IN THE LABOUR APPEAL COURT OF SOUTH AFRICA
HELD IN JOHANNESBURG
Case No: JA31/2002
In the matter between
Chemical Workers Industrial Union 1st Appellant
Sangiveni and others 2nd and Further appellants
And
Latex Surgical Products (Pty)Ltd Respondent
__________________________________________________________
JUDGMENT
ZONDO JP
Introduction
[1] The first appellant is the Chemical Workers Industrial Union (“ the
union”) which is a registered trade union. The second and further
appellants (“the individual appellants”) are members of the union
and former employees of the respondent. The respondent is a
registered company. It dismissed the individual appellants from its
employ on the 16 th February 1999. After it had dismissed them, a
dispute arose between the appellants and the respondent about the
fairness of the dismissal. In due course that dispute was referred to,
and, adjudicated by, the Labour Court. Through Jammy AJ, the
Labour Court found that there was a fair reason for the dismissal
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and that such dismissal was preceded by a fair procedure. It,
accordingly, dismissed the appellants’ claim with costs. It later
granted the appellants leave to appeal against the whole of its
judgment. This, then, is the appeal against that judgment and order
of the Labour Court. Before the appeal can be considered, it is
necessary to set out the factual background to the matter.
The facts
[2] The respondent manufactures and distributes condoms, surgical
and examination gloves and medicinal orientated glove substances.
It employed a number of employees including the individual
appellants. The union had the majority of the respondent’s
employees as its members.
[3] On the 18 th June 1998 the respondent sent a letter to the union. It
was written by Ms Desiree Pule, the general manager of the
respondent. Six of the points made in that letter require to be
emphasised. The first is that the purpose of the letter was to give
the union a notice in terms of sec 189(1) of the Labour Relations
Act, 1995 (Act 66 of 1995)(“the Act”) and to invite it for
consultations required by that Act. The second is that the
respondent stated that, in order to sustain itself, it had to consider
restructuring and downsizing which it said could lead to the
dismissal of a number employees at all levels. The third is that the
respondent said that it was “in a vulnerable position” due to:
a) the considerable turmoil in the financial
markets and foreign currencies resulting in
a substantial depreciation of the Rand and
2
increased interest rates;
b) the potential loss of important contracts;
pressure on its pricing levels, and,
c) exposure to a substantial liability with the
Southern Metropolitan Council.
[4] The fourth is that the respondent estimated the number of
employees who could be affected by the exercise at 33 full-time
employees at all levels of the company. The fifth is that the
selection criteria that the respondent proposed for the selection of
the employees to be dismissed were:
a) key skills required;
length of service;
performance record;
disciplinary record;
education requirement; and,
b) experience.
The sixth is that the respondent proposed to give preference to the
employees selected for dismissal should it have to employ
employees within 12 months after their dismissal but said that such
re-employment would depend on each employee’s suitability, skills
and previous performance records.
[5] Between the date of that letter and the 16th February 1999 a
number of meetings were held between the respondent and the
union. Those meetings were meant for the two parties to discuss
various issues arising out of the letter of the 18 th June or out of
subsequent developments. The meetings were held on 1 July, 19
August, 4, 10 and 14 December 1998, 4, 8, 13 and 19 January
1999. It is not necessary to set out what was discussed in each
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meeting. It suffices to state that not much progress, if any, had been
made by the end of 1998. A certain amount of time was not used
productively because the parties were arguing about whether they
should discuss issues relating to wage negotiations which the union
had initiated by way of a letter of the 6 th June 1998 or whether
they should discuss matters relating to consultation on the
respondent’s proposals relating to restructuring and downsizing.
[6] According to the minutes of the meeting of the 1 st July 1998 the
respondent advanced the following as the reasons why the
respondent had to consider the course of action that it was
considering:
. depreciation in currency;
. rise in interest rates;
. increased competition;
. loss of tender contracts, and,
. pricing levels.
According to those minutes, the union stated at the meeting that:
. the respondent was not the only company in the
position in which it was;
. as selection criteria, it preferred LIFO but there could be instances
where length of service would not be so important;
. there was emphasis placed on the retention of skills;
. it would like the respondent to “look at the contract workers”;
and,
. it would “consult about” the night shift contract workers working
in the condom section.
[7] In a letter dated 7 July 1998 addressed by Ms Pule to the union she
stated, among other things, that at that stage the respondent
employed 230 employees of which 28 were contract employees
who were with an outside contractor as well as 12 employees who
4
were weekly paid who had initially been taken as casual employees
but had subsequently been employed on a permanent basis. From
these figures it is clear that a total of 230 plus 12 employees were
employed on a permanent basis. That makes a total of 242.
[8] Ms Pule went on to say in the letter that from the exercise that the
management had conducted, it was estimated that the respondent
would require 169 full-time positions excluding the 12 employees
who were employed on night shift in the condoms section at the
time. This means that inclusive of these 12 employees, the
respondent would require 181 employees for the future. Ms Pule
also pointed out that the management foresaw a need for additional
two positions which required specific skills and experience relating
to production and quality control in the latex/rubber fields. She
indicated in the letter that the management was considering the
possibility of reducing the workforce by thirty three employees or
less depending on the replacement of the contract night shift. She
expressed the hope that the union would give the respondent’s
proposals careful consideration. It would seem that the union’s
attitude to all this was that it would not participate in the proposed
consultation unless the management first commenced wage
negotiations with it.
[9] By way of a letter dated the 28th August 1998 the respondent
addressed a letter to the union accusing it of linking the issue of wage
negotiations with that of consultations that the respondent sought to have
with the union in regard to restructuring. The respondent further stated
that the union had indicated that it would not participate in the
consultation process unless wage negotiations were commenced
forthwith.
[10] The respondent also wrote in the letter that, although it believed
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that the consultation should precede wage negotiations because its
outcome could impact on the wage negotiations, it recorded that it
had agreed, as a matter of compromise, to commence with wage
negotiations on condition that the union gave an undertaking that it,
too, would participate meaningfully in the consultation process
relating to the restructuring. In this regard the respondent proposed
certain dates for a consultation meeting. The dates were 1
September 1998 at 14h00, 2 September 1998 at 08h00 and 3
September 1998 at 14h00. The respondent asked the union to
choose from these dates a date for the consultation. The respondent
stated that, if it did not hear from the union with regard to any of
these dates, it would commence with the consultations even if the
union did not attend. However, it urged the union to attend the
consultation.
[11] It is not clear whether any consultation meeting took place on any
of the dates that the respondent had proposed. However, it would
seem that on the 25th September 1998 a meeting was held between
the respondent and the union. This appears from a memorandum
bearing that date which the respondent addressed to “ all staff” and
copied to the union. The respondent’s management sought to
record in the memorandum what had transpired in such meeting. In
the paragraphs numbered 4 and 5 in that memorandum the
respondent’s management is recorded as having told the union that
the “company was in this predicament ” for a number of reasons.
It gave the following as the reasons:.
“4.1 the reject rates were far too high and Company
could ill-afford the wastage in production.
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4.2 Productivity levels were not good enough in certain
areas in production.
4.3 The Company had lost some important contracts to both
international and local suppliers who were offering more competitive
prices than LSP.
4.4 The core business being surgical gloves was losing
the largest amount of money.”
The respondent also warned in that memorandum that “ so long as
a careless attitude prevailed, that standard operating
procedures and quality standards were ignored, the situation
would not improve” . The respondent’s management also placed
on record that this attitude was to be found at all levels of
employees and not simply at shop floor level.
[12] It was also recorded in the memorandum that the union
acknowledged the problem of rejects but stated that it was not just
the workers but also the supervisors who were responsible for
rejects. The union also suggested to the respondent that it (i.e. the
respondent) consider “ getting outside assistance to help find a
solution to the problem.” The respondent responded by saying
that it was at that stage in discussion with certain consultants to
help it.
[13] On the 16th November 1998 the union’s members began a
protected strike in support of their demands for a wage increase
and other terms and conditions of employment. That strike
continued until early in January 1999. On the 4th December 1998 a
meeting was held between the respondent and the union. Nothing
of any significance emerged from that meeting.
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[14] On the 7th December 1998 the respondent addressed a letter to the
union on consultations. In the letter the respondent stated that its
circumstances were at that stage such that it seemed “ an extreme
possibility that an operational restructuring with the company
needs to be seriously considered.” The respondent went on to say
that it wished to consult with the union on certain proposals. Those
proposals were set out in the second and third pages of that letter. It
is convenient to quote them in full. They read thus:
“1. With regard to examination gloves, this business will be
acquired by another entity as firstly, we are not in a position to
upgrade our line in terms of technology and secondly, we are
unable to improve the quality of gloves that are being
manufactured. Any party that acquires this operation of our
business would inevitably be required to invest time, effort and
money in upgrading the product and implementing modernised
technological facilities. This would necessitate the termination
of all forms of contracts of independent contractors and indeed,
the possible retrenchment of approximately 5 of your members.
2. Surgical gloves: Having regard
to the fact that sales have
decreased since August 1998 by
approximately 300 000 pairs per
month, steps must be taken to
rationalise the staff complement
in this department. To this end,
approximately 32 of your
members employed in
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production, testing and packing
might be dismissed due to our
operational requirements.
3. Certain other positions that may
impact [on] your membership
include quality control, cleaning
and maintenance where
approximately 12 will be
affected.
4. In addition, we wish to outsource
our stock control, distribution
and aspects of our
administration to a third party
who has indicated that it will do
so at a nominal charge and, in
addition, will utilize resources
and personnel which are
currently surplus to its
requirements. Approximately 7
of your members may be
affected.”
The respondent then asked for a meeting with the union for the
10th December 1998. In terms of those proposals the selection
criteria that the respondent would use were the “ last in first out,
save and except to the extent that an individual has special
9
skills, qualifications and an appropriate work record.”
[15] On the 10th December 1998 a meeting was held between the union
and the respondent. According to Ms Pule’s evidence at the trial
and her letter of the 11 th December 1998 addressed to the union,
the union indicated to the respondent’s management at this meeting
that, until the wage negotiations, in respect of which the union
members were still on strike, were finalised, the union would not
be attending any consultations. In the letter of the 11 th December
1998 Ms Pule wrote among other things: “ We urge you for the
sake of your members to attend the consultations and for this
purpose you are given a final opportunity – a consultation has
accordingly been arranged for Monday 14 th December 1998 at
12h00”. Ms Pule concluded that letter thus: “ This consultation
will take place at our premises and should you elect not to
attend or to meaningfully participate we shall have no
alternative but to take decisions in your absence.” The meeting
scheduled for the 14 th December went ahead with the union in
attendance. However, not much progress was made. Another
meeting was then scheduled for the 4th January 1999.
[16] At the meeting of the 4 th January 1999 one of the points that the
union made was in effect that the respondent should dismiss casual
employees before there could be a proper consultation. The
respondent’s response to this was that, while the strike was going
on, it could not dismiss casual employees because the respondent
10
had to continue running its business. The respondent urged the
union to make proposals to avoid possible retrenchments. The
union appealed to the respondent to call off the retrenchment and to
work jointly with it to address the problem. The union said that, if
the respondent worked together with it, the rate of rejects could be
reduced and productivity could be doubled. The respondent also
made the point that it had proposed the working of a continental
shift which it had believed would have avoided the retrenchment
but pointed out that the union had rejected the proposal. It would
appear also that the union proposed that, in order to avoid the
retrenchment, the workers share the work. It is not clear whether or
not the respondent responded to this proposal at this meeting.
[17] A further meeting was held on the 8 th January 1999 between the
union and the respondent. The minutes of this meeting suggest that
the union emphasised that it was not convinced that the respondent
had to retrench. The union apparently said that, if the respondent
was adamant about retrenching, the workers would rather share the
work. The union said that it would need to have a list of the
workers to be affected and a list of all the employees. The union
also stated that it wanted to know what was going to happen to
“scabs”. It said that the “scabs” should be the first to go. The union
also pointed out that all temporary workers and casual workers
should be dismissed first if the consultation process was to be fair.
The respondent emphasised that it was continuing to make losses
and it could not continue making losses. It said that it had given the
union financial statements. It challenged the union to investigate
“the authenticity ” thereof. The respondent also stated that, as it
needed to continue with its business during the strike, it could not
11
do away with casual employees.
[18] The respondent’s management also pointed out that the respondent
was looking at various options to deal with the situation in which it
found itself. It said that one option would be automation. In this
regard it stated that it was competing with companies which used
advanced technology. The management also told the union that
they had been approached by prospective buyers of the company.
The management also said that a prospective buyer had indicated
that he would employ a consultant to investigate the prospect of
taking over the company. It was stated that the prospective buyer
wanted to do an evaluation of personnel. The management stated
that this would be done on the basis of operational requirements.
The management further said that there would be no logic in
someone investing in a non-profitable company. The management
invited the union to get involved in the evaluation exercise.
[19] On the 9 th January 1999 the respondent addressed a letter to the
union as a follow-up to the meeting of the previous day. In the first
paragraph of the letter the respondent pointed out that the union
had been told that the “ potential acquiring party ” had indicated
that it was of the view that prima facie certain of the operations
needed to be curtailed significantly and that the management would
need to attend to such exercise prior to such party acquiring the
business.
[20] Ms Pule, the author of the letter, pointed out in the letter that, in
order to give the management and the “potential acquiring party”
the opportunity “to assess each individual’s skills, acumen,
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technical and other expertise and general attitude to work,” the
respondent had arranged for an independent assessment to take
place under the auspices of an entity called Ten Napel
Management Consultants CC (“TNMC”). The purpose of the
assessment was to determine which employees would be most
suitable for the respondent’s operations in order to make any future
selection criteria for retrenchment fair and objective. She went on
to say that the union was invited to participate in the assessment in
order to ensure that the interests of its members were taken care of.
[21] Ms Pule also made the point in the letter that the union had stated
in the meeting the previous day that, as long as the strike was going
on, there would be no possibility of securing the attendance of
members of the union at such evaluation. She urged the union to
ensure that it and its members took part in the exercise. She stated
that, if the union members chose not to attend the evaluation, the
respondent would assume that they had no interest in pursuing
alternative employment with the prospective acquiring party and
that, accordingly, they would be “deleted from the exercise.”
[22] A further meeting was held on the 13 th January 1999 between the
respondent and the union. One of the points made by the
management at this meeting was that to bring the respondent’s
business to a break-even point, it had to “ downsize the labour
force”. In this regard the observation was made that the respondent
had previously looked at selling 800 000 pairs of surgeon’s gloves
per month but this figure had since come down to 600 00 per
month. The management made the point that the respondent
needed to be restructured and an investor needed to be brought in.
13
The meeting ended without any agreement. According to the
evidence given by Ms Pule, the management felt very positive that
an agreement would be reached at the next meeting.
[23] On the 18th January 1999 Ms Pule addressed a notice to all
employees. In the notice Ms Pule advised the employees of the
evaluation process that was going to be conducted by TNMC. She
said that as part of that exercise each employee needed to be
evaluated. She also wrote that the evaluation process would allow
each person to be objectively assessed against certain criteria in
regard to his/her job function. She announced that over the next
few days the management would be calling each one of the
employees individually to participate in an interview where he/she
would be asked certain questions relating to the particular job
function.
[24] Ms Pule also wrote another letter to the union on the 18 th January
1999 advising it that the evaluations would commence on the 19 th
January. She once again invited the union to safeguard the interests
of its members by participating in the evaluation process. The
union responded to that letter on the same day. It adopted the
attitude that it was “ materially substantively impossible for any
assessor to make an assessment of inter alia, skills,
performance/productivity of each employee without a concrete
observance of work in motion.” The union further wrote:
“Taking into account that the majority of employees are on
strike such an evaluation would be devoid of any scientific and
concrete basis.” It also wrote that even to evaluate those that were
14
not on strike would be impractical because such an exercise
required “the workforce as a collective unit. ” It stated that it was
willing to participate in discussions on restructuring but maintained
that restructuring could only be addressed meaningfully once the
strike had come to an end.
[25] In another letter of the 18 th January 1999 to the union Ms Pule
advised the union that the assessment would be conducted on the
basis of the following criteria for each job function:.
“1. qualification level
2. Special skills
performance record/discipline and absenteeism
years of service
multi-skilled
Willingness/motivation levels
3. An interview and should it be required on the job
evaluation.”
Ms Pule expressed the view that such criteria were “ the most fair
and objective under which the exercise [could] be conducted
and the selection criteria ultimately be determined.”
[26] A meeting took place on the morning of the 19 th January 1999
between the union, the management and representatives of TNMC
to discuss the evaluation exercise which was about to begin. At the
meeting the union criticised the management on the way it had
handled the issue of the evaluation exercise. The union also stated
that the management should have involved it in the choice of the
people who would conduct the evaluation. It said that it was not
prepared to participate in the evaluation as then envisaged to be
15
conducted. The respondent said that the union would be accorded
an observer status in the evaluation process. The union was
unhappy with such a role. In a letter of the same day to Ms Pule the
union placed on record its rejection of the management’s proposals
by the management in regard to the evaluation process. The
management responded by a letter of the same day. It stated,
among other things, that, although the union was going to be
accorded an observer status, it was going to be allowed to make a
meaningful contribution and to represent its members.
[27] The evaluation exercise took place over a number of days from the
19th January 1999. A panel interviewed certain employees. Mr Ten
Napel, the owner of TNMC, who led the TNMC team, was not part
of the panel that interviewed the employees. He gave evidence at
the trial but his evidence could, obviously, not cover what occurred
during the interviews of the employees. No member of the
interviewing panel gave evidence. The evaluation of the employees
was conducted on the basis that an employee was awarded marks
under the various criteria referred to above, namely, qualifications,
special skills, performance or disciplinary records, years of service,
willingness and interview and, if need be, on the job evaluation.
The total mark was then divided among the various criteria by way
of giving a total mark for each criterion. In the documentation the
relevant table was reflected thus:
Evaluation criteria used
__________________________________________________________
criteria order of importance %
16
__________________________________________________________
qualification 1 20
Special skills 2 20
Performance record,
Discipline and absenteeism 3 15
Years of service 4 15
Multi-skilling 5 10
Willingness 6 10
Interview 7 10
Employees who participated in the evaluation exercise were
required to answer certain specific questions that had been
prepared. Some of the questions were:
1. How do you see your path at LSP (i.e. respondent)?
Where do your instructions come from Production or Maintenance?
Do you get enough training to do the job?
Would you like your children to work at LSP (i.e. respondent)?
How do you feel when you are required to work overtime and/or shifts?
How do you like your job at LSP (i.e. respondent)?
How do you see your career path within LSP (i.e. respondent)?
Another question that was not included in the above was: “ Will
you allow your children to work at LSP? Why?”
[28] Ms Pule testified that the respondent’s management left the
question of how much rating was given to an employee in respect
of the various criteria during the evaluation to Mr Ten Napel’s
team. Accordingly, Ms Pule could not testify as to the rating, if
any, that may have been given to the individual appellants. Mr Ten
Napel testified about the evaluation but his evidence went as far as
what the recommendations were which he and his team made to the
17
respondent’s management. He had no knowledge as to whether
they were implemented.
[29] It is necessary at this stage to record that Mr Mahlawunyane, who
was the human resources manager of the respondent, conceded
under cross-examination that there was logic in the proposition that
the use of disciplinary records as well as performance records of an
employee as part of selection criteria was problematic. He further
conceded under cross-examination that reliance on education as
part of the selection criteria could only be done if education was
relevant to the job. In this regard it can also be said that under
cross-examination Mr Ten Napel was presented with a scenario
which showed that the manner in which his team conducted the
evaluation of employees using the selection criteria they used was
such that the respondent’s objective of retaining employees who
had certain skills which the respondent needed could be
undermined if not defeated. The scenario was that of an employee
who did not possess skills of any significance needed by the
respondent but who happened to have had a clean disciplinary
record. It was suggested that such employee could have easily been
retained and an excellent employee with important skills required
by the respondent but who happened to have had some bad
disciplinary record could have been selected for dismissal. Mr Ten
Napel conceded this. The effect hereof is that the selection criteria
that were used did not guarantee the respondent employees who
possessed skills that it required in order for it to be a world player
and to compete effectively both locally and internationally.
[30] Mr Ten Napel also conceded in his evidence-in-chief that seven of
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the questions that employees were required to answer in the
evaluation exercise had an element of subjectivity. By way of
example he referred to the question that required the employee to
state whether he or she liked working alone. His only basis to
justify that element of subjectivity was: “I think the panel which
we established there were mature enough to evaluate that.” He
also conceded that the scoring system had a subjective element. As
an example he referred to the question that asked the employee
how he liked to work on his own.
[31] During the trial the appellants made an application to amend their
statement of claim to the effect that, soon after the dismissal of the
individual appellants, the respondent employed a number of
contract employees. Initially the respondent gave notice that it
would oppose that application. However, later the respondent
withdrew its opposition to the application and the amendment was
granted by the Court a quo and effected. The respondent does not
appear to have amended its response to the statement of claim so as
to either deny that allegation or confess and avoid. However,
during Ms Pule’s evidence-in-chief she was asked whether the
allegation that, subsequent to the individual appellants’ dismissal,
the respondent employed “ temporary employees, contract
workers or casual workers” was true. She admitted that this was
true but added that, even before the dismissal of the second and
further appellants, the respondent had employed contract and
casual workers.
[32] Ms Pule testified that at a meeting that was held at the Commission
for Conciliation Mediation and Arbitration (“ the CCMA”) on the
19
10th November 1998 the respondent’s management had made a
proposal to the union which would have made it unnecessary for
the respondent to proceed with the retrenchment. The proposal was
for the union to agree that the workers work what was referred to
as a continental shift. It is not clear exactly what such a shift
entailed. However, Ms Pule and Mr Mhlautshane testified that the
union was informed that, if it did not accept the proposal by a
certain date, such proposal would fall away. They also both
testified that the union did not accept the proposal within the
period. This evidence was not contradicted.
[33] Ms Pule testified that by the 4 th December the continental shift
proposal would no longer have been viable. She was asked under
cross-examination why that proposal would have been viable on
the 10th November but had lost its viability by the 4 th December.
Ms Pule’s explanation for this was that she had realised in the
meantime that it would address only one aspect of the respondent’s
problem and not the whole problem. The appellant’s Counsel
seems to have accepted this explanation because he did not
challenge it nor did he put to Ms Pule any suggestion either that the
union had accepted the proposal or had a justification for not going
back to the respondent within the time that had been stipulated.
[34] Ms Pule testified that the evaluation report that was submitted to
the respondent’s management by TNMC was used by the
management to select the employees that were retrenched. She said
that each employee had been given a rating in the report and the
employees with the least rating were the ones who were selected
20
for retrenchment. In this regard Ms Pule testified that, in so far as
TNMC would have wanted to know how the employees had
performed their work, the management had kept records of what
the employees had tested or packed. Counsel for the appellants also
seemed to accept this.
[35] What Counsel for the appellants did not accept and, indeed,
challenged Ms Pule on, was the relevance of the criterion of
education in addition to that of skills. The implication of this
challenge was that, if an employee had skills that the respondent
needed, that should be enough and it should not matter whether in
addition to that the employee had some academic or educational
certificate, diploma or degree which could well have no relevance
to the business or operations of the respondent. In this regard
Counsel for the appellant asked Ms Pule how the respondent would
apply the selection criteria if they had to choose between an
employee who was an excellent worker but had a bad disciplinary
record and one who had a good disciplinary record but was not a
good worker. In this regard I think Counsel for the appellants had
in mind that both employees had the same years of service. Ms
Pule did not answer this question. It seems that she avoided it. It is
not clear whether that was deliberate or whether, in the course of
giving the evidence purporting to answer this question, she forgot
what the question was. It is stated elsewhere in this judgment that
Mr Ten Napel conceded under cross-examination that the way that
his team went about the evaluation exercise and the selection
criteria that they used could easily produce the result that in such a
case the bad employee with a good disciplinary record was retained
and the skilled worker with a bad disciplinary record was selected
21
for dismissal.
[36] Mr Ten Napel was asked how his organisation came to be asked to
do the evaluation that it did in the respondent. He testified that the
respondent asked his organisation to give it a quotation to assist it
to get its products to the right level because it wanted to become a
world player in terms of its products. He testified further that, after
his organisation had begun to work with the respondent, it
discovered that the respondent had a very high reject rate on its
products, lacked training, had no understanding of the international
standards and did not always conform to even the South African
standards. He said: “ Due to that our services were engaged to
assist them to get their products and their level of people to the
skills required to conform to these strict requirements.”
[37] Mr Ten Napel testified that the reject rate was in excess of 20% of
the respondent’s products. He said that he found that the main
problem was “ lack of understanding, ability to be trained in
terms of getting to the standard which was required, not only
on the shop floor level but also on middle management level as
well where a lot of emphasis had to be put into the company if
the company really wanted to survive.” Mr Ten Napel referred to
companies which competed with the respondent whose products
came from India and Malaysia which he said were of a very high
quality and yet were sold at very low prices. He said that, if the
problem was not addressed, with a 20% reject rate the respondent
would not survive.
[38] Mr Ten Napel also testified about how his organisation went about
22
the evaluation process. He said that his organisation examined the
specific job functions from top to bottom, looked at the number of
employees employed by the respondent, defined the requirement
for each job function and defined the people resource plan based on
the market requirements. Mr Ten Napel pointed out that his
organisation also defined what the respondent’s needs were in
terms of human resources. He said that his organisation defined the
selection criteria and compliance for personnel to fulfil each job
function requirement.
[39] Mr Ten Napel testified that TNMC evaluated the workforce of the
respondent against the job functions and required competence.
Thereafter TNMC obtained the personnel records of the employees
relating to their educational qualifications, skill levels, time in
service, performance levels, absenteeism and disciplinary records.
TNMC established an evaluation panel which would then conduct
interviews of each employee. Thereafter, said Mr Ten Napel, the
evaluations would be documented and a report containing
recommendations would be compiled.
[40] Mr Ten Napel was asked to explain the basis for TNMC’s decision
to assign to the various selection criteria the rating or weight that it
assigned to each one of them. For example, TNMC assigned 20%
to educational qualifications, 20% to special skills but 15% to years
of service, 15% to performance record, disciplinary record and
absenteeism record. Mr Ten Napel’s answer to this question
reveals that the assignment of weight to be given to each criterion
was arbitrary. I do not propose to detail it here. It is sufficient to
say that it is clear from Mr Ten Napel’s evidence that he and his
23
team took each criterion and said in effect that it was very
important to the respondent and allocated the weight that they
allocated to such criterion as recorded in the documentation. The
explanation, if it can be said to be one, that Mr Ten Napel gave
leaves one with no understanding as to why he and his team
allocated 20% to qualifications but 10% to multi-skills and why
15% was allocated to years of service and not 20% as was done to
special skills. In my judgement the “explanation” is no
explanation at all.
[41] Mr Ten Napel was also asked to explain the basis upon which he
and his team could determine whether a particular employee had
the “willingness” that he and his team had included as one of the
selection criteria. He testified that such willingness was the
willingness “to take on the challenge” in terms of going where the
respondent needed such employee and whether he was willing to
be trained. He said that there was “ a certain amount of gut feel in
terms of assessing a persons willingness and we base it
obviously in terms of our interview which we have done as well,
we put specific questions to try and assess the willingness of
people”. Mr Ten Napel testified that his team was briefed before
hand that they could “not penalise someone because of his family
situation, and he cannot for instance work overtime, then you
cannot penalise him and say he is not willing.” He said that his
team had a very good understanding of the required willingness.
He added: “Willingness to be at work or willingness to
participate in training or willingness to take his career path
further that is the willingness which we tried to assess.”
24
[42] Mr Ten Napel was also asked to explain the basis upon which he
and his team decided to allocate 10% weight to the criterion of
interview. His answer provided no basis. He said: “ Finally, the
interview was a very small portion [of] this whole selection
criteria. We felt at best, to have an interview with people,
where specific questions could be asked by the panel, the
people could be assessed and that brought into the whole
perspective, on 10%.” This is as arbitrary as it can be.
[43] Mr Ten Napel said that he and his team got the statistics regarding
qualifications, special skills, overtime work, disciplinary actions
against an employee, years of service, multi-skills from the
respondent’s databank. He said that the respondent had all these
records that TNMC could use.
[44] Mr Ten Napel also gave evidence regarding how the scoring was
done. He explained the scoring system thus:
“We said, if we look at the evaluation ratings, smaller than 6 would
have given you a point of 1; 6 would have given you a point of 4; 7
would have given you a point of 5; 8; 15; 9; 10; 18; and… would have
given you 20. Based on that we looked at special skills rating, very
experienced, 20, medium experienced, 15, low experienced, no
experience, zero. Job evaluation, 0, not competent, 5, very competent.
Then literacy, verbal, read and write; if it was good, it would have
scored you a point of 4; medium, 2 and poor zero. Then absenteeism
statistics, absent and sic, low equals 3; sick, high, 1; sick, low, 2;
absent, low, 2; and absent, high, zero. Disciplinary statistics, zero
warnings would have given the person 3; one warning 2; two warnings,
zero. Years in service, six to eight years, 15 points; four to five years,
12 points; two to three, 10 points; and smaller than two, 6 points.
Multiskill rating, yes would have given you 10; no, zero. Overtime,
25
willingness, 80 equals 5; bigger than 80 would have given you 5;
bigger than 25, 4; bigger than 12,3 and bigger than 5,1. interview, on
the job, very good 10 and poor, zero”.
[45] Mr Ten Napel was asked what he had to say about the union’s
criticism that the evaluation had to be an on-the job evaluation. In
response Mr Ten Napel said that, if one had regard to technical
requirements of the manufacturing process in the respondent
without doing a physical “ on the job verification assessment of
the people’s skills, you would not have achieved anything
because that anything that the employees did was of a technical
nature.” He said: “you need specific skills to be able to, for
instance, compound, doing inspection, changing forms, things
like that. So it would not have helped if we did not do a proper
on the job evaluation, assessment.”
[46] Mr Ten Napel was asked how he and his team evaluated the
individual appellants in terms of qualifications, skills, multi-skills
as they were on strike and did not participate in the evaluation. His
answer was that “ obviously, if they did not participate in the
interview, they would not have scored any points. The on the
job assessment we had gone through a list of people, if they
were there to be rated, then obviously we would have rated
them in terms of on the job assessment. If they were not there –
because the supervisor, they also know the people, they know
the skills of the people, they could have given an input as well.”
[47] Mr Ten Napel testified that an on-the job evaluation was done in
respect of every employee who participated in the evaluation but
26
later he qualified this and said that this was not true in respect of
each and every individual. Indeed, later he said no on-the-job
evaluation was done on a one on one basis. Under cross-
examination he conceded that it was important to have done an on-
the job evaluation of the employees on an individual basis.
[48] Mr Ten Napel testified that, if the respondent did not use the
selection criteria recommended by TNMC, it would have gone into
liquidation. Counsel for the appellants challenged this statement.
He drew Mr Ten Napel’s attention to the fact that according to Ms
Pule the respondent had only used TNMC’s selection criteria as
guidelines and not strictly. Counsel also put it to Mr Ten Napel
that, soon after the dismissal of the individual appellants, the
respondent had employed a number of casual or contract workers -
about 80 to 100 per week who were not evaluated in the way that
TNMC had evaluated some of the employees and yet the
respondent was not liquidated. Mr Ten Napel could not explain
how come the respondent did not get liquidated and yet it had
relied on so many workers who were not evaluated in terms of the
selection criteria recommended by TNMC. He said that he did not
know the facts but said he stood by his statement that, if such
selection criteria had not been used, the respondent would have
been liquidated.
[49] Ms Pule testified that, after TNMC had completed the evaluation of
employees, she invited the union to come and discuss the
evaluation results but the union did not take her invitation up.
However, she testified that she gave the information to the union
27
anyway. She stated that at the meeting of the 12 th February 1999
the only thing that the union said it wanted to discuss was the LIFO
selection criterion. She said that the union later walked out of that
meeting. On the 16 th February 1999 the respondent issued letters
dismissing the individual appellants and others from its employ
with effect from the 16th February 1999.
[50] Ms Pule also wrote a letter to the union dated the 16 th February
1999. In that letter Ms Pule sought among other things to place a
number of things which had occurred between the respondent and
the union regarding the consultation process on record. She
informed the union that with effect from that date certain
employees whose names she gave were being dismissed for
operational requirements. The individual appellants were among
those employees.
[51] Some of the things that Ms Pule wrote in the letter of the 16 th
February 1999 to the union were that:
2.1 the respondent and the union had been involved in
consultations over a long period of time “with a view to
restructuring the company” following its progressive
losses running into millions over a long time;
2.2 it had been proposed that “an independent evaluation be
conducted of each employee’s skills, educational levels
and general performance and attitude towards his/her
work which would include the experience levels of each
28
employee. It was pointed out to you that this process was
essential in order that we determine a fair and objective
assessment of each person, particularly having regard to
the interests expressed by a potential investor in the
business as well as basic and fundamental legal
requirements.”
2.3 after the evaluation of the employees, the respondent and the union
had held a consultation on the 8th February 1999.
2.4 during the consultation between the union and the respondent on
the 8th February 1999:-
(a) the respondent specified to the union its
intended course of action;
(b) the respondent gave the union a list of
names of those employees whom it
intended to retain based on the criteria of
educational qualifications, special skills
with regard to the business, absenteeism
record, disciplinary record and years of
service with the respondent, ability to be
engaged in multi-skilling activities,
overtime record and willingness to co-
operate in this regard, general conduct and
demeanour during interview and, to a
limited degree, the general willingness of
the employees to assist the respondent
through “these difficult and trying times”
was also taken into account in assessing
the suitable person to be retained for one or
more particular task or duties.
29
2.5 the respondent give an assurance to the union at the
consultation of the 8th February 1999 that “ any
employee who stood to be effected as a result of the
company’s proposed course of action would be
provided alternative employment by Workforce
(Pty) Ltd, a sub-contracting concern with which
the company has had an ongoing relationship for
some time now.” The assurance was given that
whenever a situation arose where a service of such an
employee would be required Workforce (Pty) Limited
would duly liaise with the employee concerned with a
view to him/her acquiring such a job provided that
he/she had the necessary skills and ability to deal with
the task at hand.
2.6contractors on the condom night-shift section would
be retained and arrangements would be made for any
affected employee who met the criteria and expressed
a willingness to work on the night-shift condom
section to be interviewed by Workforce and to acquire
a position with it.
2.7 the biggest area to be affected in the respondent’s business
was that of testing and packaging for surgeons’ gloves where
only half the workers would be dismissed.
2.8 the alternatives of working short-time, the elimination of the
use of contractors and long leave had been considered but
had been rejected.
The dismissal dispute
30
[52] Subsequent to the dismissal of the individual appellants, a dispute
arose between the appellants and the respondent about the fairness
or otherwise of the dismissal. In due course the dispute was
referred to the Labour Court for adjudication. The appellants
contended that the dismissal was automatically unfair,
alternatively, was simply unfair. The contention that the dismissal
was automatically unfair was based on the belief that the selection
of the individual appellants was based on their membership of the
union. The respondent disputed this and maintained that the
dismissal was fair in every respect.
The proceedings in the Labour Court
[53] The dispute came before Jammy AJ in the Labour Court for
adjudication. He found that the dismissal was not only not
automatically unfair but also that it was not substantively or
procedurally unfair. He, accordingly, dismissed the appellants’
claim with costs. He subsequently granted the appellants leave to
appeal to this Court. Hence, this appeal.
The appeal
[54] On appeal before us Counsel for the appellants did not pursue the
contention that the dismissal was automatically unfair. In my view
he was wise not to do so. However, he persisted in his contention
that the dismissal was unfair because:
(a) there was no fair reason for the dismissal of the individual
31
appellants;
(b) the selection criteria that were used to select the individual
appellants for dismissal were not fair and objective; and
(c) the appellants were not consulted in regard to the real reason
for the dismissal of the individual appellants. I turn to
consider these contentions in turn.
Was there a fair reason to dismiss? If so, was there a fair
reason for the dismissal of the individual appellants?
[55] Whether or not there was a fair reason for the dismissal of the
individual appellants relates to a general question and a specific
question. The general question is whether or not there was a fair
reason for the dismissal of any employees. The specific one is
whether there was a fair reason for the dismissal of the specific
employees who were dismissed, which in this case, happened to be
the individual appellants. The question of a fair reason to dismiss
the specific employees who were dismissed goes to the question of
the basis upon which they were selected for dismissal whereas the
other question relates to whether or not there was a reason to
dismiss any employees in the first place. In dealing with either
question it is necessary to bear in mind that the onus lies with the
respondent to prove that there was a fair reason to dismiss some
employees and that there was a fair reason to dismiss the individual
appellants. For convenience I propose to deal with both questions
simultaneously.
[56] As to the question whether or not there was a reason to dismiss any
employees, what has been established in this case is that the
32
respondent sustained very huge financial losses over a number of
years. However, it was also established at the trial that, soon after
the individual appellants’ dismissal, the respondent employed over
80 contract and or casual employees. Ms Pule, the respondent’s
general manager admitted this under cross-examination.
[57] Once it was shown that, soon after the individual appellants had
been dismissed (and the reasons advanced for their dismissal were
said to be operational,) the respondent had employed many
contract and/or casual employees, this raised doubts about whether
or not the respondent dismissed the individual appellants because it
needed to reduce its workforce. In other words it raised the
question: how could the respondent say it was dismissing the
individual appellants because it needed to reduce its workforce and
yet no sooner had it dismissed them than it employed other
employees? In the light of this Counsel for the appellants submitted
that the respondent’s conduct in employing over 80 contract and or
Casual employees soon after the dismissal of the individual
appellants belied the respondent’s explanation that it had to reduce
its workforce on grounds of operational requirements.
[58] Faced with this difficulty, Counsel for the respondent sought to
avoid the appellants’ reliance upon the the employment of contract
or casual employees by submitting that the appellant’s Counsel had
never put to the respondent’s witnesses the proposition that the
reason for the individual appellants’ dismissal was not downsizing.
In this regard he was seeking to say that it would be unfair for the
Court to decide the matter on the basis that the respondent did not
seek to downsize its workforce because this had never been put to
33
its witnesses. I am afraid that the respondent’s contention in this
regard is not sustainable. The fact of the matter is that during the
consultation process the respondent repeatedly informed the union
that it was seeking to downsize its workforce and it bore the onus
to prove that it had to downsize its workforce. The question is
whether it has shown that it had to downsize its workforce. The
fact that it employed over 80 contract and casual workers soon
after the dismissal of the individual appellants is relevant to that
question. It is in conflict with there having been a need for the
respondent to reduce its workforce. Even if Counsel for the
appellants did not put it to the respondent’s witnesses that the
reduction of the workforce was not the reason for the dismissal, the
court must still decide whether the respondent has shown that there
was a need to reduce the workforce.
[59] The respondent’s case during the consultation process was, at least
in part, that it needed to downsize its operations or reduce its
workforce. Support for this can be found in:
(a) the first two paragraphs of the respondent’s letter to the
union dated the 18 th June 1998; there it, inter alia, wrote
that “(i)n order for the Company to sustain itself, it has to
consider restructuring and downsizing.”
(b) the top paragraph in the second page of Ms Pule’s letter to the
union dated the 7th July 1998 where she said: “Given this analysis we
are looking at possibly reducing our labour force by 33 people or less
depending on the replacement of the contract night shift.”
(c) the contents of the second and third pages of Ms Pule’s letter or
memorandum to the union dated 7 December 1998;
(d) point 3.6(under the heading: Human Resources) of a document
34
appearing at 1097 of the record (p 226 in the Court a quo) where it was
stated that there would be “a reduction of employment positions.”
(e) the second paragraph of Ms Pule’s letter to the union dated 9
January 1999 where she referred to the need for the curtailing of certain
operations of the respondent before a third party could purchase part of
the business.
(f) the minutes of the meeting of the 13th January 1999 between the
union and the respondent which reflect that a person referred to as “AP”,
who must have been speaking on behalf of the management, stated in the
second paragraph in the second page thereof that “our analysis, to bring
the business to a breakeven point, we have to downsize the labour
force. Seen that previously looking at selling 800 000 pairs per month
of surgeon’s gloves, this has reduced to below 600 000 pair per
month. The notion of trying to accommodate the same labour force
under the circumstances is not an option.”
(g) paragraph 11.3 of the respondent’s letter to the union dated 16
February 1999 which informed the union that the employees selected for
dismissal would be dismissed with effect from the 16th February 1999
where Ms Pule stated, among other things, that only half the employees
employed in the area of testing and packaging of surgeons’ gloves were
required. In para 11.4 Ms Pule wrote that separate “cuffers” were no
longer required.
[60] I need to say something about the number of contract and/or casual
employees that the respondent employed after the dismissal of the
second and further appellants as well as the duration of such
employment. I need to say something about this because earlier in
this judgment I have referred simply to such contract and/or casual
employees being more than 80 or being between 80 and 100. After
the Court a quo had granted the amendment referred to earlier that
the appellants had applied for which the respondent ultimately did
not oppose, the appellants subpoenaed documents from Workforce,
the labour broker that was used by the respondent then.
[61] According to the appellant’s Counsel’s supplementary heads of
argument the documents from Workforce revealed that for at least
35
about 18 months after the dismissal of the individual appellants, the
respondent employed between 80 and 100 contract and or casual
employees. Furthermore, in the appellant’s Counsel’s
supplementary heads of argument, it was stated that the
documentation revealed that, after the dismissal one contract or
casual employee worked an average of 47 hours per week at the
respondent. In the respondent’s supplementary heads of argument,
Counsel for the respondent did not dispute this. Nor did the
respondent’s Counsel dispute the statement in the supplementary
heads of argument of the appellants that it, i.e. the respondent,
admitted the veracity of the contents of the documents subpoenaed
from Workforce.
[62] There can be no doubt that, if such information was not true, the
respondent’s Counsel would have disputed the correctness or
accuracy of such statements. Accordingly, this matter must be
decided on the basis that, soon after the dismissal of the individual
appellants, the respondent had a need for between 80 and 100
contract and or casual employees. It must also be decided on the
basis that for about 18 months from soon after the dismissal of the
individual appellants, the respondent continued to employ such
contract and casual employees. There is no evidence of what
happened after the period of 18 months. The respondent could have
thrown light on this through evidence but it elected not to.
[63] To the extent that the respondent relied on the need to downsize its
operations to justify the individual appellant’s dismissal, I find that
the respondent has failed to show that there was a reason to
downsize. It has failed to show the basis upon which it could be
36
said that it had a reason to downsize because, soon after the
dismissal of the individual appellants, it employed about 80 or
more contract and/or casual employees who have not been shown
to possess any skills which the individual appellants did not have
and for whose preference to the individual appellants the
respondent has provided no justification. Indeed, Ms Pule’s
evidence to the effect that the individual appellants could have
continued to work for the respondent if they got themselves
employed by Workforce is proof that their being dismissed might
not or was not connected with the results of the evaluation process
conducted by TNMC. It undermines the whole TNMC evaluation
exercise. In General Food Industries Ltd t/a Blue Ribbon
Bakeries v FAWU & Others (2004) 25 ILJ 1655 (LAC ), this
Court found the dismissal of employees for alleged operational
requirements unfair on the grounds that as the employees were
being retrenched, the employer was busy recruiting other
employees who were going to do work that had not been shown to
be work that the employees being retrenched could not perform.
[64] What was the rationale of using the selection criteria that were used
to select employees that the respondent could dispense with if, in
employing others such as contract and/or casual employees, the
same selection criteria were not used in order to ensure that such
contract and/or casual employees were not virtually the same as the
ones who had just been selected to be dispensed with? The
respondent’s employment of contract and/or casual employees
without applying to them the selection criteria used to select the
individual appellants for dismissal makes a mockery of the
respondent’s reliance on the selection criteria used to select the
37
individual appellants for dismissal as the criteria that were
appropriate for its operational requirements. The respondent has
advanced no evidence to suggest that the work which the contract
and/or casual employees were employed to perform was work
which the individual appellants had no skill or ability to perform.
Accordingly, it can be said that the respondent dismissed the
individual appellants when there was still ample work that they
could perform. That means that there was no fair reason for their
dismissal and renders their dismissal a dismissal without a fair
reason.
[65] In her letter of the 16 th February 1999 to the union Ms Pule dealt
with, among other things, alternatives that the respondent had
considered. One of these was the elimination of the use of
contractors. She dealt with this issue in paragraph 12.2 of her letter.
She said in paragraph 12.2.1 that what the respondent wanted with
regard to contractors was “ the aspect of quality control.” She
continued: “No personnel management is necessary and to the
extent that there is non-performance on the part of any staff,
the burden in this regard rests with the contractor. This proves
to be a huge benefit to the company which can concentrate on
its core business, namely, the manufacture of latex related
products.”
[66] In paragraph 12.2.2 Ms Pule wrote that contractors had ensured
that, whenever necessary overtime would be worked. She further
wrote that there had been a concerted refusal by “numerous
permanent employees to work overtime as and when required,
notwithstanding the fact that the needs and exigencies of the
38
company’s operations required same as a matter of urgency.”
In paragraph 12.2.3 of the letter Ms Pule wrote that, “having
regard to the fluctuating requirements and the production
process, the engagement of full-time employees is not a viable
proposition.”
[67] What Ms Pule wrote in paragraph 12.2.1 to 12.2.3 of her aforesaid
letter suggests that the respondent was not happy with the terms
and conditions of employment of its workforce. She wrote that
numerous of them had concertedly refused to work overtime when
the respondent had required the working of overtime and that the
respondent’s fluctuating requirements and production process
made full-time employment not a viable proposition. The
respondent never raised this last mentioned concern during the
consultation process. However, with regard to it and the alleged
concerted refusal to work overtime, they could have been
addressed by way of ensuring that the terms and conditions of
employment of the workforce were amended appropriately with
their agreement of the employees to deal with those concerns. In
such a case the respondent would have entered into a process of
negotiation with the union which could have led to the dismissal of
the employees for operational requirements if they did not agree to
such amendments in the same way as it happened in the Fry’s
Metals matter.
[68] If, prior to the consultation process, some of the individual
appellants or even all of them had from time to time refused to do
certain work or to work a certain shift such as the night shift, as
was suggested by one or other witness called by the respondent,
39
which is why, according to such witness, the respondent had
contract employees even during the employment of the individual
appellants, the respondent ought to have pursued the negotiation
route and ultimately the dismissal route followed by the employer
in Fry’s Metals (Pty) Ltd v NUMSA(2003) 24 ILJ 133 LAC;
NUMSA & others v Fry’s Metals (Pty)Ltd (2005) 5 SA 433
(SCA).
[69] It is one thing for an employer to approach an employee to agree to
working on certain terms and conditions such as on a night shift
when the employee’s decision not to agree will not put his job at
risk. It is quite another when the employer puts such a proposal to
an employee on the clear understanding that, if the employee does
not agree, this may or will result in him losing his job to make way
for someone else who will be prepared to work under such terms
and conditions. Accordingly, when an employer’s operational
requirements dictate that its workforce should work in accordance
with certain terms and conditions by which such workforce is not
bound, the employer should convey this to the workforce and ask
them to agree to work according to such terms and conditions,
negotiate with them and warn them that, if they reject such terms
and conditions, he will have to terminate their contracts of
employment and employ new employees in their place, who will
accept such terms and conditions. This is what was done in Fry’s
Metals. If the employees reject such proposals and the employer
terminates their services, the employees cannot complain that they
were not given a chance to avoid their dismissal by accepting the
new terms and conditions of employment. In this case there is no
evidence that the respondent ever proposed to the employees or the
40
individual appellants that they agree to work on different terms and
conditions on the understanding that, if they refused, they would
lose their jobs as the respondent would then look for employees
who would be prepared to work according to such terms.
[70] In the light of the respondent’s conduct in employing contract and/
or casual employees that it employed soon after the individual
appellants’ dismissal and its conduct in not using TNMC’s
selection criteria in recruiting such contract and casual employees,
the respondent has failed to show that there was a fair reason for
the selection of the individual appellants for dismissal. That alone
renders the dismissal substantively unfair.
[71] Another matter that needs to be considered in relation to whether
there was a fair reason to dismiss is the fact that during the
consultation process, the union proposed to the respondent that
rather than have some of the workers retrenched, the workers
should share the available work. The respondent’s management did
not give this proposal any serious consideration. When during the
trial Ms Pule was asked why the management had not accepted this
proposal, she complained that it would have affected “ continuity”.
I understand her evidence to suggest that, if implemented, this
proposal would have been disruptive to the operation of the
respondent. Her understanding of the proposal was that some of the
workers would work some hours in a day and others would work
another set of hours. I think that she spoke of some workers
working four hours and others working the next four hours on the
same day.
41
[72] I cannot see how it can be said that there would have been
disruption if one group of workers worked the first four hours and
another one the next four hours per day or whatever the required
hours were. Accordingly, I cannot accept Ms Pule’s evidence that
such proposal, if implemented, would have affected “ continuity”.
It seems from the record that the Acting Judge in the Court a quo
interrupted the leading of evidence in regard to this point and made
a remark which the respondent’s attorney may have construed to
mean that that was not a matter which he needed to bother about.
[73] The respondent’s attorney elected not lead further evidence from
Ms Pule on the proposal. In my view he should have made a
submission to the Acting Judge a quo that this was a legitimate
point on which the respondent should lead evidence and let the
Court a quo make a ruling if there was a legal basis to preclude him
from leading evidence on the point. The Court a quo did not make
a ruling that he should not lead evidence on the point. It made a
remark which showed that its prima facie view was that that was
not an important point. By going along with that inclination -
probably because it was in his favour - the respondent’s attorney
took the risk that, if there was an appeal against the Court a quo’s
judgment and a higher court took a different view of the
importance of that point, the record before the higher court would
be without all the evidence that the respondent could have led on
the point and if that risk materialised, the respondent could be
prejudiced by the absence of such evidence.
[74] It is very important for a practitioner appearing in a matter to know
his case and the law governing it as fully as possible and not to go
42
along with every and any point or remark that the Court may make
about the case in his favour or in his opponent’s favour. He should
carefully consider every point, question or remark that the Court
makes during the hearing which is in his favour or tends to reveal
that the Court may be thinking favourably of his or his opponent’s
case on one or other point and adopt a stance that is based on his
honest and bona fide understanding of the law, the facts and his or
his opponent’s case. He should not adopt an approach in terms of
which what he says depends on which way the wind is blowing if
that will mean that he goes along with a remark or answer to a
question either about the law, the evidence or his case or his
opponent’s case which is not in accordance with his honest
understanding of the law, evidence, his case or his opponent’s case.
[75] Lest I be misunderstood, let me make it clear that I do not at all
suggest that the respondent’s attorney in this case did anything
dishonest in how he dealt with this point. On the contrary I think he
was bona fide but may have erred in going along with the Court a
quo’s inclination to the point. It is the characteristic of a good
practitioner to submit to the Court with the necessary courtesy and
respect that, although the Court’s remark on a certain point is
favourable to his case, it is not in accordance with the legal
position or it is not part of his case or it is not supported by the
evidence. A practitioner should not just grab any point that comes
from the Bench which seems to be in his favour whether on the law
or facts. He might regret it later if the Judge changes his or her
mind when preparing judgment having had time to reflect upon it
or to consult authorities or when the matter is taken on appeal to a
higher court.
43
[76] In my judgement there were other ways in which the proposal
could have been implemented which, without doubt, would not
have affected continuity. Obviously, the workers would all be
workers who could perform the work. One very obvious way to
implement the proposal would have been for the workers to be
divided into two teams. The two teams of workers would then
work on different days in a week. Yet another way would have
been for the two teams to work alternate weeks (i.e. one week on,
one week off). There would definitely have been no disruption if
the proposal to share work was implemented in that way. I have no
doubt that this proposal would have worked if the respondent’s
management had given it proper attention during the consultation
process.
[77] In his heads of argument Counsel for the respondent submitted, in
regard to the proposal to share work, that the union made it subject
to the strike being resolved and subject to contract and casual
employees being removed. That the problem with the proposal was
that it was made subject to certain conditions was not Ms Pule’s
evidence. And Ms Pule was the general manager. The reason that
she advanced is the one of “ continuity” referred to above. At any
rate, to the extent that what the union was saying was that contract
and casual workers should be the first ones to lose their jobs before
permanent employees could lose their jobs, that was a legitimate
stance for the union to take, particularly in respect of casual
employees. The respondent may have been perfectly entitled to
retain temporary replacement labour during the strike. However,
there could have been no justification to retrench permanent
44
employees while continuing to employ casual employees.
[78] In Ms Pule’s letter of the 16 th February 1999 to the union she
dealt, among other things, with the issue of short time. In my view
the way that the employee’s proposal to share work would have
worked would have amounted to the working of short time. For
that reason it is necessary to refer to what Ms Pule wrote about
short-time as an alternative to dismissal in paragraph 12.1.1 to
12.1.1.3 of that letter. There she wrote that short time had been
considered “ but was not regarded as being feasible due to the
following factors:
12.1.1.1 not all personnel have the necessary skill to
combine cuffing, testing and stripping operations;
12.1.1.2 the administrative and supervisory functions of a small
group are far easier and more manageable with the result that far
more investments can be obtained with a smaller workforce;
12.1.1.3 it is essential that an element of continuity be maintained
from a production point of view.”
[79] With regard to the point made in para 12.1.1 of Ms Pule’s aforesaid
letter, it is too general. It may be so that not all personnel had the
necessary skill referred to but it may well be that a very limited
training of those personnel who did not have such skill would have
been enough to give them such skill and this could have made all
the difference that was needed for them to continue to have a job
and avoid joining the ever increasing number of those without
employment. Furthermore, the respondent did not rely on this in
the evidence led at the trial. At any rate the respondent also led no
evidence at the trial to the effect that the employees’ proposal to
share work could not be accepted because the individual appellants
45
lacked certain skills. The respondent ought to have told the Court
what skills each group of workers would have needed to have and
in what numbers if short time had to be worked. It should also have
looked at the workers who were likely to be dismissed and have
determined whether it would not have been possible to arrange the
groups in such a way that each group included people who had the
required skills.
[80] I have some difficulty following the point made in para 12.1.1.2 of
Ms Pule’s aforesaid letter (i.e letter of 16 February 1999 to the
union) within the context of short time. There Ms Pule wrote that
in order to obtain more investments, it was far easier to have a
small group from an administrative and supervisory point of view.
I do not know what investments she was referring to. She also did
not explain this in her evidence in Court. Obviously, this was
because she was not asked to. She also wrote that it was preferable
to have a small group. But, if workers were going to work short-
time in the manner I have referred to above, the respondent would
have been dealing with the same number of employees at any one
time. All the respondent had to do was to determine the number of
employees it needed for its operations. Presumably, there would
have been a surplus of employees. The employees would take turns
to do the same work either on the basis of working different hours
or different days or different weeks but the respondent would
always have the same number of employees required by its
operations at any one time.
[81] I have already dealt above with the point made in para 12.1.1.3 of
Ms Pule’s aforesaid letter. In all of the circumstances I am of the
46
view that the respondent has failed to show that there was a sound
reason for it not to accept the employees’ proposal to share work or
to work short time.
[82] It seems to me that the workers’ proposal for them to share work
was a sensible and constructive proposal that the union made to try
and avoid the retrenchment of the individual appellants and others.
In my view the respondent could and should have accepted the
proposal, particularly seeing that it was about to employ contract
and casual employees, who, for all one knows, may well have been
doing the work that the individual appellants were doing before
they were dismissed. The respondent has not advanced any valid
reason for not utilising that proposal to avoid the dismissal of the
individual appellants in compliance with its obligation in terms of
sec 189 of the Act. For that reason, too, it has failed to discharge
the onus it bears to prove that there was a fair reason for the
dismissal of the individual appellants.
The selection criteria
[83] Section 189(2) of the Act deals with matters that are required to be
the subjects of consultation when an employer contemplates the
dismissal of one or more employees for operational requirements.
One of these is provided for in sec 189(2)(b). It is “ the method for
selecting the employees to be dismissed.” Section 189(5) requires
the employer to allow the other consulting party an opportunity
during consultation to make representations about any matter on
which they are consulting. Section 189(6) obliges the employer to
“consider and respond to the representations made by the
47
other consulting party and, if the employer does not agree with
them, the employer must state the reasons for disagreeing”.
[84] Section 189(7) makes provision for what happens at the end of the
process of consultation. Where attempts at finding measures that
would avoid the dismissal of employees have failed, the end of the
consultation process is the selection of the employees to be
dismissed and then, finally, the dismissal. With regard to what
selection criteria an employer must use when selecting employees
to be dismissed, Counsel for the appellants submitted that, where
the employer and the union have not agreed upon the selection
criteria, the employer is obliged in terms of sec 189(7) (b) to use
fair and objective selection criteria. I agree. Section 189(7) of the
Act contemplates two types of selection criteria that may be used in
the selection of employees to be dismissed. The one type is
provided for in sec 189 (7) (a) and the other in sec 189(7) (b).
Section 189(7) (a) and (b) read:.
“(7) The employer must select employees to be
dismissed according to selection criteria –
a) that have been agreed to by the consulting parties;
if no criteria have been agreed, criteria that are fair and objective.”
The type provided for in sec 189(7) (a) is for a situation where the
consulting parties have reached an agreement on the method of
selection (selection criteria) to be used to select employees to be
dismissed. The one provided for in sec 189(7) (b) is for a situation
where the parties have not reached an agreement on the method of
selection to be used to select the employees to be dismissed. The
two types of selection criteria can be referred to as the agreed
selection criteria and the fair and objective selection criteria
48
respectively. Obviously the agreed selection criteria are selection
criteria that have been agreed upon between the consulting parties.
The fair and objective selection criteria must be used where the
selection criteria have not been agreed upon between the consulting
parties. What sec 189(7), therefore, means is that, where the
consulting parties have agreed upon the selection criteria, the
employer is obliged to use the agreed selection criteria to select the
employees to be dismissed. Where there are no agreed selection
criteria, the employer is obliged to use only fair and objective
selection criteria to select the employees to be dismissed.
[85] An employer and a union are free to agree upon selection criteria
that are or may be subjective. When the agreed selection criteria
are subjective, the employer does not act unfairly in using such
selection criteria to select the employees to be dismissed. Indeed,
he may be acting unfairly if he departed from the agreed selection
criteria simply because they are or may be subjective or may
include a certain element of subjectivity. If the agreed selection
criteria are contained in a collective agreement, he may be acting in
breach of a collective agreement if he departed from them.
However, where the employer does not use agreed selection
criteria to select the employees to be dismissed, he may not use
selection criteria other than “ fair and objective” selection criteria.
The effect of sec 189(7) is therefore that, when the Court deals
with a dispute concerning a dismissal for operational requirements
where the selection criteria used by the employer to select
employees for dismissal are challenged, it must first determine
whether the selection criteria used were agreed or not. If they were
agreed, sec 189(7) (a) applies. If they were not agreed, sec 189(7)
49
(b) applies.
[86] The rationale for this is that the use of agreed selection criteria will
not produce a dispute about the fairness of such criteria whereas
the use of selection criteria that have not been agreed upon has the
potential to lead to dissatisfaction and disputes about such criteria.
The whole idea of the consultation process required by sec 189
before dismissals for operational requirements can be effected is
fairness and the prevention of unnecessary disputes that could
otherwise arise if such dismissals occurred without such a process.
Obviously, there are many dismissals for operational requirements
which do not produce dismissal disputes precisely because of the
consultation process required by sec 189 and there would be many
disputes that would arise if such a process did not occur.
[87] In this matter the scenario was a sec 189(7)(b) scenario because the
parties had not agreed upon the selection criteria. Accordingly, it
was not permissible for the respondent to use any selection criteria
other than those that were “ fair and objective ” as required by sec
189 (7)(b) of the Act. The use of selection criteria that are not fair
and objective in a sec 189(7)(b) scenario – in other words where
the selection criteria have not been agreed upon – renders a
dismissal substantively unfair. The use of subjective selection
criteria in a sec 189(7) (a) scenario – that is where the selection
criteria – have been agreed upon does not render the dismissal
unfair because, although the criteria are not objective, their use is,
as it were, by mutual consent.
[88] The use of subjective selection criteria where they have not been
50
agreed upon can easily lead to abuse of such criteria. This would be
the case where they are used to get rid of employees that the
employer may view as unwanted but against whom it is unable to
produce acceptable proof of unacceptable conduct. That is why the
Act contemplates the use of subjective selection criteria only where
the parties have reached agreement thereupon. In other words the
policy behind the provisions of the Act is that there is a price to be
paid by an employer if he wants to use subjective selection criteria
in a retrenchment case. That price is to secure an agreement with
the other consulting party about the use of such selection criteria. If
an employer strikes such a deal, it can go ahead and use subjective
selection criteria. However, if it does not strike a deal with the
other consulting party on the use of such criteria, the price it pays
for not reaching an agreement thereon is that it may not use
subjective selection criteria to select employees to be dismissed. In
such a case, it must use selection criteria that are “fair and
objective” as required by sec 189(7)(b) of the Act.
[89] In this matter the selection criteria that were used to select the
individual appellants and other employees for dismissal were the
following:.
Criteria rating
(a) qualifications 20%
(b) skills 20%
(c) performance and disciplinary record 15%
(d) years of service 15%
(e) willingness 10%
(f) interview 10%
In his heads of argument, the respondent’s attorney conceded that
51
the criteria of willingness and interview were subjective. He
submitted that the rest were objective. During the cross-
examination of Mr Ten Napel, the criteria of qualification were
challenged. A hypothetical scenario was put to him which could
lead to an excellent employee being selected for dismissal and an
employee with poor work performance record being retained on the
basis of his qualifications which might not be of any benefit to the
organisation. Mr Ten Napel conceded that the selection criteria
could, indeed, produce such a result.
[90] I shall assume, without deciding, that the criteria of work
performance and disciplinary record are objective. That will mean,
as was conceded by the respondent’s attorney in his heads of
argument, that 20% of the selection criteria that were used were
subjective. What is the effect of the fact that 20% of the selection
criteria used were subjective? The respondent’s attorney submitted
that 20% is so insignificant in the scheme of things that it should be
ignored.
[91] In this regard it will be remembered that Mr Ten Napel testified
that under the criterion of willingness an employee was given
either 0% or 10% and nothing in between because, as he put it, a
person is either willing - in which case he gets the whole or is not
willing – in which case he gets zero. So it would have been easy
for an employee to be awarded zero out of ten or to get 10 out of
10. Under “interview”, if an employee did not attend the interview,
he got 0 out of 10. It is common cause that the individual
appellants did not attend the interviews. Accordingly, they would
have been awarded 0 out of 10. So, already before the criteria
52
could be considered against them, they would already be 10% in
debit. Under “willingness” if they also got 0 out of 10, that would
mean that, when the criteria were applied to them, they were
already 20% in debit.
[92] I am unable to uphold the respondent’s attorney’s submission that
the presence of the two admittedly subjective selection criteria that
were used to select the individual appellants is insignificant and
should be ignored. In my view it is very significant and renders
their selection unfair because those criteria were not supposed to be
used in selecting them for dismissal as this was a sec 189(7)(b)
scenario. It may be appropriate to give a practical life situation in
order to demonstrate that 20% is a very significant percentage. A
law student is writing his final year examination for his law degree.
The paper is out of 100. The questions that relate to the last 20% of
the marks are not supposed to have been in the paper because they
relate to another law subject that he did not enrol for and which he
was not supposed to be asked on. Such a student would have a
legitimate complaint because, even before his answer paper is
marked, he would already be less 20% marks. In my view the
unfairness in that case speaks for itself.
[93] Mr Ten Napel conceded under cross-examination that some of the
above selection criteria are subjective. He further conceded that at
least seven of the questions that employees who participated in the
evaluation exercise had to answer were subjective. Some of the
questions were apparently intended to elicit from the employees
answers which it was thought would give an indication of the
employee’s loyalty or commitment to the respondent. However,
53
some of the questions were such that no answer could possibly give
the respondent the indications it was hoping for. One question was
whether an employee would like his or her children to work at the
respondent. If, for example, the answer to that question was no,
that could not necessarily mean that the employee was less
committed to the company than an employee who answered yes.
As Counsel for the appellants put it to Mr Ten Nappel during
cross-examination, the employee answering in the negative may
well have better ambitions for his children. Accordingly, in such a
case an answer in the negative would not be a reflection of lack of
loyalty or commitment to the respondent. It is not an answer to the
usefulness or otherwise of this question to say, as Mr Ten Nappel
said, that there would be follow-up questions. The fact of the
matter is that a question was put up for the purpose of determining
from the answer thereto whether employees were committed to the
company which could simply not produce such indication.
[94] If the respondent was to prove that there was a fair reason for its
selection of the individual appellants for dismissal, it was required
to place before the Court evidence that would show what
qualifications all the employees, including the individual
appellants, had, what years of service they all had, what multi-
skills they all had and what answers they gave to questions as part
of the evaluation. This would have placed the Court in a good
position to determine whether or not there was a fair reason for the
selection of the individual appellants as opposed to the selection of
other employees for dismissal.
[95] The respondent’s attorney referred to the fact that there were union
54
members who had been on strike when the evaluation was
conducted just like the individual appellants were on strike but who
were not dismissed after the application of the same selection
criteria to them. That may be so but that is no answer. Such
employees may have got very high marks under one or more of the
first four selection criteria with the result that, despite being judged
on a debit of a 20%, they still made it. But, if the two criteria were
not supposed to be part of the equation, as in my view, they were
not, then the individual appellants were entitled to be considered
together with all other employees against the first four criteria only.
In other words 100% should have been constituted by the first four
criteria and not by the six criteria. Had the last two criteria not been
part of the selection criteria and had the selection criteria been the
first four only, employees who were selected for dismissal may
well have been retained and employees who were retained may
well have been selected for dismissal.
[96] Without knowing what skills or special skills the employees who
remained behind had, what skills the individual appellants had
compared to them, what years of service they all had, what
performance records and disciplinary records all the employees
including the individual appellants had, the Court is left to
conclude on the basis of the respondent’s ipse dixit that there was a
fair reason for the selection of the individual appellants for
dismissal. That cannot be accepted. In those circumstances I
conclude that the selection criteria have not been demonstrated to
have been fair and objective nor has the respondent shown that
there was a fair reason to select the individual appellants and not
other employees for dismissal. Accordingly, I have no hesitation in
55
concluding that the individual appellants’ dismissal was unfair for
lack of a fair reason.
[97] In these circumstances I am of the view that the use of the two
selection criteria rendered the selection criteria unfair and the
dismissal substantively unfair. On this ground, too, I find that there
was no fair reason for the selection of the individual appellants for
dismissal and, ultimately, for their dismissal.
Consultation
[98] The only basis upon which the appellants disputed the procedural
fairness of their dismissal was that the respondent had not
consulted the union on the real reason for the retrenchment. This
submission was made in the light of the fact that, subsequent to the
dismissal, the respondent employed more than 80 contract and
casual employees to do work that the individual appellants were
not unsuitable or unskilled to do. This was after the respondent had
repeatedly told the union during the consultation process that it
wanted to reduce the size of its workforce. In the light of the
conclusion I have reached above that the dismissal was without a
fair reason, it is unnecessary for me to decide whether it was also
procedurally unfair. It will make no practical difference to the
outcome of the matter.
The Judgment of the Court a quo
[99] The Court a quo found that the dismissal of the individual
appellants was both substantively and procedurally fair. With
56
regard to the Court a quo’s finding that there was a fair reason for
the individual appellants’ dismissal, it seems that the Court a quo
completely overlooked three matters of great significance in this
matter. The one is the fact that, soon after the respondent had
dismissed the individual appellants, it employed more than 80
contract and casual employees to perform work that was not shown
to be work that the individual appellants could not do. The Court a
quo did not anywhere in its judgment refer to this aspect of the
matter. That means that it also did not consider what the effect was
of the employment of such contract and casual employees upon the
existence or non-existence of a fair reason to dismiss the individual
appellants. It is difficult to understand how the Court a quo could
overlook such an important aspect of the matter, particularly when
the appellants had gone to the extent of securing an amendment of
their statement of claim and subpoenaing records from Workforce
in order to be able to have this factor considered as part of their
case.
[100] The Court a quo also did not anywhere in its judgment deal with
the question whether or not the selection criteria that the
respondent said it had used to select the individual appellants was
fair and objective as required by sec 189(7) (b) of the Act. That the
Court a quo also overlooked this part of the appellants’ complaint
is difficult to understand in the light of the fact that, just before
leading his first witness at the trial, Counsel for the appellants
announced three grounds upon which he would pursue the
appellants’ case and one of these was that he was challenging the
selection criteria.
57
[101] The third matter is that the Court a quo did not give consideration
to the question whether the employees’ proposal that, rather than
some of them getting retrenched, they should all share the available
work could have avoided the dismissal of the individual appellants
if it had been accepted and implemented. Nor did the Court a quo
consider what the effect was of the failure to accept such proposal
on the existence or otherwise of a fair reason to dismiss the
individual appellants.
[102] It seems to me that the Court a quo’s failure to consider and deal
with the three matters referred to above is what led to it coming to
the conclusion that there was a fair reason for the dismissal of the
individual appellants when, in fact, there was none. As I have
found elsewhere in this judgment I am unable to uphold that
finding and have found that the appellants’ contention that the
dismissal of the individual appellants was without a fair reason
should be upheld.
Relief
[103] The appellants seek reinstatement. The respondent did not in its
heads of argument indicate what order should be granted if the
Court came to the conclusion that there was no fair reason for the
dismissal. If the finding of unfairness was limited to the procedure
for the dismissal, reinstatement would not have been competent as
a remedy. The respondent confined its submissions in the heads of
argument to showing that the appeal should be dismissed and did
not deal with the eventuality of what relief the Court should grant
should the appeal be upheld.
58
[104] The finding that the dismissal of the individual appellants was
unfair is based on the conclusion that there was no fair reason for
their dismissal. The necessary implication of such a conclusion is
that they should not have been dismissed in the first place either
because there was no need for any employees to be dismissed or
because, although there may have been a need for some employees
to be dismissed, there was no fair reason for these particular
employees to have been selected for dismissal. In either case such a
finding means that the employees concerned should have been
allowed for all the past years to continue to work and earn income
in the respondent’s employ.
[105] On the evidence that was led in the Court a quo, the only evidence
that the respondent could possibly rely upon to argue that
reinstatement should not be ordered is Mr Mhlawutshana’s
evidence that the respondent would have no work for the individual
appellants if they were reinstated. Mr Mhlawutshana’s evidence in
this regard must be understood in its correct context. That context
is that, soon after the individual appellants had been dismissed, the
respondent employed more than 80 contract and casual employees
for work which was not shown to be work which the individual
appellants had no skills or ability to do and to do satisfactorily.
Indeed, those contract and casual employees were not subjected to
scrutiny of any kind to determine whether they had better skills or
abilities than the individual appellants.
[106] It is known that those contract and casual employees worked for at
least eighteen months from the time of the dismissal of the
59
individual appellants or from soon thereafter. It is not known what
the respondent’s position was from the expiry of that time to the
date of the trial. What happened during that time was definitely
within the knowledge of the respondent. If the respondent wanted
to apprise the Court a quo of what its position was from the expiry
of that 18 month period to the trial, it could have done so,
particularly if its position was such that an order of reinstatement
would not be appropriate. The onus is upon an employer, if it takes
the view that its circumstances are such that an order of
reinstatement should not be made against it, to place before the
Court evidence to prove such circumstances. Where it does not do
so, the Court may well have no reason not to order reinstatement,
particularly because, as I said in my separate judgment in
Kroukam v S A Airlink (Pty) Ltd , case no JA3/2003, as yet
unreported, delivered on 16 September 2005, together with that of
Davis AJA in which Willis JA concurred, sec 193(2) obliges an
arbitrator, the Labour Court and, on appeal, this Court, to order
reinstatement when an employee’s dismissal has been found to be
unfair for lack of a fair reason unless one or more of the situations
provided for in sec 193(2) (a) – (d) exists. (see paragraphs 110, 114
– 118 of my separate judgment in Kroukam). This is not one of the
points on which the majority and I could not agree in Kroukam.
The majority did not deal at all with this question.
[107] I am of the view that none of the situations provided for in sec
193(2) (a) – (d) of the Act exists in this case. Mr Mhlawutshana’s
evidence that, if the individual appellants were reinstated, the
respondent would not have work for them cannot be accepted. This
is because, for all one knows, for about eighteen months after the
60
dismissal of the individual appellants, the respondent had work
which was more than enough to keep its workforce as it was before
the dismissal busy. The respondent provided no evidence to show
what happened thereafter. The documentation that helped to show
this situation had to be subpoenaed from Workforce (Pty)Ltd. It
does not seem that the respondent was keen to take the Court a quo
into its confidence and give it a picture as to its position after that
eighteen month period. I find it difficult to believe that that
evidence, if led, would have shown that reinstatement would have
been inappropriate. I think it is highly unlikely that the respondent
would have elected not to lead evidence that would have shown
that reinstatement would be inappropriate. At any rate it was Ms
Pule’s evidence that each one of the employees who were
retrenched, including the individual appellants, would have
continued to work for the respondent if he got himself employed by
Workforce (Pty)Ltd.
[108] In the light of all the circumstances I am of the view that I should
order the respondent to reinstate the individual appellants.
Whatever order I make must be an order which the Court a quo
should have made as at the time when it delivered its own
judgment. That was in June 2002. The next question that arises is
whether, if the Court a quo had ordered reinstatement, as, in my
view, it would have had to if it had come to the same conclusion
that I have come to about the fairness of the dismissal, such order
should have been one operating with retrospective effect and, if so,
from what date. I turn to consider that question.
[109] In this matter Counsel for the appellants submitted that the
61
reinstatement of the individual appellants should operate with
limited retrospectivity. In this regard he did not indicate how
limited that retrospective operation should be. I shall assume that
he was leaving that issue in the hands of the Court. As already
indicated above, Counsel for the respondent made no submissions
whatsoever on what relief the Court should grant if it upheld the
appeal. I also take it that he was leaving that issue in the hands of
the Court.
[110] In considering the question whether or not reinstatement that is
ordered should operate with retrospective effect and, if so, how
much retrospective effect, the court exercises a discretion. It is
required to exercise such discretion judicially and fairly to all
parties concerned with due regard to the applicable principles, the
evidence and all relevant circumstances.
[111] The individual appellants were dismissed with effect from the 16 th
February 1999 with payment of notice pay in lieue of notice. Such
notice pay was indicated in the respondent’s letter of the 16th
February 1999 to the union to be notice pay in lieue of 14 days
notice or notice in terms of the contract of employment. It would
be fair to deal with the matter on the basis that such notice pay
covered the period up to the end of February 1999. That would
mean that the first month when the individual appellants were
without pay from the respondent is March 1999.
[112] It is necessary to consider the question whether there is any
limitation on how far retrospective the Court may order the
62
operation of a reinstatement order because, obviously, an order of
reinstatement with limited retrospective operation that the Court
may make must still be one that is competent. This raises the
question whether in a case where the dismissal is an ordinarily
unfair dismissal (as opposed to an automatically unfair dismissal) it
is competent for a court to order that the reinstatement order
operate with retrospective effect for a period that is beyond twelve
months from the date of the delivery of the order or judgment of
the Labour Court backwards. This includes the question whether,
where the period between the date of the order and the date of
dismissal is in excess of twelve months, the reinstatement can
competently be ordered to be with retrospective effect from the
date of dismissal.
[113] I considered this question both in relation to an ordinarily unfair
dismissal and in relation to an automatically unfair dismissal in
Kroukam’s matter. (see paragraphs 121-129 of my separate
judgment in Kroukam). My view in this regard differed from that
of Davis AJA with whom Willis JA agreed. However, both my and
Davis AJA’s dicta on this point were obiter because, in that case,
being one relating to an automatically unfair dismissal, the period
between the date of dismissal and the date of the delivery of the
judgment of the Labour Court was less than 24 months and it was
not necessary for purposes of our respective judgments to decide
that point. Accordingly, Davis AJA’s and Willis JA’s judgment on
this point is not binding upon me as it was obiter. However, in this
case it seems to me that I have to decide this point because I must
consider whether the limited retrospective operation of the
reinstatement order that I may be disposed to granting can be in
63
excess of the 12 month period or whether it has to be 12 months or
less.
[114] In regard to this question, I can do no better than adopt the view
and reasoning that I expressed in Kroukam. I had the following to
say in paragraphs 121 -129 of my judgment in that case:
“[121] Counsel for the appellant submitted that, if an order of
reinstatement was made, it should operate with retrospective
effect to the date of the appellant’s dismissal, namely, the 11 th
May 2001. From that date to the 17th October
2002, which was the date of the delivery of the
judgment of the Court a quo, it is just over
seventeen months. As that period is below 24
months, the question whether it is competent to
make a reinstatement order that operates with
retrospective effect for a period longer than 24
months in the case of an automatically unfair
dismissal and for a period longer than 12 months
in all other unfair dismissal cases does not arise.
The reference to 24 months and 12 months arises
out of the fact that in terms of sec 194 of the Act
compensation that is awardable to an employee
whose dismissal has been found to be automatically
unfair is capped at an amount equivalent to 24
months’ remuneration and that of an employee
whose dismissal has been found to be unfair for
lack of a fair reason or because no fair procedure
64
was followed in the employee’s dismissal is limited
to a maximum of 12 months remuneration.
[122] Davis AJA has expressed the view in his separate
judgment that it is competent for the Court to
make an order of reinstatement that operates with
retrospective effect up to the date of dismissal even
if that goes beyond 24 months or 12 months
retrospectively, as the case may be, because,
particularly in a case such as the present one, the
Court may wish to ensure in effect that an
employer who has dismissed an employee for a
reason that renders the dismissal automatically
unfair is dealt with firmly to show that such
conduct will not be tolerated by the Court. I am
unable to agree with this reasoning. This
proposition ignores the fact that, if one has regard
to sec 194 of the Act, provision has already been
made in the Act for an employer who is found to
have dismissed an employee for a reason that
renders the dismissal automatically unfair to be
ordered to pay double the amount of compensation
that an employer who has unfairly dismissed an
employee but not for such a reason may be ordered
to pay.
[123] It can be argued that backpay which an unfairly
dismissed employee gets paid when an order has
been made for his reinstatement with retrospective
65
effect constitutes in effect compensation for unfair
dismissal in the same way as compensation
provided for under sec 194 of the Act constitutes
compensation for unfair dismissal to an unfairly
dismissed employee who is awarded compensation
under sec 194 of the Act. If that is so, thus would
run the argument, a reinstatement order the
retrospective operation of which goes beyond 24
months or 12 months, as the case may be, would
amount to an award of compensation for unfair
dismissal which exceeds the relevant maximum
prescribed by sec 194. The argument would be that
such a retrospective operation of an order of
reinstatement would undermine the capping of
compensation prescribed by sec 194 of the Act.
[124] It would further seem that the construction that
the only limitation on the extent of the
retrospective operation of an order of
reinstatement is the date of dismissal ignores the
purpose of sec 194. The purpose of sec 194 is to
limit the financial risk that an employer has when
involved in an unfair dismissal claim. To secure
organised labour’s agreement to the limitation of
such financial risk, employers made a concession at
NEDLAC when the Labour Relations Bill was
negotiated, that reinstatement would be the
primary remedy in unfair dismissal cases. As
already stated above, sec 193 gives effect to that
66
agreement as far as reinstatement being the
primary remedy in unfair dismissal cases is
concerned. Sec 194 gives effect to that agreement in
so far as it relates to ensuring that the employer’s
financial risk in terms of payment to the employee
is limited to either 24 months’ remuneration or 12
months’ remuneration, as the case may be.
[125] If it is accepted, as I think it should be, that at least
part of what the retrospective operation of a
reinstatement order means is that the employer
must pay the employee backpay for the period
covered by such retrospective operation and that in
a case where the arbitrator or the Court awards a
dismissed employee compensation under sec 194,
such compensation is or at least part of such
compensation is backpay, then the proposition that
an order of reinstatement can operate
retrospectively to the date of dismissal even if this
goes beyond 24 months or 12 months
retrospectively, as the case may be, would not only
undermine but would also defeat the whole
purpose of sec 194 of the Act. I am unable to see
what purpose of the Act would be served by a
construction to the effect that, if an employee is
granted reinstatement, there is no limitation to the
employer’s financial risk in terms of backpay, but,
if the same employee is awarded compensation and
is not granted reinstatement, the employer’s
67
financial risk is limited to 24 months remuneration
or 12 months’ remuneration, as the case may be. I
prefer the view that the employer’s financial risk is
limited in either case.
[126] One way in which sec 194 would be undermined if
an order of reinstatement which operates with
retrospective effect beyond 24 months or 12
months, as the case may be, was made would be
this one. An employee who no longer wants to be
reinstated but only wants to be paid compensation
would indicate that he wants to be reinstated with
retrospective effect to the date of dismissal which
would go beyond 24 months or 12 months, as the
case may be. After the Court has granted him a
reinstatement order with such retrospective effect
and he has been paid his backpay covering the
period of retrospectivity going beyond 24 months
or 12 months, he would resign. In that way he
would have been able to get paid what in effect
would be compensation for unfair dismissal that
would be in excess of the relevant maximum
prescribed by sec 194. It seems to me that sec 193
should be construed to mean that an order of
reinstatement can operate retrospectively to the
date of dismissal or up to 24 months or 12 months
backwards, as the case may be, whichever is the
earlier. This construction will harmonise the
provisions of sec 193 and 194. It would seem to me
68
that that is the correct construction of sec 193. The
two sections must be construed in such a way that
the one does not undermine the other or defeat the
purpose of the other.
[127] I do not think that sec 195 of the Act changes any
of the above. Sec 195 of the Act reads: “An order
or award of compensation made in terms of this
chapter is in addition to, and not a substitute for,
any other amount to which the employee is entitled
in terms of any law, collective agreement or
contract of employment” It seems to me that the
backpay which flows from the retrospective
operation of an order or award of reinstatement
does not constitute an amount that such employee
can be said to be entitled to in terms of any law,
collective agreement or contract of employment as
provided for in sec 195. In our law an employee is
not entitled to have the Labour Court or an
arbitrator order that the reinstatement order (in
his favour) operate with retrospective effect. There
is no such right. Once the Labour Court or an
arbitrator has decided to order the employee’s
reinstatement, it or he has a discretion whether to
order that the reinstatement order operate with
retrospective effect. In the exercise of that
discretion, the Court or the arbitrator may decide
that such reinstatement order should or should not
operate with retrospective effect to the date of
69
dismissal or might order a limited retrospective
operation of the reinstatement order or might
order no retrospective operation of the
reinstatement order at all.
[128] In the light of all this it seems to me that, prior to
the Court or an arbitrator ordering that a
reinstatement order made in favour of an employee
shall operate with retrospective effect in favour of
the employee, the employee has no right to, and
therefore, cannot be said to be entitled to, any
amount in that regard in terms of any law,
collective agreement or contract of employment.
What the employee is entitled to is to make an
application to the Court or the arbitrator to
exercise its or his discretion in favour of ordering
that the reinstatement be with retrospective effect.
Once an order has been made, the employee
becomes entitled to such amount in terms of an
order of court or an arbitration award and not in
terms of any law, collective agreement or contract
of employment as contemplated by sec 195 of the
Act. I am accordingly inclined to think that any
backpay that an unfairly dismissed employee gets
paid when there has been an unfair dismissal claim
gets paid such amount not because he is entitled to
it in terms of any law or any collective agreement
or contract of employment but because he is
entitled to it in terms of an order of Court or an
70
arbitration award made in the exercise of a
discretion.
[129] In the light of the above it would therefore seem
that backpay flowing from the retrospective
operation of an order of reinstatement made under
sec 193 of the Act does not constitute an “amount
to which the employee is entitled in terms of any
law, collective agreement or contract of
employment” as contemplated by sec 195 of the
Act. It seems that the “amount that the employee is
entitled to in terms of any law, collective agreement
or contract of employment” that sec 195 refers to
does not include an amount that the employee is
entitled to in terms of an order of court or in terms
of an arbitration award. It seems to relate to
amounts such as unpaid wages for the period prior
to the dismissal, notice pay, severance pay, pension
or provident fund or amounts in terms of the
unemployment insurance Act, 1996.”
[115] It also seems to me that in regard to this question paragraphs 116 –
118 of my separate judgment in Kroukam are apposite. They read
thus:
“[116] The absence of a discretion on the part of the
Labour Court or an arbitrator to deny
reinstatement to an unfairly dismissed
employee in the absence of anyone of the
situations set out in sec 193(2) must be
71
understood against the background that
reinstatement was made a statutory primary
remedy in unfair dismissal disputes in return
for organised labour’s agreement that there
should be a capping of compensation that
could be awarded to unfairly dismissed
employees which was a huge concession and
sacrifice on the part of organised labour and
workers. In the explanatory memorandum
((1995) 16 ILJ 278) which accompanied the
Labour Relations Bill, before the Bill was
passed into the present Act, the following is
part of what the drafters of the Bill had to
say at 316 about the problems regarding
remedies which existed under the old regime:
‘There are also problems concerning the courts’
decisions regarding remedies. The courts have
on numerous occasions shown a reluctance to
reinstate workers who have been unfairly
dismissed because of the period of time that has
passed between the date of dismissal and the
date of the court order. This is a cause of
dissatisfaction among workers and undermines
the legitimacy of the adjudication process as an
alternative to industrial action. It also creates
problems for employers. Reinstatement orders
have on occasion been granted years after the
dismissals occurred. For the employer, who in
the interim has engaged an alternative labour
force in an endeavour to maintain production,
72
the consequences of such an order, particularly
in the case of mass dismissals, are self-evident.
The alternative of compensatory awards presents
its own difficulties. In the absence of statutory
guidelines or caps on compensation, which are
the norm in other countries, the courts have used
tests applied in personal injury claims to assess
losses. Awards have become open-ended and, in
the case of the dismissal of executives,
sometimes amount to hundreds of thousands of
rands.’
[117] At 320 of the explanatory memorandum it is stated
that the Bill gave statutory support for
reinstatement as a primary remedy where the
dismissal is found to be unfair. It is then said that
this is appropriate when adjudication takes place
shortly after the dismissal. It went on to set out “a
number of benefits in providing for reinstatement
as a primary remedy.” In the second of seven bullet
points against which the benefits were set out, the
benefit set out was:
‘it allows for legislative capping of compensation
awards. Without reinstatement, compensation must be
open-ended and calculated on a edictal damages basis.
Because the draft Bill offers reinstatement as a primary
remedy, it caps compensation awards.’
[118] In the light of the above it, therefore, seems to me
that, with regard to what remedies courts and
other tribunals would have power to make in
73
regard to dismissals that are found to be unfair, the
main objection on the part of organised labour was
that courts and other tribunals must ensure that,
except in certain specified situations, workers were
given their jobs back when they have been
dismissed unfairly, whereas one of organised
business’ objectives was that Courts and other
tribunals should not have power to make huge
awards of compensation against employers and
that, therefore, the compensation that they can
award should be capped. The deal arrived at, as
reflected in sec 193(2) and sec 194, was that
workers should be reinstated and the courts and
other tribunals should not have any discretion to
deny an unfairly dismissed employee reinstatement
except in specified situations and that there should
be a limitation on the amount of compensation that
Courts and other tribunals could award to
employees. In the light of all the above I consider
that the appellant should be granted an order of
reinstatement.”
[116] In the light of all of the above I conclude that it is not competent to
order a retrospective operation of a reinstatement order (even if
limited) which is in excess of twelve months in an ordinarily unfair
dismissal case. Accordingly, in this matter, retrospective operation
of the order of reinstatement that I propose to grant has to be 12
months or less but not more. That is part of the limitation on my
discretion to order that the reinstatement of the individual
74
appellants operate with retrospective effect.
[117] As the judgment of the Court a quo was delivered on the 19 th June
2002, a period of 12 months from that date backwards would run
from that date to 19 June 2001. Should the retrospectivity of the
reinstatement order be for less than 12 months or 12 months from
backwards to 19 June 2001? Even though in a case such as this one
that it is not competent to make a reinstatement order that operates
with retrospective effect beyond 12 months from the date of the
delivery of the order of the Court a quo backwards, the fact that the
individual appellants were without income during that period
remains and must be taken into account in the exercise of the
discretion. Their having been without income for that period was a
direct consequence of the respondent’s unfair conduct in
dismissing them when they should not have been dismissed. In this
case, as the reinstatement order can only operate with retrospective
effect from the date of the order of the Court a quo to 19 June
2001, this means that the respondent keeps whatever money it
otherwise may have had to pay the individual appellants were it not
for the legal impediment relating to the period of 12 months. The
respondent already benefited by a period of more than two years in
this case in respect of which the law does not place an obligation
upon it to pay backpay to the individual appellants even though it
has been found that they should not have been dismissed in the first
place. That is the period from March 1999 to June 2001. That is a
period of over two years for which the individual appellants get
penalised even if they are not in any way to blame for their
dismissal.
75
[118] There is a schedule in the record showing which of the individual
appellants got employment after the dismissal. That schedule is
based on affidavits which the individual appellants filed. The only
appellants who got employment after dismissal are E. Sobane and I
Dondolo. The former apparently got employment with the
University of the Witwatersrand from October 1999. His salary at
that University was R2000, 00 per month. The latter seems to have
got employed by an organisation referred to in the schedule simply
as Quantum earning R1100, 00 per month. The former earned less
at the respondent than at the University of the Witwatersrand while
the latter earned slightly more at the respondent, namely R1266, 00
per month. Both were still so employed at the time of the trial. The
rest of the individual appellants did not get any employment
between the date of their dismissal and the trial. That means that
for over at least two years from the date of their dismissal to the
conclusion of their matter, they went without any income and, on
my finding, unfairly so.
[119] Another factor which must be considered relates to whether or not
the individual appellants could have mitigated their losses. If they
could have but did not do so, such a factor would be relevant and
should be taken into account in the exercise of the Court’s
discretion. In this regard Ms Pule’s uncontradicted evidence that
anyone of the individual appellants could have continued to work
for the respondent if he got himself employed by Workforce (Pty)
Ltd is relevant. In her evidence Ms Pule did not specify what the
terms and conditions were under which the individual appellants
could have been employed by Workforce (Pty) Ltd and continue to
work at the respondent. This omission on her part includes what
76
the wage rate would have been for any individual appellant who
chose to do so. This makes it difficult to say what income the
individual appellants could have received in the interim if they had
got themselves employed by Workforce. It, therefore, becomes
difficult to say how much should be deducted from the backpay
that the individual appellants should otherwise get.
[120] Ms Pule’s evidence may or may not coincide with what she wrote
in paragraph 11.1 and 11.2 of her letter to the union dated 16
February 1999. In those paragraphs she wrote:
11. “B
y
wa
y
of
so
me
ba
ck
gr
ou
nd,
we
ill
ust
rat
e
the
77
co
m
pa
ny
’s
po
siti
on
to
be
th
us:
11.1 Contractors will be retained on the condom night-
shift section having regard to the fluctuating needs
and requirements which necessitate an increase or
in fact minimising of labour on very short notice.
Should any affected employee meet the criteria and
express a willingness to work on the night-shift
condom section of our operations, we will make the
necessary arrangements for that person to be
interviewed by Workforce and to acquire a
position with it;
11.2 The status quo will be retained with regard to
engaging contractors on the examination gloves for
the same reasons as recorded above;”
[121] What did Ms Pule’s last statement in paragraph 11.1 of her letter of
16 February 1999 to the union mean? At first glance it seems to
mean that the respondent would ensure that any affected employee
78
who met the necessary criteria and expressed a willingness to work
on the night-shift condom section would be guaranteed
appointment. However, on closer examination of the statement it
seems that what the respondent was giving an assurance of was that
it would secure an interview of such employee by Workforce. The
last portion of that statement refers to “ to acquire a position with
[Workforce]”. May be it was an assurance that such an employee
would definitely get appointed if he met the criteria. But, if such
employee would be assured of appointment, what would be the
purpose of the interview that the respondent would arrange for
such employee. The interview could not have been for determining
whether he met the criteria because such an employee would have
had to meet the criteria and express a willingness to work before
the respondent could arrange the interview.
[122] At any rate the respondent did not lead any evidence as to which of
the individual appellants in this case met the criteria applicable to
working on the night-shift condom section. It should have done this
because it is only in respect of those individual appellants that it
could be said that they could have but did not mitigate their losses
by taking up the respondent’s offer, if it was an offer, contained in
this regard. However, it is strange that the union and the individual
appellants did not, after this letter of the 16th February 1999,
approach the respondent to discuss possible utilisation of the
individual appellant’s services even if this was to be under protest
pending the outcome of the litigation. This should count against the
appellants. The union and the individual appellants simply showed
no interest whatsoever.
79
[123] Ordinarily I would have taken the view that the retrospective
operation of the reinstatement order in this case should operate
from the 19 June 2001 which would have given a 12 months
retrospective operation from the date of the judgment of the Court
a quo. However, in the light of the appellants’ failure to approach
the respondent to discuss the utilisation of the individual
appellants’ services pending the outcome of the litigation, I
propose to reduce the period by half. The result is that the
reinstatement order that I propose to make is one the retrospective
operation of which will commence from the 19th December 2001.
[124] With regard to costs, the appeal was dealt with by both Counsel on
the footing that costs should follow the result.
[125] In the premises I make the following order:
1. The appeal is upheld with costs;
The order of the Labour Court is set aside and replaced with the
following one:
“(a) The second and further applicants’ dismissal is hereby declared
to have been without any fair reason.
(b) subject to (c) below, the respondent is ordered to reinstate the
second and further applicants in its employ with retrospective
effect from the 19th December 2001.
(c) With regard to individual applicants E. Sobane and I. Dondolo the order of
reinstatement in (b) operates with effect from the 19th June 2002.
(d) The respondent is ordered to pay the applicants’ costs.
80
_______________
Zondo JP
I agree.
_______________
Mogoeng JA
I agree.
_______________
Jafta AJA
Appearance:
For the appellant : Adv C Orr
Instructed by : Cheadle Thompson & Haysom
For the respondent : Adv W Hutchinson
Instructed by : Fluxmans Inc
Date of judgment : 25 November 2005
81