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«THE CONCEPT OF MANAGERIAL PREROGATIVE IN SOUTH AFRICAN LABOUR LAW - John Kinamugire (LLM Environmental Law) 1. Introduction “Managerial ...»

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- John Kinamugire (LLM Environmental Law)

1. Introduction

“Managerial prerogative, or ‘the right to manage’, has two components: the one

concerns the power to manage industrial capital and is founded on the employer’s

position as owner or controller of ‘industrial capital’, the other concerns the power to

command labour or human resources, which derives from contract.”1 An employer owns the capital and has the power to decide how to perform or control his or her affairs. ‘The employer commands capital, information and access to legal advice, whereas an employee works in order that he or she may survive.’2 Employment contract establishes unequal bargaining relationship between employers and employees. The former allocates tasks to the employees that must e done adequately. However, ‘individual employment rights constitute the most far-reaching limitation on the right to manage.’3 Since the beginning of a new South Africa in 1994, the concept of managerial prerogative has been severely restricted. ‘The scope of that prerogative is limited by statue, collective bargaining, considerations of public policy and, of course, the interest of employees.’4 The legislature has interfered in employment relationships in order to maintain the balance of power and protect both the interests of employers and employees.

This research deals with the meaning and justification of managerial prerogative, appointment of employees, affirmative action, changing terms and conditions of employment, dismissal for substantive and procedural fairness, operational requirements, B Jordaan. ‘Managerial prerogative and industrial democracy’ in Industrial Relations Journal of South Africa vol. 11 (1991) 1 at 1 – 2.

EML Strydom. The origin, nature and ambit of employer prerogative (part 2) (199) 11 SA Merc LJ 311 at 311 – 312. See also Paul Pretorius ‘Status quo relief and the industrial court: the sacred cow tethered’ (1983) 4 ILJ 167 at 170.

B Jordaan op cit (n. 1) 3.

Ibid 7.

Available at: http://www.thembosdev.com/articles unfair labour practice, dismissal for poor work performance, corporate retrenchment and restructuring and effect of collective bargaining on the employer.

2. The meaning of and justification for managerial prerogative The term prerogative denotes ‘something which some people are able or allowed to do or have, but which is not possible or allowed for everyone.’5 In the sphere of labour and employment, ‘prerogative’ is usually taken to refer to the right to mange an organisation.6 This concept ‘refers to the right to make decisions regarding the aims of the organisation and the way in which it will achieve these aims.’7 Managerial prerogative ‘is linked to the ability of the employer to control the activities of the employees in the workplace.’8 The employer decides the number of employees needed, when and how to do the work, when to start and finish the work, the standard of work and son on.

The employer has capital and owns or controls the means of production. “The power to order production can probably be explained in terms of the fact that the employer either owns, or in some manner controls, industrial capital, that is the material assets employed in the production process.’9 This power provides the employer with unlimited rights to structure his or her affairs to increase profits. As a result, he or she engages employees to perform the work and achieve great productivity. ‘However, by regarding the employer’s right to manage employees as an automatic consequence of every contract of employment, it was possible for the law of contract to secure and to legitimise that control as having been consented to by the employee.’10 ‘In South Africa, a contract today still serves as the theoretical justification for the employer’s right to manage human resources, but all the law has to rely on in this regard is the somewhat contrived construction of an implied duty upon the employee to obey the employer’s lawful Cambridge Advanced Learner’s Dictionary. Cambridge: University Press, 2003.

EML Strydom. The origin, nature and ambit of employer prerogative (part 1) (1999) 11 SA Merc LJ 40 at 42.



B Jordaan op cit (n. 1) 1.

Ibid 2.

Available at: http://www.thembosdev.com/articles commands.’11 However, the employer does not have absolute rights over the employees.

‘The employer only has those rights over his employees which the relevant contract of employment explicitly or impliedly affords.’12 This is necessary in order to achieve and maintain good relationships between employer and employees.

‘The only thing that seems relatively certain is the fact that the right to manage is fundamentally restricted, both in the interest of employees and society at large.’13 ‘Potentially, individual employment rights constitute the most far-reaching limitation in the right to manage.’14 Statutes, such as the Labour Relations Act (LRA),15 Employment Equity Act (EEA)16 and the Basic Condition of Employment Act (BCEA)17 have severely affected the right of the employer to manage. Case law has also contributed to the limitation of managerial prerogative and provides fairness to both employers and employees. The nest topic deals with some of managerial prerogatives and how they have been restricted.

3. Appointment of employees

‘The right to decide on the appointment of employees vests in the employer.’18 This employer’s right is not absolute. For instance, the employer cannot employ a child who is under 15 years of age19 or appoint any person to perform any forced labour.20 The employment of such person as employees constitutes an offence.21 This protects the interests of society and the individuals concerned.

Ibid 4.


Ibid 6.

Ibid 3.

Labour Relations Act (LRA) 66 of 1995.

Employment Equity Act (EEA) 55 of 1998.

Basic Conditions of Employment Act 75 of 1997.

Port Elizabeth Municipality v Minister of Labour and Another 1975 4 SA 278 (E) at 282 G, see also A Rycroft & B Jordaan. A guide to South African labour law 2ed 1992 at p. 65.

Basic Conditions of Employment Act op cit (n. 17) s. 43 (prohibition of employment of children).

Ibid s. 48 (prohibition of forced labour).

Ibid s. 43 (3) and 48 (3).

Available at: http://www.thembosdev.com/articles

In making appointments for employment, ‘the state may not unfairly discriminate directly or indirectly against anyone on any one or more grounds, including race, gender, sex, pregnancy, marital status, ethnic or social origin, colour, sexual orientation, age, disability, religion, conscience, belief, culture, language and birth.’22 The employer is prohibited from unfairly discriminating in his or her activities.

In Hoffmann v South African Airways,23 the applicant applied for a position as a cabin attendant in the respondent company. He fulfilled all the requirements but he was not appointed to the position due to his HIV/AID status. The respondent tried to justify its decision on commercial grounds. The Constitutional Court (CC) found that the respondent’s conduct constituted unfair discrimination against the applicant and was an infringement of his right to dignity. The CC ordered the respondent to employ the appellant as a cabin attendant with effect from the date of the judgment.24 This judgment warns employers that refusal to appoint a person on the ground of his or her HIV/AIDS status will never be tolerated.

Sometimes an appointment may prove to be bad before the employee has commenced his or her job. In this case, the employer may probably wish to reverse the appointment and get rid of the employee. ‘However, a new employee, even if he has not yet commenced with his duty, does have certain rights in terms of the Labour Relations Act 66 of 1995.’25 This was the issue in the arbitration of Van Deventer and Venture SA Ltd.26 Van Deventer was appointed as a new employee at Venture SA Ltd and his old employer accused him of stealing during his notice period. After discovering this information, the new employer decided to dismiss him, even if he had not yet commenced his employment. Van Deventer approached the Commissioner for Conciliation, Mediation and Arbitration (CCMA) and claimed that he was unfairly Constitution of the Republic of South Africa Act 108 of 1996 s. 9 (3); EEA op cit (n. 16) s. 6 (1).

Hoffmann v South Africa Airways 2001 1 SA 1 (CC).

Ibid 27 E – F, para 61.

A H Dekker. ‘When good appointments go bad: a discussion of van Deventer and Venture SA Ltd’ (2007) 19 SA Merc LJ 372.

Van Deventer and Venture SA Ltd (2007) 28 ILJ 268 (CCMA).

Available at: http://www.thembosdev.com/articles

dismissed. In Wyeth (Pty) Ltd v Manqele and Others,27 the Labour Appeal Court (LAC) held that ‘the definition of employee in s. 213 of the LRA can be read to include a person or persons who has or have concluded a contract or contracts of employment the commencement of which is or are deferred to a future date or dates.’ Thus, an employee is indeed someone who has accepted an offer of employment even if he or she has not started working. This case deviated from the earlier decision in Woolworths v Whitehead (Pty) Ltd,28 which held that ‘a person qualified as an employee only once he became entitled to remuneration.’ This meant that the LRA applied only to an employee who had started working. The arbitrator found that the dismissal of van Deventer was substantively and procedurally unfair and therefore he was awarded compensation. The new employer would have escaped liability if it had held a proper disciplinary inquiry to find out whether or not dismissal was the appropriate sanction. ‘Employees should indeed enter the workplace with clean hands.’29 To achieve this objective, employers must use a proper procedure in making a disciplinary inquiry in the alleged misconduct of new employees, or else they will have to pay compensation for unfair dismissal.

The employer may also take measures to fulfil the purpose of the EEA. In recruiting persons, the employer may take steps ‘to achieve equity in the workplace by promoting equal opportunity and fair treatment through the elimination of unfair discrimination.’30 He or she may also implement ‘affirmative action measures to redress the disadvantages in employment experienced by designed groups, in order to ensure their equitable representation in all occupational categories and levels in the workplace.’31 ‘An employer is furthermore not at liberty to arbitrarily select employees for re-employment where they had been dismissed en masse, e.g. for participating in a strike.’32 The Promotion of Wyeth (Pty) Ltd v Manqele and Others (2005) 26 ILJ 749 (LAC) 765 B, para 52.

Woolworths v Whitehead (Pty) Ltd (2000) 21 ILJ 571 (LAC). Despite the decision in this case, the Labour Court (Jack v Director-General Department of Environmental Affairs [2003] 1 BLLR 28 (LC)) and the CCMA have on occasions found that the contract of employment commenced once the offer of employment had been accepted. See also Greyvenstein and Iliso Consulting Engineers (2004) 24 ILJ 613 (CCMA), Mills and Drake International SA (Pty) Ltd (2004) 25 ILJ 1519 (CCMA).

A H Deller op cit (n. 25) 378.

Employment Equity Act op cit (n. 16) s. 2 (a).

Ibid s. 2 (b).

A Rycroft & A Jordaan op cit (n. 18) 66, see also Borgwarner (SA) (Pty) Ltd v NAAWU/NAMSA (1991) 12 ILJ 549 (LAC).

Available at: http://www.thembosdev.com/articles

Administrative Justice Act (PAJA) provides that ‘an administrative action which materially and adversely affects the rights or legitimate expectations of any person must be procedurally fair.’33 This requires employers to take decisions that are procedurally fair in their activities. In spite of certain limitations, ‘employers retain their right to decide whom to employ provided they are not either statutorily prohibited or required to employ certain applicants.’34 Although the right of the employer to appoint employees is limited in certain circumstances, he or she still enjoys this prerogative. The implementation of affirmative action is a crucial issue in the workplace.

4. Affirmative action

The EEA provides that ‘every employer must take steps to promote equal opportunity in workplace by eliminating unfair discrimination in any employment policy or practice.’35 The employer may include affirmative action measures in his or her employment strategy, for the purpose of benefiting previously disadvantaged people. In Stoman v Minister of Safety and Security and Others,36 a black policeman was appointed to a post in the SA Police Service instead of the applicant employee, a white policeman.

The applicant wanted to set aside such appointment. The court held that, in appointing the black policeman, the aim was not to reward him as an individual, but to advance the category of persons to which he belonged and to achieve substantive equality in the SAPS as an important component of South African society.37 The court refused the relief sought by the applicant.

In Harmse v City of Cape Town,38 the court held that ‘if an employer fails to promote the achievement of equality through taking affirmative action measures, then it Promotion of Administrative Justice Act (PAJA) 3 of 2000 s. 3 (1).

EML Strydom op cit (n. 2) 313 – 314; the National automobile & Allied Workers Union (now known as National Union of Metalworkers of SA) v Borgwarner (Pty) Ltd (1994) 15 ILJ 509 (A). In s. 186 (d) of LRA 1995, the selective non-re-employment of an ex-employee may be regarded as a dismissal. Where an employer refuses to renew a fixed-term contract, he or she may be guilty of an unfair dismissal if the employee had reasonable ground to expect that it would be renewed (s. 186 (b) of LRA 1995).

Employment Equity Act 55 of 1998, s. 5.

Stoman v Minister of Safety and Security and Others (2002) 23 ILJ 1020 (T).

Ibid 1035 H.

Harmse v City of Cape Town (2003) 24 ILJ 1130 (LC)

Available at: http://www.thembosdev.com/articles

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