South Africa: Important Constitutional Court Judgment On The Extension Of Collective Agreements To Members Of Minority Unions

Last Updated: 10 March 2017
Article by Peter Le Roux and Fritz Malan

Most Read Contributor in South Africa, July 2017

An important case between the Association of Mineworkers and Construction Union ("AMCU") and the Chamber of Mines of South Africa acting on behalf of Harmony Gold, AngloGold Ashanti and Sibanye Gold, has finally been decided by the Constitutional Court. The case concerns the extension of a 2013 wage collective agreement to AMCU members in terms of section 23(1)(d) of the Labour Relations Act, 1995 ("LRA"). The case has important implications for collective labour law and industrial relations in South Africa. The judgment follows a prior judgment of the Labour Court, which AMCU took on appeal to the Labour Appeal Court, and then to the Constitutional Court after the Labour Appeal Court dismissed AMCU's appeal. AMCU's primary challenge to the previous judgments in the Labour Court and Labour Appeal Court was that section 23(1)(d) of the LRA is unconstitutional.

Section 23(1)(d) allows parties to a collective agreement to extend the agreement to, and bind, employees who are not members of the trade union/s that entered into the collective agreement – including employees who are members of minority unions that are not party to the collective agreement. This is permitted when the collective agreement is entered into by a trade union (or trade unions) which has (or have) as its (or their) members the majority of the employees in the workplace of the employer/s concerned.

In 2013, the Chamber of Mines agreed with the National Union of Mineworkers ("NUM") and two other unions that a collective agreement regulating terms and conditions of employment applicable to Harmony Gold, AngloGold Ashanti and Sibanye Gold be extended to, and bind, AMCU's members employed by these companies within certain defined recognition units. AMCU, which had been party to the negotiations but had refused to sign the wage agreement, gave notice that its members would strike in support of wage demands higher than those contained in the collective agreement. The Chamber successfully interdicted the strike on the basis that AMCU was bound by the collective agreement.

The most important argument raised by AMCU during the Labour Court proceedings, and later in the Labour Appeal Court and the Constitutional Court, was that, in broad terms, section 23(1)(d) of the LRA is unconstitutional because it restricts the constitutional right to strike and violates the rule of law insofar as it envisages the unrestricted exercise of a public power by private bodies.

AMCU also contested the interpretation attached to the word "workplace" by the Chamber, ie, that all the mining operations of each mining house taken together constituted a single workplace for each company. AMCU contended that each mining operation of each company should be considered a separate workplace for purposes of the interpretation of section 23(1)(d) and that the relevant wage agreement could therefore not be extended to AMCU members at those mining operations of each employer where AMCU had majority status.

In a unanimous judgment written by Judge Cameron the Constitutional Court held that section 23(1)(d) of the LRA is not unconstitutional. The court accepted that one of the effects of an extension of a collective agreement in terms of section 23(1)(d) is to restrict the right to strike. This was held to be the case because the extension of a wage agreement to minority unions and their members who are not party to the agreement limits the right of such unions and their members to pursue their own wage demands by means of strike action, as the subject matter of a potential wage strike is then covered by the terms of a binding collective agreement. However, the court also accepted that the need to maintain the principle of majoritarianism in industrial relations justifies the restriction of the constitutional right to strike. The court appears to have been swayed in this regard by the practical consequences of placing employers in a position where, despite the fact that the majority of employees through their representative unions are satisfied with a given wage proposal and are prepared to accept it, employees represented by minority unions may still contest the wage settlement reached with the majority by means of strike action.

The court further found that the concept of a workplace is intentionally decoupled by the legislature from mere geographical location and has a legal meaning which is informed by functional organisation. The intrinsic possibility of locational multiplicity for a single workplace thus exists in the definition. The court therefore held that AMCU's contention could not be upheld and that the functional organisation of the operations of the mining companies in question had to take primacy over the fact of geographically separate mining operations. Due to the centralised and integrated nature of the operations of the mining companies involved, the workplace in this context was not each individual mining operation, but the operations of each mining house collectively.

In relation to the rule of law issue, the court held that the extension of a collective agreement in terms of section 23(1)(d) does comprise the exercise of public power, but that such exercise of public power does not violate the rule of law. Although not subject to the Promotion of Administrative Justice Act, 2000 the extension of a collective agreement in terms of section 23(1)(d) is subject to judicial scrutiny.

The prospect of a review of the extension of a collective agreement in terms of section 23(1)(d) has therefore been created, at the very least as a theoretical possibility, by this judgment. The court specifically noted that all exercise of public power, including non-administrative action such as the extension of a collective agreement in terms of section 23(1)(d), must conform to minimum standards of lawfulness and non-arbitrariness. It further noted that the exercise of public power in this instance may not occur "irrationally or arbitrarily". It remains to be seen how this injunction is to be interpreted by the courts over time. Examples of practical circumstances in which a court would be inclined to overturn an extension of a collective agreement on the basis of rationality or arbitrariness do not readily present themselves.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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