A unanimous Constitutional Court decision has clarified unions' fiduciary duties to their members.
Labour law experts agree that a judgment handed down by a unanimous Bench of the Constitutional Court this week has huge ramifications for the trade union movement. The judgment held that unions did not enjoy special immunity from damages claims by their members if they failed to represent them adequately in labour disputes.
The court dismissed an application by the Food and Allied Workers' Union (Fawu) for leave to appeal a Supreme Court of Appeal judgment, which held the union liable for failing to pursue an unfair dismissal claim brought by two of its members.
Michael Mkhize and Mandla Ndlela were unfairly dismissed by Nestlé in 2002. They successfully sued Fawu for damages when it failed to prosecute their claim for unfair dismissal. Fawu appealed, but the appeal court upheld the mens' damages claim. Fawu sought leave to appeal to the Constitutional Court, but lost the appeal this week and has to pay the costs of its court action.
The court rejected the union's argument that it enjoyed special protection from damages claims because it had a constitutional right to determine its own administration and that its members could have pursued the dismissal claim on their own.
The court agreed with the appeal court that union members have a contract of mandate with their union, and unions can be held liable if they breach it.
Pamela Stein, a partner in the employment and employee benefits practice department at law firm Webber Wentzel, said unions would have to "run a much tighter ship".
"Trade unions had better read [the judgment] carefully. It has huge implications for them in the way they manage their members' legal disputes. The excuses and arguments made to the Constitutional Court by Fawu to absolve it of liability was given short shrift by a unanimous Bench, which held the trade union accountable for failing to properly prosecute its members' unfair dismissal claim, and ordering the union to pay its members 12 months' salary.
"Perhaps [trade unions] also need to make an appointment with an insurance broker."
Stefan Swart, an associate at labour and commercial law specialist firm Anton Bakker Attorneys, said the judgment also confirmed that union representatives were accountable in much the same way as lawyers were accountable to their clients.
"All practising attorneys have an ethical and professional duty towards their clients to execute their particular mandate in a professional, efficient and cost-effective manner. Trade unions are likewise bestowed with these responsibilities. It is about time that all trade unions realise that, upon the acquisition of members or organisational rights, they have a fiduciary duty to protect members' interests and that the Fawu judgment sends a strong message to all unorganised unions to act more diligently and in good faith."
Chris Todd, an employment law specialist and director at Bowman Gilfillan Attorneys, said the judgment empowered workers as it affirmed their union's responsibility towards them. "Workers are saying: we don't just pay fees so that you can participate in national political dialogue, we want adequate representation and you will have to pay if you don't provide it. The union said there were special considerations that applied to it, like the right to determine its own administration, [but] the court said these considerations simply weren't there."
Cosatu spokesperson Patrick Craven said the trade union federation viewed the judgment with "serious concern" and would "seek urgent legal advice and will formulate a detailed response".
Fawu deputy general secretary Moleko Phakedi said the union was studying the judgment, which had "implications for how we render services to our members".