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[2011] ZALCJHB 41
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SASBO - The Finance Union v Absa Bank Limited (J746/2011) [2011] ZALCJHB 41; [2011] 12 BLLR 1232 (LC) (23 May 2011)
IN THE LABOUR COURT OF
SOUTH AFRICA
HELD AT JOHANNESBURG
Case no: J746/2011
Reportable
In the matter between:
SASBO – THE
FINANCE UNION
…...................................................................
Applicant
And
ABSA BANK LIMITED
…...............................................................................
Respondent
JUDGMENT
BHOOLA J:
Introduction
[1] This is an
application in terms of section 189A(13) of the Labour Relations Act
66 of 1995 (the LRA), in which the applicant
seeks urgent relief
ordering the respondent to engage in a proper consultation process,
and that it restores the
status quo
in the consultation
process to 3 May 2011. Alternatively, it seeks an order that the
respondent withdraws all communications at
Absa Collections Cape
Town, Absa Retail Bank Collections, Absa Vehicle and Asset Finance
(AVAF) and Home Loans, including letters
handed to the applicant’s
members.
Background
facts
[2] The respondent
embarked on a process to reorganise its AVAF, Home Loans and
Collections departments in early 2011, with the
objective of
centralising these functions to reach increased profit targets by
2012.
[3]
The process is governed by the ABSA Reassignment and Retrenchment
Policy, a collective agreement entered into between the parties
in
2008. The agreement regulates the method and process of consultation,
provides the selection criteria to be applied and alternatives
to be
considered, as well as defining certain principles applicable to
restructuring. It provides for a first consultation between
the
parties to encompass the following:
(a)
The commercial rationale (“business case”) pertaining to
the restructuring;
(b)
The current (“as is”) and the proposed (“to be”)
structures;
(c)
The potential people impact
[4]
The agreement makes provision for follow up consultation sessions
until information referred to in paragraph 5.3 is adequately
covered.
Paragraph 5.3 incorporates the requirements for a meaningful joint
consensus-seeking process as envisaged in section 189(2)
of the LRA
and lists the relevant information to be provided to affected
employees and/or their representatives. This includes
inter alia
the reasons for the restructuring, alternatives to mitigate the
impact, number of affected employees, selection criteria to be
applied, proposed timeframes, assistance and future employment. The
agreement provides that in the second consultation phase a
reassignment and section 189(3) letter is issued to individual
employees, who are excused from work for a period of 90 days and
are
paid for this period to search for alternative positions at the
respondent.
[5] The parties embarked
on a consultation process from 7 March 2011 until 4 May 2011 when the
respondent closed the Cape Town collections
offices and issued staff
with reassignment or relocation letters.
The consultation
process
The 7 March meeting
[6] Despite this being
common cause the founding affidavit omits any reference to the
meeting held between on 7 March when the “HR
Guiding
Principles” applicable to the restructuring were presented and
discussed by the parties. It is further common cause
that on the same
day the power point presentation was sent to the applicant together
with the meeting agenda. The power point presentation
contained the
business plan for the proposed restructure and sets out details
relevant to the commercial rationale for the restructuring
as well as
detailed practical implications for each department including the
current and proposed structure; the number of employees
likely to be
affected; the proposed impact on the affected employees; selection
criteria; alternatives to retrenchment to be dealt
with in the
reassignment phase; proposed compensation for employees who accept a
relocation; early retirement; voluntary retrenchment
and severance
benefits. In it the respondent unambiguously disclosed its intention
to close certain departments in Cape Town, Kwazulu
Natal and
Johannesburg, and to relocate or reassign employees. It also stated
clearly that the Cape Town Collections department
would be closed
down and relocated to Johannesburg, and the Kwazulu-Natal AVAF
department would be closed.
The 8 March meeting
[7] According to the
applicant the consultation process commenced on 8 March 2011 when the
respondent announced, during a normal
weekly meeting of the parties,
that it contemplated major restructuring. The business plan for
restructuring was presented (as
circulated the previous day) by
Thomas Mashaba, the Head of HR Retail and copies provided to the
applicant’s representatives
(the deponent to the founding
affidavit, Comfort Duma, Joe Kokela and Francina Peteke).
[8] The 8 March meeting
involved specific consultations on the proposed change to each
department. Although there is a dispute of
fact about what occurred
at this meeting, the minute of the meeting (signed by Duma, the
deponent to the applicant’s papers)
is instructive. The minutes
record the following in respect of the collections department: “[t]he
business plan to relocate
functions from Cape Town to Johannesburg,
the Cape Town office will be closed. There will be 174 employees
affected; 23 will stay
in current role but relocate to JHB; 112 will
be placed on re-assignment & redeployed and 39 will remain in
Cape Town (Trade
Centre). The relocation advantage will be that
employees will be developed, re-skilled, better employee engagements
and continuity
of business. Affected employees will be given first
preference for vacancies that will be available. No change to all
remaining
jobs/levels or remuneration change. There will be
geographical and reporting line change”. In respect of Home
Loans the following
is recorded:
“
Home
Loans production center consists of four (4) processing centers
currently servicing six (6) regions. KZN center will be closed.
Randburg employees (148) will be relocated to Pretoria. In total 201
employees will be affected. All the KZN product employees
will be
placed on reassignment. Gauteng and Gauteng North will be
consolidated into one processing center. There will be no change
in
job change, level, remuneration or headcount. The travelling distance
from Randburg to Pretoria will be reimbursed. There will
be some
reporting line changes – Customer care centre. The Union
responded that they will not engage the Bank but will forward
the
presentation to the entire NCF. The Union proposed that there should
be a special NCF but cannot confirm date and time. The
Union advised
that there should be no communication with staff until a proper
engagement”.
The 31 March meeting
[9] A Mini Negotiating
and Consultative Forum (NCF) took place on 31 March when the
applicant complained that it had not received
the timelines for the
restructuring. There is a dispute of fact about this. The respondent
alleges that it was provided to the
applicant by hand as well as
email, but a further copy was provided at the meeting. The meeting
was aborted however as the applicant
had not circulated the business
plan/power point presentation to its members on the NCF and they were
completely in the dark about
the restructuring. It was agreed that
the applicant would be given more time and that the parties would
meet again on 6 April 2011,
although with only core NCF members since
the respondent was reluctant to waste the costs of travel again. The
minutes also reflect
that that the applicant said “The union
will never agree to retrenchments”.
The 6 April meeting
[10] Duma states in the
founding affidavit that as at the 6 April meeting the applicant was
not entirely convinced that there was
a commercial rationale for the
restructuring. However, no discussion of this issue appears from the
minutes, which reflect an otherwise
substantive engagement on
alternatives to retrenchment. The applicant requested additional
information, including demographic and
vacancy information, and the
parties discussed voluntary retrenchments as well as a transport
allowance for relocated employees.
The applicant made its position
clear that it would not agree to retrenchment of its members, and
made proposals to reduce the
number of affected employees. It
appeared that the applicant was aware that its members faced
relocation, and accordingly engaged
the respondent on alternatives
including setting up SMMEs and services contracts with employees.
[11] It is also
instructive that the summary of minutes prepared by the applicant
reflects the following: “ Management team
will be responsible
for communicating to employees and will rely on the communication
tool provided”. What is further instructive
is that in the
respondent’s detailed notes of the meeting (which are not
disputed) Joe Kokela, President of the applicant
is recorded as
having said regarding communication “…we decided that we
do not want to be seen to stall the process,
so communicate with the
affected employees.” However the applicant submitted that this
did not amount to consent to implement
the retrenchment process in
respect of individual employees and must be seen in the context of
earlier remarks by Duma to the effect
that “make sure the
correct message is communicated – SASBO has not agreed when we
say you may communicate. For SASBO
this is not a retrenchment
exercise”.
The 19 April meeting
[12] On 19 April the
respondent submitted additional information to the applicant
consisting of a comprehensive management toolkit
(the communication
tool referred to in the 6 April meeting). The toolkit was designed to
assist the respondent in engaging with
staff on the process and
covers the entire spectrum of issues required to be dealt with under
section 189(3). The applicant did
not object to any of the contents
of the toolkit provided to it on 19 April although Duma states in the
founding affidavit that
it was not useful for consultation purposes
as it did not mention estimated periods such as proposed date of
reassignment, notice
month, date of actual closure or possible last
date of service. However, contrary to this assertion, it appears that
the toolkit
contains extensive information concerning frequently
asked questions including the nature of the consultation process with
the
applicant, the selection criteria, the reassignment phase,
reassignment policy, voluntary severance packages as well as proposed
dates for reassignment, the notice month and last date of service.
[13] The respondent had
also provided a list of affected employees by email on or about 6
April. Duma admits in the founding affidavit
that the list was
received before 19 April.
[13] The summary of
minutes prepared by the applicant reflect the following as having
transpired: “[t]he Bank submitted the
required information to
the Union. The Bank informed the Union that they will be
communicating to employees on the 4
th
May 2011. The Bank
informed the Union that the KZN & Cape Town vacancies have been
frozen. The Union responded that they will
analyse the submitted
information and will submit their official respond (sic) on the 3
rd
May 2011.” The respondent denies that this is a correct summary
and in its answering affidavit states that the applicant
undertook to
“provide Thomas with feedback on 3 May”. The applicant
rejects this as mere semantics and reaffirms that
the parties “agreed
to further continuous engagement and periodic updates, the first of
which were to occur on 3 May 2011”.
However, the handwritten
contemporaneous minutes reflect that Duma only said “we will
now analyse it (the toolkit) along
with your business rationale”
and there was no reference to reverting to the respondent by 3 May.
[14] If there was any
doubt in the applicant’s mind about the continuation of the
process then the statement in the handwritten
minutes of the 19 April
would dispense with it – it records that:
“
TM:
Distributes and example of the managers toolkit. By 4
th
May 2011 we want to communicate to staff in CT/Dbn.
CD: we are meeting with
TM on 4
th
May 20111.
EL: SASBO welcome to join
us on 4
th
of May 2011.
TM: vacancy list –
not electronic tracker – now manually done.”
[15] The applicant was
therefore informed on 19 April that the respondent would be
commencing the implementation of the proposed
restructuring and would
start communicating with employees on 4 May. It is apparent from this
discussion in the context of the
toolkit and timelines given to the
applicant that the applicant consents to the continuation of the
process and communication with
staff.
[16] After this meeting
Duma analysed the documentation and prepared a list of questions
about the commercial rationale and business
plan, which he sent to
the respondent on 28 April. His understanding was that these issues
would be fully discussed at the mini
NCF scheduled for 3 May.
The 3 May meeting
[17] The agenda for the 3
May meeting was revised to remove “Retail Bank reorganisation
presentation” as an item. The
applicant emailed the meeting
organiser querying whether this meant the respondent would not
communicate anything to staff until
the parties had engaged on the
relevant issues. Duma states in his founding affidavit that he was
under the impression that the
item had been moved off the agenda
because the respondent was preparing its response to the questions he
had posed on 28 April.
He then rather tersely states that on the same
day he learnt of the plans to communicate with the staff at the Cape
Town office.
He decided to travel to Cape Town to address staff but
was advised by another official that there was no point as the
respondent
had informed staff of the immediate closure of the Cape
Town office and asked them to hand in all bank property.
[18] The hand written
minutes however reflect that Duma has been selective in his
recollection of the events of 3 May. The minutes
reflect that there
was discussion about the communication session, that Mashaba was
called on the speaker phone during the meeting
and said “[Retail
could go on with the calendar…Managers will start communicate
tomorrow. Continuous engagement was
not to stop comm.” There
was then some discussion about the communication plan and Duma said
this had not been received but
Mashaba and VM confirmed this was done
and Duma replied that the applicant would revert by the end of the
day (presumably as to
whether they had received the communication
plan). Kokela then appeals that the communication is stopped and
Mashaba is again telephoned
and the following exchange ensues:
“
Phoned
TM again – asking him to stop communication.
TM says cannot do.
There are already rumours
doing the rounds of the restructuring.
Too late to stop it now.
Do not go back on your
word.
[caucus – both]
CD: Given benefit of
doubt to Bank. We will attend at the comm sessions. In CT we want to
also communicate to staff on 5/5/11 in
the same place.
SL: not one area –
venue may be a problem.
CD: we will communicate
with TM. Also Dbn, JHB, Randburg – not on same day as when the
Bank is communicating”.
[19] The agreement of 19
April is therefore confirmed and there could have been no doubt in
the applicant’s mind about the
events that would transpire the
following day. Insofar as it contends that it consented merely to
communication not to implementation,
it is clear from the facts and
submissions below that it must have been apparent that the
communication was about the implementation
of the closure and
reassignment and relocation phase.
The events of 4 and 5
May 2011
[20] On 4 May affected
employees were collectively addressed in a general meeting by
managers relying on the pre-prepared script
in the toolkit, which set
out the restructuring process and practical implications. In
subsequent individual consultations they
were presented with the
relevant extracts from the toolkits and given letters of reassignment
or relocation. The respondent denied
that employees were simply told
on 4 May to hand over bank property and leave, as is alleged by the
applicant, and at least one
of the employees has confirmed that the
process was fair.
[21]
The applicant takes issue with the unfairness perpetrated on the
employees by not permitting questions when the Cape Town closure
was
announced on 4 May, and submits that staff were not consulted and
were simply handed letters of reassignment or relocation
as a
fait
accompli
. The refusal to permit
questions in the general meeting was designed to undermine the
applicant. The respondent submits that it
had no intention of
undermining the applicant and that it was concerned about
communicating a standard message given the possibility
for
misunderstanding. The prepared script and process set out in the
toolkit had to be adhered to and was designed to ensure that
communication took place in a coherent and consistent manner to a
large number of employees. There was nevertheless sufficient
opportunity for individuals to raise their concerns when the
individual consultations were held over the next two days. Moreover,
a union official was on the premises but did not attend, and a shop
steward was present but made no objection. Duma chose not to
be
present, and he suggests in reply that it was on account of the
respondent’s conduct. The applicant
could
and should have availed itself of the opportunity to attend the
consultations on 4 and 5 May as it was invited to do.
Analysis
[22]
Mr Pretorius submitted that the
applicant’s
case was twofold, namely:
The
consultation that took place was superficial in that it was one of
form rather than substance. There has therefore been no
joint
consensus seeking engagement as envisaged in section 189(3) of the
LRA or as required in the collective agreement.
The
consultation process is incomplete in that it was unilaterally
truncated when the respondent closed offices and issued letters
to
employees implementing the retrenchments on 4 May 2011.
[23]
Counsel submitted that as at 4 May the consultation process was just
beginning and the parties were yet to reach consensus
on issues
pertaining to the commercial rationale and the business plan for the
restructuring. The applicant was simply presented
with a
fait
accompli
–
it was given complex
and detailed prescriptive material and not given
a
real opportunity to influence the outcome of the process or to
interrogate the business plan.
A
list of questions had been submitted by the applicant with the
purpose of engaging in meaningful consultation, but the respondent
formed the view that consultation was over and proceeded to implement
the retrenchments in respect of individual employees. It
is not
possible on any reasonable interpretation of events that the
applicant would have given the go ahead for implementation,
and it
therefore seeks a proper opportunity to consult on the commercial
rationale and business plan.
[24]
In this context, counsel submitted, it is highly improbable that the
applicant would have consented to implementation because
it expected
the business plan to be debated on 3 May. The notes of the 3 May
meeting indicate that the applicant requested a workshop,
and this
could be attributed to its frustration at having been excluded from
interrogating the commercial rationale and being forced
to deal only
with human resources staff rather than a business representative.
Duma also expressed his frustration with the haste
with which the
respondent has proceeded, which led to the applicant being presented
with
a fait accompli.
He
complained that the applicant should be approached at a conceptual
stage instead of with the “diagnosis and medicine”.
There
is however a dispute of fact as to whether these remarks relate to
the process that forms the subject of this application
or to the FX
operating model, although this issue is not material to these
proceedings.
[25]
Moreover, from the facts set out above it
is
improbable that Duma could have formed the view that the commercial
rationale and business plan would be discussed on 3 May.
It is
apparent that the power point presentation complies in all respects
with section 189(3) of the LRA, and that the applicant
would
therefore have been aware, as from 7 March, that employees were to be
relocated or reassigned and various offices closed.
It is also
improbable that he would only have considered this on 19 April for
the first time despite having been in possession
of the business
plan, the timetable and broad principles applicable to affected
employees, from as early as 7 March. Even if his
version is accepted
that he only formulated the list of questions after the meeting of 19
April there is no attempt to explain
why he only sent it on 28 April.
Moreover the applicant does not dispute that it was provided with
detailed information for the
purposes of consultation, but asserts
that there was no substantive opportunity to engage on the commercial
rationale and business
plan. In the circumstances the applicant’s
bona fides
in
bringing this application must be questioned. The respondent submits
that the applicant failed to submit any counter-proposals
nor has it
demonstrated an intention in these proceedings to do so. However what
is of significance, and I return to this below,
is that the
applicant, having now received a formal response to its questions
(many of which appear to have been answered in the
consultation and
documentation presented to it), is not precluded from continuing to
engage the respondent in discussion about
its issues, concerns and
even proposed alternatives.
[26] What is further of
concern is that the applicant does not disclose in its founding
affidavit that it had not circulated the
power point presentation, a
clearly critical document, to its NCF members as a result of which
they were kept in the dark until
31 March about the restructuring.
This is untenable in circumstances where it was the applicant that
requested that the matter
be dealt with at the level of the NCF. The
only explanation provided is that there were sensitive and difficult
salary negotiations
ongoing at the time, but this explanation only
emerges in the replying affidavit and is rather spurious. It is clear
from these
facts that the applicant, as was correctly conceded by its
counsel in argument, had to accept some responsibility for the delay
in the process. However counsel also submitted that the delay was
insignificant given that the restructuring relates to proposed
profit
margins to be achieved by 2012 and there was no need for the
respondent to proceed with such undue haste.
[27]
On the issue of the undue haste with which respondent has proceeded,
the applicant’s counsel relied upon a
dictum
of
Van
Niekerk
J
in
Van Rooyen v Blue
Financial Services
[2010]
10 BLLR 1119
(LC) at [25] for the submission that although our law
acknowledges and permits business reorganisation for strategic
reasons other
than as a life-saving measure, this comes with a caveat
that the process must have reasonable timeframes.
In
this regard the court said the following:
“[25] As I
have already indicated, the circumstances in which the respondent
found itself was not one in which urgent and
drastic measures were
necessary in order to ensure the survival of the enterprise. The
business in which the applicants were engaged
was profitable, and the
respondent’s restructuring was designed and implemented to
generate profit levels that it considered
acceptable. While from the
perspective of substantive fairness this court has recognised an
employer’s right to restructure
for reasons relating to
profitability and increased efficiency as opposed to reasons which
threaten the financial viability of
the business, it seems to me that
in the former case, the obligation to give serious consideration to
reasonable proposals made
by employees or their representatives,
especially in relation to alternatives to retrenchment and the
prospects of accommodation
in alternative employment is more onerous.
This is not a case where any delay in the consultation process would
have resulted in
unsustainable losses for the respondent, or which
might otherwise have justified bringing the consultation process to
an abrupt
end.” Counsel conceded correctly that the case is not
directly in point. Moreover it is clear from this
dictum
that
this is not a matter where the respondent is proceeding without
having considered proposals made by the applicant. Indeed
it is still
expected of the applicant to submit these, particularly in relation
to individual consultations, although my understanding
is that the
respondent will not dismiss consideration of reasonable counter
proposals to the business plan should these be forthcoming.
[28]
Secondly, counsel submitted, being a “spill and fill”
exercise where a department is closed down and its staff
reassigned
or relocated elsewhere in the business, it is imperative that
selection criteria should be consulted about. This principle
was
confirmed by Van Niekerk J in
Van
Rooyen (supra),
when
he stated as follows :
“[18] Prof. Rycroft
observes that a decision by an employer that all jobs in a department
are redundant avoids the need to
decide selection criteria ‘up
front’ for those who will be ultimately retrenched. The
selection criterion effectively
becomes the employee’s failure
to be appointed to a ‘new’ job, or the failure to apply
for it. Prof Rycroft suggests
in this regard that the criteria for
appointment to the restructured position to be fair, they have to be
clear and transparent
– the more vague the criteria, the more
likely it is that in reality, the selection is made on the basis of a
subjective
view, thus crossing the line between a no-fault dismissal
and one based on performance (at 680-681).” Counsel submitted
that
this is imperative
particularly
where the criteria in the collective agreement are all-encompassing
and vague as is the case
in
casu
. I do
not understand the respondent to disagree, although having agreed
broad selection criteria, in the context where offices
have been
closed the application of the criteria to individual employees who
may not be reassigned or relocated is still pending.
[29]
In this context
Mr Redding submitted that the
closure
of the Cape Town office has not resulted in retrenchments and this
application is therefore premature. The process has involved
employees being identified for either redeployment or reassignment,
and a
n employee who is to be
retrenched will only receive a notice of retrenchment if no
alternative position in the business is found
for them in
approximately 3 months from 4 or 5 May or 16 or 17 May (in relation
to employees offered relocation). They may then
be retrenched on or
about 4 or 5 August or 16 or 17 August, with an additional 4 weeks’
notice pay. They will be paid while
alternative positions in the
business are being sought for them and they are obliged to
participate in this process together with
the applicant. Only at the
culmination of this 90 day process is it correct to refer to
retrenchment of an individual who cannot
be placed in the bank.
[30] The applicant
initially sought the setting aside of the Cape Town office closure
and the reversal of the process to 3 May 2011.
At
the hearing it proposed a compromise which involved postponing the
date referred to in the letters issued to members.
The relief sought is in essence a final interdict and in this
regard the applicant must therefore demonstrate a clear right. It
undoubtedly has a statutory right to participate in a joint-consensus
seeking process as well as a right to enforce compliance with
the
collective agreement, although this does not encompass extending or
reversing the process on account of it having dragged its
heels. It
has furthermore failed to demonstrate that the balance of convenience
favours the granting of relief or that it will
suffer irreparable
harm should relief not be granted. It is common cause that both
parties contemplate a continued consultation
process save that the
commercial rationale is no longer on the agenda and the process
cannot now be reversed. The applicant moreover
has not demonstrated
that it has real counter proposals to avoid the restructuring which
it will put on the table should the process
be reversed.
[31] The prejudice to the
respondent both logistically and financially is insurmountable and
outweighs the prejudice to the applicant
should relief not be granted
– it has closed offices, reassigned staff and there is no
utility in postponing by a further
month or longer a decision that is
yet to be made in regard to retrenchment. Employees are not in
immediate danger of losing their
jobs as there is a further 90 day
period before any decision to retrench can be taken. Insofar as
employees who were issued with
relocation letters are contractually
obliged to relocate whilst others being re-assigned are not required
to relocate, the applicant
has a real role to play in their
consultations to seek placements, or alternatives in the event these
cannot be found through the
job matching exercise or otherwise. The
respondent has moreover undertaken to apply the principles of
reassignment and relocation
in a fair manner with due regard to the
individual circumstances of the affected employees. The applicant has
obvious remedies
should this undertaking not be complied with. In my
view the applicant had sufficient opportunity to engage substantively
with
the respondent but failed to do so, nor did it brief its members
timeously or properly about the process. This is not a deficiency
in
the process for which the respondent can be accountable, and it is
entirely up to the applicant to determine its future course
of
conduct. Rather than having been unilaterally terminated the
consultation process is continuing, and in the absence of manifest
unfairness in the process, which is the basis for a section 189A (13)
intervention, the applicant is not entitled to relief. For
these
reasons the application stands to be dismissed.
The respondent does
not seek costs given the ongoing relationship between the parties
Order
[32]
Therefore, I make the following order:
The
application is dismissed.
There
is no order as to costs.
_____________
Bhoola J
Judge of the Labour Court
of South Africa
Date of hearing: 19 May
2011
Date of judgment: 23 May
2011
Appearance:
For the Applicant: Adv P
Pretorius SC instructed by Bieldermans Attorneys
For the Respondent: Adv A
Redding SC with Adv F A Boda instructed by Cliffe Dekker Hofmeyr
13