South African Municipal Workers’ Union National Medical Scheme (SAMWUMED) vs. City of Ekurhuleni and Others

South Africa

22.12.2023

Civil

A collective agreement is a statutory construct, medical scheme is not recognized as a party to the collective agreement by the Labour Relations Act (LRA)

The appeal centred around a dispute between the South African Municipal Workers’ Union National Medical Scheme (appellant), a self-administered medical scheme registered in terms of Section 24 of the Medical Schemes Act, 1998, and the City of Ekurhuleni (COE).The high court dismissed SAMWUMED’s application. It found that SAMWUMED was not a party to the collective agreement, and hence, SAMWUMED enjoyed no rights under the collective agreement. As to the territorial limitation that SAMWUMED sought to impose upon Moso, the high court found this limitation to offend against the right of employees to choose a broker, and, furthermore, offended against the Financial Advisory and Intermediary Service Act, 2002 (FAIS Act) and its Code of Conduct.

On appeal before this Court, the Appellant sought to compel COE to comply with the collective agreement and to permit the appellant to market its scheme and benefit options, as well as render services, to employees of COE. Additionally, the Appellant sought to render these services and market its offerings without having Moso imposed upon it as intermediary.

The Appellant was not a party to the collective agreement, and did not have any rights under this agreement. A collective agreement, this Court found is a statutory construct. Section 23 of the Labour Relations Act, 1995 (LRA) sets out the legal effects of a collective agreement. A medical scheme is not recognized as a party to the collective agreement by the LRA, and thus the appellant could claim no rights under the collective agreement. However, the LRA provided for the establishment of bargaining councils. The collective agreement in question deputed the South African Local Government Bargaining Council (SALGBC) to accredit medical schemes for the benefit of employees. SALGBC accredited the appellant and in so doing concluded an agreement, from which these parties derived rights and obligations.

The collective agreement did not place any restraints upon the appellant of the kind COE sought to impose. COE’s imposition of a broker was held to constitute intentional and unlawful interference with the contractual relationship subsisting between the appellant and SALGBC. Additionally, the appellant sought relief against Moso. Moso contended that it was not confined to the territory set out in its broker agreement with the appellant. However, this Court decided that the territorial restraint did not restrict the choice of brokers that the Medical Schemes Act protected; nor was the restraint against public policy; and the appellant had not waived its rights under the agreement with Moso. Appeal was upheld and the order of the high court was substituted with orders permitting the appellant to render its services as an accredited medical scheme.

Tags : Collective agreement Rights Entitlement

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