Varying terms and conditions of employment

1. Varying terms and conditions of employment • S’bu Gule • Chairman • Norton Rose Fulbright South Africa • 31 July 2013

2. 22. Freedom of trade, occupation and profession • Every citizen has the right to choose their trade, occupation or profession freely. The practice of a trade, occupation or profession may be regulated by law. • 23. Labour relations • (1) Everyone has the right to fair labour practices. • (2) Every worker has the right - • (a) to form and join a trade union; • (b) to participate in the activities and programmes of a trade union; and • (c) to strike. • (3) Every employer has the right - • (a) to form and join an employers’ organisation; and • (b) to participate in the activities and programmes of an employers’ organisation. • (4) Every trade union and every employers’ organisation has the right - • (a) to determine its own administration, programmes and activities; • (b) to organise; and • (c) to form and join a federation. • (5) 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). • (6) National legislation may recognise union security arrangements contained in collective agreements. To the extent that the legislation may limit a right in this Chapter, the limitation must comply with section 36(1). 26th Annual Labour Law Conference

3. The employment contract • The Labour Relations Act, 1995 Precedent decided under the Act The common law ------ parol evidence rule ------ only variable by consent 26th Annual Labour Law Conference

4. The employment contract • Consent given by a union on behalf of its members • All changes expressly and tacitly envisaged by the contract • Fair variation clauses can be included in the contract • Variation by consent 26th Annual Labour Law Conference

5. The approach of foreign jurisdictions • Standard clauses in contracts reserve the rights of the employer to vary terms and conditions of employment • Consent to unilateral variation from the outset • Employer can serve notice to terminate existing contract and offer employee re-employment on new contractual terms if no agreement on terms is made • Clauses interpreted strictly and in favour of employee where ambiguous 26th Annual Labour Law Conference

6. Is the law unnecessarily stifling? • Unilateral change repudiation of contract • Constructive dismissal claim for damages • Specific performance re-employment What remedies are available to employers? 26th Annual Labour Law Conference

7. The lock-out • The Interim Constitution: • Right to lock-out will not be impaired by anything else contained in this right • Labour Relations Act • Procedure same as for protected strike • Requires referral to CCMA • May be lengthy process • Only in collective bargaining • Employer not obliged to use lock-out before any other remedy • No procedural requirements where in response to unprotected strike • Check peace clauses in collective agreements first • Replacement labour prohibited 26th Annual Labour Law Conference

8. Lock out dismissals • Section 187(1)(c) of the Act • “A dismissal is automatically unfair…if the reason for the dismissal is - • to compel the employee to accept a demand in respect of any matter of mutual interest between the employer and employee…” • “Mutual interest”? • Salary • Benefits • Working hours • Shift arrangements • Age of retirement • Supervisory relationships • Place of work; etc. 26th Annual Labour Law Conference

9. Lock out dismissals • Section 187(1)(c) of the Act • “A dismissal is automatically unfair…if the reason for the dismissal is - • to compel the employee to accept a demand in respect of any matter of mutual interest between the employer and employee…” • “Automatically unfair”? • Dispute referred directly to the Labour Court • Compensation up to 24 months’ salary 26th Annual Labour Law Conference

10. Section 189 and 189A of the Act • Dismissal for operational requirements • Employees do not agree to required changes • Restructuring of business necessary • Retrenchment procedures in terms of the Act 26th Annual Labour Law Conference

11. Section 189 and 189A of the Act Section 189 and 189A : Fair dismissal procedures v Section 187(1)(c) : Automatically unfair 26th Annual Labour Law Conference

12. Fry’s Metals v NUMSA: • Labour Appeal Court: 2003 • Unanimous judgment that dismissals did not fall into section 187(1)(c) and were fair • Supreme Court of Appeal: 2005 • Dismissals in terms of section 187(1)(c) have to be designedto induce agreement to employer’s demands. • Leave to appeal refused. • Changes proposed to shift system • Those who do not accept proposed changes “may be retrenched” • Section 189A consultation process initiated • Employees given opportunity to reconsider proposed amendments and not be dismissed 26th Annual Labour Law Conference

13. The relevant question, then, is: • Was the dismissal effected to compel the employees to agree to the employer’s demands, such that the dismissal would be withdrawn and the employees retained if they acceded to the demands; or • Is the dismissal final so that the employer may replace employees permanently with other employees who are prepared to work under the terms and conditions required by the employer? 26th Annual Labour Law Conference

14. Chemical Worker’s Industrial Union V Algorax: • Changes proposed to shift system • Valid operational requirements • Many attempts by employers to engage and negotiate • Employees given notice that they may accept changes or services would be terminated • Offered option of changing their minds post dismissal and returning to work • Labour Appeal Court: 2003 • Same bench as Fry’s Metals • 2:1 majority decision that dismissals fell within section 187(1)(c) and were automatically unfair • Purpose for dismissal found to be to compel employees to accede to employer’s demand 26th Annual Labour Law Conference

15. Fair dismissals for operational requirements • Motives for retrenchment and for forced compliance in terms of section 187(1)(c) may be indistinguishable, but dismissals effected properly in terms of section 189 will be fair • Dismissals must be unequivocal and irrevocable • Does not have to follow dire necessity, but must be necessary for valid operational requirements • Must strictly follow section 189 mandated procedure 26th Annual Labour Law Conference

16. The ultimate test is of fairness “Collective bargaining is based on the recognition of the fact that employers enjoy greater social and economic power than individual workers. Workers therefore need to act in concert to provide them collectively with sufficient power to bargain effectively with employers.” - Ex Parte Chairperson of the Constitutional Assembly: In re Certification of the Constitution of the Republic of South Africa, 1996 26th Annual Labour Law Conference

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