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Instituting claims for damages against Unions

By Neil Coetzer, Partner, Employment Law, Benefits & Industrial Relations, Cowan-Harper Attorneys

 

In the recent case of Professional Transport & Allied Workers Union obo Khoza and others v New Kleinfontein Gold Mine (Pty) Ltd (2016) 37 ILJ 1728 (LC), the Labour Court was required to deal with, inter alia, a counterclaim for damages in terms of section 68(1)(b) of the Labour Relations Act 66 of 1995 (“the LRA”) which had been brought by an employer that had suffered loss arising from an unprotected strike engaged in by the Union, PTAWU.

 

The Labour Court, after examining the evidence, found that the strike called by the Union and engaged in by its members was indeed unprotected since it was bound by a peace clause in a collective agreement concluded between the employer and NUM, the majority Union at the employer’s workplace. In its claim, the employer alleged that if the unprotected strike had not taken place it would have been able to mine approximately 32.52 kilograms of gold which, at that stage, it could have sold for R426 000.00 per kilogram. After deducting the operational costs, the employer calculated that its losses amounted to R9 888 564.00 as a result of the two day strike. The Union was unable to contest these figures. During legal argument, the employer submitted to the Court that it was prepared to accept a figure of 30% of the loss as compensation for damages inflicted by the Union and its members, which would still amount to a figure in excess of R3 million.

 

The Court considered the merits of the claim and referred to the judgment of Algoa Bus Co (Pty) Ltd v Transport Action Retail & General Workers Union & Others (2015) 36 ILJ 2292 (LC) where the Labour Court had previously laid down certain guidelines in respect of claims for damages against Unions in terms of section 68(1)(b) of the LRA. In that case, the Labour Court ordered the Union to pay an amount of R1 406 285.33 to the employer as a consequence of damages caused by an unprotected strike.

 

The Court however found that the present case was different to the Algoa Bus case. In evaluating the evidence before it, the Court found that the employer had not advised the Union either prior to or during the unprotected strike that it would institute a damages claim in terms of section 68(1)(b) of the LRA. After considering the Union’s financial statements and its ability to repay any possible damages, the Court accordingly found as follows:-

 

“[79]    While unions cannot escape liability simply because it would be onerous financially, it is important that compensation claims are not used as a device to cripple a union’s ability to operate or to deal it a terminal blow. While I am reluctant to allow a union to escape the consequences of pursuing the unprotected strike, I am also concerned that the issue of liability for compensation under s68(1)(b) was only raised with it after the event, at a stage when PTAWU could not have done anything to minimise its exposure to such liability. Had it been made aware of the potential liability faced at an earlier stage that might well have concentrated the minds of the union leadership to consider more seriously the wisdom of persisting with the strike action.”

 

The Court was therefore of the view that it would not be just and equitable to order the Union to pay compensation for damages caused by it and its members. The claim for damages was accordingly dismissed.

 

Despite the fact that section 68(1)(b) permits employers (and others) to institute claims for damages arising out of unprotected strikes, the remedy has not been utilised all that often. While there may be varied reasons for this, it appears that damages claims against Unions have increased in recent years.

 

The judgments in PTAWU and Algoa Bus serve as a useful guide for employers in understanding the requirements for succeeding in a claim for damages. While section 68(1)(b) makes no mention of an employer having to notify a Union of a possible claim for damages, the Court appears to have imported this additional requirement into our law. Unions should also take note of the judgments as it could have particularly serious consequences for Unions that fail to comply with the provisions of the LRA in regard to strikes.

 

For more information please contact Neil Coetzer at This email address is being protected from spambots. You need JavaScript enabled to view it. 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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