Demarcation is not a term commonly heard in everyday conversation, yet it can be beneficial to businesses if it applies to them. The purpose of this article is to provide a simple understanding of what a demarcation dispute entails and how such a dispute is handled. This is important because a demarcation dispute differs significantly from other CCMA disputes.

To understand how a demarcation dispute arises, let’s start with its definition. According to the CCMA, a Demarcation is: “A ruling made by a CCMA Commissioner determining whether any employer, employee, or class of employees is engaged or employed in a particular sector. This ruling determines whether the employer(s) and employee(s) involved fall under the jurisdiction of the Bargaining Council regulating that sector.”

In simpler terms, if a company believes that the nature of its business, or part of it, does not fall under the scope of a particular Bargaining Council’s main collective agreement, it may apply for a demarcation dispute.

Certain businesses naturally fall under specific Bargaining Councils due to the nature of their operations. For example, a company operating in the motor industry falls under MIBCO (Motor Industry Bargaining Council). However, it is essential to determine whether the actual nature and activities of your business truly fall within the scope of that Bargaining Council. This is where a demarcation dispute becomes relevant.

When an employer considers a demarcation dispute, the starting point is Section 62 of the Labour Relations Act (LRA). This section outlines the procedure for demarcation and the manner in which the CCMA handles such disputes.

Like any other dispute, the process begins when the employer refers the matter to the CCMA. The employer must complete LRA Form 3.23 and serve it on both the Bargaining Council and the CCMA. This form is available on the CCMA’s website, or it can be requested via email.

The following information must be included on the LRA Form 3.23:

• The employer’s details.
• The details of the other party to the dispute.
• The details of the industry, area, or sector involved in the application.
• The primary issues in dispute.
• The demarcation being sought.

There is no time limit for referring a demarcation dispute. This means that whether an employer has received a compliance order to join a Bargaining Council or already belongs to one, they may still refer a demarcation dispute to the CCMA.

A demarcation dispute is generally a lengthy and technical process, consisting of several stages:

1. In Limine Process (Conciliation)

The process begins with an In Limine or Conciliation hearing, where both parties briefly present their cases to the Commissioner and submit preliminary evidence off the record in order to reach an agreement. The Commissioner’s role at this stage is to help the parties understand whether the company’s operations fall within the scope of the relevant Bargaining Council.

If the parties cannot reach an agreement, the Commissioner will issue a ruling ordering an Inspection in Loco.

2. Inspection in Loco

At this stage, the Commissioner and representatives from both parties visit the employer’s premises. An agent from the Bargaining Council will interview the employer and employees to determine whether the business activities and nature fall within the Bargaining Council’s scope. The Commissioner may also ask clarifying questions.

If the parties reach an agreement during this stage, a settlement agreement is signed. If no agreement is reached, the employer’s representative prepares an inspection report, and the matter proceeds to Arbitration.

3. Arbitration

The final stage is Arbitration, where both parties present their evidence and witnesses before the Commissioner. Based on the evidence, the Commissioner will issue an Arbitration Award that determines the outcome of the dispute at the CCMA.

A demarcation dispute can temporarily halt other proceedings, such as an enforcement process initiated by a Bargaining Council. This is because the dispute challenges whether the employer falls within the jurisdiction of that specific Bargaining Council. Consequently, the enforcement process is suspended until the demarcation dispute has been resolved. The continuation of the enforcement process then becomes dependent on the CCMA’s Arbitration Award in respect of the demarcation dispute.

It is important to note that each demarcation proceeding is assessed on its own merits. Given the technical and often complex nature of demarcation disputes, it is strongly recommended that employers involve their Employer’s Organisation or a qualified labour relations specialist to ensure the process is correctly handled.

Tips:

Get Expert Guidance Early:

Demarcation disputes are highly technical and fact-specific. Before referring a dispute, employers should consult their Employer’s Organisation or a labour law specialist. Expert guidance can help structure the application correctly, avoid procedural mistakes, and ensure the evidence accurately reflects the true nature of the business.

Document Your Business Activities Clearly:

Because demarcation decisions hinge on the business’s actual activities (not just what appears on CIPC documents or company descriptions), employers should maintain detailed, up-to-date documentation of operations, processes, and job functions. This evidence is crucial during inspections, conciliation, and arbitration, and it strengthens the employer’s case when demonstrating whether the business does or does not fall within a Bargaining Council’s scope.

Written by Sharice Naicker, Dispute Resolution Official (CEO SA)