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[2010] ZALCCT 46
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Naude v Bioscience Brands Ltd (C 842/2008) [2010] ZALCCT 46 (11 March 2010)
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT CAPE TOWN
Case
no:
C842/2008
In
the matter between:
LORNA
E
NAUDE
.....................................................................................................................
Applicant
And
BIOSCIENCE
BRANDS
LTD
...............................................................................................
Respondent
JUDGMENT
CELE
J
Introduction
[1]
This claim is for an unfair dismissal of the applicant on the basis
of the operational requirements of the respondent as envisaged
in
section 189 of the Labour Relations Act Number 66 of 1995, (‘the
Act’). The respondent opposed the claim on the
basis that the
dismissal of the applicant was premised on a fair reason and that it
was carried out fairly.
Background
facts
[2]
The applicant commenced her employment on 19 September 2005 with a
company called Bioharmony. In May 2008 she was promoted to
the
position of a Supply Chain Administrator with effect from 17 June
2008. She was based at the Wynberg office of the company
and was
earning R9029 per month. Bioharmony was a division of Enaleni Group
and was subsequently sold to Arcay Financials, which
has become the
respondent company.
[3]
A consortium headed by Arcay Merchant took control of Wellco Health
Limited and it was renamed BioScience Brands Limited, the
respondent.
Arcay Merchant also acquired Bioharmony (Pty) Ltd and Aldabri 53
(Pty) Ltd t/a Muscle Science from Enaleni Pharmaceuticals
Limited.
These companies were transferred to BioScience, respondent, on 1
March 2008. The respondent subsequently acquired Phyto
Nova from
Thebe Medicare (Pty) Ltd on 1 September 2008. Chief Executive Officer
(CEO) of the respondent at the time was Mr Mike
Allan who was based
in Durban.
[4]
In the middle of May 2008 the Distribution Manager of the respondent,
one Sian Stradling resigned from the company. The Financial
Manager
of the respondent, one Mara Draber approached the applicant and asked
her to take over some functions that had been part
of the portfolio
of Ms Stradling. She agreed to the suggestion and the company
increased the salary with an amount of R2000.00
per month, due to the
additional task she had taken over.
[5]
When the distribution Manager of the Respondent left the company, the
applicant took over that portfolio on 17 June 2008. The
Wynberg
premises had its own warehouse and had distribution, invoicing and
debt collecting functions.
[6]
Up until September 2008 the applicant was engaged in the functions
of:
>
Credit controller,
>
Forecast and Planning, and
>
Sales consultant – Direct Marketing and Selling at the Wynberg
premises of the respondent.
[7]
In June 2008 the respondent employed one Ms Lizell Bright as its
Supply Chain Manager in its Durban office. In August 2008 Phyto
Nova
employed the services of one Ms Janine de Grill at its Newlands
office in Cape Town, as a Supply Chain Administrator through
a labour
brokerage company.
[8]
As a result of the acquisition of subsidiary companies, the
respondent underwent some transformation which necessitated a
reconsideration
of its structure. The respondent decided to outsource
the warehousing, distribution, invoicing and debt collecting
functions to
Pharmaceutical Healthcare Distributors (PHD). The
respondent decided to close down the warehouse it had in Wynberg.
[9]
In August 2008 Mr Allan went to Wynberg to address the staff about
the structural changes of the respondent. There was an option
of some
staff being transferred to Newlands Office. There is a dispute about
whether or not all staff in Wynberg could have been
accommodated in
Newlands.
[10]
Mr Allan returned to the Wynberg Office on 10 September 2008 on which
occasion he addressed the staff and consulted with each
of those that
wanted to talk to him regarding a possible retrenchment. He invited
the staff to come up with any suggestions or
alternatives in respect
of their possible retrenchment. He met the applicant individually for
about ten minutes. He suggested to
the staff that he could be
contacted by telephone, fax or email. He then issued to each staff
member a letter dated 10 September
2008 entitled “Possible
Termination of Employment”. The letter reads:
“
1.
It is with sincere regret that management has to inform you that it
is in the process of considering a number of options concerning
its
business and that you may be adversely affected thereby. It is
possible that it may be necessary to terminate your contract
of
employment based on the operational requirements of the business.
2.
Section 189
of the
Labour Relations
Act 66 of 1995
obliges management to consult you before taking any
final decisions. You are hereby invited to consult with management.
Details
of the first consultation meeting are set out in paragraph 5
below.
3.
For that purpose the following
necessary and relevant information is being disclosed to you in
confidence:
Bioscience
brands Limited (“BioScience”) acquired Bioharmony (Pty)
Ltd (“Bioharmony”) on 30 November 2007.
BioScience has
decided to consolidate its accounting, office administration and
supply chain functions at the BioScience head office
in Durban. As a
result the Wynberg office together with the relevant accounting,
office administration and supply chain functions
is not required.
The
following alternatives were considered but for operational reasons
were considered unsuitable.
Relocate
the entire BioScience head office accounting,
office
administration and supply chain functions to Cape Town.
Create
satellite accounting, office administration and
supply
chain functions in Cape Town.
It
is expected that all eight (8) employees at the Wynberg office will
be affected.
The
office will be officially closed at the end of September but some
employees will be required to continue beyond that date to
finalise
closure and attend to other matters. You would be required until 30
September 2008 and will be paid your normal salary
until such date.
Subject
to our consultations with you, we propose paying you the following:
1.
Retrenchment Pay:
Retrenchment
pay will be calculated as per Section 41 of the Basic Conditions of
Employment Act No.75 of 1977 – i.e. pay equal
to at least one
week’s remuneration for each completed year of continuous
service. Your employment commenced on 19/09/2005
and as such you will
receive 3.00 weeks pay amounting to R 6 249.88.
2.
Leave Pay:
Leave
will be paid pro rata up to the 30
th
September 2008 and on the basis of gross remuneration totalling R
416.66 per day.
3.
Ex Gratia Payment – In
addition to the above proposal, the company will pay an additional ex
gratia payment, amounting to
R 9 029.00.
A
recruitment agency will be appointed to assist you in the preparation
of a CV should you require it.
4.
Management invites you to make representation about any matter on
which you are being consulted. After considering such representations
management will respond.
5.
Management is prepared to meet with you on 10 September at the
Wynberg office at 12h00. You may be represented by another employee
of your choice from the same section.
6.
If there are any queries please do not hesitate to communicate with
management.
7.
Management is obliged by law to consult with any registered trade
union of which you are a member. Please inform management as
soon as
possible if you are a member of any registered trade union.”
[11]
He thereafter continued with consultation with each of the staff
members who needed to talk to him and thereafter left Cape
Town for
Durban on the afternoon of the same day.
[12]
On 12 September 2008 Ms Bright telephoned the applicant to schedule
an appointment with her. She subsequently flew to Cape
Town –
Wynberg and met with the applicant. They went through the functions
performed by the applicant.
[13]
On 15 September 2008 the respondent issued letters of termination of
employment to six of the eight staff members at its Wynberg
offices.
Two of the eight staff members were transferred to PHD. The letter
informed them that:
(a)
their last working day would be 30 September 2008,
(b)
they would receive severance pay calculated on the basis of one
week’s pay for every completed year of
service, which came to
R 6249.88 for the
applicant,
(c)
the annual leave pay for the applicant would be R 2083.29 ,
(d)
they would get an ex gratia payment of R 9029.00 .
[14]
On 16 September 2008 Ms de Grill telephoned the applicant and also
sent an email to her, scheduling an appointment so that
the applicant
could train and take her through the processes of the job that the
applicant was doing. The respondent contracted
with Alphatect company
to give Ms de Grill training on Pastel computer system.
[15]
The applicant then referred an unfair dismissal dispute based on the
operational requirements of the respondent, to the Commission
for
Conciliation, Mediation and Arbitration (CCMA) for conciliation. The
dispute could not be resolved and a certificate of outcome
dated 17
October 2008 was issued. On 24 November 2008 the applicant referred
the dispute to this court by means of a Statement
of Claim.
The
issue
[16]
Procedural fairness of the dismissal is under challenge, where the
questions to be answered are whether:
(1)
a proper or meaningful consultation was followed;
(2)
necessary information was in fact supplied;
(3)
Mr Allan could have approached the consultation with an open mind;
(4)
there was a position in the company that could have been offered to
the applicant but was not so offered.
[17]
Substantive fairness of the dismissal is challenged on the basis that
there was an alternative position which could have been
offered to
the applicant but was not. That refers to the Newlands office
occupied by Ms De Grill.
[18]
Although not expressed in clear terms, the applicant suggested in her
evidence that she should have been considered for the
Durban post.
T
he applicant made the following
concessions in the document for the Judge President's Directions
regarding Retrenchments for Operational
Requirements-
That
there was a need to retrench;
There
was no dispute regarding the selection criteria and
that
there is no dispute regarding the manner in which the selection
criteria were applied
[19]
The applicant only seeks compensation to the exclusion of
reinstatement or re-employment.
The
trial
The
version of the respondent
[20]
The respondent's witnesses were its Chief Executive Officer, Mr Mike
Allan and its Supply Chain Manager Ms Lizelle Bright.
[21]
The respondent's Wynberg office, where the applicant was employed,
was closed in its entirety at the end of November 2008.
The
applicant's dispute is the only unfair dismissal dispute referred
against the respondent arising out of the retrenchment exercises
undertaken by the respondent in the Western Cape.
[22]
When the respondent acquired the various companies and brands there
were a number of supply chain processes in place.
The
management of the respondent analysed the best way to consolidate
these supply chains after the businesses were acquired.
The
last brand acquired in 2008 was Phyto Nova from Thebe Medicare (Pty)
Ltd on 1
st
September 2008. The distribution, warehousing,
invoicing and debt collection was outsourced to PHD which is based in
Centurion
on 1 June 2008. The applicant was only doing supply chain
administrative duties from mid-June 2008 until her employment
terminated
some three and a half months later on 30
th
September 2008.
[23]
The Applicant was initially doing the functions of "approximately
one and a half jobs" and that is why she received
an additional
R2000 remuneration (an approximately 30% increase) when she assumed
the supply chain administration functions in
June 2008. Her
previous position largely wound down after PHD took over the debt
collection and credit control function on
1 June 2008. It was not the
equivalent of two jobs, otherwise the respondent would have given her
a larger increase in her remuneration
if this was the case.
[24]
There was a lot of uncertainty surrounding how the new businesses
would be run as they had only recently been acquired and
warehousing,
distribution, debt collection and invoicing was outsourced to PHD. It
was eventually decided in September 2008, after
consultation, that
the supply chain administration function of Bioharmony would be
absorbed into head office in Durban. There
was a commercial
rationale for the decision to close the Wynberg office
[25]
The respondent has embarked on three retrenchment exercises in the
Western Cape since March 2008. The respondent's distribution
warehouse for Bioharmony, located in Wynberg, the Bioharmony Wynberg
office and the Newlands office have all been closed in the
last
year. The respondent has saved significant costs by closing the
Wynberg office.
[26]
The operation of the Bioharmony and Phyto Nova brands and the supply
chain administration of these two brands have been absorbed
by the
head office in Durban. The respondent's entire portfolio of
brands now has two people managing their supply chain
from the Durban
office. The absorption of the Bioharmony supply chain into the
Durban office occurred following the closure
of the Wynberg office at
the end of September 2008 and the absorption of the Phyto Nova supply
chain shortly thereafter. There
were intricacies of the consolidation
of the supply chain at the respondent in Durban.
[27]
Ms de Grill was employed through a temporary employment service (or
labour broker), ETA Lyons & Associates by Phyto Nova,
just prior
to the brand being transferred to the respondent, on approximately
28
th
August 2008. From the supply chain perspective, the
Phyto Nova brand was having a difficult period as the key supplier to
the brand,
Parceval, had "gone under" prior to the
acquisition of the brand by the respondent and a new supplier had to
be found.
An alternate supplier, namely Afriplex was found and
Phyto Nova needed a person in a temporary capacity to assist with the
transition
and with other duties.
[28]
The appointment of Ms De Grill was made before a decision had been
taken by the respondent to embark on a retrenchment exercise
at the
Wynberg office. The position that she eventually occupied at
Phyto Nova was initially advertised a long time before
the
acquisition of the Phyto Nova brand by the respondent. She
initially applied for the job in March 2008 although the whole
recruitment process was only completed on 28
th
August 2008
when she started working at Phyto Nova. When she started working
there approximately 50% of the job consisted of supply
chain
administration and the other 50% consisted of product development.
[29]
Ms De Grill was based at the Newlands office. There was no-one
at the Newlands office to deal with the supply chain administration
issues of the Phyto Nova brand at the time that De Grill was hired.
The two brands and their supply chain administration
were run
completely independently of one another until the point when they
were absorbed by the Durban office.
[30]
Shortly after Ms De Grill commenced employment, she was diagnosed
with cancer and took an extended period of sick leave, from
5 October
2008 until 5 January 2009. No one else was appointed to take over her
functions at Phyto Nova when she went on sick leave
and the
respondent did not have any need to make such an appointment.
Ms De Grill only did supply chain administration for
a period of just
over a month. The supply chain administration of the Phyto Nova
brand was absorbed by the Durban branch
when Ms De Grill went on sick
leave.
[31]
When Ms De Grill returned to work in January 2009 there was actually
nothing for her to do at the Newlands office. However,
the respondent
did not feel comfortable cancelling the contract two months before
the fixed term was finished, considering that
she had just been
treated for cancer. When she got back to work in January she did
administrative tasks and filing and that approximately
20% of her job
was product development. Her job function had changed
dramatically on her return. She hardly worked
on supply chain
administration. There was no supply chain administration work at the
respondent, within any of the brands, in the
Cape Town region from
early October2008. The supply chain administration role of Ms De
Grill was only ever going to be a temporary
role whilst the supply
chain of the brand got absorbed into the head office branch at
Durban. On why the respondent did not offer
the post that was
occupied by Ms De Grill to the applicant, there was actually very
little supply chain work for De Grill to do,
even at the stage that
applicant was consulted regarding retrenchment. Ms De Grill had also
been hired to do product development
which was a function that the
applicant had no eexperience or training in.
[32]
Ms De Grill had been hired as a temporary measure on a six month
contract before the decision to retrench had been contemplated
in
Bioharmony brand. It did not make sense to offer the applicant
the job as there was minimal supply chain work to do in
the Phyto
Nova brand around the time of her retrenchment. There was
simply no other job for the applicant to do in the region.
Furthermore, the applicant's credit control and debtor's function had
been outsourced to PHD in June and that she had been doing
a limited
credit control function in the period since that occurred. The
entire operation in Wynberg had become redundant.
[33]
Ms Bright contacted the applicant in mid September in order to
discuss the absorption of the supply chain of Bioharmony into
the
Durban branch. Ms Bright had not done this to take over the
applicant's job. Ms De Grill was asked to contact the applicant
to
learn how she ran the Bioharmony supply chain so that the Phyto Nova
supply chain could be run in a similar fashion until it
was absorbed
into the Durban office supply chain administration. The respondent
did not appoint Ms De Grill to take over the applicant's
job. The
applicant did not know anything about the Phyto Nova supply chain or
what Ms De Grill's original position (before her
illness) entailed.
She misunderstood the circumstances in which she said that Ms De
Grill was hired to take her job, despite the
explanation that had
been given during the retrenchment consultation. The applicant did
provide information to Ms Bright and Ms
De Grill though it became
clear that not all of it was relevant to the supply chain of Phyto
Nova. Ms De Grill and Ms Bright
received a list of information
from the applicant with contacts and a guide to compiling forecasts.
However, a lot of that information
was not relevant to them and they
did not require it. The assertion that the applicant had to teach Ms
De Grill and Ms Bright her
job was clearly a gross exaggeration. The
respondent was clearly under no obligation to offer the applicant the
position that De
Grill was occupying at Phyto Nova.
[34]
Mr. Allan did call everyone together for a meeting in the Wynberg
office in August. However, he did not make a declaration
of
redundancy at this point. In August 2008 the respondent did not
know how they would be running the various brands and
had made no
decisions regarding the closure of the Wynberg office. He
advised the staff that if they were offered a good
position
elsewhere, they could take it as he simply did not know what would be
happening with the company in the future and there
was great
uncertainty. Retrenchment had not been contemplated at that stage and
redundancy had not been declared. Applicant’s
job was not
redundant at that stage.
[35]
As soon as retrenchment was contemplated by the respondent letters
were sent to the employees at the Wynberg office. The letter
is
detailed and provides a great deal of information regarding the
respondent's acquisitions and the alternatives which had been
contemplated to avoid dismissals. Ms De Grill and the applicant met
at the Newlands office prior to the retrenchment consultations
taking
place. Even if the applicant had not met Ms De Grill before the
consultations occurred, by the time the consultations took
place, it
was clear that the Phyto Nova supply chain administration work would
soon come to an end. It would not have made
sense to offer that
position to the applicant in consultation.
[36]
Mr. Allan approached the consultation with an open mind. Due to his
experience with retrenchments in his previous employment
Mr. Allan
knew that in an "acquisition situation" it was very
important to keep an open mind. Often, the people
who have been
working in the business "know the detail" and will have
very good ideas to avoid retrenchment. One could
"miss a gem"
if one did not keep an open mind in a consultation process in these
circumstances. The employees had as
much information as was available
to the respondent and that the contents of the letter were discussed
in detail with all the staff.
He met each of the staff members on an
individual basis following the group meeting.
[37]
The applicant did not provide any alternatives to avoid retrenchment
during the meetings or afterwards. The staff members were
asked
whether they would relocate to Durban and they were not willing to.
The applicant never indicated a willingness to relocate
to Durban.
Mr, Allan did not try to "chase her" out of his office when
she had an individual meeting with him. She did
not give him any
suggestions or raise any queries regarding the retrenchment.
Applicant’s
version
[38]
Ms De Grill testified and thereafter the applicant presented her
evidence. Applicant was never offered a job in Durban as
averred by
Allen. She would have worked part-time in order to alleviate hardship
and that she would have accepted a downgraded
post but this was never
offered to her or discussed with her.
[39]
Offering her Ms De Grill’s job would not have been pointless
and unfair merely because it could have been terminated
on 1 (one)
month’s notice. During the August meeting, her understanding of
what Mr., Allen had said to them was that they
would be made
redundant and that if they received a job offer they should take it.
Shortly after the beginning at the Respondent
company, she had
received a bonus in the form of a gift voucher because she had
identified weaknesses in the supply chain system
and on her own
initiative corrected them, including drawing up a register in which
clients would sign receipt of deliveries and
a cross referencing
system where waybills were cross referenced with invoices. In
addition to this and because of her previous
experience, she had
identified a weakness, a security risk, in the operations of the
Respondent company because its stock was open
to the public and on
her recommendation the stock was safely secured. Mr. Allen did
not know about these improvements made
by the Applicant.
[40]
On Mr. Allen’s instructions, Ms Draber had offered her the job
and had in fact pleaded with her to take the job of Supply
Chain
Administrator. The applicant was in fact doing two full time jobs and
on a visit to PHD with Mr. Allen, she asked whether
her job
description would change and was told it would. In respect of the
consultation, she received her Section 189 letter on
10 September
2008 on or just after 10h00 and consulted at about 12h00 with Mr.
Allen. She understood the 10 minutes meeting
to be the
consultation and that she felt the company had already decided that
there was no point in making representations.
Mr. Allen said
that they all had to get on with their lives. She had no information
concerning Phyto Nova, the appointment of Ms
De Grill, the position
at the Newlands office or any other possible positions. Her
administrative skills were of a nature
generic enough to do any
supply chain functions required of her at the Newlands office. Both
parties had to deal with Biomox. even
though Mr. Allen said that he
did not know why Ms De Grill would need information on Biomox. She
could have done the job that De
Grill did, because her skills as an
administrator of supply chain functions were such that she could or
at least should have been
told about the job, and the fact that she
had trained Ms De Grill to do work that she was currently doing meant
that she could
have done her work. She had been approached to do
Supply Chain Administration by her employer, but she was qualified.
Even though
she only had 5 (five) months at the Respondent’s
company she had many years before that done work at BMD (Pty) Ltd of
a general
nature that involved administration and similar skills.
Furthermore, that the Newlands office and the Phyto Nova Brands
supply
chain functions were different because there were new supplier
she had dealt with new suppliers in her current job and it was simply
a question of incorporating them into the system. In fact, the
biggest part of her job comprised the taking of forecasts, including
the balancing of stock. It was a labour intensive job which did not
require any special product development skills.
[41]
She did not experience the consultation as being a
consultation or meaningful in any sense.
Mr. Allen never put
to her or any of the employees that they could apply for posts in
Durban. She had very little interaction
with Ms Bright who knew
very little about her work. She did not know that dismissal for
operational requirements was a “no
fault” dismissal, and
that businesses can close for operational reasons. She had
experienced two retrenchments in the past
and had been a human
resources officer at BDM Textiles. She did not know that after 5
October 2008 there was in fact no supply
chain administration job
left even if she was qualified to do it. As to why the applicant did
not make representations to the respondent,
she had been emotional
and upset at the time. The fact that the applicant was the only
person who was dissatisfied with her dismissal
and who had decided to
take the respondent to Court was borne out by the fact that she felt
she had a right because she was not
consulted.
SUBMISSIONS
BY THE PARTIES
Respondent’s
submissions
[42]
It is the respondent's submission, as confirmed in the evidence of
Mr.Allan and Ms Bright, that there was no supply chain administration
work at the respondent, within any of the brands, in the Cape Town
region from early October. The respondent further submitted
that the
supply chain administration role of Ms De Grill was only ever going
to be a temporary role whilst the supply chain of
the brand got
absorbed into the head office branch in Durban. This was the
testimony of both Mr. Allan and Ms Bright and
it could not be
gainsaid by the applicant or Ms De Grill.
[43]
Mr. Allan was asked under cross examination why he did not offer the
post that was occupied by Ms De Grill to the applicant.
He
testified that there was actually very little supply chain work for
Ms De Grill to do, even at the stage that applicant was
consulted
regarding retrenchment. He pointed out that Ms De Grill had
also been hired to do product development which was
a function that
the applicant had no experience or training in.
[44]
Mr. Allan and Ms Bright testified that Ms Bright contacted the
applicant in mid September in order to discuss the absorption
of the
supply chain of Bioharmony into the Durban branch. Whilst the
applicant had initially pleaded in her application papers
that Ms
Bright had done this to take over the applicant's job, it was rightly
conceded by the applicant at the start of the trial
that Ms Bright
was not employed to take the applicant's job. Ms Bright
testified that Ms De Grill was asked to contact the
applicant to
learn how she ran the Bioharmony supply chain so that the Phyto Nova
supply chain could be run in a similar fashion
until it was absorbed
into the Durban office supply chain administration.
[45]
In the testimony of Mr. Allan and Ms Bright it was confirmed on a
number of occasions that the respondent did not appoint Ms
De Grill
to take over the applicant's job. In her testimony the
applicant conceded that she did not know anything about the
Phyto
Nova supply chain or what Ms De Grill's original position, before her
illness, entailed.
[46]
It emerged in the testimony of Mr. Allan, Ms Bright and Ms De Grill
that the applicant did provide information to Ms Bright
and Ms De
Grill. However, it became clear that not all of it was relevant to
the supply chain of Phyto Nova. Ms De Grill
and Ms Bright both
received a list of information from the applicant with contacts and a
guide to compiling forecasts. When Ms
Bright and Ms De Grill were
taken through the list by the applicant's representative they
testified that a lot of the information
was not relevant to them and
they did not know why it had been included in the list as they did
not require it. The applicant's
contention in her papers and in her
testimony that she had to teach Ms De Grill and Ms Bright her job, is
clearly a gross exaggeration
and should be rejected.
[47]
The respondent was clearly under no obligation to offer the applicant
the position that Ms De Grill was occupying at Phyto
Nova and so the
applicant's allegation of substantive unfairness should be dismissed.
[48]
Mr. Allan testified that he did call everyone together for a meeting
in the Wynberg office in August. However, he emphatically
denied that
he made a declaration of redundancy at this point. He stated
that in August 2008 the respondent did not know
how they would be
running the various brands and had made no decisions regarding the
closure of the Wynberg office.
[49]
As soon as retrenchment was contemplated by the respondent letters
were sent to the employees at the Wynberg office.
It was
submitted that the letter was detailed and provided a great deal of
information regarding the respondent's acquisitions
and the
alternatives which had been contemplated to avoid dismissals.
In cross examination the applicant could not clarify
what further
information she required in the letter.
[50]
The applicant was angry that Mr. Allan
seemed "nonchalant" in his discussions with her. She
cited this nonchalance
and his alleged comment that "Life goes
on after retrenchment…" as reasons for her inability to
provide suggestions
to Mr. Allan regarding the retrenchment process.
This was never put to Mr. Allan in cross examination and so he was
never
asked to comment on these allegations. The applicant stated
under cross examination that she did not raise any queries regarding
Ms De Grill or Ms Bright with the management of the respondent when
they contacted her regarding her supply chain administration
following the decision to close the Wynberg office.
[51]
In any event, it is submitted that if the applicant had raised the
issue of Ms De Grill with the respondent it would have been
explained
to her that Ms De Grill was not hired to replace her. Mr. Allan
testified that the positions they were occupying
were actually
different although some of the functions were the same. They
were dealing with very different products, different
suppliers and
the position was with a separate entity. The respondent would have
reiterated that the supply chain administration
of all of the brands
was being consolidated in the Durban office. Mr. Allan gave
evidence that Ms De Grill was "shutting
down" and
"integrating" the Phyto Nova supply chain. It is the
respondent's submission that none of the issues raised
by the
applicant in relation to the procedural fairness of the dismissal can
be sustained and that the respondent clearly fulfilled
the
obligations placed upon it in terms of the Act and the Code of Good
Practice (the Code).
[52]
The Act and the Code place substantive and procedural obligations on
the employer in situations where dismissals for operational
requirements are anticipated. It is the respondent's submission
that they fulfilled both the procedural and substantive requirements
mandated by the legislation and that consequently the applicant's
dismissal was fair. The obligations to consult are not only
shouldered by the employer. The process of consultation has
been held to be "…
a bilateral process in which
obligations are imposed upon both parties to consult in good faith in
an attempt to achieve the objectives
specified…
" in
the Act. The employer cannot be blamed if the employee fails to
engage adequately in the consultation process.
[53]
The respondent attempted to engage with the applicant in consultation
and that she did not endeavour to consult adequately.
She was
given ample opportunity to canvas the options and issues, that she
knew what her obligations were in this regard and that
she failed to
do so. The respondent cannot be held to blame for this failure.
[54]
The Act does not prevent an employer from coming to the table with a
favoured proposal although it does require that the employer
gives
employees a "fair opportunity to express their views…"
and to keep an open mind during the consultation
process. The
employer must be open to persuasion by the employees if it is argued
that "…
[the] method is wrong or is not the best or
that there is or may be another one that can address the problem
either equally well
or even in a better way….
"
[55]
It is the respondent's submission that this is exactly how it
approached the consultation process at the Wynberg office.
Mr.
Allan specifically testified that he kept an open mind. He also
testified that there were no arguments, comments, or
suggestions,
persuasive or otherwise, given by the employees or by the applicant
herself.
[56]
It is submitted that the respondent did everything it could to
achieve joint consensus-seeking and that the applicant was unwilling
to meaningfully participate in the consultation process. The
respondent could not shoulder the full responsibility of proposals
to
avoid retrenchment and the applicant had a responsibility to assist
with proposals. It is clear from the letter that was
given to
the applicant and from the testimony of Mr. Allan that a number of
options were considered before the decision to retrench
was taken and
that he was very eager to discuss alternatives with the employees.
Applicant’s
submissions
[57]
Neither Mr. Allen nor Ms Bright knew the extent of the supply
chain administration work that the applicant did. Neither of them
knew the extent of the supply chain work that Ms De Grill did and
neither of them knew the extent to which the work of both the
applicant and Ms De Grill overlapped. At the very least 50% of all
the work done by Ms De Grill could have been done by the applicant.
In addition, some of the product development work was of an
administrative nature and could have been done by the applicant.
Finally,
the respondent chose to hire Ms De Grill from a labour
broker and the option was open to them to ask for a person who could
focus
only on product development. They chose not to. No
explanation was forthcoming as to why they could not have waited
before
hiring Ms De Grill.
[58]
A consultation was held that lasted 10 minutes, alternatively, the
applicant was expected to make representations and have
a
consultation by telephone or email with the CEO of a R100 000 000
company. The applicant was under the impression that
the 10 minutes’
consultation constituted the entire consultation. She understood Mr.
Allen’s words “that we must
all get on with our lives”
to mean that the retrenchment was a foregone conclusion. Mr.
Allen understood it to mean
an introductory discussion and that it
was open to the employees after he had left for Durban to contact him
per e-mail and by
telephone to make any further suggestions.
[59]
At the August meeting the applicant understood Mr. Allen’s
words to the effect that if people were offered jobs that
they should
take them to mean that retrenchments had been decided on and were
going to take place. On Mr. Allen’s version,
he merely
wished to indicate that the company faced an uncertain future and
should a good offer come along an employee may be well
advised to
take it up.
[60]
It is common cause that no information concerning the Newlands job
was presented to the applicant or any information concerning
the
acquisition of Phyto Nova and the implications of hiring an outside
person in the form of Ms De Grill. Mr. Allen testified
that he
could not employ the applicant because Phyto Nova had not yet been
acquired by the respondent company at the time that
Ms De Grill was
employed. In addition he testified that the supply chain
functions were entirely different. This testimony
was directly
contradicted by both Ms De Grill, who fulfilled the functions of
supply chain administrator in the Newlands office
and the applicant
who trained her to perform those functions.
[61]
Finally, it was put to both Ms De Grill and the applicant that the
Phyto Nova Brand and the Bio Harmony Brand were of a completely
different type. Both Ms De Grill and the applicant considered
this irrelevant and were of the view that the nature of the
supply
chain administration functions were the same or similar.
Procedural
Fairness
[62]
It is an absolute prerequisite for a fair retrenchment that a
consultation take place where exhaustive and meaningful discussions
are held at the earliest possible opportunity with employees. Failure
to consult would be unfair. If there is any way to
avoid a
dismissal and the employer does not take the necessary steps to avoid
such a dismissal then the dismissal will be unfair.
[63]
Section 189 requires not only a consultation but a meaningful
consultation. A CEO cannot have already approved the
restructuring
of a business and thereafter hold a consultation.
Adequate and proper notice of the subject of the consultation is
necessary.
Furthermore an adequate opportunity to consider the
position and to consult must be given to the employee. If the
employee
is not afforded such an opportunity the procedure is
unfair. Failure to consult on and to provide information
regarding future
re-employment at the employer is unfair especially
where the employee has limited employment opportunities. Failure to
make information
available to an employee, either in writing or at
all, and failure to provide all relevant information on possible
vacancies in
other departments is considered unfair.
[64]
Discussions are to be exhausted as soon as possible and these
discussions cannot be sporadic or superficial. The idea
is to
explore the reasons for the retrenchment and to hear representations
on ways and means to avoid retrenchment by discussing
and considering
alternative measures. Our Courts have consistently held that a
mechanical checklist approach to Section 189
is inappropriate.
The proper approach is to ascertain whether a joint consensus seeking
process has been achieved.
Section 189 places an obligation on
the employer and the Court must determine whether the employer in
fact fulfilled the purpose
of Section 189. The test for compliance of
whether the purpose of Section 189 has been fulfilled is objective.
This means
that even if the employer believes subjectively that
further consultation is fruitless, a fair procedure must still be
followed.
[65]
In considering alternatives to avoid retrenchment the employer must
consult with an employee in order to ascertain whether
the employee
is prepared to accept the post even if that post is a downgraded
post. The duration of the consultative process is
also significant.
The time allowed between informing an employee of the prospect of job
loss and the actuality of that job
loss must be such as to permit a
fair consultation on relevant issues. The extent of this period
is an essential element
in assessing fairness. The timing of the
consultation is also relevant. An employer is required to
consult with an affected
employee as soon as it decides in principle
to adopt a policy which might conceivable result in retrenchment.
[66]
The dismissal of the applicant was procedurally unfair because there
was no consultation, or there was no meaningful consultation.
On Mr.
Allen’s version the meeting he had with the applicant was not
the consultation. It was something else. The consultation
according
to him was the invitation to the applicant to contact him and discuss
or make representations regarding the s189 letter.
He was in Durban.
She was in Cape Town. He was a CEO, she was a low-level employee. He
assumed email or telephone would be sufficient
for her to make such
representations. On the applicant’s version the 10 minutes she
spent with Mr. Allen was the consultation.
Whichever version is
accepted, no consultation could be said to have taken place that
would satisfy the requirements of s 189 as
interpreted by our courts.
[67]
No necessary or reasonably necessary (for purposes of consultation)
information was provided to the applicant. She did not
know about the
opportunity at the Newlands office nor about the appointment of Ms De
Grill and had she known it still would not
have availed her because
it is common cause that Ms De Grill had already been appointed by the
time the applicant consulted with
Mr. Allen. It does not assist the
Respondent to argue that the supply chain administration functions
were different or that Phyto
Nova did not yet belong to the
Respondent company. Even if they were different or of such a
different nature that Mr. Allen
felt it would be impossible for the
applicant to perform the functions he had to, at the very least, give
her an opportunity to
disagree with him.
[68]
The fact that Phyto Nova did not yet belong to the respondent is
irrelevant. The respondent knew prior to the appointment of
Ms De
Grill that it would be acquiring Phyto Nova, and therefore there was
a duty on it, particularly in light of the fact that
it would in all
likelihood retrench employees, to either delay the appointment of Ms
De Grill to give the applicant an opportunity
to make proper
representations, or to consult the applicant and offer her the
Newlands job prior to the appointment of Ms De Grill.
It does not
avail the Respondent to argue that it did not yet own Phyto Nova and
could not therefore have placed the applicant
in the Newlands office.
To do so would mean that employers could circumvent the protections
offered to employees in terms of s
197 of the Act. The fact that Mr.
Allen thought it would be unfair to offer the applicant a temporary
post that could be terminated
with one month’s notice and that
is why, or at least that was one of the reasons why he did not raise
it with the applicant
is procedurally untenable.
[69]
The very purpose of the consultation is to have a discussion, between
the parties and not for an employer to make unilateral
decisions.
Whereas the period between the time the employee gains the knowledge
of the possibility of losing his job and
the actuality of
retrenchment is essential in assessing fairness, it would appear that
the principle can equally be applied to
the period between the
knowledge the employee gains of the possibility of losing her job and
the time when she is required to make
representations and consult. In
the present case this was about 2 hours and the total amount of time
between the applicant’s
receipt of her s 189 letter and her
dismissal letter was 5 days. The fact that Mr. Allen told the
employees that he was available
on his cell phone or by e-mail is
insufficient. He was in Durban. They were in Cape Town.
It can hardly have
been the intention of the legislature that a
meaningful consultation is one conducted between a low level employee
and the CEO
of a company by telephone or e-mail exchange.
[70]
Mr. Allen should have consulted with the applicant as soon as
Bioscience had adopted the policy which might conceivably result
in
retrenchment and should have at least consulted with her about the
Newlands post. Bioscience was aware of the imminent acquisition
of
Phyto Nova. It should have applied its mind to the
consequences. It did not. Its failure to do so amounts to
procedural
fairness in as much as it disregarded the applicant’s
rights to put forward any proposals regarding her contributions to
the Newlands office based on her supply chain administration
experience and skills.
[71]
Mr. Allen failed to provide all relevant information about possible
vacancies in other departments, specifically the Newlands
office and
was obliged to do so. It is not sufficient for Mr. Allen to aver that
it was in his opinion, a pointless exercise because
the supply chain
functions were so different. The test is objective. The
continued emphasis by the respondent was on the
business, how the new
acquisition would affect and fit into the existing business, the
degree to which it was a new brand, and
its corporate eye was fixed
firmly on consolidation in Durban. In the process it forgot
about its employees and in fact at
one stage in his testimony Mr.
Allen stated that he had an obligation towards his shareholders. But
the Court’s primary concern
is the compliance with the Act, not
the interests of shareholders.
[72]
Furthermore, whilst Mr. Allen might have been of the view that he had
genuinely engaged employees, his actual conduct measured
objectively
falls short of any meaningful consultation. The formal primary
obligation remained with him to be available there and
then for
employees and not to remove himself to Durban. It was Mr. Allen’s
conduct that frustrated consensus being sought.
Substantive
fairness
[73]
If there is an employee in the organisation that can perform the work
of another employee with shorter service then the first
employee
should be offered the job. In circumstances where there is a
dispute on the facts as to whether there has been a
meeting in the
sense of a meaningful consultation, the courts have looked at what
information was present at the meeting as a guideline.
The
court’s view was that substantive fairness is inexplicably
linked to procedural fairness because it is by way of exhaustive
consultation that the economic rational, the fair reason, for the
retrenchment, is established. The court’s primary concern
is
with labour relations and not with the interests of shareholders. A
company’s financial position does not absolve it from
its
duties under the Act.
[74]
The respondent could have avoided the dismissal of the
applicant, because there was alternative work the applicant could
have performed
in the Newlands office. The failure of the respondent
to avoid the dismissal on these grounds is substantively unfair. It
was unfair
of the respondent to hire in Ms De Grill from a labour
broker when the applicant, a person already in the employ of the
respondent,
was not considered for the position. There was an
alternative to retrenchment, a position that could have alleviated
the
hardship of the applicant, and the law requires the respondent to
have offered, or at the very least discussed, the position with
the
applicant.
Evaluation
[75]
When an employer contemplates dismissing one or more employees for
reasons based on the employer’s operational requirements,
the
employer must consult the relevant person or persons, see s189 (1) of
the Act. The employer and the other consulting parties
must in the
consultation envisaged by subsections (1) and (3) engage in a
meaningful joint consensus seeking process and must attempt
to reach
consensus on various issues, see s189 (2). The moment of
contemplation is often very difficult to ascertain in a
number of
cases. Added to this difficulty is the fact that an employer is
entitled to approach the retrenchment process with a
favoured
proposal on how to resolve what it deems to be an impasse to be
possibly resolved through a retrenchment exercise, see
Nehawu &
Others v University of Pretoria
[2000] 5 BLLR 437
(LAC)
. The
employer must however be open to persuasion by the employees or their
representatives. A meaningful joint consensus seeking
process
envisages a bilateral engagement in which obligations are imposed
upon both parties to consult in good faith in an attempt
to achieve
the objectives of the Act, see
Visser v Sanlam [2001]3 BLLR 313
(LAC)
.
[76]
Because of this dual responsibility of the parties as a basis for the
meaningful joint consensus seeking process, the process
may be
frustrated by either party, that is, the employer or the employee.
Where therefore, an employee refuses to constructively
take part in
the process, such a refusal may be held up against him or her, see
Johnson & Johnson (Pty) Ltd v CWIU [1998] 12 1209 (LAC).
[77]
It needs to be pointed out that dismissals based on the operational
requirements of the employer are “no fault”
dismissals.
In the present matter the dismissal of the applicant had nothing to
do with her blameworthiness. It had everything
to do with the
inability of the respondent to continue with some of its operations
in Wynberg and Newlands. The accolades received
by the applicant do
not therefore found a cause of action.
[78]
Section 189 requires not only a consultation but a meaningful
consultation. A number of factors follow from this type of
consultation
and to the extent relevant in this matter, a few of
these factors need to be outlined. Adequate and proper notice of the
subject
of the consultation is very necessary. An adequate
opportunity to consider the position and to consult must be accorded
to the
employee. Failure to consult on and to provide information
regarding future re-employment at the workplace of the employer may
be unfair especially where the employee has limited employment
opportunities. Similarly a failure to provide all relevant
information
on possible vacancies in other departments of the
employer may be unfair, see
Visser v Institute for Medical
Research (1998) 19 ILJ 1616 (LC).
The parties have to
consider alternatives to avoid a retrenchment. The employer must
therefore consult with an employee
to ascertain whether the employee
is prepared to accept a downgraded post, see
Reckitt & Coleman
(SA) (Pty) Ltd v Bales [1994] 8 BLLR32 (LAC)
.
[79]
With these considerations in mind, I now return to the facts of the
case before me. The challenge by the applicant to substantive
fairness is one of a limited nature. It has not been sought to
challenge the closure of the Wynberg branch office, where the
applicant
was based. In fact in the pre-trial minute there was no
challenge at all to substantive fairness of the dismissal. The
challenge,
as I understand it, is that the applicant ought not to
have been retrenched but should have been retained in the position
occupied
by Ms De Grill, which was a fixed term contract. A bold but
unsubstantiated statement was made on behalf of the applicant that
retrenchment was already foreseeable when Ms De Grill was employed. I
must accept the version of the respondent that at that stage,
retrenchment was not contemplated. There is no factual basis for
holding otherwise.
[80]
The undisputed evidence of the respondent is that Ms De Grille was
employed by Phyto Nova, through a labour brokerage with
effect from
27 August 2008. 5 days later Phyto Nova was taken over by the
respondent. While the period between the employment of
Ms De Grill
and the acquisition of Phyto Nova by the respondent is very short, in
the absence of direct or even indirect evidence,
it would be
speculative to hold that the respondent had a say over who Phyto Nova
could or could not employ.
[81]
Ms De Grill was off sick for the better part of her employment
period. The undisputed evidence is that her work was done from
the
Durban office, while she was on sick leave. There is overwhelming
evidence suggestive that, in fact there never was a need
to employ
her in the first place, let alone a need to employ someone else in
her place. When her fixed term of employment ended,
her functions
were taken over by the Durban office.
[82]
It must follow as of necessity than that the respondent has succeeded
in showing that it had a fair reason for not substituting
Ms De Grill
with the applicant. There was some challenge by the applicant that
the Durban office was never offered to her. The
respondent said that
the offer was extended to her. It is noteworthy that the applicant
did not say that she could have uprooted
to Durban, had the offer
been made to her. In the letter of 12 September 2008 issued by Mr.
Allan to the applicant and other staff
members, the following
information was given- “…
BioScience has decided to
consolidate its accounting, office administration and supply chain
functions at the BioScience head office
in Durban. As a result the
Wynberg office together with the relevant accounting, office
administration and supply chain functions
is not required………..
It
is expected that all eight (8) employees at the Wynberg office will
be affected…..”
[82]
The letter proposed a payment of the retrenchment package, subject to
a consultation with the staff. It further invited the
staff to make
representations about any matter on which the staff was being
consulted and a response thereto. Against this,
there is
paucity of evidence on the applicant suggestive that she would have
wanted to move to the Durban office.
[83]
I hold therefore, as I must, that the respondent has succeeded in
showing that the dismissal of the applicant on its operational
requirements was substantively fair.
[84]
In August 2008 Mr. Allan went to the Wynberg offices of the
respondent. He addressed the staff on the structural changes on
the
respondent. He discussed the possibility of some staff moving to
Newlands offices. The understanding by the applicant of what
Mr.
Allen said in that meeting was that their positions would be made
redundant and therefore that if they received other job offers,
they
were to take them. This goes against the evidence of the applicant
that Mr. Allen told her that her position was secured.
The evidence
of the applicant is unclear in this regard. It could mean that there
is something that Mr. Allan said which the applicant
understood to
mean their positions would be redundant. In that case she failed to
tell court what that something was so that court
would assess it on
its own. There is room for a misunderstanding by the applicant. News
of a possibility of a retrenchment is never
good news. Also, the
evidence of the applicant in this regard is lacking in details.
Against it there is the unequivocal denial
by Mr. Allan that he had
uttered the disputed words. I accordingly find that there is
insufficient evidence that Mr. Allan had
already decided to retrench
the Wynberg staff in August 2008.
[85]
The next enquiry pertains to the procedural fairness of the
dismissal. Section 189 (2) and (3) considerations, to which I have
already referred, are apposite. On 10 September 2008 Mr. Allan came
to Wynberg and held a staff meeting pertaining to their retrenchment.
He had not apprised them of the purpose of the meeting. They had not
been placed in a position from which they could meaningfully
contribute to a joint consensus seeking process. It is not surprising
that he said the meeting was not part of a consultation process.
The
applicant thought it was. Objectively it could not have been. It was
only after that meeting that he distributed the letter
of 10
September 2008, which is a written notice as envisaged by section 189
(3). It gave the employees two days within which to
make any
representations they might want to make. Paragraph 5 of the notice is
interesting. It reads- “
Management is prepared to meet with
you on 10 September at the Wynberg office at 12h00. You may be
represented by another employee
of your choice from the same
section.
”
[86]
It can not be that the employees were given an adequate proper notice
of the subject of consultation. Such consultation was
to take place
on the same day of the receipt of the notice. They were not given
reasonable time to reflect on their position, to
consult and then to
think of the way forward. They could not choose to be represented by
an employee of their choice from the same
section as each was
concerned about her own position. The notice told them that the
office would officially be closed at the end
of the same month,
giving them effectively 20 days’ notice of the termination of
their employment. It is not surprising that
the applicant felt angry
and confused at the time. Mr. Allan was just taking the employees
through predetermined stages of their
dismissal, when he met them
individually. Theirs was just a
feit accompli
dismissal. It
could never have been procedurally fair in the circumstances. One can
not tell what suggestions they might have made
had they been given an
opportunity to reflect and consult. The applicant was well vest with
her duties. She might for instance
have come up with proposals to
delay the time of retrenchment which the respondent might have found
acceptable. The applicant’s
failure to follow up on the
terms of the letter of 10 September 2008, as its contents suggested,
is accordingly excusable. To the
extent that procedural fairness
touches on Ms De Grill, the version of the respondent stands
unshaken.
[87]
The dismissal of the applicant by the respondent is accordingly found
to have been procedurally unfair.
[88]
The applicant has requested that the compensation to be awarded to
her, on being successful, should be punitive to take account
of the
behavior of the respondent. There is authority for this approach. In
the case of
Moodley v Fidelity Cleaning Services (Pty) Ltd t/a
Fidelity Super Care Cleaning
(2005) 26 ILJ889 (LC), this court
held that the provisions of Section 189 are prescriptive, clear,
notorious, well understood,
wisely crafted and tailored. Their
aim is joint consensus seeking and court stated in unambiguous
language that employers
that do not follow them do so at their own
peril.
[89]
The applicant was represented on pro bono basis. The considerations
of law and fairness of this matter suggest that a costs
order should
issue against the respondent. There is no specific provision in the
rules of this court for the awarding of costs
in these circumstances.
Rule 40 of the High Court provides for a costs order for a successful
litigant
in forma pauperis.
[90]
The following order will issue –
(1)
The respondent is ordered to compensate the applicant in an amount of
money equivalent to six months of the salary she was earning
on the
date of her dismissal. (R9029 x 6 =R54174.00).
(2)
The respondent is ordered to pay so much of the costs of counsel for
the applicant as were actually incurred, to include any
court fees
and sheriff’s charges as may have been disbursed.
……………………
Cele
J
DATE
OF HEARING : 22 OCTOBER 2010
DATE
OF JUDGMENT : 11 MARCH 2010
APPEARANCES
APPLICANT
: EDWARD NATHAN
SONNENBERGS
RESPONDENT:
SHEPSTONE & WYLIE
ATTORNEYS