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[2016] ZALAC 43
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Standard Bank of South Africa Ltd v Letsoalo (J18/2014) [2016] ZALAC 43 (27 July 2016)
THE
LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Not Reportable
Case no: JA 18/2014
STANDARD BANK OF SOUTH
AFRICA LTD
Appellant
and
ANGELINA
LETSOALO
Respondent
Heard:
10 November 2015
Delivered:
27 July 2016
Summary:
Dismissal for operational requirements – procedural fairness –
section 189 of the Labour
Relations Act – proper consultation –
what constitutes – whether rejection of alternative position by
employee
coupled with an alternative salary proposal constituting a
counter offer – employer not responding thereto – whether
conduct by employer rendered the dismissal procedurally unfair.
Coram:
Tlaletsi DJP, Musi JA
et
Makgoka AJA
JUDGMENT
MAKGOKA AJA
[1]
The issue in this appeal is whether the
employer consulted properly with an employee before dismissing her
for operational reasons.
The appellant appeals against the whole
judgment and order of the Labour Court delivered on 2 October 2013,
in terms of which the
dismissal of the respondent (Ms Letsoalo) due
to operational requirements, was held to be procedurally unfair. The
appellant appeals
against that finding, with leave of the Labour
Court, granted on 6 March 2014.
[2]
Ms Letsoalo was employed by the appellant
on 20 September 2010 as a provincial foreign exchange manager. She
was based at the appellant’s
office in Mpumalanga Province. She
reported directly to Mr Andre Jonker, (Mr Jonker) the appellant’s
provincial sales manager.
Due to the worsening economic climate, Ms
Letsoalo’s position was one of those identified as non-critical
by the respondent.
She was a member of South African Society of Bank
Officials (SASBO) a representative trade union at the appellant’s
work
place.
[3]
Prior to embarking on the retrenchment
process, the appellant consulted with SASBO regarding possible
dismissals due to operational
requirements. An agreement was reached
on the procedure that needed to be followed regarding the issue. In
terms of that agreement,
all employees identified as occupying
non-critical positions were to be placed on informal redeployment for
six months. If a suitable
position was not identified during that
period, the employees would be placed on an informal redeployment
process for two months.
If there were still no suitable positions
available, the employees would be issued with letters of termination
at the beginning
of April 2012, with their services to terminate on
30 April 2012.
[4]
In the Mpumalanga Province, where Ms
Letsoalo was based, four positions, including hers, were identified
as non-critical. Subsequent
to the consultation with SASBO, the
appellant consulted individually with the affected employees,
including Ms Letsoalo, pursuant
to the agreement with SASBO. The
consultation with Ms Letsoalo was done through Mr Jonker. She applied
for various positions, but
was unsuccessful in each of them. On 23
April 2012, she was offered a position with the appellant’s
business banking section
as account analyst. She rejected the offer
on 26 April 2012 and eventually, on 30 April 2012, she was dismissed
for operational
requirements. I will deal in full with the
circumstances in which she rejected the offer, as those circumstances
are relevant to
the outcome of the appeal.
[5]
As a result of her dismissal, Ms Letsoalo
referred an unfair dismissal dispute to the Labour Court, challenging
both the substantive
and procedural fairness of her dismissal by the
appellant. Substantively, she alleged that the appellant had failed
to comply with
the provisions of s189 of the Labour Relations Act 66
of 1995 (the LRA) in that she was not consulted by the appellant
prior to
her dismissal. She further alleged that the dismissal was
procedurally unfair because the consultation process was not
followed.
[6]
The trial took place from 3–6 June
2013 in the Labour Court before Molahlehi J. Despite some initial
contentions by Ms Letsoalo’s
legal representative that the
substantive fairness of the dismissal was also in dispute, the issue
was eventually not pursued,
and the sole issue was whether the
dismissal was procedurally fair, and in particular, whether the
appellant had properly consulted
with Ms Letsoalo before her
dismissal. This position is also confirmed by the minute of a
pre-trial conference held by the representatives
of the parties on 29
November 2012.
[7]
Only Mr Jonker, on behalf of the appellant,
and Ms Letsoalo, testified during the trial. Much was common cause
between the parties.
What became of critical importance is the
alternative position offered by the appellant to Ms Letsoalo. Mr
Jonker testified that
once Ms Letsoalo’s position was
identified as non-critical, he engaged with Ms Letsoalo over a period
of eight months, including
assisting her to find other employment
both internally and with other retail banks. He pointed out that
because Ms Letsoalo was
a specialist in the foreign exchange, she
lacked in other skills. It was not easy to find alternative
employment for her. During
2012, a position of a banking accounting
analyst was identified and offered to her, in a letter dated 23 April
2012. Had she accepted
the position, she would have commenced her
duties on 1 May 2012. If she did not, her last day in the employ of
the appellant was
to be 30 April 2012.
[8]
However, that position was at a lower grade
than that occupied by Ms Letsoalo at that stage. At the time of the
retrenchment, her
salary was R453 737 per annum. The alternative
position offered was at the salary of R379 484. Initially Ms
Letsoalo’s
calculation was that if she accepted the position,
she would be required to take a salary reduction of R7 000 per
month, while
she was only prepared to take a salary reduction of no
more than R4 000 per month. A meeting was held on 24 April 2012
between
Mr Jonker and Ms Letsoalo. The meeting was also attended by
Ms Tandiwe Dlamini (Ms Dlamini), who was the appellant’s
provincial
human resources consultant.
[9]
During that meeting, it was agreed that Ms
Letsoalo’s calculations on the salary reduction of R7 000
per month was erroneous,
and that the correct figure for her salary
reduction was R5 628 per month. Subsequent to that meeting, Ms
Dlamini wrote an
e-mail to Ms Letsoalo recording the outcome of the
meeting, and explained to Ms Letsoalo that the offer of the position
of account
analyst was at the maximum in the relevant band and that
the appellant could not offer her anything more. She was invited to
indicate
her acceptance of the offer by noon on 25 April 2012,
failing which the appellant would proceed with the retrenchment. Ms
Letsoalo
responded to Ms Dlamini’s e-mail the same day, 25
April 2012, as follows:
‘
Due
to the fact that there were (sic) of Grade 11 in the Province and I
was never given the opportunity to prove myself, and yet
you (are)
offering me the role of ‘Account Analyst’ which I
understand you are trying to assist and at this point in
time I am
prepared to take whatever position you (are) offering for as long as
I will be comfortable to do (and I am sure with
the good support,
coaching I will definitely do well). But my problem is that I cannot
accept any offer which is less with +-R7 000
from my current
salary as it will really have a huge financial impact which will
definitely affect me badly. I take note that you
are trying to assist
, and it is because of that why (sic) I’m requesting you not to
cut my salary with R7 000 but with
R4 000’.
[10]
Ms Dlamini responded to Ms Letsoalo’s
e-mail, still on 25 April 2012, emphasising that there were
guidelines to follow regarding
salary grades which the appellant was
not at liberty to ignore, and go against. She enquired from Ms
Letsoalo whether she would
be accepting the offer by noon of that
day, or whether she should proceed with the retrenchment. At 11h19,
Ms Letsoalo indicated
in a return e-mail to Ms Dlamini that she was
not accepting the position because of the R7 000 salary deduction she
would have
to take if she accepted the position. She further stated
that:
‘
I
am not accepting this salary cut of R7 000, and it is so unfortunate
that I will have to take the matter further to seek for external
assistance…’
[11]
Another meeting was convened by Mr Jonker
with Ms Letsoalo to discuss the matter further, which Ms Dlamini also
attended. During
that meeting, the package of the position offered to
Ms Letsoalo was explained to her, as it was Mr Jonker’s view
that her
calculations as to the salary reduction were erroneous. A
detailed breakdown of the package was drafted and presented to Ms
Letsoalo.
It was also made it clear that the offer was at the maximum
of the band and that the appellant could not offer her more as the
salary grades were regulated by the appellant’s company
guidelines. Notwithstanding the above, Ms Letsoalo declined the
position
through an e-mail dated 26 April 2012, on the basis that it
required of her to take a salary reduction of R5 628 per month.
She suggested that her salary cut be no more than R3 311 per
month. There was no response by the appellant to Ms Letsoalo’s
e-mail.
[12]
Mr Jonker further testified that on 27
April 2012, he telephonically endeavoured to persuade Ms Letsoalo to
accept the offer as
he was of the view that she would receive much
needed exposure and experience, which would have stood her in good
stead when she
later applied for other positions internally with the
appellant. Mr Jonker’s efforts came to nought as Ms Letsoalo
persisted
in her rejection of the offer. She was accordingly
retrenched on 30 April 2012.
[13]
In her testimony, Ms Letsoalo stated that
there was no need for the appellant to do away with her position.
According to her, the
position should rather have been aligned to
other business units. With regard to the alternative position, she
testified that she
rejected it because of the reduction in salary.
During cross-examination, she stated that she rejected the offer as a
matter of
principle because she felt that the appellant had not
followed the correct procedure. Much of her testimony introduced new
issues
which were not canvassed with Mr Jonker during
cross-examination.
[14]
The Labour Court handed down its judgment
on 2 October 2013, in which it rejected Ms Letsoalo’s
contention that she was never
consulted by the appellant. However,
the Labour Court found that Ms Letsoalo’s dismissal was
procedurally unfair on the basis
that she had not completely rejected
the offer of alternative position made to her. For that reason, the
Labour Court ordered the
appellant to compensate Ms Letsoalo in the
amount equivalent to 12 months, calculated at the salary that she
received at the time
of the dismissal.
[15]
In arriving to that conclusion, the Labour
Court reasoned that Ms Letsoalo’s response to the offer of
alternative employment,
in which she declined the offer on a salary
reduction of R5 628.18 per month, and proposed instead a salary
reduction of R3 311
per month, could not be regarded as an
outright rejection, but rather as a counter-proposal. The Labour
Court made a finding that
there was no evidence that the appellant
had considered the counter-proposal. It also pointed out that the
formal notice period
given to Ms Letsoalo was less than 30 days which
had been promised to her. It concluded, however that, failure in this
regard was
not “serious enough” to warrant a conclusion
that there was a defect in the procedure.
[16]
The Labour Court then concluded thus:
‘
In
relation to the offer of the alternative employment, I found that the
employee did not necessarily reject the offer but made
an alternative
proposal which the respondent failed to consider. The failure by the
respondent to consider the counter-proposal
by the applicant, in my
view, has an impact on the procedural fairness of the dismissal. The
issue that then arises is whether
the failure to consider the
alternative proposal made by the applicant is serious enough to
warrant the maximum compensation for
the unfairness of the procedure.
In my view, that failure to consider the proposal is serious and but
for the fact that the substantive
fairness was not in issue, this
would have had a serious impact on the substantive fairness had it
remained an issue for consideration…In
light of the above, I
find that the respondent should for that reason be ordered to pay the
maximum compensation.’
[17]
In this Court, the appellant relies on two
grounds for its contention that the Labour Court erred in its
conclusion. The first ground
is that the basis on which the Labour
Court premised its conclusion, i.e. that the appellant had not
considered Ms Letsoalo’s
counter-offer, was never pleaded, nor
relied on by Ms Letsoalo in her statement of case and during her
evidence. According to the
appellant, it was never called to answer
such a case, and as such, it was prejudiced because the Labour Court
went beyond the scope
of the pleadings and the evidence in coming to
its conclusion. The second ground is that the Labour Court’s
conclusion that
Ms Letsoalo did not completely reject the offer but
made a counter-offer, is in any event, not supported by the evidence.
[18]
I find it convenient to consider the second
ground first, as it is, in my view, potentially dispositive of the
appeal. But before
I do so, it is prudent to set out the legislative
framework governing dismissals. Such framework finds expression,
among others,
in two sections of the LRA, namely ss 185 and 189. The
former confers on every employee, a general right not to be dismissed
unfairly,
while s189 pointedly governs dismissals for operational
requirements. In terms of s189(1), the employer is required to engage
employees
or their representatives, depending on the circumstances,
in a consultation process when it contemplates dismissals based on
its
operational requirements. Section 189(2)(a)(i) enjoins the
employer and the employees or their representatives to attempt to
reach
consensus on appropriate measures to avoid the contemplated
dismissals. Section 189(3)(b) requires the employer to disclose to
the other consulting party in writing the reasons for the proposed
dismissals and “the alternatives that the employer considered
before proposing the dismissals and the reasons for rejecting each
one of those alternatives.”
[19]
I
turn now to consider whether Ms Letsoalo’s e-mail dated 26
April 2012 constituted a counter-offer. This is essentially an
enquiry as to whether there was proper consultation.
It
involves a factual enquiry. As to how that enquiry is to be
undertaken, two well-settled principles must be applied. The first
is
that courts will not assist employees who refuse to accept reasonable
alternative positions.
[1]
The second is that courts will not find against employers who provide
a reasonable explanation for not accepting alternatives proposed
by
employees or their trade unions.
[2]
Therefore, in the context of the present case, it must be determined
(a) whether Ms Letsoalo refused to accept a reasonable alternative
position, and (b) whether the appellant provided a reasonable
explanation for not accepting the alternative remuneration package
proposed by Ms Letsoalo.
[20]
It is common cause that the appellant did
not respond to Ms Letsoalo’s e-mail of 26 April 2012, and that
the appellant proceeded
with the retrenchment process. According to
the Labour Court, this demonstrates that the retrenchment occurred
without the appellant
considering her “counter-offer”. On
that basis, the Labour Court found that the dismissal was
procedurally unfair.
It appears that the Labour Court ignored the
background and context of Ms Letsoalo’s e-mail. It was preceded
by intensive
engagement between her and the appellant (represented by
Mr Jonker). Sight should not be lost of the fact that the alternative
position offered to Ms Letsoalo was two grades lower than the one she
held. It was a demotion. Necessarily therefore, a substantial
reduction in salary was inevitable. It was explained to her
repeatedly by Mr Jonker and Dlamini that the salary that was offered
for the lower position was the highest in that band, and there was no
way the salary could be increased if she accepted the position.
[21]
Two meetings were held in this regard where
the point was made clear to her. After each meeting, she made her
position very clear
that she was not prepared to accept a salary
reduction beyond a particular threshold. By 26 April 2012, it was
clear that the parties
held irreconcilable views on the matter. It
would therefore have been an exercise in futility, and served little
or no purpose,
had the appellant reverted to Ms Letsoalo as to its
final decision. In all circumstances, the answer to what the Labour
Court deemed
to be a counter-proposal, was a foregone conclusion: the
appellant would have simply reiterated its earlier position that
there
was nothing more it could offer in terms of salary to Ms
Letsoalo in the alternative position.
[22]
The context in which the offer was made,
and responded to, must be borne in mind. It is this: The appellant
was experiencing financial
difficulties. The appellant’s final
position had been conveyed clearly and unequivocally to Ms Letsoalo.
Under those circumstances,
it is difficult to see what difference it
would have made, had the appellant responded to Ms Letsoalo’s
e-mail. Had there
been a response, it would predictably have been to
reiterate the appellant’s position, which had been conveyed to
her previously.
In all circumstances, Ms Letsoalo cannot tenably
suggest that she does not know the reason why the appellant proceeded
with the
retrenchment without responding to her e-mail of 26 April
2012. The Labour Court did not address this aspect. At the risk of
repetition,
the reason was provided to her repeatedly during the
process of consultation, as fully set out in the paragraphs above.
[23]
In
the context of the matter, the appellant’s reason for not
responding to Ms Letsoalo’s e-mail is self-evident. It
is
unlikely that the representations of Ms Letsoalo would have dissuaded
the appellant otherwise, given the virtual breakdown in
the
consultation process. The law requires consultation, not futile
engagements. As this Court explained in
SACTWU
and Another v Discreto
(
a
Division of Trump &
Springbok
Holdings
)
,
[3]
the function of a court in scrutinising the consultation process is
not to second-guess the commercial or business efficacy of
the
employer’s ultimate decision, but to pass judgment on whether
the ultimate decision arrived at was genuine and not merely
a sham.
[24]
In the present case, far from being a sham,
the consultation process engaged by the appellant was genuine and
bona fide
,
geared to minimise the impact of the retrenchment on Ms Letsoalo.
Therefore, by concluding that the dismissal was procedurally
unfair
simply because there was no response to Ms Letsoalo’s e-mail,
despite extensive and exhaustive consultations that
preceded it, the
Labour Court, in my view, placed form above substance. The appellant,
in particular Mr Jonker, did everything
it could to assist her and to
comply with its obligations in terms of s189 of the LRA.
[25]
Ms Letsoalo was clearly ill-advised, and
unreasonable, in rejecting what plainly was a reasonable offer, in
the circumstances. I
agree with the contention by Mr Cithi, attorney
for the appellant, that Ms Letsoalo’s conduct in rejecting a
reasonable offer
was at variance with the notion of joint
consensus-seeking process as envisaged in s189 of the LRA. Therefore,
unlike the Labour
Court, I conclude that Ms Letsoalo’s conduct,
under the particular circumstances of the case, constituted an
unequivocal
rejection of the offer of an alternative position, and
not a counter-offer.
[26]
This
conclusion deems it unnecessary to consider the appellant’s
contention that the issue of counter-offer and non-consideration
thereof was not pleaded, and therefore the Labour Court should not
have considered it. But it appears that the appellant is wrong
in
this regard. Ms Letsoalo has been unfortunate to have been assisted
by less than competent people. Her statement of case is
not a model
of clarity or elegance. It is an incoherent hand-written document,
from which it is not clear what the issues are.
However, during the
trial, it became clear that the issue of the counter-offer was
canvassed, thus enlarging the issues. It is
trite that the
court
has inherent jurisdiction to decide a matter even where it has not
been pleaded, provided that such matter was ventilated
before it.
[4]
[27]
In
the circumstances, the appeal must be allowed. The Labour Court’s
order must be replaced with an order dismissing Ms Letsoalo’s
application. With regard to costs, I bear in mind that the awarding
of costs in labour disputes is governed by the requirements
of law
and fairness in terms of s162 of the LRA. The rule of practice that
costs follow the result therefore does not govern the
making of costs
orders in labour disputes. See in this regard
MEC
for Finance, Kwazulu-Natal and Another v Dorkin N.O. and Another.
[5]
The requirements of law and fairness are on equal footing, and none
is secondary to the other. See in this regard
Xaba
v Portnet Ltd
.
[6]
In the present case, the successful appellant is a corporate entity
against an individual employee who is not supported by a trade
union.
[28]
In
Lewis
v Media 24 Ltd,
[7]
it was observed that the Labour Court has generally been reluctant to
order costs against an individual employee. Indeed, there
is an
unambiguous trend in the judgments of the Labour Court, this Court
and the erstwhile Appellate Division, in which those Courts
have
declined to make costs orders against unsuccessful individual
litigants not supported by trade unions, first, because of their
vulnerable financial position, and second, because a costs order may
deter similarly placed individuals from approaching the courts.
[8]
[29]
I therefore consider that the requirements
of law and fairness dictate that no order should be made regarding
the costs of appeal.
[30]
The following order is made:
1.
The appeal succeeds;
2.
The order of the Labour Court made on 2
October 2013 is set aside and in its stead the following is
substituted for it:
‘
The
applicant’s claim of procedural unfairness regarding her
dismissal is dismissed. There is no order as to the costs’
3.
There is no order as to the costs of the
appeal.
________________
T.M.
Makgoka
Acting
Judge of the Labour Appeal Court
Tlaletsi
DJP and Musi JA concur in the judgment of Makgoka AJA
APPEARANCES:
FOR THE APPELLANT:
Mr D. Cithi of Mervyn
Taback
Inc. Parktown,
Johannesburg
FOR
THE RESPONDENT
In person
[1]
[1]
Wanda
and Others v Toyota SA Marketing, a Division of Toyota SA Motors Ltd
[2003] 2 BLLR 224 (LAC).
[2]
SACCAWU
and Others v Wimpy Aquarium
[1998] 9 BLLR 965 (LC).
[3]
[1998] 12
BLLR 1228 (LAC).
[4]
Shill v
Milner
1937
AD 101
at 105;
Collen
v Rietfontein Engineering Works
1948 (1) SA 413
(AD) at 433;
Van
Mentz v Provident Assurance Corporation
1961
(1) SA 115
(A) at 122;
Robinson
v Randfontein Estates, G.M. Co Ltd
.,
1925 A.D. 173
at 198.
[5]
(2008) 29
ILJ 1707 (LAC);
[2008] 6 BLLR 540
(LAC) at para 17.
[6]
(2000) 21
IJL 1739 (LAC).
[7]
Lewis v
Media 24 Ltd
(2010)
31 2418 (LC) at para 129.
[8]
NUM v
East Rand Gold & Uranium Co. Ltd
(1991) 12
ILJ 1221 (A);
Malandosh
v SABC
(1997) 18 ILJ 544 (LC);
Value
Logistics v Basson and Others
(2011) 32 ILJ 2552 (LC
);
University of Pretoria v CCMA and Others
(2012)
33 ILJ 183 (LAC);
Nombakuse
v Department of Transport & Public Works: Western Cape
Provincial Government
(2013)
34 ILJ 671 (LC).