Advisory arbitration – Not just a box to be ticked

The drafters of the LRA chose, quite deliberately, not to include a general duty to bargain. In other words, the drafters chose to allow voluntarism as a policy choice. The LRA accordingly does not oblige Unions or employers to bargain with each other, if they don’t wish to do so. 

Notwithstanding this, section 64(2) of the LRA provides for a right to strike or lock-out where a Union or employer refuses to bargain. Recently, section 64(2) was the point of contention in the matter between Macsteel Service Centres SA (Pty) Ltd v National Union of Metalworkers of South Africa (NUMSA) and Others (J1063/21) [2021] ZALCJHB 275 (8 September 2021).

Macsteel Services Centres SA (Pty) Ltd (“Macsteel”) brought an urgent interdict application, seeking an order declaring a planned strike by the National Union of Metalworkers of South Africa (“NUMSA”) and its members unprotected and further interdicting NUMSA and its members from engaging in any unprotected strike. 

The genesis of the dispute could be traced back to 22 May 2021 when NUMSA served Macsteel with a letter to initiate plant level negotiations on its demands on various issues pertaining to its members’ conditions of employment. This request was, however, turned down by Macsteel, advising NUMSA to table its demands at the MEIBC. 

Aggrieved by Macsteel’s refusal to initiate plant level negotiations, NUMSA referred a refusal to bargain dispute to the MEIBC. The matter was conciliated on 12 July 2021, when a technical point in limine was raised by Macsteel objecting to the jurisdiction of the MEIBC. 

Macsteel argued that NUMSA had failed to comply with the MEIBC Constitution which provides that the Secretary of Council, in consultation with the President, must decide whether a dispute constitutes a plant or industry level matter. If found to be an industry matter, negotiations initiated by Manco should precede a referral of that dispute to the MEIBC for conciliation. 

The Commissioner upheld Macsteel’s point in limine and found that the MEIBC had no jurisdiction to adjudicate the dispute on the basis that NUMSA had tabled its demands on substantive issues at plant level, contrary to the procedural dictates of the MEIBC’s Constitution.

NUMSA however rejected the jurisdictional ruling, insisting that it was nothing more than an advisory award. NUMSA accordingly served Macsteel with a notice to commence a strike, thereby prompting Macsteel to approach the Labour Court for an order interdicting the strike.

It was common cause that due to the nature of the dispute, an advisory award had to be made before a notice to commence a strike could be given in accordance with section 64(2) of the LRA. As such, the legal effect of the jurisdictional ruling made by the Commissioner became a point in contention. 

Macsteel in this regard argued, inter alia, that the jurisdictional ruling rendered the strike unprotected to the extent that the Commissioner had found that MEIBC had no jurisdiction to entertain the referral. 

On the other hand, NUMSA urged the Court to the look at the substance of the jurisdictional ruling and not merely its form, as it held that the substance of the Commissioner’s findings was advisory in nature and not binding on the parties despite the label attached to the ruling. It is on this basis that NUMSA contended that the requirements of section 64(2) had been complied with, thereby allowing it to proceed to strike. 

The Court, however, rejected NUMSA’s contention holding that NUMSA’s construction of the provisions of section 64(2) would lead to “impractical, unbusinesslike and/or oppressive consequences”.

The Court examined the Explanatory Memorandum to the LRA which holds, inter alia, that there is a special procedure in respect of refusal to bargain disputes which holds that such disputes must be thoroughly conciliated and referred to advisory arbitration before the resort to industrial action. 

The Court accordingly viewed the planned strike by NUMSA and its members as unprotected until such time as the Commissioner had discharged his statutory duties and functions and issued an advisory award. The Court accordingly directed the Commissioner to perform his duties and functions in terms of section 64(2) and to issue an advisory award. 

Employers and Unions should not forget about the importance of advisory arbitration, which can also be invoked in other disputes as part of a conciliation process. Formalizing the process in an arbitration setting is often a useful way of forcing parties to deal with the factual issues before them and to reconsider their options, before engaging in damaging strikes or lock-outs.