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[2010] ZALCD 19
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Dube v Ithala Development Bank Ltd (D655/06) [2010] ZALCD 19 (7 June 2010)
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT DURBAN
Reportable
CASE No. D 655/06
In
the matter between:-
CEDRIC
MUNTU DUBE
Applicant
And
ITHALA
DEVELOPMENT BANK
LIMITED
Respondent
JUDGMENT
GUSH,
J
1.
The
Applicant in this matter was employed by the Respondent in 1988.
On the 31
st
March 2006, the applicant was dismissed by the
respondent due to operational requirements. At the time of his
dismissal the
Applicant held the position of “Divisional
Manager Micro-finance” in the Financial Services Division of
the Respondent.
2.
Whilst
the Applicant conceded in the pre trial minute that there was a
general need for the Respondent to retrench he averred that
his
retrenchment was firstly procedurally unfair; and secondly
substantively unfair on the grounds that it was not necessary to
retrench him specifically. The Applicant sought reinstatement
on terms and conditions no less favourable than those he enjoyed
at
the time of his dismissal.
3.
During
August 2004 the Respondent commenced a restructuring exercise of its
financial division. During the course of this exercise
the Applicant
was, in October 2004 appointed to the position of acting Senior
Manager: Microfinance. When the position of Senior
Manager:
Microfinance was advertised on the 12
th
November 2004 the
Applicant applied for and was appointed to the position with effect
from the 1
st
January 2005.
4.
It
is apparent from the evidence and the documents contained in the
consolidated bundle that the restructuring process continued
after
the 1
st
January 2005. The Applicant referred in his
evidence to a number of emails or memos addressed to the Respondents
staff regarding
further changes in the structure and personnel of the
finance section. The Applicant’s evidence was that after his
appointment
to the permanent position in January, he was required, as
were his fellow managers, to establish a staff structure for his
section.
He explained that he had attempted to do so but had not
managed to persuade his immediate superior nor the CEO to make the
appointments
he had recommended.
5.
According
to the Applicant this caused him considerable stress as he had no
staff to assist him and on the 10
th
June 2005 the
Applicant testified that as a result of suffering blackouts he
consulted his General Practitioner who referred him
to a
Psychiatrist. The Psychiatrist concluded that the Applicant was
suffering from stress caused by his working environment and
booked
him off on sick leave. It appears from the sick leave records in the
bundle of documents that the Applicant was initially
booked off from
the 10
th
June to the 19
th
June and again from
the 4
th
July to the 17
th
October 2005.
6.
On
the 13
th
June 2005, some two and a half weeks prior to the
Applicant being booked off the Respondent appointed a new “Chief
Operations
Officer: Financial Services”, Mr. Omega Shelembe, to
whom the Applicant reported. The Applicant had had little contact
with
Shelembe prior to his sick leave, save that shortly before the
onset of his blackouts he had, together with the other managers,
presented their proposals on their divisional structures. Shelembe,
according to the Applicant, had been hostile to the Applicant’s
proposal and had “torn it apart”.
7.
On
the 20
th
September 2005, during the Applicants sick leave,
Shelembe wrote to him recording his concern at the amount of sick
leave that
the Applicant had taken during the current sick leave
cycle. Shelembe invited the applicant to meet with him on the 29
th
September to discuss this matter. It is relevant as that in his
letter Shelembe makes no mention of the respondent having embarked
on
any restructuring initiative involving either the financial section
or the Applicant himself.
8.
Up
until this point the facts are essentially common cause. At this
point however the versions of what transpired begin to diverge.
Each
party called only one witness. The Applicant himself gave evidence
and the Respondent only called Mr. Mxolisi Msomi, a manager
responsible for the Respondent’s employee relations. Msomi had
only been appointed on the 1
st
of September 2005, some
months after Shelembe’s appointment. It appeared that Shelembe
was no longer an employee of the Respondent
but apart from that fact
no explanation was offered as to why he did not give evidence.
9.
It
is common cause that the meeting Shelembe had proposed did in fact
take place on the 29
th
September 2005. What is in dispute
is what was discussed at this meeting. The Applicant’s evidence
was that the discussion
was confined to the topic set out in the
letter, viz his ill health, while Msomi’s evidence was that
after discussing the
health of the Applicant the discussion moved on
to the restructuring that had taken place in the Financial Services
Division. In
the absence of any indication to the contrary, and
taking into account the contents of the letter of the 20
th
September 2005 the probabilities favour Applicants’
evidence that the subject of restructuring was not discussed. The
Applicant indicated that he had undertaken during this meeting to
consult his doctor to determine when he could return to work.
He had
done so and following the consultation with his doctor he telephoned
Shelembe to advise him that his doctor had said he
could return on
the 17
th
August 2005 as he had “handled the meeting
with Shelembe and Msomi well”
10.
On
the 17
th
October the Applicant returned to work and
discovered that in his absence his post had been re-designated
“Divisional
Manager: Co operatives and Microfinance”;
advertised; and that the closing date for applications had been the
13
th
September 2005. The Applicant decided as a result of
this information to request a meeting with Shelembe. Shelembe had
only been
available on the 20
th
October when the meeting
took place. There was a dispute over whether Msomi attended this
meeting together with Shelembe or not.
The Applicant was adamant that
Msomi had not been present whilst Msomi insisted that he had. The
Applicant explained that when
he had requested the meeting on
learning that his post had been re-designated and advertised, he had
not disclosed to Shelembe
the reason for his wanting to meet. In
those circumstances he maintained that there was no reason for Msomi
to have been present.
Again the probabilities favour the Applicant’s
version particularly in the absence of any evidence to the contrary
from Shelembe
or any reference Msomi’s presence in the
subsequent memo from Shelembe recording what he averred had been
discussed at the
meeting.
11.
Following
this meeting the Applicant received a memo from Shelembe dated the
31
st
October referring to the meeting of the 17
th
October and purporting to record the issues that had been discussed.
Msomi gave evidence that he had drafted the memo on Shelembe’s
behalf. The memo does not refer to Msomi’s presence, nor is it
copied to Msomi, as is the case in later meetings when it
is not
disputed that Msomi was present. In the absence of Shelembe it is
noteworthy that Msomi claimed to have been present and
the author of
memos signed by Shelembe which ex facie the memos were authored.
Whilst the Applicant indicated that he had some
concerns over the
contents of the memo he did confirm that Shelembe had advised him
that:
11.1 The
finance section had been reorganized;
11.2 That his
position no longer existed;
11.3 That a
new post Divisional Manager: Co operatives and Microfinance had been
established in its place; and
11.4 That
this post had been advertised.
12.
It
was apparent from the evidence that a number of new posts had been
created in the Financial Services Division during the Applicant’s
absence; viz Divisional Manager: Micro and Cooperative Finance;
Divisional Manager: Insurance; Divisional Manager: Credit Risk;
Divisional Manager: Insurance; Divisional Manager: Group Finance;
Divisional Manager: Property Asset Management. The Applicant
also
confirmed that Shelembe had told him that these posts had not been
filled and that despite the fact that the closing date
for
applications had passed he, the Applicant, could “put [his]
application forward for consideration before Friday 04 November
2005.”
13.
What
the memo does make very clear is that as a result of the Applicant’s
illness he had not been included in the consultation
process which
had taken place prior to the implementation of the Respondents
restructuring exercise.
14.
The
Applicant replied to the Shelembe memo on the 4
th
November
detailing his concerns but did not apply for the positions as he was
invited to nor did he in his reply indicate why he
had not applied.
In his evidence, however, the Applicant referred to a meeting he had
held with Shelembe on the 25
th
October in which meeting
the Applicant said he had advised Shelembe that he did not intend
applying for the position until he received
further information.
15.
Whilst
the Respondent’s Msomi gave evidence that later during November
2005 further memos had been addressed to the Applicant
which the
Applicant denied having received there were no significant
developments during the latter part of November or December
which any
bearing on the final outcome, viz the dismissal of the Applicant. In
addition the Applicant’s sick leave records
show that during
November and December he was in any event absent for a further 17
days.
16.
The
next step in what the Respondent relied on as the consultation
process, commenced in January 2006. On the 5
th
January
2006 the Respondent issued an email to all employees advising them of
the appointment of the new Divisional Manager: Micro
and Cooperative
Finance. This was the post that the Applicant believed was his post
and was one of the posts that he had been invited
to apply for but
had not.
17.
On
the 10
th
January Respondent’s Shelembe addressed
what purported to be a letter in compliance with section 189(3) of
the Labour Relations
Act (LRA) inviting the Applicant to meet on the
16
th
January for the purpose of attempting to reach
consensus on those issues enumerated in section 189(2) of the LRA. A
careful perusal
of this letter reveals that it materially does not
comply with section 189(3) in that there is no disclosure of any of
the “relevant
information’ the section required the
Respondent to make. This letter, as with previous correspondence
addressed to the Applicant
( the memos of the 31
st
October
and the 28
th
November) simply refers to “previous
consultations” during which consultations it is averred that
the details of the
restructuring were discussed. No evidence was lead
by the Respondent nor was any documentation produced to explain the
rationale
behind restructuring which had lead to the Applicants
position becoming redundant. No evidence was adduced or explanation
provided
surrounding the procedure followed in the restructuring of
the finance division which necessitated the creation of the new posts
viz Divisional Manager: Micro and Cooperative Finance; Divisional
Manager: Insurance; Divisional Manager: Credit Risk; Divisional
Manager: Insurance; Divisional Manager: Group Finance; Divisional
Manager: Property Asset Management.
18.
The
so called s189 (3) letter requested that a meeting take place on the
16
th
January 2006. This meeting duly took place and at
this meting the Respondent confirmed that the position of Divisional
Manager:
Micro and Cooperative Finance had been filled and that the
Applicant’s position had accordingly become redundant. The
Applicant
was then invited to apply for any one of the following
positions: Divisional Manager: Insurance; Divisional Manager:
Credit
Risk; Divisional Manager: Insurance; Divisional Manager: Group
Finance; or Divisional Manager: Property Asset Management. On the
18
th
January Shelembe sent an email to the Applicant
recorded his understanding of what had transpired at the meeting.
19.
The
Applicant remained dissatisfied with the process and invoked the
grievance procedure by lodging a grievance regarding the retrenchment
process on the 18
th
January 2006. At first the
Respondent’s Msomi acknowledged the grievance and indicated
that it would be dealt with, but later
on the 23
rd
January
appeared to have had a change of heart and responded to the Applicant
advising him that the Respondent was of the opinion
that it had
correctly followed the process required by the LRA and that the
Respondent’s Grievance procedure did not allow
for grievances
regarding a restructuring process
20.
Despite
this the Applicant, as he had been invited to, made application for
the posts of Divisional Manager: Credit Risk; Divisional
Manager:
Insurance; Divisional Manager: Group Finance; or Divisional Manager:
Property Asset Management on the 31
st
January 2006. In
response to the Applicant’s applications that the Respondent
itself had asked him to submit he was advised
by the Respondent’s
Msomi that:
“
I have
forwarded your request to relevant Executives.
However, I
should note that, when reviewing your CV, your application does not
meet the required competencies for positions you
have requested to be
considered for” (sic)
It
is important to note that the Respondent had some 12 months earlier
appointed the Applicant to the position of “Senior
Manager:
Microfinance- E Band” as part of the initial stages of the
restructuring.
21.
It
must be recorded that the requirements, competencies or
qualifications of the posts Divisional Manager: Micro and Cooperative
Finance Divisional Manager: Credit Risk; Divisional Manager:
Insurance; Divisional Manager: Group Finance; or Divisional Manager:
Property Asset Management appears to have been very similar and
devoid of any specific detail or distinguishing feature relating
to
each specific post. The requirements are set out in three brief
paragraphs and in fact the only difference in the various job
descriptions is that “requirements” for the different
posts contain a paraphrased reference to the specific job title.
If
the Applicant did not “
meet the required competencies”
for the positions he applied for in January 2006, he most
certainly would not, on the strength of the job descriptions, have
met
the competencies for the post he did not apply for viz “Manager:
Micro and Cooperative Finance” . Despite this,
Msomi was
at pains to point out that he was of the opinion that the Applicant
did satisfy the competencies for the position “Manager:
Micro
and Cooperative Finance” and it was suggested that his failure
to apply for this ultimately lead to his dismissal.
What remained
unexplained was why if the Applicant had been suitably qualified to
be appointed to the post of Senior Manager: Microfinance
barely
twelve months earlier, a post with very similar requirements he was
now no longer “[
met] the required competencies”.
22.
Unsurprisingly
the Applicant was only invited to be interviewed for one of the posts
and was unsuccessful in his application. The
Applicant was advised of
the interview on the 13
th
February and the interview was
scheduled for and took place on the 14
th
February 2006
23.
As
the Applicant’s existing post was redundant and as the
Applicant was unsuccessful in his application for an alternative
post, the Respondent played out the remaining steps in the
retrenchment process by dismissing the Applicant for operational
reasons
with effect from the 31
st
March 2006 and paid him
his severance benefit as required by the Basic Conditions of
Employment Act.
24.
The
pre trial minute recorded that the issue in dispute was whether or
not the Applicant’s dismissal was substantively and
procedurally unfair.
24.1Substantively; the
Applicant recorded that he believed his dismissal to have been unfair
in that he satisfied the competencies
of and was able to perform the
duties of the restructured posts and that it was not only
unnecessary to have dismissed him
but to have employed outsiders to
fill the newly created positions was unfair. The Respondent’s
reply to this was that Applicant
was selected to be dismissed because
his position was affected by the restructuring, became redundant and
that there was no suitable
post where he could be absorbed.
24.2 Procedurally; the
Applicant complained that the Respondent had not properly nor
meaningfully engaged him as required by the
section 189 of the LRA;
that the outcome viz his dismissal was a fait accompli and that the
efforts of the Respondent were simply
designed to pay lip service to
the process. The Respondents reply to this was that as the Applicant
had been on extended sick leave
and as the restructuring was
important the Respondent could not be held to ransom by the
Applicants indisposition and therefore
it had proceeded in with the
process without him; and that its efforts on his return were
sufficient to render the process procedurally
fair.
25.
In
the matter of UNITED PEOPLE'S UNION OF SA on behalf of KHUMALO v
MAXIPREST TYRES (PTY) LTD (2009) 30 ILJ 1379 (LC) Molahlehi
J
relying, on FAWU & others v SA Breweries Ltd
[2002]
11 BLLR 1093
(LC) at 1109B-D and Decision Surveys International (Pty)
Ltd v Dlamini & others
[2002] ZACC 27
;
[1999] 5 BLLR 413
(LAC),
held:
“…
that
the test for substantive fairness in dismissals for operational
reasons is whether the retrenchment is genuinely justified
by
operational requirements.”
(at page 1387 para 39)
In
the pretrial minute the Applicant conceded that there was a general
need to retrench but argued that that need did not extend
to the
Applicant.
26.
In
the matter of UNITRANS ZULULAND (PTY) LTD V CEBEKHULU
[2003] 7 BLLR
688
(LAC) Zondo JP in rejecting the
“…
contention
that the substantive and procedural fairness were so intricately
linked that, once the court a quo had found that the
dismissal was
procedurally unfair, it could not find that it was substantively
fair...”
held:
“
Substantive
fairness relates to the existence of a fair reason to dismiss. In
relation to substantive fairness the question is whether
or not, on
the evidence before the court, and not on the evidence produced
during the consultation process, a fair reason to dismiss
existed”
(page 696 para 25)
27.
It
was clear from the evidence that the restructuring process had not
been finalized during 2004 and that despite the Applicants
appointment to the position of Senior Manager: Microfinance at the
time of the initial restructuring in 2004, during the Applicants
absence on sick leave certain further changes to the proposed
structure had been decided on and given effect to by re-designating
the erstwhile “
senior
managers” posts as
“
divisional
managers.” This change in nomenclature
however was not a matter that Respondent relied on to
distinguish between the
posts as Shelembe in his memos to the
Applicant described him as the “Divisional Manager:
Microfinance”. Save for the
letter Shelembe addressed to the
Applicant recording his concern (understandably) at the Applicants
protracted absence from work
there was no documentary evidence
produced to support the decision to rename and designate the posts
which ultimately lead to the
Applicant’s dismissal let
alone a explain why there was a fair reason to do so.
28.
Unfortunately
for the Respondent, Msomi, who was Respondent’s only witness,
was similarly unable to establish a reason for
the Applicants
dismissal save for the fact that the Applicant had not applied for
the Advertised post of Divisional Manager: Micro
and Cooperative
Finance and that in his opinion the Applicant did not satisfy the
requirements for the remainder of the vacant
divisional manager
posts. His evidence on this aspect of the matter was not supported by
the various job descriptions. The respondent
made no effort to
explain why in the light of the Applicant’s appointment to the
position of Senior Manager: Microfinance
or (as Shelembe regarded it)
Divisional Manager: Microfinance his qualifications and experience no
longer satisfied the Respondents’
requirements. Whilst one
might speculate that the Applicant’s inability to cope with the
stress of the job and his lengthy
absence could have been reasons for
his unsuitability the Respondent studiously avoided this aspect and
it was not proffered as
a reason.
29.
In
the absence of evidence of a fair reason for the dismissal of the
Applicant it must be concluded that his dismissal was substantively
unfair.
30.
Turning
to the alleged procedural unfairness there is abundant authority for
the proposition that in engaging in “meaningful
joint consensus
seeking” the parties are required to openly and honestly
address alternatives to the retrenchment. In
JOHNSON & JOHNSON
(PTY) LTD v CHEMICAL WORKERS INDUSTRIAL UNION (1999) 20 ILJ 89 (LAC)
the Labour Appeal Court set out clearly the requirements for
compliance with the procedural aspects of section 189 of the Labour
Relations Act. The court held:
“
The important
implication of this is that a mechanical, 'checklist' kind of
approach to determine whether s 189 has been complied
with is
inappropriate. The proper approach is to ascertain whether the
purpose of the section (the occurrence of a joint consensus
seeking
process) has been achieved (cf Maharaj & others v Rampersad
1964 (4) SA 638
(A) at 464; Ceramic Industries Ltd t/a Betta
Sanitaryware & another at 701G-702H (BLLR), 676B-677C ( ILJ ); Ex
parte Mohuloe
(Law Society Transvaal intervening)
1996 (4) SA
1131
(T) at 1137H-1138D).”
“
Mention has
already been made that s 189 is inextricably linked to the issue
whether a dismissal based on operational requirements
is fair or not.
In testing compliance with its provisions by determining whether the
purpose of the occurrence of a joint consensus
seeking process has
been achieved or frustrated, a finding of non-compliance by the
employer will almost invariably result also
in the dismissal being
unfair for failure to follow proper procedure. It is difficult to
envisage a situation where the result
could be different.”
(at
page 96/7 paras 29 and 31)
31.
The
lack of attention to detail in the procedure adopted by the
Respondent and the somewhat belated efforts to satisfy the required
procedure were met with a somewhat petulantly response by the
Applicant. This however does not gainsay the fact that the Respondent
did not comply with the procedural requirements of the LRA and did
not produce any evidence to substantiate or justify the fairness
of
the decision to dismiss the Applicant. The Respondent had decided
whilst the Applicant was on sick leave to continue with the
restructuring process without input from the Applicant in
circumstances where the proposed restructuring would have a
substantial
effect on the Applicant and neither did the Respondent
attempt to disclose “
all relevant information
” as
is required by section 189(3) of the LRA. All that the Respondent was
able to offer in support of its contention that
it had complied with
the procedural elements of section 189 of the LRA and in particular
the “relevant information”
were the memos and emails
which somewhat glibly referred to the “consultations”
where it was averred that the detail
of the proposed restructuring
had been “
shared with you on our discussion” (sic)
;
and “…
part of the consultation session of the 20
th
July 2005, I informed you of the re-organisation of the Financial
Services Department and that you are still in this SBU”.
33.
The
facts of this matter particularly required disclosure to enable the
Applicant to engage in the consultations meaningfully given
his
recent appointment and that his position was now in jeopardy. The
failure of the Applicant to apply for the position of Divisional
Manager: Micro and Cooperative Finance was understandable in the
circumstances where the applicant had not been provided with the
“
Proposed organisational structure for the Financial
Services Department”
which had been “
outlined to
employees and the implications hereof identified”
. The
Respondent’s Shelembe stated clearly in his memo to the
Applicant on the 31
st
October that having shared the
information with the employees they had been invited to “
make
input”
and “
give their motivations thereof”
(sic).
Shelembe in the same memo continues to advise the
Applicant that having followed this procedure the positions had been
advertised
and input sought from the affected employees.
Shelembe’s regret that the Applicant had not been part of this
process
due to his being on sick leave does not excuse that fact that
the Applicant had been excluded from the process.
34.
I
am satisfied that the procedure followed by the Respondent was unfair
and that accordingly his dismissal was procedurally unfair.
35.
The
Applicant persisted in his claim for retrospective reinstatement. The
Applicant gave evidence that he had been unemployed for
a period of
18 months and had thereafter been employed by the Department of
Economic Development as a Deputy Manager where he was
still employed.
36
The
court has discretion to direct in circumstances where a dismissal is
unfair that the Respondent either reinstate or re employ
the
Applicant. In his evidence Msomi indicated that the Respondent had
undergone numerous restructuring exercises subsequent to
the
Applicant’s dismissal the positions had changed and that the
Applicant’s job no longer existed. This evidence was
not
challenged. In those circumstances it is more appropriate to order
his reemployment as opposed to reinstatement and to make
the
reemployment retrospective for the eighteen months that he had been
unemployed.
37.
In
all the circumstances I make the following order:
37.1
The dismissal of the Applicant was both substantively and
procedurally unfair;
37.2
The Respondent is ordered to re employ the Applicant with effect from
the 1
st
January 2009 in a position and on a level
commensurate with the position held by the Applicant at the time of
his dismissal;
37.3
The Respondent is ordered to pay the Applicant’s costs.
---------------------
Gush
J
Date
of Hearing: 3
rd
, 4
th
and 6
th
May
2010
Date
of Judgment: 7th June 2010.
Appearances:
For
the Applicant: Advocate M Naidoo, instructed by Brett Purden
Attorneys;
For
the Respondent: A. P Shangase of A P Shangase and Associates.