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[2013] ZAFSHC 240
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South African Equity Workers Association and Others v Titancor Sixteen (Pty) Ltd (JS1068/11) [2013] ZAFSHC 240 (13 December 2013)
IN THE LABOUR
COURT OF SOUTH AFRICA
[HELD AT
BLOEMFONTEIN]
CASE NR : JS
1068/11
SOUTH AFRICAN
EQUITY WORKERS
ASSOCIATION
FIRST APPLICANT
MARTHA
STOCKL
SECOND APPLICANT
ELSIE
DIBA
THIRD APPLICANT
ANDRIES
KOTSI
FOURTH APPLICANT
JOSEPH
MELK
FIFTH APPLICANT
CORNELIUS
MOKWAKWA
SIXTH APPLICANT
THABO
NDINISA
SEVENTH APPLICANT
EXECUTOR:
ESTATE OF THE LATE
MOSIUOA
JACOB
RATHABA
EIGHTH APPLICANT
JANET
RATHABA
NINTH APPLICANT
AND
TITANCOR
SIXTEEN (PTY)
LTD
RESPONDENT
Date of the
hearing: 03-05 June 2013; 19 August 2013; 05 October 2013.
Date Delivered:
13 December 2013
JUDGMENT
PHATSHOANE
AJ
[1]
The claims by the South African Equity Workers Union (“the
Union”), the first applicant,
and Ms Martha Stockl, Ms Elsie
Diba, Mr Andries Kotsi, Mr Joseph Melk, Mr Cornelius Mokwakwa, Mr
Thabo Ndinisa, the executor of
estate of the late Jacob Rathaba and
Ms Janet Rathaba, the second to the ninth applicants, are in two
parts. On Claim “A”,
the second to the ninth applicants,
contend that they were unfairly retrenched by the respondent,
Titancor Sixteen (Pty) Ltd, t/a
as Top Furniture, Bloch Furniture,
Ace Furniture, Chief Furniture and Protea Furniture in a number of
towns in the Free State Province.
On Claim “B”, the
applicants argued that they are entitled to minimum wages as set out
in the Sectoral Determination
No 9, published under GN 1600 on 19
December 2003 in that the respondent underpaid them. Claim “B”
is founded on
s 74
of the
Basic Conditions of Employment Act, 75 of
1997
.
[i]
A copy of the
calculations of the claim is attached to the pre-trial minutes as
Annexure “B”. The respondent conceded
liability in
respect of the latter claim.
[2]
At the commencement of the proceedings I was informed that the ninth
applicant, Mr Mosiuoa Jacob Rathaba,
passed away on 25 February 2012.
An application was made that he be substituted in these proceedings
by the executor in his estate.
This application was granted.
[3]
In their statement of claim the applicants sought an order that the
dismissal of the second to the ninth
applicants be declared
substantively unfair; that the respondent be ordered to pay the
second to the ninth applicants compensation
equivalent to 12 months’
salary and the attendant costs. At the conclusion of the trial,
before the closing argument could
be heard, the applicants brought an
application for the amendment of the relief sought in the statement
of claim. In its amended
form the relief is substantially couched as
follows:
[3.1]
Declaring the dismissals of the second to the ninth applicants
invalid and null and void.
Alternatively,
[3.2]
That the dismissals of the second to the ninth applicants are
declared substantively unfair
in terms of
s 189A(19)
of the Labour
relations Act, 66 of 1995 (the LRA);
[3.3]
That the dismissals of the second to the ninth applicants are
declared procedurally unfair;
[3.4]
That the respondent is ordered to pay the second to the ninth
applicants compensation
equivalent to 12 months’ remuneration
in accordance with their rates of remuneration as at 31 July 2011;
[3.5]
That the respondent is ordered to pay the third, fourth, fifth,
sixth, seventh and ninth
applicants the amounts set out in Annexure
“B” to the pre-trial minutes, being the underpayments
made under Sectoral
Determination No 9, Wholesale and Retail Sector
(Claim “B”);
[3.6]
That the respondent, alternatively, the respondent and AVZ Labour Law
Services CC, is
to pay the applicants’ costs on an attorney and
own client scale, jointly and severally, the one paying the other to
be absolved.
[4]
The respondent objected to the amendment on the basis that the Court
may grant costs against AVZ Labour
Law Services CC, a member of AHI
Employers’ Organisation, which was not a party to the
proceedings. Put differently, the
resultant effect of the order would
be the joinder of AVZ to the proceedings while the applicants had not
followed the procedures
set out in the Rules; that the hearing had
been finalized; that the applicants had ample time to amend their
papers prior to the
hearing; that the proposed amendment will
necessitate the recalling of witnesses and that AVZ was never granted
any opportunity
to answer to the claim and/or present evidence.
[5]
Having considered the argument, I granted the amendment and ordered
the applicants to pay the related
costs. The parties were informed
that my reasons for granting the application for the amendment were
to form part of this judgment.
[6]
In seeking an amendment Mr Johannes Hendrik Engelbrecht, the deponent
to the founding affidavit, states
that at the time the statement of
claim was drafted he was advised that the existing case law in terms
of s 189A, properly read,
precluded the aggrieved employee from
seeking an order declaring his/her dismissal procedurally unfair in
trial proceedings. That
the applicants have referred to issues
involving procedural fairness in their statement of case and the
pre-trial minutes including
the fact that the respondent failed to
issue a Notice in terms of s 189(3) on 25 May 2011. He further
explained that the applicants
mentioned that the respondent had
failed to give the union an opportunity to engage in a meaningful
joint consensus-seeking process.
[7]
Engelbrecht says that it was not brought to his attention when the
statement of claim was filed that
there is case-law permitting the
Court at the trial to grant a declarator. After the pre-trial minutes
had been filed he was made
aware of the decision of the Labour Appeal
Court in
Revan Civil Engineering Contractors & Others v
National Union of Mineworkers & Others
(2012) 33 ILJ 1846
(LAC) which held that the Labour Court may grant the declarator. The
applicants state that when their counsel
finally settled their heads
of argument he realised that he had not moved for an amendment in
line with the Practice Notice and
therefore the Notice for an
amendment was accordingly served and filed.
[8]
It is trite that a party can amend its pleadings at any stage of the
proceedings even after argument
but before the judgment, provided
that the other party is not to be prejudiced thereby, if to do so
would facilitate the proper
ventilation of the dispute between the
parties so that justice may be done (see
Caxton Ltd and Others v
Reeva Forman (Pty) Ltd and Another
[1990] ZASCA 47
;
1990 (3) SA 547
(A);
Morgan
and Ramsay v Cornelius and Hollis
1910 NPD 262
at 264;
Rishton
v Rishton
1912 TPD 718
at 719-720).
[9]
It was initially in dispute whether s 189 or s 189A of the LRA
applied to the retrenchment of the second
to the ninth applicants.
This much is apparent from the statement of claim and the pre-trial
minutes. When the trial commenced
the respondent conceded that s 189A
of the LRA applied. In view of the uncertainty on the process that
ought to have been followed
in effecting the retrenchments, issues
pertaining to procedural fairness were traversed in the evidence of
the respondent. Counsel
for the respondent, understandably, did not
object to this line of cross-examination. Mention should also be made
that in the pre-trial
conference minutes one of the issues the Court
was required to determine was recorded as follows:
“
In the
event of the Court deciding that s 189A was applicable and that the
provisions of s 189A are peremptory the Court is required
to decide
whether the dismissal of the second to the ninth applicants on 31
July 2011 was both procedurally and substantively fair”.
[10] The
applicants pleaded in their statement of case that s 189A applied. In
their Practice Notice filed on 24 May
2013 they make it plain that
they would seek an order declaring that their dismissals were invalid
and of no force and effect as
the respondent failed to follow s189A.
Alternatively, in the event that the Court finds that s189 was
applicable that an order
would be sought to declare the dismissal
substantively and procedurally unfair. The amendment should therefore
not come as a surprise
to the respondent.
[11]
Nothing turns in the prayer for costs against AVZ, an employer’s
organisation that assisted and/or carried
out the retrenchment on
behalf of the respondent. In my view, the question of joinder of AVZ
for the purposes of costs is not necessary
because the Court has a
discretion, in appropriate cases, to award costs against any person
who represented a party in the litigation
even if that person is not
cited
[ii]
. The following dictum
in
Sikhosana
& Others v Sasol Synthetic Fuels
(2000)
21 ILJ 649 (LC) at 663G-I is instructive:
“
At
common law it is clear that orders for costs can be given against
persons who are not parties to the litigation. The subjects
of such
orders are, typically, legal practitioners who act improperly in
conducting the case; but costs are sometimes given against
other
non-parties who have supported the litigation or have some other
connection with it. See, for an example of such a case,
Francarmen
Delicatessen (Pty) Ltd v Gulmini & another
1982
(2) SA 485
(W). In the absence of some contrary stipulation in the
Act, there is no reason why the Labour Court should not have the same
power.
It is a court that, within its province, is of equal status to
the High Court and is expressly vested with the power to make
orders for costs in the exercise of its discretion (see, in addition
to s 162(1), s 158(1)(a) (vii)).”
[12] In
Caxton Ltd and Others v Reeva Forman (Pty) Ltd and Another
[1990] ZASCA 47
;
1990
(3) SA 547(A)
at 565G-J Corbett CJ, for the Court, made the following
pronouncement:
“
Although
the decision whether to grant or refuse an application to amend a
pleading rests in the discretion of the Court, this discretion
must
be exercised with due regard to certain basic principles. These
principles are well summed up in the judgment of Caney J in
Trans-Drakensberg
Bank Ltd (Under Judicial Management) v Combined Engineering (Pty) Ltd
and Another
1967
(3) SA 632
(D) at 640H - 641C. In the portion of the passage referred
to, Caney J states (at 641A):
'Having
already made his case in his pleading, if he wishes to change
or add to this, he must explain the reason and show
prima facie that
he has something deserving of consideration, a triable issue; he
cannot be allowed to harass his opponent by an
amendment which has no
foundation. He cannot place on the record an issue for which he has
no supporting evidence, where evidence
is required, or, save perhaps
in exceptional circumstances, introduce an amendment which would make
the pleading excipiable.'
With
this should be read the remarks of De Villiers JP in
Krogman v Van
Reenen
1926 OPD 191
at 195:
'...
(H)e must show, for instance, that the matter involved in the
amendment is of sufficient importance to justify him in putting
the
Court and the other party to the manifold inconveniences of a
postponement....'
It
should further be noted that in the
Trans-Drakensberg Bank
case supra it was held that mere delay in bringing forward an
amendment is no ground for refusing it (see at 642H).”
[13] The
amendment sought cannot be said to be without any basis. As it will
later become apparent, it invokes an important
arguable question. In
my view, the resultant prejudice was not too substantial that it
could not be cured by an appropriate costs
order. To mitigate any
prejudice that the amendment could have caused to any of the parties
I issued a directive in terms of which
the parties could file further
pleadings and reopen their respective cases. Further, the parties
were informed that they could
file supplementary heads. It is
for these reasons that the application for an amendment was granted.
[14] The
respondent’s statement of defence was filed 49 days late. The
application for condonation of the late
filing thereof is unopposed.
This application was granted in the interest of justice and because
the explanation proffered is plausible.
[15]
This Court is enjoined to determine if the dismissal of the second to
the ninth applicants was fair. The respondent
bore the onus to prove
the fairness thereof. The applicants did not testify.
[16] Mr
Julius de Villiers took over the business of the respondent from his
father in December 2010. He testified that
his father left him with a
debt of approximately R7.2 million and therefore he decided to
restructure.
[17] On
25 May 2011 the union received a facsimile message from AVZ, acting
on behalf of the respondent, in which it
was informed that the
respondent contemplates to restructure its business and extending an
invitation to the union to attend a
consultation meeting in terms of
s 189 of the LRA. Mr André van Zyl of AVZ testified that when
this letter was issued a
decision had not been made that the
dismissals would take place.
[18] On
30 May 2011 the respondent provided the union with a list of names of
employees likely to be affected by the
retrenchment exercise prior to
the consultation process. On 03 June 2011 the union directed a letter
to Mr Neels van der Merwe
of AVZ in which it gave information on the
list provided by Van Der Merwe. The first paragraph of this letter
reads:
“
1)
Hiermee die inligting wat u aangevra het i.v.m die lys wat u aan my
besorg het op die 30/05/2011. Die volgende werknemers op
die lys is
nog nie lede van SAEWA nie. Meriam Hlatswayo, Talita Manotsi, Pertus
Motaung…”
[19] In
the aforesaid letter of 03 June 2011 the union informed the
respondent that Ms Marietjie Stockl was elected
as a shop steward and
requested that Stockl, employees on the list and De Villiers, the
respondent’s manager, attend the
meeting. Much was made on how
the union came to be in possession of the list. It is not certain
from the evidence who gave the
union the list because Van der Merwe
was not called to testify but from its statement of defence, the
respondent provided the list.
What is material is that the union was
in possession of the list of ‘the affected employees’ as
at 03 June 2011. AVZ
responded to the letter of 03 June 2011 on the
same day intimating that Stockl could attend the meeting and that it
was not possible
to release all the workers to attend. AVZ also
confirmed that the meeting would take place on 09 June 2011.
[20] The
first consultation between the union and AVZ was held on 09 June
2011. Present at this meeting were Mr Hennie
Stander, the regional
organiser of SAEWA and Stockl, representing unionised employees on
the one hand and on the other hand, Van
der Merwe and Van Zyl,
representing the respondent. According to Van Zyl, this was a short
meeting the aim of which was merely
to get the retrenchment process
underway. He says that this meeting was bitterly difficult as Stander
insisted that De Villiers
be present despite the fact that he was
duly represented. Van Zyl also intimates that Stander also wanted
Stockl’s name to
be removed from the list of the “affected
employees”. This is the only time, Van Zyl says, he got to know
of the existence
of the list. Under cross-examination he was
constrained to accept that the list was compiled before the
retrenchment exercise.
[21] Van
Zyl testified that at the time of the meeting of 09 June 2011 he had
not given the union information on the
number of employees that were
to be retrenched or on the timing thereof. He states that he
explained to the consulting parties
that the reason for the
contemplated retrenchment was that the respondent had several stores
in the Free State which it wished
to be operated on a similar basis.
That the key staff were to be a manager and two staff members who had
to be in possession of
the drivers’ license of which one would
have to be strong enough to load and offload the furniture. On the
terse minutes
of the meeting of 09 June 2011, which Van Zyl dismissed
as merely notes, there is no indication that the reason for the
retrenchment
was disclosed. It also does not appear on the
respondent’s statement of defence that the union was given the
reason for the
retrenchment. Be that as it may, Van Zyl says that as
he gave the reason for the retrenchment Stander stopped him and
enquired
why the respondent was not exploring offering voluntary
retrenchment packages to the employees.
[22]
Those present at the meeting of 09 June 2011 agreed to discontinue
the meeting so that the question of voluntary
retrenchments could be
considered to ascertain if there would be employees interested to opt
for this form of retrenchment. Accordingly,
on 10 June 2011 a letter
offering voluntary retrenchment packages to the employees was
distributed to about 30 of the respondents’
branches. The offer
was valid until the close of business on 13 June 2011. It is common
cause that the union advised its members
not to accept the voluntary
retrenchment packages which were set at the statutory one week’s
pay for every completed year
of service. Only one employee, Ms L
Vrey, accepted the package offered.
[23] In
the pre-trial minutes it is recorded as a common cause fact that at
the meeting referred to in the preceding
paragraph the union made the
following suggestions: that the employees be offered voluntary
retrenchments and that the services
of the employees above 65 years
of age be terminated. It is also recorded as an issue not in dispute
that the union requested disclosure
of information on: any
retrenchments that took place in the 12 months preceding the
contemplated retrenchments; the criteria to
be used to retrench
employees; and the possibility of retrenching casual employees first.
[24] Van
Zyl testified that in effecting the retrenchments he applied s 189
not s 189A of the LRA. He became aware that
s 189A applied after the
letter of voluntary severance package was dispatched to the
employees. As the cross-examination
progressed he intimated that he became aware that s 189A applied only
after the retrenchment process was completed. He added that
he was
not obliged to tell the union that s 189A applied to the
retrenchment. He says that the retrenchments were supposed to be
finalised as soon as possible, by the end of July 2011. He discussed
short-time and lay-offs of employees as alternatives to retrenchments
with De Villiers. Other alternatives were open to be discussed in
consultation with the union. Future reemployment was not offered.
[25] On
28 June 2011 AVZ directed a letter to the union inviting it to
represent the affected employees in the retrenchment
process;
confirming that it had been tentatively agreed that the meeting was
to be held in Bloemfontein on 30 June 2011 and that
the list of the
affected employees remained unchanged. Attached to this letter is a
contentious Notice in terms of s 189(3) of
the LRA dated 28 June
2011. The following is recorded in this notice:
“
Herewith
find notice in terms of
s 189(3)
of the
Labour Relations Act, 66 of
1995
, in terms of operational requirements.
a.
The reason for the retrenchment is due to restructuring of the
business.
b.
The Employer considered alternative employment, reduction in
salaries
and short time. The Union and Management agreed to forward an
offer of voluntary retrenchment. One Employee was
interested in the
voluntary retrenchment offer.
c.
The Employer Party contemplates that 15 (fifteen) Employees
might be
retrenched.
d.
The Employer Party contemplates that the retrenchment will take
effect on the 31
st
of July 2011.
e.
Criteria used are due to special needs of the business and the
LIFO
principle.
f.
The Employer Party proposes one (1) week severance pay for every
completed year of service.
g.
The Employer Party proposes to assist Employees by issuing a
UI 19
document and looking for alternative employment.
h.
The Employer Party cannot consider re-employment due to the
restructuring of the business.
i.
The Employer employs 168 (hundred and sixty eight) employees.
j.
The Employer dismissed no Employees in terms of operational
requirement in the preceding twelve months.
k.
Herewith find express notification of termination of employment
contract as required by the
Basic Conditions of Employment Act.
If
you need any information, do not hesitate to contact the writer.”
[26]
Van Zyl did not attend the meeting of 30 June 2011 but Van der Merwe
did. According to a report Van Zyl says he
received, Stander and
Stockl attended the meeting only to inform Van der Merwe that they
would respond to the Notice in terms of
s 189(3)
in writing. The
hand-written minutes of the meeting of 30 June 2011 contained in the
respondent’s bundle, on the contrary,
merely states that the
Notice in terms of
s 189(3)
was handed over to the union and that
Stander and Stockl acknowledged receipt thereof.
[27] In
paragraph ‘K’ of the Notice in terms of
s 189(3)
referred
to earlier the second to the ninth applicants were given express
notification of termination of their contracts of employment.
The
minutes of 30 June 2011 referred to in the preceding paragraph are
quite revealing of the approach adopted by the respondent
in
dismissing the applicants than that professed by it in the following
way.
27.1
Van der Merwe recorded on these minutes a telephone call at 10h00 on
the same day as follows:
“
betrokke lede moet nie aanmeld vir
diens Julie 2011”.
27.2
In the next page of these minutes the following telephonic
conversation in a hand-written
form is also recorded by Van der
Merwe:
01 July 2011
“
Julius bel my. Hy sê
Marietjie sê Hennie [Stander] sê hy kan nie sy mense
inlig nie want dit is telefonies aan
hom oorgedra”.
27.3
On same date Van der Merwe recorded sending a Short Message Service
(SMS) to Stander which
reads “
Geliewe asb, al u betrokke
lede in te lig dat hulle pligte othef is vir Julie 2011 soos
telefonies met u bespreek. Dankie Neels.”
27.4
On the same day at 7h45 Van der Merwe records again: “
Hennie
bel my. Hy sê dat dit is nie sy plig om sy lede in te lig nie.
Dit is die werkgewer se verantwoordelikheid om dit te
doen. Hy sal
terugvoering van hulle kry. Ek sê vir hom dit is sy
verantwoordelikheid om sy unie se lede in te lig van die
retrenchment
”.
[28]
Despite these notes, De Villiers testified that the employees were
given the option to report or not to report
for duty after they were
served with the Notices in terms of
s 189(3)
which incorporated the
notice of termination of their services. Ultimately, the listed
employees were retrenched. Their last day
of work was 31 July 2011
but before then, on 07 July 2011, letters were distributed to the
already dismissed employees. They read:
“
It
is with regret that Titancor Sixteen (Pty) Ltd has to inform you of
the termination of your service due to the retrenchment procedures.
Titancor
Sixteen (Pty) Ltd and you and/or your Union representative have been
in extensive consultations regarding the retrenchment.
During these
consultation meetings, the Company followed the Provisions of
Section
189
of the
Labour Relations Act, Act
66 of 1996, to the letter.
The
Following have been agreed upon:
1.
That a fair procedure was followed in terms of
Section 189
of the
Labour Relations Act.
2.
That
fair objective criteria were implemented to
nominate affected Employees.
3.
No alternative to the retrenchment could be
implemented.
4.
The retrenchment will take effect on 31 July 2011.
It
was further agreed that the following payments are due to you.
Notice
pay for month of July 2011
……..
Retrenchment
Package
…
weeks
Prorata
Leave Pay
… days
…….
Total
…….
Notice
Pay will be paid out on 31 July 2011. Please check if you agree
with the pro rata leave pay and the retrenchment totals.
You
have until Friday 12 August 2011 to log any queries. If no
queries were logged it will be assumed as correct and be paid
out as
is.”
[29] The
aforesaid letters sparked controversy because Van Zyl testified that,
insofar as they demonstrate that the
respondent and the
union/employees agreed on certain issues mentioned therein, it is not
true. He added that this was a standard
pro forma
communique
AVZ used in retrenchment processes generated by his office. He says
that there was no agreement: that a fair procedure
had been followed;
that a fair and objective criteria was implemented; on the
alternatives to retrenchment; on the timing of the
dismissals; or on
the retrenchment packages payable to the employees.
[30] On
11 July 2011, despite the purported notice of termination of
employment, AVZ addressed a further letter to the
union. Of relevance
in this letter is that mention is made that the respondent was
willing to consult on the contemplated retrenchment
and to provide
the union with any relevant information and to consider the union’s
representation. On 25 August 2011 AVZ
directed a further letter to
the union still expressing the respondent’s willingness to
consult.
[31] Mr
Landman, for the applicants, contended that the respondent’s
evidence was of a poor quality and did not
merit any response from
the applicants. He argued that a proper case had been made out for a
declaratory relief in that the notice
of termination of the
applicants’ contracts of employment was premature. In the
alternative, counsel argued that the Court
should declare that the
dismissals of the second to the ninth applicants were substantively
and procedurally unfair.
[32] Mr
venter, for the respondent, argued that the Court should draw an
adverse inference on the applicants’
failure to testify. He
contended that an answer was required of them to explain,
inter
alia
, why they advised their members against acceptance of
voluntary severance packages; why they felt that there was no reason
to restructure
or felt that the restructuring process was
unnecessary; why they displayed indifference to correspondence
forwarded to them and
had not provided a response.
[33]
The respondent approached the retrenchment on the basis that
s 189
as
opposed to
s 189A
of the LRA applied.
Van
Zyl was unable to give good reason why the respondent followed
s 189
instead of
s 189A.
Mr Venter contended that the respondent made a
bona fide
mistake in invoking the provisions of
s 189
of the LRA when it embarked on the retrenchment exercise. That
it followed the provision of
s 189
with no resultant prejudice to the
applicants and urged the Court to approach this matter on that basis
and conclude that the procedure
leading to the termination of the
applicants’ services was effected fairly as envisaged in
s 189
of the LRA. Mr Landman
countered that the respondent was ably represented by well-qualified
and experienced labour law specialists
during the retrenchment
process. In any event, he contended, the respondent’s alleged
bona fide
error was not pleaded. He pressed
that failure to follow
s
189A
in circumstances where it applied, is itself an act of
procedural unfairness.
[34]
The
application of
s 189
or
189A
to a particular retrenchment exercise is
determined with reference to the number of employees the employer
contemplates to dismiss
in relation to its total workforce. In this
case, the union was advised, for the very first time, that the
employer employed 168
employees and that it contemplates dismissing
15 employees on 28 June 2011 when it was served with the Notice in
terms of
s 189(3).
[35]
Section 189A
applies to the large-scale retrenchments exercises. The
primary difference between s 189 and
s 189A
retrenchments is that in
the latter instance the employees may resort to strike in order to
dissuade their employer from terminating
their services on account of
its operational requirements. In addition, either the employer or the
employees may compel the other
to submit to facilitation by the
Commission for Conciliation Mediation and Arbitration (CCMA) or an
accredited agency during the
consultation process. What
s 189A
entails was lucidly explained in
National Union of Metalworkers of
SA & others v SA Five Engineering & others
(2004) 25 ILJ
2358 (LC) at 2361-2362 para 7 as follows:
“
[7]
Section 189A
sets out to accomplish several objectives. First and
foremost it bestows on employees in significant operational
requirement dismissals
a choice between industrial action and
adjudication as the means of attempting to resolve the dispute. To
minimize avoidable strikes
and litigation, the section allows for the
possibility of compulsory facilitation by the CCMA, if either the
employer or a consulting
party representing the majority of employees
targeted for dismissal requests it. Otherwise the parties are free to
agree to voluntary
facilitation
(s 189A(3)
and (4)). The appointment
of a facilitator suspends the employer's right to dismiss for 60
days. After the period has expired the
employer may give notice of
termination of employment. Once the notice of termination is given,
the employees have the choice of
either embarking on lawful
industrial action or referring a dispute regarding substantive
fairness to the Labour Court -
s 189A(7).
Once there is a referral to
the Labour Court the right to strike is no longer available. Equally,
if no facilitator is appointed,
neither party may refer a dispute to
the relevant bargaining council or the CCMA for 30 days from the date
of a
s 189A(3)
notice. Thereafter the employer is free to give notice
of termination and the employees are compelled to opt for industrial
action
or a referral of the dispute about substantive fairness to the
Labour Court.
What
is most notable about this scheme for present purposes, is that
referrals to the Labour Court are overtly restricted by
s
189A(7)(b)(ii)
and
189A
(8)(b)(ii)(b) to disputes "concerning
whether there is a fair reason for the dismissal", in other
words disputes about
substantive fairness. Moreover, both provisions
state expressly that the referral is to be made in terms of
s
191(11)
, the provisions of which appear below. Disputes about
procedure in cases falling within the ambit of
s 189A
cannot be
referred to the Labour Court by statement of claim, but must be dealt
with by means of motion proceedings as contemplated
in
s 189A(13)
,
the exact scope of which I will return to presently. Suffice it now
to say that the intention of
s 189A(13)
, read with
s 189A(18)
, is to
exclude procedural issues from the determination of fairness where
the employees have opted for adjudication rather than
industrial
action, providing instead for a mechanism to pre-empt procedural
problems before the substantive issues become ripe
for adjudication
or industrial action.”
[36] It
is hard to imagine how the proposition advanced by Mr Venter can be
practicable. The difficulty in this is that
s 189
cannot apply in an
instance were
s 189A
had to apply. To hold
otherwise may lead to absurdity and create a situation where the
employer has an election to follow either
of the sections of the LRA
despite the number of employees it contemplates retrenching in
relation to its total workforce. The
respondent made a concession
that
s 189A
applied. So be it.
The
analysis on the substantive fairness of the dismissal:
[37]
In
SA Chemical
Workers Union & Others v Afrox Ltd
(1999)
20 ILJ 1718 (LAC) at 1727 para 38
Froneman
DJP held:
“
[38]
It follows that it can no longer be said that the court's function in
scrutinizing the
consultation process in dismissals for operational
requirements is merely to determine the good faith of the employer
(compare
SACTWU
& others v Discreto (A Division of Trump & Springbok
Holdings)
[198]
12 BLLR 228
(LAC); (1998) 19 ILJ 1451 (LAC) para [8]). The matter is
now one of proof by the employer, on a balance of probabilities of -
•
the
cause or reason for the dismissal..
•
the
defined 'operational requirements' that the dismissal was based on..
•
a fair
procedure in accordance with
s 189
…
•
the
facts upon which a finding of a substantively fair reason for the
dismissal can be made (para [36]) above).”
[38]
Section 189A(19)
provides:
“
In
any dispute referred to the Labour Court in terms of
section 191
(5)
(b) (ii) that concerns the dismissal of the number of employees
specified in subsection (1), the Labour Court must find that
the
employee was dismissed for a fair reason if-
(a)
the dismissal was to give effect to a requirement based on the
employer's
economic, technological, structural or similar needs
(b)
the dismissal was operationally justifiable on rational grounds;
(c)
there was a proper consideration of alternatives; and
(d)
selection criteria were fair and objective.”
[39]
Once it is established that the decision to retrench is based upon
sound economic considerations the Court will
not interfere with that
decision if it was taken in business way with a view,
inter
alia
,
to cutting losses or even improving profits. See
Môrester
Bande (Pty) Ltd v National Union of Metalworkers of SA & another
(1990)
11 ILJ 687 (LAC) at 689.
Our
case law is replete that it is not the function of the Court to
second-guess the employer's decision to retrench
[iii]
.
The Court should nevertheless determine if a rational basis exists
for the retrenchment.
[40] The
respondent’s alleged financial difficulty, which it contends
triggered the retrenchment exercise, is
problematic. No documentary
evidence was put before Court in support of the respondent’s
case that its business experienced
financial hardship at the time of
the retrenchments. De Villier’s cross-examination elicited that
around January to April
2011 or when the respondent embarked on the
retrenchment exercise its business was profitable and not in any
financial crisis.
Ultimately, it is for the respondent to satisfy the
Court that there was a
bona fide
economic or commercial reason
to retrench. Therefore, it can hardly be said that there was a
commercial rational to dismiss the
second to the ninth applicants.
[41] Mr
Landman argued that, with the present retrenchments, the respondent
aimed to rid itself of trade union members
by reducing the number of
employees who were union members in anticipation of the time when it
had to sign the recognition agreement.
Counsel contended that this
agreement provides that the respondent must recognise the union if
its membership is and remains at
50% plus one. When the membership
falls below this number the respondent need not interact with the
union. That the respondent
aimed to get rid of the unionised
employees cannot be discerned from the papers or from the evidence.
To the contrary, the evidence
shows that almost half of retrenchees
were not unionised.
[42]
Quite apart from the purported economic rational, which the
respondent claimed necessitated the retrenchment, the
respondent’s
case is that it needed to restructure its business in order to
achieve a uniform structure and to improve efficiency
at its head
office. The restructuring of the business somewhat conflates with the
selection criteria. Therefore they are dealt
with together.
[43] In
terms of
s 189A(19)(d)
the selection criteria in respect of employees
likely to be dismissed must be fair and objective. De Villiers
testified that when
he selected employees to be retrenched he
gathered information from the personnel records. His selection was
based on the last
in first out (LIFO) method. He also looked at the
special needs of the business. At a branch level he required a
manager and two
employees. One of these two employees had to hold a
driver’s licence and the other to be strong enough to load and
offload
the furniture. He conceded that the affected employees on the
list he compiled were not necessarily of the shortest duration of
service. He could not say how long the applicants had been in the
service of the respondent nor could he recall how he came to
select
the individual employees on the list, save that it was based on
criteria already mentioned. The respondent may have had
the need to
restructure its business but the manner in which it went about it was
wrong as it shall later become apparent.
[44]
With regard to alternatives considered by the respondent in an
attempt to avert the dismissals, De Villiers stated
that he did not
consider same because of the structural changes of the business.
Insofar as the Notice in terms of
s 189(3)
, referred to in para 25
hereinbefore, suggests that the respondent considered alternative
employment, reduction in salaries and
short-time, De Villiers
testified that it would have been futile to consider alternative
employment as this would not fit in with
the new structure.
Similarly, it will be pointless to reduce the salaries if the purpose
of the retrenchment was to reduce the
number of employees. Likewise,
the short-time was not considered. This evidence should put an end to
an enquiry into the question
whether the respondent considered
alternatives to retrenchment because it did not.
The
analysis on the procedural fairness of the dismissal:
[45]
It is trite that the Labour Court may not adjudicate a dispute about
the procedural fairness of a dismissal based on
the employer's
operational requirements in any dispute referred to it in terms of
s
191(5)(b)(ii)
(sees
189A
(18)). The respondent contended that the
applicants chose not to avail themselves of the remedies set out in
s
189A(13)
of the LRA from 25 May 2011 when they were invited to
consult, until 31 July 2011 when their contracts of employment came
to an
end. Mr Venter argued that the respondent was not exclusively
to blame for the procedural defects. The applicants were just as much
to blame.
[46]
Section 189A(13)
of the LRA provides:
“
(13)
If an employer does not comply with a
fair procedure, a consulting party may approach the Labour
Court by
way of an application for an order-
(a)
compelling
the employer to comply with a fair procedure;
(b)
interdicting or restraining the employer from
dismissing an
employee
prior
to complying with a fair procedure;
(c)
directing the employer to reinstate an
employee
until it has complied with a fair procedure;
(d)
make an award of compensation, if an order in
terms of paragraphs
(a)
to
(c)
is not
appropriate.”
[47]
In
National
Union of Mineworkers & others v Revan Civil Engineering
Contractors & others
(2011) 32 ILJ 2167 (LC) at 2177 para 43 the Court held that where the
employees were not afforded an election contained in
s 189A(3)
, that
is, a request for the appointment of a facilitator to assist the
parties engaged in consultations because the respondent
chose to
conduct the retrenchment as though
s 189A
did not apply the employees
cannot lose their right to claim procedural fairness of their
dismissal.
[48]
Section 189
, provides in part:
“
(2)
The employer and the other consulting parties must in the
consultation envisaged by subsections (1) and (3) engage in a
meaningful
joint consensus-seeking process and attempt to reach
consensus on-
(a)
appropriate measures-
(i)
to avoid the dismissals;
(ii)
to minimise the number of dismissals;
(iii)
to change the timing of the dismissals; and
(iv)
to mitigate the adverse effects of the dismissals;
(b)
the method for selecting the employees to be dismissed; and
(c)
the severance pay for dismissed employees.
(3)
The employer must issue a written notice inviting the other
consulting party to consult with it and disclose in writing all
relevant information, including, but not limited to-
(a)
the reasons for the proposed dismissals;
(b)
the alternatives that the employer considered before proposing the
dismissals, and
the reasons for rejecting each of those alternatives;
(c)
the number of employees likely to be affected and the job categories
in which they
are employed;
(d)
the proposed method for selecting which employees to dismiss;
(e)
the time when, or the period during which, the dismissals are likely
to take effect;
(f)
the severance pay proposed;
(g)
any assistance that the employer proposes to offer to the employees
likely to be dismissed;
(h)
the possibility of the future re-employment of the employees who are
dismissed;
(i)
the number of employees employed by the employer; and
(j)
the number of employees that the employer has dismissed for reasons
based on
its operational requirements in the preceding 12 months.
(4) (a)
The provisions of
section 16
apply, read with the changes required by
the context, to the disclosure of information in terms of subsection
(3).
(b)
In any dispute in which an arbitrator or the Labour Court is
required to decide whether or not any information is relevant,
the
onus is on the employer to prove that any information that it has
refused to disclose is not relevant for the purposes for
which it is
sought.
(5)
The employer must allow the other consulting party an
opportunity during consultation to make representations about any
matter dealt with in subsections (2), (3) and (4) as well as any
other matter relating to the proposed dismissals.”
[49] The
applicants could not have known if
s 189
or
189A
applied if the
respondent had not furnished them with the relevant information as
required in terms of
s 189(3)
and had dealt with the retrenchment as
if
s 189
applied. As already alluded, they became aware of this fact
on 28 June 2011. Ordinarily the Notice in terms of
s 189(3)
should
precede the consultation process so as to enable the union to make
representations and meaningful contributions on issues
enumerated in
s 189(2)
, (3) and (4). This would also serve to give an indication to
the union if
s 189
or
189A
applied. In
De Beers Group Services
(Pty) Ltd v National Union of Mineworkers
(2011) 32 ILJ 1293
(LAC) 1302-1303 para 31-32 the Court enunciated on the duty to
consult as follows:
“
[31]…
Section
189(1)
creates a duty upon the employer to consult in the event of a
contemplation of dismissal for operational requirements.
Section
189(2)
provides that the employer and the other consulting parties
must, in the consultation as envisaged by subsections (1) and (3),
engage in a meaningful and joint consensus-seeking process in an
attempt to reach consensus on what are considered to be appropriate
measures to deal with the contemplation of dismissal. Thus,
subsection (2) gives content to the general duty in terms of
s
189(1)
, namely that an employer, when it contemplates dismissing one
or more employees on the basis of operational requirements must
consult
either the parties as set out in terms of a collective
agreement, the workplace forum and the registered trade union whose
members
who are likely to be affected by the proposed dismissals or,
in the absence of a union, the employees likely to be affected by the
proposed dismissals or their representatives nominated for that
purpose.
[32]
The section contemplates a dispute, namely that the employees, quite
obviously,
do not accede to losing their employment and there is then
a need for a fair process. Hence a consultation process is designed
to ensure that some form of consensus can be reached as to how to
deal with a problem of a reduction of a workforce based on the
employer's operational requirements…”
See also
Johnson
& Johnson v Chemical Workers Industrial Union & others
(1999)
20 ILJ 89 (LAC) at 95 para 27;
Moodley v Fidelity Cleaning
Services (Pty) Ltd t/a Fidelity Supercare Cleaning
(2005) 26 ILJ
889 (LC) at 901 para 34.
[50]
The respondent did little it was statutorily enjoined to do. One
aspect which is particularly lamentable and holds
true is that the
respondent held no proper consultation with the union. Apart from the
brief meeting of 09 June 2011, which was
stopped to explore voluntary
retrenchment, there is nothing in the evidence suggesting that any
further consultation took place.
[51]
There are two issues which stood out in the flawed consultation
process which I now turn to. The first issue is
the list of employees
likely to be affected by the retrenchment which the respondent
forwarded to the union before the retrenchment
process could be set
in motion. The disclosure of the names of employees likely to be
retrenched prior to the consultation process
was irregular. In
Mabaso
& others v Universal Product Network (Pty) Ltd
(2003)
24 ILJ 1532 (LC) the employer identified and selected employees for
retrenchment before the commencement of the consultation
process. At
1546-1549 paras 67-69 the Court held that this led to the dismissal
being procedurally unfair and that the ensuing
consultation was a
sham.
In
Goldfields Trust (Pty) Ltd &
Another v Stander & Others
[2002]
9 BLLR 797
(LAC) at 806 C-D the Court made the following
pronouncement:
“
[23]…In
those circumstances I am satisfied, like the court a quo, that a
final decision of the respondents was taken before
the consultation
process was initiated and that, for that reason, the consultation
process that took place in this matter did not
comply with the
requirements of
section 189.
This rendered the dismissal procedurally
unfair.”
[52]
The second issue is the notice of termination of service. It is
inconceivable that on 28 June 2011 a Notice in
terms of 189(3),
inviting the union to consult, encapsulated an effective notice of
termination of the second to the ninth applicants’
contracts of
employment. In my view, after the employees had received notice of
termination of the employment ties, there could
not have been a
genuine endeavour to consult. In truth, there was nothing to
consult on as the final decision to retrench
had been announced. The
applicants were simply not afforded the opportunity to question their
dismissals and to defend their
employment. The inescapable conclusion
is that the respondent conducted the consultation process with undue
haste contrary to a
meaningful joint-consensus seeking process
envisaged by the Act.
[53] Central to the applicants’ contention is the
question of the premature notice of termination of employment. The
date of delivery of the Notice in terms of s 189(3) is pivotal to the
calculation of the number of days that must lapse before
the employer
may give notice of termination of service. In this case parties had
not sought facilitation (s 189A(7)) therefore
s 189A(8) applied
[iv]
.
Where a facilitator has not been appointed and a dispute exists
between the parties, a period of 60 days should lapse before the
employer can give notice to terminate the contracts of employment.
See
Leoni
Wiring Systems (East London) (Pty) Ltd v National Union of
Metalworkers of SA & others
(2007)
28 ILJ 642 (LC) at 652 para 21.
[54] The
notice of termination of service issued simultaneously with the
Notice in terms of s 189(3) was woefully premature
and improper
because such a notice of termination could only have been issued
after the lapse of 60 days from the date the Notice
in terms of s
189 (3) was issued.
[55]
In
De Beers Group
Services (Pty) Ltd v National Union of Mineworkers
supra
at 1299-1300 paras 19-21 the Court held:
“
[19] In
National
Union of Mineworkers v De Beers Consolidated Mines (Pty) Ltd
(2006)
27 ILJ 1909 (LC) Freund AJ considered the implications of s 189A(8)
read together with s 189A(2) which provides
inter
alia
that
an employer must give notice of termination of employment in
accordance with the provision of the section. Reading the two
sections together, Freund AJ held at para 35:
'I think it is
clear that the lawgiver intended that the employer may only give
notice to terminate the contracts of employment
if the periods
mentioned in s 64(1)(a) have elapsed.'
[20]
Accordingly, where a facilitator is not appointed, s 189A(8) is the
operative provision. Thus (at para 36):
'A well
advised employer intent upon giving notice to terminate the contracts
of employment as soon as is lawfully permissible is
not prevented by
s 189A(8) from giving such notices for any longer than the same
60-day period. To procure this result the employer
must ensure that
the relevant dispute is referred to a bargaining council or the CCMA
as soon it is permissible in terms of s 189A(8)(a),
ie as soon as 30
days have elapsed from the date on which the notice was given in
terms of s 189(3). Of course, the employer is
not obliged to refer
the dispute at the earliest permissible moment, but if it fails to do
so, the consequence may be that, if
agreement is not reached in
respect of the retrenchments and the dispute is referred for
conciliation, it will have to hold off
from issuing notices of
termination for the periods mentioned in s 64(1)(a).'
[21]
In my view, this approach, as adopted by Freund AJ, is the only one
which is clearly justified in terms of the express wording
of s
189A(8). The section envisages that a period of 30 days must have
lapsed from the date on which notice was given in terms
of s 189(3)
before the party may refer the dispute to the council or the
commission. In addition to the 30-day period, there is
the further
period set out in s 64(1)(a) which must lapse before the employer can
give notice to terminate the contracts of employment.
Hence if a
dispute existed, the question arises whether it should have been
referred, that is after the initial 30-day period.”
Conclusion:
[56]
In
National
Union of Mineworkers & others v Revan Civil Engineering
Contractors & others
(supra)
at 2175-2176 paras 34-36 the Court had to consider what the effect of
the employer’s failure to conduct the retrenchment
in terms of
s 189(A) was in the case where it conducted same in terms of s 189
and secondly, whether the Court could make an order
on procedural
fairness of the dismissal where the respondent acknowledged that 189A
was applicable. In that case the Court concluded
that, on proper
reading of s 189A, the remedy of a declaration of invalidity of
notices of termination, may only be granted on
an interim basis,
pending compliance with its provisions not in trial proceedings where
such an order will be final in effect.
On appeal:
Revan
Civil Engineering Contractors & others v National Union of
Mineworkers & others
(2012)
33 ILJ 1846 (LAC) at 1849 paras 12-14 the Court held:
“
[12]
Does s 189A(18), where it applies, preclude the Labour Court from
deciding whether the foundation for a claim based on
an alleged
unfair dismissal exists? This subsection reads:
'The Labour
Court may not adjudicate a dispute about the procedural fairness of a
dismissal based on the employer's operational
requirements in any
dispute referred to it in terms of section 191(5)(b)(ii).'
[13]
Unless there has been a valid dismissal a court may not consider nor
grant any relief on the basis that the dismissal was unfair.
Section
189A(18) is not intended to disturb this fundamental principle. This
subsection cannot be read so as to preclude a party
from alleging
that the very foundation for a claim based on the substantive
unfairness of a dismissal does not exist in law. If
this were to be
the case, it would lead to the absurd result that employees could be
reinstated or compensated although the law
did not recognize that
they had lost their jobs.
[14]
The court a quo should have declared that the dismissals of the
employees were invalid for being in breach of the provisions
of s
189A of the LRA.”
[57]
If the employer fails to comply with the mandatory requirement of
consultation in terms of s 189(2) and moves to
terminate the
employment in breach of these provisions, then the dismissal must be
considered to be invalid and accordingly of
no force and effect
[v]
.
I am bound to follow the approach enunciated by the Labour Appeal
Court in
Revan
Civil Engineering Contractors & others
supra.
[58] On
the analysis set out above, even if the retrenchment process was to
be approached on the basis that s 189 applied,
the respondent would
still have failed to discharge the onus that the dismissal was
substantively and procedurally fair. The corollary
of this is that
the dismissal of the second to the ninth applicants should be
declared invalid for being in breach of the provisions
of s 189A of
the LRA.
[59]
I should mention at this juncture that the respondent accused the
union of having been uncooperative and that it
had stymied the
consultation process. Even assuming that the union had advised its
members not to accept the voluntary retrenchment
packages it is still
incumbent on the respondent to follow due process. Where the union
frustrates the process the employer must
attempt to follow a fair
procedure to the extent that it is possible and to arrive at a fair
decision due to the onus placed on
it.
[vi]
On the
question of costs:
[60] Mr
Landman argued that costs on a punitive scale be awarded against the
respondent and AVZ jointly and severally.
As against AVZ, he
contended that this should be for the role it played during the
impugned retrenchment process. A critique of
Van Zyl’s conduct
in the manner he drove the retrenchment process became the hall-mark
of the prayer for costs against AVZ.
Mr Landman regurgitates the
argument on the unfairness of the retrenchment process to justify the
award of costs on an attorney
and own client scale.
Inter alia
,
in respect of Claim “A”, the fact that the concession in
respect of the applicability of s 189A was belated; in respect
of
Claim “B”, that the applicants had already expended
considerable effort to prepare for the trial on the basis that
liability was disputed only to be met with a concession at trial.
[61]
In
Waar v Louw
1977 (3) SA 297
(O) the Court held
the administration of justice is sometimes an irritating discipline
and that even the most skilful practitioners
can make mistakes which
cause unnecessary costs.
AC
Cilliers on Law of Costs 4-14 para 4.09 states:
“
In
Van
Wyk v Millington
[1948
(1) SA 1205(C)]
it was pointed out that the court’s reluctance
to award attorney and client costs against a party is based on the
right of
every person to bring his complaints or his alleged wrongs
before the court to get a decision, and he should not be penalised if
he is misguided in bringing a hopeless case before the court. If,
however, the court is satisfied that there is an absence of
bona
fides
in
bringing or defending an action it will not hesitate to award
attorney and client costs.”
[62]
I am not persuaded that this is a case where the Court should, to
borrow the words used in
Waar
v Louw
supra, ‘crack the whip’ by means of an order that
respondent pay costs on a punitive scale let alone that AVZ
pay the
applicants’ costs. In my view, it would be in accordance with
the requirements of law and fairness that the respondent
should pay
the applicants' costs on party and party scale.
[63]
In the result I make the following order:
ORDER:
1.
In respect of Claim “A”,
it is declared that the dismissals of the second to the ninth
applicants are invalid and null
and void.
2.
In respect of Claim “B”,
the respondent is to pay the third, fourth, fifth, sixth, seventh and
ninth applicants the
amounts set out in annexure “B” to
the pre-trial minutes being the underpayments made under Sectoral
Determination
No 9, Wholesale and Retail Sector together with
interest thereon at the rate of 15.5% per annum from date of this
order to date
of payment.
3.
The respondent is ordered to pay the
applicants’ costs.
___________________________
MV
PHATSHOANE
ACTING
JUDGE
LABOUR
COURT
On
behalf of the applicants: Adv A.P. Landman instructed by Graham
Attorneys
On
behalf of the respondents: Adv P.M. Venter instructed by HV Jordaan
Inc.
[i]
Section
74(2)(a) of the Basic Conditions of employment Act, 75 of 1997,
provides: “If an employee institutes proceedings
for unfair
dismissal, the Labour Court or the arbitrator hearing the matter may
also determine any claim for an amount that is
owing to that
employee in terms of this Act if-
(a)
the claim is referred in compliance with
section 191
of the
Labour
Relations Act, 1995
;”
[ii]
In terms of
s
162(3)
of the LRA the Labour Court may order costs against a party
to the dispute or against any person who represented that party in
those proceedings before the Court.
[iii]
See for
example,
Kotze
v Rebel Discount Liquor Group (Pty) Ltd
(2000)
21 ILJ 129 (LAC) at 133E-G;
SA
Clothing & Textile Workers Union & others v Discreto - A
Division of Trump & Springbok Holdings
(1998)
19 ILJ 1451 (LAC) at 1454J-1455A.
[iv]
Section
189A(8)provides:
If a facilitator is not appointed-
(a)
a party may not refer a dispute to a council or the Commission
unless a period of 30 days has lapsed from the date on which notice
was given in terms of
section 189
(3); and
(b)
once the periods mentioned in
section 64
(1) (a) have elapsed-
(i)
the employer may give notice to terminate the contracts of
employment
in accordance with section 37 (1) of the Basic Conditions
of Employment Act; and
(ii)
a registered trade union or the employees who have received notice
of termination may-
(aa)
give notice of a strike in terms of section 64 (1) (b) or (d); or
(bb)
refer a dispute concerning whether there is a fair reason for the
dismissal
to the Labour Court in terms of section 191 (11).
[v]
See
De
Beers Group Services (Pty) Ltd v National Union of Mineworkers
(2011)
32 ILJ 1293 (LAC) at 1304 para 36
[vi]
See
National
Union of Metalworkers of SA v Ascoreg
(1999)
20 ILJ 2649 (LC) at 2651 para 9