Can Collective Bargaining be a Ground of Justification

Can Collective Bargaining be a Ground of Justification to an Equal Pay Claim in terms of the EEA? Adv. Shamier Ebrahim Senior Lecturer, Department of Mercantile Law College of Law, UNISA LLB (NMMU); LLM Labour Law (cum laude) (UNISA)

INTRODUCTION • Section 6(4) (EEA 55/1998) prohibits unfair discrimination in the terms and conditions of employment between employees of the same employer performing the same work, substantially the same work or work of equal value • Grounds of justification to equal pay claims set out in the EER (2014) duplicated in the Equal Pay Code (2015) • (a) Seniority/length of service; (b) qualifications, ability and competence; (c) performance (quality of work); (d) red-circling; (e) temporarily employed to gain experience; and (f) skills scarcity • No mention of collective bargaining

INTRODUCTION • R 7(1)(g) – difference in ts and cs not unfair discrimination if fair and rational and based on any other unlisted relevant factor that is not unfairly discriminatory ito s 6(1) • Shows that listed grounds not a closed list and employer can rely on an unlisted ground as justification provided it meets the requirements of the regulation • R 7(2) a differentiation in ts and cs based on the grounds in sub regulation (1) will be fair and rational if it is established, in accordance with section 11 of the Act, that – • (a) Its application is not biased against an employee or group of employees based on race, gender or disability or any other ground listed in section 6(1) of the Act; and • (b) It is applied in a proportionate manner.

RESEARCH QUESTION • Can collective bargaining be a factor which can fall within the ambit of regulation 7(1)(g) of the Regulations and consequently justify unequal pay?

BRIEF LEGISLATIVE FRAMEWORK • Constitution makes reference to collective bargaining in ss 23(5)-(6). • S 23(5) provides trade unions and employers organisations have the right to engage in collective bargaining and national legislation may be enacted to regulate collective bargaining. • The LRA has been enacted to regulate collective bargaining • S 23(6) states national legislation may recognise union security arrangements contained in collective agreements. • Long title of LRA refers to the LRA promoting and facilitating collective bargaining • Collective agreements fruits of collective bargaining

BRIEF LEGISLATIVE FRAMEWORK • Section 213 LRA defines a collective agreement as a written agreement relating to terms and conditions of employment or any matter of mutual interest • Section 23(1)(a) LRA provides that a collective agreement binds the parties to the collective agreement. • Section 23(3) LRA then states that a collective agreement varies any contract of employment between an employee and employer who are bound by the collective agreement.

BRIEF LEGISLATIVE FRAMEWORK • More importantly, the EEA contains sections which refer to collective bargaining in the discrimination law arena • The EEA defines a collective agreement as a written agreement relating to terms and conditions of employment or any other matter of mutual interest • Section 27(3)(a) of the EEA read with section 27(2) of the EEA provides that where disproportionate income differentials or unfair discrimination relating to a difference in terms and conditions of employment in terms of section 6(4) of the EEA are reflected in the statement contemplated in terms of section 27(1) of the EEA, then the designated employer must take measures to progressively reduce the differentials and one such measure is collective bargaining.

SELECTED CASE LAW • Collins v Volkskas Bank (1994) 15 ILJ 1398 (IC) • IC held that it had a discretion to intervene in a collective agreement notwithstanding that it was the outcome of collective bargaining. • It further held that such discretion should only be exercised in very limited circumstances as the approach adopted by the IC to collective agreements was a non-interventionist one because those agreements were the outcome of collective bargaining which is the prime method of resolving labour disputes • IC stated it would intervene (strike down provisions) where a collective agreement results in a manifestly gross unfair labour practice being perpetrated against an employee • It would even in these circumstances be slow to intervene as this would amount to judicial intervention in the outcome of the collective bargaining process, an area which is generally regarded as falling outside the court’s unfair labour practice jurisdiction

SELECTED CASE LAW • Western Cape Education Department v George (1996) 17 ILJ 547 (LAC) • LAC remarked that it was mindful of the value of collective bargaining and the undesirability of third parties intervening therein including the Industrial Court. • LAC stated that it does not agree that such intervention will necessarily be subversive of the powers of collective bargaining • The resolution of that action by adjudication still leaves the 'macro' dispute to be resolved by the negotiating parties around the bargaining table.

SELECTED CASE LAW • Provincial Administration of the Western Cape v Hospersa (1998) 19 ILJ 1297 (CCMA) • CCMA held that a collective agreement concluded in the Western Cape Provincial Bargaining Council reflecting that employees were entitled to work less hours per week (38 hours 45 minutes) than the hours stated in the Public Service Staff Regulations (40 hours) was invalid • Those employees working less than 40 hours per week were doing so in conflict with their statutory obligations

SELECTED CASE LAW • Heynsen v Armstrong Hydraulics (Pty) Ltd [2000] 12 BLLR 1444 (LC) • Applicant alleged that he was discriminated against on the basis of race in that he earned less than his co-employees who were part of the bargaining unit and who were weekly paid • He was monthly paid and not part of the bargaining unit • There were differences in the terms and conditions of employment with regard to weekly paid and monthly paid employees • The Labour Court noted that according to the ILO, collective bargaining is not a justification for pay discrimination. • It warned that this rule was compelling in an ideal society but should not apply rigidly in South African labour relations due to the fact that employees had fought hard for collective bargaining rights

SELECTED CASE LAW • Jansen van Vuuren v South African Airways (Pty) Ltd [2013] 10 BLLR 1004 (LC) • Employer attempted to justify the discrimination against the applicant on the ground that it was the product of a collective agreement and for that reason it was fair. • The Labour Court referred to Larbi-Odam & Others v Member of the Executive Council for Education (North-West Province) 1998 (1) SA 745 (CC) and stated that this judgment is clear authority for the proposition that justification cannot be founded on a collective agreement or any other agreement. • It further remarked that a collective agreement is subject to the Constitution as well as the EEA and parties thereto may not contract out of the rights in the Bill of Rights.

ACADEMIC WRITINGS • Grogan asserts that collective bargaining agreements with different unions which result in pay differentials are permissible (Grogan J Employment Rights (Juta Claremont 2010) 230) • Landman asserts that an employer can attempt to rely on a collective agreement that provides for discriminatory wages as a ground of justification for pay differentials but this reliance is unlikely to succeed (Landman A “The Anatomy of Disputes about Equal Pay for Equal Work” (2002) SA Merc LJ 341 -356 at 351) • Le Roux states that there are limits as to what can permissibly be contained in a collective agreement and this includes that a collective agreement that evidences unfair discrimination will not be enforceable as well as a collective agreement that provides for terms and conditions that are in contravention of the BCEA (Le Roux PAK “Collective agreements: their role and status” CLL 12(11) 2003 at 94)

PIONEER FOODS v WAR [2016] ZALCCT 14 • The LC stated that the reason for paying new employees at the 80% rate for the first two years was as a result of FAWU convincing the appellant to reduce the number of precarious employees, including those supplied by labour brokers • The LC held that the Commissioner’s award was wrong as it had the implication that the EEA does not allow a South African employer to give effect to a collective agreement which sets out different rates of pay for employees with different periods of service. • The LC remarked that a collective agreement that sets out different pay levels for employees with different periods of service does not amount to arbitrary differentiation, neither is seniority/length of service (being a new employee) an unlisted ground which meets the test of unfair discrimination

PIONEER FOODS v WAR • It held that in determining the existence of unfair discrimination, the fact that the conduct complained of is the product of a collective agreement negotiated with a representative trade union is relevant in the determination. • It held further that this becomes more relevant where the reasons for reaching consensus on the relevant points have been disclosed, are not illegitimate and where, but for the term objected to (the 80% rate for two years for new employees), it is doubtful that the jobs concerned would ever have been created • It stated that in the absence of the agreement on the 80% rate for the first two years for new employees, there is no reason to assume that the jobs would have been created at all. The Court held that the very existence of the jobs of the new employees must weigh in the fairness scale. The appellant also acted transparently in that it informed applicants for new positons regarding the 80% rate for the first two years.

INTERNATIONAL LABOUR LAW • The EEA mandates an interpretation of the Act which complies with the international labour law obligations of South Africa, in particular the Discrimination (Employment and Occupation) Convention. S 3(d) EEA. • It is well established that the main sources of international labour law are to be found in the form of the Conventions and Recommendations of the International Labour Organisation. (Valticos N and Potobsky G International Labour Law 2 nd ed (Kluwer Law and Taxation Publishers Deventer-Boston 1995) at 49) • Regional Instruments are also a source of international labour law (Valticos and Potobsky International Labour Law at 49, 66, 68 -71, 73 -75)

INTERNATIONAL LABOUR LAW • Article 2(c) of the Equal Remuneration Convention (100/1951) recognises the importance of collective bargaining in addressing unequal pay by stating that the principle of equal pay can be applied by means of collective agreements between the employer and employees • Discrimination (Employment and Occupation) Recommendation (111/1958) provides in item 2(e) as follows: • “in collective negotiations and industrial relations the parties… should ensure that collective agreements contain no provisions of a discriminatory character in respect of access to, training for, advancement in or retention of employment or in respect of the terms and conditions of employment…” • The Equal Pay Guide states that the state and the social partners (employers and unions) should promote equal pay in collective bargaining (Oelz M, Olney S and Manuel T Equal Pay: An Introductory Guide (International Labour Office, International Labour Standards Department, Conditions of Work and Equality Department Geneva, ILO, 2013) at 61)

FOREIGN CASE LAW • Redcar & Cleveland Borough Council v Bainbridge (No. 2) [2008] IRLR 776 EWCA • The Court held that different jobs that have been subject to separate collective bargaining processes can be a complete defence to an equal pay claim. • It qualified this by stating that collective bargaining can only be a defence where the reason for the pay differential is the separate collective bargaining process and not the difference of sex. • It concluded by stating that separate collective bargaining in itself will be unlikely disprove the possibility of sex discrimination.

FOREIGN CASE LAW • Enderby v Frenchay Health Authority Case C-127/92, [1993] IRLR 439 • “The fact that the rates of pay at issue are decided by collective bargaining processes conducted separately for each of the two professional groups concerned, without any discriminatory effect within each group, does not preclude a finding of prima facie discrimination where the results of those processes show that two groups with the same employer and the same trade union are treated differently. ” • “If the employer could rely on the absence of discrimination within each of the collective bargaining processes taken separately as sufficient justification for the difference in pay, he could, as the German Government pointed out, easily circumvent the principle of equal pay by using separate bargaining processes. ”

FOREIGN CASE LAW • Specialarbejderforbyndet i Danmark v Dansk Industri, acting for Royal Copenhagen [1995] IRLR 648 ECJ • “The fact that the rates of pay have been determined by collective bargaining or by negotiation at local level may be taken into account by the national court as a factor in its assessment of whether differences between the average pay of two groups of workers are due to objective factors unrelated to any discrimination on grounds of sex. ”

FOREIGN CASE LAW • Kenny v Minister for Justice, Equality and Law Reform [2013] IRLR 463 CJEU • Court of Justice held that the national court may take the interests of good industrial relations into account in its assessment of whether differences in pay are due to objective factors unrelated to any discrimination on grounds of sex • The Court stated that like collective agreements, good industrial relations are subject to the principle of non-discrimination in pay between male and female workers. • The Court held that the interests of good industrial relations cannot on its own constitute the only basis for justifying discrimination • Napier states that good industrial relations may have discriminatory connotations and the wording of the general material factor provision in the UK’s Equality Act does not allow an employer to rely on a collective agreement that is sex-discriminatory and neither does it allow an employer to rely on a union’s resistance to the removal of discriminatory pay. (Napier B “Equal Pay in 2013” (2014) 246 Equal Opportunities Review 10 in Hepple B Equality the Legal Framework 2014 2 nd ed (Hart Publishing, UK) 131. )

FOREIGN CASE LAW • Kowalska v Freie und Hansestadt Hamburg [1990] IRLR 447 ECJ • “it is the responsibility of the national court. . to decide whether, and if so to what extent, a provision of a collective agreement which applies without distinction to all workers but in fact affects women more than men is explained by objectively justified reasons unrelated to any discrimination on grounds of sex” • Nimz v Freie und Hansestadt Hamburg [1991] IRLR 222 ECJ • “where there is indirect discrimination in a provision of a collective agreement, the national court is required to set aside that provision, without requesting or awaiting its prior removal by collective bargaining or any other procedure” • “It would be incompatible with the very nature of Community law if the court having jurisdiction to apply that law were to be precluded at the time of such application from being able to take all necessary steps to set aside the provisions of a collective agreement which might constitute an obstacle to the full effectiveness of Community rules. ”

CONCLUSION • Can Collective Bargaining be a Ground of Justification to an Equal Pay Claim in terms of the EEA? • Yes it can provided that the provisions relied on or attacked are not unfairly discriminatory • This can be determined by providing the reasons for the provision and will also show its legitimacy • It can also be relied on where it gives effect to one of the grounds of justification listed in the EER • An employer will however not succeed in relying on collective bargaining/agreement in and of itself as a ground of justification as it will have to explain the reasons for the provision / rationale • Collective bargaining must further comply with regulation 7(2) in that it must not be biased against employees on the prohibited grounds and it must be applied in a proportionate manner.

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