About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Johannesburg Labour Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: Johannesburg Labour Court, Johannesburg
>>
2012
>>
[2012] ZALCJHB 47
|
|
National Union of Mineworkers and Another v Corobrik (Pty) Ltd (J S90/10) [2012] ZALCJHB 47 (30 May 2012)
Reportable
Of interest to other judges
REPUBLIC OF SOUTH AFRICA
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
JUDGMENT
case
no: JS90/10
In the matter between:
NATIONAL UNION OF MINEWORKERS
…............................................
First
Applicant
MOHALE J and OTHERS
…...........................................
Second
to Further Applicants
and
COROBRIK (PTY) LTD
…............................................................................
Respondent
Heard
:
13 March 2012
Delivered
:
30 May 2012
Summary:
Retrenchment – applicants claim no
operational justification as contemplated in section 189A(19)(b) and
(c) as at the date
when the retrenchments took place –
operational justification when consultation began common cause and
not negated by temporary
operational difficulties at the date when
retrenchments effected a year later - claim dismissed with costs
.
JUDGMENT
BHOOLA J
Introduction
The applicants seek, in their statement of claim, the following
relief in terms of section 189A(8)(b)(ii) read with section 191(11)
of the Labour Relations Act, 66 of 1995 (“the LRA”):
Declaring that the dismissals of the second and further applicants
by the respondent were substantively unfair;
Ordering the respondent to reinstate the second and further
applicants with effect from the date of their dismissal;
Ordering the respondent to pay the costs of this application;
Granting further and/or alternative relief.
At the commencement of the trial, the respondent made a “with
prejudice” offer to re-employ 11 of the second to further
applicants (“the individual applicants”) who it submits
it had been unable to contact previously to communicate its
recall
offer. The offer was rejected. It was submitted by the applicants’
counsel that they sought compensation and no
longer reinstatement.
Facts recorded as common cause in the pre-trial minute
The individual applicants are members of the first applicant (“the
union”), and were employed by the respondent at
its Rietvlei
factory, a brick-producing factory, until their dismissals on or
about 28 August 2009.
On 5 May 2008, the respondent sent the union a notice in terms of
section 189(3) of the LRA inviting it to consult about ‘a
project contemplated at its Rietvlei factory and which could affect
a number of positions at Rietvlei factory.’ The notice
also
stated that the project related to the automation of key functions
at the factory, including ‘de-hacking and sorting
operations
which are currently undertaken on a manual basis’.
The respondent indicated that it would be willing to pursue the
proposal of offering the opportunity for employees to volunteer
for
retrenchment subject to them not constituting essential skilled
manpower or experienced staff considered critical to the
efficient
functioning of the factory.
The parties met the following day, 6 May 2008 and discussed various
issues arising out from the proposal to automate the de-hacking
and
sorting operations. The first applicant’s representative
requested a schedule indicating how the automation would affect
its
members. Discussions took place around the potential implications
for staffing needs being reduced at the level one category
and the
resultant creation of further positions at the more skilled level
two and three positions.
In June 2008, the respondent provided the union with a schedule
reflecting the existing staff complement and the proposed changes
after the proposed automation. The respondent also informed the
union that in terms of the proposal, two sorting belts would
remain
operational until October 2008 at which time it was expected that
one of the belts would be removed in order to accommodate
the
installation of the automated de-hacking via robotic technology. The
automated system was expected to become operational
by 1 December
2008.
The parties met again on 12 September 2008. At this meeting, the
respondent indicated,
inter alia
, that the anticipated date
for the commencement of recruitment at the factory for the new
positions in levels two and three that
had arisen as a result of the
automation was now October 2008. The respondent also indicated that
it would invite employees to
apply for voluntary retrenchment.
In 2009, the union’s representation was taken over by Bongi
Zwane, who was briefed by the respondent during meetings in
April
2009 on the consultations and processes that preceded his
involvement.
On 5 May 2009, the respondent provided the union with certain of the
information it had requested.
On 22 May 2009, the parties met again and the respondent provided
the union with further information regarding its proposed selection
list derived with reference to LIFO, skills levels, handymen duties
and back-up employees, with particular reference to skills
it wished
to retain. The parties discussed proposed severance pay for the
employees who would eventually have to be retrenched.
The parties met again on 25 June 2009. The union requested that the
individual applicants should be provided with information
on
severance and other payments so as to enable them to volunteer where
applicable. The union sought to propose a broadly framed
retrenchment agreement.
The parties met again on 20 July 2009. At this meeting, the
respondent indicated that it intended to proceed with the
retrenchments.
The parties met again on 22 July 2009 when they reached agreement on
the issue of retention of forklift drivers. The respondent
also
provided the union with a template letter of retrenchment it
intended to issue to the individual applicants.
The parties met again on 29 July when the respondent submitted
further proposals on the draft retrenchment agreement.
A further meeting followed on 1 August 2009 and the parties
discussed the outstanding selection issues relating to the use of
back-up employees and the handymen issue. The union agreed to
compromise on the handymen issue based on the considerations that
the respondent had articulated regarding their retention, and the
respondent agreed in turn to compromise on the issue involving
the
retention of the back-up employees and agreed to use LIFO as a basis
for determining eligibility for employee retention where
the choice
was between back-up employees and other affected staff.
On 3 August 2009, the respondent issued termination notices to the
individual applicants informing them that their services would
terminate with effect from 28 August 2009.
Shortly after their retrenchments, the respondent engaged some of
the individual applicants on fixed term contracts.
On 3 September 2009, the applicants referred a dispute to the CCMA
for conciliation. The dispute remained unresolved and was
referred
to this Court for adjudication on 1 February 2010.
The issue to be determined
This Court is required to determine whether the dismissal of the
individual applicants for operational requirements was substantively
unfair, and if so the relief to which they are entitled. Although
the individual applicants sought reinstatement in their statement
of
claim, this was amended during the proceedings to a claim for
compensation.
The evidence led
Evidence led for the respondent
Steven Feist
Feist is Director: Industrial Relations of the respondent. He
explained the process of brick making at the Rietvlei factory.
This
requires the crushing and grinding of clay which is then compressed
and pushed through a processor, following which it is
cut into
bricks, burnt, vitrified and removed into kilns for de-hacking and
sorting. The bricks are then picked up by forklift
trucks, taken to
the sorting yard and packed into bins. The main processes involve
crushing, grinding, de-hacking, sorting as
well as the yard
procedure. The crushing and grinding process was automated in 2006
but this did not involve retrenchments. It
always remained
conceivable that there would be changes to production as the
respondent’s objective was to produce product
of a certain
quality in volumes that would achieve production benefits. The
Rietvlei factory had been shut in the 1990s on account
of the
economic recession. It had a massive capacity but was
underperforming. In 2002, it was decided to operate the factory
again on a 2-kiln basis to produce mid-range product. Since the 2006
automation had not resulted in any retrenchments, when he
was
instructed by the Executive Committee to initiate discussions with
the union in regard to a proposed automation of de-hacking
and
sorting, he likewise did not anticipate that retrenchments would be
necessary.
Feist despatched the notice in terms of section 189(3) notice to the
union and its members, and was involved in the consultations
with J
Rabothata (the union organiser). The parties first met on 6 May 2008
when Feist explained the operational issues and the
rationale for
the proposed automation. He also set out the alternatives that had
been considered by the respondent, namely job
sharing and
short-time, but explained that given the fact that the proposal was
not driven by economic/financial reasons these
alternatives were
limited in terms of reducing or obviating the need for the
retrenchments. He also indicated that the respondent
was willing to
consider voluntary retrenchments in order to reduce or eliminate the
need to retrench. He proposed that selection
criteria such as
skills, LIFO and experience should be utilised, and indicated the
proposed period in which the introduction
of the technology was
envisaged and that fixed term contract labour would be used to
provide supplementary labour for any additional
sorting that would
need to be done over the period. It was also proposed that manual
sorting would take place on one belt while
the installation of the
new technology occurred on the other. In the meeting, Rabothata
requested additional information, including
a schedule reflecting
how the union members would be affected, and Feist provided this
attached to his correspondence of 2 June
2008. They also discussed
the intended manner in which the new technology would be installed,
how the operator level positions
would be filled, and when
volunteers would be invited. Feist also proposed that if
retrenchments were still necessary they should
be finalised by 12
December 2008. On 2 June, he also provided the union with a revised
breakdown of the existing staff complement
and the planned
complement after the installation of the technology.
On 3 June 2008, Feist met with Rabothata again when an in principle
agreement was reached on the rationale for the proposal;
the
proposed process by which the new technology would be introduced;
the proposed process by which the operator positions at
levels two
and three would be filled; the proposed process for calling for
volunteers; and the proposed process for selecting
candidates for
any forced retrenchment and the fact that the selection criteria
used would be LIFO, experience and special skills.
The parties also
agreed to continue to discuss issues in order to minimise job losses
as far as possible.
On 24 July 2008, he updated Rabothata about the delays in installing
the new technology. He also sought to propose dates by which
the
filling of the operator positions would take place and again
outlined the volunteer process. He sent correspondence to Rabothata
on 4 August 2008 in which he reiterated the proposal that fixed term
labour would be used to provide back up to the automated
sorting
during this period. Under cover of that letter he also provided an
updated schedule of all employees, including wage
and salaried
staff.
A further meeting was held on 12 September 2008 when again
information and updates were provided to the union. Feist testified
that he again proposed to Rabothata that any shortfall in manpower
complement during the period of conversion from the manual
to
automated de-hacking would be made up through the use of fixed term
contractors and overtime. In his correspondence to the
union on 17
September 2008, he again set out the agreed process by which the
selection of employees would take place as well
as the criteria of
LIFO, experience and special skills.
Feist testified that the installation of the new technology was only
finalised in January 2009 but thereafter the parties began
wage
negotiations which resulted in a strike that lasted approximately
one month from about February to March 2009. At this stage
the level
two and three operator positions had been filled and the only
remaining issues were the placement of the forklift drivers,
back-up
employees and handymen, as well as the identification of sorters and
cleaners who would be affected by the process.
On 17 April 2009, Feist and Heinrich Von Wielligh, the respondent’s
Factory Manager, met with Bongi Zwane who had replaced
Rabothata as
union official. They briefed him on progress made to date as well as
the selection criteria agreed with his predecessor.
Zwane insisted
that LIFO should be the sole selection criteria determining which
union members should be retained and insisted
on agreement being
reached on this basis alone. Feist tried to explain the importance
in some instances of utilising special
skills in conjunction with
LIFO as an objective basis for determining eligible employees for
retention. Zwane insisted that if
LIFO was not the sole selection
criteria he would declare a dispute, and Feist undertook to
accommodate his concerns as far as
possible. Subsequent to the
meeting and under cover of a letter dated 23 April 2009 he provided
Zwane with a schedule relating
to waged employees at the factory,
their job titles, dates of engagement and job levels. He indicated
in the schedule the implications
of the application of LIFO by level
on the one side and on the other the implications of using
experience, skills and LIFO in
determining the selection of affected
employees. In addition to this, on 5 May 2009 an email was sent to
Zwane setting out the
Rietvlei staff complement (pre and post
restructuring), the positions to be filled as well as surplus
positions, as well as a
breakdown of current salaried posts,
incumbents and years of service.
A further meeting followed on 22 May 2009 where the focus shifted to
the specifics of what was outstanding in respect of the
restructuring process. At that stage the issues still outstanding
were the placement of forklift drivers, handymen and back-up
employees. Severance pay was also discussed. The forklift drivers
were affected because as a result of the introduction of the
new
technology the respondent was able to place less reliance on two ton
forklifts and proposed the use of eight ton forklifts.
A number of
employees had experience in operating eight ton forklifts but the
union was opposed to them being placed in these
positions and
insisted that employees with longer service (and no experience)
should be preferred. The respondent undertook to
consider this
demand that LIFO should be the sole criterion determining
eligibility for the forklift driver positions. In relation
to
handymen the respondent provided the union with details of how LIFO
would impact on the group if it were the sole selection
criteria to
be applied. In relation to back-up employees, Feist provided Zwane
with details of four employees who provided back-up
services (i.e.
they occupied key positions during periods of absence and lunch
breaks) and who had over time acquired skills
and knowledge in
various activities where they provided relief. Feist attempted to
explain to Zwane that it was operationally
necessary to retain the
services of these employees.
Zwane had also raised the issue of one week’s severance pay
and Feist indicated that at this meeting he conceded to the
demand
that two weeks’ severance pay for every year of service should
be paid.
A further meeting was held with Zwane on 25 June 2009 where the
focus was on the outstanding issues relating to forklift drivers,
handymen, back-up employees, volunteers, temporary services and
salaried employees. Zwane still insisted on only LIFO being applied
to forklift drivers; rejected the proposal that handymen should be
retained for their skills and experience which were essential
to the
functioning of the factory and could not be replaced over a short
period of time; and rejected the retention of the four
back-up
employees on account of the skills and experience they had
accumulated over the years. The respondent agreed to consider
the
union proposal that LIFO should be the sole criterion for
determining who would be retained from this list and ultimately
revised the list. It was agreed in relation to volunteers that this
would occur in due course. Feist indicated that there was
also
discussion about temporary services through a labour broker that had
been rendered to the respondent for the purposes of
providing
cleaning services in the ablution blocks and change rooms. The
respondent did not consider these activities as key
and wished to
continue to retain the services on an outsourced basis, but
undertook to refer affected employees who wished to
be employed by
the contractor. It was further agreed that salaried positions would
be advertised to enable affected employees
who had the necessary
skills and capabilities to apply for those positions even though
these were supervisory positions which
the individual applicants who
were mainly sorters and cleaners at level one did not have. Feist
confirmed that he provided Zwane
with the full details relating to
the experience levels of the handymen on 7 July 2009. On 20 July
2009 at a further meeting
Zwane agreed that he would view the work
the handymen were doing in order to form a better understanding of
the situation. He
failed to do so and at a further meeting on 31
July 2009 it became clear there was a deadlock between the parties
on the issue
of the handymen with the respondent contending that
these jobs involved special skills. In relation to the back-up
employees,
it was agreed that the list would be revised in
accordance with the schedule provided by the respondent on 7 July
and at the
31 July meeting the union was informed that only one of
the back-up employees had applied for a salaried position and would
shortly
be interviewed for that position.
As far as the labour brokers were concerned, Feist’s evidence
was that he had addressed the union’s concerns that
the
respondent wanted to retrench its members in order to bring in staff
contracted through labour brokers. Feist indicated to
Zwane that the
respondent had agreed to extend the 12-month recall period following
the retrenchments and that this should allay
any concerns of the
union that it intended to replace retrenched employees with staff
contracted through a labour broker. He
had also explained to Zwane
that the respondent had terminated its outsourcing contract with the
labour broker providing cleaning
services, which would create a
further four positions for the affected employees. Furthermore,
another vacancy had arisen which
would create an additional position
and thus reduce the number of retrenches to 35.
On 1 August 2009, a Saturday, an urgent meeting was held to resolve
the impasse that had arisen on 31 July around the issue of
the
handymen. Zwane and a number of union shop stewards met with Feist,
Von Wielligh and David Matlou, Managing Director of the
respondent.
Zwane produced a generic retrenchment agreement to replace the
contemporaneous one drafted by the parties, and the
respondent’s
representatives indicated that this was not practical and suggested
amending the generic agreement but Zwane
indicated that he did not
have the stamina to do so. The respondent’s representatives
indicated their willingness to meet
on the Sunday for this purpose
but Zwane said he was not available.
After exhaustive discussions, the identity of the employees to be
retrenched was agreed with Zwane. It was also agreed that the
notice
of termination, a template of which had already been given to the
union, would be issued on Monday 3 August 2009 after
Von Wielligh
and the shop stewards committee had verified the names. Feist
testified that this agreement had only been reached
once the union
had relented on the handymen issue and agreed to their retention on
the basis of special skills. The respondent
had in turn conceded on
the issue of back-up employees and agreed that LIFO would apply to
their selection. On the Monday the
shop stewards informed Von
Wielligh that there were volunteers for retrenchment, which reduced
the proposed number of retrenchments
to 33. Von Wielligh and the
shop stewards signed off on the final list and the termination
notices were accordingly issued to
the 33 individual applicants.
Feist received a telephone call from Zwane on 14 August 2009 when he
was travelling and Zwane suggested a further meeting. Feist
asked
him if there was anything specific he wished to discuss and he said
no. They agreed to meet on 25 August 2009 when Zwane
raised a number
of new issues.
In keeping with its recall undertaking Feist confirmed that 17 of
the individual applicants were subsequently re-employed into
permanent positions. An additional three applicants were later
recalled, of which two were dismissed and the third (Koka), who
had
been appointed on a fixed term contract did not have her contract
renewed on account of her refusal to work overtime. A further
two
applicants were deceased. He confirmed that the respondent had made
attempts to contact the remaining 11 applicants via the
shop
stewards committee, but had been unsuccessful.
In relation to the allegation that the respondent relied
unnecessarily on overtime and fixed term contracts at the time of
the retrenchments, Feist testified that this reliance was
short-lived and was driven by unusual operational circumstances that
the respondent had to deal with shortly before the retrenchments
became effective and for a short period thereafter. This was
prompted by an order in May 2009 for a specific brand of bricks by
customers for two projects, one at Port Shepstone and the
other at
Kempton Park. Difficulties had arisen with the colour matching of
these bricks and they had to be sorted manually in
accordance with
the agreement reached with the union in 2008 that it could use fixed
term contract labour and overtime to meet
customer demands.
Unfortunately for the respondent at the same time there was an
economic recession which affected the brick
making business and in
order to keep its operations going and ensure that it could be given
an opportunity to reduce its conventional
product stockpiles it
resorted to making plaster and classic satin bricks. This resulted
in the unanticipated problem of clinkering
(sticking together) which
required manual labour to separate the bricks. The respondent
utilised fixed term contract labour from
its Springs factory as the
employees at Rietvlei were refusing to work overtime, and subsequent
to the retrenchments it recalled
some of the individual applicants.
This was demonstrated by the graphs produced by the respondent and
which formed part of the
evidentiary bundle. This was a short term
problem and when it resolved itself the respondent progressed
towards the elimination
of overtime and use of fixed term contract
labour.
In cross-examination, Feist denied that the respondent had continued
to use employees contracted by labour brokers. He confirmed
that the
only discussions that had taken place in this regard with Zwane
related to cleaning services being provided by a labour
broker
(AML), but that the respondent had agreed to in-source this function
effectively resulting in four positions being created
for affected
employees. He stated that Zwane had referred in the 31 July 2009
meeting to an ulterior motive on the part of the
respondent to get
rid of permanent employees and bring in employees contracted through
a labour broker. In order to allay these
fears, the respondent
confirmed that it would extend the recall period beyond 12 months.
He confirmed that shortly after the
retrenchments, unanticipated
problems arose with bricks clinkering which required manual sorting.
Once this was completed there
was no further need for fixed term
contract labour or overtime, which had been necessitated by the same
considerations.
Evidence of David Matlou
Matlou is the Managing Director of the respondent. He confirmed that
the equipment used on the lines was outdated and there were
problems
with obtaining replacement parts, as well as implications for
employee safety. This resulted in significant loss of
production.
After various alternatives had been considered, the respondent
ultimately proposed the introduction of robotic technology.
The
executive committee received feedback on the union consultation
process from Feist and in June 2008 they were informed that
a
principle agreement had been reached on the operational rationale
for the proposal, the means and manner of implementation
and the
process of placement and retrenchment. The installation of the new
technology was finalised in January 2009 and the commissioning
of
the technology took place over a four month period up to April 2009.
He confirmed that he attended the meeting with Zwane
on 31 July 2009
and that Zwane threatened to declare a dispute as a result of the
eight handymen positions, and insisted that
LIFO should be the sole
selection criterion determining which employees should be retained.
Given the outstanding issues he suggested
the parties meet on the
Saturday (1 August) to seek consensus. Zwane arrived late that
afternoon but had issued instructions
to the shop stewards to
proceed in his absence. On his arrival the parties reached agreement
on the handymen and back-up employees.
Zwane had conceded on the
handymen issue and the respondent conceded to the demand that only
LIFO should apply in appointing
the back-up employees. He confirmed
that there was discussion on the labour broker issue with the
respondent agreeing to extend
the recall period in order to allay
the union’s concerns about its alleged continued reliance on
labour brokers. He confirmed
that Zwane had produced a new
retrenchment agreement and Feist indicated that they should continue
the discussions on the basis
of the original agreement the parties
had developed. Zwane’s attitude was that he had no appetite to
discuss the agreement.
It was then agreed which employees would be
retrenched and Zwane agreed that Von Wielligh would meet with shop
stewards on Monday
3 August to confirm the names.
Matlou testified that since March 2009 there had been problems with
two contracts and that complaints had been received from
the
architects on the projects which resulted in manual sorting being
necessary. He confirmed that Feist had consulted with Rabothata
in
2008 about the possibility that using fixed term contract employees
and overtime might be necessary to deal with operational
problems
that may arise. After the termination notices were issued, the
respondent had been forced to make plaster and classic
satin bricks,
and had to use fixed term contract employees from the Springs
factory to deal with clinkering. The retrenched employees
were
recalled to assist with the temporary operational problems, but once
these problems were resolved the respondent no longer
required the
use of additional labour.
Matlou confirmed that the running of two kilns required
approximately 100 employees. He testified that after the
retrenchments,
in 2010, there was an economic recession which
resulted in the respondent having to use one kiln only and as a
result further
retrenchments were necessary to reduce staff to below
100. When conditions improved again in 2011 the respondent recalled
20
of the individual applicants and attempted to contact the
remaining 11 applicants but to no avail. It then employed other
employees
who had been retrenched subsequent to the individual
applicants, on fixed term contracts.
He also confirmed that the cost of production had reduced
significantly as a result of the new technology and that the factory
was currently operating at its pre-2009 costs which enabled the
respondent to be competitive and to operate in markets it had
been
unable to access previously.
In cross-examination Matlou maintained that the possibility of fixed
term and overtime work to deal with operational issues had
been
canvassed with and agreed to by Rabothata at the inception of the
consultation process. He confirmed that the use of this
additional
labour was short lived and the respondent reverted to its normal
employee complement thereafter. He denied that the
use of
supplementary labour was something more than a temporary situation
necessitated by the clinkering or that it had any relevance
to the
retrenchments of the individual applicants. He confirmed with
reference to the graphs produced by the respondent that
at the stage
at which the problems with clinkering became apparent (i.e. 21
August 2009) the notices of termination had already
been issued to
the individual applicants.
Evidence of Heinrich Von Wielligh
Von Wielligh was the Factory Manager at Rietvlei at the relevant
time and had participated in the consultation meetings together
with
Feist. He confirmed the operational rationale for the installation
of automation technology. He confirmed that an in principle
agreement had been reached with Rabothata in June 2008 in respect of
any proposed retrenchments and the selection criteria that
would
apply. He confirmed that at further meetings with Rabothata in
August and September 2008, the latter was given feedback
on the
implementation of the new technology. By January 2009 the technology
had been installed and operators at levels two and
three had been
migrated from their old positions into new positions. Zwane became
involved on 17 April 2009 when the respondent
had already
commissioned the installed equipment and which process was intended
to take approximately four months. Zwane then
raised the issue that
LIFO should be the sole selection criteria. Discussions ensued about
the handymen and back-up employees
as well as certain salaried
employees, D Smit and K Kruger, who were shift supervisors, and whom
the union contended (at a rather
belated stage just prior to the
trial) should have been retrenched instead of some of the individual
applicants. He explained
that Smit and Kruger had previously worked
for a contractor until they were directly employed by the respondent
and had been
trained in 2006 by the Australian contractors who had
installed the initial robotic technology, in addition to which they
had
artisan skills which were necessary to provide maintenance and
diagnostic services on the production line. Two other employees,
whom the union had also recently contended should have been
retrenched, Happy Sepogoana and J Mailola had been trained by French
contractors in 2006 on the new technology for a period of three
months, were experienced and held their positions over a long
period
of time. The union also raised an issue concerning Prince Sekushule
who was an experienced Extruder Operator who had been
in the
position for a significant length of time. Von Wielligh explained
that there were serious risks involved if an unskilled
employee
performed these services. Von Wielligh testified that the individual
applicants were mainly sorters and cleaners employed
at level one
(specifically those referred to by the union in Exhibit B, page 88,
namely Matlala, Nkosi, Selepe, Lekgothoane and
Koka). As such they
had no specialised skills nor could they acquire these within a
short period of time. He had indicated the
skills levels as above to
Zwane but at no stage during the meetings were any issues raised in
relation to the above individuals
and whom the union now suggests
should have been retained in preference to certain of the retrenched
employees.
He also testified that following the meeting of 30 July, he met with
shop stewards on Monday 1 August 2009 to compare the lists
of
employees and the final list was agreed and signed by him and the
shop stewards. Subsequent to the list being agreed the shop
stewards
informed him that two employees were volunteering for retrenchment
and the list was amended.
He confirmed the problems concerning country meadow bricks for which
the colour matching had to be done urgently based on client
needs.
Contract workers from the Springs factory had been used since at
this stage the applicants were still employed by the
respondent. On
or about 21 August 2009 a completely unanticipated problem arose
with clinkering in two types of bricks, i.e.
plaster and classic
satin. The problem, he explained, only becomes apparent about a week
after the mix has been put through the
machines when already a
million bricks had passed through the system. The machines could not
deal with clinkering and sticking
of bricks and this had to be done
manually with the use of fixed term contract labour. This had
occurred over a short period
as was manifested by the peaks in the
graphs produced by the respondent. When the applicants became
available their services
had been used instead of the Springs fixed
term employees as was apparent from the graphs. He confirmed that
these problems were
unanticipated and had to be dealt with as a
matter of urgency. He confirmed that the respondent had not used
labour brokers to
provide staff other than cleaning staff and two
employees who were used as
ad hoc
support when specialised
technical assistance was required on the lines or the equipment.
In cross-examination, it was put to him that the retrenchment should
have been delayed and he indicated that this would have
served no
purpose as the requirements for fixed term labour were fluctuating
and could not be predicted or planned with any degree
of certainty.
In addition, once the unanticipated problems had been resolved there
was no longer any reliance upon such supplementary
labour.
Evidence of Robbie Carswell
Carswell replaced Von Wielligh as factory manager at the end of
November 2009. He testified that when he started there had been
a
problem with sticking and clinkering that was associated with the
manufacture of plaster bricks and classic satin. There had
also been
a further phase (after May 2009) on the Kempton Park and Port
Shepstone projects where country meadows bricks had been
used and
this had resulted in a further need for manual sorting for a short
period of time. He confirmed that the individual
applicants had been
engaged on a fixed term basis to help with these unplanned
difficulties and that the difficulties had more
or less resolved
themselves by 16 April 2010. At the stage the new technology was
implemented the employee complement was anticipated
to be around 100
on the basis of two kilns operating, but that there had been a
significant economic recession in 2010 that resulted
in only one
kiln operating. However retrenchments had been held off until
October 2010 and when these took place the staff complement
of the
respondent was reduced by almost half. When economic circumstances
improved the second kiln was made operational and approximately
20
of the individual applicants were recalled. Three of those were
subsequently dismissed. Attempts were made to contact the
remaining
11 and two of the individual applicants were deceased. He also
confirmed that costs of production had come down to
pre-2009 levels
and the respondent was accordingly able to compete in markets it had
not been able to access before as a result
of the introduction of
the new technology.
The evidence led by the union
Evidence of Bongi Zwane
Bongi Zwane was the union organiser at the time and received a
section 189 (3) prior to the process commencing and on 17 April
2009
held the first meeting with the respondent. The 2008 process had
been abandoned and a new consultation process had commenced
but the
union did not want to get into whether restructuring was necessary.
Their concern was just how many people are affected.
He admitted
that the rationale was technological and economic and that by the
time he first met with Feist, the technology had
already been
installed. His approach was not to focus on the reason why the
technology or economics were in issue – but
how the numbers
can be reduced
The union asked for information and was promised information
regarding both the current and intended staff complement and
incumbents.
The union was not necessarily concerned with the
rationale for the retrenchments because management would have
already decided
on the need to retrench. They were provided with
list of staff at the time and the positions that were anticipated as
a result
of the restructuring but this did not reflect salaried
staff and they then requested this to get a holistic view of the
employees.
The respondent insisted on confining them to information
about the bargaining unit and wage earners only. This led to the
argument
that to engage in a fair process the union should be
permitted to look at all opportunities to limit casualties and
salaried
staff should not be protected. Management later provided
information (by email on 5 May) but this was limited to level one
and
two employees.
At the next meeting on 22 May 2009, he engaged with the respondent
as follows :
They compared staff
affected and those not affected. The respondent wanted to use LIFO,
skills and experience to select which
employees would remain in
employment on the restructured line. He pointed out that the
universal principles applicable are LIFO
and skills, and that
experience was part of LIFO. The respondent said there were certain
people with certain skills they did
not want to lose and the union
requested proof but were not provided with this immediately although
they eventually received
it. This was the information relating to
salaried employees allegedly trained by the foreign consultants
(i.e. Smit, Kruger,
Sepogoana, Mailola and Sekushule) but he was of
the view that there was favouritism and these employees did not
bring higher
skills. LIFO meant the respondent needed to look at
date of employment and nothing else and these salaried employees had
commenced
after some of the individual applicants. The union
continued to be concerned about the unjustified differentiation
between LIFO
and skills and between waged and salaried staff.
The union also wanted a
moratorium on the use of labour brokers. The respondent initially
denied it was using labour brokers but
the shop stewards knew this
and referred to AML as one of the labour brokers being used. The
respondent agreed that at the time
of the retrenchments it would no
longer use labour brokers. There was no discussion of fixed term
contractors being used or of
a need for overtime. There were vacant
positions for which union members were told to apply but the union
was opposed to this
because then management prerogative would
determine appointments. In his view the distinction between salaried
and waged staff
was a myth.
At the final meeting of 1 Aug 2009, the union realised that there
was no intention to discontinue the use of the labour brokers
and
the question of overtime was discussed. There were still four
employees employed by labour brokers doing cleaning and the
union
said they should be replaced before the end of the process. The
respondent finally conceded that they would discontinue
this
practice. His concern about labour brokers was that it was unfair to
replace permanent staff with employees contracted through
labour
brokers.
He finally admitted in cross-examination that he knew the respondent
was using labour brokers including AML and temporary workers
and
that they were sorting and doing general work mostly during the
night. He denied being aware of any operational emergencies
and
suggested that the union should have been consulted had this been
the case. When he received information that the respondent
was
continuing to rely on overtime and fixed term contractors he
contacted Feist on 13 August 2009. They met on 25 August when
he
raised his concerns. His view was that the use of labour brokers on
or after the retrenchments was never discontinued. The
respondent
was simply going through the motions of consulting and continued its
usage of labour brokers through offering these
employees fixed term
contracts on or before 1 September 2009. He denied that this was as
a result of operational problems but
manifested a pre-determined and
clear intention to retrench union members.
Zwane admitted that there had been agreement as at 1 August 2009 on
the list of employees to be retrenched but this was on the
understanding that the labour brokers would be gone by the time the
retrenchments took place. He indicated that he believed that
the
respondent had gotten rid of its permanent employees in order to be
able to employ staff through labour brokers and fixed
term
contractors. It was only at the meeting of 25 August that he
realised that the respondent had no intention of discontinuing
its
use of employees contracted through labour brokers.
Zwane denied that the respondent had briefed him on its
consultations with Rabothata and that he had seen any of the
previous
correspondence between the respondent and the union. He
testified that he had received a new s 189 (3) notice from the
respondent
in April 2009, but was unable to point it out from the
bundle of documentary evidence. He disputed that the notice sent to
the
union in 2008 had been brought to his attention at any stage. He
identified annexures to letters sent to Rabothata as documents
that
had been handed to him as part of the consultation process, and
denied (when it was put to him in cross-examination) that
they were
in fact annexures to letters written to Rabothata in 2008 (and
represented period specific employee complements from
May and June
2008) and that it was improbable that they would have been given to
him without copies of the covering letters which
were sent to
Rabothata. He was insistent that these were the only documents given
to him by the respondent during the consultations
in 2009.
It was further put to him in cross-examination that contrary to his
suggestion that he had not been provided with the information
requested on salaried employees, information on both waged and
salaried employees as well as positions that needed to be filled
were given to him and this was apparent from the annexures to the
letter dated 23 April 2009 and the email sent to him on 5 May
2009
by the respondent. He also indicated that he had requested
information in writing about the skills of salaried employees,
including Smit and others, but this had not been forthcoming. It was
put to him that there was no evidence that this had been
requested
nor had it been put to the respondent’s witnesses. He refused
to explain why he had insisted on LIFO being the
sole selection
criterion and had threatened to declare a dispute if this was not
applied. He was unable to explain why he felt
the handymen skills
were not discrete. He admitted that he had been given information
about the handymen skills after the second
meeting on 22 May 2009
and he had then accepted the distinction between them and other
affected employees on the basis of their
special skills. Insofar as
he testified that the respondent had been withholding information
about the handymen it was put to
him that this was improbable if one
took into account the fact that the respondent had provided him with
details of the handymen
skills as well as the past experience of
these employees, and furthermore that he had not addressed any
correspondence to the
respondent complaining about the alleged non
disclosure of information and demanding that it should be provided.
He denied that the discussions with Feist about labour brokers was
limited to concerns about the outsourced cleaning contract,
and
insisted that they also discussed labour brokers providing sorting
services. He was unable to indicate why, if he continued
to object
to this vehemently and the respondent had not complied, he had not
sought fit to place his objections in writing.
He insisted that the consultation process initiated with Rabothata
had been abandoned by the respondent and that he was party
to a new
process commencing in April 2009. This is despite it being common
cause in the pre-trial minute that the process commenced
in May
2008. He was unable to explain why both Feist and Von Wielligh would
testify that they had briefed him on the past consultations
or why
he would not have known anything about the past process in which the
union had been involved.
In his view, the retrenchment of the individual applicants was
unfair because the respondent did not disclose to him that it
was
using fixed term contractors, and because it had never intended to
stop contracting labour brokers. The retrenchments were
not
necessary, according to his evidence, because the respondent
intended to get rid of permanent staff and "casualise"
its
workforce.
Analysis of evidence and submissions
In his written closing argument, Mr Van Der Riet submitted on behalf
of the applicants that the dismissals were substantively
unfair in
that :
The dismissals were not operationally justifiable on rational
grounds within the contemplation of section 189A(19)(b);
There was no proper consideration of alternatives to retrenchment
before proceeding with the retrenchments (as contemplated in
section
189 A (19) (c)).
Mr Van Der Riet submitted that the evidence proved that 24 of the
individual applicants were employed on fixed term contracts
immediately after their retrenchments. At the time the respondent
was already employing more than 25 other employees on fixed-term
contracts as well as requiring its employees to work overtime. This
situation continued well into 2010 (albeit to a lesser degree
after
October 2009). Thus, he submitted, on the respondent’s own
version it is clear that at the time the individual applicants
were
retrenched (i.e. 28 August 2009), the respondent needed their
labour.
Mr Van Der Riet submitted that it was not in
issue, as was the evidence of Zwane, that the respondent never
raised the fact that
it was using fixed-term contractors and that it
planned to recall many of the individual applicants after they had
been retrenched.
The fact that the respondent’s witnesses
suggested that the use of contract workers was mentioned in the
consultation process
does not take the matter any further since this
relates to two letters written in 2008 and which had a very specific
context.
The reference in the correspondence
1
to the effect that ‘for practical reasons
the company favours that day shift sorting be conducted by existing
sorters and
that night shift sorting be done on contract.
Consequently, it is planned to effect voluntary retrenchments (where
applicable)
to take effect early in July 2008, and for the contract
to operate fully from that date (after a period of training during
June
2008)’, related to the situation before the automation on
the de-hacking section became operational and had nothing to do
with
what occurred in August 2009.
Furthermore, Mr Van Der Riet submitted, the respondent stated in its
2008 correspondence that ‘should a small complement
of sorters
/ de-hackers be required for a while as a backup to the automated
sorting, employment would be on a fixed-term contract
basis during
this period. Preference in this regard would be given to those
employees who were previously in permanent employment’,
but
the evidence was that when the automated sorting started on 1 April
2009 all the sorters were still in full time employment
and no use
was made of fixed-term contractors at that stage. Therefore, there
was no suggestion whatsoever that in August 2009
the respondent
would need contract workers (and overtime) for the purposes it
needed labour at that stage.
On the law Mr Van Der Riet submitted that it was
trite that the LRA
2
requires the employer, in consultations preceding
retrenchments, to not only reach consensus with the union on
appropriate measures
to avoid dismissals and to minimise dismissals,
but also to change the timing of dismissals. He submitted further
that, as was
held in
SACTWU and Others
v Discreto (a division of Trump and Springbok Holdings),
3
the consultation process has a substantive
purpose, namely to ‘ensure that the ultimate decision on
retrenchment is properly
and genuinely justifiable by operational
requirements or, put another way, by a commercial or business
rationale’.
This,
he
submitted, introduces a substantive component to the consultation
process in that if a matter is not raised in the consultation
process it would be impossible for the dismissals to be justified as
substantively fair. Furthermore, retrenchment must be a
measure of
last resort in order to be substantively fair: See
CWIU
V Algorax (Pty) Ltd
4
where the LAC held that a retrenchment was
substantively unfair on the grounds that there were reasonable
alternatives and retrenchment
was therefore not a measure of last
resort.
Mr Van Der Riet submitted that the union’s
approach does not amount to challenging procedural fairness, since
as was pointed
out in the
Discreto
matter,
5
if a matter is not raised during consultations it
is often impossible to justify the ultimate retrenchments. It
becomes a question
of substantive fairness. The crux of the
applicants’ case is that the dismissals were substantively
unfair because on the
evidence led it is clear that the respondent
has failed to show that the retrenchment of the individual
applicants was rationally
justifiable for operational requirements
as at the time of their dismissal on 28 August 2009. At that stage,
the respondent needed an additional 50 fixed term
contractors and the retrenched employees would have performed the
work required.
The respondent may have been able to show at a later
stage that the retrenchment of some of the individual applicants was
justifiable
on operational grounds, but on the date in question
there were reasonable alternatives to retrenchment. The respondent
could
have simply used the individual applicants to do the work it
used contractors to do or to do the work done by permanent employees
as overtime. The applicants conceded the technological rationale for
the retrenchments and conceded that it made sense in the
long term.
However,
they submitted that at the time
this reason had nothing to do with the retrenchments even though it
may have become relevant at
a later stage. Mr Van Der Riet submitted
that the evidence of Von Wielligh supports the applicants’
submission in that
he confirmed that after the operational problems
had been resolved and the respondent no longer needed replacement
labour, the
retrenchments would have been operationally justified.
However, the respondent retrenched the individual applicants before
that
point arose and at a point in time when they still needed
labour. The retrenchment accordingly cannot be justified as a
measure
of last resort, and as in
Algorax
(supra
at para 70) where the employer
had other alternatives available that would make it unnecessary to
resort to dismissals, the dismissals
are not substantively fair.
Mr Van Der Riet admitted there was no reference in the statement of
claim to the use of Springs factory workers because this
fact only
became apparent at the trial. The criticism of Zwane’s
evidence, moreover, he submitted, is not justified since
he was
called simply to rebut the evidence that the references in the
correspondence to contract workers were made in the context
of a
justification for the retrenchments to be effected on 28 August
2009. Zwane’s testimony established that the manual
sorting on
contract had nothing to do with justifying the use of contract
labour in August and September. His evidence proved
that all sorters
were still in permanent employment until 28 August 2009 and at no
stage did management indicate to him that
as at 28 August 2009 they
will still require contract workers. They could have raised this
with him on 25 August 2009 when Zwane
expressed the concern to Feist
that there were still ‘lots of labour brokers,’ and the
failure of the respondent
to raise this or agree to an extension
implies that it is not able to justify the retrenchments. This
information was only within
the knowledge of the respondent but was
never raised with the union. Matlou’s explanation provides the
only rationale for
persisting with the retrenchments at the time
i.e. that the termination notices had already been handed out. The
respondent could
have withheld these given its need for contract
labour, and there was therefore no justification for the timing of
the retrenchments.
Mr Van Der Riet submitted further that the
statement of claim should accordingly be deemed to be amended in
light of the facts
that emerged during the trial regarding the fixed
term contract employees.
No submissions were made on the selection criteria issue and in
their final submissions the applicants would appear to have
abandoned reliance on this issue. The allegation that certain
skilled and salaried employees should have been retrenched instead
of some of the individual applicants, raised rather belatedly, was
also abandoned, correctly in my view as the evidence refuted
entirely the union’s proposition in this regard. In any event
this issue would have been subsumed by the fact that the
parties
eventually reached agreement on the identity of the individual
applicants.
Mr Lawrence submitted that the union’s sole witness was unable
to dispute that there was a fairly extensive consultation
process
which commenced in 2008 with the issue of the s 189(3) notice and
continued into 2009. Zwane conceded that there were
many meetings
and that the union accepted the technological rationale for the
retrenchments but was only concerned about the
impact on its
members. He was unable to explain his evidence that a new s 189(3)
notice was sent to him in 2009. Zwane’s
main issue was that
the respondent did not disclose the use of the fixed-term
contractors and labour brokers, which led to a
dispute being
declared. Mr Lawrence submitted that it was clear from the
interactions with Rabothata at the very commencement
of the
consultation process that the respondent was not coy about the
difficulties envisaged in the process and had raised upfront
the
fact that it had considered job-sharing and short-time but these
were not appropriate as this was a retrenchment for technological
reasons. In addition, the respondent had raised the possible use of
fixed-term contractors and overtime to support the variable
need to
the business as it envisaged that there would be problems with the
introduction of new technology. The respondent played
open cards
with the union and the extensive and open discussions culminated in
agreement being reached on the selection criteria
of LIFO,
experience and skills. There was accordingly no need to revisit the
entire process when Zwane stepped in to replace
Rabothata as the
union’s representative. Zwane then sought to change the
playing field by insisting that LIFO should be
the sole selection
criterion, although in his evidence he conceded that skills were
correctly also applied. Zwane initially denied
this, but later
conceded that he had been briefed on the background by Feist and it
is hardly probable that he would not have
been briefed by his own
colleagues or indeed that he would not have been informed by the
shop stewards that the respondent was
using fixed-term contractors.
Moreover, the graphs confirm that there was no persistent and
continuous need for fixed term contractors. Instead there were
peaks
and troughs and a decline in the use of this additional labour from
October 2009 but in April 2010 the variable need for
fixed term
contractors had disappeared completely. This was not a situation
that could have resulted in permanent employment
for the individual
applicants.
The explanation for the temporary use of fixed term contractors was
moreover clear. The evidence of Feist and Matlou, which was
not
controverted by Zwane, was clearly and consistently that a
particular type of brick had to be produced; that the installation
of new technology led to difficulty with matching colours; and that
the delivery of the bricks could not be delayed as it was
customer
driven. The economic recession coincided with the operational
difficulties and led to a decision to produce plaster
bricks and
classic satin in order to stave off closure as other brick factories
were closing at the time. The reality was that
by 3 August notices
of termination with effect from 29 August 2009 had already been
issued, and the respondent could not postpone
the retrenchments, nor
was it even suggested that at the time the applicants sought this.
The design of the process led to problems
being identified only
after a week’s production when (as with the clinkering) over a
million bricks would have already
been produced. This could not have
been anticipated earlier by the respondent.
Furthermore, the respondent complied with its undertaking to the
union and when problems manifested post the retrenchments it
completely ended any reliance on the fixed term contractors from
Springs and instead immediately recalled the individual applicants.
Zwane conceded in cross examination that that it came to his
attention only on 13 August 2009 that fixed term contract labour
was
being used. He then telephoned Feist but chose not to raise this
with him, instead agreeing to a meeting more than a week
later on 25
August. However, when the meeting occurred he raised a number of
other issues other than the use of fixed term contractors,
and more
importantly, he threatened an interdict in relation to the use of
LIFO. The option of an interdict was in any event
available to the
applicants in respect of their procedural concerns under s 189A but
they elected not to pursue it. It is only
the substantive fairness
that is now before this Court and it is not available to the
applicants to challenge procedural fairness.
The undisputed evidence of the respondent was
that the factory currently runs at pre-2009 costs. This in itself
justifies the
technological rationale. The respondent also deferred
the retrenchments during the recession. The justification of
productivity
has been realised and this, as Mr Lawrence submitted,
is the true litmus test. In other words, the retrenchments resulted
in
justification of the rationale of a termination for operational
reasons. Mr Lawrence submitted that it is not the case that it
was a
justification based on financial reasons and could therefore have
been deferred. Zwane’s evidence was that on 1 August
2009 they
had reached agreement on the list of affected employees, selection
criteria as well as the effective date. Moreover,
there had been
consultation with the union on the possible use of fixed term
labour. It is thus ironic for the applicant to submit
that the
recall of individual applicants proves that in retrospect there was
no justification for the retrenchments. What is
clear from the
evidence is that the union accepted the technological rationale;
there were no alternatives proposed by the applicants;
and the
criteria used were fair and objective, and in fact were agreed
during consultation. Mr Lawrence submitted that although
Zwane had
concerns about experience as a criterion it is clear that experience
is an acceptable selection criterion: se
e
NUMSA obo Members v Timken SA (Pty) Ltd
[2009]
6 BLLR 548
(LC) at para [29]. The approach taken by the respondent
has moreover, Mr Lawrence submitted, has been endorsed by the Labour
Appeal Court i
n CWIU & Others v
Latex Surgical Products (Pty Ltd.
6
Mr Van Der Riet submitted that the criticism of
Zwane for his refusal to answer the question that he insisted on
LIFO is not correct.
He did reply that he had already dealt with the
issue in his evidence in chief. In any event it was quite apparent
(after Feist’s
letter that Zwane was insisting on LIFO) that
the parties thereafter engaged on the skills issue and this was
conceded in respect
of the handymen.
Zwane was moreover, as Mr Lawrence submitted, the only witness
called by the applicants. He had no knowledge of the operational
realities at the respondent and could not controvert any of the
operational facts testified put up by the respondent’s
witnesses; he could not offer any evidence in regard to the
operational rationale and had no knowledge of the labour broker
contract. He was unable to controvert the testimony of Matlou and
Von Wielligh that after the termination notices had been issued
plaster bricks and classic satin had presented sticking and
clinkering problems which were also unpredicted and needed to be
dealt with manually as robotic technology could not deal with this.
He was also unable to controvert the position of the respondent’s
witnesses that this was an unanticipated short-term problem which
had nothing to do with the retrenchment process. He was constrained
to accept that the services of the individual applicants were used
immediately after their retrenchments to deal with these
unanticipated operational problems. He was not able to substantiate
his view that the respondent’s agenda had been to get
rid of
permanent employees and replace them with labour brokers and fixed
term contract employees. None of the shop stewards
or individual
applicants was called to corroborate his version. The evidence of
Carswell was not rebutted and was to the effect
that when he took
over the reliance on fixed term contractors and overtime work had
been resolved and customer orders had been
finalised. Zwane was not
able to rebut the testimony of Matlou and Von Wielligh that it took
in excess of a week and after about
a million bricks have been moved
through the system to detect problems. On this basis Mr Lawrence
submitted there is only one
version before this court. Furthermore
all the issues raised by the union have been abandoned and the
relief sought has now been
limited to compensation. The respondent
acted in good faith and recalled the retrenched employees and is now
faced with the argument
that this means there was no original
rationale for the retrenchments. Carswell also testified that the
normal capacity required
running two kilns but this was reduced
during the recession to one; new technology was introduced; the
respondent picked up the
market share of other factories and only in
2011 was it able to run on two kilns again and this led to recalling
the individual
applicants first.
It is clear from the evidence that there had been
consultation with the union right at the inception of the
consultation process
about the use of supplementary labour, and in
addition that unanticipated operational problems arose which
necessitated this
at the time of the retrenchments. This was not a
permanent situation however and once the individual applicants were
retrenched
they were recalled to assist until the problems had been
resolved within a period of a few months. This did not invalidate
the
operational justification for the retrenchment on rational
grounds, which the applicants conceded when the consultation process
commenced. In this regard Mr Lawrence argued that the law envisages
consultation to be a two-way street and that the applicant
bears
some responsibility to raise alternatives to retrenchment :
SATAWU
v Old Mutual Life Assurance Company SA Ltd.
7
It failed to suggest any alternatives.
Furthermore, he submitted,
SATAWU
dispensed with the notion that retrenchment was
required to be a last resort. The court held as follows in this
regard :
8
[84] With the
amendments to the legislation in 2002, the legislature has given a
clearer indication of the standard to be applied.
Section
189A(19)(b)
,
applicable to employers retrenching a significant number of
employees, imports into the test for adjudging the fairness of a
retrenchment the requirement that the dismissal must be
“operationally justifiable on rational grounds”. Grogan
argues
that the use of the phrase “justifiable on rational
grounds” implies that the approach envisaged is akin to that
adopted
by the Labour Court in reviewing arbitration awards by the
CCMA. Still, the question remains whether the employer is obliged to
satisfy the court that dismissal was the only option under the
circumstances or that retrenchment can only be used as a means of
last resort. The balance of authority suggests not.
[85]’The test formulated
by the legislature in the 2002 amendments harkens back to the
principle of proportionality or the
rational basis test applied in
constitutional and administrative adjudication in other
jurisdictions. As such, the test involves
a measure of deference to
the managerial prerogative about whether the decision to retrench is
a legitimate exercise of managerial
authority for the purpose of
attaining a commercially acceptable objective. Such deference does
not amount to an abdication and,
as stated in BMD Knitting Mills
(Pty) Ltd (supra), the court is entitled to look at the content of
the reasons given to ensure
that they are neither arbitrary nor
capricious and are indeed aimed at a commercially acceptable
objective. The second leg of the
enquiry is directed at the
investigation of the proportionality or rationality of the process by
which the commercial objectives
are to be achieved. Thus, there
should be a rational connection between the employer’s scheme
and its commercial objective,
and through the consideration of
alternatives an attempt should be made to find the alternative which
least harms the rights of
the employees in order to be fair to them.
The alternative eventually applied need not be the best means, or the
least drastic
alternative. Rather it should fall within the range of
reasonable options available in the circumstances allowing for the
employer’s
margin of appreciation to the employee in the
exercise of its managerial prerogative. The formulation of the test
in this way adds
nothing new. It simply synthesises what has already
been said in Discreto and BMD Knitting Mills. The two decisions are
not entirely
at odds with one another. They are simply elucidations
of the governing principle that the decision to dismiss must be
operationally
justifiable on rational grounds, which permits some
flexibility in the standard of judicial scrutiny, depending on the
context’.
In regard to the conduct of the union the court in
SATAWU
(supra at page 404) made the following observations which Mr
Lawrence submitted are applicable to the facts
in casu
:
[88] ‘The union’s
attack on the underlying rationale for the retrenchments throughout
the process was surprisingly muted
and indirect. The dispute letter
of 20 October 1999 certainly makes it clear that the union did not
see the need for outsourcing.
Yet throughout, and despite repeated
invitations to do so, it never interrogated the rationale for
outsourcing, nor requested details
of the anticipated financial
savings. Nor did it make any proposals whatsoever for an alternative
strategy. By and large its approach
suggested that it had accepted
the need to outsource and chose instead to secure the best severance
package for its members. In
the result, there is no evidence that the
decision to outsource was not for a legitimate, commercially
justifiable objective, or
that it was arbitrary or capricious in any
way’.
The applicants accepted the technological rationale for the
retrenchment, and as such it can hardly be contended that the
dismissals
were not operationally justifiable as at August 2009. The
respondent has led sufficient evidence to prove the rational and
justifiable
basis for the introduction of new technology which led
to it being cost effective, and has adequately explained the
operational
problems which resulted in a temporary reliance on
additional or supplementary labour, including that of the individual
applicants.
The unanticipated operational contingencies do not
subvert the original rationale, and in any event would appear to
correlate
with procedural fairness other than substantive fairness.
In terms of section 189A (18) this court is precluded from
adjudicating
a
dispute
about the procedural fairness of a
dismissal
based on the employer's
operational requirements
in any
dispute
referred to it in terms of section 191 (5)
(b)
(ii).
In regard to substantive fairness section 189A (19) provides as
follows : “[i]n any
dispute
referred to the Labour
Court in terms of section 191 (5)
(b)
(ii) that concerns the
dismissal
of the number of
employees
specified in
subsection (1), the Labour Court must find that the
employee
was dismissed for a fair reason if-
(a)
the
dismissal
was to give effect
to a requirement based on the employer's economic, technological,
structural or similar needs;
(b)
the
dismissal
was operationally
justifiable on rational grounds;
(c)
there was a proper consideration of
alternatives; and
(d)
selection
criteria were fair and objective”.
The applicants do not dispute the technological
rationale for the retrenchments and the dismissals were accordingly
operationally
justifiable on rational grounds. Moreover, it is
common cause that the selection criteria were fair and objective and
in fact
were ultimately agreed between the parties and that the
identity of the individual applicants was furthermore agreed. No
alternatives
to retrenchment were moreover proposed by the
applicants. The respondent conducted an extensive consultation
exercise in regard
to the technological innovation it sought to
introduce, raising from its inception the anticipated operational
difficulties.
When these and other unanticipated difficulties arose,
it utilised fixed term contractors, as agreed with the union for a
temporary
period. The union’s concerns that the respondent was
motivated by the need to replace its permanent workforce with fixed
term contractors and employees of labour brokers was purely
speculative and did not materialise. The respondent has also
demonstrated
that it recalled most of the individual applicants when
its capacity increased and it further made a without prejudice offer
to re-employ the remaining 11 individual applicants. This in itself
demonstrates that it was
bona fide
in undertaking the technological restructuring.
Moreover, the evidence that the financial benefits of the
restructuring have been
realised was not disputed. The applicants
have therefore failed to make out a case for relief.
On the issue of costs Mr Lawrence submitted that
the rejection of the “with prejudice” offer made in open
court demonstrates
that the applicants’ approach to this
litigation was nothing but vexatious. The respondent was entitled to
seek costs on
an attorney and client scale occasioned by conducting
a trial for four days. Mr Van Der Riet denied that the refusal to
accept
the offer was vexatious and submitted that the union is not
responsible for the matter being heard more than two years after the
retrenchments as a result primarily of the respondent’s
raising of a point
in limine.
The individual applicants have moreover obtained
other employment and no longer seek reinstatement but are entitled
to compensation
for their unfair dismissals more than two years ago.
He urged this court given the principles in
Ergo
9
not to make any order as to costs given the
ongoing relationship between the parties. In my view there is no
reason in law or
fairness why costs should not follow the result
since the applicants persisted with their claim notwithstanding
evidence to the
effect that most of the individual applicants are
already in employment with the respondent or had already been
recalled, that
two are deceased, and there was an offer to re-employ
the remaining applicants. The applicants made no attempt to amend
their
relief to compensation prior to the commencement of the trial.
However, considerations of fairness would in my view militate
against costs on a special scale being imposed and moreover I am of
the view that the costs should be paid by the first applicant
only.
Order
Therefore, I make the following order :
The claim is dismissed. The costs are to be paid by the first
applicant.
_______________________
Bhoola J
Judge of the Labour Court of South Africa
APPEARANCES
APPLICANTS:
H Van Der Riet SC
Instructed by
Cheadle Thompson & Haysom Inc., Johannesburg
RESPONDENT:
I Lawrence, Edward
Nathan Sonnenbergs, Durban
1
See
Bundle B page 2.
2
See
section 189(2)(a),(b) and (c).
3
[1998]
12 BLLR 1228
(LAC) at para 8.
4
[2003]
11 BLLR 1081
(LAC) especially at para 70.
5
Supra
at paras 6-9 and 15.
6
[2006]
27
ILJ
292 (LAC) at 328B.
7
[2005]
4 BLLR 378
(LC).
8
Ibid,
at page 403 para 85.
9
National
Union of Mineworkers v East Rand Gold and Uranium Co Ltd
[1992]
4 All SA 78
(AD)