Employers often deal with disputes referred to the CCMA as an unfair labour practice relating to benefits. The CCMA and Labour Court have however faced much uncertainty over the years with what constitutes a “benefit” in terms of Section 186(2) of the Labour Relations Act 66 of 1995.
The uncertainty surrounding the concept of a “benefit” was not created by the Courts, but rather by the legislature. The reason for this is that the concept was not specifically defined by legislature and as a result, had a wide and vague ambit. In previous decisions though, the Courts upheld a more restrictive interpretation of “benefits” to maintain the divide between disputes of interest and disputes of rights. This was to ensure that issues that should be the subject of negotiation could not become issues that may be decided by an Arbitrator.
In the past, the Courts insisted that a benefit was something arising out of a contract or embedded in law. However, in the precedent case of APOLLO TYRES SOUTH AFRICA (PTY) LIMITED VS CCMA 2013 BLLR 434 (LAC), the Court had to determine what actually constituted a benefit, and whether a benefit was limited to an entitlement which arises out of a contract or law.
In this case, it was found that an early retirement scheme was a benefit, although the Employee at that stage did not have a contractual entitlement to that benefit, and that the benefit was also subject to the Employer’s discretion. What became clear from this case is that the jurisdiction of an unfair labour practice cannot be used to assert an entitlement to new benefits, new forms of remuneration or new policies.
Under the current unfair labour practice regime, the conduct of the Employer may be scrutinized by the CCMA in at least two instances:
- When an Employer fails to comply with a contractual obligation, entitlement or right that an Employee may have in terms of a statute; and
- When an Employer exercises a discretion under the contractual terms of a scheme conferring a benefit, including situations where the Employer enjoys a discretion in terms of benefits provided in terms of a policy or practice (rights created judicially).
Over the years, there have been different interpretations as to what Arbitrators consider a “benefit”, and whether the CCMA would have jurisdiction to entertain the dispute because of what the term “benefit” could possibly encompass. It was through the Courts that the answer of what constituted a “benefit” became clearer. A few notable cases over the years are cited as follows:
In 1997 – Schoeman v Samsung Electronics SA (Pty) Ltd  10 BLLR 1364 (LC), the Labour Court held that the term benefit could not be interpreted to include remuneration. It stated that a benefit is something extra from remuneration.
In 1998 – Gaylard v Telkom South Africa Ltd  9 BLLR 942 (LC), the Labour Court endorsed the decision in Samsung and held that if benefits were to be interpreted to include remuneration then this would curtail strike action with regard to issues of remuneration.
In 2000 – Hospersa v Northern Cape Provincial Administration (2000) 21 ILJ 1066 (LAC), the Labour Appeal Court held that the term “benefits” referred only to benefits which exist “ex contractu” or “ex lege” (out of contract or law) but did not include a hope to create new benefits. The Courts adopted this approach in order to maintain the separation between a dispute of interest and one of mutual interest, the latter being subject to arbitration whilst the former is subject to the collective bargaining process (strike action).
In 2005 – Protekon (Pty) Ltd v CCMA  7 BLLR 703 (LC), the Labour Court held that the term remuneration as defined in Section 213 of the LRA is wide enough to include payment to employees, which may be described as benefits. The Labour Court remarked that the statement in Samsung to the effect that a benefit is something extra from remuneration goes too far.
In 2012 – South African Post Office Ltd v CCMA and others (2012) 33 ILJ 2970 (LC), the Court noted that there had been cases which held that an “acting allowance” did not constitute a “benefit”. The court also referred to case law which stated that an acting allowance would constitute a benefit if the employees showed that they had a right to same arising from contract or in law.
Furthermore, in 2013 – Apollo Tyres SA (Pty) Ltd v CCMA and others (2013) 34 ILJ 1120 (LAC), it was argued that the definition of remuneration in the LRA was wide enough to cover wages, salaries and most if not all wages and benefits, and that many such benefits were an essential part of employment contracts and constituted an integral part of the employment package offered to employees.
In 2014 – NUMSA obo Jooste / Atlantis Foundries (Pty) Ltd (2014) 35 ILJ 829 (BCA), the Arbitrator ruled that the CCMA did have jurisdiction to deal with a case where the practice of awarding the Applicant an acting allowance when he performed work at a higher grade afforded an “advantage”. The Arbitrator relied on case law that a “benefit” could include an advantage or privilege to which the employee was entitled as a right or granted in terms of a policy or practice subject to the employer’s discretion.
More recently in 2016 – Independent Municipal & Allied Trade Union obo Nzimande / Johannesburg Road Agency (JRA) (2016) 25 CCMA 6.7.8, the Commissioner held (in accordance with the South African Post Service and Apollo cases above) that since the claim arose in contract, it fell within the scope of the “benefits” and the distinction between “benefits” and “remuneration” is an artificial and rigid distinction.
Although the Courts have reached different conclusions over the years as to what constitutes a “benefit”, it is clear that the Courts’ decisions have placed more of an emphasis on the Employers’ actions and the unfairness of such acts or omissions. Previously, Arbitrators seemed to have taken a narrower interpretation by holding that certain allowances are not “benefits”. However, recent judgments seem to agree with the approach that such allowances are regarded as a “benefit” if the Employee can show a right arising in contract or in law, and that a strict distinction between “benefit” and “remuneration” is artificial, as the two concepts do overlap.
Furthermore, that a “benefit” is wide enough to include an advantage/privilege enjoyed by the Employee. Since the recent judgments by the Labour Court and CCMA that currently uphold a wide interpretation of the term “benefit” – the CCMA or Bargaining Council will have the power to scrutinise any discretion regarding a “benefit” that the Employer has under a policy, contract, practice or collective agreement.
Article by: Carl Ranger
Dispute Resolution Official – Bloemfontein