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[2017] ZALAC 40
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MSC Container Depots (Pty) Ltd v Doorasamy (DA17/2015) [2017] ZALAC 40 (13 June 2017)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, DURBAN
Not Reportable
Case no: DA 17/2015
In the matter between:
MSC CONTAINER DEPOTS
(PTY)
LTD
Appellant
and
DENZEL
DOORASAMY
Respondent
Heard: 30 August 2016
Delivered: 13 June
2017
Summary: Appeal
against finding that dismissal of respondent, an estimator, employed
by the appellant was substantively and procedurally
unfair. On appeal
it was held that the dismissal was for operational reasons and had
been preceded by consultation and the application
of LIFO. The appeal
was upheld.
Coram: Ndlovu, Coppin
and Landman JA
Neutral citation:
MSC
Container Depots (Pty) Ltd v Doorasamy
(LAC DA 17/2015)
JUDGMENT
LANDMAN JA
[1] The judgment in this
appeal has been delayed on account of the unfortunate ill-health of
our colleague Ndlovu JA who subsequently
passed away. We offer our
apologies to the parties for the delay.
[2] MSC Container Depots
(Pty) Ltd, the appellant, appeals against paragraphs 2 and 3 of the
findings and the whole order of the
Labour Court (Cele J) delivered
on 27 May 2015 that the retrenchment of Denzel Doorasamy on 31 March
2009 was procedurally and
substantively unfair and ordering his
reinstatement and costs. The appeal is with the leave of this court.
[3] The court
a quo
dismissed the respondent’s claim that he, a shop steward, was
victimised by the appellant. There is no cross-appeal.
The background
[4] The appellant is part
of an international group of companies. The appellant operates a
container depot where shipping containers
were received, stored in
stacks, inspected, repaired and later dispatched to various
destinations worldwide. The inspection of
the containers was done to
ensure that they were air and water tight. If a container failed the
inspection, it would be sent for
repairs. The inspections and, where
necessary, an estimate of the repair costs, are performed by
employees of the appellant called
“estimators”.
[5] The appellant
maintained a depot and employed three estimators. Later, the
appellant also leased land from Transnet referred
to as “the
Shosholoza land” where it had the necessary space to inspect
containers. At that stage, the appellant employed
four estimators.
The lease of the Shosholoza land terminated in July 2007. The
appellant attempted to lease another site known
as “Ambrose
Park” without success. The appellant was left to fall back on
its original depot with its space constraints.
[6] On 5 January 2009,
the appellant notified the respondent that it was contemplating
retrenchment for the following operational
reasons:
(a)
consequences
of the loss of the Shosholoza land;
(b)
financial
loss;
(c)
the
Geneva audit; and
(d)
the
world economic collapse.
[7] The appellant
proposed to reduce the number of estimators on its staff and a
managerial employee. The appellant said that it
proposed applying
LIFO and this meant that the respondent was in danger of being
dismissed. It proposed consultation with the respondent.
Some
consultations took place, but the respondent was dismissed.
The issues on appeal
Appeal against finding
of substantive unfairness
[8] Mr Schumann, for the
appellant, submitted that the court
a quo
misdirected itself
by not finding that the appellant’s operational requirements
necessitated the retrenchment of one estimator.
He referred to
paragraph 28 of the judgment in support of his submission. This
paragraph reads:
‘
On this
aspect the applicant testified that there was overtime worked by
Estimators after the move from the Shosholoza Land in April,
2009,
and such overtime extended into the night till about six or seven
o’clock, and in the summer it extended beyond those
hours. The
volume of containers entering and leaving the MSC Depot after the
closure of the Shosholoza land had increased substantially.
In the
light of such an increase in volume of containers, applicant’s
dismissal on operational grounds was completely unfair.’
[9] I am satisfied that
there was an operational basis for retrenchment arising from the loss
of the Shosholoza land and a return
to the original depot, with its
space restrictions. Only three estimators were able to do the work
there because there was insufficient
space to place containers on the
ground. This aspect was barely challenged even when the respondent
was given a second opportunity
to do so.
[10] The court
a quo
did not specifically reject the economic proposition that the
appellant needed to save costs or the outcome of the audit. It seems
to have considered the downturn in the global economy but found that
the original depot received more containers than what it had
previously received.
[11] However, the court
a
quo
held that the respondent’s dismissal was procedurally
and substantively unfair because:
(a)
The
appellant appeared to have made a deliberate choice to avoid the
retention of skills where the use of LIFO with the retention
of
skills would have been objectively fair in the circumstances.
(b)
The
appellant acted prematurely as it had an obligation to delay the
dismissal of the respondent while looking for (and securing)
another
site as the number of containers coming into the depot had not
decreased but had increased and the remaining estimators
were
required to work overtime after the respondent’s dismissal.
(c)
The
appellant did not adequately consider alternatives to the dismissal
of the respondent because of the attitude it adopted towards
the
respondent. For example, the storeman position should have been
offered to the respondent.
(d)
The
appellant resorted to retrenchment as a quicker and easier solution
to eliminate the respondent, being an employee who was found
to have
been much less productive than other estimators and to have caused
massive loss of productivity.
(e)
The
appellant used retrenchment as a quick fix solution for the problems
it associated with the respondent.
(f)
There
was no evidence presented by the appellant of a rational connection
between the number of estimators and the financial strain
at the
depot.
[12] Each of the reasons
requires consideration. The respondent was adamant that he had longer
service than a fellow estimator,
Mr Naicker. There is simply no merit
in this. The respondent acknowledged that after he signed a contract
of employment with the
appellant on 1 August 2005 he asked to be
allowed to commence his employment on 1 September but he nevertheless
maintains that
his length of service commenced on 1 August. It did
not. Naicker had the longer service as he commenced work on 1 August
2005.
[13] The respondent was
the only estimator who had obtained an IICL certificate, although the
certificate had recently expired.
He had trained some estimators.
Last in, first out (“LIFO”) is a fair and neutral
selection criterion. It may also
be accompanied by the retention of
skilled employees with lesser service if the employer requires those
skills. The finding of
the court
a quo
, that the appellant
appeared to have made a deliberate choice to avoid the retention of
skills where the use of LIFO with the retention
of skills would have
been objectively fair in the circumstances, constitutes a
misdirection. It is fair for an employer’s
right to retain
skilled staff that may have been at risk by the application of LIFO
for retrenchment. If an employee with such
skills is targeted for
dismissal, it is open to that employee to persuade the employer to
retain him or her, but if the employer
declines to do so, it does not
constitute an unfair decision.
[14] The finding that an
obligation, as it was phrased, rested on the appellant to delay the
dismissal of the respondent while looking
for (and securing) another
site, does not take cognizance of the fact that the appellant had
stayed its hand for at least a year
while it waited for clarity on
the Ambrose site that it wanted to lease. The fact that the number of
containers arriving at the
original depot had increased and overtime
was worked, does not take into consideration that the problem was the
shortage of ground
space upon which to place the containers for
inspection. There is no suggestion that the overtime worked was such
that it could
have been used to structure a shift system and so have
saved the respondent’s position.
[15] The respondent did
not suggest an alternative post when the appellant consulted him.
Neither did the respondent respond to
an invitation made at the
pre-trial conference to list the alternative posts that could have
been offered. The court
a quo
held that the appellant should
have offered the respondent a storeman position. But this overlooks
the fact that the storeman’s
post was not available during the
consultation process. The post was only advertised in October 2009,
some seven months after the
respondent’s dismissal. In the
absence of evidence suggesting the contrary, it may be inferred that
it became vacant shortly
before it was advertised.
[16] The court
a quo
found that the appellant resorted to retrenchment as a quicker and
easier solution to eliminate the respondent, being an employee
who
was found to have been much less productive than other estimators.
But LIFO was applied and as the respondent had the lesser
service, he
was retrenched. The fact that the appellant regarded him as the least
productive estimator was not the cause of his
dismissal.
[17] The court
a quo
found that there was no evidence presented by the appellant of a
rational connection between the number of estimators and the
financial strain at the depot. Assuming that this finding is correct,
it is completely outweighed by the fact that operationally
there was
no space at the original depot and therefore no need for a fourth
estimator when the appellant lost the Shosholoza land.
The original
depot could only accommodate three estimators.
[18] I conclude that in
the circumstances the dismissal of the respondent was substantively
fair.
Appeal against
procedural unfairness
[19] The court
a quo
found as regards the procedure followed by appellant that led to the
dismissal of the appellant as follows:
(a)
The
appellant failed to provide the respondent with a notice as envisaged
by section 189(3) of the LRA.
(b)
The
respondent learnt of the contemplated retrenchment on 5 January 2009
while attending a meeting.
(c)
The
respondent communicated about this by letter on 9 February 2009 but
he did not complain of the procedure followed to initiate
the
process. Nor did he complain that his trade union had not been
formally served with the section 189(3) notice. The respondent
did
not suffer any prejudice.
(d)
A
consultation meeting was held on 23 February 2009.
(e)
After
the meeting of 23 February 2009, the appellant sent a written
communication outlining four reasons why retrenchment was
contemplated,
the alternatives considered and proposed that LIFO
would be used and two employees were affected; the respondent and a
managerial
employee.
(f)
A
further meeting was held on 4 March 2009.
(g)
On
9 March 2009, information that the respondent sought was supplied to
him in writing.
(h)
On
18 March 2009, the respondent sought further information on losses
incurred by the appellant and raised a number of issues, including
an
averment that the appellant was conducting undercover approaches to
employees of both unions, particularly the shop stewards.
(i)
On
23 March 2009, the appellant denied the allegations and emphasised
that the depot was continually incurring losses.
(j)
A
further consultation meeting was held on 25 March 2009.
(k)
On
27 March 2009, the appellant replied to queries raised in the
meeting.
(l)
On
31 March 2009, the respondent was dismissed.
(m)
While
the respondent raised certain issues during the consultation process,
he did not do so with as much vigour as he did during
the trial.
(n)
The
appellant selected LIFO and the respondent did not resist it.
[20] Having made these
findings the court
a quo
ought to have concluded that the
dismissal was at least procedurally fair. It did not. The court
a
quo
, in the face of the evidence, could only have decided that
the process followed was unfair if it had been a sham. But the court
a quo
expressly rejected the respondent’s claim that he
was targeted because he was a shop steward. This goes to show that
the
retrenchment was not a sham.
[21] In the result, the
appeal must be upheld and the order of the court
a quo
set
aside.
Costs
[22] Costs in this Court
and in the court
a quo
are awarded on the basis of law and
fairness. There is no warrant to order costs in this Court or the
costs of the application
for leave to appeal in the court
a quo
against a retrenched employee.
Order
[23] The following order
is made:
1.
The
appeal is upheld.
2.
The
order of the Labour Court delivered on 27 May 2015 is set aside and
replaced with the following order:
‘
(1) The
dismissal of the applicant was substantively and procedurally fair.
(2) There is no order as to costs.’
3. There is no order as
regards the costs of the appeal including the application for leave
to appeal.
_____________________
AA Landman
Judge of the Labour
Appeal Court
Coppin JA concurred in
the judgment of Landman JA
APPEARANCES
FOR THE APPELLANT: Adv P
Schumann
Instructed by Shepstone
Wylie.
FOR
THE RESPONDENT: Mr T Pillay attorney.