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[2017] ZALAC 76
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United National Breweries v Ngqimbana (JA100/2015) [2017] ZALAC 76 (30 November 2017)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Not Reportable
Case no: JA 100/2015
In the matter between:
UNITED NATIONAL
BREWERIES
Appellant
and
THEOPHILUS BONISILE
NGQAIMBANA
Respondent
Heard:
2 November 2016
Delivered:
30 November 2017
Summary:
Coram: Ndlovu JA,
Landman JA, and Savage AJA
Neutral citation:
United
National Breweries v Ngqaimbana
(LAC JA 100/15)
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. In terms of s 168(2) of the
Labour Relations Act (the LRA) this
Court was constituted before
three judges. A decision to which any two judges agree is the
decision of the Court under s 173(4).
Having regard to s 13(3) and
s
14(5)
of the
Superior Courts Act 10 of 2013
which although not of
direct application are instructive, it appears to me that, as the
remainder of the judges hearing the matter
constitute a majority,
this is consequently the judgment of this Court.
[2] United International
Breweries, the appellant, appeals against part of the judgment of the
Labour Court (Shai AJ) delivered
on 5 December 2014 that found that
the retrenchment of Mr T B Ngqaimbana, the respondent, was
substantively fair but procedurally
unfair and awarded him
compensation in an amount equivalent to 18 months’ wages and
costs. The appeal is with leave of this
Court.
[3] The appellant filed a
notice of appeal. The notice does not conform to the Rules of this
Court as it contains submissions in
support of the grounds of appeal.
Some of these submissions, paragraphs 13, 14, 15, 16 and 20 are
relevant to substantive fairness
which is not the subject of this
appeal. The appeal is directed against:
(a)
the
finding of procedural unfairness;
(b)
the
compensation awarded;
(c)
the
costs of the trial; and
(d)
the
costs of the application for leave to appeal.
The background
[4] The appellant brews
and distributes traditional beer. The respondent was employed by the
appellant on 1 March 2006. The respondent
had managed the production
of beer, ie. the brewing of beer and its packaging at various plants.
He was employed at the appellant’s
Phelindaba plant when he was
retrenched. Immediately prior to this, he had been employed at the
Egoli plant. According to the respondent,
when it was closed down he
was transferred to the Phelindaba plant. His evidence was that he
would be the production manager of
the brew house.
[5] Although the
appellant anticipated that the Phelindaba plant would produce
12,000,000 litres of beer per month, demand for the
product dropped
and the appellant needed to curtail overhead costs. On 19 June 2012,
the respondent was given a letter headed “Consultation
for work
re-organisation”. The letter informed him of the reasons for
the re-organisation. He was told that the envisaged
re-organisation
would include all the departments as well as the head office
departments. The selection criteria would be last
in, first out
(LIFO) and demonstrable skills and knowledge. He was invited to a
meeting to be held on 3 and 4 July 2012.
[6] On 19 July 2012, the
respondent requested substantive reasons in writing as to why he was
to be retrenched instead of his two
colleagues, especially Mr
Sabrumanian who had fewer years of service with the company. He said
that he had been running the packaging
department successfully over
the past year. He said that the appellant noted that Mr Hofmeyer had
volunteered for retrenchment
or early retirement, but the appellant
had not acted on this. He concluded his letter saying that:
‘
The
procedure followed by you and your cabinet made me come to the
conclusion that the retrenchment procedure was not fair. Therefore,
I
feel discriminated against, and this has caused a lot of emotional
and psychological distress to me.’
The respondent abandoned
his reliance on discrimination at the trial.
[7] On 23 July 2012, the
appellant responded telling the respondent that the appellant had
regarded the packaging department and
the brew house as two separate
departments and that only the brew house has been restructured. He
was also told that it was the
appellant’s prerogative to allow
an employee to go on early retirement or retrenchment, but that the
company needed to look
at its own interests before doing so.
[8] A further
consultation meeting took place. On 30 July 2012, the respondent
outlined his unhappiness at having been selected
to leave the
company. He said that the appellant had shown inconsistency and did
not adhere to the Labour laws and LIFO, skills
and expertise. He felt
discriminated against and was made to lose his self-esteem. He was
prepared to settle for payment of an
amount equivalent to 18 months’
wages. He set out the considerations on which this was based. These
included his age that
mitigated against getting employment, his
emotional stress, and the commission of an unfair labour practice.
[9] On 31 July 2012, the
appellant responded and pointed out that the respondent would have
been retrenched after the closure of
the Egoli plant, but instead,
alternative employment was found for him at the Phelindaba plant. The
reason for the re-organisation
was again repeated. It was pointed out
to him that he had accepted the post of production manager in the
brew house and not in
the packaging department. It was also said that
the brew house and the packaging department had always been treated
as separate
departments. However, in view of his objections, the
appellant had reconsidered its approach, and he was invited to
compete for
the position of production manager in the packaging
department.
[10] The appellant also
explained why it felt the need to retain the proven skills and
experience of Hofmeyer who also had longer
service than the
respondent. It made no business sense to retrench Hofmeyer. The
respondent was also told that the appellant felt
that he had some way
to go in his development as a brew house manager before he would be
able to successfully manage the brew house
at the Phelindaba plant.
[11] As regards the
respondent’s complaint that the company was not adhering to the
labour laws of the country, the appellant
pointed out that LIFO
applied as between him and Hofmeyer but the appellant was prepared to
disregard LIFO when the skills and
expertise were required by the
company.
[12] The respondent
responded on 6 August 2012 stating that he had been provided with the
new organogram and pointed out that it
did not provide for a senior
production manager position. He pointed out that the Egoli brewery
was closed down after he had left
it. He repeated that he went to the
Phelindaba plant to replace Hofmeyer who was serving his notice. He
was told that he was a
senior production manager and that he would be
the production manager in the brew house and Sabramanian would be
production manager
packaging. He knew that Hofmeyer had indicated his
preference for retrenchment. He did not want voluntary retrenchment.
He required
the company to comply with
section 189
of the L RA. He
said he has experience, knowledge and skills in running the
production department as a whole and that he had made
a valuable
contribution to the company. He declined the offer to be assessed for
the post of packaging manager.
[13] The appellant
responded on 10 August 2012, restating why it intended to retain the
skill and expertise of Hofmeyer. It told
the respondent that he has a
subjective view of his own skills and expertise as do the other
incumbents and that is why it was
preferable that an external
assessment should be made. He was again invited to participate in the
external assessment.
[14] The respondent
replied four days later saying,
inter alia
, that the appellant
must comply with
section 189
of the LRA and that he thought it was
unreasonable to go through all the pain and stress of repeating the
exercise that he has
done ie an external assessment.
[15] The appellant went
ahead and reassessed both Hofmeyer and Sabramanian. Although the
respondent did not take part in the assessment
his previous
assessment was put into the mix.
[16] On 26 September
2012, the appellant wrote to the respondent, stating that his
previous assessment had been used. There were
some areas in which he
fell short and that he would be retrenched on 31 October 2012. The
company offered to pay him two weeks’
salary for every
completed year of service, payment of all leave credits, and
repayment of his provident fund contributions. A
sum equivalent to
his basic salary would be made available for him to take any course
of his choice. All affected retrenched employees
would be re-employed
preferentially if a vacancy arose and they were found suitable for
the position. This provision would be valid
for 18 months from the
effective date. He was asked whether he wished to consult any
further.
[17] The respondent was
then retrenched. The appellant later advertised a position for a
production manager at the Phelindaba plant.
This came to the
respondent’s attention. On 20 March 2013, his attorney wrote to
the appellant claiming that the respondent
was entitled to be
employed in the advertised post. The appellant’s responded and
confirmed that an internal post had been
advertised for the post of
production manager and that it is not yet been filled. The names of
two internal applicants were mentioned.
The respondent was advised
that although he may be considered favourably that the two candidates
had equivalent, if not stronger
expectations, than he had. But
notwithstanding this he was invited to apply for the post of
production manager at the Phelindaba
plant and compete with other
candidates. For this purpose, he would be regarded as the internal
candidate.
The grounds of appeal
[18] The appellant’s
complaints may be summarised as follows. The court
a quo
:
(a)
did not appreciate the relationship between the selection criteria of
LIFO and skills and
experience;
(g)
failed to make a credibility finding when it should have done so;
(h)
exceeded its powers in ordering compensation in the amount that it
did;
(i)
should not have awarded the costs of the trial to the respondent as
he was only
partially successful; and
(j)
should have awarded the costs of the application for leave to appeal
to the
appellant as the appellant’s application should have
succeeded.
Evaluation
[19] At the outset, I
observe on the court
a
quo
’s finding that the
procedure was unfair, this ought to have led the court
a quo
to find that the dismissal was substantively unfair. However, as
there is no cross-appeal this aspect may not be explored.
[20] A retrenchment is
brought about by the operational requirements of the employer. When
the need arises, in these circumstances,
to dismiss employees, it has
been found that fairness requires the use of neutral selection
criteria unless the parties involved
agree on different criteria. The
last in, first out (LIFO) rule is an acceptable neutral selection
criterion. However, at the same
time that the employer is reducing
its staff, it must maintain its business and fairness recognises that
the employer may depart
from LIFO and retain the skills of
experienced employees, even though they may have shorter service than
other employees.
[21] The court
a quo
may not have fully appreciate this. In my view, it erred in holding
that an employer may choose between LIFO and skills and experience
between the two and that once the employer has made its choice, it
would be held to that choice. LIFO and skills and experience
are
criteria that may be applied at the same time and do not require an
employer to elect one of the other. When regard is paid
to the
purpose of
section 189
of the LRA, which requires consultation with
the view to reaching an agreement in respect of retrenchment, it was
fair for the
appellant to examine the respondent’s claim that
he had greater skills and experience. This explains why the
appellant, after
selecting the respondent in preference to his senior
colleague Hofmeyer, decided that the respondent should have an
opportunity
for his skills and experience to be tested for the posts
of brew house manager and packaging manager. But, even while it
considered
this latter possibility, the appellant maintained, as it
was entitled to do, that LIFO could be supplanted by skills and
experience.
It was for this reason that the employer proposed that
the three employees be assessed externally.
[22] Paradoxically, the
court itself accepted that skills and experience could come into play
at the same time. It expressed the
view that:
‘
The criteria
will be used as follows. Firstly, the last in first out principle
will be applied and if two or more employees came
at almost the same
time or date the further principle relating experience and skill will
be applicable’.
The court
a quo
went on to say that:
‘
I do not
think the employer would be allowed to pick and choose criteria to
suit its wishes. That might be prejudicing another employee,
pitting
employees against each other.’
[23] Although an employer
must avoid prejudicing its employees, it is acceptable for a business
to survive the event, that employees,
with skills and experience that
it requires, may be retained even though other employees have longer
service.
[24] The respondent, for
his own reasons, was not prepared to engage in an external assessment
of his skills and experience. But,
as I have indicated, in a bid to
assist him the appellant evaluated his previous external assessment
and found that his skills
did not equal those of the other two
employees. In short, the appellant cannot be faulted for its stance
that skills and experience
trumped LIFO as a selection criterion. The
appellant was satisfied that the respondent’s skill and
experience were of a lesser
standard than the other two employees.
[25] The appellant’s
complaint that the court
a quo
did not make a credibility
finding as regards the respondent is relevant to the finding of
substantive fairness. The respondent’s
account of how he came
to learn that he would be on the retrenchment list does not
significantly affect the retrenchment process
and does not show that
the process was unfair.
[26] It was submitted, on
behalf of the respondent, that when the appellant agreed to evaluate
Hofmeyer and Sabramanian, these employees
should have been given
letters inviting them for consultation. This submission is made in
the context of the further submission
that the proposed assessment of
their skills and expertise and that of the respondent was to cover up
irregularities in the process
that have been followed to date. For
reasons set out above, I am satisfied that there had been no
irregularity in the retrenchment
process and that the invitation to
be assessed was an action flowing from the process of consultation.
[27] It was also
contended that the appellant’s initial intimation that the
re-organisation would include all the departments
as well as the head
office departments meant that the packaging department would also be
targeted. I do not think that the intimation
was intended to be taken
literally. It was only if the appellant could save on overheads that
a department would be re-organised.
[28] With reference to
section 23
one of the Constitution of the Republic of South Africa of
1996, dealing with the right to fair labour practices; article 13 of
the International Labour Organisation Convention 158, Termination of
Employment Convention of 1982; and the similar wording of
section 189
of the LRA, it was correctly contended that the retrenchment process
must be put in operation when an employer contemplates
termination
for reasons of an economic nature. This was followed by a submission
that the retrenchment letter of 19 June 2016 followed
after
retrenchment had been contemplated. It was contended that none of the
affected employees, including the respondent, would have
been able to
change the appellant’s corporate mind. This was not a finding
made by the court
a quo
. In the absence of a cross-appeal, it
cannot be raised now.
[29] I am satisfied, for
the reasons expressed above, that the court
a quo
erred in
finding that the appellant had not shown that the procedure followed
was a fair one. It follows that the compensation
award must fall
away.
Costs
[30] The appellant has
been successful but it does not necessarily follow that costs should
follow the result. Costs in this Court
and the court
a quo
are
awarded in accordance with the law and fairness. The appellant lost
his employment through no fault of his own. It would not,
in my
opinion, be fair to saddle him with the costs of the appeal, or
indeed with the costs of the trial and the application for
leave to
appeal.
Order
[31] In the result, I
make the following order:
1.
The
appeal is upheld.
2.
The
order of the court
of
quo
is replaced with an order reading:
‘
The
dismissal of the applicant was substantively and procedurally fair
and the application is dismissed. There is no order as to
costs.’
3.
The
cost order made by the court of quo as regards the application for
leave to appeal is set aside and replaced with an order that
reads:
‘
No order is
made as to costs of the application for leave to appeal’.
4.
No
order is made as regards the costs of the appeal.
__________________
A A Landman
Judge
of the Labour Appeal Court
Savage AJA concurs in the
judgment of Landman JA.
APPEARANCES:
FOR
THE APPELLANT:
Mr J Crawford of Crawford
and Associates Attorneys
FOR
THE RESPONDENT:
Mr N E Kubayi of Noveni Eddy Kubayi Attorneys
Inc.