Alarm at ruling on ‘scab’ labour
Economists have warned that a Constitutional Court judgment on replacement labour during a strike could have far-reaching consequences for SA and discourage new investments.
The Constitutional Court ruled on Tuesday that employers may not use “scab labour” during a lockout while workers are on strike. The unanimous judgment, written by judge Owen Rogers, held that strikes are constitutionally protected while employers’ right to lockouts is not.
Stanlib chief economist Kevin Lings said the judgment adds to the “burden of doing business in SA, on top of load-shedding and Transnet. It’s a discouraging environment for everyone. In general, SA has a complicated set of labour legislation, it’s extensive and all of that adds to the complexity of doing business.”
The court case arose out of a 2020 dispute between striking workers belonging to the National Union of Metalworkers of SA (Numsa) and their employer, Trenstar, a logistics company for Toyota. After a strike over a demand for a one-off gratuity, Numsa gave notice to Trenstar that its members would be returning to work.
On the same day, Trenstar responded that it would lock out Numsa members on their return. The company’s lawyers said at the time that because the lockout was a “response” to the strike, Trenstar was allowed to use replacement labour.
In law, during lockouts, employers may not use replacement labour to perform the work of those workers it has locked out. There is, however, one exception: when the lockout is a “response” to a strike.
Lings said businesses took the decision to use replacement labour in the “interest of business. They are doing that because they are trying to look at the business in total, that is, what’s good for the outcome of business as a whole. There is no doubt from time to time that is going to upset some participants in business, including labour unions,” he said.
He argued that the Constitutional Court judgment could result in business owners being
reluctant to expand their operations and take on additional employment.
“If you are having difficulties with labour unions, you will be reluctant to expand your labour base. Over time, you are going to ask yourself how do I increase technology in my business, how do I automate it and introduce robotics, as that would lessen the complication labour brings to your business,” Lings said.
The judgment “discourages new investments into the market. It is prohibitive to a start-up business and discourages people from entering the industry, or expanding their operations when they are in business.”
Econometrix chief economist Azar Jammine said that considering the unemployment levels in SA, “no doubt the labour regime is too tough” and adds to the cost of doing business.
Previously, Numsa argued in the labour court that the strike was over and thus the replacement labour was unlawful and unnecessary. Trenstar, however, argued the strike had merely been suspended, not fully terminated. It therefore was allowed to use replacement labour in response to a continued strike.
The labour court ruled in favour of Trenstar, not accepting that mere suspension of a strike negated the lawful use of replacement labour.
Despite the dispute being resolved, Numsa appealed to the Labour Appeal Court. It dismissed the matter as moot and said that despite its size Numsa did not represent the broader labour community.
More recently in the Constitutional Court, Numsa argued that even though the matter was moot, the determination by the apex court would affect everyone involved in collective bargaining. It noted that replacement labour during lockouts lowers the efficacy of strikes.
Trenstar argued that there is a difference between suspended and terminated strikes. The workers had indicated only a “suspension” of their strike, which could be reinstituted at any time. According to Trenstar, if the court followed Numsa’s logic, a lockout in response to a strike would be legally impossible and striking workers could simply suspend their strike to defeat an employer’s lockout notice and restart it when it is convenient to them.
Rogers noted that the Labour Relations Act does not deal with distinctions between suspended and terminated strikes.
“A ‘strike’ is a state of affairs occurring with a particular purpose,” he wrote. “It either exists or it does not. A ‘strike’ ends… when there is no longer a concerted withdrawal of labour.”
Rogers concluded that because Numsa told the company that its workers would be returning to work this meant the strike was over.
He also held that “the right to use replacement labour no longer existed when the lockout actually began …” This meant employers could not use this as a mechanism to effectively punish workers for striking.
Commenting after the Constitutional Court ruling, Numsa general secretary Irvin Jim said Numsa went to court to prevent employers from abusing lockouts and to ensure they do not “give employers disproportionate and unfair power.”