The exercise of employers’ conduct in relation to the provision of employment benefits has left many employees vulnerable to unfair labour practices. In this article, I will analyse the challenges to the interpretation of what constitutes the term “benefit”. Furthermore, I will discuss the case of Apollo Tyres SA (Pty) Ltd v Commission for Conciliation, Mediation & Arbitration as it is the authority for the current jurisprudence relating to the interpretation of the term “benefit”.
The Challenges to the Interpretation of what Constitutes a “Benefit”
Prior to the judgment of Protekon (Pty) Ltd v CCMA, the labour courts adopted two approaches in interpreting “benefits”.
First, a number of cases indicated that benefits do not include remuneration. For example, in Schoeman v Samsung Electronics SA (Pty) Ltd, the Labour Court (LC) held that commission claimed by the applicant was not a “benefit” but was part of the employee’s salary. The Court further held that a benefit ‘is something extra apart from remuneration’ and to reduce the rate of commission of an employee could not, therefore, be an unfair labour practice as envisaged in Section 186(2)(a) of the Labour Relations Act (hereinafter referred to as the LRA).
The second approach in determining benefits was adopted by the Labour Appeal Court (LAC) in Hopersa v Northern Cape Provincial Administration. In this case, the LAC held that the term “benefit” was limited to benefits to which an employee is entitled as of right, either in terms of a contract of employment, a collective agreement or in terms of legislation.
In Eskom v Marshall, the dictum in Hospersa prevented Landman J from finding that the employer’s failure to exercise its discretion in favour of an employee, who applied for a voluntary severance package, amounted to an unfair labour practice because the employee had no contractual right to that benefit. This despite the Honourable Judge’s view that the benefit-related unfair labour practice ought to cover situations where the employee has a legitimate expectation to a benefit that is an ‘ascertainable advantage or privilege which has been created by the employer concerned; or one which the employer has declared it will consider conferring upon the employee’.
The Hopersa decision was, however, not followed in the subsequent decision of the LAC in Department of Justice v CCMA. Goldstein AJA, in a minority judgment, held that it would be meaningless if an unfair labour practice were confined only to claims relating to pre-existing rights that arise from contracts or from the law. Dr John Grogan believes this minority judgment to be correct. Section 186(2)(a) was created to prevent unfair employer conduct. If its scope were limited to contractual claims, the provision would serve little purpose.
Current Jurisprudence Relating to the Interpretation of the Term “Benefits”
Given the contradictory and various approaches outlined above, it was hoped that the LAC in Apollo Tyres would provide clarity on the definition of “benefit”. The LAC was required to consider on appeal, whether the early retirement benefit offered to employees, the award of which was subject to the discretion of the employer, constituted a benefit as contemplated by Section 186(2)(a) of the LRA. To determine this matter, the LAC held that a “benefit” in terms of Section 186(2)(a) is not limited to an entitlement that arises from contract or legislation but extends to include ‘an advantage or privilege which has been offered or granted to an employee in terms of a policy or practice subject to the employer’s discretion.’ The Court found that the early retirement benefit was initiated by the employer and offered to all monthly paid employees between 46 and 59 years of age. Furthermore, it was undisputed that Hoosen was 49 years old, that he was paid a monthly wage, that he did not have a contractual entitlement to the early retirement benefits and that the benefits were to be granted at the employer’s discretion. All these facts satisfied the term “benefit” as defined by the Court.
The Apollo Tyres judgment is to be welcomed as it provides guidance as to what constitutes a “benefit” in terms of Section 186(2)(a). It is clear from the judgment that the notion of “benefit” is broad enough to cover legal entitlements as well as benefits to which an employee is not entitled as of right; for example, discretionary benefits. Another reason why the Apollo Tyres decision is to be welcomed is that its interpretation of the term “benefit” accords with Section 23 of the Constitution and the purpose of Section 186(2)(a) of the LRA. Thus, as the law currently stands per Apollo Tyres, the statutory unfair labour practice provision may be relied upon to regulate benefit disputes, including disputes about discretionary benefits. This finding makes the constitutional right to fair labour practices practicable for an aggrieved employee by providing them with an effective remedy. Employers who grant benefits to their employees subject to their discretion will no longer be able to grant such benefits at their will or fancy but will have to act reasonably and in line with the Constitution.
Guest Author: Omphile Moerane (Legal Intern at SchoemanLaw Inc – September 2020)
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