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[2002] ZALAC 25
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Fry' Metals (Pty) Limited v National Union of Metal Workers of South Africa and Others (JA9/01) [2002] ZALAC 25; (2003) 24 ILJ 133 (LAC); [2003] 2 BLLR 140 (LAC) (6 December 2002)

IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA
HELD
IN JOHANNESBURG
Case
no: JA9/01
In the
appeal between:
FRY’S
METALS (PTY) LIMITED APPELLANT
and
NATIONAL
UNION OF METAL
WORKERS
OF SOUTH AFRIC
A
ND FIFTY FIVE OTHERS 1
ST
AND FURTHER RESPONDENTS
________________________________________________________________
JUDGEMENT
_______________________________________________________________
ZONDO
JP
INTRODUCTION
[1] This
appeal raises the following questions:-
Does
an employer have a right to dismiss employees who are not prepared
to agree to certain changes being effected to their terms
and
conditions of employment when such changes are necessary for the
viability of the employer’s business or undertaking or are
necessary to improve productivity or efficiency in the business?
if an
employer has such a right, what is the relationship between that
right, on the one hand, and, on the other, an employee’s
right
implicit in sec 187(1)(c) of the Labour Relations Act, 1995 (Act no
66 of 1995) (
“the
Act”
)
not to be dismissed for the purpose of being compelled to agree to a
demand in respect of a matter of mutual interest between
employer
and the employee?
[2] The
appellant is involved in the business of smelting and refining lead
from secondary materials. Its customer base is primarily
the lead
acid battery manufacturing industry. According to the appellant it
supplies approximately 55% of the total South African
lead
consumption and approximately 75% of all lead manufactured locally.
The first respondent is a registered trade union of which
the second
and further respondents are members. The second and further
respondents
(“the
individual
respondents”)
are employed by the appellant. In 2000 the appellant sought to
dismiss the individual respondents. They, together with their union,
brought an urgent application in the Labour Court to inter alia,
interdict the appellant from dismissing them and from effecting
certain changes in the workplace. The Labour Court granted them an
order that effectively achieved that result. The appellant applied
in
the Labour Court for leave to appeal. The application was refused.
The appellant then petitioned this Court which granted leave
to
appeal against the judgement of the Labour Court. This then is the
appeal against that judgement of the Labour Court.
The
facts
[3] In
May 2000 the appellant contracted a firm of consultants called
Xybanetx to review its operations and to make recommendations
on how
to increase productivity. It did this because it believed that it was
essential for the continued viability of the appellant
to be
productive and, where possible, to increase its productivity. The
appellant believed that, if it did not do this, it would
eventually
have to close down. In June 2000 the consultants submitted their
report.
[4] As
a result of the report, the appellant called a meeting between itself
and the union. The meeting took place on the 1
st
September 2000. The only matter of substance for discussion on the
agenda of that meeting was given as the appellant’s viability.
At
the meeting the appellants’ representatives stated that the purpose
of the meeting was two fold, namely:
(a) to
give the shopstewards an overview of the status of the appellant,
and,
(b) to
present a proposed collective agreement to the shopstewards which
sought to address the human resources element of the problems.
The
minutes of that meeting which were prepared by the appellant’s
representatives reveal that the appellant informed the shopstewards
“of
the various investigations and/or proposals to address the future of
[the appellant] to make the company viable and also ensuring
employment for its employees”
.
The appellant proposed a collective agreement
“to
address and formalise the human resources element”
.
This was given to, and, discussed with, the shopstawards.
[5] The
appellant’s employees were working a three shift system. In terms
of the appellant’s proposals the three shift system
was going to be
replaced with a two shift system. Each of the three shifts was 8
hours long with the first shift starting at 06h00
each day seven days
a week. The two shift system was going to entail two 12 hour shifts
with the first one starting at 06h00 seven
days a week. In its
answering affidavit the appellant pointed out that at the time of the
application the appellant’s effluent
department worked two eight
hour shifts for five days a week. There was no hand-over between
shifts. The appellant stated that this
caused a productivity problem
which it wanted to address. The lack of hand-over resulted in lost
productivity time of about one hour
per day. Obviously, in seven days
this translated to seven hours. The appellant also wanted to withdraw
the transport subsidy that
it had been giving its employees. It said
that this was going to be the consequence of the introduction of the
two shift system.
The shopstewards were given an opportunity to go
and study the proposed collective agreement and respond only at the
next meeting
which the parties scheduled for the 6
th
September 2000.
[6] The
parties held a meeting on the 6
th
September. The shopstewards responded to some of the proposals. They
accepted some of the proposals and rejected others. In respect
of
some proposals the shopstewards needed more time or asked for
clarification or more information. According to the appellant’s
answering affidavit, the shoptewards rejected the proposed two shift
system
“emphatically
and in (an) inflammatory language”
and made no alternative proposals.
[7] The
parties held another meeting on the 15
th
September 2000. The minute of that meeting reveals that the purpose
of the meeting was to enable the shopstewards to respond to certain
proposals to which they had not as yet responded. The shopstewards
rejected most of the proposals but accepted others. It was then
agreed between the parties that another meeting would be held on the
22
nd
September 2002. On the 22
nd
September a meeting was held as arranged. The shopstewards responded
to the appellant’s proposal on the disciplinary procedure.
The
appellant’s representatives outlined which proposals had been
accepted and which ones had been rejected by the shopstewards.
The
management then held a caucus meeting. After the caucus meeting the
appellant’s managing director explained the need to effect
changes
in order for the appellant to be efficient. He stated also that the
union had rejected the appellant’s proposals on most
issues. He
emphasised the need to implement the proposals by the 1
st
October 2000. He also stressed the appellant’s commitment to
continue operating and creating employment for its employees.
[8] The
appellant then read out a certain letter to the shopstewards that
bore that day’s date. In the letter the appellant referred
to the
fact that it had made certain proposals to the union aimed at
effecting certain changes including changes in the terms and
conditions of employment of employees in order for the appellant to
be efficient and that the union had rejected these proposals.
The
letter also stated that the effect of the proposed changes was to
introduce continuous shifts in the operations of the departments
of
Polyprop, Smelter, Refinery, Laundry and Cleaners. Another effect was
also to introduce a shift hand-over procedure. The appellant
attached
to the letter a document containing all the proposals. It said that
about 55 employees would be affected by the proposed
changes.
[9] The
appellant stated that at its negotiations with the union it had
become clear that the affected employees were not prepared
to accept
the proposed changes. The appellant stated in the letter that, in the
light of this it was proposing that the affected
employees who were
prepared to accept the changes be retained in their positions and
that those who did not accept the changes
“may
be retrenched”
.
The appellant went on to say in the letter that in the event of
retrenchments,
the
retrenchments would take place after the 21 day notice required by
the main agreement; it also said that such notice was being
given
therein;
any
affected employee who did not accept the changes and who had an
opportunity to obtain alternative employment could request time
off
to attend job interviews; it further said that, if reasonably
possible, permission would be granted for this;
the
appellant would consult the employees and/or their representatives
regarding any assistance which they may require in the event
of
retrenchment;
those
affected employees who did not accept the required changes would, if
no reasonable alternative position was available, be
notified of
their retrenchment on or about the 16
th
October 2000; it further stated that, since it was the appellant’s
view that an acceptance by the affected employees of the required
changes was a reasonable alternative to retrenchment, it was not
expected that employees who got retrenched would be paid a
retrenchment
package.
[10] The
appellant stated in the letter that the purpose of the letter was to
convey in writing a summary of the important points
to be considered.
The affected employees and their trade unions were invited by the
appellant to convey to the appellant their views
and representations
on any issues referred to in the letter as soon as possible. The
letter further said that a meeting would take
place between the
appellant and the employees’ representatives on Thursday the 28
th
September 2000 to enable the views of the employees’
representatives’ to be conveyed to the appellant.
[11] According
to the minutes of the meeting of the 22
nd
September the response of the shopstewards to the letter included
statements to the effect that the appellant’s purpose was to
force
the employees to accept the appellant’s proposals, that the
appellant’s intention was to divide the workers, that the appellant
would no longer be there in six months’ time, that this was
intimidation by the appellant, that the appellant was playing with
fire and that they would close the appellant down. In the founding
affidavit the respondents stated that they understood the letter
of
the 22
nd
September to be an ultimatum to employees to accept the appellant’s
proposals or face dismissal. In its answering affidavit, the
appellant denies that the letter was an ultimatum to employees to
accept its proposals or face dismissal. It states that the letter
made it clear that, for cogent reasons, the appellant deemed it
necessary to introduce a two shift system and that,
“if
the employees were unwilling to accept such a system, retrenchments
might occur”
.
[12] The
parties held a further meeting on the 28
th
September. The parties again discussed their differences. The
shopstewards asked the appellant’s management whether it was their
intention to retrench employees. The management confirmed this to be
the case. The minutes of the meeting reveal that, when the
shopstewards
accused the management of using retrenchment as a threat
against the workers, the management responded by saying that they
were also
feeling threatened by the workforce
“not
wanting to change to make the company more viable”
.
The meeting ended with the shopstewards declaring a dispute with the
appellant. In par 33.2 of the founding affidavit the respondents
state that the union
“accused
the [appellant] of threatening to retrench workers if they failed to
comply with the new terms and conditions of employment
as set out in
the proposed collective agreement”
.
In the paragraph the respondents state that the management replied
that the appellant was retrenching
“as
workers would not agree to changes to terms and conditions of
employment”
.
In the last sentence of the paragraph the respondents allege that the
appellant stated that, if the union agreed to the new shift
system,
there would be no need to retrench employees.
[13] On
the 2
nd
October 2000 the union addressed a letter to the appellant asking for
clarification whether the appellant was contemplating a new
shift
system or embarking upon retrenchments. The appellant responded with
a letter dated the 3
rd
October. The body of the appellant’s reply, in so far as it is
relevant to this matter, reads thus:-
“
1. Because
the consultation process has not produced any other viable
alternatives to retrenchment and employees have indicated their
rejection of the alternative working arrangement (as documented in
annexure “A”) [the appellant] has been left with no choice
but to
contemplate retrenchment.
------------------------------
If
the proposed working arrangement is accepted by your members the
need to retrench would not arise.
In
the event that the alternative working arrangement is accepted by
the employees or a different viable alternative is proposed
it would
not be necessary to continue with retrenchment
We
trust that the matter has now been sufficiently clarified”.
[14] On
the 3
rd
October 2000 the appellant distributed notices to workers informing
them that they would be retrenched on the 13
th
October 2000. The contents of those notices are important in this
matter. For that reason it is necessary to reproduce them in full.
They read thus:-
“
Dear
Sir
Notice
of retrenchment
The
[appellant] was unsuccessful in its efforts to negotiate a collective
agreement with your union and its members relating to a
number of
issues including changes to working hours. The [appellant] therefore
gave notice to NUMSA and all employees of its intention
to consult in
respect of the retrenchment of those employees who were not prepared
to accept the new working hours needed by virtue
of the [appellant’s]
operational requirements. Having explained the [appellant’s]
proposals to the union and the shopstewards
and, having invited them
to consult, the [appellant] has been informed that all affected
employees, including you, are not prepared
to accept the new hours of
work.
Therefore,
you are hereby notified that your employment with the [appellant] is
to be terminated for reason (sic) of its operational
requirements.
The following will apply:
should
you require time off during working hours to attend job interviews,
permission will be granted if reasonably possible;
All
monies due to you including leave pay, leave bonus, etcetera, will
be paid to you on your last day;
It
is not the [appellant’s ] intention to pay a retrenchment package
because your acceptance of the changes to working hours
would
eliminate the need to retrench you and is a reasonable alternative
to retrenchment. If, however, you are prevented from
accepting the
change to working hours for [a] good reason, you are required to
contact me as soon as possible and explain these
reasons to me. For
good reason, the [appellant] may reconsider its position;
If
you reconsider your position and are prepared to accept the changed
working hours, please sign the attached document which
confirms
that you will work in terms of the required shift system. Provided
that the signed document is returned to me by Monday
9 October
2000, you will not be retrenched. After that date, even if you
accept to work in terms of the required working hours,
the
[appellant] does not guarantee that you will be retained.
If
you do not understand any part of this notice, please communicate
with me or with your union, without delay, so that it can
be
explained”.
[15] According
to the respondents’ founding affidavit, the workers rejected the
letters. On the 9
th
October the workers forcibly removed two managers or directors from
the appellant’s premises to, according to the respondents,
“convey
a sense to the managers of what it was like to be dismissed.”
According to the appellant’s answering affidavit, the workers
prevented the managers’ return to the premises in defiance of an
order of the Labour Court. Following upon the events of the previous
day a meeting was held on the 10
th
October between the appellant’s management and its attorneys, on
the one hand, and, the workers, on the other. During this meeting
there was a discussion of some of the appellant’s proposals on
changes but no agreement was reached.
[16] On
the 18
th
October 2000 the appellant gave the affected workers letters of
dismissal. The letters read thus:-
“
Mr
.......
Clock
no ........
NOTICE
TO RETRENCHED EMPLOYEES
Because
you have rejected the new two shift system operationally required by
the [appellant], you have been given notice of your retrenchment
and
your employment will terminate on 20 October 2000.
Please
note that the [appellant] does not want to retrench you and will
retain [you] in its employ provided that you agree to work
the shift
system.
If
you would like anything explained to you before finally making up
your mind to accept or reject the shift system, please contact
your
manager URGENTLY so that he can explain this to you and answer any
questions you may have.
Please
do not reject the shift system, unless you are ceratin of your
choice. If you have any special personal problem which prevents
you
from working the proposed shift system,
please
let your manager know URGENTLY:-
in such case, the [appellant] will try to accommodate you.
If
you have decided not to accept the shift system, then we confirm that
your services will no longer be required and that you will
be paid
until Friday 20 October 2000. You will be paid your usual wages on
that day and as soon as possible next week, your outstanding
pay
together with pro rata bonus and leave pay will be paid directly into
your account.
Yours
faithfully
FRYS
METALS
______________
TO
Karshagen
Technical
Director”.
Proceedings
in the Labour Court
[17] The
respondents then launched an urgent application in the Labour Court
for an order, inter alia,:-
interdicting
the appellant from dismissing the second and further respondents for
their failure to accede to the appellant’s demands
with respect to
the implementation of a two shift system and the withdrawal of a
transport subsidy in the context of proposed changes
to terms and
conditions of employment;
interdicting
the appellant from implementing the proposed shift system until it
had obtained the agreement of the second and further
respondents or
until it had exhausted the dispute resolution provisions of the
Labour Relations Act, 1995
and the main agreement for the Iron,
Steel, Engineering and Metallurgical Industry and until it had the
necessary exemptions from
that agreement from the provisions
governing working hours and public holidays;
directing
the appellant to withdraw the letters of termination issued to the
second and further respondents, and,
declaring
that the proposed change constituted a matter of mutual interest.
There
were other orders sought which are not relevant for present purposes.
[18] In
par 45 of the founding affidavit the respondents submitted that the
then proposed dismissals would be unfair and unlawful.
They went on
to say:
“The
[appellant] is proposing to dismiss the second and further
[respondents] as a result of their failure to agree to changes to
their terms and conditions of employment. It is submitted that this
action of the [appellant] constitutes a step to compel a demand,
and
if implemented such dismissals would be automatically unfair
dismissal (sic) in terms of
section 187(1)(c)
of the Act”
.
In par 46 it was submitted that the employees had a clear right not
to be dismissed unfairly
“on
the above grounds
”.
In its answering affidavit the appellant denied that the dismissal
was effected in order to compel the employees to agree to
the
proposed changes.
[19] The
Court a quo subsequently handed down a judgement in favour of the
respondents. It found that the appellant’s proposed dismissal
of
the second and further respondents was sought to be effected in order
to compel them to agree to its proposed changes on their
terms and
conditions of employment. It found that this was contrary to the
provisions of sec 187(1)(c) of the Act. It made no order
as to costs.
The Court a quo effectively granted the respondents all the orders
they sought except costs.
The
appeal
[20] The
respondents did not, in challenging the proposed dismissal in the
Court a quo and on appeal, rely on any failure on the appellant’s
part to comply with its obligations under sec 189 of the Act. The
respondents’ case is a very narrow one. It is that the dismissals
which the appellant sought to effect in respect of the second and
further respondents on the 20
th
October 2000 were sought to be effected in order to compel them to
agree to the appellant’s proposed changes on their terms and
conditions of employment. The respondents contended that this would
be contrary to the provisions of sec 187(1)(c). For this reason
they
contended that they had a clear right to have the dismissals
interdicted. The appellant disputes the correctness of the contention
that the dismissals were sought to be effected in order to compel the
second and further respondents to agree to its proposals. It
contends
that it sought to dismiss the second and further respondents simply
because the appellant’s operational requirements required
the
changes it proposed and, as the second and further respondents were
not prepared to agree to the changes, they had to be dismissed
so
that employees who would be prepared to accept the changes would be
employed in their stead.
[21] Sec
188(1)(a)(ii), in so far as it is relevant to this matter, reads:-
“
188
other unfair dismissals-
(1)
A dismissal that is not automatically unfair, is unfair if the
employer fails to prove-
(a)
that the reason for dismissal is a fair reason-
(i)
----------
(ii)
based on the employer’s operational requirements; ...
(b)
-----------”
The
provisions of sec 188 give three grounds of dismissal in our law,
namely, conduct, capacity and operational requirements. This
is in
line with international norms and standards. In this regard article 4
of the Termination of Employment Convention 158 of 1982
provides:-
“The
employment of a worker shall not be terminated unless there is a
valid reason for such termination connected with the capacity
or
conduct of the worker or based on the operational requirements of the
undertaking, establishment or service”
.
Sec 188(1)(a)(ii) means that an employer may dismiss an employee for
a fair reason that is based on its operational requirements
(and, if
a fair procedure is followed) such dismissal will be fair. Sec 189(1)
reaffirms that the Act does contemplate a dismissal
based on the
employer’s operational requirements. It begins with the words “
when
an employer contemplates dismissing one or more employees for reasons
based on the employer’s operational requirements, the
employer must
-----
”.
[22]
Sec 67(5) provides that sec67(4)
“does
not preclude an employer from fairly dismissing an employee in
accordance with the provisions of chapter viii for a reason
related
to the employee’s conduct during the strike, or for a reason based
on the employer’s operational requirements”
.
Sec 213 of the Act defines the term
:“operational
requirements
”
as meaning
“requirements
based on the economic, technological, structural or similar needs of
an employer”
.
Sec 67(5) must be read with sec 67(4) which precludes an employer
from dismissing an employee for participating in a protected strike.
From the above there can be no doubt that the Act does give an
employer the right to dismiss an employee or employees for a reason
based on its operational requirements.
[23] Sec
187(1)(c) in so far as it is relevant to this matter, reads:
“
A
dismissal is automatically unfair ---- if the reason for the
dismissal is -
(a)-------------
(b)------------
(c)
to compel the employee to accept a demand in respect of any matter of
mutual interest between the employer and employee;
”
Accordingly
an employer is, by implication, precluded by sec 187(1)(c) from
dismissing an employee or a group of employees if the
“reason
”
for doing so is to compel him or her or them to accept a demand by
the employer in respect of any matter of mutual interest between
the
employer and employee. The question that arises is when it can be
said that, in dismissing an employee or a group of employees,
the
employer is exercising his right to dismiss for operational
requirements as opposed to an employer dismissing employees in order
to compel them to agree to a demand on a matter of mutual interest
which is contrary to the provisions of sec 187(1)(c).
[24] I
do not think that there is any conflict between the two provisions.
There is a historical context to sec 187(1)(c). It is that
the now
repealed Labour Relations Act, 1956 (Act 28 of 1956) (
“the
old Act
”)
included in its definition of a lock-out the
“termination
by [the employer] of the contracts of employment of any body or
number of persons in his employ if the purpose of that....
termination........is to induce or compel any person who are or have
been in his employ or in the employment of other persons-
(1)
to agree or comply with any demands or proposals concerning terms or
conditions of employment.......”
[25] When
one has regard to the wording of sec 187(1)(c) and that of the
relevant portions of the definition of
“lock-out”
in sec 1 of the old Act, one is left in no doubt that sec 187(1)(c)
is based on the definition of the word
“lock-out”
in the old Act. There are a number of cases which feature in our law
reports that were decided under the old Act in which the definition
of a lock - out featured. These include those cases where lock - out
dismissals or purported lock - out dismissals had taken place.
Some
of the cases are
NUMSA
v De Beers Consolidated (1996) 17 ILJ 703 (IC); FAWU v Royal Beech -
Nut (Pty) Ltd (1988) 9 ILJ 1033 (IC); Ndlovu & Others
v
Steynsfields Restaurant CC (1994) 15 ILJ 655 (IC); Techikon SA v
NUTESA (2001) 22 ILJ 427 (LAC); NUMSA v Aerial King Sales (Pty)
Ltd
(1994) 15 ILJ 1384 (IC); National Hotel, Liquor & Restaurant
Workers Union & Others v PE Hotels Group t/a The Edward
Hotel
(1995) 16 ILJ 877 (IC); CWIU & Others v Indian Ocean Fertilizer
(1991) 12 ILJ 822 (IC); NUMSA v Cobra Watertech (1994)
15 ILJ 832
(IC); SACWU v Plascon Inks and Packaging Coatings (Pty) Ltd (1991) 12
ILJ 353 (IC); Ngubane & Others v NTE Ltd (1991)
12 ILJ 138 (IC);
NTE Ltd v SACWU & Others (1990) 11 ILJ 43 (N); NTE Ltd v Ngubane
& Others (1992) 13 ILJ 910 (LAC); FAWU
v Midde - Vrystaatse
Suiwel Kooperasie Bpk (1990) 11 ILJ 776 (IC); Midde - Vrystaatse
Suiwel Kooperasie Bpk v FAWU (1992)13 ILJ 927
(LAC)
).
[26] In
Commercial
Catering and Allied Workers’ Union and Others v Game Discount World
Ltd (1990) 11 ILJ 162 (IC)
the Industrial Court had to interpret the definition of the word
“lock-out”
in regard to a termination by an employer of contracts of employment
of employees within the context of a dispute about a change
in terms
and conditions of employment. In that case the employer purported to
effect a termination of the contracts of employment
as part of a
lock-out under the old Act. However, it maintained, and, told the
employees’ representatives and the public, that
the termination of
the employees’ contracts of employment was final and irrevocable.
The Industrial Court held, correctly in my
view, that a dismissal
that was final and irrevocable fell outside the definition of a
lock-out in sec 1 of the old Act. It held
that in order for a
termination of contracts of employment to fall within the definition
of a lock -out in sec 1, it had to be effected
for one of the
purposes specified in the definition of the word
“lock
-out”
in sec 1 of the old Act. At 165D -F of the report the Industrial
Court had the following to say:-
“
There
can be no lock-out if the act forming part of the lock -out was not
performed for one of the specified purposes. The employer
who
introduces a lock - out must do so to achieve a purpose. In casu the
act which purportedly introduced the lock - out was the
dismissal on
11 October 1989. That dismissal was, and was intended to be final and
irrevocable. The individual applicants were not
dismissed to compel
or induce them to accept respondent’s demand. The fact that the
notice to the employees was for that purpose
does not assist the
respondent. The termination should have been for that purpose.
The
termination of the employment of the individual applicants is in casu
not a lock -out dismissal. There is in casu no lock- out”.
[27] In
my view what was said by the Industrial Court in Game Discount World
in respect of a lock - out dismissal under the definition
of a lock -
out under the old Act, namely, that such a dismissal cannot be final
and irrevocable, applies with equal force to the
provisions of sec
187(1)(c) of the Act. In order to fall within the ambit of sec
187(1)(c) a dismissal must have as its purpose the
compulsion of the
employees concerned to accept a demand in respect of a matter of
mutual interest between employer and employee.
If a dismissal is not
for that purpose, it falls outside the ambit of sec 187(1)(c).
[28] A
dismissal that is final cannot serve the purpose of compelling the
dismissed employee to accept a demand in respect of a matter
of
mutual interest between employer and employee because, after he has
been dismissed finally, no employment relationship remains
between
the two. An employee’s acceptance of an employer’s
I am
aware that I am now using the word
“purpose”
and not
“reason”
when sec 187(1)(c) does not refer in express terms to the word
“purpose” but refers to the word
“reason”
.
The word
“reason”
is, in my view, a misnomer in the context of sec 187(1)(c). That
part of sec 187(1)(c) which follows after (c) makes it clear that
it
relates to a purpose and not a reason. The dismissal is effected
“to
compel the employee to accept a demand ------”
.
Accordingly, strictly speaking, the word
“reason”
must be read as
“purpose”
in relation to par (c). This would mean that sec 187(1)(c) must be
read as providing that a dismissal is automatically unfair if
the
purpose of the dismissal is to compel the employee to accept a
demand in respect of any matter of mutual interest between employer
and employee.
demand
in respect of a matter of mutual interest can only be useful or worth
anything if the employee is going to continue in the
employer’s
employ. Let us say that an employer wants his employees to agree that
a transport subsidy be done away with. If the
employees accept this
demand and continue in the employer’s employ, that would serve a
useful purpose. However, if the employees
are dismissed finally and
irrevocably, their agreement that the employer may do away with the
transport subsidy is irrelevant. The
people whose agreement matters
to the employer are those who are going to be in his employ.
[29] A
lock - out dismissal entails that the employer wants his existing
employees to agree to a change of their terms and conditions
of
employment. In a lock-out dismissal the employer would take the
attitude that, if the employees do not agree to the proposed changes,
he would dismiss them - not for operational requirements - but to
compel them to agree to the change. In such a case the employees
thereafter have an opportunity to agree to the change. When they
agree to the change, the dismissal ceases because it has served
its
purpose. If the employees do not agree to the change after they have
been dismissed for the purpose of compelling them to agree,
the
employer dismiss them finally. The last mentioned dismissal is not a
lock -out dismissal. It is an ordinary dismissal for operational
requirements.
[30]
The purpose of a dismissal for operational requirements in such a
case, which is the same as in the present matter, is to get
rid of
employees who do not meet the business requirements of the employer
so that new employees who will meet the business requirements
of the
employer can be employed. Such a case was
TAWU
& Others v Natal Co - Operative Timber (Pty) Ltd (1992) 13 ILJ
1154 (D).
The purpose of a lock-out dismissal is not to get rid of the
employees who are not accepting the demand in respect of a matter of
mutual interest but it is to keep them but under different terms and
conditions of employment, hence the notion that the dismissal
is to
compel them to accept a demand in respect of any matter of mutual
interest between employer and employee.
[31] A
dismissal for operational requirements fits comfortably within the
definition of
“dismissal”
in sec 186(a) of the Act. There may be an argument that a dismissal
contemplated by sec 187(1)(c) - especially if it is understood
not
to be final - does not fit comfortably within the definition of
“dismissal”
in sec 186(a). This argument would be based on the notion that the
word
“dismissal”
as
defined in sec 186 does not refer to a dismissal that is not final
and that, wherever it appears in the Act, it bears the meaning
given
to it in sec 186. The argument would be that to hold that the
dismissal that is contemplated in sec 187(1)(c) is not a final
dismissal is to give the word “dismissal” in sec 187(1)(c) a
meaning that is different from the meaning given to that word in
sec
186(a) In my view the difference between a dismissal as defined in
sec 186 and a dismissal such as is contemplated by sec 187(1)(c)
is
that the latter dismissal is required to be effected for the specific
purpose given in sec 187(1)(c) and that purpose is absent
in an
ordinary dismissal such as is defined in sec 186(a). That purpose
renders a sec 187(1)(c) dismissal a special kind of dismissal.
In the
light of all the above I conclude that there is a distinction between
a dismissal for a reason based on operational requirements
and a
dismissal the purpose of which is to compel an employee or employees
to accept a demand in respect of a matter of mutual interest
between
employer and employee. The distinction relates to whether the
dismissal is effected in order to compel the employees to agree
to
the employer’s demand which would result in the dismissal being
withdrawn and the employees being retained if they accept the
demand
or whether it is effected finally so that, in a case such as this
one, the employer may replace the employees permanently
with
employees who are prepared to work under the terms and conditions
that meet the employer’s requirements. An ordinary retrenchment,
where the employees who are being retrenched will not be replaced,
is, of course, also a dismissal for operational requirements.
[32] The
case which the respondents sought to make in their founding affidavit
was simply that the dismissal of the second and further
respondents
was going to be contrary to the provisions of sec 187(1)(c) because
it was going to be effected in order to compel the
employees to agree
to the appellant’s proposals. That was the only ground relied upon
for the contention that the dismissals were
going to be unfair and
unlawful. There was an attempt by Counsel for the respondents, in his
heads of argument and in oral argument,
to argue that the appellant
could not dismiss for operational requirements when this was done for
the purpose of making more profit
as opposed to where it was resorted
to in order to ensure the survival of the business or undertaking. It
seems to me that this argument
was inspired by the article:-
“Bargaining,
Business Restructuring and the Operational Requirements Dismissal”
by Thompson
which
appears in
(1999)
20 ILJ 755
where the author discusses the distinction between, and, the
reconciliability of, on the one hand, the provision of sec
188(1)(a)(ii)
and, on the other, the provision of sec 187 (1)(c).
[33] There
are two answers to the argument. The one is simply that no such case
was foreshadowed in the respondents’ founding affidavit
and,
therefore, it is not open to the respondents to argue such a case.
The second is that, even if it was open to the respondents
to argue
such a case, that argument has no statutory basis in our law. This is
so because all that the Act refers to, and, recognises,
in this
regard is an employer’s right to dismiss for a reason based on its
operational requirements without making any distinction
between
operational requirements in the context of a business the survival of
which is under threat and a business which is making
profit and wants
to make more profit. Neither Thompson in his article nor Counsel in
his argument has pointed to any provision in
the Act that can be
relied upon to make this distinction. Accordingly, I would have
rejected the contention in any event.
[34] It
was also argued on behalf of the respondents that, since, on the
respondents’ argument, the appellant was not entitled to
dismiss
the second and further respondents for operational requirements in
this case, it was obliged to resort to a lock - out. This
argument is
also without substance. Firstly, the recourse to a lock - out that
sec 64 of the Act makes provision for is not an obligation
but it is
a recourse which an employer is free to resort to when faced with
circumstances in which the Act permits the institution
of a lock -
out. Secondly, the argument proceeds on the assumption that, in
dismissing the employees, the appellant was seeking to
compel them to
accept the proposed changes. This does not follow. I turn to
consider the question whether or not the appellant’s
proposed
dismissal of the second and further respondents was sought to be
effected in order to compel them to agree to the appellant’s
proposed changes.
[35] The
respondents’ case, as sought to be made out in the founding
affidavit, was contained in par 45 of the founding affidavit.
Par 45
reads:-
“
I
have been advised and respectfully submit that the proposed
dismissals would be unfair and unlawful. The [appellant] is proposing
to dismiss the second and further [respondents]
as
a result of their
failure to agree to changes to their terms and conditions of
employment. It is submitted that this action of the [appellant]
constitutes
a step to compel a demand and, if implemented such
dismissal would be an automatically unfair dismissal in terms of
section 187(1)(c)
of the Act”.
That
is the only paragraph in the founding affidavit in which the
respondents stated what the basis was for their challenge of their
proposed dismissals. It also needs to be pointed out that the
respondents did not either in par 45 or anywhere else in the founding
affidavit allege that, in dismissing the second and further
respondents, the appellant sought to compel them to agree to the
changes
it was proposing. Instead, the respondents allege in the
second sentence of par 45 that the appellant was proposing to dismiss
the
second and further respondents
“as
a result of their failure to agree to changes to their terms and
conditions of employment”
.
That is not the same as to allege, as the respondents should have
alleged if they sought to base their case on sec 187(1)(c), that
the
appellant sought to effect the dismissals in order to compel them to
agree to its proposals. This notwithstanding, I propose
to deal with
the matter on the basis that the case the respondents sought to make
out was that the dismissals were effected in order
to compel them to
agree to the proposals made by the appellant. I do this because it is
clear from par 4 of the appellant’s answering
affidavit that this
is how it understood the respondents’ case and has sought to deal
with it on that basis.
[36] The
respondents did not in their founding affidavit substantiate the
submission made by them in the third sentence of par 45
that the
dismissal constituted
“a
step to compel a demand, and, if unimplemented, such dismissals would
be automatically unfair in terms of section 187(1)(c)”.
In par 79.3 of its answering affidavit, the appellant categorically
denied the allegation that the dismissals constituted a step
to
compel a demand. It stated that the dismissal was the consequence of
the changes to the appellant’s business necessitated by
economic,
health and environmental factors and the second and further
respondents’ refusal to adapt to, and accept, continued employment
on conditions adopted to these changes. This created a material
dispute of fact. In regard to this aspect of the matter the Court
a
quo concluded that the
“most
probable reason for the proposed dismissals was to compel the [second
and further respondents] to accept the [appellant’s]
demand for a
new shift system.”
In reaching this conclusion the Court a quo did not at any stage
refer to the fact that the appellant had denied the allegation that
the proposed dismissal constituted a step to compel the second and
further respondents to accept the changes.
[37] The
Court a quo also did not refer to or apply the approach that is
applicable whenever a dispute of fact has arisen in affidavits
in
motion court proceedings when final relief is sought and no request
has been made for the matter to be referred to oral evidence.
The
applicable approach is, of course, to be found in
Plascon
- Evans Paints v Van Riebeeck Paints 1984(3)SA 623(A) at 634H-635C
.
That approach is to the effect that in such a case the Court makes
its decision, in so far as any dispute of fact is concerned,
on the
basis of the version of the respondent party unless that version is
so far-fetched or clearly untennable that the Court is
justified in
rejecting it merely on the papers or the denial by the respondent of
a fact alleged by the applicant is such as not
to create a real or
genuine or bona fide dispute of fact. In a case where the respondent
party’s version is so far fetched or so
untennable that the Court
is justified in rejecting it merely on the papers or where the denial
by the respondent of a fact alleged,
bythe applicant is not such as
to create a real or bona fide dispute of fact, the court must include
the fact alleged by the applicant
among the facts it takes into
account in deciding whether or not to grant the final relief. Of
course, the other facts that the Court
will take into account are
those that are alleged by the applicant and admitted by the
respondent (or which the respondent cannot
deny) as well as those
facts which are alleged by the respondent.
[38] It
was, no doubt, with the Plascon - Evans approach in mind that Mr
Tiedeman, who appeared for the appellant, submitted that,
as there
was a material dispute of fact on whether the dismissal was a step to
compel the second and further respondent’s to agree
tot he
appellant’s proposed changes, the Court a quo should have based its
decision on the appellant’s version as the appellant
was the
respondent in the Court a quo and that in failing to do so it
committed an error. I agree with this submission.
[39] In
this matter the present appellant’s denial was not so far fetched
nor clearly untennable that the Court was justified in
rejecting it
merely on the papers as contemplated by the exception to the general
rule as set out in Plascon - Evans nor was the
denial such as to
raise a real, genuine or bona fide dispute of fact. In fact in par
79.3 of its answering affidavit in the Court
a quo the appellant had
substantiated its denial of the allegation. That being the case it
was not open to the Court a quo to base
its decision on the version
of the applicants in the Court a quo. It should have based its
decision on the version of the respondent
in the Court a quo. This
would have resulted in the Court a quo proceeding on the basis that
the dismissals did not constitute a
step to compel the employees to
agree to the proposed changes. On that approach the Court a quo would
no doubt have dismissed the
application.
[40] In
a recent judgement that is not reported as yet, namely,
Molapo
Technology (Pty) Ltd v Schreunder and Others, case no CA5/01
handed down on the 8
th
August 2002, this Court found that the judge dealing with the matter
in the Labour Court had failed to apply the Plascon Evans approach
to
disputes of fact in deciding that matter. I think it is necessary to
emphasise that the approach is applicable to motion proceedings
in
the Labour Court as well and should be applied.
[41] In
any event there are a number of areas both in the affidavits as well
as in the correspondence exchanged between the parties
prior to the
litigation that support the appellant’s contention that the
dismissals were not sought to be effected in order to
compel the
second and further respondents to accept the proposed changes but
were sought to be effected because the second and further
respondents’ contracts of employment were no longer suitable for
the appellant’s operational requirements or because the second
and
further respondents were not prepared to accept the proposed changes.
Par 5.1 of the appellant’s letter of the 22
nd
September said that those employees who did not accept the proposed
changes
“may
be retrenched”
.
It did not say that in dismissing the employees the appellant would
be seeking to compel them to accept the proposed changes. On
the
contrary par 6.2 of that letter made it clear that the appellant did
not contemplate that the employees who got dismissed would
have any
future in the company. There the appellant stated that
“any
affected employee who does not wish to accept the changes and who has
the opportunity to obtain alternative employment may
request time off
to attend job interviews. If reasonably possible permission will be
granted for this”
.
In par 6.3 of the same letter the appellant promised to consult with
the employees or their representatives regarding any assistance
which
employees could require in the event of a retrenchment. In par 6.4
the appellant stated that the employees who got retrenched
would not
be paid severance pay because, as far as the appellant was concerned,
their acceptance of the proposed changes would have
been a reasonable
alternative to retrenchment.
[42]
In its letters distributed to employees on the 3
rd
October, the appellant, after explaining in the first paragraph that
it had been told by the union that the employees including the
addressees were not prepared to accept the proposed changes,
specifically stated in the second paragraph that the addressee was
being
notified that
“your employment with the [appellant] was to be terminated for
reason (sic) of its operational requirements”
.
It then told the addressee in the next sentence that his last shift
would be on Friday 13 October 2000. Just below that the appellant
once again stated that permission would be granted for time off to
attend job interviews should that be required by the addressee.
It
said also that all monies due to the addressee including leave pay
and bonus would be paid on the addressee’s last day.
[43] Although
in par 4 of the appellant’s letter of the 3
rd
October the appellant said that the addressee would not be dismissed
if he reconsidered his position and was prepared to accept the
proposed changes and signed a document therein enclosed, that does
not assist the respondents because the date by which the envelope
enclosing the acceptance of the proposed changes had to be submitted,
namely the 9
th
October, in order for the addressee not to be retrenched was before
the proposed date of dismissal. In other words what this meant
was
not that, if the acceptance of the proposed changes was conveyed
after the dismissal had taken effect, the dismissal would be
withdrawn but that, if the acceptance was conveyed before the
dismissal could take effect, the dismissal would not be effected. In
fact in the next sentence the appellant made it even clearer that the
dismissal was not effected for the purpose of compelling the
employees to accept the proposed changes because it stated that
“(a)fter
that date, even if you accept to work in terms of the required
working hours, the [appellant] does not guarantee that you
will be
retained”
.
This is not the language of an employer who plans to effect the
dismissal in order to compel the employees to accept the proposed
changes so that it can withdraw the dismissal and have the employees
back in its employ. It is the language of an employer who is
not
basing its plans on having those employees in its employ.
[44] In
par 3 of the document that the appellant delivered to the union as
its response to the union’s reasons for rejecting the
proposed two
shift system, the appellant also stated that it had decided to
retrench the employees who were not prepared to work
the two shift
system and they would be paid up to and including Friday 20 October.
It did not say anything along the lines that if,
subsequent to their
dismissals, the employees accepted the proposed changes, their
dismissal would be withdrawn.
[45] In
its notice of the 18
th
October 2000 to the employees who were being retrenched, the
appellant made a statement in the second paragraph that it did not
want
to retrench the addressee and would retain him in its employ
provided he agreed to work the shift system. That statement seems to
be in conflict with the one that the appellant had made that has been
referred to earlier to the effect that, after the 9
th
October, even if an employee accepted the proposed changes, there was
no guarantee that he would be retained. However, that statement
must
be understood on the basis that it does not say that, even if the
acceptance was conveyed after the 20
th
October, which was the date on which at that stage the dismissals
were intended to be effected, the employees would be retained.
It is
reasonable, in the light of all the other statements, to infer that
this statement related to an acceptance that was conveyed
before the
dismissals could be effected. In any event the statement must not be
read in isolation. It must be read in the light of
all the contents
of that letter and the other correspondence. In the first paragraph
of that letter the appellant stated that
“(b)ecause
you have rejected the new two shift system operationally required by
the [appellant], you have been given notice of your
retrenchment and
your employment will terminate on 20 October 2000"
.
That was as final as any dismissal could be. In the last paragraph of
the letter or notice dated the 18
th
October 2000 the appellant told each affected employee:
“If
you have decided not to accept the shift system, then we confirm that
your services will no longer be required and that you
will be paid
until Friday 20 October 2000. You will be paid your usual wages on
that day and, as soon as possible next week, your
outstanding pay
together with pro rata bonus and leave pay will be paid directly into
your account
”.That
indicates quite clearly that the dismissal that the appellant was
going to effect was going to be final and was not meant
to compel the
second and further respondents to accept the proposed changes so as
to then continue to employ them or so as to have
the dismissals
withdrawn upon acceptance by the employees of the proposed changes.
[46] In
the light of all of the above the appeal must succeed. There is no
warrant for costs not to follow the result. Indeed, both
Counsel
submitted that costs should follow the result.
[47] In
the premises I make the following order:-
The
appeal is upheld.
The
respondents are ordered to pay the appellant’s costs of the
appeal jointly and severally, the one paying the others to
be
absolved.
The
order of the Court a quo is hereby set aside and replaced with the
following one:-
“
(a) the
application is dismissed.
The
applicants are ordered to pay the respondent’s costs jointly
and severally, the one paying the others to be absolved”.
_____________
ZONDO
JP
I
agree.
_____________
___
NICHOLSON
JA
I
agree.
______________
HLOPHE
AJA
Appearance:
For
Appellant: Adv T.C. Tiedeman SC
Instructed
by: Webber Wentzel Bowens
For
Respondent: Adv K.S. Tip SC with Adv R Lagrange
Instructed
by: Cheadle Thompson & Haysom
Date of
Judgement: 6 December 2002