Passenger Rail Agency of South Africa v Commission for Conciliation, Mediation and Arbitration and Others

PRASA employed the employees (third to 164th respondents) on fixed-term contracts. When section 198B of the Labour Relations Act came into effect on 1 January 2015, the employees remained employed but were not required to sign new fixed-term contracts. Trade unions (SATAWU and UNTU) referred disputes to the CCMA which were consolidated. On 7 April 2016, the parties concluded a settlement agreement under the PRASA Bargaining Forum covering various disputes including the appointment of fixed-term contract workers. The agreement provided for a study to verify numbers of fixed-term contract workers to be absorbed and compliance with recruitment policies. The settlement agreement contained a dispute resolution clause requiring disputes about interpretation or application to be resolved under the PRASA Bargaining Forum Constitution. The settlement agreement was made an order of court on 8 August 2017. On 8 and 22 February 2018, groups of employees (without union assistance) referred disputes to the CCMA seeking to be declared permanent employees and claiming payment of benefits (provident fund contributions and bonuses) from 1 April 2015. The arbitrator dismissed PRASA's point in limine that the settlement agreement precluded the dispute, and made an award finding the employees deemed permanently employed from 1 April 2015, ordering payment of R35,455,140.00 and requiring PRASA to enrol employees in the provident fund. PRASA sought review of the award.

• Whether the arbitrator had jurisdiction to entertain the dispute given the existence of a settlement agreement with a dispute resolution clause
• Whether the dispute was properly characterized as a section 198B dispute or an unfair labour practice dispute
• Whether the arbitrator had power to grant retrospective compensation for benefits under section 198B of the LRA
• Whether the arbitrator erred in law by conflating the status of indefinite employees with fixed-term employees under section 198B(8)(a)
• Whether the arbitrator committed a gross irregularity by treating the matter as an unfair labour practice without following the proper conciliation and arbitration process for such disputes

1. Condonation for the late filing of the review is granted. 2. The award issued by the second respondent on 17 July 2018 under case numbers WECT2826-18 and WECT3271-18 is reviewed and set aside. 3. There is no order as to costs.

1. A Commissioner cannot assume jurisdiction to arbitrate an interpretation and application dispute relating to a settlement agreement outside of section 24 of the LRA. Where parties have agreed to a specific dispute resolution mechanism in a settlement agreement, disputes about interpretation or application of that agreement must be resolved through the agreed mechanism. 2. Section 198B of the LRA only applies to employees employed on fixed-term contracts. Once employees are deemed to be permanently employed (whether by concession or determination), section 198B ceases to apply to them. 3. Section 198B(8)(a), which provides that fixed-term employees must not be treated less favourably than permanent employees performing similar work, does not apply to claims by indefinite/permanent employees seeking equal treatment with other permanent employees. 4. Section 198B and 198D do not provide arbitrators with power to grant retrospective compensation for benefits to employees deemed to be permanently employed. 5. A Commissioner commits an error of law and/or gross irregularity by applying remedies available under unfair labour practice provisions to a section 198B dispute, particularly where the dispute was never properly conciliated or arbitrated as an unfair labour practice. 6. Members of trade unions are bound by settlement agreements concluded by their unions by virtue of section 23 of the LRA.

The court noted that settlement agreements concluded under the auspices of bargaining forums reflect collectively bargained processes that should be respected. The court observed that employees may have been disillusioned with their unions' handling of the matter (particularly after a failed contempt application) and decided to pursue relief outside the collectively bargained process, but this did not release them from the settlement agreement's binding effect. The court also noted sympathetically that the underlying issue of indefinite employment and benefits was clearly important for the employees and they were not assisted by their trade unions in either the CCMA or the court proceedings - this informed the decision not to make a costs order against them. The judgment contains observations about the purpose of section 198B in protecting non-standard employees from abuse of fixed-term contracts and the vulnerability such employees experience. The court noted that in unfair labour practice disputes concerning benefits, the main concern is the use or misuse of discretionary power by employers, requiring examination of whether discretion was exercised fairly rather than arbitrarily, capriciously or inconsistently - an enquiry the arbitrator did not conduct.

This case provides important clarification on the scope and application of section 198B of the LRA. It establishes that section 198B only applies to employees on fixed-term contracts and ceases to apply once employees are deemed to be permanently employed. The judgment clarifies that section 198B(8)(a), which prohibits less favourable treatment of fixed-term employees compared to permanent employees, does not apply to claims for equal treatment among permanent employees. The case also reinforces principles regarding interpretation and application disputes arising from settlement agreements - such disputes must be resolved through the dispute resolution mechanism specified in the agreement, not through fresh referrals to the CCMA on different grounds. The judgment emphasizes that commissioners cannot assume jurisdiction outside proper statutory processes and cannot convert section 198B disputes into unfair labour practice disputes to access broader remedial powers. It confirms that settlement agreements, particularly those made orders of court, bind members of signatory trade unions. The case is significant for its analysis of when a dispute has been properly conciliated and the limits on arbitrators' powers to grant retrospective compensation in the absence of express statutory authority.