Visser v Sanlam (CA9/00) [2000] ZALAC 30 (14 December 2000)

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[2000] ZALAC 30
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Visser v Sanlam (CA9/00) [2000] ZALAC 30; [2001] 3 BLLR 313 (LAC); (2001) 22 ILJ 666 (LAC) (14 December 2000)

IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA
HELD AT CAPE TOWN
CASE
NO. CA9/00
In
the matter between:
WINDA
VISSER
Appellant
And
SANLAM

Respondent
JUDGMENT
DAVIS AJA:
Introduction
[1] This is an appeal against a judgment of
Arendse AJ
in which he dismissed an action concerning the retrenchment of
appellant by respondent with effect from 31 October 1998. The
respondent
cross-appeals, contending that it should have been awarded
its costs.
Facts
[2] In February 1998 respondent commenced a
process of restructuring a division of its business enterprise
called EBIZ. EBIZ was
an independent division within respondent with
its own cost centre and with the specific business objective of
promoting all aspects
of electronic business of respondent. A
document prepared by Mr Christodolou, the managing director of
respondent dated 2 June 1998,
set out the reasoning behind the
adoption of the preliminary decision thus: “Sanlam management has
considered what portion of EBIZ,
if any, is Sanlam’s core business
and what is non-core. Sanlam management is of the view that a large
proportion of EBIZ is non-core
business which will function better
outside of Sanlam. The effect of the outsourcing will be an EBIZ
function which is better placed
outside of Sanlam in line with
Sanlam’s focus on core business.”
[3] Significant
implications for staff flowed from this decision as all the posts in
that part of the EBIZ division which were to
be outsourced would be
abolished within respondent. Mr Christodolou attempted to explain
steps which would be taken to minimise any
disadvantage to staff: “We
are confident that we can negotiate with the new company to offer you
alternative employment with similar
terms and conditions to that
which you currently enjoy. In such circumstances no severance pay
will be payable. If for some reason
you are not offered an
alternative post in the new company, we will attempt to redeploy you
within Sanlam.”
[4] Concern was expressed by a number of the
employees of respondent who worked within EBIZ. At a meeting of 24
June 1998, employees
expressed concern with respect to the nature and
meaning of the concept of outsourcing as it applied to EBIZ. They
demanded some
measure of certainty as to which functions within EBIZ
would remain with respondent. On 14 July 1998 Mr Hannes van
Rensburg of
respondent replied by way of an e-mail to all
concerned members of EBIZ dealing, at least to some extent, with
queries raised and
inviting them to make alternative proposals within
the following week in order that these may be considered.
[5] Notwithstanding
these concerns, negotiations continued with BSW to take over the
business of EBIZ. Negotiations on behalf of
respondent were
conducted by a project team of which appellant was a member. At this
stage of the negotiations it was envisaged that
some fifty of the
EBIZ personnel would be transferred to an entity known as BSW and
that those EBIZ personnel who were not transferred
would remain in
the employ of respondent. In accordance with a document prepared by
Mr Botha of respondent on 12 June 1998, EBIZ
personnel not
transferred to BSW were informed that , “if their functions are
retained they will report to Lizé Lambrechts, if
their functions are
not retained in Sanlam they will be treated as ‘oortolliges’.”
[6] Pursuant to the initial decision to
outsource to BSW, most of the EBIZ staff including appellant were
moved physically into
the offices of BSW, on 27 July 1998.
[7] Critical to the determination of the number
of EBIZ personnel who would be transferred to BSW was the range of
activity which
respondent intended to transfer to BSW, in terms of
contractual arrangements to be entered into between the two parties.
[8] On the 24 July
1998, a further meeting took place between representatives of
management of respondent and EBIZ personnel including
appellant in
which the following statement of Mr George Holtzhausen, manager of
EBIZ and a superior of appellant appears from the
minute of this
meeting: “George noem dat van die personeel by die ‘ou’ eBIZ
(A) gaan oorskyf na die nuwe e-BIZ (B). Diegene
wat nie by B gaan
wees nie, sal ‘n e-BIZ Pool wees en daarna sal die persoon deur ‘n
inkortingsproses gaan”. The negotiations
had proved somewhat more
complex than anticipated by at least certain of the EBIZ personnel.
Accordingly at a meeting on 5 August
1998 at which appellant was not
present, Mr Holtzhauzen expressed the concern of many of EBIZ
personnel thus: “George het dit
duidelik gestel dat hy die e-BIZ
personeel se frustasie verstaan en hy wil graag ook net noem dat al
is daar personeel wat reeds
na Nobelpark oorgeskuif het, is daar nog
geen aanbod aan dié personeel gemaak nie – hierdie personeel het
(soos dié personeel
wat nog in Sanlam is) geen idee waar hulle
geplaas gaan word nie en poste moet nog individueel met ALMAL
onderhandel word”.
[9] On 14 August 1998 a further meeting took
place at which appellant was also not present. At this meeting it was
announced that
Holtzhausen was leaving the employ of respondent and
that BSW would offer employment to ten persons even though no
contracts with
respondent had yet been concluded. Later that evening
Holtzhausen contacted appellant and informed her of the nature of
the meeting
, in particular that the transaction with BSW had
fallen through and that she would be placed on the "oortollige
list".
[10] On or about 17
August 1998 another meeting was held with EBIZ personnel at which Mr
van Rensburg of respondent announced that
EBIZ personnel would be
divided into three groups, namely group A where offers from BSW had
been received, group B where respondent
would enter into individual
contracts with personnel and group C , the so-called “oortollige
lys”. The minutes of the meeting
reflected that Mr Van Rensburg
said “Persone wat wil aansoek doen vir ‘n vrywillige
skeidingspakket moet skriftelik aansoek
doen en redes verskaf waarom
die betrokke persoon nie die BSW aanbod en/of ‘n Sanlam herplasing
wil aanvaar nie.
…….Persone in groep C wat onseker is oor
werksekuriteit kan voorstelle aan bestuur voorlê waarop daar formeel
gereageer moet
word.”
[11] On 31 August 1998
appellant requested voluntary retrenchment but withdrew this request
on 3 September. She then received a job
offer from Brain Ware, a new
business organisation in which Holtzhausen was involved but she
refused to consider it. By the time
she changed her mind no further
position at Brain Ware was available. She then approached Mr Vic van
Vuuren a senior executive of
respondent, in an attempt to secure an
alternative position within respondent’s organisation but without
success. She was finally
dismissed in terms of a notice dated 23
September 1998, with effect from 31 October 1998.
Appellant’s case
[12] Mr Rautenbach, who appeared on behalf of
appellant, submitted that notwithstanding respondent’s
substantively justifiable
grounds for the decision to outsource
EBIZ, it had breached the procedural requirements provided for in
section 189(2)
of the
Labour Relations Act 66 of 1995
as amended
(LRA). In terms of
section 189(2)
“[t]he consulting parties must
attempt to reach consensus on-
(a) appropriate measures-
to avoid the
dismissals
;
to minimise the number of
dismissals
;
to change the timing of the
dismissals
;
and
to mitigate the adverse effects of
dismissal
;
the method for selecting the
employees
to be dismissed;
the severance pay for dismissed
employees
.”
[13] Mr Rautenbach, invoking
section
189(2)(a)(iv)
, argued that the appellant was entitled to be consulted
on the adverse effect of her dismissal. Accordingly he contended that
the
aim of the consultation process envisaged in the section was
designed to enable appellant to influence the outcome materially so
that she could, if possible, obtain employment with the new
contractor, BSW or be placed in a position where she would enjoy a
reasonable chance of receiving or obtaining an alternative position.
The process of consultation could not be fair if it focussed
the
employee’s mind on a decision to restructure in a manner which
created the impression that the employee would obtain a job
only to
learn thereafter that no such job was indeed available.
[14] With regard to the facts of the present
case, Mr Rautenbach submitted that the parties had been consulted
initially about the
decision to outsource EBIZ and they had accepted
this decision in the belief that they would obtain employment with
BSW. It had
been suggested that a total of some fifty jobs would
become available with BSW. Circumstances then changed materially
when difficulties
pertaining to the conclusion of contracts between
BSW and respondent were encountered. The absence of sufficient
contracts by which
BSW would have obtained business from respondent
destroyed the premise upon which the initial acceptance by employees
of EBIZ for
the principle of outsourcing had been predicated. When
it became clear to respondent, at the very latest by 14
th
August, that far fewer jobs would become available because of
the absence of contracts concluded between BSW and respondent , a
detailed process of consultation should have been initiated with the
affected employees in order that respondent comply with its
obligations in terms of
section 189(2)
of the Act.
[15] In support of the submission that the
entire consultation had been predicated on a significant amount of
jobs being offered by
BSW to EBIZ personnel, Mr Rautenbach referred
to the following passage from the evidence of appellant: “In die
stadium wat (sic)
die onderhandelings wat u by betrokke was, was daar
sprake van onderhandeling oor hoeveel mense, hetsy 59 of dan 10, BSW
moes oorneem?
Ja nee die onderhandeling was nog die hele tyd gewees
dat om en by 50 van BSW, agt van EBIZ se mense is wat sou oorgaan.
Daardie
mense wat nie in Sanlam geabsorbeer is nie, sou almal
oorgaan. Dit is nog wat die onderhandelinge oor was.” Once it had
become
clear that there were difficulties relating to the conclusion
of contracts which would allow this ‘expectation’ to be
implemented,
respondent was obliged but failed to inform the affected
employees about these difficulties in the negotiations and the
possibility
that their expectations would be dashed.
[16] Mr Rautenbach also
criticized the nature of the information which had been provided to
employees including appellant. While
the impression had been created
as from 14 August 1998 that the BSW transaction had failed to
deliver the positions initially expected,
Mr Botha of respondent
testified that so far as communications to this effect were
concerned the following was the position: “Wat
was die graad van
finaliteit van die kommunikasie wat gemaak is by daardie vergadering
en ek wil dan vir u vra om dit te antwoord
met spesifieke verwysing
en kom ons gaan maar na 105 toe groep A, is hy finaal bepaal of nie?
-Nee ek dink die kern is, dit was
die status op daardie stadium en
dit was die mense se name wat beskikbaar was.
Was groep B finaal bepaal? -Nee ook nie. Daar
was nog onderhoude. Ek weet selfs later was daar onderhoude ook.
Was groep C klaar
finaal bepaal? -Nee C was die res. So dit wat nie by die ander, as
die ander nie vas is nie, dan sal C ook nie vas
wees nie.”
[17] Mr Rautenbach
submitted that the clear impression created by the information which
had been provided to appellant as at 14 August
1998 was inaccurate.
Mr Botha admitted the process had not yet been completed by that date
and accordingly appellant had effectively
been misled. Had she known
that the negotiation process was not yet completed she could have
pursued the possibility of negotiating
with another information
technology partner instead of BSW as the contractor, or pursued her
suitability in addition to or in preference
to an incumbent at BSW,
or sought to solve the problem relating to the adequacy of contracts
concluded with BSW which would be
sufficient to sustain the ‘EBIZ
business’ now conducted by BSW.
[18] For these reasons
Mr Rautenbach submitted that respondent failed to consult with
appellant about measures to mitigate the adverse
effects of
dismissal. It did not consult about any eventuality which would
occur if the initial plan did not materialise and it
failed to
inform appellant as to the exact nature of the negotiations between
14 to 18 August.
Analysis
[19] Consultation as envisaged in
section
189(2)
is a continuous process between the parties. It was not
sufficient in order to comply with the obligations contained in
section 189(2)
for respondent simply to consult with employees of
EBIZ as to the decision to transfer key elements of the business to
BSW. There
was an obligation to ensure that employees were properly
informed of the nature of the negotiations with BSW insofar as the
outcome
of these negotiations affected attempts to reach a consensus
on the avoidance of dismissals, the minimisation of dismissals or the
mitigation of the adverse effects of dismissal.
[20] In the present
case appellant had access to considerable information. In my view
she was either possessed of the requisite information
throughout the
negotiation process or she was in a unique position to acquire such
knowledge. It is clear from the evidence that
numerous meetings were
held with EBIZ personnel. On 14 July 1998 the respondent replied to
concerns from 26 members of BSW as to
the effects of the proposed
outsourcing and invited further proposals. On 24 July 1998 a meeting
was held with EBIZ personnel who
were informed of the division of
EBIZ employees into three groups including the “oortollige lys”.
Throughout this period appellant
was a member of the project team
which had negotiated with BSW. She had moved into BSW’s premises
and was well placed to be informed
as to the state and nature of the
negotiations including the possibility of conclusion of contracts
with respondent, a critical aspect
in the decision of BSW to employ
EBIZ personnel.
[21] Although she did
not attend the key meeting on 14 August 1998 her superior
Holtzhausen, with whom she had a sufficiently close
relationship for
the latter to offer her employment in his new enterprise, telephoned
her to advise that the BSW transaction had
fallen through and that
she had been placed on the ‘oortollige list’. Given their
relationship, it is inconceivable that appellant
would not have not
been able to request further information from Holtzhausen as to the
reasons why the “deal” had not been concluded.
To plead
ignorance as she did during her testimony, is to cast doubt upon the
accuracy of her entire account of these events.
[22] Under cross
examination appellant conceded that she had clear knowledge of the
significance of the conclusion of contracts between
respondent and
BSW:
“En dit is die 31ste van die sewende maand.
So die eerste punt dan, u is reeds ten laaste op daardie dag dan nou
bewus van die feit
dat, die
sluit
van kontrakte kardinaal is,
die fondasie van hierdie hele transaksie sou wees? -
Ek weet dit
van die begin af
”. (my emphasis).
[23] In essence appellant would have the court
believe that she was not provided with sufficient information or
afforded adequate
opportunity to put alternative proposals to
respondent. But this version cannot be accepted. She was a member of
the project team
which negotiated with BSW, she was the project team
member responsible,
inter alia
,
for personnel of EBIZ,
she was privy to all the documentation to which reference has
already been made, she had contact with
Mr Holtzhauzen and was able
to obtain information regarding the difficulties experienced in
concluding contracts with BSW. Further
she knew that the conclusion
of contracts was crucial to the number of employees who would be
taken over by BSW. There is no basis
for a conclusion that she was
provided with inadequate information so that she was prevented or
disabled from engaging in a proper
process of consultation with
respondent. Certainly she failed to testify as to exactly what she
was informed by BSW or the respondent.
In these circumstances it is
impossible to make a finding as to the respects in which the
consultation process broke down or was
discontinued by the
respondent.
[24] The process of
consultation envisaged in
section 189(2)
involves a bilateral
process in which obligations are imposed upon both parties to consult
in good faith in an attempt to achieve
the objectives specified in
the section. In my view the respondent fulfilled its obligations in
terms of
section 189(2).
If any conclusion is justified, it is that
appellant failed to engage adequately in the consultation process
envisaged in the section.
Accordingly it cannot be said that the
retrenchment of appellant was procedurally unfair.
Costs
[25] In terms of
rule 9(3)(a)
of the Rules of
this Court, heads of argument of appellant and respondent must
include a chronology of the material facts to avoid
dismissal or
mitigate the effects thereof. In this case no detailed chronology
was made available by either counsel (although respondent’s
counsel
attempted to do so) and this made the task of identifying the
material facts particularly difficult. Furthermore I consider
it to
be my unfortunate task to draw attention to the unsatisfactory manner
in which this case was conducted in the trial court.
Instead of
witnesses providing the court with a clear and coherent account of
the relevant events, documents were placed before
witnesses who were
then usually asked merely to discuss or comment on the contents
thereof. As a result of the manner in which key
evidence was
presented, it has proved to be an extraordinarily difficult task to
follow the chronology of events or to gain any
clarity at all on what
really occurred. It is arguably this difficulty which explains
counsels non-compliance with
Rule 9(3)(a).
[26] For these reasons I consider it
appropriate that no order as to costs be made both in this Court or
in the Court
a quo -
itself a clear mark of this Court’s
displeasure with the manner in which the entire process of this
litigation was conducted.
[28] The appeal and the cross-appeal are
dismissed.
_______________
DAVIS AJA
I agree.
_______________
ZONDO JP
I agree.
_______________
GOLDSTEIN AJA
For the Appellant:
N.F. Rautenbach
instructed by Balsillies Inc.
For the Respondent:
H.C. Niewoudt of
Deneys Reitz Inc
Date of Hearing:
28 November 2000
Date
of Judgment:
14 December 2000.