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[2008] ZALCCT 15
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Airey and Others v GE Security (Africa) (C218/06) [2008] ZALCCT 15 (3 October 2008)
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT CAPE TOWN
C218/06
In
the matter between
ROGER
AIREY
......................................................................................................
FIRST
APPLICANT
DAVID
DENOON –
STEVENS
........................................................................
SECOND
APPLICANT
VINCENT
WATTERS
..........................................................................................
THIRD
APPLICANT
AND
GE
SECURITY
(AFRICA)
............................................................................................
RESPONDENT
JUDGMENT
CELE
AJ
Introduction
1.
This is a claim of unfair dismissal of each applicant
based on the operational requirements of the respondent. There is no
dispute
about the need for the respondent to have undergone a
structural change. The applicants contend that the respondent should
have
retained their services in the new structure, alternatively in a
position within the respondent, alternatively in a position within
the General Electric Organisation and, in the event that
retrenchments were unavoidable, the respondent, on application of
fair
selection criteria and/or by applying “bumping”,
should have retrenched other employees than the applicants. In its
capacity as the erstwhile employer, the respondent opposed the claim
by averring that there was, in general, a need to retrench
the
applicants and that their dismissals were substantively fair. It said
that the applicants were selected for retrenchments in
accordance
with criteria to which they had agreed. Alternatively and in any
event, the selection criteria were fair and objective.
It denied that
“bumping”, which it said was at no stage raised by the
applicants during the consultation process, was
of any relevance to
the matter.
Background
facts
2.
The respondent was a GE Security (Africa) a South African general
partnership comprised of General Electric Interlogix (Pty)
Ltd and
General Electric (Infrastructure) (Pty) Ltd. The applicants commenced
their employment at different times with a Company
called Ziton SA
(Pty) Ltd, (“Ziton”). In March 2005 their services were
transferred with Ziton’s business, as
a going concern, to the
respondent. The first applicant commenced his employment with Ziton
in or during 1986 on a contract basis.
He was permanently appointed
with effect from 1 July 1990. He held the position of a
Certification, Validation and Test (CVT) Manager
where he was in
charge of the registration, validation and testing of the product of
the company. His employment with the respondent
terminated in
November 2005. The respondent offered him a fixed term employment
from 1 December 2005 to 31 March 2006, which he
accepted. The second
applicant commenced his employment with Ziton in April 1985. He held
the position of a Technical Director,
in charge of the technological
development of new products in the company. His employment was
terminated with the respondent in
November 2005. He was offered and
accepted a fixed term employment with the respondent from 1 December
2005 to 31 May 2006. The
third applicant commenced his employment
with Ziton in October 2001. He held the position of an Engineering
Manager, accountable
for managing engineers daily in their workloads.
His last working day with the respondent was on 21 October 2005. The
respondent
paid him his salary for October 2005 and notice pay in
respect of November 2005.
3.
Between November 2004 and January 2005, Ziton’s Human Resources
Manager Ms Susan Barrington conducted interviews with a
selected
group of engineering staff in order to gain an understanding of their
roles and their job descriptions. A “brown
paper”
exercise was thereafter carried out with staff, including the
applicants. According to the respondent, its current
structure had
duplicated processes which were not conducive to the company system.
Data had to be collected to determine if any
bottleneck existed in
the organisation. Ms Barrington had to facilitate the process for a
change in the structure. She lay out
the paper and asked for input on
how heads of departments in the company saw things. Discussions on
the process of change were
held. According to the respondent, the
interviews conducted between November 2004 and January 2005 were
performed in order to determine
the details of the engineering staff
members’ respective roles and job profiles so as to get their
overviews of the work
flow process and bottlenecks in that work flow.
The respondent’s purpose of the “brown paper”
exercise was to
develop a new staff structure for the engineering
department.
4.
On 29 June 2005 the applicants and other employees in the engineering
business unit were handed notices by the respondent in
terms of
section 189 (3) of the Labour Relations Act 66 of 1995 (“the
Act”). In terms of such notices the respondent
proposed that a
process be embarked upon in terms of which its engineering and
manufacturing business unit were to be restructured.
It was envisaged
that the restructuring could lead to the redundance of certain
positions and consequently to the loss of jobs
of certain of its
employees. Still on 29 July 2005, the respondent convened a meeting
with its affected staff. It advised the first
applicant that his job
did not appear to be impacted by the restructuring and that should
that occur, he would be consulted. His
position as a CVT Manager was
at that stage retained in the new structure. The respondent disclosed
to the staff the draft new
structure for its engineering department.
The second and third applicants’ positions were at risk of
being declared redundant
as their positions were to be replaced with
that of a single “Engineering Business Unit Manager’s”
position.
The respondent invited employees to consult with it on the
restructuring process and to make representations and
counter-proposals
on or before 12 July 2005. Further, the respondent
sought to introduce the positions of “Product Support Managers”
and “Test Manager” at the level of a CVT Manager. It was
determined that the respondent would no longer be involved
in new
platform or product development.
5.
Further meetings were held with the affected staff on 4, 7, 8, 12, 26
and 28 July 2005 as part of the consultation process. At
such
meetings, certain of the issues raised by the affected staff were
addressed by the respondent. In addition the respondent
on a number
of occasions, responded in writing to questions that had been raised
in writing by the affected employees. The stated
objective of the
restructuring exercise was to improve efficiency, to rationalise and
to implement a new structure with adequate
skill sets.
Representatives of the affected employees presented to the respondent
a written memorandum detailing their concerns
and objections to the
action intended to be taken by the respondent. Included in the
memorandum were a number of questions required
to be answered by the
respondent. The affected employees further called for the disclosure
of information relevant to the issues
on which the respondent sought
to consult with the employees. The employees made proposals in
respect of severance packages. They
raised for consideration by the
respondent the options for voluntary retrenchment and early
retirement.
6.
On or about 20 July 2005 the respondent submitted a written reply to
the aforementioned memorandum from the affected employees.
The
aforementioned response contained
inter alia
the following
questions and replies:-
Q:
“Where does the restructuring come from. Has this restructure
come from within CT branch or have we been given a directive
to
restructure by GE.
A:
There is no one single driver and is a result of a number of
interactions both local and overseas.
Q:
Cost Reduction: put a value to the cost reduction.
There
was no answer to what cost reduction CT had to meet. I find it
strange that we are prepared to lose good engineers and staff
without
knowing what cost reductions have to be met. I would have thought
that this site was to be perfect for the design of new
products.
Definitely would be cost effective with cheaper labour and good
engineers.
A:
We are currently R2M behind budget with a very poor looking forward
order book, however, it is not only rand value that we are
looking at
but improved efficiencies and aligning the business wit the
international strategy.
…………………………
Q
2. If we do not apply for a position advertised, will it mean that
you are automatically retrench (sic) or will you be put into
the pool
that management will look at for other positions.
A:
Not necessarily, a person may be offered a reasonable alternative or
may be placed in a pool until all other alternative positions
have
been considered and then if there is no other suitable alternative
the person will be retrenched.
…………………………
Q:
9. Shouldn’t all positions be advertised including those
positions that are currently “safe” as a person other
than those in the position might be more suitably qualified to do the
job.
A:
This would be wasted effort as strictly speaking if there are two
positions that have not changed in any way and two incumbents
in
those positions, then they have first right to these positions.”
7.
Further questions to senior management dated 25 July 2005 were
submitted in terms of the consultation process and the respondent
responded to those on 28 July 2005. Simultaneously, it responded to
questions raised in the consultation meeting held on that day,
28
July 2005. A further list of questions was received from the
employees and was responded to on 29 July 2005. The respondent
responded favourably to the affected employees’ proposals
relating to the options for voluntary retrenchment and early
retirement,
and in its letter 28 July 2005 undertook to consider the
voluntary retrenchment option in the event that redundancy led to job
losses. The only condition attached to this undertaking was that the
respondent’s operational requirements would determine
whether
voluntary retrenchments were appropriate.
8.
On 5 August 2005, a further consultation meeting was held, at which
the affected staff presented their proposed draft structure
for the
engineering department,
inter
alia
by
proposing an increase in resources and not a reduction thereof. In
terms of the proposed structure, the number of employees in
the
engineering department would increase. The respondent considered the
proposals and in a consultation meeting of 23 August 2005,
presented
its revised draft structure, together with reasons for the changes
suggested. The affected employees were requested to
consider the
revised structure and to revert with their input at the next
consultation meeting of 26 August 2005. At the next consultation
meeting of 30 August 2005, the respondent presented a further revised
structure, which was presented to the affected staff as the
final
structure. In terms of it;-
The
“Engineering Unit Business Manager” position was
replaced with that of an “Engineering Project Manager”.
Slight
changes were affected to the job specification of the CVT Manager
(First Applicant) and the Product Support Manager.
The
position of Test Manager was removed and replaced with a position
called “Senior Test Engineer”, who would report
to the
quality function.
The
Product Manager’s position was converted to that of an
off-shore position. One Mr Kenneth Sinclair was proposed to fill
the
position of Product Manager.
9.
On or about 2 September 2005, the available positions within the
proposed structure were advertised on the respondent’s
“intranet”. Affected staff members were invited to apply
for positions in which they were interested by 17h00 of 7
December
2005. Each of the applicants applied for the position of Engineering
Project Manager.
10.
Between 18 and 22 September 2005 Mr Leon Mintjens, the Engineering
Development Manager of the respondent based in Europe, but
in South
Africa at the time, provided input regarding the structure of the
engineering department of the respondent in South Africa.
Certain of
his suggestions were accepted by the respondent, resulting in a
revision to the proposed structure.
11.
The respondent proposed selecting employees to populate the new
structures through the following processes:-
The
positions in question would be advertised by the respondent.
Affected
employees were required to apply for all posts in which they were
interested as and when the positions were advertised.
Interviews
would be conducted by an external Human Resources Consultant,
together with an employee of the GE.
Selection
would be based on the employee’s experience, skills and
qualifications.
In
the event that an employee was not successful in securing a position
in the new structure, he/she would be placed in a pool
of employees
who had not obtained positions and the respondent’s Management
would evaluate all other possible alternatives,
with a view to
placing him/her in any remaining vacant positions.
If
no suitable alternatives were found, the employee’s services
would be terminated.
12.
On dates between 19 and 22 September 2005, the applicants were
interviewed by Ms Rene Steenkamp, an external Human Resources
Consultant together with Mr Mintjens. None of the applicants were
recommended by the interview panel for the position of Engineering
Project Manager. Based on the outcome of the interview process, and
after consultation with Ms Steenkamp, none of the applicants
were
considered suitable for the Engineering Managers position. The
respondent had no consultation with the applicants on:-
the
content of the interview process;
the
measurement criteria to be used by the interviewing parties in order
to determine who would be successful in the competitive
process;
the
method of evaluation of the outcome of the interview process, in
order to determine who was the best fit for the position
advertised
and applied for;
how
outside of the interview process, an applicant employee’s
competitiveness would be measured and determined; and
how
the result of each applicant employee’s assessed competencies
would be weighed and evaluated against competing applicant
employees.
13.
Between 3 and 7 October 2005 the applicants were advised that the new
structure would be implemented. The new structure was
finalised on 7
October 2005. The respondent did not conduct a fresh round of
interviews.
14.
On or about 18 October 2005 the respondent held separate meetings
with the individual applicants, at which the applicants were
informed
that they had not been successful in securing the Engineering
Manager’s position or any other position within the
new
structure. The applicants were informed that the primary reason for
their failure to be appointed was the fact that they were
not
suitable for that position. In addition, the applicants were informed
that the respondent would appoint a General Electric
candidate to the
position of Engineering Manager. As on 18 October 2005 the respondent
had filled all positions on the new structure
in the Engineering
Department.
15.
On 18 October 2005 the respondent handed the individual applicants
letters of possible termination of employment due to operational
requirements. As an alternative to termination the applicants could
consider early retirement, which in the view of the respondent,
was
of no advantage to the applicant. The letter informed the applicants
further that failing securement of employment, management
were of the
view that there was no other suitable alternatives to retrenchment.
It set out the terms of retrenchment which, in
respect of severance
pay, stated that each would receive two week’s remuneration per
each completed year of service for the
first five years and one
week’s remuneration per each completed year of service
thereafter, with the company. The severance
pay which had been
suggested by the applicants was one of one month pay for each year
(or part thereof) served, for the first five
years, and two weeks pay
for every additional year of service (or part thereof). The
respondent rejected that proposal on the basis
that it would be
setting a precedent which the respondent could not afford. The date
of dismissal was stated as 30 November 2005,
with the month of
November being a notice period. It ended with a note that if the
applicants were aware of any alternatives which
the respondent might
have overlooked, they were to advise the Human Resource Manager of it
by 24 October 2005 failing which the
respondent would assume that
they were not aware of any such alternatives and dismissal would take
effect.
16.
The first and second applicants requested to be considered for the
position of Product Manager which did not fall within the
respondent’s new structure, but was located within the General
Electric organisation in Europe. None of the applicants was
successful in his application for that position.
17.
The respondent did not consider “bumping” in order to
retain the applicants. In its view, “bumping”
had not
formed part of its proposed restructuring process, nor had, in its
view, that option been suggested by the affected employees
in the
course of the consultation process. In applicants’ view the
respondent did not consider applying “bumping”
and/or
retaining applicants in positions occupied at the time by other
employees, either within the engineering business unit or
elsewhere.
According to the applicants the respondent did not consult with the
applicants over the option of bumping and did not
provide reasons to
the applicants as to why the option was not considered or
implemented.
18.
A dispute about an unfair dismissal of the applicants arose
consequent upon their retrenchment by the respondent. They referred
it to the MEIBC for conciliation which failed to resolve it and
certificates of outcome were issued on 12 January 2006 for the
third
applicant and on 31 January 2006 for the first and second applicant.
The applicants referred the dispute to this Court on
12 April 2006 by
means of a statement of case.
The
trial issues
19.
The claim of the applicants as foreshadowed in the
statement of case with an amendment thereto and in the pretrial
minute with a
supplement to it, is premised on the following
allegations:
1.
The respondent failed to provide the applicants will all the
information necessary and as was requested by them for purposes
of
their proper participation in the consultation process.
2.
The respondent failed to follow agreed subjective selection criteria
or fair and objective selection criteria in identifying
employees to
be dismissed.
3.
When determining the applicants’ competency and suitability to
appointment within the new structure, the respondent failed
to
implement the selection process it had identified or it failed to
apply fair and objective selection criteria.
4.
The respondent failed to consult with the applicants on the
possibility of bumping.
5.
The respondent failed to consult with the first applicant before it
later declared the position of CVT Manager redundant.
6.
The respondent failed to retain the applicants’ services in the
new structure or in positions within itself or within the
General
Electric Organization.
7.
The respondent’s rejection of the applicants’ proposals
relating to severance pay in the light of the GE’s
policy or
past practices relating to such payment.
20.
In dealing with each of the listed issues, it is expedient not to
follow their chronological listing. I shall deal firstly with
the
first, the seventh and then the last.
Failure
to provide necessary or requested information
21.
From 29 June 2005, when section 189(3) notices were issued, to about
22 September 2005, the affected staff of the respondent
participated
in a joint consensus seeking consultation. While the respondent gave
some answers to certain issues raised by the
affected employees,
there were a number of issues which the respondent was expected by
the employees to address in September 2005.
Then came the proposal by
the respondent on how a selection of the employees to populate the
new structure would be done. The unanimous
response of the affected
staff was one of acceptance of the proposal. Positions within the
proposed structure of the respondent
were advertised in its intranet
and the applicants, as did other affected staff, applied. They
applied for the position of Engineering
Project Manager. At that
stage no objections were raised by the applicants on the selection
criteria. Nor did they insist that
the answers which were still
outstanding on the questions they had raised, be firstly addressed
before the next stage of populating
the structure could be resorted
to. Up until the stage for the suggestion for the population of the
new structure, the affected
employees had shown the respondent that
they engage it on issues of their concern. When the affected
employees did not oppose the
proposal for the population of the new
structure, the respondent was entitled to accept that the affected
employees had abandoned
or waived any of the issues that were still
outstanding. The affected staff, which included the applicants,
failed to put a clear
counter-proposal on the table in order to
continue to make the consultation process meaningful in the quest for
consensus, as they
had done hitherto. They therefore can hardly
complain about the fact that the respondent had implemented its own
proposal to the
population of its structure – for this approach
see
Benjamin and others v Plessey Telumat SA Ltd
[1998] 3 BLLR 272
(LC) at 277, and CWIU v Lennon Ltd
[1994] 10 BLLR 1
(LAC)
.
22.
The extent of participation by the affected employees to the joint
consensus seeking process leads only to one conclusion, namely
that
they understood their rights and that is why they were able to
effectively exercise them. Their failure to counter the proposal
to
populate the new structure is irreconcilable with any intention on
their part to enforce such a right. Their conduct leaves
no doubt
that they intended to surrender the right to further information and
to engage the respondent further on selection criteria.
For this
approach see –
Linton v Corser 1952(3) SA 685 (AD) at 695.
23.
The position of the applicants in failing to canvass further counter
proposals is not determinable only on their tacit conduct.
Mr Airey
and Dr Watters were specifically cross-examined on the issue and both
of their answers indicated that they actually agreed
with the
selection criteria as proposed by the respondent. I conclude
therefore that the respondent was no longer obliged to provide
any
necessary or requested information to the applicants as they accepted
its proposed plan to populate the new structure.
The
rejection of severance pay
24.
The issue of the severance pay did surface during the consultation
process of the parties albeit to a limited extent. The applicants
stipulated it in the amended statement of claim thus:
“
Can the
following retrenchment package be considered and, if not, why not.
One
month for every year (or part thereof) served for the first five
years and two weeks for every additional year service (or
part
thereof).”
25.
The respondent answered this question by stating that:
“
Management’s
proposed package is already better than that required by the LRA and
to agree to the above would be setting a
precedent which we cannot
afford.”
The
applicants did not counter this response with any further proposal.
26.
There are two cases which the applicants have placed their reliance
on for this claim. Both are however not originating from
South
Africa. The first is a payment of a severance packages of one month
per year of service to a Mr Smit in 2002. Such payment
was said to
have been done within the Ziton Group of companies, in particular the
GE Interlogics component thereof, all of whom
dealt with fire
detection
27.
The second payment also of four weeks for every year of service was
said to have been made in another fire detection affiliate
of the
Ziton, GE Interlogics, group in 2005 or 2006 period.
28.
Dr Watters said in his evidence that there was a “best
practices” policy in place within the GE group which required
that whenever GE benefits applicable to anyone of the companies were
greater than the benefits provided by the local practices
or
legislation, the greater benefits should be applied throughout the
group.
29.
The version of the respondent was presented through Ms Berrington and
Mr McKechnie, Ms Berrington testified that, as the severance
pay
issue was discussed, she enquired from various other companies within
the GE Group as to whether any uniform policy existed
in regard to
severance pay, but was informed that there was none, Mr McKechnie
denied that there was some ‘precedent’
as a result of the
retrenchment of five United Kingdom employees in 2005 or 2006.
30.
I have problems with the approach adapted by the applicants in
respect of this issue. The facts of the two cases they seek to
place
their reliance on were not pleaded to. In their amended statement of
the case they merely posed a question, yet in their
final submission
they blame the respondent for not obtaining substantiated responses
to the two cases they raised. Secondly, the
circumstances of each of
the two cases the applicants testified to are very vague. The terms
under which the two payments were
made were never testified to. All
we know is that such payments might have been in terms of the
applicable basic conditions of
employment of the country or state
where this occurred. It might have been in terms of applicable
collective agreements which were
unique to such parties. A further
submission of note made on behalf of the respondent is that
legislation governing severance packages
in other countries differs
from that applicable in South Africa. In the United Kingdom for
example, the Redundancy Payment Act
of 1965 and the Employment Rights
Act of 1996 govern the situation. As such, the applicants did not
make any attempt to enlighten
the court as to what the provisions
contained in those Acts are. Thirdly, the retrenchment of the
applicants took place in 2005.
The severance payment of 2006 can not
reasonably amount to a “precedent” in there
circumstances. Fourthly, there is
vagueness surrounding the evidence
on the “best practices” policy, in the absence of a proof
of such policy or substantiated
cases where such policy was applied.
Fifthly, the case of the applicants was not properly canvassed
through the witnesses of the
respondent. Instead they were asked
questions in the form of a fishing expedition. Finally, I can not
agree with applicants contention
that it could hardly be expected of
them to enquire into and obtain the relevant information. They made
an allegation of a higher
payment of severance pay within the GE
group. They had to prove it so that the respondent would only then be
expected to rebut
it. Their evidence does not carry so much of
evidential weight as to call for a response from the respondent. From
the evidence
adduced, the applicants were entitled to severance pay
equal to one week’s remuneration for each completed year of
service,
see section 41(2) of the Basic Conditions of employment Act
No 75 of 1997 and Whall v Branded of Marketing (Pty) Ltd (1999) 20
ILJ 1314 (LC).
The
criteria to be followed
31.
It is common cause that the selection criteria to be used by
the respondent in selecting employees to be dismissed had been agreed
to by the consulting parties.
32.
However during the trial Mr Rautenbach, for the applicants, put to
the witnesses of the respondent that criteria that were fair
and
objective were, in the alternative not followed by the respondent. In
their evidence, the applicants adopted a similar approach.
This issue
has been deliberated upon in the closing submissions of the parties.
33.The
selection criteria are regulated by section 189 (7) (a) and (b) of
the Act which states that:
“
(7)
The employer must select the employees to be dismissed according to
selection criteria-
(a)
That have been agreed to by the consulting parties, or
(b)
If no criteria have been agreed, criteria that are fair and
objective.”
34.
The case of the applicants is that the moment the employer departs
from the criteria agreed to by consulting parties, which
form a legal
and contractual obligation, it can only avoid a finding of unfair
dismissal by following fair and objective selection
criteria. This
approach, if correct, means that where parties have agreed on
selection criteria to be used, the employer has a
choice of either
applying those agreed criteria or has to follow fair and objective
selection criteria. Mr Rautenbach placed reliance
for this view on
the decision in
Chemical Workers Industrial Union and others v
Latex Surgical Products (Pty) Ltd (2006) 27 ILJ 2902 (LAC)
where
the following appears in pages 320C-321E:
“
[85]
An employer and 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 section 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, section 189(7)(a) applies. If they are not agreed,
section
189(7) (b) applies.
……………………
.
[88]
The use of subjective selection criteria where they have not been
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 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 section 189(7)(b) of the Act.”
35.
A party seeking to place reliance on the Latex decision as authority
for selection criteria is better advised
to be
alert to the fact that the criteria used in that case were of a
hybrid nature. Some of the criteria, such as “willingness”
and “interview” were subjective where the majority were
objective. So much of this is clearly stated in paragraph 89
of the
judgment. Paragraph 93 is a further example of the hybrid nature of
the section criteria. The relevant position reads:
“
[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 subjected…………..”
36.
Mr Rautenbach further placed reliance on paragraphs 24-96 of the
Latex decision in support of his submission. In paragraph 96
the
court concluded thus:
“
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. I have no hesitation in concluding
that the
individual appellants’ dismissal was unfair for lack of a fair
reason”
37.
According to Mr Rautenbach, the following principles emerge from the
Latex decision:
Any
reliance on subjective criteria which could materially influence the
result would render the application of the selection
criteria
unfair.
Even
if the selection criteria are viewed with reference only those
criteria which are objective, the applicants in question must
be
compared will all other employees with whom they competed for
selection, on the basis of those objective criteria.
Failure
to comply with either of these two principles will lead to a finding
of substantially unfair dismissal.
38.
The contrary submissions made in this regard by Mr Oosthuizen for
the respondent, appear to me to be maritorious.
He argued
that the submission made on behalf of the applicants confuses the two
separate categories of the selection criteria dealt
with in section
189(7)(a) and 189(7)(b) of the Act. He submitted that if the
selection criteria are agreed upon, they have to be
implemented and
the employer may be acting unfairly if he has departed from agreed
selection criteria. He further said that a failure
to abide by the
agreed selection criteria does not, in some residually applicable
way, bring the provisions of section 189(7)(b)
into play. Such
failure, rather means that the parties can be held to the agreed
selection criteria.
39.
Section 189(7) of the Act is clear. It requires the employer to use
the selection criteria that have been agreed to by the consulting
parties or if none have been agreed to, to use criteria that are fair
and objective. Paragraph 88 of the Latex decision leaves
no room for
confusion in this regard. It is either the employer strikes a deal
with the consulting party and selection criteria
are agreed to or it
pays, in the alternative, a price in that it may not use subjective
selective criteria to select employees
to be dismissed. In such a
case, it must use selection criteria that are fair and objective in
terms of section 189(7)(b) of the
Act. Accordingly, I conclude that
the respondent, having struck a deal with the applicants and
selection criteria were agreed upon,
does not have to prove that the
retrenchment was based on criteria that are fair and objective, in
the event it is found that it
did not materially follow the
subjective criteria.
40.
I propose at this stage to deal with the alleged failure to consult
with the applicants on the possibility of bumping I will
then
determine whether the respondent failed to follow the agreed
selection criteria in identifying employees to be dismissed and
when
determining the applicants’ competency and suitability to the
appointment within the new structure.
Failure
to consult on the possibility of bumping
41.
In their amended statement of claim the applicants contended
that by applying bumping, the respondent should have retrenched other
employees and not the applicants. They said that the respondent
should have retained their services at the expense of the relevant
employees ultimately appointed to the new structure, or retained
their services at the expense of the persons in the positions
in
respondent’s other departments referred to in the statement of
case, or retained their services at the expense of other
employees
within the GE organization, on the application of fair selection
criteria. The respondent denied that bumping was of
any relevance in
this matter, saying that at no stage was it raised by the applicants
during the consultation process. It also
said that the applicants
failed to set out the names of any person whom the applicants
contended should have been selected for
retrenchment in their places.
42.
As has already been stated, the parties agreed during the negotiation
stage on criteria to be used in popularity the new structure
of the
respondent. None of those terms agreed to, included bumping. During
the negotiation stage, the applicants, as part of the
affected
employees, made extensive submissions to counter the proposals of the
respondent. Such included a proposed organogram
which, if it were
accepted would be the one populated. Yet the applicants touched on
bumping, at best, by inference than directly.
Among questions they
posed which the respondent replied to and to which I have earlier
referred is question number 9. They asked
if all positions should not
have been advertised, including those positions that were currently
“safe” as a person
other than those in the position might
be more suitably qualified to do the job. The respondent said that
the exercise would be
a wasted effort as strictly speaking, if there
were two positions that were not changed in any way and there were
two incumbents
in those positions, then they have the first right to
those positions. The applicants did not take issue with this response
as
they were entitled to, in the process of a joint consensus seeking
consultation. Instead they recapitulated to the proposal of the
respondent on how the new structure was to be populated. Bumping
involving the application of fair and objective selection criteria
could not hold in a case where selection criteria were agreed upon by
the parties. It is a curious co-incidence that Mr Rautenbach
left the
bumping issue and did not persist with it in his closing submissions.
I am, therefore, unable to find that it has been
shown that the
respondent should be held liable for any failure to consult on the
possibility of bumping.
Did
the respondent fail to follow agreed selection criteria
43.
A proper approach to this issue necessitates revisiting some
of the questions posed by the applicants, under the hand of Dr
Watters,
dated 25 July 2005 and the respondent’s answer thereto
dated 28 July 2005. This consultation process formed the basis on
which the applicants accepted the proposal which the respondent used
to populate its structure. Three of these questions and answers
are
numbered 37 to 39. They read thus:
“
37.
What is the process/procedure the company intends following? What
positions will be filled first, when will interviews start,
etc. When
does the company see the end of the process?
(a)
Management would like to start by filling the proposed top structure
first and then populate the proposed structure below. Interviews
will
begin as soon as the structure is finalized through consultation
whereafter advertisements will be placed. Management proposes,
if no
viable alternative is forthcoming, to implement the new structure by
1 September 2005.
38.
How will the company guarantee that the selection process will be
fair?
(a)
The company proposes to appoint an external consultant to hold
interviews with candidates in conjunction with a Technical person
from GE with fire detection and EN knowledge who does not personally
know the candidates to assist in ensuring a fair selection
process.
39.
What will be the criteria for the selection of personnel?
(a)
The criteria will be based on competencies assessed by way of an
interview and the best fit for the job required as defined”
44.
The selection criteria agreed to by the parties for the selection of
the employees to populate the new structure, failing which
they would
be retrenched, constitute a process which I shall now deal with.
The
positions in question would be advertised
45.
The respondent complied with this requirement by advertising
the positions in its intranet. The applicants have raised no dispute
in respect of this requirement.
Affected
employees to apply for all posts in which they were interested
46.
The respondent stipulated that the affected employees were required
to apply for all posts in which they were interested as
and when the
positions were advertised. All applicants applied for the position of
Engineering Project Manager which in the new
structure became
Engineering Manager. The second applicant’s evidence was
further that he applied for the position of what
he described as
”Engineering Manager/Product Manager/Principal (Chief) Engineer
+ Existing R & D Project upfront
evaluation that my current
position embraces” If an ideal fit could not be found for him,
he asked the respondent to forward
his CV onto the GE Engineering
Integration Manager for offshore development. The further application
is dated 29 September 2005.
The first applicant enquired from the
respondent on 5 October 2005 about the salary of a Production
Manager, Engineering Team Leader
and Test Laboratory Team Leader. He
testified that he applied for these positions. Ms Berrington answered
him on the same day by
stating that she could not tell him what the
salary of a Production Manager would be as the position was to be
appointed through
Brussels. As for the two Team Leader positions, she
said that the salary was considerably less than the one he was, at
the time,
earning.
47.
A pertinent issue raised by the applicants during the trial relates
to the question they posed to the respondent which it answered
on 20
July 2005, in the cause of the consultation process. It is the
following:
“
Q2.
If we do not apply for a position advertised, will it mean that you
are automatically retrench (sic) or will you be put into
the pool
that management will look at for other positions.
A.
Not necessarily, a person may be offered a reasonable alternative or
may be placed in a pool until all other alternative positions
have
been considered and then if there is no other suitable alternative
the person will be retrenched.”
48.
This selection criteria can not be seen in isolation from yet another
very closely related to it. It states that, in the event
that an
employee was not successful in securing a position in the new
structure, he/she would be placed in a pool of employees
who had not
obtained positions. The management would evaluate all other possible
alternatives, with a view to placing him/ her
in any remaining vacant
positions.
49.
The notices dated 29 June 2005 issued by the respondent to the
applicants in terms of section 189 (3) of the Act stated,
inter
alia
that:
“
All
suitably qualified employees are free to apply for such posts [new or
materially different positions] and the principles set
out above will
apply [ie the most suitable qualified applicant will be appointed].
Those
employees who do not succeed in securing a position within the new
structure through the recruitment exercise will, unless
otherwise
employed be retrenched due to redundancy. It will accordingly be
important to apply for the posts as and when they are
advertised.
Failure to apply or failure to secure a position may lead to
retrenchment.”
50.
The position taken by the respondent throughout the trial was that
each applicant had to file an application for each of the
posts he
wished to be considered for, as a trigger to being considered for
placement in the company structure. Ms Berrington’s
explanation
of the process which she testified to was that which she gave in a
meeting held 26 July 2005 where she said that:
“
She
would then have to advertise the positions, interviews would have to
be held. The structure would be then have to be populated.
They
should then speak to the staff who are affected by the implementation
and see what other alternatives there are.” (sic)
51.
Again, in a staff ,meeting held on 23 August 2005 her explanation of
the process was that:
“
You
would then go into an advertising selection and recruitment process.
At the end of that, those people who weren’t able
to secure
positions one would say to then unfortunately you have not secured a
position what other alternatives are there, and
then we would look at
other alternatives and what they were etc.”
52.
Then, on 6 September 2005 Ms Berrington notified the affected staff
through an email, saying that:
“
Just
a reminder that applications for the new structure close tomorrow at
close of business. In order to maximize the opportunity
for each
individual to be placed in positions that would be of most interest
to them, you are strongly encouraged to submit your
applications
timeously.
Failure
to apply for any positions may result in a suitable alternative being
allocated at management’s discretion. Alternatively
it may
result in redundancy if no suitable alternative is available.”
53.
Ms Berrington testified in court that she had requested the employees
to forward their good CV’s to her and to indicate
the posts
they were applying for. Each employee could apply for as many a
position as he wanted to. No limitations were put on
the number of
posts to be applied for. A person could apply for 20 posts if he/she
wished to. Senior staff could apply for junior
posts and they would
be considered. She said that all three applicants applied for one
post of Engineering Project Manager. She
referred to a day when Dr
Watters came to her office whereupon she pointed out to him that he
had applied for one position. He
responded by telling her that he
only goes forward and not backwards. The staff, including the
applicants, were told to prepare
themselves well for the interviews
as the panelists would not know them.
54.
The applicants’ evidence was that they understood that they
would be considered for the position they applied for. In
the event
of not being successful in that position they would be considered for
positions in the same or lower level. Dr Watters
said that he had two
meetings, one of which was scheduled with Ms Berrington. He wanted to
know which way to apply. He said that
he could not understand why he
had to apply for a lower position when GE was looking for people to
move up.
55.
In that discussion with her, he was made to understand that there was
to be a top-down process of populating the structure.
That to him,
meant that if the top position was filled, the unsuccessful applicant
would be used to help fill positions on a lower
level. He said that
at the time, his financial position was very tight. He had just
bought a new house and his son was attending
at an expensive school.
He was therefore eager to get a position within the respondent. Dr
Watters said that he understood the
message in the email of 6
September 2005 from Ms Berrington to be that the respondent wanted to
understand if people were looking
for promotion or change to sections
within a department because they were not happy where they were. Mr
Airey said that he believed
he was not to be out of the race by not
applying for positions in the new structure. There were two positions
for which he said
he was to be considered when populating the
structure from top downwards. By not being considered, he was blocked
off and it struck
him hard. He said that by 24 October 2005 he had
recently learnt that all positions has been filled. By then, debating
the issue
of how posts were filled when such was a
fait accomplii,
was what he could not start.
56.
Mr Danoon-Stevens said that the job he had been doing needed to be
included in the new posts. He said that the second post he
applied
for did not have a clear job description. He asked what salary was
offered for it but was given a strange answer.
57.
It is common cause that the applicants were verbally advised by Ms
Berrington on 17 October 2005 that their applications for
the
position of an Engineering Manager were unsuccessful. She
subsequently confirmed the position in writing on the next day. She
simultaneously invited them to raise any alternatives that the
respondent might have overlooked. The letter stated that if the
respondent would assume that they were not aware of any alternatives
and no alternatives were raised their employment would be
terminated
with effect from 30 November 2005. The first and second applicants
asked to be considered for a post of Production Manager
which
position was outside the new structure. No other alternatives were
recorded as having been raised by any other applicants
for
consideration by the respondent.
58.
Mr Oosthuizen’s submission in this regard is that the version
of the applicants is an absurdity. He said that it is improbable
that
the respondent would opt for a process in which employees were not
required to apply for all positions in which they were
interested. An
application is the essence of any recruitment and selection process
and is by far the most efficient manner of determining
the pool of
candidates for each vacant post. He said that the very purpose of
advertising post was to determine which employees
were interested in
each respective position
. It was never the case
that the purpose of advertising posts was to get people happy. He
contended that the applicants’ version
was not borne out by any
of the voluminous documentary evidence before court. He said that it
was clear that the applicants were
informed from the outset, in
writing and in no uncertain terms, of the consequences should they
fail to apply for the advertised
posts. He said that there was no
question that employees were required to submit applications for all
the posts in which they were
interested, and that they would not
merely be considered for all available posts.
59.
Regarding the applications for other posts by the
first and second applicants, he said that the applicants’
version contradicted
their pleaded case. Their pleaded case was that
they had applied for the Engineering Manager position without
alleging that they
had applied for additional positions. As they had
requested, their CV’s were forwarded to Europe for
consideration for a
Production Manager position. He argued that if,
in addition, they made applications for other positions and such
applications had
simply been ignored one would have expected them to
complain about it in the period 18-24 October 2005 given the
circumstances
then prevailing.
60.
I have been persuaded by the contrary submissions made in this regard
by Mr Rautenbach. Regarding the email message of September
2005 from
Ms Berrington and all other communications from the respondent about
the application procedure, he said that the first
thing that should
be noted is that it nowhere states that an application is a
prerequisite for consideration for a job, or that
failure to apply
for positions would preclude consideration for such positions. On the
contrary the email message suggests the
opposite. It states that
failure to apply “
may result in redundancy if no suitable
alternative is available.”
What is more, he argued,
the email spells out the effect of a failure to apply in the
following terms: “
failure to apply for any position may
result in a suitable alternative being allocated at management’s
discretion.”
In other words management may exercise its
discretion as to the most suitable position for the employee in
question, since then
it would be ignorant of the employee’s
particular preferences. He said that it is significantly not stated
that failure to
apply will result in retrenchment, or that if an
employee fails to apply he forfeits the right to be considered. He
contended that
the purpose of the application procedure was no more
than to enable the employees affected to be placed in their first or
second
choice positions as the case might be, which version was
confirmed by Dr Watters in his evidence. According to the respondent,
the applicants did apply and therefore did not fall into a category
of those who did not apply and in respect of whom the answer
was
given. In my view if the answer was to the benefit of those who did
not apply, the applicants cannot be worse off after they
applied for
at least one post. When posts, other than the one they applied for
are considered, it becomes irrelevant that they
applied for the one
post. They are entitled to be considered as employees who did not
apply.
61.
It has always to be borne in mind that a dismissal based on
operational requirements of the employer is a no fault dismissal
in
respect of which the employer has to avoid such dismissals where
possible. If not so possible, the employer is under a legal
obligation to exhaust all suitable alternatives possible. To use the
application procedure as a means of excluding the employees
who did
not apply, in populating the company structure would result in the
respondent not being able to consider reasonable alternatives
to
dismissal where it could turn out to be possible. A failure to apply
for a position in the new structure of the respondent,
ought not, in
my view, to lead to an automatic retrenchment as such would
necessarily result in an unfair dismissal, contrary to
the spirit of
section 189(3) of the Act. The respondent was consequently legally
obliged to consider the placement of applicants
in posts other than
those they applied for, in the process of considering suitable
alternatives possible in the circumstances.
One significant question
posed by the affected employees, during the consultation stage was
whether an employee would automatically
be retrenched if he/she did
not apply for a position advertised or he/she would be put into the
pool that management would look
at for other positions. The
respondent’s answer was that failure to apply for an advertised
post would not necessarily lead
to automatic retrenchment. In its own
version therefore, the respondent knew that a failure to apply for an
advertised post ought
not necessarily to lead to retrenchment as a
person might be offered a reasonable alternative or might be placed
in a pool until
all other alternatives have been considered. Clearly
therefore, the procedure followed by the respondent in excluding the
applicants
from a consideration to those positions they did not apply
for had unfair consequences to them.
62.
I have now to consider whether the population of the new structure of
the respondent had to be done layer by layer, starting
from the top,
moving down.
63.
Mr Oosthuizen identified “several obstacles” which he
said were on the way of the endeavours of the applicants to
persuade
court in this regard. I have looked at each such “obstacle”
but I am not persuaded by his submissions in this
regard. The first
of such, he said was the fact that the version testified to by the
applicants was never their pleaded case. In
my view it did not have
to be their pleaded case seeing that, it infact was the promise of
the respondent to the applicants that
it would start first with the
top structure and then populate the proposed structure below. I refer
here to the questions and answered
numbered 37 to 39, dated 28 July
2005. the relevant answer given by the respondent reads:
“
Management
would like to
start by filling the proposed top structure first
and then populate the proposed structure below.
(my emphasis)
Interviews will begin as soon as the structure is finalized through
consultation whereafter advertisements will be
placed. Management
proposes, if no viable alternative is forthcoming, to implement the
new structure by 01 September 2005.”
64.
No evidence was led of any viable alternatives after this,
forthcoming from the applicants. The respondent was consequently
obliged to keep the promise it made to the applicants who were in top
positions, applying for a top position. From this layer by
layer
population of the structure, the applicants would have been
considered for alternative placement. If not, they would be in
the
pool for further consideration. Had the respondent followed this
process as promised, which by the way was very logical, it
would have
been better positioned to decide whether, in respect of them, further
interviews were necessary and if so, to carry
them out. By not
following this process, it placed the applicants in an awkward
position where they suddenly could not be considered
for reasonable
alternatives. They were then, indeed, faced with retrenchment as a
fait accomplii
without any fault on their part. No wonder they
were at a loss and could not cry foul. As unsuccessful applicants in
the top post,
they should have, in addition been considered for
positions at the next level of seniority. When all documentation of
the parties
pertaining to the population of the structure, is seen
against the background of the promise made by the respondent, it
becomes
abundantly clear that a layer by layer structural population
ought to have been followed by the respondent. The failure of the
respondent to keep to the promise it made to the applicant result in
them being prejudiced. The consequence of this is that the
respondent
failed to retain the applicants’ services in the new structure
or in the position within itself. Had it made an
attempt , it might
have found that there were reasonable alternatives that it could
successfully have offered to the applicants.
I am not able to find on
evidence that the respondent was at fault in failing to keep the
applicants within the GE organization.
The undisputed evidence of the
respondent was that it forwarded the CV’s of the applicants to
Europe, in terms of their request.
65.
Linked again to the issue at hand, is the question of whether the
respondent carried out the interviews of the applicants, following
the agreed selection criteria. I found the evidence of Ms Berrington
and Ms Steenkamp to have been of high probative value.
For me
to have to reject the material evidence of Ms Steenkamp, it needed
the applicants to have contradict it with credible evidence
of
another Human Resources personnel. In the absence of such
contradictory evidence, I have to accept that she applied and
followed
an acceptable technique in conducting the interviews with
the applicants. The same cannot be said of Mr Mintjens. Unlike Ms
Steenkamp,
he did not draw up a standardised questionnaire which
would have guided him in the interviews. While the assessment of
candidates
by Ms Steenkamp can be determined on her questions and
answers given thereto, I have to be guided by the say so of Mr
Mintjens
on questions put to the applicants. It does not help the
respondent’s case to say that the applicants could not remember
the questions Mr Mintjens put to them. It was for the respondent and
therefore Mr Mintjens to have testified to the adequacy thereof
in
compliance with the competency-based interview promised to the
applicants.
66.
When it however comes to the issue around the technical knowledge
that Mr Mintjens had regarding fire detection services, I
am
persuaded by the submission made by Mr Oosthuizen. Both Messrs Airey
and Denoon-Stevens were found to be technically competent
while Dr
Watters admitted to not being possessed of any particular experience
in fire detection system. A suggestion was put forward
that Mr
Mintjens’ lack of experience in fire detection meant that he
would not have understood the reasons which the applicants
put
forward as to why many of their projects were not completed in time.
The understanding of such a reason did not depend on the
experience
in the fire detection as testified to by the applicants. Such reasons
included the inter departmental co-ordination
in the finalization of
the product to avoid delays. I have noted though that the respondent
guaranteed the fairness in the selection
process by promising to
appoint an external consultant to hold interviews in conjunction with
a person from the GE Group with fire
detection and EN knowledge. Mr
Mintjens ought to have been such a person from the GE Group. As
already shown the first and second
applicants were found to be
technically competent, while Dr Watters did not have such experience
in fire detection. It has therefore
not been shown to me that the
lack of experience in the fire detection of Mr Mintjens disadvantaged
them with prejudicial consequences.
Failure
of respondent to consult with the first applicant on a CVT Manager
positon
67.
It is common cause that further changes to the new structure were
effected on 23 September 2005. The consequence was the upward
merging
of a position CVT Manager to one of Engineering Project Manager. The
incumbent of the CVT Manager post at the time was
the first
applicant. He had up until then been told that his position would not
be affected. The undisputed evidence of Ms Berrington
was that the
respondent consulted with the first applicant. Such consultation was
between him, Ms Berrington and Mr McKechnie on
23 September 2005,
where he was handed a s189 notice. The first applicant went overseas
to return in early October 2005. Further
consultations were held with
him. The final structure was adopted on 7 October 2005. I am
persuaded by the evidence of both Ms
Berrington and Mr McKechnie that
the respondent did consult with the first applicant before it later
declared his post redundant.
It however, remains an unfair procedure
adopted by the respondent not to have considered the applicants for
this post as well,
in its obligations to search for a reasonable
alternative to retrenchment.
68.
A proper conspectus of all the evidence in this matter informs me
that the respondent failed to comply with the agreed selection
criteria thus resulting in the dismissal of each applicant being
procedurally unfair. They are entitled to compensation. In
considering
a just and equitable amount, I am guided by the salient
facts of this matter. These include the attempts made by the
respondent
to comply with s189 and that it offered fixed term
employment to the first and second applicants after they were
retrenched. It
has not been shown to me that the respondent was
vindictive in not assisting the third applicant. There remains a
probability that
he was not available for such services. The
applicants are not entitled to any additional severance pay. The law
and fairness of
this case dictates that the costs should follow the
results.
69.
I then proceed to issue the following order:
1.
The respondent is ordered to compensate each of the applicants in an
amount equivalent to five (5) months of the remuneration
earned by
each applicant on the date of his dismissal. Such payment is to be
made within 10 days from the date hereof.
2.
The respondent is to pay the costs of this claim.
__________
Cele
AJ
Date
Last Heard: 23 January 2008
Date
of Judgment: 3 October 2008
Appearances:
For
the Applicant: Adv F Rautenbach instructed by A R Irish
For the Respondent:
Adv A C Oosthuizen SC, Adv G Leslie instructed by Cliffe Dekker Inc