Strike issues: replacement labour, leave, public holidays, benefits

Presented by:Michelle NaidooNorton Rose South Africa

Introduction

• Sustainability is the capacity to endure

• Sustainable development is “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”

• Does strike action pose a challenge to the concept of

sustainable development?

Introduction

The challenges:

• Sustainability is not a guaranteed outcome of collective bargaining power play

• Competing interests such as economic interests versus social justice are both critical pillars of sustainability

• The consequences of strike action impact on both business and labour

Strike statistics 2011: work days lost

Netherlands • 20 000

United Kingdom• 1.4million

South Africa • 30million as at end of July 2011

The effect of strike action on business and labour on key conditions of employment that directly affect the social and economic pillars of sustainability:

• Remuneration

• Benefits

• Accrual of leave

• Pay for public holidays; and

• Replacement labour

Section 213, LRA

Remuneration

• “Any payment in money or in kind, or both in money and in kind, made or owing to any person in return for that person working for any other person, including the state, and remunerates has a corresponding meaning.”

Employee

• “Any person, excluding an independent contractor, who works for another person or for the state and receives, or is entitled to

receive, any remuneration; and

• Any other person who, in any manner, assists in carrying on or conducting the business of an employer, and “employed” and

“employment” have meanings corresponding to that of employee.”

Section 67, LRA

• An employee does not commit a delict or breach of contract for participating in protected strike action.

• The employer’s obligation to remunerate an employee for service not rendered during strike action is suspended.

But what if services are partially tendered?

• Exceptio non adimpleti contractus (defence of non-performance of contract) available to employer when locked-out employees claim payment for work tendered on a go-slow basis

• An employer is entitled to reject the tender of services on a go-slow basis during a protected lock-out and not obliged to pay for partial compliance

Benefits

Section 186(2), LRA

“An unfair labour practice means any unfair conduct or omission that arises between an employer and an employee involving unfair conduct by the employer relating to promotion, demotion, probation (excl. disputes about dismissals for reasons relating to probation) or training of an employee or relating to the provision of benefits to an employee.”

What constitutes a benefit?

Jurisprudence

Hospersa and another vs Northern Cape Provincial Administration [2000] 21 ILJ 1066 (LAC)

Issue: Whether failure by the employer to pay an acting allowance, in the absence of any agreement, was an unfair labour practice?

Held: Unfair labour practice concerned only with disputes of right arising ex contractu or ex lege. No right existed, therefore no unfair labour practice.

Protekon (Pty) Ltd vs CCMA & others [2005] 7 BLLR 703 (LC)

Issue: Whether travel concessions constituted a benefit?Whether the withdrawal thereof was an unfair labour practice?

Held: The travel concession constituted a benefit.

Although remuneration does not constitute a benefit, the categories of benefits that fall within the scope of Section 186 are not finite.

Disputes over the provision of benefits fall into two categories:

• benefits not presently enjoyed by employees; or• the fairness of the employer’s conduct in relation to the provision of benefits

Schoeman vs Samsung Electronics (Pty) Ltd [1997] 10 BLLR 1364 (LC)

Held: Remuneration is different from benefits. A benefit is something extra apart from remuneration.

Gaylard vs Telkom South Africa Limited [1998] 9 BLLR 942 (LC)

Held: A claim for accumulated leave pay is not a benefit.

Section 35(5), BCEA:Minister’s determination Categories of payment forming part of an employee’s remuneration for the purposes of calculating leave pay, severance pay and notice pay:

• Housing or accommodation allowances or subsidy

• Car allowance or provision of a car (unless provided to enable the employee to work)

• Any cash payments or payments in kind except those listed as exclusions

• Employer’s contributions to medical aid, pension, provident fund, funeral or death benefit schemes

Applicable principles

• If a payment in money or in kind is held to constitute remuneration, section 67(3) applies

• The defence conveyed by the maxim exceptio non adimpleti contractus is a potential competent defence to claims for remuneration or benefits

The accrual of leave and public holiday pay

• Minimum statutory entitlements governed by the BCEA

• No express provision in the LRA providing for the suspension of accrual of leave or payment for public holidays in the event of protected strike action

Nampak Products Ltd t/a Nampak Corrugated Containers v Paper, Printing and Wood Allied Workers’ Union [1992] 13 ILJ 1292 (ARB)

Held: Statutory payments such as leave, are suspended if:

(a) employees were not receiving or entitled to receive remuneration; or

(b) not actually working under the supervision of the employer; or

(c) not assisting the employer in the carrying on of the business.

The employer was therefore entitled to disregard the period of strike action in calculating leave pay.

Arbitrator’s reasoning

• During a strike, although the employee remains employed, the employee is not entitled to receive remuneration, does not work under the direction or supervision of the employer and does not assist in carrying on or

conducting the business of an employer.

• Statutory benefits are applicable only to persons who satisfy both components of the definition of employee.

• Statutory benefits are entitlements in terms of the BCEA that are automatically imported into contracts of employment and apply during periods that employees are entitled to receive remuneration.

• Constitutional provisions

• ILO conventions

• Foreign jurisdictions

• Canadian law

• United Kingdom

Replacement labourSection 76, LRA

(1) An employer may not take into employment any person-

(a) to continue or maintain production during a protected strike if whole or a part of the employer’s service has been designated a maintenance service; or

(b) for the purpose of performing the work of any employee who is locked out, unless the lock-out is in response to a strike.

(2) For the purpose of this section, ‘take into employment’ includes engaging the services of a temporary employment service or an independent contractor.

Key issues arising

• The interpretation of the phrase “in response to a strike”; and

• The meaning of “take into employment”

“In response to a strike” has been interpreted as including both protected and unprotected strikes and to occur if a lock-out notice is issued after notice of the strike has been given, even though the strike has not yet commenced.

“Take into employment” has been interpreted to mean that employers may not employ new persons to replace striking employees on a temporary or permanent basis. An employer may use its existing employees to continue with operations.

The aim is to discourage employers from resorting to an offensive lock-out and to discourage employees from resorting to strike action.

Conclusion

• Strike action impacts on a broader level than “no work, no pay”

• Loss of BCEA entitlements are associated losses that should be factored into both economic and social considerations prior to embarking on strike action.

• Applying the potential associated losses, the impact of 30million lost days of work in South Africa, on both business and labour, poses a serious threat to the sustainability of business and job security.