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SACTWU vs Bakbor

The Garment Manufacturing Association (GMA), a Western Cape based employer organisation, advised its members to insert a clause in individual contracts of employment to circumvent the jurisdiction of the NBC dispute resolution processes in favour of private arbitration. Bakbor, a GMA aligned Western Cape-based clothing company, has attempted to bypass the provisions of the clothing sector Main Agreement in this manner.

The union argued that such a provision was not permissible in law. We argued that if this ‘contract out' provision was allowed to stand, it would open the door for employers to insert other similar provisions on other matters governed by the clothing industry Main Agreement into private employment contracts. This approach, in our opinion, could have potentially rendered the Main Agreement useless in future.

This disagreement was arbitrated under the auspices of the National Bargaining Council (NBC). The arbitrator found in favour of the company and ruled that the NBC did not have jurisdiction to process disputes which arose between the employee and the employer, but that that such disputes should be privately arbitrated in terms of the ‘by-pass clause' contained in the original employment contract.

The arbitrator reasoned that the private arbitration clause contained in the contract of employment constituted a ‘non-negotiable offer of employment' which, when accepted, formed part of a binding agreement between the parties to the employment contract and thereby excluded the jurisdiction of the NBC to determine inter alia, dismissal disputes.

In short, the arbitration award concluded that the NBC lacked jurisdiction because the clause in the employment contract specifically excluded the NBC's jurisdiction. SACTWU then took this arbitration award on review. Our argument was that section 199 of the Labour Relations Act provides that “..contracts of employment may not disregard or waive collective agreements or arbitration awards..”.

We received the judgment in February 2007. Judge AJ Nel ruled in our favour. His ruling set aside the original arbitration award, stated that it was not permissible for the company to insert such a ‘by-pass clause' in the employment contract and confirmed that the NBC does have jurisdiction to deal with the matter. The judge also awarded costs to the union.

Our attorneys are of the written opinion that the SACTWU vs Bakbor judgment is important to the industry itself as it establishes the following two key principles:

1. That non-parties are bound by the provisions of the main agreement and cannot contract out of its provisions and that

2. The approach adopted by the GMA whereby employers would insert a clause in the individual contract of employment ousting the
    jurisdiction of the NBC in favour of private arbitration is found to be contrary to the section 199 provisions of the Labour Relations