South African airline Comair reinstates medical cover after union goes to labor court

Comair had decided to stop providing medical cover to its employees on September 1. Subsequently, the National Union of Metalworkers of South Africa challenged the decision in a labor court

September 08, 2020 by Peoples Dispatch

After being taken to labor court by the National Union of Metalworkers of South Africa (NUMSA), Comair, a South African private airline, has agreed to reinstate the medical cover of its employees. The company on September 1 had decided to stop paying for the cover.

The company — which owns the low-cost airline and has a franchise to fly British Airways on domestic routes — reversed its earlier decision over the weekend. This was just ahead of a hearing on the legality of the decision. The hearing was scheduled in the Johannesburg Labor Court on Wednesday, September 9. 

Following this, NUMSA withdrew its application from court on Monday. However, should negotiations on unpaid wages scheduled for Tuesday fail to yield a way forward, a dispute in the labor court ahead of the crucial vote on Comair’s Business Rescue Plan on September 18 cannot be ruled out. 

Representing the majority of Comair employees, NUMSA filed an urgent application in the labor court on September 3. It argued that the unilateral withdrawal of the company’s contribution to medical cover for employees was a violation of the employment contract.

Further, the union also argued that this amounted to a change in terms and conditions of employment, which enjoys legal protection during the period of the company being placed under business rescue.

However, before the hearings in the court began, the company’s attorneys met NUMSA’s representatives with the assurance that the medical cover will be reinstated. 

“If the proposed Business Rescue Plan which is scheduled to be voted on the 18th of September is adopted, then the Post Commencement Funding will cover the medical aid contribution until the end of November 2020,” NUMSA said in a statement on Monday, explaining what the attorneys of the company committed to in the meetings over the weekend.

The finalized business rescue plan that is to be approved by the votes of stakeholders, including creditors and trade unions, will set out the details of medical cover after November 2020, when the airline is expected to resume flying again, NUMSA’s national spokesperson, Phakamile Hlubi Majola, told Peoples Dispatch.

For now, the union has decided to withdraw its application in the court. NUMSA has nevertheless clarified that it might have to return to court if the negotiations with the company’s management and its Business Rescue Practitioners (BRPs) on Tuesday, September 8, fail to lead towards a resolution of the dispute over unpaid salaries.

“Comair has not paid salaries since June 1. Workers have been depending on the Temporary Employee Relief Scheme (TERS),” Hlubi Majola said. TERS was set up to help companies, financially distressed due to the lockdown, to pay salaries to its workers. It is funded from the Unemployment Insurance Fund (UIF) to which employees as well as the employers have been contributing over the years,

The wage of most workers represented by NUMSA  is between R12,000 (USD 709) and R14,000 (USD 827) per month. However, since June 1, when Comair imposed an unpaid leave, they have been left with incomes only from the TERS which amount to an average of R4,000 (USD 236) per month.

The legal notion that under “supervening impossibility of performance, they are not obliged to remunerate employees” is not a tenable defense “after 1 June 2020, when the government lifted domestic travel restrictions”, NUMSA had pre-emptively argued in its now withdrawn application.

Neither can the company state its financial distress as a defense against not fulfilling its obligation to employees, because the company has been assessed to be solvent by the company and its two BRPs, Shan Collyer and Richard Ferguson, who were also named as respondents.

NUMSA has further alleged that from the content of the Business Rescue Plan they published on September 2, “it is apparent that.. all along (they) had options available to secure funding” to pay employees’ wages, but consciously chose not to.

Instead, Collyer and Ferguson, who have been seeking to double their own fee, have published a plan which requires employees “to waive the right to receive salaries until the end of November”. This would again amount to a change in “terms and conditions of employment” in violation of Section 136 of Companies Act quoted from above.

A subsequent clause makes an exception to cases where the unions agree to such changes. However, NUMSA has not been consulted. “We want to find solutions, but if the engagement fails, we do not rule out returning to court in order to enforce our rights,” NUMSA said in its statement.