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[2024] ZALCJHB 316
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SACCAWU obo Mavuso Nonhlanhla and 2 Others v Tsogo Sun Casinos (Proprietary) Limited (JS25/22) [2024] ZALCJHB 316 (5 April 2024)
FLYNOTES:
LABOUR – Dismissal –
Operational
requirements
–
Procedural
and substantive fairness challenged – Consultations geared
towards discharging respondent’s statutory
obligations
rather than seriously seeking ways to avoid retrenchments –
Union should have been included in consultation
process –
Failure to allow same is fatal and detrimental to respondent’s
case – Failed to genuinely and
seriously consider
alternative solutions – Dismissals substantively and
procedurally unfair –
Labour Relations Act 66 of 1995
,
s
189.
THE LABOUR COURT OF
SOUTH AFRICA, JOHANNESBURG
Reportable
Case no: js25/22
In the matter between
SOUTH AFRICAN
COMMERCIAL CATERING AND
ALLIED WORKERS UNION
(SACCAWU) obo
MAVUSO,
NONHLANHLA and 2 OTHERS
Applicant
and
TSOGO SUN CASINOS
(PROPRIETARY) LIMITED
t/a EMNOTWENI CASINOS
ENTERTAINMENT
Respondent
Heard:
9 October 2023
Delivered:
5 April 2024
Summary:
Application to Labour Court in terms of
section 191(5)(b)(ii)
of the
Labour Relations Act 66 of 1995
, as amended - The aggrieved
employees, were purportedly dismissed based on operational
requirements during COVID-19 – Court
considered and fully
discussed an employer’s obligation to ensure that the
consultation(s) held with the employees to be
laid off are meaningful
and are in compliance with the objectives set out in
section
191(5)(b)(ii)
(which are
inter alia
, ensuring a joint
consensus-seeking process) and other objectives set out in the
Labour
Relations Act – i.e
. promoting and encouraging employees'
participation in workplace decision-making, especially where the
decision made would adversely
affect the employee.
This
judgment was handed down electronically and was circulated to the
legal representatives of the parties. The date and time for
hand down
is deemed to be 5 April 2024, 10:00 am.
JUDGMENT
MORGAN, AJ
Introduction
[1]
This application concerns the harsh and
regrettable reality of our struggling economy. It concerns the
attempts by a company to
dismiss a portion of its workforce because
of operational requirements. In other words, the company decides to
shed and reduce
its workforce in order to remain economically viable.
[2]
Ergo,
this is an application in terms of section 191(5)(b)(ii) of the
Labour Relations Act
[1]
(LRA).
[2]
The aggrieved
employees, Nonhlanhla Mavuso, Lorrain Mdaka and Lerato Malatji
represented by the Applicant, the South African Commercial
Catering
and Allied Workers Union (SACCAWU) were purportedly dismissed based
on operational requirements by the Respondent, Tsogo
Sun Casinos
(Pty) Ltd trading as Emnotweni Casinos.
[3]
The Applicant challenges the dismissals of the
employees on two grounds namely that, the dismissals were
procedurally unfair and
substantively unfair.
[4]
The Applicant seeks the following orders: (i) an
order declaring the section 189 retrenchments as procedurally and
substantively
unfair; and (ii) an order that the Respondent is to
retrospectively reinstate the aggrieved employees from 17 November
2021
(the date of the purported dismissal) to the date of this
Court’s order.
[5]
Therefore, the question before this Court is
whether the dismissal of the employees was either procedurally unfair
and/or substantively
unfair, based on the requirements of section 189
of the LRA. There are more specific allegations, which I will return
to shortly,
but for now, it is important to set out the background
facts that gave rise to this dispute.
[6]
A preliminary note is necessary here. This case is
a harsh reminder of the long-lasting impact of the COVID-19 pandemic.
The emergence
of COVID-19 in South Africa delivered a devastating
blow to the nation's already fragile economy. The pandemic's impact
went far
beyond public health concerns, triggering a domino effect
that crippled businesses and forced widespread redundancies.
[7]
South Africa's response to the pandemic involved
strict lockdown measures that brought economic activity to a near
standstill. Sectors
heavily reliant on face-to-face interaction, such
as tourism, hospitality, and retail, experienced a dramatic decline
in demand.
Global supply chains were disrupted, impacting
manufacturing and import-dependent businesses. This sudden halt in
economic activity
led to a sharp decline in GDP, pushing the country
into recession.
[8]
With revenue streams dwindling and fixed costs
remaining constant, businesses faced immense financial strain.
Companies were forced
to deplete savings and resort to drastic
measures to stay afloat. This included salary cuts, recruitment
freezes, and unfortunately,
redundancies.
[9]
The need to reduce operational costs and adapt to
a new economic landscape forced many businesses to take the difficult
decision
of making workers redundant. This decision was not just
about financial survival; it was about ensuring long-term viability.
With
reduced demand and limited resources, businesses were forced to
streamline their workforce, leading to widespread job losses across
various sectors.
[10]
The true impact of these redundancies extends far
beyond cold numbers. Job losses translated to lost income, increased
financial
strain for families, and a rise in unemployment. This had a
domino effect on consumer spending, further hindering economic
recovery.
[11]
While South Africa has slowly begun to ease
restrictions and rebuild its economy, the scars of COVID-19 remain.
Businesses continue
to grapple with the aftermath of the pandemic,
and the job market faces a long road to recovery.
[12]
The COVID-19 pandemic exposed vulnerabilities in
South Africa's economy, leaving a trail of business closures and
widespread job
losses. As the country navigates towards recovery,
addressing these vulnerabilities and fostering a more resilient
economic environment
will be crucial to prevent similar devastation
in the future.
Background facts
[13]
It has
been held in this Court that parties in a dispute are bound by the
pleadings, the pre-trial agreement and the issues set
out in the
pre-trial minutes.
[3]
This is to
ensure certainty, finality and fairness. Each party knows the case
before it and will be aware of the standard they
have to meet. One
party ought not to be blindsided or ambushed with fresh and novel
arguments and issues at trial. That would undermine
the fundamental
tenets of finality, fairness and certainty. It is also for this same
logic that courts are bound by the pleadings
and pre-trial
agreements.
[4]
This is because:
‘
The
Court does not provide its own terms of reference or conduct its own
enquiry into the merits of the case but accepts and acts
upon the
terms of reference which the parties have chosen and specified in
their pleadings. In the adversary system of litigation,
therefore, it
is the parties themselves who set the agenda for the trial by their
pleadings and neither party can complain if the
agenda is strictly
adhered to.’
[5]
[14]
Against
this backdrop, I set out the facts and issues as set out by the
Applicant and the Respondent in their statement of claim,
[6]
pleadings, and pre-trial agreement.
[15]
There are three employees in this case who were
purportedly dismissed based on operational requirements. Nonhlanhla
Mavuso was employed
on 15 March 2016 as a crèche attendant.
She attended the following training: firefighting, first level and
basic computer
literacy. She was laid off in July 2020. Lorrain Mdaka
was first employed as a casual employee on 16 September 2005 and, on
1 July
2007, became a permanent employee. She was a crèche
attendant from 2007 to 2014, a receptionist in March 2020, and a
senior
crèche attendant from 2020 to 2021. She attended
training in firefighting, first level, occupational health and safety
and
basic computer literacy. She was laid off in July 2020. Lerato
Malatji was employed on 14 March 2014 as a crèche attendant.
She attended training in firefighting, first level and basic computer
literacy. She was laid off in July 2020.
[16]
On 23 September 2021, the Respondent called and
invited the employees to attend a meeting scheduled for 27 September
2021. The meetings
were scheduled at different times for the
individual employees.
[17]
On 27 September 2021, the Respondent issued the
employees with a section189(3) notice. In this notice, it was stated
that the consultations
would be held on four different occasions: the
first consultation would take place on 27 September 2021; the second
consultation
would take place on 4 October 2021; the third
consultation would take place on 11 October 2021; and the fourth
consultation would
take place on 18 October 2021.
[18]
The section 189(3) notice reads:
‘
1.
As you are aware, the outbreak of Covid-19 in South Africa in 2020
resulted in the declaration of a national state of disaster,
as well
as the various national lockdowns that have been implemented at
different levels on an ongoing basis.
2. The stringent
restrictions on various businesses has resulted in many organisations
losing their ability to engage in economic
activity for a lengthy
period of time. This has of course [
sic
] had a severe adverse
impact on numerous organisations throughout South Africa, including
Emnotweni Casino (“the Casino").
3. While the Casino was
allowed to reopen for business in July 2020, the Creche facilities
were not reopened and the creche employees
did not resume their
normal duties due to the risks surrounding children being in
attendance at these facilities during the pandemic.
4. Given the uncertainty
of these uncontrollable factors and the ongoing impact that the
pandemic has on the Casino, it is unlikely
that the creche facilities
will reopen [
sic
] at any time in the foreseeable future.
Accordingly, the Casino proposes to close these creche facilities
which are not being utilised
and declaring the positions within the
creche facilities redundant. If implemented, this may lead to the
dismissal of some employees
employed by the Casino based on its
operational requirements.
5. This notice is being
given to you since the Casino proposes declaring, your position
redundant. You are therefore potentially
going to be affected by the
proposed retrenchments and we have an obligation to consult with
[you] regarding what we are proposing,
as well as about the
consequences of the retrenchments if they are ultimately
implemented.’
[19]
At this point, the crèche (child day care
facility) had been closed for about 18 months. It remained
closed for an additional
20 months.
[20]
In terms of the section 189(3) notice, the
affected employees were required and requested to consider the
Respondent’s proposals
and attend the consultation to make
representations and provide suggestions. If they needed further
information, they were told
that they could approach and contact
Mthengiseni Silaule, the Respondent's Human Resources Manager (Mr
Silaule).
[21]
On 4 October 2021, Mr Silaule asked the affected
employees if they had given consideration and thought to possible
alternatives
in order to avoid retrenchment. The affected employees
suggested that the operating hours of the crèche can be opened
on
weekends only; or that they be moved to different positions such
as being cleaners or receptionists.
[22]
Mr Silaule advised that this was not possible as
the cleaning services were outsourced, and that the Respondent was
reducing its
overall staff complement. He confirmed that his seniors
agreed with this view – that these were not viable alternatives
for
the affected employees.
[23]
The affected employees also proposed that the
Respondent’s crèche services be outsourced to them. The
Respondent said
that the crèche was not currently operating
(due to COVID-19) and was of the view that the crèche would
not likely
open in the near future.
[24]
On 11 October 2021, Mr Silaule informed the
employees that the alternatives they had proposed were not viable
options that the Respondent
could implement.
[25]
On 18 October 2021, Mr Silaule presented to the
affected employees voluntary retrenchment agreements and informed
them that the
offer of a voluntary severance package would lapse on
27 October 2021.
[26]
The affected employees asked if they could be
provided with copies of these agreements so that they could consult
their union representatives
to obtain advice on the Respondent’s
offer and consider their options. However, this was rejected. Mr
Silaule did not permit
the affected employees to receive the offers
as he stated that they were private and confidential. He told Ms
Mavuso that she does
have an opportunity to call whomever she wanted
and to consult with them in order to seek any advice but not have the
person present
in the consultations.
[27]
On 29 October 2021, the affected employees were
invited to a consultation. Despite them agreeing to attend, they did
not attend.
[28]
Another meeting was scheduled for 4 November 2021.
Again, none of the employees attended this meeting. Prompted by this,
on 8 November
2021, Mr Silaule instructed the Respondent’s
security to hand deliver invitations to the affected employees to
attend a consultation
on 10 November 2021. Ms Malatji accepted the
invitation but refused to sign for it; Ms Mdaka accepted the
invitation and signed
for it. Ms Mavuso was not present at her house,
but she agreed that her mother could sign the letter on her behalf.
[29]
Again, the employees did not attend this
consultation. Mr Silaule then sent a WhatsApp message to reschedule
the consultation for
12 November 2021. There was no attendance by the
Applicants.
[30]
From the pre-trial minute, it appears that:
30.1 The Respondent did
not make proposals to the employees during the consultations of any
alternatives that could avoid the need
to forcibly retrench them.
30.2 The employees did
not, at any stage, make a proposal that their employment be
transferred to other business units as an alternative
to their
retrenchment.
30.3 Following the
consultation process initiated on 27 September 2021, the Respondent
dismissed the employees on 17 November 2021.
30.4
In the section 189(3) notice, the Respondent stated that it would not
be necessary to apply a selection criteria, since all
three positions
were proposed to be declared redundant. At the same time, it
suggested that it proposes to apply LIFO (known as
the ‘Last
In, First Out’ principle)
[7]
as a selection criteria subject to the skills, qualifications and
experience, should the need arise.
30.5 The employees did
not object to this proposal regarding the selection in the section
189(3) notice. They did not query it or
raise any issues with this
during the consultation process and made no representations regarding
the application of selection criteria
that they wanted the Respondent
to consider.
[31]
On or about 29 November 2021, the Applicant
referred an unfair dismissal dispute based on operational
requirements to the Commission
for Conciliation, Mediation and
Arbitration (CCMA).
[32]
On 14 December 2021, the dispute was conciliated
by the CCMA and was unresolved. The CCMA thus issued a certificate of
outcome reflecting
that the dispute remained unresolved and should be
referred to the Labour Court.
[33]
The Respondent does not have any collective
bargaining agreement with the Applicant, and it was not recognised as
a trade union
with organisational rights by the Respondent. However,
the Applicant alleges that it had a long-standing
relationship/recognition
agreement with the Respondent, which the
Respondent terminated around January 2021. The Respondent disputes
this. The Respondent
argues that there was never any recognition
agreement or relationship between it and the Applicant.
Issues in dispute
[34]
There are two issues in dispute before this Court.
The Applicant alleges that the dismissal was procedurally and
substantively unfair.
[35]
In relation to the allegation of procedural
unfairness, the Applicant argues that:
35.1 the Respondent
should have consulted SACCAWU because the affected employees are its
members or at least acceded to the employees
request to have a union
representative present in the consultations; and
35.2 the consultation
process was not genuine and was not done in good faith. It was a sham
aimed at just ticking the statutory
boxes by the Respondent without
any real interest in seeking consensus.
[36]
In relation to the substantive unfairness, the
Applicant argues that the Respondent did not consider any
alternatives which were
viable and could have avoided the
retrenchment.
Legal framework
[37]
Section
23(1) of the Constitution
[8]
provides that everyone has the right to fair labour practices. More
broadly, section 23 of the Constitution pertains to labour
relations
and workers' rights. It outlines various rights of workers, including
the right to fair labour practices, the right to
form and join trade
unions, and the right to participate in collective bargaining.
Additionally, it prohibits unfair discrimination
against workers and
provides for the right to strike.
[9]
[38]
On the
international plane, the Termination of Employment Convention, 1982,
adopted by the International Labour Organisation (ILO),
establishes
minimum standards for justifiable reasons for employee dismissal.
South Africa, along with 36 other countries, has
ratified the
Convention. This ratification obligates South Africa, as mandated by
its Constitution, to incorporate the Convention's
principles into its
national labour law framework.
[10]
[39]
The ILO acknowledges that businesses may sometimes
need to let employees go due to legitimate operational changes.
However, the
ILO safeguards workers by setting clear guidelines for
such dismissals. These guidelines state that an employee's
termination can
only be justified if there's a valid reason connected
to either the employee's performance or conduct or due to essential
operational
changes within the company.
[40]
The
LRA was enacted to fundamentally reshape the legal landscape of
labour relations in the country. It superseded pre-existing
laws that
governed labour practices before the adoption of the Constitution.
This is explicitly stated in the LRA's long title,
which identifies
its purpose as giving effect to section 23 of the Constitution. This
focus on the Constitution is further emphasised
in section 1(a) of
the LRA itself. This subsection declares as one of the Act's primary
objectives "
to
give effect to and regulate the fundamental rights conferred by
section 23 of the Constitution”
.
[11]
[41]
The LRA, under section 185(a), states that every
employee has the right to not be unfairly dismissed and, under
section 185(b),
it provides that every employee has a right not to be
subjected to an unfair labour practice. Furthermore, the LRA
regulates two
types of dismissals: automatically unfair dismissals,
which are set out in section 187 of the LRA, and unfair dismissals,
which
are set out in section 188 of the LRA. In this case, we are
concerned with unfair dismissals, which reads:
‘
Section
188
(1) A dismissal that is
not automatically unfair, is unfair if the employer fails to prove –
(a) that the reason for
dismissal is a fair reason––
(i) related to the
employee’s conduct or capacity; or
(ii) based on the
employer’s operational requirements; and
(b) that the dismissal
was effected in accordance with a fair procedure.
(2) Any person
considering whether or not the reason for dismissal is a fair reason
or whether or not the dismissal was effected
in accordance with a
fair procedure must take into account any relevant code of good
practice issued in terms of this Act.’
[42]
As seen above, the LRA recognises dismissals for
incapacity, misconduct and operational requirements. In addition, it
also recognises
that unfairness may arise from procedural and
substantive issues. Dismissals on the basis of operational
requirements are predicated
on objective factors, whereas, misconduct
and incapacity are contingent on individual conduct and capacity. The
Constitutional
Court in
NUMSA obo
Nganezi v Dunlop Mixing and Technical Services (Pty) Ltd and others
held:
‘
Misconduct,
incapacity and operational requirements are the gateways to fair
dismissal under the LRA. For an employer, each has
its own
difficulties of proof and process. Dismissal for operational reasons
involves complex procedural processes, requiring consultation,
objective selection criteria and payment of severance benefits.
Dismissal for incapacity requires proof that performance standards
deal with the alleged incapacity and that alternative ways, short of
dismissal, were unsuccessfully pursued before dismissal can
take
place. Dismissal for misconduct in circumstances where the primary
misconduct is committed by one or more of a group of employees,
and
the exact perpetrators cannot be identified, is complicated by the
accepted principle that the misconduct must be proved against
each
individual employee.’
[12]
[43]
In
casu,
I
am concerned with dismissal based on operational requirements. The
LRA defines this type of dismissal as one based on the economic,
technological, structural, or similar needs of a company or
employer.
[13]
In terms of the
Code of Good Practice on Dismissal Based on Operational Requirements,
a dismissal based on operational requirements
embraces a dismissal
due to redundancy as a result of restructuring in the workplace.
[14]
This is a structural need for the company.
[44]
The
procedural requirements for operational requirements are duly set out
in section 189 of the LRA. The section is dense and I
will not
reproduce it here but I will attempt to summarise the provision.
Section 189(1) of the LRA demands that an employer contemplating
dismissals based on operational requirements consult
any
person, including trade unions whose members
may be
affected by the proposed retrenchments, before carrying out
dismissals. Section 189(2) of the LRA requires the employer and
other
consulting parties to deliberate and engage in a manner that is
consensus-seeking on the issues that are explicitly listed
in section
189(2)(a)-(c). For completeness, these include (i) appropriate
measures to delay or amend the schedule of the dismissals,
to
minimise and limit the number of dismissals, to avoid the dismissals
altogether, to mitigate the adverse effects of the dismissals;
[15]
(ii) the method or process of choosing the employees to be
dismissed;
[16]
and (iii) the
severance pay for dismissed employees.
[17]
[45]
Section 189(3) provides that the employer has to
issue a written notice to the other consulting party, in essence,
asking them to
consult and furnish all the relevant information
relating to the proposed dismissals. The disclosure of information
during consultation
is also addressed in section 189. Section
189(4)(a) incorporates the provisions of section 16, with necessary
contextual adjustments,
for disclosing information stipulated in
section 189(3). Section 189(4)(b) assigns the burden of proof in
situations where the
employer's refusal to disclose information is
contested. Additionally, section 189(5) mandates that the employer
grants the other
consulting party the opportunity to make
representations during consultation regarding any matters covered in
sections 189(2),
(3), and (4), along with any other issues related to
the proposed dismissals. Section 189(6) further elaborates on
responding to
these representations. Subsection (6)(a) requires the
employer to consider and respond to them, providing reasons for any
disagreement.
Section 189(6)(b) specifies that written responses must
be provided for written representations. Finally, section 189(7)
dictates
the selection criteria for dismissed employees. Section
189(7)(a) and (b) establish that the criteria must be either agreed
upon
by both consulting parties or be demonstrably fair and
objective.
[46]
For the avoidance of doubt, this case concerns
section 189 of the LRA and not section 189A as it does not concern a
large-scale
retrenchment. In other words, section 189A relates to
dismissals for operational requirements by employers with more than
50 employees.
[47]
It
must be remembered that the LRA clearly promotes and encourages
employees' participation in workplace decision-making, especially
where the decision would adversely affect the employee.
[18]
However, this is not merely a formality, which can be discharged by
simply inviting employees to a meeting and giving them an ear
without
listening to them. There must be a genuine and constructive dialogue
in good faith where all the parties are afforded the
opportunity to
make representations, and these representations must be seriously
considered. Of course, they may be rejected after
such consideration.
[48]
Thus, while the ultimate decision regarding
retrenchment may rest with the employer, the LRA emphasises the
importance of fair treatment
and respect for the rights of employees
throughout the process. Therefore, adherence to the principles of
genuine engagement and
constructive dialogue not only ensures
compliance with legal obligations but also upholds the fundamental
values of fairness and
dignity in the workplace.
Application of the law
to facts
Procedural fairness
[49]
Under this challenge, there are two questions to
be addressed: (a) was the consultation process a sham and mere
window-dressing;
and (b) should SACCAWU have been permitted to
participate as representatives in the consultation process pursuant
to the employees
request and insistence?
Were there meaningful
consultations that sought consensus between the employer and the
employees?
[50]
As a point of departure, section 189(1) of the LRA
demands that an employer consult with certain parties when it
considers dismissing
employees based on operational requirements. As
noted above, a notice in terms of section 189(3) must be issued,
setting out the
relevant information as required under that section.
[51]
The
consultation must be meaningful and be a joint consensus-seeking
process.
[19]
The consultation
must take place before a final decision on the retrenchment. This is
because they are intended to avoid the retrenchment,
to reduce the
number of retrenchments and to mitigate the consequences thereof. The
consultation must take place, as it is an inescapable
statutory
obligation on all the parties. In other words, the employer and the
employees (and other relevant parties) must engage
meaningfully in
order to reach a consensus. The language used is peremptory and the
engagement must be meaningful and be a joint-consensus-seeking
process. Much of the language in section 189(1) of the LRA is
peremptory.
[20]
[52]
Consultation
is a two-way street.
[21]
The
employer invites the employees (and other relevant parties) to the
discussion table and lays bare their position and the rationale
for
the proposed retrenchment. The affected employees may then suggest
alternatives and other solutions, which must be considered
by the
employer. Prinsloo J in this Court held:
‘
Consultation
in a retrenchment process must be distinguished from negotiations
during a collective bargaining process. Consultation
in anticipation
of retrenchment calls for a joint problem-solving approach, so that
the needs of all the parties can be explored.
Section 189(2) places
an obligation on both parties to consult.
The
employer has to invite the other parties to consult, but the
consultation process is a two-way street and requires engagement
by
all the consulting parties, with the aim to reach consensus. There is
a duty on the other consulting party to put alternatives
on the table
and to make an effort to participate in a meaningful way. Adopting an
obstructive attitude is not assisting the process.
’
[22]
[Own emphasis added]
[53]
While
employers must consult with employees before retrenchment, reaching
an agreement is not mandatory.
[23]
After proper consultation, they can proceed with retrenchment using
fair and objective criteria, even without consensus. However,
skipping consultation on selection criteria makes the layoff process
unfair. If an agreement is not reached, using unfair or subjective
criteria makes the dismissal itself unfair. This is because the wrong
employees might be let go. In simpler terms, just because
there was
no agreement on how to choose who gets retrenched does not
necessarily mean the chosen criteria were unfair, or that
the
retrenchments were unjust. This interplay between fair procedures and
fair outcomes can be seen in another required consultation
topic:
finding alternative employment. Consulting about ways to keep
employees on, even if no alternatives are ultimately found,
likely
avoids procedural unfairness in the dismissal process.
[54]
In
casu
,
there is something rather amiss about the consultations. The
Respondent, through Mr Siluale, seems to have a predisposition and
was merely going through the motions. The consultations seemed to be
geared towards discharging the Respondent’s statutory
obligations rather than carefully and seriously seeking ways to avoid
the retrenchments or minimise the adverse impacts which may
arise
from the retrenchments.
[55]
The allegation that Mr Silaule refused to provide
the affected employees copies of the voluntary severance packages
(VSP) offer
they had requested during the consultations to allow them
an opportunity to consider them at home or to submit to the union
representative
to consider and provide them with advice prior to them
deciding whether they will accept or refuse the offer or consider
other
options to propose to the Respondent gives me discomfort.
During cross examination, Mr Silaule conceded in the hearing that he
disallowed them copies of the VSP offers and from taking them home on
the basis that they were confidential and private. Mr Silaule’s
refusal to me, demonstrates that the Respondent had a
take-it-or-leave-it approach and deprived the affected employees of
the
ability to apply their minds and solicit advice from their union
representative or any other third party.
[56]
I must
also note that the election by the affected employees to not attend
all the consultations was ill-advised. I understand that
the affected
parties were of the view that the consultations were going to lead to
a foregone conclusion and that it would be a
waste of time. Be that
as it may, they should not take the law into their own hands by
declaring the consultations a sham and withdrawing
from them. This
denudes the strength of their claims because they did not
participate, and they frustrated the process with their
absences. It
would be beneficial for them and strengthen their claim if they
attended all the consultations and contributed.
[24]
[57]
When testifying the affected employees said that
they were running out of funds and felt that the consultations were
leading to
a foregone conclusion. They were of the view that they
were wasting their already limited funds in light of the ongoing
COVID-19
pandemic; they could not afford to attend these
consultations only to lose their jobs. They found that their
financial predicament
was untenable. However, this would have been
avoided had the Respondent allowed SACCAWU to represent these
workers. I turn to this
issue next.
Should SACCAWU have
been involved or permitted to attend as the affected employees’
representatives in the consultation process?
[58]
In relation to this challenge, I believe that
SACCAWU should have been included in the consultation process. Mr
Silaule was made
aware by the affected employees that they wanted to
consult someone, namely their union representative.
[59]
The Respondent claims that the affected employees
did not specifically indicate that they wanted to consult SACCAWU and
that they
were unaware that they belonged to a trade union. I find
this rather unconvincing.
The Respondent
knew that the affected employees were paying fees to SACCAWU as this
was being deducted from their salaries monthly.
It is implausible
that they did not know. Mr Silaule indicated that he was aware of
this, whilst testifying during the hearing.
Furthermore, once the
affected employees stated that they would like to consult “someone”,
the Respondent could have
asked further to find out who this
“someone” was. It also seems unlikely and implausible
that they would not inquire
who this “someone” was. It
defies logic that the affected employees would ask to have recourse
to someone, and Mr Silaule
did not ask “who?”. It seems
to me that this is a simple question that a reasonable human
resources manager would ask.
[60]
In my view, not allowing SACCAWU to represent the
affected employees even after the affected employees had persistently
requested
so in the consultations, is fatal and detrimental to the
Respondent’s case. It demonstrates that the Respondent was
taking
a hard-line approach to the consultation
ab
initio
. This is further exacerbated by
the fact that Mr Silaule refused to provide the affected employees
with copies of the VSP offers
pursuant to their request for copies so
that they could take home and obtain advice thereon as stated above.
Substantive fairness
[61]
The Applicant alleges that the dismissal was
substantively unfair because the Respondent failed to genuinely and
seriously consider
alternative solutions to the retrenchments.
Were the employees’
dismissal substantively unfair?
[62]
The fairness of a lay-off for operational reasons
hinges on two crucial inquiries. The first question is a general
question and
the second is a specific question. As Zondo JP of the
Labour Appeal Court (as he then was) stated in
Chemical
Workers Industrial Union and Others v Latex Surgical Products (Pty)
Ltd
:
‘
Whether
or not there was a fair reason for the dismissal of the individual
appellants relates to a general question and a specific
question. The
general question is whether or not there was a fair reason for the
dismissal of any employees. The specific one is
whether there was a
fair reason for the dismissal of the specific employees who were
dismissed, which in this case, happened to
be the individual
appellants. The question of a fair reason to dismiss the specific
employees who were dismissed goes to the question
of the basis upon
which they were selected for dismissal whereas the other question
relates to whether or not there was a reason
to dismiss any employees
in the first place.’
[25]
[63]
Thus,
the question is whether there is a rationale for the dismissal of any
employees. From the papers and at the hearing during
the affected
employees’ testimony, there does not appear to be any argument
by the Applicant that the dismissals were unfair
and that there was
no rationale for them, save to state that the Respondent required
those positions in its structure in order
to keep its operating
license. Thus, without more, the general question is unchallenged and
as such, the irresistible deduction
is that the Applicant accepts the
rationale for the dismissal as being based on proper business sense.
The Labour Appeal Court
in
Kotze
v Rebel Discount Liquor Group (Pty) Ltd
was
unambiguous: “
[w]hat
we have to do is to decide whether the respondent's decision to
retrench was informed and is justified by a proper and valid
commercial or business rationale. If it is, then that is the end of
the enquiry even if it might not have been the best under the
circumstances”
.
[26]
[64]
This brings me to the crux of the Applicant’s
contention – the specific question. The Applicant contends that
the Respondent
did not seriously consider the alternative
suggestions, which would have avoided the retrenchments altogether.
It is contended
that the process was a
fait
accompli
as none of the proposals were
entertained and were quickly dismissed and rejected.
[65]
The Applicant asserts that there were several
options available to the Respondent by way of alternative
employment/positions, which
would have avoided retrenchments. It
argued that the three affected employees could have been placed in
these positions:
a.
Receptionist;
b.
Waitresses;
c.
Scullery, or washing dishes;
d.
Admin;
e.
Cash desk;
f.
Slot attendants;
g.
Transfer to other business units; or
h.
Implement short (part time) or reduced working
hours to all employees.
[66]
Not only this, but the Applicant alleges that the
affected employees also proposed the crèche being outsourced
to them. Moreover,
it is alleged that the wrong selection criteria
was used and that the Respondent should have used a different
criteria such as
LIFO throughout the whole business structure.
[67]
The Respondent argued that the Applicant did not
plead that the Respondent did not consider alternatives before
commencing the section
189 process. The Respondent contends that this
approach is essentially litigation by ambush and that thus
inadmissible. Moreover,
the Respondent further contends that there
were no alternative positions available in any case. The thrust of
this submission is
that the Respondent did indeed consider the
alternative positions suggested but that due to the harsh reality of
the COVID-19,
the Respondent had not, and has not, financially
recovered and therefore had embarked on a lay-off process, which made
it unfeasible
and commercial unviable to move the applicants to a
different position.
[68]
The Respondent testified that it was retrenching
in other departments and that it was limiting its staff complement.
There was an
overall reduction. This is because the Respondent’s
business was harshly hit by the national lockdown announced after the
COVID-19 breakout. Mr Silaule testified that the Respondent has
reduced the number of slot machines and gambling tables it operated
and reduced its business trading hours.
[69]
Davis
AJA in
Enterprise
Foods (Pty) Ltd v Allen and Others
[27]
referred
to the following extract from
Chemical
Workers Industrial Union and Others v Algorax (Pty) Ltd
[28]
with
approval:
‘
When
either the Labour Court or the Labour Appeal Court is seized [sic]
with a dispute about the fairness of a dismissal, it has
to determine
the fairness of the dismissal objectively. The question whether the
dismissal was fair must be answered by the court.
The court must not
defer to the employer for the purpose of answering that question. In
other words it cannot say that the employer
thinks it is fair, and
therefore, it is or should be fair.’
And further held that:
‘
The
Court must examine whether there is a fair reason to dismiss. If, as
Zondo JP noted in
Algorax
,
there are two rational solutions, one of which preserves jobs,
fairness as mandated by the Labour Relations Act 66 of 1995 (the
Act)
dictates that this is the solution that must be adopted by the
employer...’
[29]
[70]
It is trite that an employer has an obligation to
consider any alternatives suggested and satisfy itself that there
were no other
alternative employment positions or solutions
available. The Respondent here had this obligation.
[71]
I am
not convinced that the Respondent seriously and genuinely considered
the alternative solutions provided by the affected employees.
I
accept that operational requirements are not to be treated as a
measure of last resort. The dismissals must have been avoidable.
[30]
However, failing to offer
available
alternative
employment would be substantively unfair.
[31]
[72]
In
Van
Rooyen and Others v Blue Financial Services (SA) (Pty) Ltd
[32]
,
the Labour Court noted that this enquiry of substantive fairness is
objective. The court quoted with approval from
BMD
Knitting Mills (Pty) Ltd v SA Clothing and Textile Workers Union
[33]
which
held thus:
‘
the
starting-point is whether there is a commercial rationale for the
decision. But, rather than take such justification at face
value, a
court is entitled to examine whether the particular decision has been
taken in a manner which is also fair to the affected
party, namely
the employees to be retrenched. To this extent the court is entitled
to enquire as to whether a reasonable basis
exists on which the
decision, including the proposed manner, to dismiss for operational
requirements is predicated. Viewed accordingly,
the test becomes less
deferential, and the court is entitled to examine the content of the
reasons given by the employer, albeit
that the enquiry is not
directed to whether the reason offered is the one which would have
been chosen by the court. Fairness,
not correctness is the mandated
test.’
[73]
Murphy AJ further iterated this in
SATAWU
v Old Mutual Life Assurance Company South Africa Ltd
:
‘
The
test formulated by the legislature in the 2002 amendments harkens
back to the principle of proportionality or the rational basis
test
applied in constitutional and administrative adjudication in other
jurisdictions
.
As such, the test involves a measure of deference to the managerial
prerogative about whether the decision to retrench is a legitimate
exercise of managerial authority for the purpose of attaining a
commercially acceptable objective
.
Such deference does not amount to an abdication and, as stated in
BMD
Knitting Mills (Pty) Ltd
(supra),
the court is entitled to look at the content of the reasons given to
ensure that they are neither arbitrary nor capricious
and are indeed
aimed at a commercially acceptable objective. T
he
second leg of the enquiry is directed at the investigation of the
proportionality or rationality of the process by which the
commercial
objectives are to be achieved. Thus, there should be a rational
connection between the employer's scheme and its commercial
objective, and through the consideration of alternatives an attempt
should be made to find the alternative which least harms the
rights
of the employees in order to be fair to them. The alternative
eventually applied need not be the best means, or the least
drastic
alternative. Rather it should fall within the range of reasonable
options available in the circumstances allowing for the
employer's
margin of appreciation to the employee in the exercise of its
managerial prerogative
.’
[34]
[Own emphasis added]
[74]
Moreover, Mr Silaule testified that even after the
Covid-19 pandemic restrictions were lifted and the Respondent
continued to trade
normally, it did not do away with the positions of
affected employees its structure instead, it re opened the
crèche
and
outsourced the functions of the affected
employees to a third-party service provider.
[75]
Mr Silaule further testified that the Respondent’s business
required the crèche attendant positions in its organisational
structure as one of the requirements for it to keep its
trading/operating license. He further confirmed that prior to the
closure
of the crèche in 2021 and after it had reopened after
the Covid-19 restrictions were lifted, he had addressed notice
letters
of these developments to the industry regulator (Mpumalanga
Economic Regulator) advising of the closure of and reopening of the
crèche in order to comply with the Respondent’s trading
license obligations. This conduct corroborates his testimony
regarding the necessity of the positions in the Respondent’s
business structure. Therefore, it is difficult for me to find
that
the crèche attendant positions in the organisational structure
ever became redundant if on his own version, they are
required to be
in the company structure in order for the Respondent to keep its
trading license.
[76]
The outsourcing of the affected employees’ jobs to a
third-party service provider, is not only contradictory to the reason
he advanced to the affected employees during the consultations for
rejecting their proposal but also indicates that an intention
to
deliberately sideline the affected employees when the opportunity
they proposed arose and out rightly refuse them the opportunity
to
pursue the alternative option to save their jobs. It boggles my mind
why the affected employees were not offered the opportunity
they
proposed first as would have been the case of an employer who decided
to re-employ in a position once declared redundant or
laid off an
employee for financial reasons, but later implemented revived the
position. This leads to an irresistible inference
that the affected
employees lay-off was not genuine and in good faith.
[77]
Whilst there is no obligation on the Respondent to
take up the suggestions and implement them, it is incumbent on the
Respondent
to apply its mind to them in good faith. It was apparent
from the evidence led by the affected employees and the evidence Mr
Silaule
led in chief and in cross examination that the purported
consultations were a sham from the outset, and the Respondent had
already
made up its mind prior to engaging in them. In my view, the
outcome was predetermined, and the consultations were a tick box
exercise
aimed at creating the impression that the dictates of
section 189 of the LRA were taken seriously.
[78]
This is evinced by the fact that Mr Silaule
conceded during cross examination that he did not allow the affected
employees to take
the proposed VSP offers home and solicit the views
of their union representatives. He stated that these documents were
confidential
and private. However, it cannot be gainsaid that the VSP
offers are confidential and private towards the affected employees or
their chosen union representatives. If the consultations were
genuinely aimed at achieving meaningful engagement, the affected
employees should have been given sufficient opportunity to consider
the contents of the VSPs and solicit the views of their
representatives.
This would have enriched the consultations as the
affected employees would have been better informed and better
advised. The Respondent,
through the Human Resource Manager, created
an artificial barrier by barring the affected employees from being
able to take the
documents home to consider and obtain advice
thereon.
[79]
The affected parties recommended several positions
within the Respondent’s business, which were promptly rejected.
In relation
to the option of outsourcing the business to the affected
parties, this was not properly considered and was rejected equally as
quickly. The proposal of working on a part-time basis was also
rejected. The affected employees also testified that after they
had
proposed the outsourcing of the crèche to them Mr Silaule
decidedly rejected this proposal advising them that it was
not
permissible to outsource the service in terms of the gambling
license. This statement was not challenged or denied by Mr Silaule
but contradictory with the Respondent’s subsequent actions.
[80]
I am cognisant of the principle in
General
Foods Industries Ltd v FAWU
, where the
Labour Appeal Court held:
‘
After
consultations have been exhausted the employer must decide whether to
proceed with the retrenchment or not. The loss of jobs
through
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 if the employer can show that all
viable alternative steps have
been considered and taken to prevent the retrenchments or to limit
these to a minimum.’
[35]
[81]
On a careful review of the evidence, I am not
convinced by the Respondent’s submissions that it was
meaningfully engaged in
a consensus-seeking consultation process. The
affected employees suggested alternative positions and options during
the consultations,
and they were decidedly rejected by Mr Silaule.
[82]
I must not be misunderstood. It is neither my
suggestion nor my finding that the affected employees should not have
been dismissed
for operational reasons. I am neither contending that
the Respondent has no commercial basis to embark on a retrenchment
process.
This Court does not have the evidence or expertise to make
such a determination and it was not properly put before me or
challenged
in any event. My finding is simply this: the Respondent
failed to comply with the procedural and substantive dictates of
section
189 of the LRA. The Respondent did not afford the affected
employees the requisite fairness that was expected of it during the
retrenchment process. Thus, the retrenchments can be proverbially
characterised as fruits of a poisoned tree.
Relief sought
[83]
The Applicant seeks reinstatement with full
salaries and employment benefits of the affected employees effective
from the date of
dismissal. In the absence of any evidence by
the Respondent to indicate that the Applicant’s reinstatement
would not
be reasonably practicable, I am inclined to order
reinstatement since it is the primary statutory remedy in unfair
dismissal disputes.
Further, that the affected employees be paid
their full salaries from their date of dismissal (17 November 2021).
Costs
[84]
Insofar as costs are concerned, this Court has a
broad discretion in terms of section 162(1) of the LRA to make any
order for costs
according to the requirements of the law and
fairness. An official of SACCAWU (the Applicant) represented the
affected employees
in these proceedings. Therefore, the Applicants
did not incur any costs associated with their legal representation
before this
Court, thus it would in my view be inappropriate to order
costs in this case.
[85]
In the circumstances, the following order is made:
Order
1.
The dismissal
of the
individual affected employees namely, Nonhlanhla Mavuso, Lorrain
Mdaka and Lerato Malatjie based on the Respondent’s
purported
operational requirements is substantively and procedurally unfair.
2.
The individual affected employees stated above,
are reinstated with full salaries and employment benefits effective
from the date
of dismissal (17 November 2021).
3.
There is no order as to costs.
[Electronically
signed PDF]
L.M Morgan
Acting Judge of the
Labour Court of South Africa
Appearances
For
the Applicant:
Mr
P Ngoato
Instructed
by:
Trade
Union:
SACCAWU
For
the Respondent:
V.M.
Mndebele
Instructed
by:
Edward
Nathan Sonnenbergs Inc
[1]
Act
66 of 1995, as amended.
[2]
Section
191(5)(b)(ii) provides:
‘
(5)
If a council or a commissioner has certified that the dispute
remains unresolved, or if 30 days or any further
period as agreed
between the parties have expired since the council or the Commission
received the referral and the dispute remains
unresolved –
…
(b) the
employee may refer the dispute to the Labour Court for adjudication
if the employee has alleged that the reason
for dismissal is –
…
(ii)
based on the employer's operational requirements…’
[3]
See:
Professional
Transport & Allied Workers Union on behalf of Khoza and others v
New Kleinfontein Gold Mine (Pty) Ltd
[2016]
ZALCJHB 121; (2016) 37 ILJ 1728 (LC);
National
Union of Metalworkers of SA and others v Driveline Technologies
(Pty) Ltd and another
[1999]
ZALC 157
; (2000) 21 ILJ 142 (LAC); and
Chemical,
Energy, Paper, Printing, Wood & Allied Workers Union and others
v CTP Ltd and another
[2012]
ZALCJHB 163;
[2013] 4 BLLR 378
(LC).
[4]
See:
J. Jacob, I. S. Goldrein, ‘
Pleading:
Principles and Practice’
Sweet
& Maxwell at pp 8 – 9.
[5]
Ibid.
[6]
The
purpose of a statement of claim was lucidly explained in
Candy
and Others v Coca Cola Fortune (Pty) Ltd
[2014]
ZALCJHB 320; (2015) 36 ILJ 677 (LC).
[7]
The
application of LIFO is generally subject to a right to retain
certain special skills and expertise, which might be necessary
for
the continued operation of the business. See
NUM
& others v Anglo American Research Laboratories (Pty) Ltd
[2005]
2 BLLR 148
(LC) and
SA
Breweries (Pty) Ltd v Louw
[2017]
ZALAC 63
; (2018) 39 ILJ 189 (LAC).
[8]
Constitution
of the Republic of South Africa, 1996.
[9]
The
text of section 23 of the Constitution provides:
‘
23.
Labour relations
(1) Everyone
has the right to fair labour practices.
(2) Every
worker has the right –
(a) to form
and join a trade union;
(b) to
participate in the activities and programmes of a trade union; and
(c) to
strike.
(3) Every
employer has the right –
(a) to form
and join an employers' organisation; and
(b) to
participate in the activities and programmes of an employers'
organisation.
(4) Every
trade union and every employers' organisation has the right –
(a) to
determine its own administration, programmes and activities;
(b) to
organise; and
(c) to form
and join a federation.
(5) Every
trade union, employers' organisation and employer has the right to
engage in collective bargaining. National
legislation may be enacted
to regulate collective bargaining. To the extent that the
legislation may limit a right in this Chapter,
the limitation must
comply with section 36(1).
(6) National
legislation may recognise union security arrangements contained in
collective agreements. To the extent
that the legislation may limit
a right in this Chapter the limitation must comply with section
36(1).’
[10]
Section
39 of the Constitution.
[11]
Section
1 of the LRA is worth reproducing here:
‘
The
purpose of this Act is to advance economic development, social
justice, labour peace and the democratisation of the workplace
by
fulfilling the primary objects of this Act, which are —
(a) to give
effect to and regulate the fundamental rights conferred by section
23 of the Constitution;
(b) to give
effect to obligations incurred by the Republic as a member state of
the International Labour Organisation;
(c) to
provide a framework within which employees and their trade unions,
employers and employers' organisations can
—
(i)
collectively bargain to determine wages, terms and conditions of
employment and other matters of mutual
interest; and
(ii)
formulate industrial policy; and
(d) to
promote —
(i)
orderly collective bargaining;
(ii)
collective bargaining at sectoral level;
(iii)
employee participation in decision-making in the workplace; and
(iv) the
effective resolution of labour disputes.’
[12]
[2019]
ZACC 25
;
2019 (5) SA 354
(CC) at para 31.
[13]
Section
213 of the LRA.
[14]
Published
under GN 1517 in GG 20254 of 16 July 1999.
[15]
Section
189(2)(a) of the LRA.
[16]
Section
189(2)(b) of the LRA.
[17]
Section
189(2)(c) of the LRA.
[18]
Steenkamp
and Others v Edcon Ltd (National Union of Metalworkers of SA
intervening)
[2016]
ZACC 1
; (2016) 37 ILJ 564 (CC) at para 27. See also, section 1(d) of
the LRA.
[19]
Section
189(2) of the LRA.
[20]
South
African Municipal Workers Union Obo Madlala and Others v UGU South
Coast Tourism (Pty) Ltd
[2023]
ZALCD 11 (
Madlala
)
at para 99.
[21]
Govind
v AC Nielsen Marketing and Media (Pty) Ltd
(P
95/2020) [2020] ZALCPE 12 (
Govind
)
at para 37.
[22]
Madlala
supra
at para 100.
[23]
Ibid
at para 101.
[24]
In some cases, a failure to attend consultations or the abandoning
of consultations at a later stage was detrimental to the case
of the
affected employee. See
Govind
supra
and
also
SA
Airways v Bogopa and Others
[2007]
ZALAC 10
; (2007) 28 ILJ 2718 (LAC).
[25]
[2005]
ZALAC 14
; (2006) 27 ILJ 292 (LAC) at para 55.
[26]
[1999]
ZALAC 25
at para 36.
[27]
[2004] ZALAC 5
; (2004) 25 ILJ 1251 (LAC) (
Enterprise
Foods
)
at para 17.
[28]
(2003) 24 ILJ 1917 (LAC) at para 69.
[29]
Enterprise
Foods supra
at
para 17.
[30]
See
Mamabolo
and Others v Manchu Consulting CC
[1999]
ZALC 40.
[31]
R. Le
Roux, ‘
Double
Trouble: Consulting for a Fair Retrenchment
’
(2017)
4
Revue
de droit comparé du travail et de la sécurité
sociale at pp 154 - 161.
[32]
[2010]
ZALC 80
; (2010) 31 ILJ 2735 (LC) at para 15.
[33]
(2001) 22 ILJ 2264 (LAC) at para 19.
[34]
[2005]
4 BLLR 378
(LC) at para 85.
[35]
[2004]
7 BLLR 667
(LAC) at para 55.