee is best suited for the job at hand. This may
occur in the case where females are found to be better at executing a certain task, or it could
result from an affirmative action programme or from technological developments necessitating
the importation of labour. An event of this kind would occasion a shift to the right in the
demand for that kind of labour and a shift to the left as regards the rest of the labour market.

Chapter 9: Labour Economics: Theories and Application 457

The possibility of using alternatives to labour – with greater technological development,
there is a greater possibility of capital investment in other ways of producing goods and
services, which would replace labour and, in the long term, prove more cost-effective. This
will decrease the demand for labour or for a particular type of labour, resulting in a shift of
the demand curve to the left and a subsequent decrease in the wage rate.
An increase in the cost of labour –if the price of labour increases for any reason (such as
a minimum wage determination, the granting of union wage demands, or the imposition of
a payroll tax), employers may in the longer term look for alternatives to labour. This would
cause a shift in the demand curve to the left, a situation which will contribute to increased
unemployment.

Supply
Shifts in the supply curve will occur for the following reasons:
Oversupply or undersupply of labour – if, in general, the market is oversupplied (for
example, if there are too many unskilled workers as a result of immigration by people with
poor educational qualifications), the supply curve will be shifted to the right. Conversely,
a general shortage of labour (for example, in time of war) will cause a shift of the supply
curve to the left.
The amount of training needed to perform a certain job – training of any kind necessitates
expenses, also for the individual undergoing such training. The result is that, as the level
and difficulty of training increases, the supply of labour of a particular type decreases. This
will result in a shift to the left in the supply curve for that type of labour and a higher wage
rate than the average.
Attractiveness of certain positions – work which has a high public image or offers a great
deal of flexibility is usually more attractive than other occupations. Unless there are special
skills involved, this will result in an influx of persons to that occupation, leading to a shift
to the right in the supply curve.
Degree of hardship or risk involved – occupations which require hard or dirty work, or
which entail a certain amount of risk, are less likely to draw potential employees. This leads
to an upward shift in the supply curve relating to that particular occupation. Few applicants
offer themselves and wages are higher than the average. A good example is the high wage
rate paid to lumberjacks in the Canadian bush, or to men prepared to work on oil rigs at sea.
However, where unemployment is at a high level, these jobs might be sought after by a large
number of persons with low-level skills and may therefore be poorly paid.
Union activities – a union may limit the supply of labour to the market, for example, by
controlling the intake of apprentices, leading to a shift to the left in the supply curve.
Discriminatory policies –where certain positions are reserved for people of a particular
age group, race or sex the supply of labour is limited in those occupations while there is
an oversupply of labour in unreserved occupations. These occasions an upward shift in
the supply curve in respect of the reserved occupations and a downward shift in respect of

458 Labour Relations: A southern African perspective

open occupations. Privileged employees will command higher wages, whereas those less
fortunate and facing strong competition for jobs have to be satisfied with lower wage rates.
The factors mentioned contribute towards the creation of an imperfect market. The reasons
for these imperfections range from variables such as economic conditions, educational
facilities, demographic influences, government policy, overpopulation, discriminatory
practices, union activity, technological development and a lack of labour mobility, to
personal preferences and the desire for leisure.

Elasticity of Demand and Supply

The law of demand and supply postulates that, as the price of labour increases, the quantity
of labour demanded will decrease; equally that, as the price decreases, the quantity supplied
to the market decreases. Yet there are instances where quantity demanded or supplied is not
responsive to price; hence the concepts of elastic and inelastic demand or supply. Where
quantity demanded can be rapidly adapted, the demand is elastic. Where quantity demanded
cannot easily change, the demand is said to be inelastic.

Elastic and Inelastic Demand

The varying positions of elastic and inelastic demand are illustrated in Figure 9.7.
In Figure 9.7, the equilibrium wage (We) corresponds with equilibrium quantity demanded
(Qe). When wages increase from, We to Wn there is a change in quantity demanded from:

a) Qe to Q1 where demand is relatively inelastic (Di)

b) Qe to Q2 with unitary demand (Du)

c) Qe to Q3 with relatively elastic demand (De).

Therefore, one sees that the employer is more sensitive to an increase in wages in situations
where demand is relatively elastic (De). In these situations, higher wages result in a significant
decrease in demand (Q3).
In terms of the inelastic demand curve (Di) in Figure 9.7 on the following page, demand
will diminish only slightly (Q1), despite a steep increase in wage price.
This is particularly important when looking at employment levels. As noted in a later
chapter, it also affects union bargaining power. With inelastic demand, employment levels
remain relatively constant, even if a significant increase in wages is negotiated by the union.
Demand will be more inelastic if:
■■ labour is essential and irreplaceable
■■ the employer has to produce a certain number of units
■■ labour costs do not constitute a large proportion of total costs
■■ the supply of capital and other non-labour factors is also constant.

Chapter 9: Labour Economics: Theories and Application 459

 Wage rate

In
ela
sti
cd
Un em
ita an
ry d
de
ma
De nd
Wn

We Elas
tic
dem
and

Du
Di
Number of labour units
Q3 Q2 Q1 Qe

figure 9.7: elastic and inelastic demand

Effect on Employment Levels

The effect of elastic and inelastic demand on employment levels is best illustrated by
observing the effects of a wage determination on employment levels under elastic and
inelastic demand conditions, as illustrated in Figure 9.8 on the following page. As can
be seen, where the demand for labour was elastic, the higher wage rate imposed led to a
significant decrease in the number of people employed. Where the demand for labour was
inelastic, the decrease in employment was insignificant. In absolutely inelastic conditions,
the demand curve would be vertical. The imposed minimum wage rate would have no effect
on employment levels.

Elasticity of Supply
Where the number of labour units supplied changes rapidly with a change in the wage rate,
supply is described as elastic. If, on the other hand, the number of units supplied remains
relatively constant, the supply is said to be inelastic. Elastic and inelastic supply curves are
illustrated in Figure 9.9 on the following page.
As seen from the inelastic supply curve (Si), supply decreases only marginally (from Qe to
Q1), despite significant changes in the wage rate from We to Wn. In the elastic supply curve
(Se), the quantity supplied will decrease rapidly from Qe to Q3, with minimal changes in the
wage per hour.

460 Labour Relations: A southern African perspective

 Wage rate

De
S1
Minimum wage
W2

E
W1

Unemploy- De
S1 ment
Number of labour units
Q2 Q1

elastic demand

Wage rate

Di
S1
Minimum wage
W2

W1 E

Unem- Di
S1 ployment
Number of labour units
Q2 Q1

inelastic demand

figure 9.8: employment levels as affected by wage determination in elastic and inelastic
demand conditions

Chapter 9: Labour Economics: Theories and Application 461

 Wage rate

Si = Inelastic supply
Su = Unitary supply Si Su
Se = Elastic supply
Se

We

Wn

Se

Su
Si
Number of labour units
Q3 Q2 Q1 Qe

figure 9.9: elastic and inelastic supply

Cause and Effect

Inelasticity of supply can be caused by:
■■ a closed labour market – found, for example, in the apprenticeship system
■■ market discrimination
■■ the immobility of labour
■■ a shortage of training in certain skills.

It has an important effect on labour relations in that an inelastic supply can lead to wage fixing,
either by employers or unions, whereas an elastic supply leads to more competitive wages.
The degree of elasticity in the demand for and supply of labour constitutes an important
consideration in the bargaining situation. Naturally, employers will favour circumstances
in which demand is elastic, but supply remains inelastic. The reverse situation would be
favoured by the union.

The Law of Diminishing Returns

Premises
The law of diminishing returns postulates that, in any process, a stage is reached at which
the input of an additional unit brings a marginally declining return.

462 Labour Relations: A southern African perspective

It is usually applied to the use of labour in the production process, but may also be applied
to individuals, in the sense that there will be a point where an employee decides that it not
worth giving up more of his leisure time in exchange for a higher income. It is also used
inversely to illustrate that a union’s pursuit for higher wages may ultimately be negative
in that it may lead to a loss of employment and of union membership. This is the rational
maximising behaviour emphasised by the neo-classicists.

The Marginal Productivity/Utility of Labour

It is common practice for producers of goods or services to attempt to increase their
productive output by increasing labour units – that is, the number of people employed.
However, marginal productivity theory proposes that, if the other major factor of production
such as capital, in the form of machinery or available space, remains constant, a stage
will be reached where each additional unit of labour will produce marginally less than the
previous unit. If a machine or process was designed for operation by three persons or, at the
maximum, five persons, then greater total output could be obtained by using another two
operators, but each operator after the third will produce marginally less than those before
him. This development is illustrated in Table 9.1.

table 9.1: total and marginal output per labour unit

Number of labour Average output per

units Total output Marginal output labour unit

0 0 – –

1 12 12 12

2 26 14 13

3 42 16 14

4 57 15 14.25

5 70 13 14

6 80 10 13.3

7 86 6 12.3

8 86 0 10.75

9 84 –2 9.3

10 81 –5 8.1

From the table it is obvious that, if only one labour unit is employed, available facilities
are completely underutilised. The addition of another labour unit adds substantially to
the total output and the marginal output of the second unit (what he contributes to the
total output) is higher than that of the first unit (14 versus 12). Optimal marginal output is

Chapter 9: Labour Economics: Theories and Application 463

achieved when three units are employed, but it may still be of benefit to employ an one or
two additional units. Total production still increases substantially and there is a relatively
slighter decline in marginal output and, initially, a slight increase in the average output per
unit. Any additional employment after the sixth unit requires careful consideration At the
eighth unit total output remains constant, while marginal output is zero. The addition of the
ninth and tenth units results in a negative return. To employ any additional units after the
seventh would not be cost effective. The progression as depicted in the table is graphically
illustrated in Figure 9.10.

Output

Optimal
100 total
output
90
Optimal
80 average and
Total output
total output
70 Optimal
marginal and
60 total output

50

40 Optimal
marginal
Optimal
output
30 average
output
20
Average output
10
Marginal output
1   2   3   4   5   6   7   8   9   10

figure 9.10: progression of total marginal and average product functions

Implications
Marginal productivity theory underscores the fact that an increase in employment cannot be
achieved without the necessary economic growth, increased capital investment or expanded
production. Moreover, it cannot be expected of an employer to employ more than the
optimal number of employees at which output per unit would be maximised. Conversely,
a limitation on wages or a wage subsidy does not necessarily lead to substantially higher
employment levels since, whatever the wage rate, employers will cease to add additional
units of labour once they have achieved maximum productive capacity.

464 Labour Relations: A southern African perspective

Other Labour Market Theories

The Institutional Economists

The Institutional Economists have their origin in a group of researchers who were sceptical
of the classic concepts of perfect competition and economic man. Instead, they maintained
that economic phenomena and behaviour could only be understood by studying the
institutions involved. According to these theorists the labour market results from a complex
interaction between the organisations, the State and social customs/norms and that these,
more so than demand, set wage rates.
The early institutionalists conducted empirical investigations into various organisations
and came to the conclusion that the ‘reality of the labour market’ as it operated in
institutions/organisations was different from that postulated in classical labour market
theory. Government regulation, bureaucratic corporations and unions were responsible for
internal markets that were almost independent of the external labour market.
The institutionalists were initially criticised for merely reporting their findings and not
developing any theories of their own, but institutionalism resurfaced with theorists such as
Dunlop and Kerr (1960) who concluded that institutional labour markets were governed by
formal and informal rules and not so much by economic variables, a situation which led to
the establishment of non-competing groups in the economy.
The institutional school was, in many ways, the forerunner of the dual labour market and
segmented labour market theories.

Dual Labour Market Theory

Dual labour market theory, as postulated by Piore, divides the labour market into primary and
secondary markets. The primary market is described as high-paying, with good conditions
of service, stable employment and the possibility of promotion. The secondary market, on
the other hand, is low paying, with poor conditions of service, high labour turnover and
very little, if any, opportunity for promotion. The secondary market is usually unstructured,
and may be attached to a primary market, but these employees are not given the privileges
granted to their counterparts in the primary market.
According to Piore, persons in the secondary market are usually those from disadvantaged
backgrounds or the victims of discrimination. They have poor work histories and lack the
skills to participate in the primary market. However, later theorists maintained that workers’
skills were not important in granting access to primary markets. These theorists claim to have
proved that education and training programmes did not succeed in bridging the gap between
the primary and secondary markets. Instead they propose the introduction of expansive macro
policies and a focus on the demand side of the labour market through public employment
programmes, wage subsidies, and anti-discrimination programmes. On the supply side they
reject human capital development and job-search assistance suggesting that the focus should
be on internal labour markets and on breaking down the barriers to labour mobility.

Chapter 9: Labour Economics: Theories and Application 465

Alternative forms of the dual labour market are the segmented labour market and the split
labour market. The segmented labour market also refers to non-competing groups but these
can include, for example, markets where entry is restricted in terms of qualifications, or
markets where there is a division between urban and rural areas. Split labour markets are
those where, on the basis of sex, race or ethnicity, one group is paid less than other groups.

Radical Theories
Radical theory, still broadly based on Marxian philosophy, centres on the critique of
capitalism. Proponents of this theory maintain that any benefits coming from competition
are stifled by monopoly capitalism and governments which do nothing to change this
situation. Radical theory emphasises class conflicts and blames the occurrence of the
underdeveloped sector on the ‘imperialistic’ primary economy. Technology is manipulated
by capital and the dominant class to further their interests. The solution, for these theorists,
would be a radical change in the economic system and a more dominant role for workers.

The Effect of Collective Bargaining on Wage and

Employment Levels
The question as to whether bargaining power has any effect on real wage levels remains
controversial. There are theorists who believe that the effect of bargaining on wage levels
is minimal, since the wage will always tend to revert to the competitive market price.
Alternatively, entrepreneurs will merely raise prices in order to compensate for the higher
wage bill, resulting in a wage-price spiral.
In certain exceptional cases inelasticity of demand may lead to unions negotiating
significantly higher wage levels, but general elasticity of demand will prevent wages from
increasing disproportionately to the market value. If they do, employment levels might drop.
The conclusion that demand for labour is generally elastic arises, according to Dobbs
(1996), from the assumptions that the supply of capital is elastic (that, if wages increase,
capital invested will shrink) and from the fact that entrepreneurs are able to substitute
labour with machinery/technology. Except during boom conditions or where increases
are matched by higher productivity, the elasticity of capital will lead to a decrease in the
quantity demanded and to resultant unemployment.
These arguments are countered by those theorists who maintain that the market wage is
not necessarily a ‘natural’ wage but is determined by the percentage which the entrepreneur
wishes to retain for himself and his shareholders. Increased wages need not, therefore, be
offset by diminishing capital investment and employment, but rather by decreased profits.
They maintain that there is no real proof that increased wages significantly affect investment.
It is also suggested by Dobbs that wage increases, although they may lead to greater
unemployment, may profit the working class in general in that, for example, the wife
or husband and younger children may not be obliged to work. Most importantly, wage

466 Labour Relations: A southern African perspective

bargaining raises employees above the exploitation level for, if they remain at that level,
they will continue to accept wages below the market rate.
The general conclusion is that, although wage bargaining may not have a significant
impact on overall wage levels, it is necessary to prevent exploitation arising from imperfect
competition in the labour market and monopolistic practices by employers. With a strong
labour movement or free competition, it is unlikely that wages will drop far below subsistence
level. On the other hand, the upper limit to which wages are raised by unions may depend
more on sociopolitical than on purely economic factors.

The Effect of Wage Determinations on Employment

Levels
Wage determinations can have a two-way effect on wage levels in that they can either
establish a minimum rate higher than the market rate or limit wage increases to an acceptable
level. It is generally held that the imposition of a minimum wage which is above the market
rate will lead to a decline in employment levels, as illustrated in the section on supply
and demand. This need not always be the case. The manner in which demand will react
will depend, firstly, on its degree of elasticity. Secondly, minimum wage regulations have
what Reynolds et al. (1986) call a ‘shock effect’. Organisations subject to a minimum wage
regulation may be shocked out of organisational inefficiency, resulting in higher production
levels and obviating the necessity to reduce employment levels. Similarly, minimum wages
may, in some circumstances, offset the monopsonist power of employers, in cases where the
entrepreneur is the sole employer of labour.
Wage policies aimed at limiting increases in wage levels are usually introduced for the
purpose of stabilising the economy and promoting employment. Unless other factors are
regulated, the policy may not be successful. As illustrated by marginal productivity theory,
limiting wage levels may not lead to significantly higher employment levels. Economic
growth or capital investment should be stimulated simultaneously if employment is to
increase. The theory also presupposes that the supply of labour is adequately trained to fill
new jobs which are established.

Labour Markets in the Twenty-first Century

In various other chapters in this text mention is made of the effect that digitalisation and
scientific progress have on the nature of work, work organisation and ultimately also on
the nature of the labour market. According to Blix, digitalisation will affect all aspects of
social policy, but the most significant effect will be on the labour market. With advances
in automation and technology there will, as he puts it, be increasing competition between
labour and machines with the middle level of the labour market being the most affected.
Many of the more advanced countries have started showing negative economic growth
and wages are stagnating while the Gini Coefficient continues to rise. This would indicate

Chapter 9: Labour Economics: Theories and Application 467

that traditional theories about labour supply and demand may no longer provide the
answers and the necessary strategies. The role played by unions in ensuring fair wage rates
is diminishing. More and more jobs will be outsourced and entrants to the labour market
will need to constantly improve their skills. Governments will have to be constantly ahead
of the change process and to adapt their policies accordingly.
This does not mean that labour market theory will become obsolete, but the ingredients
and constellations will change and therefore also the proposed solutions. (See Chapter 10.)

Conclusion
The labour market, perhaps more so than any other market, functions in terms of a set of
complex variables. No single variable can be considered in isolation and the application of
the theory to the practice would entail a detailed study of the circumstances surrounding a
particular labour market.

Suggested Questions/Tasks
•• As has been happening in the mining industry, a union and management are
deadlocked on the issue of substantial wage increases for lower level employees.
Using the theory contained in this chapter as well as your own further reading,
present and support the following arguments:
oo the argument from management’s side as to why high wage increases would not
ultimately benefit either party and also not the country
oo the argument, with support, from the union side against those of management.
•• Do you believe that application of classical and neo-classical labour market theory
is appropriate in the South African context? Write a reasoned essay supporting
your case and pointing to the way forward.
•• A great deal of controversy exists about the planned introduction of the Minimum
Wage Act Conduct a debate, based on labour market theory, arguing the pros and
cons of this Act.

Sources
Bessinger, T & Moeller, J. 2000. ‘Unemployment: Theoretical Explanations’ in Helmut Wagner (Ed)
Globalisation and Unemployment. Springer.
Blix, M. 2017. ‘The Effects of Digitalisation on Labour Market Polarisation and Tax Revenue’, CESifo
Forum, 18(4/2017), pp. 9-14. Available: www.cesifo-group.de/DocDL/CESifo-forum-2017-4-blix-
digitalisation-welfare-state-december.pdf. (Accessed 22 August 2018).
Boyer, G & Smith, RS. 2001. The Development of the Neo-classical Tradition in Labour Economics.
Cornell University, ILR Collection.

468 Labour Relations: A southern African perspective

Cain G. 2006. The Challenge of Segmented Labour Market Theories to Orthodox Theory, www. kumlai
free fr/research February 2006.
Dobbs, M. 1996. Wages. James Nisbett & Co.
Fick, R & Hugh, SH. 1987. The Theory and Practice of Industrial Relations in South Africa. Hodder &
Stoughton.
Heilbroner, R. 1983. The Worldly Philosophers. Penguin.
Kerr, C, Dunlop, JT, Harbison, F & Myers, CA. 1960. Industrialism and Industrial Man. Harvard University
Press.
McConnell, CR & Brue, SL. 1986. Contemporary Labour Economics. McGraw-Hill.
Piore, MJ. 1995. Beyond Individualism. Harvard University Press.
Reynolds, LG, Masters, SH & Moser, CH. 1986. Labour Economics and Labour Relations. Prentice Hall.
Rowan, RL (Ed). 1990. Readings in Labour Economics and Labour Relations. Richard D Irwin.
Sadie, JL. 1980. Labour Demand and Supply, Kosmo Publishers.

Chapter 9: Labour Economics: Theories and Application 469

 10

The South African Labour Market

Chapter Outline
OVERVIEW
LABOUR MARKET PRINCIPLES OF DEMAND AND SUPPLY
UNEMPLOYMENT
The Nature of Unemployment • Classification of Unemployment | Frictional Unemployment | Cyclical
Unemployment | Structural Unemployment | Seasonal Unemployment
BALANCING DEMAND AND SUPPLY
Labour Market Perfection • Labour Market Imperfection: Major Causes of Unemployment • Capital
Mobility and the Labour Market • Wages and Employment Levels • Productivity and the Labour
Market • Demographic Changes and the Labour Market • Monopsonist Practices
GOVERNMENT AND THE LABOUR MARKET
Government Policies • The Government as Employer
THE SOUTH AFRICAN LABOUR MARKET
INITIATIVES POST-1995
The Alliance Partners • GEAR and the RDP • ASGISA
ECONOMIC RECESSION
VARIABLES IMPACTING ON EMPLOYMENT LEVELS
Labour Market Regulation • Small, Medium and Micro-Enterprises (SMMEs) • Education and Training
• Productivity • Migration, Emigration and Immigration • Labour Action • Crime
EMPLOYMENT INITIATIVES POST-2008
The Joint Initiative for Priority Skills Acquisition and the HRDS • The New Growth Path Framework
• The National Development Plan • Radical Economic Transformation
THE REALITY ON THE GROUND
PLANNING FOR THE FUTURE
CONCLUSION
SUGGESTED QUESTIONS/TASKS
SOURCES

Chapter 10: The South African Labour Market 471

 Overview
For a labour market to function effectively a balance has to exist between the
demand for and the supply of labour. In an ideal market there would be a perfect
balance, but no such market exists. The market system is beset by labour market
imperfections leading either to supply not meeting demand) or, more generally, an
oversupply in relation to demand (unemployment).
According to neo-classical theory, the ability of an economy to grow in relation
to the population and to create new jobs is a prime factor determining employment
levels. However, imperfections in demand and supply may still be caused by a lack of
mobility, particularly on the part of labour, abnormally high wage rates (leading to
a decrease in demand), disproportional population growth, monopsonistic practices,
government regulations and, as some modern theorists would have it, by the
existence of dual or segmented labour markets.
The South African labour market suffers from endemic structural unemployment.
The economy cannot absorb all work-seekers and those positions which are available
can often not be filled by the unemployed, owing, in some cases, to a lack of skill, but
also to structural inequities arising from historical and sociopolitical factors.
In an attempt to engender economic growth, the government post-1995 adopted
the GEAR strategy, aimed at both growth and redistribution. Although economic
growth, even if minimal, did occur, there was no marked increase in employment
and foreign investment was disappointing. More recently, investor confidence was
affected by perceived labour market rigidities in the form of labour legislation, the
influence and militancy of the trade union movement, the crime rate and government
inefficiencies.
In 2012/2013 the government launched the New Growth Path Framework and
the National Development Plan, both of which were aimed at economic development
and more employment opportunities. The results of these initiatives were not
immediately visible, but some, such as various infrastructure programmes and the
youth wage subsidy, were implemented.
In August 2017 the Government announced yet another plan, namely that for
Radical Economic Transformation. This plan deviated from the previous ones in
that it emphasised the need to expand ownership of land and even to expropriate
land without compensation. The means by which the objectives of the plan will be
achieved needed and still needs clarification.
In the meantime, unemployment remains a serious problem, as does the economy,
which has not grown as might be expected. Initiatives to promote economic growth
and market competitiveness should become a priority, as well as informed research
into future labour market requirements and planning for that market.

472 Labour Relations: A southern African perspective

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Labour Market Principles of Demand and Supply
Chapter 9 described the classical labour market theories which underpin the free-market
approach to both employment levels and wage setting.
As indicated, the concept of an absolutely free market is largely theoretical, since it
presupposes no government interference, perfect competition and absolute flexibility and
mobility on the part of both labour and capital. There is no country where the market is
allowed an absolutely free rein, and therefore no country with a perfect labour market.
As later theorists indicated, wage rates or wage costs are distorted by factors other than
demand and supply. Equally, employment levels are subject to numerous influences.
Nevertheless, in systems which broadly support free-market principles, an interrelationship
does exist between demand and supply, and wage rates are broadly determined by such
interrelationships.

Unemployment

The Nature of Unemployment

There are many definitions of unemployment. Some researchers regard the unemployed as all
potential labour without a fixed position, while others concern themselves only with active
work-seekers who are unable to find jobs. Sadie defines the unemployed as ‘… all those who
are temporarily or indefinitely laid off without pay and those without a job who are available
for employment and are seeking work’. This definition does not take into account the large
number of ‘underemployed’ in South Africa, ‘people who work for a few hours a week to eke
out an existence and who form a large percentage of the economically active population’ and
whom the International Labour Organization (ILO) labels as ‘vulnerable employees (see later).
A broader definition of unemployment is that which describes the unemployed as:
■■ all those ‘who are willing and able to work, but who cannot find work, those who find
only partial work and those who have given up looking for work’.

Classification of Unemployment
Unemployment can, in terms of the main reason for its occurrence, be broadly divided into
frictional unemployment, cyclical unemployment, structural unemployment and seasonal
unemployment.

Frictional Unemployment
This type of unemployment occurs where existent vacancies could be filled by the
unemployed, but where these persons, owing either to geographical location, a lack of
information or dissatisfaction with the wages offered, do not apply for the positions.
Sometimes communication regarding available positions does not reach the target market of

Chapter 10: The South African Labour Market 473

unemployed persons or the information is not widely disseminated. Frictional unemployment
may be combated mainly by:
■■ ensuring continual and correct exchange of information
■■ establishing a central ‘clearing house’ for vacancies and applications
■■ improved vocational guidance.

Cyclical Unemployment
Cyclical unemployment is encountered when labour employed during peak economic cycles
becomes redundant during periods of economic recession. As business activity declines,
there is a corresponding decrease in employment levels. Employment usually increases
when the economy recovers.

Structural Unemployment
This is the most deep-rooted of all forms of unemployment. An oversupply of labour in
relation to demand is the main cause of structural unemployment. Structural unemployment
may be divided into two types, that the first of which occurs when the economy cannot
absorb all work-seekers and the second which occurs where employment opportunities
do exist, but where the available labour does not possess the qualifications or the skills
necessary to take up the vacant positions. This could be the result of basic inadequacies
such as lack of education and training in the labour force or be caused by technological
advancements where existing skills become obsolete.

Seasonal Unemployment
Seasonal unemployment occurs where jobs are performed only at certain times of the year
– for example, in seasonal fruit picking. Persons employed in this type of work may be
unemployed for the rest of the year but will probably be employed again in the new season.

Balancing Demand and Supply

Labour Market Perfection

In a perfectly competitive or perfectly balanced labour market the number of persons willing
to work and willing to accept the rate offered would equal the number of persons required.
This means that economic activity, in the form of production and services, would provide
jobs at acceptable rates of pay for most members of the economically active population
(those who are able and willing to work). It also means that as the pool of economically
active persons grows, the economy will grow accordingly.
The state of the economy is important to the functioning of the labour market. However,
the economy is not solely responsible for the health or otherwise of the labour market or for

474 Labour Relations: A southern African perspective

prices (wages) paid within this market. The labour market is composed of a number of different
markets in different sectors, both industry- and job-wise, which require different skills.
Flexibility and mobility of labour contribute to the efficacy of the labour market. Job-
seekers need to be both vocationally and geographically mobile in order to optimise the
opportunities available. This is particularly important in the modern era where the nature
of work is changing on a continuous basis, a development which will increasingly require
effective, flexible and relevant education and training.
Social factors, such as population growth, housing, health and transport, have an effect on
the labour market. A lack of adequate housing not only prevents mobility to areas where labour
is required, but also prevents those who have inadequate housing from working properly or
bettering their skills. A healthy population contributes to a healthy labour market, while
adequate public transport allows for greater labour mobility and decreases the non-wage cost
of labour. Where the population growth exceeds economic growth, the labour market is unable
to support all entrants. Conversely, a marked decrease in population, particularly among the
economically active, will adversely affect the economy and therefore the labour market.
The most prevalent social impediment is the inability of certain sectors of a population to
equip themselves through education and training, to meet the existing and future demands
of the labour market. This occurs in markedly uneven societies or those where governmental
policies and initiatives are either lacking or ineffective.

Labour Market Imperfection: Major Causes of Unemployment

As indicated above, labour markets which fail to match supply with demand are responsible
for unemployment. However, the Utopian ideal of a perfectly balanced labour market
has never been achieved. This is so both in those systems which support the free-market
principle and those which prefer a government-controlled economy. In the latter instance,
labour markets may be balanced by training and by allocating labour where it is needed,
but this may happen at the cost of economic decline and unacceptable wage rates. Economic
recession leads to a decline in demand and to subsequent unemployment.
Where the free-market approach has been adopted, labour market imperfections are
endemic to the system. One of the main reasons is the fact that free-market economic systems
are prone to cyclical downturns, leading in turn to a decrease in demand and the laying-off
of those who are already employed. This gives rise to cyclical unemployment which is usually
temporary but could last for a number of years. There are economies which never achieve
the necessary growth. These economies are or become unviable, rendering them unable to
absorb the number of work-seekers and resulting in structural unemployment. Structural
unemployment also occurs where work-seekers do not possess the required skills. It follows
that structural unemployment occurs more frequently in countries where the economy is weak,
where population growth exceeds economic growth and where there is insufficient education
and training. This is usually accompanied by a lack of adequate housing and proper health
care facilities. South Africa unfortunately suffers from chronic structural unemployment
exacerbated by cyclical unemployment when the economy does not perform as it should.

Chapter 10: The South African Labour Market 475

According to the International Labour Organisation, the worldwide unemployment figure
now stands at over 190 million. Moreover, the number of persons in vulnerable employment
(that is own account workers and contributing families) is expected to rise after the previous
downward trend stalled in 2012. At present 42 per cent of workers worldwide, or 1.4 billion
people, belong to the group classified as being in vulnerable employment. This figure will
remain high, particularly in emerging and developing economies.

Capital Mobility and the Labour Market

The free-market principle presupposes that both labour and capital are allowed maximal
mobility or flexibility. This means that employers are free to substitute labour with machines
or technology thereby decreasing labour demand in relation to supply. The competitiveness
inherent in the free-market system often obliges employers to introduce new technology in
order to achieve improved efficiencies. Equally often rising labour costs result in machines
being employed as substitutes for labour. Capital may also attempt to achieve maximum
flexibility through flexible employment practices such as the use of casual and temporary
labour, flexible wage rates and outsourcing. Attempts by governments to regulate these
actions are viewed as interference and as leading to labour market rigidity. This problem is
bound to grow as employers are forced by competition and economic necessity to replace
traditional production with more up-to-date processes and techniques.
The mobility principle also presupposes that capital is free to go where the other factors
of production – namely, land and capital – are both cheap and abundant, and where labour
does not make excessive demands on the employer or engage in labour action. Thus, investors
will look to those countries with the least possible labour regulation. Unfortunately, this
very often leads to exploitation of workers in those countries.

Wages and Employment Levels

The market-based wage–price theory assumes that there is a direct, inverse relationship
between the price of labour and the demand for labour; that, as the wage price of labour
increases, the demand for labour will fall, leading to increased unemployment. Conversely,
as the supply of labour increases in relation to demand, the price of labour will fall.
Basing their argument broadly on these assumptions, employers warn that ‘unrealistic’
wage demands by employees or their unions will result in growing unemployment. By the
same token, they expect labour to cap wage demands in times of rising unemployment.
Wage demands alone do not account for labour costs. Regulated conditions of employment
in the form, for example, of leave, sick leave, maximum working hours and payment for
overtime, add to these costs, as do levies on employer wage bills. It is argued that these, too,
may contribute to unemployment.
There is no doubt that unrealistic wage demands and other rigidities in the labour market
do influence employment levels. On the other hand, the absolutely free play of market forces
can result in gross human rights abuses and in the intolerable exploitation of labour. A delicate

476 Labour Relations: A southern African perspective

balance has to be maintained between the protection of employees from exploitation and the
institution of basic worker rights on the one hand, and employment creation on the other.
On the opposite side of the spectrum are those theorists who propose that the starting point
should be the demand for consumer goods. As wage and salary earners normally constitute
the majority of consumers, the argument is that higher wage rates would raise consumer
demand, resulting in increased economic activity and, therefore, increased employment. It
may also increase national savings, leading to increased local investment. Theories of this
nature are not popular in existing market-driven economies, but do have some merit and
should be balanced against the absolute reliance on employment demand principles.

Productivity and the Labour Market

The productivity levels of those employed in the labour market will eventually affect total
employment. The reason for this is the relationship between productivity and economic
prosperity. The more productive the workforce, the greater will be the economic benefits
enjoyed by the country as a whole. Furthermore, a reputation for productivity encourages
investment, both locally and from external sources. Productivity is engendered by a positive
work ethic, sound organisational relationships and relevant education and training.

Demographic Changes and the Labour Market

When the population grows at an excessive rate, the economy will eventually have to grow
accordingly to absorb the increasing number of persons entering the labour market. If this
does not happen, unemployment levels will rise and a large number of persons entering the
labour market will not be able to find work.
The major cause of population growth is an increase in the birth rate. Statistically
speaking, a birth rate of 2.1 per family results in a static population count (discounting
immigration and emigration). If the mortality rate also remains constant, this would mean
that an economy which has full employment would not have to grow at all to accommodate
new work-seekers. On the other hand, an economy with existing high unemployment rates
would need to curb the birth rate still more in order to first absorb the existing and potential
work-seekers. (The idea of curbing population growth is, however, highly controversial.)
Population increases or decreases are also brought about by immigration and emigration.
When national unemployment levels are high, immigration is usually discouraged as it
places an additional burden on the labour market. On the other hand, if capital can move
wherever it wants, it could be argued that the same should apply to labour.
Emigration from one national labour market to another is a cause for concern as the result
may be a structural imbalance in the markets left behind by emigrants. This is particularly
so where highly skilled persons emigrate from a market which cannot easily replace those
skills or where the existing stock of skilled labour is insufficient.
Just as population growth may give rise to market imbalances, so too may a sudden or
gradual reduction in the population. The loss of a large number of skilled and economically

Chapter 10: The South African Labour Market 477

active persons has a detrimental effect on the economy, which cannot produce as optimally
as before. The labour market becomes imbalanced since the number of prime providers of
labour and skills is drastically reduced.
On the other side of the coin is the fact that people are living much longer. This places a
strain on those wage earners who have to support ailing relatives and who therefore seek more
income. It also leads to a situation where older people are staying in employment longer than
before and thereby lessening the opportunities for new entrants to the labour market.
A balanced labour market further presupposes that all persons, irrespective of race or
gender, should be able to work if they desire to do so. Discrimination and cultural norms
often militate against this principle in practice.

Monopsonist Practices
Monopsonist practices exist where one employer or a number of employers in collusion are able
to set wage levels, thus not allowing for the free play of demand and supply. This may occur
where a number of large employers dominate the market, where employers form cartels or even
where powerful employers matched by weak unions regulate wages through bargaining councils.

The Government and the Labour Market

Government Policies
The political, economic and social policies adopted by a particular government largely
determine economic well-being, and therefore influence the labour market in terms of
employment levels. Depending on its orientation, a government can allow for maximum
market flexibility of producer, consumer and labour markets or impose regulations which
introduce protectionist measures, such as import and export controls or minimum wages.
These may lead to rigidities in the market.
Equally, a government can attract investment by, for example, deregulation, incentives
for business start-ups and lowering company tax. Social policies such as housing, health,
crime, transport, education and training all eventually have an impact on the labour market.
In formulating policy and legislation, a democratic government needs to carefully balance
the interests of capital and labour. Undue protectionism of, say, employees or society at
large, may result in inflexible labour markets with consequent unemployment. On the other
hand, complete non-regulation inevitably leads to exploitation and destruction of both the
social fabric and the environment.

The Government as Employer

Governments are themselves employers and providers of services. In certain quarters, it is argued
that governments need to absorb the excess supply of labour by employing persons for diverse
social services and by increasing government spending not only on these services but also

478 Labour Relations: A southern African perspective

on, for example, arms and other instruments of war. However, government activities are non-
economic activities. They do not contribute to the Gross Domestic Product. Government revenue
is obtained from the taxation of economic activity. Therefore, undue increases in government
spending will inevitably lead to increased taxation, which will, in turn, adversely affect
investment and the labour market. Also, one criterion for measuring the health or otherwise
of an economy is the proportion of government spending in relation to gross national income
and expenditure. When this ratio is too high, the economy loses credibility. This having been
said, labour market changes and problems are also the business of government. Where society
as a whole is being or might be adversely affected it is the Government’s duty to be continually
aware of possible problems and to step in when the situation so requires.

The South African Labour Market

Initiatives Post-1995
As previously indicated, the South African labour market suffers from endemic structural
unemployment. For the post-1995 government, addressing labour market needs was among
its most important priorities.

The Alliance Partners

There was initially a measure of disagreement among the Alliance parties regarding the best
strategies to solve the country’s economic and labour market problems. This is illustrated
in Table 10.1 below.

table 10.1: differing approaches among alliance partners – july 1998

ANC COSATU SACP

Fiscal Policy Discipline and reducing Flexible bands for deficit More generous attitude
budget deficit to 3 per and revenue targets. to budget deficit.
cent of GDP. Growth rate Expand demand for Macro-economic
of 6.1 per cent. locally produced goods policy subordinate to
and services. Reduce developmental growth
national debt. strategy.
Monetary Policy Control inflation. Stimulate demand Slice interest rates
Encourage domestic by lower interest, drastically. Review
savings and investment redistribution through removal of exchange
with high interest taxation and export controls. Instead take
on saving. Phase out promotion. Establish into account the vagaries
exchange controls. capital controls. of speculative pressure on
Facilitate loans from Discourage speculative the currency.
banks for foreign investment by exchange
investors. control and taxes on
short-term capital gains.

Chapter 10: The South African Labour Market 479

 ANC COSATU SACP
Industrial Policy Promote export-oriented Selective tariff barriers to Regulate financial
growth. Remove tariffs save jobs. De-emphasise sector. ‘Intercept’
and lure foreign investors small business as engine demutualisation.
with tax breaks. Promote of job creation. Punish
small enterprises. retrenchments with tax
disincentives. Oppose
demutualisation.
Social and Redistributive budgets in Security system and Promote cooperative
Sectoral Policy favour of poor (through social wage for poor and elective ventures.
GEAR). Partnerships and unemployed. Free Basic needs provided to
with voluntary service public health, housing, everyone.
organisations. Find transport for destitute
affordable alternatives – obtain from taxes
for social grants. on wealth. Solidarity
tax on companies for
development.
Land Reform Agricultural development State-sponsored land State plays big role
as key to distribution of redistribution. Collective in agricultural and
income. bargaining extended related industries. Land
to farms. Stop all made available for
retrenchments and cooperatives.
evictions from farms.
Labour Market Regulated labour market Abandon labour market Democratise labour
flexibility. Flexible flexibility, deregulation market. Absence of social
bargaining structures and capping of wage strife, inequality and
– differing standards. increases. Extend provision of adequate
Wages not to rise faster unemployment insurance human resources will
than productivity and or institute basic income bring investment.
inflation. grant for the poor.
Job Creation Job creation from three Dramatically expand Moratorium on
sources: economic mass public work retrenchments. Heavy
growth, government programmes, including investment in training
programmes and labour housing. Moratorium on and development.
market reforms. Private retrenchments.
sector biggest job creator.
Public Sector More than 300 000 jobs Extend and improve Restructure for efficiency
created by 2000. Private public service to and development. Don’t
sector involvement in disadvantaged. Don’t cut cut jobs.
matters such as housing. jobs in public service.

GEAR and the RDP

When the ANC-led government came to power it was faced with a neo-liberal revival
worldwide and the need to compete in the global economy. In the light of this the government
adopted the Growth Employment and Redistribution Strategy (GEAR) as a framework
for economic development (see Chapter 2). This, it was believed, would bring about the
necessary jobs. By including the aspect of redistribution, the government signalled that it

480 Labour Relations: A southern African perspective

was not discarding the principles of the Reconstruction and Development Programme (RDP)
and was adopting a two-pronged approach.
The RDP placed emphasis on redistribution, the opening-up of previously suppressed
economic and human potential in urban and rural areas, education and training, affirmative
action, public works and programmes which would address unemployment. GEAR, on the
other hand, emphasised economic growth. This would be achieved by adopting the free-
market approach and by encouraging local and foreign investment. It was believed that, in
a democratic dispensation, redistribution would flow from such growth.
Economic growth, though initially positive, did not reach the envisaged targets of five to
six per cent per annum. In fact, in 1998, growth fell to a low of zero per cent.
The economic growth which did occur did not engender the necessary growth in jobs,
since most investments were in capital and technology rather than in labour-intensive
industries. In 1997 it was estimated that the number of jobs created per R1 million invested
had declined by 23 per cent since 1978.
In support of a freer market, the government also set about lifting import and exchange
controls. The influx of foreign goods adversely affected sectors such as the clothing and
textile industries, which had till then enjoyed large-scale protection and had, in the process,
become uncompetitive.
In 2007, the Director-General of Labour reported that the economy had grown by three
per cent since 1994. On the other hand, Harvard University’s Professor Rodick found that,
between 1994 and 2006, the per capita GDP in South Africa had grown by only 1.2 per cent
and that the income level still had to catch up with the peak achieved in 1980.
The low increase in per capita GDP was attributed mainly to South Africa’s inability to
generate growth, which, in turn, was largely attributable to weakness in export-oriented
manufacturing. South Africa had lost ground in manufacturing, while countries like
Malaysia had increased their output from manufacturing. In short, South Africa had de-
industrialised while Malaysia had industrialised. This also affected unemployment levels,
since non-mineral tradeables are the most labour-intensive, and provide jobs for unskilled
workers.

ASGISA
In February 2006, then President Mbeki announced the launch of the Accelerated Shared
Growth Initiative for South Africa (ASGISA), which would, in Mbeki’s words, provide ‘a
limited set of interventions intended to serve as catalysts to accelerate shared growth and
development’. ASGISA was given a budget of R370 million. Among its proposals for growth
were:
■■ an increase in public sector capital investment from six to eight per cent of GDP
■■ massive capital spending by Transnet and Eskom
■■ government capital expenditure to increase by 15 to 20 per cent every year

Chapter 10: The South African Labour Market 481

■■ public investment to increase threefold (This would necessitate an increase in private
sector investment from R219 billion to R316 billion, while realistically it could only
increase to R264 billion).

There were high hopes of delivery, but barely a year later the panel of international experts
appointed to advise on the initiative declared that it would be virtually impossible to achieve
ASGISA’s target of a six per cent growth per annum by 2014 unless the most binding
constraints were eliminated. These included the following:
■■ currency volatility
■■ inefficiencies in the national logistics system
■■ skills shortages
■■ limited market competition
■■ burdensome regulatory environment
■■ deficiencies in state organisation.

(It is interesting to note that the two entities on which government placed its hope for
improving economic performance, namely Eskom and Transnet, have, in fact, drained the
state coffers and over the past years have come close to a complete collapse)

Economic Recession
2008 saw the worst worldwide economic crisis in recent history, and South Africa followed
the rest of the world into a recession. Between October 2008 and March 2009, the GDP fell
by 1.5 per cent, with mining being the hardest hit. By the end of 2009, Stats SA indicated
that almost a million jobs had been lost during the course of that year.
Like the rest of the world, South Africa in 2009 looked forward to some improvement in
2010. In this it was encouraged by a report from UK Trade and Investment, which placed
South Africa fourth on its list of key emerging markets as regards investment potential.
Unfortunately, the expected growth did not materialise.

Variables Impacting on Employment Levels

Labour Market Regulation

It is obvious that to achieve its objectives the government had to interfere more directly
in the labour market. However, this could bring its own problems. Overregulation of the
labour market by government or by centralised union–management agreements may result
in inflexibility. This means that the wage price of labour remains relatively constant or
increases despite market fluctuations in demand and supply. When demand is, by comparison,
elastic, it will decrease if the wage price remains high. Employers either mechanise or invest
elsewhere, thus reducing demand and contributing to unemployment.

482 Labour Relations: A southern African perspective

The cost of labour includes not only the actual wage price, but also other costs in the form
of benefits, insurance funds, levies on employment or total salary bill, leave and sick leave
provisions. Consequently, the extension of more favourable conditions of employment
through the Basic Conditions of Employment Act, the extension to non-parties of centralised
bargaining council agreements, greater freedom to strike, the Unemployment Insurance Fund
and Workmen’s Compensation Fund levies, the skills levy, and even difficulties in dismissing
unproductive workers, may all be regarded as possibly contributing to labour market rigidities.

Small, Medium and Micro-Enterprises (SMMEs)

Some observers viewed the development of the SMME sector as the ‘engine’ of employment
creation. Initially, the South African government also regarded this as one of the prime
avenues for job creation. However, very often this sector operates at the subsistence level.
Thus, while the establishment, particularly of micro-enterprises, may give some of those
who are unemployed enough to live on, it hardly serves to engender massive employment
or substantial economic growth. Moreover, trends in world production markets may not
favour the establishment of very small enterprises unless these form clusters or cooperatives
or are contracted to larger enterprises for specialised tasks. The dearth of personal savings
and relatively high interest rates also make it difficult for small entrepreneurs to acquire
capital. Similarly, poor education deprives would-be entrepreneurs of the necessary life and
business skills.
It is further held by various critics that legislation affects the development of small
business, in that red tape and agreements impact on all businesses – regardless of size –
often deterring would-be entrepreneurs.

Education and Training

Griffiths and Jones define education as ‘… the process by which human capital is created’.
They maintain that ‘… the stock of human capital is closely related to the rate of economic
progress’. In this respect the fact that a large percentage of the South African population is
functionally illiterate is extremely disturbing.
The establishment of the South African Qualifications Authority and the National
Qualifications Framework (NQF), the implementation of the Skills Development Levies Act,
and the restructuring of higher education were all intended to address the existing imbalances
and to partially alleviate the problem of structural unemployment. Unfortunately, training in
terms of the Skills Development Act did not deliver as expected and, although the education
system expanded, primary and secondary education were still reported to be unsatisfactory.

Productivity
South African ranks very low on the global competitiveness register. This is attributable to
ineffective use and development of human resources and to a lack of productivity by those
in employment.

Chapter 10: The South African Labour Market 483

The productivity problem has many probable causes. Among these are insufficient
education and training and high labour turnover. Productivity problems not only rendered
South African products uncompetitive as against those of other countries, but generally
discouraged investment. This happens particularly if labour costs are, by comparison,
relatively high. Productivity did increase, in relative terms, between 2000 and 2008, but
much remained to be done.

Migration, Emigration and Immigration

After 1994 the lifting of influx controls resulted in a steady flow of work-seekers from
rural to urban areas. This placed a strain on the provision of housing and other facilities
and raised unemployment levels in the urban areas. Services and industries in urban areas
were unable to provide employment to all new job-seekers. As unemployment and crime are
closely related, crime figures in urban areas escalated. This, in turn, had an adverse effect
on the economy.
In addition to the migrants there were countless immigrants, many illegal, who entered
South Africa in the hope of finding a better future. These swell the ranks of the unemployed
or, at worst, contribute to the increase in crime.
In contrast to immigration there was also an outflow of mostly skilled or qualified
persons. A large number of qualified South Africans, nurses, doctors, teachers, engineers,
artisans and technicians, all possessed of skills which South Africa desperately needed, were
emigrating to reside in other countries.

Labour Action
Union actions, in the form of wage demands and concomitant actions when negotiations
deadlock, had an effect on the economy and on investor confidence. South African unions
had, since the early 1980s, adopted a militant style, sometimes in reaction to the recalcitrance
of employers. Strike figures compared unfavourably with those of the country’s major
trading partners and those countries with whom it competed for investment. This led to
the World Bank calling on the government to ‘rein in the unions’. Events since 2000 – and
particularly during 2012 and 2013 – held out little hope of a decrease in union militancy
and concomitant labour action. (see also Chapters 2, 4 and 13).

Crime
A circular relationship exists between crime and unemployment. As the crime rate
increases, investor confidence wanes. Decreased economic growth leads to higher levels of
unemployment and the unemployed, unable to sustain themselves, turn to crime.
It can, therefore, be postulated that, as unemployment decreases, the crime rate will drop,
but the problem lies with fuelling the necessary economic growth while crime prevails.
Crime affects every aspect of society, and also business. While the ‘poverty push’ to crime is
understood, it can be argued that poverty will not be alleviated before crime is taken in hand.

484 Labour Relations: A southern African perspective

Employment Initiatives Post-2008

The Joint Initiative for Priority Skills Acquisition and the HRDS
In 2008, realising that all other efforts were not producing the skills required, the then Deputy
President announced the formation of the Joint Initiative for Priority Skills Acquisition (JIPSA),
meant to place emphasis on the skills required by the economy and to foster, with business and
labour, opportunities for individuals to acquire these skills. JIPSA was a short-term measure, and
in April 2009 it was announced that it would be replaced by the Human Resource Development
Strategy for South Africa (HRDS). The top priorities of the HRDS were to:
■■ eradicate adult illiteracy
■■ ensure that youths remain in education and training until they are eighteen
■■ enable all entrants to the labour market to access education and training
■■ ensure that immigration reflects an inflow of persons with priority skills
■■ ensure that education is equitable in terms of race, gender, disability and geographic
location.

Most of the initiatives mentioned were too broad to be termed strategies and although each
had some impact, the problems remained.

The New Growth Path Framework

In 2012 the government adopted the New Growth Path Framework, originating from the
Department for Economic Development under former trade unionist Ebrahim Patel.
The stated objectives of the Framework were:
■■ to create five million jobs within ten years
■■ to promote a green economy
■■ to create more agricultural jobs
■■ to facilitate land transfers
■■ to promote mining and beneficiation of products
■■ to establish state mining companies in competition with the private sector
■■ to bring about reindustrialisation in manufacturing
■■ to promote tourism and other income-generating sectors
■■ to bring about improvements in government
■■ to promote stronger partnerships between government, the private sector and organised
labour.

The drafters recognised the importance of a competitive economy and saw a stronger role
for a competitions policy, but also for monitoring prices. Nevertheless, the Growth Path was
viewed as more socialist than the National Development Plan (see below).

Chapter 10: The South African Labour Market 485

The New Growth Path Framework was underpinned by the National Infrastructure Plan.
The central objective of the plan is to decentralise basic services and engage in strategic
integrated projects and thereby ‘transform the economic landscape’. The plan identified
decentralised areas around the country and projects to be undertaken in these areas. It was
believed that it would create a significant number of jobs, unlock opportunities, integrate
human settlements and lead to a more balanced economy.

The National Development Plan

The New Growth Path Framework appears to have been absorbed into the National
Development Plan proposed by Planning Minister, Trevor Manuel. The Plan, for which
the target date is 2030, is based on the premise of a social compact between government,
business and labour with the aim of:
■■ reducing poverty and inequality
■■ raising employment levels
■■ increasing investment.

More specifically, the plan aims to:

■■ increase employment from 13 million in 2010 to 24 million in 2030
■■ significantly reduce the GINI Coefficient
■■ reduce the 39 per cent of households living on R419 per month
■■ increase the share of national income owned by the poorest from 10 to 40 per cent
■■ raise per capita income from R50 000 to R120 000 per annum
■■ achieve economic growth of 5.4 per cent
■■ increase fixed investment from 17 to 30 per cent.

These objectives are to be achieved by:

■■ broadening access to employment
■■ a stronger social wage
■■ better transport systems
■■ a more professional public service
■■ promoting private investment in labour intensive industries
■■ increasing public infrastructure development by 10 per cent
■■ promoting competitiveness in exports
■■ promoting accountable education
■■ instituting a national health system
■■ encouraging youth employment through a tax incentive or subsidy for learnerships.

486 Labour Relations: A southern African perspective

The drafters of the plan saw the following as its primary challenges:
■■ the quality of school education
■■ inadequate infrastructure
■■ lack of inclusive development
■■ too great a reliance on resources
■■ an inadequate public health system
■■ uneven and poor quality public service
■■ high levels of corruption
■■ societal divides.

The plan, described as high on vision but short on detail, was generally accepted by business.
COSATU, while agreeing with some of the plan, described it as liberal-democratic and not
advancing a radical ideological shift. The federation was also not in favour of the youth wage
subsidy, owing to fears that this would erode other employment. It further criticised the plan
for not putting the concept of ‘decent work’ at the centre, not emphasising redistribution
and basing employment creation on small business promotion. For these reasons some of
the COSATU unions declared themselves in favour of Patel’s strategy rather than that of
Manuel.
The government, for its part, decided that the time for debating was past and that there
was an urgent need to proceed to actual implementation.
The first steps towards implementation of the plan were contained in the Infrastructure
Development Act, which made provision for an Infrastructure Co-ordinating Commission
headed by the President. The function of the Commission is to oversee the implementation
of Strategic Integrated Projects and for Ministers to take responsibility for specific projects.
Infrastructures are defined as ‘installations, structures, facilities, systems, services and
processes’ and their development should lead to economic and social upliftment. Strict
criteria as to the type of projects to be undertaken were contained in the Act. Some progress
has been made in infrastructure development, but lack of adequate resources may have
hindered the programmes becoming as successful as anticipated.

Radical Economic Transformation

At its National Policy Conference in July 2017 the African National Congress, under a
beleaguered President Zuma, announced its plan for what it termed Radical Economic
Transformation. This, it was claimed, constituted the second phase of the transition from
Apartheid. It was envisaged that the proposed shift in focus would bring about economic
transformation, promote growth and development, increase state-led infrastructure
development, with the emphasis on local content and local companies, and ensure macro-
economic stability. According to a statement issued at the time the plan would bring
about ‘fundamental change in the structures and patterns of ownership’, as well as ‘the
management and control of the economy’, with a focus on females and the poor.

Chapter 10: The South African Labour Market 487

More specifically, the objectives of the plan are to;
■■ reduce unemployment, particularly among the youth
■■ return land to the people
■■ increase black ownership and control of the economy
■■ activate small businesses and cooperatives
■■ raise level of investment
■■ strengthen social justice
■■ improve the employment impact of infrastructure projects
■■ reduce inequality in employment
■■ dismantle monopolies
■■ assert South Africa’s interests in the global economy
■■ improve integration into the African economy
■■ stimulate inclusive growth.

Some aspects of the plan, and in particular that relating to land restoration, raised concern,
resulting in a negative effect on the economy and on sentiment among investors. On the
whole it constitutes yet another instance of high ideals without sufficient analysis of the
obstacles and clear guidelines as to their achievement. It also fails to consider future changes
in the nature of work and therefore future labour market requirements.

The Reality on the Ground

In reality, the officially acknowledged unemployment level has risen steadily from 15.5
per cent in 1995 to 23.3 per cent in 1999, reaching all-time highs of 29.5 per cent in 2001
and 31,08 per cent in 2003. In the years following, it decreased gradually to 25.5 per cent
in 2012 and to 24.7 per cent by the third quarter of 2013. However, by November 2017
unemployment had again increased to 27,7 per cent with only a slight decrease to 26,7
per cent in the first quarter of 2018. This is equal to more than a quarter of all persons
making themselves available for employment. Moreover, the figures are based only on the
economically active population, that is those who are willing and able to work. They do
not include those who have given up looking for employment. It is estimated that, if these
individuals were included, the figure would be closer to 37 per cent.
A large section of the economically active population suffers from chronic joblessness.
An estimated 39 per cent of all those unemployed have never worked. In this respect the
high rate of unemployment among the youth, at present standing (officially) at 38,4 per
cent, is of particular concern. Furthermore, in the group of those aged between 50 and 65
years old, 47,7 per cent of the unemployed have been without work for periods exceeding
five years.
The unemployment figures are a cause for concern. South Africa inherited structural
imbalances in the labour market. To this can now be added insufficient or inappropriate

488 Labour Relations: A southern African perspective

education and training initiatives, as well as the inability of the economy to grow to the
extent where it can absorb new work-seekers.
Of equal concern is the fact that inequality has deepened since 1995. In terms of the
latest Gini coefficient, which measures inequality in different countries, South Africa, with
a rating of 0,63 is now the most unequal society in the world. (A rating of 0 would be given
where there is no inequality while a rating of 1 signifies absolute inequality.)
Financially the outlook is bleak with the economy showing a negative growth rate of 0,8
per cent for the period 2017 to 2018 and a drop of 2,2 per cent in the first quarter of 2018.
By June 2018 the rand had once again dropped in value against the major world currencies.
In terms of competitiveness the country in 2017 was ranked at 61 out of 137, down 14
places from its previous ranking. The government coffers have come dangerously close to
depletion, owing partly to previous misspending and corruption, and many state enterprises
will need substantial assistance if they are to survive. In these circumstances it is doubtful
whether the labour market problems can be adequately addressed unless emphasis is firstly
placed on economic growth and security.
Both the International Labour Organization and the World Bank have expressed concern
at the state of the South African economy and the high level of unemployment. It is obvious
from the statements by these bodies that they do not regard the steps taken or planned
to be sufficient to rectify South Africa’s situation. The World Bank believes that, while
the economy may grow around 2 per cent in the period up to 2030 it will not meet the
5,4 per cent growth envisaged by the National Development Plan, nor will the projected
employment levels be achieved. The present and projected money supply does not allow
much space for further expansion. Growth in production is not expected to be more than
1,1 per cent. In fact, poverty levels may well increase. Inequality and political demands for
redistribution will add to the already high government expenditure. At the same time there
is growing investor uncertainty and a slowdown in private investment, which does not
augur well for the economy.
Added to the problems outlined above is the fact that union wage demands are for
increases above the rate of inflation. Moreover, militant action, particularly by unions in
competition with others, has not abated. It is understandable that wage demands should be
aimed not merely at matching inflation but also at improving the situation of, in particular,
the working poor. However, union actions often have a boomerang effect in that protracted
strikes eventually affect the economic viability of organisations and result in retrenchments,
as happened recently at the Lonmin mines.

Planning for the Future

Ensuring that South Africa does not sink further in terms of economic depression and
unemployment will require extensive and ongoing research and analysis. The battle should
be on two fronts, the first being the existing problems of poverty and unemployment and
the second the predicted changes in the labour market. The purpose should be to establish
strategic priorities, to question previously held assumptions and to identify areas where

Chapter 10: The South African Labour Market 489

employment will decrease as against those where it will grow. For example, South Africa
continues to rely heavily on the mining and manufacturing industries as being among the
main sources of economic and employment growth. In reality predictions regarding the
future nature of industry and work point to these becoming less important in the face of
increasing scientific inventions.
According to Mårten Blix (2017) the changes brought about by digitalisation will ‘affect
all aspects of social policy, but the biggest changes will be in the labour market’. He quotes
Frey and Osborne (2013) who estimate that half the existent jobs in the United States will
be automated within the next two decades. This does not mean that human work will
disappear, but the content and context of work will change, Technology improvement will
favour high level skills and ‘cognitive social abilities’.
The latest South African statistics attribute increases in employment to trade and business
services while, over the same period, there was a decrease in the mining and quarrying,
construction and transport sectors. The highest number of job opportunities were said to be
for technical and associated skills.
It is evident that both the existing problems and ensuring preparedness for the changes
to come will require not only the economic means, but also appropriate and diverse
skills development and education. Relying on previous standardised university and other
qualifications may not bring the necessary results. Employees themselves should also take
responsibility for continually upgrading their skills to meet new job requirements. As Blix
has warned, those who are slow to upgrade their skills will experience faster wage stagnation.
The anticipated changes in the nature of work will lead to greater casualisation and to
an increasing number of persons acting as independent contractors. This will oblige the
government to rethink existing laws and arrangements in order to ensure proper protection
for all concerned. In fact, the role of government may become bigger rather than smaller.

Conclusion
South Africa is not the only country faced with the problem of rising unemployment,
although the situation in this country may be worse than in many others. Unemployment
is on the increase worldwide. It is a situation which should arouse concern in every quarter
since it could eventually lead to a breakdown of the social fabric. Unemployment breeds
poverty and poverty breeds crime. It also breeds resentment on the part of those who
suffer deprivation against those who have. This, throughout history, has been the cause of
major wars. As Adam Smith stated, no nation can prosper if the majority of its citizens are
poor and miserable. Equally, the world cannot prosper or continue as is if the ranks of the
unemployed continue to grow.

490 Labour Relations: A southern African perspective

Suggested Questions/Tasks
•• Summarise the major strategies of the Growth Path Framework and the National
Development Plan. Thereafter:
oo Compare these to ASGISA, GEAR, the RDP and the suggested solutions in Table
10.1.
oo In which ways, if any, do the GPF and the NDP differ from and improve on
previous initiatives?
•• List the five major factors contributing to unemployment in South Africa and
suggest strategies by which these could be addressed.
•• Study the initial inputs by the ANC, the Alliance Partners and COSATU. Which of
the suggestions have already been implemented and which should be implemented?

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Baskin J. 2007. ‘The Facts Behind the Figures’ in Mail & Guardian, 24−30 November 2000.
Blix, M. 2017. ‘The Effects of Digitalisation on Labour Market Polarisation and Tax Revenue’, CESifo
Forum, 18(4/2017), pp. 9-14. Available: www.cesifo-group.de/DocDL/CESifo-forum-2017-4-blix-
digitalisation-welfare-state-december.pdf. (Accessed 22 August 2018).
Cape Times, 9 February 2007; 2 July 1998.
Caulkin, S. 1998. ‘The Nasty Side-effects of Flexibility’ in Mail & Guardian, 20−26 January 1998.
Daily News, 14 April 2000.
Department of Labour, Annual Report 1999.
Frey, CB & Osborne MA. 2013, Future Employment: How Susceptible Are Jobs to Computerisation?
Oxford Martin School Working Paper, https://www.oxfordmartin.ox.ac.uk/downloads/academic/
The_Future_ of_Employment.pdf. (Accessed 22 August 2018).
Griffiths, HR & Jones, RA. 1980. South African Labour Economics. McGraw-Hill.
Mail & Guardian, 23−29 May 1997; 27 February−6 March 1998; 23−29 October 1998; 20−27 April
2000; 24−30 November 2000; 22−28 September 2006; 9−15 February 2007; 9−16 April 2009;
23−29 May 2009; 29 May−4 June 2009.
Mail & Guardian Staffing Index, 8 March 2009.
Rackham, N. Available: www.huthwaite.co.uk. (Accessed 24 August 2018).
Sadie, JL. 1980. Labour Demand and Supply, Kosmo Publishers.
Sunday Times, 4 April 1999; 3 July 2000; 23 July 2000; 18 October 2009.
Tucker, B & Scott, BR (eds). 1992. South Africa, Prospects for Successful Transition. Juta.
Useful websites
www.labour.gov.za/DOL/.

Chapter 10: The South African Labour Market 491

www.statssa.gov.za/.
www.nationalplanningcommission.org.za/Pages/default.aspx.
www.worldbank.org/en/country/southafrica/overview.
documents.worldbank.org/curated/en/530481521735906534/Overcoming-Poverty-and-Inequality-in-
South-Africa-An-Assessment-of-Drivers-Constraints-and-Opportunities.

492 Labour Relations: A southern African perspective

 11

Traditional Negotiation

Chapter Outline
OVERVIEW
PART ONE: CONTEXTUAL BACKGROUND
DEFINING THE CONCEPT
ISSUES WHICH TRIGGER NEGOTIATION
ENVIRONMENTAL FACTORS IMPACTING ON NEGOTIATIONS
Macro-economic Forces | Government Policy | Economic Prosperity | Economic Adversity | The Inflation
Rate •Micro-economic Factors | Elasticity of Demand | Labour Market and Product Competition |
Profit Margins • Public Policy • Political Influences • Societal Influences • Demographic Influences
• The Role of the Press • Technological Advancement
EFFECTS OF COLLECTIVE NEGOTIATIONS ON THE ENVIRONMENT
CONFLICT AND POWER IN THE NEGOTIATION PROCESS
Sources of Conflict • Methods of Handling Conflict • The Conflict Dynamic | Aggravators and
Moderators | Escalation of Conflict • Sources of Power • Different Forms of Power • Power Principles
PART TWO: THE NEGOTIATION PROCESS
FACTORS CONTRIBUTING TO THE SUCCESS OR OTHERWISE OF THE PROCESS
Individual Skills, Interactions and Perceptions • Power as the Ultimate Determinant | Using Different
Forms of Power | ‘Positive’ Power | Strategies for Gaining Power • Expertise in Negotiation
PREPARING FOR NEGOTIATION
Negotiation Conventions • Initiating the Negotiation Process • Selection of the Negotiator(s) |
Single Person or a Negotiation Team | The Chief Negotiator | Roles Assigned to Team Members •
Identifying the Issues • Obtaining a Mandate • Setting Objectives • Intra-organisational Negotiation
• Information Gathering | Current Conditions | Statistical Indicators | Organisational Position |
Knowledge of the Other Side • Testing the Water• Detailed Preparation around Specific Issues
• Delimiting the Area of Negotiation • The Need to Establish a Bargaining Range • The Area of
Interdependence | Definition | Employee/Union Considerations when Setting Limits | Employer
Considerations | Other Factors Determining Limits Set • Resistance and Target Points • The Settlement
Range • Calculation of Utilities and Disutilities | Cost-Benefit Analysis for Management | Cost-Benefit
Analysis for Employees/the Union | Weighing Costs against Benefits • The Contract Zone
Importance of Establishing Bargaining Ranges • Costing of Contracts • Developing Strategies
• The Negotiation Planning Sheet • Conducting Negotiations • Overview of the Negotiation Process
• The Opening Phase | Establishing Climate | Establishing Positions | Feeling Out the Opponent
• The Body of the Negotiation Process | Bringing Argument | Countering the Opponent’s Argument
| Displaying Commitment | Granting Concessions | Caucusing | Impasses | ‘Final’ Offers/Demands
| Threats and Bluffs | Deadlock | Sanctions • Closure • Negotiation Manoeuvres • Collaborative
Negotiations • The Traditional Approach • Preconditions for Collaborative Negotiations | Recognising
the Legitimacy of the Other Party | Emphasis on Common Interests | Trust as an Important Component
| Communication • Initiating Collaborative Negotiations • Evaluation • Agreements: The Outcomes
of Successful Negotiation • Types of Agreement | The Agreement to Bargain | Wages, Conditions of
Service and Procedures | Subject-Related Agreements • Monitoring Agreements • Enforceability of
Agreements
DISPUTES AND COERCIVE ACTION
CONCLUSION
SUGGESTED QUESTIONS/TASKS
SOURCES

494 Labour Relations: A southern African perspective

 Overview
Negotiation may be described as the practical implementation of the collective
bargaining concept. In the negotiation situation, actual demands have been made or
grievances have been raised. An issue exists, and the parties meet in order to attempt
an equitable resolution. The parties will not be operating in isolation, but will be subject
to external influences. These will play a major role in determining the negotiating
power of each party. In its turn, negotiating power, together with the quality and skill
of particular negotiators, will influence the outcome of the negotiation process.
In traditional labour negotiations, there are certain conventions which both
parties adhere to. Negotiations are conducted in a polite and formal manner, even
though opposing viewpoints are expressed and although it is accepted that each side
can bring to bear all the power it is able to muster.
Where major negotiations of long-term impact are about to occur, careful and
detailed preparation is required. Parties need to raise and identify issues, appoint
suitable negotiators, obtain mandates, establish objectives, gather all relevant
information, set targets and fall-back positions, decide on possible concessions to
be made, determine which would be non-negotiable issues, cost projected contracts
and plan their strategies. A lack of planning and foresight could place negotiators in
an unfavourable position once actual negotiations begin.
Negotiations vary in length and tone, depending on the nature of the issues and
on the positions adopted by the parties. They may be interrupted by withdrawals or by
deadlocks on particular issues, but most negotiation can be broadly divided into four
stages: the opening phase, which is followed by the body of the negotiations, leading to
a stage of crisis or near-settlement, after which there is a closing or summing-up phase.
In the last stage, absolute certainty needs to be achieved on agreements
reached. In the opening phase and during the body of negotiations, each party will
use whatever it can to persuade the other party to move from its position. Certain
methods used may be positive and constructive, while others are essentially negative.
Positive methods are called negotiation skills, while the negative ones are commonly
called negotiation ‘tactics’ or manoeuvres. Successful negotiators concentrate on
developing skills and avoid manoeuvres.
If a final agreement is reached, both parties need to ensure that information
concerning the agreement is communicated to all concerned, that the terms of the
agreement are correctly implemented and that it is continually monitored. There may
have to be follow-up sessions if there are problems with implementing the agreement.
Where circumstances change, the entire agreement may have to be renegotiated.
This chapter deals with traditional, positional negotiation, which is usually
adversarial in nature but is still the most common type of negotiation in the labour
relations situation. Ideally, as the relationship develops, there should be progress
towards more collaborative or cooperative negotiations. These require a different
mindset and a sincere effort by both parties to find a solution which satisfies all
parties. (see chapters 14 and 16)

Chapter 11: Traditional Negotiation 495

Part One:
Contextual Background

Defining the Concept

Salamon (1987] defined labour–management negotiation as
■■ … the interpersonal process used by representatives of management and employees/
unions, within the various institutional arrangements of collective bargaining, in order
to resolve differences and reach agreement.

He characterised negotiation by the following facts:

■■ It is an explicit and deliberate event.
■■ It is undertaken by representatives on behalf of their principals.
■■ The process is designed to reconcile differences between the parties involved.
■■ The outcome is dependent, at least in part, on the perceived relative power relationship
between the principals.

Negotiation as traditionally practised is a process of give and take. It entails:

■■ demand
■■ offer and counteroffer
■■ the granting of concessions
■■ the eventual achievement of a compromise solution.

It has traditionally been distributive and positional, although some joint problem-solving
does occur. This means that the parties see themselves as adversaries and each is intent on
winning. The result is a great deal of game-playing. The more progressive trend is to engage
in collaborative rather than competitive negotiation and to attempt to gain maximal returns
for both parties.

Issues which Trigger Negotiation

Negotiation topics are as varied as the issues and problems arising from the collective
bargaining relationship. Negotiations may be conducted to resolve differences regarding the
dismissal of a single employee or the intended retrenchment of a group of employees, or to
settle a grievance brought by an individual. Periodically, major negotiations are conducted
to determine wage levels and conditions of service and to resolve other important issues.
Besides these major negotiation sessions, negotiations will be undertaken with every dispute
which arises, and will have to be instituted or continued should a strike or lockout occur.

496 Labour Relations: A southern African perspective

Environmental Factors Impacting on Negotiations
Negotiations are influenced by environmental factors, in the form of:
■■ the economy
■■ ideological preferences
■■ sociopolitical developments
■■ public policy
■■ demographic changes.

Developments in these spheres help to determine:

■■ the content and progress of negotiation
■■ the power balance between the parties
■■ the role of government in the process
■■ the attitude adopted by one party towards the other.

Macro-economic Forces
As Kochan (1980) stated: ‘All theories of collective bargaining start with a set of economic
variables. The economic constraints, pressures and incentives influence all of the other
components of the collective bargaining system.’

Government Policy
In the macro sphere, a government’s overall economic policy will set the stage for collective
bargaining and will determine the importance attached to this process in a particular labour
relations system. Most importantly, the current monetary policy of a government will affect
the conduct and content of negotiations. It is this monetary policy which largely determines
the rate of economic growth and, with it, inflation and unemployment rates. These in turn
affect the expectations of employees and the bargaining power of unions.

Economic Prosperity
In times of economic prosperity, the expectations of employees will rise. More importantly,
labour will be in high demand and unions will have greater bargaining power. This may lead
to increased demands by unions and to aggressive negotiation, even though employers are
better able to meet union demands than in times of economic recession.
The bargaining range will be quite narrow, but, because unions hold more power, wage
rates will probably show a marked increase. This holds the danger of a rise in unemployment
since, with the increase in labour costs, employers may attempt to achieve the same
production levels with a smaller workforce or may decide to mechanise. If this occurs,
unions may again have to limit demands.

Chapter 11: Traditional Negotiation 497

Economic Adversity
In times of economic adversity and rising unemployment, union bargaining power diminishes
because labour becomes more dispensable. As a result, the demands and expectations of
employees may, on the face of it, have to be more realistic, and there may have to be a
more cooperative relationship at the bargaining table. Yet negotiations are still likely to be
lengthy and, at times, hard-fought. The problem is not straightforward. Economic downturns
will not necessarily result in less militancy and lower demands by unions. Whether unions
moderate their demands will also depend on societal factors such as growing poverty and
inequality, and on the unions’ position in that society.

The Inflation Rate

A high inflation rate or a consistent increase in the Consumer Price Index (CPI) will inevitably
lead to demands for higher wages and for agreements to contain escalation clauses, whereby
wage levels automatically increase by a certain percentage for every year of the agreement.
If, at the same time, there is no increase in productivity, and if the government engages
in expansionary policies, a still higher inflation rate may result. Prices will increase with
the increase in wages, giving rise to a wage–price spiral which may be difficult to break.
Employers will expect unions to take the initiative by limiting their demands and unions
will first want to see prices decreasing.

Micro-economic Factors
Kochan cites various micro-economic factors as important in the bargaining process; these
factors are discussed below.

Elasticity of Demand
Marshall (2013) originally postulated the theory that the power of trade unions will increase
as the demand for labour becomes more inelastic. If the demand is inelastic, increases in
wages will not result in a reduction of the workforce, and the bargaining power of the union
thus remains constant. Inelasticity of demand may occur when:
■■ labour cannot be easily replaced
■■ the demand for the final product will not change
■■ the supply of other factors of production is static
■■ labour costs constitute only a small proportion of total costs.

If an employer is unable to continue the work process without certain employees (or a
certain number of employees), or if the union has organised workers throughout the market,
unions representing those employees hold additional power.
If, for whatever reasons, the product (eg bread) remains in demand, the union need
not be concerned that an increase in wages will affect employment levels. Similarly, if an
employer is not able to substitute other factors for labour – in the form, for example, of
capital investment in technology – unions are stronger.

498 Labour Relations: A southern African perspective

If the cost of labour is relatively low in comparison to the overall costs of production, the
employer will more readily agree to increased remuneration for employees.

Labour Market and Product Competition

Where an industry is concentrated and where a number of employers compete for labour in
a tight market, unions can exercise greater leverage.
Conversely, if the product is highly competitive, the employer may, particularly if there
is no centralised bargaining system, engage in aggressive wage bargaining for fear that
increased labour costs will price his product out of the market.

Profit Margins
The last factor mentioned by Kochan – namely, the level of profit in an undertaking – may
be controversial, but it can happen that an employer who has higher overall profit margins
or increased productivity may be more ready to meet wage demands than another employer
who is not in the same position.
The economic factors mentioned are all interactive, not only with one another, but also
with other influences on the negotiation process. Together they will determine the content
and success of the negotiations.

Public Policy
The government, by its legislative framework, sets the parameters for collective bargaining.
It does so by, in the first place, establishing minimum conditions of employment and by the
regulation of such matters as health and safety at the workplace. These minimum standards
are used as guidelines for further bargaining by those involved in negotiations. Secondly, a
government may guide the collective bargaining process by:
■■ making provision for statutory bargaining bodies
■■ providing for the statutory enforcement of collective bargaining agreements
■■ establishing a statutory dispute settlement machinery and mediation or arbitration
services
■■ limiting the freedom to strike or lockout
■■ enforcing bargaining with a representative union
■■ delimiting bargaining units.

If the statutory machinery provides for centralised bargaining bodies, the employers and
unions may be obliged or may prefer to adopt this bargaining structure. Equally, they might
be obliged to use the statutory dispute settlement machinery or may prefer to do so instead
of establishing their own.
Thirdly, a government may limit the rights of either party by, for example, legislation
regarding the organisation and management of unions and employer organisations, by

Chapter 11: Traditional Negotiation 499

limiting sympathy actions, picketing and boycotts and by ‘fair labour practice’ legislation.
For example, a government could oblige unions to institute strike ballots (see Chapter 13);
it could legislate for payment of damages in cases of unjustified labour action and could
declare the failure to bargain ‘in good faith’ an unfair labour practice.
A Government can, by its overall policies and legislation, greatly affect the bargaining
relationship. Should it treat one sector of society more favourably or as inferior, this spills
over into the labour relationship and affects the bargaining power of that group.

Political Influences
Strong political divisions in society, or a high degree of politicisation in certain sectors, will
eventually also be reflected in the issues raised at the bargaining table and in the attitude
of the bargaining partners towards each other.
Where the bargaining partners are diametrically opposed in their political viewpoints, or
one partner sees the other as political opposition, bargaining becomes more aggressive and
less cooperative. Where politicisation is intense, political issues are added to the bargaining
agenda. These may range from demands for the celebration of political holidays to insistence
that employers take a political stand on certain issues.

Societal Influences
The societal influences on the bargaining relationship are many and varied. Social and
cultural divisions between employer and employee could, if these are very distinct, lead
to tensions between the bargaining partners and create sensitive areas in the negotiation
process. Group divisions in a community, whether of a social or religious nature, may lead
to divisions among employees. This could cause tension at the place of work and further
complicate the bargaining process.
Problems experienced in particular communities – such as insufficient housing,
inadequate childcare or other facilities, poor education and lack of or insufficient transport
– will make their way to the bargaining table in the form of demands for benefit and other
schemes, or for social responsibility programmes. An employer could be expected not only
to care for his own employees, but also to show some responsibility towards the community
from which he draws his labour force.

Demographic Influences
Demographic changes in the composition, average age, predominant gender or average
educational level of a workforce and other developments, such as greater urbanisation or
decentralisation of industry, will have a direct influence on worker expectations and on
employee attitudes towards jobs and unions. This will, in turn, be reflected by changes in
union composition and union objectives and, therefore, in bargaining relationships and
negotiation issues.

500 Labour Relations: A southern African perspective

As the workforce on average becomes younger, less emphasis may be placed on job security
and more on personal development, and unions may have more militant supporters.
Women, too, have become more vociferous in their demands and are particularly sensitive
to discriminatory practices. A workforce which is, on average, more highly educated may
stress job enrichment and opportunities for leisure rather than increased wages.
All these developments will affect the strength and bargaining power of unions. In some
instances, union membership may increase, whereas in others it will show a decline. The
more rapid the change and the more heterogeneous the membership of a union becomes,
the more difficult does it become for the bargaining process to accommodate the various
interests.
Urbanisation results in greater population density and, consequently, in facilitated
organisation for trade unions. Also, greater urbanisation will be accompanied by intensified
social problems, especially as regards housing. These problems are certain to be brought to
the bargaining table.

The Role of the Press

The press, as an opinion-forming medium, has an active influence on negotiations, in both
the long and the short term. On the negative side, press involvement can detrimentally
affect actual negotiations and complicate the bargaining relationship.
The press helps to shape the initial opinions and standpoints of the parties and their
attitudes towards other parties. The public is influenced by the press and the body public
may, by collectivised opinion or the application of pressure, play a role in the negotiation
process.
The press may disproportionately emphasise issues and disputes between the parties
or misreport events, thus heightening conflict situations and hampering the progress of
negotiations.

Technological Advancement
The effects which technology has on negotiations can be divided into two types, namely:
■■ the influence of technology on the work process and on the employee, who performs
that work
■■ the effect on employment levels.

It is commonly believed that mass production technology alienates the employee from
his work, minimises social interaction and, in general, has a dehumanising influence.
This results in demands by unions for the humanisation of the work process by, for
example, increased job content, whole process tasks, the establishment of work groups and
psychological counselling of employees. Demands of this nature become problems or issues
at the bargaining table and could be subjected to distributive or integrative bargaining.

Chapter 11: Traditional Negotiation 501

The ever-present threat of technological development to the job security of employees is
a constant point of debate between employers and unions. Technology may be purposely
introduced by an employer in order to diminish trade union power. At the very least,
unions will demand to be consulted on the introduction of new technology and to be
assured of compensation should employees be retrenched. In more sophisticated systems,
this is followed by the demand for employee retraining or re-education of employees
so that employees themselves are able to man any new machinery which might be
introduced.
As indicated in earlier chapters, the new millennium has seen escalating technological and
scientific developments which threaten the very nature of work and traditional employment.
Many traditional jobs may disappear, and employers will increasingly outsource special
aspects of the business. Employees with the necessary expertise may well become business
partners. Unions may not necessarily disappear, as some have predicted, but will have to
reassess their priorities and strategies. Negotiations, where they do occur, will probably be
at more centralised levels, perhaps even involving the government.

Effects of Collective Negotiations on the Environment

Just as environmental influences affect the negotiation process and its outcome, so also the
process itself influences developments in the environment. This is particularly the case in the
economic sphere, where agreement on higher wages or other benefits and consequent price
increases may contribute to inflationary trends in the economy. Repeated, disruptive strike
action may negatively affect the economy and societal relationships and may necessitate
measures limiting the rights of parties (see Chapter 13).
Socially, the results of collective bargaining are most obvious, especially if parties
negotiate social improvement schemes or employers become involved in education and
housing problems. On the negative side, conflicts and problems arising in the negotiation
process will be carried out to the wider society and may result in community actions against
employers in the form of product boycotts, blacklisting by communities and tensions
between various sectors of the community.

Conflict and Power in the Negotiation Process

Sources of Conflict
The institution of collective bargaining – and, therefore, the process of negotiation – arises
from the need to share scarce resources and from conflicting needs, goals, values, ideologies
and perceptions, as well as structural imbalances, ambiguities and lack of coordination.
Employers and employees find themselves in conflict for the following reasons:
■■ The employer, while he may believe in paying well, does not want to pay too well;
employees believe that, in comparison, they are still getting too little.

502 Labour Relations: A southern African perspective

■■ The employer likes to be in control and to make all important decisions, but employees
continually challenge this managerial ‘prerogative’.
■■ Employees want to be informed on all issues affecting them, while employers still closely
guard information, often as a source of power.
■■ Employers may believe that employees do not have the interests of the enterprise at
heart; employees equally believe that their interests are not important to the employer.
■■ Employers may place the interests of the enterprise, shareholders and executives above
those of workers while workers want, at the very least, to receive equal consideration.
■■ Employees often do not enjoy their work because they cannot develop; employers may
enjoy work and expect the same enjoyment from employees.
■■ Employers are inclined to view matters only in a company context; employees see work
in relation to family and community, and within the sociopolitical framework.
■■ Both sides communicate ineffectively and often fail to communicate at all.

(See also Chapter 14.)

These conflicts, if they are not resolved, lead to a lack of trust and cooperation, a continual
challenging of managerial decisions, continual comparisons and actions by employees or
their unions. In general, a ‘we’ and ‘they’ approach is adopted. It is to improve on this
situation that negotiations take place.

Methods of Handling Conflict

Methods of handling conflict may be divided into two types:
■■ the non-confrontational approaches, such as
◗◗ avoidance
◗◗ withdrawal
◗◗ suppression
◗◗ soothing
■■ the confrontational approaches, which would include:
◗◗ majority decision-making
◗◗ bargaining or compromise
◗◗ integrative problem-solving.

Although the non-confrontational approaches may be advisable in some instances,

negotiation necessarily entails confrontation of conflict, albeit with the purpose of eventually
achieving a compromise. Ideally, a win−win solution should be sought. Unfortunately,
achieving an integrative climate is not always possible, particularly where relationships
are essentially adversarial. Consequently, numerous issues are still resolved by distributive
bargaining, often resulting in a win−lose situation.

Chapter 11: Traditional Negotiation 503

The Conflict Dynamic
Aggravators and Moderators
Anstey (1991) provides a process model of conflict in which the sources of conflict are
identified as conflict antecedents, but where the degree of conflict arising from these sources
depends on what Anstey calls ‘moderators’ or ‘aggravators’. These in turn, will determine the
type of behaviour in conflict situations: whether the parties resort to
■■ violent acts, coercion, sabotage
■■ industrial action
■■ negotiation
■■ integrative problem-solving
■■ intervention of third parties and litigation to resolve the conflict.
Among the aggravators and moderators, Anstey mentions are such aspects as:
■■ the aspirations and perceptions of the parties
■■ the history of their relationship
■■ their use of strategies
■■ internal cohesion within constituencies
■■ the acceptance (or not) of the other’s legitimacy
■■ the existence of procedures, forums and third-party institutions for the regulation of conflict
■■ shared conflict-limiting norms
■■ the ‘size’ of the grievance or threat
■■ the balance of power between the parties
■■ the existence (or otherwise) of ‘cross-cutting group membership’
■■ social controls
■■ tolerance and certainty.

The extent to which various aggravators or moderators can influence conflict behaviours is
self-evident. (For more detail, see Chapter 14.)

Escalation of Conflict
Much research has been conducted on the escalation of conflict. The theory is that, if
escalators can be controlled, the degree of conflict would then be minimised, and the
negotiation process facilitated. Conflict escalators include:
■■ a large number of issues
■■ too many participants in the negotiations
■■ the formation of collectives and alliances
■■ vague and general demands instead of concrete and specific ones

504 Labour Relations: A southern African perspective

■■ an increase in resources for a particular party
■■ negative perceptions of the other party
■■ a history of poor relations between the parties
■■ poor or insufficient communication
■■ autocratic leadership within the parties.

Research findings have proved that conflict increases in direct relationship to the number
of issues involved. Limiting the issues or settling some issues rapidly would serve to de-
escalate conflict. Similarly, conflict remains at lower levels when fewer participants are
involved, particularly if such participants act in an individual capacity. Where parties form
different alliances and collectives, conflict tends to escalate.
According to Anstey (1991), conflict is lower when demands are concretised and specific
rather than general and all-encompassing. Also, conflict tends to escalate when available
resources increase. This is proved by the fact that negotiations are sometimes tougher during
times of economic prosperity.
Furthermore, the degree of conflict will depend to a large extent on the perceptions of the parties,
the relationship between them and the level of communication. Conflict increases where:
■■ there is a strong perception of opposition
■■ the other party is viewed in a negative light
■■ the relationship is one of hostility
■■ the objective is to inflict as much harm as possible.

Where parties adopt a non-evaluative stance, have a more positive relationship and mainly
want to obtain the best possible deal, conflict levels are generally lower.
Equally, and predictably, conflict escalates where communication is closed and infrequent, and
de-escalates in a climate of open and regular communication. Another factor which will affect
the conflict level is the climate within each organisation. Where there is democratic management
and loose controls, conflict is minimised; autocratic leadership, high task orientation and a high
degree of mobilisation normally lead to escalation of the conflict potential.
In negotiation, the purpose is to minimise the potential for conflict in order to prevent
it from reaching destructive proportions. There is no conflict which cannot be resolved. In
fact, studies have estimated that 70 per cent of all conflicts are resolved simply by more
effective communication, 20 per cent by negotiation and only about 10 per cent require the
active intervention of a third party. (See also Chapters 1 and 14.)

Sources of Power
The power base of employers during negotiations rests in:
■■ their authority
■■ their control of employment

Chapter 11: Traditional Negotiation 505

■■ their ability to bestow or withhold rewards
■■ the possibility of continuing operations without certain employees
■■ the ability to stockpile (to store sufficient product to last through a strike).

Employees/unions, in their turn, derive power from their ability to:

■■ withhold labour
■■ disrupt the productive process
■■ make management lose its market
■■ disrupt other operations
■■ ‘reward’ management by hard work and commitment.

Different Forms of Power

As explained in Chapter 1, the literature dealing with power identifies five forms of power,
namely:
■■ coercive power
■■ reward power
■■ legitimate power
■■ expert power
■■ referent power.

Coercive power (see Chapter 1) is that most frequently applied in the labour relationship, and
the use of such power forms the basis for the collective bargaining process. Nevertheless,
during the negotiation process, various types of power may be employed in order to enhance
the position of a particular party. (See later in this chapter.)

Power Principles
In order to use power effectively, the user should remember the following points:
■■ Power is never absolute. It is limited by, and relative to, the power held by others.
■■ Power is not static, and power relationships are subject to continual change.
■■ Power is enhanced if it is based on common ground rather than on differences and
coercion.
■■ Power based on authority should be accompanied by responsibility.
■■ Power needs to be perceived and accepted by the other party.
■■ Perceptions of own power should be realistic.
■■ The limits of one’s power cannot be exceeded, as this leads to loss of self-control.
■■ The end does not always justify the means.
■■ Using power in order to achieve more power has negative results.
■■ Using power defensively may prove harmful to the user.

506 Labour Relations: A southern African perspective

■■ The overuse or abuse of power makes a victim of the party against whom the power has
been used. Victims can become aggressors.
■■ A display of power does not always necessitate action.
■■ Less power is not necessarily bad.
■■ The use of power always involves costs and risks.
■■ Power shared is power gained.

Although power is necessary within the context of successful negotiation, power in itself, or
even the wrong perception of power, could prove dangerous. Negotiations are not a power
game in which the intention of one party is to crush the other completely. The objective is
to reach a workable solution – workable in the sense that it is acceptable to both or all the
parties involved.

Chapter 11: Traditional Negotiation 507

Part Two:
The Negotiation Process

Factors Contributing to the Success or Otherwise of

the Process

Individual Skills, Interactions and Perceptions

The degree of success achieved during a particular negotiation will depend to some extent on:
■■ the skill of the negotiators
■■ the willingness or perceived willingness of either party to engage in coercive action
■■ the degree of commitment to reaching a final agreement
■■ the expectations and needs of both parties
■■ their past relationship
■■ the knowledge that each party has of the other and of prevailing circumstances
■■ the amount of trust existing between the negotiators.

Power as the Ultimate Determinant

Using Different Forms of Power
The conduct and outcome of distributive negotiation is ultimately dependent on the power
balance between the parties. As indicated previously, coercive power is at the basis of the
bargaining relationship and is the form of power most frequently applied by the parties.
Nevertheless, various types of power may be applied during the negotiation process. Thus,
legitimate power is applied by ensuring that the chief negotiator is a person who holds a
senior position in either employer/management ranks, the union hierarchy or the employee
collective. Alternatively, a principal to whom a negotiator refers may be an individual with
legitimate power, or reference may be made to an outsider who holds legitimate power in
society. In a negotiating team, important issues could be addressed by an individual who
holds legitimate power in that sphere.
Reward power can be used on an individual or a collective basis. A negotiator may point
to the collective rewards which can be achieved from agreement.
Coercive power, on the other hand, is used when negotiators employ threats and bluffs;
when they demonstrate displeasure by, for example, walking out of the negotiation session;
or when they play on the fears of the other party.

508 Labour Relations: A southern African perspective

‘Positive’ power
One of the best forms of power to utilise in negotiations is expert power, which in turn
depends on the knowledge and skill of the negotiator. Expertise is demonstrated by creating
awareness of a negotiator’s experience and background, by citing facts and figures and by
the manner in which information is presented and arguments are countered. Expert power
can also be enhanced by calling on persons with expertise in particular areas to make
presentations during negotiations.
The last form of power listed by French and Raven (1959) is referent power, regarded as
the most beneficial form of power. To utilise this kind of power, the negotiator would have
to be someone with whom the other side could identify, despite their differences. This is why
employers may sometimes appoint an outside consultant as chief negotiator in the belief
that the union team will more easily identify with him than with a member of management.
Referent power may also be gained by referring, in argument, to persons with whom the
other side can identify, or by operating within the context of shared values and beliefs. This,
of course, is the ideal negotiating situation.

Strategies for Gaining Power

During the negotiating process itself, parties may gain power if they:
■■ set relatively high aspirations and commit themselves to these
■■ have the support of their constituents or principals
■■ gain support from the community
■■ can make the other party look bad
■■ ensure that time is on their side
■■ are willing to take risks
■■ have knowledge of, and can resort to, the law
■■ have sufficient information and skill
■■ can create dominance (particularly by displaying knowledge and skill)
■■ persuade the other party of their commitment
■■ maintain contact with constituents and principals
■■ demonstrate strength by letting the other side know what measures can be taken
■■ point to the benefits of cooperation and the importance of maintaining a favourable
image
■■ show that they have contacts outside who are willing to support them
■■ act courageously at all times.

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Expertise in Negotiation
The best negotiator is not the most forceful or aggressive character in the union or
management team. The most important qualities required by a negotiator are:
■■ sensitivity to the needs, feelings and perceptions of all concerned
■■ tact – not needlessly antagonising the other side
■■ a readiness to listen, particularly to the other side
■■ the ability to interpret silent messages such as facial expressions
■■ discretionary judgement – for example, knowing when to stand firm, when to concede
and when to use particular arguments
■■ flexibility – being willing to adopt different strategies and approaches
■■ the ability to handle information
■■ the ability to present a persuasive, reasoned argument
■■ superior thinking and planning skills
■■ in-depth knowledge of the issues at hand
■■ good communication skills
■■ the ability to withstand pressure and stress
■■ the ability to earn the respect of the other party.

A negotiator intent on winning at all costs is not the most effective. A total triumph by one
party involves the complete defeat of the other. This is bound either to elicit a counterreaction
or to lead to more conflict at a later stage. The effective negotiator will consider also the
other party. He may, and is entitled to, pursue the interests of his own party as single-
mindedly as possible and, in the process, to use aggression and threats. However, he should
do so without totally antagonising the other party and without causing the opposing side
to lose face completely. (See also Profile of a Successful Negotiator later in this chapter.)

Preparing for Negotiation

Negotiation Conventions
Before engaging in negotiation both parties should understand the protocol applicable to
this process.
The practice of negotiation requires, in the first place, recognition of the right of each
party to state its case, to make proposals and counterproposals and to raise arguments and
counterarguments.
The chief negotiator speaks and makes decisions on behalf of his team, but other team
members may also speak, either when called upon or at their own request.
In properly conducted negotiations, both sides acknowledge the need for compromise.

510 Labour Relations: A southern African perspective

At the same time, each recognises the right of the other to pursue his own targets as
aggressively as possible, even to the point of threatening coercive action.
The art of negotiation relies on gentlemanly behaviour. There is consideration for the
other side, and correct manners are maintained at all times. It is accepted that no petty
harangues will take place and that no personal attacks will be made; also, that negotiators
on either side will not lose their tempers. For this reason, negotiations normally follow a
formal procedural pattern. The chief negotiator on either side is the one to be addressed.
An agenda is drawn up, minutes are taken, time periods are set and there is an opening
and closing address. In all negotiations each side has a right to request a caucus or the
opportunity to report back to its principals or members.
When conducting negotiations, all participants should have equal status. It is accepted
that existing agreements will be upheld, and that movement will come from both sides.
Negotiations should be conducted fairly and in good faith. This means that:
■■ an offer, once made, cannot be withdrawn
■■ verbal offers and agreements are taken as given
■■ there should be no denial of something which has been accepted
■■ both sides should display willingness to negotiate
■■ there can be no outside or informal settlement of a negotiable issue
■■ confidential or privileged information may not be abused by either party during
negotiations or at a later stage
■■ opponents should be left with some credit
■■ no trickery should be employed in the final agreement
■■ agreements will be implemented as they stand.

Initiating the Negotiation Process

Traditionally, the initiative for starting the negotiation process has come from the union
or employees, either by way of a set of demands or in the form of grievances raised by
employees. The reverse could and does occur. The employer may act as initiator in order to
gain certain concessions from, or institute arrangements with, his employees or the union.
Whoever the initiator may be, the proposals made by one side are certain to be met with
counterproposals from the other or by an agreement to meet for the purpose of negotiation.
Depending on the nature and extent of the issues, the ensuing negotiation could be
conducted at various levels and may be very limited or extensive, as for example negotiations
around wages and conditions of employment. For the present purposes it is assumed that
negotiations are of the latter kind.

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Selection of the Negotiator(s)
Single Person or a Negotiation Team
Any negotiation requires the appointment or selection of the person or persons most suited
to conduct the negotiations. The type of issue and the nature of both employer/management
and union organisation will determine the type and number of persons appointed. These will
be selected on the basis of their expertise or their involvement in the issue at hand. Thus,
a management negotiating team could consist of the production manager, the financial
manager, the company secretary and one or two foremen, while the union team may consist
of an organiser, one or two officials and some shop stewards. The preferred practice is to keep
the team as small as possible. Too large a negotiating team might encumber negotiations
and make it more difficult to reach consensus.

The Chief Negotiator

Where negotiations are to be conducted by a negotiation team, it is customary to appoint
a chief negotiator. The chief negotiator is usually chosen on the basis of his experience, his
expertise and his knowledge of both his own organisation and the other party. His task is to:
■■ coordinate and lead the negotiating team
■■ get to know the other party
■■ advise his principals in preparing an objective strategy
■■ arrange and lead meetings
■■ continually report back and refer to his principals
■■ within limits, reach decisions during negotiations on behalf of his principals.

If he is to carry out his task successfully, a chief negotiator will have to establish a sound
relationship with his principals, his teammates and the other side. He should have the trust
and confidence of all involved, and particularly of his principals.

Roles Assigned to Team Members

Some teams may decide to cast each team member in a specific role. One may act the
aggressor and another as pacifier, while yet another maintains the position of expert and
adviser throughout the negotiations. This is not always necessary, as long as the team
coordinates effectively and one team member is designated as listener. It is necessary that
one person, trained in listening and observation skills, refrains from talking and instead sits
back to observe innuendoes, subtle gestures and reactions. He is the one who from time to
time may call for a caucus in order to inform his teammates of his observations. This person
may also act as recorder, but in larger teams it is preferable to appoint another team member
to record all the important arguments and decisions.

512 Labour Relations: A southern African perspective

Identifying the Issues
Once demands have been posted or proposals and counterproposals have been made, the
negotiating team will, as one of its first tasks, attempt to identify the issues to be subjected to
negotiation. This is necessary, as not all the issues may be immediately recognisable. In certain
cases, demands or proposals are in misleading language, or one demand raises another issue.
Issues should be listed in order of priority. The list of issues established at this early stage
may later be amended and priorities may change, both after intra-organisational bargaining
has occurred and after the initial encounter with the other side.

Obtaining a Mandate
Before any preparations for negotiation can commence, the chief negotiator or his
negotiating team should obtain an initial mandate from the principals or, in the case of
a union, its constituents. This will probably not be the final mandate for negotiations,
but it will establish a framework within which planning can take place. For the union
negotiators, it would entail bringing a management demand to their membership or, most
often, establishing the needs and demands of their members. Management negotiators will
obtain direction from their principals and broadly establish the size of the package which
the principals are prepared to offer. A mandate is never absolute, and it may change as
preparations and negotiations progress.

Setting Objectives
Planning and strategising is usually preceded by the establishment of certain broad
objectives and, if possible, calculated guesses as to the objectives of the other party. The
objectives are described as ‘broad’ in the sense that they refer not to targets to be reached
during negotiation but rather to:
■■ the overall objectives of the negotiation process
■■ the general objectives of management and the union
■■ the specific objectives of negotiators.

The overall objective of negotiation is usually to achieve the fairest and most acceptable
settlement. This notwithstanding, there are particular circumstances in which the overall
objective may be to take a principled stand or to display strength. This usually happens
when the other party has in the past displayed an exaggerated sense of its own power or
when too many concessions are perceived to have been made.
Whatever the overall objective, it is important that it is clearly defined and is kept in
mind by the entire negotiating team. It is this objective which will set the tone for the
negotiations and which will keep negotiators on course.
During negotiations, management’s main concern will be with turnover, profits before and after
tax, and tax concessions, profit margins, reinvestment, growth, expansion, dividends declared,

Chapter 11: Traditional Negotiation 513

competitiveness, productivity, market retention, control and cost savings. An appreciation of
these concerns by the union can facilitate negotiation and result in better argument. Equally,
management should understand and appreciate the union objectives (see Chapter 4) and should
plan arguments and counterarguments in the light also of these objectives.
Generally speaking, unions want to improve the situation of their members, in
terms of continued employment and security, job satisfaction, a happy workforce and
acknowledgment of employee rights. Management, on the other hand, wants production
to continue and improve and the operation to run with as few problems and difficulties as
possible. Understanding these general and specific objectives leads to better strategising and
to more reasonable behaviours during negotiations.
One overall objective of negotiation remains, and that is the desire of both parties to maintain
and, if possible, improve their relationship. Whatever their individual aspirations, the parties
undertake negotiations principally as a means of ensuring the continuity of the relationship.

Intra-organisational Negotiation
Collective bargaining or negotiation with the other side will always be preceded by
negotiations with other people in the organisation and, in the union’s case, with union
members. Such intra-organisational negotiation will continue as long as the negotiations
themselves last. The task of formulating a joint strategy or position will fall mainly on the
shoulders of the chief negotiator. In order to achieve the necessary coordination, he will
have to identify the issues, establish the needs of all concerned (particularly those of his
own and the opposing organisation), gather as much information as possible and negotiate
with his own team, his principals and other concerned persons in the organisation. Only
once consensus has been achieved can the actual planning of negotiations commence.
Entering negotiations with an uncoordinated team, or without the support of principals/
members, is looking for trouble .

Information Gathering
In both the preparation for and the actual conduct of negotiations, information may prove the
key to success. The negotiating team should have all the necessary information at its disposal
before negotiations commence. This includes information relating to current conditions, its
own organisation and the other side. Comprehensive information leads to realistic goal-
setting, good strategic planning and persuasive argument and counterargument. The types
of information needed are discussed below.

Current Conditions
Economic, social and political conditions will influence the conduct of negotiations and
the bargaining power of each party. Negotiators should know whether prevalent economic
developments will favour the other party and whether social or political conditions could
play a role in the negotiation process.

514 Labour Relations: A southern African perspective

In wage negotiations, economic conditions are particularly important. Negotiators need to
take the following into account:
■■ inflation levels
■■ cost of living indices
■■ levels of economic activity
■■ business cycles
■■ industry trends
■■ economic forecasts
■■ unemployment levels
■■ the labour market
■■ current trends in wages and prices
■■ wages negotiated in related undertakings
■■ household and minimum subsistence levels
■■ wage determinations and arbitration awards.

Statistical Indicators
The following statistical indicators are most frequently used during substantive negotiations:
Consumer Price Index (CPI). This reflects the increased price of goods and services used
by an average family, and is calculated by taking approximately 600 consumer goods
and services, weighting them in terms of importance, establishing a base year and then
calculating the percentage increase from month to month and from year to year. It is used
to calculate the inflation rate and to adjust prices and wages.
However, there are certain inherent problems with this statistic in that the household used
is imaginary and the basket of goods is therefore not always typical. Also, it does not take
into account direct taxation. In dealing with lower-level income groups, it is often advisable
to supplement this statistic with the food price index, which may be more relevant.
Inflation Rate. The inflation rate is wider and more general than the CPI, and can therefore
be lower. In essence, it shows by how much money has devalued over a certain period, and
is calculated by taking all prices into account and expressing increases on a percentage
basis. It is usually calculated on a month-by-month and year-by-year basis, expressed as a
12-month moving average.
Producer Price Index (PPI). Previously called the Wholesale Price Index, this shows the
increased price of a representative basket of goods required by producers, including capital
and intermediate goods. It reveals the increase in the price of imported goods more effectively,
and is often used by management to prove an escalation in capital and production expenses.
Gross Domestic Product (GDP). This statistic reflects the total price of goods and services
produced in a country, but does not include unrecorded and non-market activity. It is used
to measure the degree of economic activity in a country from one year to another and to
compare this with that of other countries.

Chapter 11: Traditional Negotiation 515

Per Capita Income. Income per capita refers to the average income per person in a particular
country, and is calculated by dividing the total income by the number of people. It is used
to compare earnings with those in other countries and to measure economic progress, but
the problem is that it does not say how income is distributed.
Real Wages. The real wage lag is the loss suffered when prices rise without a concomitant
rise in wages. Thus, if the inflation rate is 15 per cent per annum, a wage of R100 in January
will amount to a real wage of R85 by December.
Minimum Subsistence Level and Household Subsistence Level (MSL and HSL). The first
determines how much a family of a certain size (usually five or six) needs just to survive,
and the second how much they need to subsist reasonably. It is calculated by taking the
price of an average basket of goods – but, again, the problem is that the basket is arbitrary
and does not allow for any other expenditure except necessities. Nowadays, MSLs and HSLs
are mostly discredited, with unions preferring to use a ‘decent wage’ as the basic criterion.

Organisational Position
No negotiator can enter into a negotiation situation without full knowledge of the
organisation he represents. The management negotiator should have sound knowledge of:
■■ the organisational needs for profit, control, stability and expansion
■■ the organisation’s present position as regards profitability
■■ plans for the future
■■ the ratio of labour costs to total costs
■■ the operation of each department
■■ the production process
■■ the management styles adopted in every department.

He needs this knowledge so that he does not make commitments which, in practice, prove
to be unrealistic or out of line with general policy.
From the union side, the union negotiator has to be fully informed about the organisation
he represents. In union circles it is not necessary to stress this point as emphatically. A
union is established for the sole purpose of representing the interests of its members, mainly
by the process of collective bargaining; consequently, negotiation is one of its main tasks.

Knowledge of the Other Side

From the management side, it is essential to study the union, to know, for example:
■■ its policy, strategy and past history
■■ its successes and failures
■■ its proneness to strike action
■■ its affiliations

516 Labour Relations: A southern African perspective

■■ the support it may receive
■■ its present position and intentions.

The union, in its turn, will study the company as regards:

■■ its managerial style
■■ the industry within which it operates
■■ its past history
■■ its internal and external organisation
■■ the work process
■■ profitability levels, wage structures and labour costs.

More sophisticated unions will obtain information from the annual reports of a company
and its competitors, or they may request that the company’s books be opened for inspection
by union officials.

Testing the Water

Before entering into more detailed preparation for negotiation, it is advisable to test the
water. This entails finding out more about the other side’s intentions and objectives,
establishing how committed they are to their demands, how much support they have and
how they would react to certain proposals. Initial probing can take the form of casual
questions, informal talks and parallel remarks (saying something ‘by the way’). It can also
be used to give the other side an idea as to whether their demands will be acceptable or not.

Detailed Preparation around Specific Issues

Delimiting the Area of Negotiation

Before negotiations commence each party should establish:
■■ what it wants to achieve
■■ what it is likely to achieve
■■ to what extent it is prepared to concede
■■ what the other side will want to achieve
■■ what they are likely to achieve
■■ what they are likely to concede.

This allows negotiators to make optimistic and pessimistic projections for each issue,
particularly the substantive ones, and gives some idea of what a realistic outcome would be.

Chapter 11: Traditional Negotiation 517

The Need to Establish a Bargaining Range
The upper and lower limits of one party may be entirely unrealistic and there may be no
commonality at all with the limits set by the other party. This will result in both sides having
to go back to the planning stage before actual negotiations can commence. It is therefore
necessary to establish a more specific bargaining range. The bargaining range will be widely
delimited by what is generally known as the area of interdependence.

The Area of Interdependence

Definition
■■ The area of interdependence is that range – say, in wages – within which it is worth each
party’s while to try to maintain the relationship; in essence, to continue negotiating.

The outer limits of this area are set by the points at which either party would terminate
a potentially advantageous relationship. For example, employees might be unwilling to
continue working for the undertaking or engage in protracted actions if the wage rate is
set at lower than R30 per hour while, if the employer is forced to pay more than R60 per
hour, he might look for alternatives such as giving up the operation, mechanising or moving
to another area where labour is cheaper. Thus, principally, the area of interdependence
establishes or limits the bargaining range, as illustrated below.

Employee/Union Considerations when Setting Limits

In practice, these limits may be pushed even lower in the case of employees and higher in
the case of employers. The decision of employees that it is not worth their while to continue
in employment might be affected by:
■■ their lack of mobility
■■ limited knowledge of the labour market
■■ the decentralised nature of the market
■■ their experience in a particular type of work
■■ the fact that they may lose benefits or seniority rights
■■ their skill levels
■■ the rate of unemployment.

Employer Considerations
The employer, on the other hand, may go beyond his upper limit after considering such
factors as the high cost of replacement, the cost of severance and of moving. The employer’s
upper limit, or whether he will go beyond his upper limit, will also depend on the union’s
control of the labour market. Should the union control the entire market, the employer may
have no option but to agree to union demands, but he may eventually decide to mechanise,
in which case the union will have gained in the short term and lost in the long term.

518 Labour Relations: A southern African perspective

Other Factors Determining Limits Set
It is generally believed that high or higher upper limits will be established if:
■■ demand is inelastic
■■ there is a national rather than a local product market
■■ the operations of the employer are of a large scale
■■ multi-unit companies are involved
■■ it is not easy for the organisation to relocate
■■ the products are diverse.

The area of interdependence will further be affected by what is known as mutually created
gain. Negotiation is not merely a divisive process. It creates additional value and mutual
benefit. In the long term it will lead to trust and confidence between the parties. They may
form a unique combination, which provides social satisfaction for both.
In addition to mutually created gain, there are subjective utilities and disutilities to
consider. Although a union may have higher wages as its main objective, it will also
consider the subjective disutility of enforcing its demands at all costs, as this may lead to
problems in later negotiations and even to a drop in employment.
In the same way, the employer who may not want to pay higher wages might consider the
subjective utility of having a happier and more satisfied workforce and a favourable image
in the industry.
The area of interdependence cannot be rigidly established. There are many factors which
would influence employees to accept less than their limit and employers to offer more than
their limit. In practice, a skilled negotiator will not attempt to push an opponent to these
limits, as it greatly endangers the relationship.
A negotiator will always set his own limits slightly lower or higher, than the limits of the
party he represents. This is done because he would lose credibility with his party and might
even lose his job if he negotiates around their outer limits. The position is thus as follows:

Employee’s limit Employer’s limit

R30.00 R60.00

Union negotiator limit Management negotiator limit

R37.50 R52.50

Resistance and Target Points

The considerations outlined above are not separate steps but form part of an integrated
process, the purpose of which is to establish target and resistance points. From these the
settlement range will eventually be obtained.

Chapter 11: Traditional Negotiation 519

Targets are based on:
■■ the highest estimate of what is needed or possible
■■ the most optimistic assumptions regarding the probability of success
■■ the most favourable assessment of the negotiator’s bargaining skill.

Resistance points are based on:

■■ the lowest estimate of what is needed or possible
■■ the most pessimistic assumptions regarding the possibility of success
■■ the least favourable assessment of the negotiator’s bargaining skill.

Resistance points are also those at which a union would go on strike and management
would stage a lockout.
Target and resistance points of both parties will be established within the perceived bargaining
range. Thus, if the two are brought together, the situation illustrated below will result:

MT Management range MRP

R30 R33 R37.50 R45 R52.50 R55 R60

URP UT
Union range

The Settlement Range

The settlement range is the area between the resistance points of both parties. A positive
settlement range (one in which there is a likelihood of agreement) is achieved if the union’s
resistance point is lower than management’s resistance point. This is illustrated below.

MT Management range MRP

R30 R33 R37.50 R45 R52.50 R55 R60

URP UT
Union range

A negative settlement range (one where there is little likelihood of agreement) is obtained when
the union resistance point is higher than management’s resistance point, as in the example below.

Management range

MT MRP

R30 R33 R37.50 R45 R52.50 R55 R60

URP UT

Union range

520 Labour Relations: A southern African perspective

In order to estimate the settlement range, it will be necessary to make a calculated guess as
to the target and resistance points of the other party. This is done by:
■■ studying the demands of that party
■■ drawing from past experience and other agreements reached
■■ estimating the benefits and costs of agreement as against the benefits and costs of
disagreement to both parties.

It is obvious that, as actual negotiation progresses and more information is obtained,

perceptions of the settlement range may have to be adapted. Nevertheless, it is useful
to project the settlement range before entering into negotiations, as it assists in the
establishment and modification of the party’s own targets and points the way to the type
of strategy to be adopted.
If the projected settlement range is negative, preliminary efforts will have to include
establishing a more positive zone for negotiation. This may be done if the party modifies
its own resistance and target points or it may be achieved by placing subtle pressure for
modification on the other party.

Calculation of Utilities and Disutilities

When attempting to establish realistic upper and lower levels, it is useful to hypothetically
calculate the costs and benefits of non-settlement for both sides. Representatives should
estimate what they will gain and what they will lose if settlement is not reached at a certain
point. Equally, they need to project the benefits and costs which the other side might incur.
This may lead to a party rethinking its limits. Alternatively, benefits and costs relating to
one negotiation issue may be offset against those derived from another issue.

Cost-Benefit Analysis for Management

The costs which management could incur by not settling could include:
■■ losses suffered as a result of a strike, a go-slow or a work-to-rule
■■ a decline in productivity
■■ lack of involvement by employees
■■ loss of time
■■ loss of market segment
■■ a poor public image
■■ lack of credibility in the community
■■ high labour turnover
■■ legal action
■■ a breakdown in the relationship
■■ tougher bargaining in the future
■■ eventual loss of face when forced to settle.

Chapter 11: Traditional Negotiation 521

Benefits would include:
■■ savings incurred by not conceding
■■ the establishment of precedents
■■ less administration
■■ time gained for reassessment
■■ opportunity to use stockpiles
■■ face-saving
■■ a greater willingness by the other side to make concessions in the future.

Cost-Benefit Analysis for Employees/the Union

By not conceding, employees, as represented by unions, may:
■■ lose wages should there be a lockout or a strike
■■ in the long term, lose more than they gain by going on strike
■■ face tougher bargaining the next time around
■■ suffer a breakdown in the relationship
■■ eventually lose face
■■ find themselves without support from members.

However, by not conceding they may:

■■ eventually obtain a better deal
■■ establish a precedent and a power base for the future
■■ start off from a more advantageous position during the next round of negotiations
■■ have increased solidarity and greater commitment from members.

Weighing Costs against Benefits

Bargaining power can be calculated by weighing the other and the own party’s costs
of disagreeing against benefits derived. Bargaining power could also be calculated by
assessing the cost of settlement to the other party. If the cost of a certain settlement is
disproportionately high in relation to the benefits, it is unlikely that the party involved
would readily agree. The bargaining power of the other party consequently decreases.

The Contract Zone

The contract zone is that area within the settlement range which will be delimited as the
final area of negotiation. The area in which the contract zone is established will depend
on the skill of the negotiators on each side and the power of the parties. In the example of
a positive settlement range given previously, the contract zone will probably be between
R37.50 and R45.00 if management has more skill and power. Conversely, it will be between
R45.00 and R52.50 if union negotiators are more skilful and can exert more pressure.

522 Labour Relations: A southern African perspective

Importance of Establishing Bargaining Ranges
It may be asked if preliminary establishment of bargaining and settlement ranges is necessary,
and whether it would not rather be advisable for each side to make as realistic an assessment
as possible and to establish a contract zone forthwith. This is usually not possible, firstly
because perceptions of reality are established gradually and may change during negotiations.
Secondly, the contract zone established depends to some extent on the negotiation process.

Costing of Contracts
Especially where substantive issues are concerned, it is necessary for management to calculate the
cost of the projected contracts, both at the most pessimistic level and from a realistic perspective.
In the example of a positive settlement range already given, management would need to calculate
the increase in labour costs if a wage of R52.50 as against, say, R37.50 per hour is negotiated.
Similar costing would have to be undertaken where negotiations hinge around extended leave
benefits, fringe benefits, pensions, training and other matters of this kind.
It is advisable to draw up various alternative packages and to cost these accordingly.
The costing of individual factors and of the total contract makes it easier to reach decisions
regarding affordability, the possibility of trading off one benefit against another and the
possibility of staggered increases. Moreover, total contract costs constitute a powerful
argument in persuading the other party to lower its demands or to raise its offer.

Developing Strategies
Once targets and resistance points have been established, strategic planning for negotiations
can proceed. In developing strategies, negotiators will decide:
■■ which issues to address first
■■ which arguments should be raised
■■ when and where concessions can be made
■■ which issues or targets will be non-negotiable.

In making these decisions it is useful to appoint one of the negotiating team as ‘devil’s
advocate’, or to test arguments on an outsider.
At this stage negotiators will also plan:
■■ the initial approach to the other side
■■ the tone to be adopted
■■ the role of the various negotiators
■■ the probable order of negotiations.

Possible coercive action is another aspect which requires close attention. All major
negotiations should be preceded by contingency planning for a strike by employees or a
lockout by employers.

Chapter 11: Traditional Negotiation 523

Timing, too, is important. In management’s case it might be strategically expedient to
negotiate when there is a downturn in production, when employees want a rapid settlement
and when management has time to spare. This, of course, would not be beneficial to the
union. Equally, unions would not wish to negotiate when management is not busy and can
therefore prolong negotiations, nor do they favour negotiations at the beginning of the
financial year or when an annual increase date is imminent.

The Negotiation Planning Sheet

In order to put their plans into concrete form, negotiators may choose to draw up a
negotiation planning sheet. This will list the issues, the bargaining parameters, the projected
costs, the areas of concession and matters which are non-negotiable. A planning sheet of
this kind provides all members of the negotiating team with the necessary information for
reference purposes during the actual negotiations.

Conducting Negotiations

Overview of the Negotiation Process

Negotiations commence with an opening encounter, which sets the climate for negotiations
and is usually of a formal nature. After the rules have been established and the agenda has
been formulated, each party attempts by various tactics to establish the position of the other
side, without itself revealing too much. It may become necessary even at this stage for the
parties to reassess their positions and strategies in the light of what they have learnt from
the other party.
The opening encounter is followed by the actual body of negotiation, a period of
argument and counterargument during which both parties will engage in hard bargaining
in an attempt to modify the perceptions of the other and to initiate movement towards their
own targets. Concessions will be given and taken, pressure will be applied, joint problem-
solving may occur and the commitment of either party to its position is revealed. From time
to time, one or the other party may request a caucus to reassess its position or to engage
in further planning. Negotiators will keep their principals or members informed, and may
periodically request the adjournment of negotiations to allow for feedback or consultation.
From here, negotiations will gradually move to a stage of crisis where pressure is increased
in an attempt to extract more concessions. Sanctions are more seriously considered,
impasses are frequent and deadlock may eventually be reached. Before this occurs, the
parties may search seriously for alternatives and the bargaining range will have narrowed
down considerably.
In the final stage or closing encounter, agreement may have been reached on some issues
but not on others. The decisions taken should be carefully summarised and recorded, since
they will form the basis of the written agreement. Any incorrect wording or misconceptions
may give rise to disputes in the future. Once a written agreement has been drawn up, it

524 Labour Relations: A southern African perspective

should be studied and signed by both parties – but only after each has ensured that his
understanding of the provisions is correct. On issues where agreement has not yet been
reached, both sides will start pushing for closure.
Negotiations do not always proceed smoothly. Most often they are marked by withdrawal
or the threat of withdrawal, or they may be interrupted by labour/industrial action. These
may bring an end to the negotiation process, but, most commonly, negotiations are resumed
after reassessment by each side.

The Opening Phase

Establishing Climate
The opening phase of negotiations has a great impact on the rest of the proceedings, as it is
during this stage that the climate for the entire negotiation is established. Usually both parties
will attempt to establish a positive framework for the negotiations and emphasise common
ground or point to mutual gain to be achieved from the negotiations. At the same time each will
be assessing the other’s attitude and position, and a great deal of careful listening takes place.

Establishing Positions
During the initial stages of negotiation, much time is devoted to establishing one’s own
position and attempting to discover the real position of the other party. Skilled negotiators
will from the outset attempt to establish a position of dominance. This they do by making a
very firm offer or demand and displaying great commitment. It is not necessary at this stage
to engage in any lengthy arguments.
The opening offer or demand could be disproportionately low or high, or it could be
more realistic. Some practitioners argue that an exaggerated opening bid allows more room
for manoeuvring, but it is also dangerous as it could be summarily rejected, could harden
attitudes and detract from the credibility of the negotiator. Another suggested policy is to
follow up an extreme opening bid with a more realistic one which, although still low or
high, will then be more acceptable to the other side. This could prove useful but could still
detract from the credibility of the negotiator, particularly if he has already displayed firm
commitment to his initial offer/demand. He would then have to find a very good reason for
changing his stance so rapidly. The best approach is probably to set high but realistic targets
and to negotiate around these for some time.

Feeling Out the Opponent

While confirming his own position, the negotiator tries to establish the degree of commitment
on the other side. For this reason, it is advisable not to talk too much during the initial
stages of a negotiation session. Karas (1970) suggests that the good negotiator will attempt
to discover more about the other side by:
■■ asking leading or loaded questions
■■ eliciting responses from persons other than the chief negotiator in the opposing team

Chapter 11: Traditional Negotiation 525

■■ suggesting that they are not well briefed
■■ trying to find out which are their hard and soft lines
■■ noting reactions to statements and questions
■■ above all, listening to what the other party is saying.

The other party will at the same time be attempting to establish the negotiator’s position.
Consequently, he should be careful that he himself does not give too much away. He does so by
deferring questions from the other party – for example, by asking for clarification, deflecting
the question, providing ambiguous or selective answers or breaking down the question. The
purpose is to gain time to think and to avoid intuitive answers or too many explanations.

The Body of the Negotiation Process

Bringing Argument
Arguments constitute the core of the negotiation process and should be carefully prepared. It
is better to bring one strong argument rather than a range of weaker ones. Not all arguments
supporting a particular point of view should be made from the beginning.
The beginning and the end of a message are the most important. The negotiator should
first state his point of view, then supply the reason and follow this up with a summary or
reiteration of his position. He will also be more persuasive if, from the outset, he takes into
account different points of view and provides counterarguments.
Arguments should be brief and to the point. Conclusions should be clearly stated, and the
message can be repeated as often as possible, even by different members of the negotiating team.
Sound argument requires sound knowledge, and if the chief negotiator himself does not
know enough about a particular issue, he should defer to another member of the team or,
if allowed, use the services of an expert. Points of view may be backed up by illustrations,
statistics or written communications.
The negotiator should aim at persuading the other party that he will benefit from
agreement. This can be done by pointing to the disadvantage if no agreement is reached
and even by subtle threats and bluffs. He should try to find common ground, emphasise this,
and attempt to make his stance sound as reasonable as possible.
When negotiations revolve around a multitude of issues, it is preferable to commence with
an issue which is easier to settle and, if possible, to link easier issues with more difficult ones.

Countering the Opponent’s Argument

The attention devoted to the presentation of the negotiator’s own argument should be
equalled by that devoted to the countering of the opponent’s argument. The negotiator
adopts a critical stance, in that he:
■■ questions the assumptions, statements of fact and conclusions of the other side
■■ challenges inconsistencies

526 Labour Relations: A southern African perspective

■■ takes note of omissions
■■ points to emotionally biased argument.

It is usually not advisable to reject the argument of the other party immediately, but the
negotiator could:
■■ question the speaker’s credibility
■■ point to the consequences of the proposal
■■ enlarge on the other party’s weaknesses
■■ suggest he revises his case.

During the entire process of argument and counterargument, the skilled negotiator will:
■■ seek clarification from the other side
■■ from time to time, summarise his own and the opponent’s point of view
■■ ensure that there is mutual understanding of matters dealt with
■■ at the same time measure progress.

Displaying Commitment
In order to gain the necessary dominance, a negotiator should display commitment to his
position. However, this commitment should not be rigid, particularly during the initial stage
of negotiations. Instead, he should persuade the other party that he sincerely believes his
offer/demand to be fair and that only very sound argument from the other side will convince
him to change his stance. As he moves nearer to his resistance point, his commitment
should become firmer, but he should never be absolutely inflexible unless he has decided
that he is prepared to take the consequences.

Granting Concessions
It is expected that, during the negotiation process, both sides will make concessions; however,
a trade-off of concessions on a one-for-one basis is not always necessary or advisable.
The skilled negotiator will not commence granting concessions until he has the full
picture and has felt out the opponent, unless he has purposely opened with an exaggerated
offer or demand and intends to make a large initial concession in order to bring movement.
Usually concessions are granted slowly, commencing with concessions on smaller issues
and moving gradually to larger ones. Initial unwillingness to grant concessions signals
commitment and firmness, but care should be exercised that positions do not become
hardened. Concessions on particular items may be larger at the beginning and become
smaller as negotiators move closer to each other, although a larger concession may be made
towards the end to signify a final offer.
A good strategy is to link concessions to previous ones, and to indicate that a concession
is now expected in return.

Chapter 11: Traditional Negotiation 527

In some instances, a concession from the other side may not be accepted immediately. The
negotiator will indicate that it is insufficient and suggest that it be revised.
The number, type and rate of concessions will eventually depend on bargaining power,
and the good negotiator will make concessions only if forced to do so or if he wishes to
bring about movement, yet he should remain flexible, always bearing in mind the golden
rule of concessions according to Karas: not to give too much too soon, too much too late
or too little too late.

Caucusing
Periodic caucuses are necessary in order to reassess, replan or consider a concession made
by the other side, but they are also a sound bargaining strategy.
The temporary withdrawal of one party allows the other time for consideration,
particularly during moments of heightened tension. The other party may become uncertain
and decide to move from previously held positions. Parties should agree on the approximate
duration of caucuses and, where extensions are required, it is good form to ask permission.

Impasses
Impasses may be reached at any point during hard bargaining. These are not deadlocks, in that
both sides may still be prepared to move, but neither wants to move first. It is left to the skilled
negotiator to bring about new movement, preferably by the other side. This he may do by:
■■ changing from a competitive to a cooperative mode
■■ changing the shape of his own package
■■ letting the other side know that they cannot afford to remain where they are
■■ suggesting a change in their package
■■ encouraging them to move by indicating that, if they do, he might also move
■■ limiting issues, summarising developments and pointing to areas requiring movement
■■ suggesting that both move together by making a concession linked to one from the
other side
■■ suggesting that both refer back to their principals or constituents
■■ providing them with the necessary face-savers.

Where tension is high, it might be advisable to move to another agenda item for the time being,
to call for a caucus, to introduce a red herring or to use humour. Usually impasses arise because
one or both sides become overcommitted. If this is the case, the negotiator should search for a
means by which the other party can graciously move from his overcommitted position.

‘Final’ Offers/Demands
Once the parties approach the expected contract zone, ‘final’ offers or demands are put on
the table with the purpose of achieving a settlement which is as near to the negotiator’s

528 Labour Relations: A southern African perspective

target as possible. Final offers should be presented in such a manner that the other party
is convinced of their seriousness. The offer/demand should be clear and firm, should be
precisely phrased, but can be linked to alternatives and time spans. The other party must
be allowed time to think. This is generally achieved by timing final offers and demands to
coincide with the end of a particular negotiation session.
When a final offer or demand is made by the other side, the negotiator should never
accept immediately and should not overreact. By listening carefully, he will convince the
opponent that he is taking the matter seriously. In essence, final offers are not always final.

Threats and Bluffs

A threat serves as a reminder that one party can initiate sanctions against the other. A bluff,
on the other hand, is a threat which that party has no intention of carrying out or is unable
to carry out. Bluffs should be handled circumspectly as the other side may call the bluff,
leading to loss of face for the initiator. Threats, too, should be carefully planned and should
not be of a spontaneous or idle nature. The other party should be convinced that the threat
will, in fact, be executed. Karas suggests that negotiators should gradually raise the level
of threats and should set an example by putting minor threats into action. Threats should
be implied rather than spoken, mild rather than enormous, rational rather than emotional.
One of the best methods of countering a threat is to oblige the other party to articulate it.
Very often he will hesitate to do so as he is then committed to carrying out the threat. The
negotiator could also pretend that the threat is harmless, or that he has not heard it at all.
Alternatively, he could face the threat head on and prove to the opponent that its execution
will in fact harm both parties.

Deadlock
Deadlock is reached when neither party is prepared to move any further. Both are prepared
to declare a dispute and to risk sanctions from the other side. Deadlocks merely test the
strength and commitment of the parties. They serve to soften positions and to initiate new
movement. This is proved by the fact that most dispute procedures provide for renewed
negotiation.

Sanctions
In union−management negotiations, the ultimate sanction is a strike or a lockout, but less
severe sanctions may be instituted when impasses or deadlocks are reached. These range
from a display of antagonism to temporary walkouts from negotiations, demonstrations, bad
publicity, work-to-rules, go-slows and overtime bans. Sanctions are applied in escalating
order, according to the severity of the situation.

Chapter 11: Traditional Negotiation 529

Closure
Most negotiations will reach a stage where one or both parties realise that they are close to
an agreement. One method of nudging the other party towards a final settlement is to agree
in principle but to ask for something in addition, or to set certain conditions. The negotiator
could also attempt to lure the other party into settlement by offering a deal, granting minor
concessions or engaging in flattery. Alternatively, he could assume that agreement has been
reached and start noting down the details or summarising the main points. Where the other
party continues to hold back, he could express surprise at the fact that a settlement cannot
be reached under the circumstances, point to the dangers or costs of not settling, or he could
threaten to withdraw all other concessions if a final agreement is not reached (this only if
he has made the concessions conditional on a final settlement).
The negotiator should be assertive, even a little aggressive, He should not talk too much
and should display a positive attitude.
Once agreement has been reached, a document reflecting the terms and conditions is
drawn up and signed by both parties.

Negotiation Manoeuvres
In the previous section, discussion was about the art of negotiation. It is necessary also to
mention the tactics which some negotiators, intent on gaining the upper hand, may apply.
Many of these are negative by nature and, while they may prove useful in the short term, do
not necessarily guarantee high-value outcomes. The following are among the best-known
manoeuvres:
Deadlines: Certain broad time limits for negotiations should be established. However, the
skilled negotiator will not be coerced into meeting narrow deadlines, since these create
unnecessary pressure. In the urgency of the moment, negotiators sometimes concede too
readily, only to regret their actions once the agreement has been signed.
Limited Authority: A negotiator may, when faced with a difficult decision, hide behind
the excuse that he does not have the necessary authority to make the decision. While all
negotiators will from time to time refer back to their principals or constituents, they should
have decision-making power within the parameters of their mandate. The best way to deal
with an opponent who continues to plead limited authority is to request him to obtain a
wider mandate or to have himself replaced by someone capable of making the necessary
decisions.
Statistics and Averages: Statistics do serve a purpose in that they may support an argument
or point of view, but there are negotiators who will attempt to overwhelm the other party
with statistical information which may have no meaning at all. Those subjected to this
overuse should remember the adage that ‘There are lies, lies, lies … and statistics’. Statistics
may be interpreted in many ways, and for every statistic there is often another which proves
the opposite.

530 Labour Relations: A southern African perspective

‘Funny Money’: Closely associated with the abusers of statistics are those who play around
with figures to prove their arguments. By juggling figures, they attempt to show losses and
gains which actually do not exist in practice – much like the wife who tells her husband that
she has saved R500 by paying half price for a dress which originally cost R1 000.
Body Language: During negotiations the skilled negotiator will closely observe also the
subtle, nonverbal communication from the other side. Much is revealed by looks, body
movements, posture and gestures. He should, however, be aware that an equally skilled
opponent may purposely be misleading him. He may pretend boredom by drumming his
fingers or a pencil on the desk, try to appear confident and dominant by leaning back with
his hands in his lapels, or assume an indifferent attitude by placing his feet on the desk and
staring out of the window. It is best not to pay too much attention to such actions.
Shock Tactics and Irritants: A negotiator may attempt to put the other party off his stride
by doing or saying something which he knows will shock the opponent, or by irritating
behaviour. In the process of recovering from the shock or distraction, the opponent may
readily concede on an issue, because he is not concentrating fully on the matter at hand.
Fatigue: One tactic often used is to continue negotiating until the other party virtually
drops from fatigue and, in his desire to end the negotiations, readily comes to an agreement.
Change of Pace: Negotiations usually proceed at a relatively even pace but a negotiator may,
at a certain point, speed up the process in an attempt to rush the other party into settlement.
Deliberate Errors: Particularly when summarising the other party’s argument or the points
of agreement, a negotiator may deliberately make an error. If the other party does not listen
carefully, he may agree that the summary is correct, thus weakening his own position.
Changing Negotiators: A change of negotiators may take place with the purpose of gaining
time, since the new negotiator is not up to date with developments during negotiations and
a great deal of backtracking has to occur. It is disturbing for the other party to suddenly
have to deal with a new person. There should be an agreement that no changes will be made
without the consent of both parties.
The ‘Bad Cop, Good Cop’ Trick: Here one member of the team purposely acts in an aggressive
manner and harangues the other side. When a crisis is reached, another member of the team
steps in with a much kinder approach. The other party is usually more willing to deal with
the second negotiator, who then starts from an advantageous position.
Addressing the Weakest Member: Where a negotiator is unable to elicit sufficient
information from the other side or where he is of the opinion that there is some disagreement
in the other team, he may attempt to elicit comments or answers – or even agreement – from
the weakest member of the other team. Alternatively, he may harangue this person in the
hope of breaking him down.
The Defence–Attack Spiral: Certain negotiators deliberately initiate attacks on the other
party, hoping that he will react defensively. This leads to a defence–attack spiral which
detracts from the real issues. A skilled negotiator will absorb such emotional attacks and
wait for the right moment to make his own, more rational, counter-attacks.

Chapter 11: Traditional Negotiation 531

Acted Emotions: Negotiators may be very good actors who can act out emotions such
as frustration, anger, disappointment and sadness at will. It is best to allow emotional
outbursts, whether acted or not, to subside and not to react intuitively to these.
Killing with Kindness: There are negotiators who treat their opponents with such kindness
that it is difficult for these persons to oppose or argue with them. The purpose is to change
enemies to allies, thereby weakening the stand of the other side.
Interruptions: Interruptions can prove very useful, particularly when negotiations are
progressing unfavourably for one’s own side or when a party needs time to reconsider but
does not wish to request a caucus. Experienced negotiators will determine beforehand that
no interruptions should occur.
Red Herrings or Straw Issues: Here the negotiator deliberately introduces one or more issues
which are of no real importance to him but on which he spends an inordinate amount of
time. This may distract the other party from the more important aspects of the negotiations.

As mentioned at the start, many of the manoeuvres described have negative effects and they
should, therefore, be used with care.

Profile of a Successful Negotiator

For a number of years, Neil Rackham (1978) of the Huthwaite Research Group
conducted various studies with the purpose of identifying the attributes of successful
negotiators. His observations proved the following:
■■ When planning for negotiations, skilled negotiators considered a wider range of
options and outcomes than those who were less skilled.
■■ While all negotiators tended to concentrate on conflict areas, skilled negotiators
gave far more attention to areas of possible co-operation than did the average
negotiator.
■■ Both skilled and less skilled negotiators tended to concentrate on short-term
objectives, but successful negotiators did pay more (twice as much) attention to
long-term objectives.
■■ Skilled negotiators established upper and lower limits during their planning
sessions, whereas those less skilled tended to plan around a fixed point.
■■ Less skilled negotiators established rigid sequences beforehand, whereas the
skilled negotiators were more flexible in this respect.
■■ More successful negotiators seemed to avoid irritating expressions such as
‘unfair’, ‘unreasonable’, ‘uncaring’, etc.
■■ Skilled negotiators did not make immediate counterproposals as frequently as
those who were less skilled.

532 Labour Relations: A southern African perspective

 ■■ Average negotiators engaged in defence−attack spirals on a much more frequent
basis than skilled negotiators.
■■ Skilled negotiators usually warned the other party of the kind of statement they
were going to make – for example, by saying that they intended to make an
offer – but less skilled negotiators tended to say ‘I disagree’ more often than their
skilled colleagues, who, instead, would commence with reasons and explanations.
■■ More successful negotiators frequently tested understanding and summarised
their own and the other party’s arguments.
■■ Skilled negotiators questioned the other party far more frequently than did their
less skilled colleagues.
■■ While average negotiators tended to concentrate on facts and figures, more
successful negotiators explained how they felt about the other side and its
arguments.
■■ Skilled negotiators backed up their arguments with an average of 1.8 reasons,
whereas those who were less skilled used an average of three reasons per
argument.
■■ Finally, it was found that more than two thirds of the successful negotiators spent
time after the negotiations reviewing what had happened and thus learning from
experience, while less than half of the average negotiators had acquired this
habit. Perhaps this, more than anything else, accounts for the high rate of success
experienced by the first group in comparison to the second.

Collaborative Negotiations

The Traditional Approach

As mentioned earlier in this chapter, the traditional approach to negotiation is adversarial
in nature. Each party adopts a particular position, which it guards at all costs. The objective
of these negotiators is to urge the other party to move as far as possible towards their
position, and to concede as little as possible. This results in an extremely narrow approach
to negotiation – along a straight line between the position of one party and that of the
other, with much game-playing and posturing in between. There is little or no consideration
of alternative solutions, and each strives to gain as much as possible at the expense of the
other. Personalities and egos become involved and, very often, the outcome relies on a
contest of wills rather than on the realities of the situation.
The description given may be extreme, as most negotiations will involve some attempt
also at collaboration, but it serves to typify the dominant aspects of positional or adversarial
negotiation. A more fully collaborative or integrative approach to negotiation would, of
course, be preferable and would lead to outcomes which are of greater value for both
parties. However, for such collaboration to exist, certain preconditions are required.

Chapter 11: Traditional Negotiation 533

Preconditions for Collaborative Negotiations
Recognising the Legitimacy of the Other Party
If parties are to engage in collaborative negotiations, each should, in the first place, recognise
the legitimacy of the other party. Each should:
■■ display respect for the other’s needs and interests
■■ approach the negotiations openly and honestly
■■ be willing to share information and to work towards a solution
■■ believe that together they can and will find the best possible solution.

Emphasis on Common Interests

Collaborative negotiations further require that, although there may be different goals and
perspectives, and although these are respected, common interests predominate. For this to
happen, both parties should be accorded equal value and status. One party should not be
pleading with or demanding from the other. This means that, in an organisational setting,
both management and employees should view themselves as joint stakeholders and the
organisation as their point of common interest.

Trust as an Important Component

Parties will have to share their needs, interests and fears, which in turn necessitates a trust
relationship. Such trust is built by:
■■ engendering psychological closeness
■■ displaying openness and honesty
■■ emphasising similarities and interdependence
■■ displaying positive attitudes – including a desire to co-operate
■■ minimising power differentials and avoiding the use of power
■■ instead of arguing positions, focusing on problems.

Collaborative negotiation does not rely on positioning and, therefore, on absolute mandates.
Negotiators have to be trusted by their constituents and be given far greater flexibility and
decision-making powers than would be granted in an adversarial situation. Therefore, not
only the negotiators but also the different constituents have to trust each other. Clearly
such a relationship cannot be built up overnight, and will be supported by a history of
collaboration and goodwill in other areas. Also, it is easier to build a relationship of this
kind in a decentralised situation where parties continually work closely together.

Communication
As always, the successful establishment of a collaborative relationship will depend on
continual clear and accurate communication and the furnishing of all relevant information
by the parties concerned.

534 Labour Relations: A southern African perspective

Initiating Collaborative Negotiations
Collaborative negotiations may commence with a statement of positions; but, instead
of concentrating on positions, concessions and demands, the parties explore the needs,
interests and concerns behind these positions. In other words, the problems have to be
separated from the positions, and also from the negotiators themselves.
In most cases, it is preferable not to state positions at all, but rather for both parties to put
their concerns and objectives on the table. These are then placed in organisational context
and explored within the framework of prevailing circumstances. However, before this can be
done it might be necessary to sideline hardliners in each group and to establish the correct
climate through levelling conferences, pre-meetings and training in problem-solving skills.
This is important since, once concerns have been placed on the table and depersonalised,
the parties basically adopt a problem-solving mode.

Evaluation
The collaborative mode is a complex process to which the very sketchy outline above does
not do justice. It requires far more detailed study and continued building of the relationship
by both parties. In some instances, the parties may not be capable of this on their own, and
a facilitator may be required during the initial stages. Also, both parties may be reluctant
to relinquish power positions. Taking power, especially coercive power, out of the picture in
negotiations requires a definite paradigm shift, which may not be easy to achieve.
(Collaboration and problem-solving, as alternatives to adversarialism, are explored in
greater detail in Chapter 14.)

Agreements: The Outcomes of Successful Negotiation

The purpose of collective bargaining is to reach agreement. Minutes are kept during the
conduct of negotiation meetings, and, once agreement has been reached, a formal agreement
is drawn up and signed by both parties.

Types of Agreement
The Agreement to Bargain
The first type of agreement to be reached between the parties to the bargaining relationship is
the agreement to bargain. Thus, the recognition agreement or the constitution of a bargaining
association, both of which contain basic procedures for the conduct of the bargaining
relationship and for the settlement of possible disputes, form the cornerstone of the relationship.

Wages, Conditions of Service and Procedures

Certain substantive conditions of employment may be subject to further negotiation at regular
intervals. Therefore, it is preferable that these be contained in a separate agreement. Wages in

Chapter 11: Traditional Negotiation 535

particular are subject to regular amendment. This is why, in certain bargaining relationships,
a main agreement might cover basic procedures dealing with grievances, discipline, lay-offs,
retrenchment and consultation on technological innovation, as well as basic substantive
conditions of employment such as hours of work, benefits and holiday pay, while another
agreement will cover wages and other substantive conditions which may change from time
to time. Alternatively, the main agreement could merely be amended after each negotiation
session, or wages could constitute a schedule attached to the main agreement.

Subject-Related Agreements
Besides the recognition agreement and substantive wage agreements negotiated from
time to time, a union with a strong plant-level presence may wish to become involved in
health and safety issues, or to negotiate agreements covering certain eventualities, such as
retrenchment and the introduction of new technology. Also, the employer, if he wishes to
introduce changes in the organisation and desires the co-operation of the union and his
employees, may enter into the necessary agreements with the union. One such agreement is
the productivity agreement.

Monitoring Agreements
Once an agreement has been reached and signed by both parties, it will be necessary to obtain
all-round commitment to its successful implementation. The enforceability of agreements
has been discussed in Chapter 5. Legal enforcement of an agreement or the declaration of
a dispute becomes necessary only when one of the parties has acted in bad faith. Where
good faith exists, the concern is more with monitoring the agreement to see that it works.
Consequently, follow-up meetings may take place in order to discuss problems which have
occurred, or to renegotiate decisions which have proved unimplementable in practice.
It is the task of the chief negotiator on each side to ensure that the members of his
organisation are acquainted with the terms of the agreement and that they adhere to these.
The employer has the duty to inform members of management of the agreement and to
train managers and supervisors in its implementation. The union, on the other hand, should
furnish accurate information to its members and urge acceptance of the terms agreed upon.
Management, too, may play some part in disseminating information to employees.
Both sides, through their appointed agents, will monitor the implementation of the
agreement by the other side and, should any breach occur, will raise this immediately with
those responsible for implementation.

Enforceability of Agreements
In South Africa, Section 23 of the Labour Relations Act of 1995 provides for the enforceability
of all collective agreements. Disputes about the implementation of collective agreements are
submitted to the CCMA for conciliation and, if this fails, either party may request that the
dispute be submitted to arbitration. Furthermore, Section 23(4) provides that any party to an

536 Labour Relations: A southern African perspective

indefinite agreement may withdraw from such agreement after giving reasonable notice. In
the case of fixed-term agreements, such as wage agreements, the parties are subject to the
agreement for its duration unless its implementation becomes impossible.

Disputes and Coercive Action

Where voluntarism predominates and where the freedom to strike is recognised, disputes
and coercive action by either party form an integral part of the collective bargaining
process. Negotiation does not always end in agreement. Alternatively, while agreement
may eventually be reached, the process could be marked by repeated disputes and actions
along the way. The reason for this is self-explanatory. At times of complete disagreement
between the parties, the coercive power of each party is again brought into play. Employers
attempt to oblige acceptance of their terms by withholding the opportunity for work, while
employees will attempt to achieve the same ends by the joint withholding of their labour
from the employer or by otherwise damaging the business of the employer (see Chapter 13).
Thus, actions in the form of lockouts, strikes, go-slows, work-to-rule and product
boycotts may flow from the negotiation process. They are not intended to put an end to
negotiation, although, in the extreme, they may. Their purpose is to serve as pressure tactics
in the negotiation process. Figure 11.1 on the following page illustrates the development of
the negotiation process from the inception of the relationship to the point of agreement, via
the display of coercive power.

Conclusion
The art of negotiation is not easily acquired. In general, the conduct of a negotiation session
requires a great deal of knowledge, hard work, preparation and practice, and the outcome of
a particular negotiation session is never certain until the final agreement has been signed.
It is impossible within the context of this book to devote full and detailed attention to the
actual practice of negotiation. Individuals who are interested should refer to texts dealing
specifically with this subject, such as those by Anstey (1991); Pienaar and Spoelstra (1991);
and Karas (1970).

Chapter 11: Traditional Negotiation 537

 Employers or Business

538
employers’ profits
associations Procedural and
substantive
issues

Lockouts

Pursuit of goals
Coercive power
Force Counterforce

Agreement Procedures for Agreement on

Force Counterforce Conflict Recognition Negotiations Dispute procedural or

figure 11.1: development of the negotiation process

to bargain negotiations
substantive
issue

Force
Coercive power Counterforce
Pursuit of goals

Labour Relations: A southern African perspective

Strikes,
go-slows
and boycotts

Procedural and
substantive
issues
Employees
or Assured
Unions income
Suggested Questions/Tasks
•• Think of a situation in which you and your group would be involved in negotiations
with another party (this need not necessarily be a labour-management negotiation).
Submit a written report in which you:
oo Describe your situation, the other party and the issues involved.
oo Provide a copy of the letter you would send to the other party setting out your
demands (or your response to their demands).
oo List the persons you would involve in your negotiation team (explain why you
have selected them and what their roles will be).
oo Assess how strong (powerful) you are in relation to the other party and explain
why (consider also his strengths).
oo Explain where you think your contract zone will be and how you reached that
conclusion.
oo Briefly explain the process you would follow and the strategies you would
adopt during the negotiation.
oo Say what you will do if there is deadlock.
oo Establish whether there would/would not be a possibility of reverting to a more
collaborative mode and give reasons for your opinion.

Sources
Anstey, M. 1991. Negotiating Conflict. Juta.
Anthony, PD. 1977. The Conduct of Industrial Relations. London: Institute of Personnel Management.
Atkinson, G.1975. The Effective Negotiator. Quest Research Publications.
French, J & Raven, B. 1959. The Bases of Social Power. University of Michigan.
Green, GD. 1987. Industrial Relations. Pitman.
Herman, EE & Kuhn, A. 1981. Collective Bargaining and Labour Relations. Prentice Hall.
Karas, CL. 1970. The Negotiating Game. Thomas Y Cromwell.
Kochan, TA. 1980. Collective Bargaining and Industrial Relations. Richard D Irwin.
Marshall, A. 2013. Principles of Economics. 8th ed. Palgrave Macmillan.
Pienaar, W & Spoelstra, M. 1991. Negotiation. Juta.
Rackham, N & Carlisle, J. 1978. The Effective Negotiator – Part 1: The Behaviour of Successful
Negotiators. Journal of European Industrial Training, 2(6).
Rackham, N & Carlisle, J. 1978. The Effective Negotiator – Part 2: Planning for Negotiations, Journal of
European Industrial Training, 2(7).
Salamon, M. 1987. Industrial Relations Theory and Practice. Prentice Hall.
Scott, B. 1982. The Skills of Negotiating. Gower.
Walton, RE & McKersie, RB. 1965. A Behavioural Theory of Labour Negotiations. McGraw-Hill.
Woods, SJ. Negotiation Skills. SJ Woods and Associates (Private training document).

Chapter 11: Traditional Negotiation 539

 12

Dispute Settlement

Chapter Outline
OVERVIEW
THE NATURE AND SCOPE OF LABOUR DISPUTES
TYPES OF LABOUR DISPUTE
Disputes of Right • Disputes of Interest • Dispute Settlement Methods • Conciliation • Mediation |
Definition | Purpose | Appointment of a Mediator | Characteristics of a Good Mediator | The Mediation
Process | The Effectiveness of Mediation • Arbitration | Definition | Types of Arbitration | Med-Arb and
Con-Arb | Advisory Arbitration | The Effectiveness of Arbitration
DISPUTE SETTLEMENT IN TERMS OF THE LABOUR RELATIONS ACT
DISPUTE-SETTLING BODIES
The CCMA | Legal Position | Functions | Management | Conciliation by the Commission | Mediation in
the Public Interest | Arbitration by the CCMA | Representation at Arbitration Proceedings | Arbitration
Awards | Variation and Review of Arbitration Awards • Accredited Bargaining Councils and Private
Agencies • The Labour Court | Composition and Status | Jurisdiction | Functions | Proceedings and
Representation of Parties • The Labour Appeal Court | Routing of Different Types of Dispute • Types of
Dispute and Means of Settlement | Interference with the Freedom of Association | Refusal to Grant
Organisational Rights | Interpretation or Implementation of Collective Agreements | Refusal to Admit
a Party or Parties to a Bargaining Council | Disputes about Statutory Determinations | Interpretation
and Implementation of the Act as regards Organisational Rights and Bargaining Bodies | Disputes of
Interest in Essential Services | Automatically Unfair Dismissals or Dismissals Related to Retrenchments,
Closed- Shop Membership or Participation in an Illegal Strike | Dismissals Related to Misconduct,
Incompetence and Incapacity (Including Constructive Dismissal) | Unfair Labour Practice Disputes |
Workplace Forums (Including Joint Decision-making and Disclosure) • Remedies for Unfair Dismissal •
Establishing In-House Procedures
CONCLUSION
SUGGESTED QUESTIONS/TASKS
SOURCES

Chapter 12: Dispute Settlement 541

 Overview
Negotiations do not always end in agreement. Disagreements give rise to a situation
in which the parties are said to be in dispute.
Two kinds of labour dispute exist, namely, disputes of right and disputes of
interest. Disputes of right do not arise from and are not usually subject to negotiation.
Rights are entrenched in law or agreement, and disputes regarding their institution
are finally submitted to arbitration or legal adjudication. However, even in these
disputes, an attempt is made, through conciliation, to get the parties to settle.
Collective conflict in the labour relations situation is seen mainly in disputes
of interest. Disputes of interest can usually not be settled by legal determination.
Consequently, other methods of dispute settlement have to be established.
Disputes of interest arise when the conflict cannot be resolved in the normal
negotiation forum or when one side has refused to negotiate at all. The immediate
reaction in situations of this kind could be that either party resorts to coercive power,
in the form of a strike or a lockout. This kind of action is detrimental to both parties
and their relationships, and also to society at large. It is more productive to attempt
settlement by other means before using coercive power; this is the reason why there
are dispute settlement procedures.
Dispute settlement procedures may be agreed upon between the parties
themselves, or the State may put procedures and systems in place for the settlement
of disputes. The State’s main concern is to protect the public interest and to promote
economic activity by maintaining labour peace. The procedures it introduces are
aimed at minimising or eradicating the need for labour action. At the very least, they
oblige the parties to cool off before any action is undertaken. Experts disagree on
the extent to which the State can force the parties to use the legislated machinery
and also the extent to which it can prohibit or limit strike action. The degree of
compulsion and limitation varies from one system to another.
Conciliation, mediation and arbitration are most frequently used in attempts to
settle labour disputes. Both conciliation and mediation allow for the negotiation
process to continue and for the parties themselves to reach a settlement. In
arbitration, on the other hand, a determination is made by a third party. There is no
possibility of further negotiation but it does serve to prevent coercive action. The
type of dispute settlement procedure chosen and the methods preferred will depend
on the needs of the parties and those of a particular labour relations system.
South Africa has official dispute settlement processes aimed at the promotion
of collective bargaining, the maintenance of labour peace and fair labour practices.
The Labour Relations Act of 1995 changed the name of the previously established
Industrial Court to the Labour Court, and made provision also for a Labour Appeal
Court and for the establishment of the Commission for Conciliation, Mediation
& Arbitration (see Chapter 3). The Act sets out detailed procedures for different

542 Labour Relations: A southern African perspective

types of rights disputes. It further separates unfair dismissal from other unfair
labour practices. With some exceptions, unfair dismissals go to arbitration by the
CCMA or a bargaining council rather than the Labour Court. In certain instances,
modified procedures are instituted for the public sector. Disputes of interest may
also be submitted first to conciliation or mediation. If this fails, parties may choose
voluntary arbitration or engage in strike or lockout actions.
So far, the dispute settlement machinery has functioned relatively effectively. As
relationships between employers and unions have matured, arrangements have been
made for private settlement of disputes of right – for example, by reverting to private
arbitration as an alternative to the use of the official machinery. This alleviates the
heavy burden on the CCMA and the Labour Court.

Chapter 12: Dispute Settlement 543

The Nature and Scope of Labour Disputes
The definition of a labour dispute varies from country to country, but most definitions have
in common the fact that they limit a labour dispute to a dispute between an employer and
his employees or their union. The subject matter of a labour dispute is usually limited to
so-called matters of mutual interest, that is, matters which could be regulated jointly by the
employer and his employees or those which affect employees.
For the present purposes, a labour dispute is defined as:
■■ a continued disagreement between employers and employees/ex-employees or their
unions as regards any matter of common interest, any work-related factor affecting their
relationship, or any processes and structures established to maintain such relationship.

Thus disputes may arise from:

■■ failure to agree to the establishment of a relationship
■■ disagreement about procedures
■■ failure to agree on terms and conditions of employment
■■ failure to abide by the terms of an agreement
■■ denial of the other party’s rights
■■ poor treatment of the other party
■■ any other action or event which negatively affects the relationship.

In the definition above, the word ‘continued’ is important. The mere raising of a demand or
a grievance, does not constitute a labour dispute. A dispute will arise only if there is no final
agreement on a demand or if an issue is not settled in a manner satisfactory to both parties.

Types of Labour Dispute

Disputes of Right
A right is that to which a party is entitled by law, by contract, by agreement or by established
practice. In the labour relationship, rights are ensured by:
■■ common law
■■ labour legislation
■■ the terms of the contract
■■ legally enforceable agreements
■■ customary practices at the place of work.

Disputes of right do not arise from failed negotiations.

544 Labour Relations: A southern African perspective

Disputes of right will centre on issues such as:
■■ the failure of one party to abide by the contract of employment
■■ failure to implement legally determined conditions and procedures, such as minimum
working hours and prescribed notice periods
■■ failure to implement the terms of a legally enforceable agreement
■■ non-implementation of an arbitration award or wage determination
■■ transgression of any other legal determination, such as the prohibition on victimisation
or interference with the freedom of association
■■ transgression of the common law
■■ a unilateral change in accepted or customary practices
■■ unfair dismissals and unfair labour practices in terms of the Labour Relations Act.

Although attempts may be made to settle disputes of right by negotiation and other methods
before, and even after, an official dispute has been declared, the final recourse in these
disputes is to judicial adjudication or arbitration.

Disputes of Interest
An interest is that to which a party is not yet entitled but to which he would like to become
entitled. Whether he achieves his objective or not will depend on whether he can persuade
the other party to grant the concessions he seeks.
Interests are subject to negotiation. Once agreement has been reached, the interest
becomes a right. An employee who has the right by law to two weeks’ leave per year may
not be satisfied with this minimum provision. His interest is to be granted annual leave of
four weeks. To achieve this, the employee, or his representative or union, would engage in
negotiations with the employer. If the employer eventually agrees and the new terms are
written into a contract of employment or a legally enforceable collective agreement, the
interest will have become a right. Disputes of interest arise when no agreement on demands
or grievances can be achieved.
The issues which lead to disputes of interest are essentially those listed in Chapter 5 as
issues and problems in collective bargaining. Any matter causing conflict between employer
and employee, and not regulated by law, agreement or custom, can give rise to a dispute
of interest.

Dispute Settlement Methods

Conciliation
The Oxford Paperback Dictionary (1991) defines conciliation as:
■■ the act of procuring goodwill or inducing a friendly feeling.

Chapter 12: Dispute Settlement 545

In the settlement of labour disputes, conciliation entails the procuring of renewed goodwill.
This is done by establishing a forum for parties who are in conflict or have failed to reach
agreement, to come together and attempt to settle their differences.
Conciliation is undertaken by a third party who may be a functionary of the CCMA or
from a private entity. The third party is normally present during the process. He may act
as chairman during the conduct of meetings and will try to steer the parties in the right
direction, but he cannot actively interfere or make any decisions or proposals regarding the
matter.
Essentially, conciliation entails the continuation of negotiation between the two parties,
but, in this instance, the negotiations form part of the dispute settlement procedure, and are
undertaken in the presence of a third party. Also, failure to conciliate may lead to coercive
action or to further steps in the dispute settlement process.
The advantage of conciliation is that it extends the negotiation process. It allows
for settlement between the parties without the interference of external agents. Where a
procedure requires conciliation before any action can be undertaken, both parties have time
to cool off. They can then approach each other in a friendlier manner and seriously attempt
to settle before engaging in an action which might eventually destroy the relationship.
In practice, most third parties conducting conciliation do mediate to some extent – that
is, they try more creative methods to bring the parties together. The distinction between the
two processes has become somewhat blurred.

Mediation
Definition
Mediation may be described as:
■■ the active intervention of a third party, or third parties, in an attempt to get a settlement

Mediation involves an attempt at conciliation, but in this case a third party, in the person
of the mediator, is present at and pivotal to the conciliation process. The mediator plays an
active part in the process. He attempts by all means possible to bring about a settlement. He
advises both sides, acts as intermediary and suggests possible solutions. Mediation differs
from arbitration in that a mediator acts only in an advisory and conciliatory capacity. He
has no decision-making powers and cannot impose a settlement on either party.

Purpose
Mediation is intended to facilitate negotiation during a dispute of interest or to help parties
come to an agreement in disputes of right. Situations arise in which the parties are incapable
of agreeing on rights or of continuing negotiations on their own. Introducing a neutral
person, especially if he is an experienced negotiator, could diffuse tensions and help them
to achieve a settlement. In particular, mediation serves to narrow the gap in the settlement
range.

546 Labour Relations: A southern African perspective

Because a mediator does not belong to the opposing party, each party will more easily reveal
its actual position to him. Consequently his estimation of the settlement range might differ
from that established by the participants, and he could persuade one party to move closer
to the other within that range. Also, a mediator might more easily elicit concessions from
either party. This promotes a trade-off and a possible settlement. As an outsider who is not
directly involved in the conflict between the two parties, and as an individual with wider
knowledge, he imposes reason and brings new perspectives to the dispute.

Appointment of a Mediator
A mediator may be appointed by the parties themselves or be supplied by governmental or
other agencies.
If the parties themselves appoint a single mediator, such person must meet with the
approval of both sides and his neutrality should be beyond question. Where there is no
neutral person available or if the parties cannot agree on a particular mediator, each side
may appoint a mediator of its choice. Each mediator will meet with his side, whereafter the
two mediators will come together and attempt to formulate a possible settlement.

Characteristics of a Good Mediator

An effective mediator will have broadly the same qualities as a good negotiator, but he
should possess these qualities to a greater degree. Preferably, he should have a proven
record of success in negotiations.
A mediator, if he is to be successful, has in the first place to elicit the trust, acceptance and
cooperation of both parties or of the party he represents. The parties will accept him only if he has
sufficient credibility and if they are assured that he can be entrusted with confidential matters.
Intelligence, discernment and practicality are essential qualities in mediation. A mediator
should be able to identify problems and offer workable solutions. To do this, he needs to:
■■ be knowledgeable in all matters related to the negotiations
■■ be acquainted with the organisational structures, strategies and attitudes of both parties
■■ have up-to-date knowledge of labour legislation, collective agreements or determinations
■■ be up to date with the latest economic, sociopolitical and technological developments
■■ be tactful and diplomatic
■■ be sensitive to nuances
■■ have the necessary powers of persuasion
■■ be an effective communicator
■■ have a strong character, since he may need to nudge the participants towards an agreement.

In practice, an individual of such high calibre is not easily found, but, even though a
mediator may not possess all the characteristics described, he should possess some of them,
as the success of the mediation process will depend partly on the qualities of the mediator.

Chapter 12: Dispute Settlement 547

The Mediation Process
Kochan (1980) divided the mediation process into the following stages:
Stage I: Introduction and Establishment of Credibility – During this stage, the mediator
plays a more passive role than at any other time during the mediation process. His main
task is to gain the trust and acceptance of the parties. They should believe that he will be
capable of assisting them and that he is a person on whom they can rely at all times. An
experienced mediator will initially leave most of the talking to the disputing parties, but
will listen attentively and ask probing questions. His main objectives at this stage will be to:
■■ diagnose the causes of the dispute
■■ identify the issues in order of priority
■■ pinpoint the obstacles to a possible settlement
■■ gain an impression of the different attitudes held by parties
■■ estimate the relative power between the parties.

Once his position is entrenched and he has sufficient background knowledge, the mediator
will attempt to persuade the parties to resume negotiations, or he could try to steer
negotiations in a different direction. This could happen after he has supplied them with a
different perspective or after he has removed some of the obstacles to continued negotiation.
Stage II: Steering the Negotiation Process – In the second stage, the mediator intervenes
more actively in the process. He will offer advice to the parties and attempt to establish
the actual resistance point of each party and to discover areas in which compromise could
be reached. The mediator will encourage proposals and counterproposals, and if a solution
seems possible, he will gently urge the parties towards accepting it.
At this stage he may become more assertive and, by his behaviour, exert pressure on
the participants to accept a certain solution. However, this should be carefully timed and
the mediator should be sure that they are ready to consider a settlement. A mediator who
comes over too strongly at the wrong time may antagonise one or both of the parties and
lose much of the ground already gained. At the worst, he could be rejected by one or all of
the parties.
Stage III: Movement towards a Final Settlement – An experienced mediator will know
when to exert pressure towards a final settlement. During this phase he would, most
probably, conduct intensive negotiations with both parties in an attempt to persuade them
to face reality and adjust their positions. He may also become more forceful than at any
other stage. However, timing and diplomacy are extremely important. It frequently happens
that only the diehards prove an obstacle to final settlement. Getting chief negotiators to
subdue militants in their own ranks could help.
During the final stages the mediator may suggest, or draft proposals for, a settlement. He
should make sure that he is not identified too closely with these proposals. If either or both
of the parties reject the proposals and they see these as coming from the mediator, they may
also reject the mediator. Once a final settlement has been reached, the mediator remains to

548 Labour Relations: A southern African perspective

assist the parties in drafting an agreement and to ensure that both sides are satisfied with
its terms and conditions.
The process of mediation, more so than negotiation, is dynamic and finely tuned. A
mediator has to be extremely flexible and inventive. Also, he needs to be continually on his
guard against interference by his own values. He should ensure that he does not attempt to
impose on the parties the settlement which he regards as correct, but rather that he finds one
which is acceptable to both parties. Preferably, under his guidance the parties themselves
should formulate a favourable settlement.

The Effectiveness of Mediation

It is difficult to establish whether mediation is generally effective or not, since in many
instances it is not possible to decide if a settlement would in any event have been reached
by the parties. Mediation ultimately depends on the willingness of the participants to come
to an agreement. The most a mediator can achieve is to advise or persuade them towards
agreement. Nevertheless, it is generally assumed that mediation does facilitate agreement
and that it is most effective in situations where:
■■ owing mostly to lack of experience, negotiators have overcommitted themselves to a
particular stand
■■ the dispute centres on issues or procedures such as dismissals
■■ the impasse is the result of intra-organisational conflicts between the members of one
or both parties
■■ hostility between members of the opposing parties is the major reason for the continuation
of conflict
■■ the parties are strongly motivated to attempt settlement
■■ external pressures are being placed on the participants to end the dispute
■■ coercive action is threatened
■■ other commitments encourage a settlement of the existing dispute.

Mediation has proved less successful where:

■■ conflict has reached a high level of intensity
■■ matters of principle are at stake
■■ the dispute originated from a negative settlement range
■■ the dispute concerns economic issues
■■ there is inability to pay on the one side and high expectations in the face of eroded
wages on the other.

Ultimately, the success of mediation depends as much on the commitment of both parties to
a peaceful settlement as on the skills of the mediator.

Chapter 12: Dispute Settlement 549

Arbitration
Definition
Arbitration entails:
■■ the appointment of a third party to act as adjudicator in a dispute and to decide on the
terms of settlement.

Arbitration differs from conciliation and mediation in that it does not promote negotiation.
In arbitration, a third party actively intervenes in the dispute and takes over the role of
decision-maker. The arbitrator listens to and investigates the demands and counter-demands
on both sides, and decides on a final settlement. The parties may submit their individual
proposals for a settlement to the arbitrator, but the final decision is his. Whatever settlement
the arbitrator imposes will become binding on the parties concerned.

Types of Arbitration
The first differentiation to be made is between judicial arbitration and interest arbitration.
Judicial arbitration is conducted in disputes of right and is undertaken by courts of law
or other judicial and semi-judicial bodies.
Interest arbitration centres on the issues raised in the collective bargaining forum. It can
be conducted by government arbitration, bodies arbitrators appointed by government or a
bargaining council. Alternatively, the parties themselves may appoint an arbitrator or they
might decide to make use of an independent arbitration service.
Kochan (1980) also distinguishes between conventional and final offer arbitration (the
latter being package- or issue-related), and between arbitration conducted by a single
arbitrator or by a panel of arbitrators.
Conventional arbitration leaves the arbitrator free to impose the settlement of his choice,
while in final offer arbitration (also termed ‘pendulum arbitration’) the arbitrator studies the
final offers of each party and selects one of the proposals for final settlement.
Pendulum arbitration may be based on the total package offered by each party, or it
could be based on the offers made by the parties on each issue. In issue-by-issue arbitration,
the arbitrator may select the final offer of the union on one issue and that of the employer
on the other. Pendulum arbitration has the advantage that the parties know that extreme
demands or minimal offers would be immediately rejected by the arbitrator and are therefore
inclined to modify their proposals and to assess the situation more realistically.
The final question regarding arbitration is whether the parties will accept determination
by one arbitrator or whether they would prefer the decision to be made by an arbitrator and
an assessor from each side, or by a panel of arbitrators. If they choose a panel of arbitrators,
such a panel might consist of a number of neutral persons. Alternatively, the panel could be
chaired by a neutral person, assisted by two or more arbitrators who are selected on a parity
basis by each side. It is generally preferable to limit the number of arbitrators.

550 Labour Relations: A southern African perspective

Med-Arb and Con-Arb
Parties could also be given a choice between ‘mediation–arbitration’ and ‘conciliation–
arbitration’. The arbitrator initially performs the function of a conciliator or mediator.
Before attempting arbitration, he urges the parties towards settlement and he will conduct
arbitration only if the parties themselves fail to reach an agreement.
There may be complications entailed in this process, as a mediator or conciliator will have
gained the confidence of the parties. He will have more and different information from that
which would be given to an arbitrator, who judges only in terms of the facts of the case.
To avoid this complication the arbitrator could first reach a decision as arbitrator, but not
disclose this to the parties, and then go over to mediation in an attempt to persuade them
into a voluntary settlement of their own. This would then be known as arbitration−mediation.

Advisory Arbitration
Advisory arbitration occurs when the arbitrator communicates his decision, but where the
parties are not bound to abide by it. It is hoped, however, that the decision of the arbitrator
will encourage a change in positions.

The Effectiveness of Arbitration

That arbitration is effective in ending disputes is self-evident. Once an arbitration award has
been made, the parties are obliged, either by law or by a gentlemen’s agreement, to discontinue
their dispute and to abide by the terms of the arbitration award. However, arbitration may
not succeed in resolving the conflict. One or both parties might be dissatisfied with the award
and, while they may adhere to the terms, the continued conflict may surface in other ways.
Where interest disputes are involved, arbitration may be a poor option because it does
not extend the negotiation process and takes the decision-making power out of the hands of
the parties. In some instances, it may be seen as favouring the employer or the employees,
resulting in further dissatisfaction or conflict.
Arbitration, particularly in interest disputes, can be subjected to overuse, or what is
commonly called the ‘narcotic effect’. Parties who have frequently taken disputes to
arbitration tend later to use it as a first, rather than a last, resort. When a dispute arises,
no negotiation is attempted and the issue is immediately subjected to arbitration. In other
instances arbitration may have a ‘half-life’ effect in that the parties become disenchanted
with the outcome of arbitration and resort to other means of settlement.
Arbitration tends to detract from the credibility of negotiators, particularly those acting
on behalf of the union. Negotiators are viewed as having given over their power to the
arbitrator, and may lose their standing with their members or their principals.
Despite these disadvantages, arbitration is a popular method of dispute settlement, particularly
if, in the case of a dispute of interest, the parties want to avoid coercive action at all costs. In such
instances, participants may more readily accept the decisions of a credible third party who has
special power rather than a proposal of settlement from the other party or a mediator.

Chapter 12: Dispute Settlement 551

The arbitration process can be more effective if it provides for pendulum arbitration on
an offer-by-offer basis, instead of independent decision-making by the arbitrator. Also,
a tripartite panel of arbitrators may produce a more balanced decision than a single
individual. Generally, voluntary arbitration is more effective than compulsory arbitration.
Parties who choose to go to arbitration show greater commitment to a settlement and are
able to exercise greater control over the arbitrator.
In some instances arbitration may be a viable alternative to coercive action. It is
particularly effective where conflict has reached unmanageable proportions, and where the
parties are strong enough to resist allegations of surrendering their roles as negotiators by
participating in arbitration

Dispute Settlement in Terms of the Labour Relations Act

Dispute Settlement Bodies

The CCMA
Legal Position
The LRA provides for the establishment of the Commission for Conciliation, Mediation
& Arbitration, which is independent of the State, any political party, union, employer,
employers’ association or federation of unions or employers’ associations.

Functions
The functions of the CCMA are to:
■■ attempt, by conciliation or mediation, to resolve any dispute referred to it in terms of
the Act
■■ arbitrate on disputes referred to it
■■ provide assistance in the establishment of workplace forums
■■ provide advice regarding procedures in terms of the Act
■■ assist any party to a dispute in obtaining legal advice, assistance or representation
■■ offer to conciliate in a dispute not referred to it
■■ accredit bargaining councils and private agencies to engage in dispute settlement
■■ conduct, supervise or scrutinise elections for a union or employers’ association
■■ publish guidelines regarding any matter regulated by the Act
■■ conduct and publish research concerning any matter related to its work and regarding
sexual harassment
■■ compile and publish information and statistics concerning its activities.

552 Labour Relations: A southern African perspective

■■ provide advice and training to any party regarding the conclusion of
◗◗ collective agreements
◗◗ workplace forums
◗◗ the prevention of disputes and grievances
◗◗ disciplinary procedures
◗◗ procedures relating to dismissal
◗◗ restructuring of the workplace
◗◗ a programme for affirmative action.

Management
The CCMA is managed by a governing body consisting of a chairman and such other
members as are nominated by NEDLAC and appointed for three years, as well as an
appointed Director (who may not vote at meetings). The NEDLAC nominations comprise
one independent person as chairman, three persons proposed by labour, three by employers
and three by the State.
The Commission may charge fees for conducting or supervising an election or for giving
advice or assistance to any party.

Conciliation by the Commission

If a dispute is submitted to conciliation, the Commissioner appointed to the case should
attempt to achieve a resolution within a period of 30 days from the date of referral. The
Labour Relations Amendment Act of 2018 does propose that the Commissioner or the parties
could apply to the Director for an extension which should not be longer than 5 days and
should be granted only under special circumstances.
At the commencement of Conciliation the Commissioner sets out the procedures to be
followed, which could include:
■■ mediation
■■ fact-finding (providing detailed, concrete information on issues subject to dispute)
■■ advisory arbitration.

In essential services the parties have the option, within seven days of referral, to agree on
the Commissioner to be appointed and on the procedure to be followed.
At the end of the 30-day period, or whatever longer period may have been agreed upon,
the commissioner must issue a certificate declaring that the dispute has been resolved or
that it remains unresolved. A copy of this certificate must be served on both parties, while
the original is handed to the Commission.
Where both parties agree, a Commissioner may, immediately after conciliation has failed,
engage in arbitration.

Chapter 12: Dispute Settlement 553

Mediation in the Public Interest
As indicated previously in this Chapter, a new Section 150(1) in the Amendment Act of
2013 gives the Director the right to appoint one or more Commissioners to conciliate in any
dispute irrespective of whether it has or has not been referred to a bargaining council or the
Commission. This he may do with the consent of the parties or without their consent, if he
decides that it is in the public interest to do so.
Before appointing a Commissioner, the Director must consult with the parties and the
secretary of the bargaining council which has jurisdiction over the parties. He may also
appoint two persons from the Governing Body to assist the Commissioner. One such person
should be nominated by the employer party and one by the employee party.
Even if conciliation is being attempted, either of the parties may still engage in a strike
or a lockout.
A follow-up to the amendment is contained in the 2018 Amendment Act which provides
that a high level panel may intervene in disputes where a strike or a lockout seems imminent,
if it is in the public interest to do so (see Chapter 13).

Arbitration by the CCMA

Where conciliation has failed, the Commission is obliged to undertake arbitration, if the law
provides for it and when requested to do so by one of the parties. The parties have 90 days
from the date on which the certificate of non-resolution was ordered to apply for arbitration
by the Commission.
Arbitration may be undertaken by the same Commissioner who engaged in conciliation
and mediation of the dispute but, as explained in an earlier section, this might prove
problematical. The Act provides that any party may object to the appointment of the
same commissioner. Also, parties may, by agreement, express their preference for certain
commissioners by providing a list of not more than five names within 48 hours after the
issue of a certificate stating that conciliation has failed. (In the case of a dispute in essential
services, the limit is seven days.)
In certain cases, the parties may apply to the Director of the CCMA for the appointment
of a senior commissioner to undertake arbitration. The Director may decide to do so after
considering:
■■ the questions of law arising out of the dispute
■■ the complexity of the dispute
■■ the existence of conflicting arbitration awards relevant to the dispute
■■ the public interest.

As indicated in Chapter 6, parties who have an agreement to engage in pre-dismissal

arbitration may have this performed by an accredited private agency, a bargaining council
or the CCMA.

554 Labour Relations: A southern African perspective

The Labour Relations Amendment Act of 2013 also provides that a Commissioner should be
appointed to resolve a dispute where the parties had agreed on private arbitration, but where
the employee involved earns less than the earnings threshold (R205 433.30 per annum)
and has to pay for any part of the private arbitration, or where the private arbitrator is not
independent of the employer. (See Disciplinary Procedure in Chapter 6.)
During arbitration proceedings, the parties are entitled to offer testimony, to call witnesses,
to cross-examine the witnesses of the other party and to direct closing argument to the
commissioner. Where an applicant party is not present for the proceedings, the commissioner
may cancel the arbitration. Where the respondent does not attend, the commissioner may
conduct the arbitration in absentia or postpone the arbitration to a later date.
An arbitrator may at any stage (but with the consent of the parties), cease arbitration and
engage in conciliation).
A new Section 158(1B) in the 2013 Amendment Act prevents the Labour Court from
reviewing a decision or ruling made during arbitration or conciliation proceedings by
the Commissioner or an accredited bargaining council before the dispute has been finally
determined, unless the Court believes that it may be just and equitable to review the decision
or ruling. Moreover, if the parties agree and if it is expedient to continue with proceedings,
the Court may sit as an arbitrator, but the ruling it makes must be one which an arbitrator
would have been entitled to make.

Representation at Arbitration Proceedings

As in conciliation proceedings, parties appearing before the CCMA for arbitration may
represent themselves or be represented by a director, a trade union member, official or office
bearer, an official or office bearer of the employers’ association. In arbitration proceedings
they may also be represented by a legal practitioner. However, if the case centres on
dismissal for misconduct, incompetence or incapacity, legal representation is not allowed
unless all parties and the Commissioner consent or unless the Commissioner concludes that
legal representation should be allowed. The decision to allow legal representation should
be based on the nature or complexity of the dispute, the comparative ability of the parties
and the public interest.

Arbitration Awards
Once the arbitration has been finalised, the Commissioner has 14 days to make an award. (If
the dispute involves an interest related to an essential service, he has 30 days from the time
of referral, or whatever longer period may be agreed upon.)
The award must briefly state the reasons for the decision. Copies of the award must be
served on all parties, while the original is lodged with the Labour Court. The Commissioner
is empowered to make any award which complies with the Act. Arbitration fees can be
collected from an employer where it is found that a dismissal was procedurally unfair. An
arbitration award is final and binding and, once verified by the Director, can be made an
Order of the Labour Court.

Chapter 12: Dispute Settlement 555

Variation and Review of Arbitration Awards
Reviews of arbitration awards may be requested only where it is alleged that:
■■ the commissioner was guilty of misconduct regarding his duties as an arbitrator
■■ the commissioner committed a gross irregularity
■■ the commissioner exceeded his authority
■■ the award was improperly obtained.

A party to a dispute may, within six weeks of receiving a copy of an award that he believes
has been improperly made, request that the Labour Court review the award. Where corruption
is cited as the reason for the request, the applicant has six weeks from the date on which
the corruption was discovered.
The Labour Court may suspend the award pending its decision. It may eventually set the
award aside and settle the dispute in a manner which it deems fit or issue an Order setting
out the procedure to be followed in resolving the dispute.
The Labour Relations Amendment Act of 2013 provides that the Labour Court should
hand down its decision as soon as is reasonably possible.

Accredited Bargaining Councils and Private Agencies

One of the functions of bargaining councils is to attempt to resolve any disputes within its
area of jurisdiction. In support of this, Section 51(3) of the Act provides that any party to a
dispute which falls within the jurisdiction of a council may refer the dispute to the council.
This body must then engage in conciliation and, if necessary, arbitrate the dispute.
A bargaining council or private agency must apply to the governing body of the CCMA
to be accredited as conciliators and arbitrators. If accredited, the nominated officials have
the same powers as a Commissioner. However, councils or private agencies will not be
accredited to adjudicate on any dispute centring on:
■■ disclosure of information to unions
■■ organisational rights
■■ the interpretation and application of collective bargaining agreements
■■ agency-shop and closed-shop agreements
■■ statutory council agreements
■■ cancellation of a council’s registration
■■ demarcation
■■ picketing
■■ co-decision-making
■■ information to be given to workplace forums
■■ interpretation of the provisions relating to workplace forums.

556 Labour Relations: A southern African perspective

In broad terms, these bodies deal with disputes of interest and disputes relating to dismissals,
unfair labour practices and the freedom of association.
Should the controlling body decide to accredit a council or agency, it will enter its name
in a register of accredited agencies and furnish the applicant with an accreditation certificate.

The Labour Court

Composition and Status
The Labour Court is a court of law and equity, which, as regards matters within its
jurisdiction, has the same powers as the High Court. It is also a court of record. It consists
of a Judge President, an Assistant Judge President and as many judges as the Minister of
Labour, acting on the advice of NEDLAC and in consultation with the Minister of Justice
and the Judge President, may determine.

Jurisdiction
In terms of Section 157 of the Labour Relations Act, the Labour Court has, except when the Act
provides otherwise, exclusive jurisdiction in all matters that, in terms of the LRA or any other
law, have to be determined by the Court. Furthermore, the Court has concurrent jurisdiction
with the High Court as regards an alleged or threatened violation of a fundamental right as
per Chapter 2 of the Constitution, if the violation relates to employment and labour relations
or to any dispute over an executive act or conduct by the State in its capacity as employer.

Functions
The Labour Court may issue any appropriate Order, granting any of the following:
■■ urgent interim relief
■■ an interdict
■■ an Order providing for an action to be carried out which will help remedy an injustice
or give effect to the main objectives of the Act
■■ a declaratory Order
■■ an Order for compensation
■■ an Order for damages
■■ an Order for costs.

The Court may also:

■■ order implementation of any provision of the Act
■■ declare any accord or arbitration award to be an Order of the Court
■■ request the CCMA to conduct an investigation or to report to the Court
■■ settle a dispute between a member and his union or an employer and an employers’
organisation regarding the implementation of the collective body’s constitution

Chapter 12: Dispute Settlement 557

■■ review the performance of any function provided for in any action of the State as
employer
■■ hear an appeal against a health and safety inspector in terms of the Occupational Health
& Safety Act
■■ perform any activities necessitated by the Labour Relations Act or any other Act.
A new Section103A (1) in the Labour Relations Amendment Act of 2013 of gave the Court
the power to order that an Administrator, who may be a Commissioner, be appointed to
administer a trade union or employers’ organisation if the party concerned or the Registrar
requests it to do so or if it is found that the trade union or employers’ organisation has failed
to fulfil its functions or that there is serious mismanagement.

Proceedings and Representation of Parties

Generally, all proceedings of the Labour Court must be conducted in open court, but the
Court may exclude the public or specific persons from proceedings in any circumstances
where a provincial division of the Supreme Court would be entitled to such exclusion.
A party to the proceedings may represent himself or be represented by:
■■ a legal practitioner
■■ a director or employee of the employer
■■ an official or office bearer of the employee’s registered union or employers’ association
■■ a designated agent or official of a bargaining council
■■ an official of the Department of Labour.

In terms of the 2017 Amendment Act the Court is given the right to determine who might
act as representatives and to determine that no representative should charge a fee for his
services unless allowed by Court to do so.

The Labour Appeal Court

A party subject to a decision of the Labour Court may apply for leave to appeal against
such decision. Should permission to appeal be granted, the party requesting such permission
must lodge an appeal within 21 days of the date on which leave to appeal was granted.
The Labour Appeal Court is a court of law and equity. It should be the highest court of
appeal against any decision made by the Labour Court.
The Court comprises the Judge President and Assistant Judge President of the Labour
Court, as well as three judges from the same court. Appeals are heard by any three judges
from the panel as designated by the Judge President, except that a judge who heard the case
which is subject to appeal may not act as chairman during the appeal.
During proceedings, the Court may hear further evidence, which may be oral or given by
way of affidavit, and it may decide to refer the case back to the Labour Court for the hearing
of further evidence. After deliberation, the Appeal Court may decide to confirm or amend

558 Labour Relations: A southern African perspective

the decision of the Labour Court, or to reject the decision and to give any other decision
which it deems appropriate.

Routing of Different Types of Dispute

The Labour Relations Act of 1995 distinguishes between many different types of dispute, but
essentially all disputes of right may be submitted first to conciliation by either the CCMA
or a bargaining council, and thereafter to arbitration by one of the above or, in certain
instances, to a final determination by the Labour Court. Disputes of interest, too, may be
submitted first to conciliation by one of the bodies mentioned above, but after that the
parties, except those in essential services, are free to resort to voluntary arbitration or to
engage in a legal strike or lockout (see Chapter 13).
However the Labour Relations Amendment Act of 2018 contains a new Section 150
which allows the Director of the CCMA to appoint a Commissioner to arbitrate in a dispute
which has not been referred to it if it is in the public interest to do so (see Chapter 13).
The Act widens the definition of ‘conciliation’ to include fact-finding, mediation and
even advisory arbitration.
The procedures to be followed in specific types of dispute are outlined below. Certain
disputes may be referred to the Commission only if there is no bargaining council which
has jurisdiction, but there are other disputes which must be referred to the CCMA and not
to the bargaining council. (See Table 12.1.)

table 12.1: dispute routes – final resorts

DISPUTES CONCILIATED BY BARGAINING COUNCIL OR CCMA

Type of dispute Route if unresolved

Freedom of association (freedom from To Labour Court

victimisation)

Dispute of interest in essential services Arbitration by Council or Commission

Dismissals relating to incapacity, incompetence or Arbitration by Council or Commission

misconduct

Automatically unfair dismissals To Labour Court

Dismissal for participating in unforced strike for To Labour Court

reasons related to a closed shop

Dismissals relating to reason for retrenchment To Labour Court

Unfair labour practices (excluding discrimination) Arbitration by Council or Commission

Unfair labour practices entailing discrimination To Labour Court

Interest disputes Strike action (excluding disputes about refusal to

bargain)

Chapter 12: Dispute Settlement 559

 DISPUTES CONCILIATED ONLY BY THE CCMA
(not referred to Council even where one has jurisdiction)

Type of dispute Route if unresolved

Organisational rights Arbitration by CCMA

Collective agreements (interpretation and Arbitration by CCMA

application where no agreed procedure)

Closed-shop agreements and agency-shop Arbitration by CCMA

agreements

Disputes relating to refusal bargaining Advisory Arbitration by CCMA – then possible

strike action

Request for picketing agreement Determination by CCMA

Breach of picketing agreement or refusal of right To Labour Court

to picket

Determination by Statutory Councils To Labour Court

Application and interpretation of law regarding To Labour Court

organisational rights and bargaining councils

Workplace forums Arbitration by CCMA

Types of Dispute and Means of Settlement

Interference with the Freedom of Association

Disputes where interference with the freedom of association is alleged may be referred
first for conciliation by the CCMA or a bargaining council having jurisdiction and, if they
remain unresolved, to the Labour Court for final determination (see Figure 12.1).

560 Labour Relations: A southern African perspective

 dispute

commission bargaining council

conciliation
30 days

dispute unresolved

application to
labour court

court order

figure 12.1: freedom of association

An applicant who alleges victimisation or interference with the freedom of association

has to prove that a certain action (for example, dismissal) has been taken against him. The
employer will then have to prove that he did not interfere with the freedom of association
of the employee, or that he did not victimise him. Thus he will have to show other good
reasons for his action or for his treatment.

Refusal to Grant Organisational Rights

Where a union informs the employer that it wishes to exercise its organisational rights in
terms of the Act, a meeting has to be held within a period of 30 days with the purpose of
establishing an agreement between the parties. Should no such agreement be reached, either
party may refer the dispute to conciliation by the CCMA. If conciliation is unsuccessful, the
dispute may be submitted to arbitration by the Commission. The Commission must make a
determination within a period of 14 days (see Figure 12.2 on the following page).

Chapter 12: Dispute Settlement 561

 notice that union
wishes to exercise rights
30 days

meeting

collective agreement no agreement

commission

conciliation 30 days

dispute unresolved

voluntary arbitration

14 days
arbitration award

figure 12.2: organisational rights

The Act provides that, where the Commission has to arbitrate on the representativeness of
a union which is applying for organisational rights, it should:
■■ try to avoid multiplicity of trade unions
■■ encourage ‘a system of a representative union’ at a workplace
■■ attempt to minimise the financial and administrative burden placed on an employer
who has to deal with more than one trade union
■■ consider the nature of the workplace, the type of organisational rights being requested,
the type of sector in which the employer operates, and the developments as regards
organisation at that workplace.

A commissioner may, on his own initiative or at the request of the employer, cancel the
organisational rights of another union already operating at the workplace if he is of the
opinion that that union is no longer representative.

562 Labour Relations: A southern African perspective

Interpretation or Implementation of Collective Agreements
Every collective agreement (except an agency-shop, closed-shop or settlement agreement)
must provide for a procedure by which disputes regarding the interpretation or implementation
of the agreement can be resolved. Such procedure should provide for conciliation as a first
step, followed by arbitration. Where there is no disputes procedure in the agreement, where
the procedure is not yet operative, or where one party blocks the use of the procedure, either
of the parties may refer the dispute to the Commission (see Figure 12.3). The Commission will
attempt conciliation and, should this fail, either party may request that the Commission engage
in arbitration.

dispute
regarding interpretation
or application

Agreed
procedures not
agreed effective or being no agreed procedure
disputes procedure contravened by
one party or

dispute unresolved commission

agreed conciliation 30 days

arbitration procedure

dispute unresolved
arbitration award

voluntary arbitration

14 days
arbitration award

figure 12.3: collective agreements

The same procedure will apply in the case of agency-shop and closed-shop agreements,
except that any person bound by an arbitration award relating to the administration and
application of funds obtained under an agency-shop or closed-shop agreement may appeal
to the Labour Court against such an award (see Figure 12.4 on the following page).

Chapter 12: Dispute Settlement 563

 dispute

commission

30 days
conciliation

dispute unresolved

voluntary arbitration

14 days Appeal to Labour Court

if award deals with
arbitration award
administration and
application of funds

figure 12.4: interpretation and application of closed-shop agreements

A different procedure applies where an employee has been dismissed because of his refusal
to join a closed-shop union, or the cancellation of his union membership. This aspect is
dealt with later in the chapter.

Refusal to Admit a Party or Parties to a Bargaining Council

Any registered union or employers’ association may apply in writing to be admitted as party
to a bargaining council. The application should set out details regarding the applicant’s
representativeness, the reasons why the applicant should be admitted to the council and any
other relevant information in support of the application.
The council then has 90 days in which to decide whether or not to grant admission.
Should it refuse admission, it must within the next 30 days supply reasons for such refusal.
The applicant union or employers’ association may then apply to the Labour Court for
an order granting it admission to the council. The Court may admit the applicant to the
council, amend the constitution of the council or make any other order which it deems fit
(see Figure 12.5 on the following page).

564 Labour Relations: A southern African perspective

 application for admission

admission granted admission refused 90 days

notice of refusal

30 days
reasons for refusal

application to
labour court

court order

figure 12.5: admission to bargaining councils

determination
promulgated by
minister in terms of
act

dispute

commission

30 days
conciliation

dispute unresolved
90 days

voluntary arbitration

14 days
arbitration award

figure 12.6: disputes regarding statutory determinations

Chapter 12: Dispute Settlement 565

Disputes about Statutory Determinations
When a dispute arises concerning the interpretation of a determination made on behalf of a
statutory council, any party may refer the dispute in writing to the CCMA. The Commission
will attempt conciliation and, failing this, either party may request that the Commission
arbitrate on the dispute (see Figure 12.6 on the previous page).

Interpretation and Implementation of the Act as regards

Organisational Rights and Bargaining Bodies
These disputes may be referred first to the CCMA for conciliation, and thereafter to the
Labour Court for legal adjudication (see Figure 12.7).

APPLICATION AND
INTERPRETATION OF
THE LAW RELATING TO
ORGANISATIONAL RIGHTS
AND BARGAINING BODIES

DISPUTE

COMMISSION

MEDIATION

LABOUR COURT

ADJUDICATION

figure 12.7: disputes relating to application and interpretation of the law concerning organisational
rights and bargaining bodies

Disputes of Interest in Essential Services

When a dispute of interest occurs between parties in a designated essential service (see
Chapters 3 and 13), the dispute may be referred to a bargaining council having jurisdiction
or, where no council exists, to the Commission. The council or Commission will attempt to
conciliate the dispute but, if no resolution is achieved, either party may request that it be
subjected to arbitration by the Commission or the council (see Figure 12.8).

566 Labour Relations: A southern African perspective

Arbitration must be conducted within a period of 30 days. If the arbitration award involves
the State and has financial implications for the State, the Minister may within 14 days table
the award in Parliament. Parliament may then decide that the award should not be binding,
in which case the dispute is referred back to the Commission for conciliation and, should
this fail, for eventual arbitration.

dispute

commission bargaining council

conciliation
30 days

dispute unresolved

arbitration

30 days
except where
financial possible tabling in
binding award
implications parliament
for the State
14 days

decision that award

is not binding

commission

conciliation

arbitration

figure 12.8: essential services – disputes of interest

Automatically Unfair Dismissals or Dismissals Related to Retrenchments,

Closed-Shop Membership or Participation in an Illegal Strike
A dismissal will be automatically unfair if:
■■ it involves victimisation

Chapter 12: Dispute Settlement 567

■■ it resulted from the employee’s participation in a legal strike or protest action
■■ the employee has been dismissed for refusing to do the work of a co-worker who is on
strike
■■ it has resulted from the refusal by the employee to agree with an employer demand
concerning a matter of mutual interest
■■ it resulted from the employee’s exercising or declaring his intention to exercise any right
in terms of the Act
■■ it is related to the pregnancy of an employee
■■ it is based on discrimination.

Disputes centring on such dismissals, as well as disputes relating to dismissals arising from
retrenchments, participation in an illegal strike or non-membership of a closed-shop union,
may first be referred to a bargaining council having jurisdiction, or, if no bargaining council
exists, to the CCMA. Referral has to take place within a period of 30 days from the date
of dismissal, but an extension can be condoned by the council or Commission. The body
concerned has 30 days in which to conciliate the dispute. If no settlement is reached the
employee may refer the dispute to the Labour Court for adjudication (see Figure 12.9 on the
following page).

dismissal

dispute
30 days

bargaining council commission

conciliation

30 days

dispute unresolved

referral to
labour court

court order

figure 12.9: automatically unfair dismissals and dismissals relating to retrenchments, closed-shop
membership or participation in an illegal strike

568 Labour Relations: A southern African perspective

Dismissals Related to Misconduct, Incompetence, and Incapacity
(Including Constructive Dismissal)
Disputes relating to the abovementioned dismissals must also, within a period of 30 days
from the date of dismissal (or a longer period if condoned), be referred to a bargaining
council or, if there is no bargaining council or the bargaining council is not accredited, to
the CCMA. The body in question will attempt to resolve the dispute by conciliation. If this
fails or if a period of 30 days has elapsed since the referral of the dispute, the employee may
request the bargaining council or the Commission, whichever is applicable, to engage in
arbitration. This it must do within a period of 14 days (see Figure 12.10).

dismissal

dispute
30 days

bargaining council commission

conciliation

30 days

dispute unresolved

request to refer 90 days

arbitration
to labour court

director refers 14 days

arbitration award
to court

court order

figure 12.10: unfair dismissal (misconduct, incompetence, incapacity and constructive dismissal)

Alternatively, if one of the parties so requests, the Director of the Commission may refer
the dispute to the Labour Court. This he will do only after considering the reasons for the
dismissal, whether a question of law has arisen, the complexity of the dispute, the existence
of conflicting arbitration awards and the public interest.

Chapter 12: Dispute Settlement 569

A decision by the Director to refer the dispute is final and binding.
The Labour Relations Amendment Act of 2002 provided for a joint conciliation and
arbitration process in cases where the dismissal is related to probation. A hearing will
have to be held within 30 days and the council or CCMA must inform the parties that, if
conciliation is unsuccessful, arbitration will commence immediately unless the dispute is
withdrawn or there is reason for postponement.

Unfair Labour Practice Disputes

Where an unfair labour practice (see later section) is alleged, any party may refer the dispute
to a bargaining council having jurisdiction or, failing this, to the CCMA. Either body will
attempt to conciliate the dispute. Should the dispute remain unresolved and if it involves
discrimination, making it automatically unfair, it will be referred to the Labour Court. Any
other unresolved unfair labour practice dispute may be referred to the Commission or Council
for arbitration (see Figure 12.11). However, if an unfair labour practice dispute centres on
an occupational detriment suffered after making a protected disclosure, the employee may
request that the case be heard by the Labour Court.

dispute

bargaining council commission

conciliation 30 days

dispute unresolved

90 days
other unfair
discrimination
labour practices

labour court arbitration

14 days

court order arbitration award

figure 12.11: unfair labour practices

570 Labour Relations: A southern African perspective

Workplace Forums (Including Joint Decision-making and Disclosure)
Any dispute relating to the establishment and functioning of workplace forums, co-
decision-making with forums and the disclosure of information to forum members may, in
the absence of an agreed procedure relating to disputes on that particular issue, be referred
to the Commission for conciliation and, should this fail, to arbitration (see Figure.12.12).

dispute

agreed procedure no procedure

settlement in terms commission

of procedure

30 days
conciliation

dispute unresolved

90 days

arbitration

14 days
arbitration award

figure 12.12: workplace forums

Remedies for Unfair Dismissal

In any actions involving an alleged unfair dismissal (excluding an alleged constructive
dismissal), the employee merely has to prove that the dismissal occurred. The onus will then
fall on the employer to prove that the dismissal was fair. The Labour Court or an arbitrator
may order the employer to:
■■ reinstate the employee with effect from the date of dismissal, or
■■ re-employ him in the same or a similar position from any date following the dismissal, or
■■ pay compensation to the dismissed employee.

The first option should be to reinstate the employee, unless:

■■ for good reason, the employee does not want to be reinstated

Chapter 12: Dispute Settlement 571

■■ it has become impossible to continue the relationship
■■ it cannot reasonably be expected of the employer to reinstate the employee.

Where a dismissal is automatically unfair or resulted from unfair retrenchment or

redundancy, the Labour Court can make any other award which it deems fit.
Section 194 of the Labour Relations Act sets limits to the amount of compensation which
can be ordered. The Act firstly stipulates that compensation must be ‘just and equitable’. If
the dismissal was automatically unfair, a maximum of 24 months’ remuneration may be
ordered. In other unfair dismissals and unfair labour practices the maximum is 12 months.
(This is not the case with cases relating to matters heard in terms of the Employment Equity
Act, where no limits are set.)

Establishing In-House Procedures

Employers and employees or their unions may decide among themselves on a procedure to
be followed in the event of a dispute arising. Such procedures could specify the following:
■■ the manner in which a dispute is to be declared (this includes notice to the other party
and a specification as to whether or not the declaration should be in writing)
■■ time limits for replying to the allegations or claims of the first party
■■ arrangements for negotiation meetings to attempt settlement
■■ time limits for negotiation (a procedure may specify that, if negotiation does not result
in settlement within a period of two weeks, the parties may take recourse to other
measures)
■■ other methods of dispute settlement, such as mediation or arbitration, which will be used
by the parties
■■ whether a distinction will be made between disputes of right and disputes of interest,
and whether different settlement procedures will be used in each case
■■ whether or not disputes of right will be submitted to private arbitration, the dispute
settlement machinery established by the government, or to legal action
■■ whether or not the right to a strike or lockout is admitted and, if it is admitted (or legally
allowed), the limitations set and safeguards provided (an employer may agree not to
dismiss illegal strikers before a specified period has elapsed, or a union may undertake
to remove illegally striking employees from the premises of an employer).

(For an example of an in-plant disputes procedure, see the Recognition Agreement in the
Annexures provided online.)
The dispute settlement processes established by private agreement may be described as
private, plant-level or bargaining-level procedures. Such procedures are particularly popular
where a system of plant-level recognition of unions exists. Where a party seeks to use
procedures established by government, the first question to be asked is whether the parties
themselves tried to find a resolution and whether organisational procedures were used.

572 Labour Relations: A southern African perspective

Conclusion
The use of the dispute settlement mechanisms provided for in the Act remains largely
voluntary. The parties or a party may, in most cases, decide to refer the dispute to the
Commission, a council or accredited agent, but may equally decide, even in a dismissal
dispute, to follow other agreed procedures. Dispute settlement by the CCMA places a
greater financial burden on the State, and the problem is to find sufficient persons with the
necessary expertise to handle the workload of the Commission.
The specific procedures outlined for every dispute are confusing, but clarification is
obtained if it is remembered that all disputes first have to be submitted to conciliation. This
is usually undertaken by the CCMA, but, in the case of freedom of association disputes,
interest disputes, dismissal disputes, illegal strikes and unfair labour practices, conciliation
is undertaken by a bargaining council, if one has jurisdiction in the particular industry or
sector. If conciliation fails, matters relating to freedom of association, admission to bargaining
councils, the interpretation of the law regarding organisational rights, bargaining bodies,
picketing, automatically unfair dismissals, retrenchments, dismissals for illegal strikes and
dismissals resulting from non-membership of a closed-shop union go to the Labour Court. The
Commission, or a council where it has conciliated a dispute, arbitrates on the remaining issues.

Suggested Questions/Tasks
•• John Smith works for a company which manufactures gates. Although it is not
a member of an employers’ organisation, the company has quite sophisticated
labour relations procedures, including a detailed disputes process which includes
all possible attempts at a solution. John has been in their employ for the past 10
years and has been promised that he will be appointed in the next promotion post
which becomes available. However, when this happens, a much younger and less
experienced colleague is appointed. John is very unhappy and lodges a grievance
but it is not resolved to his satisfaction.
oo What would John’s next step be? How would he classify his problem? Provide
detail of the process and the possible dispute settling mechanisms which could
be employed. Explain how these would work.
oo After the first step the situation remains unresolved. What would John’s next
step be? Provide detail of the process and the persons involved.
oo The second step proves unsuccessful and the matter progresses to the next
step. What would this be? Who could be present and what process would be
undertaken?
oo John is not satisfied with the outcome of the previous step. Does he have any
further recourse and, if so, subject to which conditions?
oo Give your own opinion on possible ways to resolve the problem.
•• Write your own case study involving a rights dispute. Exchange it with a fellow
student who has also written a case study. Provide a reasoned judgement of the case.

Chapter 12: Dispute Settlement 573

Sources
Brassey, M, Cameron, E, Cheadle, H & Olivier, M. 1987. The New Labour Law. Juta.
Green, GD. 1987. Industrial Relations. Pitman.
Herman, E & Kuhn, A. 1981. Collective Bargaining and Labour Relations. Prentice Hall.
Kerr, C & Siegel, A. (eds). 1954. ‘The Inner Industry Propensity to Strike’ in A Kornhauser et al. Industrial
Conflict. McGraw-Hill.
Kochan, T. 1980. Collective Bargaining and Industrial Relations. Richard D Irwin.
Labour Relations Act (66 of 1995), Government Gazette vol 366 no 16861, Pretoria, Government
Printer, December 1995.
Salamon, M. 1987. Industrial Relations Theory and Practice. Prentice Hall.
Thompson, C & Benjamin, P. 1991. De Kock’s Industrial Laws of South Africa, Juta.
Labour Relations Amendment Act 2013: Government Gazette No 17921, 18 August 2014
Labour Relations Amendment Bill 2017: Government Gazette No10779, 10 November 2017
Usefulwebsites
www.labour.gov.za/DOL/.

574 Labour Relations: A southern African perspective

 13

Coercive Action

Chapter Outline
OVERVIEW
STRIKE ACTION
Definition • Reasons for Strike Action • Classification • Factors Contributing to Strike Action • The
Freedom to Strike • The Question of Dismissal: The Right to Strike
OTHER EMPLOYEE ACTIONS
Withdrawal of Cooperation • Work-to-Rule • Product and Service Boycotts • External Pressures
LOCKOUTS BY THE EMPLOYER
STRIKES AND LOCKOUTS IN SOUTH AFRICA
Protected versus Unprotected Actions • Protected Strikes and Legal Lockouts | Procedures Towards
a Protected Strike/Lockout | Waiver of Procedures | Dismissals | Replacement Labour and Payment
of Strikers • Unprotected Strike and Lockout Action | General Prohibitions | Essential Services |
Minimum Services | Maintenance Services • Recourse against Illegal Actions | Urgent Interdicts |
Dismissal of Unprotected (Illegal) Strikers • Advisory Arbitration • Sympathy Strikes | Definition |
Legal Requirements | Recourse by the Secondary Employer • Picketing | Purpose | The Legal Position |
Picketing Agreements/Rules Sociopolitical Protest Actions
HANDLING STRIKE ACTION
The Union • Management: The Need for a Contingency Plan | Purpose of the Contingency Plan |
Ensuring Preparedness | The Action Plan | Aftercare | Ensuring Effectiveness • The Role of the Police
CONCLUSION
SUGGESTED QUESTIONS/TASKS
SOURCES
 Overview
Because numerous disputes centre on interests and not on rights, coercive action
may be taken by either party. Sometimes it may occur before procedures are utilised,
and at others after the procedures have been exhausted. A free labour relations
system will not provide for compulsory arbitration of all disputes and will entrench
the right to coercive action, and particularly to a strike or a lockout.
Coercive action is the ultimate manifestation of conflict in the workplace.
Strikes and lockouts constitute the most visible expression of the conflict that exists
between employers and employees. They are the direct result of the power struggle
between employers and employees. Coercive action, of which strikes are but one
manifestation, can emerge in different forms. These can range from organised strikes
to overtime bans, go-slows, etc.
Strikes occur more often than lockouts, and most lockouts instituted by employers
are in response to actions or demands by employees; these types of lockouts are
known as defensive lockouts. The employer may also lock out employees in order to
compel them to agree to a demand.
Section 23(2)(c) of the Constitution provides that every worker has the right to
strike but, like any other Constitutional rights, the right to strike is not absolute. The
Labour Relations Act of 1995 not only grants employees the right to strike, but also
grants employers the right to a lockout, but only in particular circumstances and only if
they follow the prescribed procedures. The strike or lockout will only be legal if the party
concerned adheres to the prescriptions. Moreover, in the case of a strike, the legality of
the action protects the employees from dismissal. Hence legal strikes are also known
as protected strikes. In the case of a lockout, the employer is protected from being sued
for breach of contract. The Act also allows for sympathy strikes by employees in other
organisations and for strikes in protest at socio-economic conditions.
In certain circumstances strikes are prohibited, for example, where legislation or
an agreement provides for arbitration of a dispute. For example, the Act prohibits
strike action in essential services or in designated maintenance services. The Labour
Relations Amendment Act of 2018 also provides for an advisory arbitration panel to
arbitrate a dispute which may lead to or has led to a strike. The purpose is to reach
an agreed solution and thereby to avoid an action which might very adversely affect
individuals or society at large.
Persons who engage in a strike or a lockout without following due process are
not protected by the Act and the aggrieved party may apply to the Labour Court to
interdict the offender. Employees who engage in an illegal strike may be dismissed
by the employer, but only after the employer has followed a fair procedure, which
includes the issuing of an ultimatum to return to work or face the consequences.
Strikes and lockouts are traumatic occurrences and both parties should be
adequately prepared for their occurrence.

576 Labour Relations: A southern African perspective

Strike Action

Definition
A strike may be broadly defined as:
■■ a temporary, collective withholding of labour, its objective being to stop or impede the
continuation of business and thereby to oblige the employer to take notice of employee
demands.

The fact that a strike is of a temporary nature is important. Employees engaged in strike
action do not intend to permanently withhold their labour from the employer but merely
to oblige him to enter into negotiations or, where negotiations are already under way or
deadlocked, to persuade him to change his position regarding the demands of his employees.
Section 213 of the Labour Relations Act defines a strike as:
the partial or complete concerted refusal to work, or the retardation or obstruction
of work, by persons who are or have been employed by the same employer or by
different employers, for the purpose of remedying a grievance or solving a dispute
in respect of any matter of mutual interest between employer and employee, and
every reference to work in this definition includes overtime work, whether it is
voluntary or compulsory...

This definition has the following main elements:

Refusal to work: The refusal to work can be partial or complete and can also include
retardation or obstruction of work. A strike does not need to amount to a complete withdrawal
of labour. A partial refusal means that employees perform some of their tasks but not others.
The retardation of work is manifested in the so-called go-slow, where employees continue
to work but do so at a slower rate. Obstruction of work refers to instances where employees
in one way or another hamper production or the work process. The refusal to work overtime
is also viewed as a strike. (This refers only to contractual overtime – where the employee
has contracted to work overtime or where he has usually worked overtime and therefore
contractually accepted it. Employees who do not normally work overtime would not be
striking if they refuse to do so.)
Collective action: One employee cannot strike. Strike action is by its very nature a collective
action and by implication it will always involve two or more employees.
Following from a grievance or dispute: Strike actions usually emanate from failed
negotiations, demands by employees or protests at management actions or decisions. If
employees refuse to work but they do not have any demand or are not seeking to remedy
a grievance or resolve a dispute, there is no strike in terms of the statutory definition.
Furthermore, a union may not strike in support of a demand that is unlawful. Once an
employer has agreed to the demands of employees there is no longer any valid purpose for
the strike.

Chapter 13: Coercive Action 577

In order for any form of labour action to constitute a strike in terms of the LRA, it must
comply with all three of the above elements. It should also be noted that the definition
refers to persons who are in the employ of the same ‘or different’ employers. This not only
caters for strikes by employees in the same industry, but also allows for sympathy strikes
(see below).

Reasons for Strike Action

The following are some of the most common reasons for strike action:
General dissatisfaction among employees: This normally starts with unhappiness or
dissatisfaction with current circumstances. The unhappiness becomes more serious, tempers
flare, workers become involved in emotional group discussions which can then lead to
demands being made and, eventually, to a strike.
Economic concerns: These include wages, increasing prices of electricity, transport, food,
health services, clothing, rent, etc. Concerns of this nature lead to demands for higher
wages. An attempt by employers to reduce wages will have the same effect.
Dissatisfaction with conditions of service: Some examples are working hours, ineffective
training and benefits. These issues can lead to an increase in employee dissatisfaction and
frustration, which may result in strike action.
Personal problems: Workers very often have limited power to influence their personal
environment. Frustrations related to social issues such as poor housing, transport to work,
access to health care, etc, are brought to the work environment and employees expect
employers to help them solve their problems.
Solidarity with other employees: Workers are very aware of the value of their labour
and the impact on organisations that withholding labour can have. Unions also promote
solidarity amongst all employees and very often call on other unions to support the causes
of their members by also engaging in strike action.
Lack of consultation: Unions and employees want to be consulted on issues that might
affect them and very often claim that employers fail to consult with them, which leads to
dissatisfaction and possible strikes.
Socio-economic issues: Workers may not be satisfied with the socio-economic status
quo and through their unions may engage in collective action to raise awareness of their
concerns.
The need to demonstrate strength: Where the employer is not taking a union seriously, a
strike may be called, ostensibly for a work-related reason, but the real purpose is to show
the employer that the employees and their union can wield power if he does not cooperate.

Classification
The classification of strikes is related to the reasons for particular strikes. Because the
reasons are wide-ranging, numerous types may be identified. These include the following:

578 Labour Relations: A southern African perspective

Economic strikes: Strikes of this nature are the most common. They relate to management’s
refusal or failure to satisfy the demands of employees regarding wages and other economic
issues such as service benefits and working conditions.
Grievance strikes: These normally occur when employees do not agree with the way in
which management deals with normal day-to-day problems. These issues can include
the introduction of new technology, downsizing, restructuring or any other work-related
problems.
Demonstration strikes: This refers to actions intended primarily to display dissatisfaction,
as a preliminary to negotiation or to further negotiation.
Recognition strikes: These are actions in which it is intended, by a show of strength, to make
management recognise the employees’ right to representation or to closer consideration of
their demands.
Procedural strikes: This type of strike occurs after procedures or negotiations have been
exhausted, or are thought to have been exhausted, where no agreement has been reached
and a deadlock situation has arisen. In these circumstances, strike action may be seen as a
‘last resort’ attempt to break the deadlock and to continue with negotiations under different
conditions.
Strategic strikes: These strikes are instituted to consolidate the union’s position at a
particular plant or in a particular industry or area. They are, in part, a show of strength and
are often not caused by immediate grievances or demands.
Go-slows: The go-slow is a method of withholding labour and affecting production without
actually bringing operations to a standstill. For employees, it holds the advantage that
they do not lose their wages as easily and that it is more difficult for management to take
action against them. Also, since employees are still manning their positions, they cannot
be replaced by temporary labour. A go-slow amounts to a partial withdrawal of labour and
managements may treat a go-slow in the same manner as a strike.
Overtime bans: Where overtime is regulated by contract or agreement, a ban on overtime
constitutes a strike action and would be subject to the same regulations as a strike. Bans on
overtime may be directly linked to employee perceptions that wages are being kept deliberately
low and that overtime is used as a means of enticing employees to supplement their incomes.
Sympathy or solidarity strikes: Other employees at plants belonging to the same company,
or in other organisations in the same industry/sector, or belonging to the same union or
federation, may institute strike action to display solidarity with other striking employees.
These sympathy strikers have no issue with their own employer, but their purpose is to
pressurise the employer against whom the original action was launched. By engaging in
sympathy action, strikers may persuade their own employer to place pressure for settlement
on the ‘offending’ employer. Sympathy actions could extend nationally and internationally,
particularly where multinational employers are involved.
Sociopolitical protest actions (also known as general strikes): These are union-initiated
actions aimed at sociopolitical grievances and are usually regionally or nationally based.

Chapter 13: Coercive Action 579

Wildcat strikes: These strikes occur without any prior warning. The element of surprise is
used to bring certain issues to management’s attention. These strikes are mostly unprotected
strikes.
Grasshopper strikes (also known as rotating strikes): This type of strike action is used
by employees to impede operations. It is normally very well planned and coordinated.
Employees start their strike action in a specific section of the organisation. As soon as the
‘problems’ in that section have been sorted out, strike action commences in another section.
This process continues until some solution to employee grievances is found.
Sit-down strikes: During this type of strike action the employees do not leave the work
area and in that way prevent the employer from making use of replacement labour. Normal
production is disrupted as workers are occupying working areas.

Strikes may also be classified in terms of their location. Thus, a certain action may be
described as a plant-level strike, an industry strike, a company-wide strike or a general
strike. Actions of the latter type would involve diverse employees, and demands made
would be more political in nature.

Factors Contributing to Strike Action

Although every strike is, in essence, a unique occurrence, certain general problems can be
discerned by studying strike actions in different countries over a number of years. Factors
usually regarded as contributing to strike-proneness, or as influencing the occurrence of
strike action, are discussed below.
Shifts in the business cycle: Unions will more readily engage in strike action during a
period of economic growth than during a recession. In times of economic prosperity there
is a higher demand for labour and employers cannot afford to lose production owing to
a strike. During a recession, when jobs are in high demand and the employer may have
produced more than he can sell, the position could be reversed. The employer is more
willing or ready to sustain strike action and may even welcome the temporary closure of
the plant or part of the plant.
This is the theoretical situation. In practice, employees might suffer during a recession
and might continue making demands while employers try not to concede. This might lead
to drawn-out actions.
Homogeneous work groups: Kerr and Siegel (1954) found that strikes are more likely to
occur where employees come from the same community and particularly if such communities
are themselves homogeneous and isolated from others. Thus, miners who work together and
live in the same community, separated from other communities, may more readily engage
in strike action than manufacturing workers who are drawn from different, geographically
spread communities.
Community support: Closely related to the previous factor is the influence of community
support. Such support sustains strikers in their action and increases the pressure on
employers for the settlement of disputes.

580 Labour Relations: A southern African perspective

Location: Organisations situated close to other concerns, particularly those of the same
kind, are more susceptible to labour action than would otherwise be the case. News travels
rapidly along the employee grapevine, and it is easier for unions to organise employees who
are in a geographically closed area.
The work process: Unpleasant, monotonous work lends itself more easily to strike action
than work of a lighter or more interesting nature. Hard work may draw more militant
workers. Also, where work is dirty or hard or has become so mechanised that it is boring,
employees may engage in strike action merely to gain temporary relief.
The labour relationship: Where employers are reluctant to recognise unions or to concede
to any union demands, and where relationships remain fragile, strike action is more likely
to occur. Furthermore, there tends to be a greater incidence of strike action if bargaining
takes place on a decentralised level, although centralised actions, when they do occur, are
on a larger scale.
The strength of the union movement: A strong union, which is organised effectively
and is assured of the support of its members, will more easily engage in strike action
than its weaker counterpart. On the other hand, unions in the process of growth may,
despite relatively weak positions, stage strategic strike actions to create awareness of their
existence, but these strikes are usually short-lived.
Inter-union rivalry: Multi-unionism, and the subsequent heightened inter-union rivalry, is
likely to lead to an escalation in strike activity as unions try to outdo one another.
Legislation: Where a government has imposed severe limitations on strike action, or has
provided an effective dispute settlement machinery, the incidence of strikes may decrease.
The converse is also true.
Size: Studies have proved that larger organisations tend to be more strike-prone than
their smaller counterparts. This is attributed mainly to the fact that large undertakings
have cumbersome organisational structures, leading to insufficient communication and to
depersonalisation of the employee, encouraging him to act as one of a collective. Also, a
union wishing to demonstrate its power to the public will target the larger organisations.
Profitability and costs: Companies which are highly profitable may suffer from more
labour action. Employees may feel that they are receiving too small a share of the wealth
generated.
Worker-related factors: In general, employees who are materially deprived and have little
to lose, or who see themselves as completely disadvantaged in society, will more readily
engage in strike action than their more privileged counterparts.
Public opinion and the press: Where the press and the public support actions undertaken
by unions, the propensity for strikes increases.
High-profile employers: Employers who have a prominent public image may be more
frequently subjected to labour unrest. Actions against these employers are highly publicised
and add to the union’s standing.

Chapter 13: Coercive Action 581

The Freedom to Strike
The question as to whether employees should be entitled to undertake strike action at all
times is a controversial one. Some theorists say that strike action should be completely
outlawed, as it is a disruption of normal employment relations. This faction argues that
conflict should be contained within the other labour relations processes, and that strike
action is an indication of a breakdown in these procedures. By contrast, there are those who
argue that strike action is an integral part of the labour relations process and a legitimate
means of expressing conflict or of exerting pressure. In the pluralist approach it is accepted
that the freedom to strike, as a last resort and as a final display of power, cannot be
denied to employees. Otherwise, they would be in an unequal power relationship with the
employer. Therefore, the freedom to strike, within certain parameters, is legitimised in most
Western systems.
The parameters mentioned may include the imposition of cooling-off periods or
conciliation processes before strike action can occur, or there may be regulations regarding,
for example, the holding of ballots or liability for damages caused. Where the State has
imposed certain limitations on strike action, there is differentiation between legal and illegal
strikes. Legal strikes are those which are instituted within the parameters of government
legislation, whereas employees engaged in illegal strike action do not follow the legislated
procedures.

The Question of Dismissal: The Right to Strike

Another subject for debate is whether employers should be entitled to dismiss striking
employees. The arbitrary dismissal of strikers effectively ends the negotiation process. If
it is accepted that strike action is part of the negotiation process and a legitimate means
of exerting pressure, then the dismissal of strikers defeats the purpose. This argument is
supported by the fact that strike action is defined as a temporary, and not a permanent,
withholding of labour. A further argument is that the ability of employers to dismiss striking
workers may result in a permanently unequal power balance in the relationship. Therefore,
the corollary of the right to strike is for employers, the right to a lockout and not the right
to dismiss strikers. Where a government has provided for legal strikes, it may also provide
that employees engaged in a legal strike may not be dismissed by an employer, or at least
not until prescribed procedures have been followed,

Other Employee Actions

Withdrawal of Cooperation
Employees withdraw their support of cooperative actions. This can include the refusal to
participate in profit-sharing schemes and quality circles. They may also raise numerous
grievances and refuse to cooperate when the employer tries to solve work-related problems.

582 Labour Relations: A southern African perspective

Work-to-Rule
This is a very difficult form of collective action to manage, as employees do not transgress
any rules, but insist on a very rigid interpretation of the duties specified in their contracts
of employment or in the collective agreement. Employees ask for very minute and detailed
instructions on how to complete work. This has the effect of slowing down work. It is not
the same as a go-slow in that employees are merely doing what they are supposed to do,
but it also impacts on production.

Product and Service Boycotts

A boycott is an attempt to stop consumers from buying a product marketed by a particular
undertaking or from using a service provided by the employer. It is a means of exerting
pressure on an employer and affecting the profitability of his undertaking without direct
action being taken by employees. A boycott requires extensive publicity, organisation and
persuasion of the consumers in the marketplace. It is best implemented where workers – or
other members of the public who would be sympathetic to the cause – constitute a significant
proportion of such consumers. Also, boycotts are more successful where a company markets
one or two well-known products rather than a diversity of lesser-known goods.

External Pressures
Employees who are at issue with their employers may attempt to extend their influence
by gaining the sympathy of other employees and employers, suppliers, consumers, the
public at large, community leaders and national or international organisations. These
persons or organisations are persuaded to interfere in the negotiations or to exert whatever
pressure they can bring to bear on the employer concerned. Where the external pressures
are numerous and varied, or where the person or organisation exerting the pressure is of
importance to the employer, this form of action may prove quite effective.

Lockouts by the Employer

Just as employees may decide to engage in strike action if their demands are not met by an
employer, so the employer may temporarily withhold employment from his employees if
they do not agree to his demands or to a settlement proposed by him.
The Labour Relations Act of 1995 defines a lockout as:
… the exclusion by the employer of employees from the employer’s workplace for
the purpose of compelling the employees to accept a demand in respect of any
matter of mutual interest between employer and employee, whether or not the
employer breaches those employees’ contracts of employment in the course or for
the purpose of the exclusion.

In a lockout the employer prevents employees from working and therefore earning their
wages. As in the case of a strike, there must be a demand made and it must relate to a matter

Chapter 13: Coercive Action 583

of mutual interest. The employer is also safeguarded from claims of breach of contract if he
legally locks out employees.
In practice, lockouts occur far less frequently than strikes, firstly because, in this context,
employers are more reactive than proactive, and secondly because an employer has far
more to lose, in total, by closing down his operations than an individual employee loses by
engaging in strike action.

Strikes and Lockouts in South Africa

In South Africa strike and lockout actions, with the exception of those in essential and
maintenance services, are not forbidden. Nonetheless, they will be legal only if the prescribed
dispute settlement machinery has been used. This does not mean that so-called spontaneous
strikes do not occur, but these have no legal status.

Protected versus Unprotected Actions

Prior to the Labour Relations Act of 1995 the terms ‘legal’ or ‘illegal’ strikes were used. Currently
the terms ‘protected’ and ‘unprotected’ strikes are more commonly applied. A protected strike
is one where employees cannot legally be dismissed if they have followed the rules and
continue to do so. Nevertheless. where a strike continues and has an increasingly adverse
effect on the organisation, the employer may have a case for dismissing on the grounds of
operational requirements. Also, the Labour Relations Amendment Act of 2018 proposes that,
if a continuing strike has an adverse effect on society and the economy, a special Advisory
Arbitration Panel may be set up for the purpose of facilitating settlement. (See below.)
The term ‘unprotected strike’ refers to strikes where the necessary statutory requirements
have not been met and where employees participating in such strike action could be
dismissed since they would be in breach of contract.
An employer who locks out employees after following the prescribed procedures is also
protected in the sense that he may not be sued for breach of contract or accused of an unfair
labour practice. He is also not obliged to pay employees during a lockout.

Protected Strikes and Legal Lockouts

Procedures Towards a Protected Strike/Lockout
The formal process towards strike action normally begins after negotiations in the workplace
have been exhausted and the parties among themselves could not reach an agreement. To
engage in a legal strike or lockout, the party concerned must:
■■ refer the issue in dispute for conciliation to the CCMA or to a bargaining council having
jurisdiction
■■ produce a certificate issued by the CCMA or the bargaining council indicating that conciliation
has failed or produce proof that 30 days have elapsed from the date of the initial referral

584 Labour Relations: A southern African perspective

■■ give the other party 48 hours written notice of the planned action (this notice must
indicate on which day and at what time a strike will commence)
■■ if the employer party is the public service (state department), give seven days written
notice of a proposed strike or lockout
■■ where the dispute involves an agreement concluded in a bargaining council, or involves
an employers’ organisation, give the necessary notice to these parties
■■ where the dispute involves the refusal to bargain, first go to advisory arbitration before
embarking on any action.

negotiation

internal or
bargaining
council
disputes
deadlock procedure

referral
48 hours’
bargaining notice
ccma (7 days
council
in public
30 days service)

legal/protected
conciliation
strike

unresolved

48 hours’ notice
(7 days in public service)

legal/protected
strike or
lockout

figure 13.1: procedure towards a legal strike or lockout

Waiver of Procedures
The procedures outlined above need not be followed where:
■■ a strike is in response to an illegal lockout by the employer
■■ a lockout follows an illegal strike by employees

Chapter 13: Coercive Action 585

■■ a collective agreement sets out the procedure to be followed
■■ a bargaining council has handled the strike in terms of its procedures.

Moreover, where the dispute concerns a unilateral change in conditions of employment,

the union may demand that the employer restores the conditions or does not implement
changes while due process is being followed. The employer will have 48 hours to comply.
If he fails to do so, the employees may immediately engage in legal strike action without
following the prescribed procedures.

refusal
to bargain

internal or
council
dispute disputes
declared procedure

referral

council ccma

unresolved unresolved

advisory
arbitration

48 hours’ notice
(7 days in public service)

protected/legal
strike or
lockout

figure 13.2: procedure for disputes centring in refusal to bargain

Dismissals
As stated previously, participation in a protected strike does not constitute breach of contract
and the employees cannot be dismissed. Nevertheless, striking employees may be dismissed
should they make themselves guilty of offences (such as intimidation, assault, damage to

586 Labour Relations: A southern African perspective

property, etc) that justify dismissal in terms of the employer’s disciplinary code. In these
cases, normal disciplinary procedures should be followed by the employer.
(If employees participate in strike action where the statutory procedures have not been
followed, they are not protected against dismissal, but the employer will still have to follow
fair procedures, including an ultimatum to employees to return to work (see case review at
the end of this chapter). The employer may also approach the Labour Court for an interdict
against illegal strikers.)

Replacement Labour and Payment of Strikers

There is no prohibition on the use of replacement (‘scab’) labour during a strike, except where
a workplace has been designated as a maintenance service. Nevertheless, striking employees
will try to discourage ‘scabs’ by organising pickets at the entrance to the premises.
The employer does not need to remunerate any employees participating in a strike
irrespective of whether the strike was protected or unprotected. The principle of no work –
no pay applies. However, during any strike action an employer must, if so requested by an
employee, continue any payment in kind such as accommodation, or other basic amenities.
Once the strike is over, arrangements may be made for the employer to recover the value
of payment in kind.

Unprotected Strike and Lockout Actions

General Prohibitions
Strikes and lockouts are prohibited where:
■■ the parties are bound by a collective agreement prohibiting strike or lockout action in
certain kinds of dispute
■■ an agreement obliges the parties to take the issue to arbitration
■■ the issue in dispute must, in terms of the Act, be taken to arbitration or to the Labour Court
■■ the parties are engaged in an essential or maintenance service
■■ the parties are bound by an arbitration award, a determination by a statutory council, or
a determination in terms of the Basic Conditions of Employment Act (unless a period of
12 months has expired since the determination came into effect).

The ban on strikes where a matter is subject to arbitration means that in most disputes of
right, the parties may not legally engage in labour action. The exceptions to this are disputes
centring on the granting of organisational rights and those related to retrenchments in
organisations employing more than 50 people. (The regulations regarding the latter situation
have been discussed in Chapter 7.) Unions are entitled to strike or to go to arbitration over
organisational rights. Section 65(2)(b) of the Act provides that, if a union gives notice of a
strike over organisational rights, it may not, for a period of 12 months, take the dispute to
arbitration.

Chapter 13: Coercive Action 587

Essential Services
An essential service is defined as:
■■ any service the interruption of which may endanger the lives, personal health or safety
of the entire population or a part of the population.

It is obvious that any medical or emergency service, such as firefighting, would be classified
as an essential service. Persons involved with the supply of water to the general public may
be regarded as involved in an essential service, while the interruption of rubbish collection
over a long period may eventually render this, too, an essential service. Parliamentary
services and the South African Police Service are also classified as essential services.
Disputes in these sectors, whether they constitute disputes of right or of interest, cannot
be settled by the use of economic power. The only alternative, therefore, is to use mediation
and arbitration or legal adjudication. (See Chapter 12.)
The law provides that the Minister, in consultation with NEDLAC, must establish an
Essential Services Committee. It is the task of this committee to hear representations from
concerned parties, and to decide which services should be designated ‘essential services’.

Minimum Services
Sometimes it is not necessary for the entire organisation to be classified as an essential
service, but there may be special parts of its operations which need to continue functioning.
The committee may endorse any collective agreement providing for the maintenance of
minimum services, which are then classified as essential services as regards that employer
and his employees.

Maintenance Services
Section 75 of the Act also makes provision for the designation of certain services as
Maintenance Services. These are services which cannot be interrupted since this would
result in ‘material physical destruction to a working area, plant or machinery. Like minimum
services these are also classified as essential services.
The continued incidence of illegal strike action by persons employed in essential services
has proved problematic. For this reason, the Labour Relations Amendment Act of 2013
contained detailed proposals aimed at further empowering the Essential Services Committee
and encouraging the use of alternative dispute settlement procedures.

Recourse against Illegal Actions

Urgent Interdicts
The Act grants the Labour Court sole jurisdiction as regards illegal strikes and lockouts, and
allows it to grant urgent interdicts prohibiting such actions.

588 Labour Relations: A southern African perspective

Where a party engages or intends to engage in a strike or lockout which is illegal in terms
of the Act, the other party may apply to the Labour Court for an urgent interdict (see Figure
13.3). The applicant must give the respondent 48 hours’ notice of his intention to apply for
such interdict, but the Court may condone shorter notice if:
■■ the applicant has informed the other party in writing of his intention to lodge an
application
■■ the respondent has had a reasonable opportunity to be heard
■■ there are sound reasons for allowing a shorter notice period.

(Notice periods are not applicable in the case of an essential or maintenance service.)
In granting the interdict, the Labour Court may make an order prohibiting participation in,
or the promotion of, an illegal strike or lockout. It may order compensation for any losses
suffered, but only after it has considered the following:
efforts made to conform to the provisions of the Act
the extent of such efforts
whether the strike or lockout was pre-planned
whether it was a reaction to an unfair practice by the other party
the duration of the action
the financial position of each party
the promotion of orderly collective bargaining.

Dismissal of Unprotected (Illegal) Strikers

As mentioned above, employees engaged in a protected strike may not be dismissed merely
for participating in such a strike, whereas employees embarking on an unprotected strike
can be dismissed. The LRA states that participation in an unprotected strike is viewed as
misconduct. Although it cannot always be equated with other instances of misconduct; a
fair procedure must be followed before the employee can be dismissed.
If the employer is of the opinion that the employees’ action justifies dismissal, he should
issue an ultimatum in clear and unambiguous terms. This ultimatum should:
■■ inform the employees that they are participating in an unprotected strike
■■ state very clearly what the employees are required to do – namely, to return to work
within a reasonable time
■■ provide the employees with a ‘cooling off’ period where they can calmly consider their
actions and possible consequences
■■ state what sanction will be imposed if the employees fail to comply with the ultimatum
■■ give employees sufficient time to respond to the ultimatum.

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There is no general agreement among judges and experts about the procedure to be followed
if the employees do not return to work. Some maintain that the ultimatum is sufficient
warning and the employer can then proceed with the dismissal while others would have
the employer engaging in further consultation, if not with employees, then at least with
the union, and even hearing representations by employees. (See case review: Dismissal of
Unprotected Strikers.)
Disputes about dismissal related to strike action are conciliated by the CCMA but, should
conciliation fail to settle the disputes, they will be adjudicated by the Labour Court.

strike or lockout which is

alleged to be illegal

48 hours’ notice
(5 days, where 10 days’ written notice
of strike or lockout has been given)

application to labour court

for urgent interdict

court order

figure 13.3: strikes and lockouts not in conformity with the act

Advisory Arbitration
Until now the Act has provided mainly for conciliation as a method of possibly resolving
disputes of interest. Should conciliation fail, the parties are then free to resort to a legal
strike or lockout once they have followed the procedure outlined above. However, the new
Sections 150(A) (B) (C) and (D) in the Labour Relations Amendment Act of 2018 allows the
Director of the CCMA to appoint a panel to engage in advisory arbitration of a dispute if:
■■ the Minister orders him to do so
■■ one of the parties has requested that a panel be appointed
■■ the Labour Court has issued an order to that effect
■■ the parties have agreed to resort to advisory arbitration.

The decision to order a panel can only be made when the Labour Court declares a dispute to
be unresolved or with the commencement of a strike, whichever occurs first.

590 Labour Relations: A southern African perspective

The Director may order a panel to be appointed only if he has reasonable grounds to believe that:
■■ the strike or lockout is no longer functional to the collective bargaining process
■■ there is an imminent danger of constitutional rights being violated
■■ there is a threat of violence or damage to property
■■ the strike causes or can cause ‘an acute national or local crisis which affects the normal
functioning of a community or society’.

The Labour Court will order that a panel be appointed if it believes that there are reasonable grounds
for doing so and that a national crisis may arise, or that constitutional rights may be violated.
The panel must consist of a Senior Commissioner as Chairperson and four Assessors,
of whom two should be nominated by the employer party and two by the employee party.
If the parties fail to do so, they will be a presented by NEDLAC with a list of assessors
from which each party chooses two persons. Should either or both of the parties fail to
participate, the Director must appoint assessors on their behalf.
The Chairperson, together with the Assessors, will conduct the arbitration. In doing so, he
will have the same powers as a Commissioner in terms of the Act and may request disclosure
of all the necessary information. The panel has 7 days to complete its task but may request
an extension from the Director. Following this the panel makes an award, setting out its
findings and recommendations, which is then served on the parties. Thereafter the employer
and employee parties have 7 days to indicate their agreement or otherwise but may request an
extension or that they reconvene. If a party does not respond, it will be assumed that they agree.
The Minister must publish the findings of the panel, whether the parties have agreed or
not. Where there is agreement, the aspects agreed upon may be extended to non-parties
within their jurisdiction. (For example, where the parties represent a bargaining council.)
The original provision for Advisory Arbitration is contained in Section 150 of the Act
(see previous Chapter). In terms of that section, parties who do not accept the arbitration are
still free to engage in a strike or a lockout. According to the Explanatory Memorandum, this
would also apply where an advisory panel has been appointed.
The amendments have been widely criticised as interfering in the hitherto accepted
process. However, there is no indication that there will be unnecessary interference and
this kind of intervention should occur only when the circumstances as outlined call for a
possible alternative solution.

Sympathy Strikes
The Labour Relations Act of 1995 grants employees the right to engage in sympathy strikes.

Definition
A sympathy strike may be defined as:
■■ an action initiated by employees of one employer (secondary employer) in support of
striking employees at another employer (primary employer).

Chapter 13: Coercive Action 591

This is also known as a solidarity strike or secondary strike. The issue in dispute at the workplace
of the primary employer may have little or nothing to do with the secondary employer.

Legal Requirements
In terms of the Act a secondary strike will be protected if:
■■ the strike that is being supported, namely the primary strike, is a protected strike and all
procedural requirements have been followed
■■ the secondary strikers have given their employer, or a representative employers’
organisation, at least seven days’ notice before going on strike
■■ the nature and extent of the secondary strike is reasonable in relation to the possible
direct or indirect effect it might have on the business of the primary employer
■■ there is some kind of correlation between the businesses of the primary and the secondary
employers (for example, Spar employees going on strike in support of employees striking
at Checkers).
■■ The law therefore accepts that a secondary action, in order to be legitimate, must be
instituted for the purpose of exerting pressure on the first employer to change his position
and that it should not be undertaken merely to express solidarity with other strikers.

Recourse by the Secondary Employer

An employer faced with a secondary strike that, in his opinion, does not comply sufficiently
with the above requirements may lodge an application in the Labour Court to prohibit the
strike action by means of a court interdict (see Figure 13.3). The Court or any party to the
action may then request the CCMA to investigate the extent to which the sympathy action
will have any effect on the first employer.

Picketing
Picketing normally goes hand in hand with a strike. It can be viewed as the action by
employees or their supporters to publicise the existence of a labour dispute by patrolling or
standing outside or near to the location where the dispute has arisen. More often than not
it is marked by the waving of placards indicating the nature of the dispute.
Picketing is allowed in terms of Section 17 of the Constitution which gives all citizens the
right to – peacefully and unarmed – demonstrate, picket and present petitions.

Purpose
Picketing is undertaken in order to:
■■ persuade other employees, who are not participating in the strike, to stop production and
to join or support the strike
■■ deter customers from entering the employer’s premises

592 Labour Relations: A southern African perspective

■■ hamper the delivery of supplies necessary for production
■■ prevent, disrupt or limit the delivery of goods to customers
■■ communicate grievances to the wider public.

The Legal Position

The LRA accepts that picketing is a legitimate action in support of a strike. In terms of
Section 69(1) of the Act a picket will be protected if:
■■ the picket has been authorised by a registered trade union
■■ picketers engage in a peaceful demonstration
■■ it is held in support of a protected strike or in opposition to a lockout.

Picket lines may be formed in any public place outside the premises of the employer or,
with the permission of the employer, on the actual premises. Permission for picketing on the
premises may not be unreasonably withheld.
A new Section 69(6)(a) in the Labour Relations Amended Act of 2013 allows picketers
engaged in a sympathy strike to assemble outside the premises of their employer on condition
that their employer had the opportunity to make representation to the Commission before
the picketing rules were established.
Where the union involved in the dispute has been refused access to the employer’s
premises, a new Section 69(6)(c) allows the Commission to grant access if it is believed that
the employer unreasonably withheld permission.

Picketing Agreements/Rules
It is advisable for employers and worker representatives to establish rules regarding picketing.
In the event of a strike or a contemplated strike, either party may request the CCMA to
facilitate an agreement setting out the rules applicable to picketing in that undertaking. If
the parties cannot agree, the CCMA will itself establish picketing rules for the organisation.
Concerns about continuing violence on picket lines has led the lawmakers to insert a new
clause into Section 69 of the Labour Relations Amendment Act of 2018. This would oblige
a Commissioner conciliating a dispute of interest to make sure that there are picketing rules
in place. Where there are no rules and it is evident that a strike will occur, he will be obliged
to establish the rules.
■■ A Code of Good Practice on Picketing has been issued by the Department of Labour.
(For an example of a picketing policy, see the Annexures online.) When an agreement
regarding picketing has been concluded and such agreement is breached, or where the
union is unable to exercise its right to picket, the dispute may be referred to the CCMA
for conciliation and, if no agreement is achieved, to the Labour Court (see Figure 13.4
on the following page). Where the dispute involves the rights afforded to the parties by
the Act, it may be referred direct to the Labour Court.

Chapter 13: Coercive Action 593

 request to commission
re picketing rules

no agreement

agreement

determination

alleged breach of
agreement, or allegation
that one party is unable to
exercise its right to picket

commission

conciliation 30 days

dispute unresolved

labour court

court order

figure 13.4: picketing disputes

Sociopolitical Protest Actions

Much argument has revolved around the question as to whether a protest action, and,
therefore, the absence from work of employees engaged in such action, should constitute
employment-related action. The LRA does provide for legal (and, therefore, protected)
protests or stayaways, the purpose of which is to promote the socio-economic interests of
workers in general. No definition of ‘socio-economic interests’ is provided, but the term
can be taken to include such matters as the imposition of certain taxes, cuts in government
spending or employment creation, the provision of housing, and privatisation.

594 Labour Relations: A southern African perspective

Employees engaged in protest actions will be accorded the same protection as legal strikers,
provided that:
■■ the action has been instituted by a registered trade union or federation
■■ the union or federation has sent a notice by registered mail to NEDLAC stating the
reason for and nature of the proposed action
■■ the union or federation has, at least 14 days before the commencement of such action,
given notice to NEDLAC of its intention to continue with the action.

Where the procedures outlined have not been followed, the Labour Court will have sole
jurisdiction to grant an order prohibiting a person or persons from taking part in such
protest or from taking any action in furtherance of the protest.
The Court may also issue a declaratory order taking the following into account:
■■ the nature and duration of the protest
■■ the steps taken by the union or federation to minimise the unfavourable effects of such
action
■■ the behaviour of those participating in the protest action.

Any employee who acts in contempt of an order of the Labour Court in respect of a protest
action loses the protection granted by the law.

Case Review: Dismissal of Strikers Bound by

Bargaining Council Constitution
S.A. Clothing and Textile Workers Union & Others v
Yarntex (Pty) Ltd t/a Bertrand Group
(2013) 34 ILJ 2199 (LAC)
Background
The organisation concerned falls under a sub-sector of the Textile Bargaining Council
which, in its constitution, provided that conditions of employment, including wage
rates, could be negotiated only at sub-sector or section level (and therefore not at
individual companies). At the beginning of 2008 SACTWU negotiated new wage rates
for the sub-sector under which Bertrand was classified.
The dispute in question arose over the fact that the Bertrand Group, because it
operated in a disadvantaged area, had previously been granted a concession to pay
80 per cent of negotiated rates. The exemption was due to end in 2009. The union
and Bertrand employees were not satisfied with the fact that Bertrand would still
be paying less than the negotiated rates and in July 2008 workers engaged in a
wildcat strike. After receiving a final written warning, they returned to work, but in

Chapter 13: Coercive Action 595

the same month the union declared a dispute with the company, demanding that
they pay the full negotiated rate. However, in August it withdrew the dispute and
instead declared a dispute in the bargaining council. When this initiative failed, the
union gave notice to commence a strike on 17 September. Later, while in consultation
with the company’s lawyers, the union agreed to continue negotiations, but on the
17th the workers went out on strike. The company warned both the union and the
employees that the strike was unprotected and issued an ultimatum to return to
work. In the meantime, strikers had stormed the premises and threatened violence
against non-strikers. The company posted notices around the premises warning that
disciplinary action would be taken. A notice to this effect was also sent to the union.
On 18 September, the union met with management representatives and agreed that
the action would be suspended, and negotiations would continue. However, when,
on 22 September, a union official met with the workers, they refused to return to
work. At this stage SACTWU withdrew from the situation. The company issued a final
ultimatum to employees and at the same time invited them to elect representatives
who could make submissions on their behalf. No representations were made and all
the strikers were dismissed, whereupon they declared an unfair dismissal dispute.
In court the union representative argued that the bargaining council constitution
did not expressly forbid strike action.

Pronouncements
The Court pointed out that the Bargaining Council constitution was an all-embracing
document intended to regulate collective bargaining and labour action in the industry
and that it was itself a product of bargaining. The starting point was the promotion
of organised centralised bargaining intended to avoid coercive action and, as this was
the intent, the constitution did not have to state specifically that strikes could not
occur at other levels. The Labour Appeal Court therefore upheld the decision of the
Labour Court that the dismissals had been fair under the circumstances.

Comments
The finding that the dismissals were fair indicates that the Court agreed with the
employer that the strikes were illegal as they contravened a provision implicit in the
council’s constitution forbidding labour action at that level. The employer did not
react to the threats but followed the necessary procedures. The strikers were given
ample opportunity to rectify the situation, which they refused to do.

596 Labour Relations: A southern African perspective

 Case Review: Dismissal of Unprotected Strikers –
the Right to a Hearing
Modise & Others v Steve’s Spar Blackheath
(Labour Appeal Court: 9 November 1999 & 15 March 2000)
Background
This case was brought by four employees of Steve’s Spar who, with others, had been
dismissed for engaging in an illegal or unprotected strike. The four claimed that they
were not members of the union, that they had been unwilling participants in the
strike but had not reported for work for fear of reprisals. They further claimed that
they had been in contact with the employer to inform him that they were willing but
scared to work. This the employer denied.
The Labour Court did not accept their explanation and their claim was denied. The
employees subsequently appealed against this judgment on the grounds that they
had been dismissed without being given the opportunity to plead their case.

Pronouncements
Dissenting judgments were given by Justice Zondo and Justice Conradie, respectively.
Justice Mogoeng concurred with Justice Zondo, whose award thus stood.

Zondo AJP
Justice Zondo commenced by noting that the audi alteram partem rule was ‘part
of the rules of natural justice which are deeply entrenched in our law’. This was
particularly so in labour law under which the employer became ‘… obliged to hear
the employee’s side before he could dismiss him.’ According to Justice Zondo this
applies to all dismissals, whatever the reason for such action. The only possible
exceptions could arise from ‘crisis zone situations’, waivers or possible waivers (when
the employees denied themselves the right to a hearing). In A Guide to SA Labour Law,
Rycroft and Jordaan (1992) had approved of this opinion and, referring specifically to
strike dismissals, had stated that, although an illegal strike was sufficient reason for
dismissal, the employer had to
… give the employees an opportunity to address it either through their union
… or through an elected committee so that they could debate their decision
to strike, and, secondly, it is required to issue an ultimatum in order to give the
employees sufficient time to return to work.

Justice Zondo also referred to Article 7 of the ILO Convention on Termination of

Employment, which, in his opinion, made it clear that a hearing was imperative in all
cases of misconduct. Illegal strikes were not exempted from this rule.

Chapter 13: Coercive Action 597

Justice Zondo concluded that
… it can be said with a sufficient degree of certainty that, in the context of
dismissal, an employer is obliged to observe the audi rule where the decision
may adversely affect the employee’s rights. Were these rights not to be given
to strikers, they would be receiving different treatment to an employee who,
for example, stole from the employer.

It was conceded that there were a large number of cases in which the courts had
not found the dismissal of strikers to be unfair despite the fact that no hearing had
been held. However, in these cases, the courts had ‘acknowledged the general rule’
that a hearing should take place, but had found justification for the failure to hold a
hearing. In some of the cases cited it had been found that
… the strikers had waived or abandoned their right to a hearing or that a
hearing would have been pointless or would have served no purpose or that
in the particular circumstances the employer could not reasonably have been
expected to give the strikers a hearing.

It was Justice Zondo’s considered opinion that the failure to hold a hearing should
only be condoned under very exceptional conditions. In this regard he referred to
Hoexter JA in the Zenzile case where it was pronounced that ‘… even if the offence
cannot be disputed, there is always something which can be said about sentence
and if there is something that can be said about it, there is something that should
be heard.’
Another argument raised was that an ultimatum replaced the necessity for a
hearing. To this Justice Zondo replied that a hearing and an ultimatum are ‘two
different things’ which serve different purposes. The one could not be substituted
for the other. It would, according to Justice Zondo, probably be preferable to allow a
hearing before an ultimatum was issued. This could, for example, be done by sending
a letter to the union inviting them to make representations as to why employees
should not be dismissed: The employer could deal with the strikers as a group by ‘…
calling for collective representations why the strikers should not be dismissed.’

Conradie JA
Justice Conradie commenced by noting that the fact that a strike was illegal did not
necessarily mean that the strikers should be dismissed. The decision as to dismissal
depended on whether the strike was ‘functional to collective bargaining’ or not. In
this case the strike was ‘totally dysfunctional’. In fact, the employees and their union
had been interdicted from continuing with the strike but had continued regardless
and had made no effort to discuss the matter with the employer. He therefore could ‘…
see no reason why the appellants should not be penalised for their non-compliance.’

598 Labour Relations: A southern African perspective

Justice Conradie accepted the employer’s version that an ultimatum had been issued
to the assembled strikers together with the court order, that the ultimatum had been
extended to the following morning and that they had been dismissed only when they
did not comply with the extended ultimatum.
Turning to the question as to whether the strikers should have been afforded a
hearing, Justice Conradie had the following to say:
The only general principle that I can discern in both administrative and labour
law is that a hearing should be afforded if it is in the circumstances fair to give
one. Usually the circumstances are such that it is fair to give a hearing. It is
only in this sense that there may be said to be an obligation on an employer: if
he encounters circumstances where it is fair to do so, he must give a hearing.

In support of the contention that a hearing was not necessary, Justice Conradie
referred, amongst others, to the Haggie Rand case where the presiding judge had
expressed the opinion that there was no merit in the argument for a pre-dismissal
hearing in the event of an illegal strike and that:
If one postulates a hearing in the present circumstances one necessarily
emasculates the ultimatum, for it would have to read that workers are to
return to work or be dismissed but subject to a disciplinary hearing … There
is also something quite artificial and unacceptable in requiring an employer
who is directly affected by the flagrant, unmistakable behaviour of an
employee to conduct an enquiry himself into such misbehaviour after such
employer has himself deemed it necessary to issue a dismissal ultimatum as
a result thereof.

This opinion was supported in other cases cited by Justice Conradie. The judge then
went on to explore the purpose of the ultimatum. An illegal strike was, he stated,
misconduct of a special kind which could be ‘purged’ by compliance to an ultimatum.
Once the employee returned to work, he was no longer guilty of misconduct relating
to participation in the strike. Unlike a disciplinary enquiry an ultimatum was ‘… not
directed at establishing the existence of an offence and then imposing a sanction’,
but rather ‘… a device for getting strikers back to work.’ This presupposed the
unlawfulness of the workers’ action. It was both a means of avoiding a dismissal and
a prerequisite for effecting one. Thus ‘… the question of dismissing a striker can only
logically arise after non-compliance with an ultimatum.’
At this point, Justice Conradie noted that the Code of Good Practice did, in any
event, provide for a pre-ultimatum discussion in that it required the employer at the
earliest possible opportunity, to contact the union to discuss the intended ultimatum.
In Justice Conradie’s opinion, the employer’s obligation went no further. He could not
see why this discussion should be ‘… supplemented by another and discreet hearing

Chapter 13: Coercive Action 599

of some kind and another.’ Justice Zondo’s suggestion of a pre-ultimatum hearing,
which could be individual, seemed to him to be useless. Would the employees then
attempt to convince the employer that they should not be dismissed, yet proceed
to ignore the ultimatum and continue with the strike? Equally, a post-ultimatum
hearing would be futile:
They would be able to urge the employer either to withdraw the ultimatum
on account of the strike being lawful, if that was their intention, or, it is said,
to urge that they should, by virtue of their excellent employment records or
family commitments or advanced age or their ignorance of the lawfulness of
the strike, or their unwillingness to participate in it, be permitted to continue
striking unlawfully.

Justice Conradie conceded that in normal cases of misconduct, there was usually no
excuse for not holding individual disciplinary enquiries. However, in a collective action
such as a strike, the employee or the union was not entitled to present individual
motivations. If this were to be allowed, the employer could selectively dismiss. It would
also undermine union solidarity and be unfair to the union. Even the argument that
certain strikers were unwilling participants did, in Justice Conradie’s opinion, not hold:
There would, in every strike, legal or illegal, almost certainly be reluctant
participants, for example, those who voted against the strike but participate
because they bow to the will of the majority. It would in my judgment be
grossly unfair to require an employer to hold an enquiry into each striker’s
enthusiasm for the cause before being able to issue an ultimatum against
those, and only those, found to be in favour of the strike … The absurd result of
this would be that the ‘willing’ strikers would be dismissed, but that those who
make allegations of intimidation which the employer is unable to disprove,
may remain on strike unhindered.

In conclusion, it was noted that the union was involved from the beginning, that
an application had been brought to interdict the strike and that this was an open
invitation to the union to defend its position; but it did not; that: ‘In a strike situation
discussion (or attempted discussion) with a union acquits an employer of his duty to
listen to the other side’.

Reply of Zondo AJP

Justice Zondo replied to the argument regarding fairness that ‘the audi approach’
introduced certainty into labour law and that the ‘no audi approach’ would perpetuate
uncertainty. With the ‘audi approach’ every employer would know in advance what
he should do even though this rule was not absolute, and the existence of exceptions
was acknowledged. It provided for a principled approach as opposed to deciding each
case on its own.

600 Labour Relations: A southern African perspective

Justice Zondo consequently concluded as follows:
In the light of the above, I have no hesitation in concluding that in our law an
employer is obliged to observe the audi rule when he contemplates dismissing
strikers. As is the case with all general rules, there are exceptions to this general
rule … The form which the observance of the audi rule must take will depend
on the circumstances of each case including whether there are contractual or
statutory provisions which apply in a particular case. In some cases, a formal
hearing may be called for. In others an informal hearing will do. In some cases,
it will suffice for the employer to send a letter or memorandum to the strikers
or their union or their representatives inviting them to make representations
by a given time why they should not be dismissed for participating in an illegal
strike … In some cases, a collective hearing may be called for whereas in others
… probably a few … individual hearings may be needed for certain individuals.

The employer was ordered to reinstate the four employees with retrospective effect.

Discussion
Certain issues arise from these judgments, the first being whether participation in an
illegal strike can be equated with other forms of serious misconduct or whether, as
Justice Conradie has stated, it is misconduct of a special kind. The facts would seem
to favour the latter interpretation, as the Act specifically declares the participation
in a strike without following due process or without an enforceable demand as
unlawful. This it does not do in other cases of misconduct. Furthermore, the Act
makes special provisions for strike dismissals, different from those related to other
forms of misconduct.
If it is accepted that strike dismissals are different from other dismissals; then the
question arises as to how they differ. The primary difference is that guilt exists from
the outset and does not have to be proved. The employees have not tendered their
services. This renders them in breach of contract. The only possible excuses would
be a belief that the strike is legal or that they were intimidated into participation.
The illegality of the strike therefore has to be conveyed to the strikers from the
outset. Secondly, employees need to know that, if they are being intimidated, they
can, before or at the beginning of the strike, bring this to the employer’s attention,
not when the possibility of dismissal is imminent. In this case there were employees
who did just that and who kept in constant contact with the employer. They were
not dismissed. Allowing employees to bring representations regarding intimidation
when they are threatened with dismissal is to invite everyone to use that excuse. A
further difference was pointed out by Justice Conradie when he noted that in strike
dismissals the misconduct could be rectified. All employees had to do would be to
return to work. Other misconducts cannot be rectified in this manner.

Chapter 13: Coercive Action 601

 The second issue arises from the fact that these dismissals are different. If they
are, does it then signify a different procedure? The Act has already answered this
question, but, as evidenced by this case, the general principle of the hearing remains.
The Act does state that a discussion should be held with the union. Both judgments
accepted that this would be sufficient to satisfy the ‘audi’ rule, but differed as to the
content of the discussion. Moreover, Justice Zondo intimated that there might be
cases for individual hearings. In these circumstances it may be advisable to address
both the union and employees beforehand and to indicate that representations citing
exceptional circumstances can be made but that these exceptional circumstances
would not include normal arguments in mitigation.
Finally, there is the matter of reality. A strike situation is a crisis situation. Not all
employees may agree with the strike. Some might go along with it for the sake of
solidarity while others are intimidated into joining. Employers need to deal with this
reality and cannot in these circumstances be judged by absolutes. All that could be
expected of them is to do the best they can and to be as fair as possible. They cannot
be expected to consider all possibilities and all possible exceptions. As far as they are
concerned, their employees as a collective are out on strike, and they deal, through
the union, with this collective. Where they sense that the union is not acting in good
faith, they should address the employees themselves, but they cannot, when it comes
to the ultimatum, which is the final step in the conflict, be expected to engage in a
lengthy process of consultation and the hearing of representations. This would lead
to a litany of mostly fabricated excuses and would, as has been correctly stated,
emasculate the entire process.

Handling Strike Action

Both employers and unions need to plan for and handle strike action as effectively as
possible.

The Union
The primary tasks of the union are to:
■■ maintain the morale of the workforce
■■ ensure that strikers are effectively looked after so that material considerations do not
oblige a return to work
■■ undertake talks towards the settlement of a strike or towards the recommencement of
negotiations with management.

The union will attempt to elicit as much sympathy action as possible and to exert pressure
through other agencies. Publicity is important. This it will gain through pamphlets and the
press and also by picketing, where this action is legally permissible. The union will also

602 Labour Relations: A southern African perspective

attempt, as far as is legally possible, to prevent the replacement of striking workers with
‘scab’ labour, but it will have to be careful as attempts to prevent ‘scabbing’ may develop
into actual intimidation.

Management: The Need for a Contingency Plan

Management, on its part, will attempt to minimise the effects of a strike and bring about a
return to work by negotiation with representatives of the striking workers. Any management
team, irrespective of its relationship with its employees or representative unions, should be
prepared for the event that employees, or a group of employees, stage a work stoppage or
strike, particularly where such actions are spontaneous or illegal. They prepare for this by
drawing up a contingency plan.

Purpose of the Contingency Plan

The purpose of a contingency plan is to:
■■ avoid impulsive reaction on the part of management and panic among managers or
among those employees who are not on strike
■■ establish a uniform policy and plan of action
■■ formulate guidelines for the handling of striking employees
■■ ensure the necessary protection of persons and property
■■ arrange for the continuation of production, or for shutdown or partial shutdown
■■ ensure that a negotiation forum is established
■■ make the necessary practical or administrative arrangements for the return (or non-
return) of striking employees.

Ensuring Preparedness
Certain concrete steps can be taken to ensure that all key managerial personnel have
the information they will need immediately a strike or work stoppage occurs, and that
coordinated action will be initiated. One person, in the form of the general manager or
another senior manager, should be responsible for coordinating all actions. Everyone else
will report to him and he will act as spokesman for management. This person will also be
charged with the task of dealing with the press. Management should deal honestly with the
press, since sensationalism and unguarded statements may lead to an escalation in tension.
All other persons should be prohibited from making any public statements.
The manager in charge will be assisted by a negotiating committee, appointed beforehand,
which will be charged with the function of planning strategy and negotiating with employee
representatives. The method of selection of employee representatives should be decided on
during the preparatory stage. Management may decide that it will negotiate with shop
stewards, union officials, workers’ committee members or a number of persons elected
by the striking employees. To attempt negotiation with an entire contingent of strikers is

Chapter 13: Coercive Action 603

usually not feasible. For this reason management should also decide whether or not it will
allow strikers to remain on the property and, if so, where they will be allowed to gather and
how representatives will be elected.
Practical contingencies need to be foreseen. A list of persons or institutions such as
suppliers, customers and subsidiary agencies who will need to be contacted, and the
telephone numbers of each, should be drawn up.
Arrangements need to be made for the protection of other employees – for example, by
moving them from premises close to the strikers. The necessary security has to be arranged
and provision will have to be made for the protection of buildings and property, as well as
for the shutting off of machinery. In each instance, persons to be held responsible ought to
be appointed.
If preparation is made for production or delivery to continue, a list of available
manpower should be drawn up. The list will describe the skills of each person in the
organisation, including managerial- and supervisory-level staff, so that planning and
training for redeployment can occur before the event. The manager who will coordinate
redeployment should be specified. The possibility of obtaining additional manpower may
also be considered, although this may incense the strikers. Furthermore, the operation of
each section needs to be studied with the purpose of providing for different or extended
shifts or cycles in the event of any irregularity.
Finally, there are administrative details which require attention. These include the issue
of notices and ultimatums to striking employees, as well as provision for rapid payout of
wages and for new employment or re-employment, should the strike be illegal and dismissals
eventually prove unavoidable. The manager responsible must already have devised a plan or
made the necessary arrangements.

The Action Plan

The action plan will be drafted beforehand and will include provisions for the following:
(A detailed strike contingency plan is included in the Annexures available online.)
■■ immediate reporting of a work stoppage or strike action
■■ assessment of the extent of the action and the possible cause
■■ the handling of striking employees
■■ evacuation of strikers, or their movement to a particular venue
■■ the shutdown of machinery and equipment and the institution of security measures
■■ the movement or evacuation of non-striking employees
■■ the manning of key positions
■■ information to outside agencies
■■ the convening of the negotiating committee
■■ communication among managers and between management and non-striking employees

604 Labour Relations: A southern African perspective

■■ the keeping of a strike diary
■■ communication with the strikers and the appointment of representatives
■■ the establishment of a negotiation forum
■■ notice to striking employees that they will not be paid for the time that they do not work
■■ attempts to persuade employees to return to work while negotiations continue
■■ prevention of violence and intimidation
■■ monitoring of picketing
■■ redeployment, continued production and delivery
■■ dealings with the media
■■ issuing of statements to striking employees
■■ notification of settlement
■■ return to work of employees
■■ in the case of an illegal strike, ultimatum and notification of dismissals and procedures
for payment, employment or re-employment.

Aftercare
The conflict which gave rise to a strike is not necessarily settled when employees return to
work. Also, the previous existence of conflict, even where resolution is achieved, leads to a
heightened conflict potential. Consequently, the necessary aftercare (which does not mean
management should pander to employees) should be instituted. This means that:
■■ all agreements and promises made must be acted upon as soon as possible
■■ no further recriminations should be made
■■ measures to improve communication channels and procedures should be put in place
■■ the necessary precautions to prevent a recurrence should be taken
■■ after a cooling-down period, a follow-up, in the form of a meeting with employee
representatives, should be arranged.

Ensuring Effectiveness
Unfortunately, the effectiveness of a contingency plan can be assessed only once an action
has occurred. It is never possible to foresee all contingencies, and some ad hoc action
may become necessary. Nevertheless, managerial representatives should be trained in the
execution of the plan, possibly by the use of simulation exercises. The plan does ensure that:
■■ there is a degree of preparedness
■■ there is certainty as to the action which should be taken
■■ cohesion is maintained among members of management.

Unions might equally draw up their own strike action or lockout contingency plan, which will deal
with matters such as meetings, strategies, pickets and dissemination of information to strikers.

Chapter 13: Coercive Action 605

The Role of the Police
The police have no role to play in strikes. It is not their task to act on behalf of management
and to disperse strikers or to force employees to return to work. The police may act only as
protectors of the public interest. Thus, they may act if strikers cause a public disturbance
or pose a physical threat to any person or persons, but their duty towards employers and
striking employees is, in this respect, the same as towards the general public. In particular,
they should not be seen to favour any of the parties.

Conclusion
To the public at large and to some students of the subject, strike and lockout actions
constitute the most important and most sensational aspect of labour relations. While these
actions are important, they need to be handled with care. They are only part of a web of
interrelated processes and should preferably constitute the last resort following a period of
protracted negotiation.

Suggested Questions/Tasks
•• Using the information previously gathered on the protracted strike of 2014 in the
platinum industry, answer the following questions:
oo Was this a protected strike? Support your opinion and explain the procedure.
oo What was the reason for the strike? Could there possibly be more than one
reason? Explain.
oo Which of the factors contributing to strike action were present in this case?
oo What would the union have to do if it wanted to demonstrate outside the
employer’s premises and what would be the purpose of such demonstrations?
oo Do you think a strike that lasts for six months will ultimately benefit the
workers?
oo Some observers believe that the legislation is insufficient in that it does not cater
for strikes which ‘have become dysfunctional’. Under which conditions could a
strike be described as dysfunctional and what could the legislators do about this?
oo Access the Code of Good Practice on Picketing. Divide into two groups, one
representing Management and lecturers and the other the students. They are
now in dispute and the students have given notice of their intention to engage
in strike action. Come together and negotiate a picketing agreement.

Sources
Brassey, M, Cameron, E, Cheadle, H & Olivier, M. 1987. The New Labour Law. Juta.
Douwes-Dekker, L. (ed). 1997. Community Conflict. Juta.

606 Labour Relations: A southern African perspective

Green, GD. 1987. Industrial Relations. Pitman.
Herman, E & Kuhn, A. 1981. Collective Bargaining and Labour Relations. Prentice Hall.
Industrial Law Journal, vol 20, August 1999. Juta.
Industrial Law Journal, vol 21, March 2000. Juta.
Industrial Law Journal, vol 27, December 2006. Juta.
Kerr, C & Siegel, A. (eds). 1954. ‘The Inner Industry Propensity to Strike’ in A Kornhauser et al. Industrial
Conflict, McGraw-Hill.
chan, T. 1980. Collective Bargaining and Industrial Relations. Richard D Irwin.
Labour Relations Act (66 of 1995), Government Gazette vol 366 no 16861, Pretoria: Government
Printer, December 1995.
Labour Relations Amendment Act, 2014. Government Gazette No 37921, Pretoria: Government Printer.
Rycroft, AJ & Jordaan, B. 1992. A Guide to South African Labour Law. 2nd ed. Juta.
Salamon, M. 1987. Industrial Relations Theory and Practice. Prentice Hall.
Thompson, C & Benjamin, P. 1991. De Kock’s Industrial Laws of South Africa. Juta.
Usefulwebsites
http://www.labour.gov.za/DOL/legislation/bills/proposed-amendment-bills/. (Accessed 24 August 2018).
www.jutalaw.co.za

Chapter 13: Coercive Action 607

 14

Intergroup Conflict: Analysis

and Facilitation

Chapter Outline
OVERVIEW
THE CONFLICT PHENOMENON
Conflict and Commonality as Endemic to Relationships • Group Formation • Intergroup Relationships
• Intergroup Conflict • Power Realities in Intergroup Conflict • The Trigger Incident
VARIABLES DETERMINING CONFLICT LEVELS
The Reason for the Conflict • The Number of Issues • Recognition of Legitimacy • Intra- and
Intergroup Dynamics • Leadership • Aspirations • Size of Threat • Uncertainty • Common Norms/
Standards • Reciprocity • Interaction between Aggravators and Moderators
SIGNS OF CONFLICT ESCALATION
STANDARD APPROACHES TO CONFLICT RESOLUTION
Resolution versus Settlement • Authoritarian Intervention• Conciliation, Mediation and Arbitration
THIRD-PARTY FACILITATION
The Nature of Facilitation• Basic Principles of Facilitation• Engaging in Facilitation | Understanding
the Conflict | Recognising Different Paradigms | Identifying Different Needs and Goals | Differentiating
between Rights and Obligations | Emphasising Commonality | The Continuation of the Relationship
• Initiating Facilitation | Identifying the Issues and the Parties and Gaining Trust | Bringing the Parties
Together | The Behavioural Contract | Other Requirements • Engaging in Joint Problem-solving
• Listing the Issues | Defining the Problem | Agreeing on Criteria | Generating Options | Evaluating
Solutions • Planning Implementation • Problems Bedevilling the Process • The Role of the Facilitator
CONCLUSION
SUGGESTED QUESTIONS/TASKS
SOURCES
 Overview
As all persons are individuals, conflict is unavoidable. Individuals join groups to
strengthen the sense of their own identity or to exercise some control over their
own destiny.
Because certain groups are interdependent or share scarce resources, they have
to form relationships with one another. However, they may still come into conflict,
particularly when one group prevents the other from achieving its goals, threatens
its identity or controls the resources. Inevitably, this results in a power play between
the parties. Where both groups perceive the other as holding power, they may decide
to institute procedures to regulate their relationship. This happens in collective
bargaining, but collective bargaining may result in further power competition.
Where resources or control are unevenly distributed, a structural imbalance
occurs. The party which is relatively disadvantaged may seemingly submit to the
other, but conflict will remain covert. Where there is strong power competition, a
trigger incident may well lead to overt, serious conflict.
Whether this conflict will be resolved or escalate to more serious proportions
will depend on the existence of moderators or aggravators, as well as the history
of the relationship, the degree of trust between the parties and the manner in
which the parties communicate with each other. If there are numerous ‘aggravators’
compounded by a poor relationship and inadequate communication, the conflict is
bound to escalate until a stage is reached where the parties are, on their own, not
able to come to a settlement. The factors which prove that conflict is escalating may
themselves cause further escalation.
Where conflict has reached unmanageable proportions, a third party will have to
intervene. The third party may have the authority to impose a settlement, as in the
case of arbitration, but this does not always resolve the conflict. A better approach
is one which relies on facilitation.
The third party’s purpose would be to move the conflicting parties to a position
where they agree on a mutually acceptable solution. This is a very complex and time-
consuming process, but one which in the end, may yield the best results.

Chapter 14: Intergroup Conflict: Analysis and Facilitation 609

The Conflict Phenomenon

Conflict and Commonality as Endemic to Relationships

The term ‘conflict’ denotes the meeting of opposing forces or persons. In essence, every person
stands in opposition to others. This is so because, as a unique human being, he has and will
strive to uphold an individual identity, different from that of any other person. Therefore,
conflict is endemic to all relationships. However, people do share many common traits, interests,
values and goals, and they seek out other persons with whom they have the most in common
and with whom they can form relationships. It is this commonality which binds the relationship
and which enables the parties to handle whatever conflicts may arise in a constructive manner.

Group Formation
As man is a social being, his sense of identity is further strengthened by his membership of
a group or groups. He will join a particular group because he sees it as reflective of his own
ideology, values, interests and goals. The shared identity of the group enhances his identity.
Alternatively, an individual may join a particular group not so much for the commonality
among them, but because he perceives that, by membership of the group, he is able to gain
some control over his destiny and thereby ensure the fulfilment of his more basic physical,
social and economic needs.
Membership of a group grants the individual a particular place in society, different and
therefore in opposition to that of other groups. Even in the group itself, individuals and
sub-groups will stand in opposition to each other, giving rise to intragroup conflict, but,
again, commonality will usually ensure the constructive handling of such conflicts. Groups
also develop their own cultures, norms and rules which will be different from those of other
groups, and are often not understood or recognised by the other groups.
It is evident from the foregoing that:
■■ humans have a natural tendency towards group formation
■■ groups so formed will have goals, values, interests, cultures, norms and even ideologies
which are different from those of other groups
■■ the achievement of both an individual and social identity and of some sense of control
over his own destiny is as important as the fulfilment of man’s basic needs for food,
shelter and security.

Intergroup Relationships
Groups form part of a wider societal order and may themselves seek alignment with other
groups with whom they share common interests, goals, values or ideology. On the other
hand, they may have to coexist with groups with whom they do not have much in common.
Nonetheless they may have to establish relationships with these groups, either because they
depend on one another or because they rely on the same, often scarce, resources. Because

610 Labour Relations: A southern African perspective

they are in a relationship, there will have to be communication of some sort among them.
By observing other groups and communicating with them, they form perceptions of one
another. The relationships formed are not those to which the groups would be naturally
inclined, and they may even enter them with great reluctance. Yet, even here, some
commonality of interests exists, although it may not be openly acknowledged. It is between
such groups that conflict, if not correctly handled, may reach unmanageable proportions.

Intergroup Conflict
The possible sources of conflict between groups which are not aligned by choice are already
evident from the differences as regards values, interests, goals, ideologies, cultures and
norms between them. If each group was able to pursue its own interests and goals in the
framework of its own ideology, culture and norms, they would never come into open conflict
with one another. Unfortunately, this would be possible only if each group inhabited its own
island. Societal (and now global) existence places the onus of interaction and sharing upon
mankind. Groups cannot exist in isolation and are usually interdependent. Thus, inevitably,
the goals and interests of one group will come into conflict with those of another. The
manner in which such conflict is handled will largely depend on:
■■ the relationship which was formed
■■ the availability or otherwise of resources for each group
■■ the fulfilment of basic and other needs
■■ the acknowledgment by each group of the other’s identity and legitimacy
■■ the effectiveness of the communication between them
■■ their acknowledgement of interdependence or common interests
■■ their perceptions of the other party.

Power Realities in Intergroup Conflict

Where one group forms an obstacle to the achievement of another group’s goals, or where
both compete for the same resources, power becomes an important factor. Each party will
try to muster as much power as it can in order to achieve its goals or maintain its interests
in opposition to those of the other party. This results in a power battle between the parties,
which, if allowed to develop, may become unmanageable.
If they want to prevent conflict and the resultant power battles from getting out of hand,
the parties need to engage in rational problem-solving or use processes which will lead to
some form of settlement. This can happen only if:
■■ the parties have established a relatively healthy relationship
■■ they acknowledge their interdependence and common interests
■■ they are subject to the same legal framework
■■ norms and ideology are not in absolute conflict
■■ each party acknowledges that the other holds power.

Chapter 14: Intergroup Conflict: Analysis and Facilitation 611

Collective bargaining is an example of the type of process which can be established between
opposing parties. These processes rest on the acknowledgement by one party that the other
party also holds power and that they may each inflict harm on the other.
However, very often one party holds no power or is not perceived as holding power. This
is usually the result of a structural imbalance between the parties. Different groups occupy
different places in society; hence, the concepts of class and status. The place which a group
occupies may give it a position of dominance over other groups, usually accompanied by
the control over resources, with resultant inequalities.
The greater the structural imbalances, the greater will be the potential for conflict, but
where one group is dominant, the other group(s) may not yet hold enough power to counter
the power of that group. Consequently, the latter group(s) may seemingly surrender. Yet
conflict will remain hidden and, since no individual or group is absolutely powerless, the
weaker group(s) will continue to build a power base until such time as it (they) can openly
confront the dominant group.

The Trigger Incident

In a situation of power abuse, covert conflict or continued power competition, it may
happen that an insignificant trigger incident leads to conflict of major proportions. The
mistake which is then made is to concentrate on the events related to the trigger incident
instead of dealing with the conflict inherent in the relationship. It is necessary to analyse the
relationship as a whole in order to establish the underlying causes of the conflict situation.
Only once this has been done can the conflict be effectively resolved.

Variables Determining Conflict Levels

Anstey (1999) lists a number of variables which will collectively determine whether conflict, once
triggered, will remain at a relatively low and manageable level or will escalate to unmanageable
and even violent proportions. These ‘moderators’ and ‘aggravators’, together with others, are
explained below. They are interactive, and no variable should be seen in isolation.

The Reason for the Conflict

Where the cause of the conflict is to be found in the inability of one party to achieve
satisfaction of an interest but where this does not involve a basic necessity, conflict levels
may remain relatively low, as will the potential for escalation. On the other hand, the
possibility of the conflict escalating is high if:
■■ a party’s identity is threatened
■■ one party feels that he has lost control over his own destiny
■■ values (often emanating from ideological beliefs) are at issue
■■ one party cannot fulfil his basic needs
■■ power struggles develop between the parties.

612 Labour Relations: A southern African perspective

 Need for:
‘low’ variables
• Individual and
• Social Identity • Conflict of interests
Control over Destiny • Few Issues
Individuals Rational
Collective • Legitimacy
Solutions/ Adversarial Power
Bargaining • Group Cohesion
Processes Competition • Cross-cutting Group
Memberships
• Moderate Constituency
Pressure
Group Group • Flexible Leaders
Culture • Moderate Threat escalation
Negotiation/
Intra-group (Norms and • Agreed Norms
Settlement?

figure 14.1: intergroup conflict

Conflict Rules) • Reciprocity • More & More Issues
• Bigger Demands
Inter- History of • Coalitions
Relationship
dependence Relationship • Stereotyping/
Difference Power
Values Different Communication (Communications, Trigger Overt History of Relationship Demonisation
In Class and Co-reliance Realities Structures, Processes,
Goals Perceptions Incident Conflict ‘Trust’ Communication • Increased Adversarialism
Status On
Interests Perceptions Past Conflicts, Trust • Information Selection
Resources Relationship) • Group Solidarity
• Mob Identity
• Communication
Breakdown

ideologies/paradigms
‘high’ variables
Group Group • Violent Behaviours
Culture • Conflict of Needs • Aggressive Leadership
Intra-group (Norms and inequalities Values, Ideologies
Conflict Rules) • Power Battles
• Lack of Legitimacy
• High Group Cohesion
• Group Pressures on
Structural Power
Leaders
Imbalance Abuse
• Numerous Issues 3rd party intervention
• High Expectations
• Inflexible Leadership
FACILITATION
• Isolation/Separation

Chapter 14: Intergroup Conflict: Analysis and Facilitation

Need to Satisfy Suppression • Conciliation
• Uncertainty (Change)
Individuals Physical, Economic and • Mediation
Social Needs (Adapted from Anstey) • Factfinding
Covert
Conflict • Joint Problem-solving

613
ARBITRATION
The Number of Issues
Conflict is usually moderate if one or few matters are at issue. However, the type of issue
is also important. Matters such as an attack on identity or denial of basic needs can in
themselves lead to heightened conflict. Too many interest-based issues may also raise the
level of conflict.

Recognition of Legitimacy
One of the greatest causes of conflict escalation is the failure of one party to recognise the
legitimacy of the other party, or the legitimacy of the issues raised by the latter. Conflict
increases if one party refuses to acknowledge that the other party occupies a legitimate
place in society (or the organisation), that he has a right to raise issues and that the issues
themselves may be legitimate. This should be understood in relation to the fact that non-
recognition of legitimacy denies the identity of the other party and its right to exercise some
control over its destiny.

Intra- and Intergroup Dynamics

Where there is high group cohesion and pressure on group leaders to deliver desired results,
conflict levels tend to rise. The more closely knit the group, the greater will be the support
for the leader in instances where he threatens to use, or actually does use, coercive power.
In fact, a highly cohesive group may urge a leader to take actions which he himself might
otherwise not consider as wise.
The degree of cohesion in a group often stands in direct proportion to its isolation
from other groups. Groups which have little or no contact with other groups turn in upon
themselves. There is no cross-cutting group membership (where some members from two
different groups are also joint members of a third group).

Leadership
The type of leadership also influences the level of conflict. Where the leadership is power-
hungry, aggressive and inflexible, conflict will escalate. Flexibility on the part of the leader
promotes more peaceful and rational settlements. It may happen that a leader needs to
entrench his position. He may be losing his following and may ‘create’ issues in order to draw
the group together under his leadership. If this is the case, the person attempting to facilitate
a resolution could either allow another, more generally acceptable, leader to emerge or allow
the existing leader the necessary credibility to make him feel secure in his position.

Aspirations
Where aspirations or expectations are high, the potential for conflict escalation increases.
This can also happen when the group has been promised certain benefits, either by those in
control or by their leadership. When these do not materialise, there is general discontent.

614 Labour Relations: A southern African perspective

Size of Threat
If the threat from the other party is relatively insignificant, conflict can normally be
confined to manageable proportions. The greater the threat, the greater will the possibility
of escalation become.

Uncertainty
Man has a desire for certainty; to know where he is placed and to have some idea as to what
the future holds. The individual’s desire for certainty is rooted in the need to exercise some
measure of control over his own destiny.
In times of change or when the group is kept ignorant of future plans, the conflict
potential increases. Uncertainty is often caused by ineffective communication, rumour-
mongering and an overactive organisational grapevine.

Common Norms/Standards
Where norms or standards of behaviour are there by mutual agreement, or where both
groups subscribe to the same norms, these can be applied to prevent extreme or unacceptable
behaviours. If, for example, all in society support the rule of law, respect the lawmakers and
law enforcers, crime is more easily controlled. The opposite is, of course, also true.
Acceptance of mutually agreed standards and the establishment of processes to enforce
these rely on the consensual application of power. If one party imposes the standards, the
other party may regard this as an abuse of power and reject the standards so established
even if they essentially agree with these standards.

Reciprocity
Reciprocity refers to an interchange of behaviour, and it is one of the standards of fairness.
It means that both sides must be prepared to give. If the relationship is not reciprocal, the
party which does most of the giving will look for ways to re-establish a balance. This it will
do by developing its power base and even by inflicting harm on the other party.
Reciprocity stands in inverse relationship to structural imbalance. The less the reciprocity,
the greater will be the structural imbalance.

Interaction between Aggravators and Moderators

It has become evident that the ‘aggravators’ and ‘moderators’ do not function in isolation.
The existence of a number of aggravators will exponentially increase the potential for or
level of conflict. However, this may be partly nullified by strong moderators. Furthermore,
the history of the relationship, the communication between the parties and their perceptions
of each other will provide the framework for any situation which arises and will partly
determine the course to be adopted.

Chapter 14: Intergroup Conflict: Analysis and Facilitation 615

Signs of Conflict Escalation
Where there are few inhibiting factors, or where conflict is badly handled, the conflict tends
to escalate. Anstey identifies a number of signs which serve as indicators that the conflict is
escalating. It is interesting to note that these indicators of escalation at the same time serve
to further raise conflict levels.
As conflict escalates, the following will occur:
■■ The number of issues increases and may reach a point where the original issue is
overshadowed by a myriad of other complaints.
■■ As issues increase, demands become bigger.
■■ Parties hear only what they want to hear. They give and receive selective information or
communication breaks down completely.
■■ Coalitions are formed among different groups and with parties not involved in the
original conflict situation.
■■ Adversary between the parties increases – they view each other as enemies.
■■ The group itself becomes more closely knit as its members see themselves threatened by
the common enemy. In the extreme, they develop a mob identity.
■■ The other party is stereotyped, even demonised. This de-individualisation of the persons
in the other group accounts for the fact that persons who engage in acts of violence
often see these as justifiable. The perpetrators themselves relinquish their individuality
by their membership of the mob. Equally, they do not see the members of the other
group as individuals, but as part of a malicious force.
■■ As conflict escalates, group members may turn against those leaders who want to
resolve the conflict, the result being a change to the leadership structure, where the
‘hawks’ replace the ‘doves’.
■■ Coercive action by one party elicits a reaction from the other, leading to increasingly
violent behaviours.

Conflict which has escalated to unmanageable proportions feeds on itself. It escalates in

ever-widening circles. Also, some persons or groups actually thrive on conflict. It becomes
the focus of their being. Consequently, they may resist any attempt at de-escalation or
resolution of the conflict situation.

Standard Approaches to Conflict Resolution

Resolution versus Settlement

In the employment relationship the parties usually see an agreement of one kind as ending
the conflict between the parties. This could be a misconception. The kind of settlement
reached by, for example, the adversarial collective bargaining process, may take the form of
a compromise, often achieved because one party holds more power than the other. In these

616 Labour Relations: A southern African perspective

situations, one or both parties may remain dissatisfied, which heightens the potential for
further conflict. Therefore, it cannot always be said that the conflict has been resolved. To
achieve resolution of conflict there should be:
■■ no coercion of one party by the other or by a third party in the form of an arbitrator or
enforcer
■■ mutual satisfaction with the outcome
■■ a reduced possibility of further conflict
■■ an improvement in the relationship, which should thereafter be placed on a sounder
footing.

If possible, disputes should be resolved by the parties themselves. When this does not
happen it becomes necessary for a third person or body to intervene. Such intervention can
take numerous forms.

Authoritarian Intervention
Where conflict is deep-rooted or has escalated to unmanageable proportions, it will be
impossible to resolve without the intervention of a third party. In situations where the parties
are inflicting harm upon each other and where behaviour is of a violent nature, it may
be necessary first to use authority structures in order to restore a sense of order. This will
not resolve the conflict but will allow for conflict resolution processes to be set in motion.
The authorities used should be those respected by both parties. (See Recognising Differing
Paradigms below.) Once the violence has subsided, attempts at resolution can begin.

Conciliation, Mediation and Arbitration

In labour relations, third-party intervention usually takes the form of conciliation, mediation
or arbitration. This type of intervention has been discussed in detail in Chapter 12. It is, on
the whole, best suited to the resolution of conflicts about the rights of either party. While
they may result in settlement, they may not necessarily resolve the conflict or may leave
both parties dissatisfied. Consequently, third-party facilitation is regarded as a more effective
intervention in addressing endemic or deep-rooted conflict between different groups.

Third Party Facilitation

The Nature of Facilitation

A facilitator may commence with conciliation, the purpose still being that the parties should
eventually resolve the conflict themselves. However, the facilitator does not merely bring the
parties together. He re-educates them and supports them through the process of achieving
a solution. He is not merely an intermediary, but more a participant and a guide, although
he never dominates the process. This requires vast experience and great skill on the part of
the third party and is usually a time-consuming process.

Chapter 14: Intergroup Conflict: Analysis and Facilitation 617

Basic Principles of Facilitation
Conflict resolution is an interactive process and as such requires an interactive intervention
and resolution. The parties should, from the beginning, be encouraged to take ownership of
the process and to interact with each other in a manner different from that which may have
been adopted previously.
Secondly, although conflict and the causes of conflict appear overt, conflict has
subjective roots. It is necessary to deal with, and perhaps change, the subjective orientations
of both parties. This refers particularly to their perceptions of the conflict, each other and
themselves. They should also be made aware of how their own prejudices, preferences and
paradigms influence their view of the conflict and of the other party.

Engaging in Facilitation
Understanding the Conflict
Before a third party can engage in facilitation, he should gain an understanding of the
conflict, and particularly of the issues and problems which caused the conflict to escalate
to existing levels. He needs to analyse all facets of the situation and to know the history of
the conflict and of the relationship.

Recognising Different Paradigms

Douwes-Dekker et al. (1997) emphasise the importance of differing paradigms in approaching
the resolution of conflict. Paradigms emanate from ideological beliefs, norms and value
systems. When the paradigms in which one party operates are directly opposite to those of
the other party, any attempts which the parties themselves may make to solve the conflict
is bound to fail. In these situations the parties will make progress only if they acknowledge
that they are coming from different perspectives and if each agrees to move away from his
paradigm and meet on neutral ground.
Given the strong influence of ideology, values and norms, this is an almost impossible
task for the parties themselves. It usually requires a third, neutral party to create awareness
of the different approaches to the problem and to present an alternative approach.
In the employment relationship the most distinct conflict of paradigms occurs where one
party supports individualism, private property and the free-market system and the other
leans towards a more communitarian approach. This difference in paradigms is reflected in
the formation of ‘radical’ and ‘conservative’ camps, with the radical party not accepting the
status quo in a capitalist/free-market system and the conservative attempting to preserve
the existing order (see Chapter 2).
It is obvious that parties at these extremes will differ on the ways of handling particular
conflict situations. As Douwes-Dekker et al. explain, the individualist/conservative grouping
will expect conformity to societal norms and attempt to impose order by the enforcement of
norms and laws. Such attempts are resisted by the communitarian/radical grouping which

618 Labour Relations: A southern African perspective

views its position as legitimate and the enforcers of norms, rules or the law as illegitimate.
From their perspective, their own community organisations or others holding the same
beliefs are more legitimate. In situations like this it is unwise to rely on entrenched societal
or organisational institutions and processes to quell or settle the conflict.
Unless each party understands the other’s frame of reference, the conflict cannot be resolved.

Identifying Different Needs and Goals

Since most deep-rooted or unmanageable conflicts arise from clashing needs and goals or
from structural imbalances, these should be identified at the commencement of the conflict
intervention. Physical needs such as those for food, water, shelter and clothing are not
difficult to identify; neither is the need for security in both the physical and the social sense.
Besides these, individuals and groups also need:
■■ a sense of dignity and own identity
■■ to participate in groups and in society
■■ to feel that they are in control of their own destiny
■■ to feel that they are respected (the legitimacy issue)
■■ to know that they do have some power
■■ to have psychological security
■■ to be able to predict the effects of their actions
■■ to enlarge the range and quality of satisfactions available to them
■■ the freedom of choice
■■ a sense of their own worth and integrity
■■ the confidence that society or the organisation holds a fair measure of hope
■■ the prospect that their aspirations may be fulfilled.

Unless the intermediary understands the needs of the parties and creates an understanding
of the other’s needs, the process of resolution cannot begin. Some conflicts may arise from
one party’s need for excessive power or from a ‘subordinate’ party’s need to create a power
balance. Even where power is not overtly sought, the power play between conflicting parties
cannot be ignored. Power cannot be taken out of the equation, but parties should understand
that all sides hold power of some kind or other. What they should be seeking should not
be power over the other party, but the power to achieve their goals and satisfy their needs.
If both parties are empowered to achieve all or some of their goals, there is no need for a
power play between the parties.

Differentiating between Rights and Obligations

In most conflict situations, parties tend to equate interests with rights, to insist on supposed
rights or to dwell on rights that they already have but which the other party does not
acknowledge. (Compare, for example, the union’s reaction to management’s insistence on

Chapter 14: Intergroup Conflict: Analysis and Facilitation 619

its right to make decisions.) To achieve successful resolution, the issue of rights has to
be excluded. One party cannot insist on rights which the other party does not accept or
acknowledge. It is preferable to focus on the obligations which parties might have, both
towards each other and to other societal or organisational players.

Emphasising Commonality
It is natural that, in a conflict situation, the differences between the parties will be
emphasised and the commonalities or common interests overlooked. It is the task of the
facilitator to search for, and create renewed awareness of, common interests or goals and
to shift the emphasis away from points of difference. Also, neither party may be willing to
acknowledge its dependence on the other. Unless this happens, the power play between the
parties will continue.

The Continuation of the Relationship

The most important of the initial questions is whether both parties wish to continue and even
develop the relationship. If one or both have no desire to do so, attempts at a resolution may
prove futile. However, the mere fact that the parties have agreed to come together points to
a wish for continuance. This should then be emphasised.

Initiating Facilitation
Identifying the Issues and the Parties and Gaining Trust
Before commencing with facilitation all parties involved in or influencing the conflict
should be identified. The persons most overtly engaged in the conflict may not be the only
ones involved, and if they alone are present, the conflict may continue to be fuelled from
outside. It is customary for the facilitator to meet with each party beforehand in order to
gain a thorough understanding of the issues.
From the outset the facilitator should focus on gaining the trust of the various parties.
They need to be assured that he is neutral yet knowledgeable, and that he is able to guide
them toward resolution of the conflict. However, at the same time they should be made
aware that the solution lies with them and not with the facilitator. He will merely help
them to achieve resolution. At this stage the facilitator will be listening to the parties and
gaining an impression of the past relationship, the issues and the stances or perceptions of
each party.

Bringing the Parties Together

The parties are brought together at a venue removed from the actual conflict situation.
Experience has taught that behaviours change when persons are placed in a different
setting. It also removes them from the comfort zone of their own support systems and from
an environment which may reinforce their particular perceptions.

620 Labour Relations: A southern African perspective

The Behavioural Contract
The conflict is not addressed before the parties have agreed on a behavioural contract. The
parties commit themselves to the process and agree that they will not engage in aggressive
behaviours, will demonstrate respect for each other and will engage in honest and open
communication. Parties need to know that:
■■ no individual will be vested with authority
■■ nobody will be granted special privileges
■■ judgement will not be passed on any communication, irrespective of its source.

Other Requirements
It may be necessary first to train the parties in problem-solving techniques by using a fictitious
case and also to instil the rules of controlled communication – that is, communication where
ideas, thoughts and even feelings are expressed without excessive emotion and without
engaging in defensive or aggressive behaviour.
It is in this initial stage that the tone for the entire process is set. Meetings should not be too
formal, yet not so informal that there is no order. The tone can be quite light, and it is useful
to introduce humour, but there is always an underlying seriousness and a sense of purpose.

Engaging in Joint Problem-solving

Listing the Issues
The parties need to explore, define and delimit the conflict. The interests and viewpoints
of both parties should be explored, and the key issues identified. The facilitator does not
prevent any person from expressing feelings as long as this is done in a controlled manner
and is mediated so that it does not threaten other parties. In fact, if properly handled,
expressing emotions may serve to de-escalate the level of conflict. It should be made clear
that, although this may be what is felt, the purpose is to change those perceptions and
feelings by enhanced understanding of the other party. Here it could be useful to let the
parties change positions and to explore what they would feel were they in the other party’s
position. Where perceptions, ideological stances and value systems influence the conflict,
the facilitator attempts to change those subjective orientations or, at the very least, create
an understanding of the role played by these in the conflict situation.
In all probability, a diversity of issues will be raised, some of them old grievances
and others entirely new. The facilitator needs to keep the parties on track by constantly
guiding them back to the main issues. If there is agreement as to what these are, the parties
should progress to joint information-gathering on these issues. The facilitator assists by
contributing facts and information of his own.

Chapter 14: Intergroup Conflict: Analysis and Facilitation 621

Defining the Problem
Once the issues have been explored and defined, the parties should jointly define the central
problem. This requires expert guidance, as the tendency is to define the problem in terms
of the issues while the two may not be synonymous. For example, two persons in conflict
because the one wants to go to the cinema, and the other to a rugby match will be inclined
to say that the problem is that they want to do different things, while the actual problem
may be that they have only one car or that the two events are taking place at the same time.
This is what differentiates a problem from an issue. Attempts to resolve the issue would
result in a compromise by one of the parties, while the solution to the problem may be to
explore other forms of transport or to establish whether the film will be showing at another
venue at another time.
The example above is simplistic but confirms the necessity of making a clear distinction
between issues and positions on the one hand and the problem on the other. It also
demonstrates that focusing on the problem depersonalises the issues and allows the parties
to move away from their respective positions.
When there are a number of diverse issues, a problem statement may have to be developed
for each issue. However, most commonly, the issues can be compacted into one or two all-
encompassing problem statements.
Great care should be exercised that the parties or one of the parties does not already, at
this stage, put forward solutions. The facilitator needs to explain that the process has just
begun and that no partisan solution is acceptable.

Agreeing on Criteria
If a proposed solution is to be acceptable to all parties, it will have to be evaluated in terms
of agreed criteria. These criteria will indicate whether the solution is feasible and acceptable
to both groups. Criteria could, for example, include such matters as cost-effectiveness, the
statement that the solution must impose minimal harm on all parties or that there should be
no threat to the environment.
The establishment of criteria depersonalises proposed solutions and allows for rational
argument regarding the merits and demerits of such solutions.

Generating Options
The next step is to encourage the parties to generate as many options or alternative
solutions as possible. This can be done by brainstorming or the nominal group technique.
All suggestions are recorded, and no evaluation or criticism of a suggested solution is
allowed. The facilitator could add solutions or rephrase the solutions offered.
The processes used allow for depersonalisation of the proposed solutions. It is unlikely that
when the solutions are put up for scrutiny and evaluation they will be attributed to particular
persons. Participants are encouraged to be as creative as possible and are given the assurance
that no suggestion, however improbable, will be discarded without evaluating its merits.

622 Labour Relations: A southern African perspective

Evaluating Solutions
The proposed solutions are posted up or printed and opened to general discussion.
Participants are encouraged to raise concerns with particular solutions, but the concerns
should not be partisan by nature. Thereafter the solutions are evaluated in terms of the
criteria, and those which prove the least feasible are immediately discarded. Further
discussion around the remaining solutions, which may entail redefining the solutions or
obtaining more information, should result in a consensual decision as to the most feasible
option. Consensus entails the agreement of all parties. If there is no consensus, clarification
and information-sharing continue until such agreement is reached. If this is not achieved,
the conflict will not have been resolved.

Planning Implementation
A solution may seem feasible in theory but may prove unfeasible in practice. Consequently,
the process cannot end before implementation plans have been jointly established. Obstacles
to implementation need to be identified by, for example, a SWOT analysis, whereafter
strategies to overcome the obstacles are developed.
If the solution proves to be completely impractical, it is replaced with one of the other
options generated and the process is repeated.
The fact that the parties work together in formulating strategy and planning for
implementation strengthens the change in relationship which should already have developed
when generating the problem definition and its solution.

Problems Bedevilling the Process

The joint problem-solving process may seem relatively straightforward, but in practice it is
often difficult to implement, owing to particular stances by individuals or groups.
One of the main problems is that there is a tendency to maintain role identity and to look
for authoritative leadership. In management–employee sessions, managers and employees
alike tend to act and speak within the framework of their traditional roles. Employees defer
to the ‘boss’ or are afraid to speak honestly in his presence. It requires great skill on the part
of the facilitator to move participants from these stances and to equalise relationships, but,
if this is not done, there is no honesty, innovation or creativity and the process fails. The
facilitator should, in a non-threatening manner, ‘neutralise’ any individual or group which
displays a tendency to dominate the process.
Just as there are some who would dominate, there are others who are intractable and
remain over-committed to their own positions or solutions. Persons who are not willing to
consider alternatives should be side-lined as far as possible, or members of their own group
who are more flexible could be requested to intervene.
The greatest problem in implementing a cooperative approach to conflict resolution is
the prevalence of the power factor. Parties are either afraid that, by engaging in the process,

Chapter 14: Intergroup Conflict: Analysis and Facilitation 623

they will be relinquishing their power base or would rather risk engaging in a coercive
process where they might lose but also have the prospect of winning. When parties are
intent on power competition, a joint problem-solving process is not feasible.

The Role of the Facilitator

It has become evident from the above that the facilitator takes responsibility for the process,
but not for the solution. His role is to:
■■ defuse the conflict
■■ set the stage for exploration of each party’s interests and subjective orientations
■■ set and control the agenda
■■ harvest ideas
■■ provide detached overviews
■■ review concepts
■■ show connections between different ideas and solutions
■■ provide knowledge and information when necessary
■■ keep the discussions at a logical level
■■ get the parties to acknowledge each other’s interests, values and beliefs
■■ almost imperceptibly control behaviour and communication
■■ prevent any person or party from becoming over-committed to a position or solution
and thereby again becoming entrapped in a conflict situation
■■ by his very presence shift the focus from the parties to the problem.

Conclusion
The conflict phenomenon, together with the power phenomenon which underlies it, is
extremely complex. There are so many variables affecting the prevalence and escalation,
or otherwise, of conflict, and particularly intergroup conflict, that it requires detailed study
and considerable experience before successful resolution can be undertaken.

Suggested Questions/Tasks
•• Describe a situation of heightened conflict about which you have read extensively,
which you have witnessed or in which you yourself have been involved. Thereafter:
oo Analyse the conflict.
oo Identify the factors which led to the escalation of conflict.
oo Identify the main participants and the stances adopted.
oo Describe how you would go about preparing for a facilitation of the conflict.
oo List the possible issues which the parties would raise.

624 Labour Relations: A southern African perspective

 oo Formulate a problem statement.
oo Provide a step-by-step description of the process you would follow after
generating the problem statement.
oo Describe how you would ensure that the eventual solution is the best possible
and acceptable to all parties.
oo Provide details on how the facilitation would differ from the traditional
confrontational (aggressive bargaining) approach.

Sources
Anstey, M. 1999. Managing Change: Negotiating Conflict. Juta.
Douwes-Dekker, L (ed). 1997. Community Conflict. Juta.

Chapter 14: Intergroup Conflict: Analysis and Facilitation 625

 15

Workplace Democracy
and Workers’ Participation

Chapter Outline
OVERVIEW
THE LABOUR RELATIONSHIP AS A SOCIAL PARTNERSHIP
PRINCIPLES AND PRACTICE OF WORKPLACE DEMOCRACY
PRINCIPLES OF WORKERS’ PARTICIPATION
TRADE UNION REPRESENTATION VERSUS WORKERS’ PARTICIPATION
LEVELS OF PARTICIPATION
FORMS OF WORKERS’ PARTICIPATION
Direct and Indirect Participation • Information-sharing • Independent Work Organisation • Plant-
level Committees or Councils | Liaison Committees | Workers’ Committees | Safety Committees | Shop
Steward Committees | Co-management Committees • Joint Decision-making on Supervisory Boards
• Profit-sharing Schemes • Share Ownership Schemes • Cooperative Enterprises
REASONS FOR INTRODUCING AND SUPPORTING PARTICIPATION
DISADVANTAGES OF PARTICIPATION
The Managerial Perspective • Union Concerns
IMPLEMENTING A PARTICIPATION SCHEME
General Guidelines • Inclusion of Unions/Employees • The Need for Training • The Seven Structural
Principles • Participation as an Ongoing Process • Workers’ Participation in South Africa • The
Concept of Workplace Forums | The Present Position | Establishment and Functions | Definition of
Employee | Matters for Consultation | Nature of Consultation | Matters Subject to Joint Decision-
making | The Joint Decision-making Process | Applying for a Workplace Forum | Definition of Workplace
Constitution of a Workplace Forum | Forum Meetings • Establishing a Workplace Forum | Prerequisites
Union Dominance | Ensuring Independence of the Workplace | Agreement on Common Values and
Purpose | Common Understanding of the Consultation and Co-decision-making Process | Agreement
on Important Aspects | Clarification of Confidentiality Provisions | Drawing up a Constitution |
Appointment of an Electoral Officer and the Holding of Elections | Training of Forum Members | Review
of Practices and Policies, Goal-setting and Monitoring • Labour Relations Realities • Other Initiatives
towards Greater Participation
CONCLUSION
SUGGESTED QUESTIONS/TASKS
SOURCES

Chapter 15: Workplace Democracy And Workers’ Participation 627

 Overview
The institution of free collective bargaining places emphasis on the conflict of
interests in the labour relationship and allows each party to pursue his self-interest,
limited only by the coercive power of the other party. The concepts of workplace
democracy and workers’ participation, on the other hand, emphasise the need for
cooperation between employer and employee and for an employee share in the
decision-making processes of management.
True workplace democracy would be achieved only by a system of worker self-
management. This interpretation of workplace democracy is not prevalent in developed
societies, most of which still endorse private ownership of the means of production.
Instead, efforts towards greater democracy are aimed mostly at participative practices.
Participation entails the involvement of the worker in as many aspects of his work
life as possible. This may occur either directly or indirectly, through elected worker
representatives. Systems of participation vary, and while some are merely consultative
in nature, others offer the employee a substantial say in the decision-making process.
Managements and unions have their own particular reasons for supporting
participative programmes. Whereas management may see participation as a means of
obtaining greater commitment and cooperation from the workforce, unions view it as
a means of extending employee influence and control at the workplace. Both parties
may have certain reservations regarding participation. Managements may object to
participation because it delays decision-making, takes control out of the hands of the
employer and may prioritise employee goals as against the goals of the organisation.
Unions, on their part, encounter many practical problems in demarcating areas for
participation from those subjected to collective bargaining. They may find it difficult
to reconcile their role as challenger of managerial decisions with that of joint
decision-maker. Certain unions take a principled stand against participation alleging
that it is used as an alternative to actual worker management.
The introduction of a participation scheme is a slow process and requires
the commitment of all concerned. Managements which attempt to introduce
participation schemes without consulting employees or recognised unions may find
that they are unsuccessful. In South Africa, participation had until relatively recently
not been prevalent and had not been legally enforced, the exception being the
workers’ committees for black employees in the pre-1979 dispensation, but these
were not intended to increase participation.
With the passage of the Labour Relations Act of 1995, provision was made for
workplace forums to be initiated by a majority union or unions. These forums, once
established, have statutory rights to information and to consultation or co-decision-
making on certain issues. The concept of forums has had a mixed reception from
employers and unions, and so far has not proved too popular. Nevertheless, they
provided, for the first time, a legal platform for cooperation as opposed to continual
confrontation.

628 Labour Relations: A southern African perspective

Some employers have themselves attempted programmes aimed at greater workplace
cooperation. Some of these have had limited success, while others have failed mainly
because they were only task-related. Cooperatives initiated by unions and other
parties have also had mixed success, as have share ownership schemes.
Implementing a participation scheme takes careful planning and will fail without
the involvement and cooperation of employees and their unions.

Chapter 15: Workplace Democracy And Workers’ Participation 629

The Labour Relationship as a Social Partnership
It has been stated in previous discussions that, while conflict is inherent in the employment
relationship, attempts at the containment of conflict are made and the relationship is
maintained only because there is a commonality of interest between the employer and
his employees. Nonetheless and despite the existence of both commonality and conflict,
traditional labour relations structures and systems have been aimed mainly at the
institutionalisation and containment of conflict by the process of collective bargaining.
In collective bargaining, the point of departure is the employer/management’s traditional
prerogative to make decisions regarding the organisation and its employees. Trade unions
have traditionally not attempted to take over or share this prerogative. They have attempted
merely to challenge it and, by collective bargaining, to place limits on the employer’s
powers and authority.
Until the 1950s, free collective bargaining was, with a few exceptions, the focal point
of most developed labour relations systems. During the last 30 to 40 years of the twentieth
century, a gradual shift of focus occurred. The reason for this was, firstly, the fact that
free collective bargaining, entailing also the freedom to strike, involves high social and
economic costs and leads to a polarisation between capital and labour. Secondly, very few
undertakings still belonged to single entrepreneurs. This change towards more diffused
ownership made it more difficult to distinguish the employer/owner as a separate entity.
Thirdly, and more importantly, sociopolitical values and ideologies had changed. Capitalism
and the absolute rule of the market principle were mellowed by considerations of social
justice and egalitarianism, and by the greater interference of governments as protectors of
social interest. Also, employees themselves became more aware and more knowledgeable,
and aspirations increased. This was accompanied by a greater concern for people in society
and in the world of business. The result was a demand for the widening of workplace
democracy, in the form of increased employee participation, both in the decision-making
process and in the profits of the undertaking.
The past decade has seen increasing globalisation and, with it, the rise of neo-liberalism
and its emphasis on individual interests. Consequently, there has in some countries been
a move away from workplace democracy in favour of enlightened human resources
management. (See Chapter 16.) Another reason for this development might well be the
changing nature of work and work relations where employment may be more diversified,
resulting in less emphasis on the collective. (See Chapter 10.)

Principles and Practice of Workplace Democracy

Political democracy is interpreted to encompass, in its basic form, the principles of equal
rights and government for the people by the people. If this concept of democracy is
transferred to the labour relations sphere, then democracy would encompass not only equal
rights for all involved in the organisation, but also the government of the organisation
by all concerned or by their elected representatives. Since, by headcount, employees form

630 Labour Relations: A southern African perspective

the majority in organisations, this would entail government of employees by employees.
Workplace democracy in this, its absolute sense, is practised only where a cooperative of
workers or workers’ councils control the organisation. This form of workplace democracy
is not practised in any modern developed society, although successful individual attempts
at cooperative enterprises have been undertaken in particular situations. Most societies
still support the principle of private ownership, even if such ownership has been diluted by
corporate shareholding. Added to this is the belief that the success of business undertakings
depends on professional management. Consequently, attempts to introduce more democratic
structures and practices at the workplace generally fall under the heading of workers’
participation.

Principles of Workers’ Participation

Workers’ participation entails the involvement of the employee in:
■■ the organisation and planning of the work process
■■ the establishment of procedures and future processes
■■ decision-making at various levels
■■ the management and policy-making bodies of the organisation.

As such, it can take various forms and could range from mere information-sharing and
consultation to joint decision-making and shared ownership. Workers’ participation is
actually intended to promote the extension of democracy in the enterprise. Therefore, only
those forms of participation where employees share in decisions, or are able to influence the
actions of the employer/management, will be regarded as relevant in the present context.

Trade Union Representation versus Workers’

Participation
It could be argued that workplace democracy is best practised by the institutionalisation
of free collective bargaining. Bargaining does limit the authority and prerogative of
management but it does allow for the representation of employee interests as against those
of the employer. By the process of collective bargaining, trade unions and employees can
engage in joint regulation of workplace-related affairs and may jointly solve problems.
Nevertheless, it is preferable to distinguish between the two concepts, since the following
differences do exist:
■■ Trade union representation usually places emphasis on the employer−employee conflict,
whereas workers’ participation tends to promote cooperation (although elements of
conflict and cooperation exist in both practices).
■■ Trade union representation rests on the bargaining relationship, while workers’
participation is based on consensus and the perception of a social and economic
partnership.

Chapter 15: Workplace Democracy And Workers’ Participation 631

■■ A system of workers’ participation presupposes that the right of employees to share in
the decision-making process is accepted. By contrast, collective bargaining recognises
the right of the employer to manage and to take important decisions; unions only
challenge these decisions.

In many developed systems, participation and collective bargaining are complementary

processes. While free collective bargaining continues, participation is instituted to extend
employee influence and to deal with aspects which were either omitted in the collective
bargaining process or are not suited to collective bargaining.
The differentiation between the collective bargaining function and the participation
function does not mean that trade unions and their office bearers cannot be involved in
workers’ participation schemes. In the majority of systems where participation has been
introduced, trade unions play an important, sometimes dominant, role. Also, the shop
steward, being involved as he is in workplace affairs, may act in both a collective bargaining
and a participative capacity. However, participation may also place unions in a dilemma in
terms of their traditional role as antagonists and challengers of managerial decisions.

Levels of Participation
Participation may be instituted at various levels of the organisation, depending on whether
it is task-centred or power-centred – that is, whether it is aimed at participative work
practices or at power-sharing. If it is instituted from a task-centred approach, participation
will be restricted to the lower levels of the organisation and will entail mainly the joint
organisation and planning of the work process. Power-centred participation entails the
involvement of the employee in decision-making related to his section, department, plant
or the entire organisation.
Workplace democracy is extended only by the introduction of power-centred participation.
However, far-reaching democracy will not be introduced if power is shared only at the
highest levels and if there is no task-centred participation.

Forms of Workers’ Participation

Direct and Indirect Participation

Participation may be either direct or indirect. In direct participation, the employees
themselves are involved in the activity or process; in the case of indirect participation, their
involvement occurs through elected representatives.
Decision-making, except at the very lowest levels or in very small undertakings, might
be too time-consuming if it involved the direct participation of all employees. It follows
that meaningful participation takes place mainly by the indirect method and that direct
participation is mostly task-centred by nature.

632 Labour Relations: A southern African perspective

Information-sharing
Some authorities list information-sharing as a form of participation. By information-
sharing is meant the dissemination of information or communication from management to
employees and from employees to various levels of management. It is generally believed that
the continual two-way flow of information alleviates the fear of the unknown on the part
of employees and leads to greater acceptance, involvement and commitment. Although any
form of participation most definitely rests on full and continuous sharing of information,
mere information-sharing is not a participation method in the true sense. It does not in any
measurable or concrete form extend the employee’s sphere of influence.

Independent Work Organisation

The concept of shared or independent work organisation arose from the need to alleviate
the frustration and alienation caused by the fragmentation of modern work processes. The
purpose is to motivate the employee to become involved in his tasks, to gain satisfaction
from his work and, thereby, to become more productive. The most common methods of
achieving these aims are:
■■ job enrichment
■■ job enlargement
■■ job rotation.

In all of these the workforce is divided into independent work groups. These groups are
provided with the necessary material and equipment to do their jobs, and are left to decide
for themselves how the work is to be done, by whom each task will be performed, who is to
lead the group and how long each task will take. An incentive may be added in the form of
a bonus for increased productivity or a share of the profits made from additional outputs.
Alternatively, employees might be given a budget of their own, with any excess profits
being allocated to them. The independent work group, if properly implemented, could:
■■ increase employee satisfaction
■■ encourage individual responsibility and discretion
■■ lead to immediate feedback
■■ give the employee the feeling of having made a significant contribution to the total
process
■■ create a climate for social interaction.

Managers and supervisors may fear a loss of control and authority, but this need not be
the case, particularly if leadership by management is effective and regular meetings are
conducted.
The independent work group does allow the employee a certain measure of control over
his working environment, but participation, if it is restricted to this activity, remains at a
relatively low level.

Chapter 15: Workplace Democracy And Workers’ Participation 633

Plant-level Committees or Councils
The use of plant-level committees or councils is one of the most popular forms of employee
participation, but many such committees are not truly participative. Plant-level committees
may take many forms, some of which are described below.

Liaison Committees
Liaison committees consist equally of management and employee representatives and
are essentially consultative in nature. They are intended to promote interaction between
management and employees, but, since management has a 50 per cent vote on these
committees, it is unlikely that any decision not favoured by management would be taken
by a committee of this kind. This greatly limits the influence that employees on such
committees could exercise in the organisation.
The type of issues dealt with by a liaison committee will be determined by its constitution,
and could range from simple physical and hygiene-related matters to conditions of work,
workplace procedures and future organisational plans.
The higher the level of the issues involved, the greater will be the effectiveness of the
committee, but, even so, managerial representatives on these committees are under no
obligation to agree to the requests or demands of the employee representatives. Yet liaison
committees do serve some purpose. At the least, employees are granted the opportunity of
bringing their interests to the attention of management. At the best, they are consulted on
matters of importance to them and to the organisation.

Workers’ Committees
Workers’ committees are comprised solely or mainly of representatives elected by
employees. Decisions taken by these committees are likely to be more unanimous and more
influential than those of liaison committees. The issues dealt with by a workers’ committee
are determined by its constitution. Its scope could be unlimited, but, as with a liaison
committee, there is no onus on management to accept the suggestions, decisions and
demands of the committee. There are instances where the agreement between management
and employees, or the law itself, obliges management to consult with these committees
before taking decisions on certain major issues. In these instances, committees perform a
more truly participative function.
Workers’ committees which have the support of the entire workforce could exert a
certain amount of pressure on employers/management, but, ultimately, the effectiveness of
workers’ committees and liaison committees depends on management’s true commitment
to participative practices and the perceptions employee representatives hold of their roles.

Safety Committees
Management and employees may decide to form any other kind of committee to deal with
specific issues. The most prevalent type of committee so formed is that which deals with

634 Labour Relations: A southern African perspective

matters of health and safety. In many societies, including South Africa, the law regulates
the establishment of safety committees and prescribes the powers of worker representatives.
(See Occupational Health and Safety Act in Annexures as available online.)

Shop Steward Committees

Although shop stewards are the trade union appointees at a plant, they are also the
elected representatives of a majority of employees. Where there is strong shop steward
presence, management tends to consult with the shop stewards’ committee before taking
any major decisions affecting employees, if only to prevent repercussions from the union.
Shop stewards will also present employees’ grievances and problems to management for
discussion and joint problem-solving. Where they act in a dual capacity as collective
bargaining and participative agents, shop stewards could resent the institution of other
participative structures.

Co-management Committees
Participation may extend to co-management of the undertaking, but this is not very
prevalent. There may be instances where management allows joint decision-making by
elected employee representatives, but even here there is usually not parity in numbers,
and the number of shared decisions is limited. Were full co-management to be introduced,
employee representatives would share in decisions of all kinds, such as the decision to
dismiss or discipline another employee or a manager, to extend or curtail operations or to
cut back on wages.
The lack of shared decision-making at managerial level speaks of a general resistance
among employers to this final encroachment on managerial prerogative. This resistance
could be echoed by unions, who may fear the joint responsibility, possible role conflict and
co-option of employees involved in such a system.

Joint Decision-making on Supervisory Boards

The principle of joint decision-making by employees on supervisory boards or boards of
directors is common practice in a number of Western European countries, and is supported
by a draft directive to this effect issued by the European Economic Community in 1992. The
policy allows for employee-directors, elected by employees or trade unions, to be appointed
to supervisory boards or boards of directors. These boards decide on general policy for
the organisation and its management team, but do not usually function in an executive
capacity; that is, they are not involved in the day-to-day running of the organisation.
In countries where one board fulfils both the policy-making and executive functions,
there is a general resistance to the appointment of worker-directors. It is feared that, if
worker-directors are involved also in the management function, there will be continual
confrontation between employee and managerial representatives, and urgent decisions may
be delayed. The general perception is that, while it may be all right to involve employees

Chapter 15: Workplace Democracy And Workers’ Participation 635

in long-term decisions and policy formulation, they would lack the expertise to function at
management level.
Representation on supervisory boards is very rarely based on equity. Most commonly,
employee representatives constitute one third of the board, the other two thirds being made
up of directors elected by the shareholders. Alternatively, the remaining directorial seats
could be divided between shareholder-directors and independent experts.
The appointment of worker-directors to supervisory boards does bring about employee
participation at the highest decision-making level of the enterprise. A more balanced
perspective is achieved and more equitable decisions may be taken. Worker-directors are
able to represent the interests of employees at this level and to put forward alternatives to
managerial proposals. In essence, such worker-directors share in controlling and supervising
the functions and policies of management. However, the fact that parity representation is not
granted begs the question as to the degree of influence which can be exercised by worker-
directors. It reflects the belief that the final decision should rest with the shareholders or, at
the least, with shareholders and appointed experts. It is also possible that some trade unions
would want this kind of co-responsibility.

Profit-sharing Schemes
The introduction of profit-sharing schemes shifts the emphasis from a share in the decision-
making and work process to a share in the financial rewards generated by employers and
employees in the organisation. Profit-sharing schemes provide for a fixed proportion of
company profits to be paid to all employees, either individually or to a fund established
for the benefit of the employees. Schemes of this nature are intended to bring about a
fairer distribution of wealth. They may also act as incentive to employees to cut costs and
increase productivity and could result in greater cooperation. Yet, unless profit-sharing is
accompanied by other participative practices, the employee does not gain greater control
over his working life, and participation – in the decision-making sense – is not achieved.

Share Ownership Schemes

Share ownership schemes are intended to counter the employer−employee dichotomy by
making employees also the owners, or, more specifically, part-owners of the organisation
for which they work. Under share ownership schemes, employees are encouraged to buy
shares, or are granted shares in the company. Usually they are prohibited from selling the
shares for a predetermined number of years.
It is believed that, even more than with profit-sharing, share ownership encourages
commitment to the organisation and reduces employer−employee conflict. It is argued that
the position of shareholder allows the employee to participate in decision-making at the
highest level. As a shareholder he can question management actions and decisions at the
Annual General Meeting and he may, theoretically, become a member of the board of
directors (although this is highly unlikely).

636 Labour Relations: A southern African perspective

In practice, employees have not proved to be as enthusiastic about share ownership as
might have been expected. One reason for this is the fact that share ownership does not
bring about immediate concrete results, in the form of an improved standard of living. Thus,
if employees feel that they are economically deprived, they may prefer direct economic
rewards rather than intangible investments. Often, shares issued are sold by employees
almost immediately after restrictions on sales are lifted. Also, employees do not see that,
by attending shareholders’ meetings, they could influence the decisions which affect their
working lives. In practice, shareholding schemes are likely to succeed only where employees
subscribe to the same ideologies as employers, or where share ownership occurs through
the collective.

Cooperative Enterprises
Cooperative, worker-managed enterprises have long been the ideal of the socialist worker
movement. This ideal appeared to have reached fruition in the State-run collectives
established by communist governments, but most of these eventually reverted to private
ownership. Those who still strongly support cooperatives attribute their failure in these
systems to the dominant role of the State and to the corruption practised by bureaucrats
and technocrats placed in positions of power. Others would argue that the absence of free-
market competition is largely responsible for the collapse of these systems.
Cooperatives have been established also in capitalist-oriented societies, including South
Africa, and some successes have been registered, but they generally suffer from a shortage
of initial funding. Consequently, they remain small and peripheral, unable to compete on
any significant scale with larger enterprises. Added to these problems of scale are other
organisational shortcomings, such as:
■■ a lack of skilled manpower
■■ the absence of business acumen
■■ little or no training directed specifically at cooperatives
■■ difficulties experienced in establishing democratic principles.

Yet there are theorists who continue to perceive cooperatives as the only and ultimate
vehicle towards the achievement of absolute workplace democracy.

Reasons for Introducing and Supporting Participation

The parties to the relationship have different reasons for supporting participation.
Employers, in general, see participation as a means of overcoming basic employer−
employee conflict and as a step towards cooperation and coalition between employers and
employees or trade unions. Furthermore, there is a perceived economic advantage, in that
cooperation is seen as bringing about greater commitment and involvement on the part of
employees and, thereby, greater motivation and higher productivity.

Chapter 15: Workplace Democracy And Workers’ Participation 637

Employees, and particularly unions, where they do support participation, see it as an
extension of employee influence at the workplace, as a means of power sharing and, in the
extreme, as a step towards eventual control of the productive system. Participation is also
perceived as providing greater protection to employees by extending their representation
in the organisation. Unions may see a cooperative effort as an intensified offensive on the
prerogative of management.
As Salamon (1987) points out, employers still approach any development of workplace
relationships from a one-sided perspective and within the framework of ultimate managerial
authority, while unions protect the collectivist ethic at all costs.

Disadvantages of Participation

The Managerial Perspective

With any type of participative scheme, it is the employer who will give up some of his
traditional prerogative.
The most frequent objection voiced by employers to participation is that shared decision-
making leads to lack of control, that it is a time-consuming process and that, as a result,
managerial efficiency may be detrimentally affected.
They fear that employees may not have the same objectives as the employer and that,
particularly where employees share in higher-level decisions, they will place their preference
for economic benefits and for leisure above the long-term interests of the organisation.
Employees may not see that if they do this, they themselves may be disadvantaged in
the long term. Employers may also object to the fact that it is usually the responsibility
of the employer to equip the employee with the skills which will allow him to participate
effectively in organisational decisions.

Union Concerns
Unions on their part are concerned that joint responsibility and accountability for decisions
will dilute the union’s traditional role as challenger of managerial decisions. This conflict
between cooperation and antagonism is the greatest dilemma faced by unions, especially
where participation at higher decision-making levels is introduced. A union which was
party to one decision by management might find it very difficult to oppose management in
other areas. Cooperation generally detracts from the union’s role as the antagonist.
Unions which adopt the radical perspective will resist participation on the grounds that
it does not change the capitalist system but leads to the co-option of employees within the
existing framework. Trade unions are particularly suspicious of direct employee participation
which is not balanced by any form of indirect or representational participation. In direct
participation, employees are treated as individuals, and commonality of interests, as well as
the combined power of employees, is diluted. The direct forms of participation are also those

638 Labour Relations: A southern African perspective

which might encourage commitment and higher productivity, but which do not greatly
increase the amount of influence employees are able to wield in the undertaking.
On the more practical level, unions may fear that the introduction of participation
schemes will eradicate the traditional boundaries between unions, and that the inclusion
of non-unionised employees in such schemes will dilute union power. There is also the
problem of the role conflict which might be experienced by shop stewards who participate
at the higher decision-making levels.

Implementing a Participation Scheme

General Guidelines
Salamon offers some useful guidelines regarding the implementation of participation within
an undertaking. He advises that:
■■ the employer/management should approach participation without any preconceptions
■■ there should be consultation with employees or their unions before the scheme is
developed so that a joint strategy may be formulated
■■ both sides (employees and employers/managers) should commit themselves to
consultation and shared decision-making
■■ participation should not merely be a boardroom policy but an overall managerial strategy
■■ it should be instituted from the bottom upward as well as from the top downward
■■ supervisors and junior managers should be actively involved in the scheme and also in
higher-level managerial decisions.

Inclusion of Unions/Employees
The introduction of participation may be more difficult where there is a strong union
presence. If this is the case, participation should not be viewed as an alternative to unionism
and collective bargaining, but as a complementary process. Unions and shop stewards have
to be involved in plans for greater participation, but not to the exclusion of non-unionised
employees.

The Need for Training

Participation schemes cannot be introduced without the necessary training. Both managerial
and employee representatives need to be trained in the utilisation of participative structures
and methods. Employees in particular will have to be given extensive information on the
operation of the enterprise. They will need to gain the necessary knowledge and confidence
to participate, to conduct meetings and to question and evaluate managerial plans and
decisions. Both parties will have to learn to approach each other in completely new ways.

Chapter 15: Workplace Democracy And Workers’ Participation 639

The Seven Structural Principles
Although there is no universal formula for democratisation, there are nevertheless seven
structural pillars without which the process cannot possibly succeed.
These are:
1) integrity
2) trust
3) transparency
4) accountability
5) co-responsibility
6) commitment to the organisation and to change
7) continual, meaningful communication.

These seven prerequisites support one another. Should any one of them be absent, the entire
process will collapse.

Participation as an Ongoing Process

Participation is a developing process. Participation in one area will lead to demands for its
extension to other areas. Salamon suggests that no limits should be set. Management should
accept that, once a participation scheme has been introduced, there is no area which might
not, in future, be open to cooperative decision-making.

Workers’ Participation in South Africa

The Concept of Workplace Forums

The Present Position
Although the pre-1995 legislation made provision for committees as an alternative to
unionism for black employees, true workers’ participation in the sense of shared decision-
making was rarely practised in South Africa and, until 1995, not considered important
enough to need legislation. The Labour Relations Act of that year changed this situation. By
providing in the Act for the establishment of statutory workplace forums, the government
signalled its approval of more participatory practices.
To date, the forums which have been established are fewer than may have been expected.
One of the reasons may be that forums have to be initiated by representative unions.
More recently the country’s economic problems – and the growing labour unrest – led to
increased calls for greater cooperation between unions and employers (see Chapters 2 and
4). Whether this will lead to the establishment of more forums, or whether the government
will eventually have to compel parties to establish forums, remains to be seen.

640 Labour Relations: A southern African perspective

Establishment and Functions
Chapter 5 of the Labour Relations Act provides that a statutory workplace forum may, at
the request of a majority union or unions, be established in any workplace which employs
100 or more persons. The purpose of the forum is to promote a cooperative relationship
between employees and management through consultation and co-decision-making on
specific issues. It is hoped that this will promote a more peaceful labour relationship, co-
responsibility and, consequently, improved productivity and efficiency.
Although a forum can be initiated only by a representative union, the eventual
distribution of seats on the forum must reflect the composition of the workforce. In terms
of the Act, a workplace forum should strive to promote the interests of all employees at the
workplace, whether they are union members or not, and to improve efficiency/productivity
at the workplace.

Definition of Employee
The term ‘employee’ is specifically defined in the relevant section of the Act. It includes all
persons employed at the workplace, with one exception, to-senior management staff are not
included if their service contracts or status allows them to:
■■ represent the employer in interactions with the workplace forum
■■ determine policy
■■ take decisions which may lead to conflict with employee representatives at the workplace.

Matters for Consultation

Except where a collective agreement (in the public service, this refers only to a bargaining
council agreement) determines otherwise, a workplace forum is entitled to be consulted on
proposals relating to any of the following matters:
■■ the restructuring of the workplace
■■ the introduction of new technology and work processes
■■ changes in the organisation of work
■■ partial or complete plant closure
■■ mergers and transfers of property rights, insofar as these affect employees
■■ the dismissal of employees based on organisational requirements (retrenchments and
redundancies)
■■ exemptions from agreements or from any legal provision
■■ job grading
■■ criteria for the granting of merit increases or discretionary bonuses
■■ education and training
■■ export promotion.

Chapter 15: Workplace Democracy And Workers’ Participation 641

A bargaining council having jurisdiction may grant workplace forums the right to
consultation on additional matters. Furthermore, the employer and the majority union(s)
may conclude an agreement on additional matters for consultation, or another law may
determine that additional matters be subject to consultation.

Nature of Consultation
The purpose of consultation is to reach agreement/consensus. According to Section 85 of
the Act the employer must:
■■ consult with the forum on any matter required by law
■■ allow forum members to make representations and suggest alternatives
■■ seriously consider all suggestions
■■ if he does not agree with the forum, furnish reasons for such disagreement
■■ if no agreement can be reached, follow an agreed procedure aimed at reconciling
differences before implementing his plans.

It is evident that the Act intends consultation to be taken seriously but that, once procedures
have been exhausted, the employer may make the final decision.

Matters Subject to Joint Decision-making

The Act obliges the employer to engage in joint decision-making with workplace forums on
any proposal relating to the issues listed below (unless they have already been dealt with in
a collective agreement):
■■ disciplinary codes and procedures
■■ rules relating to the regulation of conduct (the disciplinary code but not work
performance)
■■ measures aimed at protecting and developing employees previously disadvantaged by
unfair discrimination
■■ changes to rules regulating social benefits which are controlled by the employer.

A newly constituted workplace forum may request an employer to produce for review
the already existent criteria for merit increases and discretionary bonuses, disciplinary
procedures and the rules for regulating conduct.
Where the employer and majority union(s) agree, additional matters may be subjected to joint
decision-making, or certain matters may be removed from the list. Any other law can grant
workplace forums the right to co-decision-making on matters other than those listed above.

The Joint Decision-making Process

The aim of the joint decision-making process is to achieve consensus. This means that all
parties should be persuaded that the solution offered is the best possible one. Consensus

642 Labour Relations: A southern African perspective

differs from agreement in that agreement entails compromise and is sometimes reached by
majority decision, whereas consensus implies unanimity.
The joint problem-solving approach should be adopted and the parties should search
for viable alternatives which are acceptable to everyone. Consensus is not easily achieved.
For this reason, the legislation determines that, where consensus is not possible, the
employer may submit the matter to arbitration in terms of an agreed procedure or, if there
is no procedure, to the Commission for Conciliation, Mediation & Arbitration (CCMA). The
Commission will attempt to conciliate but, if this is unsuccessful, the employer may request
the Commission to engage in arbitration.
The Act is mute on the steps to be followed should the employer decide not to submit the
dispute to arbitration. However, since he may not implement proposals or procedures until
consensus is achieved, it is doubtful that an employer will choose this alternative. It would
appear preferable for both parties to reach agreement on consensus-achieving mechanisms,
such as fact-finding or task groups, and to build these into their own procedures.

Applying for a Workplace Forum

A majority union or two or more unions acting together and forming a majority at a
particular workplace can apply to the CCMA for the establishment of a workplace forum.
The application must be accompanied by proof that a copy has been served on the employer
concerned.
Once the Commission receives the application, it has to make sure that:
■■ there are more than 100 employees at the workplace
■■ the applicant union(s) represents the majority of employees at the workplace
■■ another functioning forum, operating in terms of the Act, has not already been
established.

Thereafter the CCMA will appoint a Commissioner whose role will be to assist the parties
in reaching a collective agreement relating to the establishment of a workplace forum. The
Commissioner has to call a meeting between the employer and all registered unions in the
workplace or, at the very least, between the employer and the applicant union. Once an
agreement is reached, the role of the Commissioner has been completed. If no agreement is
reached, the Commissioner will once again attempt to bring about agreement. Failing this,
he will establish a forum, appoint an electoral officer and set a date for the election of the
first forum members.
In the case of the public sector, the Commission does not need to be involved as the relevant
minister has the right, after consultation with the coordinating public service bargaining
council, to publish a notice in the Government Gazette whereby a schedule regulating the
establishment of workplace forums in the public service is appended to the Act.
Where a union is recognised by way of a collective agreement as representative of all
employees at the workplace, it may apply for the establishment of a union-based forum,

Chapter 15: Workplace Democracy And Workers’ Participation 643

and may then select representatives to the forum solely from its own ranks. The nomination,
election and removal from office of representatives would then be regulated by the
constitution of the applicant union. A union-based forum will be dissolved if the agreement
ends or the union concerned no longer has majority representation.
This provision would, in practice, mean that shop stewards could have two representational
bodies: the shop stewards’ committee and the workplace forum.

Definition of Workplace
The term ‘workplace’ is defined in the Act as:
■■ the place or places where those employed by a particular employer work; where the
employer conducts two or more operations which – in terms of their size, function or
organisation – are independent of one another, each operation is a separate workplace.

This wide and rather ambiguous definition may cause confusion, but the word ‘independent’
should be regarded as crucial. (See below, and also Chapter 5.)

Constitution of a Workplace Forum

Section 82 of the Act contains specifications regarding the various matters to be covered by
the constitution of a workplace forum, including the manner in which representatives are to
be elected. An employee may be nominated to the workplace forum by any registered trade
union with members at the workplace or by means of a petition signed by 100 employees or
20 per cent of the workforce, whichever is the lesser.
(Schedule 2 as appended to the Act provides further information and advice on the
constitution of the workplace forum.)

Forum Meetings
The legislation explicitly provides that the workplace forum must:
■■ meet regularly as a forum
■■ also hold regular meetings with the employer/employer representatives, at which the
employer must report to the forum about:
◗◗ the financial and employment situation
◗◗ the performance of the organisation since the last report
◗◗ expected short- and long-term performance
◗◗ any matter arising which may affect employees at the workplace
■■ at regular intervals hold meetings with employees at the workplace during which the
forum should report on:
◗◗ the forum’s activities in general
◗◗ the matters regarding which it has engaged in consultation and co-decision-making
with management.

644 Labour Relations: A southern African perspective

The employer must also call an annual meeting with employees at which he must present
a report on:
■■ the financial and employment situation
■■ the overall performance of the organisation
■■ plans and prospects.

Meetings with employees must take place during working hours without loss of pay by
employees, at a time and place agreed upon between the forum and the employer.

Establishing a Workplace Forum

Prerequisites
The expressed purpose of workplace forums is to promote cooperation and greater efficiency
and productivity in the organisation. Whether they achieve this purpose will depend to a
large extent on:
■■ the manner in which they are established and function
■■ the attitudes of unions, other non-unionised employees and management towards the forum
■■ whether unions can separate their bargaining function from their cooperative function.

Union Dominance
The need to separate the bargaining function from the cooperative function is important,
since the activities of unions and shop steward committees at plant level overlap to a large
extent with the functions of workplace forums. For this reason, workplace forums operate
more easily and independently where collective bargaining is restricted to centralised level.
The legislators’ insistence that unions play a dominant role in the establishment and
functioning of workplace forums does complicate the issue. This situation is exacerbated by
the additional provision in the Act that a union which has been recognised as bargaining agent
for all employees at the workplace may elect forum members from among its shop stewards.
A forum applied for by a non-majority union or unions will have no legal status. However,
this does not prevent an employer who has no significant union presence in his organisation,
or the employees in that organisation, from approaching the other party and establishing their
own forums. These would be regulated by agreement rather than by statute.

Ensuring Independence of the Workplace

Even before any initiatives are taken towards the establishment of workplace forums,
agreement should be reached on the definition of ‘workplace’. If this is not done, unnecessary
disputes are bound to arise. The parties need to establish whether the workplace for which
the forum is intended can be described as independent in terms of its size, function or
organisation. Where the employer has different workplaces or where operations are
geographically spread, a decision needs to be made as to whether the parties will opt for a
coordinating workplace forum with various subsidiary forums.

Chapter 15: Workplace Democracy And Workers’ Participation 645

Agreement on Common Values and Purpose
Before the constitution and procedures are agreed upon, parties should reach consensus on
the purpose of the forum, and particularly on the values which underlie its establishment. This
may require some time since employers and employees may approach the issue from different
perspectives. A clear distinction should be made between matters to be dealt with by negotiation,
and those which will be subject to consultation and co-decision-making by the forum.

Common Understanding of the Consultation and Co-decision-making

Process
The parties need to achieve a common understanding of what is meant by these processes
and to set in place a framework for consultation and co-decision-making procedures. They
also need to reach agreement on the processes to be followed if no agreement or consensus
can be achieved.

Agreement on Important Aspects

The employer/manager needs to present his understanding of the organisational situation
and the different categories of employees, where after the parties should engage in
consultation regarding the management level to be excluded from the workplace forum and
on the type of representative spread which would ensure full and equitable inclusivity. At
the same time, the employer will need to designate the senior employees who will represent
the employer in dealings with the forum.

Clarification of Confidentiality Provisions

The employer should share with the other party his concerns regarding disclosure, with the
purpose of creating mutual understanding on how a breach of confidentiality could affect the
entire organisation and, therefore, all stakeholders. At the same time agreement could be reached
regarding the sanctions to be imposed on individuals who have breached confidentiality.

Drawing up a Constitution
Many of the aspects mentioned above will eventually form part of the constitution. Certain
provisions regarding the constitution, as outlined in the legislation, may be amended or
omitted by agreement between the parties.

Appointment of an Electoral Officer and the Holding of Elections

Once an electoral officer has been appointed in terms of the constitution, nominations
should be canvassed, and elections held as soon as possible thereafter. The Commission for
Conciliation, Mediation & Arbitration may be requested to render assistance in this regard.
Members elected to serve on the forum should immediately be installed and the first
meetings with management and with employees should be held as soon as possible.

646 Labour Relations: A southern African perspective

Training of Forum Members
At the forum’s first meeting with management, or as soon as possible thereafter, an analysis
of training needs should to be undertaken in order to establish a training programme for
members. This can be done only if the meeting discusses the types of issue to be dealt with
in meetings between management and the forum, the processes involved and the nature of
the information to be disclosed.

Review of Practices and Policies, Goal-setting and Monitoring

In all likelihood, the members of the forum would wish to review existing policies and
practices related to those issues which are to be subject to consultation and joint decision-
making. In the light of this, the parties can establish objectives for the forum as well as a
monitoring procedure intended to check on progress and on the efficacy of the consultation
and joint decision-making processes.

Labour Relations Realities

When assessing the viability of forums, the South African labour relations reality needs to
be considered.
In South Africa, historical divisions among employees still impact on work relations
and on the willingness of all employees to pull in one direction. Although relationships
have improved in many respects, there is still a measure of distrust between employees and
unions on the one hand, and employers or their representatives on the other. The tag of
‘racial capitalism’ still adheres. In these circumstances, a paradigm shift to a cooperative
system embracing all employees, although desirable, may not materialise immediately.
Unions might find it difficult to surrender what they regard as their central position
at the workplace, and may have to be satisfied with regulating wages and other general
matters from a centralised level. The major unions might hesitate to do so. Even if these
problems are solved, the issue of employee divisions might remain.
In view of the above, it is not surprising that union reaction to the concept of workplace forums
has been ambivalent. On the one hand they see the provisions of the Act as extending employee
rights and influence at the workplace and providing unions with information to which they
might otherwise not be entitled. On the other hand, they may be concerned that the introduction
of workplace forums could eventually weaken union organisation and undermine shop-steward
representation at the workplace. This may happen even though forums are union-initiated, and
even though the majority union(s) may elect forum representatives from its own ranks.
Unions might foresee problems arising from the fact that there would be two separate
structures in the shape of the shop-stewards’ committee and the workplace forum. Numerous
items scheduled to be subject to consultation and co-decision-making by forums are part of
the normal union agenda and, if no agreement is reached, they can ultimately engage in a
show of strength related to demands around these issues. Where these matters become part
of the joint decision-making process, this would no longer be possible.

Chapter 15: Workplace Democracy And Workers’ Participation 647

Not only does joint decision-making preclude the right to strike, but it also places joint
responsibility on the participants and prevents an eventual challenge from the unions.
Unions continue to view themselves as having to take a position vis-à-vis employers and
even the State, and as enforcing their demands by mass action. Until such time as unions
are able to distinguish between bargaining and participation, until both sides cease to revert
to the use of coercive power whenever disagreement arises, and until a clear distinction
is drawn between aspects to be dealt with by bargaining structures and those to be dealt
with by consultation and co-decision-making, a great deal of confusion as regards the
functioning of forums is bound to exist.

Other Initiatives towards Greater Participation

By 1985, a number of major South African enterprises had become aware of the ills and
problems resulting from continued adversarial labour relations. In an effort to improve
the relationship and to gain commitment of employees, these companies, together with
others which had not been unionised but were progressive by nature, began to implement
participative strategies. The strategies varied from quality circles, green areas, ‘shared value’
and ‘relationship by objective’ programmes to extensive direct and indirect representation.
Not all could claim unqualified success, but those which appeared to be most successful
were the programmes which recognised the individual as well as the collective, and where
decision-making was shared also at the highest level of the enterprise.
As stated so often in this text, the introduction of participative structures is a lengthy and
cumulative process. Most business enterprises and unions in this country have taken only
the first tentative steps.

Conclusion
The concept of workplace democracy is one of the most relevant contemporary labour
relations issues. The shift towards corporate ownership, the convergence of socialist and
capitalist principles in society and the questioning of traditional institutions and values
made it necessary to reassess the roles of the employer and employees in the enterprise.
Differences in perceptions as to the depth and breadth of democracy will continue to exist
and will be a point of contention between employees, unions and management, and among
individual unions. Nevertheless, some form of compromise will have to be achieved between
collective bargaining and cooperation, between management’s desire to manage effectively
and the employee’s desire to be party to decisions affecting him, and, finally, between
the capitalist−individualist orientation of most employers and the socialist−collectivist
ideologies of numerous employees and unions.
The need for greater cooperation on all fronts becomes particularly relevant in view of
the country’s labour market and economic challenges and the as yet unknown changes in
the next two decades.

648 Labour Relations: A southern African perspective

Suggested Questions/Tasks
•• Your union has decided that it wishes to establish a statutory workplace forum at
the Strong Leather Company which has branches all over the country. The largest
branch sources and processes leather for the other branches. Another branch
manufactures saddles for horses. Others are footwear manufacturers while, yet
others make children’s toys from leather scraps.
oo Under what conditions would the union be allowed to request that a forum be
established?
oo What advantages does the union see in the establishment of a forum?
oo Could a forum be established to cover all Strong Leather’s operations? Explain.
oo What would the parties have to consider before drawing up their constitution?
oo Draw up a constitution for the proposed forum.
oo What would be the next step? Provide details.
oo Who could be represented on the forum if your union is the majority union?
oo What would your union have to prove if it wanted to appoint only its shop
stewards as employee members?
oo What would be the first matters to be addressed by the forum?
oo How would you go about training forum members to engage in joint problem-
solving/more cooperative processes?
oo Provide your own assessment as to the future success of the forum.

Sources
Anstey, M (Ed). 1990. Worker Participation. Juta.
‘A Slice of the Wealth Cake’. The Argus, 18 July 1987.
Benjamin, P. 1995. ‘Reforming Labour’ in South African Labour Bulletin, vol 19 no 2, Umanyano
Publications, May.
‘Cashbuild assured of a free rein’. Sunday Times, 5 October 1991.
‘ESOPS – More than just a fable on the table in US planning for SA’, The Argus, 20 October 1987.
European Economic Community. Available: www.inoplease.com. (Accessed 17 August 2018).
Hunt, E & Sherman, HJ. 1978. Economics: An Introduction to Traditional and Radical Views. Harper & Row.
Koopman, AD, Nasser, ME & Nel, J. 1987. The Corporate Crusaders. Lexicon.
Maller, J. 1992. Conflict and Cooperation. Ravan Press.
‘Minister Encourages Employers to Talk to Unions’. The Argus, 20 April 1982.
Pasic, N, Giozdavic, S & Radevic, M. 1982. Workers Management in Yugoslavia, International Labour Office.
Salamon, M. 1987. Industrial Relations Theory and Practice. Prentice Hall.
The Shop Steward, April/May 1995.
Von Holdt, K. 1995. ‘Workplace Forums: Undermining Unions?’ in South African Labour Bulletin, 9(6),
Umanyano Publications, December.

Chapter 15: Workplace Democracy And Workers’ Participation 649

 16

Organisational Development in the

New Millenium

Chapter Outline
OVERVIEW
THE NEED FOR CHANGE
Change in the South African Context • Change in a Wider Context • Challenges facing the
Government • Challenges Facing Organisations • Co-responsibility for Change
IMPLEMENTING A CHANGE PROCESS
The Role of the Employment Relations Specialist • Complexity of the Process • Gaining Commitment
Initiating Change • Spreading the message | The Environmental Scan | The Internal Audit | Formulating
a Vision, Mission and Objectives | Obtaining ‘Buy-in’ | ‘Panel-beating’ the Organisational Structure |
Continuing Development and Training | Continuous Reassessment
CONCLUSION
SOURCES
 Overview
Chapter 15 emphasised the need for democratic and forward-looking practices at
the workplace. These involve change. In order to keep in step with a rapidly changing
world, organisations (and especially South African organisations) have to continually
reassess their position.
Throughout the twentieth century, technology, and with it, workplace practices,
developed at an ever-increasing rate. According to the World Economic Forum, the
twenty-first century will see increased and even more rapid change.
It is self-evident that, as the nature of work changes it becomes necessary also to
adopt different approaches, structures and relationships. The task of the employment
relations specialist then moves away from mere negotiation and the establishment
of structures, policies and procedures to a more developmental role as agent for and
facilitator of change.
Because the changes to come may be as radical as those experienced at the onset
of the First Industrial Revolution, adapting organisations, processes and relationships
will be a complex task in which the person responsible for employment relations will
play an important role.

Chapter 16: Organisational Development in the New Millenium 651

The Need for Change

Change in the South African Context

After the first democratic elections it was obvious that South African organisations had
to change and that the need for change would be ongoing. As has become evident from
previous chapters, numerous changes were introduced in an effort to bring about a more
democratic dispensation in both the sociopolitical and industrial frameworks and to create
a more equal society. This process is continuing, but has not progressed at the desired pace,
partly owing to the fact that the economy has not grown as expected and also to sometimes
misguided interventions.
At present South Africa is still facing multiple internal challenges in the form of poverty and
inequality, an almost static economy, continued high unemployment, and inadequate education
and training, to give just a few examples. These are already daunting challenges. However, the
necessity for change stems not only from concern with more democratic and growth promoting
practices in the ‘new’ South Africa, but also from universal social and economic changes.

Change in a Wider Context

In various chapters in this text reference has been made to the onset of the Fourth Industrial
Revolution, the changes which are already upon us and those which are yet to come. It has
become increasingly apparent that work and related structures and activities will undergo
extensive change within the next two to three decades and that workers, governments and
employers need to adapt their way of doing business and to plan for the expected changes.
This does not mean that human work will disappear, but that the nature of work will
change. To give but a few examples:
■■ Technology improvement will favour high skills and ‘cognitive social abilities’.
■■ Routine work, which is already on the decline, will increasingly be replaced by non-
standard work.
■■ This will result in a further polarisation of the labour market, with concomitant pressure
on wages, especially in the middle layer of the market.
■■ An entirely new development will be the introduction of ‘platform-based work’ where a
worker performs tasks through a digital platform and where there is no factory and no
visible management.
■■ There will be more and more independent contractors and providers.
■■ Unions and collective bargaining bodies may become less important.

In general, the rate of change is predicted to be faster than during any other similar
revolution in history.
The predicted developments will result in a reduction of existing jobs, but it is expected
that at the same time new jobs will be created by technological and societal changes. In

652 Labour Relations: A southern African perspective

this context workers will have to continually develop new skills and the very nature of
organisations and work relationships will change. Companies may have to develop new
business in adjacent segments and to continually assess the value or otherwise of existing
departments and sectors. Outsourcing and casualisation will be more frequent. Consequently,
participants will have to come up with new forms of social and employment contracts that
suit the changing workforce and the changing nature of work.
In short, all participants including the government, will have to be continually aware of
already existent and expected changes, not only in terms of technological advancement and
the nature of work, but also in societal and business structures, and will have to adapt their
perspectives, policies and practices accordingly.

Challenges Facing the Government

The global picture has been emphasised, since it is essential to view workplace developments
within the broader context of global change. Should we fail to do so, the very real danger
exists that we will be blinkered by changes in our own microcosm, so that organisational
change (if it occurs) will be narrowly directed only towards meeting immediate sociopolitical,
economic and legal demands. This will leave South Africans in the not too distant future
wondering what happened and where we went wrong.
In the face of expected changes, the government will have to continually re-evaluate
its approach to workplace relationships and particularly its policies, regulations and laws
governing these. Instead of concentrating on the situation as is and on control of that
system, it will have to be more forward-looking and provide for all possible eventualities,
for new rules, new types of organisations, relationships and contracts. Its priorities should
be to establish pathways for economic growth in the context of expected changes. This
should take place in consultation with all stakeholders.
The task facing the government is not easy, particularly as it is still attempting to
address the lack of sufficient progress over the past 18 years. However, it cannot afford to
concentrate on South Africa’s unique problems in the face of expected global developments.

Challenges Facing Organisations

In order to face the challenges ahead, organisational players will need to engage in what
Hickman and Silva (1973) call ‘complexity management’. This approach rests on the
following assumptions – namely:
■■ The management of people and organisations is multilayered and multidimensional.
■■ Relationships, processes and structures are not cast in stone but are essentially dynamic
and interchangeable in nature.
■■ There is a need for proactive rather than reactive interventions.
■■ Both the individual and the collective should receive recognition.
■■ A shift from controlling people to managing relationships is a primary requirement.

Chapter 16: Organisational Development in the New Millenium 653

■■ Employers should focus not only on making money but also on its equitable distribution.
■■ The business of business should be governed by a strong ethical and moral code,
applicable to all involved in the organisation.

In short, all parties need to realise that, as we progress in the new millennium, the challenges
will become more complex. It will no longer be business as usual, ownership as usual,
structures as usual and relationships as usual.
In the light of these developments, the parties will need to:
■■ redefine their roles and functions
■■ become more effective
■■ develop, with others, ways of becoming more productive and efficient
■■ share rewards
■■ create space in which people can grow
■■ encourage openness and transparency.

Co-responsibility for Change

The responsibility for change does not rest solely with the employer or the government. The
providers of work/services will need to undergo a drastic change in perspective and attitude.
They need to:
■■ realise that they are responsible for their own quality of life
■■ commit themselves to excellence
■■ give value for money
■■ shift their focus from the immediate short term to the longer term
■■ become more proactive
■■ engage in continuous self-improvement
■■ develop the confidence and skill to take the initiative.

Implementing a Change Process

The Role of the Employment Relations Specialist

More progressive organisational styles centre on the continual development of both the
work situation and the relations between those involved. It is envisaged that this will
become the main task of the HR/IR specialist, and that he will be closely involved with
and, in fact, mostly responsible for, organisational development. In fact, some more
progressive organisations have already realised that employment relations specialists should
be the drivers of new organisational processes and initiatives. In fact, the South African
Government has declared Technology, Human Resource Management, Tourism and Mining
to be focus points for the immediate future.

654 Labour Relations: A southern African perspective

Complexity of the Process
Awareness of the need for change and acceptance of its prerequisites form the foundation
of a change initiative, but the change process itself is the most complex. The process
of evolutionary change does not rest on a single initiative or set of initiatives, but on
continuous, dynamic interaction which will take years to climax. It is often discouraging
because it may seem that nothing is happening. Furthermore, it is not a smooth process. All
aspects of the process are interrelated, and the exact format will differ from one institution
to another and from one year to the next.

Gaining Commitment
As a first step in the change process, the main players have to be made aware of the need for
change. They must themselves believe in and be totally committed to the change process. If
they merely pay lip service to the principle, other stakeholders will either relapse into apathy
or eventually engage in revolt.
Transformation workshops, encompassing interaction and correct sensitivity training, are
required at this stage, as the greatest resistance is bound to come from those in positions of power.

Initiating Change
Spreading the Message
In the second stage, the initiative goes public, commencing with a sincere expression of
intent by management, followed by an indaba of internal stakeholder representatives,
supported by similar indabas at all other levels. The purpose is to build support, commitment
and trust, but this cannot be done before the organisation and all participants take a clear
and honest look at themselves and admit to past mistakes.
The initial stages would entail employees and existing management engaging in open
exchange and clearly identifying areas of dissatisfaction with the organisation, each other,
other stakeholders or the work process. The facilitator will assist in depersonalising issues
and translating them into problems. All stakeholders should be given the opportunity to say
what they expect from the process.
This type of interchange requires that positions of equality be established, that previous
power-holders relinquish assumptions of power and control and that an atmosphere is
created in which all views are accepted and valued. All parties should display a willingness
to move from existent paradigms and attitudes, to enter into new relationship patterns
and to accept responsibility for the change process. Certain problems may be minimised or
eliminated merely by speaking about them and exchanging opinions.
Major problems will have to be addressed, but, in doing so, parties should stay with that
which is real and possible (reality testing). Representative committees need to be appointed to
deal with particular problems. Their main task will be to remove existing obstacles, such as
unnecessary regulations and bureaucratic controls, in order to facilitate future change processes.

Chapter 16: Organisational Development in the New Millenium 655

During this phase the principles of democracy, transparency and accountability should be
clearly established as a basis for any future interactions. These are fundamentals in the
light of which all future actions will be judged, and without which trust, the remaining
fundamental, cannot be engendered, thus dooming all future initiatives to ‘half-life’ or to
absolute failure.
Admittedly the process as described above is not without its obstacles. The employer/
management may cling doggedly to power and resort to existing systems of control and
regulations as a camouflage. Employees may not initially be capable of handling their new roles
and may at first pursue only their own objectives. They may have been dulled into apathy or
scepticism by previous practices or past unsuccessful attempts at change. These obstacles should
be openly addressed and unpacked, and strategies for overcoming them must be put in place.
This clearly illustrates the complexity of every stage of the change process and the need
for continued communication and workshopping. The situation should be reassessed on an
ongoing basis. Further initiatives towards transformation can be undertaken only after a
basic cultural shift has occurred.

The Environmental Scan

This phase entails a thorough scanning of the environment and of the organisation’s position
in that environment. Questions to be asked include the following:
■■ Is emphasis being placed on the most relevant areas?
■■ In which areas of business and industry will new needs arise?
■■ What changes have occurred in the general population?
■■ What is the educational, social and experiential profile of this population?
■■ What external policy frameworks are being developed or are likely to be developed?
■■ Are existing systems and structures suited to the new demands?
■■ Which technologies are available to facilitate the task?
■■ What is being done in South Africa and elsewhere in the world?
■■ On which financial resources could the organisation draw?
■■ What changes are likely to occur?
■■ How can the organisation best position itself in the existing and future environment?

The Internal Audit

While the environmental scan will provide the organisation with a broad framework for
establishing its mission and objectives, no specific objectives can yet be established, as the
second part of the exercise – the audit of existing and potential internal resources – still has
to be undertaken. This entails a thorough assessment of the financial, material and human
resources of the organisation, and is the reality check which will prevent the parties from
setting unrealistic objectives. It may equally create awareness of untapped resources. At the
very least, it will lead to the formulation of short-term strategies aimed at expanding or

656 Labour Relations: A southern African perspective

improving the resources – for example, retraining or development of the human resource
potential or renewed attempts to access financial resources.

Formulating a Vision, Mission and Objectives

It is accepted that, in line with the new culture, the above steps will have been undertaken
in conjunction with representatives of all stakeholders. The next stage would commence
with the joint establishment of a vision and mission for the organisation and the setting
of realistic yet ambitious objectives. A thorough environmental scan and a meaningful
vision and mission will lead to the setting of objectives aimed at both effectiveness and
efficiency. Once these broad organisational objectives (sometimes supplemented by more
specific objectives) have been established, short- and long-term strategies to achieve the
objectives are put in place.

Obtaining ‘Buy-in’
Once they have established a new mission and vision and framed the necessary objectives
and strategies, these must be taken to the coalface. The employer/management should
contract with employees for concrete change and display a willingness to embrace new
paradigms and experiment with new structures and procedures. Functional units or teams
need to be created, responsibilities should be reassessed, and reassigned and new leadership
styles implemented. Functionality and expertise, and not status or administrative ability,
become the dominant criteria.

‘Panel-beating’ the Organisational Structure

The change process will probably involve a decentralisation and delegation of power,
decision-making and responsibility. This may entail that each section or department
becomes an independent profit centre, that administrative functions are decentralised as
far as possible and that the overall structure of the organisation is flatter than before. Each
centre should be allowed maximum flexibility and autonomy within the framework of the
overall objectives.

Continuing Development and Training

In all areas participants should be encouraged to share responsibility and decision-making
and to engage in self-direction, self-motivation and self-control. These persons have to be
equipped and supported to play their new roles. It may also be necessary to establish support
systems which encourage employees to take responsibility for their own development and
which promote a general culture of continuous development.
Close liaison with customers is another imperative, as is the assessment of both individual
and group performance in terms of jointly established competencies and criteria. The
role of the leader becomes that of facilitator, coordinator and supporter – the creator of
opportunities for people and the organisation.

Chapter 16: Organisational Development in the New Millenium 657

Continuous Reassessment
The change process is dynamic and indefinite and frequent reassessment is essential.
Participants need to workshop frequently, to assess where they are and where they are going,
and to identify dysfunctional aspects. If necessary, they may have to backtrack and go in a
different direction. This is all part of the process, and, even where all the phases have been
implemented, new horizons and challenges will already have emerged. This will necessitate
a move forward by repeating the process, but, hopefully, now at a more advanced level.

Conclusion
The world at present is one where, as Johnson puts it, ‘… the once reliable constants have
now become galloping variables’ – where the only constant is change.

Sources
Barraclough, G. 1990. An Introduction to Contemporary History. Penguin.
Bennis, WG. 1966. Changing Organisations. McGraw-Hill.
Fox, A. 1966. ‘Industrial Sociology and Industrial Relations’. Royal Commission Research Paper no 3,
1966.
Hickman, CR & Silva, MA. 1973. The Future 500. Allen & Unwin.
Rifkin, J. 1995. The End of Work: The Decline of the Global Labour Force and the Dawn of the Post-Market
Economy. Pulman Publishing Group.
Salamon, M. ‘Individual and Collective Rights and Responsibilities in Creating Wealth’. Paper delivered
at Industrial Relations Conference, Johannesburg, March 1990.
Schwab, K. 2016. The Fourth Industrial Revolution. World Economic Forum. Available: https://www.
weforum.org/about/the-fourth-industrial-revolution-by-klaus-schwab. (Accessed 25 August
2018).
Semler, R. 1994. Maverick. Arrow.

658 Labour Relations: A southern African perspective

 Index

A page number in italics indicates a table or figure. A page number in bold indicates a case
review on the topic.

A Amended Code of Good Practice on the Handling of

abuse of sick leave provisions 335–336 Sexual Harassment in the Workplace 396–397
Accelerated Shared Growth Path Initiative for ANC see African National Congress (ANC)
South Africa (ASGIsa) 68, 481–482 arbitration 550–552, 554–556
advisory arbitration 551, 590–591 see also dispute settlement processes
affirmative action 93 arguments during negotiations 526–527
see also employment equity ASGIsa (Accelerated Shared Growth Path Initiative
affirmative action programmes 427–429 for South Africa) 68, 481–482
affirmative appointments 439–446 Association of Mineworkers and Construction
‘black people’ 417, 420–421 Union (AMCU) 76, 177
consultation 136
demographics 421–422, 422–427 B
designated employers 134, 417, 418–419 Bantu Labour (Settlement of Disputes) Act of 1953
designated groups 135, 417 54
equity plans 136–139, 137, 429–431 bargaining
problems with affirmative action 419–422 see also collective bargaining
quotas 419, 422–427 bargaining levels and partners 242
reverse discrimination 420 distributive bargaining 201
affirmative action programmes 427–429 duty to bargain 243–245
equity plans 429–431 good faith bargaining 241–242
African National Congress (ANC) 47 indirect compulsion to bargain 241
approach to labour market 479–480 integrative bargaining 201
economic measures 67–68, 75, 480–482 voluntary nature of bargaining 240–241
and the Tripartite Alliance 172, 174–175 bargaining council agreements 92–93, 232–236
agency shops 122–123, 224, 226–228, 563 bargaining councils 123, 230–232
agreements admission to 564, 565
agreement to bargain 535 in the public service 123, 236
bargaining council agreements 92–93, 232–236 bargaining relationship 195–199, 197
enforceability of agreements 230, 536–537 bargaining structures 201–202, 205–207, 239–240
monitoring of 536 centralised bargaining 204–205, 230–232
types of agreement 535–536 decentralised bargaining 203–204, 237–239
AMCU (Association of Mineworkers and bargaining units 201–202
Construction Union) 76, 177 Basic Conditions of Employment Act of 1997 71,
115–116
BBC (Black Business Council) 91, 183 Maintaining Neutrality 273–275
Bill of Rights 88 National and regional demographics and quotas
Black Business Council (BBC) 91, 183 422–427
Black Consciousness unions 76, 166–167, 168, The Need to Explore all Possibilities 331–335
178–179 The New Dilemma 371–374
Black Labour Relations Regulation Act of 1973 Notice of Disciplinary hearing 272–273
60–61, 62 Occupational Detriment arising from a Protected
black trade union movements 49–50, 56, 58, Disclosure 310–318
59–62 Permissibility of Automatic Termination Clause
Botha Commission 54 in Contract 302–304
boycotts 583 Prolonged Absence as Incapacity 329–330
breach of contract 98 Reasons for Retrenchment and the Need to
BUSA (Business Unity South Africa) 183 Consult 341–347
business chambers 182–183 Renewal of Contract 298–301
business unity organisations 183 Representation Thresholds 218–220
Retrenchment - Employer employing more than
C 50 persons 366–370
capital mobility 476 Sexual harassment 397–398
capitalism 47, 66 Transfer of Business as a going concern
criticism of 36–37, 175, 179, 466 377–381
case reviews Transfer of Contract following a merger
Affirmative appointments 439–446 383–386
Age discrimination 404–411 Who is the Employer, If Any? 108–111
Agency Shop 226–228 caucusing during negotiations 528
Application for Representative Rights 215–217 CCMAA (Commission for Conciliation, Mediation
Arbitrary grounds or inherent requirements of & Arbitration) 126–127, 552–556, 559–560
the job? 399–404 centralised bargaining 204–205, 206, 230–232
Closed Shop 228–230 change
Compliance with equity provisions 431–433 implementing change processes 654–658
Consideration of Alternatives 356–357 need for change 652–654
Constructive Dismissal 290–294 Civilised Labour Policy 51
Demand for Disclosure 222–223 closed shops 122–123, 224–226, 228–230
The Disciplinary Mould 264–266 closed-shop agreements 563, 564
Disclosure of Information 351–355 closed-shop membership disputes 567–568, 568
Discrimination: employees doing the same work CNETU (Council of Non-European Trade Unions)
413–415 53, 56, 58
Dismissal for a Reason Related to the Transfer of Code of Good Practice: Dismissals 260–261, 261,
a Business as a Going Concern 295–297 268, 277, 282, 289, 319, 327, 328
Dismissal for Union Activities 305–308 Code of Good Practice on Picketing 593
Dismissal of strikers bound by Bargaining Code of Good Practice on the Integration of
Council constitution 595–596 Employment Equity into Human Resource
Dismissal of unprotected strikers - the right to a Policies and Practices 416
hearing 597–602 Code of Good Practice: Who is an Employee? 102,
The Duty to Bargain 243–245 108–110
Extended Definition of Unfair Labour Practice Code of Good Practice: Work of Equal Value 413
321–322 coercive action 537, 582–584
Freedom of Association 210–212 see also strikes
The Independent Contract 104–107 coercive power 16, 17, 196, 506, 508
Individual Retrenchments - Consultation and collaborative negotiations 533–535
Selection Criteria 347–349 collective agreements 122–123, 230, 536, 563
Justifiability of Sanction 283–286 collective bargaining
LIFO and ‘Bumping’ 358–359 agreement to bargain 535

660 Labour Relations: A southern African perspective

 bargaining levels and parties 201–202, 242 conflict
bargaining relationship 195–199, 197 see also intergroup conflict
bargaining structures 201–202, 205–207, 206, aggravators and moderators 504, 615
239–240 and collective bargaining 14–15, 193–195
bargaining styles 201 conflict dynamics 504–505
centralised bargaining 204–205, 206 escalation of 504–505, 616
and conflict 14–16, 193–195 feature of labour relationship 193–194
decentralised bargaining 203–204, 206 methods for handling 503
effect on wage and employment levels 466–467 in the negotiation process 502
issues and problems 200 resolution of 616–624
in the labour relationship 192–193, 630 sources of conflict 194–195, 502–503, 612
and labour unrest 78 Congress of South African Trade Unions (COSATU)
legislation 70, 121–122 aims and objectives 170
organisations 181–182 approach to labour market 479–480
and pluralism 207–208 and bargaining 239–240
right to free collective bargaining 87 formation of 167
scope and content 199–200, 200 ideology 66
collective bargaining in South Africa and NEDLAC 91
agreements 92–93, 230, 232–236 political involvement 172–178
bargaining councils 123, 230–232 and relationship with government 184–185
centralised bargaining structures 230–232 structure 170–171, 171
duty to bargain 240–242, 243–245 in the Tripartite Alliance 69–70
freedom from victimisation 209 Tripartite Alliance 172–173, 174–175
freedom of association 209–210, 210–212 in the union movement 72, 75–76, 172, 177
organisational rights of unions 212–215, 215– Constitution of the Republic of South Africa 88
220, 220–222, 222–223, 224–226, 226–230 constructive dismissals 290–294, 569–570, 569
right to free collective bargaining 89, 209 consultations
voluntary nature of 240–241 affirmative action 136, 427–428
workplace forums 70–71, 125–126, 245, 640–648 retrenchment and redundancy 339–340,
collective bargaining organisations 181–182 341–349
collective power 65–66 in workplace forums 641–642
collectives versus freedom of the individual 17–18 contracts
co-management committees 635 common law contracts 95, 97–98
Commission for Conciliation, Mediation & types of employment contracts 111–112
Arbitration (CCMA) 126–127, 552–556, 559–560 written contracts 99–100
Commission for Employment Equity 140 contract zone 522
Commission of Inquiry into Labour Legislation cooperative enterprises 637
(Wiehahn Commission) 61–62 corporatism 42, 183–185
common law contracts 95, 97–99 COSATU see Congress of South African Trade
Communitarianism 34, 37, 38–39, 42, 47, 72, 618 Unions (COSATU)
community-based unions 166 Council of Non-European Trade Unions (CNETU)
Compensation for Occupational Injuries and 53, 58
Diseases Act of 1993 92, 117 Council of Unions of South Africa (CUSA) 61, 166,
con-arb (conciliation-arbitration) 551 167, 168
concessions during negotiations 527–528 councils 123–124, 127
conciliation 545–546 craft unions 148–149
conciliation-arbitration 551 crime and employment levels 484
conditions of employment 89, 535–536 CUSA (Council of Unions of South Africa) 61, 166,
Basic Conditions of Employment Act of 1997 167, 168
92, 115–116 custom and tradition in the employment
establishing correct conditions 96 relationship 18
confidentiality 130, 646 cyclical unemployment 474, 475

Index 661
D record-keeping 269
deadlocks during negotiations 529 recourse for sanctioned employees 282–283
decentralised bargaining 203–204, 206, 237–239 role of the HR department 268
Declaration of Philadelphia 86 time limits 266
democracy in the workplace 630–631 warnings 266–267
see also workers’ participation disclosure of information
demonstration strikes 579 protected disclosures (whistle-blowing)
Department of Labour 90–91 308–310, 310–318
disciplinary checklists 287 in retrenchment and redundancy 350, 351–355
disciplinary codes and procedures right to disclosure of information 221–222,
disciplinary codes 260–261 222–223
disciplinary flowchart 262 discrimination
disciplinary mould 261, 263–264, 264–266 age discrimination 404–411
objectives of 259 disputes arising from 394
organisational rules as basis 260 Employment Equity Act of 1998 71, 132–136,
rules for establishing 259–260 394
transgressions 260–261, 263–264 equal conditions for equal work 412–413,
disciplinary hearings 413–415
alternatives to dismissal 278 fair versus unfair discrimination 399, 399–404
appeals against final decision 282 implications of legislation 416–417
decision as to guilt 276 inherent requirements of the job 398–399,
decision as to sanction 277–278 399–404
decision process 279 Labour Relations Act of 1995 393–394
decision that hearing is necessary 270 pre-employment testing 395–396
factors to consider for dismissal 277–278 reverse discrimination 420
informing and recording 280 dishonesty 264
justification for decision 278, 283–286 disloyalty to the employer 264
mitigating and aggravating circumstances 277 dismissals
neutrality 271, 273–275 see also retrenchments and redundancies
notification of employee 270, 272–273 abuse of sick leave provisions 335–336
preliminaries 270–275 alcohol or drug abuse 264, 328
preparations for the hearing 270 alternatives to dismissal 278
proceedings of 276 automatically unfair dismissals 304–305,
suspension pending a hearing 271 305–308
disciplinary mould 261, 263–264, 264–266 automatic termination clauses 301, 302–304
disciplinary procedures Code of Good Practice: Dismissals 260–261,
appeals against final decision 282 261, 268, 277, 282, 289, 319, 327, 328
consistency 268 constructive dismissals 289, 290–294, 569
corrective measures 269 definition 289
disciplinary checklists 287 dismissible offences 261, 263–264
disciplinary hearing 269–286 due to ill health or injury 327–336
effectiveness of 269 factors to consider 277–278
fairness 280–281, 282, 287 fair reasons for 289–290
formalisation of procedures 268 fixed-term contracts 297, 298–301
investigations and inquiries 267–268 ILO recommendation No 119 288–289
managerial responsibility 266 the need to explore all possibilities 331–335
matters to consider 268–269 no-fault terminations 325–389
objections to disciplinary action 268 permanent incapacity 328
pre-dismissal arbitration/hearing 282–283, poor work performance 319
283–286 prolonged absence as incapacity 329–330
progressive nature of discipline 267 and the right to strike 582
temporary incapacity 327–328

662 Labour Relations: A southern African perspective

 in terms of the Labour Relations Act 289–290 economic ideologies 35–39
unfair dismissals 295–297, 320 economic initiatives by government 67–68, 75,
disputes 480–482
and coercive action 537 economic realities in the new millennium 73–75,
disputes of interest 545 77
disputes of right 544–545 economic recession 482
nature and scope of labour disputes 544 economic strikes 579
dispute settlement education and training
bargaining councils and private agencies 127, in affirmative action 420
556–557 impact on employment levels 483
CCMAA (Commission for Conciliation, employee and employer representation in South
Mediation & Arbitration) 126–127, 552–556 Africa
in-house procedures 572 employers’ organisations 159–161, 181–183
Labour Appeal Court 128, 558–559 management as representative of employers
Labour Court 128, 557–558 158
Labour Relations Act of 2017 126–128 obligations 163–164
methods 545–552 registration 126, 162–163
dispute settlement methods union and shop steward rights 164–165
arbitration 550–552 employees 101–102
conciliation 545–546 contract versus reality 102–103
mediation 546–549 definitions 101–102, 108, 130, 641
dispute settlement processes fixed-term contracts 112–114
admission to bargaining councils 564, 565 independent contractors 101, 104–107
agency-shop agreements 563 part-time employees 114
closed-shop agreements 563, 564 as party in the employment relationship 10–11,
collective agreements 563 12
dismissals related to misconduct, incompetence, persons employed by labour brokers 114–115
incapacity or constructive dismissal persons engaged in illegal activities 103–104
569–570, 569 employers
dismissals related to retrenchments, closed-shop attitudes towards unions 159
membership or illegal strikes 567–568, 568 employer goals 159
essential services 566–567, 567 as party in the employment relationship 10–11,
freedom of association 560–561, 561 12
organisational rights 561–562, 562, 566 who is an employer? 108–111
refusal to bargain 586 employers’ organisations
routing of different types of dispute 559, collective employer bodies 159
559–560 functions 160
statutory determinations 565, 566 future role 161
unfair dismissals 568, 571–572 obligations 163–164
unfair labour practices 570 organisation and management 160–161
workplace forums 571 reasons for forming/joining 160
disputes of interest 545 registration 126, 162–163
disputes of right 544–545 in South Africa 181–183
distributive bargaining 201 employer versus employee power 196
duty to bargain 240–242, 243–245 employment contracts
dysfunctional conflict 15 common law contracts 95, 97–99
fixed-term contracts 111–114
E permanent (indefinite) contracts 111
economic concerns of trade unions 151 written contracts 99–100
economic dispensation influencing employment employment equity 137
relationship 22 see also affirmative action
economic factors impacting negotiations 497–499 Commission for Employment Equity 140

Index 663
 compliance with equity provisions 431–433 employment levels
discrimination 132–134, 393–394 see also labour markets
equal conditions for equal work or work of collective bargaining 466–467
equal value 412–413, 413–415 variables impacting levels in South Africa
equity plans 136–139, 429–431 482–484
rationale for 393 wage determination and 461, 467
turnover thresholds 135 employment relationship 4–5, 23
Employment Equity Act (Act 55 of 1998) 71, analysis of 8–10
132–136, 394 approaches to 24–26
Employment Equity Amendment Act of 2013 394, common interests and interdependencies 13–14
412 and common law 97–99
employment equity plans complexity of 10
affirmative action measures 429–430 conflict and collective bargaining 14–15
communicating and reporting 431 ethical considerations 20–21
compliance with equity provisions 431–433 external influences on the relationship 21–23
developing equity plans 136, 137, 138–139 factors impacting interactions 13–16
grievance and dispute procedures 430 freedom of the individual versus allegiance to
implementing the plan 433–436 the collective 17–18
monitoring and evaluation 430 historical perspective 5–8
numerical goals and time frames 429 interaction continuum 18, 19
periodic reviews 431 intrinsic factors regulating the relationship
process for implementation 430 18–21
retention, training and development 430 legal and statutory regulation of 19, 92–94, 94
employment equity plans: implementation parties to the relationship 10–13, 12, 13
advertising of vacancies 434 power dynamic 15–16
career planning and development 435–436 as societal partnership 630
integrating employees 435 employment relations system see labour relations
interviews and assessments 434 system
monitoring and performance appraisals 435 equity plans see employment equity plans
problems with implementing 436–438, 439–446 essential services 130, 588
selection and appointment of new incumbents dispute settlement process 566–567, 567
433–434 ethical considerations in the employment
targeting all levels 434–435 relationship 20–21
weighted selection criteria 434 expert power 17, 509
employment equity plans: problems external pressures in coercive action 583
affirmative appointments 439–446
candidates-in-waiting and contract employees F
438 Fabian Socialists 37–38
disabled persons 438 facilitation of conflict resolution
fairness 436 basic principles 618
internal recruitment 438 engaging in facilitation 618–620
retrenchment and LIFO principle 438 facilitator’s role 624
‘suitably qualified’ 436–437 initiating facilitation 620–621
employment initiatives post-2008 joint problem-solving 621–623
Human Resource Development Strategy for planning implementation of solution 623
South Africa 485 problems in the process 623–624
Joint Initiatives for Priority Skills Acquisition failure or refusal to work 263
(JIPSA) 485 fairness
National Development Plan 74–75, 185, disciplinary checklists for 287
486–487 in the employment relationship 20–21
New Growth Path Framework 74, 485–486 procedural fairness 281, 282
Radical Economic Transformation 75, 487–488 substantive fairness 280–281, 282

664 Labour Relations: A southern African perspective

Federation of Non-European Trade Unions grievances
(FNETU) 52 definitions 253
Federation of South African Trade Unions discrimination or harassment 258
(FOSATU) 61, 64, 166, 167, 168 procedures 252–258, 257
Federation of Unions of South Africa (FEDUSA) grievance strikes 579
65, 69, 75–76, 91, 168–169, 178 Gross Domestic Products (GDP) 515
final offers/demands during negotiations 528–529 gross insubordination or insolence 264
fixed-term contracts 111–114, 438 gross negligence 263
automatic termination clauses 301, 302–304 Growth Employment and Redistribution Strategy
dismissal of employees on 297, 298–301 (GEAR) 68, 72, 174, 480–481
FNETU (Federation of Non-European Trade
Unions) 52, 56 H
Food & Canning Workers’ Union 52, 166 harassment 132, 133, 394
FOSATU (Federation of South African Trade definition 396
Unions) 61, 64, 166, 167, 168 employer liability 396–397
freedom from victimisation 120–121, 209–210 grievances relating to 258
freedom of association 86–87, 120–121, 209–210, policies and procedures 397
210–212, 560–561, 561 sexual harassment 397–398
freedom of the individual versus allegiance to the health and safety 89
collective 17–18 Compensation for Occupational Injuries &
freedom to strike 41, 582 Diseases Act (Act 130 of 1993) 117
free market principles 35–36, 47, 451, 473, 475, Occupational Health & Safety Act (Act 85 of
476 1993) 92, 116–117
frictional unemployment 473–474 historical perspective of employment relationship
functional conflict 15 5–8
HIV 133, 394, 395
G Human Resource Development Strategy for South
GEAR (Growth Employment and Redistribution Africa (HRDS) 485
Strategy) 68, 72, 174, 480–481
general strikes 579 I
general unions 149–150, 179–180 ICWU (Industrial & Commercial Workers’ Union of
good faith bargaining 241–242 South Africa) 50, 52
go-slows 577, 579 ideologies in the labour system
government Classical Liberalism 35
see also state interference Free Market 35–36
as employer 478–479 Individualism vs Communitarianism 34, 38–39
intervention 39–43 socialism 36–39
policies 478 illegal strike disputes 567–568
and the State 39 ILO see International Labour Organisation (ILO)
government of South Africa impasses during negotiations 528
employment initiatives post-2008 485–489 incapacity 263, 327–328
future challenges 653 dispute settlement 569–570, 569
labour market initiatives post-1995 479–482 incompetence 263, 569–570, 569
and unemployment 488–490 indefinite contracts 111
grasshopper strikes 580 independent contractors 101, 104–107
grievance procedures 257, 430 independent work organisation 633
ensuring effectiveness 256, 258 Individualism 40–41
formality 258 versus Communitarianism 34, 38–39
objectives 254 Industrial & Commercial Workers’ Union of South
requirements for effective procedures 254 Africa (ICWU) 50, 52
steps in the procedure 254–255 Industrial Conciliation Act of 1924 50, 53

Index 665
Industrial Conciliation Act of 1956 54–55, 56, 62 L
Industrial Conciliation Act of 1979 63 labour action 69, 484
Industrial Conciliation Amendment Act of 1937 see also strikes
53 Labour Appeal Court 128, 558–559
industrial councils 50, 53, 62 labour brokers 112, 114–115, 129
industrialisation in South Africa 1880-1924 Labour Court 128, 557–558
48–51 labour disputes see disputes
Industrial Revolutions 5–8 labour economics
industrial unions 150 and employment levels 466–467
Industrial Workers of Africa (IWA) 49–50 labour market models 452–464
Infrastructure Co-ordinating Commission 487 labour markets in the 21st century 467–468
Infrastructure Development Act 74, 487 labour market theory 450–452
injury on duty 90 labour market models
Inkatha and trade unionism 168 law of demand and supply 452–453
institutionalised voluntarism 41, 51, 53, 58, 72, 78 law of diminishing returns 462–464
integrative bargaining 201, 501 labour markets
interaction continuum 18, 19 see also South African labour market
intergroup conflict 611, 613 capital mobility 476
conflict escalation 616 demographic changes 477–478
group formation 610 and government 478–479
intergroup relationships 610–611 labour market imperfection 475–476
and power 611–612 labour market perfection 474–475
trigger incidents 612 models 452–464
variables determining levels of conflict monopsonist practices 478
612–615 principles of supply and demand 473
intergroup conflict resolution and productivity 477
approaches to employment relationship unemployment 473–474
616–617 wage and employment levels 476–477
facilitator’s role 624 labour market theories
third-party facilitation 617–624 classical theory 450–451
International Labour Organisation (ILO) 85–87 dual labour market theory 465–466
on inherent requirements of the job 398 institutional economists 465
on retrenchment and redundancy 337–338 neo-classical theory 451–452
on termination of employment 288–289 radical theories 466
interventionism Labour Relations Act of 1995 69, 117–119,
pro-capital interventionism 41–42 393–394
pro-labour interventionism 42, 78 Labour Relations Amendment Act of 2018
intra-organisational negotiations 514 119–131, 131
IWA (Industrial Workers of Africa) 49–50 Labour Relations Amendment Act of 1979 63, 69
Labour Relations Amendment Act of 1988 65
J Labour Relations Amendment Act of 1991 65
JIPSA (Joint Initiatives for Priority Skills Labour Relations Amendment Act of 2015 119
Acquisition) 485 labour relations definition 4
job security 90, 151 labour relationship see employment relationship
Joint Committee of African Trade Unions 52–53 labour relations in South Africa 647–648
joint decision-making 238, 571, 635–636, Labour Relations Policy 89–90
642–643, 647–648 labour relations systems
Joint Initiatives for Priority Skills Acquisition see also South African labour relations system
(JIPSA) 485 composition 32–33
judicial role in labour relations system 45 effect on society 46
ideological basis 34–39

666 Labour Relations: A southern African perspective

 legal framework 33 Labour Relations Amendment Act of 1979 63, 69
parties to the relationship 32–33 Labour Relations Amendment Act of 1988 65
processes and procedures 33 Labour Relations Amendment Act of 1991 65
role of the State 39–46 Labour Relations Amendment Act of 2015 119
labour standards legislative framework rationale 85
Convention No 87: Freedom of Association and Minimum Wages Act of 2017 116
Protection of the Right to Organise 86–87 Occupational Health and Safety Act of 1993
Convention No 98: Right to Organise and to 92, 116–117
Collectively 87 Promotion of Equity and Prevention of
Declaration of Philadelphia 86 Discrimination Act 71
Law of Accumulation 35 Protected Disclosures Act of 2000 71, 308–310,
law of demand and supply 452–453 308–318
elasticity of demand and supply 459–462, 460, regulating the employment relationship 19, 72
461, 462 Skills Development Act 68, 71, 72, 93
labour demand schedule 453 Skills Development Levies Act 71, 72, 483
market equilibrium 454–457, 454, 457 Unemployment Insurance Act of 2001 117
shifts in demand 454–455, 455, 457–458 Unemployment Insurance Contributions Act of
shifts in supply 455, 456, 458–459 2002 117
supply function of labour 453 legitimate power 17, 508
law of diminishing returns 462–464, 463, 464 liaison committees 60, 62, 634
legislation liberalism 24, 35, 39
Bantu Labour (Settlement of Disputes) Act of LIFO principle 358–359, 360–361, 438
1953 54 lockouts 124–125, 130, 583–584
Basic Conditions of Employment Act of 1997 protected actions 584–587, 585
71, 92–93, 115–116 unprotected actions 587–591, 590
Basic Conditions of Employment Amendment LRA see Labour Relations Act
Act of 2014 116
Basic Conditions of Employment Amendment M
Bill of 2017 116 maintenance services 125, 588
Bill of Rights 88 majority trade unions 212, 213
Black Labour Relations Regulation Act of 1973 mandatorism 39–40
60–61, 62 pro-capital mandatorism 43
Commission of Inquiry into Labour Legislation pro-labour mandatorism 42
(Wiehahn Commission) 61–62 marginal utility of labour 452, 463–464
Compensation for Occupational Injuries & market equilibrium 454–457, 454, 457
Diseases Act (Act 130 of 1993) 117 market individualism 40–41
Constitution of the Republic of South Africa 88 market mechanism 35
Employment Equity Act (Act 55 of 1998) 71, Marxism 25
132–136, 394 Marx, Karl 25, 36–37
Employment Equity Amendment Act of 2013 med-arb (mediation-arbitration) 551
394, 412 mediation 546–549
Industrial Conciliation Act of 1924 50, 53 Commission for Conciliation, Mediation &
Industrial Conciliation Act of 1956 54–55, 56, 62 Arbitration (CCMA) 126–127, 552–553, 554
Industrial Conciliation Act of 1979 63 mediation-arbitration 551
Industrial Conciliation Amendment Act of 1937 mediators 546, 547
53 medical testing and evaluation 395–396
Infrastructure Development Act 74, 487 mergers, transfers and outsourcing
and international labour standards 85–87 conditions of employment 381
Labour Relations Act (Act 66 of 1995) 69, insolvency 382–383
92–93, 117–119, 393–394 legal position 375–376
Labour Relations Amendment Act of 2018 liabilities post transfer 382
119–131, 131 role of the HR/IR manager 387–388

Index 667
 transfer of a contract following a merger selection of negotiator/team 512
383–386 setting objectives 513–514
transfer of business as a going concern negotiations: preparing for specific issues
295–297, 375–376, 377–381 area of interdependence 518
variation by agreement 381–382 area of negotiation 517
minimum services 588 bargaining range 518, 523
misconduct 569–570, 569 considerations for setting limits 518–519
see also disciplinary codes and procedures contract zone 522
mobility of capital and labour 476 cost-benefit analyses 521–522
monopsonist practices 478 costing of contracts 523
mutual agreement in the employment relationship development of strategies 523–524
19–20 negotiation planning sheet 524
resistance and target points 519–520
N settlement range 520–521
National African Council of Trade Unions (NACTU) utilities and disutilities 521–522
64, 69, 75–76, 91, 168, 178–179, 185 negotiations: the process
National Development Plan 74–75, 185, 486–487 arguments 526–527
National Economic Development & Labour Council caucusing 528
(NEDLAC) 68, 91, 178, 184, 185 closure 530
National Infrastructure Development Plan 74 concessions 527–528
Nationalist government 1948-1970 54–59 deadlocks 529
National Minimum Wage Act of 2018 116 development of the process 538
National Union of Metalworkers of South Africa final offers/demands 528–529
(NUMSA) 76, 177, 179–180 impasses 528
National Union of Mineworkers (NUM) 76, 77, manoeuvres 530–532
167, 177 opening phase 525–526
NEDLAC (National Economic Development & process overview 524–525
Labour Council) 68, 91, 178, 184, 185 sanctions 529
negotiations threats and bluffs 529
agreements as outcomes to 535–537 negotiators
collaborative negotiations 533–535 profile of successful negotiators 532–533
conflict in the negotiation process 502–505 qualities required 510
definition 496 roles of team members 512
development of the process 538 selection of 512
disputes and coercive action 537 New Growth Path Framework 74, 77, 485–486
effects on the environment 502 no-fault terminations
environmental factors influencing negotiations dismissal due to ill health or injury 327–336
497–502 mergers, transfers and outsourcing 375–388
factors contributing to success 508–510 retrenchment and redundancy 336–375
negotiators 510, 512, 532–533 non-majority unions 214
power in the negotiation process 505–507, non-probationary employees 319
508–509 NUM (National Union of Mineworkers) 76, 77,
the right to negotiate 89 167, 177
statistical indicators used 515–516 NUMSA (National Union of Metalworkers of South
triggers for negotiations 496 Africa) 76, 177, 179–180
negotiations: preparing for negotiations
conventions of negotiations 510–511 O
identification of issues 513 occupational detriment 308–309, 310, 310–318
information gathering 514–517 Occupational Health & Safety Act (Act 85 of 1993)
initiation of the process 511–524 92, 116–117
intra-organisational negotiations 514 occupational trade unions 148–150
obtaining a mandate 513 operational requirements 130, 288

668 Labour Relations: A southern African perspective

organisational rights of unions protest actions 130–131, 579, 594–595
agency shops 224, 225–226, 226–228 psychological testing and similar assessments 396
appointment of shop stewards 220–221 public service bargaining councils 123
closed shops 224–226, 228–230
disclosure of information 221–222, 222–223 Q
dispute settlement 561–562, 562 quotas in affirmative action 419, 422–427
exercising organisational rights 212
majority unions 212, 213 R
non-majority unions 214 Radical Approach to employment relationship 25
representation thresholds 214–215, 218–220 Radical Economic Transformation 75, 487–488
representative rights 215–217 RDP (Reconstruction and Development
representative unions 212–213, 213–214 Programme) 47, 67–68, 480–481
outsourcing 376, 377–381 recognition agreements 238–239
see also independent contractors recognition strikes 579
overtime bans 579 Reconstruction and Development Programme
(RDP) 47, 67–68, 480–481
P recourse for sanctioned employees
participation schemes 639–640 appeals against final decision 282
permanent contracts 111 pre-dismissal arbitration/hearings 282–283,
picketing 124, 592–593, 594 283–286
plant-level committees or councils 634–635 referent power 17, 509
Pluralism 25–26, 66, 207–208 Reformist economists 38
policies refusal to carry out orders 263
Civilised Labour Policy 51 refusal to work 263, 577
government policies 478 remuneration 89
Labour Relations Policy 89–90 see also wages
socioeconomic policies 71–72 representation thresholds 214–215, 218–220
power representative rights 215–217
in the bargaining process 195–198 representative unions 212–213
coercive power 16, 17, 196, 506, 508 rights of 213–214, 215–217
as determinant in negotiations 508–509 retrenchments and redundancies
forms of power 17, 506 aftercare 363
principles for using power 506–507 alternatives to retrenchment 355–356,
shifting nature of power 15–16 356–357
sources of power 505–506 bumping 358–359
pre-employment testing 395–396 consultation 339–340, 341–349
probationary employees 319 disclosure of information 350, 351–355
procedural fairness 281 dispute settlement process 567–568, 568
procedural strikes 579 final notification of dismissal 362–363
productivity 477, 483–484 ILO recommendations 337–338
marginal productivity/utility of labour 463–464 individual retrenchments 347–349
profit-sharing schemes 636 legal position 338
Promotion of Equity and Prevention of LIFO principle 358–359, 360–361, 438
Discrimination Act 71 notice of intention to retrench 339
promotion unions 148–149 organisations employing more than 50 people
protected disclosures (whistle-blowing) 365–366, 366–370
information to be disclosed 309 policies and procedures 338–339
making protected disclosures 309–310 rationale 336–337
occupational detriment 309, 310–318 reasons for retrenchment 341–347
Protected Disclosures Act (Act 26 of 2000) refusal to agree to organisational restructuring
308–318 370–371, 371–374, 374–375
Protected Disclosures Act 71 retrenchment pay 361–362

Index 669
 retrenchment programme 364 sexual harassment 396–397, 397–398
retrenchment versus redundancy 337 share ownership schemes 636–637
selection of retrenchees 347–349, 360–361 shop steward committees 635
undertaking to re-employ 363 shop stewards 155–157, 156, 164, 220–221
voluntary retrenchment/retirement 356 sick leave provisions 335–336
reverse discrimination 420 sit-down strikes 580
reward power 17, 508 Skills Development Act 68, 71, 72, 93
Rifkin, Jeremy 8, 38 Skills Development Levies Act 71, 72, 483
right of access to training and retraining 89 Smith, Adam 35–36
right to fair remuneration and conditions of SMMEs (Small, Medium and Micro-enterprises)
service 89 483
right to free collective bargaining 209 socialism 36–39
right to job security and protection against unfair societal influences on employment relationship
labour practices 90 21–22
right to negotiate and bargain collectively 89 sociopolitical protest actions 579, 594–595
right to organise 86–87 sociopolitical system as influence on employment
right to organise and to belong to a trade union relationship 21
89 solidarity strikes 579
right to security against unemployment and the South African Chamber of Commerce and Industry
payment of amounts to dependants of deceased (SACCI) 183
contributors 89 South African Communist Party (SACP) 47, 172,
right to security in the event of an injury on duty 174, 175, 479–480
90 South African Confederation of Labour
right to work 89 Associations(SACLA) 58, 165
rotating strikes 580 South African Congress of Trade Unions (SACTU)
58, 165
S South African Consultative Committee on Labour
SACCI (South African Chamber of Commerce and Affairs (SACCOLA) 65
Industry) 183 South African Federation of Trade Unions (SAFTU)
SACCOLA (South African Consultative Committee 55, 76, 77, 91, 179–180
on Labour Affairs) 65 South African government policies on labour
SACLA (South African Confederation of Labour affairs
Associations) 58, 165 Department of Labour 90–91
SACP (South African Communist Party) 47, 172, official labour relations policy 89–90
174, 175, 479–480 socioeconomic policies 71–72
SACTU (South African Congress of Trade Unions) South African labour market
58, 165 Alliance partners approaches 479–480
safety and health 89 economic recession 482
Compensation for Occupational Injuries & employment initiatives post-2008 485–488
Diseases Act of 1993 117 employment levels 482–484, 488–489
Occupational Health and Safety Act of 1993 future planning 489–490
92, 116–117 initiatives post-1995 479–482
safety committees 634–635 South African labour relations system
SAFTU (South African Federation of Trade Unions) background 47
55, 76, 77, 91, 179–180 changes in labour relations 1970-1990 59–66
sanctions during negotiations 529 developments post-1990 66–72
SATUC (South African Trade Union Council) 55 economic and social realities in the new
Schwab, Klaus 8, 38 millennium 72–78
seasonal unemployment 474 industrialisation 1880-1924 48–51
sectoral unions 150 manufacturing and service industries 1925-
serious misconduct 261 1948 51–53
serious transgressions 263–264 Nationalist government 1948-1970 54–59

670 Labour Relations: A southern African perspective

South African Trades & Labour Council (TLC) Trade Union Council of South Africa (TUCSA)
51–52, 55 55–56, 65, 165, 168
South African Trade Union Congress (TUC) 51 trade union democracy 154
South African Trade Union Council (SATUC) 55 trade union movements in South Africa
State Black Consciousness unions 166–167
as party in the employment relationship 10–11, black union movements up to 1965 56
12, 183–186 community-based unions 166
roles adopted by the State 43–46 Congress of South African Trade Unions
voluntarism and mandatorism 39–40 (COSATU) 167, 170–178, 171
State interference 40–43, 44 Council of Unions of South Africa (CUSA) 61,
statistical indicators used in negotiations 515–516 166, 167, 168
statutory councils 123–124, 236–237 developments post-1990 169–180
strategic strikes 579 Federation of South African Trade Unions
strikes 131, 577–578, 582–583 (FOSATU) 61, 64, 166, 167, 168
advisory arbitration 590–591 Federation of Unions of South Africa (FEDUSA)
classification of strikes 578–580 65, 69, 75–76, 91, 168–169, 178
contributing factors 580–581 future developments 180–181
dismissal of strikers bound by Bargaining historical perspective 165–169
Council constitution 595–596 independent black movements 52–53, 58
dismissal of unprotected strikers 589–590, and Inkatha 168
597–602 multiracial trade union movements 55–58, 57
and dismissals 582, 586–587 National African Council of Trade Unions
freedom to strike 582 (NACTU) 64, 69, 75–76, 91, 168, 178–179,
handling of strike action 602–605 185
interdicts 588–589 sociopolitical orientations 169
payment of strikers 587 South African Federation of Trade Unions
picketing 124, 592–594, 594 (SAFTU) 55, 76, 179–180
procedures towards a protected strike 584–586, Trade Union Council of South Africa (TUCSA)
585 55–56, 65, 165, 168
prohibited strikes 587–588 unionisation on the mines 167
protected strikes 584–587, 585 unity moves 167
reasons for 578 white and multiracial movements 51–52, 57
recourse against illegal actions 588–590, 590 white movements 57, 58
replacement labour 587 trade union representation versus workers’
right to strike 582 participation 631–632
role of management 603–605 trade unions 89, 147–148
role of union 602–603 in the 21st century 157–158
sociopolitical protest actions 594–595 classification of 148–150, 212–214
unprotected (illegal) strikes 567–568, 568, 584, influence on employment relationship 22
587–590, 590, 597–602 objectives of 151–152
structural unemployment 474, 475, 483 obligations 163–164
substantive fairness 280–281, 282 organisational rights 164–165, 212–230,
supervisory boards 635–636 215–220, 222–223, 226–230
sympathy strikes 579, 591–592 organisation and management 153–154
origins of 147–148
T as parties in the employment relationship 12,
termination of common law contracts 98 13
termination of employment problems with trade union democracy 154–155
see also dismissals registration 126, 162–163
threats and bluffs during negotiations 529 shop stewards 155–157, 156, 164, 220–221
TLC (South African Trades & Labour Council) structure 153
51–52, 55 Trade Union Unity Committee 55

Index 671
training 89, 420 W
transfer of a business as a going concern 129, wages 35–36, 476–477, 535–536
295–297, 375–376, 377–381 collective bargaining and wage levels 466–467
Tripartite Alliance 47, 174–175, 479–480 and employment levels 467, 476–477
TUCSA (Trade Union Council of South Africa) Minimum Wages Act of 2017 116
55–56, 65, 165, 168 Webb, Beatrice and Sidney 37–38
TUC (South African Trade Union Congress) 51 whistle-blowing (protected disclosures) 308–310,
310–318
U white and multiracial union movement up to 1965
unemployment 89, 473 57
see also labour market white-collar and professional unions 150
balancing demand and supply 474–478 Wiehahn Commission 61–62
classification of 473–474 wildcat strikes 580
major causes 475–476 window dressing 419
unemployment in South Africa 73, 488–490 withdrawal of cooperation (coercive action) 582
Unemployment Insurance Act of 2001 117 workers’ committees 634
Unemployment Insurance Contributions Act of workers’ participation
2002 117 disadvantages 638–639
Unemployment Insurance Fund 89 forms of participation 632–637
unfair dismissals 128–129, 295–297 implementing participation schemes 639–640
automatically unfair dismissals 304–305, levels of participation 632
305–308 principles for success 640
disputes 320, 567–568, 568 principles of 631
remedies for 571–572 support for 637–638
unfair labour practices 90, 129, 320, 321–322, versus trade union representation 631–632
570 workplace forums 640–648
unions see trade unions workers’ participation in South Africa 640–648
Unitary approach to employment relationship 24 workers’ rights 86–87
United Workers Union of South Africa (UWUSA) constitutional framework 88
64, 168 Labour Relations Policy 89–90
unskilled and semi-skilled unions 149 workforce profiles 429
utilities and disutilities in negotiations 519, workplace democracy 630–631
521–522 see also workers’ participation
UWUSA (United Workers Union of South Africa) workplace forums
64, 165 applying for a workplace forum 643–644
consultation 641–642
V dispute settlement 571
victimisation 120–121, 131, 140, 209–210 establishing of 641, 645–647
voidable contracts 97–98 forum meetings 644–645
voluntarism 39–40, 41, 89–91, 118, 162, 241, 537 functions 125, 245, 641
voluntary retrenchment/retirement 356 joint decision-making 642–643
legislation 70–71
pre-requisites 645–647
work-to-rule 583
written contracts 99–100

672 Labour Relations: A southern African perspective