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It's no party

July 2016

South Africa

The important issue of locking-out members of a trade union who are not party to a bargaining council came before the Constitutional Court (CC) in the case of

Transport and Allied Workers Union of South Africa v Putco Limited [2016] (2016) 37 ID 1091 (CC) during which a significant unanimous judgment was handed down.
The central question before the CC was whether section 64(1) read with section 213 of the Labour Relations Act 66 of 1995, as amended, (LRA) permitted an employer to lock out members of a trade union that were not party to a bargaining council where a dispute had arisen and was subsequently referred for conciliation. As is highlighted in this article, the CC found against the employers.

In this matter, industry wage negotiations between Putco and recognised trade unions at the time, had resulted in a gridlock at the bargaining council that subsequently led to a strike notice being issued. Prior to the commencement of the strike, Transport and Allied Workers Union of South Africa (TAWUSA), a trade union that had terminated its membership with the bargaining council in 2012, advised Putco that its members would not participate in the envisaged strike. 

Notwithstanding TAWUSA's undertaking not to participate in the strike, Putco issued a notice to the bargaining council of its intention to lock out all employees, including members of TAWUSA who were not party to the negotiations at the bargaining council. 

TAWUSA argued that a lock-out is defined as the exclusion from the workplace by the employer of its employees for purposes of compelling the employees to accept a demand. TAWUSA maintained that “there could be no dispute if there was no demand”. The principal contention was that TAWUSA was not a member of the bargaining council where the dispute arose and that accordingly the demand that was extended by Putco could only be enforced against the employees who were being locked out. 

Putco on the other hand argued that section 64(1) of the LRA provided that notice to a bargaining council was deemed as notice to all unions operating within its jurisdiction and, in light of this, TAWUSA was effectively a party to the dispute. Putco further argued that there was in fact a dispute between itself and TAWUSA. 

In support thereof, Putco relied in the manner in which TAWUSA's general secretary responded to the lock-out notice where the union sought to negotiate separately at plant level with Putco and other employer organisations that were part of the bargaining council. Accordingly, Putco argued that it had effectively made a demand to TAWUSA, just as it had done to the other trade unions. 

Subsequent to TAWUSA failing to reach common ground with Putco, the union approached the Labour Court where it sought an order interdicting Putco from locking out TAWUSA members from its employ. The Labour Court held that "a lock-out must be directed to employees with a demand [from the employer]" (Transport And Allied Workers Union of South Africa v Algoa Bus Company (Pty) Ltd and Others 34 ILJ 2949 (LC) at para 13). The Labour Court further held that TAWUSA was not party to the dispute that gave rise to the purported lock-out, as it was not a member of the bargaining council where the dispute arose. For this reason, the members of the union could not be locked out. Dissatisfied with the judgment, Putco successfully took the matter on appeal in the Labour Appeal Court where the Labour Court's decision was set aside. 

TAWUSA then approached the CC where it maintained that it was not a party to the bargaining council where the dispute arose. TAWUSA felt strongly that its constitutional rights, and that of its members to fair labour practices among others, were being infringed. The union also maintained that there was no dispute between itself and Putco and that accordingly there could be no demand from Putco to its members. Putco could therefore not lock out its members.

The CC held that, as a matter of logic, a dispute between an employer and its employees or their respective trade unions “must exist” before a lock-out could be enforced. Accordingly, any prohibition of employees from an employer's workplace that is not preceded by a demand does not qualify as a lock-out in terms of section 213 of the LRA (Constitutional Court judgment at para 32). In light of this, it is therefore mandatory for a demand to first be extended by the employer to the employees. It is this demand, which the employees refuse to accept “that sets the wheels in motion for an employer to institute a lock-out”. 

Putco had submitted that the lock-out notice that was given to TAWUSA constituted a demand in respect of a matter of mutual interest. It further clung onto the manner in which TAWUSA's general secretary responded to the notice and argued that his assertion that TAWUSA members would not sign any new conditions that Putco sought to impose by way of an unlawful lock-out constituted a rejection of the employer's demand. 

After hearing Putco's submissions, the CC held that such submissions raised two questions, namely:
  1. Was there a matter of mutual interest between the parties; and
  2. Did Putco's lock-out notice constitute a demand for purposes of section 213 of the LRA. 
To answer the first question, the CC found that the outcome of the ongoing negotiations at the bargaining council was undeniably of interest to both TAWUSA and the employer. In light of this, Putco managed to overcome the first leg.

However, on the second question, the CC found that Putco fell somewhat short. The CC held that section 213 of the LRA required an employer to make a clear and unambiguous demand to employees before locking them out. The CC held that a lock-out notice cannot constitute both notice and a demand as the two cannot be used interchangeably. It was for this reason that Putco failed to overcome the second leg of the questions posed. The CC reiterated that “an employer was not permitted to resort to a lock-out if it has not yet made a demand to the employees who are to be excluded from the employer's premises”.

The CC found that the purpose of a lock-out is to compel employees to accept a demand proposed by the employer and that before a lock-out could be instituted, a dispute between an employer and an employee or trade union had to exist. Due to TAWUSA not being a member of the bargaining council, it surely could not have been a party to the dispute and in the absence of a dispute, a lock-out by Putco of the trade union's members was therefore declared unlawful. 

Our view is that this CC case has set quite a tough precedent for employers because the implication set by this judgment is that employers will now be faced with the unpleasant task of distinguishing employees whom they are entitled to lock out from those who must be allowed to report for duty. More importantly, employers will have to ensure that a demand is made first (for acceptance), and only after rejection may a lock-out notice be issued.

Practically going forward, employers will now have to encourage employees or their respective trade unions to be members of the relevant bargaining council. In the event that this is not done, as highlighted above, the employers will bear the brunt. 

As published in Without Prejudice in July 2016.

The team

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