THE RESUSCITATION OF THE COMMON LAW DUTY - ‘TO BARGAIN IN GOOD FAITH?’ - [A REPOST]

On November 17, 2017, the SA Minister of Labour published in the Government Gazette 'for information and comment' - a Labour Relations Amendment Bill, a National Minimum Wage Bill and a Basic Conditions of Employment Amendment Bill.

All three Bills originated from negotiations that took place at the National Economic Development and Labour Council (NEDLAC).

Following their publication, a flurry of activity ensued, the form that need not be described in detail herein, by 'those for and those against' and 'vice versa' as to the substance and nature of the proposed amendments.

Suffice it to mention that an integral part of the Bills, contain clauses that point to or make reference to the 'resuscitation of the duty to bargain in good faith', which was the subject matter of an article posted on LinkedIn on April 14, 2015.

It has been re-posted in full hereunder as well as some of the comments by acclaimed academics and authors, not as some sort of self-glorification exercise, merely as a reminder.

George J. Gliaudys Jr

Chair Of The Board Of Trustees at Westcliff University

"Labor negotiations in attempting to reach an agreement are seldom without acrimony; yet, there has to be a mutual respect between labor and management both of whom have common stakes in the outcome. Bargaining is for labor is about compensation, working conditions and other benefits of their members, while for management it is to uphold their responsibility to maintain production and wage stability without injuring the bottom line of the company's value for the shareholders. It can be a challenge for both especially if there is suspicion on the underlying good faith of these two sides in each other about possible underlying agendas not related to labor negotiations itself. Trained facilitators are very useful in such situations and can guide the process forward. William Ury's classic text "Getting Past No" is valuable starting point for facilitators,union and management negotiators facing such difficult situations."

Kim Lovegrove RML FAIB

Law - Lovegrove Cotton; mediator; consultant World Bank 2016/17; RML Humanitarian Honours services to Ethiopia 2017

"Good piece Johann, well written and you raise poignant points."

John Turley

Consultative Senior Sales Executive, Team Builder and Complex IT Sales Professional

"In the USA, we endured a period with labor venting its anger by violence in the work place and in the streets. These actions were met by counterforces and oftentimes management initiated provocative actions against labor. I conclude that it is much tougher to uphold the peace and to make the necessary changes that are part of the negotiation process. Bargaining in good faith took a long time to realize in the USA, as well as throughout many parts of the world.

I applaud Susan Raines for her fine book Conflict Management in the Workplace where managers must practice sound management techniques along with the principles of dispute resolution. It takes discipline and courage to contend with the problems of the modern workplace.

Johann's well written and well argued post attests to the power of bargaining in good faith. As I stated above, it is a challenge to do so, but it is a sign of progress within society. It takes discipline on both sides to come to the table to address the issues and to refrain from violent acts to make one's points. I am not saying that the USA is an ideal example, but it is important to realize that violence leads to nowhere. Dialogue is more powerful than any physical weapon. Thank you Johann for your thoughtful post."

THE REPOST:

In an article by Karl Gernetzky “Wage talks impasse goes back to grassroots” Business Day Live (02 April 2015) it was reported that public – sector unions aligned to the Congress of South African Trade Unions (Cosatu) would consult members “on a way forward” after being told by state negotiators they had "exhausted their mandate" for salary increases, before declaring a dispute.

According to the Business Day article the unions the public sector were "hopeful" that a period of conciliation would end the impasse, but were mindful of the government "treating these negotiations with an unprecedented level of arrogance", according to National Education, Health and Allied Workers Union (NEHAWU) general secretary Bereng Soke.

To a large extent, collective bargaining within the South African context in terms of the relevant provisions of SA labour legislation takes place at bargaining councils in the form of ‘centralised bargaining’.

In short: centralised bargaining could be described as negotiations between a group of employers (often members of an employer organisation[s]) and one or more trade unions (often affiliated to trade union federation[s]), regarding conditions of employment within a specific industry or sector.

In some countries, for example, Sweden, the term at times referred to bargaining at a national level in respect of the economy as a whole, however in SA it generally refers to bargaining at industry level, for example in a bargaining council.

Insofar as it pertains to the SA public sector employees collective bargaining takes place at the Public Sector Co-ordinating Bargaining Council on a centralised basis or at a national level.

The constitution of the Public Sector Co-ordinating Bargaining Council (PSCBC) stipulates that in the event of an impasse mediation must be concluded within a month of the receipt of a referral, which according to the article referred to above would mean conciliation/mediation until the end of April 2015, failing where to industrial action may follow subject to compliance with the PSCBC constitution; read with the relevant provisions of the SA Labour Relations Amendment Act, 6 of 2014 (the LRA).

The 30 day period referred to above may be extended by the parties to the PSCBC by agreement.

It was mentioned in the article that among the government’s [employer] offers “is a three-year agreement for a 5.8% rise in the first year, followed by two years of inflation-plus-0.5% increases, but unions are asking for a 10% wage deal in one year.”

Credit rating agencies, analysts and the government issued warnings that the public-sector wage bill posed a risk to fiscal stability. “It hovers around 40% of non-interest state expenditure.”

The state, which budgeted for a 6.6% increase in the wage bill, “said its offer represented an estimated R37bn above the current R400bn wage bill.”

According to a government spokesperson, “Any increase beyond what is budgeted will lead to borrowing for recurring expenses, such as salaries, and impact negatively on operational budgets," 

In an article published in Business Day on 08 April 2015, it has been reported that ”Cosatu aligned public sector unions have resolved to reject a wage offer from the government during conciliation to be held during the week of 13 April 2015.”

Unions would, however, continue to receive mandates from their members on other aspects of the wage negotiations, and on how to proceed should conciliation fail to bear results and the state "unilaterally" implements a rejected offer, chief negotiator for Cosatu unions, according to Mugwena Maluleke.

SA’s public-sector wage bill of more than R400bn ranks among the highest of countries at a similar level of economic development and the government has repeatedly said an above-inflation increase is unaffordable. Unions maintain that their members ‘deserve real wage increases’ and have previously argued that the state’s comments on the wage bill ignore high salaries at the top end of the civil service, which is not part of the current negotiations.

Public sector unions met in four provinces of South Africa on Wednesday, 08 April 2015 to receive a report back on wage talks with the government “and chart a way forward after the state declared a dispute at the end of March 2015.”

In the article dated 08 April 2015, it has been reported that “negotiations between the government and unions have been rancorous, with the state declaring a dispute after the government negotiators said they had ‘exhausted their mandate’ with a 5.8% wage offer. Unions, which have resolved to coordinate their demands, had been demanding a 10%.”

In an article published by Greg Nicolson, “Public sector wage negotiations: Unions hammer state's 'arrogance” Daily Maverick (09 April 2015) it is reported “The public sector wage negotiations have been going on for months but after government declared a dispute on Friday unions are accusing it of acting in bad faith. Both parties hope a 30-day mediation process yields an agreement, but a strike could be coming.” [Emphasis added].

The Cosatu affiliated unions, Sadtu, Denosa, SAMA, Popcru, Nehawu, Sasawu and Pawusa, so it was reported, said they “are appalled and infuriated by the reckless and arrogant attitude of government in dealing with this year's wage negotiation…what is obvious from all this is that we are dealing with some unprecedented levels of provocation and intransigence from the employer. This has made it clear to us that we might have to mobilise the workers for a possible mass action in the public service.”

Upon perusal of the articles supra and especially the statements made by the trade unions then a central theme, so to speak is the fierce criticism that the employer [government] - “Bargained in bad faith.” 

The purpose of this article is not to assess or determine the validity, or otherwise of the allegations levelled against the employer of “bargaining in bad faith”. The purpose is to revisit and briefly address the meaning of “bargaining in good faith” vis-à-vis “bargaining in bad faith”.

Furthermore, the importance of the concept of “bargaining in good faith” would be emphasised as an indispensable requirement or prerequisite for a negotiated resolution of a dispute within the four corners of the collective bargaining arena.

As may be gleaned from the articles supra and of specific interest is the apparent “re-emergence in popularity”, as it were of the concept or notion - “Bargaining in good faith” especially the resuscitation thereof insofar as it pertains to South African labour relations.

Seasoned negotiators, mediators and dispute resolution practitioners not au fait with historical developments and in particular statutory amendments to South African labour legislation may be tempted to pose the question as to the rationale for writing an article with the subject matter or raison d’être the importance of “bargaining in good faith” as a prerequisite or indispensable requirement for the peaceful resolution of labour disputes.

Those involved in the resolution of conflict could make a wry remark that a first-year college student grappling with the study of Conflict Resolution, especially those sections of the module “Mediation cum Negotiation - 101” would without much intellectual effort persuade a willing listener of the importance of bargaining in good faith and that without a bona fide intention by disputants to reach agreement – ‘mutual destruction’ is inevitable.

Be that as it may and as the saying goes “different strokes for different folks” or rather “different strokes for South Africa.” 

BRIEF OVERVIEW OF INDUSTRIAL STRIFE IN SOUTH AFRICA

The writer published articles in LinkedIn entitled “Bargaining in Good Faith” July 01, 2014; "The Root Cause of Strikes in South Africa" July 20, 2014; "The Importance of Developing Rapport - Mediation" June 10, 2014 & Strike Violence in South Africa - "Judicial Scrutiny of Unions to Curb Unlawful Conduct" December 16, 2014 wherein the incidence of industrial strife and the manifestations thereof were dealt with more fully.

Suffice it to record that at the time of drafting the article supra South Africa was experiencing some of its most torrid, extensive and seemingly endless phases of industrial conflict since the promulgation of "the new" Labour Relations Act, 66 of 1995 (the LRA).

Under the previous LRA, the Courts realised that a statutory duty to bargain or rather compulsion to bargain was not enough to achieve the objectives of collective bargaining. In addition, parties were required to approach the negotiations with an open mind and a genuine desire to reach an agreement.

This purpose was encapsulated in the expression ‘good faith bargaining’. Practices and stratagems which undermined the bargaining process was deemed to be unfair and duly declared by the Courts and Arbitrators as such.

Judgments and awards were handed down to the effect that unwilling parties were compelled or ordered to engage in a process of ‘bargaining in good faith’ or those who for some or other reason lost interest and became reluctant to bargain, an appropriate order followed to ‘return to the negotiating table’ and to without reservation do so in a manner that satisfied the test of ‘bargaining in good faith’. 

“BARGAINING IN GOOD FAITH” – THE INTERPRETATION BY THE SA COURTS: PRE - 1995 PERIOD

As was stated above the Courts held and Arbitrators ordered that parties were required to approach the negotiations with an “open mind” and a “genuine desire to reach an agreement.”

This purpose was encapsulated in the expression ‘good faith bargaining’. Practices which undermined the bargaining process were ‘deemed to be unfair’.

Included as being unfair and tantamount to ‘bargaining in bad faith’ were codified of which some examples are recorded hereunder:

• Unreasonable preconditions for bargaining;
• Premature unilateral action;
• Illegitimate pressure tactics;
• Denial of union access;
• Sham bargaining, inadequate substantiation of proposals and dilatory tactics;
• By-passing a recognised union and negotiating directly with employees when the union was not acting in bad faith; and
• Unilaterally implementation of proposals.

The elimination of the unfair labour practice jurisdiction [statutory duty to bargain] in the LRA of 1995, left relatively little scope for arbitrators or the Labour Court to promote the scope of good faith bargaining. The duty to bargain was excluded and the bargaining process was left to the exercise of power.

For the purpose of this article writer revisited some of the judgments handed down by the Courts, prior to the 1995 amendments, and to refer to some of the pronouncements made by the Courts during the aforesaid period.

 In National Union of Mineworkers v East Rand Gold and Uranium Co Ltd (1991) 12 ILJ 1221(A) at 1237 the Court held that “the very stuff of collective bargaining is the duty to bargain in good faith”.

[Also see: Standard Bank of Bophuthatswana Ltd v Reynolds NO & others 1995 (3) SA 74G].

THE STATUTORY RELEVANCE OF A DUTY TO BARGAIN

Having regard to the exclusion by the legislature of a statutory duty to bargain as per the pre-1995 period and the legislative preference of ‘voluntarism’ within the collective bargaining relationship then the reader may pose a further question to the effect that, “if there is no statutory duty to bargain, let alone the ‘washed out’ concept of bargaining in good faith then why bother to bargain at all?” 

A STATUTORY DUTY TO BARGAIN?

In the matter, NUMSA v Bader Bop (Pty) Ltd [2003] 2 BLLR 103 (CC) 111 the SA Constitutional Court held, ‘the Constitution contemplates that collective bargaining between employers and workers is key to a fair industrial relations environment’. That much is clear from the insertion of a constitutional right to engage in collective bargaining [See: Du Toit et al, “Labour Relations Law - A Comprehensive Guide” 6th ed (2015) 279 – where the learned authors referred to and evaluated “section 23(5), Constitution, 1996].

A matter of controversy was the content of the right to collective bargaining. Following conflicting rulings in the High Court on the question of collective bargaining in the SA Defence Force, see: SANDU v Minister of Defence (2003) 24 ILJ 1495 (T); SANDU v Minister of Defence [2003] 9 BLLR 932 (T) – the SA Constitutional Court in the matter SANDU v Minister of Defence [2007] 9 BLLR 785 (CC) settled the issue.

The CC held that while there are obvious differences between the military and other sectors, the Court clarified the fundamental principles on which the South African model of collective bargaining is based.

Members of the SA National Defence Force are excluded from the LRA and are prohibited from striking. Because they cannot compel their employer to bargain by industrial action, it is arguable that they have a greater need for judicial protection of their constitutional right to bargain.

In SANDU v Minister of Defence [2006] 11 BLLR 1043 (SCA) paras, 21–25 the SCA accepted that a right to bargain is meaningless unless reinforced by an acceptable mechanism to compel the other party to negotiate. In the case of the SANDF compulsory arbitration, rather than an order to bargain, was seen as such a mechanism because (a) it is well established in the context of essential services where striking is prohibited; (b) arbitration resembles bargaining to the extent that parties present facts and arguments and respond to those presented by the other party; and (c) ‘the prospect of third-party arbitration is a powerful incentive to parties to settle’.

[See also: H Cheadle ‘Collective Bargaining and the LRA’ (2005) LDD 147 151; Brassey & Cooper ‘Labour Relations’ in Chaskalson et al “Constitutional Law of South Africa” 30–31.

In essence, the SCA concluded that a ‘right to engage’ as opposed to a ‘right to bargain collectively’ connotes a freedom rather than a positive right matched by a corresponding duty to bargain. Were it to be otherwise, it would have profound implications.

A positive right to bargain, as Cheadle explained, “is not just a right: it is a policy regime that involves fundamental choices as to the form and level of collective bargaining and the nature of its regulation. It commits a society to a collective-bargaining regime centred on the workplace rather than on the industry”.

Creating freedom to bargain without any means of judicial compulsion, on the other hand, represented a very different ‘policy regime’ which, in the view of the SCA, was consistent with the ‘interpretive milieu’ from which it emerged.

Although the South African LRA was drafted to give effect to the interim Constitution, section 23 of the final Constitution was enacted to mould the new labour relations regime. It did so without any significant departure from the interim Constitution. ‘[N]o writer on labour relations’, the court noted, ‘has so much as suggested that the LRA’s provisions with regard to collective bargaining might offend the Constitution’.

The court thus concluded that the Constitution, ‘while recognising and protecting the central role of collective bargaining in our labour dispensation, does not impose on employers or employees a judicially enforceable duty to bargain’. [See: NEWU v Leonard Dingler (Pty) Ltd [2011] 7 BLLR 706 (LC)].

While the SANDU CC judgment, therefore, did not address the content of the right to engage in collective bargaining, it also did not question the view which the Supreme Court of Appeal had taken, namely the "right to engage"; indeed, it was indirectly supportive of it.

This view according to Du Toit et al 282 is further reinforced if one has regard to international law. The instruments adopted by the International Labour Organisation (ILO), which must inform the interpretation of section 23(5) [section 39(1)(b), SA Constitution], “provide strong arguments in favour of a constitutional duty to bargain.” 

The ILO’s Right to Organise and Collective Bargaining Convention, Art 4 requires that member states take measures ‘to encourage and promote the full development and utilisation of machinery for voluntary negotiation between employers or employers’ organisations and workers’ organisations.’

 A DUTY TO BARGAIN IN GOOD FAITH?

The LRA sought to introduce a coherent model of collective bargaining based on voluntarism. It did so not by abolishing the duty to bargain.

According to J Grogan, “Collective Labour Law” 1st ed (2010) 13, the LRA regulates collective bargaining in compliance with the SA Constitution by virtue of “its scheme [the relevant provisions in the LRA] that is deceptively simple.”

An effective duty to bargain was placed on the state as an employer through the creation of a statutory Public Service Coordinating Bargaining Council (PSCBC) and further bargaining councils in the public sector, thus creating a compulsory regime.

But, beyond this, and according to Du Toit et al ‘bargaining parties [should be] able to determine the nature and structure of bargaining institutions and the economic outcomes that should bind them, and, where necessary, to renegotiate both the structures within which agreements are reached and the terms of these agreements.’

Du Toit et al go further and observe that collective bargaining could not flourish where one party can safely ignore the other. To bring about greater parity, employees and trade unions are equipped with an array of rights, including organisational rights and a right to strike, to assist them in persuading employers to bargain as well as in gaining more influence over the outcome.

Second, the use of power continues to be treated as a last resort. Industrial action must be preceded by conciliation of the issue in dispute and prior written notice [section 64(1) of the LRA]. Where the dispute concerns a refusal to bargain, a strike will not be protected unless an advisory award is first obtained [s 64(2)]. While not enforceable, such an award may be expected to exert some influence on the further course of the dispute. These processes are clearly designed to bring parties together and encourage them to seek solutions, thus reinforcing a collective bargaining culture. [Emphasis added].

In ECCAWUSA v Southern Sun Hotel Interests (Pty) Ltd [2000] 4 BLLR 404 (LC) the court declined to read an implied duty to bargain in good faith into the requirement of annual wage negotiations.

In ECCAWUSA the union unsuccessfully sought to enforce an alleged implied term of a recognition agreement by means of an application to the Labour Court.[C Thompson observes that the matter should have been resolved by arbitration in terms of section 24 of the LRA rather than by seeking an interdict: see Cheadle et al Current Labour Law 2000, 48].

Be that as it may, it would be nonsensical and an exercise in futility if the collective bargaining partners comply with a duty to bargain (supra) by merely attending to the negotiating process without the intention to reach consensus; having due regard to the observation, if not admonition by the Court [in re: the pre-1995 regime] in National Union of Mineworkers v East Rand Gold and Uranium Co Ltd (1991) 12 ILJ 1221(A) at 1237 where the Court held that “the very stuff of collective bargaining is the duty to bargain in good faith”.

COMMENTARY

It would be wise, in the interests of all the parties in the public sector dispute and more importantly the SA public that negotiators involved in attempts to resolve the impasse should revisit and take due cognizance of the pronouncements made by the Courts supra that: “The very stuff of collective bargaining is the duty to bargain in good faith’.

The legislator at the time deemed it appropriate to leave it up to the bargaining partners to regulate bargaining relationships in a responsible and accountable manner in accordance with the principle of voluntarism rather than a statutory duty to bargain.

The recent amendments to South African labour legislation and insofar as collective bargaining and the right to strike are concerned survived significant amendments. [See: Labour Relations Amendment Act, no 6 of 2014]. 

Therefore, the South African public expect the parties to act responsibly by negotiating in good faith with the purpose of reaching consensus.

 Johann Scheepers.

April 14, 2015 [Updated]

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