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Mzeku & others v Volkswagen SA (Pty) Ltd

In the latter half of June 2001, the Labour Appeal Court handed down a number of decisions, some of which reflect significant developments in Labour law.  In this issue, we discuss some of the more important judgments and their implications for South African industrial relations practice.   


Mzeku & others v Volkswagen SA (Pty) Ltd (case number PA 3/01)

22 June 2001


This judgment represents the (hopefully) final outcome of the protracted dispute between Volkswagen SA and the group of renegade employees at its plant. 


The dispute has a fairly long history and has its roots in a spat between NUMSA and a group of its members.


NUMSA represented about 80% of the company's hourly paid employees.  For some time, a dispute brewed within the ranks of the union's members in relation to the conduct of some of the union shop stewards.  In January 2000, the union suspended thirteen of its shop stewards.  In response to legal proceedings instituted by the union to restrain the shop stewards from continuing to act as its representatives, the matter was resolved on the basis that the shop stewards would submit to their suspension, pending a disciplinary hearing which the union would conduct. Despite the settlement, a number of Volkswagen employees participated in a strike in support of the suspended shop stewards.  They announced their intention to continue their strike until the union lifted the suspension of the shop stewards.


Volkswagen advised the employees and the union that the strike was illegal, and called on the employees to return to work.  The company met a delegation representing the striking employees, who said that they wished the company to get the union to lift the suspension and address their complaint. The company's attitude was that the suspension of the shop stewards was an internal issue, in which it would not intervene.  Volkswagen's representatives also advised the delegation that their strike was illegal and that those who continued participating in it would face disciplinary action, including dismissal.  The company also issued notices to employees entering the plants stating that the strike was illegal and calling on them to resume work.  It sought the intervention of the Minister of Labour as well as  COSATU, the relevant MEC and the Deputy Director General of the Department of Labour. 


The next day, Volkswagen closed its plant.  It issued a notice to all employees informing them that the strike was illegal and calling on them to resume work on 24 January failing which they would face serious consequences, including dismissal.  The union advised Volkswagen that it had informed employees that they should discontinue the strike.  On 24 January, Volkswagen handed employees entering the plant notices requiring them to report to their work stations or face dismissal.  Both the union and the company issued various statements to the media calling on employees to return to work and warning them of their possible dismissal.  Despite these joint efforts, Volkswagen continued to experience significant rates of absenteeism.  On 24 January, the local media carried reports of the call to return to work.  The executives of Volkswagen's parent company in Germany arrived in South Africa and met with the union's regional structure. The union again undertook to meet with its members in an effort to end the strike.  Further meetings continued over the next four days.  The meetings culminated in a collective agreement between Volkswagen and NUMSA in terms of which it was agreed that Volkswagen would reopen the plant on 31 January, and that if employees persisted with their strike, the company would take disciplinary action which would include dismissal.  The agreement was widely publicised in the local community. 


Despite these further efforts at notifying employees to resume work or face dismissal, levels of absenteeism remained significant.  The union was finally advised that those employees who did not resume work on 3 February faced dismissal.  On that date, a number of employees failed to return to work.  They were dismissed. 


The dispute between the company and the dismissed employees would ordinarily have been referred to the Labour Court after conciliation, because the dispute was one concerning a dismissal for participation in a strike.  However, the parties agreed to go to arbitration under the auspices of the CCMA.  With the benefit of hindsight, this is a decision that Volkswagen no doubt regrets.


Round 1


The Commissioner found that the dismissal of the striking workers was substantively fair, but procedurally unfair.  He held that in the circumstances, the employees were not entitled to any compensation, but he reinstated them without retrospective effect. 


The basis of the finding of procedural unfairness was that the company had failed to give the employees concerned an opportunity to make representations prior to their dismissal.  In arriving at this conclusion, the Commissioner based his understanding of the law on the recent Labour Appeal Court in Modise & others v Steve's Spar Blackheath [2000] 5 BLLR 496 (LAC).  In that case, the Labour Appeal Court decided that before being dismissed for participation in industrial action, employees are entitled to be heard before being dismissed (the 'audi alteram partem' rule) even if the employer issues an ultimatum to return to work or face dismissal. 


Round 2


Volkswagen then applied to the Labour Court to review and set aside the Commissioner's award.  It did so in terms of section 145 of the Act, which entitles the Labour Court to review arbitration proceedings conducted the auspices of the CCMA.  In its application, Volkswagen sought to set aside the Commissioner's finding that the dismissal was procedurally unfair, as well as the reinstatement order.  The employees brought a counter application in which they sought to set aside the Commissioner's finding that the dismissal was substantively fair, and his decision not to order compensation or to make the reinstatement order retrospective to the date of their dismissal.  In its judgment, the Labour Court granted Volkswagen's application for review in part.  It dismissed the application for counter review altogether.  The Labour Court held that while it disagreed with the Steve's Spar decision, it was bound by it, and that it could not interfere with the Commissioner's finding that the dismissal had been procedurally unfair. However, the Court held that the Commissioner had no power to reinstate the employees because the dismissal was unfair only because fair procedure had not been followed.  The Labour Court was of the view that the LRA did not permit reinstatement in these circumstances.  The Labour Court's order effectively left the workers effectively with a finding that their dismissal had been procedurally unfair, but without any relief. 


Round 3


The employees lodged an appeal against the judgment of the Labour Court.  In the appeal, they attacked the finding of the Labour Court that the dismissal was substantively fair.


The case argued by the employees on the substantive unfairness of their dismissal was largely based on an argument to the effect that the employees did no more than exercise their legal right to strike.  To the extent that the LRA was in conflict with the provisions of ILO Convention 87 on Freedom of Association and the Right to Organise and ILO Convention 98 of the Right to Organise and to Bargain Collectively, it should be disregarded.  Counsel for the employees referred to provisions of the Constitution regulating international agreements, and also to those provisions of the LRA that require an interpretation of its provisions so as to comply with South Africa's public international obligations.  The upshot of these submissions was that the employees, in terms of the Conventions referred to, were entitled to participate in a strike of any nature, and that Volkswagen had no right to dismiss them.  The Labour Appeal Court made short work of this argument, and found that they were "wholly without foundation".  The Court was unable to find any provision in Convention 87 or 98 to the effect that employees could resort to a strike as and when they pleased, without following any of the procedures laid down by national law.  The Court referred to conclusions drawn by the ILO's Committee of Experts which clearly acknowledge the validity of limitations on the right to strike, including a requirement that conciliation and mediation procedures must be exhausted before a strike can be called.  The Court noted:


"Indeed, if Mr Ruben's submission was to be accepted it would, in effect, destroy some of the most important pillars of our strike law and open the door to industrial chaos rather than legitimate regulation of our labour relations.  Our constitution envisages a careful balance between the right to strike and the regulation thereof."


In relation to Volkswagen's obligation to comply with the "audi" rule before it dismissed the workers, the Court held that the meetings held between Volkswagen and the employee delegation, the invitation to the delegation to explain the conduct of the striking employees, notice by Volkswagen to the delegation that the strike was illegal and unprocedural and in breach of a court order, and that they would face disciplinary action which could include dismissal, was all relevant.  There was no doubt, held the Court, that Volkswagen's position had been clearly conveyed to the employees.    The Court then scrutinised the inter action between Volkswagen and NUMSA and observed NUMSA's clear stance on the illegality and unprocedural nature of the strike and the fact that it had no representations to advance to Volkswagen to justify the conduct of the employees who returned to work, even after all reasonable efforts had been exhausted to get them to do so.  NUMSA had consistently adopted the attitude that the employees should cease their strike without delay, and it had clearly stated that it would not be responsible for the dismissal of employees who failed to return to work.  In these circumstances, there was no logic to the Commissioner's view that Volkswagen, despite NUMSA's position, had been obliged to invite the union to make submissions as to why the employees who continued their strike should not be dismissed. 


The Labour Appeal Court concluded that the Commissioner had misconstrued the nature of the enquiry in relation to the audi alterum partem rule, as well as the evidence before him.  In so far as the rift between the union and the striking employees was concerned, the Court found that in the absence of a resignation by the employees concerned from NUMSA, and Volkswagen's awareness of any such resignation, Volkswagen was entitled to continue to regard NUMSA as the representatives of the employees, and to deal with it on that basis.  Finally, the Court attached a great deal of significance to the agreement entered into between Volkswagen and NUMSA prior to the dismissals.


On these grounds, the Court found that the dismissals were both substantively and procedurally fair.  In view of the cross-appeal, seeking the reinstatement of the workers, the Court went on to consider the provisions of section 193 of the Labour Relations Act and concluded that if a dismissal is unfair only because the employer did not follow fair procedure, reinstatement, except in extraordinary circumstances, was not a competent remedy.


The judgment provides a useful case study for the application of the audi alternum partem rule in the context of unlawful industrial action.  It is clear that the Court, as it decided in the Steve's Spar case, will judge every case on its merits, and take into account all of the factual circumstances preceding the dismissal and in particular the employer's efforts to give employees and their representatives an opportunity to be heard in some appropriate manner.  The decision also highlights the absolute necessity of taking advice before even contemplating the dismissal of workers for participation in illegal industrial action.


Shoprite Checkers (Pty)Limited v A. Ramdaw and others (LAC, DA 12/00, )


On 29 June 2001, approximately a year after being heard, the Labour Appeal Court delivered its judgement in the matter. In this case the appellant, aggrieved by the arbitration award issued by the CCMA, brought an application in the Labour Court for an order reviewing and setting aside the award. The Labour Court considered that the ground for review upon which the applicants relied had been justifiability and held that justifiability was not a ground upon which a CCMA award could be reviewed. The Court however found that if justifiability was a ground of review, it would have concluded that the award was indeed reviewable.

This decision came as a surprise to the labour law community as, until then, the Labour Appeal Court decision in Carephone (Pty) Ltd v Marcus N.O and others (1998) 19 ILJ 1424 had consistently been relied on and referred to as authority for the fact that justifiability was a ground of review. The main thrust of the decision in this matter was that the issuing of an arbitration award by a CCMA commissioner constituted administrative action. The Court stated further that the ground of review contained in section 145 (2)(a)(iii), namely the exceeding of a commissioner’s powers, incorporated the constitutional requirement that an administrative action must be justifiable in relation to the reasons given for it.

The main question before the Labour Appeal Court in the Shoprite Checkers matter was whether the Court’s decision in the Carephone case was still “good law”.

In the course of coming to its decision the Court considered the Constitutional Court Judgement handed down in Pharmaceutical Manufacturers of SA: in re Ex Parte President of the RSA 2000 (2) SA 674 (CC). In this matter the Constitutional Court found that as long as a particular decision is the result of an exercise of public power such a decision can be set aside by a court if it is irrational.


In the context of the Pharmaceutical case, the Labour Appeal Court had regard to what the court had to say in the Carephone case about the reviewability of CCMA awards on the grounds of unjustifiability. The Court noted that a requirement of rationality in the merit or outcome of the administrative action should be imported when determining the justifiability of an administrative act.


The Labour Appeal Court in the Shoprite Checkers case then went on to  consider whether the terms ‘justifiable’ and ‘rational’ bear the same meaning.


In this regard the Court found that although the terms justifiable and rational many not strictly speaking be synonomous, they bear a sufficiently similar meaning to justify the conclusion that rationality can be said to be accommodated within the concept of justifiability used in Carephone.


Finally, the Labour Appeal Court considered implications of the recently enacted Promotion of Administrative Justice Act 3 of 2000 (“the PAJA”), the broad purpose of which is to give effect to the right to administrative action that is lawful, reasonable and procedurally fair. In section 1 of the PAJA, “administrative action” is defined as meaning “any decision taken or any failure to take a decision by inter alia:


“(b) a natural or juristic person, other than an organ of state, when exercising a public power or performing a public function in terms of an empowering provision, which adversely affects the rights of any person and which has a direct, external legal effect…”


The Court held, without coming to any final conclusions, that if the PAJA applies to the making of arbitration awards by the CCMA commissioners, section 6 of the PAJA comes into operation. Section 6 provides that an administrative action may be reviewed if procedurally unfair or if it is not rationally connected to the information before the administrator or the reason given for it by the administrator.


In conclusion, the Court found that having regard to all the circumstances and in order to bring about certainty and stability in the law it would serve no purpose for the court to consider whether or not the decision in Carephone was correct but then stated that “Carephone stays”.


The implications of this judgement are that the debate whether CCMA awards can be reviewed and set aside if they are not justifiable in relation to the reasons given for them has hopefully come to an end. Ironically, as far as the merits of the review are concerned the court found that even on the ground of justifiability, the arbitration award did not stand to be reviewed.






This information is published for general information and is not intended as legal advice. As every situation depends on its own set of facts and circumstances only specific professional advice should be relied upon. The authors, editors, publishers and printers do not accept responsibility for any act, omission, loss or damage occasioned by any reliance upon the contents hereof. This update is subject to copyright under the Berne Convention. In terms of the Copyright Act No. 98 of 1978, no part of this update may be reproduced or transmitted in any form or by any means, electronically or mechanical including photocopying, recording and any information storage and retrieval system without the acknowledgement of Perrott, Van Niekerk & Woodhouse Inc.


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Gary Watkins

Gary Watkins

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