The 1995 Labour Relations Act

Transcription

1 Contemporary Labour Law Vol 11 No 10 May 2002 The new unfair labour practice: The High Court t reviv vives the possibility of a wide concept pt of unfair labour practice Foundations of the unfair labour practice The 1995 Labour Relations Act abolished both the wide concept of an unfair labour practices and the Industrial Court which was charged with striking down these practices. The residual unfair labour practice clung to life in terms of Schedule 7 of the LRA and it was considerably more limited in scope than its predecessors. No longer the boundless concept that encompassed unfair dismissal and served as foundation of the Industrial Court s imposing a duty to bargain, the unfair labour practice, in its Schedule 7 guise, only protects employees from certain employer practices that did not amount to dismissal. The focus of the unfair labour practice related to employer conduct towards an employee during the course of the employment relationship. In 1998, the Employment Equity Act removed unfair discrimination from the definition of an unfair labour practice as it appeared in item 2 of Schedule 7. The new amendments to the Labour Relations Act return the concept of the unfair labour practice to the fold of rights and duties no longer contained in a transitional schedule and no longer residual, the unfair labour practice now finds its place in s 186(2) of the Labour Relations Act as amended. Despite these recent legislative amendments, however, the thrust of the present statutory unfair labour practice has remained the same: an unfair labour practice amounts to any unfair act or omission that arises between an employer and an employee involving unfair conduct of the employer relating to the promotion or demotion of an employee, unfair employer conduct relating to the training of an employee, unfair employer conduct relating to the provision of benefits to an employee, the unfair suspension of an employee by the employer, unfair disciplinary action imposed by an employer against an employee short of dismissal, and the failure or refusal of an employer to reinstate or re-employ a former employee in terms of an agreement. It is worth noting, at this point, that the focusof the residual unfair labour practice was the protection of the employee, as the employee was protected against unfair employer conduct, indicating that the drafters Managing Editor : P A K Le Roux Hon. Consulting Editor : Prof. A.A. Landman Published by Gavin Brown & Associates Box Sandton 2146 Tel : Fax:

2 of the LRA were of the view that only employees deserved protection during the course of the employment relationship. The provisions of item 2 of schedule 7 (now s 186(2)) were taken to be a closed list actions that fell outside the scope of the practices mentioned in the list were interpreted as not constituting unfair labour practices. Du Toit et al (Labour Relations Law: A Comprehensive Guide 3 rd ed at 465) state that the very specific language adopted by the legislature would seem to exclude victims of unfair treatment in other forms (eg, transfer). Constitutional and legisla gislativ tive provisions But the term unfair labour practice, or, more correctly, fair labour practice also appears in the Bill of Rights of the 1996 Constitution: in terms of s 23(1) everyone has the right to fair labour practices. This Constitutional provision firstly serves a general function as a conceptual foundation for labour legislation. One of the objects of the Basic Conditions of Employment Act of 1997 (BCEA) is to give expression to the concept of fair labour practices (s 1 of the BCEA). As such, the Constitutional right is given concrete form in more specific legislation in the same way as the Constitutional right to strike is given content and form in section 64 and section 65 of the Labour Relations Act. The 1995 Labour Relations Act is also founded on, among others, the right to fair labour practices. Another important constitutional provision is s 39(2) of the Constitution, 1996, which provides that when interpreting any legislation, and when developing the common law or customary law, every court, tribunal or forum must promote the spirit, purporse and objects of the Bill of Rights. Section 169 of the Constitution also provides a constitutional jurisdiction for the High Court: the High Court may decide any constitutional matter except a matter that only the Constitutional Court may decide or a matter that is assigned by an Act or Parliament to another court of a status similar to a High Court. The High Court also has the power, in terms of s 169 of the Constitution, 1996 to decide any other matter not assigned to another court by an Act of Parliament. The complex web of legislation becomes more complicated if we take into account the provisions of the LRA. The Labour Court s jurisdiction is determined by s 157 of the LRA, in terms of which the Labour Court has exclusive jurisdiction in respect of all matters that elsewhere in terms of this Act or in terms of any other law are to be determined by the Labour Court. Section 157 further provides that the Labour Court has concurrent jurisdiction with the High Court in respect of any alleged or threatened violation of any fundamental right entrenched in Chapter 2 of the Constitution and arising from (amongst others) employment and from labour relations. The Labour Court also has concurrent jurisdiction with the High Court over any dispute over the constitutionality of any executive or administrative act or conduct, or any threatened executive or administrative act or conduct, by the State in its capacity as employer. And in respect of contractual disputes, section 77(3) of the BCEA Act provides that the Labour Court and the High Court have concurrent jurisdiction. It against this legislative background that one can pose the question whether the unfair labour practice is still, in 2002, limited to the closed list of employer-actions contained in Schedule 7 (and now in s 186 of the LRA). From recent judgments it appears that the High Court is finding some force in a new and constitutionallybased view of the unfair labour practice, a view that implies looking beyond (or past) the LRA. In this guise, the unfair labour practice may well return to haunt those who experienced discomfort with the wide and open-textured definitions that were in place before being swept away by the 1995 reforms. The courts views In Fedlife Assurance Ltd v Wolfaardt [2001] 12 BLLR 1301 (A), the Supreme Court of Appeal held that the constitutional right to fair labour practices was sufficient to create an implicit right not to be unfairly dismissed in the contract of employment. The majority of the Supreme Court of Appeal was of the view that the Constitutional protection of the right to fair labour practices was powerful enough to serve as the basis for the finding of implicit rights in the context of the employment contract. Froneman AJA, in his dissenting minority judgment, expressed a more detailed view of the force of the Constitutional provisions: Prior to the acceptance and enactment of the Constitution, our law maintained a rigid distinction between a common-law contract of employment, which was said to have nothing to do with fairness, and a statutory labour dispensation, which had much to do with Page 92

3 fairness.... In my view the Constitution has a material impact on that particular conceptual distinction between the proper domain of contract and that of the statute, namely that the former has little to do with fairness, whilst only the latter has.... Section 23(1) of the Constitution provides that everyone has the right to fair labour practices. It seems to be almost incontestable that one of the most important manifestations of the right to fair labour practices that developed in labour relations in this country was the right not to be unfairly dismissed. Had the Act not been enacted with the express object to give effect to the constitutional right to fair labour practices (amongst others), the courts would have been obliged, in my view, to develop the commonlaw to give expression to this constitutional right in terms of section 39(2) of the Constitution. To the extent that the Act might not fully give effect to and regulate that right, that obligation on ordinary civil courts remains.... (at 1310B I, emphasis added). In Nelson & Others v MEC Responsible for Education in the Eastern Cape & Another [2002] 3 BLLR 259 (Tk), the High Court had to decide whether a transfer of educators to other schools in terms of the Educational Department s re-deployment policy constituted an unfair labour practice. In this case, the High Court found that it did not have jurisdiction to hear the matter, as it related to the interpretation and application of a collective agreement and unfair dismissals. What is of interest, however, is that the High Court, even though obiter, expressed a view as to the fairness of the transfer of the educators, holding To transfer the applicants to schools which are inaccessible to ordinary transport, where there are no housing facilities, where the children speak a language which they do no understand, and where a culture different to their own exists, appears to be the antithesis of fair treatment.... If this Court had the jurisdiction to hear the matter it would have had no hesitation in finding that the applicants have been denied their rights to fair treatment in terms of the resolution, and to be heard in terms of the principles of natural justice and the audi alteram partem rule. It would consequently have set aside the redeployment directives concerning the applicants. (at 272C G). In spite of not having jurisdiction, therefore, the High Court was still prepared to consider fairness and, it appears, fairness is no longer limited to the Labour Relations Act and the resolution of disputes in terms of the LRA. It has become a force pervasive enough to influence thinking in the High Court. In Ntlabezo & Others v MEC for Education, Eastern Cape & Others [2002] 3 BLLR 274 (Tk), the High Court took the concept of fairness even further: the applicants sought an order directing the Department of Education to pay the applicants all outstanding monies, salary bonus, salary increments and monies due to the applicants as a result of a revision of salary scales of employees in the Public Service in what used to be the Transkei. The High Court drew a distinction between general unfair labour practices and residual unfair labour practices the latter being resolved in terms of the dispute resolution provisions contained in the Labour Relations Act itself (at 281G). The Court analysed the facts of the case and held that....the unfair labour practice complained of by the applicants does not fall within the category of residual unfair labour practices referred to in item 2, Part B of Schedule 7 to the LRA. The dispute at hand is therefore not one which falls exclusively within the jurisdiction of the Labour Court (at 282A B). But in Manyahti v MEC for Transport, Kwazulu- Natal & Another (2002) 23 ILJ 273 the High Court took a different view, holding that the LRA does not confer, directly or indirectly, a jurisdiction on the High Court to deal with those labour matters which are the exclusive preserve of the Labour Court. The Constitutional Court has taken the matter further in Fredericks & Others v MEC for Education and Training, Eastern Cape & Others (2002) 23 ILJ 81 (CC). It must be noted, however, that for the purposes of its judgment and based on the parties approach, the Constitutional Court did not rely on s 23(1) of the Constitution. But the Constitutional Court analysed and considered, in detail, the effect of s 157 of the LRA, holding that the overall scheme of the Labour Relations Act does not confer a general jurisdiction on the Labour Court to deal with all disputes arising from employment (at 102B). This view of the Constitutional Court entails that the High Court s jurisdiction is not ousted merely because the dispute is one that falls within the overall sphere of employment relations (at 102G). In respect of s 157(2) of the LRA, the Page 93

4 Constitutional Court came to the conclusion, at least in respect of situations where the state is the employer, that the provisions of the LRA do not oust the jurisdiction of the High Court, holding that.. [w]hatever else its import, s 157(2) cannot be interpreted as ousting the jurisdiction of the High Court since it expressly provides for a concurrent jurisdiction (at 103D). From these High Court decisions and the view of the Constitutional Court it could be argued that the High Court finds itself at the beginning of developing, on the basis of the s 23(1) Constitutional right, its own views of fairness and how it applies in the workplace context. The Constitutional Court has affirmed that the Labour Court is not the only court with jurisdiction in respect of disputes arising from the employment relationship. It also appears that this development, even though in its early stages, is not limited exclusively to the finding of implied rights in the contract of employment (such as the Supreme Court of Appeal did in the Fedlife case), but that the High Court s view of fairness may take on a form all of its own. Which h court? But the issues about the unfair labour practice in terms of the LRA and the constitutionally-based unfair labour practice concept are not, unfortunately, neat and clear conceptual issues and debates. On a practical level, the issue of jurisdiction has become pertinent. In Langeveldt v Vryburg Transitional Local Council & Others [2001] 5 BLLR 501 (LAC), the Judge President of the Labour Court conducted an exhaustive investigation into the difference and concurrence of jurisdiction between the Labour Court and the High Court. He noted, in concluding, that the current state of law provides fertile ground for the unacceptable practice of forum shopping (at 522I) and Through the new system with its specialist institutions and courts which are run by experts in the field, the stakeholders and Parliament sought to ensure a certain efficient, costeffective and expeditious system of resolving labour disputes. The fact that the High Courts also have jurisdiction in employment and labour disputes completely undermines and defeats that very important and laudable objective and thereby undermines the whole Act (at 523C). In Mgijima v Eastern Cape Appropriate Technology Unit & Another 2000 (2) SA 291 (Tk), the High Court affirmed the purpose of the LRA as giving effect and content to the right to fair labour practices, but, it added In doing so the Legislature has seen it fit to create a specialist Court for that purpose and to provide for certain procedures. It was clearly not the intention to merely provide employees with a different procedure in another Court. The Act creates a new, separate and distinct regime and the procedures and remedies available have their origin in the same right [the right to fair labour practices]. In my view, it could not have been the intention of the Legislature to allow an employee to raise what is essentially a labour dispute in terms of the Act as a constitutional matter under the provisions of s 157(2) of the Act.... To conclude otherwise would mean that the High Court is effectively called upon to determine a right which has been given effect to and which is regulated by the Act (at 308). The High Court has developed tests for determining whether or not a dispute should be heard in the Labour Court or in the High Court. In Jacot-Guillarmod v Provincial Government, Gauteng 1999 (3) SA 594 (T), the High Court held that questions relating to the interpretation and enforcement of employment contracts fall outside the scope and purpose of the LRA, and that it was clear from the long title and the section relating to the purpose of the Act that it relates to broad issues of peace in the workplace and the regulation of collective bargaining and matters incidental thereto. That in broad terms was the purpose of the Legislature in passing the Act [the LRA] (at 598I, emphasis added). In Minister of Correctional Services v Ngubo 2000 (2) SA 668 (N), the High Court took a different approach: The Legislature s clear intention was to establish a specialist court of law enjoined to deal with all matters arising from the LRA. It seems to me that in order for the Labour Court to enjoy this exclusive jurisdiction there must be a direct relationship between the matter or the dispute before it and a particular relevant aspect and objective of the LRA. A mere indirect and incidental one will not suffice.... Now there may be cases where unlawful conduct occurs in a particular workplace which is not at all connected in this sense to any matter which falls within the purview of the LRA (at 673D, emphasis added). Page 94

5 It appears from these statements that the High Court links the jurisdiction of the Labour Court to the Labour Relations Act and its objectives. If the High Court finds that a certain dispute falls outside the scope of the LRA (as interpreted by the High Court), the High Court could exercise jurisdiction over the matter. If the matter falls within the scope and objectives of the LRA, the implication would be that the High Court would see itself as deprived of jurisdiction. The upshot is that jurisdiction is now dependent upon an interpretation of the LRA as a whole, especially the objectives of the LRA. And, as the Judge President of the Labour Court has indicated, there can indeed be different interpretations (see the Langeveldt-decision at 512A C for the Judge President s interpretation of the LRA s objectives with reference to the Ngubo-decision). The Constitutional Court s findings in respect of the High Court s jurisdiction in respect of labour matters have already been noted above: no quick and easy solution there. These jurisdictional issues are difficult to resolve, as the wording of the relevant provisions, especially s 157(2) of the LRA emphasise concurrence of jurisdiction in essence, even though it may be uncomfortable from a jurisdictional point of view, concurrence of jurisdiction is a fact of the legislation and is likely to remain so. The recent amendments to the LRA leave s 157 unscathed. It also appears that the High Court takes the view that there are principles of fairness relevant outside the scope of the LRA, and within the jurisdiction of the High Court a view the Supreme Court of Appeal gave its stamp of approval in the Fedlife-decision by holding that the LRA is not the be all and end all in providing legal rules relevant to the workplace and the termination of the employment relationship and a view that now carries the approval of the Constitutional Court. Beyond the LRA The High Court has used the uncertainty in jurisdiction in a manner that gives rise to a number of interesting possibilities and which lays the foundation of an entirely new unfair labour practice outside the LRA. The High Court has sought to grapple not only with the jurisdictional issues but also with the issue of the content of the right to fair labour practices. No doubt the Constitutional Court will also soon find itself having to delimit and structure the content of s 23(1) of the Constitution. The jurisdictional issues are daunting: a termination of employment may constitute an unfair dismissal and/or a breach of contract (in terms of s 77(3) of the BCEA, either the High Court or the Labour Court would have jurisdiction in respect of the breach of contract). There is a distinct possibility of forumshopping: that senior managers may elect to approach the High Court purely on the basis of a breach of contract for the purposes of claiming damages arising from the breach and that they may disregard, completely, the Labour Court or seeking a remedy in terms of the unfair dismissal provisions of the LRA. Our law seems poised at the beginning of a completely new unfair labour practice outside the scope of the LRA, and based on the constitutional protection of the right to fair labour practices. This new development would fall well and truly outside the closed list of unfair labour practices now contained in s 186(2) of the LRA. Because of its constitutional origin, this new unfair labour practice could lead to significant developments in our law: the possibility of other forms of employer conduct (such as the re-deployment or transfer of employees) amounting to unfair labour practices, or even the possibility of employee actions against the employer as constituting unfair labour practices. It may even be wide enough to develop a law relating to the relationship between a trade union member and the union. Unwittingly, it seems, South African labour law has returned to a point from which it sought to escape an open-textured, wide in scope and interpretationdependent unfair labour practice. Contemporary Labour Law is published monthly from August to July of each year. Annual Subscription: R including VAT and storage binder. Subscription Enquiries : Tel : (011) Fax : (011) workplace.co.za Copyright held by the authors. No part of this publication may be reproduced in any form without the prior written consent of the publishers. Page 95

6 The interpretation of collective agreements: Making sense of collective intentions by Carl Mischke The statutory definition of a collective agreement is deceptively simple: a written agreement concerning terms and conditions of employment or any matter of mutual interest concluded between an employer (or employers organisation) on the one hand, and, on the other hand, a registered trade union or unions (s 213 of the Labour Relations Act 66 of 1995 (LRA)). Upon closer inspection, however, it is clear that the constituent parts of this statutory definition are relatively difficult to define with anything even approaching precision. The term matter of mutual interest is, itself, a concept with almost no limit. It now appears, from decisions of the Labour Court and arbitration awards that language that appears as simple as possible can give rise to different approaches: the term written agreement has led to differing approaches in relation to whether or not the collective agreement must be signed or not (see Samacor Limited v MWU Solidarity, NETU, NUM, NUMSA & UASA [2001] 10 BALR 1060 (AMSSA)). These differing interpretations are not only of academic or theoretical interest they impact, in a very direct and practical sense, on the way collective agreements are interpreted and applied to the parties that concluded the agreement. Increasingly, arbitrators and Commissioners are required to make sense of documents and deals months or even years after they were concluded. Making sense of the parties intentions, and giving effect to those intentions, appears to be more difficult than the straightforward definition of a collective agreement appears to admit. One of the fundamental questions relates to whether a collective agreement constitutes a contract, and/or the extent to which it constitutes a contract. Regarding it as contractual in nature implies a certain view of the kinds of evidence that may be led, during the course of a subsequent arbitration hearing, in respect of the intention of the parties at the time of concluding the contract and the contents of the contract itself. These issues arise largely from the application of the parol evidence rule (or integration rule), in terms of which a party to a written contract cannot subsequently lead evidence to change the contents of the contract. Another view of a collective agreement regards it as noncontractual in nature, and therefore finds that the parol evidence rule is not applicable in the context of the interpretation or the application of collective agreement. The contractual core of a collective e agreement The fact that the definition of a collective agreement is based on its being a written agreement creates the impression that the core of a collective agreement relates to contract that a collective agreement constitutes a type of contract between the employer and the trade union (in its simplest form). Unlike ordinary commercial contracts, however, a collective agreement concluded within the scope of the LRA is not binding on the parties by virtue of the common law, but by virtue of the provisions of s 23 of the LRA, which provides how and when a collective agreement is binding and on whom. Our courts have emphasised the fact that a collective agreement should not be regarded as an ordinary civil contract. In North East Cape Forests v SA Agricultural Plantation and Allied Workers Union & Others (1997) 18 ILJ 971 (LAC), Froneman DJP stated that a collective agreement in terms of the Act is not an ordinary contract, and the context within which a collective agreement operates under the Act is vastly different from that of an ordinary commercial contract (at 979F). From this perspective, the learned judge expressed the view that a practical approach to the interpretation and application of the collective agreement (as embodied in the approach of the then Judge President in the same case) was preferable to an interpretation that relied on purely contractual principles (at 980I). But the fact that a collective agreement is not an ordinary commercial contract, and the fact that it should not be applied or interpreted as such, does not invalidate Page 96

7 the view that a collective agreement has a contractual core. A modern view of what constitutes a contract supports this view: A contract, in the modern Roman-Dutch law of South Africa, may be defined as: an agreement (arising from either true or quasi-mutual assent) which is, or is intended to be, enforceable at law (RH Christie The Law of Contract 4 th ed at 2). A collective agreement, even though it derives its binding effect from legislation, is still the product of assent or consensus between the parties it is voluntarily entered into (even though sometimes under pressure or the economic duress of collective action). In this context it appears that the Labour Court is now prepared to consider whether a collective agreement can be voided on the basis of its having been concluded in a situation where the employer party was placed under economic duress see Nehawu v Public Health & Welfare Sectoral Bargaining Council & Others BLLR 222 (LC). Even so, there can be no denying the fact that consensus ( agreement ) is at the very heart of a collective agreement, that a collective agreement is entered into, in terms of the LRA, with the intention of its being binding and its being enforceable at law. It also appears that recent arbitration awards emphasise the fact that the consensus or agreement must be reduced to writing, and that the parties themselves must be identified: these awards appear to indicate that, in respect of formalities, arbitrators and Commissioners are expecting more than just any old piece of paper. An exchange of correspondence, for example, has been held not to constitute a collective agreement (see, for example, NUMSA obo Johnson & Others v Redcore t/a Trentyre [2002] 3 BALR 299 (CCMA)). The parol evidence rule The basic thrust of the parol evidence rule (also called the integration rule) is that where the parties to a contract have reduced their agreement to writing, the document or text will be accepted as the sole evidence of the terms of the contract. The aim of the rule has been explained as follows by the Supreme Court of Appeal: It is clear to me that the aim and effect of this rule is to prevent a party to a contract which has been integrated into a single and complete written memorial from seeking to contradict, add to or modify the writing by reference to extrinsic evidence and in that way to redefine the terms of the contract.... To sum up, therefore, the integration rule prevents a party from altering, by the production of extrinsic evidence, the recorded terms of an integrated contract in order to rely upon the contract as altered (Johnston v Leal 1980 (3) SA 927 (A) at 943B). The locus classicus of this rule is to be found in Union Government v Vianni Ferro-Concrete Pipes (Pty) Ltd 1941 AD 43 at 47: Now this Court has accepted the rule that when a contract has been reduced to writing, the writing is, in general, regarded as the exclusive memorial of the transaction and in a suit between the parties no evidence to prove its terms may be given save the document or secondary evidence of its contents, nor may the contents of such document be contradicted, altered, added to or varied by the parol evidence. These dicta create the impression that once a written document containing contractual terms and conditions exist, the rule comes into operation immediately, and that parties are precluded from leading any evidence as to the surrounding events, negotiations or exchanges between them. As Christie points out, however, it may well be necessary to decide whether the document is in truth a reduction to writing or integration of the contract, and for this purpose evidence may well be necessary because the true nature of the document may not appear from the contract itself. Such evidence may be oral or documentary and may canvass the negotiations and oral agreement preceding or accompanying the document, provided it is directed to establishing the status or true nature of the document (at ). If we apply these principles to collective agreements, the impact of the integration rule is that, in the course of an arbitration relating to the interpretation or application of a collective agreement in terms of section 24 of the LRA, no party may lead oral or other evidence to alter, add to, vary or modify in any way the contents of the written collective agreement as concluded by the parties. The collective agreement is the exclusive memorial of the agreement or consensus between the employer party and the trade union party. But the parol evidence rule is limited in scope. Evidence may be led, for example, in order to ascertain whether the agreement Page 97

8 before the arbitrator is a collective agreement at all. It is also not the case that the parol evidence rule excludes all evidence relating to the parties exchanges and negotiations in the process of interpreting the collective agreement the negotiating context and the exchanges may prove to be of assistance in the process of interpreting the contract in situations where the contract is ambiguous and requires interpretation. As Hoffman and Zeffert point out: Owing to the inherent imperfections of language, as well as the inadequacies of those who use it, there will often be difficulty in deciding what a reasonable person would have understood by certain words unless there is evidence of the context in which they were used. This will provide circumstantial evidence of the writer s intention and so enable the court to choose one of the range of possible meanings which could be attached to his words.... But if the words cannot reasonably have more than one meaning, the court is bound to apply them in that sense, and facts which show what the writer meant are irrelevant (South African Law of Evidence 3 rd ed, at ). The parol evidence rule means however, that when an employer and a trade union have agreed to a 10% wage increase in clear and unambiguous language, one of them may not, during the course of the subsequent arbitration, allege and seek to prove that they had in fact agreed on a 12% increase by referring to evidence not contained in the agreement itself. No evidence may be given to change the clear and unambiguous language (and meaning) of a collective agreement. Application of the parol evidence rule Our courts and arbitrators have not been consistent in their approach to the application of the parol evidence rule in the context of collective agreements. In SASBO v First National Bank of Southern Africa Ltd [1995] 10 BLLR 108 (IC), the Industrial Court held the view that the Bill of Rights contained in the Interim Constitution of 1993 would be ill-served by a strict adherence to the application of a contractual approach that includes the parol evidence rule. The Industrial Court s reasoning included the fact that the relationship between the employer and the union is a continuous relationship, and collective agreements constitute mere punctuations which cannot be interpreted without having regard to what went before (at117i). Nor does a collective agreement constitute a once-off agreement between two parties as is the case in an ordinary commercial contract. The Industrial Court also considered the fact that the agreement before it lacked the technical pretence and precision that characterise commercial contracts. In SACTWU v Best Clothing (Pty) Ltd [1997] 5 BLLR 658 (CCMA) the CCMA Commissioner affirmed the application of the parol evidence rule, finding the clear and unambiguous wording of the agreement to be decisive on the facts. But in Independent Municipal & Allied Trade Union v Cape Town Municipality (1999) 20 ILJ 960 (CCM), the Commissioner held that collective agreements should not be approached in the same way as one would approach an ordinary commercial contract: The interpretation of a commercial contract is premised on the notion that it was freely and voluntarily entered into. In the case of a collective agreement, the parties are in an employment relationship, with conflicting interests: their agreement represents a compromise that is the result of a protracted process of negotiation, and may follow the exercise of power. I do not therefore think a collective agreement can be properly interpreted without full regard for the context in which it is negotiated... The purposes of the Act include advancing social justice and promoting the effective resolution of labour disputes. In my opinion the effective resolution of labour disputes is not promoted by reliance on a legal rule of evidence which restricts the abilities of the parties to present their arguments at a forum such as this. Similarly, social justice is not promoted by a reliance on a rule which advantages those who have access to legal and other resources in formulating agreements, and disadvantages those who are illiterate or have had an inadequate education, or who do not have access to such resources (at 966D F, H J). In FAWU v Supply Chain Services [2000] 9 BALR 1095 (IMSSA), the arbitrator made short shrift of these arguments, stating that many commercial contracts are also characterised by compromise and the exercise of power therefore these are not distinguishing features of commercial contracts vis-à-vis collective agreements. The arbitrator also came to the conclusion that the dictum of Froneman DJP in North East Cape Forests (above) did not imply that parties to collective Page 98

9 agreements had a free hand to lead evidence as to the negotiations preceding the signing of the collective agreement. Some arbitrators choose not to enter the debate in respect of the application of the parol evidence rule at all. In NUMSA obo its members & Another v Willard Batteries [2001] 5 BALR 493 (CCMA) the Commissioner was tasked with the interpretation of a collective agreement concluded in 1998, for the purpose of establishing whether it affected the validity of a collective agreement that had been concluded in Making no reference to parol evidence or the rule, the Commissioner allowed evidence relating to the negotiations that preceded the conclusion of the 1998 collective agreement, holding, on the basis of the parol evidence produced by the trade union, that the 1998 agreement did not terminate the agreement concluded in Back to the basics of contract In NUMSA v Volkswagen of South Africa (Pty) Ltd [2002] 1 BALR (P), a respected arbitrator returned to the rules for the interpretation of contracts when faced with different interpretations of a collective agreement relying exclusively on decisions the civil courts had handed down in the context of the interpretation of ordinary commercial contracts. He stated that the key to the interpretation of a contract is in the first instance to ascertain the intention of the parties from the words which they used to express their agreement. Other relevant principles of contractual interpretation canvassed in this award included the following: The first rule of contractual (and statutory) interpretation is that the words used must be taken in their ordinary meaning. The contract must be read as a whole and individual clauses must be interpreted within the context of the entire written contract. If the words of the contract are unclear or ambiguous, it was said, the circumstances in which the agreement was entered into can be referred to as a guide in determining the true intention of the parties. The object of the interpretation exercise is to ascertain not the meaning of the contract at the time of interpretation, but the intention of the parties at the time of concluding the contract. If a party argues that a term must be implied in the contract (even though the wording of the contract is silent on that matter), the following test must be applied: whether, at the time they were negotiating their agreement, the parties considered that term so obvious that it was not necessary to record it expressly (at 5F J). In respect of implying terms into the contract in situations where the text is silent, the arbitrator held that one could ask whether the terms which each party now claims should be read [into the clause] were, or ought reasonably to have been, within the contemplation of both parties when they negotiated the agreement (at 7C). The presumption that the contracting parties wish their contracts to have business efficacy was affirmed (at 9C), and The hypothetical bystander test was used for the purpose of establishing what was in the minds of parties at the time of contracting. The application of the integration or parol evidence rule was not relevant for the purposes of deciding the matter, and it is not discussed. But what is of considerable interest is the fact that the arbitrator used, rigorously and with close attention to detail, rules not developed in the Labour Court or principles derived from an interpretation of the LRA, but rules developed by the civil courts for the purposes of interpreting ordinary commercial contracts. This award proves, convincingly so, that the rules for the interpretation of contract can serve as an effective, sound, logical and coherent basis for the interpretation of collective agreements. Even though there can be no disputing the significant differences between ordinary commercial contracts relating to purchase and sale, letting and hiring or the provision of other services, on the one hand, and collective agreements concluded between an employer and a trade union on the other hand, the fact that the collective agreement consists of a written instrument reflecting consensus between the parties makes it possible to use the rules developed for interpretation of contracts in order to make sense of the parties intentions at the time of concluding the collective agreement. Page 99

10 The rules of interpr preta etation tion of contracts Invariably, the interpretation of a contract or a collective agreement means looking back trying to ascertain the intentions of the parties at the time of the contract. According to the approach used by the civil courts, the first rule is always to interpret the written agreement with reference to its grammatical and ordinary meaning. Words and phrases should never be interpreted in isolation, but the context within which the word or phrase is used must also be borne in mind, paying special attention to the interrelation between the phrase or word and the contract as a whole (including the nature and purpose of the contract). If the document is ambiguous, extrinsic evidence may well be necessary to enable the arbitrator to choose from the range of meanings encompassed by the document. These kinds of facts may be relevant because they assist in determining what matters were probably in present in the minds of the parties at the time of conclusion of the contract. The courts have also held that it is permissible to apply extrinsic evidence regarding the surrounding circumstances when the language of the document is on the face of it ambiguous, by considering previous negotiations and correspondence between the parties, subsequent conduct of the parties showing the sense in which they acted on the document, save direct evidence of their own intentions (Coopers & Lybrand v Bryant 1995 (3) SA 761 (A) at 768E). There are a number of other contract-interpretation rules that can assist in the interpretation of collective agreements, such as the presumption of business efficacy and the presumption against tautology or superfluity. Big deals,, little wor ords South African contract law has, over a long period of time, developed detailed and concrete rules relating to the interpretation of contracts. There is no real reason for re-inventing a set of tools to make sense of parties intentions at the time of entering into a collective agreement. The application of the parol evidence rule means that parties cannot make new bargains at the time of the arbitrations, or seek to change or modify what is contained in the written text of the collective agreement. Whether or not this rule should apply in the context of the interpretation of a collective agreement is a different question altogether. Perhaps it is for the best, in view of the contractual core of a collective agreement and the considerable importance attached to collective agreements in the Labour Relations Act (the policy of self-regulation being one of the cornerstones of the LRA as a whole) that parties not be permitted to change their contracts in the arbitration stage and that they are seen as bound by their own agreements. It is now easier than ever to dispute the meaning of a collective agreement s 24 of the LRA provides an accessible forum for these types of disagreement. But the fact that it is easy to get to arbitration about the interpretation of a collective agreement may eclipse the fact that the parties bear, ultimately, the responsibility for their own agreements. It is true that parties may be in uncomfortable situations when drafting a collective agreement. It may be that the parties have faced or taken economic action and that the collective agreement which settles the dispute is framed in language that is, intentionally or not, somewhat vague and abstract in order to maximise consensus and make it possible for both parties to sign the document. Some undertakings may be made in the heat of the moment, or in situations of desperation where a party is prepared to sign anything to bring a strike to an end. It is understandable that the language used in the agreement may not be of the clearest, but, whatever the pressures of the situation and the events preceding the agreement, parties should take care in drafting their agreements to minimise ambiguity and to serve as an accurate record of their agreement. The greater the pressure, the more care should be exercised, and, if required, more than one draft should be completed. Technical words and phrases should always be defined in a definition section, even those that do not appear to the parties to be ambiguous or susceptible of widely differing interpretations. Close attention must always be paid, because also in cases of agreement, a poor choice of wording, ambiguity and other difficulties with words may undo a deal so carefully crafted. Page 100