Rights job seekers: Collective bargaining and legality

Posted by GilesFiles | May 4, 2016 | 2016, 2016, Applications, Associations/corporates, Causes and defences, Collective Bargaining (LRL 5), Costs, Costs not awarded, Courts, Declaratory, Evidence & onus, Exceptions/special pleas, High Court, Interpretation etc, John Murphy, Judges, Jurisdiction & powers, Labour Relations, Landmark judgments, Legal Practice, Legality principle, Markets in SA, Orders, Organisations (LRL 4), PAJA 2000, Parties, philosophy / economics, Reforms required, Retired judges, Review tests, Sectors, Statutory, Topics | 7

Free Market Foundation v Minister of Labour (13762/13) [2016] ZAGPPHC 266 [2016] 8 BLLR 805; (2016) ILJ 1638; [2016] JOL 35802 (HC) (4 May 2016) per JR Murphy J [KE Matojane J and AC Basson J concurring].

Job seekers fall outside the ambit of collective bargaining. The High Court identified the problem of high levels of unemployment and negative social consequences. The Free Market Foundation’s focus on this social problem was accepted by the High Court by refusing to award costs again the Foundation despite failing to obtain an order curbing the powers of the Minister of Labour.

Issues discussed at pages 52, 296 and 326 by Du Toit et al in Labour Relations Law: A Comprehensive Guide 6th ed (LexisNexis, 2015).

Section 23(5) of the Constitution reads:

“Every trade union, employers’ organisation and employer has the right to engage in collective bargaining. National legislation may be enacted to regulate collective bargaining. To the extent that the legislation may limit a right in this Chapter, the limitation must comply with section 36(1).”

But where does this leave job seekers who are outsiders and unable to apply for exemption from any bargaining council agreement that has been extended to non-parties by the Minister of Labour?

Excerpts

Costs

1. With regard to the question of costs, while the FMF application has been shown in a number of respects to be misconceived, and fundamentally so, I have no doubt that it was motivated by the best of intentions. Our country prides itself in the promotion of a strong civil society. Although there will be many opposed ideologically to the classic liberal and free market agenda advanced by the FMF, there should be no quibble with its activism on behalf of small business and the unemployed. The most intractable social and economic problem facing our country is the persistently high level of unemployment and its attendant negative social consequences. There are differing views about how to solve it. Many will argue that as a society we need to think outside the box and cannot simply continue with business as usual. The FMF is intent upon challenging the prevailing dogma. It does so as a morally responsible citizen whose opinion, if not heeded, deserves at least to be heard. We need not look back far into our history to recall that the censured opinions of today may well become the moral directives of tomorrow. As the Constitutional Court said in S v Mamabolo, [2001 (3) SA 409 (CC) para 37] the open market-place of ideas is all the more important to us in this country because our democracy is not yet firmly established and must feel its way. For that reason civil society activists should not be discouraged from pursuing constitutional claims for fear of being mulcted in costs. [Biowatch Trust v Genetic Resources 2009 (6) SA 232 (CC)].

1. Moreover, although the FMF’s constitutional argument, no doubt crafted by Mr Brassey, misses the mark, that in no way detracts from its elegance and admirable ingenuity. It might not have yielded what the FMF asked for, but by compelling the debate in the way it did, the application in its result has usefully demarcated the parameters of power and administrative justice in the legislative scheme governing collective bargaining at sectoral level.

7 Comments

GilesFiles on May 5, 2016 at 11:13 am

Media release: FMF delighted by historic High Court judgement in LRA constitutional challenge

The Free Market Foundation (FMF) is delighted by the judgment handed down today and welcomes the court’s finding that extension of Bargaining Council Agreements (BCAs) to non-parties should not be automatic and mandatory. It is bad news for advocates of compulsion by narrow vested interest and good news for eight million destitute job seekers, thousands of small, marginal and prospective employers, and all compassionate South Africans.

The FMF is surprised by the reaction of Cosatu, Sactwu and Numsa who regard the judgement as their victory. It is a Pyrrhic victory, one which leaves the ‘victor’ worse off. They clearly do not understand the FMF’s motives or the judgement. The ruling is a fatal blow to their view that they should have the power to force the minister to extend self-serving contracts that discriminate against their rivals and victims.

The court’s view, as argued by the FMF, is that the rights of vulnerable workers and employers, and the country as a whole, must be respected. The FMF’s objective can be achieved, without the need to change S 32* of the LRA, by subjecting labour law to administrative justice. In terms of the judgement, the extension of BCAs is subject to the administrative justice clause in the constitution and the Promotion of Administrative Justice Act (PAJA).
It is now clear that extending BCAs is reviewable at three stages instead of only one as requested by the FMF. The three are a bargaining council’s request to the minister for her to extend agreements to non-parties, the minister’s view that the parties are representative, and her decision to extend if they are not.

The FMF’s concern has always been that automatic and compulsory extension of BCAs victimises non-parties and harms the economy. The court shares this concern in a judgment that might have implications for labour relations exceeding what the FMF sought.
From the outset, parties opposed to the case sought to delay, prevent and undermine it. A Cosatu affiliate threatened blood in the streets and Cosatu itself resorted to other means of intimidation to “compel” the FMF to withdraw, including picketing FMF offices and intimidating private companies. The FMF hopes that misplaced enthusiasm for the judgment means that Cosatu will henceforth refrain from revealing its disrespect for the courts, due process, the constitution and the rule of law.

The FMF derives significant comfort from the judgement, even if, in technical terms, the judgement it sought was not granted. The FMF will reflect on whether it is necessary to take it on appeal to achieve greater certainty for unemployed South Africans desperate for hope of a job.

The FMF derives significant comfort from the judgement, even if, in technical terms, the judgement it sought was not granted. The FMF will reflect on whether it is necessary to take it on appeal to achieve greater protection for unemployed South Africans. It remains concerned about unemployed people who who lack the knowledge and resources to invoke the review options identified by the court. It should be mandatory to consider their rights without them needing to institute costly and complex legal review proceedings.
GilesFiles on May 5, 2016 at 11:22 am

Court dismisses challenge against collective bargaining extension
BY KARL GERNETZKY, 04 MAY 2016, 17:37 published in BDlive and Business Day.

A full bench of the court dismissed the FMF application in its entirety, but did not attach costs, concluding that the application had been well-intentioned and well crafted, and in line with societal debate about socioeconomic problems.

The FMF spent nearly three years trying to get a court date for the hearing, arguing that the ability to extend collective bargaining agreements to non-parties in wage negotiations was unconstitutional.

The FMF argued that the Labour Relations Act unduly endowed bargaining councils with public power without public accountability, despite being private actors. It held that SA’s bargaining system was collusive, uncompetitive, and responsible for stifling job creation and business growth.

In its judgment, the court found that: “The most intractable social an economic problem facing our country is the persistently high level of unemployment and its attendant negative social consequences.

“Many will argue that as a society we need to think outside the box and cannot continue with business as usual,” it noted.

It found that the Constitution was comfortable vesting public power in private hands and imposed no duty to act in the public interest, as this was for public purposes, and was subject to account as if it were a state body.

The court found that although the FMF’s constitutional argument “missed the mark”, that in no way detracted from its “elegance and ingenuity”.
GilesFiles on May 5, 2016 at 2:23 pm

NEASA’S PRESS RELEASE: COLLECTIVE BARGAINING AND THE FREE MARKET FOUNDATION’S CASE.

A huge victory for orderly collective bargaining

5 MAY 2016

“Bargaining Council’s and trade unions are apparently jubilant about the Pretoria High Court’s dismissal yesterday of the Free Market Foundation’s constitutional challenge. Should they study the judgement carefully, they will realise that there’s nothing to be jubilant about”, Gerhard Papenfus, Chief Executive of NEASA said.

This judgement, however, has brought a huge amount of clarity to a number of issues which NEASA has been arguing for years.

This judgement has brought an end to the slip-shod manner in which bargaining councils, and the MEIBC in particular, have forced administrative issues, especially with regard to the extension of agreements, through Council processes. This was extremely harmful to SMMEs in particular and are currently the subject of review processes.

In his judgement Judge Murphy brought complete clarity to the issue by finding that, when a bargaining council extends a collective agreement to non-parties, it does so either as an organ of state or as a juristic person exercising a public power or performing a public function under legislation or an empowering provision, and therefore that the Promotion of Administrative Justice Act (PAJA) applies, with all the checks and balances accompanying it.

“This remark by the High Court has brought about a complete change in the world of bargaining councils and NEASA will henceforth scrutinise each and every act of all councils, in particular the MEIBC, in order to ensure that the requirements of the rule of law and the rule of administrative justice is complied with”, Papenfus said.

This is a very positive development which empowers NEASA in its fight for a sustainable dispensation for SMMEs, increased employment and economic growth.

For this we thank the Free Market Foundation.

In future newsletters, we will deal with at least two very positive remarks by Judge Murphy regarding:-

the conduct by the Minister in extending agreements, and
the fact that the right to seek an exemption from the provisions of an agreement, is limited to non-parties.

The FMF has lost the case because, in his view, Judge Murphy found that there is sufficient protection under PAJA. That, in our view, is a huge victory for collective bargaining in South Africa.

We are also of the respectful view that this is an extremely good judgement.
GilesFiles on May 13, 2016 at 9:49 am

Prof Darcy du Toit’s latest editorial in IR Network published by LexisNexis [subscription required]

The extension of bargaining council agreements: A new chapter

Excerpts

First, bargaining councils are not “private actors”; though formed by employers and trade unions, they are organs of state exercising public functions.
Secondly, there is nothing unusual about citizens being given powers by legislation to take decisions that may have legal consequences for others – which, in essence, is what bargaining councils do.
This being so, the court defined the “true” question to be determined. The only basis on which the legality of section 32 could be challenged, the court found, was the question whether the limitation of ministerial discretion and court supervision imposes an impermissible limitation of non-parties’ right to reasonable and fair administrative action.
. . . . .
In fact, it is not certain what exactly the FMF has been handed. The court unpacked in detail the nature of the “administrative decisions” involved in the extension of a bargaining council agreement that would be subject to review in terms of PAJA. Thus, the collective agreement itself is not an administrative decision. The question only arises at the next stage in the process: asking the Minister to extend it.
But is this an administrative decision with potentially “adverse consequences” for anyone, as PAJA contemplates? Arguably, the Minister may properly decline to extend it on technical grounds, so that it will have no consequences at all. The court found that the answer will in each case depend on the facts but, as a rule, the decision of the bargaining council will be subject to PAJA review. The Minister’s decision, however, would certainly be included.
. . . . .
Much remains to be clarified. The bottom line, however, is that the court accepted the extension of bargaining council agreements as a reasonable and necessary mechanism of sectoral bargaining which, when taken by unions and employers representing a majority of affected employees, justifies the removal of ministerial discretion (and, with it, court supervision) in deciding on the merits of extending it.
Section 6 of PAJA does create scope for reviewing the Minister’s “mechanical” decision on the ground of “rationality”, but this does not allow the court – any more than the Minister – to decide on its substantive merits. This is the legislative model which the social partners agreed on in 1995 and which Parliament duly enacted. It can be changed by legislative amendment, but not by order of court. However, the judgment has opened up a new chapter in its application.
GilesFiles on July 21, 2016 at 6:48 pm

Now reported:
[2016] 8 BLLR 805; [2016] JOL 35802 (HC)
Bargaining council – Agreements – Extension to non-parties – Bargaining council’s request to Minister to extend agreements to non-parties constituting reviewable administrative action.
GilesFiles on October 12, 2016 at 11:47 am

Extension of bargaining council collective agreements to non-parties: Monique Jefferson BA (Wits) LLB (Rhodes) is an attorney at Bowman Gilfillan in Johannesburg in De Rebus October 2016.

Excerpt

“The FMF proceeded on the assumption that a decision of a bargaining council to request the Minister to extend, a collective agreement, as well as the ‘administrative action’ as defined in the Promotion of Administrative Justice Act 3 of 2000 (PAJA). It was for this reason that it argued that the discretion should be limited by a duty to act in public interest. The FMF conceded that if PAJA is indeed applicable then this would be more than the relief that they sought from the court.

No parties led evidence as to whether PAJA applied and thus the court did not make a ruling on the application of PAJA. However, Murphy J stated that he inclined to agree that PAJA would ordinarily apply to the decision of a bargaining council to request the extension of a collective agreement. On the other hand, Murphy J was of the view that the negotiation and conclusion of a collective agreement would not constitute administrative action. Murphy J held that if the Minister’s decision to extend is administrative action then it would be reviewable on the grounds of reasonableness, legality and due process. If it is not administrative action under PAJA then it would still be subject to the rationality and legality review under the rule of law provisions in the Constitution”.
GilesFiles on February 21, 2017 at 2:53 pm

See now:
Amcu v Chamber of Mines of SA (CCT87/16) [2017] ZACC 3 (21 February 2017) per Cameron J (Nkabinde ACJ, Froneman J, Jafta J, Madlanga J, Mbha AJ, Mhlantla J and Zondo J concurring) at fn 89

Free Market Foundation v Minister of Labour [2016] ZAGPPHC 266; 2016 (4) SA 496 (GP) concerned a challenge to section 32 of the LRA. In that case, the High Court went further, and considered the possibility that an extension of a collective agreement made in a bargaining council framework could amount to administrative action. The Court found that while the negotiation and conclusion of a collective agreement would not necessarily constitute administrative action, the parties’ request under section 32(1) to the Minister to extend the agreement may constitute administrative action. The Court was inclined to find that PAJA would apply; and if not, the decision would still be subject to rationality and legality review.

Whatever the position in regard to section 32, section 23 extensions entail the exercise of public power. A section 23(1)(d) extension occurs without more upon the conclusion of an agreement that conforms to the provision’s specifications. Differently put, the parties’ employment of the statutory provision by itself entails extension. This entails a public dimension. Unlike extensions under section 32, there is a single rather than a two-step process.