Demarcation Disputes cannot be used to interpret Collective Agreements

By David Short | Director

CCMA ruling clarifies the limits of the demarcation process

A recent ruling issued in favour of a client of Fairbridges provides helpful clarity on the purpose and limits of demarcation disputes in South African labour law.

In the matter between GDPEOSA obo Expelog (Pty) Ltd t/a Fresh and Frozen and the Bargaining Council for the Meat Trade – Gauteng, the Commissioner was asked to determine whether a dispute about the geographical scope of a bargaining council’s main collective agreement should be treated as a demarcation dispute.

The ruling confirms an important principle, that demarcation proceedings cannot be used as a mechanism to interpret or determine the application of a collective agreement’s geographical scope.

Background to the Dispute

The dispute arose where an employer operating several retail outlets challenged whether some of its shops fell within the geographical jurisdiction of the Bargaining Council for the Meat Trade – Gauteng.

The employer approached the Commission seeking a demarcation determination on the basis that the geographical scope of the council’s main agreement formed part of the definition of its jurisdiction.

The central question for determination was therefore whether the physical location of an employer’s business within a defined geographical area could be determined through a demarcation process.

The Purpose of Demarcation Proceedings

In analysing the issue, the Commissioner emphasised that demarcation disputes serve a specific purpose under section 62 of the Labour Relations Act.

Demarcation proceedings are primarily concerned with determining whether an employer and its employees fall within a particular industry or sector, based on the nature of the business and the activities performed.

Courts have consistently held that the key consideration is the character of the enterprise and the industry in which it operates, rather than administrative questions about jurisdictional boundaries.

Importantly, the authorities cited in the ruling confirm that demarcation determinations are intended to identify the relevant industry classification, not to resolve disputes about the interpretation or enforcement of a collective agreement.

Geographic Scope is an Administrative Question

The Commissioner ultimately concluded that determining whether a business is physically located within the geographical area defined in a bargaining council’s main agreement does not fall within the purpose of the demarcation process.

Instead, such issues are administrative or enforcement questions that should be addressed through other mechanisms, including:

• Enforcement procedures contained in the main collective agreement; or
• Proceedings before the Labour Court.

The ruling therefore clarifies that geographical jurisdiction is a factual and administrative matter, rather than a question requiring demarcation arbitration.

The Ruling

The Commissioner held that determining whether an employer’s business falls within the geographical area defined in a bargaining council’s scope is not a demarcation matter.

This finding reinforces the distinction between:

• Demarcation disputes, which determine the industry or sector in which a business operates; and
• Administrative or enforcement disputes, which concern the application of the terms of a collective agreement.

Practical Implications

This ruling provides useful guidance for employers and organisations dealing with bargaining council jurisdiction disputes.

Key implications include:

Demarcation is not a tool for interpreting agreements: Employers cannot use demarcation proceedings to determine whether the terms of a collective agreement apply to them.

Geographical disputes must follow other routes: Where the dispute relates to whether a business operates within the defined geographic scope of a bargaining council, the matter should be addressed through exemption or enforcement procedures.

Clarity on jurisdictional challenges: The ruling reinforces that demarcation proceedings focus on industry classification, not on administrative questions regarding territorial scope.

For employers operating across multiple locations or jurisdictions, this distinction is important when determining the correct forum in which to resolve disputes relating to bargaining council agreements.