In this article we will discuss whether, in the face of an agreement between an employer and an employee in terms of which an employee accepts a demotion to a lower position, the employee is nevertheless entitled to refer an unfair labour practice dispute concerning this demotion to the CCMA.
The facts in Builders Warehouse (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others can be summarised as follows: The employee worked as an Administrative Manager at Builders Warehouse (Pty) Ltd. She was informed by doctors that she was very ill and would most likely have to go to hospital frequently and take various types of medication. Over the next three years her absenteeism increased significantly and her employers became concerned as she was no longer able to do her job effectively, even when she was not absent, due to the side effects of her medication. Builders Warehouse (Pty) Ltd, after having discussions with the employee, suspended her pending an investigation into her capacity to undertake the functions of an Administrative Manager, taking into account her health and performance. Builders Warehouse (Pty) Ltd held an incapacity hearing and the external Chairperson ruled that, due to the employee’s excessive and increasing absenteeism, dismissal was the appropriate sanction. The Chairperson, however, offered her a demotion instead of a dismissal. The employee accepted this demotion in writing.
After this agreement between Builders Warehouse (Pty) Ltd and the employee was concluded, she obtained legal assistance and subsequently complained to the CCMA that Builders Warehouse (Pty) Ltd had committed an unfair labour practice by demoting her.
The question here is whether, in the face of an agreement between Builders Warehouse (Pty) Ltd in terms of which the employee accepted demotion to a lower position, she was nevertheless entitled to refer an unfair labour practice dispute concerning this demotion to the CCMA.
The arbitrator in the CCMA decided that because there was consent to the demotion, the CCMA did not have jurisdiction to hear the dispute. The employee then appealed to the Labour Court and once again to the Labour Appeal Court, of which the outcomes are set out below.
The Labour Court and the Labour Appeal Court looked at Section 186(2)(a) of the Labour Relations Act in this regard, which states the following:
“Unfair labour practice means any unfair act or omission that arises between an employer and an employee involving –
unfair conduct by the employer relating to the promotion, demotion, probation (excluding disputes about dismissals for a reason relating to probation) or training of an employee or relating to the provision of benefits.”
The Labour Appeal Court upheld the judgement in the Labour Court and found that although a binding contract comes into existence when employers and employees settle their differences by agreement, such an agreement does not mean that the CCMA does not have jurisdiction to hear the dispute. The fact that the parties have agreed that the employee accepts demotion is not a complete defence for the employer because the ambit of this unfair labour practice is wide enough to include the implementation of an agreement to accept demotion. The Labour Appeal Court confirmed that the determination of whether a demotion took place, unlike the determination of dismissal, does not require an arbitrator to determine if there was consent or not.
In conclusion, it is clear from the Builders Warehouse case that, although consent is a relevant issue in regard to the merits of a dispute regarding an unfair labour practice, it is not a jurisdictional prerequisite. This means that the CCMA does have the power to hear a matter relating to a demotion even though there was consent thereto.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. (E & OE)
l Builders Warehouse (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others (PA 1/14)  ZALAC
l Labour Relations Act 66 of 1995
 (PA 1/14)  ZALAC.
 (PA 1/14)  ZALAC Par 12.
 Act 66 of 1995.
 Builders Warehouse (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others (PA 1/14)  ZALAC Par 14.
 Builders Warehouse (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others (PA 1/14)  ZALAC Par 13.