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Employers' rights to sue for financial losses incurred...

South Africa

INDUSTRIAL ACTION OP-ED

The rights of employers to sue for financial losses incurred during a protected strike

A landmark Labour Court ruling means that employers are entitled to claim compensation for losses attributed to a strike that has subsequently turned violent and resulted in various offences.

The possibility of strikes, whether protected or unprotected, is an ever-looming threat to South African businesses. These strikes almost always result in some form of financial loss for the business and leave them with very little recourse for recovery.

Section 68(1)(b) of The Labour Relations Act, 1995 (LRA) provides that, if an employer has suffered loss as a result of an unprotected strike or conduct in furtherance of such a strike, it may claim compensation that is “just and equitable” from the responsible party.

However, the question arises whether the section also permits an employer to claim compensation if the strike is protected? This question was considered in the recent decision of the Labour Court in Massmart Holdings Ltd & others v South African Commercial Catering and Allied Workers Union.

In this matter, various companies within the Massmart Holdings group of companies sued the South African Commercial Catering and Allied Workers Union (Saccawu) for the payment of compensation in terms of section 68(1)(b) of the LRA totalling R9,383,454.57; this being compensation sought for losses the companies claim they suffered during the course of a protected strike called by Saccawu. The companies contended that, during the strike Saccawu’s members committed various offences and that their conduct:

  • Was not peaceful;
  • Did not comply with the provisions of the LRA;
  • Did not comply with the Covid-19 regulations in force at the time; and
  • Did not comply with picketing rules determined by the Commission for Conciliation, Mediation and Arbitration (CCMA).

Saccawu excepted the company’s statement of claim on various grounds. Of most importance for the purposes of this article was the argument that the Labour Court does not have jurisdiction to consider claims for compensation in terms of section 68(1)(b) if the strike is protected.

The Labour Court rejected this argument on the basis of its interpretation of section 68(1)(b). It argued as follows:

  • Section 68(1)(b) states that the court has jurisdiction to order the payment of just and equitable compensation for any loss attributable to an unprotected strike “or conduct”. The term “conduct” is not explicitly linked to an unprotected strike. Neither is it qualified as being conduct in furtherance of an unprotected strike;
  • Section 67(6) of The LRA gives unions and their members immunity from any civil legal proceedings in respect of conduct in contemplation or furtherance of a protected strike. However, this does not apply to unlawful conduct in contemplation or furtherance of a protected strike; and
  • Section 69 of the LRA regulates the right to picket and empowers the Labour Court to intervene in disputes concerning pickets. It may make a variety of orders and these are expressly stated to be “in addition” to any relief contemplated in section 68(1) of the LRA.

In closing, the court stated that “it would be anomalous if an aggrieved employer or union was entitled to pursue a claim for compensation in this court under section 68 for loss attributable respectively to a strike or lockout that does not comply with Chapter IV but not for loss attributable to conduct that constitutes a breach of the same Chapter, simply because the strike or lockout is protected.”

Conclusion

The importance of this case is that it demonstrates that employers can now rely upon section 68(1)(b) as a remedy to claim compensation for losses attributed to a strike that has subsequently turned violent and resulted in various offences.

We advise that employers should insert into their picketing rules specific provisions of the LRA that would be breached or other offences that would be committed if a protected strike turns violent. This would assist with establishing an offence and as such proving that the immunities in terms of section 67 do not apply. DM

Kerrie-Lee Olivier is an Associate in the Employment Department of law firm ENSafrica. Article reviewed by Peter le Roux, an Executive Consultant in the department.

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