While the topic of demarcation disputes can sometimes seem as if they are shrouded as an enigma and can be rather technical in nature, the purpose of this article is to provide a concise and practical understanding of demarcation disputes as well as how an employer goes about referring a demarcation dispute.

The CCMA defines a demarcation as “a ruling made by a CCMA Commissioner determining whether any employer, employee, class of employers or class of employees is engaged or employed in a particular sector. This ruling will determine whether the employer(s) and employee(s) involved are subject to the jurisdiction of the Bargaining Council regulating that sector.” In simplistic terms then, certain industries or certain employers, due to the nature of their trade or the activities which they carry out, belong to certain bargaining councils. These bargaining councils, such as the Metals and Engineering Industry Bargaining Council (MEIBC), for instance, prescribe their own conditions of employment which are applicable to those who are employed in that particular sector. The various Bargaining Councils in the various industries are central to any employment relations between parties in that particular sector. Each bargaining council has a scope in which it defines or categorises which industries or types of activities would fall within the ambit of the scope of application of that council. Demarcation disputes arise when an employer or employee for that matter, do not agree that they fall within the scope or ambit of a specific Bargaining Council and therefore seek to have the CCMA direct that they do not fall within a specific sector and are therefore not subject to a specific Bargaining Council.

When looking at demarcation disputes from a legislative point of view, attention is drawn to Section 62 of the Labour Relations Act (LRA). This Section, together with the various subsections that exist under Section 62, give rise to the process as well as the manner in which a demarcation dispute is dealt with by the CCMA. For instance, should an employer be of the view that either the whole or part of their business activity does not fall within the scope of a particular Bargaining Council, then that employer, as per Section 62 of LRA, would need to refer the dispute to the CCMA for adjudication. To do so, employers need to complete the LRA form 3.23 and serve same on both the relevant Bargaining Council with which they have a dispute as well as the CCMA. LRA form 3.23 is like the more well-known LRA form 7.11, which many employees use to refer to and initiate their respective claims at the CCMA. Once the matter has been referred in accordance with form 3.23, the matter will then be set down at the CCMA. It is important for employers to remember that the burden of proving that the company does not fall within a specific sector rests with the referring party. Consequently, it is highly advised that employers are well prepared to properly ventilate their case with all the necessary evidence. It is further important to remember that it often transpires in demarcation disputes that the Commissioner will schedule an inspection in loco at the premises of the employer to better understand and establish the nature and activities of the business, especially as they relate to the scope of the relevant Bargaining Council.

Seeing as a demarcation ruling can have a significant impact on a respective sector or industry, Section 62(7) of the LRA further prescribes that if the CCMA believes that the issue relating to whether an employer or employee falls within the scope is of substantial importance, then the CCMA must publish a notice in the Government Gazette inviting written representations on the topic within a certain period. Furthermore, Sections 62(9-12) indicate further processes which must be carried out, such as the Commissioner having to consult with NEDLAC before issuing the award.

In the recent case of National Union of Metalworkers of South Africa v Commission for Conciliation, Mediation and Arbitration and Others [2021] ZACC 47, the Constitutional Court was tasked, inter alia, with determining whether or not an arbitration award stemming from the CCMA pertaining to a demarcation dispute relating to whether or not certain employers fell within the scope of the MIBCO or the MEIBC and whether when adjudicating the award on review, the Labour Court had inherent powers to not only set the award aside but to also substitute the award with an order the Court deemed appropriate. While the Constitutional Court, in a majority judgment, agreed that the Labour Court had inherent powers to substitute the award with an appropriate order, the pertinent takeaway from this matter is the fact that when determining a matter relating to demarcation, the end process or the outcome of the process in which a company or sector operates, especially in relation to how that outcome of the process interacts with the industry in which it operates, needs to be evaluated before arriving at a decision as to which industry or sector a specific company belongs.

In summation, demarcation disputes need to each be evaluated against their own respective merits before deciding whether to proceed with the demarcation application or not. Previous awards, as well as the scope and definitions contained in each bargaining council’s agreements, will assist parties when trying to establish whether there exist good grounds to refer a matter for demarcation or not.

Article By: Daniel Van Der Merwe
Provincial Manager – Eastern Cape