Do trade unions have the right to make decisions on behalf of members?
The labour court, in Fakude and 25 Others v Kwikot (Pty) Ltd (2013) 24 SALLR 295 (LC), had the opportunity of considering the following important issues:
(a) Is it required of a trade union, as a matter of law, to seek approval from its members before concluding any agreement?
(b) Is a trade union entitled to make a decision on behalf of its members if such decision is to adversely affect those members, without first obtaining such members’ consent?
(c) In a scenario where the members of a trade union are negatively affected by a decision taken by such trade union without their consent, are they able, as a matter of law, to withdraw from such agreement?
(d) To what extent are employees, who are not members of a trade union party to an agreement, bound by such agreement?
(e) What is the content of the basic principle in law as to whether or not economic pressure to conclude an agreement constitutes duress?
(f) What are the requirements to be met in order for an applicant to renege from an agreement on the basis of duress?
The applicants in these proceedings claim that their dismissal by the respondent, during March/April 2005, was both substantively and procedurally unfair.
They contend that the reason for their dismissal by the respondent was for operational reasons and, therefore, the fairness of their dismissal should be assessed, amongst others, on the basis of the selection criterion used by the respondent. The respondent, on the other hand, contends that the applicants were not dismissed but that their employment was terminated by agreement with the union.
Pertinent facts of the case
The applicants did not dispute the existence of the agreement, neither that the agreement was by definition a collective agreement as envisaged in section 23 of the Labour Relations Act 66 of 1995 (“the LRA”).
Subsequent to the signing of the collective agreement, each individual applicant signed agreements which set out the packages which were to be paid to each one of them. These agreements are also not disputed except that the applicants contend that they signed them under duress.
The parties agreed that the court should determine the following issues by way of the stated case in terms of Rule 33 of the rules of the high court, read with rule 11 of the labour court Rules.
Rule 11(3) of the rules of the labour court reads as follows:
“If a situation for which these rules do not provide arises in proceedings or contemplated proceedings, the court may adopt any procedure that it deems fit in the circumstances.”
Issues in dispute
In the stated case, in terms of rule 33 of the rules of the high court, the parties agreed that the court should determine the following.
“3.1.1 Whether the termination of the applicants’ employment by way of agreement between the respondent and NUMSA constitutes a ‘dismissal’ in terms of section 186 of the LRA.
3.1.2 Whether the conduct of the respondent referred to in 2.21 above amounts to duress that would entitle the applicants to avoid the settlement agreement.”
The parties further agree that the stated case be determined on the basis of the common cause facts set out in the pre-trial minutes and reflected infra.
Subsequent to industrial action, the employer and the union, National Union of Metalworkers of South Africa (“NUMSA”), concluded an agreement, the essence being that those employees whose names appear in a list would be dismissed and the others would receive severance packages.
The list consisted of 26 employees, who were required to sign for the packages they each were to receive.
The applicant raised, inter alia, the arguments as set out infra.
Relying on the cases of Bredenkamp v Standard Bank and Barkenhuizen v Napier 2007 (5) SA 323 (SCA), the applicants argued that, even if the court was to find that prima facie the agreements were not unconstitutional, they were such that the court should rule that they were unenforceable because they offended public policy.
In addition to the issue of public policy considerations, an attempt was also made to introduce an exception to the application of the agreement as concerning some of the individuals on the basis that they were not members of the trade union.
The other argument, on behalf of the applicants, is that their dismissal was unfair because the agreement did not provide for a fair selection criteria. It was for this reason that it was argued, on behalf of the applicants, that the dismissal was unfair because there was no compliance by the respondent with the requirements for a fair dismissal based on operational reasons.
As concerning the agreement signed by the individual applicants, it was suggested that the applicants are entitled to avoid the agreement:
firstly, because the terms thereof are questionable; and
secondly, because they were concluded on the basis of duress.
Findings of the court
First argument: the collective agreement is unenforceable because applicants did not consent. The applicants’ contention in relation to the issue of the collective agreement is based on two legs:
the first leg is that, despite accepting the validity of the agreement, it is unenforceable because the individual applicants did not give their consent to its conclusion; and
the second leg is that which conflates the provisions of s189 of the LRA and the situation were the parties have reached a consensus as to how their employment relationship is to be terminated without the necessity of having to go through the process set out in that section.
The first argument on behalf of the applicants is, on its proper analysis, based on the notion that trade unions are agents of their members. In other words, trade unions as agents of their members have, as a matter of law, to seek approval from members before concluding any agreement.
S200 of the LRA
Trade unions specifically derive their power to make decisions on behalf of their members in terms of the provisions of s200 of the LRA which provides as follows:
“(1) A registered trade union or registered employers’ organisation may act in any one or more of the following capacities in any dispute to which any of its members is a party –
(a) in its own interest;
(b) on behalf of any of its members;
(c) in the interest of any of its members.
(2) A registered trade union or a registered employers’ organisation is entitled to be a party to any proceedings in terms of this Act if one or more of its members is a party to those proceedings.’
The issue of the power and authority to make decisions by registered trade unions as envisaged in s200 of the LRA has received attention in a number of the decisions of the labour court.
In Mzeku v Volkswagen SA (Pty) Ltd and Others  10 BLLR 972 (LC) the court held that:
“ It is, therefore, clear also that sec 200(1) gives a registered union the right to act on behalf of its members when there is a dispute involving anyone or more of its members and that sec 202(1) takes this further and provides that, once a registered trade union acts, as it is entitled to, on behalf of its members, the employer has a right not to serve documents on the individual members themselves but to serve them on the union. It provides that such service on the union is as good as service on the members of the union themselves. If this is so, the position must be that even with regard to the giving of the opportunity to be heard, the employer is entitled to deal with the union.”
Consent of members not required
The above indicates that a trade union is entitled to take any decision on behalf of either the majority or the minority of its members without necessarily having to obtain the members’ consent, even if such a decision is to adversely affect those members.
Members cannot withdraw from agreement
In other words members affected by a decision taken by a union without their consent are bound by such a decision and are unable as a matter of principle to withdraw from such an agreement (see also NUMSA v CCMA and Others (2000) 11 BLLR 1330 (LC) at paragraph ).
Agreement contrary to interest of a member not unconstitutional
Any decision taken by a trade union either detrimental or beneficial to some of its members cannot be said to be unconstitutional because the trade union would have derived the power to act in that particular manner in terms of the provisions of s200 of the LRA which in turn has its basis in terms of section 23 of the Constitution.
In the present instance, it is apparent that the union acted in the interests of the majority at the expense of the minority. The fact that the minority are adversely affected by the decision taken by the union is immaterial because, in law, those affected by the decision joined the union voluntarily and in the exercise of their freedom of association.
Turning to the two judgments referred to earlier and which the applicants relied on in support of their case, it is important to note that the facts and the circumstances in both cases are distinguishable from the facts in the present case.
The underlying principles that inform the agreement under discussion are also different. However, the broader principles are the same.
In the Barkenhuizen case the issue concerned the constitutionality of a time limitation clause in the short-term insurance policy. The clause in question provided that the insured had to institute proceedings within three months after the claim had been rejected by the insurer.
The insured contended, in that case, that the time limitation clause denied him his right of access to the courts which is guaranteed by s34 of the Bill of Rights.
The court found that the common law has always recognised the right of an aggrieved person to seek assistance of a court of law and that the term of contract, which deprives a party of that right, is contrary to public policy. The court further found that s24 does not only reflect the foundational value that underlies the constitutional order but also constitute public policy.
The supreme court of appeal, in the Bredenkamp matter, dealt with a clause in a contract between the bank and a client which entitled the bank to unilaterally cancel the contract without affording the client a hearing.
The client argued that the clause was unfair and unenforceable because it prejudiced his future right of contracting with other banks.
In dismissing the appeal Harmse DP held:
“ I find it difficult to perceive the fairness of imposing on the bank the obligation to retain the client simply because other banks are not likely to accept that entity as a client. The appellants were unable to find a constitutionality niche or other public policy considerations justifying their demand. There was, accordingly, in the words of Moseneke DCJ, no ‘unjustified’ invasion of a right expressly or otherwise conferred by the highest law in our land.”
s23(1)(d) of the LRA: non-union members also bound by collective agreement.
In terms of s23(1)(d) of the LRA, employees, who are not members of the trade union or trade unions party to the agreement, are bound by such an agreement if they are identified in the agreement and the agreement expressly states that those employees are bound by the agreement.
It follows from the above that even if Mr Sello Moloi was not a member of the trade union he was, in terms of s23(1)(d), bound by the decision taken by the union.
As indicated earlier, the applicants signed the individual settlement agreements in which they each individually accepted the packages given to them by the respondent in full and final settlement of any claim they may have against the respondent.
Second argument: full and final settlements were signed under duress. However, the applicants sought to renege on these agreements on the basis that they were forced to sign them under the threat that they would not receive the packages if they did not sign them. The basic and general principle of our law is that economic pressure to conclude an agreement does not constitute duress.
It would, however, appear that, in special circumstances of a given case, our courts would be willing to consider rating economic pressure as duress (see Van den Berg en Kie Rekenkundige Beamtes v Boomprops 1028 Bk 1999 (1) SA 780 (TPA), a judgment which was referred to with approval by the supreme court of appeal, in Medscheme Holdings (Pty) Ltd and Another v Bamjee 2005 (5) SA 339 (SCA)).
The reason for not treating economic pressure as duress is explained by Nugent JA in Medscheme in the following terms:
“ For it is not unlawful, in general, to cause economic harm, or even to cause economic ruin, to another, nor can it generally be unconscionable to do so in a competitive economy. In commercial bargaining the exercise of free will (if that can ever exist in any pure form of the term) is always fettered to some degree by the expectation of gain or the fear of loss…(H)ard bargaining is not the equivalent of duress, and that is so even where the bargain is the product of an imbalance in bargaining power. Something more – which is absent in this case – would need to exist for economic bargaining to be illegitimate or unconscionable and thus to constitute duress.”
The requirements for a successful avoidance of the contract on the basis of duress are set out in Arend v Astra Furnishers (Pty) Ltd 1974 (1) SA 298 (C) at 306 as follows:
“Duress may take the form of inflicting physical violence upon the person of a contracting party or of inducing in him a fear by means of threats. Where a person seeks to set aside a contract, or resist the enforcement of a contract, on the ground of duress based upon fear, the following elements must be established:
(i) the fear must be a reasonable one;
(ii) it must be caused by the threat of some considerable evil to the person concerned or his family;
(iii) it must be the threat of an imminent or inevitable evil;
(iv) the threat or intimidation must be unlawful or contra bonos mores;
(v) the moral pressure used must have caused damage.”
In the labour court’s view, the collective agreement concluded by NUMSA, on behalf of the employee, does not offend the Constitution neither is it contrary to public policy. There is, therefore, no basis to treat it as unenforceable.
The termination of the employment of the applicants was a result of a binding collective bargaining agreement.
Concerning the individual agreement, the labour court was of the view that the applicants had failed to make out a case for vitiating their agreements on the basis of duress. The agreements were, accordingly, binding on the applicants.
Dr Brian van Zyl is a Director at labour law firm Van Zyl Rudd and Associates, www.vanzylrudd.co.za.
This article appeared in the June 2015 issue of HR Future magazine.