Changing terms and conditions of employment – The pitfalls

labour-guideBy Neil Coetzer, Senior Associate, Employment Law, Benefits & Industrial Relations, Cowan-Harper Attorneys

In the recent case of ICHAWU & Others v CCMA & Others (case C308/13, 29 July 2015), the Labour Court was faced with a situation which it summarised as follows:-

“An employer imposes unilateral changes to terms and conditions of employment on its workers. The workers refuse to comply. Does that constitute gross insubordination?”

The Union, representing nine former employees of the employer, argued that such a refusal could not constitute gross insubordination or any misconduct at all. The question arose after the employer, who was experiencing financial difficulties, indicated its intention to introduce short time which would have the effect of reducing the employees’ working week from five days to four.

The employer consulted with the Union on this issue. When the Union did not agree to the proposed change, the employer implemented the new roster unilaterally. In response, the Union referred a dispute to the CCMA in terms of section 64(4) of the Labour Relations Act, and required the employer to restore the previous terms and conditions of its members.

The employer however refused to do so and instead issued an instruction to the employees to report for duty in accordance with the new roster. When the employees refused to do so, the employer issued each of the employees with three separate written warnings. Following disciplinary hearings, all nine employees were dismissed.

The employees subsequently referred an unfair dismissal dispute to the CCMA. At the arbitration, the employees confirmed that they had refused to work short time, but denied that this amounted to misconduct as the employer had unilaterally changed their terms and conditions of employment.

Notwithstanding this, the Commissioner concluded that the instruction given by the employer was valid and that the refusal by the employees to work in accordance with that instruction constituted misconduct and saw ‘no reason to interfere with the sanction of dismissal’.

The employees subsequently took the decision on review to the Labour Court where the pertinent question before the Court was whether the instruction given by the employer was a reasonable one.

The Court considered the various options that were available to both parties in regard to, one the one hand, challenging the unilateral change to terms and conditions of employment and, on the other hand, implementing those changes.

The Court found that the Commissioner had misconceived the nature of the enquiry by unreasonably finding that the employer was entitled to implement the proposed changes since it had consulted with the Union on that issue, even though no agreement had been reached.

By doing so, the Commissioner disregarded the fact that the employer had unilaterally imposed new terms and conditions of employment, thus making the instruction to comply with those terms unreasonable.

The Court accordingly reviewed the decision and set it aside and also awarded each employee 12 months compensation.

The Court pointed out that in circumstances such as those faced by the employer in this case, employers could resort to a lock-out in order to reduce terms and conditions of employment. It also stated that in certain instances, where a change in terms and conditions of employment is necessitated by operational requirements, an employer could embark on a section 189 process and offer the revised terms and conditions of employment as alternatives to retrenchment. There are, however, several complicating factors which must be considered and employers should therefore seek legal assistance before attempting to implement revised terms and conditions of employment.

For more information please contact Neil Coetzer at  ncoetzer@chlegal.co.za or (011)  783 8711 /(011) 048 3000

Article published with the kind courtesy of Cowan-Harper Attorneys www.cowanharper.co.za

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