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13 Jul 2021
BY Brian Patterson AND Nomampondo Banzi

The SAA lockout case trilogy

South African Airways (SOC) Limited ("SAA") is a party to an evergreen regulating agreement between it and the South African Airways' Pilots Association ("SAAPA"), which regulates its pilots' terms and conditions of employment. These terms and conditions of the pilots are more favourable than comparable airlines and over the years, SAA has sought to renegotiate the regulating agreement, with SAAPA thwarting all such attempts.

On 5 December 2019, SAA was placed in business rescue. On 14 July 2020, a business rescue plan was published to turn around SAA and make it a profitable and self-sustaining airline. As part of that turnaround, SAA sought to negotiate new terms and conditions of employment with SAAPA. When SAAPA refused, SAA demanded that SAAPA agree to the termination of the regulating agreement. SAA then implemented a lawful lockout on 16 December 2020 and locked out the SAAPA pilots (with limited exceptions) from 18 December 2020.

On 21 December 2020, SAAPA alleged, in an urgent interdict before the Labour Court, that the lockout is unprotected and unlawful because:

  1. The lockout amounted to a suspension of the pilots' employment contracts which is prohibited by section 136 (2A) (a) (i) of the Companies Act, 2008.
  2. Since SAA ceased operating during the lockdown, there is no “workplace” as envisaged by the lockout definition in section 213 of the LRA.
  3. The SAA lockout notice is invalid. It excludes only certain members of SAAPA and contains demands that differ from and are in addition to the demands previously made by SAA and the terms of its referral to the Commission for Concilaition, Mediation and Arbitration (“CCMA”).
  4. The lockout is in breach of section 65 (1) (b) of the Labour Relations Act, 1995 (“LRA”), which prohibits a lockout if that person is bound by an agreement that requires the dispute to be referred to arbitration. SAAPA contended that SAA is bound by a collective agreement, the resolution of disputes collective agreement of 1999, that requires the dispute to be referred to arbitration.

On 29 December 2020, the Labour Court (per Van Niekerk J) dismissed SAAPA's application for the following reasons:

  1. The lockout does not constitute a suspension of employment contracts. The exclusion of SAAPA's members from the workplace constitutes a breach of contract. A protected lockout indemnifies SAA against the legal consequences that would ordinarily flow from a breach of the employment contract.
  2. The Companies Act limitation precludes a business rescue practitioner from suspending any employment contract but that does not apply to a lockout. Section 136 (2A) of the Companies Act contemplates that agreed changes to employment terms and conditions may be secured during the business rescue. Collective bargaining is a legitimate vehicle to secure consent to changed terms and conditions. The right to industrial action is integral to collective bargaining. Therefore, a business rescue practitioner may engage in collective bargaining and initiate any legitimate economic pressure to press for proposed changes to employment terms.
  3. By virtue of section 5 of the Companies Act and section 210 of the LRA, the LRA trumps the Companies Act and any limitations it imposes on the provisions of the LRA. Therefore, a business rescue practitioner is entitled to lock out employees in terms of the LRA during business rescue proceedings.
  4. The fact that SAA has been placed in business rescue and its operations have been mothballed does not mean that there is no “workplace” in respect of which employees cannot lawfully be locked out of.
  5. The lockout notices issued by SAA are not invalid due to their exclusion of only some of SAAPA's members or because they articulate demands that are substantially different from those that were the subject of the referral by SAA of the dispute between the parties to the CCMA. The referral to conciliation and the notice of lockout reflect the same issues in dispute.
  6. The demands that form the subject of the lockout are demands that call for the termination of the regulating agreement and for new terms and conditions of employment to be negotiated. SAA's demand is not for the interpretation or application of the regulating agreement. Therefore, the substantive limitation on a lockout established by section 65 (1) (b) of the LRA has no application.

SAAPA applied for leave to appeal against the Labour Court judgment. The basis of the leave to appeal application was similar to that relied upon to challenge the lockout's lawfulness.

The court found no reasonable prospect that SAAPA would succeed on appeal or any compelling reasons for the appeal to be heard and therefore dismissed the application for leave to appeal with costs.

On 12 April 2021, SAAPA again urgently approached the Labour Court to challenge the lawfulness of the lockout. In this instance, SAAPA sought a declaration that the lockout was unlawful and to interdict SAA from participating in the lockout and any conduct in furtherance of that lockout. In addition, SAAPA sought an order that SAA be ordered to pay the pilots remuneration from the commencement of the lockout, ie, 12h00 on 18 December 2020.

On this occasion, SAAPA alleged that SAA was precluded from embarking on industrial action during a section 189A process, which prohibits a lockout. The matter was first heard on 15 April 2021 but was postponed to 15 June 2021 as Nkutha-Nkontwana J held that the matter was not a matter of extreme urgency, as SAAPA sought to argue.

Before the hearing date, SAAPA yet again approached the Labour Court on an urgent basis and sought an order declaring that the lockout was not in response to a strike and SAA was precluded by section 76(2) of the LRA from employing replacement labour in respect of locked out pilots. Thlotlhalemaje J dismissed this application and held that SAA could use replacement labour concerning the pilots who were not locked out and were on strike. Again SAAPA sought leave to appeal against this judgment.

The matter eventually came before Prinsloo J on 15 June 2021. Prior to the matter being heard, SAAPA sought to supplement its papers and introduce new relief. This included a declaration that the SAA lockout was not in response to SAAPA's strike. Therefore, SAA was precluded from engaging replacement labour during the lockout, interdicting SAA from engaging replacement labour during the lockout concerning SAAPA members embarking on strike action. Lastly, SAAPA sought a declaration that the non-payment of its members' remuneration from June 2020 to 18 December 2020 and 2019 13th cheques were unlawful.

The Labour Court declined to permit SAAPA to supplement its papers. It found that SAAPA did not make a case for supplementing its papers but solely sought to enhance its case. To supplement its case, SAAPA had to proffer a proper and satisfactory explanation of why the facts in the additional affidavit were not placed before the court, and the court had to be satisfied that there would be no prejudice to SAA that an appropriate costs order cannot remedy. The court also found that there were no exceptional circumstances that justified the introduction of new affidavits.

Concerning the main application, Prinsloo J dismissed the application for want of urgency. In addressing urgency, she commented that the lockout that SAAPA sought to challenge had been in place for almost six months. The fact that SAAPA later devised another cause of action to challenge the lockout did not make the matter urgent. Concerning the relief interdicting SAA from participating in the lockout and any conduct in furtherance to the lockout that mainly pertained to the use of replacement labour by SAA, Prinsloo J held that Thlotlhalemaje J had decided on the issue and that decision was subject to an application for leave to appeal. Concerning the claim for remuneration, Prinsloo J found that there were no exceptional circumstances placed before the court for the matter to be dealt with on an urgent basis. This was even more so when SAAPA did not seek this relief in December 2020 when it first approached the Labour Court. A costs order was made in favour of SAA concerning the costs it incurred regarding the supplementary papers filed by SAAPA.

As things stand, the lockout is lawful, protected, and after some seven months, is the longest lockout in South African legal history. It continues, and there is now some hope that a resolution may be close.

ENSafrica acts for SAA in these matters.

Brian Patterson

Employment | Executive

bpatterson@ENSafrica.com

+27 82 338 9835

 

Nomampondo Banzi

Employment | Senior Associate

nbanzi@ENSafrica.com

+27 82 310 0585