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[2024] ZALCJHB 175
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National Union of Metalworkers and Another v Jonwin (Pty) Ltd t/a Designamate (C270/2021) [2024] ZALCJHB 175 (22 April 2024)
FLYNOTES:
LABOUR – Dismissal –
Operational
requirements
–
No
alternative full time employment available as an alternative to
retrenchment – Employer failing to justify why it
could not
have engaged redundant employees in fixed-term contract posts as
an alternative to retrenchment – Original
reason for not
doing so fell away before affected employees’ employment was
terminated – Retrenchments substantively
unfair –
Compensation awarded –
Labour Relations Act 66 of 1995
,
s
189A.
THE LABOUR COURT OF
SOUTH AFRICA
AT JOHANNESBURG
Of Interest to other
Judges
Case
No: C
270/2021
In
the matter between:
THE
NATIONAL UNION OF METALWORKERS
First
Applicant
COLLISON
C & 10 OTHERS
Second
and Further Applicants
and
JONWIN
(PTY) LTD T/A DESIGNAMATE
Respondent
Heard
:
6 May, 22 and 23 August 2022; 16 March 2023
Delivered
:
(This judgment was handed down electronically by emailing a
copy to the parties. The date of delivery of this judgment is deemed
to be 22 April 2024).
Summary:
(S 189A(13)
dismissal for operational reasons – No alternative
full time employment available as an alternative to retrenchment -
Employer
failing to justify why it could not have engaged redundant
employees in fixed-term contract posts as an alternative to
retrenchment,
when original reason for not doing so fell away before
affected employees’ employment was terminated –
retrenchments
substantively unfair – Reinstatement or
re-employment in indeterminate fixed-term contracts not practicable –
Compensation
awarded)
JUDGMENT
LAGRANGE, J
Introduction
[1]
This is an unfair retrenchment case arising from the retrenchment of
the second and further applicants (‘the individual applicants’)
on 30 March 2021. The parties agreed that the retrenchment fell under
s 189A
of the
Labour Relations Act, 66 of 1995
. The individual
applicants were members of the first applicant (‘Numsa’),
which was the union management consulted
with over the retrenchments.
Key issues in dispute
[2]
The applicants accepted the ‘rationale’ of the respondent
(‘Jonwin’) for the retrenchment but argued that
the
retrenchments could have been avoided if some or all of their
proposals made during consultations had been implemented. Jonwin
maintains it is unclear precisely what proposed alternatives the
applicants claim to have made, which could have avoided the
retrenchments.
[3]
Two issues emerged in the trial as central to the existence of
alternatives. The pre-trial minute reflects that the parties are
in
dispute about whether Jonwin’s failure to terminate the service
of employees on fixed-term contracts rather than the terminating
the
employment of the individual applicants was substantively fair. The
second issue essentially concerned whether certain of the
individual
applicants were unfairly refused appointment in available jobs in the
grinding department as an alternative to retrenchment.
[4]
More generally, even though the applicants agreed that the selection
criteria adopted by Jonwin were fair and objective, they disputed
that the criteria were fairly and objectively applied. In particular,
they claimed that employees with long service were selected
for
retrenchment. The criteria proposed in Jonwin’s s 189(3) notice
were: “
skills, experience, and failing which length of
service (LIFO).
” Jonwin maintains that, in keeping with the
criteria it had first sought to retain employees with the necessary
skill and
experience, and only applied LIFO when it was necessary to
choose between employees with similar skills and experience.
[5]
The applicants also argued that Jonwin did not engage in the
consultation process with a view to reaching consensus and it failed
to give serious consideration to Numsa’s proposals to retain
the individual applicants. Jonwin maintained that the precise
nature
of such alleged proposals was in dispute but that it did seriously
consider any proposed alternatives to dismissal that
the union made.
It asserted that it had engaged in consultations with the applicants
over a four-month period to try and reach
consensus, but the failure
to reach agreement did not make the retrenchments unfair. This point
was tied up with the claim that
Jonwin did not take steps it could
have to avoid the dismissal.
[6]
As the retrenchments fell under
s 189A
of the LRA and the applicants
had not brought an application under
s 189A(13)
to compel Jonwin to
comply with a fair procedure within 30 days of the notices of
termination as required by
s 189A(17)
, they were barred under
s
189A(18)
from pursuing claims of procedural fairness of the
retrenchment, and could not raise matters such as their allegation
that Jonwin
prematurely curtailed the consultation process.
Consequently, in these proceedings under
s 191(5)()b)(ii)
the court
can only entertain the applicants’ claim that the retrenchments
were substantively unfair.
Chronology
[7]
To contextualise the substantive fairness dispute, a brief chronology
setting out the rationale for the retrenchment and the failure
to
reach agreement on alternatives is necessary.
[8]
Jonwin’s business entails the production of a variety of
shopfitting equipment, ranging from display stands to cashier
counters
for use in various retail environments. The products are
custom made for each order. According to Mr M Swartz (‘Swartz’),
Jonwin’s operations director, the reputation of the company
rests on the visual quality of the products. Because products
are
made to order the firm does not keep stock. Jonwin also does not have
fixed orders from customers, except in one case. Even
then, the
orders placed by that firm would not be for more than a three month
period. Orders are normally completed in a four to
six week period.
Rushed jobs are processed in two to three weeks.
[9]
The company employed about 120 full time staff and approximately 50
fixed-term contractors at the time retrenchments were contemplated
in
late 2020. The HR officer recalled that this number could rise to 70
in certain circumstances. Swartz testified that if the
value of the
order book stood below about R 7 million, the business utilised full
time staff, but above that value it also used
fixed-term contractors.
The need for fixed-term contractors varied with the orders received
and the staff requirements could alter
within a couple of days. When
the nature of the business described above was put to Smit during
cross-examination, he said he was
unaware of these details, and
stated that none of this information about the business was shared
with the union during consultations,
which could have explained why
certain alternatives might not have been viable. Mr M Eksteen
(‘Eksteen’), the production
director of Jonwin, testified
that there had been times when they had no contract workers for six
months and normally they would
not require them for two to three
months around June and July.
[10]
The retrenchment process was initiated by notice of contemplated
retrenchment issued on 9 November 2020 to employees. Pertinent
portions of the letter read:
“
We
are compelled to consider the future of your role in the
organisation. Due to the competitive nature of our market, we are
forced
to upgrade production facilities with additional equipment,
which if duly commissioned will result in as requiring fewer
employees.
We believe that we will
need less posts as follows
Cutting
department
Operator
Cutter
Three
less posts needed
Drilling
Department
Operator
Three
less posts needed
Press
Shop
Operator
Four
less posts needed
Tool
Room
Operator
Two
less posts needed
In this regard, we appear
to be in a position that rendering your current role redundant is a
possibility. We would like to invite
you to make representations of
alternatives or any other ideas/proposals you may have in this
regard.
We have considered the
following alternatives:
1.
We are willing to look at volunteers for early
retirement and voluntary retrenchment. We have an informally [sic] of
who may be
interested.
2.
Can we reduce the number of temporary employees?
Yes, we are in the process of ending temporary employment within the
confines of
their respective employment agreements. We still need to
cut further posts.
In the circumstances with
these considerations in mind we must now commence A consultation
process in which we need to consider
various options, but most
importantly measure[s] to avoid job loss.
…
We propose that we use
selection criteria of skills, experience, and failing which length of
service (LIFO).
…
“
[11]
The jobs identified as potentially redundant were
directly related to the firm’s decision to buy a tube laser
machine. The
laser machine would automatically perform certain tasks
previously performed by operators in the four departments as
described
in the letter above. For example, in the cutting section,
the machine would be able to perform cutting and deburring functions
previously done by operators. In the drilling department it would
drill holes. Similarly, the use of the machine for these various
functions meant that the need to service tools used by the operators
who previously performed those functions would be reduced.
Eksteen
testified that the firm employed 23 operators performing specific
functions in each of the four departments,
at
the time of issuing the notice.
[12]
It was expected that the machine would be
installed and operating at the end of March 2021. Hence, the
s 189(3)
notice mentioned that it was envisaged that the retrenchments would
take place “
over the next few
months
”
.
[13]
According to Eksteen, the meeting on 9 November
was only with staff and was merely to present the
s 189(3)
notice to
them and elaborate on it. The first proper consultation meeting with
the union took place on 18 November. Efforts were
made to hold
another meeting before the year end, but Smit could not accommodate
the firm during that time. The annual shutdown
was a lengthy one and
the first meeting in 2021 took place on 20 January, followed by two
more on 11 February and 24 February,
respectively.
[14]
It should be mentioned that Smit testified that
the firm had invited applications for voluntary severance packages
before the
s 189
notice was issued, but the firm abandoned that
initiative when the union complained about it doing so without first
addressing
VSPs with the union.
18 November 2020
consultation
[15]
What stood out for Eksteen about this meeting was the focus on
voluntary severance packages and the contract workers.
He said that
the company did not really entertain the issue of contract workers,
because at the time it was anticipated the fixed
contract employees’
contracts were due to expire around the end of March 2021. Notes of
the meeting by one of the management
representatives did not reflect
any discussion of contract workers at this meeting, nor record any
alternatives proposed by the
union at that stage. The notes focused
on the rational for the redundancies based on the planned
introduction of the laser machine.
Be that as it may, these notes
were not confirmed in any subsequent consultation meetings as a an
accurate record of the meeting.
[16]
Eksteen did not recall the union questioning the proposed selection
criteria or proposing alternative selection methods,
but did ask if
there were other available positions the affected employees could be
placed in. An email from Smit dated 29 November
2020, gave the
feedback from the union members. It asked Jonwin to reconsider its
intention to retrench and mentioned they were
not happy with the
rationale. Nonetheless, it proposed that the parties look for
candidates for VSPs, which could be the basis
for reaching an
agreement on the retrenchments. The union proposed that the
s 189
process should only proceed once a VSP process was exhausted. At that
stage no specific mention appears to have been made about
contract
workers and the union was focusing its attention on VSPs offering a
solution.
20 January 2021
consultation
[17]
Eksteen confirmed that VSPs were raised at this meeting and
that Smit asked why the company would retrench workers while
it still
employed fixed-term contract employees. He also recalled that the
union wanted the company to look at alternative employment
for all
the affected employees, but did not recall any mention being made of
any specific proposals about departments where they
might be placed.
[18]
A note drawn up by a Jonwin representative at the meeting also
mentions the union wanting a written response to its proposal
to
consider VSPs and that it wanted the company to look at alternative
employment for all of them. It appears that it was at this
meeting
that Eksteen mooted the possibility of accommodating some employees
in a particular department to reduce the total number
of retrenchees,
but the grinding department appears not to have been specifically
identified.
11 February 2021
consultation
[19]
In the applicants’ statement of case it was alleged:
“
On
the 11th of February 2021 the first applicant tabled a comprehensive
list of alternatives, chief amongst them was that the Respondent
had
more than fifty (50) fixed-term contract workers occupying various
positions within its employ. The expectation of the first
Applicant
was that these contract workers should make way for permanent
employees likely to be retrenched. Whist finalising this
exercise the
respondent was expected to delay the postponement contemplated date
of termination.”
[20]
The first point to be made, is that no document was produced in
evidence in support of the existence of such a ‘comprehensive
list’. Eksteen recalled the union ‘disputing’ the
continued employment of fixed-term contractors and that the
issue of
alternative work in the grinding department came up at this meeting.
However, he did not recall a comprehensive list of
alternatives being
tabled. Mr B Guy (‘Guy’), Jonwin’s attorney, denied
any list relating to fixed-term contractors
was tabled on this or any
other day. He claimed that, until the meeting on 24 February, the
principal focus was on utilising VSPs
as a means of avoiding
retrenchments. He made the point that Smit’s email of 22
February made absolutely no reference to
a proposal about fixed-term
employees when referring to alternatives proposed. Nevertheless, he
conceded it was possible that the
issue of moving the retrenchment
date had been discussed at this meeting but he believed this was
simply an attempt to extend the
duration of the affected employees’
employment. By contrast, the HR officer, Ms Cecilia Williams,
recalled that the issue
of fixed-term contracts had always been
raised as an issue since the start of the consultation process. She
remembered that management
had explained to the union that owing to
the way the company worked it could not do without contract workers.
I note that she was
not present during all the consultations, so her
recollection does not necessarily reflect the constancy with which
the union raised
the issue in consultations.
[21]
There were no management notes of the 11 February meeting, but Smit
did send an email to Jonwin on 22 February 2021.
He confirmed that
the parties were still in consultations over the retrenchment process
including the issues of selection criteria
and alternative positions.
His email then expressed the union’s view that Jonwin had not
substantiated its claim that VSPs
would be too costly and disputed
the firm’s argument that training was not feasible. It called
for further discussions on
the alternative options available, so they
could be satisfied they had done everything they could to save jobs.
[22]
His email seems to have been prompted by the company having
approached three of the affected employees directly to offer
them
jobs in the grinding department, whereas it had been agreed that the
union should canvass the applicants to see who might
be interested in
the grinding department jobs. Cecilia Williams ‘ email of 18
February was pressing Smit to provide those
suggestions by the next
day. Smit objected to management having acted independently in
identifying the affected employees who had
allegedly been told to
accept the offered positions. By that stage Smit had not yet
canvassed the issue with members. He only did
so on the morning
before the following consultation meeting began on 24 February.
[23]
It was put to Swartz that it was at the meeting of 11 March that the
union had proposed that affected employees should
be placed in
fixed-term contract positions. Swartz was not at the meeting, but
said he was unaware of such a proposal. He said
he had relied on
Eksteen to keep him up to speed on what transpired in the
consultations. Eksteen did remember the union raising
the issue of
the retrenchment timeline and he did not dispute that it had proposed
to change the termination date until the issue
of replacing
fixed-term contract employees had been addressed.
[24]
Another allegation made by Smit, though not pleaded by the union, was
that at this meeting the union had specifically
requested a list of
all contract workers employed at that time, but management never
reverted to the union on this issue. None
of the company witnesses
recalled such a request and it was not referred to in any of the
correspondence between the parties nor
in meeting notes. When asked
why it did not appear in his email of 22 February, Smit said it was
because the union was only expecting
feedback on the issue from
management at the following meeting, two days later.
[25]
Jonwin offered three vacancies in the grinding department which might
be filled by affected employees to reduce the number
of
retrenchments. Smit undertook that the union would take this proposal
to members to obtain names of persons interested in taking
up one of
these placements. Before the next meeting Smit obtained names of
members who were interested in the posts, namely Mr
S Van Wyk, Mr Q
Mphahlele, Ms C Collinson, Ms K Jacobs and Ms Tatum Williams. At the
time Williams had been working in the grinding
department for about
six months. Likewise, Jacobs was had been temporarily working in the
assembly department, which was not one
of the affected departments.
[26]
Although management asked Numsa to canvass applicants who might be
interested in one of the three positions in the grinding
deparment,
Jonwin independently approached three of the applicants with the same
offer. It selected them on the basis of their
length of service, but
the individuals advised management that they could not respond as
individuals because the offer should be
canvassed with Smit as part
of the consultation process. Cecilia William testified that the three
individuals also said they were
not interested in the jobs because it
would entail a drop in their hourly rates. The three persons
approached by the firm were
Mr S Ngubelanga, Mr B Hendricks and Mr P
Penang (‘Ngubelanga’, ‘Hendricks’ and
‘Penang’). Smit
was advised of the firm’s approach
to these individuals. As mentioned, in his email of 22 February he
raised his concern
about this direct approach to members whilst a
consultation process was underway, in terms of which it had been
agreed that the
union would canvass members for volunteers for the
posts. He said it was reported to him that the three individuals were
told they
had to take up the positions, but he conceded he could not
be sure if that was so.
[27]
Ultimately none of the employees identified by the union or
management for possible retrenchment were appointed in these
positions. Smit claimed that the three positions were filled by
fixed-term contract employees, whereas the posts had been offered
to
volunteers on the basis the appointments would be to permanent
positions. Although he agreed that there might have been ten
fixed-term employees in the grinding department as well, the
correctness of his understanding that the three posts offered were
permanent ones was not challenged.
[28]
Jonwin claimed it could not appoint any of the five volunteers
proposed by the union because the grinding work entailed
heavy duty
work using a pedestal grinder, which required the operator to
manually hold the item being ground in the grinding machine.
Accordingly, it maintained that it would not be suitable work for any
of the three female volunteers, namely Collinson, Williams
and
Jacobs.
24 February 2021
consultation
[29]
At this meeting, management raised its concern that the process had
been dragging on for months and that it was necessary
for it to take
a decision. Eksteen explained this was owing to the anticipated
arrival and installation of the tube laser machine
to commence
operations in April and contract workers were also due to end their
contracts during March. The firm’s reasons
for not agreeing to
offer VSPs to other employees were explained, namely that they either
had long service, which would make it
expensive, or the they had
important skills, which the firm needed to retain. The company stated
its view that it was impractical
to train the applicants to replace
volunteers for VSPs in epoxy coating and welding jobs.
[30]
It is only at this stage, for the first time, that specific reference
to ‘limited duration’ employees appeared
in a document.
Management notes of the meeting stated that the discussion relating
to fixed-term contract employees concerned night
shift work in
particular. According to Eksteen, this was the shift worked by 90
percent of fixed-term contract employees. He testified
that he,
Cecilia Williams and Smit spoke about some of the retrenchees not
being willing to work night shift when they had previously
been
seconded to certain departments prior to the retrenchment process.
Smit did not dispute this, but pointed out that the attitude
of the
affected employees towards night shift work was not canvassed in the
context of the retrenchment exercise, and they might
have a different
view of night work if it was necessary to remain in employment.
[31]
Guy claimed the issue of fixed-term employees only came up at
this meeting, but as an allegation not as an alternative,
“…
it
was your are going through a retrenchment exercise, but you are still
using temporary labour
”.
[32]
Eksteen testified that he also told Smit in the consultation meeting
that Jonwin would be ending all fixed-term contracts
shortly, based
on an assessment of the order book as it stood at that time, and that
the firm could not prematurely shorten existing
limited duration
contracts because it had to honour its obligations to the fixed-term
employees under those contracts. Eksteen
also stated that, at that
stage, the business was also struggling to get raw materials as one
of the two mills supplying it had
shut down and it was difficult
getting imported supplies post-Covid. At the time of the meeting the
situation with regard to future
orders was not clear. There was no
indication from the sales team by 24 February that any sales were
guaranteed going forward.
However, sometime in mid-March an order for
a new Woolworths store was received and fixed-term contracts were
extended.
[33]
Smit claimed that Eksteen told him that the fixed-term contracts may
end in May, June or July 2021, but the firm could
only assess if such
employees would be needed again when that time came. Smit could not
dispute that the business of the firm was
volatile because it did not
have long term orders and that necessitated the use of fixed-term
contract employees. He also did not
dispute that the firm did not
carry stock of its products, each sale being made to order. Further
he did not dispute that the usual
turnaround time for an order was
four to six weeks and could be as short as two to three weeks, but
pointed out that none of this
information was conveyed to the union
during the consultations. However, he did acknowledge that he was
aware that the business
model necessitated the firm sometimes hiring
contract employees on one or two days’ notice.
[34]
Swartz testified that the fixed-term contracts expired on 26 March
and, in February 2021, the order book was low. It
improved slightly
in March.
[35]
Even so, Smit claimed that the union had raised the question that if
the order book was unpredictable, it should still
look at replacing
contract workers with the applicants until there was no more work for
them and then they could be retrenched
or the consultation process
could resume. Eksteen denied that the union had ever made a proposal
that the affected employees be
given fixed-term employment. He
alleged that Smit had been looking for permanent appointments, which
could not be guaranteed. However,
Smit’s recollection is also
echoed in Guy’s account of that meeting.
[36]
Smit maintained that the firm did not want to give consideration to
replacing fixed-term contract employees with the
affected employees.
He said there were ‘probably’ around 25 such employees
working in the business since the dismissals
and in his view the
affected employees could have been absorbed in those positions.
However, he had no direct knowledge of the
compliment of fixed-term
employees engaged at the time of the trial.
[37]
When Smit was asked what specific proposals the union had made about
which other departments affected employees could
be placed in, he
claimed that they were prevented by the firm from getting into the
specifics of each department. He cited various
current contract
positions members had advised him of. None of the members who
provided him with this information were called to
corroborate this
hearsay evidence. He acknowledged that Jonwin had proposed a
preferential employment offer to re-employ affected
employees if the
firm found it necessary to refill any of their posts, but pointed out
that this was never agreed upon. The focus
of discussion was on
preventing retrenchments in the first place.
[38]
In any event, at the meeting on 24 February, no agreement could be
reached on the appointment of affected employees to
the three
grinding posts. Eksteen recalled that it was just after this meeting
that the managing director, Mr J Winter (‘Winter’)
then
decided that the posts could not just be offered to certain
individuals amongst the affected employees but should be offered
to
all eleven of them. He instructed Cecilia Williams to approach all of
them to ascertain their respective skill, experience and
interest in
the grinding job, which she did. She also advised them of the hourly
rate of pay attached to the job. Smit said he
was not aware of this
subsequent step taken by Cecilia Williams. Cecilia She had apprised
Eksteen of the results of her enquiries,
but did not know what steps,
if any, were taken based on the outcome thereof. The survey she did
is discussed in more detail below.
[39]
Notices of retrenchment were issued to the applicants on 1 March
2021. The notices confirmed that the retrenchment ‘process’
was now complete and that they had been given enough time to make
representations. Jonwin had taken a final decision to proceed
with
the retrenchment. The applicants last working day was 31 March 2021.
29 March 2021.
[40]
Eksteen testified that when documentation was issued to the
retrenched employees on 29 March, they expressed their unhappiness
with the retrenchment and asked why they had been selected rather
than the contract workers. Eksteen responded that Winter had
decided
it was necessary to ‘clean the slate’ but that if
anything came up he would advise them. The applicants remained
unhappy and came back the next day. Winter then addressed them. He
told them it was the ‘end of a chapter’ but going
forward
the company might assess their positions.
The three positions in
the grinding department
[41]
The sequence of discussions and respective actions of the union and
Jonwin in trying to identify suitable candidates
for the three posts
has been outlined above. The company’s case is that when
Cecilia Williams approached the eleven affected
individuals, the
following responses were received to each of her enquiries relating
to performing pedestal grinding work:
Name
Skill
Experience
Interest
S
Ngubelanga
No
No
No.
Drop in rate
P
Perang
No
No
No
B
Hendricks
Yes
Partial
NO
S van
Wyk
Yes
Yes
No
due to rate drop
Q
Mphahlele
Yes
Yes
Yes(?)
D
Gidimane
Yes
Yes
Yes,
if not decrease
M
Gwayisa
No
No
Yes,
despite lower rate
C
Collison
No
No
Yes
T Williams
No
Yes
No
C Jacobs
No
No
Yes
V Cook
No
No
No due to rate
drop
Key:
1.
‘
Yes, if no decrease’
means the individual was only interested in the position if their
salary did not drop.
2.
‘
Yes (?)’ means
the individual was interested but would suffer a salary decrease.
However, it was not clear from Cecilia Williams’
testimony
whether the individual also implied they were only interested if
their salary remained unchanged.
3.
Names in
bold typeface
are
the names of volunteers for grinding posts put forward by the union.
[42]
Of the five applicants, whose names the union put forward, only van
Wyk and Mphahlele met the requirements according
to Cecilia
Williams’s assessment. She claimed that her diary notes
reflected what the employees themselves told her about
their
experience and ability to do the work. Because she had been advised
by a supervisor that pedestal grinding was not suitable
for women
because it was heavy duty work, she did not discuss the question of
training for the job with most of the women who were
interested.
However, she testified that Jacobs and Van Wyk had expressed a
willingness to be trained. Eksteen conceded that Gwayisa
and Tatum
Williams had been working in the grinding department doing stainless
steel polishing, but they could not do pedestal
grinding work, which
was the available job. The union maintained both these applicants
were also doing pedestal grinding work,
but no direct evidence to
support this claim was led.
[43]
Cecilia Williams strongly disputed the union’s contention that
Cook had said he was interested in the position
despite the rate
drop. She testified that van Wyk, Jacobs and Mphahlele were
interested in being trained for the pedestal grinding
work. Van Wyk’s
and Mphahlele’s interest in training is difficult to reconcile
with the fact that she recorded both
saying they had experience and
skill, but her claim that they had expressed an interest in being
training was not challenged. She
could not respond to the allegation
that Ngubelanga had ten years’ experience in the grinding
department, except to say she
knew he had previously worked there but
she did not know what kind of work he did.
[44]
Smit disputed that none of the applicants were suitable and willing
to take up the positions. He contended that Jacobs,
Gidimane, Tatum
Williams, Gwayisa and Van Wyk were suitable. He did not believe they
would have volunteered for the positions when
the union called for
volunteers but then declined them when approached by Cecilia
Williams. He also contended that Tatum Williams
had experience in
pedestal grinding. However, no direct evidence was led by any of the
individual applicants to dispute Cecilia
Williams’s account of
their responses to her.
Evaluation
[45]
As already mentioned, strictly speaking, the case
is concerned only with the substantive fairness of the dismissals and
the key
issues are whether Jonwin’s failure to adopt
alternatives to retrenchment by employing the affected employees in
fixed-term
employment in place of existing fixed-term contract
employees, or to employ three of them in positions in the grinding
department
was unfair. Nonetheless, the union still argued in its
heads of argument that there was no meaningful consultation process
under
s 189(2)
of the LRA because of the way the two issues were
dealt with by the company.
[46]
Jonwin argues that because the union conceded
there was an economic rationale for the retrenchments and that there
was no dispute
about the fairness of the selection criteria, which it
used, that ended any dispute which might have existed about
substantive
fairness. Consequently, the court has no jurisdiction to
consider any procedural issues in the retrenchment process. It
characterised
the union’s complaint about the fixed-term
contract employees as amounting only to a complaint about a
prematurely curtailed
consultation process, because the issue of
offering such positions to affected employees was not properly
canvassed in the consultation
process. As such this could not be the
basis for a claim of substantive unfairness.
[47]
An ancillary argument advanced by Jonwin is that
it had no choice but to proceed with the retrenchments by the time
the last consultation
meeting was held on 24 February 2021, because
there had been four consultation meetings and the union had delayed
the process.
It could not have been expected to extend consultations
when it was unknown at the end of February if the order book would
improve.
The fact that the order book did improve later in March
could not have been foreseen at the time. The applicants’ jobs
were
redundant and the laser machine, which was the cause of such
redundancy, was expected to be up and running by the end of March
2021 which justified the conclusion of the process by the end of
February.
[48]
Lastly, the company argues that the union made no
detailed proposal that the affected employees should replace
fixed-term employees
and it was never tabled as a serious proposal
but was an afterthought on the union’s part. In the absence of
a proposal from
the union setting out which fixed-term employees
should be replaced by them, accordingly, it had no obligation to deal
with the
issue. Even at the trial, Smit could not identify whom the
applicants might replace.
[49]
Concerning the three jobs in the grinding
department, Jonwin argues that firstly, the offer of this alternative
originated with
it, demonstrating that it tried to find alternatives
to retrenchment. Although it attempted to see if any of them could
accommodated
in those posts, it was unsuccessful for one or more
reasons, namely that they not experienced, skilled or willing to
accept the
appointments. Those who would have been able to work on
the pedestal grinder were either not interested or only willing to
take
up appointment if they did not suffer a drop in pay.
Legal Principles
[50]
The legal principles governing substantive fairness in retrenchment
dismissals have been canvassed in several judgments
of the Labour
Appeal Court and this court. In this matter, the union accepted that
the applicants’ positions were rendered
redundant by the
introduction of the laser machine which would automate the jobs they
previously performed, which meant Jonwin
no longer required their
services. Consequently, there was no dispute that there was a genuine
operational reason for the decision
to embark on retrenchment
consultations. There was also no dispute that the retrenchment
criteria adopted by Jonwin, if retrenchments
took place, were fair.
[51]
The union had nonetheless argued that the criteria were not properly
applied, but this was not an issue that was pursued
in the
retrenchment consultations or during the trial. The core of the
applicants’ substantive unfairness case was that the
company
failed to adopt alternatives it should have to avoid retrenching the
redundant employees, in that it failed to engage three
of the
applicants in the grinding room positions and failed to offer the
applicants fixed-term employment in place of existing
fixed-term
employees. It is convenient to deal with each claim separately.
[52]
Before delving into the factual issues, the legal questions arising
from disputes over the existence and relevance of
alternatives to
retrenchment needs to be briefly canvassed.
[53]
Not only is there an
obligation on the consulting parties to try and reach agreement on
alternatives under
s 189
of the LRA, but there is also a distinct
obligation on an employer to try and implement alternatives if
feasible. In
Oosthuizen
v Telkom SA Ltd
[1]
the Labour Appeal Court expressed the dual components of fairness in
relation to the handling of alternatives thus:
“
[4]
Section 189
of the Act governs dismissals for operational
requirements.
Section 189(1)
requires the employer to engage
employees or their representatives, depending on the circumstances,
in a consultation I process
when it contemplates dismissals
based on its operational requirements.
Section 189(2)(a)
(i) of
the Act provides that the employer and the employees or their
representatives must attempt to reach consensus on appropriate
measures to avoid the contemplated dismissals.
Section
189(3)(b)
requires the employer to disclose to the other
consulting party in writing the reasons for the proposed dismissals
and
'the alternatives that the employer considered before proposing
the dismissals and the reasons for rejecting each one of those
alternatives'
.
Implicit
in
s 189(2)(a)
(i) and (ii) and
s 189(3)(a)
and (b) of
the Act is an obligation on the employer not to dismiss an employee
for operational requirements if that
can be avoided
.
Accordingly, these provisions envisage that the employer will resort
to dismissal as a measure of last resort. Such an obligation
is
understandable because dismissals based on the employer's operational
requirements constitute the so-called 'no-fault terminations'.
[5]
The
obligation of an employer not to dismiss an employee for reasons of
its operational requirements where it can avoid such employee's
dismissal as now provided for implicitly in
s 189(2)(a)
(i) and
(ii) and
189
(3)(a) and (b) of the Act is not a new
obligation that came with the enactment of the Act. It is as old as
our modern
law of retrenchment in this country
.
(See Halton Cheadle 'Retrenchment: The New Guide-lines'
(1985)
6 ILJ 127
at 128-9 particularly guideline no 5 at the top of
129 and the case of Gumede & others Richdens (Pty) Ltd t/a
Richdens
Foodliner
(1984)
5 ILJ 84 (IC)
at 91B-C.) Recently this court re-affirmed
this principle in General Food Industries Ltd t/a Blue Ribbon
Bakeries v FAWU
& others
(2004)
25 ILJ 1655 (LAC)
. In this regard it is to be noted that article
13(1)(b) of ILO Convention 158, the Termination of Employment
Convention, provides
that the employer must give workers'
representatives an opportunity to consult on measures to be taken to
avert dismissals or to
find alternative employment. This obligation
also includes that, where the employee may need some training in
order to be able
to perform the duties attached to an alternative
position, the employer should afford the employee the opportunity to
get such
training.
Naturally,
this has to be within reason because, obviously, the employer should
also not be burdened with an exercise that
may have undue cost
implications
.
I note that para 21 of ILO Recommendation 166, the Termination of
Employment Recommendation 1982 provides as follows:
'The measures which
should be considered with a view to averting or minimising
termination of employment for reasons of an economic,
technological,
structural or similar nature might include,
inter alia,
... internal transfers, training and retraining .
...'
(Emphasis added.)
[8] In my view an
employer has an obligation not to dismiss an employee for operational
requirements if that employer has work which
such employee can
perform either without any additional training or with minimal
training. This is because that is a measure that
can be employed
to avoid the dismissal and the employer has an obligation to take
appropriate measures to avoid an employee's
dismissal for operational
requirements.
Such obligation particularly applies to a situation
where the employer relies on the employee's redundancy as the
operational requirement.
It is in accordance with this obligation
of the employer that in the General Foods case referred to
above this court
found the dismissal of the employees unfair. In that
case while the employer was retrenching some employees, it was busy
recruiting
new employees for work which the employees being
retrenched could perform. As already stated, this court found the
dismissal substantively
unfair for this reason. In such a case the
dismissal is a dismissal that could have been avoided. A dismissal
that could have been
avoided but was not avoided is a dismissal that
is without a fair reason.”
(emphasis
added)
[54]
In this matter, the union is precluded from contending that Jonwin
did not attempt to explore the alternative of replacing
fixed-term
contractors with the applicants because it cannot dispute the
procedural fairness of their retrenchment. However, its
submission
that Jonwin failed to implement reasonable alternatives to the
retrenchment goes to the substantive fairness of their
dismissal.
The
failure to employ any of the applicants in a permanent pedestal
grinding position
[55]
It it is common cause there were three pedestal grinding positions
available and the applicants were considered for the
posts. The issue
is whether there was any justifiable reason, none of them were
employed. It is apparent from the evidence that,
after Cecilia
Williams canvassed the applicants about the jobs after the meeting on
24 February that management provided no feedback
on the outcome of
her investigation. It was only during the trial that the results of
her survey were made known to the applicants.
[56]
It has been noted that only Van Wyk and Mphahlele met the
requirements according to Cecilia Williams survey, but both
of them
wanted training and Van Wyk was not happy with the drop in the pay
rate. The union agreed that these two applicants were
willing to take
up the position but made no mention of whether they required
training. In addition, Jacobs, Tatum Williams and
Gwayisa had
volunteered for one of the jobs. However, according to Cecilia
Williams, Tatum Williams did not have the necessary
skill to do the
job and was not interested. Gwayisa had neither the experience nor
the skill. Eksteen had also testified that Gwayisa’s
experience
in the grinding department was confined to polishing work. Jacobs and
van Wyk had expressed interest in being trained
for the job.
[57]
While Smit expressed his doubts that the five individuals who
expressed an interest in the jobs to him, would have given
a
different version to Cecilia Williams, he did not ask them about
their skill and experience or if they would accept a drop in
rate if
that was required.
[58]
It was put to Cecilia Williams that she only asked each individual if
they were interested in the job. She strongly disputed
this and none
of the individual applicants were called to testify to dispute
Cecilia Williams’s version. As Cecilia Williams’s
enquiry
was more recent, more systematic, more detailed and not disputed by
any of the individuals concerned, I am inclined to
accept her version
of her interaction with the applicants on 24 February 2021. I note
also that her survey did not purport to be
an objective assessment of
the individuals’ capabilities but merely a record of their own
self-evaluation of their suitability
for the job, so there is no
reason to assume that the results reflected a subjective managerial
assessment. Cecilia Williams made
it clear she did not attempt to
assess them herself.
[59]
It is common cause nothing came of the survey, as management did not
take any action. Cecilia Williams’s survey
was conducted after
the last consultation meeting and yielded no came of it. It was not
canvassed at any stage with the union,
and it is apparent Smit only
became aware of its existence under cross-examination.
[60]
As an initiative to attempt to reduce the number of retrenches, I
accept management was
bona fide
in trying to provide
alternative employment for three individuals, even though the
exercise was undertaken in an unsatisfactory
disjointed way because
the employer took steps independently outside of the consultation
process. Moreover, once it became apparent
that none of management’s
three preferred candidates among the applicants coincided with the
volunteers put forward by the
union, it still canvassed all of them
before taking the final decision to retrench.
[61]
Was it substantively unfair of Jonwin not to employ any of the
applicants in the positions? Considering all the applicants,
the only
one who might have been suitable was Mphahlele, but Eksteen had
testified that the pedestal grinding machine work was
not suitable
for women because it required the operator to manually hold the item
to be ground against the grinder, which was physically
arduous work.
No evidence was led to rebut this claim.
[62]
In the circumstances, I am satisfied that Jonwin did not act unfairly
by failing to appoint any of the applicants in
one of the three
pedestal grinding vacancies.
Failure to replace fixed
contract employees with the applicants
[63]
In relation to the argument that the employer ought to have
retrenched fixed-term employees before any of the applicants,
the
question to be answered is whether a retrenchment is substantively
unfair if an employer fails to first retrench temporary
employees
before permanent employees, even if no detailed proposal was made in
this regard during the consultations?
[64]
On whether a union is
prevented from raising an issue of an alternative to retrenchment at
trial, this has been addressed by the
Labour Appeal Court. In
General
Food Industries Ltd t/a Blue Ribbon Bakeries v Food & Allied
Workers Union & others
[2]
,
the LAC held that even if a union has not raised an alternative in
the consultations that did not bar it from raising it at trial,
even
though the failure to raise in the consultations might affect any
relief the court might order if that proposal could have
resolved a
substantial portion of the dispute or avoided the litigation
[3]
.
[65]
At the outset of the retrenchment consultations, Jonwin confirmed in
its
s 189(3)
notice that it was already reducing the number of
temporary employees, subject to not prematurely terminating their
services before
their contracts expired, though it believed
retrenchments would still be necessary. It maintained that the
fixed-term contracts
would be discontinued at the end of March. In
the last meeting on 24 February 2021, Eksteen mentioned that the
prospects for orders
appeared to be uncertain and on the existing
order book the fixed-term contracts would all be ending shortly.
[66]
Smit maintained that the issue of replacing fixed-term contract
employees with permanent employees was something that
had always been
on the table throughout the consultations. Eksteen did recall
contract workers being part of the focus of the meeting
on 18
November 2020, but maintained that the company did not consider it at
that stage because it anticipated their contracts would
terminate at
the end of March 2021. He also recalled Smit asking during the
meeting on 20 January 2021 why the company was retrenching
full time
employees but retaining contract workers. However, he maintained
there was no such thing as a ‘comprehensive list
of
alternatives’ tabled by the union. Cecilia Williams remembered
that the issue of fixed-term contract employees had been
raised by
the union from the beginning of the consultations, but the firm had
explained it could not do without contract workers.
By contrast, Guy
insisted that it was only at the last meeting on 24 February that the
issue of moving the retrenchment date was
discussed, but he
interpreted this simply as an attempt to prolong the applicants’
employment.
[67]
On balance it seems most likely that the union had queried why
permanent workers were being considered for retrenchment
while
contract workers were still employed, but did not devote enough
attention to the issue until the retrenchments were imminent.
Management was aware of the union’s reference to the fixed-term
employees, but took the view that there was unlikely to be
any scope
for contract work by the end of March 2021 so it was not a tenable
alternative to retrenching the applicants. As the
union did not come
up with a specific proposal as to which of the applicants should
replace which contract workers, it did not
see the need to engage on
this alternative, particularly as the focus of the union had been on
VSPs.
[68]
At the last consultation on 24 February 2021, when management
confirmed that it had no reason at that stage to believe
the order
book would improve and, consequently, that the contract workers would
end their engagements in March, the union responded
that Jonwin
should just halt the retrenchment process pending what happened with
the order book. If it then improved, the applicants
could be employed
in positions normally occupied by contract workers.
[69]
As it happened, apparently unexpectedly, the order book did improve
in March and Jonwin decided to retain contract workers
it would
otherwise have shed at the end of that month. It was never clear how
many contracts were rolled over as a result of the
turnaround in
circumstances. By that time, the applicants had already received
notice of their retrenchment and their employment
was due to end
shortly. On 29 March, they protested their unhappiness at being
overlooked for temporary work, given that fixed-term
employees were
still being retained. The managing director was not willing to revise
the retrenchment decision that had been taken
and would not give them
anything more than a very vague undertaking that they would be
advised if something materialised. Having
made the decision to
proceed with the retrenchments, Jonwin clearly was plainly unwilling
at that point to pause the retrenchments
or see if any of the
applicants could have been offered temporary employment instead of
just re-enrolling some of the temporary
workers whose contracts were
due to end in March.
[70]
Accepting that at the end of February it was true that the prospect
of even retaining any temporary workers after the
end of March seemed
poor, it was understandable the employer would not entertain a
proposal, which Guy believed was just a ruse
to prolong the
retrenchment consultations and the applicants’ employment.
Nonetheless, when things did turn out differently,
and work for
fixed-term employees became available even before the applicants’
employment ended, should Jonwin not have tried
to minimise the
retrenchment of the applicants by offering them some of the
fixed-term employment positions now available?
[71]
Jonwin never led any evidence why that was not a tenable alternative
to retrenchment, even if it did not amount to permanent
employment. I
note that the evidence that, despite fluctuations in its need for
temporary employment, the employment of a significant
compliment of
temporary employees relative to the permanent workforce, was a normal
feature of Jonwin’s operations and the
firm drew regularly on
the same pool of temporary employees to perform this work.
[72]
Jonwin’s attitude in the trial was that it was for Numsa to
prove that the firm would have been able to accommodate
the
applicants as fixed-term employees, and that it was not enough for
Numsa just to raise, in general terms, the idea that the
applicants
should replace temporary employees. Jonwin’s response as to why
that idea was not tenable was because it envisaged
such work would no
longer be available by the time the retrenchments were due to take
place. Accordingly, there was no need to
consider this idea. However,
when the anticipated scenario was reversed in March before the
applicants’ employment had ended,
this did not lead the company
to rethink matters. It took the view that there was no need to
reconsider its view because it had
now taken the decision to retrench
the applicants and their employment was due to end soon. Eksteen’s
evidence of Winter’s
statements when the applicants protested
against their retrenchment, conveyed the sense that Jonwin regarded
the retrenchments
as ‘water under bridge’ by March and it
was unnecessary to revisit it, even though the rationale for
rejecting an alternative
to retrenchment had fallen away and the
applicants’ services had not yet ended.
[73]
In circumstances where
the employer knew that the union wanted it to replace some of the
fixed-term contract employees with the
applicants when fixed-term
contracts had to be renewed, it was under a duty to consider if that
was feasible. When the reason it
believed it would not be feasible
had fallen away and the retrenchees’ employment had not yet
terminated, it was up to the
employer to demonstrate why the
alternative of not renewing some of the fixed-term contractors and
offering the new contracts to
the applicants was still not a
reasonable alternative to proceeding with their retrenchment. It
should be mentioned that it has
been held that the duty on an
employer to seriously consider alternatives raised in consultations
in cases where the cause of the
retrenchment is redundancy is more
onerous
[4]
. It is true, in this
instance, that the introduction of the new laser machinery, which
replaced the work done by the applicants,
was to enable Jonwin to
remain competitive compete, which meant it was felt it was a
necessary measure. Nonetheless, it had the
opportunity to sign fresh
fixed-term contracts but provided no evidence to justify its failure
to use that opportunity to provide
fixed-term employment to its
permanent workers as an alternative to retrenching them.
[74]
In light of the discussion above, I am satisfied that Jonwin did not
establish that it could not have done this when
it became clear in
March 2021 it was again going to be engaging fixed-term contract
employees. Proceeding with the retrenchment
of the individual
applicants at the end of that month, under the circumstances, made
their dismissals substantively unfair.
Relief
[75]
The applicants sought
reinstatement as relief. Reinstatement or re-employment is the
primary remedy for a substantively unfair dismissal
unless employees
do not seek reinstatement, or restoring the employment relationship
would be intolerable, or it would not be reasonably
practical to do
so
[5]
. In the Constitutional
Court’s decision
South
African Commercial, Catering and Allied Workers’ Union and
others v Woolworths (Pty) Limited
[6]
,
the court held that that “the term ‘not reasonably
practicable’ means more than mere inconvenience and requires
evidence of compelling operational burden"
[7]
.
In
Woolworths
the
employees who had been retrenched were cashiers. They had not been
willing to accept a flexi-time work arrangement, but the
work of
cashiers still existed. Moreover, towards the end of the
consultations, the union in that case had proposed an arrangement
in
terms of which the affected cashiers were willing to work flexi-time
subject to certain conditions. The court was confident
the parties
could resume fruitful consultations where they had left off if it
reinstated them.
[76]
It is common cause in this matter that the actual work the applicants
performed no longer existed and reinstatement would
not be possible
in those posts. By the end of the consultations in March 2024, the
union was no longer arguing that there was work
of other permanent
employees the applicants could have performed. The permanent
positions, which had been identified by Numsa,
required substantial
training in new skills. The prospect of alternative work in the
drilling department for the applicants had
been explored and had
yielded nothing. The focus turned to whether the applicants could
replace employees on fixed-term contracts
as an alternative to
retrenchment.
[77]
Is it feasible to order the re-employment of the applicants in
fixed-term positions? The number of such contracts available,
the
dates of commencement and the specific types of work entailed, are
all unknown. With these imponderable factors, the court
cannot be
confident that any relief of this kind which it might order will not
generate a number of ancillary disputes when any
attempt is made to
implement it. To my mind this would be an exercise in futility. I am
not satisfied the facts of this case are
on a par with those in
Woolworths
and that it would not be practicable to order the
reinstatement or re-employment of the applicants. Accordingly, an
award of compensation
for the substantive unfairness of their
dismissals is appropriate. In determining the amount of compensation,
I have considered
the fact that the best outcome they could have
faced at the time was occasional employment on fixed-term contracts,
and the principle
mentioned in
General Food Industries
that
the extent to which an alternative had been raised in consultations
might affect the relief awarded.
[78]
In
the result the following order is made:
Order
1.
The dismissal of the Second and Further Applicants
by the Respondent on 31 March 2021 was substantively unfair.
2.
Within 14 (fourteen) days of this judgment, the
Respondent must pay each of the Second and Further Applicants 7
(seven) months’
remuneration calculated at their rates of pay
as at the date of their dismissal.
3.
No order is made as to costs.
R G Lagrange
Judge
of the Labour Court of South Africa
.
Appearances:
For the
Applicant:
G Shiba
of NUMSA
For the
Respondent:
L W Ackermann
Instructed
by:
Guy & Associates
[1]
[1]
(2007) 28
ILJ
2531 (LAC). See also
SA
Airways v Bogopa & others
(2007)
28
ILJ
2718 (LAC) at para [60].
[2]
[2]
(2004) 25
ILJ
1655 (LAC)
[3]
At paragraphs [31] to [32].
[4]
Van
Rooyen & others v Blue Financial Services (SA) (Pty) Ltd
(2010) 31
ILJ
2735 (LC) at paraagraph
[25].
[5]
S 193(2)
of the LRA.
[6]
[2019] 40 ILJ 87 (CC)
[7]
At paragraph [40].