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[2021] ZALAC 47
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Mbekela v Airvantage (Pty) Ltd (JA2/20) [2021] ZALAC 47 (26 November 2021)
INTHE
LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Not reportable
Case no: JA2/20
In the matter between:
UNATHI VIWE
MBEKELA Appellant
and
AIRVANTAGE (PTY)
LTD Respondent
Heard:
9
September 2021
Coram:
Davis,
CJ Musi et Coppin JJA
This judgment was handed
down electronically by circulation to the parties’
representatives by email, and release to SAFLII.
The date for
hand-down is deemed to be 26 November 2021.
Summary
Retrenchment
– substantive and procedural unfairness with regards to
retrenchments overlap and should not be considered in
silos. A
failure to consult on ways to avoid retrenchment may lead to
substantive unfairness. Order of the court
a
quo
that failure to consult led to
procedural unfairness only, set aside and replaced with a finding
that the
dismissal was substantively and procedurally unfair.
JUDGMENT
MUSI JA
[1]
This
is an appeal against an order of the Labour Court. It found that the
appellant’s dismissal was substantively fair but
procedurally
unfair. The appeal is with the leave of this Court. There is no
cross-appeal.
[2] The
appellant was employed by the respondent as a technical support
manager, during January 2016. She was dismissed
in September 2016
ostensibly for operational reasons. She referred a dispute to the
Commission for Conciliation Mediation and Arbitration
(CCMA). The
matter could not be resolved at conciliation. After a certificate of
non-resolution was issued by the CCMA, she referred
the dispute to
the Labour Court.
[3] At
the Labour Court the issues in dispute were the existence of a
dismissal, and if there was a dismissal whether
such dismissal was
substantively and procedurally fair. The Labour Court found that
there was indeed a dismissal and that the dismissal
was substantively
fair but procedurally unfair. It ordered the respondent to pay the
appellant, as compensation, an amount equivalent
to four months’
remuneration. Aggrieved by that order the appellant unsuccessfully
applied for leave to appeal. She successfully
approached this Court
for leave to appeal.
[4] The
Court
a
quo
’s
exposition of the facts is not in dispute. On 13 September 2016, the
appellant was called to a meeting with Mr Terblanche
and Ms Kuper,
respectively the Chief Technology Officer and the Chief Operations
Officer cum Human Resources Manager of the respondent.
During this
meeting, that was described as brief by the participants, the
appellant’s impending retrenchment was discussed.
The appellant
was unresponsive and did not engage the other parties. At the end of
this meeting, the appellant was given a document,
date
d
12
September 2016, purporting to be a notice in terms of section
189(3)
[1]
of the Labour
Relations Act
[2]
entitled
“Notice of Contemplating Retrenchment” (Notice).
[5] The
notice was signed by Mr Terblanche and the appellant. On 14 September
2016, Mr Terblanche offered the applicant
a mutual separation
agreement that included payment of three months’ salary and a
waiver of the applicant’s debt to
the respondent for training
fees (the company previously granted the appellant a loan in order to
pay for her tuition fees). The
appellant rejected the offer. After
the rejection of the mutual separation agreement, the appellant was
given an amended notice
which included a term waiving the applicant’s
debt with regard to the tuition fees. It is not in dispute that the
appellant
signed both the original and the amended notices.
[6] On
19 September 2016, after she obtained advice, the appellant wrote to
the respondent requesting it to inform
her,
inter alia
, about
the selection criteria followed and the measures taken to avoid her
retrenchment. On 21 September 2016, the respondent replied
as
follows:
‘
1.
All the issues you have raised were dealt with in detail in the
s189(3) notice of contemplating retrenchment dated
13
th
September.
2. The
consultation process was discussed with you in the meeting held on
the 13
th
September. We reviewed your skill set and were
unable to find an appropriate alternative role within the business
based on your
skill and salary.
3. It is
noted that you have signed and agreed to the terms of the
retrenchment on the 14
th
September.
4. We have
tried to accommodate you by in addition to the statutory terms of the
retrenchment to write off the debt
to the company for training fees
paid.
5. Please
note that the retrenchment document stands as signed by both parties
on 14 September 2016.’
[7] Mr
Terblanche testified that during April 2016, the respondent bought
the intellectual property rights from
a company that developed its
software. It took over the code and intellectual property and started
rewriting the code for the next
generation. This necessitated a
change in work methods and structure from the waterfall methodology
to the agile methodology. This
meant that the respondent did not have
to write up big pieces of code and get it tested. It engaged seven
highly trained developer
operations persons (developers) who took
care of automating all the systems, which made the entire support
structure obsolete.
[8] It
is common cause that at the time that the appellant was interviewed
,
the respondent desired to appoint her as its technical support
manager or its quality assurance manager. Since the technical support
section fell away due to the new structure, the appellant was moved
to the quality assurance position during August 2016. The incumbent
quality assurance manager was appointed as the operations manager.
According to Mr Terblanche, the quality assurance position was
not
redundant when the appellant was moved into it. The work of the
quality assurance manager diminished to the level that the
appellant
had no work to do. It was then decided to declare that position
redundant. This gave rise to the 13 September 2016 meeting.
[9] The
Labour Court found that there was a dismissal. It further found that
there was no mutual separation agreement
and that the appellant’s
signature on the notices was not an indication of her agreeing to
their contents but rather an acknowledgement
of receipt of the
notices.
[10] It
further found that there was a sound and
bona fide
operational
rationale for the retrenchment of the appellant. It found that there
was a fair reason for the dismissal of the appellant
and consequently
found that her dismissal was substantively fair. With regard to
procedural fairness it found that the appellant
was not given enough
time to render a considered response or to obtain legal advice. It
concluded that:
‘
While it is clear
that the applicant is not an unsophisticated person, the evidence
clearly indicates that she was somewhat shocked
by the process she
was not given a reasonable opportunity to make representations on the
issues over which she was inside entitled
to consult. This is not
sufficient consultation or meaningful joint consensus-seeking, as
envisaged in the LRA.’
[11] Mr
Voyi, on behalf of the appellant, challenged the court
a quo
’s
finding that the dismissal was substantively fair on two bases.
First, he contended that the Labour Court based its finding
on the
testimony of Mr Terblanche in circumstances where that testimony was
not put to the appellant during cross-examination.
Second, the Labour
Court did not properly consider the fact that the total lack of
consultation rendered the dismissal substantively
unfair. With regard
to the appropriate remedy, he submitted that if we agree that the
dismissal was substantively unfair then the
appropriate remedy should
be reinstatement.
[12] Mr
Goslett, on behalf of the respondent, submitted that on the facts and
circumstances of this case, the failure
to put Mr Terblanche’s
version to the appellant should not attract a negative inference. He
further supported the Labour
Court’s reasoning and conclusion
with regard to the finding of substantive fairness and the order of
compensation.
[13] The
consequences of a failure to put a version to a witness on a
particular aspect are dependent on the facts
and circumstances of the
particular case. A court should therefore use a contextual approach
in determining what consequences to
attach to such a failure. In
SARFU,
[3]
it was said that:
‘
As a general rule
it is essential, when it is intended to suggest that a witness is not
speaking the truth on a particular point,
to direct the witness’
attention to the fact by questions put in cross examination showing
that the imputation is intended
to be made and to afford the witness
an opportunity, while still in the witness box, of giving any
explanation open to the witness
and of defending his or her character
…’
[4]
[14] In
this matter, the appellant did not testify about the genuineness of
the rationale for her retrenchment.
Mr Terblanche was indeed the only
witness who could and did testify about the rationale. It is clear
from the facts and circumstances
of this case that it would have
served no purpose for the respondent to put Mr Terblanche’s
version to the appellant. It
is something that did not fall within
the scope of her knowledge. The appellant’s response would
inevitably have been that
she was not aware of the genuineness or
otherwise of the rationale to retrench her. What she knew was that
the work that she was
doing changed and diminished substantially when
the developers took over. Her testimony, on this aspect, was
consonant with that
of Mr Terblanche. In my view, nothing turns on
this point.
[15] Section
189 of the LRA obliges an employer who contemplates dismissing one or
more employees for reasons based
on the employer’s operational
requirements to consult with such employee or employees. The
consultation should take place
before a definitive decision to
dismiss a particular employee or employees has been made. The reason
why the consultations should
occur at the contemplation stage is
because the parties must endeavour, during the consultation, to
jointly reach consensus on
inter alia
the measures, if any, to
avoid the impending dismissal.
[16] The
employer is furthermore obliged to issue a written notice inviting
the employee to consult with it and
it should disclose to the
employee all relevant information so that the employee can
meaningfully engage with the employer. The
consultation is not a
one-way communication where one speaks and the other listens. The
employee should be given the opportunity
to make representations and
the employer must consider and respond to the representations made by
the employee. If the employer
disagrees with the employee’s
representations, the employer must state the reasons for the
disagreement. It is only after
consultations have been exhausted
,
that the employer should retrench.
[17] In
General
Foods Industries Ltd v FAWU,
[5]
this Court said:
‘
After
consultations have been exhausted the employer must decide whether to
proceed with retrenchment or not. The loss of jobs to
retrenchment
has such a deleterious impact on the life of workers and their
families that it is imperative that, even though reasons
to retrench
employees may exist, they will only be accepted as valid in the
employer can show that all viable alternatives have
been considered
and taken to prevent the retrenchment or to limit this to a
minimum.’
[6]
[18] When
the employer decides to retrench it becomes the court’s duty to
determine the fairness of the dismissal
objectively. In making that
determination, the court must always be mindful of the fact that “the
resort to dismissal especially
a so-called no-fault dismissal, which
some regard as a death penalty in the field of labour and employment
law, is meant to be
a measure of last resort.”
[7]
[19] The
architectural foundation on which the edifice of our law relating to
retrenchments is built is the saving
of jobs by taking sufficient
steps to avoid dismissals. Where it is clear that no steps were taken
in order to avoid a dismissal
such dismissal would be without a fair
reason. It is difficult to discern how a dismissal which could have
been avoided but was
not can only impact procedural fairness.
Substantive and procedural fairness issues, with regard to
retrenchments, may and do often
overlap. They are, in most cases,
interlinked. Whether a failure to follow a particular procedure would
lead to substantive unfairness
depends on the facts and circumstances
of each case.
[20] The
court
a quo
evaluated substantive and procedural in silos. It
endeavoured to draw a clear and sharp dividing line between
substantive and procedural
fairness. This was unhelpful. It did not
consider whether the failure to jointly consider ways to avoid the
dismissal rendered
it substantively unfair, even in circumstances
where there is a genuine rationale to retrench.
[21] Even
if there was a fair rationale to retrench the appellant, no proper
attempt was made to allow her to give
input about her own destiny in
an attempt to avoid her dismissal. She was given the notice after the
respondent purportedly consulted
with her. When she was unresponsive
during the meeting, she was not given information on which to make an
informed decision.
[22] It
is telling that the notice ends with the following sentences: “it
is unfortunate that we all find
ourselves in this position. We wish
everything of the best in your new endeavours.” This is a clear
indication that the appellant
was confronted with a
fait accompli
.
The die was cast. The employer’s mind was made up before it
even gave the appellant an opportunity to make representations.
[23] The
disregard for the appellant’s rights was so egregious that I
cannot find that alternatives to dismissal
was indeed considered. In
my view, the court
a quo
should have found that the dismissal
was substantively and procedurally unfair.
[24] With
regard to remedy, the appellant submitted that she should be
reinstated.
[25] The
respondent submitted that the continued employment relationship
between the parties will be intolerable.
It further submitted that it
is not reasonably practicable for the respondent to reinstate or
re-employ her. In substantiation,
the respondent contended that too
much time has gone by since the dismissal and there is no position to
reinstate her in. It also
pointed out that at the rate of her salary
at dismissal her back-pay would be approximately R1 750 000.
[26] Section
193 of the LRA reads as follows:
‘
(1) If
the Labour Court or an arbitrator appointed in terms of
this
Act
finds that a
dismissal
is unfair, the Court or the arbitrator
may—
(a)
order
the employer to reinstate the
employee
from any date not earlier than the date
of
dismissal
;
(
b
) order
the employer to reemploy the
employee
, either in the work in
which the
employee was
employed before the
dismissal
or
in other reasonably suitable work on any terms and from any date not
earlier than the date of
dismissal
; or
(
c
) order
the employer to pay compensation to the
employee
.
(2) The
Labour Court or the arbitrator must require the employer to reinstate
or reemploy the
employee
unless—
(
a
) the
employee
does not wish to be reinstated or reemployed;
(
b
) the
circumstances surrounding the
dismissal
are such that a
continued employment relationship would be intolerable;
(
c
) it
is not reasonably practicable for the employer to reinstate or
reemploy the
employee
; or
(
d
) the
dismissal
is unfair only because the employer did not follow a
fair procedure.
(3) If
a
dismissal
is automatically unfair or, if a
dismissal
based on the employer’s
operational requirements is
found to be unfair, the Labour Court in addition may make any
other order that it considers appropriate in the circumstances.
(4) An
arbitrator appointed in terms of this Act may determine any unfair
labour practice
dispute
referred to the arbitrator, on terms
that the arbitrator deems reasonable, which may include ordering
reinstatement, reemployment
or compensation.’
[27] It
is trite that reinstatement is the primary remedy for a substantively
unfair dismissal. In
Booi
v Amathole,
[8]
the primacy of the remedy was underscored. Khampepe J explained it
thus:
‘
The primacy of the
remedy of reinstatement is no coincidence. It is the product of a
deliberate policy choice adopted by the Legislature.’
[9]
[28] The
respondent’s contention that the continued employment
relationship between the parties will be intolerable,
is without
merit. This was a no fault dismissal. Mr Terblanche testified that he
bears the appellant no ill will. There is no evidence
on record about
any bad relationship between the employer and the employee. The
employer bears the onus to prove the intolerability
of the
relationship. The high bar of intolerability means that a finding of
intolerability should not be made lightly. This is
so because:
‘
(T)he term
“intolerable implies a level of unbearability, and must surely
require more than the suggestion that relationship
is difficult,
fraught or even sour. This high threshold gives effect to the purpose
of the reinstatement injunction in section
193 (2), which is to
protect substantively unfairly dismissed employees by restoring the
employment contract and putting them in
the position they would have
been in but for the unfair dismissal. And, my approach to section 193
(2) (b) is fortified by the
jurisprudence of the Labour appeal Court
and the Labour Court, both of which have taken the view that the
conclusion of intolerability
should not easily be reached, and that
the employer must provide weighty reasons, accompanied by tangible
evidence, to show interrupt
tolerability.’
[10]
[29] The
respondent has not even come near to showing that the relationship
between the two would be intolerable.
It provided no reasons and no
tangible evidence to that effect. I now turn to consider whether it
would be reasonably practical
to reinstate the appellant.
[30] Like
with intolerability, the employer bears the onus to demonstrate that
it would not be reasonably practicable
to reinstate the employee. The
reinstatement remedy, in cases where the dismissal was found to be
substantively unfair, should
not be displaced for flimsy reasons or
where there is insufficient evidence to justify a deviation from the
primary remedy. In
Xstrata,
[11]
the court said the following about section 193 (2) (c):
‘
the object of
section 193 (2) (c) of the LRA is to exceptionally permit the
employer leave when it is not practically feasible to
reinstate; for
instance, where the employee’s is job no longer exists, or the
employer is facing liquidation, relocation
or the like. The term not
reasonably practicable in section 193 (2) (c) does not equate with
“practical”, …
It refers to the concept of
feasibility. Something is not feasible if it is beyond possibility.
The employer must show that the
possibilities of the situation make
reinstatement inappropriate. Reinstatement must be shown not to be
reasonably possible in the
sense that it may be potentially futile.
And employee’s length of service, the delay in the arbitration
and alleged untested
shortcomings in capacity are not normally
relevant to the question of practicability …’
[12]
[31] A
finding that it would not be reasonably practicable to reinstate an
employee must therefore be preceded
by a proper evaluation of the
employer’s circumstances and means more than ‘inconvenience
and requires evidence of
a compelling operational burden’.
[13]
[32] The
uncontested evidence in this matter is that both the technical and
the quality assurance division are
no longer operational. The
appellant can therefore not be reinstated in any of the positions
that she previously held.
[33] The
appellant was dismissed during September 2016. It is common cause
that the appellant is currently employed.
She was unemployed for a
period of 12 months after the dismissal. She has been employed for a
period of four years after the dismissal
(since 2017). Although she
expressed a desire to be reinstated, it is clear that she has moved
on.
[34] I
am convinced that reinstatement would not be reasonably practicable
under the circumstances. The respondent
has shown that it is
operationally impossible to reinstate the appellant. I am therefore
constrained to exercise my discretion
against the appellant.
[35] I
am, however, of the view that she must be compensated. The finding
that the dismissal was substantively
unfair means that we are at
large to interfere with the Labour Court’s compensation order.
Due to the egregious manner in
which this dismissal was effected, I
am of the view that the appellant should be awarded the maximum
compensation. It is the most
appropriate and fair remedy.
[36] There
are no circumstances which militate against the general rule in
labour disputes that no costs order
should be made.
[37] I
accordingly make the following order:
1. The
appeal is upheld with no order as to costs.
2. The
Labour Court’s order is set aside and replaced with the
following:
2.1 The
applicant’s dismissal was substantively and procedurally
unfair.
2.2 The
respondent is ordered to pay the applicant an amount of compensation
equivalent to 12 months’ remuneration
calculated as at date of
dismissal. The said amount to be paid to the applicant within one
month of the date of this order.
2.3 There is
no order as to costs.
C.J.
Musi, JA
Davis
JA and Coppin JA concur with CJ Musi JA.
APPEARANCES:
FOR THE
APPELLANT: Mr
NP Voyi
Instructed
by Ndumiso Voyi Incorporated,
Midrand.
FOR THE
RESPONDENT: Adv R Goslett
Instructed
by Dewey Hertzberg Levy Inc.,
Sandton.
[1]
Section
189 states:
(1) When
an employer contemplates dismissing one or more
employees
for
reasons based on the employer’s
operational requirements
,
the employer must consult—
(
a
) any
person whom the employer is required to consult in terms of a
collective agreement
;
(
b
) if
there is no
collective agreement
that requires consultation—
(i) a
workplace forum
, if the
employees
likely to be
affected by the proposed
dismissals
are employed in a
workplace
in respect of which there is a
workplace forum
;
and
(ii) any
registered
trade union
whose members are likely to be
affected by the proposed
dismissals
;
(
c
) if
there is no
workplace forum
in the
workplace
in which
the
employees
likely to be affected by the proposed
dismissals
are employed, any registered
trade union
whose
members are likely to be affected by the proposed
dismissals
;
or
(
d
) if
there is no such
trade union
, the
employees
likely to
be affected by the proposed
dismissals
or their
representatives nominated for that purpose.
(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 reemployment 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
.
(6) (
a
) The
employer must consider and respond to the representations made by
the other consulting party and,
if the employer does not agree with
them, the employer must state the reasons for disagreeing.
(
b
) If
any representation is made in writing the employer must respond in
writing.
(7) The
employer must select the
employees
to be dismissed according
to selection criteria—
(
a
) that
have been agreed to by the consulting parties; or
(
b
) if
no criteria have been agreed, criteria that are fair and objective.
[2]
Act
66 of 1995.
[3]
President
of the Republic of South Africa and others v South African Rugby
football Union and Others
2000 (1) SA 1 (CC).
[4]
Ibid at para 61.
[5]
(2004)
7 BLLR 667 (LAC).
[6]
Ibid
at para 55.
[7]
Chemical Workers Industrial Union v Algorax (2003) 24 ILJ 1917 (LAC)
at para 70.
[8]
Booi
v Amathole District Municipality and Others
(CCT
119/20)
[2021] ZACC 36
(19 October 2021).
[9]
Ibid
at para 39.
[10]
Ibid
at para 40.
[11]
Xstrata
South Africa (Pty) Ltd (Lydenburg Alloy Works) v National Union of
Mineworkers obo Masha
[2017]
4 BLLR 384 (LAC).
[12]
Ibid at para 11.
[13]
South
African Commercial, Catering and Allied Workers Union and Others v
Woolworths (Pty) Limited
2019 (3) SA 362
(CC) at para 49.