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[2024] ZALCJHB 166
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Solidarity obo Members v Sahara African Living (Pty) Ltd (JS829/21) [2024] ZALCJHB 166 (17 April 2024)
FLYNOTES:
LABOUR – Dismissal –
Operational
requirements
–
Alleged
breach of employees’ terms and conditions of employment –
Reduction of salaries and lay-offs – Changes
effected
unilaterally without consultation and employees’ consent –
Employees did not evince clear and unambiguous
intention to work
on unilaterally amended terms and conditions – Breach of
fundamental rights – Dismissal substantively
unfair –
Compensation just and equitable.
IN
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case
No: JS829/21
In the matter between:
SOLIDARITY
obo MEMBERS
Applicant
and
SAHARA
AFRICAN LIVING (PTY) LTD
Respondent
Heard:
5, 6, 7, 8 and 9
February 2024 and 25 March 2024
Delivered:
17 April 2024
This
judgment was handed down electronically by circulation to the parties
and/or legal representatives by email. The date for hand-down
is
deemed to be 17 April 2024.
JUDGMENT
MAKHURA, J
Introduction
[1]
The applicant in these
proceedings is Solidarity acting on behalf of its three members (the
“employees” or “individual
applicants”). The
claim lodged by the applicant is two-fold – the first is a
claim brought in terms of section 77(3)
read with sections 73A(3) and
77A(e) of the Basic Conditions of Employment Act
[1]
(BCEA). The applicant seeks an order declaring that the respondent
(company) breached the individual applicants’ contracts
of
employment, that the respondent complies with their contracts of
employment and payment of the individual applicants’
outstanding remuneration for the period March 2020 to July 2021
(being the date of the individual applicants’ dismissal).
[2]
The second is a referral
in terms of section 191(5)(b)(ii) of the Labour Relations Act
[2]
(LRA). In this claim, the applicant seeks an order that the
individual applicants’ dismissal in July 2021 was procedurally
and substantively unfair and an award of maximum compensation. In
addition, they seek an order directing the respondent to pay
them
their statutory monies, particularly the notice pay.
Material
facts
[3]
The three employees and Jannem Goussard, the union official,
testified on behalf of the applicant. The respondent called
Lisa
Constable (Constable), the respondent’s Responsible Persons
Operations. Below is a summary of the material facts of
the matter
based on the documentary and oral evidence led during the trial
proceedings.
[4]
The company is in the business of leasing aircraft to airlines,
non-governmental organisations and foreign state departments.
It
provides aircraft and crew outside the borders of the Republic of
South Africa.
[5]
At the start of the ‘temporary’ lay-off implemented by
the company in mid to late March 2020, the respondent
operated 2
aircraft in Comoros, 1 in Mozambique, 3 in Iraq and 1 in Sudan. It
had secured a contract in Gabon and sent 2 aircraft
in February 2020
to start operating, pending final approval from aviation authorities.
However, Gabon closed its borders around
March 2020, which delayed
the approval and the start of operations until the company brought
its aircraft back to RSA.
[6]
The three employees, Grant Ashley Burton (Burton), Francois Burger
Steyn (Steyn) and Tyler Miller (Miller) are qualified
pilots and were
employed as captains for type-rated E120 aircraft. Their contracts of
employment contained a non-variation clause
which provided that no
changes to the terms and conditions of their contracts shall be of no
force and effect unless placed in
writing and signed by both parties.
The company reserved the right to review the contract through a
process of consultation.
[7] The respondent
remunerated the individual applicants in accordance with a salary
scale that provided for ‘on-tour’
and ‘off-tour’.
They were paid in United States Dollars (USD). The on-tour salaries
for the employees were as follows
Burton - $6000.00, Steyn - $6400.00
and Clark - $8000.00. Their off-tour salaries were – Burton -
$2800.00, Steyn - $3200.00
and Clark - $5000.00. Typically, they
would be rostered 8 weeks on-duty and 4 weeks off-duty, even though
these periods may be
extended or shortened depending on the
operational requirements.
[8]
On or about 15 March
2020, the President of the Republic of South Africa declared a
national state of disaster in terms of the Disaster
Management
Act
[3]
. This declaration was in
response to the Covid-19 pandemic and in an attempt to prevent and
reduce the spread of the coronavirus.
The national state of disaster
was to take effect from midnight on 26 March 2020. One of the
measures announced before the effective
date was the travel ban and
prohibition on commercial flights, both domestic and international,
and closing South African borders
and points of entry.
[9]
On 16 March 2020, Trevor Brotherton, the Chief Executive Officer
(CEO) of the company, posted a message on Air Maestro
stating that
the company’s concerns during the Covid-19 period were the
health and welfare of its employees. The message
also stated that the
company could not anticipate the full impact of the Covid-19 pandemic
on its operations and that employees
would be informed of any
developments affecting the company.
[10]
On 20 March 2020, the company addressed an email to its employees.
The email notified these employees that the on-duty
crew’s
salaries would be reduced by 30% and the off-duty crew’s
salaries by 20%. These reductions were to take effect
from April
2020.
[11]
On 23 March 2020, Constable telephoned Clark to inform him of the
respondent’s decision to implement temporary
lay-offs for all
employees and the salary reduction. This telephone discussion was
followed by WhatsApp messages between the two
dated 23 and 24 March
2020, where they discussed the effective date of the salary
reductions and other issues.
[12]
On the same day (23 March 2020), the company addressed letters to
Clark and Steyn titled “
notice of temporary lay-off
”.
The letters informed Clark and Steyn of the company’s decision
to institute temporary lay-offs from 26 March 2020
and that they were
placed on temporary lay-off until further notice.
[13]
On 24 March 2020, the company posted another message on Air Maestro
titled Covid-19 Salary Update. The message provided
updates on its
operations, and informed the employees that:
‘
We
have had to take draconian measures to save the company and to this
end we have unfortunately had to put certain engineers and
crew
members on “Temporary Lay-Off” with immediate effect
(those affected have been contacted directly and letters
sent to
them)
·
For the remaining crew, the 30% deduction for ON salaries and 20%
deduction for OFF salaries will regretfully be
implemented with this
salary run i.e. March and not April pay run as per our previous
communique.
·
For the next payment period, commencing 26th March 2020, the OFF
salary will cut to 50% (currently 80%)
·
NB – these cuts will apply to crew who receive Fixed salaries.
We
understand the huge impact that this will have on our crew, however
this situation is dire and beyond our control. Our goal is
to keep
the company alive and to keep as many jobs as possible so that when
this crises (sic) passed we are in a position to move
forward
positively.’
[14]
On 2 April 2020, the company posted another message on Air Maestro,
informing the employees that it would register employees
affected by
the lay-offs on the Temporary Employer/Employee Relief Scheme (TERS).
Employees were also advised that the company
was available to assist
them on “
matters that arise on contract or other admin
related issues”.
[15]
On 27 April 2020, the company wrote a letter to Burton, who was not
laid off and was on duty in Comoros, informing him
that it was not
able to make any predictions or provide guarantees regarding the
future. The letter was preceded by a telephone
enquiry from Burton to
Constable about the return to normal working conditions.
[16]
On 4 June 2020, the company addressed a letter to the employees
providing updates regarding its operations and the TERS
payments.
[17]
On 12 June 2020, Clark addressed an email to Adriaan Fourie (Fourie),
the Chief Pilot. Clark noted that the Covid-19
regulations were being
relaxed and enquired from Fourie about the company’s plan to
pay them their normal salary. In response,
Fourie informed Clark that
he was not involved in the decision and essentially that he did not
know of any plans to go back to
their normal salaries.
[18]
On 10 July 2020, Clark addressed an email to Constable. Clark raised
concerns about the indefinite ‘temporary’
lay-off and
argued that this period cannot exceed 3 months. He then stated that
the company should find a solution to the issue
and communicate it to
the employees. He wrote further that:
‘
We
understand that this crisis has caused some serious restraints within
the economy and especially the Aviation industry but this
does not
mean that our basic rights have been put on pause and the company can
do as they please with regards to our Salaries and
not keep us
informed as to the next move.’
[19]
Constable did not respond to Clark’s email. Instead, Clark
received a telephone call from the CEO who according
to Clark’s
undisputed evidence, was upset with him for writing the email and
considered the email as a threat to institute
legal action against
the company. The CEO also informed Clark that the law did not apply
during Covid-19 period.
[20]
On 19 August 2020, the company issued a further update on its
operations and TERS payments.
[21]
In October 2020, a group of employees, including the three employees
in this matter, submitted a document which they
called a grievance
against the company’s decision to reduce their salaries and the
lay-offs. The employees raised concerns
that the company did not
consult them before changing the terms and conditions of the contract
and that this may be against the
labour laws. They sought clarity on
various issues, including the number of employees affected by the
salary reductions and lay-offs,
how long the salary reductions and
lay-offs would continue for or when would the lay-offs end and their
normal salaries reinstated.
In response, the company could not commit
to the period when it would reinstate the employees’ terms and
conditions of contract.
[22]
On 9 November 2020, the company issued a survey or examination to the
employees. The employees were required to answer
two questions,
namely (1) “
are you willing to be rostered to fly on tour on
your current COVID-19 impacted salary
”, and (2) “
are
you willing to be rostered to tour location Iraq – Balad Air
Base
”. A “
yes
” answer to the question
was the correct answer and “
no
” was the incorrect
answer. The pass rate for the examination was 100%. Steyn responded
in the affirmative to both questions,
obtained 100% and passed the
examination. Clark and Burton responded negatively to the second
question, obtained 50% and failed
the examination. All three
employees were prepared to continue working on the reduced salary.
[23]
On 11 February 2021, Solidarity, acting on behalf of the employees,
addressed a letter to the company. Solidarity recorded
that it was
mandated by the employees to engage the company in an attempt to
establish an agreement on the continuation of changes
to terms and
conditions of the employees’ contracts of employment.
Solidarity raised concerns regarding the indefinite lay-offs
and
argued that the company has abandoned the contracts of employment and
engaged the employees as independent contractors. The
letter then
requested the company to start a consultation process to ensure the
continuation of employment on reasonable alternative
employment
conditions.
[24]
The company and Solidarity met on 1 March 2021. On 16 March 2021,
Solidarity addressed a letter to the company. The letter
recorded
that the measures or changes implemented in March 2020, which were
understood to be short-term and were accepted ‘cooperatively’,
have become permanent and that the continued breach of contract of
the employees’ contracts of employment was not justifiable.
Solidarity demanded inter
alia
payment of the employees’
March 2020 shortfall in salaries, restoration of the terms and
conditions of employment and termination
of the lay-offs with
immediate effect.
[25]
On 18 March 2021, the company responded to the above letter and
informed Solidarity that it continued to suffer significant
financial
loss and that “
all employees continue to be free to seek
alternative employment, whether freelance or permanent
”.
[26]
On 19 March 2021, Solidarity referred a dispute in terms of section
64 of the LRA to the Commission for Conciliation,
Mediation and
Arbitration (CCMA) and sought the company to restore the employees’
terms and conditions of employment retrospectively.
The dispute was
conciliated on 15 April 2021 and remained unresolved.
[27]
On 6 May 2021, the CCMA issued an advisory award. The company was
advised to consider retrenchment and apply for facilitation.
On 13
May 2021, the company completed a CCMA form requesting facilitation.
[28]
On 14 May 2021, the company sent the request for facilitation form to
Solidarity and the CCMA. It also sent an email
titled “
Retrenchment
section 189A
”. The email purports to be a notice in terms
of section 189(3) of the LRA. It provides that the company had no
other option
but to commence a retrenchment process of the pilots and
engineers. The email also sets out that in the past 14 months, the
company
instituted “
drastic measures in an effort to ensure
the company’s survival
”. It sets out the drastic
measures as (1) the salary reduction and temporary lay-offs, and (2)
the implementation of the
“TERS process”. Then, the names
of employees who “
will be affected and was (sic) selected
”
on the basis of operational requirements and LIFO were listed, which
included the three employees in this matter.
[29]
On severance packages, the company stated that the employees would be
paid one week for each completed year at the basic
salary rate prior
to the salary reduction.
[30]
On 19 May 2021, Solidarity addressed a letter to the company
objecting to the purported section 189(3) notice on the
basis that it
was defective and again raising the issue of the salary reductions.
Further, Solidarity demanded that the company
should comply with
sections 189 and 189A of the LRA, particularly section 189(3).
[31]
On 29 June 2021, the company issued letters to the employees
notifying them that their employment was terminated for
operational
requirements with effect from 31 July 2021. They were also notified
of the payments they would receive, which excluded
notice pay.
BCEA
claim: Breach of employment contract
[32]
The applicant’s complaint is that the company breached the
employees’ terms and conditions of employment
– by
unilaterally reducing their salaries and implementing lay-offs. They
contend that they were not consulted and did not
consent to the
reduction of their salaries. They want the company to comply with the
terms and conditions of their contracts of
employment and pay them
the outstanding salaries for the period March 2020 to the date of
their dismissal, which is 31 July 2021.
Was
there a unilateral change to terms and conditions of employment and a
breach of contract?
[33]
In terms of section 64(4) of the LRA, employees confronted with the
employer’s unilateral decision to change their
terms and
conditions of employment may refer a dispute to the CCMA or
bargaining council and require the employer not to implement
the new
terms and conditions of employment or in the event the changes were
implemented, require the employer to restore the terms
and conditions
of employment that applied before the changes. Subsection (5)
requires the employer to comply with the demand in
terms of
subsection (4) within 48 hours of receipt of the referral. Should the
employer fail to comply with the demand, the employees
would be
entitled to embark on a strike action.
[34]
Although the employees in this matter could strike about the dispute,
they elected not to do so. Instead, they elected
to pursue a
different cause of action, that of a breach of contract – and
they are well within their rights to do so. They
contend primarily
that the company breached their contracts of employment by reducing
their salaries.
[35]
Section 34 of the BCEA prohibits employers from making any
unauthorised deductions from the employees’ salaries.
It
provides that:
‘
(1)
An employer may not make any deduction from an employee’s
remuneration unless –
(a)
subject to subsection (2), the employee in writing agrees to the
deduction in respect of a debt specified in the agreement;
or
(b)
the deduction is permitted in terms of a law, collective agreement,
court order or arbitration award.
(2) A deduction in
terms of subsection (1)(a) may be made to reimburse an employer for
loss or damage only if –
(a) …
(b) the employer
has followed a fair procedure and has given the employee a reasonable
opportunity to show why the deductions
should not be made; …’
[36]
In
Mazista
Tiles (Pty) Ltd v National Union of Mineworkers and others
[4]
,
the Labour Appeal Court (LAC) made the following remarks, in the
context of dismissal for operational requirements effected pursuant
to the employees’ rejection of the employer’s proposed
changes to the terms and conditions of employment:
'[48]
An
employer who is desirous of effecting changes to terms and conditions
applicable to his employees is obliged to negotiate with
the
employees and obtain their consent. A unilateral change by the
employer of the terms and conditions of employment is not
permissible
. It may so happen, as it was the position in this
case, that the employees refuse to enter into any agreement relating
to the alteration
of their terms and conditions because the new terms
are less attractive or beneficial to them. While it is impermissible
for such
employer to dismiss his employees in order to compel them to
accept his demand relating to the new terms and conditions, it does
not mean that the employer can never effect the desired changes. If
the employees reject the proposed changes and the employer
wants to
pursue their implementation, he has the right to invoke the
provisions of s 189 and dismiss the employees provided the
necessary
requirements of that section are met.’ (Own emphasis)
[37]
In
Macsteel
Service Centre SA (Pty) Ltd v National Union of Metalworkers of SA
and others
[5]
(Macsteel), this Court, per Prinsloo J, dealt with the unilateral
change in terms and conditions of employment in the context of
section 64(4) of the LRA, the right to strike. Shortly after the
national state of disaster commenced in March 2020, the employer
adopted measures to mitigate against the impact of the Covid-19
pandemic. Part of the measures was a unilateral decision to impose
a
20% salary reduction. In response, the union referred to a dispute in
terms of section 64(4) of the LRA and called its members
out on
strike. The employer then sought to interdict the strike. The Court
found as follows:
‘
[69]
In my view the question is whether the 20% salary reduction for May,
June and July 2020 implemented by the applicant
constitutes a
unilateral change in terms and conditions of employment or whether
that is simply an issue of potential short payment
of salary.
[70] In
Staff
Association for the Motor & Related Industries (SAMRI) v Toyota
of SA Motors (Pty) Ltd
the court held that s 64(4) and (5) of the
LRA is aimed at limiting the managerial prerogative to vary terms and
conditions of employment
and/or policies unilaterally and found that:
‘
To
be successful under s 64(4) the employee has to show firstly
unilateral changes were effected to the terms and conditions of
the
employment contract and secondly that there was no consent to the
unilateral changes.’
[71]
As to what
forms part of the terms and conditions of employment, the court held
that any variation to an employee’s salary,
irrespective of
whether it is increased or decreased, amounts to a change in terms
and conditions of employment and cannot be effected
unilaterally
.
Salary is a quid pro quo for work rendered and any change that has
the effect of affecting an employee’s salary or remuneration
package, constitutes a change to terms and conditions of employment.
[72] In casu, the
applicant announced and implemented a 20% reduction in the salaries
of its employees. It is undisputed that
NUMSA did not agree to this
reduction.
[73] I cannot but
find that the 20% reduction in the salaries of its employees across
the board constitutes a unilateral change
to terms and conditions of
employment.’ (Own emphasis)
[38]
The company relied on different passages of the
Macsteel
judgment.
In paragraphs 81 to 84 of the
Macsteel
judgment, the learned Judge dealt with the
employer’s failure to distinguish between employees who
rendered services and those
who did not. The Judge commented that the
principle of ‘no work no pay’ would normally be
implemented where employees
did not render services due to no fault
on the part of the employer and that where employees rendered full
time services, they
are entitled to their full salaries and any
reduction would constitute a unilateral change in terms and
conditions. The learned
Judge concluded that insofar as the employer
was not prepared to guarantee the full salaries to employees who
rendered full time
services, the employer had not restored the terms
and conditions of employment. The company contends that these
paragraphs of the
judgment are not just remarks but constitute the
ratio
of
the judgment.
[39]
The
Macsteel
judgment, insofar as it deals with the question of
whether the employer restored the terms and conditions of employment,
is irrelevant
to the present matter. Therefore, whether what the
learned Judge said was
obiter
or
ratio
is immaterial because whether or not the company
restored the terms and conditions of employment is not the question
this Court
has to determine. The question before this Court is
whether there was a unilateral change in terms and conditions of
employment
and consequently a breach of contract.
[40]
That the company changed the terms and conditions
of employment is not contested. It is also not contested that the
changes were
effected unilaterally without consultation with the
employees and their consent.
[41]
Although the company conceded that it unilaterally
imposed the changes to the terms and conditions of employment by
reducing the
employees’ salaries and implementing lay-offs, it
contends that the employees subsequently tacitly consented to the
unilateral
changes or they acquiesced with the company’s
unilateral decision. The company refers to the subsequent conduct of
the employees,
their queries, failure to expressly object to the new
changes and their oral evidence which confirmed that they did not
expressly
raise objections to the unilateral decision.
[42]
The
Appellate Division in
McWilliams
v First Consolidated Holdings (Pty) Ltd
[6]
made the following observation regarding the defence of acquiescence:
‘
I
accept that “quiescence is not necessarily acquiescence”
(see
Collen
v Rietfontein Engineering Works
1948
(1) SA 413 (A) at 422) and that a party’s failure to reply to a
letter asserting the existence of obligation owed by
such party to
the writer does not always justify an inference that the assertion
was accepted as the truth. But in general, when
according to ordinary
commercial practice and human expectation firm repudiation of such an
assertion would be the norm if it was
not accepted as correct, such
party’s silence and inaction, unless satisfactorily explained,
may be taken to constitute an
admission by him of the truth of the
assertion, or at least will be an important factor telling against
him in the assessment of
the probabilities and in the final
determination of the dispute. And an adverse inference will the more
readily be drawn when an
unchallenged assertion had been preceded by
correspondence or negotiations between the parties relative to the
subject-matter of
the assertion.’
[7]
[43]
I
have considered the judgment in
Solidarity
obo members v Sahara African Aviation Operations (Pty) Ltd
[8]
,
which dealt with a similar issue. This matter was decided by
Nkutha-Nkontwana J (as she then was). On the facts of that matter,
the learned Judge found that “
the
applicant employees conducted themselves in a manner that gave rise
to the inescapable inference that there was, in fact, consensus
ad
idem to the temporary implementation of COVID-19 impacted salaries
and lay-offs
”
.
[9]
[44]
Did
the employees in this matter tacitly agree or acquiesce to the new
terms and conditions of employment? If so, was the tacit
agreement or
acquiescence for permanent or temporary duration? If temporary, until
when? The company did not state the duration
of the salary reduction
and lay-offs. Could the employees have accepted the new terms and
conditions and set their own period of
the existence of the new
terms? Or, could the acceptance have been permanent? If permanent,
why would they enquire about when they
would revert to their normal
salary - as evidenced by the email of 27 April 2020 from the company
to Burton (which was preceded
by a telephone discussion) and the
emails during June and July 2020?
[45]
Having
considered the documentary and oral evidence of the employees in this
matter, which in my view established the employees’
vulnerability during the period, I am not persuaded that the
employees evinced clear and unambiguous intention to work on the
unilaterally amended terms and conditions of employment. I am also
not persuaded that the conduct of the employees could lead a
reasonable person to believe that they intended to so work. The
employees did not tacitly consent to nor did they acquiesced
themselves
to the company’s unilateral decision. The fact that
they understood the reasons for imposing the measures is not
tantamount
to an acceptance of the new terms and conditions, more so
without them being afforded an opportunity to engage and decide.
[46]
The
Court is not oblivious to the greater social and economic power that
employers, including the company in this case, enjoy. In
the current
matter, with borders closed and commercial flying halted in many
countries, the company was acutely aware of the vulnerability
of the
employees in the aviation industry. To impose such a decision,
without any form of consultation, during the Covid-19 pandemic
and
later argue that the employees tacitly agreed and/or acquiesced to it
is, in my view, disingenuous and unfair.
[47]
The crux of the matter is whether there was
unilateral change to terms and conditions of employment and a breach
of their contracts
of employment. The
Macsteel
judgment, bar the cause of action pursued by the
trade union in that matter, is on all fours with the present matter.
In
Macsteel
,
the employer unilaterally imposed the changes to terms and conditions
of employment and the employees were entitled to strike
after
following section 64(4) and (5) of the LRA. In
casu
,
the company unilaterally imposed the changes to terms and conditions
of employment and the employees elected to pursue a breach
of
contract claim. The unilateral decision is in breach of the
employees’ contracts of employment, which expressly required
that any alteration or variation be signed by both parties after a
process of consultation. The conduct of the company is also
in breach
of section 34 of the BCEA which requires that any deduction to the
employee’s salary must be consented to by the
employee and
after following a fair procedure and providing the employee a
reasonable opportunity to show why the deductions should
not be made.
The deductions were not authorised by the law, collective agreement,
court order or an award. In the final analysis,
the company effected
salary reduction without the employees’ consent.
[48]
To conclude, the decision to reduce the employees’
salaries was taken and implemented unilaterally, which is in breach
of
the contract of employment and section 34 of the BCEA. The
employees’ subsequent conduct did not undo the breach already
committed, nor did the employees acquiesced to the unilateral
decision. At best for the company, the conduct of the employees may
be relevant to the enquiry on the appropriate remedy.
Remedy
[49]
The employees seek payment of outstanding salaries
from March 2020 to the date of their dismissal. The company has
conceded to payment
of the shortfall in salaries for the month of
March 2020.
[50]
In terms of section 77A(e) of the BCEA, this Court
may make an order including:
‘
making
a determination that it considers reasonable on any matter concerning
a contract of employment in terms of section 77 (3),
which
determination may include an order for specific performance, an award
of damages or an award of compensation.’
[51]
This Court therefore has discretion in determining
the appropriate remedy following a finding of breach of contract. I
have considered
the circumstances that prevailed during the period.
The employees conceded that they worked significantly fewer hours
during the
period when they were called to render services.
[52]
It is common cause that the borders remained
closed for at least 6 months and commercial flights only resumed in
October 2020. Until
the end of September 2020, the employees, even if
they were ready and willing to work, could not render any service.
[53]
When commercial flying resumed in October 2020,
the company had already lost some of its contracts and could not
immediately operate
at the pre-March 2020 or pre-Covid-19 level.
Other than the arbitrary and unfair survey on 9 November 2020, the
company did not
really communicate with the employees or provide any
updates on its operations.
[54]
In March 2021, the company informed Solidarity
that it was still operating at a significant financial loss. Not much
information
was provided. The company could have communicated better
during this period. It was unfair to keep the employees on its
payroll
for this prolonged period without providing them with work
and allowing them to earn a living. It is not of any assistance to
the
company that it had allowed the employees to seek alternative
employment.
[55]
The company conceded that it should not have
reduced the employees’ March 2020 salaries. Accordingly, the
company must pay
the employees their shortfall in salaries for March
2020.
[56]
Regarding the claim for outstanding salaries from
April 2020, I am of the view that compensation to each of the
employees in the
amount equivalent to 3 months’ remuneration,
payable at their off-tour salary, is reasonable.
Retrenchment
Was
the dismissal fair?
[57]
Section 189(1), (2) and (3) of the LRA prescribes a process to be
followed by employers who contemplate dismissing employees
for
operational requirements. Subsection (1) deals with the relevant
party or parties to be consulted. In this case, the company
was
obliged to consult with Solidarity. Subsection (2) requires the
employer and trade union to engage in a meaningful joint
consensus-seeking
process and attempt to agree on selection criteria,
severance pay and appropriate measures to avoid dismissals, minimise
the number
of dismissals, change the timing of dismissals and
mitigate the adverse effects of dismissals.
[58]
Subsection (3) requires the employer to issue a written notice
inviting the trade union or any consulting party to consult
with it.
In this written notice, the employer is obliged to disclose certain
information, including alternatives considered and
the reason for
rejecting them, the number of employees likely to be affected by the
dismissals, the proposed selection criteria,
the proposed date of
dismissal, the proposed severance pay, the assistance offered by the
employer to the employees and the prospect
of future re-employment.
[59]
In
Super
Group Supply Chain Partners v Dlamini and another
[10]
,
the LAC affirmed the employer’s right to dismiss for
operational requirements. However, employers who want to do so
successfully
are:
‘
[24]
… obliged to have a bona fide economic rationale for the
dismissal and to comply with the provisions
of s 189 as well as s
189A of the Act where applicable. Section 189 imposes an obligation
on the employer to consult the employee
or its representative on the
matters listed in subsection (2). There is a duty on the employer not
only to consult the affected
employee(s) but to take appropriate
measures on its own initiative to avoid and minimize the effect of
the dismissal. The consultation
envisaged by the Act is a 'meaningful
joint consensus-seeking process' in which parties to the process
should attempt to reach
some agreement on a range of issues that may
best avoid the dismissal and where not possible to ameliorate the
effects of the dismissal
for operational requirements.’
[11]
[60]
The LAC referred to its
earlier decision in
Kotze
v Rebel Discount Liquor Group (Pty) Ltd
[12]
,
where it observed as follows:
'[18]
A fair retrenchment process imposes an obligation on the employer to
disclose to the employees all relevant
information and that
obligation has since been codified in the terms set out in s 189(3)
of the Labour Relations Act 66 of 1995
(the Act) ... the duty to
engage in meaningful and genuine consultation is owed to all
employees from the lowest to the executive
level, ... the process's
fairness to the employee finds expression in the recognition of its
prerogative to make the final decision
to retrench ...
the
final decision must be informed by what transpired during
consultation. That is why consultation must precede the final
decision.
The requirement of consultation is essentially a formal or
procedural one, but it also has a substantive purpose
.
That purpose is to ensure that such a decision is properly and
genuinely justifiable by the operational requirements or by
commercial
or business rationale... The function of the court in
scrutinizing the consultation process is not to second-guess the
commercial
or business efficacy of the employer's ultimate decision
but to pass judgment on whether such a decision was genuine and not
merely
a sham. The court's function is not to decide whether the
employer made the best decision under the circumstances, but only
whether
it was a rational commercial or operational decision,
properly taking into account what emerged during the consultation
process.'
[13]
(Own emphasis)
[61]
To further expand on the
section 189 procedure also contemplating a substantive purpose, this
Court in
Ndhlela
v SITA Information Networking Computing BV (Incorporated in the
Netherlands)
[14]
,
said the following:
‘
[45]
Although
as a matter of practice, we tend to separate process from substance,
there are no bright lines distinguishing process from
substance in
the area of dismissals for operational requirements. The procedure
mandated by s 189 has a substantive purpose. Its
purpose is to save
jobs. This is done by considering alternative means by which the
operational problem identified by the employer
can be addressed
without resorting to dismissals. In a case such as the present, where
the proffered substantive justification
is the need to reduce
operating costs, the issue to be discussed at the consultations is
whether there are no other areas of the
employer's business where the
costs can be reduced without affecting employment security.’
[15]
[62]
In the present matter, it is common cause that there was no
consultation, which means that there was no joint consensus-seeking
process (whether meaningful or not) nor were there discussions on
alternatives, the method of selecting the employees, the timing
of
the dismissal and future plans. The company could not rely on the 9
November 2020 survey as a method of selecting the employees
to be
dismissed in June 2021. The fact is that there was no consultation.
[63]
Courtrooms are not boardrooms. This Court must guard against
employers who flagrantly disregard the section 189 retrenchment
process and attempt to comply with that process for the first time
court proceedings. It is too late to consult and provide the
necessary information after the dismissal of the employees. The
Court’s duty is to scrutinise the retrenchment process that
led
to the dismissal of the employees, not to chair or facilitate the
retrenchment process.
[64]
Employers who do not
consult with the relevant parties in accordance with the LRA must
know that their failure to comply with these
provisions is not just a
breach of a procedure. It is also a breach of the employees’
express or implied terms of their contracts
of employment and
consequently, a breach of the fundamental rights of the employees
enshrined in section 23 of the Constitution
[16]
.
Such flagrant breach manifestly results in the dismissal being
substantively unfair.
[65]
The company has not consulted the employees. The result is that it
deprived the employees of the opportunity to know
and understand the
basis for the retrenchment, to discuss the alternatives to
retrenchment, the selection criteria, severance packages,
and
make representations about any matters relating to the retrenchment.
The inevitable conclusion is that the dismissal
is procedurally and
substantively unfair and I find accordingly.
Appropriate
remedy
[66]
The employees seek
maximum compensation, that is, 12 months each. Sections 193 and 194
of the LRA empower this Court to award compensation
to an employee
whose dismissal for operational requirements was found to be unfair
up to 12 months’ remuneration calculated
at the employee’s
rate of remuneration at the date of his dismissal. The amount of
compensation must be just and equitable.
[17]
[67]
The company was aware of its obligation to consult, per its request
for facilitation dated 13 May 2021 and email dated
14 May 2021. It
was advised by a labour consultant. However, it elected to flush the
LRA down the drainage and act in a lawless
manner. In its CEO’s
words, the law did not apply during Covid-19 pandemic. After
Solidarity recorded its objection to the
‘defective’
referral to the CCMA and demanded that the company should comply with
section 189(3) of the LRA, the company
did not respond to Solidarity
nor did it make any attempt to call for a consultation in terms of
section 189(3) or follow up with
the CCMA to enrol the matter for
facilitation. Instead, it went ahead and dismissed the employees.
[68]
Just as there was no evidence of the company’s financial record
in May 2021 when it contemplated retrenchment,
there was also none
regarding its unaffordability to pay what the employees seek. The
company was aware that the employees sought
payment of 12 months’
compensation each.
[69]
Having considered the above factors, I find that it would be just and
equitable for the company to pay each of the employees
8 months’
compensation. This payment will be made at the rate of the employees’
off-tour salary.
Notice
pay
[70]
The notice of termination issued on 29 June 2021 informed the
employees that their services were terminated with effect
from 31
July 2021. The company did not pay the employees notice pay.
[71]
Section 37(1)(c) of the
BCEA provides that an employee who worked for the employer for one or
more years is entitled to four weeks'
remuneration on termination of
the employment by the employer. The employer may pay the employee in
lieu of notice.
[18]
[72]
The employees had, at the time of their dismissal, worked for the
company for more than one year each. They are therefore
entitled to
four weeks’ notice pay. There is no reason to deny them what is
due to them in terms of the law. The company
is therefore liable to
pay the employees four weeks’ notice pay, payable at their
off-tour salary.
Costs
[73]
Insofar as the dismissal dispute is concerned, section 162 of the LRA
is applicable. The principle in LRA disputes is
that costs do not
follow the result. The factors set out in section 162(2) are not
present in this matter. Accordingly, there is
no reason for this
Court to deviate from the principle that costs do not follow the
result.
[74]
Regarding the contractual claim, both parties are in my view
successful in that whilst there was a finding that the company
breached the employees’ contracts of employment, the employees
were not awarded the relief they sought, which is payment
of the
outstanding payment from April 2020 to date of their dismissal.
Regardless, this Court retains the overall discretion to
award costs.
In my view, I am not persuaded that this is a matter that warrants a
cost order being awarded against any of the parties.
Accordingly,
there shall be no order as to costs.
[75]
In the premises, the following order is made:
Order
1. The company has
breached the individual applicants’ contracts of employment by
unilaterally amending the terms and
conditions of employment.
2. The dismissal of
the individual applicants by the company is declared substantively
and procedurally unfair.
3. The company is
ordered to pay each of the individual applicants the following:
a. 3 months’
compensation for breach of their employment contract, at an off-tour
salary rate.
b. 8 months’
compensation for their unfair dismissal, at an off-tour salary rate.
c. Their shortfall
in salaries for March 2020.
d. Four weeks’
notice pay at an off-tour salary rate.
4. Payment in
paragraph 3 above must be made within 14 days of receipt of this
judgment.
5. There is no
order as to costs.
M. Makhura
Judge of the Labour Court
of South Africa
Appearances:
For
the Applicant:
Adv. C. Dames
Instructed
by:
Serfontein Viljoen and Swart Attorneys
For
the Respondent:
Adv. J.
Withaar
Instructed
by:
Richard Spoor Incorporated
[1]
Act
75 of 1997.
[2]
Act 66 of 1995, as amended.
[3]
Act 57 of 2002.
[4]
[2004] ZALAC 16
; (2004) 25 ILJ 2156 (LAC) at para 48.
[5]
[2020] ZALCJHB 129; (2020) 41 ILJ 2670 (LC) at paras 69 - 73.
[6]
1982 (2) SA 1
(A);
[1982] 1 All SA 245
(A).
[7]
Ibid at 10D – G.
[8]
(JS720/21) [2024] ZALCJHB 83 (22 February 2024).
[9]
Ibid at para 80.
[10]
[2012] ZALAC 25
; (2013) 34 ILJ 108 (LAC).
[11]
Ibid
at para 24.
[12]
(2000) 21 ILJ 129 (LAC); [1999] ZALAC 25.
[13]
Ibid
at para 18.
[14]
[2014] ZALCJHB 64; (2014) 35 ILJ 2236 (LC).
[15]
Ibid at para 45.
[16]
Section 23(1) of the Constitution of the Republic of South Africa,
1996 provides that “
Everyone
has the right to fair labour practices”
.
[17]
See: sections 193(1)(c) and 194(1) of the LRA.
[18]
See: section 38(1) of the BCEA.