Labour Court awards compensation to employer after unprotected strike

The Labour Relations Act 66 of 1995, as amended (“the LRA”) provides a simple mechanism for employees to engage in a protected strike. A failure by employees to comply with those requirements i.e. filling in a referral form, awaiting a certificate of outcome and issuing a strike notice, should result in disciplinary action being taken by the employer. Unfortunately, this does not always happen. When employees abandon the unprotected strike and return to work, employers are often relieved that the damage has been mitigated and production has resumed. In those circumstances, employees are often given no more than a slap on the wrist, even though engaging in an unprotected strike constitutes serious misconduct.

Where the employer has had to apply to the Labour Court for an interdict to declare a strike unprotected, the Labour Court should also sanction the employees with an appropriate costs order. The prevailing view of our Courts, however, is that they should be hesitant to order Unions or employees to pay the costs of litigation, because such an order may strain the relationship between the parties and negatively impact on future collective bargaining. While such an approach is open to criticism, it remains the legal position today.

The recent case of NUMSA obo Dhludhlu & others v Marley Pipe Systems (SA) (Pty) Ltd (unreported, JS878/17, 23 January 2020) is a timely reminder of an additional avenue open to employers who have suffered losses during an unprotected strike.   The Labour Court was tasked with determining whether the dismissal of 145 employees of the respondent during August 2017, who were participating in an unprotected strike action, was substantively and procedurally fair. The employer also instituted a counterclaim in terms of section 68(1)(b) of the LRA for the payment of equitable compensation for any loss attributable to the unprotected strike. The employer also filed an alternative claim in terms of section 77 of the Basic Conditions of Employment Act 75 of 1997, as amended (“the BCEA”) for the payment of damages arising from the strike.

In this matter, employees had engaged in an unprotected strike during which a manager of the employer was assaulted. At the Labour Court, the employer produced video footage of the strike and the assault and also led the evidence of several witnesses to prove the fairness of the dismissals. The Union, however, denied that its members engaged in a strike or that any of them had assaulted the manager. The Union also contended that the dismissal of its members was procedurally unfair. It led the evidence of a shop steward in support of its contentions.

The Court, having reviewed the evidence of both parties, found that on a balance of probabilities, a strike had in fact taken place on or about the 14 July 2017 and that the strike was unprotected as it failed to comply with the provisions set out in section 64 of The Act. In regard to the assault on the manager, the Court relied on the judgment of the Constitutional Court in National Union of Metalworkers of South Africa obo Nganezi and Others v Dunlop Mixing and Technical Services (Pty) Limited and Others 2019 40 ILJ 1957 (CC) and found that the employees had acted with common purpose. The dismissal of the employees was accordingly substantively fair.

In regard to procedural fairness, the Court concluded that the employer had served an ultimatum on the striking employees. It had also held disciplinary hearings prior to the dismissal of the employees, whereby they were given the opportunity to state their version of events. No procedural unfairness was evident in the approach followed by the employer.

In regard to the employer’s counterclaim, the employer claimed an amount of some R18m, being the just and equitable compensation in terms of section 68(1)(b) of the LRA, alternatively general damages under section 77 of the BCEA. As a further alternative, the employer claimed R829 835.00 for losses incurred on the day of the strike and the days immediately thereafter. It maintained, however, that the figure of R18m was correct, since the impact of the strike had disrupted the employer’s operations for several months.

The employer’s evidence indicated that it had lost key customers as a result of the strike and that it was necessary to take certain measures to restore production to its required capacity. No production took place on the day of the strike, resulting in significant losses for the employer. The employer’s evidence was that the total impact of the strike resulted in a loss of some R18m, but that the loss incurred on the day of the strike and the days immediately thereafter amounted to some R829 835.00.

The Union did not challenge any of the employer’s evidence but denied that the employer was due any compensation or damages. The Court considered several factors and found that the strike and assault on the manager was premeditated and that such conduct was not in conformity with orderly collective bargaining. The Court accordingly found that it would be just and equitable to award the employer R829 835.00 as just and equitable compensation. It also ordered that each of the 145 employees are jointly and severally liable for the payment of that amount.

The judgment is a ringing endorsement of the rights of employers. Employers should not overlook the importance of holding Unions and employees to account for engaging in unprotected strikes. A strike is serious business and employees should not engage in such conduct on a whim and without following the provisions of the LRA. Employers should make a point of ensuring that Unions and employees comply not only with the terms and conditions of their employment, but the provisions of the LRA and other legislation. In our experience, a costs order or claim for damages often has a salutary effect on the conduct of the recalcitrant party, allowing for rational, reasonable and constructive interactions around the negotiating table.

Written by Neil Coetzer and Mzamo Danana
of Cowan-Harper-Madikizela Attorneys

Neil Coetzer of Cowan-Harper-Madikizela Attorneys,