Transport and Allied Workers Union of South Africa v PUTCO Limited

PUTCO Limited, a bus operator, was a member of the South African Road Passenger Bargaining Council. TAWUSA, a trade union representing 26% of PUTCO's employees, was also initially a member of the Bargaining Council but terminated its membership in August 2012. In April 2013, when wage negotiations at the Bargaining Council reached an impasse, SATAWU and TOWU (other trade unions) issued strike notices. TAWUSA informed PUTCO that its members would not participate in the strike. On 19 April 2013, PUTCO issued a lock-out notice to all employees, including TAWUSA members, in support of the employer's wage proposals at the Bargaining Council. TAWUSA's general secretary confirmed that TAWUSA members would not strike and that TAWUSA was not a party to the Bargaining Council dispute. PUTCO proceeded to lock out TAWUSA members on 21 April 2013. There was a recognition agreement between PUTCO and TAWUSA that recognised minimum terms were negotiated at the Bargaining Council.

• Whether the Labour Relations Act permits an employer to lock out members of a trade union that is not a party to a bargaining council where a dispute arose and was referred for conciliation
• Whether section 64(1) read with section 213 of the LRA allows a lock-out of employees whose trade union was not party to the dispute at the bargaining council
• What constitutes a 'demand' for purposes of the definition of lock-out in section 213
• Whether a lock-out notice can constitute both a notice and a demand
• Whether TAWUSA was a 'party to the dispute' by virtue of its interest in the outcome of bargaining council negotiations
• The application of the principle of majoritarianism to lock-outs
• Whether parity of reasoning applies between the constitutional right to strike and statutory recourse to lock-out

The Constitutional Court granted leave to appeal, allowed the appeal, set aside the Labour Appeal Court judgment, and restored the Labour Court order granting the interdict preventing PUTCO from maintaining the lock-out against TAWUSA members. PUTCO was ordered to pay TAWUSA's costs in the Constitutional Court, including costs of two counsel where applicable. The order was: (1) Condonation granted; (2) Leave to file supplementary written submissions refused; (3) Leave to file supplementary affidavit refused; (4) Leave to appeal granted; (5) Appeal succeeds; (6) Labour Appeal Court order set aside and replaced with "The appeal is dismissed with costs"; (7) Respondent to pay applicant's costs including two counsel.

The binding principles are: (1) A lock-out under section 213 of the LRA requires that a demand be made to the employees being locked out; the purpose of a lock-out is to compel employees to accept an employer's demand in respect of a matter of mutual interest. (2) Section 64(1) of the LRA requires that an issue in dispute be referred for conciliation before industrial action (strike or lock-out) can occur. The parties to the dispute referred for conciliation remain the same parties throughout the dispute resolution process, including during any subsequent industrial action. (3) An employer may only lock out employees who are parties to the dispute that was referred for conciliation in terms of section 64(1)(a). Notice under section 64(1)(c) can only be given to employees who were party to the bargaining council where the dispute arose and was referred for conciliation. (4) A trade union that is not a member of a bargaining council where a dispute has arisen and been referred for conciliation is not a party to that dispute, even if it has an interest in the outcome of negotiations. Such interest amounts to a mere hope or expectation (spes). (5) A lock-out notice cannot constitute both a notice and a demand simultaneously - these are distinct concepts in the LRA. A demand must precede recourse to a lock-out. (6) The principle of majoritarianism, while important in the LRA, does not operate to make a non-party to a bargaining council into a party to a dispute arising at that council for purposes of lock-outs.

The Court made several non-binding observations: (1) The lawfulness of clause 2.2 of the Bargaining Council constitution, which purported to bind all employees of employer organisation members regardless of union affiliation, is questionable. The LRA does not empower a bargaining council to conclude collective agreements binding non-parties, otherwise section 32 (ministerial extensions) would be rendered ineffective. (2) The Court acknowledged that its interpretation may place employers in difficult positions, including having to distinguish which employees can be locked out, potentially having to keep operations running for small groups of non-striking employees, or dealing with complete shutdowns while still paying wages. However, these consequences flow from the clear wording of the LRA and it may be in employers' interests to encourage trade unions to join bargaining councils. (3) The Court noted that while section 32 extensions of collective agreements may eventually benefit non-party unions, this possibility does not make them parties to the underlying dispute, as extensions only occur after collective agreements are concluded and are not foregone conclusions. (4) The Court distinguished Moloto, noting that case dealt with whether employees who did not issue strike notice could join a strike (permitted to counter-balance employer power), whereas employers have multiple "weapons" beyond lock-outs including dismissal, replacement labour, and unilateral changes to terms and conditions.

This judgment is significant because it clarifies the proper interpretation of sections 64(1) and 213 of the LRA regarding lock-outs. It establishes that employers cannot lock out members of trade unions that are not parties to a bargaining council where a dispute arose and was referred for conciliation. The judgment reinforces the importance of the referral and conciliation process in the LRA's scheme for orderly collective bargaining. It clarifies that parties to a dispute must remain the same throughout the dispute resolution process, from conciliation through to industrial action. The case distinguishes between the constitutional right to strike and the statutory recourse to lock-out, confirming they do not have equal status. It also clarifies the limited application of the majoritarianism principle in the context of lock-outs and strikes. The judgment resolves a divergence in Labour Court opinions on this issue and provides important guidance for employers, trade unions, and bargaining councils regarding the lawful exercise of lock-outs.