13 September 2021 by , and Employment Law Alert

Embarking on a lock-out action while subject to a collective agreement: The do’s and don’ts

In the recent judgment of South African Commercial Catering and Allied Workers Union (SACCAWU) obo Members v Southern Sun Hotel Interests (Pty) Ltd [2021] ZALCJHB 259 (26 August 2021), the Labour Court handed down a judgment regarding an employer’s institution of a lock-out against employees for their refusal to reach an agreement indemnifying the employer against its failure to implement a wage increase mandated by a collective agreement.

The South African Commercial Catering and Allied Workers Union (SACCAWU), acting on behalf of its members, approached the Labour Court on an urgent basis seeking an order to declare the lock-out instituted by Southern Sun unprotected and unlawful in terms of section 68(1)(a)(ii) of the Labour Relations Act 66 of 1995 (LRA), and to interdict Southern Sun from further locking out any of its members going forward.

Southern Sun commenced the lock-out action against its employees for reasons stemming from the employees’ refusal to agree to the non-implementation of a collective agreement signed on 13 March 2020. This collective agreement required Southern Sun to implement a 5,5% wage increase for its employees for the period of 1 April 2020 to 31 March 2021.

The hospitality industry has been particularly impacted by the COVID-19 pandemic. As a result, Southern Sun failed to implement the agreed upon 5,5% increase throughout the course of 2020, eventually providing SACCAWU with a notice of termination of the recognition agreement between itself and SACCAWU. In doing so, Southern Sun indicated by implication that no further collective agreements would be negotiated or re-negotiated come 31 March 2021.

Dispute and lock-out notice

Southern Sun then issued its employees with a demand in the form of a “non-implementation” agreement. The employees were required to sign the agreement and thereby consent to Southern Sun’s non-implementation of the 5,5% increase to their wage rate agreed upon in the original collective agreement. The employees were to accept the demand by 21 May 2021. SACCAWU rejected this demand and Southern Sun referred the matter to the Commission for Conciliation, Mediation and Arbitration as a dispute of mutual interest on 27 May 2021. As the dispute remained unresolved after 30 days, Southern Sun issued a 48-hour notice of a lock-out on 27 July 2021, effective 30 July 2021.

It was these steps that resulted in SACCAWU successfully challenging the protected status of the lock-out on the grounds that the issue in dispute was regulated by a collective agreement, which resulted in the interdict being granted against the employer. The lock-out was found to be unprotected.

Baloyi AJ pointed out in his judgment that:

the respondent [Southern Sun] has indeed complied with the requisite process set out in section 64 [of the LRA]. This should ordinarily form the basis for a lock-out to be protected. With the collective agreement in place for the period of the increase forming [the] subject matter of the lock-out, the very lock-out certainly lost protection in view of section 65(3)(a)(i) limitations.

Section 65(3)(a)(i) states that “[s]ubject to a collective agreement, no person may take part in a strike or a lock-out or in any conduct in contemplation or furtherance of a strike or lockout if that person is bound by any arbitration award or collective agreement that regulates the issue in dispute.

The issue in dispute was clearly based on the increase in wages of Southern Sun’s employees as agreed to in the prevailing collective agreement.

Southern Sun may have been in a better position had it taken steps to legally terminate the collective agreement before instituting the lock-out notice. This may have prevented section 65(3)(a)(i) coming into play. As pointed out in the judgment, the employees would still have had recourse to claim the unpaid increase under section 77 of the Basic Conditions of Employment Act 75 of 1997 as the terms and conditions of employment in the collective agreement had a bearing on the individual employees’ contracts of employment.

Employers should be mindful of the reach of collective agreements which they conclude. If they have entered into collective agreements that are later found not to be affordable, it is important to ensure that such an agreement includes requisite escape clauses to meet unforeseen changing events. This way an unprotected lock-out can be avoided.

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