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

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). 26 th Annual Labour Law Conference2

The employment contract 26 th Annual Labour Law Conference3 The Labour Relations Act, 1995 Precedent decided under the Act The common law parol evidence rule only variable by consent

The employment contract 26 th Annual Labour Law Conference4 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

The approach of foreign jurisdictions 26 th Annual Labour Law Conference 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 5

Is the law unnecessarily stifling? 26 th Annual Labour Law Conference6 Unilateral change repudiation of contract Constructive dismissal claim for damages Specific performancere-employment What remedies are available to employers?

The lock-out 26 th Annual Labour Law Conference7 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

Lock out dismissals 26 th Annual Labour Law Conference8 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.

Lock out dismissals 26 th Annual Labour Law Conference9 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

Section 189 and 189A of the Act 26 th Annual Labour Law Conference10 Dismissal for operational requirements Employees do not agree to required changes Restructuring of business necessary Retrenchment procedures in terms of the Act

Section 189 and 189A of the Act 26 th Annual Labour Law Conference11 Section 189 and 189A : Fair dismissal procedures v Section 187(1)(c): Automatically unfair

Fry’s Metals v NUMSA: 26 th Annual Labour Law Conference12 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 designed to 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

The relevant question, then, is: 26 th Annual Labour Law Conference13 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?

Chemical Worker’s Industrial Union V Algorax: 26 th Annual Labour Law Conference14 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

Fair dismissals for operational requirements 26 th Annual Labour Law Conference15 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

The ultimate test is of fairness 26 th Annual Labour Law Conference16 “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

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