INDUSTRIAL COURT OF SWAZILAND
HELD AT MBABANE
In the matter
Y. K. K.
SOUTHERN AFRICA (PTY) LTD........APPLICANT
ADV. DAVE SMITH
The Applicant is
YKK Southern Africa (Pty) Ltd, a company duly incorporated according
to the company laws of Swaziland with its principal place of business
situate at King Sobhuza 11 Avenue Matsapha Industrial sites
Swaziland. The Respondent on the other hand is Swaziland
Manufacturing and Allied Workers Union, a trade union registered as
such in terms of Section 27 of the Industrial Relations Act No. 1 of
2000. The Respondent is recognized as the sole bargaining agent for
the unionisable employees of the Applicant in terms of a Recognition
Agreement entered into between the Applicant and the Respondent on
the 19th January 1998.
ISSUES IN DISPUTE
On the 25th
November 2003, the Respondent wrote a letter to the Applicant calling
for a meeting on the 4th and 5th December 2003
to discuss interalia the wage increment to its members for the year
2004. To the letter was attached a draft Collective Agreement for the
year 2004 for YKK, which is annexure 'B' to the
For the purposes
of this application, only clause 2 of the proposed Collective
Agreement for the year 2004 for YKK is relevant. The same reads as
2.1 An across
the board increment of 15% shall be paid by the employer.
The Applicant at
a time and in a manner that remains contentious made a counter
proposal to the Draft submitted by the Respondent as follows in a
document entitled: "Wages Negotiations Proposals and Responses".
The same is at page 16 of the Book of Pleadings and is annexure 'C'
to the application.
Item 2 thereof
" Wages; we
have offered 4.5% across the Board".
Whereas it is
alleged by the Applicant that the contents of this document
constituted its counter proposal to the Draft Collective Agreement;
and that these proposals were presented to the Respondent at the
negotiation meetings held on the 10 and lltri December
2003 between the parties; the Respondent has maintained that they saw
this document for the first time at the meeting held between the
parties on the 29th April 2004,
This being the
case, so the Respondent has argued, the Applicant's proposal was time
barred in terms of Article 5 (2) of the Collective Agreement in that
the said clause provides:
(a) Negotiations will be by
way of the union submitting a Memorandum of Agreement to the
(b) If the employer feels
like offering or adjusting anything in the submitted Memorandum, he
shall within 21 (twenty-one) days submit his memorandum to the
Executive of the union;
(c) If the period
stipulated in (b) lapses without any submission made by the employer,
the memorandum submitted by the union shall be effective; and
(d) Shall be signed by
both parties as valid agreement".
Respondent argues that the Applicant having failed to submit its
counter proposal to the proposed wage increment timeously is bound by
Clause 5 (2) to implement the Respondent's proposal of 15% across the
board without any alterations or adjustments.
On the contrary,
the Applicant has pleaded that it submitted its counter-proposal of
4.5% at the meeting of the 10th and 11th
December 2003, and within the 21 days period provided by Article 5
(2) of the Collective Agreement. That the Respondent rejected the
said demand of 15% wage increment across the Board is both
unrealistic and unreasonable for the following reasons:
1. The Applicant
had in the year 2003 implemented a job grading exercise, the result
of which was a wage increment of an average 11.12% across the board
with effect from the end of February 2004.
2. That the
projected inflationary rate for the year 2004 was a mere 3.7% and the
proposed 4.5% increment was well above that
3. That the
Consumer Price Index (CPI) which is very relevant to the
determination of reasonable wage increments had averaged 8.4% in the
year 2002, 6.8% in 2003, 4.3% in 2004 and 3.7% up to July 2005. For
this reason, the offer of 4.5% was close to reality than the demand
by the union.
4. That the Rand
had markedly strengthened against the Dollar with a resultant
substantial drop in turnover and profit margins bearing in mind that
46% of all goods manufactured by the Applicant were exported and paid
for in Dollars.
was demonstrated by exhibit B as follows:
4.2.1 Jan to Dec 2002 -
4.2.2 Jan to Dec 2003 -R
4.2.3 Jan to Dec. 2004- R
4.2.4 Jan to August 2005 -
5.That as a
result of the drop in turnover the Applicant was not operating
profitably and was incurring increased losses from year to year as
was demonstrated in the financial statements produced before court as
5.1 1991- Profit
E827,829 - Exhibit 'D' pg 7
5.1.2 2000- Loss
Rl,300,356 - Exhibit 'D' pg 7
5.1.3 2001 - Profit
R4,704,633 - Exhibit F-' pg9
5.1.4 2002 - Profit
R3,017,727- Exhibit 'E'pg9
5.1.5 2003 - Loss
R2,735,256 - Exhibit' F 'pg 5.
5.1.6 2004 - Loss
Rl,410,034 - Exhibit 'F 'pg 1
5.1.7 2005 - Loss
R3,067,319 Exhibit 'G 'pg 6
surprisingly made by the Applicant which appears to be in favour of
the Respondent's demand for a 15% pay rise is the demonstrated trend
of annual wage increments by the company to the employees over the
past 7 (seven) years as follows:
In this respect
the court notes the following:
In the year 2000
inspite of the loss of Rl7300.356 experienced by the
Applicant, the company awarded a 10% wage increment across the Board.
In the year 2003, the company experienced a big loss of R2,735.256
but went ahead to grant 15% wage increment across the board. It would
not be far fetched to say that there is a lack of correlation between
the loss and profit margins experienced by the Applicant in the years
under review with the wage increments awarded to the workers across
the board for each specific year.
This trend must
have played a big role in the general attitude of the union and its
approach to the wage negotiations at the meeting of the 29th
April 2004. The expectations of the Respondent were high and for
reasons discernable from the general trend of wage increments at the
increments seem to have disregarded the consumer price index, the
inflationary trends and the actual profit/loss margins experienced by
the company during the period under review.
has strongly argued for the offer of 4.5 % across the Board for the
years 2004 and 2005 on the basis that on the 28th February
2004, the Applicant had given an increase to all its employees
pursuant to a job grading exercise that resulted in an average weekly
wage increment of 11.12%.
has confirmed this submission through the evidence of Mr. Nene, the
Executive Officer of the Union and documentation presented to court
to the effect that the adjustments referred to were part of a long
overdue Grading System and did not constitute wage negotiations for
the year 2004.
This position is
captured in paragraph 1 of exhibit 64 in the Book of Pleadings as
SOUTHERN AFRICA (PTY) LTD JOB GRADING AGREEMENT
adjustment is part of Grading System not wage negotiations for 2004".
It was strongly
argued for the Respondent that the court should completely disregard
this grading exercise in arriving at the reasonable wage increment
for the year 2004 and 2005 therefore.
The court also
notes the contents of paragraph 6 of the said agreement which reads
Monday the 16th February 2004, new spirit of cooperation
will happen between shop floor and management to improve this company
and to try and solve past and future problems".
by the parties as captured in the agreement was positive and the
court can only hope the spirit will endure regardless of the outcome
of this suit.
in its pleadings and the submissions by Mr. Mtetwa has pressed for
the upholding of Clause 5 (2) of the Recognition Agreement by
disregarding all the evidence by the Applicant on the financial
status of the company during the years under review.
That the court
would be undermining the process of collective bargaining and
agreements entered into by the parties, if it considered the
proposals made by the Applicant outside the 21 days limit set by
Clause 5 (2).
submitted further that the contents of the financial statements
presented to court by Mr. Taylor are not in dispute, but at the
meeting of 29th April 2004, Mr. Taylor acting in bad faith
had denied the union access to the financial statements.
Mr. Taylor in
his testimony conceded that in hind sight, he ought not to have
withheld the financial statements to the union. He conceded further
that had he provided all the documentation availed to the court but
not given to the Respondent during the negotiations maybe the issue
of wage increment would have been resolved at the table.
Though the court
commends Mr. Taylor for his candid concession, the court must point
out that withholding audited statements from the union during
negotiations is not in keeping with agreements between the Applicant
and the Respondent and is in violation of the labour laws of
Swaziland as found in numerous decided cases of this court and the
Industrial Court of Appeal. This is also contrary to the letter and
spirit of Clause 30 of the Code of Practice promulgated in terms of
Section 109 of the Industrial Relations Act No. 1 of 2000 as follows:
collective bargaining to be conducted realistically, responsibly and
in good faith, it is necessary for bom parties to have adequate
information on the matters being discussed. Management should be
prepared to meet all reasonable requests from employee organizations
for information relative to planned negotiations. In particular it
should make available, in convenient form, information supplied to
shareholders or published in annual reports".
was therefore wrong to withhold the audited financial reports during
the negotiations and by so doing contributed significantly to the
deadlock that resulted on the issue of the wage negotiations.
motivated its demand for a 15% increment across the board by
submitting further that as appears from the minutes of the 29th
April 2004, one of its members by the name of Ndumiso Magongo had
been awarded a 15% increment for the year 2004.
This issue was
not put to the two witnesses of the Applicant (Mr. Taylor the General
manager and Mr. Simon Magagula the Human Resources Manager) for them
to explain to the court if indeed this took place and under what
circumstances. The Applicant was therefore not presented with an
opportunity to deal with this issue. This being the case, the court
will disregard the same in weighing up the probabilities in this
significant to note that the Respondent did not question the audited
financial statements of the Applicant indicating that the Applicant
made significant losses in the year 2004 up to and including June
2005. The CPI figures and the Rand/Dollar exchange rates were equally
not challenged by Mr. Nene for the Respondent and counsel for the
Were the court
to find that the Applicant did not submit its counter-proposal to the
wage demand by the Respondent within 21 days in terms of clause 5 (2)
of the Collective Agreement between the parties, the matter will be
at an end, and the Applicant would be bound to grant the 15% wage
award across the board.
In the event the
court finds that the counter proposal was submitted on the 10th
and 11th of December 2005, then it would have to
consider all the evidence by the witnesses and the relevant
documentation to arrive at an equitable and fair wage increment
across the board for the years 2004 and 2005.
I will first dispose off with the issue as to whether the Applicant
presented its proposal to the Respondent within 21 days in terms of
Clause 5 (2) of the Collective Agreement.
This is strictly
a factual question that must be determined with regard to the
evidence of Andrew Taylor and Simon Magagula for the Applicant and
that of Chris Solomon Nene, the Chief Negotiator and Executive Member
of the Respondent.
Both Mr. Taylor
and Mr. Magagula consistently told the court that the comprehensive
response contained in annexure "C to the application to the
demands of the Respondent contained in annexure 'B' to the
application was tabled and discussed at the meetings of the 10th
and 11th December 2003. Mr. Nene on the other hand
insisted that the Respondent saw this document and therefore the
counter proposal to its demand for the first time at the meeting of
the 29th April 2004.
Mr. Nene went on
to explain that annexure C was presented by Mr. Taylor at the meeting
in response to the Respondent's request for the minutes of the
meeting held on the 11th December 2003.
responded by saying that no minutes were kept of that meeting except
for notes that could be made available. The Applicant went ahead to
present annexure 'C' to the union as the notes that had been made
during the last meeting. He therefore denied that annexure 'C' was a
counter proposal to the union demands given to them on the 10th
and 11th December 2003.
A closer look at
document 'C' shows that the contents thereof represent a blow by blow
response by the Applicant to the demands by the Respondent contained
in annexure 'B'. If this was not a prepared response to the demands
by the Respondent and constitutes notes that were taken at the
meetings of the 10th and 11th December 2003,
then one thing is certain; the Applicant had made a counter proposal
in those meetings to all the demands of the Respondent. One of those
demands was an award of 15% salary increment across the Board. This
was met by a counter proposal by the Applicant of 4.5% across the
Board. It being common cause that the demand had been made on the
25th November 2003, it is a foregone conclusion that the
counter proposal made at the meeting of the 10th and 11th
December 2003 was within the 21 days limit set in terms of Clause 5
(2) of the Collective Agreement.
The conduct of
the Respondent in attending the meeting of February 2004, to discuss
the issues named in the Memorandum dated 25th November
2003; attending the meeting of 29th April 2004 to discuss
the same issues; not taking any steps to enforce implementation of
its demand in terms of Clause 5 (2) of the Collective Agreement and
reporting a dispute to the Commissioner of Labour on the 3rd
May 2004 leads to the inevitable inference that the issue as to what
wage percentage was to be awarded across the board for the year 2004,
was very much alive. The issue of the time bar is an afterthought by
the Respondent that runs counter to its own conduct in the
It is thus
unnecessary for the court to delve into any details regarding the
construction of Clause 5 (2) of the Collective agreement.
The next issue
that falls to be determined by the court is the quantum of the annual
wage increment to the members of the Respondent for the years 2004
and 2005. We have herein before delved into the competing evidence
and submissions by the parties on this issue.
The court is
satisfied that the Respondent did not challenge the financial
evidence before the court. This evidence underpins the Applicant's
case for a 4.5% increment across the board for the years 2004 and
2005. This is the evidence that was not availed the Respondent during
The evidence in
summary comprises of the consumer price index for the years 2002 to
July 2005; the strengthening of the Rand against the Dollar between
the period January 2002, to August 2005 and the financial statements
for the Applicant company between the years 1999 to June 2005.
The thrust of
the Applicant's case was that for the last three years under review
i.e. 2003 to 2005 it had experienced massive financial losses, mainly
due to the strengthening of the Rand against the Dollar with a
resultant substantial drop in turn over and profit margins. This was
because 46% of all the goods manufactured by the Applicant were
exported and paid for in Dollars. This situation was juxtaposed
against a climate of a consistent decline in the CPI as earlier
demonstrated. It was not in dispute therefore that the inflationary
rate in Swaziland for the period under review had continued to
In her book,
Industrial Relations in South Africa 2nd Edition at page
205 Sonia Bendixstates the following:
negotiations, economic conditions are of a particular importance.
Thus negotiators need to take cognizance of inflation levels, cost of
living indices, levels of economic activity, business cycles,
industry trends, economic forecasts,
levels and the general position of the labour
market............................... The following statistical
indicators are most frequently used during substantive negotiations".
In this respect,
the court will reiterate the necessity of the employer to avail all
necessary data, and expertise during negotiations to enable the union
to make an informed stand. The employer cannot and should not
withhold vital information and at the same time expect the union to
make a reasonable demand in the proceedings. The employer cannot have
its cake and eat it at the same time.
This approach is
supported by the decision in the case of Durban City Council v
Durban Integrated Employees Society f!990^ 11IL3 619 as follows:
be considered include statistical material concerning the cost of
living although this material should not be mechanically applied,
market factors, even where the enterprise is a municipality and does
not compete in the commercial market; the effect of inflation on
wages and wages paid by similar enterprises".
trial, though no evidence was adduced, it was alluded by the
Applicant that it was one of the better paying undertakings in the
To counter this
the Respondent adduced the evidence of one Sarah Mkhabela a machine
operator. She testified that she had worked for the Applicant as a
machine operator for the past 23 (twenty three) years. She produced
her pay slip that showed that she earned E502.16 (Five Hundred and
Two Emalangeni Sixteen Cents) per week. This translates to El,004.32
(One Thousand and Four Emalangeni and Thirty Two Cents) per
that in terms of the Regulation of Wages (Manufacturing and
Processing Industry) Order of 2004, the basic minimum wage she was
supposed to earn as a machine operator was E950.32 (Nine Hundred and
Fifty Emalangeni Thirty Two Cents). This translated to El,900.94 (One
Thousand Nine Hundred Emalangeni and Ninety Four Cents) per
was not seriously challenged by the Applicant. The court notes that
if indeed this be the case, then it is damning evidence against the
Applicant regarding its compliance with the laws of the country. This
however is not the case that falls to be determined by the court in
casu. It was however, a useful arrow by the Respondent in its quiver.
It is not
everyday that the court is asked to step into the shoes of a
reputable employer to determine a wage increment across the board for
a very large work force of 170 employees.
Applicant left a matter of such magnitude and implication into the
hands of the court, is an indication of the level of trust that the
employers in Swaziland have placed on the Industrial Court.
The trust arid
confidence bestowed over the years on the court by its users, should
be jealously guarded. This will happen provided the court continues
to discharge justice to all even handedly, upholding the law, whilst
at the same time dispensing equity. Only then shall the court be
truly, the guardian of harmony, growth, continuity and tranquility at
every workplace in Swaziland.
that, with due regard to the evidence before us, especially the
following; the inflationary trends and levels, the financial
statements of the Applicant; the annual wage increments across the
board from 1999 to 2003; the continued strengthening of the Rand vis
avis the dollar and its effect on the export of goods manufactured by
the Applicant; the job grading exercise that resulted in an average
11.12% increment across the board in 2004 and the Minimum Wage
Regulations in place in the industry inter alia;
The Court awards
a 6.5% increment across the board for the year 2004 and 2005 to the
employees of the Applicant (YKK) in the Respondent's bargaining unit.
For the role the
Applicant played in the impasse due to its failure to provide the
financial statements to the Respondent during negotiations, the
Applicant will pay the costs of the application.