The Commission for Conciliation, Mediation and Arbitration (the CCMA) is a statutory body created for the purposes of addressing employment law disputes through alternative dispute resolution mechanisms. Should a matter subsequently be taken on review, the court may, in exceptional circumstances, consider evidence arising from conciliation proceedings in the CCMA, where the evidence relates to the nature of the dispute. In this article, we provide a brief overview of Rule 16 of the CCMA Rules and the impact this may have on employers in conciliation proceedings, in light of the recent Constitutional Court judgment of September v. CMI Business Enterprise CC [2018] ZACC 4 (27 February 2018).

Conciliation proceedings generally

Conciliation is the initial process at the CCMA, where a commissioner facilitates informal settlement discussions. This begins with the commissioner meeting with parties to the dispute, and the parties will be encouraged to give brief statements regarding the dispute. The commissioner is given wide functions at this initial meeting, and may hold individual caucuses, where the other party is asked to leave the room. Generally, the commissioner will actively encourage parties to share information and ideas as to how their differences and the dispute may be settled, and commissioners often put forward their own suggestions in this regard.

Other functions given to the commissioner at conciliation include the power to determine processes best suited to the dispute (for example, mediation or making recommendations in the form of an advisory arbitration award). A commissioner may also cause persons and documents to be subpoenaed, and has the power to enter and inspect premises and seize any book, document or object that is relevant to the dispute.

By and large, the commissioner's role is to try to resolve the dispute within 30 days of it being referred to the CCMA. If the dispute is settled, an agreement will normally be drawn up and that ends the matter. The commissioner will issue a certificate recording that the dispute has been settled.

Any discussions or communications between parties to a dispute (or between their legal representatives), that relate to the attempted settlement of the dispute, are made “without prejudice”. This means that anything disclosed or divulged during discussions relating to settlement cannot be interpreted as admissions, and essentially cannot be used against another party as evidence. South African public policy prescribes that settlement negotiations are made bona fide and without the fear that these discussions will be held against a party should these negotiations fail.

Rule 16 of the CCMA Rules provides that conciliation proceedings are private and confidential and are conducted on a without prejudice basis, and no person may refer to anything said in conciliation during any subsequent proceedings, unless the parties agree in writing or as ordered otherwise by a court of law. Further, no person, including the commissioner, may be called as a witness during any subsequent proceedings in the CCMA or in any court to give evidence about what transpired during conciliation unless as ordered by a court of law.

The purpose of this rule is to allow a measure of safety in conciliation proceedings, so that the parties may speak freely and ultimately try to settle their dispute.

The question that arose in this case is whether discussions at the CCMA around the nature of the dispute are also covered by Rule 16, or whether it is only discussions regarding settlement amounts and compensation that are afforded this protection.

The three applicants in this matter were employed by the respondent as general workers required to perform technical and mechanical duties on mine-related projects throughout South Africa and other African countries.

The employees were, at the time of their employment, the only black employees employed by the respondent company. During the course of their employment, some two years, the applicants endured physical, verbal and mental harassment based on their race. The applicants were called by a litany of derogatory names and their manager would often make derogatory public statements.

By way of example, during assignments and business trips, the applicants were provided with accommodation far inferior to that of their white colleagues and, on one such occasion, no accommodation for the applicants was arranged at all. In this particular instance, the white employees were provided with accommodation quarters with separate bathrooms, a kitchen and living space with a multitude of appliances, including flat-screen televisions, fridges and kettles. The applicants, on the other hand, were forced to sleep in a washroom without separate toilet facilities.

Where the applicants were required to be on-site early in the morning, they were forced by their manager to sleep at their manager’s residence. This was not required from their white counterparts. The room at their manager’s residence allocated to the applicants contained a number of tools, car parts and an open toilet. This room was usually used to house their manager’s dogs.

When being transported to and from work, the applicants were always obliged to sit at the back of the vehicle and, if they attempted to sit in the front, they were asked if they “were becoming white” and told that “a dog should know their place”.

The applicants eventually resigned and informed the respondent that this was due to intolerable working conditions. They made two referrals to the CCMA: one based on an unfair labour practice in relation to the Skills Development Act 97 of 1998, and the other in respect of alleged unfair discrimination in terms of the Employment Equity Act 55 of 1998. In the latter referral form, the relief sought was “for employer to stop discriminating us [sic]”, despite the fact that they had already resigned. The applicants alleged that they did not receive any assistance when filling out their referral forms.

At conciliation, the commissioner stated that it became apparent that their dispute was one of constructive dismissal related to the racial discrimination they had endured. On the certificate of outcome, the commissioner specified that the dispute related to unfair discrimination, that it remained unresolved and that the applicants should refer it to the Labour Court for further relief.

The applicants referred the matter to the Labour Court accordingly by way of a statement of case based on section 187 of the Labour Relations Act 66 of 1995, as amended.

The applicants claimed that their departure from the respondent was an automatically unfair constructive dismissal and their statement of case included a number of instances of discrimination, including those set out above. In response, the respondent filed a document that was not in compliance with the Labour Court Rules and, as such, the Labour Court deemed the matter to be unopposed and eventually granted default judgment in favour of the applicants.

The Labour Court held that the applicants had been constructively dismissed and that such dismissal was automatically unfair. The Labour Court awarded each applicant 24 months’ remuneration as compensation.

The respondent then applied for rescission of the default judgment, stating that it was not notified of the hearing of that matter. It also argued that the Labour Court did not have jurisdiction, on the basis that this was not the dispute referred to the CCMA.

The Labour Court held that the nature of the dispute is determined by the referral form and the certificate of outcome. It stated that a court must look at the findings of the commissioner during the fact-finding exercise undertaken to determine the nature of the dispute, and that this would then inform the jurisdiction of the court. Given what had transpired at the conciliation, and what had been explained to the commissioner at that point, the court was satisfied that, factually, it was constructive dismissal. The court was also satisfied that such dismissal had been automatically unfair due to the discriminatory conduct of the employer and what the employees had been subjected to.

The respondent appealed to the Labour Appeal Court, which held that the Labour Court erred in having regard to evidence concerning what had transpired during the conciliation proceedings, because such evidence was inadmissible.

The Labour Appeal Court also considered whether the dispute of unfair dismissal was actually conciliated and it noted that the dispute which the applicants had referred for conciliation was one of unfair discrimination, and not one of dismissal. It further noted that the applicants, at the time of referring their dispute to the CCMA, did not regard themselves as dismissed. The Labour Appeal Court held that the Labour Court’s conclusion that the unfair dismissal was conciliated was “not supported by any admissible evidence” and, as a result, it upheld the respondent’s appeal.

The applicants then approached the Constitutional Court, which had regard to the fact that Rule 16, at the time the dispute arose, only contained the qualification “as agreed by the parties” and that “or otherwise directed by the court” was added after the amendment to the CCMA Rules. The Constitutional Court held that, while the amendment was only after the dispute arose, the purpose of Rule 16 was to allow and protect free discussions and negotiations around settlement – this does not apply to any other discussions (for example, where there is misconduct on the part of the commissioner, or discussions pertaining to the nature of the dispute). As a result, the appeal was upheld and the decision of the Labour Appeal Court was set aside.

In conclusion, employers should be wary of what they discuss during conciliation proceedings. It is important to remember that discussions not relating to settlement, and especially those relating to the nature of the dispute, do not fall within the scope of Rule 16 and are therefore not privileged.