Facts

A group of Woolworths employees were retrenched in 2012, prompting them to file an unfair retrenchment dispute in the Labour Court. The matter eventually made its way to the Constitutional Court, where the employees were found to have been unfairly retrenched and their reinstatement was ordered. The reinstatement was subject to negotiations for a new flexi-time employment contract, which had already been agreed to by other employees. The employees sought to maintain benefits from their previous full-time employment contracts, including their previous medical aid scheme and a retirement age extension from 60 to 63.

Woolworths, however, insisted that these benefits could not be reinstated under the new flexi-time contract, especially with the rest of the workforce already having moved to a different medical aid scheme.

Following at least two years of failed negotiations, in December 2020 Woolworths issued a lock-out notice under section 64(1) of the Labour Relations Act 66 of 1995 (LRA) arguing that the negotiation process had reached an impasse, necessitating a lock-out. This involved a refusal to allow the reinstated employees to return to work under the pre-existing full-time contract terms; instead insisting on the new terms under the flexi-time contract. This effectively halted the employees’ return to work until an agreement could be reached.

Aggrieved by the lock-out, the employees referred an unfair labour practice dispute to the Commission of Conciliation Mediation and Arbitration (CCMA). Woolworths challenged the CCMA’s jurisdiction to entertain the dispute in that it was not, in fact, an unfair labour practice dispute but was rather a mutual interest dispute. This argument was dismissed by the CCMA and taken on review by Woolworths, where the Labour Court reasoned that the dispute did not satisfy the definition of an unfair labour practice as set out in section 186(2)(a) of the LRA. In other words, the dispute did not concern the provision of benefits.

The outcome was taken on appeal. The LAC was tasked with determining whether the employees’ claims for reinstating benefits under their pre-existing full-time contracts constituted an unfair labour practice under section 186(2)(a) of the LRA. The employees argued that Woolworths’ refusal to provide these benefits amounted to an unfair labour practice. Woolworths, on the other hand, contended that the dispute was one of mutual interest and should be resolved through collective bargaining and industrial action. The court also had to address whether the employer’s lock-out notice was lawful, given the ongoing negotiations over the flexi-time contracts.

The LAC found the following:

• The dispute was one of mutual interest and not an unfair labour practice dispute as the employees’ claims were not deemed acquired rights, but rather demands for inclusion in the flexi-time contracts, making them subject to ongoing negotiation.
• Woolworths’ lock-out was lawful as it followed failed negotiations over the flexi-time contracts.

Key takeaways

The LAC’s finding reaffirms an employer’s right to negotiate new terms and conditions, especially when dealing with changes to employment contracts, and emphasises the importance of resolving such disputes through collective bargaining.

Employers are legally entitled to issue lock-out notices if negotiations fail and disputes over terms of employment – such as benefits – arise, especially if these disputes fall within the realm of mutual interest and not acquired rights. However, employers must engage in good faith negotiations with employees regarding changes to contracts and benefits. Employers should be proactive in addressing disputes before they escalate and in considering the practical implications of reinstating benefits, ensure that all decisions are made in good faith and within legal boundaries.