The Labour Appeal Court has set aside a ruling ordering the Commission for Conciliation, Mediation and Arbitration (CCMA) to pay a former commissioner over R176,000 in salary arrears after finding that the Labour Court had wrongly treated a collective agreement as the contractual basis for his remuneration claim.
The appeal concerned SN, who had challenged the salary he received after transitioning from a part-time CCMA commissioner to a full-time commissioner.
SN had approached the Labour Court arguing that he was entitled to be paid at the P6 salary level.
He advanced two alternative arguments.
His first argument was that there was a tacit, implied or express term in his employment contract that his remuneration would not be lower than what he had earned as a part-time commissioner.
Alternatively, he relied on the CCMA’s Wage and Substantive Agreement (WSA), concluded with the Commission Staff Association in January 2018.
The Labour Court rejected his argument that a tacit contractual term entitled him to maintain his previous earnings.
However, it upheld his alternative claim and found that the WSA applied to him once he became a full-time commissioner and entitled him to remuneration at the 80th percentile of the P6 level.
The court consequently ordered the CCMA to pay him R176,174.32, representing the difference between the remuneration he received and the amount it found he should have received under the WSA.
The CCMA appealed the finding.
SN disputed his salary from the outset
SN was appointed as a part-time Level B commissioner in July 2017 for a fixed term ending in June 2023.
In October 2020, he successfully applied to become a full-time commissioner and was transferred from the CCMA’s Cape Town regional office to Tshwane. Both changes took effect on 1 December 2020.
When he became a full-time commissioner, he was placed on an annual package of over R615, 000, equivalent to over R51,000 a month at the P7 level.
He disputed the remuneration from the beginning.
According to his evidence, he had earned about R61,500 a month when fully booked as a part-time commissioner, based on a daily rate of a little over R2,900 for 21 days.
He also maintained that he should alternatively have been placed at the P6 level.
SN initially refused to sign the employment contract because he regarded the salary as inconsistent with the grade attached to his appointment.
After discussions with the CCMA’s human resources manager, he eventually signed the contract on January 28, 2021, but inserted a handwritten rider stating that there was a dispute over the remuneration and that his signature should not be regarded as acceptance of the offer.
The CCMA rejected his request for an adjustment and maintained that he had been correctly placed under its salary progression framework.
He continued working and was paid R51,281 a month until he was dismissed for misconduct on February 22, 2022.
Appeal centred on source of salary entitlement
The Labour Appeal Court said the central problem with the Labour Court’s decision was that it had not identified the contractual source of SN’s alleged entitlement to P6 remuneration.
The appeal court noted that remuneration was an essential term of an employment contract and that SN had expressly rejected the remuneration offered by the CCMA.
It said the Labour Court should therefore first have determined whether the parties had reached agreement on the remuneration obligation before deciding what salary SN should have received.
“Absent a cogent answer to that question, the foundation for enforcing the alleged contractual bargain becomes suspect,” the court found.
The Labour Appeal Court pointed out that the Labour Court had rejected SN’s claim based on a tacit term and had also found no express agreement to remunerate him at the P6 level.
It therefore effectively imposed a remuneration term that had not been shown to arise from an agreement between the parties.
Collective agreement dispute followed a different legal route
The appeal court also found that the Labour Court had conflated two different legal jurisdictions.
SN had pursued his case as a contractual claim under section 77(3) of the BCEA.
But after rejecting his contractual claim, the Labour Court determined that the WSA applied to him, interpreted its provisions and used that interpretation to establish his entitlement to P6 remuneration.
The Labour Appeal Court said a dispute concerning the interpretation and application of a collective agreement falls under section 24 of the Labour Relations Act (LRA).
It stressed that jurisdiction depends on the true nature of a dispute rather than the label given to it by a litigant.
The court said the Labour Court should have determined whether SN had established a contractual entitlement to P6 remuneration.
Instead, it found that the Labour Court had moved from interpreting the WSA directly to concluding that SN was contractually entitled to the resulting remuneration.
“The Labour Court never answered that question,” the appeal court said, referring to the contractual source of the alleged entitlement.
WSA was not automatically part of employment contract
The Labour Appeal Court further found that the WSA was a collective bargaining instrument and was not, without more, a term of SN’s individual employment contract.
The issue was therefore not simply whether the WSA supported his interpretation of the salary scales.
The critical question was whether he had established a contractual right, enforceable under section 77(3) of the BCEA, to remuneration at the level he claimed.
The court found that the Labour Court had not explained how the WSA had become incorporated into SN’s employment contract or how it created the specific contractual entitlement he sought.
Instead, the Labour Court had effectively created the right by interpreting and applying the WSA and then enforced it as though it were a contractual right.
The appeal court held that this approach blurred the distinction between contractual disputes under section 77(3) of the BCEA and disputes about collective agreements under section 24 of the LRA.
Labour Court order overturned
The Labour Appeal Court concluded that the Labour Court had materially misdirected itself by granting relief on a legal basis that was not supported by the cause of action pleaded by SN.
It said that, once the alleged tacit contractual term had been rejected, the Labour Court had to identify another contractual basis for the P6 entitlement.
It failed to do so.
Instead, it entered the terrain of interpreting and applying the WSA, which was a collective-agreement dispute regulated by section 24 of the LRA.
The Labour Appeal Court therefore upheld the CCMA’s appeal and set aside the Labour Court’s order.
The substituted order dismissed SN’s claim and ordered him to pay the CCMA’s costs.
The appeal court also ordered SN to pay the CCMA’s costs in the appeal.
sinenhlanhla.masilela@iol.co.za
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