About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Labour Appeal Court
SAFLII
>>
Databases
>>
South Africa: Labour Appeal Court
>>
2020
>>
[2020] ZALAC 34
|
|
South African Airways (SOC) Limited (In Business Rescue) and Others v National Union of Metalworkers of South Africa obo Members and Others (JA32/2020) [2020] ZALAC 34; [2020] 8 BLLR 756 (LAC); (2020) 41 ILJ 2113 (LAC); 2021 (2) SA 260 (LAC) (9 July 2020)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case
No: JA32/2020
In
the matter between:
SOUTH
AFRICAN AIRWAYS (SOC) LIMITED
(In
Business
Rescue)
First Appellant
LESLIE MATUSON
N.O.
Second Appellant
SIVIWE
DONGWANA
N.O.
Third Appellant
and
NATIONAL
UNION OF METALWORKERS
OF
SOUTH AFRICA obo MEMBERS
First Respondent
SOUTH
AFRICAN CABIN CREW
ASSOCIATION
obo MEMBERS
Second Respondent
AVIATION
UNION OF SOUTH AFRICA
Third Respondent
NATIONAL
TRANSPORT MOVEMENT
Fourth Respondent
SOUTH
AFRICAN AIRLINE PILOTS
ASSOCIATION
Fifth Respondent
SOUTH
AFRICAN TRANSPORT AND
ALLIED
TRADE UNION
Sixth Respondent
SOLIDARITY
Seventh Respondent
NON-UNIONISED
EMPLOYEES
Eighth Respondent
THE
COMMISSION FOR CONCILIATION,
MEDIATION
AND ARBITRATION
Ninth Respondent
Heard:
30 June 2020
Delivered:
09 July 2020
Coram: Phatshoane
ADJP, Davis JA, Musi JA.
JUDGMENT
___________________________________________________________________
PHATSHOANE
ADJP
[1]
This appeal relates to the vexed question when may a business rescue
practitioner
commence retrenchment proceedings under s 189 of the
Labour Relations Act, 66 of 1995 (“the LRA”). The answer
lies
in the correct interpretation of s 136(1)(
b
) of the
Companies Act,71 of 2008 (“the Companies Act”).
[2]
The appeal, with the leave of the Labour Court (
per
Van
Niekerk J), is against the whole of its judgment and order issued
under Court Case No: J424/20 on 07 May 2020. The Labour Court
found
that the business rescue practitioners’ (BRPs’) conduct
in issuing a notice in terms of s 189(3) of the LRA was
procedurally
unfair and directed that the concerned notice be withdrawn.
[3]
The factual matrix culminating in this appeal has been set out
in some detail in
the judgment of the Labour Court. An
abbreviated version will suffice. The financial woes experienced
by the South
African Airways (SOC) Limited (“SAA”), the
first appellant, over a protracted period of time is a matter of
public
record. On 05 December 2019 SAA was placed under voluntary
business rescue. Messrs Leslie Matuson and Siviwe Dongwana NNO, the
second and third appellants, were appointed as the business rescue
practitioners to oversee its affairs.
[4]
On 11 November 2019, prior to the commencement of the business rescue
proceedings,
the SAA management proposed a reorganisation of its
business in which it was envisaged that 944 employees of a workforce
of about
4 700 may be dismissed for operational reasons. A
retrenchment process commenced with the issue of a s 189(3) notice to
the employees.
The consultation process was initially deferred to
January 2020, but after the appointment of the business rescue
practitioners,
it was aborted. The formal communication of the
abandonment of that process was sent to the unions on 13 March
2020.
[5]
The business rescue process has not proceeded smoothly. There is no
dispute that after
taking control of the business, the BRPs examined
the business and found it haemorrhaging money unsustainably. The
company was
hit by a loss of confidence in its business by travel
trade partners and customers. This required additional funding from
outside
investors. The BRPs took steps to alter business practices in
early February 2020 by closing routes and reducing flights in order
to decrease costs and to limit the “burn of cash”
injection into the business as a measure of last resort.
[6]
This reorganisation of the
business was interpreted by NUMSA, the first respondent, and
certain
unions to be the commencement of a retrenchment process. As a
consequence, the unions launched an urgent application on
09 February
2020 in the Labour Court under Case No: J149/20 which came before
Moshoana J on 14 February 2020. They sought to interdict
the mooted
retrenchment as procedurally unfair on the basis that no notice in
terms of s189(3) of the LRA had been issued by the
employer. The
application was dismissed on the basis that, at that stage, the BRPs
had not yet contemplated dismissals for operational
requirements and
the retrenchment obligations imposed by the LRA on SAA had not yet
arisen. During this application NUMSA argued
that a retrenchment
process had
de facto
commenced and that the BRPs ought to have
issued a s 189 notice commencing the retrenchment. This argument was
rejected by the
Labour Court.
[7]
On 09 March 2020 the BRPs issued a notice in terms of s 189/189A of
the LRA in which
they invited the employees and the unions to consult
over the proposed retrenchments. The effect of that notice, in light
of the
scale of the proposed retrenchment and the size of SAA's
business, ushered in a 60-day period during which consultation should
take place. The notice highlighted that SAA’s business was not
financially or economically viable and that the company required
a
fundamental restructuring of its business affecting potentially all 4
700 employees. In the envisaged structure 2 440 jobs would
exist,
comprising existing or newly restructured positions. It was
anticipated that initial consultations would be held on 12 March
2020
and that the 60 day period for consultation as envisaged in s 189A of
the LRA would end on 08 May 2020. Any termination notices
would be
issued with effect from 10 May 2020.
[8]
On 15 March 2020, the President declared a National State of Disaster
(NSD) due to
the Covid-19 pandemic. Following this, on 19 March 2020,
the BRPs issued a supplementary s 189/189A notice addressing the
changed
circumstances and the consequential impact on the aviation
industry. It sought an agreement on certain short-time and related
interventions.
A revised intention to issue letters of dismissal by
31 March 2020 was recorded.
[9]
NUMSA refused to participate in the s 189/189A consultation process
whereas the BRPs
pressed on in all earnest. On 30 April 2020, NUMSA
and SACCA, the second respondent (“the unions”), launched
an application
in terms of s 189A(13) of the LRA in the Labour Court
seeking a declarator,
inter alia
, that the SAA and BRPs’
issuing of s 189/189A notice to the employees on 09 and 19 March 2020
was unlawful, alternatively,
unfair because SAA and the BRPs had not
presented the employees with a business rescue plan as contemplated
in s 150 of the Companies
Act. The unions also sought an order that
the notices be withdrawn, alternatively, that the consultation
process be suspended until
the employees were placed in possession of
a draft business rescue plan as contemplated in s 144(3)(d) read with
s 150 of the Companies
Act. The application was predicated on s
136(1)(
b
) of the Companies Act. Essentially, the unions
contended that the BRPs could not commence the consultation process
without having
published a business rescue plan.
[10]
At the time the application was launched in the Labour Court, the
BRPs had not yet produced and published
the business rescue plan as
envisaged in s 150 of the Companies Act despite having been in the
office for approximately five months.
Several extensions for the
publication of the plan were sought and granted by the creditors. It
is common cause, and in the public
domain, that the BRPs published
their long-awaited business rescue plan on Tuesday 16 June 2020.
[11]
The Labour Court held that there was complete protection against the
employees’ dismissal during
the business rescue proceedings and
found that the present dispute implicated the right to fair labour
practices as enshrined in
the Bill of Rights. An important facet of
this right is the right to security of employment. The Court held
that s 136(1)(
b
) of the Companies Act had to be read
purposefully in light of the constitutional provisions and that,
properly construed, reference
to “contemplated retrenchments in
a business rescue plan” in s 136(1)(
b
) “
establishes
precondition precedent for the commencement of any retrenchment
process during business rescue proceeding
s”. Section
136(1)(
b
) required that any need to retrench had to be rooted
in the business rescue plan.
[12]
The Court found no provision in s 136(1) or in Chapter 6 of the
Companies Act that empowered a business
rescue practitioner to
retrench employees in the absence of a business rescue plan. It
concluded that, absent a business rescue
plan, the issuing of the
notices in terms of s189(3) of the LRA to commence the consultation
was premature and amounted to procedural
unfairness. As noted, it
directed that the notices be withdrawn.
The
grounds of appeal
[13]
In a nutshell, the grounds of appeal are that the Labour Court erred
in:
13.1
interpreting s 136 to mean that there is complete protection against
employees’ dismissal
during the business rescue proceedings;
13.2
holding that the default position imposed by s 136 is that the
retrenchment is excluded
or prohibited until the development of a
business rescue plan;
13.3
interpreting s 136 to impose additional rights and obligations on the
employers and employees
over and above those imposed by the LRA;
13.4
finding that the reference in s 136(1)(
b
) to “contemplated
retrenchments” establishes a condition precedent to the
commencement of any retrenchment process
during the business rescue
proceedings;
13.5
holding that a contemplated retrenchment may only be located in a
business rescue plan;
13.6
not following the reasoning in
Solidarity
obo BD Fourie and Others v Vanchem Vanadium Products (Pty) Limited
and others
,
[1]
in particular, the finding in para 36 of that decision where Lagrange
J held that the provisions of s 136 did not effectively outlaw
any
retrenchments taking place except in terms of a business rescue plan;
and lastly
13.7
failing to find that the Court had no jurisdiction to grant the
relief sought because s
133(1) of the Companies Act prohibited the
legal proceedings against a company in business rescue without the
written consent of
BRPs; that the High Court had exclusive
jurisdiction on the question of interpretation of Chapter 6 of the
Companies Act.
[14]
There are two aspects to the appeal that need to
be considered first. These relate to the mootness of the
application
and the question of jurisdiction of the Labour Court.
Mootness
of the application
[15]
As already discussed, it is now publicly known that the BRPs
published their business rescue plan on
Tuesday 16 June 2020. The
publication of the plan means that events have overtaken the initial
move by the BRP ‘s to retrench.
Therefore, the outcome of this
appeal may have no practical effect. Be that as it may, irrespective
of the mootness of the application
between the parties
inter se
,
it is necessary for this Court to consider the appeal because it
raises novel legal issues which are of public importance. In
addition, a
part from the parties’
general view that the matter be determined by this Court, there are
three divergent decisions of the
Labour Court o
n the
interpretation of s 136 of the Companies Act. It is therefore
manifestly in the interests of justice to resolve this legal
question
.
Jurisdiction
of the Labour Court
[16]
The proposition advanced on behalf of the BRPs, half-heartedly
I should add, is that s 133(1) of the Companies Act prohibits any
legal proceedings against a company in business rescue, in any forum,
without the written consent of the business rescue practitioners,
or
the leave of the Court. It was further contended that, in the absence
of consent, a litigant must obtain leave of the High Court
which was
not sought in this case. It was argued that the Labour Court has no
inherent power to intervene in business rescue proceedings
but the
effect of the judgment of the Labour Court was to impose such a
power.
[17]
By means of s 133(1)
the
legislature intended to allow a company in distress the necessary
breathing space by placing a moratorium on legal proceedings
and
enforcement action in any forum.
[2]
The
approach adopted by the BRPs is problematic because they did not
pertinently raise this objection before the Labour Court. The
Labour
Court was of the view that the aspect of jurisdiction had been
resolved on the basis that the unions had confirmed that
the
application was filed under s 189A(13) of the LRA which conferred a
supervisory role on the Labour Court over the retrenchment
process
with powers to intervene, where necessary, and to craft a remedy
which would address any resultant procedural defects.
[18]
In
Barkhuizen
v Napier,
[3]
the
Constitutional Court pronounced:
‘
The
mere fact that a point of law is raised for the first time on appeal
is not in itself sufficient reason for refusing to consider
it. If
the point is covered by the pleadings, and if its consideration on
appeal involves no unfairness to the other party against
whom it is
directed, this Court may in the exercise of its discretion consider
the point…’
[19]
Mr Redding, for the BRPs, submitted that the question of jurisdiction
was not argued orally in the
Labour Court although it remained an
issue on paper which was advanced in written argument. Apparent from
the answering affidavit
the alleged non-compliance with s 133(1) was
not properly pleaded by the BRPs. They perfunctorily stated therein
that they had
not been asked nor have they granted permission or
consent for the launching of the application. They fully participated
in the
proceedings before the Labour Court without any demur despite
the fact that their consent to the filing of the application had not
been sought by their rival. This point ought to have been fully
ventilated in the Labour Court. The belated attempt to raise it
on
appeal is unfair and prejudicial to the other parties to this
dispute. All this militates against this Court’s exercise
of
its discretion to consider the point. Therefore, the point is
rejected.
[20]
Mr Redding’s further argument is that an application in terms
of s189A(13) must be brought no
later than 30 days after the employer
has given notice to terminate employees’ service or if notice
is not given, the date
on which the employee is dismissed. As at the
date the application was launched, no notice of termination of any
employee arising
from the section 189/189A process had been given and
no employee had been dismissed arising from that process. Mr Redding
submitted
that the giving of notice of termination of employment or
actual dismissal as set out in s 189A(17) is a precondition for the
Labour
Court exercising its jurisdiction in terms of s189A(13). In
the circumstances, he contended, the Labour Court did not have
jurisdiction
in terms of s189A(13).
[21]
The following dictum in
Banks
& another v Coca-Cola SA—A Division of Coca-Cola Africa
(Pty) Ltd
[4]
is apposite:
‘
[17]
The requirement in subsection (17) that an
application be brought 'not later than 30 days after the
employer has
given notice to terminate the employee's services or, if notice
is not given, the date on which the employees
are dismissed', read
with subsection (13), places what might be termed an 'outside limit'
of 30 days post-dismissal or notice of
dismissal within which the
application must be brought. However, the wording of the subsection
and the structure of s 189A generally
envisage that the court may be
asked to intervene at any appropriate stage during a consultation
process that has been initiated,
or even prior to that, for example,
when an employer purports to dismiss employees without commencing any
consultation with
them or their representatives.
[18]
In short, the conclusion to be drawn from the wording of s 189A is
that this court appears to have been accorded a proactive
and
supervisory role in relation to the procedural obligations that
attach to operational requirements dismissals. Where the remedy
sought requires intervention in the consultation process prior
to dismissal, the court ought necessarily to afford a remedy
that
accounts for the stage that the consultation has reached, the
prospect of any joint consensus-seeking engagement being resumed,
the
attitude of both parties, the nature and extent of the procedural
shortcomings that are alleged, and the like. If it appears
to
the court that little or no purpose would be served by intervention
in the consultation process in one of the forms contemplated
by s
9A(13)
(a)
,
(b)
and
(c)
, then
compensation as provided by para
(d)
is the more
apposite remedy.’
[22]
This Court has on occasion dealt with the timeframes set out in s
189A(17) of the LRA in
Edcon
Ltd v Steenkamp & others
[5]
as follows:
‘
..(T)
hese
time periods speak plainly to the intrinsic urgency of judicial
intervention pursuant to s 189A(13), if a party wishes a procedural
fairness dispute to be addressed. The relief that a court might
grant in terms of s 189A(1)
(a)-(d)
must
be understood in that context. The remedies are designed to be
available when an aggrieved applicant brings the application
by
not later than 30 days after the notification of the possible
retrenchment, and thus, 30 days before a dismissal notice may be
given.
The primary purpose is to get
the retrenchment process back onto a track that is fair.’
(My
own emphasis)
[23]
An application in terms of s 189A(13) of the LRA is triggered where
an employer does not comply with
a fair procedure. A consulting party
may approach the Labour Court for an order,
inter
alia
,
compelling the employer to comply with a fair procedure. The Court
would correct any procedural irregularity as and when it arises
so
that the integrity of the consultation process can be restored and
the consultation process forced back on track.
[6]
The unions approached the Court on an urgent basis to vindicate their
members’ rights and had satisfied the jurisdictional
requirement set out in s 189A(17) of the LRA. In the result, this
legal point cannot be sustained and must also fail.
The
main appeal (interpretation of s 136(1)(
b)
of the Companies
Act)
[24]
The relevant part of s 136 provides:
‘
136 Effect of
business rescue on employees and contracts:
(1) Despite any provision
of an agreement to the contrary-
(a)
during a company's business rescue proceedings, employees of the
company immediately before the beginning
of those proceedings
continue to be so employed on the same terms and conditions, except
to the extent that-
(i)
changes occur in the ordinary course of attrition; or
(ii)
the employees and the company, in accordance with applicable labour
laws, agree different terms
and conditions; and
(b)
any retrenchment of any such employees contemplated in the company's
business rescue plan is subject to
s 189 and 189A of the Labour
Relations Act, 1995 (Act 66 of 1995), and other applicable employment
related legislation.’
[25]
Mr Redding contended that s 136 neither expressly nor by necessary
implication aims to augment the
LRA rights and protections, but
rather preserves them. The moratoria provided for in Chapter 6 of the
Act do not extend to the
preservation of employment and the
immunisation of employees from all dismissals, whether for misconduct
or operational reasons.
He further submitted that s 136(1)(
b
)
provides that any retrenchment has to be in terms of the LRA (thus
protecting the employees’ LRA rights). In his view, this
does
not lead to a conclusion that there may be no retrenchment unless it
is contemplated in a business rescue plan. The provision
does not go
so far as to state that the employer/BRP cannot initiate the
retrenchment process until the plan has been devised,
published or
adopted. There was no clear commercial or other reason why the
legislature would permit retrenchments, but limit it
to cases where
these dismissals were contemplated in a business rescue plan, the
submission went.
[26]
Mr Ngcukaitobi, for the unions, submitted that a business rescue plan
under the Companies Act is a
condition precedent to the commencement
of the retrenchment process under the LRA. At the conclusion of the
business rescue process,
that is when a business rescue plan is
finalised, employees may, under s 136(1)(
b
) be dismissed for
operational requirements in accordance with the provisions of the
LRA. He argued that this was the only “sensible”
and
“business-like” meaning that could be attributed to the
subsection because a BRP cannot decide precisely who to
retrench
until it is known how the company will be restructured and saved
through a business rescue plan. If this was not the case,
he argued,
then conceivably employees could be retrenched only to find that the
business rescue plan, in final form, required them
to be retained and
that another distinct group of employees be retrenched. He further
contended that to implement retrenchments
in order to inform and
shape the content of a future business rescue plan would be to put
the cart before the horse and permits
an unlawful “pruning”
of the business in order to achieve a future outcome (which may
potentially also constitute an
automatically unfair dismissal in
terms of s 187(1)(
g
) of the LRA).
[27]
It would be wrong for courts to ignore the clear language of a
statute under the guise of adopting
a purposive interpretation, as
doing so would be straying into the domain of the legislature.
[7]
In
Dadoo
Ltd and Others v Krugersdorp Municipal Council
[8]
Innes CJ enunciated the principle in these terms:
'Speaking generally,
every statute embodies some policy or is designed to carry out some
object. When the language employed admits
of doubt, it falls to be
interpreted by the court according to recognised rules of
construction, paying regard, in the first place,
to the ordinary
meaning of the words used, but departing from such meaning under
certain circumstances, if satisfied that such
departure would give
effect to the policy and object contemplated. I do not pause to
discuss the question of the extent to which
a departure from the
ordinary meaning of the language is justified, because the
construction of the statutory clauses before us
is not in
controversy. They are plain and unambiguous. But there must, of
course, be a limit to such departure. A Judge has
authority to
interpret, but not to legislate, and he cannot do violence to the
language of the lawgiver by placing upon it a meaning
of which it is
not reasonably capable, in order to give effect to what he may think
to be the policy or object of the particular
measure.'
[28]
For this reason the language adopted by the legislature remains the
starting point for any interpretative
inquiry. Where the words
employed admit of more than one plausible interpretation, the purpose
of the legislation must be employed
as a tiebreaker. In the context
of the Companies Act such an interpretative process must be applied
in a manner that gives effect
to the purposes set out in section
7.
[9]
In the case of s136 and
the balance of the business rescue provisions, a key purpose is to
provide for the efficient rescue and
recovery of financially
distressed companies, in a manner that balances the rights and
interests of all relevant stakeholders.
[10]
The statutory mechanism for the achievement of this purpose is
contained in Chapter 6 of the Companies Act which governs business
rescue and compromise with creditors. Business rescue is defined in
the Act as proceedings to facilitate the rehabilitation of
a company
that is financially distressed by providing for-
(i)
the temporary supervision of the company, and of the management of
its affairs, business and property;
(ii)
a temporary moratorium on the rights of claimants against the company
or in respect of property in
its possession; and
(iii)
the development and implementation, if approved, of a plan to rescue
the company by restructuring its affairs,
business, property, debt
and other liabilities, and equity in a manner that maximises the
likelihood of the company continuing
in existence on a solvent basis
or, if it is not possible for the company to so continue in
existence, results in a better return
for the company's creditors or
shareholders than would result from the immediate liquidation of the
company.
[11]
[29]
The primary aim of a corporate rescue procedure is not merely to
rescue a company business or potentially
successful parts of the
business. The procedure aims to rescue the whole company or corporate
entity.
[12]
This will
naturally include preservation of jobs. Indeed one of the main
drivers for the introduction of the business rescue regime
in place
of the system of judicial management was the rescue of an ailing
business
[13]
and thus the
retention of jobs. This gloss on the purpose of the business rescue
provisions is captured by Prof Anneli Loubser and
Mr Tronel
Joubert as follows:
[14]
‘
The preservation
of jobs is widely regarded as one of the many economic and social
benefits that could result from the successful
rescue of a company or
business…. the saving of jobs is a high priority for South
Africa and the introduction of an
effective and successful business
rescue procedure was seen by government as an important measure to
prevent further job losses. As
was to be expected, the
protection of the rights and interests of employees in the new
business rescue proceedings were emphasised
from the early stages of
the corporate law reform process. It became evident that employees
were to be regarded as stakeholders
in a class of their own. In the
Memorandum on the Objects of the Companies Bill 2008 it was stated
that the new chapter 6 'recognises
the interests of shareholders,
creditors and employees'. The rest of this part of the document
then continued by referring
only to the protection of the interests
of workers with no further mention of either the creditors or
shareholders.’
It
is against this purpose that s 136(1) ought to be construed.
[30]
Section 136(1)(
a
) is clear and unambiguous. As the Court
a
quo
correctly pointed out, employees in the employ of the company
immediately before the business rescue proceedings continue to be
employed on the same terms and conditions. There are three exceptions
to this general protection that is offered to the employees;
first,
when changes occur in the ordinary course of attrition as in the case
of dismissals for conduct or capacity, resignations,
and retirements
(s 136 (1)(
a
)(i)); and second, where the employees and the
company, in accordance with applicable labour laws, agree on
different terms and
conditions of employment (s 136(1)(
a
)(ii)).
[31]
The third exception, which is central to this appeal, is contained in
s 136(1)(
b
). In terms of this provision, employees may be
retrenched as contemplated in the company's business rescue plan. The
section stipulates
that:
‘
Despite any
provision of an agreement to the contrary……
any
retrenchment of any such employees contemplated in the company's
business rescue plan
is subject to section 189 and 189A of the
Labour Relations Act, 1995 (Act 66 of 1995), and other applicable
employment related
legislation.’
The
words “
contemplated in the company’s business rescue
plan,
” in my view, signifies the existence of a corporate
rescue plan which would conceptualise the commercial rationale for
the
retrenchments of the employees. As I have indicated, the
raison
d’être
for the enactment of s 136(1)(
b
) was to
safeguard employees from being subjected to retrenchment without a
business rescue plan.
[32]
Section 150 makes it plain that the lawmaker intended that the rescue
plan must precede any retrenchment
and puts paid to any suggestion
that the retrenchment process may commence without the plan. In terms
of s 150(2) the business
rescue plan must contain all the necessary
information reasonably required to facilitate affected persons in
deciding whether or
not to accept or reject the plan, and must be
divided into three Parts: Part A which sets out the background; Part
B, proposals;
whereas Part C, would contain the assumptions and
conditions. Under this last rubric the plan must explain,
inter
alia
, what its effect will be on the number of employees and
their conditions of employment. The proposed retrenchment of any
employee
would have to be disclosed in this part of the plan.
[33]
To interpret s 136(1)(
b
) in the manner contended for by the
BRPs would do violence to the language of the section. The
argument that it ought to be
interpreted as permitting the BRPs to
commence with the retrenchment exercise in the absence of the rescue
plan is incongruent
with the statutory architecture of the corporate
rescue process. The business rescue plan is intended to reorganise
the business
by crafting a roadmap aimed at salvaging an ailing
company including preserving jobs. The formulation of a business
rescue plan
is the central task of the BRP and that it must be
developed with the greatest expedition is made clear from a reading
of s150(5)
of the Companies Act which provides that the business
rescue plan must be published within 25 business days after the date
of the
appointment of the BRP save where an extension had been
granted by the court or the majority of creditors. It is clear from
this
provision that, as the business rescue plan must be published
within a short period, retrenchments would be contained in the plan
as opposed to a piecemeal reconstruction of the company which would
allow a decision on retrenchments before the plan was published.
[34]
Much store was also set by Mr Redding on the practical problems which
in his view are posed by the
Judgment of the Labour Court. He argued
that insofar as a retrenchment process forms part of a business
rescue plan its course
and fate would be determined by the voters of
the plan – not the management of the company or the BRPs. Once
adopted, the
plan must be implemented by the BRP as voted on and the
BRP has no discretion to exercise. Mr Redding further argued that
this
would present a real difficulty as the responsibility for fair
consultation, which requires an employer to respond and be flexible
in respect of consultations on measures to avoid and minimise
dismissals, would be a responsibility which, on the Labour Court’s
interpretation, falls upon a meeting of creditors, not the company’s
management or the BRP.
[35]
In my view, the argument is somewhat misplaced because in terms of s
136(1)(
b
) the retrenchment process is subject to s 189 and
189A of the LRA and other applicable employment-related legislation.
Where the
rescue plan, which contemplates retrenchments, has been
approved the envisaged retrenchment would have to be conducted as
prescribed
in the LRA in the same way as any solvent company has to
do. It is axiomatic that a BRP would have to assume control over that
process.
[36]
There was much debate about the role of section 39(2) of the
Constitution of the Republic of
South Africa, 1996 (Constitution)
which fashions a mandatory constitutional canon of statutory
interpretation.
[15]
It imposes
an obligation on this Court “when interpreting any legislation”
to “promote the spirit, purport and
objects of the Bill of
Rights”. In
South
African Police Service v Public Servants Association
[16]
the
Constitutional Court held that:
‘
Interpreting
statutes within the context of the Constitution will not require the
distortion of language so as to extract meaning
beyond that which the
words can reasonably bear. It does, however, require that
the language used be interpreted as far as
possible, and without
undue strain, so as to favour compliance with the Constitution. This
in turn will often necessitate close
attention to the socio-economic
and institutional context in which the provision under examination
functions. In addition, it will
be important to pay attention to the
specific factual context that triggers the problem requiring
solution.'
[37]
Mr Redding noted that the constitutional right to fair labour
practices as set out in s 23 of the Constitution
balances the rights
and interest of both the employers and the employees. It is not
weighted only towards the employees and job
security but recognises
the employer’s right to reorganise and manage its business.
[38]
This
Court held that where legislation has been enacted to give effect to
a constitutional right, a party may not bypass that legislation
and
rely directly on the general provisions of constitutional right
to fair labour practices in s 23 or the equality clause
in s 9
of the Constitution.
[17]
This
is in conformity with the subsidiarity principle which provides
that where legislation was enacted to give effect
to certain
constitutional rights, reliance must first be placed on the
provisions of the specific legislation, and challenged if
they do not
adequately give effect to the constitutional rights in question.
[18]
The constitutional right to fair labour practices finds legislative
expression in the LRA. Its scope covers the interests of both
employers and employees.
[19]
[39]
There can be no question that s 23 recognises the rights of
employers but simultaneously protects a range of rights of employees
that are central to the democratic model promoted by the Constitution
read as a whole. There is nothing in the interpretation that
I have
given to s136 of the Companies Act that is at war with the spirit,
purport and objects of the Constitution. In addition,
the
interpretation that I have adopted to the wording of s136 is
congruent with both the words employed by the legislature and
the
purpose it clearly had in mind when it enacted these provisions.
[40]
On the basis of this analysis, no cogent criticism can be sustained
on the Labour Court’s conclusion
that the issuing of the s 189
notice by the BRPs, absent the business rescue plan, was premature,
unfair and had to be withdrawn.
The concomitance thereof is that the
appeal must fail.
The
cross-appeal
[41]
In the cross-appeal the attack on the judgment of the Labour Court is
directed at the following passage:
‘
There was some
debate during the hearing on voluntary separation packages. As I
understand the position, there is currently an offer
open to SAA
employees to accept voluntary retrenchment on the terms specified.
Some of them have accepted. To the extent that the
unions contended
that any moratorium on retrenchments during business rescue
proceedings prohibited a business rescue practitioner
from seeking to
secure voluntary retrenchments, there is no basis for that
proposition either in s 189 of the LRA or s 136 of the
Companies Act.
Nothing prevents an employer from offering a voluntary severance
package as a measure to avoid retrenchment. If
a voluntary severance
package is offered and accepted as a means to avoid the need to or
even contemplate retrenchment, the contract
of employment is
terminated by mutual agreement and there is no dismissal. (See R le
Roux
Retrenchment Law in South Africa
(Lexis-Nexis 2016) at
p116-7) As I have indicated, s 136 (1)(
a
)(ii) contemplates a
variation of terms of employment (including any termination of
employment) by mutual consent.’
[42]
It was argued for the unions that this finding by the Labour Court
was incorrect because, when the
voluntary severance packages were
offered, the BRPs were already contemplating the dismissal of
employees for operational reasons.
Thus, the offer of voluntary
severance packages was in effect a retrenchment and subject to a
consultation process as envisaged
in s 189 of the LRA.
[43]
The Labour Court did not make any order regarding the offer of
voluntary retrenchments packages. An
appeal is by its nature directed
at a wrong order and not at incorrect reasoning.
[20]
In any event, there is no reason in law why the BRPs could not
unilaterally offer voluntary severance packages to the employees.
The
upshot of this is that the cross-appeal has no merit and must be
refused.
[44]
None of the parties requested costs.
In
the result, I make the following order:
Order:
1.
The appeal and the cross-appeal are dismissed.
2.
No order is made as to costs.
_________________________
MV
Phatshoane ADJP
Davis
JA and Musi JA concur in the judgment of Phatshoane ADJP
APPEARANCES:
FOR
THE APPELLANT:
Adv T Ngcukaitobi SC with J Raizon
Instructed
by Minnaar Niehaus Attorneys
FOR
THE THIRD RESPONDENT:
Ms A Redding SC with V Ndebele
Instructed
by Edward Nathan Sonnenbergs Inc.
[1]
J385/16 &J393/16) [2016] ZALCJHB 106 (22 March 2016).
[2]
Cloete
Murray
NNO & Another v Firstrand Bank Ltd t/a Wesbank
2015 (3) SA 438
(SCA) at 447I-448A para 40.
[3]
[2007] ZACC 5
;
2007 (5) SA 323
(CC) at 336C-D para 39.
[4]
(2007)
28 ILJ 2748 (LC).
[5]
(2018)
39 ILJ 531 (LAC) at 539 para 24- this decision was upheld in
Steenkamp
& others v Edcon Ltd
(2019) 40 ILJ 1731 (CC).
[6]
See
Steenkamp
& others v Edcon Ltd
(2019) 40 ILJ 1731 (CC) at para 52 and authorities cited therein.
[7]
Smyth
and Others v Investec Bank Ltd and Another
2018 (1) SA 494
(SCA) at 509 para 45.
[8]
1920 AD 530
at
543.
[9]
Section 5(1)
of the
Companies Act 71 of 2008
.
[10]
Section 7(K)
of the
Companies Act 71 of 2008
.
[11]
Section 128(1)(
b
)
of the
Companies Act.
[12
]
See Companies and other Business Structures in South Africa, Dennis
Davis
et
al
,
third Edition, Oxford Southern Africa, Chapter 12 at page 237.
[13]
See Eric Levenstein Business Rescue Procedures.Lexis Nexis
(looseleaf).
[14]
Anneli Lobser & Tronel Joubert “the Role of Trade Unions
and Employees in South Africa’s Business Rescue Proceedings
(2015)
36 ILJ 21.
[15]
Fraser
v ABSA Bank Limited
(National
Director Of Public Prosecutions as Amicus Curiae)
[2006] ZACC 24
;
2007
(3) SA 484
(CC) para 43.
[16]
2007
(3) SA 521
(CC),
[2007] 5 BLLR 383
;
[2006] ZACC 18)
at para 20.
[17]
Safcor
Freight (Pty) Ltd t/a Safcor Panalpina v SA Freight & Dock
Workers Union
,
(2013) 23
ILJ
335
(LAC) at para 18.
[18]
Baron
and Others v Claytile (Pty) Ltd and Another
2017
(5) SA 329
(CC) para 10.
[19]
Amcu
and Others v Royal Bafokeng Platinum Ltd and Others
2020 (3) SA 1
(CC) at 17 para 50.
[20]
See
National
Director of Public Prosecutions v Zuma
[2009] ZASCA 1
;
2009
(2) SA 277
(SCA)
at
308-9 para 85.