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[2007] ZALCD 4
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Perumal and Another v Tiger Brands (D987/04) [2007] ZALCD 4 (1 June 2007)
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT DURBAN
(REPORTABLE)
CASE
NO
: D987/04
In
the matter between
T
PERUMAL
1
st
Applicant
FOOD
AND ALLIED WORKERS
UNION
2
nd
Applicant
and
TIGER
BRANDS
Respondent
JUDGMENT
DELIVERED BY
THE
HONOURABLE MADAM JUSTICE PILLAY
ON
1 JUNE 2007
PILLAY
D, J
[1]
The first applicant employee was retrenched on 31 July 2004.
[2] At pre-trial the
parties identified the following issues for determination:
“
Procedural
fairness issues to be decided
The respondent failed to
consult with the second applicant in respect of the first applicant’s
retrenchment. The respondent
alleges that the consultation
process was inadequate and predetermined and failed to comply with
provisions of section 189 of the
LRA generally. The respondent
disputes this and will raise argument in terms of section 189A (18).
Substantively:
(1)
The applicants record that there was a need
to retrench.
(2)
The applicants allege that the selection
criteria and the interview process followed was unfair and that the
applicant should not
have been selected for retrenchment. The
applicants contend that the principle of LIFO should have been
followed, alternatively,
that if the retrenchment was to be based on
skills, that the method used by the respondent was unfair, unlawful
and inappropriate.
(3)
The respondent contends that the criteria
and process used are fair. The parties confirm that this agreement
narrows the issues
raised in the previous minutes.”
[3]
The facts surrounding the procedural complaint are the following.
The employee was a member of the second applicant, the
Food and
Allied Workers Union (“FAWU”) since she started working
for the employer in 1990 as a general worker.
She retained her
membership after she was promoted to the position of supervisor.
[4]
When the respondent employer identified the need to retrench, it
called a meeting of all the salaried workers. The management
explained the need for the retrenchment and the process that would be
followed. A further meeting was held of only the supervisors
as
they were the affected group.
[5]
There is a dispute as to whether FAWU was invited to these meetings
to participate on behalf of the salaried workers in the
retrenchment
process, or even notified that the supervisors were considered for
retrenchment.
[6]
Mr Peter Lyes, the Human Resources Manager of the employer, testified
that he telephoned Derrick Dlamini, the chairman of the
shop stewards
committee, on the morning of 24 June 2004 to invite him to the
meeting. Mr Dlamini attended the meeting with
two other shop
stewards. They sat alongside three shop stewards from a rival
trade union. Mr Lyes recalled observing
this at the time
because it was unusual. Despite his invitation to the shop
stewards to participate in the process, they
did not do so, so he
testified. Historically, FAWU did not represent salaried
workers. Mr Lyes was not aware that the
employee was a member
of FAWU.
[7] Mr Dlamini denied
receiving a telephone call from Mr Lyes inviting him to any meeting
to discuss retrenchment for salaried workers
or the supervisors.
That would not have happened as FAWU was not recognised as a
bargaining agent for supervisors.
He could not recall attending
any such meeting. The employee did not see him at the meeting
of supervisors. Mr Dlamini
became aware during a previous
retrenchment a few months earlier that the supervisors would be
retrenched. However, neither
he nor FAWU had been notified of
the process in respect of the supervisors. Historically, the
respondent had refused to recognise
or bargain with FAWU in respect
of salaried workers. Hence it did not do so in respect of the
retrenchment of the supervisors.
[8] In
the opinion of the Court the employer bears the
onus
of proving the procedural fairness of the dismissal. Whereas
the employer addressed correspondence to FAWU’s office
when it
wished to engage FAWU about wage-earners, it did not do so in respect
of the supervisors.
[9]
Mr Lyes’ recollection of the trade union shop stewards sitting
alongside each other has a ring of truth. However,
almost three
years after the incident both parties’ memories have faded.
They could be mistaken. Mr Lyes is also
64 years old.
[10]
In any event the basis for inviting them and their attendance
could not have been to engage them as representatives of
the
supervisors because FAWU was not recognised as the bargaining agent
for supervisors. Supervisors were not considered part of
the
bargaining unit. If Mr Lyes notified the shop stewards it would
have been, as he testified, just so that they could know
what was
going on. Mr Lyes did not know that the employee was a member
of FAWU. This also confirmed that he had not
entertained the
idea that supervisors could be trade union members and that the
employer would have to bargain with the trade union.
[11]
Employers have a statutory duty to ensure that the correct consulting
party is notified of a retrenchment. The employer’s
failure to do so in respect of this employee is a procedural defect.
Section
189A (18) objection
[12]
Mr
McGregor
submitted in closing argument that the provisions of section 189A(18)
of the Labour Relations Act No 66 of 1995 (“the LRA”)
precluded the applicants from contesting the procedural fairness of
the retrenchments in these proceedings in terms of
section 191(5)(b)(ii),
as sub-section (13) creates an
opportunity to challenge procedural fairness by way of an
application.
[13]
Mr
Schumann
submitted for the employee that the purpose of sub-section (13) was
to shift the procedural compliance to the realm of collective
bargaining, and correction if necessary, through that process.
It is not intended to deprive consulting parties of the right
to
challenge procedural fairness altogether.
[14] The proper
construction of the provisions is that procedural unfairness can be
contested in a section 191(5)(b)(ii) referral
if a sub-section (13)
application had not been launched. Furthermore, there has to be
proper notice, i.e. notice in terms
of section 189(3) of the LRA to
FAWU as the consulting party in order for a sub-section 13
application to be brought. So he
submitted.
[15]
Sub-section (13) provides:
“
If
an employer does not comply with a fair procedure a consulting party
may approach the Labour Court by way of an application for
an order –
(a)
compelling the employer to comply with the
fair procedure;”
[16] Sub-section (18)
provides:
“
The
Labour Court may not adjudicate a dispute about the procedural
fairness of a dismissal based on the employer’s operational
requirements in any dispute referred to it in terms of section
189(5)(b)(ii).”
[17]
A sub-section 13 application is also timed to take place not later
than 30 days after notice of dismissal or the date of dismissal.
[18]
Sub-section 13 hives off procedural defects from substantive flaws by
permitting a consulting party to launch a challenge by
way of an
application. These provisions address the special hardships
endured by both parties to bargaining in big retrenchments.
The
costs of undoing a bad retrenchment are huge. Undoing any
restructuring could have a domino effect on people and processes.
The differentiation in process between big and small retrenchments is
therefore justified. The provisions also shift the
responsibility of correcting a flawed process onto the consulting
party Thus a consulting party who fails to bring
procedural flaws to the attention of the employer by way of a
sub-section (13) application forfeits the right to do so altogether.
[19]
Sub-section (18) expressly bars procedural challenges being raised in
section 191(5)(b)(ii) disputes. Furthermore, contrary
to Mr
Schumann’s
submission
the sub-section (13) application is not time-bound to the section
189(3) notice but to a dismissal notice.
[20]
The applicant is accordingly barred from contesting the procedural
flaws. This Court is, consequently, precluded from
adjudicating
about the procedural fairness of the dismissal.
[21]
The interpretation of sub-sections (13) and (18) was raised after the
parties led evidence on procedural and substantive fairness.
Whereas in some cases the procedural unfairness can be neatly severed
from the substantive fairness, that is not so here.
Furthermore, the credibility of the witnesses has to be assessed on
all the evidence, including that relating to procedural unfairness.
[22]
The employer’s failure to engage FAWU contributed directly to
it choosing the selection criteria that it did. It
lost the
opportunity of testing its criteria for fairness with FAWU.
FAWU’s participation in the application of the
criteria would
also have moderated the scope for unfairness. To that extent
the Court takes into account the influence of
the procedural
unfairness in assessing the substantive fairness of the applicant’s
dismissal.
Substantive
fairness
[23] The selection
criteria applied was the following:
“
Voluntary
retrenchment; placement of employees into equivalent positions within
the unit structures, dependent on retention of skills
and knowledge.
It is proposed to include the transfer of employees across units in
order to ensure an even distribution of
skills, knowledge and
abilities; a competency based interview process in order to recruit
suitable candidates for remaining vacancies;
early retirement; LIFO
(coupled with the retention of skills and knowledge). These
selection criteria will be applied with
due consideration to the
Company’s commitment to the issue of employment equity.”
[24]
At the heart of the controversy is the competency test to which the
supervisors were subjected. Mr Lyes designed a questionnaire
to
assess the supervisors’ knowledge about products and processes,
quality, costs and team management. The supervisors
were rated
on a scale of “no evidence” to 5, with scores of 3 to 5
being positive indicators. Each question had
a table of core
competencies, as determined by Mr Lyes. The table was used as a
checklist to grade the supervisors.
Summaries of the
supervisors’ responses were noted alongside the table. A
panel of three interviewers assessed each
supervisor. Members
of the panel varied for each supervisor.
[25]
With regard to meeting its employment equity commitments, the
selection was influenced by the employer’s desire to retain
newly-employed staff because they were better educated and
qualified. They were also Africans. Retaining them would
balance out the predominance of Indian workers. Better-educated
employees would also be more knowledgeable about handling
modern
technology. Long-serving employees had experience but low
levels of education. One employee was functionally
illiterate.
Experienced employees could do the job but they did not understand
technical terms. Consequently, the better-educated
new
employees were more suitable. So the argument went. Against
these objectives Mr Lyes testified that LIFO subject to skills
was
not appropriate. The oral interview was preferred to
accommodate those with literacy problems. If employees did
not
understand the question the panel could explain it to them, so it was
submitted for the employer.
[26]
The employee contested the fairness of the selection criteria and the
way in which it was applied to her. When she learnt
about the
interviews she enquired from her managers, Palm Naidoo and Rajen
Gounden, about what was expected of her. Mr Gounden
told her
that she simply had to talk about the work she did. Mr Naidoo
reassured her that she had nothing to worry about,
given her track
record.
[27]
Her track record was that she started working for the employer in
1990. It was her first job after matriculating.
She was
24 years old. Having started as a general worker she
progressed to the positions of plant operator (mallow),
senior
operator (cocoa-bean roasting), laboratory analyst, technical
assistant (process of new product), supervisor: chocolate,
supervisor: sweet and supervisor: chocolate (speciality). A
year after she was engaged she started work on the commissioning
of a
new plant. Having worked closely with the people installing the
plant, she became more knowledgeable about some issues
than the
engineer Cathy Morris, who was assigned to oversee the work.
When the employee returned to work in May 2004 after
being absent for
more than two months, she was assigned the task of documenting the
entire plant’s safety operation procedures.
She had to
observe every process for every product, question the operators,
document her observations and make recommendations
to the safety
auditors. All her recommendations were accepted.
[28]
The employee alleged that she ranked at least in the top five in a
written test that she undertook. Mr Lyes disputed
this.
For reasons that will become obvious, Mr Lyes was less than generous
in his assessment of the employee. Given
her experience and
knowledge, the employee was confident that she would fare well in the
interview. However, she was not
happy to be interviewed because
she was undergoing the stresses of a divorce, a court application to
restrain her husband from
abusing her and recovering from bi-polar
depression at the time of the interview. She also had two
children to consider.
The employee was also unhappy about the
persons who comprised the interviewing panel. They were Mr
Lyes, Miss Cathy Morris
and Mr Itzik Levy.
[29]
Mr Lyes, she testified, was biased because he was unhappy about her
long periods of absence between 2002 and 2004 on account
of illness.
He convened a meeting with her on 20 October 2003 to inform her that
her continued absence could result in her
dismissal for incapacity.
He also accused her of negligence when a mishap occurred on her
production line during her sick
leave. Nothing came of the
allegation. Mr Lyes had been a production manager a while ago.
As the HR manager he
was not suitable to assess the employees’
competence in production. Miss Morris was also biased.
The applicant
interacted with her in 1991 when the new plant was
being commissioned. The employee had become more knowledgeable
about the
machinery. Miss Morris being more senior and more
academically qualified, did not respond well to being advised by the
employee,
a subordinate. Although that interaction was about
13 years ago, the employee maintained a formal relationship with
Miss Morris. Mr Levy worked on the toffee line. He
had no experience in the sweet and chocolate line in which the
applicant had worked previously before her current position as
supervisor in the speciality line. The employee would have
preferred to have been interviewed by her immediate managers, Naidoo
and Gounden, as they knew the production process for which
she was
responsible and her capabilities.
[30] Turning to the
content of the interview, the employee found that she was not
questioned about the work she was doing in the
speciality line.
She was questioned about sweet and chocolate production which she had
done previously. That was not what
she was told she would be tested
on. On team-building she was asked a question, the answer to which Mr
Levy said she should have
known as she had undergone the exercise.
It transpired that the team-building exercise was conducted about
1996 and no notes
were issued to the participants. The employee
had no idea what weighting was attached to each question or how long
her answers
should be. She had not been given any material she
could use in order to prepare for the interview. When she
stopped
speaking, the panel asked her the next question.
Contrary to Mr Lyes’ evidence, she was not encouraged to
respond further.
Given their lack of experience and knowledge
of the sweet and chocolate line, it was likely that the panel did not
understand some
of her responses.
[31]
Mr
McGregor
submitted that at least in respect of the three questions to which
all three panellists recorded “no response from the employee”
the Court should hold that the competence assessment was valid and
that the employee was less suitable than someone who scored
higher.
[32] Stepping back from
the details of the interview, the Court is struck by the startling
difference between the employee’s
performance on the job and
her performance in the interview. She enjoyed her work.
She had no work-related problems.
Her performance was not
questioned. Her difficulties only arose when her domestic life
was in disarray. Even though
she was advised by the provident
fund doctor to take longer sick leave, she insisted on returning to
work in May 2004.
[33]
Mr Lyes was manifestly biased against her. This emerges from
the minutes of the meeting on 20 October 2003 and his evidence.
For instance, in an unguarded moment during cross-examination, he
alleged with undue robustness that the employee said during the
interview that the managers hated her. What the employee in
fact said was that the managers should communicate with her.
Mr
Lyes admitted that the method used to assess competence was
subjective.
[34]
In
Chemical Workers Industrial Union and
Others v Latex Surgical Products (Pty) Ltd
[2006] 27 ILJ 292 (LAC) 293H-J, 320B-G, the Labour Appeal Court
considered the selection criteria used by the company in that case
and made the following observations:
“
Section
189(7) contemplates two types of selection criteria that may be used
in the selection of employees to be dismissed.
The one is the
agreed selection criteria, section 189(7)(a), where the consulting
parties have agreed to the criteria. The
other is the fair and
objective selection criteria, section 189(7)(b), where the consulting
parties have not agreed upon the criteria
to be adopted. In
this matter the parties had not agreed upon the selection criteria,
therefore it was not permissible for
the company to use any selection
criteria other than those that were ‘fair and objective’,
as required by section 189(7)(b).
The Court analysed the
criteria used by the company, and concluded that some of the criteria
had been subjective. They had
accordingly not been demonstrated
to be fair and objective and this rendered the dismissal
substantively unfair.”
One of
the selection criteria in that case that accounted for 10% of the
rating was an interview of the employee.
[35]
On this authority the employer must fail based on Mr Lyes’
admission alone. Nothing in the evidence prevents the
Court
from awarding the employee reinstatement with 12 months’
compensation. In making this award, the Court also takes
special note of the failure by Mr Lyes to recognise the peculiar
hardship to which the employee was subjected as a result
of being in
an abusive relationship, her success in overcoming this adversity and
to weigh them against the significant progress
that she made in
developing herself over almost 14 years of service with the same and
only employer.
[36]
With regard to the costs reserved when the matter was set down for a
pre-trial conference, FAWU should be held responsible
as it failed to
respond to several requests to attend a pre-trial conference before
the matter could be enrolled for that purpose.
[37] The order that I
grant therefore is in the following terms:
(1)
The dismissal of the employee was substantively unfair.
(2)
The employer is ordered to reinstate the employee and pay her
compensation equivalent
to twelve months’ remuneration.
(3)
The employer shall pay the costs of the action.
(4)
FAWU shall pay the costs reserved on 19 August 2005.
- - -
- - - - - - - - - - - - - - - - - - - - - - - - -
___________________
PILLAY
D, J
DATE
OF HEARING:
30/05/07 – 01/06/07
DATE
OF JUDGMENT
: 01/06/07
FOR
THE APPLICANT:
ADVOCATE P. SCHUMANN
INSTRUCTED BY BRET PURDON & ASSOCIATES.
FOR
THE RESPONDENT:
MR. B. MACGREGOR OF
DENYES REITZ ATTORNEYS.