Your get-out-of-arbitration-and-into-the-Labour-Court-for-free card

To serve the democratic order post-1994 should be a badge of honour. But the reality is that while there are many public servants who try to do so with distinction, every day, across the country, there is an even greater and more powerful legion of cadres in the public service whose only intent is personal well-being and preservation.

This is always at the expense of the taxpayer and works against the new cliché of "service delivery"; worse, it is done in the name of the "now is our time to eat" mentality. Then, add to the mix the lack of experience and skill across the public sector. But none of this is a revelation to any of us. Neither is the consequential collapse of municipal infrastructure across the length and breadth of the country. Here are some chilling statistics:

Irregular spending by South Africa's municipalities surged 75% to ZAR28.4 billion (US$2.2 billion) in the 2017 fiscal year as accountability "continues to fail in local government," said Kimi Makwetu, the Auditor-General. The AG reported that of the 257 municipalities reviewed, only 33 received a clean audit. No municipality in the Free State, Limpopo or North West received clean audits. These three provinces are led by the African National Congress. Material non-compliance with key legislation was evident in 86% of the Councils the highest percentage since 2012-13. Some cities are "on the brink of collapse" and need to be pulled back from the cusp of financial ruin, said Finance Minister Nhlanhla Nene, in April. There is no doubt that years of mismanagement at some state-owned companies and municipalities have adversely weighed on government finances. Since 2013-14 fruitless and wasteful expenditure has almost tripled to ZAR1.5 billion. In May, Bloomberg summarised the following highlights from the AG's report:

  • The audit environment in which teams had to work "become more hostile, with increased contestation of audit findings and pushbacks whereby their audit processes and motives were questioned".
  • In total, 87% of municipalities exceeded the 30-day payment period to their creditors, with the average being 161 days.
  • Inability to collect money from municipal consumer was widespread and 92% of the councils said they need to write off more than 10% of their debt.
  • About 43% of councils had more liabilities than assets, which means they won't be able to pay creditors.
  • Factors including poor revenue and budget management led to 31% of the municipalities disclosing that they may not be able to continue operating.
What has any of this got to do with labour law? Is the writer a frustrated politician or an "in the closet" aspiring opposition bench sitter? Neither. (I used to be a card-carrying member of the ANC). 

The reality is that one only needs to review the roll of cases at the Johannesburg Labour Court to see the majority of matters that come before the court arise out of the public sector. Also, our current labour law dispensation is modelled on a by-gone era and has not caught up with the challenges and realities of today – evidenced by the disputes created out of the public service. 

To address the challenges of the times – which range from incompetence to plain criminality – it seems that the courts have had to fill the gap and hold the line against abuses in the public sector. Mohlomi v Ventersdorp/Tlokwe Municipality (2018) 4 BLLR 355 (LC) is one such case. It is the latest in a series of judgments in which the Labour Court has expressed reservations about public servants using urgent court applications to interdict the state from disciplining them. The decision, penned by Acting Judge Snyman is, in my opinion, probably the most forceful. In my view it is also a decision that will likely find favour with other judges of the Labour Court. 

The case started out as an urgent application in December 2016. It arose out of the termination of Molemo Mohlomi's employment contract by the Ventersdorp/Tlokwe Municipality, by way of a resolution adopted by the Council. The main relief was for a review and setting aside of the termination of Mohlomi's contract under section 158(1)(h) of the Labour Relations Act, 1995. On 20 December 2016, the parties agreed that the decision to terminate Mohlomi's services be suspended, irrespective of the merits of his dismissal. His salary and benefits would be paid until the review application was decided. The application initially came before the court on 2 March 2017. And so, he was reinstated, and the ratepayers of Tlokwe Municipality had the (dis)pleasure of paying his salary past Christmas 2016. 

In fairness to Mohlomi, his employment was terminated without any process, and so in breach of the law. This too is not out of the ordinary. The LRA does not, however, address this aspect through the current disputes system on an immediate basis. In reality, the conciliation/arbitration process is too slow to provide the quick relief that is often necessary. The current LRA, for instance, replaced status quo orders under the 1956 LRA. Something akin to the old status quo orders needs to find its way back into our law, as currently there is no defined basis of obtaining them. In my experience this is one of the drivers for employees seeking the urgent intervention of the Labour Court through some creative lawyering.

For a number of reasons, the review application in Mohlomi was only set down for hearing in May 2017 when it came before Snyman AJ. So Mohlomi was paid for a further six months, compliments of the local ratepayer.

These are the facts of Mohlomi's employment with the Municipality: 
  • He was appointed in November 2007 as Manager: Housing and Planning on a five-year fixed-term contract.
  • In 2012, the Municipality advertised the position. One of the (new) qualifying criteria was an appropriate bachelors' degree or other equivalent tertiary qualification, coupled with relevant skills.
  • Mohlomi applied for this position with a number of other incumbents. He was shortlisted and interviewed for the position.
  • Following the interviews, the interview panel submitted its recommendations in a report dated 19 November 2012. The preferred candidate was Mr M Ralukake, and second preferred candidate was Mr M Musetha. Mohlomi was not recommended.
  • On 29 January 2013, the Tlokwe City Council decided to appoint Mr Ralukake. If he declined, Mr Musetha would be appointed. However, both candidates declined the position and on 13 April 2013, the City Council resolved that all the other candidates be interviewed again. This included Mohlomi.
  • In an about turn, on 2 July 2013, the City Council decided to use the scoring sheets from the original interviews to make a recommendation on an appointment. On this basis Mohlomi was then recommended for appointment and, in fairness to him, it should be noted that he had the second highest score in the interviews.
  • On 13 December 2013, the City Council resolved to appoint Mohlomi on a fixed-term contract for five years, effective 13 December 2013. A letter of appointment was issued to him on 20 December 2013.
  • The position of Manager: Housing and Planning is a position contemplated by section 56 of the Municipal Systems Act (Systems Act) and the appointment required a written contract of employment. This was concluded on 16 January 2014. The employment contract provided for the termination of the agreement and included, in clause 10.3.1, termination with immediate effect for any reason recognised by law as sufficient, at the instance of the City Council. Clause 10.2 provided that: "The Employer will be entitled to summarily terminate the Employee employment contract after substantiation and on any sufficient reason recognised by law ... " (sic)
  • During the course of 2014, a former councillor of the City Council, Mr J Johnson, lodged a complaint with the Municipal Manager about Mohlomi's appointment. It was contended that Mohlomi did not possess the requisite prescribed qualifications. Nothing seems to have happened.
  • Mr Johnson elevated his complaints to the MEC and to the national Minister of Corporate Governance and Traditional Affairs.
  • On 10 December 2014, the City Council provided the MEC and the Minister with all the information relating to the applicant's appointment.
  • On 29 June 2015, the MEC sent a letter to the Executive Mayor indicating that the appointment of Mohlomi appeared to be irregular because he was not on the recommended list of appointees emanating from the original interview panel, and there was non-compliance with Circular 19. The MEC stated that the appointment was thus not endorsed in terms of the Systems Act, and requested the Executive Mayor immediately take necessary remedial action to ensure compliance with the Act. Nothing was done until much later.
  • The Tlokwe City Council was then disestablished by virtue of a notice published in terms of section 12 of the Local Government: Municipal Structures Act, dated 22 June 2016. This was part of a restructuring to amalgamate the Tlokwe and Ventersdorp Municipalities (called NW405, Ventersdorp/ Tlokwe Local Municipality). In terms of clause 7(1)(b) of the notice, all employees of both municipalities were transferred to the newly established Municipality.
  • The MEC issued a notice on 1 August 2016 confirming that the amalgamation would take effect on 3 August 2016 and that with effect from that date, the Tlokwe and the Ventersdorp Municipal Councils would cease to exist. Until the new Municipal Council was constituted, the MEC appointed a number of individuals to management positions in acting capacities in the newly established Municipality. Mohlomi assumed the position of Acting Director: Housing and Planning.
  • More than a year later, after the establishment of the Council of the new Municipality, the issue raised in the MEC's letter of 29 June 2015 was served before the Council.
  • In a Council meeting on 25 August 2016, it was decided that legal opinion be sought about the validity of Mohlomi's appointment, and if the appointment was considered illegal, what could be done about it.
  • Following the receipt of legal opinion, on 6 December 2016, a resolution was adopted that Mohlomi's contract of employment be terminated with immediate effect. This was in line with the MEC's directive of 29 June 2015.
  • On 7 December 2016, Mohlomi was issued with a termination of contract notice – effective immediately.

Snyman AJ concluded: "Crystallised down to its pure form, the simple reason for the termination of [Mohlomi's] contract by and employment with the [Municipality], was because the [Municipality] considered [Mohlomi's] appointment into the position on 13 December 2013 to be in contravention of the Systems Act, as a result of [Mohlomi] not having the requisite qualifications for the position when so appointed". This is indeed so. 

There is absolutely nothing complicated about these facts. 

The Constitutional Court made it plain in its recent decision in the Assign Services (Pty) Ltd v NUMSA & Others (July 2018) (as yet unreported) case, at paragraph 43: 

"Every provision of the LRA must ... be read to create clear and precise parameters through which both employers and employees can meaningfully participate in labour relations". That this is not so is demonstrated by the Mohlomi decision. 

The Mohlomi application came before court under section 158(1)(h), which provides that: "The Labour Court may... review any decision taken or any act performed by the State in its capacity as employer, on such grounds as are permissible in law." 

In Hendricks v Over strand Municipality (2015) 36ILJ163 (LAC), the court described section 158(1)(h) as follows: 

“In sum therefore, the Labour Court has the power under section 158(1)(h) to review the decision ... on (i) the grounds listed in PAJA, provided the decision constitutes administrative action; (ii) in terms of the common law in relation to domestic or contractual disciplinary proceedings; or (iii) in accordance with the requirements of the constitutional principle of legality, such being grounds 'permissible in law'." 

However, in the subsequent 2016 LAC decision in Merafong City Local Municipality v SA Municipal Workers Union (2016) 37 ILJ 1857 (LAC) it was said: 

"The Labour Court is not precluded by the LRA from reviewing the decisions and Acts contemplated in section 158(1)(h). It has the power (and jurisdiction) to review them on any grounds 'permissible in law'. Permissible grounds in law would include the constitutional grounds of legality and rationality and, if they constitute 'administrative action', on the grounds that are stipulated in PAJA...." 

So, the review powers under the LRA are extremely wide. This provides public servants with an opportunity to bypass the arbitration processes, to which others are subjected under the LRA, and directly access the Labour Court. However, this seems out of joint with certain Constitutional Court decisions that have made the point that there is to be no distinction between employment rights in the public and private sectors. 

Snyman AJ then goes on to say, correctly in my view, that the inquiry as to whether or not to entertain a review application does not stop just because, in general terms, it is accepted that the Labour Court has jurisdiction to do so. Simply put, even though the court has jurisdiction to review, it does not mean that it is appropriate for it to exercise such power, especially where there are other specifically prescribed alternative means by which the dispute can be resolved. And, this is where the Labour Court has had to engage in judicial activism because the legislature failed to be clear in its terms and restrict the application of the review jurisdiction. 

Having considered earlier Labour Court decisions and, importantly, the Constitutional Court on the alternative disputes mechanism created by the LRA, Snyman AJ concludes that the unique scheme set up under the LRA to resolve disputes that arise within the scope of the employment relationship must be respected. This is, in my view, correct. The LRA creates a right to a fair dismissal and the right to a fair labour practice, and then provides for a prescribed dispute resolution process to give effect to these rights. At the heart of this dispute resolution process lies the notion of fairness, which is not compatible with concepts such as unlawfulness or illegality or invalidity. At a policy level, the Labour Court should always strive to give primacy to the prescribed dispute resolution processes of the LRA, and the notions of fairness underlying it. 

Snyman AJ concludes by saying that when the Labour Court is confronted with an application seeking to challenge decisions in the context of the employment relationship in the public service, the court is duty-bound to ascertain whether the decision taken is one that would normally be challenged under the auspices of what is defined as a dismissal or unfair labour practice under the LRA. This is irrespective of the fact that the review applicant may label it as a legality challenge. If the dispute is capable of resolution under the proper prescribed processes under the LRA, in the forum properly and specifically designated to deal with such a dispute, the review on the basis of legality must not be entertained. It will only be considered under exceptional circumstances. 

Let us now analyse the facts in Mohlomi and see whether he should be able to short circuit the process: 
  • Mohlomi was clearly an employee.
  • He concluded an employment contract.
  • He was appointed and the contract was concluded pursuant to the 2013 resolution.
  • The employer never contended that it considered the employment contract null and void.
  • The employer brought the employment contract to an end for two reasons, one - Mohlomi did not possess the required qualifications and two - he misrepresented that he had the qualifications. This is regrettably not a novel reason for dismissal in South Africa.
In Chirwa v Transnet Ltd and Others (2008) 29 ILJ 73 (CC), the Constitutional Court held: 

"The LRA does not differentiate between the state and its organs as an employer, and any other employer. Thus, it must be concluded that the state and other employers should be treated in similar fashion.'' 

As Mohlomi was dismissed, he was then required to pursue his dismissal dispute in the relevant bargaining council. In the course of arbitration, if Mohlomi proved his dismissal, the onus would shift to the employer to prove that the dismissal was substantively and procedurally fair. If successful, he could get relief in the form of fully retrospective reinstatement and the restoration of his employment contract, with back pay. This is the defined system. 

On the continued journey of judicial activism, Snyman AJ then goes on to say that it was never the intention with the introduction of section 158(1)(h) that the Labour Court should be tasked with deciding what in essence are dismissal disputes of public sector employees as a court of first instance. There is, however, no basis for this remark - the LRA certainly does not say so. And in paragraph 63 the court says: "The abuse of section 158(1)(h) by well-paid public service employees to bypass a dispute resolution process that must be (and is) followed by everyone else, must stop". (my emphasis

While I agree with Snyman AJ's conclusion, these judgments do beg the question why it is that "well-paid employees" seek to bypass the dispute resolution process imposed upon them by the LRA. I would venture that there are a number of reasons and it is time for proper research to be commissioned so the matter can be fully debated at NEDLAC. In my assessment, the current system of arbitration at CCMA level and the bargaining councils is not well suited to deal with employee disputes at this level. The system was not designed to achieve this. In 1995 the LRA could not have contemplated that highly-paid employees would be subject to arbitration in the CCMA or bargaining councils under the same practice rules as other employees. For instance, there are no pleadings in place or proper pre-arbitration processes prior to a dispute being heard by way of arbitration. In my experience, litigants prefer a right of appeal (which exists in the Labour Court but not from the CCMA) as opposed to a limited right of review (which exists from the CCMA to the Labour Court) and being armed with advance knowledge of the other party's case with reference to proper pleadings. Unfortunately, the ANC is bound by COSATU and is hamstrung in a debate of this nature with its historic alliance partner. 

Our law recognises that the quantum of a claim is a rational basis upon which to slice up jurisdiction. Curiously, this is not the case in employment litigation. The current system was conceived to abort the somewhat stigmatised defunct Industrial Court of the past in the name of cheap and quick processes. At the 21st World Congress of the International Society for Labour Law and Social Security in Cape Town in September 2015, Prof Hilton Cheadle told the story of the birth of the CCMA. It was the idea of the late Sir Bob Hepple QC. Hepple QC set out his idea of a quick, informal and inexpensive forum on a flipchart in Geneva. These ideas developed into the CCMA. There are many success stories to be told at the CCMA. But these are at a particular level of employment and the current system is not designed for "highly-paid employees" and large quantum claims. 

Twenty-three years later, it is time to re-look at the disputes system. It is beyond growing pains and as Mohlomi shows, it has become rebellious. It is not for the courts to impose the curfew. If South Africa is to become a contributing partner in BRICS and, importantly, a destination that attracts FDI, the time has come for the state to take the lead, without being influenced by COSATU sentiment. 

This is but one element of labour reform that is now long overdue. Legislative reformers need to take the baton from the late Hepple QC et al and look to the future. The alternative will be a continuation of creative lawyering that works around the contours. 

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