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Of mines and men

February 2016

According to PwC's annual review of the trends in the mining industry, Mine 2015, the market capitalisation for the world's top 40 mining companies at the end of 2014 was US$791 billion, being the same level as it was 10 years ago. This was the first time that no South African company made the top 40 list, which is indicative of the hardships currently facing numerous mines in South Africa. In a media statement on 12 May 2015, the then Minister of Mineral Resources Advocate Ngoako Ramatlhodi announced his concern over the high rate of retrenchments in the mining sector.

With large scale retrenchments being on the cards industrywide, and with the government requesting mines to do everything in their power to avoid this, it may be appropriate to re-look at the statutory obligations imposed on the mines to consult their trade unions and workers before deciding on retrenchments, and the obligations to inform the Department of Mineral Resources of these intentions.

When large-scale retrenchments are envisioned by a mining company, it is crucial to consider the interplay between section 52 of the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA) and sections 189 and 189A (if the employer has more than 50 employees) of the Labour Relations Act 66 of 1995 (LRA).

In terms of section 52(1)(b) of the MPRDA, the holder of a mining right must, after consultation with any registered trade union or affected employees or their nominated representatives where there is no such trade union, notify the Minister if any mining operation is to be scaled down or ceased with the possible effect that 10% or more of the labour force, or more than 500 employees, whichever is the lesser, are likely to be retrenched in any 12-month period.

At first glance, section 52 of the MPRDA appears to create an obligation to consult with registered trade unions or affected employees in addition to those obligations contained in sections 189 and 189A of the LRA. This requires an employer who contemplates dismissing one or more employees based on operational requirements to consult with, inter alia, the registered trade unions or affected employees.

The relationship between the MPRDA and the LRA in cases where large-scale retrenchments were envisaged at a mine was dealt with in the case of National Union of Mineworkers v Anglo American Platinum Ltd and Others (2014) 35 ILJ 1024 (LC) (Amplats case). In an urgent application, NUM contended that the dismissals of its members were invalid due to the respondents' apparent failure to comply with section 52 of the MPRDA and/or sections 189 and 189A of the LRA.

The presiding officer in the Amplats case, Judge van Niekerk, held that section 52 of the MPRDA does not seek to substitute the procedures prescribed by sections 189 and 189A of the LRA. Section 52(4) of the MPRDA entrenches this interpretation by stipulating that the holder of a mining right remains responsible for the implementation of the processes pertaining to the management of downscaling and retrenchment contained in the LRA.

Insurance & Banking Staff Association & another v Old Mutual Services & Technology Administration & another (2006) 27 ILJ 1026 (LC) at 9 reiterated that the purpose of section 189A of the LRA is to enhance the effectiveness of consultations during large-scale retrenchments. Therefore, where an employer has failed to follow a fair process, section 189A(13) of the LRA permits a consulting party to approach the Labour Court to compel the employer to act fairly. Judge van Niekerk held in the Amplats case that it was unnecessary to make any ruling on whether the dismissal of the affected employees was invalid due to a contravention of section 52 of the MPRDA, considering that section 189A(13) aimed to correct only instances of procedural unfairness. Section 52 of the MPRDA was thus only relevant to determine whether the consultation process between the parties was fair.

Judge van Niekerk found that section 52 of the MPRDA imposes an obligation on the mining right holder and not on the employer whose employees may be the subject of contemplated retrenchment, as imposed by section 189 of the LRA. It is, therefore, feasible that the holder of a mining right may have obligations in terms of section 52 of the MPRDA, while having no obligations to employees or registered unions in terms of section 189 of the LRA.

Section 52 of the MPRDA clearly aims to address a different purpose than section 189 of the LRA, which aims to promote a meaningful joint consensus-seeking exercise on the employment related consequences of adverse operational requirements. Judge van Niekerk held that the reference to consultations contained in section 52 of the MPRDA is only relevant to the timing of the notice to the Minister of Mineral Resources and does not, in fact, create an obligation to consult with registered trade unions or affected employees.

Judge van Niekerk went further to state that notice in terms of section 52 of the MPRDA does not necessarily need to be given only once consultations conducted under the LRA have been concluded. Consequently whether a section 52 notice to the Minister should precede or succeed the section 189 consultation process or whether the two processes should run concurrently, is dependent on all of the relevant facts and circumstances. The MPRDA thus regulates when notice should be given to the Minister of the curtailment of mining operations affecting employment, while the LRA stipulates when registered trade unions or affected employees should be invited to consult. Judge van Niekerk accordingly reached the conclusion that the failure by a holder of a mining right to comply with section 52 of the MPRDA does not necessarily result in procedural unfairness for the purposes of sections 189 and 189A of the LRA.

It is important for both the mining right holder and the employer, if they are not one and the same, to be aware of the obligations placed on them by the MPRDA and the LRA respectively when large-scale retrenchments are considered. In light of the cumulative retrenchments in the mining industry, the Amplats case provides much needed clarity on the mechanisms of section 52 of the MPRDA and sections 189 and 189A of the LRA.

The team

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