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[2009] ZALCJHB 52
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NUMSA obo Members v Timken SA (Pty) Ltd (JS460/04) [2009] ZALCJHB 52 (15 January 2009)
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
IN JOHANNESBURG
REPORTABLE
CASE
NO: JS 460/04
In
the matter between:
NUMSA
OBO MEMBERS
APPLICANT
and
TIMKEN
SA (PTY)
LTD
RESPONDENT
JUDGMENT
MOLAHLEHI
J
Introduction
[1]
The applicant, the National Union of
Metalworkers of South Africa (NUMSA) brought an application on behalf
of six of its members,
claiming that their dismissals for operational
requirements by the respondent were both substantively and procedural
unfair. The
relief sought by NUMSA on behalf of five of its members
is that they should each be reinstated with compensation and that in
the
case of Mr Samson Dlamini who passed away in 2005 only maximum
compensation should be granted.
[2]
In relation to Mr Ben Motaung, one of the
individuals applicants, the respondent placed in disputes his
locus
standi
and the right to claim any
relief. The respondent contended that Mr Motaung was not selected for
retrenchment but volunteered to
make the place for the fellow
employee Mr Mahlaba.
The
issues
[3]
The issues for determination by this Court
are:
“
6.1
The fairness of the selection criteria;
6.2
Failure by the respondent to re-employ any of the individual
applicants after their retrenchment; and
6.3 The
appropriate relief to be awarded to the individual if successful in
their claim.”
[4]
Other issues that arose relates to the role
of the Black Economic Empowerment (BEE) and its influence on the
failure to re-employ
the applicants. The applicant did not pursue the
ground concerning the validity of the retrenchment.
Background
facts
[5]
All the individual applicants were before
their retrenchment employed at the Original Equipment Manufacturing
plant (OEM Plant).
It is common cause that prior to their
retrenchment the respondent issued section 189 notice and held
several consultation meetings
with NUMSA.
[6]
The one main issue which the parties could
not agree on during the consultation process was the selection
criteria. During the discussion
about the selection criteria, the
respondent proposed to apply a criteria that would have included
LIFO, skills, competencies,
attendance record, disciplinary record,
relevant qualification, training and performance. NUMSA on the other
hand proposed LIFO
with retention of skills as criteria to use in
choosing those to be retrenched.
[7]
The parties having failed to reach
consensus, the respondent in selecting the individual applicants,
used a criteria comprising
of years of service, attendance record,
disciplinary records and tardiness.
The
case of the respondent
[8]
The first witness of the respondent was Mr
Leppan (Leppan) a former manager of the respondent, focused on the
consultation process
during his testimony. He confirmed that the
parties could not agree on the selection criteria, but that the
criteria applied by
the respondent was ultimately fair in the
circumstances.
[9]
In relation to the re-employment of the
individual applicants when vacancies arose, Leppan testified that the
understanding of the
respondent was that the duty to re-employment
the individual applicants would only take effect after six months of
the retrenchment.
[10]
Leppan was not sure whether or not in
applying the criterion the respondent included days when an employee
would have had a valid
reason to be absent or absent due to injury at
work. He testified further in this respect that whenever an employee
was late the
respondent would deduct from such employee’s pay
for the hours that he or she was late. The employees who were absent
from
work would not be paid for that day or days unless they produced
a medical certificate. In addition such employees would lose shifts
allowance resulting in them also losing part of their leave bonuses
and leave pay. An employee who was absent and who had exhausted
the
30 days leave within the three years’ cycle would get half pay
for each day that he or she was absent.
[11]
Except for knowing about the employment of
the BBE employees, Leppan did not know why the applicants were not
informed or invited
to apply for the vacant positions that had become
available. He also was not aware of the 36 (thirty-six) months period
for re-employment
of the retrenched employees as provided for in the
main agreement. According to him those employees who were employed
after the
retrenchment were appointment at PRS and 10 (ten) of them
were transferred to OEM on a temporary basis.
[12]
Mr Nel (Nel), in support of the
respondent’s case testified that in October 2007, the
respondent lost 50% of the Spoornet
tender. The tender which the
respondent lost from Spoornet constituted 75% of respondent’s
market share according to Nel.
He initially testified that 78
(seventy eight) workers were retrenched in October 2007 however under
cross examination confirmed
that the 78 (seventy eight) workers were
in fact not retrenched but offered early retirement packages. He
could not however confirm
as to the category in which these employees
fell in.
[13]
Ms Booysen (Booysen) who was human resource
manager of the respondent until 2005, stated in her testimony that
there was no dispute
about the accuracy of the records of the
individual applicants which were used in applying the selection
criteria which the respondent
had chosen. The criteria as indicated
earlier included amongst other things the disciplinary record and
absenteeism record of the
individual applicants.
[14]
Nel further confirmed that new employees
were engaged after the retrenchment and that the individual
applicants were not considered
for employment in this regard. He
contended however that although the individual applicants were not
invited to apply for the vacant
posts, NUMSA shop stewards should
have known about the new positions since the posts were advertised in
the respondent’s
notice board.
[15]
According to Nel the respondent concluded a
BEE agreement with ASGDA in writing on 2
nd
August 2005. He also confirmed during cross examination that OEM was
always under pressure to increase production and that was
the reason
for the employment of new and temporary workers in OEM. The need for
new employees to meet the production demand was
contained in a
memorandum from Mr Coetser, managing director dated 15
th
October 2004 which reads as follows:
“
TO:
Associates via notice boards operational management team via email:
SUBJECT
:
Black Economic Empowerment
I refer to my memo of
2004-10-11 notifying associates of our Black Economic Empowerment
status.
In view of the fact that
an announcement is expected to be made by Tuesday, 2004-11-30
associates are advised that we are withdrawing
the two permanent
vacancies advertised in respect of the Heap Treatment and AP Grind
Area. Our immediate production requires 5
additional associates to
work in Heap Treatment and 5 additional associates to work AP Grind.
These additional vacancies will be
TEMPORARY
and some
will involve the change in current conditions of employment. All
associates who have applied for the permanent vacancies
will be
considered for these temporary functions. Any other associate on site
applied through the internal transfer application
process (forms
obtainable Mrs Girleen Bopha).
Interested associates are
to submit their application for transfer by 15h00 on Monday,
2004-10-18 to Mrs Girleen Bopha.”
The
case of the applicant
[16]
The first witness of the applicant was Mr
Julius Jiki who was employed at the cone grind section of OEM and was
employed there for
more than 10 (ten) years. He testified that had
the respondent applied LIFO he would not have been retrenched as he
was the most
senior to most of the employees in that section. He also
testified that he was highly skilled and had the ability to operate 7
(seven) machines in the grind section. He was however certified as an
AA grade which qualified him to operate 4 (four) machines.
At the
time of his retrenchment he had already worked in all the sections of
OEM.
[17]
In relation to his attendance record, Jiki
testified that the 17 (seventeen) days reflected in the attendance
record includes 8
(eight) days when he was off duty due to the injury
he sustained at work.
[18]
The second witness of the applicant, Mr
Mbatha was prior to his retrenchment employed as a cone grinder and
was certified as AA
grade and could operate 4 machines. All the other
witnesses of the applicant testified about their employment
background prior
to their dismissal and to what happened to them in
relation to finding alternative employment subsequent to their
dismissals.
[19]
Mr Motaung who at the time of the
retrenchment had an AA grade which like others qualified him to
operate 4 (four) machines, testified
that he was advised by the union
to accept the retrenchment in the place of Mr Mahlabe. The reason for
this approach by the union
was as stated earlier because of the
financial situation which confronted Mahlabe. Mahlabe had recently
divorced and had also purchased
a house which he would to afford if
he was to be retrenched.
[20]
Motaung disputed his attendance record and
his tardiness. He contended in this regard that the respondent
refused to disclose
when required to do so by the applicant.
Analysis
[21]
The respondent contended that the parties
had agreed to abandon skills retention as a selection criteria due to
the fact that they
could not reach consensus as to how such a
criteria was to be used. And in relation to the criteria it used the
respondent contended
that it was fair because it was debated at
length with the applicant. LIFO was used only to break a tire when
the attendance score
of two or more employees was the same.
[22]
The law is clear that where the parties are
unable to reach consensus on the selection criteria, the prerogative
as to the criteria
to use rests with the employer. In choosing
whatever selection criteria the employer has to ensure that such a
criteria is both
objective and fair. In this regard section 189 (7)
of the LRA provides as follows:
“
The
employer must chose the employee to be dismissed according to a
selection criteria-
(a) that have been
agreed to by the consulting parties or;
(b)
if no criteria have been
agreed, criteria that is fair and objective.
In addition to choosing a
fair and objective criteria, the employer must ensure that
implementation of such a criteria is also fair.”
[23]
In
Chemical
Workers’ Industrial Union & others v Latex Surgical
Products (PTY) (2006) 27 ILJ 292 at 320 A-B,
the Court in dealing with the issue of choosing the selection
criteria held, per Zondo JP that:
“
[84]
…The two types of selection criteria can be referred to as the
agreed selection criteria and the fair and objective
selection
criteria respectively. Obviously the agreed selection criteria are
selection criteria that have been agreed upon between
the consulting
parties. The fair and objective selection criteria must be used where
the selection criteria have not been agreed
upon between the
consulting parties. What s 189(7), therefore, means is that, where
the consulting parties have agreed upon the
selection criteria, the
employer is obliged to use the agreed selection criteria to select
the employees to be dismissed. Where
there are no agreed selection
criteria, the employer is obliged to use only fair and objective
selection criteria to select the
employees to be dismissed.”
[24]
In the present instance it is common cause
that attempts at reaching consensus on the selection criteria was
unsuccessful. It was
for this reason that the respondent developed
and implemented its own criteria to be used in the selection of the
employees to
be chosen for the dismissal due to operational reasons.
The issue that has then arisen which needs to be determined is the
fairness
or otherwise of criteria used to choose the applicants for
retrenchment.
[25]
The respondent argued that it acted fairly
and objectively in applying the selection criteria to the employment
data of the applicants
when selecting them for retrenchment. It was
further argued that the weighting allocated to each of the factors
was calculated
to be as neutral and fair as possible and “normal”
behaviour, relating in particular to the average attendance record,
was accorded a neutral score. What was taken into account was the
abnormal behaviour such as excessive poor attendance which attracted
negative implication in the calculation of the scores.
[26]
In support of its argument the respondent
relied on the case of
Engineering
Industrial and Mining Workers’ Union & another v Starpack
(PTY ) Ltd (1992) 13 ILJ 655(IC),
where
the Court held that productivity and conduct have been held to be a
fair selection criteria provided that the affected employees
are
given the opportunity to challenge the assessment. In the present
instance the applicants were not afforded the opportunity
to
challenge the data used in arriving at the conclusion that the
attendance records were negative and therefore influenced their
scores in the assessment of whether or not they should be retrenched.
[27]
It is generally accepted in retrenchment
cases that LIFO is the most objective and fair criteria to use. This
criteria need not
be applied in those cases where its application
could result in loss of skills or disrupt the business operations.
There was no
evidence to that effect in the present instance.
[28]
Where the selection of employees is based
on factors such as attendance record, tardiness and performance, such
employees should
be given an opportunity to make representation
against the negative conclusion that may be drawn against them as a
result thereof.
[29]
In the present instance the analysis of the
selection criteria shows clearly, in my view, that it was
subjectively based on the
elements of discipline. The criteria
excluded from its scope skills, qualifications, experience and long
service. What is also
clear is that even if it was to be found that
the criteria itself was objective and fair, its application was
clearly unfair.
[30]
The duty to show that the criteria used was
both objective and fair in its definition and application rests on
the employer. It
was therefore the duty of the respondent in the
present instance to show that the exclusion of the factors such as
skills, qualifications,
experience and long service did not result in
unfairness on those selected for retrenchment as a result thereof. I
have already
indicated that once the employer successfully
demonstrates that the criteria by its definition was fair, it then
has to show that
its implementation was also fair.
[31]
In my view the respondent has in the
present instance failed to show that the criteria it chose to use in
the selection of the applicant
was fair. The undisputed evidence
reveal that the applicants had already received punishment for their
attendance record which
was used to select them for retrenchment.
There is also evidence showing that the attendance factor was applied
even in cases of
absence due to ill-health arising from injury at
work. In the case of Mr Jiki, for instance the respondent did not
dispute that
the 17 (seventeen) days of absence from work included
those days when he was sick due to the injury suffered at work.
Substantive
fairness
[32]
In addition to the above, substantive
fairness requires the employer to show that the retrenchment of
employees was an act of last
resort. The employer has to show that
there were no other alternatives to the retrenchment of the employee.
An essential consideration
when faced with retrenchment in a
restructuring exercise is whether there is work available which the
affected employee can perform.
If there is, then fairness would
require the employer to offer such a position to the affected
employee. In a case where a position
is available but the employee
lacks skills to perform in that position, the employer is obliged to
consider any additional training
that may assist the employee in
achieving the level of performance required. As part of the principle
of seeking to avoid retrenchment,
as envisaged in section
189(2)(a)(i) and (ii), the same consideration would apply where new
positions are created. Similarly, if
the new position requires a
higher performance level and the employee lacks the skills thereof,
training as a means to avoid retrenchment
has to be an option to
consider. In this regard the decision of the Labour Court in
Andre
Johan Oostehizen v Telkom SA Ltd (2007) ILJ 2531 (LAC),
is
instructive. In that case (at para 4) Zondo JP held that:
“
Implicit
in section 189 (2)(a)(i) and (ii) of the Act is an obligation on the
employer not to dismiss an employee for operational
requirements if it can be avoided. Accordingly, these provisions
envisage that the employer will resort to dismissal as a measure
of
last resort. Such an obligation is understandable because dismissals
based on the employer’s operational requirements
constitutes
the so called no fault terminations.”
Zondo
JP went to further [at para 8] to say:
“
In
my view an employer has an obligation not to dismiss an employee for
operational requirements if the employer has work which
such employee
can perform either without any additional training or with minimal
training. This is the because that is a measure
that can be employed
to avoid the dismissal and the employer has an obligation to take
appropriate measures to avoid it and employee’s
dismissal for
operational requirements. Such obligation particularly applies to a
situation where the employer relies on the employee’s
redundancy as the operational requirements ... A dismissal that could
have been avoided but was not avoid is a dismissal
that is
without a fair reason.”
[33]
The foundation for the above approach can
be found in
General Food Industries Ltd
v FAWU
(2004) 7 BLLR 667
(LAC)
where
Nicholson JA said:
“
The
loss of jobs through retrenchment has such a deleterious impact on
the lives of workers and their family that it is imperative
for that
-even though reasons to retrench employees may exist -they will only
be accepted as valid if the employer can show that
all viable
alternative steps have been considered and taken to prevent the
retrenchment or to limit it to the minimum.”
[34]
In
Nehawu &
others v The Agricultural Research Council & others
[2000] 9 BLLR
1081
(LC),
the Court held that:
“
[27]
The ultimate decision to retrench must be fair. In this context,
fairness means that the ultimate decision to retrench must
properly
and genuinely be justified by operational requirements. The ultimate
decision must be genuine and not merely a sham. The
court’s
function, therefore, is not merely to determine whether the
requirements for a proper consultation process have been
followed and
whether the decision to retrench was commercially justifiable. The
enquiry is whether the requirement is properly
and genuinely
justified by operational requirements in the sense that it was a
reasonable option in the circumstances. In this
regard see Decision
Survey International (Pty) Ltd v Dlamini & others [1999] 5 BLLR
(LAC) at 418E-J.”
[35]
The one alternative which if the respondent
had considered may have avoided the retrenchment is the “bumping”
process.
This issue was put forward by the applicant as an
alternative to retrenchment during the consultation process but was
rejected
or ignored by the respondent without giving any reason for
doing so. The respondent failed to provide any reason for not
considering
“the bumping process” in contravention of
section 189(6) of the LRA.
[36]
The principles governing “bumping”
were considered in
Porter
Motor Group v Karachi (2002) 23 ILJ 348
(LAC)
and are stated as follows:
“
(2)
Bumping is situated within the 'last in first out' (LIFO) principle
which is itself rooted in fairness for well-established
reasons.
Longer serving employees have devoted a considerable part of their
working lives to the company and their experience and
expertise are
an invaluable asset. Their long service is an objective tribute to
their skills and industry and their avoidance
of misconduct. In the
absence of other factors, to be enumerated hereinafter, their service
alone is sufficient reason for them
to remain and others to be
retrenched. Fairness requires that their loyalty be rewarded.
(3)
The nature of bumping depends on the circumstances of the case. A
useful distinction is that of dividing
bumping into horizontal and
vertical displacement. The former assumes similar status, conditions
of service and pay and the latter
any diminution in them.
(4)
The first principle is well established, namely that bumping should
always take place horizontally,
before vertical displacement is
resorted to. The bumping of an individual, in the absence of the
other relevant factors, seldom
causes problems and the fact of longer
service establishes the inherent fairness thereof. Vertical bumping
should only be resorted
to where no suitable candidate is available
for horizontal bumping. Where small numbers are involved the
implementation of horizontal
or vertical bumping should present few
problems.
(5)
Where large-scale bumping, sometimes referred to as 'domino bumping',
necessitates vast dislocation,
inconvenience and disruption,
consultation should be directed to achieving fairness to employees
while minimizing the disruption
to the employer. Examples of
disruption include difficulties caused by different pay levels,
client or customer reaction to a replacement
of employees and staff
incompatibility. In evaluating the competing interests of the
employer and the affected employees the consulting
parties should
carry out a balancing exercise. Where minimal benefits accrue to
employees, while vast inconvenience is the lot
of employers, fairness
requires that fewer employees should move.”
[37]
There is no evidence that had bumping been
applied it could have been disruptive and led to unworkable
consequences. It is therefore
my view that the respondent did not
consider other alternatives to retrenchment and therefore the
retrenchment was not a last resort.
Re-employement
[38]
It is an established principle of our law
that whenever the situation that led to the retrenchment improves,
resulting in the need
for additional personnel, the employer is
obliged to give preference to the re-employment of the retrenched
employees should they
be suitably qualified.
[39]
The respondent did not dispute that the
employment of the new recruits after the retrenchments but sought to
explain their employment
on the basis of the BEE agreement. However,
aside the BEE agreement, the facts of this case reveal that the
respondent did employ
new recruits without notifying or inviting the
applicants to apply for those positions.
[40]
I now proceed to deal with the contention
of the respondent that the applicants did not plead the issue of
failure to re-employ
them in their statement of case. In my view this
point is unsustainable because an allegation is made in the statement
of case
that the retrenchment was both procedurally and
substantively unfair and therefore the failure to re-employ the
applicants
would fall under this allegation. And the same applies in
the pre-trial minutes wherein the parties agreed that the Court is
required
to determine whether the retrenchment of the applicants was
substantively and procedurally fair. The pre-trial minutes further
record that the applicants dispute “
whether
the retrench employees were recalled and whether it was done in terms
of a fair process.”
[41]
It is also important to note that section
189(3)(h) of the LRA, in addition to consulting and disclosing
relevant information, an
employer in a retrenchment exercise is
obliged to disclose the possibility of future re-employment of the
employee who were dismissed.
Thus in addition to the points that have
already been made the issue of failure to re-employ or invite the
applicants to apply
is also covered under paragraph 72 of the
pre-trial minutes which requires the Court to determine whether or
not the respondent
has complied with the provisions of section 189 of
the LRA.
[42]
I now proceed to deal with the issue of the
agreement to accept the retrenchment by Motaung whose record was also
not positive but
scored better than the others and was not to be
retrenched for this reason. As stated earlier Motaung accepted the
retrenchment
in order to save Mahlaba’s employment. The
agreement to accept retrenchment by Motaung was precariously based on
the criteria
which I have already found to have been unfair. In other
words but for the unfair criteria, Mahlaba would not have been faced
with
the possibility of a retrenchment. The need for the agreement
would accordingly not have arisen. In the circumstances the agreement
stands to be set aside and declared null and void.
[43]
In terms of Section 193 of the Act the
primary remedy in instances where the Court found the dismissal to be
unfair is reinstatement
or re-employment. The Court may not grant
reinstatement where the employee does not wish to be reinstated, or
where continued employment
is intolerable, or it is not reasonably
practicable for the employer to reinstate or the dismissal is unfair
only because the employer
did not follow a fair procedure.
[44]
In the circumstances of this case and
totality of its evidence I see no reason why the applicants should
not be reinstated. It is
also just and equitable that the applicants
should receive the maximum compensation.
[45]
Although the respondent indicated that the
cause of the retrenchment was due to the loss of the tender to supply
bearings to Spoornet,
it has not been shown that such a loss had
affected 30% of production of bearings in South Africa through OEM.
Conversely, the
respondent’s own witness testified that OEM is
consistently under pressure to improve and increase production. It
was for
this reason that new recruits were engaged after the
retrenchment.
[46]
In light of the above discussion I find the
dismissals of the applicants including Motaung to have been unfair. I
see no reason
why costs should not follow the results. In the
premises, I make the following order:
(i)
The respondent, Timken SA (Pty) Ltd is
ordered to reinstate the applicants, Julius Jiki, Quintin Mbatha, Ben
Motaung, Thulani Mdluli
and Norman More.
(ii)
The respondent is to pay compensation to
all the above applicants including the estate of the deceased Mr
Dlamini, in the amount
equivalent to 12 (twelve) months salary.
(iii)
The respondent is to pay the costs of the
first applicant, NUMSA.
_______________
Molahlehi
J
Date
of Hearing : 12
th
May 2008
Date
of Judgment : 15
th
January 2009
Appearances
For
the Applicant : Advocate H W Sibuyi
Instructed
by : Ranamane Phungo
Inc
For
the Respondent: Advocate G A Fourie
Instructed
by : Edward Nathan
Sonnenbergs Inc